On Friday, April 3, the federal government announced several changes to the leadership of the Canada Infrastructure Bank (CIB). Michael Sabia, the Director of the Munk School of Global Affairs and Public Policy and former CEO of Caisse de dépôt et placements du Québec (CDPQ), is now Chair of the Board, while the CIB’s previous President and CEO, Pierre Lavallée and previous Chair, Janice Fukakusa, stepped down. These changes, in the midst of the COVID-19 pandemic, are signaling a concerning shift towards more privatization from the Canada Infrastructure Bank.
The CIB was established in 2017 with a $35 billion budget and a mandate to attract private investments to finance infrastructure projects. The bank has announced funding for nine projects, including public transit, regional rail, water, electricity and broadband. These projects include a loan from the CIB and involve private companies in the financing, construction and operation of major infrastructure projects.
The most concerning move from the CIB’s change in leadership is the introduction of Michael Sabia as the new Chair of the Board. Sabia is a well-known name in the investment sector for his privatization track record. He was recruited to join Canadian National Railway in the 1990s to help privatize the corporation, and later led privatization efforts for Bell Canada Enterprises in 2008 as its CEO, although the $50 billion deal fell through due to the 2008-2009 financial crisis.
The Canada Infrastructure Bank was formed in response to the federal Liberal’s election promise to close the infrastructure gap in Canada through federal funding and low-cost borrowing. However, instead of providing loans to chronically underfunded municipalities, provinces or Indigenous communities, the bank’s mandate focuses on attracting private investors in critical infrastructure projects through public-private partnerships. Michael Sabia was involved in shaping this agenda, as part of Finance Minister Bill Morneau’s Advisory Council on Economic Growth, which advised on the formation and structure of the bank.
More recently, Sabia served as the CEO of CDPQ, the largest pension fund in Quebec and the recipient of the first project that the CIB funded. The bank provided a low-cost loan of $1.28 billion in the Réseau express métropolitain public transit project in Montreal, administered by the CDPQ. Sabia was still on the Advisory Council while this deal was finalized.
The leadership change is cited as a move to “spurring economic growth in the aftermath of the COVID-19 health crisis.” We are deeply concerned by these moves to make tax-payer dollars available to more private investors, at a time when public investments are critical.
The infrastructure deficit in Canada is significant. Addressing this gap presents an opportunity to revive the economy after COVID-19 through green projects like public transit, water, and electricity, and support the transition to a low-carbon economy. In the rebuilding efforts, the federal government should embrace investments in public infrastructure and services, support lower levels of government through funding and low-interest loans, and help the economy and workers get back on track. The CIB can play critical roles in supporting that recovery. The emergency responses from the last few weeks have shown that rapid and far-reaching measures are possible.
Unfortunately, the funding model the CIB employs uses public-private partnerships and ends up costing taxpayers more by offloading risks onto municipal or provincial governments, cutting workforce and raising user rates. Under this model, essential services like water and wastewater, electricity and public transit are being placed in private control, sometimes for decades.
The COVID-19 pandemic has laid bare the damages of decades of gutted public services and privatization on our collective health and well-being. The neoliberal policies of the last several decades have locked us into irreversible warming, dispossessed and marginalized the most vulnerable people, plundered our resources and put our public health at risk for the profit of a wealthy few. Now, we must not let those in power take advantage of this crisis to bail out polluting industries and promote privatization in service of those same interests. It’s time we put communities first and invest in the public infrastructures and services of the future.