Saturday, May 13, 2017

Very Much Alive And Well


If you think that Neo-liberalism is on life support in Canada, take a look at  the Trudeau government's proposed infrastructure bank. Linda McQuaig writes:

The bank is being presented to the public as a way to attract billions of private sector dollars to help pay for our public infrastructure.

But the bank’s unusual design will also, for the first time, give powerful private institutional investors — even foreign-owned entities — the opportunity to actually own important pieces of Canadian infrastructure, with the ability to charge us fees for using them.

That's a radical departure from the way we used to think about infrastructure. We used to think that we, the citizens, owned the nation's infrastructure.

But big institutional investors — pension funds, mutual funds, investment banks, etc. — are looking for investments that are safe and produce a reliable revenue stream.

Nothing fits that bill better, in these days of volatile markets, than investing in infrastructure, as a 2015 report by Wall Street giant JP Morgan documented. The report noted that, compared to other investment options, infrastructure assets offer very high returns, at very low risk, that they operate in monopoly situations free from competition and provide reliable revenue, even during economic downturns. “Infrastructure assets have produced stable, predictable and growing returns,” concluded JP Morgan.

Trudeau will attract big money to the bank. But, McQuaig writes:

While the investment community’s enthusiasm for Canada’s new bank is clear, it’s less clear what’s in it for Canadians.

When tolls and user fees are added in, privately owned infrastructure could cost us more — and we’d own nothing.

Whether privately or publicly owned, Canadians will still end up paying for these assets, note analysts Azfar Ali Khan and Randall Bartlett in a report for Ottawa’s Institute for Fiscal Studies and Democracy. “[T]his does beg the question: Why would Canadians want to sell their most valuable assets to the private sector?”

We could own our own infrastructure through our own taxes. And borrowing costs are very low: 

Now more than ever, there’s good reason to do so: Ottawa can borrow money at very low rates, much lower than the private sector. “With yields on 30-year Government of Canada bonds currently sitting around 2.2 per cent, the federal government can almost literally get ‘money for nothing,’ ” Khan and Bartlett note.

But "tax" is a dirty word. Neo-liberalism is very much alive and well. 

Image: CUPE

25 comments:

liberalandlovingit! said...

Isn't Linda McQuaig, Owen, a failed NDP candidate?

Owen Gray said...

That's correct, lovingit. She ran against Bill Morneau -- the finance minister who is setting up the infrastructure bank.

liberalandlovingit! said...

a) I always consider the source.
b) I'm sure Minister Morneau is capable of his job. He seems like a man who takes in good advice and actually, uh, knows things. I don't believe he's crooked nor is the LPOC, until I see evidence to the contrary.
c) We have Minister Freeland.

Owen Gray said...

McQuaig is a good journalist, lovingit. She and Tom Walkom worked on the student newspaper when they were both at the University of Toronto.

liberalandlovingit! said...

I believe you, Owen. I'm a slight bit tetchy about things, since, oh,
2016- Dark November. It offended every sensibility I had. It changed me.

Toby said...

Selling off infrastructure to the private sector is a Gordon Campbell/Christy Clark specialty. The key is in hiding the financial yoke from the public. We may think BC runs a balanced budget but we have financial commitments that will last for generations. It's a scam. This is corruption on a grand scale designed to siphon tax dollars into corporate coffers. Trudeau and Morneau are wannabe crooks.

liberalandlovingit! said...

Owen, the Syrian children in the back of the pick-up and gassed- changed me too.
There's a special place in Hell for those who mess with the Beloved's children...

Ben Burd said...

"Isn't Linda McQuaig, Owen, a failed NDP candidate? " and that means what?

"That's correct, lovingit. She ran against Bill Morneau -- the finance minister who is setting up the infrastructure bank." and this means that the wrong candidate won.

Where else would we pay three times as much as we need to, just to bow down to the Private Sector? Just remember the halycon days when Ontario owned the 407, and before a Spanish Company hijacked the tolls.

Owen Gray said...

Here in Ontario, Kathleen Wynne is selling off 60% of Ontario Hydro to private interests, Toby. It seems to be the thing to do these days.

Hugh said...

The low interest rates are the reason investors want better returns, I guess.

Low interest rates have resulted in massive debt accumulation, and are partly to blame for the real estate bubble.

The government wants GDP growth in order to deal with the massive growing debt.

Which is why the interest rate is kept so low.

Looks like a Ponzi, smells like a Ponzi.....

Owen Gray said...

They got Highway 407 at a bargain basement price, Ben. And they have been raking in the tolls for over twenty years.

Owen Gray said...

I'm sorry, lovingit. I don't understand the reference.

Toby said...

Owen, we can remember when public utilities such as Ontario Hydro and BC Hydro were built to serve the people and they did such a job to be proud of. Destroying them has been deliberate. In our part of the world we view places like Afghanistan as dens of corruption and somehow overlook our home grown variety. Our politicians legalize their corruption but that doesn't lessen the pain.

Owen Gray said...

In the past, Hugh, we've relied on inflation to devalue the debt.

Owen Gray said...

