Opposition to private investment in public projects ‘stupid’: MP
OTTAWA — One of the architects of the Liberals’ proposed infrastructure bank said opposition to the idea is short-sighted, stupid and irresponsible.
Liberal MP Adam Vaughan, parliamentary secretary to Prime Minister Justin Trudeau, said the whole idea of the bank is to make it possible for municipalities to leverage private-sector cash to fund crucial projects that would otherwise be unaffordable.
And while he acknowledges there are some risks involved, he maintains they’re far outweighed by the cost of doing nothing.
“The cost of not fixing aging infrastructure can be catastrophic and if you don’t factor that into the cost analysis you’re not being realistic,” Vaughan said.
For example, Vaughan pointed to the urgent need to spend about $1 billion to upgrade the levees around the Port of Vancouver to prevent flooding from extreme weather events brought on by climate change. Those levees were almost breached three years ago, he said, coming within inches of flooding the port and the nearby Vancouver International Airport.
“The cost of losing that port and that airport? Three-quarters of our exports come in and out of that piece of infrastructure. If that isn’t fortified and rebuilt very quickly, climate change will have an economic impact on this country, the likes of which will be impossible to calculate,” he said.
“The idea of losing southern Vancouver and southern B.C. to a levee that was built in the 1940s for weather conditions that have changed radically in 50 years, to put that at risk because you have a fear of the private sector being a partner is not only stupid, it’s bloody irresponsible.”
Vaughan is an ex-Toronto councillor who helped craft the housing and urban infrastructure components in the Liberals’ election platform, where the infrastructure bank was first promised.
The Trudeau government is planning to launch the bank next year, with $15 billion in direct federal investments and another $20 billion in repayable contributions, loans and loan guarantees. It hopes to leverage up to $5 in private investment for every $1 in government funding.
But both the Conservatives and New Democrats have warned that private investors’ demand for a high rate of return on their investments will inevitably increase the cost of building or upgrading infrastructure and result in road and bridge tolls and other user fees.
Their objections intensified after Trudeau’s summit with some of the most powerful institutional investors in the world, representing a combined capital pool worth $21 trillion.
He also met with some of Canada’s largest investors, including insurance firms, big banks and pension funds.
But Vaughan said the doubters should recognize that without a private-sector partner, the Daniels Corporation, the city of Toronto would never have been able to afford to revitalize Regent Park, a crime-ridden, dilapidated, inner-city, social-housing ghetto.
The project required “a private sector partner, public sector assets and public borrowing to coordinate and create the plan that delivers new housing for people.”
The infrastructure bank is intended to leverage private investment for projects “with a natural revenue stream that people are used to paying,” he added, like water and electricity. “People are used to paying their water bill. It doesn’t matter one whit whether they pay it to government or private company as long as it’s delivered to them cheaply.”