Link Investment in Core Infrastructure to Productivity Performance and Enhancement

Oakville Chamber of Commerce, co-sponsored by the Halton Hills Chamber of Commerce Issue: Provincial and federal infrastructure investments must support the long term growth of our economy and quality of life.

Background:   Ontario’s infrastructure deficit is delaying recovery in all parts of the province.  Meanwhile, congestion in the Greater Toronto Hamilton Area (GTHA) costs the region an estimated $6 billion in lost productivity each year. With Ontario’s population expected to grow approximately 30% by 2041 our infrastructure needs will justifiably grow with it. Roads, bridges and highways are all critical to our economic competitiveness. Canada’s current infrastructure deficit is estimated to be approximately $200 billion, and the Federation of Canadian Municipalities (FCM) claims that left unattended this deficit could potentially rise to as much as $2 trillion by 2065.

The Ontario government has committed to invest approximately $150 billion over 12 years in direct infrastructure spending however it is not yet clear where these funds will be deployed and which principles will guide infrastructure spending. According to the Canadian Infrastructure Report Card (CIRC) almost 60% of Canada’s core public infrastructure is owned and maintained by municipal governments and the total value of core municipal infrastructure assets is estimated at $1.1 trillion dollars. 

While most of our infrastructure challenges are the responsibility of our local government, both the federal and provincial government have committed renewed investment to tackle our infrastructure needs.  Successful distribution of this funding will be achieved by the co-ordination, communication and collaboration of all levels of government.

Infrastructure funds need to be allocated effectively and efficiently to the right types of projects. It is vital that investments are made strategically into projects that support the long-term growth of our economy. According to the Federation of Canadian Municipalities (FCM), every $1 billion invested in infrastructure generates between $1.20 billion and $1.64 billion in real GDP growth; a proven multiplier effect guaranteed to boost the economy. Similarly, every $1 billion invested in infrastructure creates approximately 16,000 jobs which are supported for one year across multiple sectors. Under current federal infrastructure programs, Public Transit Infrastructure Fund, Clean Water and Wastewater Fund, funding recipients are required to demonstrate that projects are “incremental” – i.e. new or accelerated projects – rather than projects funded and/or prioritized through asset management plans.

Moving into Phase Two of the federal government’s distribution of federal funds, investments in productivity-enhancing projects need to be the criteria.  The government needs to adopt an outcomes-based approach to infrastructure funding instead of a project-based approach. The government also needs to find a balance between its strategic objectives and ensuring that eligibility criteria for Phase Two infrastructure programs are flexible to ensure that municipalities can meet their diverse needs. The need for a long term sustainable infrastructure plan will still be essential. 

The new infrastructure demands coupled with the maintenance and future rehabilitation will further strain our resources.  This will only be compounded by further population growth. The federal government also needs to expand the use of public, private partnerships (P3s) while making it easier for smaller projects, like those at the municipal level, to attract private sector investment. Canada is a global leader in the use of public, private partnerships. Both the provincial and federal governments should look for innovative and collaborative approaches to help ensure that private sector money and know-how can be directed to projects that benefit communities of all sizes.

Recommendations: The Ontario Chamber of Commerce urges the Government of Ontario to:
  1. Develop an infrastructure strategy that demonstrates how infrastructure dollars will be allocated linking investment in core infrastructure to productivity performance and enhancement, economic growth and job creation;
  1. Work with the federal government on developing a principled approach to the design of the federal government’s funding commitments;
  1. Continue to use Alternate Finance Projects (AFP’s) and Private, Public Partnership (P3) models to develop large infrastructure projects, where appropriate and develop strategies to encourage private sector investment in smaller, municipal level projects;
  1. Recognize the many years of critical capital planning and prioritization work already undertaken by municipal asset management plans and work with the federal government on a flexible approach by not imposing “incrementality” requirements for project eligibility.