‘The Longer We Put It Off,’ the Worse Things Will Get

(New Brunswick Business Journal – Matt McCann)

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% 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% 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% 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% 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% of all business productivity gains. “Infrastructure has to be a clear priority for the federal government,” he said.