It’s been an amazing run for the Canadian economy over the past six-odd months. Real GDP growth this year is expected to well outpace our neighbour to the south by a wide margin. The labour market is rapidly tightening as well. And given Canada turns 150 years old this year, the bumper economy north of the 49th parallel is the icing on the cake of this sesquicentennial year. However, the party can’t last forever.
The federal government seeks to create a new institution for funding infrastructure investment––the Canada Infrastructure Bank (CIB). In Canada, it is governments at all levels that tend to hold the primary role in the planning, building (i.e. as sponsor), managing and financing of infrastructure. Other than in the construction phase, the private sector is a relatively niche player in the lifecycle of infrastructure assets. The CIB aims to be a catalyst for including the private sector in the other aspects of the lifecycle. The untested presumption is that service levels, externalities and competition will remain constant (at least) while risk will be transferred from the public to the private sector. However, this has rarely been the case with public-private partnerships (PPPs)––the oft-cited private-sector solution to public-sector infrastructure folly. Indeed, with the private sector owning and managing infrastructure assets, the cost of capital is likely go up.
In the 2016 Fall Economic Statement, the federal government outlined the broad strokes of its soon to be established CIB. A key recommendation of the Finance Minister’s Advisory Council on Economic Growth and Prosperity, the federal government expounded further on the CIB in Budget 2017 and again, more recently, in the Budget Implementation Act (BIA). The BIA has put even more meat on the bone, although information on this one-of-a-kind crown agency still makes for some pretty thin pickings and public consultations appear to be sparse.
Along with continued advances in computing power and the availability of a broader range of data than just that provided by official sources, nowcasting has become an increasingly popular area of analysis among economists. Also known as tracking or monitoring, nowcasting refers to forecasting an economic variable in the very near term by incorporating data of varying frequencies or timeliness, as well as data from official and unofficial sources.