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Consistent inconsistency on infrastructure

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April 1, 2014 by Jim Barnes

Government’s hot-and-cold relationship with infrastructure is a topic that makes many in our industry groan. Infrastructure spending has always been a political football in Canada and it has usually been difficult to tell which way it is going to bounce when it hits the ground.

That inconsistency has been consistent over the years.

That’s doing Canadians a major disservice.

The feast-and-famine approach pretty much guarantees that taxpayers pay maximum dollar for infrastructure by making it difficult for both local government and contractors to plan ahead and invest appropriately. Even when the federal government does decide to make the big spend, regulation and red tape sometimes forestall any real momentum.

Despite many impressive projects completed since the last recession, Canada’s infrastructure deficit remains a problem. Enormous numbers are tossed around. For one example, the Federation of Canadian Municipalities has estimated that Canada’s municipal infrastructure deficit recently stood at about $123 billion and is growing by some $2 billion a year.

The federal government seems to be feeling a little underappreciated in this infrastructure discussion. In response to comments made at the recent Canada 2020 conference, federal Finance Minister Joe Oliver noted that “In 2013 we created the longest and largest infrastructure fund in Canadian history, dedicating over $70 billion over 10 years for public projects.” Historically, that’s a significant number— but it isn’t enough, as provincial and municipal governments have been pointing out.

Economic uncertainty is a concern with the federal government, keyed into its worries about deficits, the price of oil and general economic instability. However, we should remember that interest rates are extremely low at present, and infrastructure investment can’t be deferred indefinitely.

Few have been more vocal than Ontario Premier Kathleen Wynne. The premier has been calling for “a Canadian infrastructure partnership — a collaboration that has an explicit objective of investing five per cent of our GDP in infrastructure renewal” annually. That would represent a significant increase from our current three to 3.5 per cent, and represent about $100 billion a year.

Among other proposals, Wynne suggested “a new and dedicated infrastructure transfer—like the transfers for health, education and social services.” Such a transfer would support sustained infrastructure investment that would enhance competitiveness for years to come, she notes. Provincial and municipal investments have outstripped federal investments in many cases.

It is worth noting that the federal investment in infrastructure tends to get them a good return. The mayors of Canada’s biggest cities are on the same path, promising the federal political parties to hold their feet to the fire on infrastructure during the coming election.

At the Big Cities summit organized by the Federation of Canadian Municipalities in Toronto in February, 18 mayors called for commitments to protect current allocations and disburse allocated infrastructure money faster. “… We are saying, let’s talk about creating predictable, stable forms of income,” noted Calgary Mayor Naheed Nenshi.

Beyond the raw numbers involved, building certainty about infrastructure investment would go a long way to make the industry more efficient and competitive.

By the way, if you are feeling a sense of déjà vu at seeing my byline again, let me reassure you: Editor Corinne Lynds is on maternity leave and I’m just filling in until she gets back in a few months. In the meantime, I am looking for-ward to hearing from many of my old friends in the industry.

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