There is a distressing and predictable pattern to many government megaprojects. The future is never rosier for these schemes than when politicians and bureaucrats first hatch them.
And then it's all downhill. Costs soar, delays mount, and the promised economic benefits fizzle. Then one day, taxpayers wake up with a nasty and unexpected bill.
By that time, the leaders who sold everyone on the wondrous benefits of the projects have typically moved on, retired or vanished from public view. But the projects keep on giving – and not necessarily in a good way. We present the 10 projects to watch closely in 2018. They all face rising costs, posing untold risks to taxpayers.
1. Muskrat Falls
For former Newfoundland premier Danny Williams, developing Muskrat Falls on Labrador's lower Churchill River was never just about hydroelectric generation. It was about sticking it to Hydro-Québec, which still buys power from the original Churchill Falls project at 1960s prices. Unfortunately, the $12.7-billion Muskrat Falls project has become a curse that could triple the cost of electricity in Newfoundland and endanger the province's solvency. It is destined to produce high-cost power Newfoundland doesn't need and can't easily resell. The province is already in damage-control mode, launching a public inquiry to find out what went wrong and who is to blame.
2. Gordie Howe International Bridge
The new Windsor-Detroit bridge was supposed to ease traffic congestion at the busiest crossing on the Canada-U.S. border. A series of unfortunate events now risks turning the $4.8-billion bridge into a white elephant when construction begins in 2018.
The recession badly dented Canada's manufacturing exports and sent truck traffic plunging. The U.S. balked at paying any of the cost. Then along came U.S. President Donald Trump, whose push to renegotiate NAFTA could further hobble trade. Truck and car traffic is way down since 2008, a trend that could undermine Ottawa's plan to make the bridge pay for itself through tolls.
3. Sturgeon Refinery
Alberta's first new refinery since the 1980s is poised to go into full commercial production in 2018, turning oil-sands crude into diesel fuel. The $9.3-billion refinery will be coming online at least a year late and almost $1-billion over budget. Ostensibly, it's a private project, but the downside risks mainly belong to the province, which has committed to supply crude, pay refining tolls and guarantee construction debt. The deal was struck when diesel was in short supply and the price of crude was much higher. Alberta could be forced to produce diesel no one wants – at a loss.
4. Davie shipyard
The federal and Quebec governments have sunk hundreds of millions of dollars over the decades into the Levis, Que., shipyard – all in the name of keeping shipbuilding alive in the province. Privately owned Davie recently finished converting an old container ship into a Royal Canadian Navy supply vessel. The company wants to do a second supply ship, which Ottawa insists it doesn't need. Without it, 800 jobs could be cut. The job-loss extortion racket has been going on at Davie since the 1980s, when Ottawa steered work its way on a fleet of frigates in a bid to appease Quebec, which owned the shipyard at the time.
5. Phoenix pay system
It's bonus time for many Canadian workers. Not, however, for a number of federal employees who will get nothing at all this pay period – the latest snafu to hit the Phoenix payroll system. Two years on and the new system still can't seem to pay thousands of federal workers what they are owed. Some are getting too much; others not enough. Half of all government employees have experienced errors, creating what is now a half-billion-dollar accounting mess. The federal Auditor-General says the government's cost estimate of $540-million to fix it is way too low. The choice now for Ottawa: repair Phoenix or ditch it altogether.
6. Hudson Bay Railway
The railway was built in the 1920s as an alternative to shipping grain to foreign markets via the Great Lakes. But the line to Churchill, Man., and the deepwater Arctic port there have been chronic money-losers – first for the federal government, then Canadian National Railway and now Denver-based Omnitrax. Floods last spring knocked out a section of the track, and now Ottawa and Omnitrax are locked in a legal fight over who should pay for the repairs. Fairfax Financial Holdings and other investors are looking at buying the assets. Chances are it will take fresh subsidies to get the train and port running again.
7. Darlington Nuclear Generating Station
There isn't anything inherently wrong with keeping Ontario's fleet of nuclear reactors running for a few more decades, particularly as the province strives to curb greenhouse-gas emissions. But the massive cost – Ontario Power Generation is spending $12.8-billion to refurbish Darlington's four reactors near Oshawa, Ont. – underscores Ontario's troubled electricity future. The province has committed to long-term deals that saddle future generations with a surplus of premium-priced power and hefty debts.
8. Canada.ca
What could be so difficult about creating a single e-mail address for federal employees? Apparently, a lot. Ottawa decided in 2011 to unify 550,000 federal government e-mail addresses, across 63 separate systems and 43 departments and agencies, under a single domain, @Canada.ca. The $245-million effort is now roughly two years behind schedule, and most e-mail addresses have not been migrated to the new system. Several departments are now balking at moving their addresses.
9. Site C dam
Every big project reaches a point of no return, where the cost of scrapping it exceeds the cost of proceeding. B.C.'s new NDP government reversed a campaign promise and announced this month that it will go ahead with the $10.7-billion Site C dam on the Peace River. With $2-billion already spent, the government said cancellation would have been too costly – a $4-billion writedown, steep hydro rate hikes and a possible credit downgrade. Of course, going ahead with the project will also likely push up rates. Much depends on export demand and prices upon the project's completion in the mid-2020s.
10. Keeyask dam
Not to be outdone by Newfoundland, Ontario and British Columbia, Manitoba has its own entry in the energy-excess sweepstakes: the $8.7-billion Keeyask dam. Located 725 kilometres north of Winnipeg on the lower Nelson River, the project has already doubled in cost. And that means ratepayers will have to pay roughly 8 per cent more for electricity over the next five years to fund the dam and a new transmission line.