> 4. By type of asset
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This section shows that infrastructure growth differed across regions in terms of the type of assets (Table 2). These differences, as subsequent graphs will show, were sharpened after 1980 when the funds available for infrastructure slowed. Every region showed differences in spending by asset type because their distinct economies, cultures and values required different needs and priorities: British Columbia focused on the environment, as well as recreation and engineering works in view of the upcoming Olympic games; culture and security were a priority in Quebec; sport complexes, water and roads featured in Ontario; marine construction (such as irrigation) was given attention in the Prairies; and institutional buildings (such as training centres) featured in the Atlantic Provinces.
The detailed asset types are regrouped to correspond to the following overall functions, listed in order of their importance to infrastructure capital in 2005: road infrastructure (including bridges and overpasses), which account for almost 40% of all infrastructure capital; environmental protection and the water supply, which together represent nearly one-quarter of all infrastructure; office buildings, which embody approximately 10% of total capital; and the remaining assets, which each account for about 5% or less of all capital, including culture and recreation (notably sports facilities); marine construction and transportation and communications equipment; institutional buildings; security; commercial buildings and engineering works; and research laboratories (Table A.3 in the Appendix). 5 The regional data are mostly presented on a per capita basis (in constant 1997 dollars), which also help adjust for the effect of a slowdown in population growth (from 1.9% in the 1960s to 1.1% in the 1990s, before recovering to 1.3%).
4.1 The road system
The development and operation of road infrastructure are essential to the movement of people and goods and drive a large proportion of the economy. These fall mostly under the government's responsibility. Thus, it is not surprising to see that roads and bridges make up the bulk (39.9%) of the government-owned stock of infrastructure. The provincial and municipal governments own the road system in about equal proportions.
The stock of road infrastructure per capita (in 1997 dollars) increased significantly from 1960 to 1980, but has been eroding since then, falling to $2,511 in 2005 from its peak of $3,019 in 1979. From 1995 to 2000 it fell an average of $322 million a year. Governments have boosted the flow of investment in roads from $4.3 billion in 1998 to $7.3 billion in 2005, but this has not offset the previous decline that set in during the 1980s.
Quebec's road capacity grew rapidly during the golden years of infrastructure spending in the 1960s and 1970s, but has also dominated the decline in subsequent years (Figure 3). In the 1960s and 1970s, with the arrival of Expo and the Olympics, a whole new road network took shape, including the Décarie Expressway 6 and the Louis-Hippolyte Lafontaine Tunnel under the St. Lawrence River (the longest underwater tunnel built in Canada since the 1930s). By the late 1970s, Quebec had invested at least as much in its road system per capita as any region in Canada (see Figure 3).
Figure 3
Stock of infrastructure capital stock, by region – Total road
system
In the late 1970s, highway construction started to decline in Quebec. Lower investment spending and steady depreciation resulted in a significant decline in its net capital stock in roads over the next two decades, far more than in any other part of the country. In terms of bridges and overpasses (Figure 4a), Quebec invested so little that the capital stock fell in absolute terms, tumbling from the most in Canada in the late 1970s ($1.6 billion) to reach, at $1.3 billion, approximately the same level as British Columbia and the Atlantic Provinces and below even the Prairies (despite Quebec having the largest land mass among all of the provinces at more than 1.5 million square kilometres, 7 or one quarter of all Canada's territory). Since 2001, its capital stock in roads has started to recover.
The average age 8 of bridges and overpasses in Quebec also has risen constantly since 1976, becoming older than those of any of the other provinces. While Quebec's territory is similar in size to the Prairies, more than half of Quebec's exports travel by road, far more than in the Prairie Provinces. Trade rose significantly after the North American Free Trade Agreement, and the number of total vehicles registered in Quebec almost doubled after 1975.
Road construction on the Prairies took off in the 1980s. Government-owned road infrastructure per capita in the Prairies continued to rise until the end of the Olympic games in Calgary. It then fell, with Alberta and Saskatchewan reducing their investments in roads the most. Low investment in roads on the Prairies can be associated with industrial demand shifting from roads in favour of trains and pipelines for the transportation of grains and oil and gas. British Columbia did not raise its investment in the road system to keep pace with its population after Expo 86.
