Economic News/Trends and Analysis — March 10, 2010

Ontario's infrastructure programs saved jobs and maintained economic activity during recession

OTTAWA, March 10 /CNW Telbec/ - Ontario's increased infrastructure spending preserved about 70,000 jobs in the province last year and added almost a full percentage point to Ontario's economy in 2009, according to a Conference Board of Canada report issued today.

"This year Ontario's public infrastructure expenditures will be more than double their 2008 levels. This increase in spending has already provided a strong stimulus to the economy and will continue to do so," said Pedro Antunes, Director, National and Provincial Forecast. "The additional boost to infrastructure spending in 2009 and 2010 is noteworthy, both in terms of growing the province's gross domestic product and in maintaining employment during the recession."

In 2009, government infrastructure spending is expected to have supported 182,897 jobs in the province; this figure is estimated to rise to 223,268 jobs in 2010.

The significant increase in infrastructure spending-an additional $5 billion last year and a further $3.6 billion in 2010-is expected to have added 0.9 percentage points to real gross domestic product (GDP) in 2009 and is forecast to add a further 0.4 percentage points in 2010. The Conference Board's most recent Provincial Outlook estimates that Ontario's economy declined by 3.6 per cent in 2009 and is forecast to expand by 3.5 per cent in 2010.

In real terms, the cumulative $53.6 billion in public infrastructure investment is generating a total of $59.3 billion in real gross domestic product between 2006 and 2010. Thus, real GDP is lifted by $1.11 for every dollar invested during this period.

Following the completion of major public works projects in Ontario in the 1960s (notably the Trans-Canada Highway and Toronto's subway system) growth in the stock of public capital began to slow in the 1970s. This slower pace of public infrastructure expansion continued through the 1990s, until programs such as ReNew Ontario and Move Ontario helped growth in public investment overtake the rate of growth in private investment.

In addition to the short-term impact in countering the downturn in the business cycle, infrastructure investment can lead to productivity gains in the medium and long-term. Productivity in Ontario has benefited from strong infrastructure growth more than Canada as a whole, and more than other developed economies. Between 2000 and 2008, public infrastructure programs such as ReNew Ontario and Move Ontario accounted for a quarter of labour productivity growth in the province.

This research was undertaken by The Conference Board of Canada for Infrastructure Ontario. In keeping with Conference Board guidelines for financed research, the design and method of research, as well as the content of this study, were determined solely by the Conference Board. The publication, The Economic Impact of Public Infrastructure in Ontario, is publicly available at www.e-library.ca.

For further information: Brent Dowdall, Media Relations, Tel.: (613) 526-3090 ext. 448, E-mail: corpcomm@conferenceboard.ca

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