Canada lacks private sector managers for big projects and needs a national infrastructure plan and agency, Summit hears

Ottawa, Oct. 12, 2016

Panel 4 | Beyond Stimulus: Infrastructure as an Engine for Long-Term Growth

Jane Bird, Complex Public and Private Construction and Infrastructure Advisor, Bennett Jones, Vancouver
Bert Clark, President & CEO, Infrastructure Ontario
Dawn Farrell, President & CEO, TransAlta

Drew Fagan, Public Policy Forum Fellow and former Ontario Deputy Minister of Infrastructure

Session Recap

By Carl Meyer

Infrastructure is a big part of the political and business conversation in Canada today, but the effectiveness of any one project depends on complex factors that get less attention than the big shovel-ready photo-op.

A panel discussion at the Public Policy Forum’s Growth Summit in Ottawa on Wednesday looked at how to ensure projects with the best long-term effects are picked.

Key to many speakers was the idea of effectiveness, expressed through things like central co-ordination, competent project management and proper governance.

Jane Bird, a senior business advisor at Bennett Jones Vancouver who deals with public and private construction and infrastructure, said there is an absence of sophisticated private sector project managers.

Bird said governments in Canada sometimes carry out transportation planning without the needed commercial analysis in parallel that can help determine what exactly they need to buy.

“Most of the big problems on big projects can be traced to a large degree back to governance,” said Bird, including what decisions need to be made, who needs to make them, and which ones need to be made when.

Multiple delivery organizations on one project is also a drag on efficiency, she said.

Public Policy Forum Fellow Drew Fagan, a former Ontario deputy minister of infrastructure, authored a PPF report, “Building the Future: Strategic Infrastructure for Long-Term Growth,” that argued in favour of a pan-Canadian infrastructure strategy over three decades that could help boost this efficiency.

The strategy would include a national infrastructure agency as well as a greater focus on digital infrastructure, he said.

That would help the federal government carry out two objectives, said Bert Clark, president and CEO of Infrastructure Ontario. First, as the feds have responsibility for many national jurisdictions like federal courts, border crossings, military installations, and first nations communities, an agency would apply consistency to building up infrastructure in those domains.

The other role could be lending to Infrastructure Ontario itself. As the provincial Crown corporation takes municipal credit, the federal agency would be taking provincial credit.

“Canadians don’t like to brag; we’re much more comfortable wringing our hands,” said Clark.

Even so, he noted the many big projects on the go in the province: three LRTs being built in Waterloo, Ottawa and Toronto, and two more in planning stages in the Toronto area, with another planned for Hamilton. No US state, regardless of population, can claim this level of activity, he said. Over the decade there has been over 50 projects worth tens of billions of dollars.

Sometimes a careful planning process pays dividends, said Dawn Farrell, TransAlta’s president and CEO. She gave an example a natural gas pipeline in Western Australia, which brought in gas from the coast and was commissioned and built in 18 months. It takes more like three years in Canada, and for far less distance, she said.

But just having plans in place and competent managers is still no guarantee of success. Technology can disrupt planning even with a solid follow through.

Imagine a large hotel line that built big, beautiful hotels all over the world, said Farrell. Now with Airbnb, all of a sudden people are sleeping in basements in the suburbs instead of at those hotels. The meticulously planned hotel projects all went off without a hitch, but still didn’t result in their intended effect.

For TransAlta, the game has changed. In the past, low-cost capital was easy to attract due to regulations and long-term stability, but now wind power is coming online and solar power will be an increasingly larger factor. These renewables are being pushed into the system using subsidies, she said.

TransAlta’s major customers — mining companies, oil sands companies, big retailers and the like — will also have to adjust to the new emissions regime in Alberta. New capital stock will be much more intermittent, said Farrell.

Plus, customers aren’t automatically going to recognize infrastructure’s contributions. When infrastructure works well, it’s invisible, she said. It essentially gets stolen, as people mistake it for a public good.

With her industry, electricity, people use the service — like charging their phones or laptops when they travel around the world — without paying much attention to who’s paying for it.

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