The Need for Investment in Infrastructure
Canada needs vision beyond the Building Canada Plan.
December 6, 2012 By Chris Lorenc
It is well established that sustained investment in public
infrastructure brings results – enhanced economic productivity, higher
competitiveness, and therefore, better rates of economic growth.
It is well established that sustained investment in public infrastructure brings results – enhanced economic productivity, higher competitiveness, and therefore, better rates of economic growth. It is this economic growth that generates revenue with which the government funds Canada’s globally envied health-care, education, and social safety nets. Hence, our quality of life in this country.
In short, investment in infrastructure is Canada’s economic health-care program.
In a set of cross-Canada roundtable meetings held this summer, the federal government explored how best to create and implement a Long Term Infrastructure Program (LTIP) that extends beyond the expiry of the Building Canada Plan in 2014.
It would appear that the Harper government’s LTIP focus will be on investments in infrastructure that support long-term economic growth and prosperity, leveraging in the process both private-sector partnership opportunities and funding from all levels of government to ensure national affordability and sustainability over the long term.
An Informetrica report on infrastructure and its impacts on productivity found that for every $10 billion invested in local infrastructure, 115,000 new jobs are created and nominal GDP grows by 1.3%. The study also found that investments funded from growth taxes – specifically sales and income taxes – deliver a bigger boost to a slowing national economy than investments funded from municipal property taxes. And for $1 invested in municipal infrastructure, roughly 35¢ is returned to the provincial and federal governments in direct financial benefits, mainly through increased sales and income tax revenue.
A 2010 Residential and Civil Construction Alliance of Ontario report underscored the economic importance of infrastructure by concluding that continued underinvestment in infrastructure over the next 50 years will slow economic growth, will reduce business profitability by up to 20% and could cost the average Canadian entering the work force today up to $51,000 in reduced wages over the course of a career.
Congestion on Canada’s transportation system – railways, U.S. border crossings, airports, marine facilities and roadways – has devastating consequences on our nation’s trade-dependent economy and our jobs. These assets must not only be well maintained, but they must be adequate to meet the current and future needs of the economy for Canada to remain internationally competitive.
Unfortunately, according to Statistics Canada, most of the core public infrastructure upon which Canadians depend was built in the 1950s and is rapidly approaching the end of its useful service life. Much of it will need to be rehabilitated or replaced within the next 10-15 years.
At the same time, Canada’s population has not only increased from 16 million to approximately 34 million, but has become more urban, increasing from approximately 70% urban back then to more than 80% today. The problem Canada faces is not only that our infrastructure is old, but in many cases, that current daily demands on this infrastructure far exceed its intended design capacity.
The tragedies that occurred in Quebec with the bridge collapse (shortly after a similar disaster in Minneapolis) and the bridge closure on Highway 1 east of Portage la Prairie, Man., will become all too common without a concerted effort on the part of Canadian governments at all levels to accelerate and sustain the pace of infrastructure reinvestment.
The investments of the past three years – as large as they have been – have made only a small dent in our national infrastructure deficit. In its recent report card on Canada’s infrastructure, the Federation of Canadian Municipalities (FCM) found municipal infrastructure ranks between “fair” and “very poor.” Replacing key assets such as drinking-water systems, wastewater and storm water networks, and municipal roads will cost $171.8 billion, nationally.
| By Chris Lorenc
President, Manitoba Heavy Construction Association (MHCA)
How Canada renews and invests in its aging infrastructure over the next 10 years will determine our nation’s economic, fiscal and social health. Delaying improvements today will place an impossible financial burden on present and future generations, and will without question lower our standard of living.
Canada stands on a precipice. Although the need to return to fiscal balance is important, it must be implemented in such a way as not to neglect important investments in our economic health. Canadians need to recognize and support the principle that investment in public infrastructure is Canada’s economic health-care program.
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