Canada Infrastructure Bank
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Native name | Banque de l'infrastructure du Canada |
---|---|
Company type | Crown corporation |
Founded | June 22, 2017 |
Key people | Michael Sabia (Chair of the Board of Directors) |
$CDN 3,316, 000 [1]: 7 (September 30, 2019[1]: 7 ) | |
Total assets | $CDN 796,408, 000[1]: 6 (September 30, 2019[1]: 6 ) |
Total equity | $CDN 796,408, 000 (September 30, 2019[1]: 6 ) |
Owner | Government of Canada |
Number of employees | 46[1]: 6 (November 2019) |
Website | cib-bic |
The Canada Infrastructure Bank (French: Banque de l'infrastructure du Canada) (CIB) is a federal Crown Corporation of Canada tasked with financially supporting revenue-generating infrastructure projects that are "in the public interest" through public-private partnerships.
History
The Canada Infrastructure Bank was announced by Finance Minister Bill Morneau during the 2016 fall economic update, in response to a campaign promise made by the Liberal Party during the 2015 Canadian federal election. It was officially established in June 2017 when the Canada Infrastructure Bank Act received royal assent. The bank's website used to state that it "was established in response to a market gap between government-funded and privately funded infrastructure projects".[2][3] Some speculated that the banks creation was a way to sidestep the Committee on Monetary and Economic Reform's lawsuit.[4]
A Canadian investment banker working for Bank of America Merrill Lynch helped design and set up the Canada Infrastructure Bank as an unpaid advisor.[5] In November 2016, the government held high-level meetings behind closed doors with equity investors such as BlackRock and Canada's largest pension funds concerning the bank's structure.[6]
The creation of the Canada Infrastructure Bank coincides the dissolution of PPP Canada and the PPP Canada fund, which were created under Prime Minister Stephen Harper to fund infrastructure projects with public-private partnerships.
In January 2020, following numerous criticism of the Banks' operations, the House of Commons commissioned an audit of all infrastructure projects worth over $186.7 billion, and a complete review of Bank.[7]
Pierre Lavallée was the first President and Chief Financial Officer (CFO) and Chief Executive Officer (CEO) of the Bank. He resigned from his position in April 2020. Upon his resignation, he was awarded a bonus worth $720,000, or 120% of his annual salary.[7]
Mandate
The 2017 Canada Infrastructure Bank Act sets out the corporation's mandate to invest, and seek to attract investment from private-sector investors and institutional investors, in revenue-generating infrastructure projects that are "in the public interest".
The CIB uses financial instruments including loans, equity, and, where appropriate, loan guarantees to deliver federal support to projects to make them commercially viable. The CIB will provide financing and investment using a combination of these instruments depending on a project's unique characteristics.[8] The model is to use private and institutional capital and to finance projects up front, while the public sector funds their return on investment over time.[6]
The Government of Canada sets the high-level policy priorities for the CIB, including:
- projects that support the government's current priorities to invest in public transit, trade and transportation, and green infrastructure;
- projects that contribute to the objectives of the Investing in Canada Plan and the Pan-Canadian Framework on Clean Growth and Climate Change; and
- projects generally eligible for cost sharing under federal infrastructure support programs.
Consideration is given to potential projects appropriate for the new partnership- and revenue-based funding model.
