The Canada Infrastructure Bank: A Tale of Corporate Cartels, Laurentian Elites, and Public Pensions
Updated: Dec 13, 2021
PART TWO: The Projects - or Lack of Them.
Parliamentary Budget Officer (PBO) Yves Giroux wrote in a report from March 2021 that the Canada Infrastructure Bank (CIB) had only committed just over $4 billion for projects to date, but that none of the infrastructure deals struck involved funding from private sector investors.
None involve private investment funding? Wasn’t that the entire mandate of the Canada Infrastructure Bank?
PBO Giroux also stated eight out of thirteen projects were yet to announce an actual concrete financial commitment, and are only under either a memorandum of understanding, or still receiving consulting advice. Giroux wrote in his report on the bank that "Of the projects for which contracts have been signed, there is no evidence that any private investment has been leveraged. Nor is it clear that private dollars are involved in any of the remaining 13 projects in which the agency is participating.”
The Government of Canada’s website however, updated in October 2021, states that there is $6.7 billion dollars of private sector investment. Either much has changed over the second half of 2021, or we have a problem here Houston.
Giroux wrote that CIB's current projects at the time were exclusively funded by the government. So, taxpayers. Us. Remember, this was a bank that was supposed to attract “two or three times” as much in private funding for every dollar spent by taxpayers. The PBO report also made a note that although the CIB had received 420 potential project proposals, almost all have been rejected. Not the right Liberal Party donors, perhaps? More than half of the officials running the bank have official ties to the Liberal Party of Canada.
So, what happened here? One issue is that most of the private sector wants nothing to do with some of the projects, which makes one wonder about their economic viability. Another is that the provinces and municipalities just aren’t taking the bait.
In 2017, the CIB chair stated that projects could generate revenues "in many different forms, including fees, tolls, fares, tariffs, and mechanisms based on appreciating land value".
Setting up Canadians to pay user fees to private companies for critical infrastructure? Pardon me? No wonder Mapleton bowed out.
This all sounds rather different than the 2015 election campaign promise, which in the Liberals' own words said that “We will establish the Canadian Infrastructure Bank to provide low-cost financing for new infrastructure projects. The federal government can use its strong credit rating and lending authority to make it easier and more affordable for municipalities to build the projects their communities need. Where a lack of capital represents a barrier to projects, the Canada Infrastructure Bank will provide loan guarantees and small capital contributions to provinces and municipalities to ensure that the projects are built.”
Projects under proposal to date include public transit, bridges, ports, water, energy, telecommunications and more. Were these projects not supposed to be independently revenue-generating? And now we are talking about public asset recycling and infrastructure to be privatized for corporate profiteering? What is going on here?
Furthermore, the Auditor General - Canada’s top spending watchdog - is only able to provide limited oversight on the CIB because of the way the CIB is structured, despite the fact that so far it only utilizes public funds. As a side note, the Auditor General’s department - an essential pillar of our parliament - has been purposefully underfunded by the Liberal government. Ten years ago, the Auditor General’s Office was conducting 27 audits a year. At present funding levels, the Auditor General can only execute approximately 14 performance audits a year. How convenient for the Liberals.
The lone project which we have some concrete data on is that which SNC-Lavalin won - the $6.3-billion Réseau express métropolitain (REM) light rail network in Montreal that is currently under construction. SNC-Lavalin had to pay $280 million in fines whilst constructing the transit corridor in a plea deal reached for construction bid-rigging, but that didn’t stop it from acquiring the contract for some reason. So far in fact, it’s the only Canadian company to be granted exemption status from a federal policy that states government shall refrain from using corrupt contractors. A fraud conviction under Quebec's Anti-Corruption Laws results in an automatic five-year public contract bidding banishment for corporations, but that didn't halt this partnership. The plea deal of course reached with prosecutors forever tarnished SNC-Lavalin, and the highest office of the Canadian government, ultimately leading to the resignation of then Attorney General Jody Wilson-Raybould.
Justin Trudeau was found guilty of an ethics violation. Conflict of Interest and Ethics Commissioner Mario Dion found that "The Prime Minister, directly and through his senior officials, used various means to exert influence over Ms. Wilson‑Raybould. The authority of the Prime Minister and his office was used to circumvent, undermine and ultimately attempt to discredit the decision of the director of public prosecutions as well as the authority of Ms. Wilson‑Raybould as the Crown's chief law officer," The Ethics commissioner ruled that Justin Trudeau had contravened Section 9 of the Conflict of Interest Act "through a series of flagrant attempts to influence" Jody Wilson-Raybould so that SNC-Lavalin could duck criminal charges.
Yet the company was allowed to circumvent a ruling that could have had its current projects halted in their tracks, and continued to bid on and receive federal contracts by utilizing the CIB. The bank is being manipulated by SNC-Lavalin so that it may receive federal contracts that it would otherwise be barred from bidding on by provincial governments.
The CIB provided a $1.28 billion 15-year loan towards the REM project in Montreal to be completed by SNC-Lavalin. Pierre Lavallée, who was the CEO of the Canadian Infrastructure Bank at the time, stated that this funding model should “set an example” for how future large scale projects in Canada are developed and paid for.
To say things didn’t pan out exactly as planned is an understatement. Maybe that’s why he’s no longer with the bank.
To be continued...