Shovel Ready Projects for Post Shut-Down Stimulus

[kwoldtimer]

Originally Posted by Loco101

Do you realize what the consequences are if we don't go into debt?

It is to be expected that a segment of public opinion will object to the cost of the various emergency measures. There will also be complaints down the road if/when stories emerge of ineffective programs and funds being paid out in error. At the end of the day, I doubt it will matter, unless the public mood shifts to needing someone to blame.

[jawagord]

Originally Posted by milomilo

This I'm sure sounds very smart to those that say it, but isn't really true at all, especially when it comes to a country. If we borrow $1B (including interest) and it grows the economy by $1.1B, then it doesn't matter that the $1B has to be repaid, as you are still richer in the end. When you hear of someone taking out a mortgage (a far more risky endeavour than the feds borrowing money), do you scream at them "don't you know that needs to be paid back!!!"?

I'd rather we didn't lower the conversation to these conspiracy theory wackjob ideas that we'd all be alright if it the damn government just let us be free to infect each other. Who knows if Taiwan's strategy will work, but the price for that will be vastly increased government intrusion, something I have a feeling those calling for premature reopening would not support.

I thought it was obvious that we are not borrowing money to grow the economy, we are borrowing money to slow its contraction. How long do you think the government can keep borrowing 100’s of billions in a shrinking economy? It’s soon going to reach a point of failure at the rate Trudeau is shovelling the money out.

Taiwan’s strategy is working better than ours by all measures, I’m sure the majority of the Canadian population would take some targeted government intrusions that allow the majority to get safely back to work over the current intrusion of staying home. This pandemic is going to set back the economy for a decade or more and when interest rates return to normal debt servicing will become a monster for the government of the day.

these responses indicate that pandemics are followed by sustained periods—over multiple decades—with depressed investment opportunities, possibly due to excess capital per unit of surviving labor, and/or heightened desires to save, possibly due to an increase in precautionary saving or a rebuilding of depleted wealth.

Either way, if the trends play out similarly in the wake of COVID-19—adjusted to the scale of this pandemic—the global economic trajectory will be very different than was expected only a few weeks ago. If low real interest rates are sustained for decades they will provide welcome fiscal space for governments to mitigate the consequences of the pandemic. The major caveat is that past pandemics occurred at time when virtually no members of society survived to old age.

https://www.frbsf.org/economic-resea...ACyMhbl4lCepKs

[Truenorth00]

Originally Posted by ssiguy

I am a strong supporter of environmenal reviews but only where they are needed.

And who gets to judge where they are needed?

Your assertion here reeks of someone who doesn't understand the EA process or the purpose of it.

[ssiguy]

Originally Posted by milomilo

No that isn't how either of those mechanisms work, they are not "lazy".

I don't believe the -goodgrowth- was inferring that the immigrants themselves are lazy as clearly the vast majority are not.

I think what he was inferring is that opening up the immigration floodgates again is "lazy" in that it is an easy way out. Instead of increasing productivity and investing in our social, technological, and physical infrastructure to grow the economy we simply let more foreigners in to prop up our real estate sector again. Our booming real estate sector is what has got us into the personal debt crisis we have today so making it even worse is the last thing we should do.

[Truenorth00]

Originally Posted by milomilo

This I'm sure sounds very smart to those that say it, but isn't really true at all, especially when it comes to a country. If we borrow $1B (including interest) and it grows the economy by $1.1B, then it doesn't matter that the $1B has to be repaid, as you are still richer in the end. When you hear of someone taking out a mortgage (a far more risky endeavour than the feds borrowing money), do you scream at them "don't you know that needs to be paid back!!!"?

Except that the frustration with the Liberals is that this excuse (Keynesian economics) has been abused to justify regularizing deficit funded fiscal transfers.

Imagine taking out a loan and instead of buying a house, you decide you're going to use the money on rent and massive annual parties. This is closer to reality with Liberal fiscal policy. Most of the deficit didn't go to infrastructure. It went to social programs, which should have been getting funded.

