RiskAnalytica The Science of Applied Risk Management Contact Us: 416-782-7475 or connect@riskanalytica.com

RiskAnalytica report says infrastructure spending critical to economic growth

The “Building Together” infrastructure plan proposes a more strategic, long-term approach to capital spending, including infrastructure asset management. All the provincial parties have said they support the plan’s $35 billion in infrastructure spending over three years. “We do have a concern that could slip back based on the fiscal pressures the province is seeing right now,” said Residential and Civil Construction Alliance of Ontario (RCCAO) Executive Director Andy Manahan. The report reinforces that increased public infrastructure investment in Ontario will alleviate many future economic risks and that increased investment over the past several years is a move in the right direction. The current trend has improved to spending of about three per cent of the GDP on infrastructure; there is room up to five per cent of the GDP before marginal returns disappear, the report found. “Getting five per cent is probably not realistic, but we want to make sure we’re trending in the right direction,” added Manahan. The report found that ideally long-term infrastructure investments would need to be 40 per cent above the levels in Building Together to optimize GDP growth in Ontario. Last year’s RiskAnalytica report conducted for the RCCAO about Canada’s level of infrastructure spending showed that Ontario’s spending on infrastructure maintenance was quite low compared to other provinces.

Paul Smetanin, CEO of RiskAnalytica, suggests that infrastructure simulation models, as an example, could provide better insight into priority-setting based on objective economic and community data. “More analysis is needed by sector and even by infrastructure type,” he said in a release.