This article was first published in medium.com
Launched by the Trudeau government in June 2017, the Canada Infrastructure Bank (the Bank) promised to significantly transform Canada's project development landscape. Three years later, that promise has yet to be fulfilled. However, as COVID-19 continues to push the global economy deeper into recession, many wonder if the Bank is now finally poised to make its mark on Canada's economy.
A Crown Corporation, the Bank was established with the mandate of investing $35 billion of federal funding in much needed infrastructure projects across Canada – and, in turn, attract private sector investment into new revenue-generating projects. Notably, for infrastructure to be eligible for investment by the Bank, it must be both transformational and in the public interest.
Unfortunately, the Bank has got off to a slow start and to date has committed (not invested) less than $4 billion to projects. Many blame such sluggishness on bureaucracy; although the Bank was organized to operate independently, several stakeholders have reported that policies and decisions were often subject to additional layers of approval by federal officials. A lack of clarity surrounding the Bank's mandate and its criteria for participating in projects has led to even greater uncertainty about its role in the Canadian infrastructure investment community.
The future, however, is looking brighter for the Crown agency.
In June 2020, in the midst of the pandemic, Catherine McKenna – the federal minister responsible for the Bank – quietly announced sweeping leadership changes. Such changes included the resignations of Chairperson Janice Fakakusa and CEO Pierre Lavalee, and the appointment of Michael Sabia to chair of the board. Mr. Sabia recently completed an 11-year term as CEO of La Caisse de dépôt et placement du Québec (CDPQ) and brings to the Bank a formidable record of experience in the public and private sectors. His appointment is widely viewed as a major change in direction at the Bank, one that it is both timely and overdue.
Indeed, several observers – including the Globe and Mail – have reported that the Trudeau government will accelerate planned infrastructure spending as part of its efforts to boost the economy in the wake of a virus-generated global recession. A Michael Sabia-led Bank is poised to play a leading role in government's infrastructure spending plans.
With a view to ensuring the Bank is equipped to rise to this unprecedented occasion, here are some unsolicited suggestions for Mr. Sabia to consider as he goes forward:
- First, clarify the mandate of the Bank and its relationship with government; this will enable it to be nimble and provide leadership in getting transformational infrastructure projects off the drawing board and underway.
- Second, tap into the creativity and resourcefulness of Canadians. Actively seek unsolicited proposals for infrastructure projects that come from private sector and institutional investors.
- Third, find willing partners to co-invest with the Bank. Co-investing with private sector partners will spread risk and generate a larger capital pool for investment. Partnering with the private sector demands a degree of clarity and speed not witnessed from the Bank to date.
- Fourth, foster a sense of urgency in the Bank. Faced with the economic impacts of a global health crisis, federal, provincial and municipal governments alike () have shown they can act swiftly when presented with urgent circumstances. The absence of basic infrastructure in many communities across Canada demands attention on a similar scale. Many Canadians live without essential services: clean water, electricity and facilities for the delivery of modern health care and education. It is in the public interest for the Bank to play a leading role in delivering urgently needed infrastructure in these communities.
- Fifth, develop a Canada-first investment strategy. Canada is a relatively small infrastructure market; major domestic funds, including pension funds, have sought opportunities elsewhere. The Bank's leadership will improve the project pipeline and planning cycle for investment. A more robust pipeline of projects will increase investor interest and investment in Canadian projects by Canadian funds.
Canada continues to punch far above its weight in the design, delivery, finance, and management of high-quality smart infrastructure assets. Moreover, our country has earned a reputation among infrastructure investors and buyers for transparency, innovation, environmental sustainability and value-for-money.
In these pandemic-ridden times, the need to mobilize and deliver smart infrastructure across our country quickly has never been greater. With leadership from the Bank, and support from leaders across the industry, we have an opportunity to deliver new transformational infrastructure to Canadians and to make our country a better, safer place to live and work for generations to come.