One of the axioms of Neo-liberalism, Toby, is that public assets are better managed by private enterprise. The Canada Pension Plan exposes that trope as a lie.

Toby said...

Owen, There is a cycle of government versus corporate management of utilities such as electricity, ferries, railways, telephones, roads, hospitals, etc that can be observed over a very long term. Private capital does a poor job and the public demands that government nationalize. Government then builds the infrastructure and gets it all up and running. When it is all rosy the private sector wants back in and we hear that "public assets are better managed by private enterprise" as you stated above. Then the utilities are sold off and the cycle repeats. The public has a short memory which forgets just why utilities were nationalized in the first place so the players get away with it. This has often been summarized as subsidize the costs; privatize the profits.

The Mound of Sound said...

It's all part and parcel of the neoliberal "everyday low taxes" mentality. Praise the Lord for delivering us from sovereignty into the protective arms of globalism.

And, to liberalandlovingit, remember it was Morneau who told young Canadians they would just have to get used to a future of "job churn." Morneau was giving them free admission to the precariat. "There'll be no job security for you, youngster. For your lifetime you'll be bounced around from pillar to post by one employer after another."

In a liberal democracy the government's responsibility is to control the corporate sector to ensure that they act in the best interests of the public and the nation. Morneau rejects that idea as heretical. It's just another step in the transition from democracy to the corporatist state and onward to oligarchy. We've seen this happen in the United States. If we lay down and trust people like Morneau it will happen here soon enough.

Owen Gray said...

And that, Toby, is one of the prime directives of Neo-liberalism.

Owen Gray said...

The problem is that these tropes have become dogma, Mound. They are seen by many as beyond question.

Steve said...

THE 407 THE 407 THE 407 THE 407 THE 407 THE 407 THE 407 THE 407 THE 407 THE 407 THE 407 THE 407 THE 407 THE 407 THE 407 THE 407

Privatization and extensions[edit]
407 International Inc. /
407 ETR Concession Company Ltd.
Headquarters Vaughan, Ontario, Canada
Owners
Cintra (43.23%)
CPP Investment Board (40%)
SNC-Lavalin (16.77%)
Website www.407etr.com
When Mike Harris was elected Premier in 1995 on his platform of the Common Sense Revolution, the Ontario government faced a $11 billion annual deficit and a $100 billion debt. Seeking to balance the books, a number of publicly owned services were privatized over the following years. Although initially spared, Highway 407 was sold quickly in the year leading up to the 1999 provincial elections. The highway was leased to a conglomerate of private companies for $3.1 billion. The Ontario corporation, known as 407 International Inc., is jointly owned by the Spanish multinational Cintra Infraestructuras (43.23%), as well as various subsidiaries of the Canada Pension Plan Investment Board (40%) and the Montreal-based engineering firm SNC-Lavalin (16.77%).[39] The deal included a 99-year lease agreement with unlimited control over the highway and its tolls, dependent on traffic volume; however, the government maintains the right to build a transport system within the highway right-of-way.[11]

Owen Gray said...

Thanks for the information, Steve. A very illustrative example.

the salamander said...

.. 'Infrastructure Bank' ..
Stinks to high heaven of neoliberal cronyism, captured government
and public servant sellout instead of public service..

When they start selling pipeline & energy infrastructure
and the lands and waterways required off to the Infrastructure Bank,
Canadians will see the last shreds of accountability to the electorate,
the First Nations and our youth blowing away in the winds of treachery

The owners aka investors of this so called 'Bank' will sit around boardroom tables
paid for by ordinary Canadians and they'll discuss insider information
of every piece of legislation either being created to feather their nest
as well as what legislation wil be repealed to enhance and accelerate the process

Aint it funny how Harper and now Trump immediately seized the moment
to trash legislation that might impede large scale stripping of resources
to flush off to foreign owned entities. And here comes Trudeau for his turn

They'll describe the deceit, sellout and ripoff as 'nation building' of course
just as Stephen Harper did, all part of their myth of perpetually 'growing the economy' for jobs
and will require endless influx of 'temporary foreign workers'
to ensure their profitability.. Ordinary Canadians will have ZERO say or control
will 'own' absolutely NOTHING.. and just keep paying for the SCHEME

This makes me sick ..

The latest example of the setup for such a scam must be the so called 'supertanker ban'
on the North Coast of BC. Note how the ban only includes vaguely defined 'crude oil'
and the federal goverenment maintains the option to redefine what substances are banned.
Its as usual, a set of moving goal posts for future use..
How else to explain how Harper et al destroyed Environmental Protection legislation

Smokescreen Politics & Pretend Public Servants aka outrageous and shocking frauds
no better in any way than the creeps and thieves south of our border

Owen Gray said...

Smokescreen politics. That's an excellent capsule comment, salamander. It describes exactly what is going on.

Hugh said...

Canadian banks get credit rating downgrades due to ongoing real estate ponzi bubble:

http://www.cbc.ca/news/business/moodys-banks-1.4109847

Owen Gray said...

Thanks for the link, Hugh. The one percent continue to do very well.