Thank you for the invitation to speak.
First I'll say that CUPE agrees that infrastructure investment is one of the best ways to drive economic growth, and I think we all share that understanding.
Next, I’ll say this. The Canada Infrastructure Bank is not what we were told it would be. In 2015, many of us from across the political spectrum got very excited about the idea of a public infrastructure bank. The purpose of this proposed public bank was to provide low-cost financing for infrastructure projects. There are very good examples of public infrastructure banks, both internationally and domestically. These entities provide low-cost loans in both the public and private sectors for infrastructure projects on many scales. They are public entities that pool assets and share risk. The state can guarantee the bonds it issues on the capital markets, so they are stable and highly attractive investments.
In Canada, the Municipal Finance Authority of British Columbia provides a good example of what a national infrastructure bank could achieve. Originally seeded with public money, the MFA has evolved to offer not only long-term capital financing but also a range of financial tools to municipalities, some of these in partnership with private financial institutions.
I could also mention, as Mr. Sanger did, the Canada Mortgage and Housing Corporation, the Business Development Bank of Canada and the EDC, all lending institutions that provide low-cost loans well below the private sector borrowing rate. The CIB, on the other hand, provides Canadians with less value for money. The federal government can borrow at significantly lower rates than the private sector, almost historically low rates, making any CIB project financed with private equity much more expensive. This is not consistent with best practices.
Here are three things the CIB could do immediately to become a more effective financier of public infrastructure.
The first is to fund projects directly. This is the fastest and most effective way to get infrastructure built and to begin addressing the infrastructure gap. The government already does this via the gas tax fund with great success. As I mentioned, we have other good examples of public financing institutions right here, so why not look to a model that works rather than one that clearly doesn’t?
The second is to scrap the P3 mandate. Privatization and P3s do not work for public infrastructure or public services. Countries that went down this road over previous decades are reversing course. Indeed, a 2019 study by the Transnational Institute, which we contributed to, found over 1,400 cases in 58 countries where privatized or P3 public infrastructure and services were brought back into the public sector. Why? Because privatization and P3s have failed. It’s a dead-end model for the public sector and wholly inadequate in this moment to address the prevailing challenges of our time: climate change, inequality, escalating public health crises and more. Only a strong public sector can do this.
The third is to amend the governance model so that provinces and municipalities have a seat at the table. A governing model that includes rather than excludes the municipal stakeholders will better ensure that the CIB keeps the public interest at the fore.
Thanks for your attention. I'm going to give the rest of my time to my colleague Mat.