Federal Government Prioritizes Rural Economic Development — Including Infrastructure 

The government has created a new economic development strategy that focuses on rural Canada, as well as a connectivity strategy that provides high-speed access for all Canadians

“Smart cities” are all over the Canadian Infrastructure scene. However, the federal government launched a new Minister and a new strategy this year. Why do we hear less about rural projects than urban, and is this set to change?

Brian Kelsall of Fasken Martineau DuMoulin LLP in Toronto puts rural Infrastructure in context: “There are two dynamic tensions” in this sector: first, projects “tend to be smaller and often municipally focused, albeit with provincial or federal support.”

Second, says Kelsall, they often have inherent complexities as a result of where they are, including, “short construction season, difficult access and supply, vagaries of ice roads and permafrost, and heightened environmental sensitivities.”

Also First Nations are often involved, which brings in another level of government.

In short, says Kelsall, rural Infrastructure projects “can be hard to do, small and a bit risky, making them harder to finance and attract big players.”

Having said that, Fasken as well as Torys LLP and other firms are working on some very large rural projects, often in the Energy sector.

Torys LLP is acting as counsel to Wataynikaneyap Power, a partnership between 24 First Nation Communities and FortisOntario Inc., in connection with the Wataynikaneyap Transmission Project in northwestern Ontario. According to the firm’s website, “Torys acted for Wataynikaneyap Power in the selection of a transmission partner and in the negotiation of the related partnership arrangements with FortisOntario, and continues to provide ongoing advice to the partnership on all commercial and regulatory matters related to the project’s development and financing.”

Fasken represented the Ontario government on the Wataynikaneyap project.

The federal government has made significant overtures into the rural Infrastructure sector in 2019. In January, Prime Minister Justin Trudeau appointed the Honourable Bernadette Jordan as Canada’s first Minister of Rural Economic Development. Infrastructure Canada’s website says “The Minister provides rural Canadians with a dedicated voice at the Cabinet table, representing rural perspectives and championing economic opportunity and quality of life in rural Canada. Minister Jordan is also leading the roll-out of broadband and infrastructure investments in rural Canada.”

By the end of June, Minister Jordan released a new federal strategy: “Rural Opportunity, National Prosperity: An Economic Development Strategy for Rural Canada,” which “is based on consultations with the people living and working in rural communities — like forestry workers, entrepreneurs, and farmers — as well as community leaders, associations, businesses, academics, municipalities, Indigenous groups, and provincial and territorial governments. It directly responds to the input we received and puts people, places, and partnerships at the centre of rural economic development.”

Launched concurrently and most would say necessarily, the government released its “High-Speed Access for All: Canada’s Connectivity Strategy” with a plan to ensure that “all Canadians have access to affordable, high-speed internet, no matter where they live. It also commits to improve cellular access where Canadians live and work, and along major highways and roads.”

According to the Strategy, it “was designed to address the priorities of rural Canada. This grass-roots Strategy was built on ideas submitted by rural Canadians from across the country. Minister Jordan and Parliamentary Secretary Marc Serré toured the country and met with hundreds of rural Canadians to hear first-hand about their local needs. They spoke with people living and working in rural communities — like forestry workers, entrepreneurs, and farmers — as well as community leaders, associations, businesses, academics, municipalities, Indigenous groups, and provincial and territorial Ministers.

“Canadians were also invited to submit their ideas directly to the new Centre for Rural Economic Development at Infrastructure Canada. We heard that rural Canada is facing rapid and unprecedented changes, but more importantly, it has a solid foundation for building a prosperous future. While every community’s ideas were different and specific to their needs, common themes and challenges emerged: the need for reliable and affordable high-speed Internet and mobile connectivity; a desire to maintain vibrant local economies; the need to attract and retain talent (including through skills development and immigration); the need for affordable and attainable housing; the need for new or improved Infrastructure where people live and work that is resilient to climate change; a need for community capacity to plan and implement improvements and change.”

A key part of the Strategy is to extend high-speed internet and wireless connectivity to all Canadians. “Access to reliable, high-speed Internet is essential for success. It’s needed for business growth, skills training, public safety, access to services, and participation in the democratic process. Rural and remote communities are particularly hard to connect, given their low population density, remoteness, and often challenging terrain. As a result, as of 2018, 4.9 million Canadians lacked access to the government’s target speeds of 50 megabits per second download (Mbps) and 10 Mbps upload (“50/10”). In fact, only 37 percent of rural households are currently able to access these speeds, compared to 97 percent of households in urban areas. Cellular coverage is also an issue. As of 2017, 14 percent of major Canadian roads and highways still lacked mobile wireless coverage.

This gap in coverage poses safety concerns for motorists and travellers ....”

Renewing Rural Infrastructure is specifically called out: “Strong and modern infrastructure is an essential building block for Canada’s competitiveness and the long-term prosperity of Canadians, whether they live in large cities or small communities. Canada, which is the most trade-dependent nation among the G7, relies on its transportation network and supporting infrastructure to get goods to market. Together, population and economic growth are putting increasing pressure on Canada’s public infrastructure. The need to upgrade and replace Canada’s infrastructure is becoming urgent. Better infrastructure planning and construction can reduce the impact of human activity, help protect and improve the environment, and contribute to the health and prosperity of Canadians.”

Minister Jordan and Parliamentary Secretary Serré heard from rural community representatives and business leaders who “frequently spoke about the challenges related to maintaining aging public Infrastructure. Leaders spoke about having to delay or cancel business park expansions or housing development projects due to inadequate infrastructure, and how that has slowed economic growth. Community Infrastructure, like recreation and cultural centres, was also cited as important to attracting new workers and immigrants, and creating places where existing residents want to stay.

“Yet many noted that the terms for accessing government funding programs are often beyond a small community’s capacity or financing ability. The capacity of small communities to effectively plan for, manage, and renew Infrastructure assets is a concern. The Federation of Canadian Municipalities estimates that 60 percent of Canadian municipalities have five staff members or fewer. These rural municipalities are less likely to have asset management plans, yet rural municipalities own up to 49 percent of Infrastructure assets. Rural municipalities also typically have an extensive Infrastructure network and a limited tax base to fund the maintenance and renewal of their Infrastructure assets.”

In the “What We’re Doing” section of the Report, the government outlined that it is “providing significant investments in infrastructure through the Investing in Canada plan and initiatives such as the National Trade Corridors Fund. The Investing in Canada plan is investing over $180 billion in funding across the country, in five priority areas: rural and northern communities’ Infrastructure; public transit infrastructure; green Infrastructure; social Infrastructure; and trade and transportation Infrastructure.

“As of May 2019, the Government of Canada has approved more than 48,000 Infrastructure projects, and nearly all are underway or completed. Cost-sharing for rural and northern Infrastructure projects is the most flexible in recognition of rural needs, with the Government of Canada able to contribute up to 60 percent of eligible project costs in small communities with populations under 5,000. In addition, Budget 2019 provided a one-time top-up of $2.2 billion through the federal Gas Tax Fund to address short-term priorities in municipalities and First Nations communities.”