http://www.chroniclejournal.com/opinion/only-part-of-the-solution-infrastructure-bank-not-a-replacement/article_486e2396-ae5d-11e6-b693-bfdb61451df4.html
Only part of the solution; Infrastructure bank not a replacement for public funding
Posted: Saturday, November 19, 2016 8:37 am | Updated: 8:38 am, Sat Nov 19, 2016.
GUEST COLUMN | 0 comments
BY DAN OLDFIELD
FOR THE CHRONICLE-JOURNAL
The Trudeau government recently announced plans for the creation of an “infrastructure bank” in Canada. It’s being pitched as a way to exploit the government’s favourable credit rating to provide lower interest loans for the construction of public infrastructure projects.
It sounds good. Cities and provinces will be get cheaper money to replace roads, bridges, tunnels, etc. But a closer look at the mandate for the new bank, which is set to be established next year, suggests something far less benevolent.
That mandate repeatedly makes reference to, “investments in revenue generating projects.” In other words, this isn’t just about setting up some kind of fund that can be used to service the public good but rather is a way for private investors to make money from needed public infrastructure projects.
It’s also important to note the bank would be set up in an “arm’s length” relationship with the federal government which means it would be up to the bank to determine which projects are funded and when. Public priorities would, in effect, be determined by private interests.
When we refer to public infrastructure, what we’re talking about is a long list of facilities and services necessary to citizens, communities, businesses and local economies. They include roads, bridges, airports, rail lines, waterways, telecommunication, water safety, sewers, electrical grids and public safety to name a few.
The government plans to seed the bank with $35 billion of taxpayer money and is hoping Canadian and foreign investors will kick in four to five times that amount. Private investment by necessity creates the need to make a profit. This might be a realistic option for construction of a road to access the Ring of Fire where private enterprise will reap the lion’s share of profits from the mining of chromite. But is the profit motive beneficial to the provision of most public infrastructure?
One only has to look at southern Ontario to see a raw example of where a project that started out as a pubic venture and which later turned into a private enterprise significantly failed to address key public needs.
Highway 407 was planned in the late 1950s as a way to take pressure off Highway 401, the busiest highway in the world. Work on the new highway didn’t start until 1987. The main section was completed in 1997. All of it - the land assembly, the planning, arranging financing and much of the construction - used public funds.
In 1998, the highway was sold to a Spanish/Canadian consortium. This resulted in an unbreakable 99 year lease, the highest toll costs in the world and more northward urban sprawl. And over the long haul, it has failed in its original purpose. The pressure on the 401 is unrelenting and has resulted in billions more spent to expand and improve other public roads.
Canada is in desperate need of infrastructure construction and repair. Priorities, if left to those seeking to make a profit, will not necessarily favour those in the greatest need. The approach is more likely to favour those with the quickest and biggest return. Areas serving bigger populations are more likely to be the beneficiary. One can only surmise how less populated areas such as Northern Ontario will fair in such an arrangement.
An infrastructure bank that provides lower cost money to cities, towns and provinces isn’t by its nature a bad idea. But it can’t be the body that sets the priorities to address the needs of Canadian citizens.
