Frustrated with being “ignored,” construction leaders in Manitoba are speaking out against Premier Brian Pallister’s government, taking their concerns to the public.
The Manitoba Heavy Construction Association (MHCA) and the Merit Contractors Association of Manitoba will take to various media, including radio, this month to explain the impact severe cuts in provincial investment in highways has on the economy.
Chris Lorenc, president of the MHCA, said he and other industry groups have tried to get the province to establish a working group to jointly lay out a plan to get back to strategic, sustainable investment in core infrastructure, including highways, over the next five years.
Lorenc said the association asked the government to respond with “meaningful” progress on three requests:
- to restore the highways capital budget to an annual minimum of $500 million;
- accelerate Manitoba Infrastructure’s service review and move inhouse delivery to the competitive market; and
- release the report on Manitoba’s transportation system infrastructure investment deficit (understood to be $6 billion), with annual and five-year rolling budgets supported by a capital-asset management strategy.
But despite supporting the government’s goals of strategic infrastructure investment, restoring fiscal balance and growing the economy, Lorenc was informed there has been no “useful” response. According to the MHCA, all indications make clear the highways capital budget will not rise from its $350-million level, which is a level last seen in 2009. In 2015 to 2016, $628 million was invested in highways.
“To say shocked would be a gross understatement,” said Lorenc. “To say we felt a sense of betrayal and to say we were grossly disappointed would be an understatement.”
Lorenc added as a result of reduced infrastructure investment, the industry has seen significantly reduced margins, returns and corporate values, at least one receivership, higher unemployment, accelerated layoffs and layoffs earlier in the season.
This data on the health of the industry, gathered by the surety industry, was taken to government and ignored, Lorenc claimed.
“There is a concern at a level and depth by companies regardless of size and location that I haven’t seen in the 27 years I have served with the MHCA,” Lorenc said. “The province is knowingly adding a further investment deficit and the impact is across the board.”
Lorenc said he is concerned about the future of the industry if infrastructure investment continues to stagnate or see further cuts.
“I am very worried about what will happen in 2019,” Lorenc said. “You can take hits for a year or two, but after that, the bank and sureties start looking at you different. Keeping employees becomes a challenge. You lose key people to other sectors.”
Lorenc said decrepit transportation infrastructure isn’t just toxic for the construction industry, it adds cost to moving goods and services and then those dollars go elsewhere.
“That’s a slippery slope and it’s hard to earn an efficiency and ‘open-to-business’ reputation. Once you lose that, getting anything close to that reputation back becomes a multi-decade effort,” Lorenc said. “I just don’t understand why any government, regardless of its fiscal commitments, would want to risk that happening.”
In response to an inquiry made by the Journal of Commerce, government representatives referred to a statement previously made by Manitoba Infrastructure Minister Ron Schuler.
“Our government was elected on a promise to fix the finances of our province and we are committed to sustainable spending,” he said. “$350 million in highway infrastructure capital spending represents strong, stable funding for the construction industry and ensures that we maintain the safety of our highway network.”