Canadians might be looking at toll roads, hiked user fees and steeper costs for infrastructure if a little-publicized Liberal government plan goes ahead.
Critics are calling it one of the biggest privatization schemes in the country's history.
Has the public been paying enough attention?
Back in 2014, Prime Minister Justin Trudeau delivered a keynote address to the Canadian Council for Public-Private Partnerships, outlining a plan that would stimulate economic growth in Canada and add billions of dollars to the nation's gross domestic product.
"It's a pretty simple fact: infrastructure investments help the economy," he said. "Not only can we promise infrastructure investment, we can make it happen, feasibly, sustainably and responsibly across all levels of government."
One year later, Trudeau was on the campaign trail. He promised $125 billion of new infrastructure investment over 10 years and "modest short-term deficits" to fund it. The Liberal plan would focus on key areas such as transit, green projects and social infrastructure such as affordable housing and long-term care centres to support a rapidly aging population.
Responding to dramatic changes in the Canadian economy and record-low interest rates, Trudeau's vision proffered political justification for stimulus spending — the kind shunned by fiscal conservatives who warn against the long-term consequences of higher debt.
Borrowing to spend on public infrastructure makes good sense, particularly in an era when it is politically feasible and governments are under increased pressure to rebuild their economies and update roads, hospitals, waste-water plants and the like.
It is no wonder that even the International Monetary Fund, long a facilitator of unregulated market capitalism, recently criticized the global impact of neoliberalism in a June 2016 report. Its authors warned against privatization and limits on the "ability of governments to run fiscal deficits and accumulate debt."
Yet as the federal government prepares to splash billions in 2017, Ottawa's "unprecedented" appeals for private financing are raising concerns. The Liberals are courting well-heeled investors to leverage billions in private capital and that will have as much as an 80 per cent stake in Canadian infrastructure projects.
The prime minister has scheduled meetings with representatives of banking institutions, sovereign wealth and pension funds that have a combined capital pool of $21 trillion.
Earlier in November, Finance Minister Bill Morneau announced the formation of the Canada Infrastructure Bank. To launch with $35 billion — $15 billion redirected from "funding for public transit, green infrastructure, social infrastructure, trade and transportation, and rural and northern communities" — the bank's mandate is to support revenue generating infrastructure projects with the help of the private sector.
Public-private partnerships (P3s) represent tens of billions of dollars of investment in the Canadian economy. Advocates insist they promote efficiency by offloading risk on the private sector. But critics are asking, at what price?
P3s often involve investment in projects that serve private interests before the public good. In practical terms, this means toll roads, high user fees and even steeper costs. For taxpayers, especially those who rely upon public infrastructure in their daily lives, it's a raw deal.
Studies have shown public-private partnerships cost up to 16 per cent more than contracts funded completely by the public, in part because governments enjoy much lower interest rates than private borrowers.
- Value for money and risk in public-private partnerships
- Infrastructure Ontario — alternative financing and procurement
Not only do public-private partnerships drive up costs, they're unpopular. An Ipsos Reid poll done for the Ontario Public Service Employees Union suggests barely 23 per cent of Ontarians believe public-private partnerships cost the public less, "and when asked about the cost of infrastructure projects, nearly six in ten (59 per cent) agree that P3 deals add unnecessary costs."
Despite this, the PM and several senior cabinet ministers met with big-money investors last week at Toronto's Shangri-La Hotel to discuss investment in Canadian infrastructure. Among those in attendance were Laurence Fink, chairman and CEO of BlackRock (the world's largest asset manager), and the company's senior managing director, Mark Wiseman, who also serves as a key member on Morneau's recently assembled, business-dominated Advisory Council on Economic Growth. The council's recommendations led Morneau to propose the Canada Infrastructure Bank in his fall economic update.
In the words of Duncan Cameron, professor of political science at Simon Fraser University, "It is clear that world private finance attended because they expect to make lots of money from the Trudeau government's pledge to renew Canada's aging and inadequate built environment of public facilities."
Instead of prioritizing the interests of the public, the Canada Infrastructure Bank marks the Liberals' enthusiastic surrender to market forces. After all, the bank provides what is necessary to secure returns for investors, while appearing to sidestep the priority of productive investments in the renewable, green economy necessary for a future of supercharged climate change.
When asked how the Canada Infrastructure Bank would function by CTV's Evan Solomon, Morneau awkwardly avoided a simple question: "Is Bill Morneau against tolls?" After providing a rambling and incoherent response, Solomon continued his questioning. This time, there was no equivocation. "Sometimes you just won't get an answer," he said.
Harrison Samphir is an independent writer and researcher and the web editor at Canadian Dimension Magazine. He holds a master's degree in international relations from the University of Sussex.