Remaining useful service life ratios of non-residential capital stock, 2016
An asset's share of remaining useful life is an estimate of the percentage of its remaining useful life before it no longer delivers economic benefit to its owner. For example, if the expected useful life of an asset is 20 years, and the average remaining useful life of the asset is 15 years, then the share of the remaining useful life would be 75%.
Due to the weighted nature of the calculation, a higher proportion of investment spending in recent periods on a given non-residential asset relative to previous periods will result in a young average investment age and hence a higher share of remaining useful life.
The share of Canadian non-residential capital stock's remaining useful service life declined to 65.7% in 2016, as a result of lower business investment.
In 2016, all four broad asset categories comprising Canadian non-residential capital stock posted a decrease in their share of remaining useful life. Intellectual property products declined to 61.5% (-1.5 percentage points), non-residential engineering capital stock stood at 69.5% (-0.5 percentage point), machinery and equipment edged down to 55.4% in 2016, and the share of remaining useful service life for non-residential buildings was down 0.2 percentage points to 63.0%.
Ratios decrease in eight provinces and territories
The majority of the provinces and territories showed decreases in the share of remaining useful service life for their non-residential capital stock. In 2016, this ratio ranged from 53.2% in the Northwest Territories to 70.9% in Newfoundland and Labrador.
This was the first time Newfoundland and Labrador held the highest share of remaining useful life in Canada. The 1.9 percentage point increase in Newfoundland and Labrador was mainly attributable to the investment and development of the Hebron offshore oil project and the Muskrat Falls generating facility.
For the second consecutive year, Alberta (69.7%) and Saskatchewan (68.4%) posted lower ratios, mainly due to the slowdown in investment in the oil and gas subsector.
As was the case in the three previous years, the Northwest Territories, Prince Edward Island, Nova Scotia and New Brunswick had the lowest share of remaining useful service life in Canada in 2016.
Remaining useful service life of foundational infrastructure declines in 2016
In 2016, the three assets forming Canada's infrastructure foundation, which includes highways, roads, streets, bridges and overpasses; waterworks engineering; and sewage engineering, posted decreases in their share of remaining useful service life.
The ratio for highways, roads, streets, bridges and overpasses decreased from 65.5% in 2015 to 65.0% in 2016. Nunavut, Nova Scotia and Saskatchewan recorded an increase in their ratio, while the rest of the provinces and territories posted declines.
The ratio for Canadian waterworks engineering (71.4%) decreased for the third consecutive year in 2016. All provinces and territories posted decreases. Similar to 2015, Nunavut's waterworks engineering assets remained the newest in Canada (80.8%), while Nova Scotia's waterworks engineering assets remained the oldest (62.0%).
The ratio of sewage engineering decreased to 63.0% in 2016. With the exception of Yukon, which saw its ratio edge up 0.2 percentage points to 53.7% all provinces and territories posted decreases. With a ratio of 73.0%, Alberta posted the highest share of remaining useful life for sewage engineering in 2016, while Prince Edward Island (47.9%) had the lowest ratio in Canada.
Note to readers
The estimate of the percent of the remaining useful life of an asset represents the ratio of the average age of the asset relative to its expected service life. The change in the estimate can be driven by the change in either the investment level or in the investment mix.
The Latest Developments in the Canadian Economic Accounts (13-605-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is available.
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is also available.
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