Ontario is the only part of the country where the capital stock in roads continued to rise throughout all four decades. Ontario spent less on government-owned road infrastructure than Quebec until the mid-1980s (figure 4b). After that, it moved ahead of Quebec. The rise in the capital stock in the road network was nearly twice as large in Ontario as in Quebec from 1961 to 2005.
Figure 4a
Stock of infrastructure capital, by region – Bridges,
trestles and overpasses
Figure 4b
Stock of infrastructure capital, by region –
Roads
The Atlantic Provinces stand out as strong investors in their road system, perhaps because of the importance of tourism. Their per capita road infrastructure is well ahead of the other regions. From 1961 to 2005 the governments of New Brunswick and Prince Edward Island injected at least half of their total infrastructure budgets into the road system. The high level ofinvestments in roads and bridges in Prince Edward Island is largely attributable to the construction of the Confederation Bridge connecting the island to the continent in 1997.
4.2 The environment and water systems
The environment and water systems represent over one-quarter of government-owned capital, with 14.5% for the environment (largely waste water treatment systems and garbage) and 10.8% for water systems (largely for the supply of drinking water). Canada has an abundance of water, ranking second to Finland in terms of the volume and diversity of its water riches per capita, according to a U.N. report. While Canada barely represents 0.5% of the world's population, it has close to 20% of all freshwater reserves. 9
While provincial and municipal governments share ownership of the roads, environmental management and the management of water systems mainly takes place at the local government level. Municipalities account for more than 80% of capital spending in these areas by supplying a wide range of government-owned infrastructure, mainly pumping and filtration systems and water storage and distribution networks. As with roads, environmental and water system assets rose significantly from 1961 to 1981. Like roads, most regions experienced decreases thereafter.
British Columbia (Figure 5a) has the most government-owned infrastructure per capita related to the environment, while Quebec has the least. The Atlantic Provinces have invested the most in waste management per capita. The presence of this capital may have encouraged the development ofits recycling programs 10 Nova Scotia is the province whose residents recycle the most in Canada, at 157 kilograms per person, ahead of second-place British Columbia.
Figure 5a
Stock of infrastructure capital in the environment, by region
– Total
Figure 6
Stock of infrastructure capital, by region – Water
systems
Investment in water systems has barely compensated for the ageing of existing equipment from 1993 to 2002. In fact, as shown in Figure 7a, investment in water systems outside of Quebec kept up with the increase in domestic demand (as indicated by the change in housing stock) only from 1961 to 1965. This was followed by a shortfall, which widened in most parts of Canada until recently. In Quebec, the pattern was different from the other regions (Figure 7b). Quebec made a massive investment in this sector in the 1970s and 1980s, far more than any other part of Canada.
Figure 7b
Stock of infrastructure capital in water systems and the stock of
housing – Quebec
4.3 Office buildings
In order of magnitude, the road and the environment and water systems are followed by office buildings, which represent 9.2% of the total value of government-owned capital. This type of asset dominates federal infrastructure, with 30.9% of its capital in 2005, ahead of institutional buildings (12.7%) and security (11.2%).
Federal office buildings have become a larger part of total federal capital, up strongly compared with 16.3% in 1961. This is one of the few types of federal asset to have risen steadily in absolute terms from 1961 to 2005, reaching $7.6 billion in 2005 out of a total of $24.5 billion (in constant 1997 dollars). Ontario, with the presence of the capital in Ottawa, accounted for 37.8% of these buildings: still, this placed it behind the Prairies, which passed it in 2003 on a per capita basis. The Atlantic Provinces are well ahead in first place, with per capita investment twice as high as in Ontario.
