March 3, 2010

Infrastructure gets funding increase in B.C. Budget 2010

‘Hopefully this will buy us time until private investment comes back,’ says independent contractor association president

RICHARD GILBERT

staff writer

The 2010 B.C. budget contains increases in capital spending and maintains investment in stimulus and municipal projects, but no new major infrastructure projects were announced.

Finance Minister Colin Hansen released the 2010 B.C. Budget in Victoria with the aim of boosting infrastructure spending, supporting social services and balancing the budget.

“We are pleased that the government recognizes the importance of accelerated spending on infrastructure,” said Jack Davidson, president of the B.C. Road Builders and Heavy Construction Association. “This will help push us towards economic recovery.”

Taxpayer-supported capital spending is projected at $5.3 billion in 2010/11, which is a $1.9 billion increase from the last budget.

Capital spending will decline to $3.6 billion in 2011/12 and $3.1 billion in 2012/13, which reflects the completion of accelerated capital projects.

As part of the accelerated infrastructure plan, additional provincial funding of $58 million has been made available to finance further community infrastructure projects, which will be matched by other levels of government.

“This is the largest investment in B.C. history in transportation and community infrastructure,” said Davidson. “It’s coming at a good time. Without this investment, it would be hard for the economy to stand up on its own.”

It is estimated that total accelerated infrastructure spending will create 34,000 construction jobs over the life of the projects in communities across B.C.

However, Davidson and others in the industry are worried about what will happen two years out when the infrastructure spending stops.

There is still talk in the U.S. about a double dip recession and it may take more time for the private sector to fill this gap.

“The budget is certainly good news for the construction industry, as it struggles to deal with the absence of private sector money,” said Philip Hochstein, president of the Independent Contractor and Businesses Association.

“Hopefully, this will buy us some time until private sector investment comes back.”

The Ministry of Finance forecasts the economy to grow by 2.2 per cent in 2010, 2.3 per cent in 2011 and return to more normal growth of 2.8 per cent in the medium term.

“Government investment in infrastructure has been relatively high for a number of years, so we can’t expect it to go on into perpetuity,” said Ken Peacock, director of economic research with the Business Council of British Columbia.

“There are a number of major infrastructure projects that will go on for some time.”

These major projects include the South Fraser Perimeter Road ($1.2 billion), and the Port Mann/Highway1 project ($2.46 billion) and the Evergreen Line ($1.4 billion).

The spending has garnered the approval of some in B.C.’s construction industry.

“If we look at it from the construction industry perspective, they have done a good job of balancing support for families and those that can’t support themselves, while making a significant commitment to stimulating economic growth in a number of key sectors,” said Manley McLachlan, president of the British Columbia Construction Association.

“Given what they have to work with this is an exceptional budget.”

Others disagreed and thought the budget could have gone further. “The budget was timid,” said Hochstein. “They could have done a better job reducing the size of the government, using the fiscal crisis we’re in. Instead, they just borrowed more money. Reducing the government through attrition is hardly a way to shrink government.”

According to the budget, the government plans to lay off another 1,100 public sector employees by 2013.

The government will cap lay offs at five per cent of the 30,000-member civil service, which is 1,500 full-time equivalent positions over the next three years.

The government expects to lose about 11 per cent or 3,500 public service jobs by 2013 through layoffs, retirements and resignations.

About 1,600 government employees retire or resign each year.

Budget 2010 projects deficits of $1.7 billion in 2010-11, $945 million in 2011-12, and $145 million in 2012-13, and aims to return to balanced budgets by 2013-14.

A Quick Glance

British Columbia’s infrastructure spending

Investment in the transportation infrastructure program in 2010/11 includes the Trans-Canada highway improvements in the Kicking Horse Canyon ($46 million) and Kamloops to Golden area ($88 million), the Evergreen Line ($33 million), Okanagan Valley Corridor ($97 million), and Cariboo Connector ($53 million) and the Canada Line ($20 million).

New projects include investments in housing renovations, the Northwest Transmission Line, upgrades to the Royal BC Museum, air tanker bases in Williams Lake and Castlegar, the Klemtu Ferry Terminal and the Mackenzie Connector.

Ongoing major projects include the South Fraser Perimeter Road at $1.2 billion, the Port Mann/Highway 1 project at $2.46 billion and the Evergreen Line at $1.4 billion.

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