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Trudeau & former OTPP president must commit to public water infrastructure

Jim Leech

The Council of Canadians has long opposed private for-profit water utilities both in Canada and around the world.

In 2010, we launched a campaign that raised concerns about the Ontario Teachers Pension Plan (OTPP) owning water utilities in Chile. The OTPP owns 89.6 per cent of Essbio, 94.2 per cent of Esval (including its wholly owned subsidiary Aguas del Valle), and 100 per cent of Nuevosur, companies that provide drinking water – at a cost.

We believe that the pension plan of Ontario’s public school teachers should not be investing in private for-profit water systems.

In September 2010, the Canadian Press reported, “[OTPP president Jim] Leech wouldn’t say what the return on private water investments in Chile have been, but he said it has met expectations and the pension fund is pleased with its performance.” In an earlier OTPP media release, Leech stated, “Chile is an excellent country for us to invest in because of its growing economy, openness to foreign investment, and mature regulatory environment for the water sector.”

As noted on the OTPP website, “Mr. Leech joined Teachers’ in 2001 to lead Teachers’ Private Capital and was appointed President & CEO in 2007.” It was in August 2007 that the OTPP began investing in Chilean water utilities. Leech retired from the OTPP in 2014 and has been advising the Ontario government on pensions for the electricity sector as that Liberal government privatizes Hydro One.

Yesterday, CBC reported, “Prime Minister Justin Trudeau has named Jim Leech special advisor for the new Canada Infrastructure Bank. In a release from the Prime Minister’s Office Friday, Trudeau referred to Leech’s ‘immense knowledge and experience’, saying he was ‘confident that he will help ensure a smooth and successful launch of the Canada Infrastructure Bank’. The release said Leech will work with the Privy Council Office and the offices of Infrastructure Minister Amarjeet Sohi and Finance Minister Bill Morneau to build an implementation team and get the new organization off the ground. It promises an ‘open and transparent process’ to recruit future board members.”

That CBC article also notes, “Last fall, the government suggested the bank would manage up to $35 billion: $15 billion from the federal infrastructure funding announced last year and an estimated $20 billion sought from private investors. The Liberals have touted the new bank as an innovative way to put private capital to work building much-needed infrastructure.”

In 2016, the Canadian Press reported, “No specific projects have yet been identified for funding from the bank but Trudeau, Morneau and Sohi are expected to tell potential investors [at a high-level gathering in Toronto] that toll bridges, energy grids and water systems could all be attractive investments for fund managers looking for predictable, long-term returns.”

A CUPE media release has highlighted, “The plan for a Canadian Infrastructure Bank is a recipe for the cannibalization and privatization of Canada’s public infrastructure for profit by private institutional investors. The federal government should put the brakes on any move towards privatization and use low-cost public financing—instead of high cost private finance—for our public infrastructure.”

CUPE economist Toby Sanger explains, “There’s no shortage of low-cost public financing available to Canadian governments. Ottawa can now borrow at 0.6 per cent over a year and issue 30-year bonds at 1.8 per cent, with provinces a percentage point higher. Long-term borrowing rates have never been this low. Meanwhile large private infrastructure investors expect ‘stable, predictable returns in the 7 to 9 per cent range’…It doesn’t take an economist to understand it makes no sense to finance projects at seven to nine per cent when you can do so at two per cent.”

Given Leech approved of OTPP investments in private for-profit water systems in Chile, that he will be recruiting Board members for the new infrastructure bank, and the Canadian Press reports Trudeau, Morneau and Sohi may have told potential investors that water systems could be “attractive investments for fund managers”, the Liberal government must now unequivocally state its commitment to publicly financed, owned and operated water and wastewater services.