The Infrastructure Bank Conundrum.

It has been surprising just how many writers are interpreting the Liberal Government’s Infrastructure Bank as a prop for public-private partnerships (P3). It has also not helped that the government included the legislation in the larger budget bill and that finance minister Bill Morneau has been slow to defend his proposal.  When you are seeding it with $35 billion of taxpayers’ money, this is not a corner store operation.

While taxpayers can expect that some of the propositions brought to the bank will be P3-type projects, we have to remember that the political partner in these projects takes the heat for the public value and the private partner takes the heat for the business case. The Infrastructure Bank takes the heat if neither of the partners nor the public are satisfied with the result.

There have certainly been some bad P3 projects in the past. It has been mostly caused by uncaring government’s selling out the public share at fire-sale prices. In Ontario you need only look as far as Toll-highway 407 and Toronto’s SkyDome to see what poor government control of P3 assets can cost.

We can hardly expect someone such as Bill Morneau, with his background, to be a very progressive finance minister. He has been to all the right schools in Canada as well as the dutiful stint at the London School of Economics and he is obviously neoliberal in his thinking.

And he will make sure that Justin Trudeau appoints all the same sort to control his Infrastructure Bank. You can hardly expect them to be dreamers or progressives. The only pressure on them will be to get the money working for us. You can be sure that like all Canadian bankers, they will act as skinflints and curmudgeons. Unlike their private sector banking brothers, they will have to address Canadian-only projects—of benefit to Canadians. That will be the novelty that will pay off for us.

Canadians can expect that the new Infrastructure Bank can attract four to five times its seed funds in foreign and domestic money in the first couple years. That $140 billion to $175 billion is going to make a huge difference in catching up our infrastructure deficit and getting us moving stronger into the future. So get off Bill’s back and help him build this bank for our future.

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Copyright 2017 © Peter Lowry

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