Canada: Clock Is Ticking on Major Liberal Government Commitments

The halfway mark of the Liberal government’s first term in office was met with mixed reviews as infrastructure investments rolled out at anemic rates and the bulk of funding budgeted to spur innovation was left unspent. While the process to get money out the door has been painfully slow, there is reason for optimism that the government will deliver, with an election fast approaching in the fall of 2019.  

The government doubled down on this optimism by launching an online “Mandate Letter Tracker” so Canadians can monitor the status of all commitments found in Prime Minister Justin Trudeau’s mandate letters to ministers. Clearly there is much still to be achieved. Here are a few of the categories:

▶ Jobs and Innovation: 12 priorities - one delivered, nine in progress.

▶ Sustainable infrastructure: 13 priorities - none delivered, 12 in progress.

▶ Export and investment: 20 priorities - none delivered, all in progress.  

Let’s take a deeper look at some of the initiatives in these priority areas.

The federal government divided its proposed infrastructure program into three main categories – public transit, green infrastructure and social infrastructure – promising the largest amount of infrastructure spending in Canadian history. The Liberals’ first budget in March 2016 was intended to show that they are serious, and earmarked $125 billion to be spent over 10 years. Nevertheless, bureaucratic red tape and evolving priorities have delayed this spending for potentially years to come. In the 2016-2107 fiscal year, the government failed to spend $2.17 billion, about 40 percent of the $5.3 billion in funding allocated for distribution.

Of the $3.43 billion that did roll out, a large portion was spent on supporting transit infrastructure projects across the country. This included funding for a host of projects in cities and provinces, such as new and expanded subway lines in Toronto and Ottawa’s light rail.

In November 2017 the government launched the social infrastructure envelope by announcing the National Housing Strategy. If carried out according to plan, $40 billion dollars will be invested over 10 years to build 60,000 new housing units and refurbish 240,000 existing low-income units. While some of this money will begin to roll out in April 2018, the lion’s share will only come post-2021, and only if there is provincial and private sector buy-in. The devil is in the details, as the federal government’s contribution is $15.9 billion with the balance expected from provincial government and municipal government contributions. Nevertheless, by most accounts this is an attainable goal that will make a difference in the lives of low-income Canadians across the country.

Spending to support innovation in Canada is puttering along after a bit of a reset. First, the Minister of Innovation, Science and Economic Development announced $2 billion in funding over three years to help postsecondary institutions build new academic infrastructure. Second, the government launched consultations in 2016 on its Innovation Agenda.

Following the consultations, the government launched the Strategic Innovation Fund (SIF), which consolidated four existing innovation funding programs and added additional funding, for a total of $1.26 billion over five years. A new application process expanded eligibility, and more than 300 applications have been submitted to date. Applications can still be submitted. The first funding approvals are expected this year.

The government also created the $1.26 billion Innovation Supercluster Initiative with the goal of creating five Supercluster hubs across Canada. These hubs, like those in other countries, are expected to cluster Canada’s most innovative ideas and spur economic growth and competitiveness of Canadian companies. The Innovation Supercluster Initiative utilizes the $800 million of innovation funding earmarked by the government shortly after the 2015 election and repurposes $150 million in green infrastructure and public transit funding allocations in the 2016 budget. These funds will be invested into Canadian companies between 2017 and 2022, matched by private sector money. This first-of-its-kind initiative in Canada attracted more than 50 applications representing more than 1,000 businesses and 350 research institutions, colleges and universities and government agencies. Of these, nine proposals have been shortlisted, and the five finalists will be announced in March 2018. Finalists include advanced mining, sustainable offshore oil and gas, and advanced manufacturing proposals.

With less than two years to go until the next election in October 2019, the government needs to show Canadians that they can deliver on their promises and move money out the door with results. This is compounded by the spending timelines which see vast amounts of the funding flowing after the election. The Liberal government is gambling that it can achieve enough checkmarks in the “delivered” column to earn a second mandate to continue its vision of growth through innovation.

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