Canada’s finance minister is busy preparing his first budget in the face of low oil and commodity prices and a free-falling loonie.
The prime minister is considering an injection of $1 billion in infrastructure spending in Alberta and Saskatchewan alone, and hasn’t ruled out spending even more than the $5 billion for infrastructure his election platform already promised to dole out in the first year of a Liberal mandate. And like his predecessor during the Great Recession of 2008-09, Trudeau’s infrastructure minister is looking to hand out cash to “shovel-ready” projects first.
But, going straight to this queue ignores an opportunity to look for projects that not only get the economy moving in the short term, but also provide long-term benefits.
By way of example, the Asia Pacific Gateway and Corridor Initiative (APGCI) was a collaborative planning endeavour that resulted in hundreds of millions of dollars in private sector investment beyond the federal and provincial funding for trade-enabling, shared infrastructure. The result was a combined investment of $7.5 billion since 2008 in port, road, rail and border infrastructure to improve the supply chain linking western Canada to Asia.
These investments built on a key geographic advantage of our West Coast ports: they are closer to Asia than U.S. ports are. Prince Rupert is 68 hours closer to Shanghai than Los Angeles is, while Port Metro Vancouver is 32 hours closer.
The payoff is even greater than the local benefits of reduced traffic congestion and public amenities. Our western ports and railways have become serious competitors with U.S. ports like Seattle and Tacoma. In 2014, the Wall Street Journal declared that the fastest route to ship goods from Asia to the U.S is through Canadian ports. Even Disney now ships the cargo it stocks in U.S. Midwest stores through Prince Rupert. Issues at U.S. ports like congestion, labour tensions, and a federal harbor maintenance tax have also prompted U.S. shippers to switch to Canadian ports – and once they make the move, they tend to stick with us.
With volume at B.C.’s ports growing at a rate of nearly four per cent higher than ports on the U.S. west coast, the Wall Street Journal observed, “[t]he increased business suggests Canada’s efforts to exploit some natural geographic advantages by spending billions of dollars on its West Coast trade infrastructure are paying off.”
How can the government find infrastructure projects like APGCI that provide both short- and long-term benefits? Establishing a process that prioritizes infrastructure based on things like national interest, need and return-on-investment would be a good start.
Although there are only a couple months until the federal budget is expected, there are more than 1,000 sharp public servants between the departments of Finance and Infrastructure Canada alone. Let’s hope they will be tasked with doing more than printing off their list of shovel ready projects.
– Naomi Christensen is a policy analyst