Canada's crumbling infrastructure reaching critical point
Published 28 August 2008
New study says $200 billion needed to shore up Canada's infrastructure in order to keep private sector competitive
Harsh critics of the state of U.S. infrastructure — roads, bridges, tunnels, rail systems, waterways, dams, power grid, relay towers, water facilities — often use the adjective “crumbling” to describe this infrastructure. More polite critics use the adjective “aging.” It is the same in Canada. The U.S. neighbor to the north needs an estimated $200 billion investment in public infrastructure and getting it will help keep the country’s private sector competitive, according to a new study that warns the state of Canada’s infrastructure is reaching a critical stage. In a report titled “Infrastructure Investment: The Foundations of Canadian Competitiveness,” released by the Institute for Research on Public Policy, University of Waterloo economist James Brox analyzed the condition of Canada’s infrastructure and its impact on productivity, specifically within the manufacturing sector.
Canada’s competitiveness depends on a modern, efficient, and well-maintained public infrastructure network, his study says. Brox argues that Canada’s productivity is being stunted because of poor infrastructure. It can take part of the blame for the manufacturing sector’s woes in recent years, he said. “I think it’s becoming fairly critical,” Brox said about the infrastructure gap. “The manufacturing sector in Canada is losing competitiveness — there are a number of reasons for that, but the lack of proper infrastructure is clearly part of the problem.”
He found that spending on the country’s roads, highways, utilities, water systems, and other key infrastructure is a little more than half of what it was in the 1960s and the facilities built back then are now starting to crumble and services are deteriorating. To remedy what is referred to as the “infrastructure gap” by some and the “infrastructure deficit” by others, Brox says up to $200 billion must be injected into infrastructure projects — $72 billion for new ones and $123 billion to repair and maintain existing infrastructure.
According to his research, recent funding commitments from federal and provincial governments only total around $65 billion. “If they don’t increase that there’s a risk that the current infrastructure will deteriorate and will mean that in the future we’ll need to invest even more,” Brox said in an interview with the Ottawa Citizen. The manufacturing sector, particularly vital to Ontario and Quebec’s economies, has been hard hit by the strong Canadian dollar and has been shrinking in size over the last two decades. Its state of health has an effect on other industries, which is why it is important to focus on the link between infrastructure investment and manufacturing activity, Brox pointed out.
Companies need good water, power, transportation routes among other things to manufacture and deliver their goods across the country and abroad. Brox calculated that a 10 percent increase in annual infrastructure spending, over a sustained period, would cut manufacturers’ costs by five per cent. The reduction would mean increased productivity and therefore make them more competitive, he concluded. “Public infrastructure increases private sector productivity and we need more public capital to be competitive and we need to maintain, therefore, what we have,” said Brox.
