National Post (National Edition)
CANADA INFRASTRUCTURE BANK ANNOUNCES FIRST LOAN.
Watchdog report cites shortfall in spending plans
OTTAWA • The head of the Canada Infrastructure Bank (CIB) said the nascent institution has received heaps of inbound calls from would-be developers looking to build projects, just as the bank announced its first-ever investment on Wednesday.
“It’s been a busy summer and I expect that will continue into the fall as things get even busier,” CIB chief executive Pierre Lavallée said in a phone interview.
The CIB announced it would invest $1.28-billion in the Réseau express métropolitain, a major light rail expansion project in Montreal, in the form of a 15-year secured loan. The announcement was part of an agreement with the Caisse de dépôt et placement du Québec, which will take a roughly 70 per cent equity position in the project.
It also comes as Ottawa’s budget watchdog released a report on Wednesday outlining lingering shortfalls in the government’s infrastructure spending plans.
The CIB was established after the 2016 budget, and is responsible for $35 billion in spending over 11 years as part of Ottawa’s infrastructure spending plan. Lavallée said the loan fits well with the bank’s three areas of focus: green infrastructure, public transit, and trade corridors.
“It’s a big moment for us as an organization,” Lavallée said. “This is an investment that is very much in line with our mandate.”
Lavallée was appointed to the position just four months ago, after delays in its establishment.
Ottawa plans to spend $186.7 billion over the next 12 years in a bid to expand public transit, trade routes and social housing, among other developments.
Lavallée declined to comment about whether the bank might buy a stake in the Trans Mountain pipeline. Ottawa has been searching for suitors ever since it announced it would buy the project for $4.5 billion from Kinder Morgan Inc. in May, and will complete the transaction around the end of this month.
“I won’t comment about specific potential investments as a general rule,” Lavallée said.
Finance Minister Bill Morneau has said the bank will operate without government interference, with the aim to invest in infrastructure projects that wouldn’t otherwise receive funding. Officials say the CIB could also spur additional private sector funding, as high as five times its initial investment.
Infrastructure Minister François-philippe Champagne said he welcomed the IBC investment, saying the rail line is a “prime example of the type of modern, resilient, and green infrastructure” that voters want.
Separately on Wednesday, the Parliamentary Budget Officer released an updated report on Ottawa’s infrastructure spending plans. It found that $13.7 billion of the government’s $14.4 billion Phase 1 spending has so far been accounted for — leaving a $700 million shortfall.
The PBO said the gap was due to a recent decision by the government to push back $247 million in spending to future years. It was also a result of a failure by two agencies, Indigenous Services Canada and Crown-indigenous Relations and Northern Affairs, to provide data on their spending plans.
Mostafa Askari, the deputy Parliamentary Budget Officer, said the shortcoming is small relative to Ottawa’s total spending plans. But it follows extended spending delays that have plagued the program since its inception.
According to the PBO, Finance Canada had in 2016 expected to spend just over $10 billion over the first two years of its Phase I spending, and expected to defer roughly $4 billion to future years. By 2018 it had deferred $7.8 billion into future years, with just $6.5 billion spent in the first two years.
“It’s clear now that a lot of that money has been pushed back to future years, and they were not able to spend the money as they had intended,” Askari said in a phone interview.
The PBO has said that Ottawa’s reporting standards have improved markedly since its first report.
Over the last three years, Infrastructure Canada and other government agencies have roughly 30,000 projects either approved or underway, according to public data.
The PBO report said infrastructure investment in the fiscal year 2017-18 boosted GDP by between 0.13 and 0.16 per cent and created between 9,700 and 11,600 jobs.