Unleashing Productivity Through Infrastructure

Author:

Advisory Council on Economic Growth

Citation:

Advisory Council on Economic Growth. Unleashing Productivity Through Infrastructure. Ottawa: Government of Canada. 2016.

Publisher:

Government of Canada

Date:

October 19, 2016

Summary

Finance Minister Bill Morneau’s Advisory Council on Economic Growth released a report outlining three recommendations to ensure Canada can deliver infrastructure meeting the country’s growing needs. Through developing a focused, federal strategy in line with the federal government’s economic growth agenda; creating a Canadian Infrastructure Development Bank (CIDB); and creating momentum for reinvestment stimulating institutional capital participation in exiting assets, the Advisory Council argues Canada would develop a good posture to meaningfully address lagging infrastructure development across the country.

Key Findings

  • The advisory council rationalizes the recommendations made in this report based on the ‘Canada’s infrastructure imperative’—in other words Canada is suffering from an infrastructure gap and needs to invest in productivity-enhancing infrastructure. The Council argues this is a prime time for Canada to focus on infrastructure as there are trillions of dollars available for investment.
  • In order to attract this institutional capital, the Council suggests the federal government focus on scalable projects; develop a clear, objective strategy with predicable regulation; and match revenue streams with new and in some cases, existing infrastructure. The Council believes this objective strategy must grow the prosperity of all Canadians; and improve the quality, accessibility, and sustainability of infrastructure services
  • Based on the rationale presented above regarding the state of Canada’s infrastructure and availability of investments, the Advisory Council makes three recommendations:
    • First, the Council suggests developing a focused, federal infrastructure strategy that would serve to improve transportation of people, goods, energy, and data within and across our boarders, and encourage the development of livable and high-performing cities that are likely to attract talent and investments.
    • Second, the Council advises creating a Canadian Infrastructure Development Bank (CIDB) whose primary objectives would be to attract institutional capital to increase the impact of taxpayer dollars, reduce the infrastructure gap, and act as a centre of expertise in delivering projects in the most cost effective way. The council advises a CIDB would require an independent governance structure in order to attract institutional capital, with the authors suggesting the Bank could operate as a Crown Corporation similar to that of the CPP Investment Board. It is also recommended the Bank be capitalized at a minimum of $40-billion over ten years by the federal government, and collaborate closely with provinces and municipalities.
    • Third, the Council recommends Canada create momentum for reinvestment. The advisors question how Canada can capitalize on the “massive storehouse” of value in its infrastructure. They suggest the government create a “flywheel” of reinvestment by stimulating institutional capital participation in existing assets. The advisors suggest the government lead by example in order to set off the flywheel.

To access full article: http://www.budget.gc.ca/aceg-ccce/pdf/infrastructure-eng.pdf