Infrastructure News

The infrastructure deficit: Report calls on government to bolster Northern development with dedicated funding

An infrastructure deficit is dubbed the largest hindrance to economic development in the Canadian North, according to a recent report urging major—and immediate—investment.

As a whole, Canada’s infrastructure shortfall was given a wide-ranging price tag of $50-570 billion by the Canadian Chamber of Commerce, but the National Aboriginal Economic Development Board cautions that deficit is most evident in the North.

New approaches and renewed investment in infrastructure are needed – across the country in Indigenous communities and particularly in the North. And it will not be enough to just patch up the existing stock of infrastructure – infrastructure that does not even adequately meet current needs,” the board writes in its Recommendations on Northern Infrastructure to Support Economic Development.

“Bold investment in large, nation-building infrastructure is required alongside increased investment in community level infrastructure to support Northern communities.”

The board is made up of Indigenous business and community leaders from across the country, with a mandate of advising government on economic development within First Nations, Inuit, and Metis communities. For the North spanning the Yukon across to Nunatsiavut, the board underscores that Indigenous people—who make up a significant portion of this population—must be “true partners in the planning, decision-making, and business development opportunities all along the way.”

Funding promises to alleviate high costs

In his election platform, Prime Minister Justin Trudeau pledged $60 billion in infrastructure funding over the next decade, and the government is currently in the process of doling out the remaining funds from its $14-billion New Building Canada Plan that started in 2014 for infrastructure projects across the country.

With low density putting the North at a disadvantage for accessing infrastructure funding, despite an arguably higher need due to the larger land mass, additional funding dedicated to Northern infrastructure projects is needed.

A portion of that plan allocates $10 billion under the Provincial-Territorial Infrastructure Component, offering a base of $25 million each year for infrastructure projects, with an additional amount determined by per capita statistics from the 2011 Census.

This per capita allocation means that the territories receive less infrastructure funding due to their lower population sizes,” the report reads. “Of the $10 billion, $1 billion is set aside for projects located in communities of fewer than 100,000 residents across Canada, however all of the communities in the territories are under that threshold.”

With low density putting the North at a disadvantage for accessing infrastructure funding, despite an arguably higher need due to the larger land mass, the report recommends additional funding dedicated to Northern infrastructure projects is needed.

The report points out that unlike the tax break for Northern residents—which Trudeau vowed to increase by 33 per cent during his campaign—no such credit is offered to industry, despite also being inflicted with high costs in the North.

One suggestion the report makes is to introduce an investment tax credit for industry seeking to develop mutually beneficial infrastructure.

High operating costs preclude infrastructure

The recent, long-rumoured shuttering of De Beers’ Snap Lake Diamond Mine in the Northwest Territories is a clear example of the challenges that face Northern operators.

The report cites a Mining Association of Canada study in 2015 that found the cost of operating Northern mines to be between 30 and 60 per cent higher than in the south, due to the lack of infrastructure such as all-weather roads and airstrips.

For every dollar spent on transportation and energy infrastructure, economic and fiscal benefits each see an $11 return.

Significant infrastructure deficits across the North mean that available infrastructure funding is being used to respond to urgent community needs rather than strategic investment in economic infrastructure,” the report states. “The infrastructure deficit reduces the attractiveness of the investment climate in the region, which results in less development in the region, and the economic potential of the North not being realized.”

Looking specifically at the resource sector, the need for infrastructure investment extends into addressing the well-being of residents and quality of life in the North. The report balances the average cost of required infrastructure for resource extraction—about $130 million per project, though there is a significant range depending on location and type—with the economic benefits of these ventures, through direct and indirect benefits, tax revenue, and royalties. It concludes that for every dollar spent on transportation and energy infrastructure, economic and fiscal benefits each see an $11 return.

“Investment in Northern infrastructure has the potential to result in significant positive benefits for Northerners through both the positive impacts on communities that increased investment in infrastructure would bring, but also through the development of job opportunities and strong and diverse economies that support community well-being,” the report concludes.

Infrastructure breakdown in Northern communities

Yukon: 97% have all-season roads, 85% have access to a regional energy grid, 90% have suitable housing, and 93% have access to a terrestrial backbone for Internet communications.

Northwest Territories: 78% have all-season roads, 50% have access to a regional energy grid, 84% have suitable housing, and 69% have access to a terrestrial backbone for Internet communications.

Nunavut: 0% have all-season roads (or adequate port infrastructure), 0% are on a regional energy grid, 62% have suitable housing, 0% have access to a terrestrial backbone for Internet communications.

Nunavik: 0% have all-season roads, 0% are on a regional energy grid, 58% have suitable housing, and 35% have access to a terrestrial backbone for Internet communications.

Nunatsiavut: 0% have access to all-season roads (but do have strong ferry access), 0% have access to a regional energy grid, 84% have suitable housing, and 100% have access to a terrestrial backbone for Internet communications.


Photo credit: Susan Drury (CC)

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