{"id":80002,"date":"2020-10-02T03:38:11","date_gmt":"2020-10-02T00:38:11","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/farewell-then-canada-infrastructure-bank\/"},"modified":"2020-10-02T03:38:11","modified_gmt":"2020-10-02T00:38:11","slug":"farewell-then-canada-infrastructure-bank","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/farewell-then-canada-infrastructure-bank\/","title":{"rendered":"#Farewell, then, Canada Infrastructure Bank"},"content":{"rendered":"

“#Farewell, then, Canada Infrastructure Bank<\/strong>”<\/p>\n

\n It\u2019s funny the various ways expectations can shrink. Here were Justin Trudeau and Catherine McKenna announcing a new plan for the Canada Infrastructure Bank, which is a novel organization designed to turn $35 billion from the federal government into widespread confusion and apathy.<\/p>\n

\u201cBy attracting other people\u2019s capital the Bank maximizes the value of every dollar of taxpayer investment,\u201d Michael Sabia, who became the chair of the Bank\u2019s board in April, told reporters. \u201cIn this way we can stretch $1 of taxpayer investment into $2 or $3 of total project investment. This is value for taxpayers.\u201d<\/p>\n

I\u2019ll say! And then McKenna, the infrastructure minister, repeated the sentiment. \u201cThere are real opportunities,\u201d she said, to \u201ctake one taxpayer dollar and, as Michael Sabia has said, turn that into double or trip<\/a>le that so we can build even more good infrastructure for Canadians.\u201d<\/p>\n

Awesome. Money from the sky. OK, two things about that.<\/p>\n

First of all, the multiplier Sabia and McKenna were describing\u2014$1 from Canadians through taxes turning into $2 or $3 of total<\/em> investment, i.e. matched by perhaps $1 or $2 of private or institutional investment\u2014represents a substantial retreat from the claims this government once made of the Bank.<\/p>\n

Here\u2019s a chart from the late Bill Morneau\u2019s fall economic update from Halloween, 2016.
\n\"\"That\u2019s $1 in tax money turning into $4 in investments from pension funds, ambitious entrepreneurs, or other deep-pocketed non-governmental sources. And, of course, since the lamented Morneau imagined that each federal dollar would automatically be matched by equal investments from a province and a municipality, the expected multiplier was vast: really $11 from other sources for every $1 from the federal government.<\/p>\n

So that\u2019s one thing. The other is that this entire conversation is science<\/a> fiction. In its three-year history\u2014which I would call \u201ctroubled\u201d except usually when an organization has a \u201ctroubled\u201d history it\u2019s kind of exciting, whereas perhaps the better adjective for the Canada Infrastructure Bank\u2019s existence is \u201cboring\u201d\u2014it has never<\/em> provided an accounting of private-sector investment for any<\/em> investment the Bank has made or contemplated. So we don\u2019t know whether the multiplier is 11, 1, or negative-pi-over-quidditch. You really should feel free to assert that $1 in CIB money attracts any amount of institutional investment that makes you feel good, and I have never had any information<\/em> to rebut you, and I never will.<\/p>\n

The Canada Infrastructure Bank exists in the exquisite realm, prized by all public administrators, where they can make the most extravagant claims about it\u2014Trudeau called it \u201can incredibly powerful tool to create opportunities, to create jobs, to create growth for the medium and long term in the country by investing in some major projects and taking on and drawing in significant international capital as well\u201d\u2014and it is app<\/a>arently distasteful to ask for any evidence of the claims.<\/p>\n

The Bank\u2019s website<\/a> is farcical. (Imagine applying for a $10,000 loan with as little information as the Bank gives you about the use it is making of $35 billion. You wouldn\u2019t get far.) Sabia was appointed to replace the former board chair six months ago, with no explanation; the BIC\u2019s CEO was sent packing<\/a> on the same day, with no replacement. Sabia said a new CEO will be named \u201cin the coming weeks.\u201d Probably that\u2019s even true, although the bank also thought it was about to name a new CEO in August<\/a>.<\/p>\n

The previous CEO, Pierre Lavall\u00e9e, is believed to have been turfed for failing to land enough projects. He told me last summer that $4 billion in the first year of operation was a pretty good burn rate for an organization that was given a decade to spend $35 billion. Apparently the government disagreed. Now Sabia and the others were meeting reporters to announce that they will spend $10 billion in the next two or three years, which by my math isn\u2019t a great acceleration. Sabia was able to announce more projects than the bank had ever announced before by (a) planning three years at a time and (b) not having a single actual project to announce. One\u2019s heart goes out to the previous guy, who insisted on waiting until he had something to announce before announcing it, and can now be found on LinkedIn. These times call for bolder souls.<\/p>\n

