It was during the 2015 election campaign that we first heard Prime Minister Justin Trudeau’s plan to create the Canada Infrastructure Bank. Three years later, the $35-billion bank is still struggling to find its footing and many Canadians are asking themselves what the purpose of this bank is, if it even has one.
According to its website, the Infrastructure Bank will use federal money to “attract private sector and institutional investment to new revenue-generating infrastructure projects that are in the public interest.” While the Crown corporation boasts that it will help with infrastructure projects that otherwise wouldn’t be built, it will essentially use public money to underwrite loans to protect private investors from losses while putting all the risk on taxpayers.
In the past year, the Infrastructure Bank has requested more than $11 million from the $35 billion to cover salaries, legal services, travel, expenses for its board of directors and other capital costs. That’s $11 million in spending, all before the bank had even announced its first project. In August 2018, the Canada Infrastructure Bank announced it would be loaning $1.28 billion to an electric rail system for Montreal at an unusually low interest rate — one per cent, rising to three per cent over the 15-year term.
If that project sounds familiar it’s because, more than a year earlier, the prime minister was in Montreal in June 2017 to announce the same amount of federal funding for the same project. So, the Infrastructure Bank’s first project was a re-announcement of funding that had already been committed. The funding was simply re-classified under the bank amid frustrations around growing federal infrastructure delays that put pressure on the bank to announce its first project.
Delays are a central theme of this government’s approach to infrastructure. The Parliamentary Budget Officer reported that the Liberals’ plan is well behind schedule and their $180-billion infrastructure program is not growing the economy as promised. In a mandate letter to the current infrastructure minister, François-Philippe Champagne, Trudeau admitted that his government was behind in getting projects completed and urged Champagne to get results. A month after Champagne’s appointment to the file came the re-announcement and reclassification of the Montreal Rail System investment.
No one knows whether the Canada Infrastructure Bank will be a success but one thing is for sure, it’s costing Canadians a lot of money — the $35 billion planned for it comes to at least $1,000 per person — and has yet to show it will provide taxpayers any value. At this point it’s safe to say that the Canada Infrastructure Bank has underdelivered just like the Liberal government has when it comes to completing infrastructure projects.
This opinion piece first appeared in the Financial Post on December 4, 2018.