By Carlo Dade, John Law and Naomi Christensen
In the Globe and Mail
February 14, 2017
One takeaway from the recent Parliamentary Budget Office report on the federal government’s performance on its massive $187-billion infrastructure plan is that Ottawa isn’t spending money fast enough.
This criticism may be misplaced.
With infrastructure spending – and particularly investments in trade infrastructure – it is more important for the government to fund projects that are “shovel worthy,” rather than throwing money at projects that are “shovel ready” to meet artificial deadlines. This resonates on projects that are of greatest long-term value to the Canadian economy, those dealing with trade infrastructure. These assets deliver Canadian products to our trading partners around the world, and earn more than 60 per cent of Canada’s collective income.
A cautious approach may be a sign that the government has learned from difficulties of the previous stimulus program.
Another crucial step Ottawa should take to make the right choice on trade-infrastructure investments is to engage with the private sector. The Canada West Foundation recently held a series of trade-infrastructure investment roundtables with industry and government. It is clear how every investment the government makes leverages multiple investment dollars from the private sector. More importantly, the private sector has powerful intelligence, tools and staff to make choices on what and where to build, assets that the public sector often lacks. Given what is at stake as Ottawa bolsters the spending plan, private-sector companies have indicated they are willing to provide not only more information but also specialized employees to assist in planning and prioritizing trade infrastructure. This takes time, and for this and other sharing to occur, a couple of conditions must be met.
To its credit, Ottawa appears to understand that getting the greatest return from adding trade-enabling infrastructure requires a view of investments as pieces of national or regional supply-and-production chains. A one-network supply-chain view, which includes both public and private assets and input, is recognized as best practice globally. Canada lags behind competitors – such as Australia – in taking this approach. Decisions are too often based on “me-too-ism” – each province wanting the same thing its neighbour receives.
A project does not have to physically touch every province to be nationally significant. For example, investments in the Lower Mainland in British Columbia are crucial for the growth of exports in the other Western provinces – roughly 17 per cent of Saskatchewan’s gross domestic product flows through the Port of Vancouver. The unimpeded flow of truck traffic over the Nipigon bridge on the Trans-Canada Highway in Ontario is essential to the movement of goods between Western and Eastern Canada, avoiding detours through the United States.
Canada has to do a better job at involving the private sector as a permanent feature of its decision making, and ensure it actually uses the information that is shared. The relationship between the public and private sector has suffered from the perception that government decisions are based more on anecdotes than data. The problem is not a lack of data, but rather a lack of capacity within the public sector to translate it into information that can be used to make decisions. For a federal government focused on demonstrating evidence-based decision making, leveraging the private sector’s knowledge and resources is a necessary and natural fit.
For this to work, there must also be a commitment by the government to set a long-term process for decision making. Retail, commercial and bulk shippers use investment and planning timeframes of 10 to 25 years for major infrastructure projects. Public-sector use of metrics and processes that take a longer-term approach would further align private- and public-infrastructure planning.
Before we open the taps of trade-infrastructure spending, we must make sure we have the capacity to make the best choices. We can fund projects that have a return on investment, make all of Canada more prosperous and improve our ability to compete globally. Or we can shovel money into whatever projects happen to be ready, and hope for the best.
The private sector is willing to participate and help make smarter choices; it is up to the government to step up with a serious offer of partnership.
Carlo Dade is the director of the Centre for Trade & Investment Policy; John Law is a senior fellow; and Naomi Christensen is a policy analyst at at the Canada West Foundation.