By Charles Lammam
and Hugh MacIntyre
The Fraser Institute
You’d think the prime minister would be intimately familiar with one of his government’s signature policy initiatives. But a recent statement by Justin Trudeau suggests he’s detached from the details on Ottawa’s multibillion-dollar infrastructure plan.
He told the House of Commons: “We’re going to continue to invest historic amounts in infrastructure that are going to help families get to and from work in a reasonable amount of time; back in time for their kids’ soccer games. We’re going to make the kind of investments that make a difference for small businesses being able to get their goods to market.”
Charles Lammam
Taken at face value, many Canadians would have no qualms with such a statement. It suggests the government is undertaking a massive expansion and improvement of the country’s core infrastructure – roads, bridges, railways and ports. Infrastructure of this kind can improve the economy’s productive capacity by helping move people, goods and resources more efficiently, within Canada and to international markets.
But the reality of the infrastructure plan is quite different from what the prime minister suggests. Very little of the new spending over the next decade is earmarked for projects that will actually improve Canada’s core infrastructure. In fact, a mere 10.6 per cent of the nearly $100 billion in new infrastructure spending is earmarked for trade and transportation.
Most of the spending is going to projects many Canadians would never call infrastructure. For instance, 56.8 per cent of the nearly $100 billion is for “green” and “social” infrastructure. These loosely-defined categories amount to spending on projects such as parks, cultural institutions and recreational centres.
Although some communities may appreciate these initiatives, they won’t help move people or products. And there’s certainly no robust evidence such spending will increase the economy’s long-term potential.
Hugh MacIntyre
There’s a fundamental problem with Ottawa’s plan: it includes numerous items that most experts and many Canadians wouldn’t consider infrastructure. Indeed, it has broadened the term to include many services and activities, rendering the definition of infrastructure unclear.
For instance, the government is including $7 billion to be spent over 10 years for subsidizing daycare. Putting aside the pros and cons of daycare subsidies, it’s a stretch to call such spending infrastructure.
Or consider the $2.1 billion in spending over 10 years to reduce homelessness by tackling addiction and mental illness. This is a laudable but by most reasonable standards, this is spending on social services – not infrastructure.
The government’s spending plan includes $77 million to develop regulations and establish pilot programs related to the adoption of driverless cars and unmanned air vehicles. Again, regulating emerging technologies may be worthwhile but it’s hard to argue it’s infrastructure.
Even data collection and research is now considered infrastructure spending by the government, including $241 million over 11 years for a government agency to improve data collection and analytics related to housing. Another $50 million of supposed infrastructure spending is earmarked for a new government centre to collect and publicly provide data on transportation in Canada.
Simply calling a project infrastructure doesn’t automatically make it infrastructure, nor does it mean it’s an economically worthwhile endeavour.
Trudeau has routinely referred to the government’s infrastructure plan as “historic,” and indeed the amount of proposed spending is large. But given that Canadians are footing the bill for this largely debt-financed spending, he should be clear about what the plan actually contains.
Charles Lammam is director of fiscal studies and Hugh MacIntyre is a policy analyst at the Fraser Institute. They are co-authors of “Myths of Infrastructure Spending in Canada.”
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