Written by Jason Roth, Geoffrey Stenger and Edward Deng
The Government of Alberta is looking to increase transparency, predictability and accountability in its capital project spending decisions. On October 25, 2021, Alberta Infrastructure Minister Prasad Panda introduced Bill 73, Infrastructure Accountability Act proposing six criteria for capital project evaluation and a strategic capital plan. The Bill is currently in its second reading in the Legislative Assembly of Alberta.
Key Features of Bill 73
Bill 73 introduces two significant changes to the government's capital project decision-making process.
1. Criteria to Evaluate Proposed Capital Projects
The Act sets out six criteria for the Responsible Minister's consideration when evaluating proposed capital projects (excluding capital maintenance and renewal projects). The six criteria assess how a proposed capital project will:
- Address health, safety and compliance needs. Projects should reduce risks to the health, safety or security of Albertans, or increase compliance with health, safety and other applicable legislation.
- Align with government priorities and strategies. Projects should align with the government’s strategic objectives, as identified in the government’s strategic and business plans, and other government priorities.
- Foster economic activity and create jobs. Projects should have positive economic impacts, including direct or indirect job creation and economic development and activity.
- Improve program delivery and services. The Act does not expand on this criteria.
- Generate a return on investment after factoring in the project's full life-cycle costs. The full life-cycle cost means the total cost associated with a capital asset, including costs of acquisition, construction, development, maintenance, improvement, operation and disposition. The full life-cycle cost commences with the identification of an asset's need and ends with its disposal.
- Enhance the resiliency of communities. Examples include: enhancing the resiliency of existing infrastructure relied on by members of the community; protecting community members and assets from natural disasters; providing a remote community with core infrastructure; preserving or enhancing the community’s culture and heritage; and improving social and environmental circumstances in the community and local conditions generally.
The Act also allows the Responsible Minister to consider any other criteria from time to time. Minister Panda stated that not every proposed capital project needs to align with all six criteria. The criteria will not be used to publicly rank or score proposed capital projects.
2. Strategic Capital Plan
The Act will require the Responsible Minister to develop and regularly review a 20-year strategic capital plan. The plan will outline the government's long-term vision to meet Alberta's infrastructure needs over the 20-year period. It will also guide the government's future infrastructure decisions by factoring in economic, demographic and other trends. The plan must be published within one year of the Act coming into force and at least once every four years afterwards.
Bill 73 will have a significant impact on capital projects in Alberta. Accordingly, we recommend that industry participants familiarize themselves with the key elements of Bill 73 and commence proactive planning measures. The Bennett Jones Capital Projects and Construction teams are ready to respond to any questions or concerns regarding Bill 73. We will also continue to monitor Bill 73 and will provide updates as they become available.