House Call with Carol Hughes

Infrastructure spending has to address the needs of Canadians first

The government started 2019 with a charm offensive from the Infrastructure Minister in an attempt to change the narrative that federal outcomes have not matched election promises on this important front. Thinking back to 2015, there was wide-spread support for infrastructure spending to address clearly identified needs across Canada. The government campaigned on a proposal to go into debt for a number of years to meet this demand. Much of that money was used to create the Canada Infrastructure Bank which wasn’t even hinted at during the campaign. What has followed is years of delay as the bank becomes operational and a focus on projects that are attractive to investors-rather than important to Canadians. That might explain why the minister is trying to change the channel.

When the government created the bank and seeded it with $35 billion of public money, they argued that it would attract investors to infrastructure projects. The problem the bank and its mandate create is less-attractive projects that are important to Canadians, but will hold little value for investors. That isn’t the only problem with privatized public infrastructure. Apart from neglected projects, the Canada Infrastructure Bank uses public money to help wealthy investors while everyday Canadians, whose taxes were also invested, get to pay user fees or tolls. In many ways, people who pay these fees will have paid twice.

But paying twice isn’t something that is going to happen very soon. That’s because the bank has only funded one project to date. That is less than encouraging given the government has placed the bulk of its resources in this one basket. Observers have seen this coming for a while, including the Parliamentary Budget Officer who reported in the autumn of 2017 that infrastructure funding had been slow to get out the door. In the lead up to that report the government had tabled two budgets and changed their funding plans for infrastructure four times. The PBO also explained that spending was slowly being delayed over a period of 12 years which bears little resemblance to the gobs of spending promised during the campaign.

Despite the delays, the biggest impediment to much-needed infrastructure in rural and Northern regions will remain the bankable criteria of projects. That’s code for ensuring they will be profitable so they can attract investors. This has big implications for rural and remote broadband. The provinces responded to the federal commitment of $500 million for expanding these services by telling the government that doesn’t even scratch the surface and they will be looking at the Infrastructure Bank for additional funding. But it’s hard to see how investors will suddenly become interested on this front. If there was money to be made expanding services into northern and remote communities, someone would already be engaged in the project. This is one area that a robust federal effort is necessary.

Without that investment, small and medium-size businesses in these parts of Canada are at a disadvantage. The same could be said for families, self-employed workers, hospitals, and farmers all of whom need modern, efficient and affordable infrastructure to access the internet and cellular service. When the infrastructure bank was created, the minister in charge said the role of the government was limited to making sure that projects were in the public interest and nothing else. That has changed and now Canadians aren’t getting the infrastructure investment they were hoping for.