BEYOND REASON AND ACCOUNTABILITY

Contributed by Robert Lyman © 2025. Robert Lyman’s bio can be read here.

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EXECUTIVE SUMMARY

The Mark Carney government is now engaged in implementing a policy that will entail accelerating the regulatory approval and construction of a number of “nation-building” infrastructure projects. News reports indicate that many of the projects will involve transportation infrastructure – pipelines, ports, electricity transmission lines, highways and light and heavy rail systems. The choice as to which projects to benefit from designation as “nation-building” will be made according to criteria and a process that has not yet been published. The nomination of the projects has been entirely political – made by provincial governments and indigenous leaderships as reviewed and endorsed by the Carney government. A significant number will be promoted for climate policy reasons; that is, based on the pursuit of sharply reduced greenhouse gas (GHG) emissions. This article will review some recent experience with public funding of similar projects in the recent past.

Infrastructure megaprojects entail large risks. In one influential study, Bent Flyvbjerg, an expert in project management at Oxford University’s business school, estimated that nine out of ten go over budget. They also typically take far longer to complete than initially estimated, which adds to the costs and inconveniences the public. McKinsey and Company cites several reasons why these problems arise: under-estimation of costs and timelines to make projects more appealing; poor design and execution; and weaknesses in organizational design and capabilities, among others.

The Carney government succeeded in convincing Parliament to pass the Building Canada Act, which authorizes priority treatment for projects deemed to be in the national interest. The government will have broad discretion as to which projects it endorses and which measures it takes both to accelerate regulatory reviews and to subsidize the projects with taxpayers’ dollars.

Major infrastructure projects, including those that involve transportation infrastructure, remain vulnerable to significant cost escalation and delays, especially when they are sponsored by governments and driven by political objectives rather than commercial ones. The passage of the Building Canada Act has potentially reduced the time required for federal government regulatory review, although this will depend upon the extent to which the criteria in the Impact Assessment Act and the Canadian Energy Regulator Act continue to be applied.

Whether it is the federal government “picking winners” or relying on provincial governments and indigenous groups to nominate them, this replaces business case considerations with political ones. Politics inevitably engages a wide array of stakeholders (e.g. legislators, opposition parties, agencies, non-governmental organizations, and the broader public) with vested interests who have different expectations concerning the project outcomes and the sharing of costs and benefits. With many billions of dollars at stake and the likelihood of increasing limits on federal expenditures in future, politicizing the project selection process may gravely misallocate the funds needed to assure Canada’s prosperity.