Can Ehren Cory turn around the infrastructure bank?
MONTREAL• Ehren Cory, the man overseeing one of the biggest infrastructure investments in Canada’s history, grew up in the Northern Ontario community of Coleman Township. A precocious kid, Cory finished five years of high school at New Liskeard Secondary in four. He also skied, did track and field, played tennis, basketball and golf, and won two Ontario provincial badminton championships. “We knew he was going to go somewhere; we just didn’t know where,” said Chuck Durrant, Cory’s longtime friend who runs the Pantry Bulk Food Store with his wife in Temiskaming Shores.
Mystery solved: last October, Cory was appointed CEO of the Canada Infrastructure Bank (CIB), the Crown corporation seeded with $35 billion in government money.
Birthed in 2017, the CIB began life as what the Liberals argued was a clever way to marry cheap money, government heft and private investment so as to compel infrastructure onto the landscape.
IF YOU’RE A MUNICIPALITY, AND YOU HAVE A CHOICE BETWEEN FREE GRANT MONEY OR THE CIB, YOU’RE GOING TO CHOOSE THE FREE MONEY EVERY DAY. — FORMER CANADA INVESTMENT BANK EXECUTIVE NICHOLAS HANN
Over time, it became a catch-all cure for what ails us: its investments would address expensive housing, spotty rural internet coverage, insufficient public transit, unsafe drinking water, profligate carbon emissions. It was also a tool for rapprochement with the country’s Indigenous communities, manna for the country’s middle class and the promise of an investment pipeline spewing forth outsized economic, social and environmental returns.
It hasn’t really worked out that way. Former parliamentary budget officer Kevin Page, among others, wondered out loud in 2017 whether the CIB was but a cheque-writing operation controlled by the federal government. As it turns out, the CIB has only spent $1.7 billion in three years, mostly in the form of low-interest loans to Montreal’s light rail project. Pierre Lavallée, the CIB’S first CEO, was positively rosy about the bank’s prospects — practically right up until he announced his resignation in April 2020 after less than two years on the job. CIB chair Janice Fukakusa stepped down at around the same time, and former CIB executives François Lecavalier and Nicholas Hann have both left.
The CIB garnered some truly wretched press, so much so that a consultant working with the organization drew up a memo ranking journalists on their “positive” and “negative” coverage so as to improve the CIB’S communication strategy. Suffice to say, the episode did not generate positive coverage.
Enter Cory. The CIB board, then chaired by former Caisse de dépôt CEO Michael Sabia, plucked the 46-year-old polyglot from Infrastructure Ontario, where he’d worked since 2012.
Cory was brought in “to get the money out of the door,” Hann told me. Nearly
four months into the job, Cory has begun to pry the floodgates open. The CIB has announced three projects since his arrival, with promises of regular funding announcements throughout the calendar year.
“We’re shifting from pump priming into execution,” Cory told me recently, touting the government’s $10-billion pandemic-recovery growth plan.
Yet there is the matter of who will really rule over the CIB’S $35-billion roost. Ostensibly at an arm’s length from government, the CIB has yet to shake its image as a very large Liberal partisan bauble, which has dogged it ever since the party first publicly entertained the idea of an infrastructure bank in 2015.
The Trudeau government hasn’t helped in this regard. Cabinet ministers regularly attach their names to CIB funding announcements, thereby giving those infrastructure dollars a distinct Liberal-red hue. And under Infrastructure and Communities Minister Catherine Mckenna, the CIB has taken on yet another grand mission: as a linchpin of the country’s POST-COVID-19 economic relaunch.
“I’ve also been very clear to (Cory) and the board that they need to deliver in the first quarter,” Mckenna said in an interview. Meanwhile, both the NDP and the Conservatives have vowed to kibosh the bank, which they consider a Liberal “slush fund” awash in red tape. If they’re successful, Cory might not have a job.
The Infrastructure Bank began as a Liberal promise in the 2015 campaign — “to be a catalyst for public interest projects that might not receive support from pure market mechanisms,” said Gerald Butts, then Trudeau’s chief campaign whisperer and policy guy, in an interview with The Logic.
Bill Morneau, then the country’s finance minister, said the bank was to have greater autonomy than a ministry, and would consult with “provincial, territorial, municipal, Indigenous and investment partners” as to how to spend roughly $35 billion over 10 years. Pierre Lavallée, a former Canada Pension Plan Investment Board executive and partner at Bain & Company, became its CEO in June 2018. The CIB model was simple: it kicked in generous loans; provincial and municipal governments matched these with cash; and the private sector, its financial exposure suddenly reduced, took on projects it wouldn’t otherwise have considered.
There were several problems at the outset, according to Hann, not the least of which was that the CIB essentially put the government in competition with itself. Infrastructure Canada already had a grant system covering off many of the projects the CIB sought to seed — and grant money is free. “If you’re a municipality, and you have a choice between free grant money or the CIB, you’re going to choose the free money every day,” Hann told The Logic.
The result was what Hann called a “turf war” between civil servants at Infrastructure Canada over the CIB’S broad mandate, the fawning ministerial attention it received, and the buckets of cash at its disposal — which ultimately went unspent, in part because municipalities looked for free grant money, instead. For Hann, it compounded a second fundamental problem with the CIB: it was already redundant because of the glut of private investment swishing around. “There was too much money chasing too few projects. And so I think the big concern was that the CIB’S $35 billion would just make the problem worse,” he said.
Hann resigned from the CIB in July 2019, after just 10 months as its head of investments. “I left because it wasn’t working,” he said.
