Posted January 29, 2016
The Trudeau government promised $10 billion per year in support of infrastructure investments, based on the premise that they will promote economic growth. It is possible—but by no means certain—that they will. Sometimes, they are done more for political than economic reasons.
In 1995, then-Minister of Public Works David Dingwall was able to secure $2 million for projects in his home riding. Some of that was invested in a decorative wall at Cape Breton University, inevitably nicknamed the “Ding Wall.”
No doubt it provided a few weeks’ work for some labourers and bricklayers, but the economic impact thereafter was zilch—and it would be tough to argue that it inspired students to greater academic achievement.
Likewise, $38 million was spent dredging Sydney Harbour, ostensibly in support of a container pier. Two and a half years after the project was completed, there is no indication of a private investor interested in investing the necessary hundreds of millions for a pier.
The right kind of infrastructure projects can make sustainable contributions to the attractiveness and economic success of communities.
In the early 2000s, the Progressive Conservative government made a major commitment to enhancing the Nova Scotia Community College, including the new waterfront campus in Dartmouth completed in 2006.
The result has been close cooperation with many employers, and a growing supply of graduates with skills needed in the economy.
Improvements to roads and transit systems mean safer transportation and less time spent commuting to and from work. Twinning and other highway improvement projects will certainly be on Nova Scotia’s wish list.
So will the replacement for the Victoria General Hospital’s Centennial building, the dilapidated state of which has made national headlines. Quality health care and schools are essential if we are to attract people working in knowledge industries.
Will Nova Scotia’s list receive support?
Federal Infrastructure Minister Amarjeet Sohi advises that “it’s not enough to be shovel-ready. Projects need to be shovel-worthy, as well.” That is good to know. Presumably, there won’t be any more Ding Walls.
On the other hand, he advises that “public transit, green infrastructure and social infrastructure like community housing are the federal government’s three key priorities for its infrastructure plan.”
It might be tricky to fit highway improvements into that box. Federal money always comes with an agenda.
Unfortunately, the emphasis on infrastructure being green sometimes causes governments to overlook basic commercial considerations. Hence, Ontario has wasted hundreds of millions on uneconomic solar power. Nova Scotia invested $60 million in wind turbine manufacturer DSME Trenton, which has few customers and fewer employees.
Some of the most worthwhile infrastructure projects require no government money.
Last week, Nova Scotia approved a plan to store natural gas in underground caverns near Alton. That project will allow utility Heritage Gas to buy in the warm months when gas is cheap, thereby saving customers an estimated $17 million per year.
A much more important project is the Energy East pipeline. It envisages sending oil from Alberta to Saint John, New Brunswick, mostly through a repurposed gas pipeline. As well as providing secure supply to Eastern Canada, it is perhaps the best of the proposals to get landlocked Alberta oil to export markets. Partly because of transportation difficulties, Alberta crude trades at a heavy discount to West Texas Intermediate, the benchmark for pricing North American oil.
Other provinces (including Ontario) have come on board, but Montreal mayor Denis Coderre, speaking on behalf of 82 municipalities, has been grandstanding against it. If any province should understand that pipelines are safer than rail for transporting oil, it is Quebec.
Coderre’s stance has led to a series of adolescent exchanges with Brian Jean, leader of Alberta’s opposition Wild Rose Party.
The Energy East pipeline will improve safety and create—after the construction period—close to a thousand ongoing jobs across Canada, at no cost to taxpayers. Improved pricing for western oil will benefit provincial and federal treasuries.
To get it done will require Trudeau to spend some political capital. According to the Globe and Mail he said on Jan. 23rd: “I am very much in the camp of both premiers, [Ontario’s Kathleen] Wynne and Notley, who demonstrated that Canada can and should work together on economic issues for all of us.” Since then, he has been sending mixed signals.
Perhaps Coderre was angling for a larger share of the $10 billion infrastructure pie. His irresponsible histrionics do not deserve a reward.