On a per capita basis, the value of office buildings fell by 38.2% in Ontario from 1961 to its low in 1997, tracking a long period of fiscal restraint. Almost half of this loss was later recovered, reflecting a building boom in the Ottawa area. From 1997 to 2005, the value of office buildings rose from $2.1 to $2.9 billion (in constant 1997 dollars).
4.4 Culture and recreation
Recreational facilities provide important gathering places in society. They draw thousands of participants from every level of society to indoor and outdoor sports facilities such as arenas, skating rinks, stadiums, curling arenas, swimming pools and Olympic facilities. These facilities are also used as concert and meeting halls. Cultural facilities include public libraries, historical sites, museums and theatres.
Sports facilities and cultural capital are the asset types that increased the fastest in percentage terms (Table 2), rising 3.7% and 3.8% respectively per year from 1961 to 2005. While there may be a widespread impression that we are spending more time at work and that the leisure society is but an illusion, the population as a whole is working far fewer hours now than it did 40 years ago. Since 1989, the average work week decreased by nearly 2 hours, from 35.7 to 33.9 hours a week. For the total population aged 15 or over, time spent alone increased by 34% from 1986 to 1998 (from 4.4 hours in 1986 to 5.9 hours per day in 1998) 11 and has continued to rise since then. 12 Local governments played the biggest role by far in these infrastructure expenditures. The provincial contributions were much smaller than the municipal ones, and they decreased over time.
Figure 8
Stock of infrastructure capital, by region – Sports
facilities
Overall, however, sports facilities represented a relatively small portion (5.5%) of total infrastructure capital. Per capita, their stock in constant 1997 dollars amounted to slightly more than $300 in 2005. The capital stock in sports facilities decreases moving from west to east, from $422 per capita in British Columbia to $403 in the Prairies, $317 in Ontario, $311 in Quebec and $274 in the Atlantic Provinces. The dollar amounts were higher out west, as international events such as the 1988 Olympic Games in Calgary were relatively recent and, as a result, the facilities depreciated less than in the east, where they were older. Moreover, the Vancouver games already have started to accelerate their level in British Columbia. The 1976 Olympic Games in Montréal had increased Quebec's capital stock. The Atlantic Provinces are well behind the other regions in this regard, having never hosted a major international sports event. Also, the Atlantic Provinces are the only ones in the country without a major sports team.
It is in Quebec that culture infrastructure capital is most prominent. Figures 9a and 9b illustrate the gap between Quebec and much of the rest of Canada that has developed since the mid-1980s. From 1961 to 2005, culture was (with office buildings) the only area of government investment for which Quebec was well ahead of the growth in government-owned capital infrastructure in the rest of the country. In 2005, British Columbia was closing in, followed by the Atlantic Provinces, the Prairies and Ontario.
Figure 9a
Stock of infrastructure capital, by region –
Culture
Figure 9b
Stock of infrastructure capital, by region –
Culture
Quebec increased its investments in cultural facilities much more than in sports facilities, the opposite of most regions elsewhere (British Columbia increased its investments equally in both). Nonetheless, culture is only a small share of government-owned capital in Quebec as elsewhere. Culture capital is approximately $100 per capita for public libraries, museums, theatres and historical sites. After 2000, the growth of culture capital fell behind roads in Quebec.
The Atlantic Provinces posted growth about equal to the national average for both recreation and culture. Nonetheless, per capita, they lagged well behind the national average over the four decades, since they started from the lowest level.
4.5 Marine construction and other transportation and communications equipment
Assets related to marine construction and other transportation and communications equipment accounted for most of the federal government's investment slowdown from 1961 to 2005, and weighed heavily on the growth of all government-owned capital during the period under study (Table 3). The federal government has cut back by 1.5% a year on average its capital in this type of asset since 1961.
Marine construction largely includes irrigation, wharves, docks, terminals, breakwaters, canals and works along shorelines. The decline, particularly for wharves, docks and terminals, occurred across the country, but mostly in the Prairies (-2.4%). The other levels of government more than compensated for the drop only in the Prairies and Ontario, especially for work on canals and shorelines. In the Prairies, municipalities invested heavily in this sector, where it represented more than 5% of capital held by all levels of government. This boosted infrastructure capital to close to $2 billion in 2005 in irrigation work and shorelines (including the Greater Winnipeg Floodway built in the 1960s), as well as canals.
