Tories should support infrastructure bank Opposing plan just because it isn’t their own
LJohn iviSon ooking along the opposition benches during question period Thursday — from Conservatives to NDP, and back from NDP to Conservatives — it became impossible to tell one from the other.
Interim Conservative leader Rona Ambrose blasted the Liberal Infrastructure Bank plan for giving “billions of dollars to billionaire bankers.”
“Put the brakes on this terrible idea,” she said.
Matthew Dubé for the NDP claimed the Liberals were rushing to introduce the “privatization bank” in order to please their “Bay Street friends.”
While it is typical for the NDP to oppose private enterprise, it is unsettling to hear the leader of the Conservative Party disown the concept.
Ambrose quoted selectively from an internal federal report produced by KPMG, first reported by the Globe and Mail, that suggested the new bank could slow down projects with new layers of bureaucracy and expose Ottawa to “public relations disasters and embarrassment.”
The NDP used their opposition day to argue that infrastructure built by private investors will cost more than public infrastructure and that the fees and tolls would make private investors wealthy to the detriment of Canadians.
All of Ottawa, it seems, is aflame at the union of two of the English language’s most boring words — infrastructure and bank. Lost in the noise was the KPMG report’s conclusion that the bank could be a good option for some infrastructure projects.
As a quick refresher, it will invest up to $35 billion into large infrastructure projects. The hope is that the bank will make public money go farther by leveraging capital from the private sector.
The job of chief executive officer was recently advertised and Infrastructure Minister Amarjeet Sohi announced this week that the bank will be headquartered in Toronto.
Some municipalities are concerned that socially useful but non-revenue-generating projects will be overlooked, in favour of those that lend themselves to tolls and user fees.
But the government says other forms of infrastructure funding such as grants and loan guarantees will remain unaffected, even if certain projects are backed by the bank.
It seems to me there is logic to attracting private sector funds for projects that generate returns, provided the execution is sound.
Even before the bank gets off the ground, taxpayers can get a sense of the type of project where it might work.
Quebec pension fund la caisse de dépôt et placement and the government of Quebec have reached a deal where the provincial government will commit $1.28 billion for a 24.5-per-cent stake in the Réseau électrique métropolitain (REM) transit project in Montreal.
The Caisse will invest $2.67 billion for a 51-per-cent stake in the new integrated 67-kilometre light rail transit network to link downtown Montreal, the South Shore, the West Island, the North Shore and the airport.
Ottawa has been asked to take a quarter share, but is said to be balking at the eight-per-cent priority return negotiated by the Caisse — and agreed to by Quebec. That seems rich and, if the feds agree to it, they will open themselves to criticism of being loose with taxpayers’ money.
The REM deal is merely a dry run, but the first deal the bank strikes will be closely scrutinized by the investment community to see if the bank’s staff know what they are doing.
One contender for that first project could be Via Rail’s proposed high-frequency rail service between Quebec City, Montreal, Ottawa and Toronto, that would also serve smaller cities like Peterborough, Ont. and Trois Rivieres, Que.
A number of pension funds have already expressed interest in the $5.5-billion project but the infrastructure bank’s involvement could prove to be decisive by making the terms richer.
From the federal government’s point of view, the new service would tick a number of policy boxes — taking cars off the road and providing Canadians with a faster, more frequent service between four of the country’s largest cities (it’s anticipated there would be up to 24 trips a day between Toronto and Ottawa, an increase from the current frequency of nine a day).
It’s a project that makes sense and is much more likely to come to fruition if Ottawa takes an equity stake.
Hearing Justin Trudeau talk about maximizing opportunities to create wellpaying jobs and grow the middle class is like living next door to the highway. He says it so often, eventually, you don’t even notice.
But this kind of project has real potential to boost Canada’s economy. For one thing, real estate developers along the route would be rubbing their hands.
Yet whether it has merit for the taxpayer would depend entirely on the structure of the deal. Canadian history is littered with boneheaded financial deals made by governments — the sale of Highway 407 and Newfoundland’s lease of Churchill Falls to Quebec spring to mind.
In theory at least, the bank will be run at arm’s length from government by investment professionals better qualified than bureaucrats to make sound investment decisions.
The infrastructure bank is clearly not a good fit for all proposals, but for others like the high-frequency rail service, it could prove the catalyst to lifting it off the drawing board.
Opposing the bank as a “terrible idea” — mainly because it wasn’t your own — is the kind of blinkered statism that has made the NDP the electoral powerhouse it is today. The Conservatives should know better.