By Rob Bradford
Municipal projects face funding cuts next spring.
By Rob Bradford
The civil construction industry is working full tilt this year trying to
complete municipal projects funded by the federal infrastructure
stimulus program, before the taps are turned off on March 31, 2011.
The civil construction industry is working full tilt this year trying to complete municipal projects funded by the federal infrastructure stimulus program, before the taps are turned off on March 31, 2011. For civil contractors, the practical deadline is really the end of the construction season this year, because little work can be done in the winter months. And with the deadline looming, the big question being asked around the industry is will the federal government come through with an extension for projects that are not complete?
|The funding taps will soon be turned off for unfinished civil construction projects.|
The official answer is “no.” If projects are not completed by the end of March 2011, the federal component of the cost is no longer available. That means municipalities will be on the hook for costs of completion – unless, of course, they have found a contractor to sign one of the onerous contracts on the street right now that essentially say the contractor picks up the tab for completion if the deadline isn’t met.
Ottawa’s logic is reasonable enough. The stimulus funding was to kick-start an economy that pulled up lame in late 2008. It was meant to get people working in 2009 and into this year. As far as the feds are concerned, if the money isn’t spent by next March, it is no longer serving its recession fighting purpose, and therefore the additional money is better left in the bank.
|The Canadian Construction Association has shown the government numerous projects that won't be completed by the spring deadline, but the feds think money in the bank is a better option. |
That reasoning works if all the anticipation back in 2008 about “shovel-ready” projects were true. The fact is the projects that qualified for the stimulus funding had to be designed and tendered. Then there is the approvals process, and for some permits, especially environmental ones, it takes several more months before that shovel can be put into the ground. That’s why most of the stimulus money didn’t translate to projects underway until 2010, and now there is a panic to get it all done at once. A lot of the work wasn’t tendered until late spring or summer this year, so completion by the deadline is going to be virtually impossible in some cases.
While the Canadian Construction Association (CCA) has shown the government lists of projects that won’t be completed and made the case for a deadline extension, the government is suggesting that a very tiny percentage of the stimulus projects are in trouble vis-a-vis the deadline; thus, the refusal to discuss an extension.
The CCA isn’t the only industry organization concerned about the deadline. Since 2008, the Ontario Road Builders’ Association (ORBA) has been telling anyone in government who will listen that “shovel ready” never really did mean shovel ready, and the delay in getting projects underway is ample justification for a deadline extension. In August, the Association of Consulting Engineering Companies (ACEC) recommended in a pre-budget submission “the federal government exercise discretion in enforcing the deadline where recipients have made reasonable and good faith efforts to meet the deadline.”
Despite the transportation minister’s insistence that there will be no deadline extension, there is encouraging talk in the industry about backroom nudge and wink banter that could indicate the government’s intention to provide some relief closer to the deadline date. As one very senior federal cabinet minister told ORBA earlier this year: “Even if we were going to consider extending the deadline, do you think we would do it now?” There is hope that saner heads will prevail and the stimulus program can be ended on a high note with original funding commitments met.
What happens if the hard and fast deadline is maintained? A good number of projects will fail to meet it, and there will be considerable dispute about who pays the rest of the bill to complete them. The industry, which has ramped up to handle the stimulus program this year, is already facing a huge hangover when the funding runs out. Enforcing the deadline will only make the impending downturn quicker and deeper, which certainly won’t help job creation or economic stimulus objectives.
Finally, while the federal government has treated stimulus funding as special extra money for municipalities, the kinds of dollars made available by the program only begin to speak to the sustainable, long-term funding municipalities require to even begin to make a dent in infrastructure deficits that have been allowed to grow for several decades.
Rob Bradford is executive director of the Ontario Road Builders’ Association.