Canada is in an infrastructure spending boom. Success is about smarter, digital projects, which the Canada Infrastructure Bank can fund.

(This article has been translated into French.)

Complaining about infrastructure is almost as Canadian as complaining about the weather. In fact, the two are linked: Canada’s harsh winters and extreme temperature fluctuations take a toll on the country’s roads, vehicles and other infrastructure.

But it’s more than that. Everyone seems to have a story about infrastructure gone wrong. Cost overruns. Late delivery. Suboptimal results. Politics that trumps evidence.

And yet, Canada is experiencing an infrastructure spending revival on a scale not seen since the 1950s and 1960s, when modern Canada – our universities and colleges, our hospitals, our highways – was built.

The federal government, which spent a generation reducing assets and spending only what it had to, now leads the infrastructure charge with a 12-year budget of more than $180-billionalmost double what it was less than a decade ago in nominal terms. It has also created the reform-minded Canada Infrastructure Bank (CIB).

Some provinces, such as Ontario, Quebec and Alberta, have done long-term infrastructure plans and increased spending significantly. Municipalities, which control about 60 percent of publicly owned infrastructure but have less revenue-raising authority than the federal or provincial governments, have also increased their infrastructure budgets significantly.

But will this spending be remembered for being visionary, innovative and inclusive and for building the country’s productivity, competitiveness and social equity? Or will the successes be outweighed in the public mind by the failures?

Success now is all about doing infrastructure smart, or smarter. Smart infrastructure melds physical infrastructure with digital infrastructure to improve information and drive better decision-making, construction and operations. As just one example, smart grid technology promises to reduce the cost of electricity production, consumption and distribution by identifying and reducing wasteful consumption, matching demand with supply and providing information to consumers.

Digital infrastructure – sensors and networks, big data and machine learning – increases capacity, efficiency, reliability and resilience. It is thus the key to getting more out of the infrastructure already built. It also increases the effectiveness of planning for infrastructure investment. Greater efficiency in infrastructure projects also means enhanced service delivery, lower costs, and it often reduces the physical footprint and the environmental impact.

This is where the CIB comes in: to help finance the myriad ways the government can get smarter results in its infrastructure plans.

The CIB is focused primarily on leveraging $35 billion in seed capital that will draw private and institutional money to build revenue-generating infrastructure. It has also has been charged with leading a broader effort to gather infrastructure data and information nationwide that will improve the evidence base for decision-making. To that end, the CIB will be well-placed to participate in conversations about Canada’s infrastructure priorities. It will need to deal with questions such as, should Canada have a single policy goal to organize its capital investment priorities – productivity enhancement, for example? If so, which sectors and initiatives would it focus on?

Most likely, priority sectors would fall into two areas: (1) transportation, including multi-modal transportation networks (including diverse transportation options such as public transit, enhanced rapid transit, and buses), as well as transportation infrastructure to further facilitate trade with the United States, and between Canada’s east and west coasts with offshore markets; and (2) next-generation telecommunications, such as 5G networks, which are becoming “table stakes” for countries pursuing a digital future, including for driver-assisted and autonomous vehicles.

Canada has been at the forefront of a global trend toward greater private sector involvement in construction and operations of public infrastructure assets. This has been an innovative model, even if ─ as some experts say ─ public-private partnerships have never driven the innovation envisaged, because governments have feared getting things wrong.

What if governments didn’t just sign contracts to build projects that they specify, but also opened up the infrastructure field by asking any and all comers to provide new ideas about what should be built and how it should be built? As one infrastructure expert put it: solicited proposals result in “small ‘i’ innovation,” while unsolicited proposals will result in “big ‘I’ innovation.”

Canada’s construction industry is thus ripe for digital disruption. The industry, which employs about 8 percent of Canada’s working-age population, lags in productivity growth compared with all sectors, except agriculture and hunting. There are several reasons for this. Construction is funded to a sizeable extent by government, which means it is heavily regulated, follows often opaque rules, and is bound to a risk-averse culture.

It is widely fragmented, with significant variance in capacity between global, national and local companies, which often benefit financially from less than transparent contracting practices. It lags industries such as automotive and financial services in its deployment of advanced digital analytics and planning tools.

Better supply-chain management and onsite execution, better contracting, including better allocation of risk and a better-trained workforce, would go a long way toward improving the sector.

Infrastructure is stuck in the past, not just in the way it often operates, but also in the image it often projects. Asphalt is infrastructure, certainly. But so is data.

An effective data strategy would start with an audit of existing assets and build on this with the deployment of real-time data monitoring and secure data-sharing to ensure maximum benefit. As an example, Transport for London in the UK is a leader in sharing information on travel patterns, which has encouraged travel apps and real-time alerts, thus reducing uncertainty and increasing public-transit use.

The CIB could help lead a national effort to broaden and standardize the collection and deployment of infrastructure data.

The infrastructure sector needs to recruit those educated in the skilled trades. Over the next decade, roughly 200,000 sector workers are expected to retire. But the apprenticeship training system will be strained just to replace those leaving, let alone to keep up with rising demand.

Education in the trades continues to suffer as the perceived poor cousin of the post-secondary sector, behind universities and colleges. And the path to an apprenticeship certificate is particularly challenging, including hard-to-navigate enrollment processes and inflexible rules for on-the-job training.

A national effort is overdue. Different provinces and territories are projected to have different needs, certainly, but all are expected to face challenges that must be addressed.

The CIB could help lead a national effort to broaden and standardize the collection and deployment of infrastructure data.

Federal, provincial and territorial ministers of infrastructure now meet annually, including with representatives of municipal governments. Many of the challenges and opportunities cited here would benefit from discussion among them, particularly if the CIB were included.

But, more generally, infrastructure deserves a higher profile as a driver of Canadian competitiveness and prosperity.

Best practices deserve to be highlighted, such as Stratford, Ontario’s early and widespread adoption of broadband and digital technology. Nation-wide initiatives such as the Smart Cities Challenge and the CanInfra Challenge deserve to be replicated, sparking continued efforts to think smart about what it means to build 21st century infrastructure.

To ensure that infrastructure funding is spent to best effect, governments should set priorities and make decisions according to these principles:

  • smart planning that prioritizes sectors that critical to competiveness and innovation
  • smart procurement, to jump-start traditional procurement processes
  • smart construction that focuses on execution and includes sharing best practices with new technologies
  • smart benchmarking that uses data to enhance capacity
  • smart employment that focuses on the skilled trades
  • smart coordination that gives infrastructure a higher profile as a driver of Canadian prosperity

After all, some of the infrastructure we build today, if built smart, will still exist when the 22nd century dawns.

This article is adapted from Canada Next: 12 Ways to Get Ahead of Disruption, a Public Policy Forum report consisting of 12 papers on disruptive challenges and opportunities facing Canada.

This article is part of the Nimble Policy-Making for a Canada in Flux special feature.

Photo: Shutterstock, by Bro Crock.


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