But a combination of circumstances appear to have created a situation in which there will soon be substantial investment in Canada’s infrastructure. These are, in particular:
- An economy struggling as a result of the collapse in oil prices and resulting fallout;
- A new Liberal Government in Ottawa that was elected partly on a pledge to run deficits for the next several years to increase infrastructure spending as a stimulus to that struggling economy;
- Historically low interest rates that make the cost of borrowing and the increase in public debt seem quite manageable; and
- Almost universal agreement from economists and business interests that the infrastructure stimulus is needed and appropriate.
Given these circumstances, there seems little doubt that we will see a significant increase in infrastructure spending. How effective that spending will be, however, is another matter entirely and there are a number of causes for concern:
- Short term or long term? As the economy continues to slide, the federal government will face increasing pressure to go with “shovel-ready” projects. But effective infrastructure investment requires considerable planning as well as coordination amongst the three levels of government.
- Type of investment? The Liberal Party plans include social infrastructure which is doubtless needed, but some experts argue that the initial concentration needs to focus on traditional infrastructure and especially transportation and transit infrastructure in urban centres to get people and products moving efficiently.
- Dispersed or Concentrated? This choice might also be expressed as politically or economically sound. The federal government will face strong pressure as to where it allocates the additional infrastructure funding. Liberal ridings will expect their “fair share” or more, as happened with Conservative ridings under the Harper government. Rural areas will insist that they not be overlooked. A federal body, the National Aboriginal Economic Development Board, has just released a report calling for increased infrastructure spending in the north where small, scattered communities make infrastructure costs high. While all these concerns are understandable, the reality is that infrastructure spending will have its biggest positive impact on the economy if concentrated in our largest urban areas where the knowledge-based economic activities of the modern economy are largely found.
- Photo-Op or Follow Through? Politicians understandably enjoy having their picture taken as they ceremonially dig the first shovel full of ground to launch some new infrastructure project. Announcing funding to repair, restore, or expand existing infrastructure doesn’t have the same impact but that type of investment is needed as much, or more. Moreover, whatever the nature of the investment being undertaken, governments need to do more to follow projects through to completion, ensure that they meet the specified standards and hold those responsible accountable for any shortfall.
We have had federal infrastructure initiatives in the past and how they were handled (or mishandled) can offer some insights into what should now be done – something that I explore in an article in the February 2016 issue of Municipal World. Stay tuned.