In response to the economic damage done by COVID, governments everywhere are planning to spend on infrastructure. But Linda McQuaig writes, in Canada, that spending will benefit the wealthy. Justin Trudeau has established the Canada Infrastructure Bank and endowed it with $35 billion:
Of course, municipalities badly need new infrastructure so the bank, endowed with $35 billion in public money to help finance infrastructure, should be a godsend.
But it isn't -- except for business and investors.
That's because of the business-friendly way the Trudeau government designed the bank. Municipalities that want the bank's financial support for an infrastructure project must "partner" with a private business.
These public-private partnerships (P3s) ultimately drive up the cost of the projects and leave municipalities with less control over their own infrastructure.
The problem is that " if municipalities don't want to "partner" with business -- if they want instead to handle the projects themselves, raising the money through municipal bonds as they've traditionally done -- Canada's new public bank won't help them."
Consider what happened in Mapleton, Ontario:
Like many municipalities, Mapleton needed to upgrade its water and wastewater systems. The CIB offered a $20-million debt-financing package, and proudly promoted Mapleton as a "pilot project" for its new model of financing municipal water projects.
But the $20-million financing package was aimed at ensuring the private partner achieved its profit targets, and offered nothing directly to the municipality.
When Mapleton township studied the deal carefully, it realized that it would be cheaper for the township to do the water project itself. So it cancelled the deal -- and received no help from the CIB.
All that Mapleton was left with was a $367,000 legal bill in connection with the CIB process.
But why didn't the CIB offer the $20-million subsidy directly to the municipality to help finance the project? Why must a private partner be involved?
What the CIB calls its "innovative financing model" is really a mechanism for directing taxpayer dollars to private companies so they can earn profits managing our infrastructure -- even though we can build and operate these projects more cheaply on our own.
What's the point of this bank -- besides ensuring businesses profit from our public services?
That really is nice work -- if you can get it.
Image: cib-bic.ca
