In last week’s MP report I outlined the concerns I had with expanding CPP at the present time that resulted in my opposing this measure in Ottawa. Since my report was written CBC has uncovered and released internal documents from the Finance Department that parallel my concerns. In fact, internal finance projections reveal that expanded CPP will be a drag on our Canadian economy until the year 2030, and worse are also expected to adversely impact employment until the year 2035. In other words the Liberal Government is knowingly committing to a policy that will harm jobs and our economy for the next 15 to 20 years. This, in my review, remains a serious concern.
This week the Liberal Government also announced an economic update that is intended to reverse the current trend of declining economic growth projections and lack of any net new jobs being created in our Canadian economy. The key announcement was the Liberal Government intends to borrow more money and increase deficit spending by an additional $31.8 billion over the next five years. This means the total amount of Liberal deficit spending will now exceed $114 billion over the Liberal’s term meaning the promises to run “modest” $10 billion-a-year deficits and return to a balanced budget in the 2019/2020 fiscal year will not be met.
One curious announcement that is part of the Liberal’s fiscal update is plans to borrow $35 billion to create a new Canadian Infrastructure Bank that in turn will also see the creation of a new branch of government or government agency that will have a mandate to attract private investment into the infrastructure bank. The NDP has already expressed strong opposition to this plan, suggesting it will result in the wholesale privatization of Canadian infrastructure. From my own perspective I question the need to develop yet another federal agency as well as an expensive new federally-run bank.
My concerns around this $35-billion infrastructure bank are as follows: While I am not ideologically opposed to public-private partnerships in infrastructure, in this case one of the advantages of government borrowing money is that it can do so at rates much lower than the private sector can. In order for the infrastructure bank to gain any private sector investors, the bank will need to pay competitive rates of return — these interest rates will of course be higher than the rates that the government can borrow at so in effect this new infrastructure bank could ultimately end up subsidizing private investors who would enjoy lucrative and guaranteed rates of return. This, in my view, is not the role of government.
My other concern with the federal infrastructure bank is that, like any bank, it will carry administrative costs — wages, leases, leasehold improvements, legal, etc. All of these costs will mean ultimately that less money is available to be spent on infrastructure as these overhead costs will come out of the bottom line. Currently federal infrastructure funds are paid directly to provinces and municipalities and are not filtered through an expensive administrative process like this one being proposed by the Liberals.
My final concern over an infrastructure bank is who is ultimately accountable for the projects that are approved and rejected? Currently elected officials are held to account; however, if this becomes unelected and appointed bankers potentially chosen from Bay Street in Toronto, what input would there be for British Columbia and Western Canada?
I welcome your views on the idea of a federal infrastructure bank and any other subject before the House of Commons.