Invest $50 billion in infrastructure over five years or fall further behind: Report


Another study, this one from the Broadbent Institute, says that Canada’s governments need to invest at least $50 billion over the next five years to prevent its public infrastructure from decaying even further, and to stimulate the economy. The benefits of such a large expenditure would be both immediate and longer term. The most immediate boost would be to employment in the construction industry. An estimated 88,000 new jobs would be created, about half of those in construction.

The report is specific about the current state of infrastructure in Canada and about the benefits to the economy the proposed spend would have. It says that $171.7 billion is actually needed to replace existing public assets that are no longer considered to be up to standards. The cost of doing nothing at all would be equal to the benefits derived from making the new investment.

For each $1 spent, the boost to GDP would be $1.43. Every $1 million spent would create 9.4 jobs. The benefits vary from province to province, but for Canada overall, the average annual increase in GDP would be 0.7 per cent over the five years.

The costs of neglecting our public infrastructure are not zero: Allowing our public infrastructure to continue to decay imposes costs at least equal but opposite to the benefits estimated in this study. The competitiveness of private businesses in Canada is tied to the quality of our public assets, so a significant and sustained public infrastructure spending initiative is required if households and businesses are to continue to enjoy the high standard of living provided by our public infrastructure.

Looked at over the long term, the return on investment is estimated to be as high as $3.83 per dollar spent. The private sector would derive significant benefits in improved productivity, lower production costs, higher wages, and increased investment. Labour productivity, it says, would rise by as much as 0.5 per cent. The increase in “public capital” can, the report argues, achieve what policy makers have been unable to achieve until now: an increase in private-sector investment spending.

The report was prepared by the Centre for Spatial Economics by economist Robin Somerville, who said that the benefits of the investment in infrastructure would also include a more productive economy and a higher standard of living, “and all are achieved without significant long-term fiscal consequences to federal or provincial governments.”

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