CG/LA Infrastructure's InfraBlog
Sun Jul 14, 2013 5:47pm AEST
Australia holds many similarities with Canada, not least the issues both countries have with large infrastructure projects.
In Australia, highways and bridges are always big vote winners, meaning infrastructure announcements tend to follow the election cycle of state and federal governments.
That situation will probably never change, and it is hard to get a dollar figure on a broad infrastructure project.
If you were looking for a case study to make an economic comparison with Australia, it is hard to go past Canada.
Like Australia, it is a massive country with a relatively small population. Most Canadians live clustered in the cities, while others live in some of the most remote and harsh places on the planet.
It has the same political system, and most importantly, it also managed to ride out the worst of the recession thanks to a resources boom, which like in Australia, has created a two-speed economy.
And also like Australia, Canada has a massive shortfall in infrastructure spending.
“It’s substantial, it’s significant, and it’s growing all the time,” said Michael Atkinson, the president of Canada’s Construction Association.
Canada needs to spend hundreds of billions of dollars to not only build new roads, bridges, railways, hydro plants, but to maintain the ones it has.
“[The shortfall is] substantial, it’s significant, and it’s growing all the time,” Mr Atkinson said.
Taking a drive through the city of Montreal, you can see how run down it all looks – from the roads to the freeway flyovers, to the rusting silos on the docks at the Port of Montreal – the world’s largest inland port.
However, Canada is now investing big in infrastructure, committing $70 billion over the next 10 years.
And that is not the only difference with Australia. In Canada, more than half of all infrastructure projects are done not by the federal or provincial governments, but by local councils.
The councils build roads, bridges, and public transport networks. They also look after electricity, water, and even airports.
Not that they wanted it that way.
“Well, it’s happened over the years and it hasn’t always been a good reason. It’s basically been downloaded from senior levels of government,” said Jim Watson, the mayor of Canada’s capital city, Ottawa.
“We have a highway in the east end of our city called Highway 174, which was a provincial responsibility but about a decade ago [and] was downloaded to a local principality.
“And that’s a huge cost. It’s not just the cost of keeping it up, it’s also the operating cost of snow ploughing, of repaving, of maintaining and so on and that becomes very expensive.
“Especially because when the bigger governments handed over the projects without giving the councils the money to maintain them.
“We had a situation last year where there was a major sinkhole on that highway that swallowed a car. Thank goodness no-one was killed.
“But it was an example of, you know what – you hand us this highway, it’s not in great shape, and then we are burdened with the cost of using property tax dollars to repair it and keep it in safe working order.”
Mr Watson said no-one knew where the next tranche of money was coming from.
“The federal government would bring in a five-year plan, a six-year plan, a three-year plan and you did not really know from one government’s term to the next whether you could count on those dollars,” he said.
Leaving big projects to local councils is a far-from-perfect system, not just because it is harder for them to do things like raise private capital.
Toronto is in crisis at the moment because its mayor is fighting allegations he smoked crack with criminals. Montreal has changed mayors twice in six months over accusations of improper dealings.
But one thing has at least changed – Canada’s federal and provincial governments have allocated parts of the country’s fuel tax to go directly to councils for infrastructure spending.
Mr Watson this week put $36 million of that fuel tax money towards the city’s public transport system, including the light-rail system his council is building, knowing it cannot be taken away again.
“It really handcuffs future governments in meddling with that money,” Mr Watson said.
“We’ve learned from that lesson from the past – that it is not wise to balance the budget and mortgage our future. And that’s exactly what we were doing.”