Don't just focus on 'shovel-readiness', says David Dodge
The adjustment period to declining oil prices will take time and be painful, and focusing on "shovel-readiness" is not the solution to kick start the economy according to the former governor of the Bank of Canada David Dodge.
"This adjustment to lower energy prices is going to take a while, and so getting the money all out the door, shovel-ready, as the government did in 2009, is probably not actually the best way to go about it," Dodge told CBC Radio's The House.
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"The important thing is to make the right investments, not necessarily to get it all out in 2016-2017," Dodge said. "Those are tough choices the government has to make."
Federal Infrastructure Minister Amarjeet Sohi outlined the first phase of his government's plan this week. The Liberal government has earmarked $10 billion over the next two-year that will go towards a "deferred maintenance backlog" across the infrastructure spectrum throughout the country.
Focus should be on growth not 'shovel-readiness'
"What you want to do is focus on additional growth that investment in infrastructure will yield over the future. From that standpoint, pure speed or shovel-readiness is not the exactly the criterion you should use," Dodge argued.
Despite pressure to get money out the door quickly, the focus should remain on the long-term. "The criterion you should use is 'what's going to produce the greatest opportunity for growth in the future," he said.
The federal Infrastructure Minister appears to be mindful of that when it comes to the first phase of infrastructure spending.
"Projects have to be shovel-ready, but being shovel-ready is not enough, they also have to be shovel-worthy," Amarjeet Sohi told The House.
Difficult times ahead
Adjusting to a new economic reality won't come without some bumps and bruises. But Dodge says the transition needs to happen.
"2016, I don't think is not going to be a great year as we go through that adjustment, but that adjustment is something we have to make and we have to buckle down and get on with it," he said.