News Release

Backgrounder

Agreement in Principle

June 21, 2005

The Government of Canada and the Government of Quebec Reach an Agreement in Principle for $1.340 billion over Five Years, Benefiting Quebec Municipalities

Montreal, Quebec, June 21 – The Prime Minister of Canada, the Right Honourable Paul Martin, and the Premier of Quebec, Mr. Jean Charest, and Minister of State (Infrastructure and Communities), the Honourable John Godfrey, and the Quebec Minister of Intergovernmental Affairs, Mr. Benoît Pelletier, today announced that their respective governments have reached an agreement in principle to transfer $1.340 billion to the Government of Quebec over five years -- including $1.151 billion as a transfer of a portion of federal gas tax revenues and up to $189 million following amendments to the 2005 federal budget – to fund municipal and local infrastructure, notably public transit.

This agreement in principle stipulates that the funds will be paid to the Société de financement des infrastructures locales du Québec (SOFIL), an agency created in December 2004 by the Government of Quebec, whose mandate is to provide financial assistance to municipalities and municipal organizations for infrastructure projects. These funds will be provided in addition to those already administered by SOFIL.

“In a climate of globalization, it is important for Canada to remain competitive in international markets. To do so, it is essential to ensure the long-term sustainability and vitality of our cities and communities,” stated Prime Minister Martin. “The payment of federal funding to SOFIL bears witness to the Government of Canada’s willingness to support the renewal of municipal and local infrastructure in Quebec, for the benefit of all citizens and to ensure the competitiveness of cities and communities.”

“The funds transferred to the Government of Quebec will be used for the benefit of all Quebec municipalities, according to our needs and priorities for municipal and local infrastructure, particularly the maintenance, renewal and development of infrastructure for drinking water, wastewater, local roadways and public transit,” emphasized the Premier of Quebec, Mr. Jean Charest.

Minister Godfrey underscored the importance of the partnerships that have been established under this agreement. “The agreement between Canada and Quebec demonstrates the capacity of the two governments to work together to improve the quality of life in communities,” stated the Minister. “Just four months ago, we indicated the share of the gas tax revenues that provinces, territories and municipalities would receive for environmentally sustainable municipal infrastructure.”

“Not only does this agreement perfectly respect the exclusive jurisdiction of Quebec in municipal and local affairs, it permits the federal government to provide an appropriate and appreciated support to the Government of Quebec in exercising its responsibilities towards cities, small and large,” stated Minister Benoît Pelletier.

It should be noted that in its 2005 budget, the Government of Canada pledged to share $5 billion in gas tax revenues over the next five years, across Canada. The annual amount will increase to $2 billion by the fifth year, and remain at this level indefinitely thereafter.

The agreement in principle stipulates that the final agreement must be signed no later than October 31, 2005.

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BACKGROUNDER

The New Deal for Cities and Communities
Québec

The Governments of Canada and Quebec have combined efforts to implement the New Deal for Cities and Communities by signing an agreement in principle on the sharing of gas tax revenues with Quebec municipalities to provide funding for environmentally sustainable municipal infrastructure. The agreement in principle also provides for additional funding for public transit, proposed under Bill C-48.

Budget 2005 provides for long-term, stable and predictable funding as part of the Government of Canada’s commitment to the New Deal for Cities and Communities.  Over the next five years, the federal government will share $1.151 billion from gas tax revenues with Quebec cities and communities, both large and small.  Starting this year, the federal government will invest $138.1 million in Quebec cities and communities.  The funding will increase progressively, to a total of $460.4 million annually, a level that will be maintained in subsequent years. These investments will result in significant environmental benefits, such as reduced greenhouse gases, cleaner air and cleaner water. 

This agreement in principle also provides for the transfer of additional funding for public transit (Bill C-48).  Under the New Deal for Cities and Communities, Quebec municipalities will share $189 million of the $800 million announced on June 1, 2005 and which, under Bill C-48, will be committed over a two-year period for improving public transit across the country.   

The agreement with Quebec is the fifth gas tax agreement to be concluded under the New Deal for Cities and Communities.  Moreover, Quebec and Ontario are the first two provinces to sign an agreement on public transit. 

British Columbia, Alberta, Yukon, and Ontario have also signed agreements on sharing gas tax revenues.  We expect to sign agreements with other provinces and territories in the coming weeks and months. 

The Canada-Quebec agreement in principle demonstrates the willingness of both governments to work together to make Quebec cities and communities more easily sustainable and illustrates the close cooperation between the two governments.

Canada and Quebec have agreed that gas tax and transit fund payments will be made to the Société de Financement des Infrastructure Locales [local infrastructure funding corporation]. 

