Infrastructure investment is smart debt
Read this article for free:
Already have an account? Log in here »
To continue reading, please subscribe with this special offer:
All-Access Digital Subscription
$1.50 for 150 days*
- Enjoy unlimited reading on winnipegfreepress.com
- Read the E-Edition, our digital replica newspaper
- Access News Break, our award-winning app
- Play interactive puzzles
*Pay $1.50 for the first 22 weeks of your subscription. After 22 weeks, price increases to the regular rate of $19.00 per month. GST will be added to each payment. Subscription can be cancelled after the first 22 weeks.
Hey there, time traveller!
This article was published 07/08/2019 (1154 days ago), so information in it may no longer be current.
Tom Brodbeck’s piece on the tab — debt and its servicing costs — of past provincial infrastructure expenditures (“Path to better highways paved with debt,” Aug. 2) warns the public against wanting too much because of the accumulated costs now on the shoulders of taxpayers.
Does that mean we don’t repair crumbling highways? That we won’t invest in modern, connected and efficient trade-transportation infrastructure, so Manitoba can move its goods into global markets opening with the new trade deals Canada has signed?
Respectfully, Brodbeck doesn’t address these critical issues. He simply points out the levels of highway capital budgets in the past decade or more and leaves it at that — just stop spending.
We agree “spending” is the wrong approach. The Manitoba Heavy Construction Association (MHCA) advocates for an investment approach. And investment is the appropriate term.
First, it must be pointed out that the referenced capital debt the province is grappling with is for programs, broadly scoped, which include hospitals, schools, etc., along with transportation infrastructure.
But transportation infrastructure is called “smart” debt because done right, it pays dividends. Multiple economic analyses have confirmed this. The findings verify a return on investment to GDP between $1.30 and $1.60 for every $1 invested, depending on the mix of infrastructure types.
Government benefits from that economic growth through higher tax revenues (income, corporate, PST), private investment and the creation of jobs. Those revenues support our social programs.
Those revenues also are used to manage the cost of borrowing — again, a smart and strategic approach to debt. It’s like the difference between taking a mortgage for a house (good debt) versus using your credit card for everyday purchases that should be purchased with disposable income (bad debt).
That’s why the MHCA advocates strategic investment in infrastructure — focusing as a first priority on those routes that move people to jobs and products to market, fuelling economic growth.
There are other ways to manage the costs of necessary investment in infrastructure: dedicating revenues from taxes linked to transportation infrastructure — licence fees, the gas tax and a portion of the PST. These are existing growth taxes that move with the economy.
Speaking of the PST, prior to the one-percentage-point cut implemented July 1, the MHCA suggested giving taxpayers the option to decide via referendum: would you rather cut the PST by one point, or keep it and dedicate the $300 million in revenues it raises to road renewal and repair?
The PST was cut and now we have $300 million less in revenues every year (pushing the need for more borrowing), at a time when we are told debt-servicing costs present a huge risk to government’s ability to provide necessary services and programs, and we’re still wrestling down annual operating deficits.
The MHCA understands and supports the need for fiscal balance, to rein in spending that threatens a government’s ability to strike that balance. Our industry supports balance.
In that context, what the MHCA does promote is a thoughtful, strategic approach to public infrastructure investment. The provincial government needs to root that strategy with a transparent asset-management plan — including scheduled maintenance to prevent costly reconstruction of roads — and multi-year budgets to balance cost against ability to finance. That’s also why we have called for a working group to assess how infrastructure is funded now and how it should be funded — we need policies tied to economic return and driven by a purpose.
This strategic approach has been resisted by successive governments for too many decades. That is how debt rises, why we get no uptake on the critical discussion about building transportation assets that can position Manitoba to compete vigorously for a higher global-trade profile.
If bringing these facts forward for public consideration, if attempting to hold politicians accountable heading into a provincial election is self-interest, then we stand guilty as charged — our company owners and the people out there repairing our roads are taxpayers, too.
The failure of successive provincial governments to commit to strategically harnessing investment in transportation represents missed opportunities to grow the economy.
We think all Manitobans should ask party leaders running to be premier to commit now to a different course, to strategically invest in infrastructure to grow the economy.
Chris Lorenc is president of the Manitoba Heavy Construction Association and Western Canada Roadbuilders & Heavy Construction Association.