Canada needs to be more strategic when planning infrastructure spending

Matti Siemiatycki is professor of geography and planning and director of the Infrastructure Institute at the University of Toronto. Drew Fagan is a professor at the Munk School of Global Affairs and Public Policy at the University of Toronto and a former deputy minister of infrastructure with the Province of Ontario.

Canadian governments have announced tens of billions of dollars in infrastructure investments as part of building back better strategies. The collective goals are to maintain services during the COVID-19 pandemic, then to drive recovery as the pandemic eases, and to spur inclusive growth and address the ravages of climate change.

But success depends on the public funds being spent effectively, including on the most beneficial projects.

A new report from, of all places, the European Court of Auditors raises important questions about how prepared Canada actually is to deliver this imminent wave of investments, which are key to national competitiveness and quality of life.

The report provides a rare, detailed comparison of approaches in the European Union, the United States, Australia, Switzerland and Canada, focusing specifically on the planning and delivery of infrastructure projects in major passenger transportation and trade corridors. It shows that the Canadian megaproject system stands out as the least rigorous and the most ad hoc.

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Canada is the only country where major transportation projects are not planned as part of a national long-term strategy. There is little effective co-ordination among the different levels of government, which can lead to second-rate projects being chosen and work being undertaken at cross purposes. Furthermore, Canada has no discernable system for monitoring performance to evaluate projects after implementation and learn for next time.

It would be easy to claim these shortcomings are the result of our decentralized federal system, which allocates much responsibility for infrastructure to provinces and territories, which then leave much up to municipalities. There are, indeed, a lot of players involved in Canada, and this can lead to system friction.

But the United States, Australia and Switzerland are also federal countries. They all have developed more rigorous approaches, according to the European study, to planning, selecting and evaluating infrastructure investments.

In the United States, regional transportation plans must be developed to meet specific guidelines set by Washington. Funding only flows once this is done. When the national government approves funding for state or local projects, furthermore, key measures of success are identified and must be reported on over time. This approach creates clearer accountability for the outcomes of public spending, something often lacking in Canada.

In Australia, the federal government set up an independent agency that produces an evergreen list of priority infrastructure projects, based on assessments of proposals submitted by governments and the private sector. The agency also evaluates approved projects to identify delivery risks. The agency’s role is advisory; it aims to provide confidence to decision makers and the public that tax dollars are well spent.

In Norway and France, which also are scrutinized in the report, reviews are required as a matter of course to compare how construction and operations went vis-à-vis what was promised when projects were approved. These reviews can be embarrassing politically when they show a systemic pattern of underestimated costs and overestimated benefits, but they are an essential learning tool that makes future projects better.

The relatively haphazard way that infrastructure is planned in Canada is a big risk to future prosperity. We risk spending money on projects that shouldn’t be at the top of the list, based on the economic, social and environmental benefits they will bring.

Last summer, the Liberal government announced a national infrastructure assessment that is to examine the country’s infrastructure needs over the next three decades and set down ideas for how these can best be met. This exercise promises to be an important step toward bringing Canada more in line with its peers.

It’s overdue. With the infrastructure funding taps open, Canada needs to be more strategic about where the money goes.

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