West Coast can gain from strategic infrastructure spend

A strategic investment will increase the volume of exports leaving B.C. ports

By Naomi Christensen
Policy Analyst
Canada West Foundation

CALGARY, Alberta/ Troy Media: The federal government is looking to hand out at least $5 billion for “shovel-ready” infrastructure projects to stimulate the economy. Going straight to this queue, however, ignores an opportunity to look for projects that not only get the economy moving in the short term, but also provide long-term benefits.

With infrastructure spending the main focus of the government’s economic stimulus policy, Prime Minister Justin Trudeau hasn’t ruled out spending more than the $5 billion for infrastructure his election platform promised in the first year of a Liberal mandate. Trudeau is considering injecting $1 billion in infrastructure spending in Alberta and Saskatchewan alone.

Those investments need to be strategic, however, because investments in infrastructure that helps move goods will contribute to economic growth. They also provide an incentive for private actors to make own investments. Making strategic choices takes more effort than selecting funding recipients from the existing list of shovel-ready projects, yet it has the potential to reap greater benefits.

The Asia Pacific Gateway and Corridor Initiative (APGCI), for example, was a collaborative planning endeavour that resulted in hundreds of millions of dollars in private sector investment beyond the federal and provincial funding for trade-enabling infrastructure. The result was a combined investment of $7.5 billion since 2008 in port, road, rail and border infrastructure to improve the supply chain linking western Canada to Asia.

These investments built on a key geographic advantage of our West Coast ports: They are closer to Asia than U.S. ports are. Prince Rupert is 68 hours closer to Shanghai than Los Angeles is; Port Metro Vancouver is 32 hours closer.

The payoff is greater than the local benefits of reduced traffic congestion and public amenities, and the regional benefits of more efficient transportation routes for western Canadian shippers. Our western ports and railways have become serious competitors with U.S. ports, like Seattle and Tacoma. In 2014, the Wall Street Journal declared that the fastest route to ship goods from Asia to the U.S. is through Canadian ports. Even Disney ships the cargo it stocks in its U.S. Midwest stores through Prince Rupert.

Issues at U.S. ports like congestion, labour tensions, and a federal harbor maintenance tax have also prompted U.S. shippers to switch to Canadian ports. As result of investments to improve the efficiency and capacity of western Canada’s trade infrastructure network, once U.S. shippers make the move to our ports, they tend to remain long-term customers.

With volume at B.C.’s ports growing at a rate of nearly four per cent higher than ports on the U.S. West Coast, the Wall Street Journal observed, “[t]he increased business suggests Canada’s efforts to exploit some natural geographic advantages by spending billions of dollars on its West Coast trade infrastructure are paying off.”

Increased business is obviously good for the ports, but the benefits are much more widespread. B.C.’s two ports together contribute more than $1.3 billion in annual tax revenue to all levels of government – money that pays for health care, education, roads and other services we enjoy. In terms of direct jobs, the ports pay more than $3 billion in annual wages.

So, how can the Trudeau government find infrastructure projects like APGCI that provide the country both short- and long-term benefits? Establishing a process that prioritizes infrastructure based on things like national interest, need and return-on-investment would be a good start. It’s not a revolutionary idea; Australia’s independent infrastructure agency does this and advises its government accordingly.

There may only be a couple months until Finance Minister Bill Morneau tables the Liberals’ first budget, but there are also more than 1,000 sharp public servants between the departments of Finance and Infrastructure Canada alone. Let’s hope they will be tasked with seeking out strategic investments, rather than simply printing off their list of shovel-ready projects.

 

Naomi Christensen is a policy analyst with the Canada West Foundation.

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