Transport Committee on May 16th, 2017

[Glenn Campbell]

I must say, that was a sophisticated but entangled question.

Infrastructure projects are about risk and they're about managing the risk, whether they're from the government steward or a constructor or a private sector. The P3 model is designed to manage a certain type of risk in a certain structure.

The Canada infrastructure bank is, by definition, designed to underwrite and manage risk between the public party and the private party. The objective would be to crowd in more investment finance. The references to—

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

I apologize, Mr. Campbell, but I'm not going to give you my entire three minutes.

[Glenn Campbell]

I'm sorry.

[Robert Aubin, NDP, Trois-Rivières, QC]

I'm going to throw out a question, and whoever cares to answer, can.

I'm still trying to figure out whether the Canada Infrastructure Bank is a good idea or a so-called good idea. My sense is that the promised transparency boils down to this: the government says that we should trust it and that this is a good idea.

The government commissioned Credit Suisse to study the privatization of airports, and the government turned to BlackRock on the matter of the Canada Infrastructure Bank. The new bank would be established as a crown corporation, and therefore immune to the parliamentary budget officer's scrutiny or questions.

How can we, as Canadians and elected representatives, keep tabs on the bank and know whether it actually follows through on the promises that have been made to us?

What say you, Ms. Ryan?

[Sarah Ryan]

I think that's a real concern, because right now, in the legislation, there are huge exclusions for what would be available publicly about the projects that are funded. We see that as well with P3s, because they're considered commercial contracts. You can't actually get access to the information. It's very difficult to even analyze whether value for money is achieved. It's often through auditors general that you get that kind of information, because they have access to all of the contracts, which the public can never see.

The Ontario Auditor General analyzed I think it was 84 projects done through P3s in 2014, and a follow-up audit in 2016, and found that the cost was $6.5 billion more expensive due to higher financing costs through the private sector. As well, $1.5 billion was around the lack of risk that was actually transferred to the private sector. I think this infrastructure bank is opening up the same types of wormholes around risk transfer.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Ryan.

Sorry, Mr. Aubin.

We have five minutes left. I'll go back to the original list.

Mr. Rayes.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

I'm going to split my time with my colleague Pierre Poilievre.

[Pierre Poilievre, Conservative, Carleton, ON]

If the infrastructure bank gives a loan to a builder that goes bankrupt during the project, who will repay taxpayers?

[Glenn Campbell]

The infrastructure bank would not be in a position to give a loan to a particular party. The infrastructure bank is either providing a loan or equity into a project holding company, to which there may be a builder or other parties. The legal, robust contracts around a partnership agreement to create an asset will have contemplated all forms of scenarios where an individual party used to sell a position. They may get into stress. Somebody else—

[Pierre Poilievre, Conservative, Carleton, ON]

It's just that the budget actually says it will give loans.

[Glenn Campbell]

It will give loans to a project. Your reference was to a builder.

[Pierre Poilievre, Conservative, Carleton, ON]

If the project goes over budget, or comes in under revenue and loses money, then who would repay the taxpayer?

[Glenn Campbell]

The characterization is that this is a project that already has less public money in it than it otherwise would. The construct would be that the private sector partner is absorbing the—

[Pierre Poilievre, Conservative, Carleton, ON]

Again, who would pay back the loan? That's the question I'm asking.

[The Chair, Liberal, Judy Sgro]

Let him have an answer.

[Pierre Poilievre, Conservative, Carleton, ON]

Who would repay it?

[Glenn Campbell]

It would only be within the confines of the structure of the infrastructure bank. It would be limited to that partnership agreement, and the exposure would be limited to that particular construct. In theory, whatever the infrastructure bank's debt or equity position is, that would be the maximum exposure of that one party. If a private sector player took risk in a project and it didn't pan out, they would bear the risk. Their returns would be reduced. They may even lose all of their capital.

The Canada infrastructure bank's position can be lessened to no more than the amount that is in a project, but what happens is that the asset gets built and the public sector still has the use and enjoyment of that particular asset. That's the reality.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

Mr. Campbell, will cabinet, the Prime Minister or the Minister of Finance have to approve appointees to the infrastructure bank's leadership and board of directors, yes or no? Will any of them have a say in the final decision?

[Glenn Campbell]

The legislation in Bill C-44 lays out very clearly the governance structure, and who would appoint the first—

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

Yes or no?

[Glenn Campbell]

—chair. It's the government, the GIC, that will be appointing the initial chair and board of directors, continuously. It will appoint the first CEO. On a go-forward basis, the board will be nominating a CEO to the government, and the minister will be consulting with the board for future board replacements.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

The government will ultimately have a say in the appointment of the bank's directors and leadership. Will it not?

[Glenn Campbell]

Yes.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

Thank you. That's all I wanted to know.

Just this morning, CBC and Radio-Canada reported that a former KPMG executive was now the treasurer of the Liberal Party. That is the very same firm behind the Canada Infrastructure Bank report the government is relying on in establishing the structure.

Can you corroborate that information reported by the media?

[Glenn Campbell]

Can you repeat the question? KPMG had a report. They've issued it. It's long over. That was last year. Is there some new piece of information? I'm sorry.