Sunday, September 30, 2007

On poor investments

CanWest reports on the Cons' planned announcements on infrastructure. And while Lawrence Cannon is typically distorting the nature of the Cons' plan to pretend that it represents a significant investment, it's glaringly clear that the main new effect of the Cons' plan is to funnel public goods into the private sector.

Let's look first at the outlines of the Cons' P3 plan - which now seems to be designed to force funding from other levels of government to fit within the Cons' desire for privatization:
Cannon added that the government will also proceed with plans to create a $1.25-billion public-private partnerships, or P3, fund. The fund, which would be managed by a new P3 agency, would count on contributions from cities and provinces.

"With our partners' investments, we expect the new plan will generate another $50 billion in infrastructure funding," Cannon said. "Imagine the construction sites it will generate. Imagine the workers needed to complete this important work."
Of course, the same (or more) construction and work would be generated if the same funding was used for infrastructure projects in the public sector: the only newly-imagined part of the Cons' plan is the one which provides for an additional layer of private profit and ownership. And the Cons are so committed to including that inefficiency in any future investment that they're apparently unwilling to waste only federal funding on that needless expense, instead relying on municipal and provincial money being harnessed to the same end as well.

But is the federal investment enough to make up for part of the damage caused by the P3 obsession? Not surprisingly, Cannon's high number for the plan is a poor attempt to conceal an embarrassingly low amount of new funding:
The Harper government will unveil within weeks the details of its $33-billion plan to upgrade aging infrastructure, the federal minister responsible for transport, infrastructure and communities said yesterday...

Nearly half of the money would come from a $2-billion-a-year transfer of gas tax revenues, a measure introduced by the previous Liberal government and extended by the Conservatives until at least 2014.
So half of the federal contribution is based on nothing more than extending a policy which already existed before the Cons took office, and which itself is significantly less of a contribution than municipalities have (rightly) been demanding. And in order to claim credit for an artifically high amount of money, the Cons' plan is based on spending over the next seven years at least - even though two federal elections would intervene before the end of that time frame.

Moreover, the Cons' amount of funding - even spread out as far as it is - would put little dent in Canada's infrastructure deficit. The current need for investment may already be as high as $100 billion - which doesn't include the cost of continuing to maintain and upgrade infrastructure over the span of the Cons' plan. Which means that contrary to Cannon's attempt to pretend the plan would substantially resolve Canada's infrastructure problems, the Cons' scheme would address only a small fraction of the need for infrastructure investment.

In sum, the most substantial policy effect of Cannon's plan would be to invest a substantial amount of money now to make government spending on vital infrastructure less efficient in the future. And Canadians who don't want to see contractors' profits as the primary goal of federal infrastructure spending should be all the more motivated to make sure the Cons aren't in office long enough to put their plan into effect.

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