Key pieces of Canada’s infrastructure are crumbling, and a $200-billion investment is needed to maintain our standard of living, says a public policy researcher.
In a paper released today by the Institute for Research in Public Policy, James Brox, an economics professor at the University of Waterloo, said facilities such as roads, highways, bridges, ports, and water systems need the money – $72 billion for new facilities and $123 billion to repair and upgrade those already built – as soon as possible.
Add to that a sustained, 10 per cent annual increase in infrastructure spending, and manufacturing unit production costs could be reduced by five per cent per year, he said, the equivalent of a five per cent increase in productivity.
The funding increase, Brox said, would help narrow the Canada-U.S. manufacturing productivity gap, and enhance the manufacturing sector’s competitive profile.
“New Brunswick’s a bit better off because the infrastructure is more recent, but in a few years it’ll be in the same position Ontario’s in,” Brox said. “The longer we put it off, the worse things are going to get,” he said, adding that the more systems wear down, the more they cost to repair.
Since the 1970s, responsibility for these infrastructure projects has gradually been shifted down to the municipal level.
But cities, Brox said, rely heavily on property taxes for money, an area that’s difficult to increase, and as such, infrastructure has gone neglected or is not even built in the first place.
“Right now, the municipalities don’t have a stable, long-term source of revenue that’s sufficient to fund the infrastructure that they’re really required to provide if we’re going to effect the productivity of the country,” he said.
In addition to lower costs and higher productivity, Brox said infrastructure investments could also translate into a 0.6 per cent increase in jobs relative to baseline trends. David Plante, vice-president of Canadian Manufacturers and Exporters for New Brunswick and Prince Edward Island, said investments in infrastructure are essential to New Brunswick. It is the most export-dependent province, with 75 per cent of its GDP relying on domestic and international exports.
“We’re in a situation where some of our existing infrastructure is deteriorating, but by the same token, we don’t have the same level of infrastructure in much of the rest of Canada and in the United States.” Plante said that every $1 spent on public infrastructure equals 17 cents in cost savings for manufacturers. Those savings translate into a 0.2 per cent increase in GDP.
Citing figures from Statistics Canada, Plante said that all of the money spent on public infrastructure between 1961 and 2000 was responsible for 18 per cent of all business productivity gains.
“Infrastructure has to be a clear priority for the federal government,” he said.
Joel Levesque, vice-president of public affairs for Moosehead Breweries Ltd., said they export a majority of their product outside of New Brunswick – to other Maritime provinces, Western Canada, the U.S. and overseas.
Moosehead uses trucks, trains and ships to move its product, and Levesque said it’s increasingly difficult and expensive for manufacturers to operate out of the Maritimes, because of the cost of moving goods in and out.
Good access to transportation infrastructure, especially ships, equates to a double-digit percentage cost savings, he said, adding Moosehead now spends more than $2 million per year on importing glass from Ontario.
Levesque said improvements have been made in recent years, like the twinning of the Trans-Canada Highway, but he hopes to see that extend past Edmundston to the Quebec border.
“That stretch from Edmundston to Riviere-du-Loup is vitally important,” he said. “That stretch alone would make a significant impact on our costs.”
He also said manufacturers would like to see more rail and port access.
“There was a lot of track ripped up in Canada in the ’70s and ’80s, and now shippers and rail lines are saying ‘Uh oh, we made a mistake,’ ” he said. “Because 20 years ago, who foresaw $140 per barrel oil? So it’s just become increasingly difficult and expensive to ship goods.”