The CIB reports to Parliament through the Minister of Infrastructure and Communities.[8]
Funding
The Canadian Parliament has authorized appropriations of $CDN35 billion covering the eleven-year period that ends in FY 2027-2028. This includes $CDN15 billion for the fiscal framework. This financial support is to fulfill a need to "mobilize private investment" for projects that would otherwise have no private investment. This may be in the form of "financial instruments" or "loans, equity investments, and loan guarantees."[1]: 11
Non-toll road public-private partnerships are generally more expensive than publicly-financed projects because they use private sector financing, which comes at a higher interest rate than public financing.[6] The CIB subsidizes this higher borrowing cost, making CIB projects more profitable for the private partners but not for taxpayers. The Bank also charges local governments for their services.[9]
Governance
Annie Ropar is the Chief Administrative Officer (CAO) and Chief Financial Officer (CFO) and Michael Sabia in Chair of the Board of Directors. Most of the board members are investors who have had their careers in major banks or pension funds. More than half of members have ties to the Liberal Party, including former Calgary mayor and past Liberal donor Dave Bronconnier.[10] Heather Whiteside argues that the board of director's private sector majority will mostly be concerned about projects' profitability, and will disregard the government's other infrastructure priorities.[6]
Oversight
The Bank is not subject to the government of Canada's strong accountability and transparency rules, and the Auditor General of Canada has limited oversight on the bank and its projects.[11]
Reception
Since its inception, the Bank received sharp criticism from public-sector unions such as the Canadian Union of Public Employees (CUPE), which characterized the CIB as a "Bank of privatization" and a "Jackpot fo corporations".[11]
According to Heather Whiteside and CUPE, the CIB's structure represents a betrayal of Trudeau's campaign promises concerning infrastructure. On the campaign trail, Trudeau argued that the government could fund infrastructure projects leveraging the public sector's low interest rates. Combined with his promise to run modest deficits, his rhetoric was distinctively anti-austerity. She argues this was a bait-and-switch because the CIB is designed to promote public-private partnerships and asset recycling(the selling of existing public infrastructure to fund new projects). As such, Trudeau's "efforts to transfer public assets to private actors display a degree of finesse and deception far beyond the Conservative approach to infrastructure privatization."[6]
After two years of operation, the private sector was displeased by the Bank's slow pace of project approval. According to Conservative infrastructure critic Matt Jeneroux, the CIB "was supposed to be a new way to build infrastructure, but we’re still faced with the same delays, and the issues of actually building infrastructure have gotten worse when we’re tying up this much money in the bank.”[12]
Both the Conservative Party and the New Democratic Party promised to wind down the CIB if they were elected in the 2019 Canadian federal election.[12]
Projects
Mapleton, Ontario waste and wastewater infrastructure project (2019-)
On 15 July 2019 the BIC made a $CDN 20 million investment commitment township of Mapleton, Ontario's water and wastewater project.[1]: 5 The financing comes in the form of a "standardized debt financing package" to "attract private capital expertise".[13] The Township of Mapleton, with a rural population of 11,000, has been seeking a consortium public-partnership to "design, build, finance, operate and maintain" a proposed 20-year project to improve and expand" the township's publicly owned water and wastewater infrastructure".[14] BIC said that this project is a potential pilot and model which could demonstrate to Canadian municipalities—including smaller communities—with water and wastewater challenges, how BIC can assist them in attracting private sector capital" for financing to improve publicly owned water and wastewater systems.[13][1]: 5 While the water and waste-water systems will continue to be publicly owned, concerns have been raised by organizations, such as the Canadian Union of Public Employees (CUPE), that there is a risk that smaller communities may become locked into lengthy agreements with private financiers that result in higher user fees for water and wastewater services.[15]
