August 29, 2015


Business

We build; will they come?

Province's infrastructure spending needs business buy-in

CentrePort's Diane Gray likes what Steve Ashton's NDP is planning, but the private sector must validate the investment.

KEN GIGLIOTTI / WINNIPEG FREE PRESS FILES

CentrePort's Diane Gray likes what Steve Ashton's NDP is planning, but the private sector must validate the investment. Photo Store

A week after the province's release of its budget and five-year, $5.5-billion infrastructure plan, Infrastructure and Transportation Minister Steve Ashton had two more kicks at the can to tout the initiative.

First there was the announcement the $150-million Headingley bypass would become a go-live project after having been little more than a long-term dream for some years.

The next day he got to speak at the Manitoba Trucking Association's annual meeting, declaring the infrastructure spending to be visionary and "the best opportunity in a generation to get us to the next level."

Ashton acknowledged talking to the truckers was preaching to the converted.

They've been worrying about this problem for years.

Not long after he spoke, MTA president Norm Blagden said, "We are pleased to see a commitment by the province to increase infrastructure investment. The MTA has been lobbying for years about our province's infrastructure deficit, so efforts to address this issue are encouraging."

Ashton also quoted a recent survey that showed infrastructure improvement was a more important issue to Manitobans than typical front-runners such as health care and crime.

The rationale behind making a big bet on the transportation infrastructure in Manitoba may make more sense than using public funds to try to create a high-tech hub, for instance.

Manitoba will never rival Silicon Valley, but if this region and location give us any advantages, it's in transportation and distribution.

It's why the commitment to CentrePort was made and it's why Diane Gray, CentrePort's CEO, has been sitting beside Ashton in public appearances quite a bit these days.

At the MTA event, Ashton said a few times he was not going to go into details about the manner in which the province is raising additional funds to do its highway and bridgework, essentially acknowledging the political risk it's taking in having raised the provincial sales tax.

The Selinger government is hanging its future on the hopes the province will get a bump in economic development from its infrastructure spending.

It hired the Conference Board of Canada to validate that concept and its analysis came up with the theory that every dollar the province spends on a more efficient transportation system will mean an additional $1.15 bump in economic development.

"We knew it would create economic development," Ashton said. "Infrastructure does not just follow development; infrastructure (investment) drives development."

What he's saying is the private sector now has to come to the table to show this really is a good investment.

Regardless of the political stripes of the Selinger government, few would argue with the general reasonableness of that economic analysis.

But the couple of hundred truckers in the Viscount Gort ballroom on Tuesday morning heard a fairly sobering story about their industry from Lou Smyrlis, the Toronto-based publisher at Transportation Media.

If Ashton had stayed to hear it, it might have put a damper on any medium-term boost he thought the trucking business might be able to come up with.

A better transportation system isn't all about the health of the trucking industry, but Smyrlis showed research that indicated shippers are not ready to stop demanding lower prices from carriers.

Which means the trucking industry will have to continue to manage on razor-sharp margins, something the smaller firms are increasingly finding difficult to do.

And the hoped-for capacity crunch in the trucking business -- that some have been waiting for since the global economic recovery commenced -- is still nowhere in sight.

Economic rules of thumb would say assets will be deployed where they can realize the best value.

The Manitoba government is taking a serious political gamble by raising the sales tax to help create that kind of dynamic in the transportation and distribution sector.

It's also gambling that the private sector recognizes the value.

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition March 12, 2014 B6

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