Federal Infrastructure Spending Benefits Only A Fraction

March 8, 2017

In a special to the Financial Post, Charles Lamman and Hugh MacIntyre argue that Canadian Federal Infrastructure spending estimated at around $100 billion is only about 10% effective at actually stimulating the economy:

In principle, sound infrastructure projects can improve the economy’s productive capacity. A needed road, bridge, railway or port that helps move people, goods and resources more efficiently — and at lower cost — can help build a more prosperous economy.

​In practice, however, not all of the federal government’s infrastructure projects fit this bill. Of Ottawa’s nearly $100 billion in planned infrastructure spending, a mere 10.6 per cent is earmarked for transportation and trade projects. Put differently, only 11 cents of every dollar of new federal infrastructure spending will be spent on improving the country’s core public infrastructure.

The authors' main claims are that because the majority of spending is being applied toward projects with indeterminate long-term economic benefit to Canadians, most of the money intended to stimulate the economy is in fact being invested into one-and-done projects that create only limited bonuses. Additionally, because of the extended time between fund allotment, project announcement, and finally, construction, many of the immediate benefits have been diluted.

The main response to this though is, what's stopping the government from turning the remaining 89.4% into projects that provide long-term tangible economic benefits by leveraging Socio Economic Advancement? Not every project can be a gigantic rebuilding of a decaying essential transport route, but even small town recreation centres and arenas can benefit from a closer look at how infrastructure spending is applied, not only enhancing local and greater economies, but also speeding up the development process by allowing for creative and truly competitive bids.