The federal government is bringing in legislation to create a Canada Infrastructure Bank, but analysts are warning the bank won’t live up to its “independent” billing.
The Canada Infrastructure Bank is designed to bring in private sector contributions to infrastructure projects. The projects are supposed to be revenue generators, and serve the public interest of Canada.
It is also supposed to act as a Crown corporation, rather than an arm of the executive.
However, the legislation (included in the C-44 budget bill), creating the bank does not appear to encourage true independence.
As reported by the Globe & Mail, under the legislation, decisions by the infrastructure bank such as loan guarantees will need to be approved by the federal cabinet.
The cabinet is also given the authority to get rid of any bank director, so long as they “consult” with the board. Keep in mind, consult doesn’t mean “get permission from,” it could mean just sending a form email, holding a meeting announcing someone’s removal, or making a phone call.
Benjamin Dachis, an Associate Director of Research at the C.D. Howe Institute, has doubts about the independence of the bank:
“The really big question that I don’t really see answered in the legislation is striking the appropriate balance between the democratic oversight of the infrastructure bank’s spending decisions with the independence necessary to make sure that this bank is going to be critically evaluating project business cases,” said Dachis.
Dachis is being diplomatic. As it stands now, there is little doubt that the Canada Infrastructure Bank has no independence at all.
A costly mistake
An effectively run infrastructure bank could be effective. Canada certainly needs infrastructure investment. While I would prefer to see the government shift spending from the bloated bureaucracy toward investing in tangible infrastructure, the infrastructure bank could bring some benefits to Canadians.
But only if it’s run well.
Unfortunately, if the Canada Infrastructure Bank goes forward and is beholden to the Trudeau government cabinet, it could end up being a costly mistake. It could also be opened up to corruption and conflicts of interest, something this government is all too familiar with.
The government has given the bank a $35 billion budget, and its success is dependent on private investment. Private investors need to have confidence in the stability and independence of organizations they invest in. A politically controlled infrastructure bank will be seen by many investors as a bad bet, considering the temptation politicians will have to rapidly increase infrastructure spending before an election, and then reduce it afterwards.
A politicized Canada Infrastructure Bank – which is the direction the Trudeau government is going – could end up being a costly mistake for Canada. As always, Canadian taxpayers would pay the price.