The federal government's recently unveiled infrastructure spending commitment will provide an economic stimulus, help tackle our mounting deferred maintenance challenge and drive investment in transportation, climate-change mitigation and connective infrastructure.
According to this quarter's C-Suite survey, 56 per cent of business leaders support the government's intention to run deficits to fund stimulative and productivity-enhancing infrastructure projects. The effectiveness rests not with the simple distribution of funds, but in project selection and delivery to maximize the benefits of each dollar.
This requires robust planning and best-in-class project execution, which federal Infrastructure Minister Amarjeet Sohi has indicated is in line with his approach: "It's not enough for a project to be shovel-ready; a project needs to be shovel-worthy as well," Mr. Sohi said.
To assess project priority, Ottawa should develop a long-term national infrastructure plan. Canada can learn a great deal from Britain and Australia, both of which have implemented long-term national plans and are broadly considered to be leaders in infrastructure investing.
Both countries' plans are anchored by fundamental principles that also apply to Canada. They are based on strategic objectives and priorities over the long-term (25 to 50 years), which align with the longer life cycles of infrastructure assets, and help decouple decision-making from the political cycle. The plans provide a priority list of nationally significant projects based on an assessment of direct economic contributions.
These plans recognize that the historical approach of primarily funding infrastructure through the tax base is insufficient to meet the challenges ahead, and that more creative solutions are required. Both plans encourage the use of user-pay models and asset recycling. They also encourage innovative approaches to attracting more private institutional financing.
Effective project delivery is also a key part of the equation. Taxpayers and investors need to have confidence that projects can be delivered on time, on budget and at high quality.
Canada needs to optimize its existing infrastructure, using data and smart technologies to innovate and improve efficiency – in the monitoring of water and electricity networks, for example. Innovation here will create multiplier effects in our economy, spurring new competitive industries and mitigating climate, social and health risks.
Doing nothing is not an option. While the provinces and municipalities play significant roles, the federal government has the power to convene these parties along with the private sector, and lead the development of long-term planning and effective project execution.
There is unprecedented agreement among all levels of government, the private sector and institutional investors on the value of infrastructure investments. We also have historically low interest rates and favourable project financing terms. If we get this right, we set the stage for our competitive future.
Craig Walter is global head of infrastructure investment advisory at KPMG.