Western Canada’s booming growth is creating a strain on public infrastructure that requires national attention, according to a new report that calls for a long-term spending pledge from Ottawa in the upcoming 2013 budget.
The report by the Canada West Foundation is being released jointly in Ottawa with the Canadian Chamber of Commerce and the Federation of Canadian Municipalities and is an effort to convince the Conservative government that infrastructure spending is good economics.
The Foundation argues that spending on public infrastructure is the “missing link” that Ottawa needs to push in order to boost productivity in Canada.
Canada’s sluggish record on productivity has dogged policy makers for years and there is some frustration that tax cuts, trade deals and other policy measures aimed at boosting productivity have had limited success.
“One thing that has been noticeably absent in all of that is the importance of public infrastructure in the productivity of an economy,” said Casey Vander Ploeg, the Foundation’s senior policy analyst and the author of the report, which argues there is a clear link between infrastructure spending and productivity.
The report is being released on the same day as Finance Minister Jim Flaherty will deliver a luncheon speech to the Economic Club of Canada on the topic of the 2013 budget.
Mr. Flaherty’s 2013 budget is expected to unveil a new long-term infrastructure spending plan. It is not clear yet how long the plan would be, nor how much money it would entail. The Globe reported this week that some sources expect the deal could run at least a decade, while others stressed that no final decisions have been made.
Also, with little money available for new spending, the government is expected to give the budget a strong focus on issues like innovation and productivity that could boost the economy over the long term.
The Federation of Canadian Municipalities has called for annual spending of $5.75-billion per year, up from an estimated $4-billion per year.
Aging infrastructure in Canada’s older cities, including Montreal and Toronto, have become pressing local concerns, but Mr. Vander Ploeg said newer growth in the West – particularly in Alberta and Saskatchewan – is also creating pressures.
“In the west, we’ve seen very rapid population growth in the last decade and significant amounts of private investment, and infrastructure has failed to keep pace,” he said.