The agreement is based on three principles: respect for jurisdiction, a fair and flexible approach, and accountability and transparency. This innovative agreement reflects the interest in social transformation that is inherent to the New Deal, given that both parties are committed to working together to help Quebec’s cities and communities improve their sustainable development.

In addition to the gas tax funds, the Government of Canada will provide stable, predictable, long-term funding for Canadian municipalities: a $7-billion GST rebate over 10 years; a $1-billion Municipal Rural Infrastructure Fund specifically for smaller municipalities; the $4-billion Canada Strategic Infrastructure Fund; and the $600-million Border Infrastructure Fund. A $300-million injection into the Green Municipal Funds, has brought its total to $550 million.

Other important achievements that have contributed to progress on the New Deal

• Prime Minister Paul Martin created the Infrastructure and Communities Portfolio, demonstrating the priority given by the Government of Canada to cities and communities. 

• Minister of State (Infrastructure and Communities) John Godfrey met with hundreds of mayors, employees and stakeholders from communities of all sizes in all 10 provinces and the three territories. He joined Finance Minister Ralph Goodale in formal pre-budget consultations with municipal leaders from across the country.  As part of the New Deal’s pledge to build stronger partnerships, the government opted to make these consultations a permanent feature of the federal budget development process.

• The External Advisory Committee on Cities and Communities, created by Prime Minister Paul Martin and chaired by the Honourable Mike Harcourt, former mayor of Vancouver and Premier of British Columbia, was assigned the mandate to develop a 30-year vision for Canadian cities and communities.

• In June 2005, Minister Godfrey announced the details of the additional $800 million in funding, to be paid to the provinces and territories to support public transit systems. 

• Ontario and Quebec have both signed agreements on sharing gas tax revenues and on funding for public transit. British Columbia, Alberta, and Yukon have signed agreements for sharing gas tax revenues. 

• Research on cities and communities was conducted in the last year, in cooperation with Statistics Canada, to guide urban planning and policy assessment.  For instance, reports have been published on income, health, immigration, the voluntary sector, and urban Aboriginal issues. Sherbrooke, Trois-Rivières and Chicoutimi-Jonquière are included in this research work.

• In the 2004 Budget, funding under the new $1-billion Municipal Rural Infrastructure Fund (MRIF) was accelerated, moving from 10 years to five years, thus doubling the funds to be provided in the short term.

Major projects

• An agreement was signed with Quebec for the completion of Highway 30, which will reduce traffic congestion on Montréal's major thoroughfares and provide better access to markets in the U.S. and in Canada.  The first phase will fund the studies required to complete the work on Highway 30.

• An agreement in principle was signed to widen Highway 175 in the Saguenay region to four lanes. A $262.5-million federal contribution will improve access to the region by tourists and help stimulate the Saguenay economy.   

• The Government of Canada announced that it would provide $47.5 million for development in Mont Tremblant to build roads, water systems and other infrastructure. The resort is positioning itself to become one of the top tourist destinations in North America, which will create jobs in the whole Laurentian region.

• Federal funding ($6.9 million) was announced for a project to install fibre optic cabling to connect the Magdelan Islands with the rest of the province. The underwater cable will provide high-speed Internet access to schools, hospitals and businesses, connecting them to Canada and the world.

• A federal contribution of $269 million was announced for improvements to Highways  173, 73, 185, 55, 50, and 35. This will also include funding for rail and intermodal infrastructure in the province.
  
• The Government of Canada announced a contribution of $36.5 million for the St. Charles River.

• The Government of Canada will invest $55 million in the redesign and rebuilding of the Dorval interchange and access to Pierre-Elliott Trudeau International Airport in Montréal.

• $36.5 million in federal funding was also announced for the Atwater and Charles-J. Des Baillets water treatment plants in Montréal, to make improvements to the drinking water treatment and water purification processes.

• Canada Lands Company, which is part of Minister Godfrey’s portfolio, welcomed the first residents of Benny Farm, a residential project in the Notre-Dame-de-Grâce region of Montréal. Once completed, this federal, provincial, municipal and community partnership will result in 550 affordable housing units, including units for seniors and single mothers.

• Montréal benefits from $2 billion in federal government funding for projects implemented nationally, through the Infrastructure Canada Program (ICP).  In March 2004, a $103.1-million investment by the Government of Canada under the program was announced for the completion of the first phase of Programme Réno-Systèmes, a program to renovate the Montréal Metro’s stationary equipment and facilities.

• In April 2004, the City of Montréal received more than $2.5 million in financial support from the Government of Canada under the Infrastructure Canada Program (ICP) for the reconstruction, rehabilitation and replacement of aqueducts.

Distribution of funds between the municipalities and public transit agencies

Quebec will receive $189 million of the $800 million earmarked for public transit in Canada.

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