March 18, 2024
In Ottawa, all eyes are on the next major political and economic milestone: the tabling of the Federal Budget on April 16th. With the promised release of a National Supply Chain Strategy still pending, this federal budget may preview the role the government envisions for itself on infrastructure investment, as a follow up to its National Trade Corridors Fund (NTCF) we understand to be mostly depleted after a successful eight-year run.
There is much at stake in the internal discussions underway at the cabinet table on investment priorities in the Federal Budget 2024 and in the decades to follow. Our economy – the world’s ninth largest – is highly dependent on international trade, with exports and imports of goods and services each worth about one third of our Gross Domestic Product.[i] While sea transport facilitates only a small amount of trade with our biggest trading partner, the U.S., Canada’s other major trading partners are situated across the Atlantic and Pacific oceans.
Globally competitive supply chain infrastructure must be a cornerstone to Canada’s overall industrial strategy with meaningful investments contributing to much-needed improvements in Canadian productivity. In fact, the Canadian Chamber of Commerce has identified trade-enabling infrastructure as the category of infrastructure with the greatest long-term economic benefit to the country[ii] and transportation challenges, including climate-related disruptions, among several barriers affecting our productivity.[iii]
Ensuring Canadian trade competitiveness requires a globally competitive environment for private Investments into infrastructure and speedier government project approval timelines, but there is also a role for government funding. If the current pause in federal infrastructure investment programming were prolonged, this could be a growing concern, as overall future investment needs remain daunting.
Since its inception, some $4.6 billion was allotted to the National Trade Corridors Fund, to be invested in trade enabling infrastructure.[iv] About $1 billion of that has gone to Canada’s port authorities and their supply chain partners, allowing them to expand the physical capacity to support trade growth, invest in digital solutions that allow for more efficient use of physical infrastructure, maintain aging infrastructure and, adapt and respond to the challenges associated with climate change.
With no new investments made to the NTCF in Federal Budget 2023, there is much anticipation within the transportation sector for insight into the federal government’s vision for its funding role over the next few years. In its report issued in the fall of 2022, the federal government’s National Supply Chain Task Force estimated that Canada must invest an additional $110 billion in seaports over the next 50 years. This is out of a whopping $4.4 trillion in investments the task force says are needed in marine, road, rail and air transportation assets to facilitate economic growth.[1]
In addition to investments to maintain and expand infrastructure, and make more efficient use of it, significant funds are needed to adapt to the impact of climate change and to decarbonize marine transport. Federal Budget 2023 dedicated $165.4 million over five years for the Green Shipping Corridors Program, a welcome preview of the kind of initiative needed for Canada’s port authorities to play a significant role in decarbonization of marine transport. But this represents merely a down payment on the investments that port authorities and supply chain partners must invest to be fully engaged on this worthy goal.
While the federal government has a clear funding role, it is not the only funding body, and government can help in other ways. For example, providing greater financial flexibility for ports to fund major projects through private capital would allow federal funding dollars to be directed where they are needed the most. Budget 2023 also recognized that the federal government can help by making investments move much more quickly, most notably by speeding up the federal permitting process for major infrastructure projects. Progress on this would be a tremendous boon for Canadian trade.
The bottom line is that our supply chain strategy – indeed our entire industrial strategy – must provide solutions to some difficult challenges if we are to remain competitive in global trade, contribute to the fight against climate change, and address infrastructure vulnerabilities that climate change has exposed. Canada’s port authorities and our supply chain partners are eagerly looking to Federal Budget 2024 and the much-anticipated National Supply Chain Strategy for greater insight on how the federal government envisions working with industry to tackle these challenges together.
Daniel-Robert Gooch is president and CEO of the Association of Canadian Port Authorities, which represents Canada’s 17 Canada Port Authorities and industry partners.
Canadian Port Authorities who have received funding through the National Trade Corridors Fund include:
Port of Saguenay $ 33.2M: 2023 NTCF Federal Infrastructure Investment
Port of Montreal $ 150M: 2023 NTCF Federal Infrastructure Investment
Port of Saint John $ 2.8M: 2023 NTCF Federal Infrastructure Investment
[1] Action. Collaboration.Transformation: Final Report of The National Supply Chain Task Force 2022. Page 8.
https://tc.canada.ca/sites/default/files/2022-10/supply-chain-task-force-report_2022.pdf
[i] Investopedia. The Economy of Canada: An Explainer
https://www.investopedia.com/articles/investing/042315/fundamentals-how-canada-makes-its-money.asp
[ii] Canadian Chamber of Commerce: Advocacy / Strategic Issues: Infrastructure
https://chamber.ca/strategicissues/infrastructure/
[iii] Canadian Chamber of Commerce: Policy Matters: Canada’s Productivity Problem
https://chamber.ca/policy-matters-canadas-productivity-problem/
[iv] Transport Canada’s National Trade Corridors Fund (NTCF): Briefing
https://tc.canada.ca/en/corporate-services/transparency/briefing-documents-transport-canada/2023/current-topics/transport-canada-s-national-trade-corridors-fund-ntcf
