Delivering on Canada’s growth ambitions

In today’s economic and trade environment, Canada must look for alternative supply chains. Interprovincial efforts to increase regulatory harmonization will be key to facilitating the development of domestic markets. At the same time, Bill C-5 should help unlock connectivity at home and internationally.

As we look ahead, two big focus areas stand out for Canada. The first is the need for greater connectivity across the country. In a recent KPMG in Canada survey of 250 Canadian business leaders, 90 percent said all levels of government need to declare the building of an energy-agnostic utility corridor as a “national emergency.”

The second is ports. The same survey found that 89 percent of Canadian business leaders think Canada’s ports are woefully unproductive and need major investments in order to make good on the promise of wider global trade.

Canada could—and should—be using these opportunities to further multiple goals and outcomes for the country. Ports are needed to modernize trade and unlock new routes to markets. But they are also key to securing our national borders, particularly as global geopolitical focus shifts to the north.

At the same time, as supply chains diversify and new suppliers are added to the mix, Canada’s builders will need to place increased focus on understanding not just their tier one suppliers, but also their tier two and three suppliers so as to better assess potential risks, vulnerabilities and costs.

Those responsible for large-scale development projects and those operating in globally competitive sectors (like power generation) will need to place tighter focus on planning and managing potential vulnerabilities.

1. Improve supply chain visibility by forging stronger relationships with key suppliers and enhancing data sharing down into the second and third tiers of your network.
2. Identify supply chain risks and critical vulnerabilities based on shifting geopolitical, trade, economic and environmental considerations.
3. Conduct scenario analysis leveraging technology and AI to rapidly assess various potential outcomes and test strategies.

The agenda is massive. Yet the capital—financial and human—is finite. If Canada wants to deliver on its build ambitions, productivity will need to increase. And that will necessitate significant innovation, in multiple forms.

Infrastructure and construction companies will need to consider how new technologies (AI in particular) can help improve construction and planning efficiency by, for example, predicting project delays, optimizing sequencing and improving resource allocation.

Productivity will also require infrastructure players to innovate around people. As the pipeline of projects unlocked under Bill C-5 swells, capabilities will be further strained. Technology will alleviate some of that pressure. But executives will also want to think about how they might be more creative in attracting and retaining key capabilities to their organization.

At the same time, project developers, both public and private, will need to consider how they might become more innovative in their contracting approaches in order to unlock new sources of productivity. That will require project owners to truly understand the market, the perspective of their counterparties and the appropriate mechanisms that promote and unlock productivity.

Government will also need to play their part in creating a supportive environment for organizations to invest into innovation and productivity. Once again, Bill C-5 will play an important role by providing some strong first steps toward harmonizing labour, simplifying regulation and reducing duplication across the country. Yet more could still be done to improve the infrastructure and innovation investment climate for the private sector.

1. Assess how the changing macro environment and the passage of Bill C-5 might create opportunities to drive enhanced growth and innovation.
2. Consider how you could be more intentional in your approach to contracting in order to unlock productivity within the project.
3. Focus on enhancing operational capacity to drive more efficient project delivery with a particular focus on attracting and retaining key capabilities.
   

There is an inherent tension between our national growth agenda and sustainability goals. Overcoming that tension will require industry and government to make value-based decisions that balance practicality, economic security, sustainability and ambition to create a clear, long-term plan of action.

While, in some cases, that will require difficult trade offs, there will also be opportunities to achieve balance. This is not about choosing between economic growth and environmental sustainability, for example, or between defense and infrastructure. This must be about finding strategies to advance multiple agenda items in harmony. Think pipelines and carbon capture.

The reality is that not everyone will always be happy with the decisions that must be made. That cannot stop our progress. Working in collaboration with Canada’s Indigenous communities, the country needs to rapidly advance those projects that will deliver the greatest benefits to Canadians today and into the future.

Biodiversity will also become increasingly important to citizens, governments and infrastructure providers. While carbon will remain a key focus for sustainability activity, we expect the impacts of climate change to manifest in Canada in multiple ways including biodiversity risk—loss of forests, marine life and habitats. Infrastructure players should be thinking about how they embed biodiversity considerations into their future strategies.

