The 2001 budget is hailed as a security budget, but it does very little to secure better quality drinking water and more environmentally friendly ways of dealing with sewage treatment and waste management. Instead, it promises more privatization of infrastructure and municipal services that are being readied for foreign investment by trade deals such as NAFTA and the GATS.
What We Needed In The Budget
A clear and strong commitment of substantial funds for needed municipal infrastructure, especially infrastructure related to water and wastewater treatment. Specifically, we needed:
- Significant investment in environment-related infrastructure. For example, the Canadian Water and Wastewater Association estimated that between $80 billion and $90 billion would be needed over a fifteen-year period to maintain and improve existing water and wastewater infrastructure and build other needed infrastructure;
- The establishment of a National Environmental Infrastructure Investment Program as a vehicle for this funding. It would replace the Canada Infrastructure Works Program (CIWP) and guarantee that all projects have maximum involvement by the public sector.;
- An annual combined investment of almost $6 billion per year from the three orders of government would be required; that is $2 billion annually from the federal government with matching funds from the provinces and municipalities;
- A National Infrastructure Investment Authority, with initial “seed” money of $500 million, would provide low-cost borrowing of investment capital by municipalities and provinces. It would borrow/issue bonds with a federal government guarantee, and would solicit investment from pension funds (in an attempt to draw pension funds away from public-private partnerships).
What We Got
Basically, the budget “confirmed” two infrastructure funds, enhanced a few others, and created a new one without any guaranteed funding for the coming year. Overall, there is very little new money that is unconditionally committed to infrastructure. What is especially alarming is the budget’s commitment to funding public-private partnerships. Therefore, privatization of public services and infrastructure gets a big boost in this budget. Here is what the budget specifically promises:
- The Infrastructure Canada Program funded in the last budget will continue. This is not new money. The total federal commitment is $2.05 billion over five years through this program. When matched by monies from the municipalities and the provinces, the fund will total approximately $6.15 billion. It allows for P3s (public private partnerships) as an option.
- A $600 million strategic Highway Infrastructure Program announced in the last budget. This program will continue but it brings no new money with it.
- The Government has doubled the $25 million Green Municipal Enabling Fund and the $100 million Green Municipal Investment Fund announced in the last budget, for a total of $250 million. The former is to help municipalities determine the best approach to renewable energy, building retrofit, water conservation, waste management and urban transit projects. The latter will loan money to municipalities to support projects in areas such as water and energy savings, urban transit and waste diversion. Loans from the fund will be repaid and then recycled to support new projects.
- The budget provides an initial incentive payment of 1.2 cents per kilowatt-hour for electricity produced from wind energy. The incentive gradually declines to 0.8 cents by 2007. This program is expected to cost $260 million over the next fifteen years. In addition, income tax incentives for certain renewable and energy efficient projects will be expanded and cost an estimated $5 million per year. This is an incentive to develop more alternative sources of electricity, but as with all new initiatives under this government, the private sector will probably be the driver and benefactor. Direct grants and interest free loans to municipalities that want to get into alternative methods of electricity generation is what is needed.
The budget creates and funds a new Strategic Infrastructure Foundation. It will:
- Receive a minimum federal contribution of $2 billion from the year-end surplus. If there is no surplus, the foundation will be deferred to the following year. Clearly, there is no firm commitment of funding for the foundation; it will solely depend on whether there is a surplus at year’s end. The foundation will not likely be even established before mid-2002 and actual project selection and funding will be much later. In such uncertain times, Canadian communities shouldn’t count on this fund to meet their infrastructure needs.
- Fund large infrastructure projects and give “special consideration” to public-private partnerships. Unlike the Infrastructure Canada Program which allows for P3s, this one will privilege P3 infrastructure projects. And only the biggest projects will b considered by the foundation for funding – the Canadian Council for public private partnerships and other privatizers definitely have a gleam in their eye when they consider the possibilities.
- Cost-share funding of projects with municipal and provincial governments, but the private sector may also invest in projects. How much the various levels of government and the private sector will contribute is not clear, as with many other things about this foundation.
- Be at arm’s length from the federal government and its board of directors will be responsible for assessing projects and making spending decisions. That’s just the way the advocates of privatization like it; government supplies most of the money and the private sector gets a large say in what projects are funded and who will have control over them.
What It Means
Canadian communities with urgent infrastructure needs will find little new assistance in this budget. Increasingly, they are being pushed to rely on the private sector and to turn the operation of important services and infrastructure to corporations that are usually large trans-nationals. Specifically:
- The existing Infrastructure Canada Program is not enhanced and is therefore woefully inadequate to address the infrastructure needs in Canadian municipalities.
- In the last budget, the private sector was provided with an opening to become more involved in infrastructure development and operation through the Infrastructure Canada Program. This budget actually promises to create a new infrastructure program that explicitly promotes privatization through public private partnerships (p3s). This is as much a privatization agenda as it is a trade and security budget.
- The Strategic Infrastructure Foundation will give “special consideration” to infrastructure projects that have private sector investment. Private sector representatives will sit on the board of directors of the foundation, giving the private sector considerable influence over which projects are to be funded. It is likely that private sector business representatives will have considerable control over a key public policy instrument, if they ever get the funding for it.
- The $2 billion of initial funding for the foundation is not secure, being dependent on a surplus at year’s end. More public funding of municipal infrastructure is therefore not assured and Canadian municipalities are left more vulnerable to the sales pitches of multi national private sector corporations.
- Because the strategic Infrastructure Foundation will be at arm’s length from government, it will be even less accountable than other infrastructure programs. Public accountability is a key aspect of democracy and people cannot feel more secure, in the full sense, if democracy is undermined.
- The incentives and funding for green municipal projects are positive but quite modest. They do not represent significant strides in fighting environmental degradation.
- The budget offers all too little for the public sector and all too much to the corporate sector.
See other CUPE Facts on the 2001 Federal Budget for more detailed information about particular sectors. They are available from the National Research Branch or at www.cupe.ca.