The Association of Consulting Engineering Companies-Canada (ACEC) is calling on the federal Liberals to commit to working with other levels of government to ensure infrastructure spending is boosted to a steady six per cent of GDP annually in future.
The target — double the current level — was a centrepiece of its pre-budget submission to the Standing Committee on Finance issued in February. The 2016 federal budget will be unveiled by Finance Minister Bill Morneau on March 22.
The ACEC also called on the government to ensure that spending on green and social infrastructure retains "core" elements leading to increased productivity, urged the federal government to ensure municipal infrastructure was managed through strong asset management plans and advocated spending on infrastructure in remote, mineral-rich parts of the country to help get resources to market, strengthen the economy and create jobs.
The six-per-cent target was taken from older studies such as the 2004 TD Economics report titled Mind the Gap and also historical precedents, explained John Gamble, president and CEO of the ACEC.
"They’ve looked at three levels of government back in the ’60s and early ’70s, we were seeing all three governments combining to invest about six per cent of our GDP in infrastructure, and for a while it slipped under three per cent, and now with recent infrastructure programs it has come back to about three per cent," said Gamble.
"What we’re saying is, it is not only growth but it is deferred maintenance. While the programs we have seen in recent years are helpful in moving in the right direction, I think the aspirational goal should be to restore that cumulative funding to six per cent."
As part of the pre-budget process, the ACEC was asked to address a variety of issues and there was a catch-all question: "How can we create economic growth, protect the environment and meet local priorities while ensuring that the most vulnerable don’t get left behind?"
Smart, strategic infrastructure investment that brings a good return on investment meets each of those needs, the ACEC submission argued.
"Infrastructure is an investment in our social, economic and environmental quality of life," the submission reads. "Core infrastructure grows the economy, creates jobs and expands the tax base…
"By contrast, the current infrastructure deficit reduces economic efficiencies for both the public and private sectors. In fact, infrastructure underinvestment is costing the Canadian economy 1.1 per cent of real GDP annually and reducing the long-term profitability of Canadian businesses by an average of 20 per cent."
Gamble expanded upon the theme in an interview with the Daily Commercial News.
"The previous government did a decent job in stimulus spending as far as it goes, but there is so much more to infrastructure than creating engineering and construction jobs," he said. "Infrastructure enables commerce. It allows us to access resources, it allows us to get goods and services to market, it allows interaction between communities and neighbourhoods. That’s the value proposition of infrastructure."
In calling for the federal government to allot resources to help municipalities develop asset-management plans, the ACEC’s submission stated, "Asset-management plans allow municipalities to understand the state of their existing infrastructure assets, reliably project their infrastructure needs and make strategic investments."
Currently there is a "checkerboard" pattern across the country in terms of the resources municipalities have to manage infrastructure assets, said Gamble.
"One of the challenging things is the absence of good data," he said. "The asset management piece is critical in terms of the long-term planning, and also measuring the performance of any infrastructure program."
Gamble said he hopes a program similar to InfraGuide, which operated from 2001 to 2007 and offered resources to the Federation of Canadian Municipalities, could be resurrected in this regard.
He said the ACEC is keen to see whether the promised Green Infrastructure Fund will support heavy civil projects that promote such initiatives as clean water and reduced flooding.
"With their new drinking water standards they’re putting increased responsibility on municipalities and a lot of these things are not easy fixes," he said.
"So you have the water management, the drinking water stuff which has a direct impact on the environment."
The ACEC made a short reference to deficit financing in its submission:
"While running a perpetual deficit is not a preferable course of action, the return on infrastructure investments has been proven to create jobs and prosperity, making short-term deficits and responsible debt management a realistic option."
Gamble acknowledged that the $20-billion-plus annual deficits the Liberals are now facing are bigger than the $10-billion shortfalls anticipated during the fall election campaign but still supported the concept in the short term. He called on the Liberals to show discipline.
"While it is not the core reason to do infrastructure, infrastructure does have a stimulus effect," he said. "So if you are going to borrow, infrastructure is what I would call good debt.
"A deficit would not be our first choice, but given the reality of the economic situation and the acute need for infrastructure, if we don’t invest in infrastructure we might just be spinning our wheels indefinitely. So we should do it and get it done and that will in turn give us the ability to strengthen the economy and consequently bring revenues back into the federal coffers."