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Strong infrastructure investment must be a priority now: RCCAO report – constructconnect.com – Daily Commercial News

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A recent report prepared for the Residential and Civil Construction Alliance of Ontario (RCCAO) states holding back on infrastructure investment could exacerbate the effects of the COVID-19 pandemic, result in billions of dollars in lost tax revenue for federal and provincial governments and hamper Ontario’s economic recovery.

Entitled Navigating the COVID-19 Socio-economic Shock: How Infrastructure Investments Will Facilitate Future Growth in Ontario, the report prepared by the Canadian Centre for Economic Analysis (CANCEA), states now is a critical time for the Government of Canada to work with the Ontario government and municipalities to find solutions that address municipal operating deficits while also funding infrastructure projects.

“We’re trying to send the message to the (federal) finance minister that although the debt situation may look dire right now, if you do make these investments, over the longer term you will get more tax revenues and more long-term building of our economic foundation in Canada,” said Andy Manahan, executive director of the RCCAO.

“I would really like to see them thinking about this as a non-political issue. They do need to work together and be more agile.

“If municipalities had a list of projects they thought were ready to tender this year, what a great time to speed that process up right now.” 

The operating deficits, caused by the increased need for services and a simultaneous drop in revenue, combined with the expected decline in both provincial and federal GDP due to the economic slowdown, could put Ontario’s planned infrastructure investments at risk while also threatening to limit the financial returns from past infrastructure investments, states the report. This could have long-term implications for growth even post-COVID-19.  

There will be no recovery unless municipalities first get the support they need,

— Bill Karsten

Federation of Canadian Municipalities

“If the Ontario and federal governments do not invest the same amount in infrastructure as was planned pre-crisis and the province uses funds from its capital budget to cover municipal deficits, then there will be clear and measurable consequences, namely lower long-term growth, fewer jobs and lower government revenue,” reads the report. “The current once-in-a-generation socio-economic crisis caused by the pandemic will only compound the consequences and significance of this decision.”

In an email to the Daily Commercial News, Federation of Canadian Municipalities (FCM) president Bill Karsten, said municipalities across the country are facing a financial crisis.

“Weeks ago, through FCM, they called for urgent, emergency operating funding to keep essential local services running for Canadians,” Karsten stated. “Municipalities are key economic drivers in this country, and the financial emergency they are facing because of COVID-19 threatens the economic recovery Canadians are counting on. We need to make sure that cities and communities are in a position to deliver needed stimulus at the local level, when it’s time.”

The RCCAO report aligns with FCM’s estimate that in order to cover all municipal operating deficits for 2020, municipalities will need $10 to $15 billion in direct support, he added.

“These conclusions add to the growing chorus of municipal, business and labour leaders calling on federal, provincial and territorial governments to come together to support municipalities, who are on the frontlines of the pandemic,” Karsten stated. “Investing directly in Canada’s communities and local infrastructure projects will help get this country back on its feet, but the fact remains that there will be no recovery unless municipalities first get the support they need to get out of this financial crisis.”

To date, the federal government’s response to municipal operating shortfalls, namely to fast-track $2.2 billion in infrastructure funding through the Gas Tax Fund, is insufficient, the report states.

“If ever there was a time where we needed to do asset management, state of good repair-type projects to keep the economy going, now would be the time,” said Manahan. “The state of good repair is stuff that can be done immediately. It’s typically more labour intensive so it does have more employment benefits right out of the gate.”

In the report, researchers proposed two contrasting risk scenarios for the next 10 and 30 years based on different levels of infrastructure spending.

Under one risk scenario, the federal and Ontario government investment levels are kept at the same percentage of GDP, which existed at pre-crisis levels and municipal operating deficits are paid for out of Ontario’s capital budget. The province would have 55,000 fewer jobs, on average, per year over the next decade, with the federal and provincial governments losing $8 billion and $12 billion, respectively, in revenue. Over the next 30 years, there would be 79,000 fewer jobs on average per year, and the federal and provincial governments would lose $36 billion and $51 billion, respectively.

Under the preferred scenario, where the federal and Ontario governments invest at pre-COVID levels and the federal government covers the majority of municipal operating deficits, Ontario would gain 61,000 jobs on average per year over the next 10 years and the federal and provincial governments would receive $9 billion and $13 billion, respectively, in revenue. Over the next 30 years, there would be a gain of 189,000 jobs on average per year and the federal and provincial governments would gain $86 billion and $123 billion, respectively.

Follow the author on Twitter @DCN_Angela.

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Africa’s Biggest Investment Takes Shape Under Islamist Threat – Yahoo Canada Finance

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(Bloomberg) — Dozens of soldiers clutching AK-47s and grenade launchers watch over roaring bulldozers on the white sand beach that meets a tropical turquoise sea. They’re guarding Africa’s biggest investment: a $23 billion project to export Mozambique’s natural gas from an area increasingly besieged by an Islamist insurgency.

Companies led by Total SA will pump the gas from wells about 40 kilometers (25 miles) offshore, cool it to temperatures below minus 260 degrees Fahrenheit so that it turns to liquid, then ship it to electricity plants from France to China. The consortium is about to finalize almost $16 billion in project financing — another record for the continent.

