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(Bloomberg) — Canada’s highways, shopping centers, schools and equipment are aging without being replaced as investment in infrastructure slows.
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The average age of the country’s non-housing capital stock was just over nine years in 2023, leaving 63.3% of its “useful” life remaining, according to data released Thursday by Statistics Canada. It’s the eighth consecutive year that the so-called remaining useful service life ratio has fallen, leaving the nation with the oldest infrastructure it’s had in data going back to 2009.
“A decrease in the remaining useful service life ratio could indicate that new capital investment is required,” Statistics Canada said.
The ratio is an estimate of the amount of economic benefit remaining in capital assets. Since 2015, the useful service life ratio in natural resources, including oil and gas, metal and wood assets has dropped sharply. In 2023, the retail sector saw the biggest decline, the agency said.
Prime Minister Justin Trudeau’s Liberals swept to power in 2015 in part on a promise to spend heavily on infrastructure. His government has invested billions of dollars in public transportation projects and other initiatives, but the data released Thursday suggest neither government spending nor private investment is being deployed at sufficient levels to keep the capital stock from aging.
Finning International, which sells and services Caterpillar construction vehicles, reported earnings that fell short of estimates on Tuesday. In a news release, management said growth in Canada was lower than expected because of lower infrastructure spending.
In a separate release Thursday, Statistics Canada data show the value of the country’s gross non-residential capital stock rose by 1.5% in real terms in 2023, driven by increases in engineering construction and intellectual property products. The value of machinery and equipment capital fell for a fourth consecutive year.
–With assistance from Jay Zhao-Murray and Stephanie Hughes.
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