Trudeau government stretches definition of ‘infrastructure’ too far
The 2017 federal budget revealed new details on the Trudeau government’s nearly $100 billion infrastructure spending plan. Canadians should know that, contrary to the government’s rhetoric, much of this spending is unlikely to drive long-term economic growth since a considerable amount is earmarked for things that stretch the definition of “infrastructure” too far.
When most Canadians hear the word infrastructure, they generally think of roads, bridges, railways or ports. And indeed, sound infrastructure projects of this kind can improve the economy’s productive capacity by helping to move people and goods within Canada and to international markets more efficiently and at a lower cost.
In practice, however, little of Ottawa’s infrastructure spending will go to projects that fit this description. Our calculations, based on new information in the budget, suggest that only 9.3 per cent—or less than 10 cents of every dollar of the nearly $100 billion plan—will pay for improving the country’s core transportation and trade infrastructure.
So where’s the rest of the money going?
So-called “green” and “social” infrastructure, including pet projects such as parks, cultural institutions and recreation centres. Although these initiatives may be appreciated by the communities in which they are built, there’s no evidence such spending will increase the economy’s long-term potential.
In fact, the only reason recreation centres, for example, qualify as “infrastructure” is because they are physical assets, made of brick and mortar. That’s the minimal requirement for a reasonable definition of infrastructure.
For many other projects stuffed into the infrastructure spending envelope, however, the government seems to have discarded that reasonable definition and broadened the term to include a myriad of services and activities, rendering the definition of “infrastructure” unclear.
For instance, the government is calling the $7 billion set aside over 10 years for subsidizing day care “infrastructure.” While we can debate whether daycare subsidies are an effective policy, 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 root problems such as addiction and mental illness. Again, a laudable goal, but by most reasonable standards, this is spending on social services—not infrastructure.
The government’s infrastructure spending plan also includes $77 million to develop regulations and establish pilot programs related to the adoption of driverless cars and unmanned air vehicles. While regulating emerging technologies may or may not be a worthwhile pursuit, let’s be clear: this is not infrastructure spending.
Even data collection and research is now considered infrastructure spending by this federal 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 publically provide data on transportation in Canada.
And the list of spending items cloaked as infrastructure goes on.
While the Trudeau government campaigned heavily on the notion that deficit-financed infrastructure spending will help grow the economy over time, the plan presented to date is unlikely to deliver. Merely calling a spending item “infrastructure” does not make it so.
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