Canada's Infrastructure Costs Threaten Nation-Building Efforts

Countries with high infrastructure costs are pricing themselves out of major projects, and Canada is no exception. According to Dr. Joseph Fournier, a senior fellow at the Frontier Centre for Public Policy, Canada pays two to five times more than other countries to build infrastructure. This premium results in reduced investment returns and drives private capital away.

The Trans Mountain expansion is a striking example of this issue. The original estimate was $7.4 billion, but the final cost reached $35 billion, or nearly five times higher. This means that Canada paid 60,000 Canadian dollars per barrel per day for pipeline capacity, compared to 9,000 Canadian dollars per barrel per day for comparable U.S. projects.

The problem is not just limited to pipelines. British Columbia's clean-energy investments, such as the Site C hydroelectric dam and the Northwest Transmission Line, will likely exceed $22 billion in cost, with a staggering $20,000 per kilowatt specific capital basis. In comparison, modern combined-cycle gas turbine plants near the LNG facilities in Kitimat would have come in at $1,500 to $2,000 per kilowatt.

A sovereign wealth fund cannot solve Canada's capital efficiency problem. The country needs to understand why its infrastructure costs so much and fix the underlying causes. Otherwise, public financing will simply shift the premium onto taxpayers.