Wealth Creation Infrastructure Opportunities
Don Drummond isn’t the only one who can make recommendations for Ontario. In an address to the Toronto Board of Trade, former politician and current senior executive VP at CIBC, Jim Prentice, laid out the results of the bank’s research into infrastructure’s role in supporting economic growth in Ontario (and Canada).
Prentice listed the numerous energy megaprojects underway in Canada—any one of which, he said, many developing countries would love to have in its pipeline. On top of Top 100 projects such as Newfoundland and Labrador’s Lower Churchill hydro project and Ontario’s Mattagami hydro project, Prentice named LNG terminals and oil and gas pipelines. And then there’s the Alberta Oil Sands, of course. Prentice said Alberta will be able to continue feeding Asia’s insatiable need for power (producing 3.5 million barrels of oil per day) for 200 years.
“One of the key realities of the twenty-first century for Canada and for Ontario is that the commodities we have in abundance as a nation are in high demand among the emerging countries of Asia,” said Prentice.
He also acknowledged that Ontario still needs to shore up its floundering manufacturing sector. A decade ago, said Prentice, auto manufacturing contributed to over 20 per cent of the province’s GDP; now it’s 15 per cent. Where once there was a trade surplus, last year, Canada’s auto sector had a trade deficit of $12 billion. Unlike those who would argue that industrial lands are no longer needed in Ontario, Prentice said he’s not giving up on manufacturing. If Canada is investing in infrastructure megaprojects, he said, then why not manufacture the components required for those projects in Ontario? The Oil Sands alone account for $55 billion dollars worth of goods and services sales in Ontario—and billions more will be invested in the Oil Sands year after year after year “as far as the eye can see,” said Prentice (although earlier in his address, he put a 200-year limit on the operation).
The infrastructure Prentice is talking about is on a large scale, mostly in the energy, mining and resources sectors. But, as one audience member asked, what about core infrastructure? “The infrastructure deficit is increasing and governments don’t have the money. How do we make real progress on the deficit challenge?” asked the Board of Trade member.
“The energy projects I spoke about are not urban, but the ability to finance it and bring it to market comes from our big cities,” said Prentice.
CIBC has focussed its research on wealth creation infrastructure opportunities. The economic benefits of helping cities address major gaps in sectors such as transit and water are less tangible—or at least less immediate.