Restoring Canada's Fiscal Balance: Consultations on Immediate and Long-Term Funding Support for Infrastructure

The Government of Canada's report on the fiscal balance consultations is now available online on the Department of Finance Canada's website: ARCHIVED - Fiscal Balance Consultations.


The purpose of this document is to provide some context for Government of Canada summer consultations with provincial and territorial governments, and the municipal sector on the development of a predictable, long-term funding and accountability framework for Government of Canada infrastructure spending.

In moving forward, the Government of Canada has been unequivocal in its desire to benefit from the experience and expertise that provinces, territories and the municipal sector can bring to the national dialogue, all with an eye towards improving Canada's public infrastructure. In addition, Infrastructure Canada officials will take advantage of this opportunity to consult on the definition of the new and renewed funding mechanisms announced in Budget 2006.


The Speech from the Throne provided direction for future measures in transport, infrastructure and communities. In particular, the Government of Canada has committed to:

  • Promoting a more competitive, productive economy;
  • Improving the quality of life in Canada's communities;
  • Achieving tangible improvements in the environment; and
  • Ensuring transparency and accountability to Canadians.

The Transport, Infrastructure and Communities Portfolio has the tools to advance these priorities through practical, specific measures in a number of inter-related areas:

  • Sustainable infrastructure;
  • Transportation Gateways and Trade Corridors, starting with the Asia-Pacific Gateway Initiative to prepare for expanding trade with Asia;
  • Transportation security, including public transit; and
  • Building strong communities that offer a healthy environment and a good quality of life.

The ortfolio positions the Government of Canada to adopt an integrated approach in addressing cross-cutting issues that matter to provinces, territories, municipalities and Canadians.

Supporting Public Infrastructure

Canada's quality of life and economic competitiveness is supported by public infrastructure that is provided by all three orders of government and the private sector. This includes infrastructure under federal responsibility (e.g. railways, marine facilities, airports, air navigation systems, etc.) and infrastructure owned by provinces, territories, and municipalities (e.g. highways, local roads, water and sewage, urban transit, culture and recreation, etc.).

The Government of Canada has provided material support for provincial, territorial, and municipal infrastructure for different types of projects, including in areas such as highways, bridges and tunnels, water and sewage treatment facilities, social housing in the North, urban transit, community centres and energy efficiency systems. This is in addition to the provision of various types of federal facilities and infrastructure. It also reflects the importance of infrastructure to the national economy and to the quality of life of Canadians.

In total, some $30 billion of direct federal support has been provided for these initiatives in recent years through various funding instruments including:

  • About $18 billion in various joint contribution programs (leveraging some $30 billion from all partners)
  • About $7 billion in various transfers and rebates (gas tax and GST)
  • About $2 billion in various trusts

Other federal support has been provided in the form of capacity building (e.g. asset management and integrated community sustainability planning at the local level), research (e.g. funding programs), outreach and awareness (e.g. building intergovernmental networks, practical "best-practices" tools for municipalities such as the InfraGuide), and legislative and regulatory frameworks.

Fiscal Balance

"The federal role must be defined to deal with projects of national significance. Federal funding must be put on a predictable, long-term track."

Speech to the Federation of Canadian Municipalities,
June 2, 2006.

Budget 2006 proposed a framework to move forward to restore fiscal balance based on the following five principles:

  1. Accountability through clarified roles and federal responsibilities;
  2. Enhanced fiscal responsibility and transparency in the budget planning process;
  3. Predictable long-term funding arrangements;
  4. More competitive economic union; and
  5. Effective collaborative management of the federation.

In this context, the Minister of Transport, Infrastructure and Communities has been asked to lead consultations with the provincial and territorial governments and the municipal sector in order to discuss the federal role in infrastructure with a view to putting federal funding on a predictable, long-term track and to ensuring accountability to Canadians for infrastructure investments by all governments.

Budget 2006 provided a number of immediate actions that the Government of Canada is taking to restore the fiscal balance, including substantial investment in infrastructure. Specifically, an additional $2 billion was provided to renew the Canada Strategic Infrastructure Fund (CSIF) and $2.2 billion to renew the Municipal Rural Infrastructure Fund (MRIF). The Government further committed to establishing a new Highways and Borders Infrastructure Fund (HBIF), worth $2.4 billion. Budget 2006 also provided $900 million in new funding for a Public Transit Capital Trust and maintained current funding under existing infrastructure agreements, such as the gas tax funding agreements worth $5 billion over five years.

In total, federal support for provincial, territorial and municipal infrastructure will reach $16.5 billion over the next four years. This is an unprecedented level of support for infrastructure in Canada.

The focus of these consultations is on both long-term and immediate funding and accountability frameworks as well as on the transition, as warranted, from one framework to the other.

These consultations are part of a broader initiative to ensure widespread discussions on fiscal balance. Contributions to these consultations can be submitted to the Department of Finance at:

ARCHIVED - Fiscal Balance Consultations

Note that the closing date for these consultations was September 8, 2006.

Submissions can also be made by e-mail at, by fax at (613) 947-6476, or by regular mail at:

Federal-Provincial Relations and Social Policy Branch
Consultation on restoring Fiscal Balance in Canada
Department of Finance Canada
140 O'Connor Street
15th Floor, East Tower
L'Esplanade Laurier
Ottawa, Ontario
K1A 0G5

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