Accelerating productivity-enhancing infrastructure projects could provide much-needed stimulus and help Canada’s economy recover from the COVID-19 crisis, according to a C.D. Howe Institute working group.

The Crisis Working Group on Business Continuity and Trade made that assertion in a statement on June 17. The group also emphasized the need to adapt Canada’s bankruptcy and restructuring process to cope with the potential for widespread insolvencies.

The group of industry experts and economists, which is co-chaired by former Ontario Minister of Finance Dwight Duncan and Jeanette Patell, Vice-President of Government Affairs and Policy for GE Canada, considered a number of measures for enhancing Canada’s prospects for a resilient recovery:

• create stimulus through accelerated infrastructure spending that can boost depressed aggregate demand through a protracted period of weakness, and that is targeted to boost productivity and address specific social and environmental objectives;
• ensure the adaptability of Canada’s bankruptcy and restructuring processes to address widespread insolvencies created by COVID-19;
• recognize the importance of expedient merger review and open access to foreign capital, as well as the need to “sunset” government interventions in markets and restore competitive forces as soon as practical; and
• use government tools to assess risk versus economic cost in order to stage re-opening and better calibrate any second wave re-tightening of activity restrictions.

The group suggested Canada should seize this near-term opportunity to address its maintenance backlog for aging public infrastructure assets. It added that broadband connectivity is a critical backbone for long-term national prosperity.

“To guide future national infrastructure priorities, Canada needs a national strategic assessment initiative to identify those infrastructure investments that would boost long-run economic growth, enhance social wellbeing and enhance resilience—particularly in response to risks from climate change,” said the group’s statement.

The group further recommended putting in place backstop facilities for “debtor in possession” financing in the event that traditional lenders become overwhelmed. It also emphasized the need for the expedient and flexible review of acquisitions by the Competition Bureau and under the Investment Canada Act, with streamlined processes to facilitate rapid restructuring if there are limited acquirers for a failing firm.