It’s that time of year where we begin to say goodbye to this year and look ahead at what the upcoming year will bring. As the summer construction season nears its end, I know you are eager to see what is contained in the fall tender schedule. Now that it is out, I want you to know what the board and I are doing about it.
Off the top, we are building new relationships. As you know, there is a new minister, Lori Carr, but there are also new faces in other prominent roles in the ministry. We look forward to working with Kyle Toffan, the new deputy minister, who previously served in the Ministry of SaskBuilds and Procurement, where he was deputy minister. There is also a new chief of staff, Josh Hack.
As we approach an election year in this province, we are eager to promote how Saskatchewan as a whole can benefit from increased investment in trade infrastructure. First, we need the ministry to understand that changes are necessary to prepare for that brighter future.
The board and I recently met with Carr and Toffan to lay out those changes. We have been consistently pointing them out to others who have been in her position, but this is an opportunity for someone new to see them from a fresh perspective.
Making these changes would send a strong message not just to the heavy construction industry and the industries who supply ours, but the world. Canada – and Saskatchewan in particular – has a strong reputation for being a global source and provider of fuel, fertilizer and food. Robust infrastructure is necessary to move commodities and people through the country and out to other parts of the world. When it comes to planning how that trade infrastructure will be maintained and enhanced, our country’s reputation is weak. That impacts our competitiveness in global trade, which adds a challenge to growing our economy.
Here at home, there are changes that could be made to signal to the world we are serious about competing.
First, Saskatchewan’s government must do better when it comes to getting work out in a timely fashion. Tenders continue to hit the market too late. The 2023 Fall Tender Schedule was only recently released. In the fall of 2022, there were several projects listed on the fall tender schedule that were released too late. Some were not released at all, leaving them to be carried over. It is not just contractors who are impacted by these delays, but also those in design and engineering, materials, fuels, aggregates, oils and equipment supply.
We also learned something very important about how to assess the quantity of projects in the tender schedule. Projects that are tendered with a two-year completion date have all production quantities linked to the year it was actually tendered. So, for example, a project on the 2022 fall tender schedule with a 2024 completion date shows all quantities in 2022 – this is why we see the same projects announced multiple times in the budget speech.
What this does, from our perspective, is skew the overall budget numbers and mislead our industry when it comes to the overall quantities shown on the tender schedule. We have asked the ministry to better display these types of jobs to paint a more realistic picture of what’s coming to the market.
When contractors have a longer – and more accurate – look down the road at what the level of investment is projected to be, they are able to better determine their business priorities and investments. They can be better organized and prepared, making them more efficient, productive and competitive. They can become more capable of managing costs and preparing to serve emerging market sectors. Long-term, continuing to release projects too late in the year will have a negative impact on industry capacity.
Second, neighbouring provinces are projecting their investment in the coming years while Saskatchewan continues to announce annual spending. In the spring of 2022, the Manitoba government announced a $2.4 billion three-year capital plan. The plan commits to investing a minimum of $500 million per year into highways. Alberta announced this year that it will spend $2.3 billion on roads and bridges as part of its 2023-26 Capital Plan.
Saskatchewan released a low level of work in the 2023 Fall Tender Schedule. On top of that, this year there was only one asphalt plant working in the province producing product for the Ministry of Highways.
The SHCA board made it clear that our industry has the capacity to complete three times the amount of work shown on the last few fall tender schedules. That capacity is available to the Saskatchewan government, but it will be the Manitoba and Alberta governments who will see an advantage because of their commitment to long-term, sustainable funding of major highways and trade corridors.
This year’s construction season saw almost all the major paving contractors looking for work in our neighbouring provinces. Eventually, we will see more companies leaving the market, which will reduce the amount of competition in our province. This will have a negative impact on the cost and quality of building and maintaining our critical infrastructure.
We encourage Minister Carr to bring a clear message to the cabinet table that there is a strong case for increasing infrastructure investment sooner rather than later, especially considering the challenges posed by inflation.
We all know construction is not immune to increased costs. It will cost less to invest in trade infrastructure now than it will later, and the return on that investment is substantial. For every dollar of investment, in the short term, there is an immediate return of one dollar and thirty cents to the province.
We are seeing the provincial government make announcements about social spending, such as the one they made at the start of October dedicating $90 million to address homelessness and addictions. Being able to find the money to announce spending on areas such as that is possible when we have a strong economy generating income for the provincial government.
The return we would get on investing in trade infrastructure can make more such announcements possible.
Investing in infrastructure that supports trade helps to grow our economy by ensuring we are competitive in the world trade markets. Over the longer term, that return on the investment could be as high as four or five dollars during the asset’s lifespan. That means infrastructure built and maintained by the members of SHCA will contribute to Saskatchewan’s continued economic growth. That growth will contribute to paying for all the social investments – in health, education and more – that ensure a high quality of life for people living in this province. If we don’t sustain our investment and make changes to support the industry, it won’t be there to provide for our future needs.
Next is an election year. I, along with the board, will continue to hammer the message, “If you can’t move it – you aren’t selling it.” We look forward to the budget in the spring of 2024 that shows taxpayers the Saskatchewan Party is serious about creating “growth that works for everyone.”
Change can be good. In our province, I am working with the board to make that case so we see positive change that benefits more than our industry. It is change that is beneficial to the daily lives of the people living and working to make this province even better than it is today.
