Shovel ready approach to why Canada’s infrastructure rankings are falling

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A “shovel-worthy” approach is the solution

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When Canada’s prospects for COVID recovery and economic growth collapse in the forest of world business opinion, does it make a sound? Apparently not in Canada.

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Canada depends on trade for over two-thirds of its gross domestic product (GDP), and just over a decade ago Canadian users placed the country in the top 10 of the global infrastructure rankings. As trade has grown in importance, confidence in the country’s transport infrastructure systems has fallen, ranking 32nd globally in 2019 – behind all of our main competitors.

The United States has also fallen in the rankings, dropping two points from 11th to 13th, in the face of incessant public alarm from President Joe Biden, Secretary of Transportation Pete Buttigieg and other US officials who say any drop is unacceptable is hard to miss.

In Canada, however, our decade-long decline hasn’t raised the same level of concern. Certainly there have been steps to address the Transportation Infrastructure Act, such as the creation of the Pan-Canadian Competitive Trade Corridor Initiative, the National Supply Chain Task Force, and the National Infrastructure Assessment.

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But governments are easily overpowered and distracted. Until elected leaders at the federal and provincial levels follow the U.S. and firmly commit to solving the transportation infrastructure problem, things will only get worse. Governments, rightly or not, have shown a lack of commitment, especially compared to the response south of the border. Bold action is required, and now.

What Canada lacks, and what is critical to improving its rankings, is a long-term, evergreen national plan.

Trade contributes three times more to Canada’s GDP than the US. That money pays for COVID recovery, social services, a green future, and all the things Canadians and the government are prioritizing.

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But the reality is that there are three types of infrastructure in Canada: the infrastructure people want, like parks and hockey rinks, the infrastructure they need, like hospitals and green transit, and the infrastructure that people want, need and want Government Priorities Paid . For Canada, that is the trading infrastructure.

Canada’s decline in global rankings points to a long-simmering problem. What is surprising is that the decline has been accompanied by gradual government investment and massive private sector investment. Yet such spending efforts have not been enough for those assessing the country’s infrastructure.

The reason for this is identified in a recent analysis by European auditors comparing how the EU, UK, Australia and Canada handle large transport infrastructure projects. The study found that Canada is the only jurisdiction that lacks coherent, institutionalized long-term coordination and planning.

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The acronym for this lack of planning approach is “shovel ready,” a term Canadians are familiar with, having been used in many government spending announcements since 2008.

Using scoops willing to direct spending, even for emergency stimuli, is evidence of a lack of long-term planning. By allocating funding on what is ready, rather than following a long-term, evidence-based plan, we are signaling to domestic users and international customers that the country has not optimized infrastructure improvements to facilitate the delivery of goods and services . By definition, shovel-ready banishes second-rate considerations about whether investments are top priority, deliver maximum return on investment, have long-term value, and are able to increase supply chain competitiveness. All of these criteria define a “shovel-worthy” approach.

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Shovel-ready is the wrong way to make big investments and an even worse way to tackle serious long-term challenges, including mitigating the impact of climate change and damage to traditionally marginalized communities. These challenges are best handled as components of a shovel-worthy approach.

The first step to remedying this is to follow what our competitors have been doing: create ongoing, coordinated long-term national plans. As others have noted, repairing trade infrastructure also requires the involvement of the private sector as a partner, not an “adviser”. The private sector is not only made up of owners, operators and users of transport infrastructure, but also has unique, often proprietary knowledge that is crucial for informed decision-making.

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The federal government’s national infrastructure assessment is a quiet but potentially promising start to catching up with competitors and reversing the country’s decades-long decline as it lays the foundation for ongoing national commercial infrastructure plans. That has to work. For this to happen, improving the country’s commercial infrastructure and committing to permanent national plans must be an explicit priority for both the federal and provincial government and opposition.

Our competitors have proved that solving the problem of a country’s trade infrastructure is quite feasible. A new report from the Canada West Foundation sets out how Canada can follow the paths taken by its competitors to rise, not fall, in the global rankings.

Carlo Dade is Director of the Canada West Foundation’s Trade and Investment Center. The Canada West Foundation’s eight-year study of Canada’s trade infrastructure challenges and recommendations for addressing them, From Shovel Ready to Shovel Worthy: The Path to a National Trade Infrastructure Plan for the Next Generation of Economic Growth, was released May 10, 2022.

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