Future of infrastructure bank in limbo

by Bill Curry, Globe and Mail

The future of the $35-billion Canada Infrastructure Bank will be decided in the October election as both the Conservatives and New Democrats say they would shut down the Crown corporation created by the Trudeau Liberals.

The two-year-old federal entity is now set up in Toronto's financial district with plans to increase to 74 employees and an annual operating budget of around $50million this year.

Conservative and NDP MPs told The Globe and Mail that their long-standing opposition to the bank has not changed, but both parties say any funding pledges announced by the bank would be honoured should either of the two main opposition parties form government after the Oct. 21 election.

Bank chief executive Pierre Lavallée appeared in Trois-Rivières last week to announce $55-million in bank funds toward "preprocurement" work on Via Rail's proposed High Frequency Rail plan to build a dedicated passenger rail line spanning 850 kilometres from Quebec City to Toronto.

The announcement was just the third time the bank had pledged financial support toward a project.

In late May, the bank made its second funding announcement with a $2-billion pledge to provide lower cost financing for the Metrolinx Go expansion project that would increase commuterrail frequency in the Greater Toronto and Hamilton Area.

The bank's first announcement was a $1.28-billion loan announced in the summer of 2018 toward Montreal's commuter light-rail line, known as the REM, which is now under construction.

While the REM project is led by the Caisse de dépôt et placement du Québec pension fund, the infrastructure bank has not yet delivered on the government's pledge that it would convince other large-scale pension funds and private investors to back major Canadian projects.

Mr. Lavallée recently told The Globe there is strong interest among private investors in Via Rail's expansion plans but that more advance work, such as environmental assessment, is needed before those investors can decide on whether to participate.

In an interview, Infrastructure Minister François-Philippe Champagne said federal Conservatives should take note that the party's provincial cousins in Ontario under Premier Doug Ford are now working with the bank.

"The fact that the Ford government is using it should lead the federal Conservatives to pause and rethink," he said. "We're looking at a number of interesting projects and I think that, despite what the Conservatives may have said, which I think is short-sighted, you build a bank like that for decades to come to make a difference. You should not rush to judgment. You should let the bank do its work."

The government introduced legislation to create the bank in 2017 as part of an omnibus budget bill. At the time, opposition MPs questioned whether the legislation would give bank officials enough independence from political interference.

Concern was expressed at the time that the legislation allowed cabinet to remove the bank CEO and its board at any time, whereas similar laws for executives at the Bank of Canada and the Canada Pension Plan Investment Board only allow for removal "with cause."

Conservative MP and infrastructure critic Matt Jeneroux said the bank's track record to date strengthens his concern over its independence. He notes that Liberals had previously expressed support for all three projects before the bank announced its financial support.

The Conservative Party is planning to release its infrastructure platform later this summer, but Mr. Jeneroux said the party remains opposed to the bank. He said the administrative costs to operate it would be better spent on infrastructure projects.

"At the end of the day, we want to make sure that we have a plan that has money flowing out of Ottawa and not keeping it in Ottawa with additional bureaucracy," he said.

While Mr. Jeneroux said the party will remain open to publicprivate partnerships in infrastructure, the NDP remains strongly opposed to the P3 model that the infrastructure bank is designed to encourage and expand upon.

"The infrastructure bank is designed to try to trigger private investment, often in areas that should be for public infrastructure. Ultimately, that will cost the taxpayers much more in the longterm," NDP MP and finance critic Peter Julian said.

He said the bank is a "smokescreen" that is being used to make political promises on the eve of the election campaign.

"The announcements that they've made are announcements that would have been made anyhow with federal government funding," Mr. Julian said. "So, I think this is a bit of smoke and mirrors designed to hide the fact that Canadians have had to spend tens of millions of dollars for the infrastructure bank that has been a failure."

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