For infrastructure to be truly stimulative, it can't just create construction jobs. Otherwise digging holes and filling them back up would be sensible stimulus. It needs to make us more economically efficient and competitive coming out of the recession. Beyond standard State-of-good-repair (SOGR) maintenance and upgrade work, there's only a small category of projects that would truly qualify by this metric. Utilities and public transport chiefly among them. Maybe education and health care infrastructure in some cases.

Originally Posted by milomilo

I'd rather we didn't lower the conversation to these conspiracy theory wackjob ideas that we'd all be alright if it the damn government just let us be free to infect each other. Who knows if Taiwan's strategy will work, but the price for that will be vastly increased government intrusion, something I have a feeling those calling for premature reopening would not support.

That is exactly what Taiwan's strategy is based on. South Korea too. Massive levels of contact tracing using individual (non-aggregated) cellphone data. Let's see any of those whackos protesting to open up support that. Of course, that's assuming their astroturfed political campaigns are motivated by genuine economic concerns and not partisan political goals. As an aside, watching supposedly pro-life conservatives consider grandma utterly disposable in a bid to save the economy has really shown some of these folks for the unprincipled charlatans they are.

[someone123]

Originally Posted by Truenorth00

Imagine taking out a loan and instead of buying a house, you decide you're going to use the money on rent and massive annual parties. This is closer to reality with Liberal fiscal policy. Most of the deficit didn't go to infrastructure. It went to social programs, which should have been getting funded.

For infrastructure to be truly stimulative, it can't just create construction jobs. Otherwise digging holes and filling them back up would be sensible stimulus. It needs to make us more economically efficient and competitive coming out of the recession. Beyond standard State-of-good-repair (SOGR) maintenance and upgrade work, there's only a small category of projects that would truly qualify by this metric. Utilities and public transport chiefly among them. Maybe education and health care infrastructure in some cases.

I agree although I think it's pretty obvious that Canada's cities haven't been keeping up on infrastructure development and there's currently low-hanging fruit all over the place. For years we've had a huge disconnect between immigration policy that is driving 2% per year growth in the cities and timid infrastructure development.

Another factor is that there's always risk or uncertainty and future income needs to be discounted based on that risk, inflation, and opportunity cost. It's rarely possible to know for certain that you'll get $1.1B back from spending $1B.

[Truenorth00]

Originally Posted by someone123

I agree although I think it's pretty obvious that Canada's cities haven't been keeping up on infrastructure development and there's currently low-hanging fruit all over the place. For years we've had a huge disconnect between immigration policy that is driving 2% per year growth in the cities and timid infrastructure development.

Honestly deeply conflicted on this. I get why the feds pay for infrastructure coming out of a recession. But over the long run federal funding creates a massive reliance on the stream and an utter refusal by municipalities to raise the taxes they need to fund their own infrastructure needs. Toronto's ridiculous refusal to raise residential property taxes to even pitch in for transit projects comes to mind. Or utilities that have refused to keep up with maintenance or budget for end of life replacements.

Originally Posted by someone123

Another factor is that there's always risk or uncertainty and future income needs to be discounted based on that risk, inflation, and opportunity cost. It's rarely possible to know for certain that you'll get $1.1B back from spending $1B.

True. But certain categories do offer higher rates of return or cost avoidance at least. Like utilities and transportation.

[Corndogger]

Originally Posted by Truenorth00

Honestly deeply conflicted on this. I get why the feds pay for infrastructure coming out of a recession. But over the long run federal funding creates a massive reliance on the stream and an utter refusal by municipalities to raise the taxes they need to fund their own infrastructure needs. Toronto's ridiculous refusal to raise residential property taxes to even pitch in for transit projects comes to mind. Or utilities that have refused to keep up with maintenance or budget for end of life replacements.




True. But certain categories do offer higher rates of return or cost avoidance at least. Like utilities and transportation.

There's only one taxpayer. The problem at the municipal level isn't that taxes are too low. It's that not enough money comes back to cities. Local taxpayers shouldn't have to foot the bill for multibillion dollar utility upgrades and transportation projects. Provinces and the feds should be covering most of those costs.

[Truenorth00]

Originally Posted by Corndogger

There's only one taxpayer. The problem at the municipal level isn't that taxes are too low. It's that not enough money comes back to cities. Local taxpayers shouldn't have to foot the bill for multibillion dollar utility upgrades and transportation projects. Provinces and the feds should be covering most of those costs.

