2019-08-22 - Transportation Supplement

Modern, necessary and effective transportation links and related infrastructure is critical to a healthy economy, whereas infrastructure created to fulfill some political end or short-term job creation scheme sets economies back, sometimes for decades. It is here that governments have a critical role in creating the conditions for business to grow and the economy to fire on all cylinders. Government can’t create jobs, but they can support the private sector in doing so by building and maintaining the right trade-enabling infrastructure at the right time. 

The Conference Board of Canada’s calculations suggest that needed infrastructure returns $1.14 to $1.78 for every $1.00 invested. However, to make these critical large-scale funding decisions in a logical and effective manner, they must relate back to a larger vision – not all infrastructure projects are created equal. 

Two transportation trade-enabling infrastructure projects that our chamber has been championing have been the expansion of the Fredericton International Airport and the twinning of Highway 185 in southern Quebec. 

Kent Fellows, a Calgary based economist who has experience modeling the GDP impacts of transportation infrastructure as a lead researcher with the Canadian Northern Corridor research program assessed the impact of this stretch of highway on the regional economy. Dr Fellows concluded that if twinning Highway 185 reduced the delivered cost of a traded good by 1.5% to 2.5%, then there would be annual GDP gains of $1 billion to $1.78 billion for Canada; $350 million to $600 million for each of New Brunswick and Nova Scotia and $100 million to $160 million for Quebec. Ontario and Quebec would have a roughly equal share of another $100 million in annual GDP gain. 

If highway 185 is not twinned by 2028, then over the next decade, the cost to the New Brunswick economy alone from the single lane Highway 185 is a net present value (lump sum today) of nearly $3 billion in lost GDP. 

Moving from the ground to the air, a second example is the expansion project at the Fredericton International Airport, which got underway last month after many years of advocacy by our organization and our other community partners. This project has been a long time coming and I expect the economic benefits will begin to show immediately after construction is completed. Local airports facilitate economic growth in several ways for a region focused on the global economy. New Brunswick is already the most export-dependent province in the country and our next major wave of exports will likely be services. Success in sectors such as biosciences, information and communications technology, engineering and many others means that the Fredericton Region is creating a hub of expertise that we can bring to the world, but in order to do that, easy air access is critical. 

As the world becomes more globalized and economies more integrated, effective transportation links will continue to grow in importance. It is one area where governments can have more confidence that the use of taxpayers’ dollars is an investment and not just a spend.