September 23, 2024 | Category: Published Articles

(Published in The Hill Times)

A growth-focused blueprint for investing in Canada’s trade infrastructure
As our country's infrastructure faces growing strain, strategic investments are key to safeguarding our economic future and maintaining competitiveness.

Canada’s economy thrives on trade with a significant portion of our GDP deeply connected to the movement of goods across borders. According to the World Bank, trade contributed 67 per cent to Canada’s GDP, underscoring just how crucial our trade infrastructure is to maintaining economic stability and growth. Yet, our current infrastructure is under significant strain, and our competitiveness in infrastructure quality has slipped dramatically, jeopardizing this country’s economic future. The need for strategic and sustained investment in our trade corridors has never been more urgent.  

Why trade matters to the economy

In 2023, Canada’s trade with global partners reached an impressive $1.5-trillion, with Western Canada playing a disproportionately large role. Despite having only 32 per cent of the national population, Western Canada contributed 44 per cent of the country’s merchandise exports, according to Statistics Canada. This region’s ports, railways, and highways are not only crucial, they are also indispensable in connecting Canadian goods to global markets, especially in key sectors like agri-food, energy, and minerals. Yet, the infrastructure that supports this immense trade volume is under increasing strain. The World Economic Forum’s Global Competitiveness Report shows that Canada’s ranking for infrastructure quality fell from 10th in 2008-09 to 26th in 2019. This decline is more than a statistic; it reflects a critical slowdown in Canada’s capital infrastructure investments since 2014, exacerbating our productivity challenges. The Western Transportation Advisory Council’s latest Compass Report underscores these challenges, highlighting stagnant competitiveness in Western Canada’s supply chains driven by factors like labour disruption, extreme weather, climate change, and limited rail options.  

Productivity and economic growth at risk

Canada’s productivity challenges have been a major concern, especially over the past 12 months. The Organisation for Economic Co-operation and Development (OECD) reports that Canada ranks second last among G7 nations in productivity growth—a troubling statistic that is closely linked to our aging and insufficient infrastructure. When transportation networks are inefficient, businesses face higher costs, longer delivery times, and reduced competitiveness, which directly impact productivity. 

The stagnation in productivity is also contributing to slower wage growth, and could result in persistently higher interest rates, posing a risk to our economic stability. This isn’t just an economic issue; it’s a societal one, as declining productivity impacts the standard of living for all Canadians. Enhancing our trade infrastructure is one the most effective ways to address this productivity issue. By reducing congestion, improving reliability, and cutting transportation costs, we can significantly help Canadian businesses and our economy to thrive. This leads to higher productivity, more jobs, and stronger economic growth—a pattern consistently supported by OECD and World Bank data, which shows a clear link between infrastructure investment and economic performance. 

Successes from the National Trade Corridor Fund 

The National Trade Corridors Fund (NTCF) has already demonstrated its value through a number of key projects across Canada. For example, the expansion of the Port of Vancouver’s Centerm container terminal—partially funded by the NTCF—has boosted the terminal’s capacity by 60 per cent, reducing bottlenecks, and improving the flow of goods. Also in British Columbia, NTCF’s support for the development of Port of Prince Rupert’s Ridley Island Export Logistics Park, which enhances the port’s capacity for handling bulk exports, plays a crucial role in driving the growth of Western Canada’s economy. 

These projects not only show the tangible benefits of strategic infrastructure investments, but they also highlight a pressing need for continued and expanded funding to meet future demands and challenges. With global trade patterns shifting and the pressure on Canadian supply chains mounting, the NTCF’s role is more critical than ever.

Strategic investment is the way forward

To ensure Canada’s economic future, the federal government must prioritize the NTCF’s recapitalization, making targeted investments in trade infrastructure a top national priority. Under the leadership of newly-appointed Transport Minister Anita Anand, there is potential for stronger alignment between infrastructure development and productivity enhancement, ensuring that Canada’s transportation networks can efficiently support businesses, reduce costs, and improve the reliability of goods movement. This investment should be directed towards projects that enhance our most critical trade corridors, particularly in Western Canada, where infrastructure constraints are most pressing. This approach is not just about maintaining current capabilities, it’s also about positioning Canada as a global leader in trade, and ensuring our economy can withstand future challenges. 

Although Canada currently lacks a cohesive economic plan, this very absence highlights the pressing need for a strategic, long-term approach to infrastructure investments. By connecting leaders from transportation, supply chains, and academia, we can begin to lay the groundworks for a cohesive framework that not only addresses our immediate infrastructure needs, but also positions us to tackle future economic challenges. This type of collaborative approach is necessary not just for maximizing the impact of every dollar spent, but also for ensuring that our investments build resilient, adaptable infrastructure that can support sustainable economic growth for years to come. 

Canada’s trade infrastructure is not merely a collection of roads, railways, and ports—it is the backbone of our entire economy. As global competition intensifies and internal challenges mount, it is time for decisive actions. Our future prosperity depends on the investments we make today. 

Marzia Rizvi is the manager of program development and communications at the Western Transportation Advisory Council.