Marc Desormeaux: Canada is advancing an ambitious economic agenda at a time when provincial finances are under acute pressure. To achieve its goals, Ottawa will have to take on more of the risks \u2014 and foot more of the bill<\/p>\n
The federal government\u2019s agreement this week to provide up to $10 billion in financial support for the Gull Island hydroelectric project is notable for more than its size. It also offers a glimpse of how the Carney government\u2019s broader economic agenda will have to be financed.\u00a0<\/p>\n
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For decades, federal governments have relied on a familiar model to advance national economic priorities:\u00a0Ottawa puts money on the table and uses that funding to leverage additional investment and action from provinces.\u00a0<\/p>\n
But that model depends on provinces having the fiscal capacity to come along.\u00a0<\/p>\n
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The Carney government is pursuing an unusually ambitious agenda, with plans to mobilize hundreds of billions of dollars in investment in infrastructure, energy, housing, defence and other areas. At the same time, provincial finances are becoming increasingly constrained.\u00a0<\/p>\n
That combination could force a significant change in the traditional federal-provincial bargain. Ottawa may have to assume a larger share of the cost and financial risk of Canada\u2019s growth agenda rather than relying as heavily on provincial governments to match its ambitions.\u00a0<\/p>\n
There are signs that shift is already underway.\u00a0<\/p>\n
In Newfoundland and Labrador, Ottawa has committed up to $10 billion in financial support tied to the redevelopment and expansion of Churchill Falls, the Gull Island hydroelectric project and associated transmission infrastructure.<\/p>\n