“The work is immense,” said Ronan Bescond, the 44-year-old French chemical engineer who Total chose to lead the project after a career of nearly two decades at the company. “The first cargo of LNG must be in 2024. And we are on the right track,” he said to a handful of reporters in a prefabricated room at the site 32 kilometers south of the Rovuma River that marks the border with Tanzania.

The obstacles facing a project that’s expected to transform the impoverished southeast African nation are huge.

To achieve the target of first production for an undertaking worth billions of dollars more than Mozambique’s entire economy, developers need to move thousands of tons of equipment through territory thick with Islamic State-aligned insurgents. At one stage, a Covid-19 outbreak saw the Total site accounting for three in four of the country’s confirmed infections. All this as natural-gas prices plunged to near 25-year lows.

Militants who first pledged allegiance to IS in 2018 have carried out increasingly brazen attacks this year.

Deadly Raid

Last week, they raided Mocimboa da Praia for a third time, and occupied the town for as long as three days. It’s a crucial supply hub just 60 kilometers south of the project site and the closest port.

As many as nine workers for Total subcontractors Fenix Construction Services Lda died in the attack, Jasmine Opperman, an African analyst at Wisconsin-based Armed Conflict Location & Event Data Project, said in a Twitter post. The company didn’t answer seven calls and two emails seeking comment.

Before the gas discoveries and insurgency, the remote coastline was more famous for luxury tropical island resorts. Last month, one of the nearby hotels offered a discount price of $19,820 a night to hire out an island as a refuge from the coronavirus.

The private military company that Mozambique hired in April to provide air support to government troops in the form of helicopters fitted with machine guns has struggled to quell the violence. Lionel Dyck, the founder of Dyck Advisory Group, the firm the government employed, declined to comment when contacted by mobile phone.

IS Warning

Governments including South Africa, the U.S. and Portugal have indicated willingness to help fight the insurgency.

“The insurgency is a challenge but we’re happy that our defense and security forces have been playing their role,” Max Tonela, Mozambique’s energy and natural resources minister, told reporters during the June 19 site visit. “We all as Mozambicans must fight against this evil that comes from external attacks.”

About 1,300 people have died in the violence, with a further 220,000 displaced since the first attack three years ago, which also took place at Mocimboa da Praia.

For the second time, IS referred directly to the projects in a weekly newsletter this month. The group said that it would be “delusional” to think that the government could protect the investments, and warned other countries against getting involved.

The marginalization of young men in a region that’s predominantly Muslim and 1,900 kilometers away from the capital, Maputo, has helped lead to radicalization that’s fueled the insurgency, according to researchers including Saide Habibe at the Maputo-based Institute of Social and Economic Studies who have studied the origins of the fighters.

Total’s project will hire 14,000 people at peak construction, of which at least 5,000 will be Mozambican and many from the region, Bescond said at the briefing, wearing a surgical mask, as all visitors to the site must do to prevent another outbreak of the coronavirus.

The financial rewards are worth the cost to the government of the soldiers patrolling the vast compound and snipers on its perimeter fence — Total’s estimate is $50 billion in direct and indirect revenue over 25 years for the $15 billion economy.

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Indonesia says trade, investment deal with Australia takes effect – TheChronicleHerald.ca

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JAKARTA (Reuters) – An Indonesia-Australia deal that eliminates most trade tariffs between the two nations and aims to open up investment, took effect on Sunday, Indonesia’s Trade Ministry said.

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), signed last year and ratified by the Indonesia’s parliament in February, aims to boost bilateral trade that was worth $7.8 billion in 2019.

“COVID-19 has resulted in economic slowdown in nearly all countries,” Trade Minister Agus Suparmanto said in a statement. “IA-CEPA momentum can be used to maintaining Indonesian trade and improve competitiveness.”

In a signing ceremony last year, the two countries said the pact would eliminate all Australian tariffs on imports from Indonesia, while 94% of Indonesian tariffs would be gradually removed.

Australia aims to boost exports including wheat, iron ore and dairy, while Indonesia hopes to increase automotive exports, textile and electronics. The deal opens up investment, including for Australian universities in Indonesia.

The ministry said in the statement it has issued three regulations to allow for implementation of the deal.

(Reporting by Fransiska Nangoy; Editing by William Mallard)

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Indonesia says trade, investment deal with Australia takes effect – The Guardian

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JAKARTA (Reuters) – An Indonesia-Australia deal that eliminates most trade tariffs between the two nations and aims to open up investment, took effect on Sunday, Indonesia’s Trade Ministry said.

The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), signed last year and ratified by the Indonesia’s parliament in February, aims to boost bilateral trade that was worth $7.8 billion in 2019.

“COVID-19 has resulted in economic slowdown in nearly all countries,” Trade Minister Agus Suparmanto said in a statement. “IA-CEPA momentum can be used to maintaining Indonesian trade and improve competitiveness.”

In a signing ceremony last year, the two countries said the pact would eliminate all Australian tariffs on imports from Indonesia, while 94% of Indonesian tariffs would be gradually removed.

Australia aims to boost exports including wheat, iron ore and dairy, while Indonesia hopes to increase automotive exports, textile and electronics. The deal opens up investment, including for Australian universities in Indonesia.

The ministry said in the statement it has issued three regulations to allow for implementation of the deal.

(Reporting by Fransiska Nangoy; Editing by William Mallard)

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