Is Calgary out of the running for infrastructure bank?

One day after Federal Finance Minister Bill Morneau’s visit to Calgary and his meetings with Mayor Naheed Nenshi and Calgary Economic Development, word came Bruce McCaig had been appointed the executive adviser to the federal government regarding its plans to establish the Canada Infrastructure Bank.

Since 2010, McCaig had been at the helm of Toronto-based Metrolinx, the Ontario government agency that oversees the transportation infrastructure of the Golden Horseshoe area of the province, which includes the Toronto and Hamilton regions. During his tenure, more than $21 billion in transit infrastructure upgrades were made to subway and transit services. In other words, he knows infrastructure and it hasn’t been easy sledding.

The announcement that someone based in Toronto is taking the role as senior adviser doesn’t necessarily throw Calgary out of the running to have the Infrastructure Bank based here, but it does feel a bit like the city has just been doused with a bucket of ice water. That, and the fact another person from Toronto is advising the government rather than looking west for input isn’t exactly encouraging.

There are those with the view that Toronto — as Canada’s financial centre and where three of the country’s largest pension funds, the Canada Pension Plan and Investment Board, Ontario Teachers and the Ontario Municipal Employees Retirement System (OMERS) are based — should be the bank’s headquarters. They also point out that it’s also where successful public-private partnerships have been structured and where the country’s largest insurance companies are based, in addition to private-sector entities such as Brookfield, which also actively invests in infrastructure.

That may be true, but when it comes to the design, engineering, and construction and financing of large infrastructure projects, Alberta — and Calgary — is where the action has been for the better part of two decades.

As Senator Doug Black said when he rose in the Senate earlier in the month to make the case for Calgary being chosen as the headquarters for the bank, this city has been the centre for financial innovation since the 1950s.

In other words, there is room for more than one financial centre in this country, and Calgary is the logical choice.

Were it not for the financial structures such as the sophisticated project finance, junior capital pools, special warrant private placements and the royalty trust structure that were developed in Calgary, capital formation for the energy sector would have looked much different.

And the oilsands growth took it to a much higher level.

According to statistics published by the Alberta government, investment in the infrastructure-heavy oilsands totalled $201 billion between 1999 and 2013, a time when production grew from 600,000 barrels a day to almost two million barrels a day; current production is 2.4 million barrels a day.

No other province in the country has seen infrastructure investments of that magnitude — and that is in only one segment of the Alberta economy. The federal government has said it wants to leverage the $35 billion that will be provided to the infrastructure bank on a 5:1 basis, using capital provided from the private sector and pension funds. That would put it at $175 billion — much less than what has been invested in the oilsands since 1999.

Not only are these projects complex, requiring a wide array of skills, they are designed to operate in a less than friendly climate.

This underscores the skill set resident in Calgary, the fact the city still boasts the highest white collar workers per capita in the country, and has a creative and entrepreneurial spirit that is hard to beat. There also has to be something to the fact Calgary still has the second largest number of corporate headquarters outside Toronto; we must be doing something right. Yet, here’s the rub. Unlike Toronto, Montreal — also on the short list — and Ottawa, Calgary doesn’t have a Crown corporation based here.

Not only would having the Infrastructure Bank based here put the city on an equal footing with other major cities that do have Crown corporations, it would do three very important things.

It would validate the expertise in finance and infrastructure development in Calgary. It would provide a unique portal for the bank to connect with the design, engineering and construction disciplines that are all strongly represented here. And it would help in the efforts currently underway to diversify Calgary’s economic base.

Ultimately, this should be a decision based on merit. Between the airline connections to major financial centres around the world, the talent base, engineering, construction, financial and legal expertise, it’s tough to argue against Calgary being at the top of the list.

Having said all that, politics also plays a role in decisions of this kind — and Ottawa has a history of making many of those with Calgary on the outside looking in.

Morneau talked of inclusive development. Choosing Calgary as the headquarters for the Infrastructure Bank would be a long overdue step in that direction.