DCN ARCHIVES

February 6, 2013

Strategic infrastructure critical for Canada

Investment in strategic infrastructure will make the Canadian economy more productive, concludes a commissioned Canadian Construction Association (CCA) report released today.

“What this study indicates is that governments shouldn’t be looking at this as something that they’re forced to do but as something they should be doing. It’s an investment in enhanced productivity and better rates of economic growth in the long-term,” said Casey G. Vander Ploeg, senior policy analyst at Canada West Foundation and co-author of “At The Intersection: The case for sustained and strategic public infrastructure investment”.

The CCA has continually advocated for sustained long-term infrastructure investment through all levels of government. Association president Michael Atkinson said having a report advocating the need for such an investment will help back up their message.

“You start to neglect it and you’re going to see that the economic performance is going to be impacted, productivity is going to be impacted or stifled and that the Canadian standard of living is going to be at risk,” said Atkinson.

Vander Ploeg said governments should not hesitate to maintain a high level of investment in public infrastructure.

“The real value of infrastructure investment is not what it accomplishes in the short term, but what it accomplishes across the long-term,” he said.

The Conference Board of Canada identified productivity as “the single most important determinant of a country’s per capita income over the long-term.”

Some of the over 200 academic papers reviewed for the report suggest that the gap in Canada-U.S. productivity growth since the 1990s was largely due to Canada investing less in public infrastructure compared to the U.S. It says Canada fares poorly with most of its important competitors.

“Half of the countries in the OECD (Organization for Economic Co-operation and Development) have higher labour productivity than Canada and our labour productivity growth has been very poor. Among the G-7, Canada also shows very slow growth in multi-factor productivity,” it says.

In the 1960s, governments in Canada combined were investing about five per cent of Gross Domestic Product (GDP) into infrastructure; that number had fallen to two per cent by 2000. The report says Canada needs investment to take advantage of emerging economic opportunities, particularly the rapid growth occurring in Asia.

“Canada’s standard of living is intimately connected with our ability to trade. Securing new markets for our goods and services can only occur if we have the infrastructure to get our products to those markets,” it reads.

Strategic infrastructure investment includes wastewater, energy, communications and transportation, such as roads and bridges and border crossings.

“We’ve got to make sure Canada remains positioned to take advantage of that recovery in the international sense. We don’t want to be left behind, as it were, because we didn’t make the strategic types of investments we should be making now to ensure that we have the quality infrastructure to support competitive business industry of the future,” said Atkinson.

Governments should also consider renewing existing infrastructure assets as they can have as much, if not more, economic benefits than new projects, says the report. It also recommends an ongoing analysis and evaluation of recent public infrastructure investments and applying those lessons to future investments.

The report also recommends that governments should encourage innovative approaches to the design of public infrastructure.

“Canada’s growing infrastructure needs are not likely to be addressed under a ‘business-as-usual’ approach. Infrastructure projects that incorporate new technologies and better designs will be more efficient and reduce operational and maintenance costs,” it says.

The report says that now is the right time to make infrastructure investment as the Canadian dollar is high, interest rates are low and Canada’s current stock of infrastructure is aging and nearing the end of its lifespan.

The report makes a correlation between strategic infrastructure investment and maintaining the Canadian quality of life.

Vander Ploeg says Canadians enjoy public health care, education and social programs, which are primarily funded by the taxation of Canadians’ personal incomes.

“If our personal incomes don’t grow sufficiently over time, governments are going to find it harder and harder to fund those programs,” he said, adding that as the baby boomers age and get ready to retire it will add even more pressure on governments.

Atkinson said this report helps the CCA continually tell the story about the importance of strategic infrastructure investment on the economy.

“Provincial level governments change, cabinet members change, at the municipal level, city councillors change, so you’ve got to continually tell that message.”

The federal government is expected to announce the successor of the expiring Building Canada Plan in the 2013 spring budget.

Follow Kelly Lapointe on Twitter @DCNKelly.

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