The Province of British Columbia released its 2017 budget (Budget) on February 21, 2017. Although the Budget mainly focuses on the reduction of Medical Services Plan premiums and increased investment in education and social supports, it also projects steady growth for B.C.’s economy as a whole and contains significant implications for the infrastructure industry in the province over the coming years.
RECORD LEVELS OF INFRASTRUCTURE SPENDING
The Budget forecasts that capital spending on schools, hospitals, roads, bridges, hydro-electric projects and other infrastructure across the province will total C$24.5-billion over the three-year fiscal plan period. Taxpayer-supported infrastructure spending on hospitals, schools, post-secondary facilities, transit and roads is forecasted to be C$13.7-billion over the fiscal plan period, a record level of taxpayer-supported capital spending. These investments will be financed by C$9.5-billion in borrowing with the remainder funded by third parties, including the federal government and from internal cash sources available to the province. The total taxpayer-supported investment represents an increase of C$1.7-billion over the forecast in the province’s 2016 budget, which is due in part to an increase in cost-shared projects with the federal government.
Additionally, the Budget forecasts a total of C$10.8-billion of self-supported commercial Crown corporation capital spending on power projects, transportation infrastructure and other capital assets over the course of the fiscal plan period. This type of capital expenditure will be financed by C$6.7-billion in borrowing, with the balance to be funded internally. Notably, this figure also represents a sizeable increase over the forecast provided in the province’s 2016 budget, an increase of C$2.2-billion, which is primarily due to the addition of the George Massey Tunnel Replacement project (further details on this project are provided below).
MAJOR INFRASTRUCTURE PROJECTS INTRODUCED IN THE BUDGET
The Budget contemplates a number of significant projects that were not accounted for in the province’s second Quarterly Report from 2016/2017, many of which are in the transportation or health care sectors (over the next three years, the Budget forecasts that the transportation and health sectors will receive over C$7-billion and C$2.7-billion in funding, respectively). A few of the more noteworthy new projects are listed below.
The most significant addition to the Budget is the George Massey Tunnel Replacement project, which will be funded by the Transportation Investment Corporation. The Budget estimates this project will cost C$3.5-billion to complete, of which nearly C$2.4-billion will be spent over the course of the next three years (these figures will be revised once the applicable P3 contracts are finalized). The province expects to select the proponent for this project in the summer of 2017, with construction to begin shortly thereafter.
Funding for phase 4 of the Highway 1 Kicking Horse Canyon project is finalized in the Budget. The Budget forecasts the province will fund C$235-million with an additional C$215-million coming from federal funding and project completion is expected in 2024. The province intends to issue a design-build request for proposals with the aim of beginning construction in 2019.
The Budget also adds two significant projects in the health care sector: the Royal Inland Hospital Patient Care Tower project and the Vancouver General Hospital – Jim Pattison Pavilion Operating Rooms project. Together, these projects are expected to receive C$237-million in funding from the province with a further C$282-million in funding to come from other contributions (mainly from certain health authorities and private donations).
Another noteworthy project in the Budget is the Abbotsford courthouse replacement project. The Budget forecasts that C$151-million will be funded by the province through completion of the project in 2020. This project is expected to proceed through the request-for-qualifications stage in 2017, with construction commencing in mid-2018.
CONCLUSION
The Budget represents an encouraging trend for the infrastructure industry in B.C. Importantly, the Budget forecasts an increase from the province’s 2016 budget of nearly 19 per cent in funding over the course of the three-year fiscal period for both taxpayer-supported and self-supported capital expenditures on infrastructure. The significant number of new projects that have been added to the Budget indicates that such increased capital expenditures will spread to a variety of sectors across the infrastructure industry and throughout B.C.
