Photo by Jonathan Hayward/ Canadian Press.
The Trudeau government could privatize federal public assets to fund its promised $120 billion infrastructure funding over the next decade.
The Canadian Press reports, "The federal government has identified a potential source of cash to help pay for Canada’s mounting infrastructure costs — and it could involve leasing or selling stakes in major public assets such as highways, rail lines, and ports. A line tucked into last month’s federal budget reveals the Liberals are considering making public assets available to non-government investors, like public pension funds. The sentence mentions 'asset recycling', a system designed to raise money to help governments bankroll improvements to existing public infrastructure and, possibly, to build new projects."
CUPE has previously explained, "Asset Recycling is a new phrase describing corporatization, marketization and privatization of government assets. An asset is 'recycled' when a government, corporation or bank either sells or borrows against its physical assets to get money for investment in new capital. ...Asset recycling is just another scheme driven by bankers and governments desperate to hide past failures of neo-liberal privatization policy."
The term 'recycling' comes from the notion that, as described by the Mowat Centre, governments "dispose of legacy assets to generate capital to invest in new assets or to refurbish existing infrastructure."
CUPE has also noted that areas subject to asset recycling (at various levels of government) include:
- water infrastructure
- waste water infrastructure
- electricity utilities
- toll roads
- public office buildings
- crown corporations
- liquor control board infrastructure
- defence infrastructure
The Canadian Press adds, "Andrew McNeill, a researcher for one of Canada’s biggest unions, believes it’s basically another name for privatization, which he says has negative connotations. Australia’s asset recycling model is being pushed 'very aggressively by companies that profit from privatization', said McNeill, who works for the National Union of Public and General Employees. He has concerns governments will use the scheme to generate short-term financial injections for political gain. McNeill also said the model could eventually mean lower wages for workers."
The Toronto and York Region Labour Council has previously commented, "The Liberal Government [of Ontario premier Kathleen Wynne] has stooped to using smokescreen words like 'asset recycling' to conceal the grim truth [of the privatization of 60 per cent of Hydro One, Ontario's electricity transmission and distribution utility]." They note that the provincial Liberal government says this 'asset recycling' could generate $5 billion to address Hydro One's debt and $4 billion to build new infrastructure, such as transit. CBC notes, "Ontario is selling off its transmission lines to help pay some of the cost of transit lines."
Lawyer Steven Shrybman has argued, "There is a very serious concern with respect to the impacts of privatizing Hydro One, in light of Canada’s obligations to foreign investors and service providers under international trade law. ...In respect of transmission and distribution services, such measures [that could be challenged for offending investor rights] could include a mandatory obligation to connect renewable energy generators, to prioritize interconnections with other provinces rather than the United States, to conduct environmental assessments for new facilities, or to protect habitat in citing or maintaining those facilities."
With the Trudeau government seeking to ratify the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and most likely wanting to ratify the 12-country Trans-Pacific Partnership (TPP), our exposure to investor-state challenges would be even greater with the full or partial privatization of federal public assets via asset recycling.
The Council of Canadians opposes asset recycling, CETA and the TPP. We have also raised concerns that federal infrastructure funds could be used to worsen climate change. The Alberta and British Columbia governments have been negotiating a plan whereby BC drops its opposition to the TransMountain and Northern Gateway tar sands pipelines in exchange for Alberta agreeing to buy hydroelectricity generated by the Site C dam. Reportedly the deal would require $1 billion in federal funding to help build the infrastructure of hydro transmission lines from northeastern BC to Alberta.