Canada needs an infrastructure bank. Not necessarily to give more, or cheaper, funds to provinces and municipal infrastructure owners/proposers but because we need to ensure the highest priority projects are built right. We need the infrastructure bank to bring an objective process that monetizes all of the costs and benefits of proposed projects. If we can add risk assessment into the mix, take politics and politicians out of the recipe, then we can avoid infrastructure white elephants and maximize our quality of life.
“you might want to follow the economists who think getting things done matters less than who does them, for what reason, and what benefit we get from them.” 1
I have discussed Larry Summers’ views on infrastructure spending. “He laid out the case for such government spending to a Liberal Party convention a few years ago. Infrastructure is the economic equivalent of a free lunch, he argued. Sure, you have to borrow to build it. On the other hand, if it is the real deal, new infrastructure lowers costs and improves productivity for businesses and workers by allowing them to do their work more efficiently. The higher business profit, land values, employment and wages that result produce more tax revenue, allowing you to pay off the loans and have more left over.”2 The result of this presentation appears to be the following Liberal platform promise: “We will establish the Canadian Infrastructure Bank to provide low-cost financing for new infrastructure projects.”3 Now in power, the Canadian government should implement an infrastructure bank that requires objective, transparent, cost-benefit analysis.
The RCCAO report4 assesses the merits of a Canadian infrastructure bank (CIB) and, I think correctly, concludes that ”to maximize the overall benefits of a CIB, it should have a broader mandate to screen or verify that projects have been selected using evidence based assessments. Thus, the CIB would be an arm’s-length federal institution that would be identified as a centre of excellence supporting rigorous project evaluation and procurement best practices, as well as providing loan support to suitable projects.”
“Infrastructure delivers major benefits … but only if the right projects are selected”5
Money invested by the infrastructure bank should be in high priority projects that “will drive economic productivity, competitiveness and social equity returns. This is something that can only be assured if project selection is based on careful cost-benefit evaluations rather than political expedience.”
“In the absence of consistent project evaluation and selection criteria it is difficult to ensure that scarce public resources – from all levels of government – are being allocated to the highest priority projects that will deliver the greatest public good.”6
1“China’s infrastructure spree a cautionary tale”Adrian Wyld, Globe and Mail October 14, 2016
3The Liberal Part of Canada https://www.liberal.ca/realchange/canada-infrastructure-bank%E2%80%A8%E2%80%A8/
4“Creating an Effective Canadian Infrastructure Bank” prepared for the Residential and Civil Construction Alliance of Ontario (RCCAO) by Matti Siemiatycki (Associate Professor Department of Geography and Planning at University of Toronto) February 2016 http://www.pppcouncil.ca/web/pdf/rccao_infrastructure_bank_discussion_paper_02172016.pdf