Increased 2017 infrastructure spending expected

By: Mike Kastner, NTEA Managing Director

This article was published in the February 2017 edition of NTEA News.

Infrastructure spending that will benefit the work truck industry is expected to increase in 2017 across the North American Free Trade Agreement (NAFTA) landscape.

Mexico is in the midst of a national infrastructure program for 2014–2018, put in place by President Enrique Peña Nieto after he took office in December 2012.

The largest expenditure announced in Canada’s budget last year was infrastructure investment, with plans to dedicate more than $120 billion over the next 10 years.

In the U.S., the Trump Administration has called for rebuilding the nation’s infrastructure with long-term investments of $1 trillion.

The four-year infrastructure spending plan was anticipated to be complete by the end of 2017 but is now expected to last into 2018. While government spending decreased somewhat due to budget cuts, overall spending remains robust as a result of public-private partnerships.

Additionally, 2013 legislation allowing private investment in Mexico’s oil and gas industry may add to infrastructure spending. Demand is expected for housing, water and pipeline infrastructure — perhaps as much as $30–35 billion in pipeline investment alone over the next several years.

Canada decided infrastructure spending is so important to its economy that it is willing to forecast a budget deficit to make these investments. The most recent budget called for $120 billion in two phases over the next decade. In the country’s fall budget update, total spending was boosted to more than $180 billion, and the Canada Infrastructure Bank was created to help facilitate funding.

In the short-term, Canada plans to spend about $12 billion to upgrade public transit and wastewater facilities. The second phase looks to long-term infrastructure needs to help modernize and position the country for global trade opportunities. This would include creating fast and efficient trade.

Canada’s energy sector was hit due to the drop in oil prices. To aid in diversifying this economic area, the nation is investing in green and renewable energy technologies, including more than $80 million over two years to support research, development and demonstration of clean energy innovations. Another short-term investment of more than $60 million will go toward infrastructure deployment for alternative transportation fuels, such as charging infrastructure for electric vehicles, and natural gas and hydrogen refueling stations.

United States
Increased infrastructure spending is long overdue in the U.S. The gridlock in Washington resulted in spending rates that have not always kept up with inflation, an inability to engage in long-term planning and failure to reform the funding mechanisms for infrastructure investment.

The Trump Administration said it will work toward long-term funding of $1 trillion. As estimated, the U.S. could require spending of $3–4 trillion to fully address infrastructure needs. Many public works projects could be financed through public-private partnerships. Things like toll roads lend to these types of financing arrangements. Fixing old roads and aging pipes is more likely to require government funding.

The new Administration indicated it would like to move forward on infrastructure funding in the first 100 days, with one proposal to offer federal tax credits to private investors who back transportation projects. Congressional leaders suggested they first will focus on finding ways to pay for the infrastructure proposal with a broader package likely to come later in the spring. They also indicated that streamlining regulations to enable more efficient transportation spending is important, in addition to leveraging private-sector involvement.

For questions or more information, contact Mike Kastner.