The Government of Alberta (the "Government") has identified infrastructure investment as a key component of Alberta's economic recovery. In response to the impacts of the COVID-19 pandemic and the crash in commodity prices, the Government has announced significant spending measures to stimulate the economy. Specifically, the Government announced the $10B Alberta Recovery Plan, which includes significant investments in infrastructure, and proposed the introduction of the Alberta Infrastructure Act and a new 20-Year Strategic Capital Plan to guide the Government's capital planning decisions.
This post will address these recent developments and provide key takeaways for those operating in Alberta's infrastructure sector.
Alberta's Recovery Plan
Faced with the economic crisis arising from the COVID-19 pandemic, in June 2020 the Government announced Alberta's Recovery Plan. Key components of Alberta's Recovery Plan include:
- $6.9 billion for capital projects in the 2020/2021 budget.
- A $1.5 billion investment in the Keystone XL pipeline.
- An investment of at least $600 million to launch large-scale infrastructure projects this summer such as the twinning of highways, projects that support growth in the agriculture sector, gas line extensions for northern residents and treatment facilities for Albertans recovering from addictions.
- Municipal funding of $50 million through the Strategic Transportation Infrastructure Program to support initiatives such as bridge improvements and upgrades to roads and community airports.
- $150 million in water infrastructure grants to support 55 water and wastewater improvement projects through the Alberta Municipal Water/Wastewater Partnership and Water for Life.
- A further $500 million in funding to municipalities for shovel-ready projects that improve economic productivity ("Municipality Funding"). On July 28, 2020, the Government announced the Municipal Stimulus Program to distribute the Municipality Funding. Further details regarding eligible projects can be found under Schedules 2 and 3 of the Program Guidelines.
- In the fall of 2020, the Government will launch the Alberta Petrochemicals Incentive Program which will provide 10-year grants to companies to attract investment in new or expanded market-driven petrochemical facilities.
- The Government will eliminate Alberta's procurement exceptions from the Canadian Free Trade Agreement [PDF].
- The Government partnered with the Canada Infrastructure Bank to develop a high-speed rail line between Calgary and Banff. The project is estimated to cost $660 million and is likely to be structured as a public-private partnership ("P3").
Alberta's Recovery Plan follows April's announcement by the Government that it would proceed with the construction of five schools worth $100 million as publicly funded projects, rather than as P3 arrangements as originally announced. The Government is also exploring whether to construct five high schools worth more than $200 million in the province as P3 arrangements and has indicated that it plans to return to the P3 model for future projects.
Alberta Infrastructure Act and 20-Year Strategic Capital Plan
In addition to Alberta's Recovery Plan, the Government is working to introduce the Alberta Infrastructure Act in the fall 2020 legislative session. This statute is new legislation intended to increase accountability and transparency in Alberta's capital planning framework.
The Alberta Infrastructure Act will govern how the Government will prioritize its capital spending on provincially supported infrastructure including schools, universities and colleges, healthcare facilities, roads and bridges, rural broadband and irrigation projects, and infrastructure that supports natural resource development. Specifically, with the Alberta Infrastructure Act, the Government intends to legislate prioritization criteria that it will apply when evaluating projects for inclusion in the annual Capital Plan. The proposed criteria are:
- health, safety and compliance;
- strategic alignment;
- economic impacts;
- improved program and services delivery;
- life cycle costs and return on investment; and
- resilient communities.
In addition, in early 2021 the Government intends to release a 20-Year Strategic Capital Plan that will anticipate Alberta's future infrastructure needs. The 20-Year Strategic Capital Plan will provide guidance for provincial decisions on future capital infrastructure. While the 20-Year Capital Plan will not include a comprehensive list of projects or commit to specific funding levels, it will provide a vision of Alberta's infrastructure future to help determine the priority of infrastructure projects in key sectors.
Taken together, the Alberta Infrastructure Act and the 20-Year Strategic Capital Plan will provide guidance regarding how the Government will make its capital planning decisions.
Both the Alberta Infrastructure Act and the 20-Year Strategic Capital Plan are in the planning stages. The Government requested feedback on both through an online survey that closed on August 10, 2020, and further announcements are expected from the Government in the coming months once it reviews the survey results.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.