Outlook 2008 (9 sectors to watch): Construction

If cost inflation is held in check Canada is about to see infrastructure become a larger part of the economy.

The federation of Canadian Municipalities recently released a report that finds cities’ infrastructure deficit now stands at $123 billion, and is growing fast. Municipal infrastructure, the report said, is “near collapse.” Good thing the federal government is moving on this file.

At the Canadian Council for Public-Private Partnerships annual conference — the CCPPP is a sort of proto-lobby or trade group of builders, financiers and lawyers who support a greater role for so-called P3s in the infrastructure space — Finance Minister Jim Flaherty delivered a keynote address and expounded upon the government’s Building Canada infrastructure plan. It will see $33 billion dedicated to funding infrastructure projects. According to Flaherty, that money will be leveraged by the private sector into some $100 billion in spending. “This is the biggest amount of money put toward infrastructure in a generation,” said Flaherty to a media scrum after his address. When asked whether the Canadian economy — whose labour pools are already strained by growth in Alberta, among other factors — can handle $100 billion in construction projects, the minister said the government is keeping an eye on the labour issue. “The demographic and labour challenges here are something we take very seriously,” he said. “It’s something we’re thinking about.”

Assuming the building boom doesn’t push cost inflation in the construction sector through the roof, Canada is about to see infrastructure, and the ongoing construction jobs it provides, become a larger part of the economy. Most of the projects posted to the CCPPP “project tracker” list involve hospitals, but what is clear is that infrastructure is becoming very big business generally. It certainly has to be one of the fastest-growing sectors in the country — and the challenge of a lifetime for this country’s young planners, designers, engineers and skilled tradespeople — if all goes according to plan in 2008.