Worldwide infrastructure spending heralded
John Morrissy
Province
Global infrastructure spending could hit between $25 and $30 trillion over the next two decades as governments seek to dig their way out of a worldwide recession and put people back to work, CIBC World Markets said in a report yesterday.
The report heralded the infusion of spending on public projects like road and bridges as a more effective means than tax cuts to stimulate economic growth, and estimated that $10 billion spent in Canada could create 110,000 jobs.
“Governments all over the world are buying jobs,” said Benjamin Tal, senior economist at CIBC World Markets. “And the infrastructure sector is where many of these jobs will be created.
“In the U.S., the impact of economic growth of infrastructure spending worth one per cent of GDP is more than double the impact of tax cuts, which have a greater leakage to imported consumer goods, and which risk being saved by households.
“In Canada, $10 billion of infrastructure spending can potentially create 110,000 jobs and lift economic growth by close to 1.5 percentage points-well above the stimulus effect of a tax cut of a similar size.”
In its continuing series of announcements preceding today’s budget, the Conservative party said yesterday the document will set aside $7 billion for infrastructure spending.
Tal’s report contained some good news for Alberta‘s struggling tarsands sector, which has been hit in recent months with tens of billions of dollars in project delays. While the bulk of fresh spending will go first to new hydroelectric and nuclear projects, Tal expects the money to flow back to the oilsands once energy prices rebound.
Over the coming decade, the report estimates $150 billion a year in new infrastructure spending in the U.S., $300 billion in Europe, $200 billion in China, and expects total global spending to total $650 billion over the next two years.
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