The Canada Infrastructure Bank: A Tale of Corporate Cartels, Laurentian Elites, and Public Pensions
Updated: Dec 13, 2021
PART ONE: How the Davos crowd created a funding mechanism to try to turn corporate profits off of the Canadian public.
The Canada Infrastructure Bank (CIB) is one of the greatest curiosities to emerge out of the Trudeau government. A $35 billion funding initiative launched the Bank in 2017, which was to operate at arm’s length to the government to complete community infrastructure projects. To date, public monies have been spent, private capital is lacking, and no projects have actually been completed.
Its legacy however will no doubt be a lasting one.
To understand what happened, we need to understand what the CIB is. It was announced in the 2015 Liberal election platform, but was not officially established until June 2017. Naturally, the campaign promises most likely to be fulfilled by the Liberals are ones that may benefit them and their friends. It was in part the brainchild of disgraced politician and retired Minister of Finance Bill Morneau, who we all know ended up taking one for the WE Charity team. Like Trudeau, he took no issue in accepting extravagant freebies from a government-funded organization.
The mega-corporations didn’t have any problem with it either.
The 2017 Canada Infrastructure Bank Act laid down a mandate to attract investment from private-sector donors and institutional investors, in revenue-generating framework projects that were "in the public interest". The bank was given $35 billion dollars to invest over a decade. It was an entity created to supposedly give municipalities badly needed funding to complete vital infrastructure projects. It sounded good. A federal-provincial partnership that would benefit Canadians with new projects at a low cost which would create jobs and spur economic growth.
It was anything but.
The bank's website previously stated that it "was established in response to a market gap between government-funded and privately-funded infrastructure projects".
Who determined there was a market gap? Why, the Davos elite, it seems.
In the 2015 platform announcement, there was no mention of private investment in the bank. The CIB was supposed to issue low rate loan bonds to assist in building infrastructure, but why would the bank provide low rate lending when it could instead help corporations turn profits? In 2016, Justin Trudeau and company attended the World Economic Forum. He met with Blackrock’s CEO Larry Fink in a meeting was set up by none other than Canada’s recently ousted Ambassador to China, Dominic Barton, who was the global head of consulting conglomerate McKinsey & Co. at the time.
Two months later, Bill Morneau announced the creation of his Advisory Council on Economic Growth, oversight body for the CIB, to be chaired by Dominic Barton. The council would provide supervision over the CIB Board of Directors. McKinsey would also provide supplementary staff to aid in this advisory process. Other investors on the council included Michael Sabia, president and CEO of the Caisse de dépôt et placement du Québec (CDPQ); Jim Leech, previously the president and CEO of the Ontario Teachers’ Pension Plan (OTPP); and Mark Wiseman, who was president and CEO of the Canada Pension Plan Investment Board (CPPIB). Mr. Wiseman ended up leaving the CPPIB to join the more lucrative BlackRock as global head of active equities, but remained on the advisory CIB advisory council. Dominic Barton of course would be named ambassador to China by Justin Trudeau in 2019. An operation “at arm’s length” to the government, indeed.
With all the key players is place, shortly thereafter, the CIB was born to save our crumbling public infrastructure, and the 2015 Liberal platform mandate was updated to signal to corporations that the CIB was open for private business.
Catherine McKenna, notorious for misplacing a few billion dollars here and there, said “There are real opportunities, to take one taxpayer dollar and turn that into double or triple that so we can build even more good infrastructure for Canadians.” I'm sorry - did the Liberals give us any "good infrastructure" to begin with? A report completed by McKinsey & Co. for the CIB estimated Canadians would gain four times as much private investment for every public dollar we spent.
To date, four years later, the Infrastructure Bank has not completed a single project.
What’s the problem here? Why have no projects been completed?
It is simple. The way the bank has been set up means that to receive funding, municipalities are forced in to a private-public partnership deal, or a P3. The issue with this partnership is that the private side of the infrastructure investment wants a profit. And the profit of course comes from project price inflation at taxpayer cost.
Mapleton tried to build a green wastewater system. The CIB offered the town a $20 million dollar debt-financing package. They ultimately cancelled their contract with the bank. Why? After some study, they determined it would be cheaper for the town to finance the deal themselves independently. Mapleton recognized the risks in granting a private, for-profit corporation control over their public water system. The town said there was limited reporting on the procurement process (of finding a private partner to deliver services), and no public consultations about the proposal. Freedom of Information requests by the town only provided redacted documents. The deal’s ultimate target was to ensure the private investment side profited. The town realized this and cancelled it, costing Mapleton $367000 in legal fees, which they happily paid to the federal government to get out of the contract.
So, why not just subsidize the projects in the absence of a private partnership? Why won’t the bank aid the municipalities in the traditional manner? What is the purpose of this model?
There’s only one reason for constricting the financing in this fashion, really. This "innovative financing model" is an instrument for directing taxpayer dollars to private companies so they can earn profits off of building and maintaining our infrastructure - even though we can do it more economically on our own. And guess what? Money still didn’t fall from the private sector sky. Part of the problem is that we don't know if the projects are profitable. The other problem with the bank is that we don’t know if the private sector even has any skin in the game. The Parliamentary Budget Officer (PBO) cannot find any concrete private-sector investment, even though the Government of Canada website lists billions.
The next CIB contract went to SNC-Lavalin, convicted of fraud and barred from bidding on World Bank contracts for ten years for bribing Libyan officials. Coincidentally, SNC-Lavalin’s largest shareholder is Quebec's public pension plan - Caisse de dépôt et placement du Québec.
To be continued…