Will Charles Sousa's cheeks still be stinging when he tables the provincial budget on Thursday? The Ontario Finance Minister has a $130-billion infrastructure program on the books but is short on ways to pay for all of those new GO trains, LRTs and subways his government has promised. He was looking to Ottawa for help. But all he got in Tuesday's federal budget was, in his words, a "slap in the face."
"Frankly, when it comes to transit, they've kind of missed the train and they're not even in the station," Mr. Sousa scoffed after federal Finance Minister Joe Oliver announced a gradual boost to funding for public transit, though the full $1-billion-a-year increase doesn't kick in until 2019.
In some circles, infrastructure spending is seen as a miracle cure to lift the economy, if not political fortunes. With rock bottom interest rates, proponents say now is the perfect time to ramp up spending on trains and subways in order to stimulate growth, relieve congestion and boost long-term productivity.
As with most economic strategies, however, the devil is in the execution. If government spending on superlatively smooth highways, sleek subways and far-stretching fast trains was the ticket to success, Japan, Spain and Greece would lead the global economy. Instead, infrastructure spending has been a major source of their debt-induced woes.
After joining the euro zone, Spain and Greece took advantage of being able to borrow money at lower German-level rates to build transportation projects that are modern wonders of the world. Athens' new airport and subway system are second to none. But both are usually empty, at risk of becoming modern versions of the ancient ruins tourists flock to the city to see.
In the decade to 2009, Spain built 5,000 kilometres of new highways in the biggest construction undertaking in Europe. It continues to add to its high-speed rail network, the world's second-largest after Japan's. But passengers are sparse to non-existent. El Pais reported in 2013 that there are "no independent studies of Spain's high-speed plans that suggest they will ever be anything other than a money pit." The country is also littered with abandoned airport terminals -- including a brand new one south of Madrid that closed after only three years in 2012.
On Tuesday, one of Japan Railway's magnetic levitation trains reached a world record speed of 603 kilometres an hour on a test run. But that technological feat also illustrates the diminishing returns of infrastructure spending. Japan doesn't need faster trains to move its declining population. It needs an entirely new growth model.
You can always find studies to buttress your claims that new infrastructure pays for itself by stimulating the economy and generating jobs during the construction phase while boosting productivity thereafter. But this is hardly true across the board. Does anyone believe the Sheppard subway line has made Toronto's economy more productive? It's a sinkhole whose operating costs are a drain on the rest of the transit system.
And what about Pearson Airport's Terminal 1? It's a cavernous monster that adds to passenger stress levels while subtracting from their productivity. Speaking of poorly conceived projects, the soon-to-open rail link between Pearson and downtown Toronto appears to rely on overly optimistic ridership projections.
In our infrastructure envy, we decry our subways, roads and commuter trains as second-rate. But proper scale and functionality are far more important than fancy architecture or expensive materials. When it comes to what matters most, our so-called infrastructure gap is nowhere near as large as the received wisdom suggests. The World Economic Forum rates Canada's infrastructure 15th out the 144 countries included in its Global Competitiveness Index. Spain (9th) ranks ahead of us on infrastructure but miles behind us in overall competitiveness.
Remove Quebec from the equation – the province suffered from post-1976 Olympics neglect of its infrastructure and has much catching up to do – and it's clear we need to exercise some sober second thought about just how much infrastructure spending makes sense. There's still far too much politics involved to inspire confidence that money is being spent on the right projects for the right reasons.
More trains and subways to nowhere will only hurt Canada's economy in the long run.