Bill C-5 should help streamline development. However, there is still significant opportunity for the Federal Government to articulate how the country will balance and prioritize those goals over time. Canada’s Indigenous communities will play a critical role in finding the balance, leveraging their deep experience and traditional knowledge.

1. Identify opportunities to partner with Indigenous communities in a meaningful way to shape and progress projects and priorities.
2. Clearly articulate the priorities and trade-offs necessary to deliver on the growth and environmental agendas.
3. Recognize the importance of biodiversity and understand your organization’s potential to create a positive impact.
   

To achieve our national goals, we don’t just need to grow our economy, we also need to modernize it. New asset classes such as data centres and digital infrastructure will be key to our future economy and data sovereignty needs.

Prime Minister Mark Carney’s election promise to pump an additional $2 billion into the development of data centres, if it materializes, will undoubtedly help catalyze growth in this area. So, too, will the world’s seemingly unsatiable demand for more computing power as AI is rapidly embedded into the daily fabric.

Canada has a unique opportunity to capitalize on our natural resources and infrastructure to attract significant foreign investment into the sector. Cooler temperatures, robust digital infrastructure, plentiful power generation capacity, the availability of talent and capabilities, strong regulation and rule of law—Canada’s data centre attributes are considerable.

Unlocking this opportunity, however, will take careful planning on the part of government and the private sector. In part, it will require a clear government strategy around sovereign digital infrastructure, a rethink of power regulation frameworks and a practical response to rising demand.

We expect data centres to become a key driver of Canada’s infrastructure growth over the coming decade. The challenge will be to ensure that investments into new data centre developments are supported by investments into the necessary power and infrastructure to meet the growing demand. Once again, partnership and collaboration will be key to driving outcomes for Canada.

1. Assess how the boom in demand for data centres might impact your long-term business strategy and create opportunities.
2. Support the development of a long-term integrated strategy for digital infrastructure and data centre development.
3. Seek out opportunities to support partnerships aimed at advancing Canada’s data centre capabilities.
   

Canada faces unique climate challenges that will significantly impact what infrastructure we develop and how we design and deliver it. The reality is that climate events are becoming more frequent, severe, and costly. Every year we are seeing record weather events across the country, from floods and fires to unprecedented snowfalls and extreme heat.

For existing infrastructure assets built in the past few decades, the conditions in which they must operate are vastly different than when they were designed. Many assets already require some level of retrofit in order to meet their initial lifespan expectations.

Recognizing that we can’t mitigate every risk and disaster, emergency preparedness will also need to move up the agenda. For infrastructure owners, that means investing in scenario modelling, emergency response capability, and in developing effective asset-specific emergency response plans.

Regardless, securing sufficient funding will be a challenge. Many owners will struggle to find the capital required to fully retrofit and upgrade their assets, particularly at a time when so much new development is required to improve quality of life, unlock economic opportunity and deliver on our climate and energy security goals. Navigating this challenge requires an integrated view of infrastructure needs, along with an objective means of expressing climate risks and priorities in terms that decision makers understand.

For new developments, owners should be thinking through the various scenarios their assets may face in the next decades and then balancing capital and operating cost expectations to deliver an appropriate level of resilience aligned with their tolerance for risk. This will require a clear understanding of asset importance or criticality in delivering needed outcomes and results.

1. Define asset criticality and required levels of service based on functional and business needs.
2. Identify your climate related risks based a range of likely climate scenarios.
3. Embed risk mitigation and emergency response into the project planning and design.
   

This country was built on major infrastructure projects. It is time for the infrastructure sector to once again build Canada strong. To do that, we need to address these trends by working in partnership, at pace and with enhanced productivity. And that will require visionary leadership at all levels of government, at boardroom tables and across the infrastructure industry.

Bill C-5 in particular represents a national infrastructure moment that could unlock Canada’s productivity potential. It sets the stage for a massive act of nation building—unlike anything Canada has seen since the establishment of the railways. The opportunities for Canada’s infrastructure sector will be massive.

At KPMG in Canada, we recognize the complex challenges and trade-offs facing decision-makers. And we are confident that, with deep collaboration, a strong vision and a practical roadmap, we can build Canada strong together.