Canada Floats $35B Infrastructure Bank Plan
An infrastructure bank that would combine government and private investment dollars for big road, transit and energy projects is part of Canadian Prime Minister Justin Trudeau’s plan for the country’s financial future.
The Department of Finance, under Finance Minister Bill Morneau, announced the plan Tuesday (Nov. 1) as a way to attract foreign investment, improve Canadian infrastructure and boost a slow economy in the country. Under the plan, the government would invest C$35 billion (about $26.1 billion) in the bank, in the hopes that it would attract four to five times as much in private investor dollars.
It’s not entirely clear yet exactly what projects would be funded with loans from the bank, but according to reports, the government plans to begin to put together a pipeline of fundable projects before the bank is even officially approved.
By the Numbers
The Department of Finance plan involves C$15 billion ($11.2 billion) in funding for infrastructure projects that may not turn a profit. The remaining C$20 billion ($14.9 billion) is seed money earmarked for projects—like energy infrastructure and toll roads—that likely will turn a profit. That money is expected to be repaid.
The portion allocated for less lucrative projects will come from a C$32 billion ($23.9 billion) increase in infrastructure spending that Trudeau’s Liberal government announced in its new budget update.
$20 billion being invested in the bank is seed money earmarked for projects—like energy infrastructure and toll roads—that likely will turn a profit, and is expected to be repaid.
The Trudeau government has set forth a plan to spend billions over the next decade to make updates to infrastructure, from roads and mass transit to water and energy. The added investment announced Tuesday brings the total money budgeted to C$81 billion ($60.5 billion) between now and 2028.
This Year's Investment
This year, the government allocated C$11.9 billion ($8.9 billion) to provinces and cities for shovel-ready projects that would update aging infrastructure, and could be finished within two years. According to The Telegram, 760 projects have been approved for funding through that program, with two-thirds at least started at this point.
Another C$48 billion ($35.8 billion) is set aside in the coming years for “transformative” projects, like major transit systems.
Municipal officials are reportedly largely pleased to hear that the government is planning a long-term solution to infrastructure funding.
According to the Guelph Mercury, Edmonton Mayor Don Iveson told a local radio station, "The previous infrastructure commitments were really, really encouraging, but we needed some longer-term certainty, particularly for some large projects.
"The federal government is absolutely stepping up when it comes to a longer-term commitment for transit and a rising commitment to transit."
Opposition officials, though, have criticized the diversion of public funds toward the bank, and questioned whether the private investment that the government hopes to attract will actually materialize.
“We haven't heard anything today about creating a better economic climate in this country for investment,” Conservative leader Rona Ambrose said, according to the Chronicle Herald. “Canadians aren't investing. Why does he think foreign investment is going to pour into this country for this infrastructure bank?"