Sorry. But why should the province and the feds be covering the majority of costs of infrastructure that is entirely locally used?

We now have the bizarre situation in Ontario where Toronto has the lowest mill rates in the province for a big city and gets the vast majority of multi-billion dollar transit projects paid for while cities like Ottawa and London have to pay half the costs of their projects. The City of Ottawa with a million residents has contributed more to its LRT plan than Toronto will to the Scarborough subway extension which is the only project it is contributing to out of nearly $30 billion worth of infrastructure planned in the 416 and 905 over the next decade.

This deep federal involvement in local infrastructure also means less spending on national and regional infrastructure priorities like intercity rail, ports, grid infrastructure, etc.

[scryer]

Originally Posted by Corndogger

There's only one taxpayer. The problem at the municipal level isn't that taxes are too low. It's that not enough money comes back to cities. Local taxpayers shouldn't have to foot the bill for multibillion dollar utility upgrades and transportation projects. Provinces and the feds should be covering most of those costs.

I agree with Truenorth00...

I get that major metro areas will command the most fund expenditures however it shouldn't be to a disproportionate level.

[milomilo]

I sympathise that local money should be spent on local projects. But there is a large flaw in that - the federal government is far better placed to provide funding. Municipalities have very limited borrowing power. Provinces have more, but still far less than the feds, who can borrow infinite money, should they so please. Not only that, but the risk to the federal government of a project not going to plan is not a huge deal, whereas for a city the risk is potentially crippling, leading to caution. The federal government can also take into account the wider economic benefits, which aren't relevant to cities.

[Truenorth00]

Originally Posted by milomilo

I sympathise that local money should be spent on local projects. But there is a large flaw in that - the federal government is far better placed to provide funding. Municipalities have very limited borrowing power. Provinces have more, but still far less than the feds, who can borrow infinite money, should they so please. Not only that, but the risk to the federal government of a project not going to plan is not a huge deal, whereas for a city the risk is potentially crippling, leading to caution. The federal government can also take into account the wider economic benefits, which aren't relevant to cities.

Municipalities are only limited so far as they are willing to raise property taxes. And we have places like Toronto which simply refuse to do it because their electoral clout is sufficient enough that they they know they'll never have to spend on infrastructure expansion in any sincerity again. Heck, even Ford backed off on having Metrolinx take over the TTC. Meanwhile, Ottawa, a city of a million people, took on over $2 billion of debt to pay for its LRT system. It's always been crazy to me that voters in Ottawa and Hamilton and London don't demand better from their MPPs and MPs.

More broadly, the Fed involvement in municipal Infrastructure has led to a massive lack of strategic focus on national infrastructure. This is why the TransCanada is still one lane in each direction in many parts of Canada. This is why we don't have proper intercity rail. Why Quebec can't sell electricity to Saskatchewan. Etc.

[someone123]

Originally Posted by Truenorth00

Municipalities are only limited so far as they are willing to raise property taxes. And we have places like Toronto which simply refuse to do it because their electoral clout is sufficient enough that they they know they'll never have to spend on infrastructure expansion in any sincerity again.

Property taxes also happen to have the advantage of capturing some of the increase in value that's directly generated by projects like new transit corridors. Different types of taxes generate different incentive structures. "There's only one taxpayer" is not a good way to think about tax policy.

Right now we generally let land owners capture value generated by public infrastructure spending. Add in the primary residence capital gains tax exemption and this can reach ridiculous levels. Buy a house along Broadway in Vancouver, "live" in it for 5 years while the subway is built, and then sell it after for commercial development and you will not pay taxes on your gains. Bonus points if you can find somebody who is 55 or older to live in it so the property taxes may be deferred with sub-inflation interest.

[Corndogger]

Originally Posted by someone123

Property taxes also happen to have the advantage of capturing some of the increase in value that's directly generated by projects like new transit corridors. Different types of taxes generate different incentive structures. "There's only one taxpayer" is not a good way to think about tax policy.

