Canada, much like its more-populous neighbor to the south,
is betting big that public infrastructure spending will jolt
its flat-lining economy back to life.
The ruling Conservative party has set aside Canadian $11.8
billion ($9.61 billion) to modernize bridges, roads and rail
lines and improve water-treatment facilities. To help pay for
the projects and other measures, it plans to run a budgetary
deficit totaling nearly C$85 billion ($69.24 billion) over the
next five years.
It's a remarkable about-face for the country's prime
minister, Stephen Harper, who in the fall was still viewing the
global economic crisis through rose-colored glasses and
insisting that the government could continue to run budgetary
As the world's major economies were skidding out of control,
Harper in late November issued an update to the government's
annual budget that offered little hope for new spending to
stimulate the economy. It also outlined intentions for some
controversial measures, such as suspending government workers'
right to strike and-perhaps most notably-reducing public
funding for political parties. Opposition groups rely on this
funding more than the Conservatives, and the action sparked a
Canada is known for its political stability, but the current
Parliament is a fragile form of democracy. While the
Conservative party holds the highest number of seats, it is a
minority government. The main opposition parties-the Liberals,
New Democrats and Bloc Quebecois-together control a majority of
Parliament's 308 seats, so the Conservatives need their support
to push through legislation.
Harper quickly backtracked on the proposed cuts to political
party funding to calm opposition cries of foul play. But the
anger didn't subside. Opposition parties publicly focused their
attacks on the budget update's lack of stated measures to
immediately stimulate the economy. They soon announced plans to
form a coalition government to uproot the Conservatives, an
action that led to Parliament being shut down for nearly two
months until the new budget was revealed at the end of January.
In the end, the spurt of spending in Harper's January budget to
get the economy moving again-not to mention opinion polls
showing little support for a coalition government-was adequate
to keep the Conservatives in power for now.
The steel and metals industries were forced to watch from
the sidelines as the nation's politicians embarrassingly
fumbled their way through the early days of the economic
downturn. In the end, though, the infrastructure spending
outlined in the January budget was welcome news. Bridges, after
all, can take between 10,000 and 30,000 tons of steel in
various shapes and forms, and repairs to an existing bridge can
use 5,000 to 10,000 tons, according to industry estimates.
Concrete reinforcing bar is used in roads and highways, and
steel rail is used for infrastructure supporting train
But the key for infrastructure spending to benefit both the
ailing economy and the steel industry is to get the projects
off the ground as soon as possible. Ottawa has identified
certain ones that it describes as "shovel ready," but it also
has attached some strings provinces and municipalities must
pony up C$8.8 billion ($7.17 billion) in matching funds. If
they don't, the spigots allowing the money to flow to many
projects will be turned off.
This could set the scene for considerable bickering between
the varying levels of government. Before the latest budget,
municipalities were already frustrated by delays in tapping
Ottawa's existing seven-year, C$33-billion ($26.88-billion)
infrastructure program. Program details were taking a long time
to be negotiated and red tape was preventing speedy
environmental approvals. Now, cash-strapped provinces and
municipalities also have to contend with the faltering
What's generally agreed is that the spending is long
overdue. According to some estimates, the gap in Canada between
the funds that have been funneled into infrastructure over the
past several years and what should have been spent-known as the
infrastructure debt-runs as high as C$130 billion ($105.9
While Ottawa has identified a shortlist of projects-ranging
from renewing a major bridge in Montreal to restoring federal
buildings-there are many others that will be vying for funding.
The Federation of Canadian Municipalities, for instance, has
released a list of more than 1,000 infrastructure projects that
could be ready to start as early as spring.
Governments appear to recognize the need to start projects
as soon as possible, but they must not forget to consult with
industry leaders to ensure they follow the best and fastest
route to completion. That may require governments going it
alone instead of waiting for complex and difficult-to-finance
private-public partnerships to be formed, an approach still
favored by Harper.
It is unfortunate that the leaders of Canada let infighting
and career-enhancement get in the way of sound planning at a
time when prudent, decisive and non-partisan leadership is what
the country and its industrial sector needed the most.
Political power plays within a dysfunctional Parliament should
have waited for another day. But with a new budget, Canada's
leaders can redeem themselves by recognizing a crisis is best
solved through cooperation and swift action.