\u201cIt\u2019s sometimes said that hope isn\u2019t a plan,\u201d Sabia said, a few times, in the manner of a man who has a plan. \u201cThis plan is the result of a serious analysis of current and potential projects. In short, this plan is real.\u201d Great! Can we see it? Of course not.<\/p>\n

But since hope isn\u2019t a plan, perhaps repetition is. \u201cThose foundations are solid because the analyses have been done,\u201d he said, and \u201cwe have done extremely rigorous, disciplined analyses,\u201d and \u201cit\u2019s built on analyses, specific projects, real projects.\u201d<\/p>\n

Here\u2019s the deal. In 2016, when I was writing for another company and Michael Sabia was giving the Trudeau government free advice on economic policy, he used to say<\/a> there was a vast pool of institutional funds around the world looking for returns that were even marginally better than zero. \u201cThere\u2019s $16 trillion hanging around where the investors actually pay the government to take their money,\u201d he said at some conference then. Pension funds like the one he ran, the Caisse de D\u00e9p\u00f4t et placement du Qu\u00e9bec, were looking for infrastructure projects, which could offer better returns, because\u2014Sabia normally left this part out\u2014you could charge customers for tickets, or put a chip in their car to measure when they used a highway, or meter their energy use, or make them pay in some other way. And really all you needed to do was open a wicket with a sign saying INFRASTRUCTURE and those trillions would park in Canada.<\/p>\n

The wicket opening was extravagant. Trudeau and nine<\/em> cabinet ministers holed up at the glam Shangri-La Hotel on University Ave. in Toronto for half a day in 2016.<\/a>\u00a0At the time I listed their guests with the breathless credulity that used to characterize my coverage of the Infrastructure Bank notion: \u201cThe Hong Kong Monetary Authority, with $360 billion (U.S.) in assets. Norway\u2019s Norges Bank, which may be the world\u2019s largest sovereign wealth fund, though it\u2019s hard to tell and the Norwegians hope to keep it that way. The Olayan Group from Saudi Arabia, with assets somewhere north of $100 billion. Singapore\u2019s Temasek Holdings, closer to $200 billion. The Qatar Investment Authority. The Lansforsakringar, which is Swedish for \u2018If you have to ask, you can\u2019t afford it.’\u201d<\/p>\n

It came out later that staff from BlackRock, the world\u2019s largest asset manager, helped write the slide deck<\/a> that Trudeau and Morneau showed their guests that day, which is a little creepy, but whatever. In the end the clouds didn\u2019t open and no part of that $16 trillion in global free money dampened the shores of Canada. This is not a tragedy nor even necessarily evidence of mismanagement: if turning on a gigantic global cash spigot were easy, probably somebody would have done it before Sabia, Morneau and Trudeau thought of it.<\/p>\n

No matter. The Bank has quietly adopted a new business model, in which the government money goes first and everyone simply hopes the private capital will show up later. The pilot project for this approach was Montreal\u2019s light-rail network<\/a>, financed mostly by the Caisse under\u2026 I have the name right here somewhere\u2026 Ah, yes, Michael Sabia.<\/p>\n

(Sabia once hoped similar projects could be exported around the world. In an amusing subplot that got no coverage here, an early attempt by the Caisse to make that happen after Sabia\u2019s departure\u2014an uninvited competitive bid to build light rail around Auckland, New Zealand\u2014caused the entire project to collapse in confusion<\/a> this summer.)<\/p>\n

So the project list the PM, his minister, and the inevitable Sabia announced on Thursday listed no projects, named no private-sector partners, and included no process for gathering private-sector capital before signing off. The Bank is, in no sense, a Bank any more. It\u2019s a pot of federal money, into which the federal government will dip to pursue the ends the federal government finds pleasing. This is hardly an outrage, although it\u2019s impossible to know whether outrages lie hidden in the mechanics of a leaderless entity dear to the Prime Minister\u2019s heart, sheltered from the purview of even the weak access-to-information laws that provide a weak light into most other government spending. Maybe this will all go better for us than WE did. Eventually we\u2019ll find out.
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Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

“#Farewell, then, Canada Infrastructure Bank” It\u2019s funny the various ways expectations can shrink. Here were Justin Trudeau and Catherine McKenna announcing a new plan for the Canada Infrastructure Bank, which is a novel organization designed to turn $35 billion from the federal government into widespread confusion and apathy. \u201cBy attracting other people\u2019s capital the Bank…<\/p>\n","protected":false},"author":1,"featured_media":80003,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/www.macleans.ca\/wp-content\/uploads\/2020\/10\/CP19924205-766x431.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[73949,67806,67816,73950],"class_list":["post-80002","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-canada-infrastructure-bank","tag-editors-picks","tag-justin-trudeau","tag-michael-sabia"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/80002","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=80002"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/80002\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/80003"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=80002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=80002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=80002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}