Name | Partner | Location | Sector | Investment |
---|---|---|---|---|
Réseau express métropolitain (REM)[16] | CDPQ Infra, Province of Quebec | Montreal, Quebec | Public Transit | $1.28 billion (15-year senior secured loan) |
GO Expansion - On Corridor[16] | Infrastructure Ontario and Metrolinx | Greater Toronto and Hamilton Area, Ontario | Public Transit | Up to $2 billion |
Via Rail High Frequency Rail Project[16] | Via Rail and Transport Canada | Ontario and Quebec | Public Transit | $55 million |
Mapleton Water and Wastewater[15][1][16] | Township of Mapleton | Mapleton, Ontario | Green Infrastructure | Up to $20 million |
Lulu Island District Energy[16] | City of Richmond, Lulu Island Energy Company | Richmond, British Columbia | Green Infrastructure | Memorandum of Understanding |
Contrecoeur Port Terminal[16] | Montreal Port Authority | Montreal, Quebec | Trade and Transportation | Up to $300 million |
Taltson Hydroelectricity Expansion[16] | Government of Northwest Territories | Northwest Territories | Green Infrastructure | Advisory Services |
Pirate Harbour Wind Farm[16] | Port Hawkesbury Paper | Point Tupper, Nova Scotia | Green Infrastructure | Memorandum of Understanding |
Kivalliq Hydro-Fibre Link[16] | Kivalliq Inuit Association, Sakku Investment Corporation, Anbaric Development Partners and Ontario Teachers' Pension Plan | Nunavut and Manitoba | Green and Broadband Infrastructure | Memorandum of Understanding |
Calgary-Banff Rail[16] | Government of Alberta | Calgary International Airport to the Town of Banff, Alberta | Transit | Memorandum of Understanding |
Acts
The CIB was established by the Canada Infrastructure Bank Act (CIB Act), an Act of Parliament on June 22, 2017.[17][1]: 11
References
- ^ a b c d e f g h i j k Second Quarter (Q2) Fiscal Year 2019-20 Financial Report (PDF). Canada Infrastructure Bank (Report). Toronto. November 19, 2019. p. 22. Retrieved January 14, 2020.
- ^ "About Us". Canada Infrastructure Bank. Retrieved December 29, 2018.
- ^ "Canada Infrastructure Bank". Liberal Party of Canada. Retrieved December 29, 2018.
- ^ MacRae, Gavin. "Whose Canada Infrastructure Bank?". Watershed Sentinel. Retrieved June 10, 2020.
- ^ Fekete, Jason (March 18, 2016). "Stakes are huge as Liberal government moves forward on Canada Infrastructure Bank". National Post. Retrieved June 10, 2020.
{{cite web}}
: CS1 maint: url-status (link) - ^ a b c d e Whiteside, Heather (May 4, 2017). "The Canada Infrastructure Bank: private finance as poor alternative". Studies in Political Economy. 98 (2): 223–237. doi:10.1080/07078552.2017.1343008. ISSN 0707-8552.
- ^ a b "Canada Infrastructure Bank approved bonuses to CEO who resigned". Toronto Sun. May 27, 2020.
{{cite news}}
: CS1 maint: url-status (link) - ^ a b "Mission and Mandate". Canada Infrastructure Bank. Retrieved July 8, 2019.
- ^ "Infrastructure bank targets local water systems". Canadian Union of Public Employees. Retrieved June 29, 2020.
- ^ Pressprogress. "Why The Liberal Government's Infrastructure Bank is Helping Big Banks and Dumping User Fees on Citizens". PressProgress. Retrieved May 9, 2020.
- ^ a b "Infrastructure bank a jackpot for corporations". Canadian Union of Public Employees. June 21, 2017. Retrieved June 29, 2020.
{{cite web}}
: CS1 maint: url-status (link) - ^ a b Curry, Bill (July 30, 2019). "Canada Infrastructure Bank executive Nicholas Hann resigns amid growing industry frustration with pace of project approvals". The Globe and Mail. Retrieved June 29, 2020.
{{cite news}}
: CS1 maint: url-status (link) - ^ a b "Township of Mapleton receives $20 Million Investment". Township of Mapleton. July 15, 2019. Retrieved January 14, 2020.
- ^ "Mapleton Water and Wastewater". Canada Infrastructure Bank. 2019. Retrieved January 14, 2020.
- ^ a b "Federal Infrastructure Bank Says It Sees 'Potential' to Privatize Local Water Systems Across Canada". PressProgress. January 14, 2020. Retrieved January 14, 2020.
- ^ a b c d e f g h i j "Projects". Canada Infrastructure Bank. Retrieved July 8, 2019.
- ^ "Canada Infrastructure Bank Act". Government of Canada - Justice Laws. Retrieved December 29, 2018.