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Federal Funding for Toronto's Subway Is Bad News for Canada

09/24/2013 05:51 EDT | Updated 11/24/2013 05:12 EST

The recent announcement by the federal government that it will fund Toronto's subway system is not good news for Canada. It means more of the same style of infrastructure funding we have always had. Instead of predictable, reliable and rules based projects, Canada is riddled with a mish mash of almost completed and almost dead projects politicians pick and choose to save (or not).

The feds' investment of $660M in the Scarborough Subway Line does little to nothing. The project is still $1-billion short for actual shovels in the ground and the jobs created as envisioned. It is still $1-billion short of employing any construction apprentices and still short of firing up of any steel mill in Ontario. In the case of the Scarborough line all three levels of government are already committed (in theory a good thing) -- so who pays the required billion? It is unlikely this project lives as a Private Public Partnership (PPP) as no other similar project exists in the City's asset base -- likely, this project dies a stop or two short of actually reaching the people of Scarborough as envisioned by either the TTC, Ontario or the City of Toronto.

So why should Canada care? It just might be your neighbourhood that doesn't get picked by the knight in shining political armour close to election time. It might be your kid's school who has to fundraise to expand physical plant so that mouldy, unreliable portable structures can stop being installed at brand new schools. It might be your town (if you live in Montreal) whose highways are in such bad disrepair pieces of overpasses fall with alarming frequency. It might be your town (if you live in Attawapiskat) that doesn't have a water treatment facility or it might be your town (insert Anywhere, Canada) whose entire infrastructure systems are at the end of their useful lives. Municipalities large and small, provinces great and tall all have one thing in common -- their raison d'etre is to provide basic and sometimes advanced services the people have already paid for.

The preceding may be heresy for some -- this isn't a call for grand central planning or federal control but a call for predictability, a call for fairness and a call to take the politics out of whistle stop infrastructure funding. Industry would be better served -- trainers of people could plan for the dips and peaks and the race for scarce resources (like labour and materials) would be based in economic reality not boom and bust. If industry had a list of upcoming projects (which were positively going to be built) three things would happen:

1. An available workforce could be trained to meet the needs of those projects. This would result in lower overall project costs avoiding certification issues or lost time before entering a worksite.

2. Workers could be relocated (if necessary) from previous jobs. Due to demographics in the coming decade, the construction workforce will experience retirements on a massive scale which will force tighter supply of workers in some markets. Increasingly, workers will have to be mobile between jurisdictions (the demand for skilled labour will be juggled between large natural resource projects and large infrastructure builds such as pipelines and subway projects).

3. Construction contractors would have the capacity to bid with some sort of normalcy and smaller construction companies would have the ability to increase their ability to compete with a clear view on what was ahead -- all good things for Canada's economy.

The 407ETR highway in Ontario is an interesting case in infrastructure planning and management -spend $100 billion over 20 or so years to acquire the land to build, $1.6 billion to build the actual asset and then sell it to a private consortium for $3 billion and then lease it away for 99 years. Confused? The private sector certainly has a role to play in infrastructure projects of the future in Canada -- but not at the expense of value for money for taxpayers and not at the expense of certainty in planning for a critical part of Canada's economy.

Did you know Canada collects about $5 billion a year on fuel taxes at the pump and provincial governments more than $13 billion collectively? Maybe in this time of financial restraint and large deficits (and debt) it is time to reallocate input tax credits at the pump for actual hard assets like infrastructure. Instead of raising taxes, a possible solution lies in getting value for money in taxes already collected then forgone by all levels of government.

Canada has to do better.

Budget Highlights 2013