Drummond’s message that our assumptions of future growth are wildly optimistic while the growth of existing programs is greater than previous projections comes as a shock to many. A balanced budget in five years is only possible with a complete realignment of spending. After allowing for smaller increases for Health Care and Education, other programs are proposed to be subject to a -2.5% budgetary increase for each of the next five years.

Drummond doesn’t specifically target a budget allocation for infrastructure investment, yet he lists Infrastructure commitments with others as items that would be unwise to cut. He later recognises Alternative Finance and Procurement (AFPs) as a legitimate alternative to traditional deficit financing.

What is the government’s likely response to this?  Without a doubt, all Ministries will be under extreme pressure to cut or remove program spending from the government’s books. A further review contemplating which service can be delivered and funded by the private sector may follow. The implications on our methods of delivering services are staggering and this is likely just the beginning of the conversation.

MOI has recently made inquiries as to the state of economic recovery in the construction industry, including “has private sector investment rebounded to pre-recession levels?” The answer unfortunately is no. Data provided to OGCA from the Construction Secretariat indicates a weak rebound has occurred, roughly equivalent to inflation.  Government investment in all construction has increased from 24% in 2008 to a projected 33% in 2011, indicating we are very susceptible to governments reducing their infrastructure commitments. The construction industry needs ongoing consistent funding from all levels of government.

Other governments facing massive budget deficits in the past have cut capital spending by 30% to 40%. This short-sighted, short term response is one of the reasons why we are in the infrastructure deficit. The McGuinty government and Infrastructure Minister Chiarelli are committed to strategic infrastructure as a vital component of economic growth and there are options available to them. The Ministry of Infrastructure will likely expand the use of AFPs and the bundling of AFPs. This will reduce the capital budget as projects that typically are funded will become AFPs.

We can expect that direct capital grants to municipalities will decline and they will be required to work with IO to develop and deliver AFPs through the Provincial agency. The focus of this will be to expand the AFP proposals, “How can we be more creative” is the new theme.

We are confident that Minister Chiarelli will attempt to continue to operate within the LTIP. This will require that a combined capital and AFP budget of $12+ billion be delivered each of the next two fiscal years. This will be a difficult task at a time when the health system is being downsized and public servants are being laid off.

It will be challenging for the construction industry as well. Very few of our firms are structured for or experienced with the AFP model. Its expansion will include projects that our medium sized and regional members would normally compete for, but will now be bundled AFPs.

We must also be conscious of the fact that the new provincial reality will soon be reflected in the budgets of the federal and municipal governments. The city of Toronto is just one example of the recognition of the new economic challenges. Either capital spending by governments will be reduced and /or they will have to embrace new means of funding and delivering capital programs.

Accardi also noted that it is imperative that the province continues to commit to the investment of strategic infrastructure to lay the foundation for future growth and ultimately a stronger provincial revenue stream. The Ministry of Infrastructure’s (MOI) Long-Term Infrastructure Plan established the need for continued investment  given that public infrastructure is a key economic driver that promotes growth and innovation.

“The CDAO has given Minister Chiarelli our commitment to work with him and his officials to deliver the Long-Term Infrastructure Plan,” said Accardi. CDAO members appreciate the fact that the Drummond report recognizes the importance of infrastructure investment and we will endeavour to work with all parties to ensure that priority is given to implementation of key recommendations.

The CDAO is composed of the major construction and design organizations involved in delivering infrastructure across Ontario. These associations provide technical advice and industry support for design and construction information to MOI and other Ministries involved in the process.

Member organizations include:

• Association of Registered Interior Designers of Ontario (ARIDO)
• Consulting Engineers of Ontario (CEO)
• Mechanical Contractors Association of Ontario (MCAO)
• Ontario Association of Architects (OAA)
• Ontario Construction User Council (OCUC)
• Ontario General Contractors Association (OGCA)
• Ontario Road Builders Association (ORBA)
• Ontario Sewer & Watermain Construction Association (OSWCA)
• Ontario Society of Professional Engineers (OSPE)
• Residential and Civil Construction Alliance of Ontario (RCCAO)
• Residential Construction Council of Ontario (RESCON)
• Ontario Home Builders Association (OHBA)

Contact Information:  OSWCA at 905-629-7766.

COR is a volunteer management system for the reduction of human and financial costs of workplace incidents, injuries and illness. It has been extremely successful in eight provinces where it is commonly recognised as the standard of construction high performance in health and safety. The Infrastructure Health and Safety Association (IHSA), with the support of OGCA, has brought the program to Ontario with the launch of a pilot in 2011. The program will be available to the construction industry by spring 2012. Thirty six of our members have been involved in the pilot program and we fully expect many of them to obtain certification by midyear.

Our special guest speaker will be George Gritziotis, the new Chief Prevention
Officer for Ontario. Many of you are familiar with George as the former Executive
Director of the Construction Sector Council. We are fortunate to have someone with
George’s proven leadership and knowledge of the construction industry. He has the
responsibility of transforming government and industry roles in health and safety and
OGCA intends to work closely with him to support a successful transformation. George
will talk about COR and his vision for the future.

For more information about this important Leadership day or to register, email mary@ogca.ca.

AABO Industry invitation and sponsorship