Our government took office with a commitment to build and rebuild Canadian communities so that they could thrive for generations to come. After a decade of an ad-hoc, inconsistent approach by the previous government, the infrastructure deficit facing our country had grown, and closing it required not just a historic investment but innovation and creativity in how that funding will be delivered.
We’ve wasted no time in delivering on our commitments since taking office. My department has approved more than 2,900 projects with a total investment of over $23 billion since our government took office—more than twice what the previous government did in their last four years combined.
This is just the beginning. In our 2017 budget, we laid out the details of our 12-year, $186-billion long-term plan that will have a transformative effect on Canadian communities. While the majority of this plan will be delivered via traditional grant funding, we proposed the creation of a new tool for our partners to use, should they wish to do so: the Canada Infrastructure Bank (CIB).
Much has been written about this proposed institution, including a recent piece by MP Pierre Poilievre here in Maclean’s. In it, he fails to answer the good question he poses: what is the Canada Infrastructure Bank for? Here is our answer, in short: the CIB will engage private capital to build more public transit, energy transmission, and trade corridors, across Canada. By engaging private capital in these projects, our investments will go further and free up more funding for things like social housing, public transit, disaster mitigation, women’s shelters, and clean water and wastewater systems. The CIB will enable Canada to build more infrastructure and enable our tax dollars to be more efficient.
The CIB would only fund projects that are in the public interest that would not have been possible otherwise. The CIB does not seek to compete with projects that can be built entirely by the private sector. The CIB seeks to fund those projects which are not viable for either the private or public sector alone.
The CIB would build new projects, not so-called brownfield ones. And private investors often don’t undertake the type of large-scale, transformative green field projects that yield huge public benefits; the CIB could help bring partners together and structure a deal where all partners share both the risk and the revenues of such a project. For example, an interprovincial transmission line is a project that would have a potential return on investment, but the cross-border jurisdictional issues create a variable that is harder to predict for investors. With the CIB, we will have the experts in place and the tools at their disposal to structure deals that can move these kinds of projects forward, while protecting taxpayers and delivering public benefits.
The traditional infrastructure-funding model in Canada has seen the federal government use grants to build projects in the public interest without any expectation of repayment or a return on investment. With the CIB, we are expanding the toolkit of offerings for our partners to include equity positions, loans, and loan guarantees. In all CIB projects, the public interest will be paramount and taxpayer dollars will be protected via the deals structured by the experts working at the Bank.
These deals will be structured expressly to shift risk to the private sector appropriate for the investments they make. Should the federal government take an equity position alongside the private sector in a project, it would share in the profits above a pre-determined level, but no rate of return would be guaranteed to the private investor by virtue of the presence of public funds.
Poilievre correctly points out that pension funds and institutional investors are already active worldwide in investing in infrastructure. However, they are largely absent in building new infrastructure in the Canadian market. The CIB is designed to help foster the conditions necessary for them and others to do so.
The CIB is one important way in which we will build more of the infrastructure Canadians need. For too long, our country has been held back by underinvestment in critical infrastructure that is necessary for a strong economy and strong, sustainable, and inclusive communities. We have changed that and by engaging private capital we will be able to build even more. The opposition may be against working with the private sector to build a better country. We are not.
Amarjeet Sohi is the Minister of Infrastructure and Communities and the Liberal MP for Edmonton Mill Woods.