Academic journal article Canadian Public Administration

Transparency and Accountability in Infrastructure Stimulus Spending: A Comparison of Canadian, Australian and U.S. Programs

Academic journal article Canadian Public Administration

Transparency and Accountability in Infrastructure Stimulus Spending: A Comparison of Canadian, Australian and U.S. Programs

Article excerpt

Introduction

In the wake of the late 2007 financial crisis, countries across the world introduced economic stimulus measures that focused on short-term growth (raising aggregate demand) as well as long-term growth by creating favorable conditions for investment and innovation. These new measures have entailed both revenue-side policies (cuts to direct and indirect taxes and social insurance contributions) and expenditure-side policies of which there are many possibilities. One of the most popular choices made by governments on the spending side has been to increase public investment in infrastructure. Spending on public works infuses cash into the economy quickly, thereby boosting demand for goods and services. A well-designed infrastructure stimulus "has been shown to have high multipliers (inducing knock-on private spending)" (Watt and Nikolova 2009: 23). Depending on the nature of the investments, targeted spending in key areas of the economy can also lead to transformative changes in the longer terre, e.g., by increasing the modal share of transit over that of automobile use. The key to both effective and strategic infrastructure investments through stimulus measures is spending quickly and spending well (OECD 2011: 9). With respect to the latter, spending must be tied to specific measurable policy outcomes that drive the decision-making process, both in terms of the type of projects that are selected and the criteria used to prioritize them.

As federal systems, the United States, Australia and Canada share many political characteristics as well as governance and infrastructure challenges. They have adopted some of the largest fiscal initiatives (revenue and spending measures) among OECD countries (Wunsch-Vincent 2009: 1). Of these, public investment in infrastructure is the largest component in Canada and the United States, and is the second largest component in Australia.' The infrastructure components of these fiscal packages have provided an infusion of cash into public works in an expedited manner, transforming built environments. The conditions attached to the spending of infrastructure stimulus funds have heightened the role of the federal government in infrastructure investment, impacting multilevel government relations. Indeed, subnational governments have managed significant amounts of stimulus funding: 33 per cent in the case of the U.S., 56 per cent in Australia and 30 per cent in Canada (OECD 2011: 24). In light of the massive transfer of monies from one order of government to another, the importance of multilevel government coordination and cooperation is clear. The strategic use of the funds - for example, attempting to propel development in certain sectors such as green infrastructure - has depended in large part on national policies predicated on local implementation. Moreover, the large infusion of funds, combined with the expediency of its deployment, has raised questions of accountability and transparency, such as how best to monitor the allocation and impact of the funds and report on the results of spending. This last point provides the primary focus of our article.

Many of the debates pertaining to stimulus spending on public infrastructure have been highly charged, with opposition parties, journalists and academics raising serious concerns about the stimulus package rationale; the effectiveness of stimulus funds; the politicization of funding decisions; and the costs associated with promoting and advertising stimulus spending. Consequently, public policy and administration, as well as the politics surrounding the infrastructure stimulus plans, may help to explain divergent processes and outcomes in each of the three countries selected.

This article explores the infrastructure stimulus plans that have been adopted in Canada, Australia and the United States. While there is a great deal written on the economic effect of stimulus measures, there is far less written about the decision-making and governance structures of the infrastructure stimulus programs. …

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