A good idea after its time
Justin Trudeau issued his cabinet additional marching orders in the form of new mandate letters late last week.
Most of Infrastructure Minister Catherine McKenna's letter was unremarkable — lots of talk about “building back better” and supporting the finance minister to restore employment to levels experienced prior to the pandemic.
But one decree caught my eye — the insistence that McKenna conduct the “first ever national infrastructure assessment to identify needs and priorities, and undertake long-term planning toward a zero emissions future.”
Oscar Wilde made being late fashionable when he said “punctuality is the thief of time.” But wouldn't it have been a good idea to conduct such an infrastructure assessment BEFORE spending billions of dollars on things the assessment might show we don't need?
The government's list suggests that $79 billion worth of projects, on behalf of 15 departments and agencies, already have been approved.
A report by the Parliamentary Budget Officer last July estimated $51 billion was spent under the 12-year, $188-billion Investing in Canada plan between 201617 and 2019-20.
Yet, it is only now that we are getting around to asking the crucial question: what do we really need to be greener and more competitive in 2050?
This is important stuff. Infrastructure is the greatest driver of economic growth, after immigration. Academic studies suggest that the multiplier effect of a well-designed green infrastructure project is $3 for every $1 spent.
But we have not been designing our infrastructure projects well. Successive PBO reports have made clear that there are data gaps when it comes to outcomes from federal investments; spending has lagged planning; job creation and economic growth have been lower than expected; and, increases in federal money have been partly offset by decreases in provincial spending. A study of the first four years of the Liberal government's infrastructure spending revealed Investing in Canada raised GDP by just 0.74 per cent and created 65,900 jobs — results that are not in line with the bold claims made when the investments were announced.
Even when the government talks a good game, such as on flood mitigation, its policies have fallen short. The Liberals accepted a finding from the National Advisory Council on Flooding in 2019 to include flood mitigation as part of its residential retrofit plans. Yet, when the new climate plan was announced last month, flood resiliency was abandoned in favour of a focus on energy efficiency.
The fundamental problem is that infrastructure works on a 25-year timeline, while politics operates on a four to five year cycle.
McKenna, to her credit, has tried to synchronize those divergent itineraries, having visited the U.K., which carried out its own infrastructure assessment in 2018.
Sahir Khan, executive vice-president at the Institute of Fiscal Studies and Democracy at the University of Ottawa, said the idea is to avoid simply rebuilding post-Second World War infrastructure and instead to focus on longer-term needs that do not simply address the “engineering gap.”
In Britain, the National Infrastructure Commission set out to address long-term infrastructure policy needs by recommending the government partially subsidize high-speed internet in rural communities, build charging infrastructure for electric vehicles and protect homes and businesses from flooding caused by climate change, among other things.
But in Canada, the likelihood is that short-term political imperatives are going to frustrate long-term planning.
Finance Minister Chrystia Freeland's first budget will reveal how the government intends to “jump-start” the post-COVID economy using $70-100 billion in stimulus spending. A “down-payment” is expected by the end of this month, in the form of a permanent transit fund for cities. that will run to billions of dollars.
But the national assessment of how to spend our infrastructure dollars in optimal fashion will take two to three years to complete.
By the time we truly know what we need, the money to build it will have been spent.
Advocates of the national infrastructure assessment suggest that money for longterm projects should be allocated by the finance department but not disbursed until projects have been properly planned. That does not seem to be a realistic outcome.
Freeland's stimulus spending and McKenna's long-term infrastructure plan are, strictly speaking, different beasts — road resurfacing projects will not make the country more productive.
But McKenna maintains there is no incongruity. “Infrastructure dollars have to create jobs, create growth in the long-term and move us to a cleaner future,” she said in an interview.
She said her department has initiated 1,300 projects since March that have been “critically important” in keeping Canadians employed.
At the same time, she referred to the need to build transmission lines to transmit clean power to the four provinces that still use coal to generate electricity. “Those really big projects are the same kind of thing as the St. Lawrence Seaway. It's about how you build and connect your country to improve lives,” she said.
The re-set at the Canada Infrastructure Bank is an example of that dual-track approach. The financial institution created by the Trudeau government has been criticized for sitting on a $30 billion pool of cash, while allocating just $3.6 billion on four projects. The government has responded by earmarking $10 billion for shorter-term use, such as providing high-speed internet in areas where the big telecom companies have found it unprofitable to do so.
McKenna disputes the idea that her department has been flying blind and that money has been misspent.
She pointed to last month's completion of the wastewater treatment plant in Esquimalt, B.C., that ended the practice of releasing untreated sewage into the ocean near Victoria. “That's going to transform the quality of water, which is important for tourism, for the economy and for fishermen,” she said.
“I came in and said, `We need a longer time frame' (than the 12-year plan),” she said. “But that's just an evolution. I'm a practical person and if you want to think big, you have got to have a longer-term plan. Canada needs to be thinking about 2050.”
There are no arguments about that. It's just a shame the government lacked that far-sightedness in 2015.