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Canada missing $145 billion in infrastructure: CCPA


January 29, 2013
By Aggregates and Roadbuilding

January
29, 2013, Ottawa, Ont. — Underinvestment in infrastructure is not a crisis but
a chronic problem in Canada, says a new study by the Canadian Centre for Policy
Alternatives (CCPA).

January
29, 2013, Ottawa, Ont. — Underinvestment in infrastructure is not a crisis but
a chronic problem in Canada, says a new study by the Canadian Centre for Policy
Alternatives (CCPA).


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The
study, by economist and CCPA Research Associate Hugh Mackenzie, reveals the
extent of underinvestment in infrastructure over the past four decades and
makes recommendations on how to close the infrastructure funding gap.


“The
cumulative effect of this underinvestment means we are missing $145 billion
worth of infrastructure,” says Mackenzie. “That’s a lot of new roads, bridges,
and buildings we’re missing — not to mention missing maintenance on our existing
infrastructure.”


According
to the study, public investment in general infrastructure peaked at just over
3% of GDP in the late 1950s and then declined steadily until the mid-2000s,
before the federal-provincial economic stimulus program temporarily reversed
the trend. However, it would require an additional $20-30 billion a year for
ten years on top of current spending to return infrastructure funding to
historic levels.


“When
it comes to Canada’s physical infrastructure, the federal government has the
money; the provincial governments have the constitutional authority; and local
governments have the responsibility for making the actual investments,”
Mackenzie says. “But the shift in responsibility for public capital investment
from senior governments to local governments has not been matched by
corresponding increases in transfer payments.”


The
study identifies obstacles, other than the obvious financial ones, that must be
addressed in order to close the infrastructure funding gap and makes several recommendations,
including:

  • Allowing local governments to have
    a direct financial relationship with the federal government.
  • Allowing governments providing
    transfer payment funding for capital to account for those payments as
    capital expenditures to be amortized over time.
  • Developing a robust and
    transparent governance structure that can resist the tendency to use
    infrastructure funding as a political pork barrel or to use that funding
    as a lever for ideological agendas such as public-private partnerships or
    the privatization of public services.


“Canada’s
infrastructure crisis is in decision making and in the fiscal and governance
structure within which those decisions are being made—or more precisely, not
being made,” Mackenzie concludes.