Federal Infrastructure Spending, 2016-17 to 2026-27
This note provides additional information related to federal infrastructure spending in Canada between 2016-17 to 2026-27.
Statistics Canada reports on infrastructure spending in Canada and its economic contributions from a National Accounts perspective.[i] These figures consider the impact of infrastructure spending carried out by the federal government, transfers from the federal government to provinces and their utilization, and infrastructure spending carried out by businesses who could potentially be incentivized by federal investment tax credits.
However, the figures reported by Statistics Canada cannot be easily compared to the Public Accounts, on which the federal government reports its spending and budgetary balance.[ii] Moreover, the Government’s financial tables do not typically identify total federal infrastructure spending on a Public Accounts basis.
To calculate total federal spending on infrastructure historically and to project it forward, we divide infrastructure spending into two streams. The first stream is infrastructure spending directly carried out by the federal government. From Table 1.3, Volume 1 of the Public Accounts, these figures represent the amortization of tangible capital assets. Over the projection horizon, federally owned assets were grown in-line with the assumptions in the 2022 Economic and Fiscal Outlook.
Next, we identified infrastructure spending financed by the federal government through transfer payments. To estimate these transfers, we included infrastructure transfer payments made under the Investing in Canada Plan (IICP) and payments outlined in subsequent budgets and updates[iii]. Over the projection horizon, transfers were adjusted based on anticipated lapse rates[iv].
On a Public Accounts (accrual) basis, we estimate that the Government spent $15.5 billion on infrastructure in 2016-17. In subsequent years, the Government’s infrastructure spending trended higher, rising to $22.8 billion in 2020-21. On average, 65% of infrastructure spending between 2016-17 and 2020-21 was related to the IICP. Based on current projections, infrastructure spending would rise to $32.4 billion by 2026-27.
Federal Infrastructure Spending, 2016-17 to 2026-27
|
($ millions) |
2016-2017 |
2017-2018 |
2018-2019 |
2019-2020 |
2020-2021 |
2021-2022 |
2022-2023 |
2023-2024 |
2024-2025 |
2025-2026 |
2026-2027 |
|
Federally owned assets |
5,168 |
5,261 |
5,643 |
5,790 |
5,969 |
6,900 |
7,293 |
7,308 |
6,957 |
7,181 |
7,493 |
|
Transfer payments |
10,298 |
11,501 |
16,675 |
13,826 |
16,809 |
22,501 |
24,315 |
25,836 |
25,283 |
24,674 |
24,867 |
|
Total federal infrastructure spending |
15,466 |
16,762 |
22,318 |
19,616 |
22,778 |
29,401 |
31,608 |
33,143 |
32,240 |
31,855 |
32,360 |
[i] Infrastructure Statistics Hub (statcan.gc.ca) ; Infrastructure Economic Account – Data tables (statcan.gc.ca)
[ii] There are conceptual and accounting differences between the Canadian System of National Accounts and the Public Accounts. One of the most important differences between these two systems are timing differences related to the recording of revenues and expenses. The Public Accounts records revenues and expenses at the time when they occur (accrual basis), whereas the Canadian System of National Accounts records revenues and expenditures when the payment is made (cash basis).
[iii] The IICP represents a snapshot in time. Therefore, new infrastructure spending announced after the IICP needs to be added to account for total infrastructure spending. To include infrastructure spending announced after the IICP, we included planned spending announced from the 2017 Fall Economic Statement to the 2021 Economic and Fiscal Update. Where possible, planned spending was verified against actual spending. Additionally, as announced measures are not specifically classified under an infrastructure envelope, assumptions were based on the nature of the planned spending. Adjustments were made to account for double counting between the IICP and the Public Accounts on federally owned infrastructure.
[iv] The spending profile for the IICP was provided by Infrastructure Canada. Other transfer payments, not included in the IICP, were gathered directly from subsequent budgets and updates. For years where funding profiles were not available, funding was assumed to be held constant based on the last available year. Planned spending may differ from actual spending as spending lapses are common with infrastructure projects. Reviewing historical reprofiling for the IICP, an implied lapse rate can be estimated. For instance, when comparing the original IICP allocation against actual spending in 2016-17, there was a lapse of 28% in the first year of the IICP as funding was reprofiled to future years. For the projection horizon, an implied spending lapse was assumed based on historical reprofiling.