Learn the details about BCG Center for Canada's Future perspective on infrastructure in Canada
The term infrastructure most commonly refers
to a large-scale physical asset that meets a basic human need, such as transport, energy, water
and waste, social services and—increasingly in today’s world—digital. The assets developed, such
as power grids or plants, generally last decades
or longer. Infrastructure projects typically require large, up-front investment from public or private sources. Those investments can be paid back in different ways, such as through taxpayer funding and end-user fees. Learn more...
Canada faces big challenges and opportunities that include sustaining our economic growth, addressing climate change, and fostering the financial and social inclusion of aboriginal people, rural communities and lower-income Canadians. Whether through ports that allow new exports, green power grids that reduce carbon emissions, broadband and mobile connectivity that links rural and Northern communities to the internet economy, or other assets, infrastructure plays an important role in advancing our prosperity.
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Infrastructure is in the midst of a technological revolution, fueled by big data analytics, Internet-of-Things capabilities, sensors, drones and network connectivity. These advances can increase the revenue potential of different infrastructure initiatives and reduce their cost and risk. For example, Barcelona embedded sensors in parking meters and created an integrated app that made it easier for drivers to find open parking spaces. Within a year the “Smart Parking” app was issuing 4000 parking permits a day and the city increased annual parking revenue by more than $50M. Learn more...
Mobility, in particular, is on the cusp of a digital revolution. Autonomous vehicles (AV) are being tested with widespread adoption expected to ramp up after 2025. AV will have far reaching consequences for our current mobility infrastructure and, more broadly, our society. For example, while robotaxis may dramatically reduce city congestion, they may also upend the parking industry with dramatic impacts in unexpected places such as airport and hospital revenues. Learn more...
When we compare per capita infrastructure investment among similar OECD countries that have a population over five million, Canada’s performance is distinctly... average. Since 1960, Canadian infrastructure investment rates have been below the median nearly as often as they have been above. The years between 1975-2005 make up a long period of relative underinvestment – culminating with especially low investment during the 1990’s...
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A 2016 World Economic Forum survey ranked Canada’s infrastructure quality at 14th among 28 OECD countries. Many higher-rated countries, such as Switzerland, Finland, Australia, France, Netherlands, Denmark and Japan, outperform Canada when it comes to per capita infrastructure spending. The 2016 Canadian Infrastructure Report Card concludes that between 10 to 20% of Canada’s infrastructure assets... Learn more...
Since 1990, Canada has invested heavily in public health and telecommunications, but we have spent significantly less than other OECD countries greater than population of 5M in transport, energy, and utilities investments—areas that are critical to fueling and supporting our economic growth. This trend is not new. In transportation, Canada has remained in the 3rd quartile from 1990 to 2016, with the exception of 2009 where spending was...
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The scale of Canada’s infrastructure deficit is difficult to estimate precisely. There currently exists no national source on the stock and condition of infrastructure assets in Canada. Fortunately, Statistics Canada is currently undertaking a survey to shed more light on the issue. When complete, it will report on the stock, condition, performance and asset management strategies associated with Canada’s core public infrastructure. Learn more...
There are many large projects being planned or underway across Canada. These projects span the range of infrastructure classes this country needs to continue to flourish. These include our transportation infrastructure such as the replacement of the George Massey Tunnel in BC or The Eglington Crosstown LRT in Toronto; energy Projects such as Muskrat Falls in Labrador or Bipole III in Manitoba; upgrades to our water and wastewater management such as the Lions Gate Treatment plant in BC or the North End Sewage Project in Manitoba. Learn more...
Our ability to raise our level of infrastructure investment is constrained by our increasing debt load. Among the OECD our debt burden is the 10th highest—representing nearly 115% of GDP, putting us alongside Spain, the United Kingdom and France. Compared to other OECD nations, however, our debt burden is growing at a slower rate, at just 2.4% per annum over the last 10 years instead of the OECD average of 4.5%. Learn more...
Canada's various orders of government differ in their shares of tax revenue and how much they typically spend on infrastructure. Municipalities construct the most infrastructure, yet collect a relatively small share of total tax revenues. The federal government, on the other hand, has strong revenue generation but directly builds a much smaller share of infrastructure. This imbalance creates some inefficiencies such as challenges in designing, executing and operating infrastructure involving multiple levels of government. Moreover, this system requires significant fund transfers between different orders of government and can result in a scarcity of talent and systems required to deliver complex projects at a more distributed level. Learn more...
On top of government funding, Canada has a large pool of private capital from potential investors, including companies, pension funds and private investors. Our largest players in telecom, transport, mining, oil and gas generate significant operating cash flows, which could potentially fund even bigger infrastructure programs than they undertake today. In addition, Canada’s pension funds include 6 of the top 20 largest pension fund infrastructure investors in the world. Their combined infrastructure investments exceeded $45 billion in 2016. Learn more...
Australia and the UK have made significant reforms to their national infrastructure policies and programs. Both countries have taken a national strategic approach and have developed processes to enhance how projects are assessed and prioritized. By enhancing transparency and developing a strategic view of the infrastructure portfolio, there are multiple benefits: better decisions can be made, synergies between projects can be identified and citizens and investors can have more confidence in individual projects and the overall portfolio. Learn more...
Canada's infrastructure approvals processes have been widely criticized as expensive, lengthy and uncertain. While protecting environmental, First Nations and social values is critical, some countries have shown that it is possible to streamline approvals processes without jeopardizing needs. For example, the UK has streamlined the process for approvals and even fast tracked some priority projects without losing inclusivity in the approvals process or maintaining environmental protections. Learn more...
New technologies and construction methods on large infrastructure builds are dramatically improving construction efficiency. In particular, Building Information Modelling (BIM) is massively reducing construction times and the lifetime costs of infrastructure projects. In addition, new construction techniques like 3D printing are being tested to further reduce cost and increase speed. Learn more...
New ways of financing and generating revenues from infrastructure can de-risk projects and enhance investibility. For example, Hong Kong has leveraged the increased property value around metro stations as a tool to generate capital to invest in more infrastructure. Equally, Colombia has de-risked revenue generation from toll road funding by private sector funds by guaranteeing minimum revenues and topping up if assets do not generate the returns required. Learn more...
Australia has been a world leader in asset recycling and maximizing the financial benefit of previous infrastructure construction. The federal government developed an incentive program for states and municipalities to encourage asset recycling. Australia also has a national list of assets most suitable for privatization and has been able to generate significant funds from marquee assets such as airports. In turn, capital raised from these sales is plowed back into new infrastructure projects, while the privately held infrastructure assets such as waterworks or airports remain tightly regulated to protect public interests. Learn more...
Infrastructure projects, which impact so many parts of our society, are complex and require significant alignment across stakeholders before they can be designed and built. Every project not only needs to factor in differing incentives but also optimize for both the short and long-term. If we want to build truly transformational infrastructure for the future, we will need all stakeholders together at the table. Learn more...