Privatizing our airports is a smart financial decision, writes Peter Watson.
Privatizing our four major airports is a good idea for Canada. Prime Minister Mark Carney recently announced this change, and it is just one piece of the puzzle to diversify trade away from the U.S.
To redirect our trading to other countries, we need to increase our existing infrastructure. We need new pipelines, new and improved ports, and other costly infrastructure.
These improvements will be very expensive, but we need the money.
Selling existing airports gives us money we can use elsewhere. We will still have access to these airports, but we will free up capital to invest in projects that will allow us to expand trade with other countries.
Toronto Pearson International Airport is one of the airports that will be privatized. Others are Montreal, Calgary, and Vancouver.
Another option was to raise money instead of selling four airports. Canada could have borrowed the money. That would be a problem because Canada already has too much debt.
Why selling airports beats borrowing debt
For those who prefer not to sell the airports, I agree in principle. But not increasing our debt is the fiscally prudent option.
How airport revenue funds trade infrastructure
If we do expand our trade to other countries, the potential additional revenue could be very lucrative. Workers and suppliers needed to build and operate these facilities will earn construction revenue, and businesses that export goods will too.
Many other businesses will earn revenue by serving the expanded workforce. All workers and businesses will also pay taxes. Better to act boldly to expand the Canadian economy than to become defensive and do nothing.
Canada made a good decision, and I hope it will keep doing so.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com.
