Thank you, Mr. Chair.
Good afternoon everyone. Thank you for the opportunity to contribute to your pre-budget consultations today.
I am going to spend my time focusing on the conditions that are necessary to ensure that federal investments in infrastructure effectively encourage prosperity in Canada's communities.
I appear before you today as an individual. My expertise stems from my work as an economics professor and researcher at Polytechnique Montréal, specifically in the research centre on concrete infrastructure, known as CRIB, and the Center for Interuniversity Research and Analysis of Organizations, or CIRANO.
The climate over the past five years has sent two diametrically opposed messages about public investment in Canadian infrastructure. First, these investments played a key role in Canada's fairly good performance during what has been termed the Great Recession. In the years prior to the recession, the federal government had renewed its investment in the area to address aging infrastructure. The timing was good, given that a number of projects were getting under way precisely during the period between 2007 and 2009. And with the recession, the support in the stimulus plan was added to funding that had already been budgeted.
At the provincial level, we saw that Quebec, for instance, which had invested heavily in the wake of the collapse of the Concorde overpass in 2006, fared relatively well. Quebec's infrastructure plan was timely in its support for the economy, given that the recession starting in the U.S. had deflated demand in the private sector.
However, the Commission of Inquiry on the Awarding and Management of Public Contracts in the Construction Industry in Quebec paints a picture of a very troubled public infrastructure sector. The Charbonneau commission and the debate it has spawned in Quebec have forced us to examine a whole slew of solutions to significantly and sustainably improve the effectiveness of the awarding of contracts and public funding, to address the role of politics in the selection process and so forth.
The challenge going forward is implementing all the necessary measures to maximize the economic impact of public infrastructure investment. The importance of achieving that objective cannot be overstated, especially since a number of economic observers have raised the spectre of a new era of weak economic growth. In fact, the IMF underscored that point in recent weeks.
Since the 1980s, economists have been actively studying the impact that investments have on economic growth. The key is to distinguish the direct effects of infrastructure investment from the indirect ones. The initial investment in the construction project, itself, generates jobs, as well as spending on goods and services, but these effects are short-lived. Conversely, the investment's indirect effects on productivity and regional development are long-lasting. Those are known as externalities. It is those effects that are crucial to ensuring Canada's economic prosperity going forward.
As an extensive body of economic literature shows, the public infrastructure sector can be a powerful driver of economic growth. It is important to understand, however, that the types of choices made by public organizations when it comes to infrastructure projects will have fairly significant economic consequences. In some cases, the impact can even be a negative one, as some economists have suggested.
To put it simply, not all projects are good ones. It is necessary to foster a culture of evaluation across the public sector. Every project must be subjected to a systematic economic assessment in order to ensure that investments are always made in the best possible place.
We must not bury our heads in the sand about the fact that public investment decisions are often very politically motivated. We must make every effort to see to it that projects are always chosen and prioritized according to a thorough economic assessment, not political or electoral needs. Political objectives can conflict with the long-term vision that infrastructure development and maintenance require. You are probably thinking that I have some nerve to be saying this in front of all of you, but in an election year, in particular, I feel it is important to step up efforts to prevent the Building Canada plan from being used for partisan purposes.
The federal government can lead by example in its approach to the infrastructure projects under its authority. Government contracts can play a major role in stimulating innovation. The rules for awarding government contracts should reward continued innovation in practices and processes to make sure that every dollar spent generates the best possible economic return for society.
Mr. Chair, how much time do I have left? A minute or just a few seconds?