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Construction leaders applaud federal budget

Richard Gilbert
Construction leaders applaud federal budget

Canadian construction leaders are applauding the 2015 federal budget for eliminating the deficit, while increasing infrastructure investment, launching new initiatives to promote apprenticeship training and reducing the tax rate for small business.

"When you’re trying to balance the budget, it is obvious there is not a lot of money for extra items," said Terrance Oakey, Merit Canada president.

"I am glad the government continues to see the value of investing in infrastructure for long-term growth and employment. With  weakening economic prospects, government spending helps bridge the divide.

"We are very pleased by the continued commitment to the skilled trades, which seems to be the longstanding focus of the current government."

Finance Minister Joe Oliver tabled the 2015 federal budget in Ottawa on April 21, which fulfills a government promise to balance the budget in 2015.

Oliver projected a surplus of $1.4 billion for 2015–16, which was reduced from a record deficit of $55.6 billion in 2010.

An important new initiative for the construction industry in the budget is a proposal to support major public transit projects.

The Public Transit Fund will provide PPP Canada Inc. with $750 million over a two year period, which starts in 2017–18.

After this initial period, the fund will invest $1 billion annually into transit infrastructure projects going forward.

"Obviously we are happy with the public transit fund. One of the biggest ups about it is that it is intended to become a permanent program," said Michael Atkinson, Canadian Construction Association president.

"It is true that it is only going for P3 projects, but a lot of the larger transit projects that municipalities are doing now are going the P3 model or AFP (Alternative Finance Procurement).

"The whole idea behind going P3 or AFP is that you use funds to leverage additional funds through the private sector."

The new fund will use more flexible financing arrangements to provide predictable payments over 20 to 30 years. So, provinces, territories and municipalities will be able to borrow against this payment stream.

The 2015 budget estimates that $1 billion per year in public transit funding generates up to $65 billion in capital contributions over the next decade.

This fund is designed to complement the $14 billion New Building Canada Fund, which was is a 10-year program launched in March 2014.

It consists of the $4 billion National Infrastructure Component and the $10 billion Provincial-Territorial Infrastructure Component.

The construction industry supports the government’s infrastructure plan but some leaders argue there is a need to accelerate spending, because new public transit funding doesn’t begin until 2017.

"Because the New Building Canada Fund is back loaded, this might be an opportunity to provide some more project specifics," said John Gamble, the Association of Consulting Engineering Companies Canada president and CEO. "Perhaps with the election coming, some of the back loaded money might be pulled forward, so it is more evenly distributed over the 10 years.

As promised, Oliver presented a balanced budget in the lead-up to the federal election on October 19. However, Gamble would like the federal government to provide a clear application process for the New Building Canada Plan, which is similar to the one used for recent federal stimulus spending.

Atkinson argues the longer process is the result of the requirement for the federal and provincial government to negotiate framework agreement for long-term infrastructure programs.

This was not required for federal stimulus spending, which focused on shovel-ready projects.

National construction industry stakeholders also support the 2015 budget’s commitment to provide skills training, harmonize apprenticeship standards and cut small business taxes.

"The tax cut is the enabler for more training to happen. Basically the federal government has laid the ground work over the last few budgets to give employers the power to have more control over training," said Sean Reid, Progressive Contractors Association federal and Ontario vice-president.

"Now they have the additional resources to invest in training. Frankly, it’s up to us as employers to honour that and invest in our people."

The 2015 budget proposes to reduce the small business tax rate to nine per cent by 2019.

This two-percentage point reduction will be phased in starting at 10.5 per cent effective on Jan. 1, 2016 and reaches nine per cent on Jan. 1, 2019.

It is estimated that this measure will reduce taxes for small businesses and their owners by $2.7 billion between 2016 and 2019.

The 2015 budget proposes to implement recommendations by the Canadian Council of Directors of Apprenticeship (CCDA) to harmonize apprenticeship training and certification in Red Seal trades.

In particular, common sequencing for technical training curriculum content and similar total hours for training will be adopted, both in-class and on-the-job.

This measure facilitates labour mobility by allowing apprentices to have their credentials recognized in all jurisdictions.

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