Thank you very much, Mr. Chair and members of the committee, for having me here today.
CUPE has been keenly involved and interested in the development and implementation of the Canada Infrastructure Bank. I know this committee has previously resolved that the bank should be abolished, but we approach with cautious optimism how it might perhaps be reformed.
CUPE's been consistent in its support for a public infrastructure bank that provides low-cost loans to local governments to finance new public infrastructure and strengthen their communities. The recommendations that CUPE submitted back in March provide suggestions for how to create a truly public bank with public interest at the forefront of its mandate.
During the 2015 federal campaign, the Liberals proposed the creation of a public bank with the mandate to provide those low-cost loans for local government. The original vision of the CIB was in response to the massive infrastructure deficit faced by local governments across Canada, which is over $52 billion in Ontario alone. Municipal and other local governments, as we've heard, have very limited budgets and routinely turn to senior levels of government for assistance in funding or financing major capital projects.
The idea of a CIB that would provide low-cost loans was a welcome one. A public bank to help communities fund their many infrastructure needs is crucial, and there are examples of public banks in countries such as the Netherlands, Germany, Finland and Norway—I could go on. These banks have been successful because they have remained committed to the core mandate of financing public development, sustainable infrastructure and ensuring public good.
There was concern when McKinsey was hired to provide advice about the CIB, and those fears were realized when it managed to convince the federal government to divert the bank from its original proposed purpose. After McKinsey's and its affiliate BlackRock's involvement in the development of the CIB, there was a major shift in mandate. The objective shifted to focus on leveraging private capital to finance infrastructure projects, and to invest and seek to attract investment from private sector investors and institutional investors, which would supposedly generate revenue. We know now, five years in, that the bank has failed to achieve these objectives.
In our democracy, it is vital that consultants should not be influencing policy. There have been other hearings about McKinsey and its extensive government contracts, which I will not delve into today, other than to remind the committee that the interests of McKinsey are not the interests of Canadians. Rather, McKinsey is interested in increasing value for its shareholders. The same is true of BlackRock, which played a large part in lobbying the government to change the original mandate of the CIB.
A real public infrastructure bank should provide low-cost financing to municipalities and local governments, and it must be accountable and transparent. McKinsey's focus on revenue generation for public infrastructure will likely mean user fees and charges, and a mandate to attract investment from private sector investors is really a way of codifying a mandate to privatize public assets.
The CIB has not reached its target of attracting up to five dollars of private financing for every public dollar. It hasn't even been able to maintain a 1:1 ratio.
We have seen the rejection of the attempts to privatize in municipalities like Mapleton, which refused to outsource the construction and operation of their municipal wastewater treatment plant back in 2020. It's important to remember that consultants hired to do service reviews are not the experts in municipal infrastructure or government service delivery.
McKinsey, which has received at least $116.8 million in federal contracts since 2015, operates under the direction of its shareholders council, which is another name for a board of directors. That its top governance structure is called the shareholders council reaffirms the fact that McKinsey, like other major consulting companies, is working primarily for the benefit of its shareholders.
Examining the role of McKinsey in the creation and development of the CIB makes it clear that diverting from the original proposed vision of the public bank was a mistake, and that the influence of McKinsey and BlackRock over what became the CIB's mandate was never truly in the best interests of Canadians or our communities. McKinsey, again, is not accountable to the residents of Canada but to its shareholders. Its advice, therefore, should not be taken in good faith, given the historical and ongoing criticisms of how such firms have undermined public services and advocated for the privatization of public services.
The primary benefactors of the CIB must be municipalities and local governments in Canada and the residents across our country who have been waiting for major infrastructure projects to improve their quality of life and their communities. Unfortunately, this has not been the case with the CIB, and the government's overreliance on multinational firms like McKinsey has been part of the problem.
CUPE knows, through an inquiry to the ministry, that at least three other consulting firms have been given contracts by the federal government as part of the five-year review of the CIB. The infiltration of government by multinational consulting firms has been a rising problem since at least the 1980s.
CUPE, as the largest union in Canada with members in all sectors, including municipal infrastructure, has a vested interest in seeing the CIB transform and succeed.
We made recommendations to that effect: The CIB must change its core mandate and reorient back towards a truly public model, wherein the beneficiaries are citizens, community members and Canadians across the country. The CIB also must be more transparent and its governance more representative, including having board members from municipal and local governments, the labour movement, civil society and infrastructure users. The CIB must also advance truth and reconciliation through meaningful ongoing relationship building with indigenous communities and make sustainability a requirement for CIB funding, ensuring that climate mitigation and adaptation are included in all funded projects.
To conclude, the CIB, as such, has failed to meet its objectives, and McKinsey's and BlackRock's advice prevented the CIB from becoming a truly public bank. Multinational consultancies like McKinsey, again, are accountable to their shareholders and not to the Canadian public, thus they have no real reason to prioritize the very real needs of community infrastructure. McKinsey and other consultancies are notorious for providing advice to governments that undermines the work of the public service and seeks to continue down the neo-Liberal path of privatizing those public services.
CUPE encourages the committee to revisit the original proposal for the CIB, which would provide low-cost financing for new infrastructure projects. There are models of successful public banks around the world that we can turn to for guidance. We simply need to choose to take a path forward that is bold, innovative and results-driven, and that places the people and communities of Canada at the forefront of any decisions.
Thank you, Mr. Chair, for your time. I'm happy to answer any of the questions of the committee.
