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Trudeau signals “openness to globalization”, projects beyond traditional P3s

Prime Minister Justin Trudeau and nine cabinet ministers will be seeking billions of dollars of capital today at a meeting organized by BlackRock Inc., the world’s largest asset manager, at the Shangri-La hotel in Toronto.

This past August, Trudeau stated, “What Canada offers to the world right now at a time when it is characterized by populism and anti-globalization is an approach that offers political, financial, economic, social stability, predictability and openness to globalization.” Now, Cameron Ahmad, a spokesperson for the Prime Minister’s Office — echoing Conservative prime minister Brian Mulroney’s statement to US executives at the Economic Club of New York in 1984 — says, “Canada is open for business.”

The Canadian Press reports, “Trudeau is hoping to persuade some two dozen representatives of large international pools of capital — including central banks, sovereign wealth funds, insurers and pension funds whose combined assets are worth a staggering $21 trillion (Cdn) — that Canada offers a stable economic and political environment in which to safely invest.”

The Globe and Mail adds, “Provincial and municipal governments have long pursued public-private partnerships – or P3s – for projects such as hospitals and highways, but observers say they have never seen such a concerted and direct appeal from the federal cabinet for private investment in infrastructure. …Ottawa is hoping to leverage at least $35-billion through a new Canada Infrastructure Bank that would package government money with private funds to build more projects more quickly. …Projects envisioned by the bank would go beyond traditional P3s…”

The Canadian Press notes, “No specific projects have yet been identified for funding from the bank but Trudeau, [Finance minister Bill] Morneau and [Infrastructure minister Amarjeet] Sohi are expected to tell potential investors Monday that toll bridges, energy grids and water systems could all be attractive investments for fund managers looking for predictable, long-term returns.”

Capital will also be sought at other meetings. The Globe and Mail reports, “At the same time as Mr. Trudeau and his ministers are meeting with investors [in Toronto today], the Canadian Council for Public-Private Partnerships is playing host to a major international conference nearby.” And Toronto Star national affairs columnist Paul Wells writes, “Morneau will continue the pitch by flying immediately after Monday’s sessions to London, where on Wednesday he will address a conference organized by the Swiss financial services company UBS.”

Beyond the echo of Mulroney’s promise to US investors years ago, this approach also appears in sync with the incoming US administration. The president of the Canadian Council for Public-Private Partnerships has commented “everybody’s quite encouraged” that president-elect Donald J. Trump has promised increased spending on roads, bridges, tunnels, airports, railways, waterways and pipelines through financing authorities and public-private partnerships.

The Council of Canadians believes that for public infrastructure to be truly in the public interest it must be publicly owned and operated.

We agree with CUPE economist Toby Sanger who says, “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.”

Trudeau’s “openness to globalization” equals higher private financing costs, more privatization, increased profits for global investors, bigger executive salaries, lower workers’ wages, higher user fees, and greater inequality.