Canada Infrastructure Bank


The Canada Infrastructure Bank is a federal Crown Corporation of Canada tasked with financially supporting revenue-generating infrastructure projects that are "in the public interest" through public-private partnerships.

History

The Canada Infrastructure Bank was announced by Finance Minister Bill Morneau during the 2016 fall economic update, in response to a campaign promise made by the Liberal Party during the 2015 Canadian federal election. It was officially established in June 2017 when the Canada Infrastructure Bank Act received royal assent. The bank's website used to state that it "was established in response to a market gap between government-funded and privately funded infrastructure projects". Some speculated that the banks creation was a way to sidestep the Committee on Monetary and Economic Reform's lawsuit.
A Canadian investment banker working for Bank of America Merrill Lynch helped design and set up the Canada Infrastructure Bank as an unpaid advisor. In November 2016, the government held high-level meetings behind closed doors with equity investors such as BlackRock and Canada's largest pension funds concerning the bank's structure.
The creation of the Canada Infrastructure Bank coincides the dissolution of PPP Canada and the PPP Canada fund, which were created under Prime Minister Stephen Harper to fund infrastructure projects with public-private partnerships.
In January 2020, following numerous criticism of the Banks' operations, the House of Commons commissioned an audit of all infrastructure projects worth over $186.7 billion, and a complete review of Bank.
Pierre Lavallée was the first President and Chief Financial Officer and Chief Executive Officer of the Bank. He resigned from his position in April 2020. Upon his resignation, he was awarded a bonus worth $720,000, or 120% of his annual salary.

Mandate

The 2017 Canada Infrastructure Bank Act sets out the corporation's mandate to invest, and seek to attract investment from private-sector investors and institutional investors, in revenue-generating infrastructure projects that are "in the public interest".
The CIB uses financial instruments including loans, equity, and, where appropriate, loan guarantees to deliver federal support to projects to make them commercially viable. The CIB will provide financing and investment using a combination of these instruments depending on a project's unique characteristics. The model is to use private and institutional capital and to finance projects up front, while the public sector funds their return on investment over time.
The Government of Canada sets the high-level policy priorities for the CIB, including:
Consideration is given to potential projects appropriate for the new partnership- and revenue-based funding model.
The CIB reports to Parliament through the Minister of Infrastructure and Communities.

Funding

The Canadian Parliament has authorized appropriations of $CDN35 billion covering the eleven-year period that ends in FY 2027-2028. This includes $CDN15 billion for the fiscal framework. This financial support is to fulfill a need to "mobilize private investment" for projects that would otherwise have no private investment. This may be in the form of "financial instruments" or "loans, equity investments, and loan guarantees."
Non-toll road public-private partnerships are generally more expensive than publicly-financed projects because they use private sector financing, which comes at a higher interest rate than public financing. The CIB subsidizes this higher borrowing cost, making CIB projects more profitable for the private partners but not for taxpayers. The Bank also charges local governments for their services.

Governance

Annie Ropar is the Chief Administrative Officer and Chief Financial Officer and Michael Sabia in Chair of the Board of Directors. Most of the board members are investors who have had their careers in major banks or pension funds. More than half of members have ties to the Liberal Party, including former Calgary mayor and past Liberal donor Dave Bronconnier. Heather Whiteside argues that the board of director's private sector majority will mostly be concerned about projects' profitability, and will disregard the government's other infrastructure priorities.

Oversight

The Bank is not subject to the government of Canada's strong accountability and transparency rules, and the Auditor General of Canada has limited oversight on the bank and its projects.

Reception

Since its inception, the Bank received sharp criticism from public-sector unions such as the Canadian Union of Public Employees, which characterized the CIB as a "Bank of privatization" and a "Jackpot fo corporations".
According to Heather Whiteside and CUPE, the CIB's structure represents a betrayal of Trudeau's campaign promises concerning infrastructure. On the campaign trail, Trudeau argued that the government could fund infrastructure projects leveraging the public sector's low interest rates. Combined with his promise to run modest deficits, his rhetoric was distinctively anti-austerity. She argues this was a bait-and-switch because the CIB is designed to promote public-private partnerships and asset recycling. As such, Trudeau's "efforts to transfer public assets to private actors display a degree of finesse and deception far beyond the Conservative approach to infrastructure privatization."
After two years of operation, the private sector was displeased by the Bank's slow pace of project approval. According to Conservative infrastructure critic Matt Jeneroux, the CIB "was supposed to be a new way to build infrastructure, but we’re still faced with the same delays, and the issues of actually building infrastructure have gotten worse when we’re tying up this much money in the bank.”
Both the Conservative Party and the New Democratic Party promised to wind down the CIB if they were elected in the 2019 Canadian federal election.

Projects

Mapleton, Ontario waste and wastewater infrastructure project (2019-)

On 15 July 2019 the BIC made a $CDN 20 million investment commitment township of Mapleton, Ontario's water and wastewater project. The financing comes in the form of a "standardized debt financing package" to "attract private capital expertise". The Township of Mapleton, with a rural population of 11,000, has been seeking a consortium public-partnership to "design, build, finance, operate and maintain" a proposed 20-year project to improve and expand" the township's publicly owned water and wastewater infrastructure". BIC said that this project is a potential pilot and model which could demonstrate to Canadian municipalities—including smaller communities—with water and wastewater challenges, how BIC can assist them in attracting private sector capital" for financing to improve publicly owned water and wastewater systems. While the water and waste-water systems will continue to be publicly owned, concerns have been raised by organizations, such as the Canadian Union of Public Employees, that there is a risk that smaller communities may become locked into lengthy agreements with private financiers that result in higher user fees for water and wastewater services.
NamePartnerLocationSectorInvestment
Réseau express métropolitain CDPQ Infra, Province of QuebecMontreal, QuebecPublic Transit$1.28 billion
GO Expansion - On CorridorInfrastructure Ontario and MetrolinxGreater Toronto and Hamilton Area, OntarioPublic TransitUp to $2 billion
Via Rail High Frequency Rail ProjectVia Rail and Transport CanadaOntario and QuebecPublic Transit$55 million
Mapleton Water and WastewaterTownship of MapletonMapleton, OntarioGreen InfrastructureUp to $20 million
Lulu Island District EnergyCity of Richmond, Lulu Island Energy CompanyRichmond, British ColumbiaGreen InfrastructureMemorandum of Understanding
Contrecoeur Port TerminalMontreal Port AuthorityMontreal, QuebecTrade and TransportationUp to $300 million
Taltson Hydroelectricity ExpansionGovernment of Northwest TerritoriesNorthwest TerritoriesGreen InfrastructureAdvisory Services
Pirate Harbour Wind FarmPort Hawkesbury PaperPoint Tupper, Nova ScotiaGreen InfrastructureMemorandum of Understanding
Kivalliq Hydro-Fibre LinkKivalliq Inuit Association, Sakku Investment Corporation, Anbaric Development Partners and Ontario Teachers' Pension PlanNunavut and ManitobaGreen and Broadband InfrastructureMemorandum of Understanding
Calgary-Banff RailGovernment of AlbertaCalgary International Airport to the Town of Banff, AlbertaTransitMemorandum of Understanding

Acts

The CIB was established by the Canada Infrastructure Bank Act , an Act of Parliament on June 22, 2017.