The Canada Infrastructure Bank (CIB) is an initiative of the Justin Trudeau government created to further entrench public-private partnerships (P3s) in the financing of all infrastructure projects. Dreamed up in 2016 and founded in 2017, the future of the CIB has seemed in doubt since its inception. Slow to get started and unable to shepherd projects to completion, the bank was ardently opposed by former Conservative Party leader Erin O’Toole, who committed to closing its doors in 2021. On the other side of the house, the New Democratic Party (NDP) has called it the “privatization bank” since its founding and have warned that it will lead to higher public costs that will be funneled into private profit. Now, an NDP private member’s bill sponsored by Niki Ashton, Bill C-245, is seeking to remake the CIB.
Ashton’s bill would amend the purpose of the bank. The current Canada Infrastructure Bank Act is dedicated to using P3s as a vehicle for funneling state funds to private interests. The act states, “The purpose of the Bank is to invest, and seek to attract investment from private sector investors and institutional investors, in infrastructure projects in Canada.”
The amended act would change the focus of the CIB to privilege public investment. It reads:
The purpose of the Bank is to invest in infrastructure projects in Canada or partly in Canada that are in the public interest by, for example, supporting conditions that foster climate change mitigation or adaptation, or by contributing to the sustainability of infrastructure in Canada.
Bill C-245 would also mandate the CIB to prioritize investments from “public institutions, all levels of governments and Northern and Indigenous communities.” It would direct the bank to focus on “infrastructure projects that propose measures aimed at mitigating or adapting to climate change.” The bill is especially concerned with the welfare of indigenous and Northern communities.
There is nothing inherently wrong with the creation of an infrastructure bank to invest in infrastructure projects. As a state tool for focusing on funding key infrastructure projects, regardless of risk, it may even be essential. Indeed, as Ashton’s bill indicates, there is a need for such an entity to tackle the country’s need to replace its crumbling infrastructure, especially considering the threat of climate change. The Liberals understand this, and in 2022, they amended the CIB mandate to permit it “to invest in small modular reactors; clean fuel production; hydrogen production, transportation and distribution; and carbon capture, utilization and storage.”
This year’s budget also included $500 million for zero-emission vehicle (ZEV) charging infrastructure. These small steps are commendable but not nearly adequate in addressing the climate change crisis. Climate mitigation and adaptation require major investments — immediately.
The problem with the Liberal government’s infrastructure bank is that it embeds private-public partnerships (P3s) within the state that will undermine accountability, pay out vast sums to the rentier class, and drive up costs. By setting up such a path dependency — linking the country’s climate adaptation and mitigation efforts inextricably to P3s — the government has committed the public purse to do the work of raising profits for the private sector. Ashton’s bill is a reminder that private capital ought not to dominate public investment. The bank should be, above all, for the public and by the public.
Writing in the Conversation, researchers Thomas Marois, David McDonald, and Susan Spronk called CIB’s P3 model a failure and argued that the CIB could still “renew its vows and become a more pro-public institution.” The Canadian Union of Public Employees (CUPE) feels similarly but advocates more muscular changes. In the aftermath of the budget, CUPE reiterated its call for “the federal government to scrap the Canada Infrastructure Bank’s privatization mandate, and instead provide direct, low-interest loans to help cities and towns with their urgent infrastructure needs.”
The government isn’t listening. Instead, they are doubling down on the CIB’s privatization mandate and speeding up the deployment of investment. In fact, they are now reusing the model to de-risk high-tech private sector investments. Once more, the government is indicating that the private market is unable to meet public needs without state concessions. At the same time, they are conceding — inaccurately — that the state is unable to meet these needs without buying off the private sector.
Consequently, the country won’t finance its critical infrastructure projects through low-interest central bank borrowing. Instead, it will hold the country hostage on behalf of the rentier class at much higher costs. While the federal government could choose to borrow at a rate of just over 2 percent, private financing will demand a floor of 7-9 percent. All of this is because the state refuses to pony up in the present — it is nothing other than ideological spit shine to prevent deficit spending. The Liberals are banking on public sector fire sales capturing private investment dollars. But the net effect of this decision will shunt much higher use costs into the future.
Last April, Joyce Nelson warned in these pages that the CIB is “a subsidy scheme for big business” and that it ought to be kept out of pandemic recovery programming. She was right. If the CIB insists on P3s, it ought to be kept out of climate adaptation and mitigation plans, too.
Opening the door for P3s to become a critical part the country’s future will doom Canada to be stuck with these parasitic arrangements for decades to come. There is political will to reverse course and even a parliamentary bill to get started. The Left should make a public transformation of the CIB a priority. Making the national infrastructure bank properly public would be an investment in the country that would yield long-term dividends for all of us — and it would cost less, too.