Thank you.
Congratulations, Madam Fukakusa, on your appointment to the Canada Infrastructure Bank.
In principle, I think infrastructure banks can make sense and can work, but I think they only work if one principle is abided by, which is that all the revenues and all the expenses are private sector. In other words, in return for getting a steady stream of revenue over a fixed period of time from tolls or user fees, the private sector steps in and makes the financing decisions and undertakes to finance the project. I get nervous and skeptical when we mix public sector and private sector funding, because I think that leads to risk for Canadian taxpayers, and it leads to profits for the private sector. I think you mentioned in your opening remarks that one of the things the bank is about is attracting private sector investment to projects that are not currently commercially viable, and so there's a reason why the private sector isn't funding them. I think by mixing that blend of private sector and public sector financing, we're going to socialize risk and privatize profit.
There are two examples in this town over many years, both under previous Conservative and Liberal governments, that are demonstrative of that. We privatized a portion of the Canada pension plan for Canadians through the CPPIB, and today that fund, which manages about $300 billion, has about $200 billion in MER, which is three-quarters of 1%. This is far higher than passive funds like Vanguard, which are one-tenth of 1% or maybe one-fifth of 1%. Essentially we're giving people $1.5 billion to $2 billion a year to actively manage these funds, which are Canadians' money, without evidence that they're going to do a better job than a passive fund. The evidence, the economic research that I've read, says that active managed funds underperform the market in the long run in every instance. This is an example where the private sector has stepped in to manage what was being managed by the Government of Canada, and it has cost Canadians a lot of money—$2 billion-plus a year in management fees. The average executive there is paid well over $3 million a year in compensation to manage a public pension fund.
For CMHC, we have massively privatized profit and socialized risk. In fact, arguably we've probably created one of the biggest housing bubbles in the world through this program over many decades. It's a half-a-trillion-dollar behemoth in this town that gets very little scrutiny. It underwrites about a third of all Canadian mortgages, and arguably the reason why the banks have been so eager to issue mortgages is that a lot of the risk is on Canadian taxpayers.
I'm skeptical about this blending of private and public funding for the Infrastructure Bank, and maybe you could address some of those skepticisms.