The government appointed Sabia as the CIB’S chair in April 2020. Sabia, who spearheaded Montreal’s light-rail system, is an at times mercurial proselytizer on the economic benefits of massive infrastructure spends. Sabia’s plan, as Trudeau said last October, would create some 60,000 jobs by investing in clean energy, zero-emission buses, home retrofits, broadband and irrigation projects — “projects where a dollar of our investments can bring in two or three dollars over time of third-party capital,” Sabia said at the time.
Sabia’s investment ratio baffled some, given that Morneau, in his 2016
Fall Economic Statement, claimed the actual leverage ratio was four to one, a potential difference of billions of dollars. “I don’t want to make it sound like it was completely made up,” said a source close to the CIB, who requested anonymity to speak freely. “But was there a lot of confidence around exactly what the leverage was? I think Michael would probably argue otherwise, but it wasn’t as scientific as it probably should have been.”
All this was placed at Cory’s feet when he was appointed just before Halloween last year. He is more circumspect than Sabia as to CIB’S leverage ratio. “It’s going to vary. Some will be more than four to one, some will be as low as two to one,” Cory said. “It’s really dependent on the economics of the project. Revenue is available. Our job is to figure out what are the revenue sources we can tap into, like user fees and ticket revenue on the ramp.”
Mckenna and Sabia together whittled down the CIB’S scattershot mandate to five priority investment sectors: public transit, green infrastructure, trade and transport, broadband and clean power. They also ladled out more spiel, promising the CIB would spur economic growth, jobs, inclusiveness and rosy climate prospects in the space of three years. As a result, Cory found himself defending the CIB’S glacial pace under the previous administration while promising a comparatively speedy delivery of projects in the weeks and months to come.
“Historically, large nation-building infrastructure projects take time,” Cory said. “If you look at the CIB and our existence getting started in the first few years, there was a lot of work done on building a ‘pipeline’ — and I use that word carefully — of building projects. It’s very natural that it would take a bit of time to prime that pump.”
Given Sabia’s obsessive focus on getting stuff built, it’s not difficult to see why Cory was picked. Cory left Coleman Township for the University of Western Ontario, and then INSEAD business school in France, where he graduated with honours. He spent 11 years as a partner at Mckinsey in Toronto before moving on to Infrastructure Ontario, first as a vice-president, then as president of its project-delivery division. IO’S infrastructure pipeline increased significantly to $60 billion during his tenure, according to IO spokesperson Ian Mcconachie. As with Sabia, Cory has experience with light-rail projects. Between 2015 and 2016, he greenlit the Hurontario and Finch West LRT projects, for a combined 29 kilometres of track to the tune of $7.1 billion. He was named CEO of IO in 2017.
“I think that the reason why he was chosen to be CEO (of Infrastructure Ontario) was his experience with project delivery, specifically,” said Andrew Bevan, who served as chief of staff to Ontario’s then-premier Kathleen Wynne at the time. “He’s not a creature of a government agency.” Nor does Cory have blue blood coursing in his veins. “He didn’t have an easy road,” Bevan said.
Instead, he worked — an old habit. His friend Durrant recalled that back in New Liskeard, Cory would disappear a week before the start of the high school year. He would stay at home, practicing his handwriting so he wouldn’t smudge his notes.
Cory is also a natural diplomat. Durrant remembers Cory’s knack for navigating myriad high school cliques, seamlessly getting along with everyone. “He fits in wherever he is. He was always able to know his audience,” Durrant says.
Being diplomatic is an important part of his current job, especially given the Liberal government’s embrace of the allegedly arm’s-length CIB. “I’ve been pretty handson with the bank, because it’s got to succeed,” Mckenna told me. “I’m not micromanaging; they’ve got to do their thing. But I think we needed to get into the right spot. It is critically important, for both short-term jobs and longterm growth reasons. We’re going to be net-zero, and we need significant amounts of capital to get there, and we need leadership that understands that.”
Cory is appropriately diplomatic when I mention Mckenna’s bon mots, highlighting the “great working relationship with government” and declaring himself happy at her “having set clear priorities for us.” He says he isn’t worried about the fate of the bank, should another government get elected. “Infrastructure is not a partisan issue. If we can be effective in getting infrastructure built in a way that’s clearly demonstrably better for Canadians, then that’s what we have to focus on. And if we do, then I don’t worry about the rest,” he said.
Cory has a record of pan-partisanship. Though he was hired under Wynne’s Liberal government, he withstood the transition to Doug Ford’s Progressive Conservatives in 2018. “Ehren was very competent and very capable,” said a former senior member of Ford’s team, who spoke on the condition of anonymity.
And the CIB is now better-positioned to spend. It doesn’t have to ask the government’s permission to do so, for one, thanks to a decree last September handing over investment decisions to the CIB board. The government has also mandated that the CIB “collaborate closely” with other federal departments, including Infrastructure. Translation: no more in-fighting, please and thank you.
Not all of the kinks have been worked out, however. A couple of weeks into reporting this story, CIB spokesperson Félix Corriveau called me. “I’m not sure I appreciate you calling around all of Ontario” about Cory, he said. He accused me of “pushing privacy boundaries” before asking what I “was after.” It was hard not to recall the memo about “positive” and “negative” coverage.
Things have changed at the CIB, says the CIB. It seems, though, there remains a lingering insecurity over how it’s perceived by those footing the bill.
THERE WAS TOO MUCH MONEY CHASING TOO FEW PROJECTS.