by JOYCE NELSON
Justin Trudeau’s government claims that the Canada Infrastructure Bank (CIB) can solve Canada’s infrastructure problems. In reality, the CIB is a vehicle for private interests to get their hands on public assets and revenue streams. It should be excluded from coronavirus recovery plans.
The Trudeau government knows that North American infrastructure is in jeopardy: for years, engineers have been sounding the alarm. Justin Trudeau and the Liberals claim to have a solution for this problem: the Canada Infrastructure Bank (CIB).
Canada’s then–finance minister Bill Morneau announced the CIB’s creation in 2016. The bank uses public-private partnerships (called “P3s”) to fund Canadian infrastructure projects.
P3 contracts allow private operators to assume responsibility for providing services that the public sector previously supplied. The government then pays the contracted companies to cover their financing, operations, and maintenance, assuming the risk while they retain the profits.
The pandemic has created unprecedented fiscal challenges for Canada’s cities and regions, and there will be strong pressure on local governments to accept public-private deals that appear to plug the gap. In reality, those deals are a rip-off promoted by corporate players like BlackRock that have a vested interest.
BlackRock Connections
There’s an obvious alternative to the public-private model. Canada’s central bank has a mandate to provide low-cost loans to provinces and municipalities for infrastructure. The federal government can float long-term bonds at rates of 2 percent or less.
However, the Liberals decided not to make use of this cheaper option when they created the CIB, opting for P3s instead. This drives up the costs of projects and locks the government into long-term contracts with private-sector owner-operators who expect to receive a 7 to 9 percent return on their investment.
In order to get the bank up and running, Trudeau’s government recruited an unnamed banker — who agreed to work on a pro bono basis — from Bank of America Merrill Lynch. They helped design the CIB and advised the federal infrastructure minister, Amarjeet Sohi, on the project.
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