Trade `hardware' in need of upgrades
Roads, railways and ports drive our country, writes Daniel-Robert Gooch.
Canada is a trading nation. Our economy is highly dependent on international trade, with exports and imports of goods and services contributing to about third of GDP. As much of our trade is with the United States, the Canadian government is prudently seeking to diversify trade through the Indo-Pacific Strategy and our network of ocean-spanning trade agreements. However, if we focus only on the trade “software” while neglecting the “hardware,” our efforts will be in vain.
Globally competitive supply chain infrastructure must be a cornerstone to Canada's overall economic strategy. Without the networks of roads, railways and ports, Canada's economy would screech to a halt. Noting that the OECD is already not optimistic about Canada's long-term prospects, there is no excuse for inaction. In fact, the Canadian Chamber of Commerce has identified trade-enabling infrastructure as the area that will provide the greatest long-term economic benefits.
But this critical system is under pressure. Aging infrastructure and expanding obligations disproportionately affect financially constrained port authorities. To make matters more difficult, a key federal program, the National Trade Corridors Fund (NTCF) is mostly depleted after a successful eight-year run.
Since its inception,
$4.6 billion has been allotted to the NTCF to be invested in trade-enabling infrastructure. About $1 billion of that has gone to Canada's port authorities and their supply chain partners, enabling expansion to support trade growth and the smooth flow of goods, providing investment in digital solutions that create more efficient use of physical infrastructure, maintaining existing infrastructure and adapting and responding to the challenges associated with climate change.
We all know what happens when ports have backlogs. The federal government's National Supply Chain Task Force estimates that Canada must continue to invest in seaports over the next 50 years to facilitate Canada's growth. This is an investment in our future. As the Canadian Chamber of Commerce points out, it is an enabler of long-term economic growth.
Funding the NTCF in Federal Budget 2024 should not be viewed as a sunk cost but rather an investment that will yield dividends for Canada's overall prosperity. Recapitalizing the NTCF will demonstrate that the government understands that this infrastructure is key to Canada's global competitiveness and economic health.
Given the competing priorities and budgetary constraints, there are additional measures that can help maximize the trade-enhancing effects of every dollar spent. For example, providing greater financial flexibility for ports to fund major projects through private capital would enable federal funding to be leveraged by the private sector. Budget 2023 also recognized that the federal government can help the smooth flow of goods by making investments move more quickly, most notably by speeding up the federal permitting process for major infrastructure projects.
The bottom line is that our supply chain strategy — indeed our entire economic strategy — must provide solutions to some difficult challenges if we are to remain globally competitive, contribute to the fight against climate change, and address our infrastructure vulnerabilities. Canada's port authorities and our supply chain partners are ready to get to work to build the infrastructure that's needed to spur long-term economic benefits for Canada.