Inadequate Infrastructure Obstacle to Economic Growth

Recent reports by the Canadian Chamber of Commerce and Ernst and Young have identified inadequate public infrastructure as a key obstacle to economic growth, especially in the resource sector. This challenge to economic development is particularly pronounced in Canada’s northern and remote regions which are lacking in basic infrastructure and do not have the tax base to support large infrastructure investments without federal support. PDAC research has shown that the costs of exploration in areas that are distant from transportation infrastructure can lead to costs that are several times higher than for projects that are close to transportation infrastructure networks.

Infrastructure is the Cornerstone of a Successful Economy

The maintenance and development of transportation, energy and communications infrastructure provides northern and remote regions with access to markets, resources and technology. Infrastructure development also benefits northern and Aboriginal communities by reducing the costs of goods, promoting job creation, stimulating GDP growth and generating tax and royalty revenue for Canadian governments. Research indicates that a $1 billion investment in public infrastructure has the potential to create 17,000 new direct and indirect jobs and to increase GDP by $1.35 billion.

Mineral Exploration and Mining Key Drivers of Economic Growth

In the territories, mining is a key driver of economic growth. It is the largest private sector contributor to the GDP of the Northwest Territories and Nunavut, comprising 30 per cent and 15 per cent of GDP respectively. However, given the North’s vast geography, short construction seasons and harsh climatic conditions, infrastructure development by the private sector in northern Canada can bring substantial costs, limiting the development of a number of mineral deposits. In addition to investments in the territories, strategic federal investments in infrastructure are also required in northern parts of various provinces, such as Ontario’s Ring of Fire region, northern Quebec and the Labrador Trough. Investments in these areas can help unlock Canada’s resource potential.

Northern Infrastructure Fund

Existing federal financing mechanisms for infrastructure development fail to recognize the unique realities of northern Canada, most notably its sparse populations and small tax base. That is why the PDAC is proposing the establishment of a dedicated Northern Infrastructure Fund (NIF), with an initial investment of $1 billion over a 5-year period. The Northern Infrastructure fund would help finance the transportation, energy and community infrastructure necessary to support resource development in Canada’s northern and remote regions.

Business Risks Facing Mining and Metals
Ernst & Young

Talking the Top 10 Barriers to Competitiveness
The Canadian Chamber of Commerce

Developing the Economic Potential of Canada’s Territories
Greater Nanaimo Chamber of Commerce

Resource Development in Northern Canada
Report of the Standing Committee on Natural Resources