Canadian Legislative Issues

 

The Liberal Government has truly doubled down on their promise on infrastructure spending.  On November 1, 2016, Minister of Finance Bill Morneau added $66 billion on top of the $120 billion already committed for infrastructure through different programs, which will unfold over the next 11 years.  He also announced that the government was adding two new categories to where the money will be going, the first being trade and transportation, the second being rural and northern communities. 

The largest announcement of his fiscal update came when he described the scope of the newly announced Canada Infrastructure Bank, which will see $15 billion from the public sector and over $20 billion from the private sector.  The public money is intended to fund things that wouldn't normally be able to provide a return for private investors.

The newly announced infrastructure bank has received mixed reviews from different sources.  Thomas Mulcair, Leader of the NDP, for example, stated that the bank was a "privatization bank" and wouldn’t benefit Canadians as much as it will benefit investors.  Others are weary of the banks success, stating that there is no international model for what the government is proposing to create.  Despite the criticism though, the feds have moved forward with their idea, meeting with representatives from billion-dollar investment firms on November 14.

The benefits of the bank could be numerous. For the investors, the lure is stable long-term returns, measured on the same decades-long time scale over which pension plans must provide for their members, at rates of return that look pretty good in the context of an extended global slump in interest rates.  For the government, the attraction is the possibility of dreaming bigger on roads, rail, power grids, and social infrastructure than Morneau could afford through direct federal spending alone.  The infrastructure bank has the potential of creating projects that are larger than the municipal level that the current spending is going towards.  

This has the potential of benefiting fleets through greater transportation efficiency.  However, it must be warned that depending on how involved investors are, many projects could be created in the future that incorporate tolls in order for the private sector to recuperate and earn on its investment.  With that said, the Liberals up to date have been very cautious with most of their decisions, finding common grounds through different consultations before taking action.  It should be expected that they move forward slowly with the creation of the Canada Infrastructure Bank and make sure to show Canadians that it’s for their benefit, not that of multinational investors.