Between 1955 and 1977, new investment in infrastructure grew by 4.8 per cent annually. This was a period of intense capital investment that closely matched Canada's population growth and rate of urbanization. This period stands in stark contrast to the 1978 to 2000 period, when new investment grew on average by just 0.1 per cent per year. Although the rate of population growth also declined, this does not account for the radical reduction in capital investment during this period. Clearly, all orders of government were under-investing.
More recently, capital spending by local governments has increased. Real investment spending posted an average annual increase of 7.5 per cent between 2001 and 2003. New investment-the portion of investment that actually adds to the overall capital stock-has been particularly strong, expanding at a rate of more than 11 per cent per year over the same period.
However, this recent growth in infrastructure spending should not be considered a solution to the infrastructure deficit. Much of this recent increase in investment can be traced to increased urbanization during the past 10 years, and it is not clear that the increase in capital stock is sufficient to meet population growth. Moreover, this increase in investment has not met the annual rehabilitation needs of existing capital stock, or alleviated the backlog of maintenance and rehabilitation that accumulated over the decade.