Facing an uncertain future for infrastructure construction
June 9, 2015 By Andrew Macklin
This isn’t the first time we needed to look at the industry ramifications of political upheaval, but for Albertans, this might be the most significant time to have this discussion.
Two elections in 2015 could cause a seismic shift in the corporate realm of Alberta, and one is already starting to do so.
In case you missed it while working too hard to get your 2015 production or construction season underway, the NDP handily wrestled a majority government away from the Progressive Conservatives, who had been in power in the province for over 40 years. The shift ushers in a party set to change the tax burden in the province, which will certainly have an impact on the aggregates and road construction industry.
According to the proposals made during the NDP’s campaign, the party will introduce a 20 per cent hike in the corporate tax rate, increasing the current rate from 10 per cent to 12 per cent. The party has also suggested that there will be an increase in the income tax for anyone making greater than $125,000 per year. Both of these increases, should the NDP move forward with them, will have a significant impact on the bottom line of Alberta’s aggregates and road construction businesses.
On the road construction side, it is difficult to find a clear indication of what the NDP plan to do with the province’s ongoing infrastructure projects. According to the party’s campaign platform, infrastructure priorities will be supported, but only transit is mentioned exclusively:
(5.16) We’ll provide stable, predictable funding to both large and smaller municipalities and ensure they have resources they need to fulfill infrastructure priorities, such as transit.
That should bode well for Alberta’s large road construction projects that will be nearing completion in the next few years (see article on page 18).
The second round of political turmoil about to hit Alberta provides even more uncertainty: this fall’s federal election. The Prime Minister’s home province is seeing some support erode in the recent wake of the NDP win. According to polling information from ThreeHundredEight.com, in the week following the NDP win, the Conservative party lost 11 per cent of its support over the three-month period encompassing February through April, with the NDP gaining 12 per cent. And while there is still plenty of time to reverse that trend before the scheduled election date on October 19th, early indications show that the political tide could also be turning federally in the province.
Should the Conservatives fall on Election Day that could have an impact on the Build Canada Fund, which supports (among other things) road and bridge construction projects across Canada. The 10-year, $53 billion fund, announced in February of 2014, represents the single largest financial commitment to infrastructure in Canadian history.
What is not yet clear is what a Liberal, NDP, or minority government would do to change that fund, positively or negatively. All the more reason why Albertans in the rock to road industry might be more inclined to push infrastructure issues forward over the length of the federal campaign.
Over the course of the next six months Albertans, and all Canadians for that matter, should have a better understanding of where infrastructure commitments lie for incoming government representatives.
And while we wait for the provincial fall-out in Alberta, we must now turn our attention to the federal election, where there is no time like the present to discuss the needs of the aggregates and road construction industries with candidates in all of Canada’s 338 ridings.
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