If Saskatchewan’s infrastructure investments had been on par with the national average over the past 25 years, the province’s GDP would have been roughly 1.6 per cent higher in 2015, according to a new report by The Conference Board of Canada. The higher GDP would translate into roughly $2,500 more income for each Saskatchewan household.
“While Saskatchewan is blessed with natural resources that have made the province more attractive to private investment, public infrastructure investment has not kept pace,” said Pedro Antunes, Deputy Chief Economist, The Conference Board of Canada. “Over the past 25 years, Saskatchewan has invested less in public infrastructure than most other provinces. Our report suggests that Saskatchewan could improve its long-term growth path by increasing public investment in infrastructure.”
Highlights
- If its infrastructure investments were on par with the national average over the past 25 years, Saskatchewan’s GDP would have been roughly 1.6 per cent higher in 2015.
- The ratio of public to private capital has been in sharp decline in Saskatchewan in recent years in comparison to a stable national performance.
- The higher GDP would translate into roughly $2,500 more income for each Saskatchewan household.
The long-term economic growth and prosperity of any economy can largely be attributed to the quantity and quality of its capital. Public capital, including schools, hospitals, roads, bridges, and recreational and cultural infrastructure, create the environment that businesses need to operate and by doing so, help boost private sector investment and productivity.
Saskatchewan has invested relatively less historically in public infrastructure than other provinces. While national average spending was 3.5 per cent of GDP during the 1990s and 2000s, Saskatchewan’s average spending was just 2.9 per cent. Despite a pick up in investment over the 2010 to 2015 period, the province’s spending continued to lag that of most other provinces.
The report, Infrastructure in Saskatchewan: Assessing the Benefits, evaluates the impact on Saskatchewan’s economy had the province invested in public infrastructure on par with other provinces between 1991 to 2015. Lifting real public infrastructure investment by roughly 0.6 percentage points over the 1991 to 2015 period to match the national average would have added $280 million (in 2007 dollars) per year to investment over a 25-year period. The increase in the stock of public capital would have boosted the province’s real productive capacity by 1.6 per cent in 2015. This represents an increase in in the average income of Saskatchewan residents of $969 per person in 2015, or nearly $2,500 per household (in current dollars).
“Investing in public capital helps boost private sector production by contributing to an educated and healthy population, as well as providing the transportation and other infrastructure relied on by businesses,” added Antunes.
