Documents expose dangers of Liberal privatization bank
Newly-released government documents expose the privatization plans at the heart of the Liberal’s proposed infrastructure bank.
The Globe and Mail is reporting on government briefings that show the Canada Infrastructure Bank has been designed with one-sided advice that comes almost exclusively from the corporations and private investors, including pension funds, that will profit from it.
- Read: Private-sector role in Canada Infrastructure Bank raises conflict issues (subscription required)
Drawing on documents obtained through Access to Information, the Globe describes months of meetings where members of Finance Minister Bill Morneau’s corporate-heavy Advisory Council on Economic Growth “worked directly with cabinet ministers, senior officials and political aides on the themes of the 2017 budget and plans for a Canada Infrastructure Bank.”
Prime Minister Justin Trudeau and Liberal cabinet ministers worked closely with the massive private investment firm BlackRock in the lead-up to a key November 2016 meeting, “to ensure the message cabinet ministers delivered at the closed-door event would be what BlackRock’s clients wanted to hear.”
The revelations help explain why the Liberals have broken their election promise of a bank that would provide low-cost lending to municipalities. Now, the bank is relying on expensive private financing. Legislation to create the bank, buried in the government’s omnibus budget bill, is being debated in Parliament.
The internal documents also highlight how Caisse de dépôt et placement du Québec CEO Michael Sabia is embedded in shaping a bank that the Caisse hopes to profit from through a privatized light-rail project in Montreal.
Risks of unsolicited bids
Potential conflicts of interest could multiply. The bank will receive and evaluate unsolicited private-sector proposals to privatize infrastructure. The bank’s board is forbidden to include representatives of federal, provincial or municipal governments.
The risks of unsolicited bids are raised in documents obtained by the Canadian Press. CP is reporting on a Finance Department briefing note warning that unsolicited pitches come with many problems, including “a lack of transparency in the selection and implementation of projects, avoidance of competitive and due-diligence processes and the acceptance of poor quality bids – either in design or execution.”
No business case
Researchers at former parliamentary budget officer Kevin Page’s think-tank have also weighed in on the bank. An Institute for Fiscal Studies and Democracy briefing concludes there’s no clear business case for private financing of our infrastructure.
The business case for the current vision of the CIB “is not compelling, as it has the potential to increase overall costs to taxpayers while privatizing the most high-return, low-risk infrastructure assets. So, why the CIB? We don’t know, and ‘just because innovation’ is not a good enough answer,” write researchers Azfar Ali Khan and Randall Bartlett.
- IFSD briefing: “Where Were They Going Without Ever Knowing the Way?” Assessing the Risks and Opportunities of the Canada Infrastructure Bank
The report notes that only the most profitable, least-risky projects will be privatized.
“Since it is Canadian taxpayers that will pay for these assets regardless of whether they are publicly or privately owned, this does beg the question: Why would taxpayers sell their most valuable assets to the private sector,” write the researchers.
CUPE economist Toby Sanger has highlighted these concerns, and proposed a public way forward, in his recent Canadian Centre for Policy Alternatives paper, Creating a Canadian infrastructure bank in the public interest. CUPE has warned about the Liberal’s “bank of privatization” since it first surfaced, last year.
Source: CUPE National