The decrease in expenditures on federal infrastructure offset increases in this area by the provincial and municipal governments in Quebec and British Columbia.
In the Atlantic Provinces, all levels of government combined spent an average 0.5% less annually. However, these data do not capture investments by Crown corporations. The decrease in the Atlantic Provinces occurs just as the Marine Atlantic Inc. crown corporation was set up, with a mandate to run a marine transportation service under contract with Transport Canada. Nonetheless, the capital stock for the transportation industry illustrates that, for the country as a whole, this infrastructure showed a slight downward trend per capita (these data are confidential on a provincial basis).
Figure 10
Stock of infrastructure capital, by region –
Marine
Other transportation equipment includes aircraft storage, railway tracks and passenger terminals. The infrastructure in these assets fell an average of 1% annually for the federal government. However, the other levels of government did not make up for these losses, and total government assets fell by less than 1% annually (part of the decline reflects the privatization of assets). This asset type accounts for less than 1% of total government-owned assets.
The federal government also reduced its investments in communications, but the private sector stepped up its investments in this area, at least until the Internet bubble burst in 2000.
4.6 Research laboratories and engineering
The federal government, which is the major stakeholder in this type of asset, just barely maintained its investments in research laboratories. However, there are strong regional variations. While such capital rose an average of1.7% annually in Quebec and 1.4% annually in the Prairies, it fell by 2.3% in British Columbia.
Most of the engineering work was done by local administrations, which boosted the overall capital stock, especially in British Columbia, where this capital grew by 5.3% a year.
4.7 Institutional and commercial construction
While the three levels of government share ownership of this type of capital more or less equally, here again the federal government has slowed its capital outlays since 1961. Federal capital growth in institutional buildings (which include veterans' hospitals, training and day care centres) rose only 0.3% annually, compared with 2.1% for all levels of government. Commercial capital (warehouses and garages) decreased by 1.1% annually, with Quebec, Ontario and British Columbia reporting the strongest declines. At the same time, the Atlantic Provinces reported higher growth for institutional and commercial construction than the Canadian average.
4.8 Security
Security-related assets include penitentiaries, detention homes and courthouses. They represent only 3.1% of the value of total government-owned capital. However, for all provincial and federal governments combined, security-related capital has been the main contributor to overall growth since 1961, after roads and office towers. Regionally, there was a shift in capital toward Quebec and the Atlantic Provinces, where the provincial governments invested a great deal. Ontario's investment was the lowest per capita.
Figure 11
Stock of infrastructure capital, by region –
Security
5 . The data only cover the public administration portion of government. Hospitals and schools are excluded, as they are classified as separate industries in the North American Industry Classification System (NAICS), which does not distinguish between public and private ownership. Including hospitals and schools has little impact on the overall trends discussed in this study.
6 . Source: http://www.gouv.qc.ca/fr/reseau/routes/autoroute.asp , consulted December 22, 2006.
7 . The data on surface territory comes from Natural Resources Canada, Geo Access Division.
8 . A note of caution is necessary when analysing the average age of capital stock. The variables used to compute the average age of capital stock are investment, the survival function, the year in which the investment was made, and year-end gross capital stock. In practice, there can be several different types of distributions for a given average age. For example, there can be structures whose ages are clustered around the average age, or a combination of young structures with much older structures.
9. Please refer to "Fresh water resources in Canada" in Human Activity and the Environment Annual Statistics 2003 , Statistics Canada.
10. The data from the Survey of Households and Environment conducted by Statistics Canada in 2006 show that access to recycling programs explains part of the difference in recycling rates across the provinces.
11 . W. Clark. 2002. "Time Alone," Canadian Social Trends . Ottawa, Statistics Canada.
12 . Time alone includes time spent listening to music, reading and watching television or time spent on sports or other cultural events.
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