Taxpayers won't be on the hook for infrastructure bank risks, Sohi says
Infrastructure minister deflects opposition criticism of proposed agency on CBC Radio's The House
Federal Infrastructure Minister Amarjeet Sohi says taxpayers won't be on the hook if projects financed through the proposed infrastructure bank don't produce the kinds of revenues private-sector investors expect.
The Liberals want to create the $35-billion Canada Infrastructure Bank to attract outside investors such as pension plans and international financial institutions for major projects that Sohi says the government can't afford to build on its own.
"We are talking about transformative projects that will otherwise not be built," Sohi said in an interview airing Saturday on CBC Radio's The House.
Critics argue the bank will lead to more user fees, higher tolls and the prospect that Canadians will be left on the hook if those projects, such as bridges and light-rail lines, don't provide the kind of returns investors expected.
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Sohi insisted that's not the case. He said the federal government will only be on the hook for its own share of the cost of building these projects.
"But the rest of the risk, on the revenue, on everything else, is with the private sector. So they're putting significant amount of money into this so it would be in the best interest for everyone to work together to do all their due diligence before the execution of that particular project."
The proposed bank was announced in the fall economic update. The government has since met with global investment giants such as BlackRock, as well as pension plans, banks, municipalities and others to set out how it would work.
Both opposition parties say those meetings put BlackRock and other private investors in a conflict.
And an internal report prepared for Sohi's department obtained under access to information advised closer study to ensure taxpayers are protected. It also warned that Canadians don't have a record of supporting tolls and user fees for roads, bridges and even municipal water service.
Even the decision to have the proposed bank's headquarters in Toronto generated controversy, with Calgary Mayor Naheed Nenshi saying the federal government missed a historic opportunity to support his city's position as a financial centre.
But it's the role of the bank that's come under the most scrutiny.
'Cocktail of waste:' Ambrose
"If the Liberals actually want to put Canadians ahead of corporate interests, will they simply commit that there will be no tolls or user fees as a result of this bank," New Democrat MP Rachel Blaney demanded this week in question period.
Interim Conservative Leader Rona Ambrose called the proposed bank a "cocktail of waste, duplication and bureaucracy" that needs to be thought through again.
And both opposition parties want the bank's creation to be set out in different legislation than the Budget Implementation Act to ensure a more thorough review by MPs at committee. As it stands now, the proposal will be dealt with at a single, two-hour hearing.
Sohi said there's no need for separate legislation.
"This directly ties to the budget. It directly ties to the infrastructure investment that we have promised to make as part of the fall economic update as well."
Usually no need for bank
The minister also said the new bank would be involved in less than 10 per cent of the government's overall $186-billion budget for infrastructure projects over the next decade.
"The vast majority of the infrastructure that we support will have no need for the bank. They will be funded through the traditional model and grant system."
Sohi said the goal is to get private-sector investment for major projects, citing the high-speed rail links from Toronto to Windsor and Calgary to Edmonton, and new electrical transmission lines between provinces.
"So we are talking about infrastructure projects that are not possible to be built with public dollars alone because they are too large. And, for the private sector, they are too large and too risky."
Sohi added that private investment for those projects will allow the federal government to earmark more money for water treatment plants, public transit systems and social housing, which will create jobs and reduce pollution.