Right now we generally let land owners capture value generated by public infrastructure spending. Add in the primary residence capital gains tax exemption and this can reach ridiculous levels. Buy a house along Broadway in Vancouver, "live" in it for 5 years while the subway is built, and then sell it after for commercial development and you will not pay taxes on your gains. Bonus points if you can find somebody who is 55 or older to live in it so the property taxes may be deferred with sub-inflation interest.

For this discussion there really only is one taxpayer. The original premise brought up was to raise property taxes. Other than commercial properties the person paying property taxes is also very likely paying taxes to the feds and the provinces. The City of Calgary claims that something like only 6 or 8% of taxes paid to the feds by Calgarians comes back to the city. Why should Calgarians or anyone else have to pay even more to fund projects that would have adequate funding if more tax dollars stayed in cities? The problem isn't that we're not paying enough taxes (I can't believe anyone thinks that!), it's with the distribution of those dollars.

The reason we don't have more infrastructure that spans the nation has a lot more to do with other factors than lack of taxes. Over the decades drivers have paid more than enough in gas taxes to twin and freewayize the Trans Canada. If that money had gone into a specified pot devoted to road building we'd be much better off. Same goes for other taxes. Until all levels of government get their acts together they can forget about raising taxes. We need lower taxes to get the economy going--much lower!

[Truenorth00]

Originally Posted by Corndogger

For this discussion there really only is one taxpayer. The original premise brought up was to raise property taxes. Other than commercial properties the person paying property taxes is also very likely paying taxes to the feds and the provinces. The City of Calgary claims that something like only 6 or 8% of taxes paid to the feds by Calgarians comes back to the city. Why should Calgarians or anyone else have to pay even more to fund projects that would have adequate funding if more tax dollars stayed in cities? The problem isn't that we're not paying enough taxes (I can't believe anyone thinks that!), it's with the distribution of those dollars.

Downtown Toronto contributes even more to federal coffers thanks to being the financial centre of the country. All those HQs and banks are filling their corporate taxes with an M series postal code. But this is a bullshit metric and argument to use because federal spending by its very nature can't be balanced regionally and certainly not along urban/rural lines. For example, a good chunk of the imbalance outside of actual transfer programs is federal Infrastructure like military bases, labs, etc. How is that kind of spending to be balanced in major metros? Should we build the next Level 4 lab in downtown Calgary or an airbase on the Toronto Islands?

Beyond that a lot of federal spending is transfers. Either equalization or direct payments to Canadians. Again, nothing that can be changed unless we change the very nature of Canada.

So deciding that what is left after all that go to a handful of urban transit projects is a recipe for leaving a lot of national priorities unaddressed. And also makes these funds far more political because every local MP from the ruling party can now angle for their ribbon cutting.

[Airboy]

Originally Posted by Truenorth00

Downtown Toronto contributes even more to federal coffers thanks to being the financial centre of the country. All those HQs and banks are filling their corporate taxes with an M series postal code. But this is a bullshit metric and argument to use because federal spending by its very nature can't be balanced regionally and certainly not along urban/rural lines. For example, a good chunk of the imbalance outside of actual transfer programs is federal Infrastructure like military bases, labs, etc. How is that kind of spending to be balanced in major metros? Should we build the next Level 4 lab in downtown Calgary or an airbase on the Toronto Islands?

Beyond that a lot of federal spending is transfers. Either equalization or direct payments to Canadians. Again, nothing that can be changed unless we change the very nature of Canada.

So deciding that what is left after all that go to a handful of urban transit projects is a recipe for leaving a lot of national priorities unaddressed. And also makes these funds far more political because every local MP from the ruling party can now angle for their ribbon cutting.

The Alberta Government shelved a new Lab in Edmonton. They could always revive it and do a redesign of the ventilation and spaces to meet the Level 4 standards. Or just make it Level 3. Leave the level 4 in Winnipeg.

[Truenorth00]

Originally Posted by Airboy

The Alberta Government shelved a new Lab in Edmonton. They could always revive it and do a redesign of the ventilation and spaces to meet the Level 4 standards. Or just make it Level 3. Leave the level 4 in Winnipeg.

I think you missed my point here. It's very hard to ensure equitable distribution of federal spending because of the nature of what the federal government does and the obligation it incurs under our constitutional framework.