Infrastructure or austerity?

Last week's Canadian Throne Speech was full of ideas for recovery from the COVID pandemic but very short on details (and costs). Today the Federal Government has announced something much more specific: a plan for the lightly-regarded Canada Infrastructure Bank (CIB) to spend C$ 10 billion on a range of new initiatives.  

The $10 billion will be divided up between plans to provide broadband internet in underserved areas, energy efficiency retrofits,  clean power generation, irrigation improvements and the adoption of low-emission buses.  These goals are all consistent with the Throne Speech's underlying theme of "building back better", and with the pledge to use the pandemic recovery phase to move the economy in a greener direction.

Tory leader Erin O'Toole, just back at work after a bout of COVID-19, is not impressed. He pledges to abolish the CIB outright, calling it "a waste of taxpayer dollars".  The Tories made the same pledge ahead of last year's election. More surprisingly, so did the left-leaning NDP, which might be expected to look more favourably on the public sector taking a leadership role here. 

The CIB's problem is that in its three years of existence, it has proved to be a whole lot better at making high-profile announcements than at actually getting anything done. The CIB is supposed to act as a catalyst for private sector firms to invest alongside it, but there has been precious little evidence of that happening, and it is not clear how today's announcements will help to move things along.

We are now getting a clearer idea of how the major parties propose to handle the pandemic recovery phase. The Throne Speech and today's CIB announcement demonstrate that the Liberals intend to continue to deploy the public purse to help bring the economy back to health. In sharp contrast, the Tories (with support from much of the media) are warning that the emergency spending programs set up in recent months must inevitably give way to fiscal austerity sooner rather than later -- yet at the same time they advocate tax cuts for both businesses and individuals. It's hard to think of any country that has ever succeeded in solving its fiscal problems through austerity, but that seems to be the Tories' agenda.