A nation-building project list alone won’t build a nation

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Yiota Kokkinos is a former director-general of energy policy and research and development at Natural Resources Canada and is currently the senior executive adviser for energy at the Public Policy Forum.

Jay Khosla is a former senior assistant deputy minister at Natural Resources Canada and is now the executive director of economic and energy policy at the Public Policy Forum.

Soon, we expect the federal government to begin to announce the major projects it will fast-track under Bill C-5, the Building Canada Act. We will learn what Canada considers nation building via the “rolling set of announcements” Energy and Natural Resources Minister Tim Hodgson has signalled will come throughout the autumn.

The federal government has indicated that some of those projects will be transportation and energy infrastructure. For instance, there have been asks for high-speed rail corridors, a new oil pipeline to the B.C. coast, and electrical transmission infrastructure to deliver hydro and wind power. Those nation-building projects will be a good start, but they alone won’t build a nation.

Equally critical is trade-enabling infrastructure to create strategic gateways on the Pacific, Atlantic and Arctic coasts. Together, these projects should form part of a broader national transportation and infrastructure strategy to turbocharge economic growth – first recommended in the 2014 Emmerson Report – to move Canadian energy and critical minerals more efficiently and diversify trade beyond the United States.

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The individual projects, meanwhile, will only succeed with careful oversight and under more favourable investment conditions than currently exist in Canada. Each project should meet four key criteria: prosperity, security, environmental responsibility and Indigenous economic participation. Applying those criteria consistently will also provide a clear framework to track progress over time.

The Public Policy Forum’s extensive consultations with industry have also revealed a need for broader action and policy coherence from tax to climate policies to make Canada a more attractive place for investment, especially when compared to key resource development competitors such as the U.S., Australia and Chile.

We know that compared to the U.S. and other advanced economies, Canada faces a persistent gap in productive capacity, which limits growth, competitiveness and resilience.

Over the past decade, Canada’s total capital investment has been essentially flat in real terms, while the U.S. increased its investment by nearly 40 per cent. On a per-worker basis, Canada invests only about 55 cents for every dollar invested in the U.S. This chronic underinvestment has contributed to a widening productivity gap: Canadian workers now produce roughly 27 per cent less output per hour than their U.S. counterparts, the largest gap in more than 40 years.

This is especially critical in sectors that drive long-term productivity and export growth, such as energy, critical minerals and infrastructure. Capital spending in energy alone remains more than 20 per cent below its 2014 peak. An RBC study estimates $2-trillion in new investment will be needed over the next three decades just to overhaul Canada’s energy systems and transition to cleaner energy to make Canada more competitive and address climate change.

Closing the productivity gap and addressing weak gross domestic product growth will require more than a few projects; it will require a step-change in overall investment, including a more strategic approach to attracting foreign direct investment.

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This fall’s announcements are a chance to change our trajectory. The federal government must work to become more than a regulator; it must act as a catalyst for attracting investment, building infrastructure and securing Indigenous economic partnerships.

The expected launch of a new Federal Major Projects Office is key. But it will need to have a big and broader mandate to succeed. We have seen this movie before: a sparkling new project generates headlines, but then stalls due to unclear permitting, insufficient infrastructure, misaligned funding, or a lack of Indigenous consultation and economic participation. The costs of delay, measured in capital flight, lost trade opportunities and forgone climate gains, are mounting.

A central hub to fast-track environmental assessments and permits could bring much-needed coherence to a fragmented regulatory landscape, but it risks stumbling if it focuses only on approvals.

It must be designed and mandated to co-ordinate across jurisdictions and integrate access to co-ordinated financing, efficient and effective regulations, enabling infrastructure and Indigenous economic participation. And it must have regular oversight in the management of the project list, starting with the Prime Minister, First Ministers and a Deputy Minister Committee that meets monthly to ensure projects stay on track.

Canada can no longer afford to let opportunity slip away. Rival countries are moving at breakneck speed. If we want to compete for investment and market share, we need some short-term wins; we must move, too, on all fronts.

Fast-tracking nation-building projects is a long-overdue signal that Canada is serious about breaking the gridlock that has slowed progress on energy, critical minerals and infrastructure development, but true nation building will also require a national transportation infrastructure strategy and an unprecedented commitment to policy coherence to create investments that drive long-term economic growth.