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The Infrastructure Bank pivots to pandemic

Minister of Infrastructure and Communities Catherine McKenna, left to right, Prime Minister Justin Trudeau, and Chair of the Board of the Canada Infrastructure Bank Michael Sabia hold a press conference in Ottawa on Thursday, Oct. 1, 2020. The Canadian Press/Sean Kilpatrick
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$10 billion: That’s how much the Canada Infrastructure Bank (CIB) is allocating to back Ottawa’s pandemic recovery plan, including capital for clean-power projects, broadband buildouts, and zero-emission buses. 

How fast can the CIB move? Industry executives have expressed concern that the Crown corporation—established in June 2017 to attract private-sector investment for megaprojects—has been slow to consider and greenlight new developments, and several top executives have departed in recent months. On Thursday, however, recently appointed chair Michael Sabia promised a 24- to 36-month timeline and over 60,000 jobs created for its new program, which is drawn from the CIB’s original $35-billion budget.

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The “growth plan” includes $2 billion to extend broadband access to 750,000 additional households. That’s up from the $1 billion over 10 years the government pledged out of CIB funds in the 2019 federal budget. And it’s in addition to the $1.7 billion pledged over 13 years for a new connectivity fund announced in that same document. 

Except…: None of that money has yet been allocated. In early June, Rural Economic Development Minister Maryam Monsef said the Universal Broadband Fund (UBF) would start accepting applications “in the coming days.” Prime Minister Justin Trudeau did not directly answer a Winnipeg Free Press reporter’s question about the delay Thursday, saying instead that the government would “move forward as rapidly as we can to create more connectivity.”

The UBF and Ottawa’s existing Connect to Innovate program give network operators capital for targeted expansions, particularly for rural and remote communities. Sabia said the CIB will “work with carriers and [internet service providers]” on its broadband plans, and will “bring more capital to the table” than it’s currently allocated if more opportunities arise. In October 2019, The Logic reported that the Crown corporation had examined the prospect of setting up a public utility to build network infrastructure.

What else are they spending it on?: Thursday’s announcement also included $2.5 billion for clean-power projects and $2 billion for building efficiency retrofits, both cited in last week’s pandemic recovery-themed throne speech. The latter dovetails with Natural Resources Minister Seamus O’Regan’s mandate to set up government-seeded funds to attract private capital for renovations. There’s also $1.5 billion each for irrigation as well as emissionless buses and charging infrastructure, plus $500 million to speed up projects the CIB already intends to back. Earlier this month, Infrastructure Minister Catherine McKenna told The Logic the bank would be looking for “a more packaged approach to projects that can go faster and also meet multiple benefits, including the cleaner future.”  

Who’s in charge, here?: Pierre Lavallée, the CIB’s first CEO, left the organization in April and Sabia has been at the helm ever since. On Thursday, McKenna praised his “ambition and vision for the new phase” of the CIB. He’s also reportedly served as an informal adviser to Trudeau on the Liberals’ post-pandemic recovery plans. “The new chief executive will be in place in the coming weeks,” Sabia said Thursday. But the CIB did not directly answer a follow-up question from The Logic about whether Sabia would continue to play an executive or active role in project selection and negotiations once Lavallée’s successor is in place.

Is the CIB the right tool for the job?: On Thursday, Trudeau, McKenna and Sabia all backed the bank’s model of leveraging Ottawa’s dollars to draw private-sector funding for projects. The pandemic could cut foreign direct investment flows by 30 to 40 per cent in 2020–2021, the UN Conference on Trade and Development estimated in March. But Sabia insisted that Canada remains a safe site for funds to put their money. “The supply of capital will be there,” he said. “Our challenge is identifying the projects, structuring the projects, structuring the financing in an attractive way.” 

However, the CIB has yet to attract significant international capital to its projects. Its biggest commitment to date is up to $2 billion for Go, owned by Ontario government agency Metrolinx, to expand its network. It’s also pledged $1.28 billion for the Réseau express métropolitain (REM), a Montreal light-rail line controlled by a division of provincial pension fund Caisse de dépôt et placement du Québec, of which Sabia was CEO until February 2020. The project is co-funded by the Quebec government and Hydro-Québec.

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Asked Thursday to provide examples of global investors backing projects after the CIB provides funding, the organization cited the REM and the Caisse’s involvement. “We will soon be announcing new investments and we are confident to collaborate with various new private, public and institutional partners,” spokesperson Félix Corriveau said.

Correction: CIB projects have attracted private-sector investment, but not international investment. This story has been updated.