Thanks. My name is John Cartwright. I'm the chair of the Council of Canadians, which is one of the largest civil society organizations in the country dedicated to defending the public good.
Our opposition to infrastructure public-private partnerships is rooted in our experience fighting water privatization in all of its forms. I'm a carpenter by trade. I started my trade at the age of 18, and I've been at hundreds of job sites, so I know a little bit about infrastructure.
Our campaigner, Dylan Penner, appeared in front of your committee two years ago to say this:
The CIB's current structure promotes a flawed financing model of public-private partnerships, inviting and subsidizing private interests to take control of critical infrastructure and services that should be kept in public hands. P3s are a tool that poorly invests public funds to further corporate interests while failing to support communities. The CIB could play a critical role in supporting a just recovery from the pandemic and support the transition to a low-carbon economy, but not if it remains fixated on privatization and P3s.
He provided numerous examples of P3 failures, and there have been many more since, including the fiasco with Ottawa transit. Fortunately, the CIB's proposal for P3 for water in Mapleton did not proceed.
This hearing looks at McKinsey & Company. It's on public record, the closed door meeting with top officials and McKinsey and BlackRock that helped shape some of the thinking around CIB. That's there. What we need to remember is that this was an attempt by the Liberal government to replace the discredited Public-Private Partnerships Canada established by Stephen Harper, which required any infrastructure project worth more an a $100 million seeking federal money to be open to P3s.
That meeting, the other research and the other involvement is only one part of a continuum where key finance players have worked to shape a more acceptable practice of infrastructure than the crude privatizations of Maggie Thatcher, Brian Mulroney or Mike Harris that sparked so much public anger. This dynamic has been driven by all of the key global accounting and consultancy firms. Their goal was, frankly, to more elegantly shift ownership and control from public to private interests. That's what P3s are about, guaranteeing a return on investment of 10% to 15% to private companies from public revenue streams and essential services. They don't feel like they are doing anything wrong. Success is measured in billable hours and the complex deals that are trumpeted regularly.
In pages of Lexpert magazine, just look at page 30 of the most recent edition for the excellence awards to law firms structuring the complex Ontario Line transactions and so many others. P3s are negotiated behind the veil of corporate secrecy. The Ontario Line bidding saw the 25% Canadian content for vehicles mysteriously reduced to 10% so that Hitachi could win the contract. Now they will build all of those vehicles in the United States instead of here in Canada. How does that serve the public good?
I listened very carefully to the testimony yesterday from the CIB leadership. These are very talented people. Imagine if all of that talent were dedicated strictly to the public good instead of being distracted to serve what Chair Tamara Vrooman outlined as making “investing in infrastructure...more attractive for the private sector by using innovative...tools to de-risk investment”.
Wasn't one of the claims of P3s that private guys would take the risk?
In October 2022, the Canadian Union of Public Employees published a study by Thomas Marois entitled “A Public Bank for the Public Interest”. I would urge the committee to review that document and the example of various public banks in that study. They have four recommendations.
First is to change the mandate of the CIB. Second is to increase transparency. Third is to invest only in environmentally sustainable projects and, finally, fourth is to speed up projects by providing financing directly to municipalities and indigenous communities.
Relying on a P3 model distorts the focus of what could be a vital tool for investing in resilience and adaptation around the threats of climate change. Instead of funding private charging stations, why not support the vision of the Canadian Union of Postal Workers in putting solar charging on every single post office in every small town across this country, so that people can rely on electric vehicles while electrifying their own entire fleet? There's no need to bring private financiers in to take a share of the electrification of grids or transit vehicles. There's no need to have a high-frequency transit service on the Montreal-Toronto corridor be privatized to compete with the current Via service.
I've seen the alternative finance and procurement concept steadily expanded into the full design, build, finance, maintain and operate model. It's the 30-year contracts to maintain that are the real gravy train. Who can predict the actual cost of running a light rail car 29 years from now?
Like the series of change orders in big mega projects, this is where the money haemorrhages. The bids are padded to take risk into account. If they get the numbers wrong, they file lawsuits to jack up prices, as we've recently seen, or they simply go bankrupt and walk away, as we've seen in the U.K.
Yesterday, the chair of the CIB noted that tax dollars are finite. That's absolutely true, and every dollar diverted away from creating public assets and public infrastructure is a dollar misspent. It doesn’t matter if the profit goes to a tax haven in Europe or a hedge fund speculator on Wall Street, for Canadians, privatization costs more and delivers less.
The CIB should either be reformed to focus solely on the public good, or as your committee recommended last year, it should be abolished and replaced with something truly fit for purpose. However, there is a lot of talent and skill needed to build a better world, and some of that is, right now, in the CIB. Doing it right is possible if we design the right tools for the job.
Thank you.