Politics

Former budget watchdog says parties should focus more on infrastructure

Former PBO Kevin Page says Canada needs to spend billions more on infrastructure to jump-start the economy while interest rates are low, and thinks the federal government needs to take on a bigger responsibility for that spending.

Money Page: Infrastructure Spending

7 years ago
Duration 3:41
Former PBO Kevin Page says Canada needs to spend billions more on infrastructure to jumpstart the economy

Canada's former budget watchdog says all parties should pledge to spend a lot more money on infrastructure ahead of the October election as a way to kickstart the sluggish economy. 

"If we're not investing in the economy we won't be growing in the future," Kevin Page told CBC News Network's Power & Politics. "Investment's been flat — we're shrinking right now."

Infrastructure has not been a hot topic in the early days of the campaign, but Page said it is the best way to get the economy back on track.

The finance department's own numbers indicate that spending on infrastructure provides the best return on investment. "This is the biggest bang in the buck in terms of increased output and jobs," said Page.

Never a better time

Page said there's never been a better time to invest in infrastructure, given record low interest rates mean a low cost to borrow money.

But when asked by host Rosemary Barton what is the right amount to be spending, Page was quick to respond. "More than we're spending now," he said.

Spending on infrastructure has declined over the years. In the 1960s, governments spent as much as 5.7 per cent of GDP on infrastructure. The government would need to spend $20 billion to $40 billion annually to reach those same spending levels now, said Page. In 2013, infrastructure spending reached only 3.9 per cent of GDP.

Government spending on infrastructure has declined as a percentage of GDP since the 1960s Source: CANSIM 031-002; CANSIM 380-0064; CANSIM 380-0017

Over the years the federal government has also reduced its share of funding, leaving municipalities to pay more for every dollar spent on infrastructure, Page said.

"If you look at the data now, you see that in the current context the feds are small players on the public sector dollar," said Page. "If we go back to 1955 when we had higher growth rates... there was much more equitable distribution."

Since the 50s the federal government is investing less in infrastructure requiring municipal government's to fill in the gaps

Another concern for Page is the amount of infrastructure money that goes unspent. Every year the government budgets billions more for infrastructure than it actually spends.

"They're leaving a billion to two billion dollars unspent, and it's money that we really need now," said Page. "Particularly in the context an economy that's declining."

For years the government has failed to spend all the money budgeted for infrastructure projects. Source: Public Accounts

Special thanks to Nigel Wodrich (@nigelwodrich) and Sarah Roach (@sarah_m_roach).

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