The Canadian Union of Public Employees (CUPE) is calling on the federal government to fundamentally overhaul the mandate of the Canada Infrastructure Bank (CIB) so its focus is to provide low-cost loans to municipalities and Indigenous communities and support only environmentally sustainable projects.
“Recently there’s been a flurry of green CIB project announcements. But there’s no guarantee that will continue,” says CUPE national president Mark Hancock. “We’re in a climate crisis and we need governments to take urgent action to help communities cut emissions and adapt to the impacts, whether it’s flooding, wildfires, droughts or extreme heat. The human and financial costs are enormous and we can’t afford to waste any more time.”
CUPE recently released a report on the matter, called A Public Bank for the Public Interest, as the CIB is facing a legally required review of its first five years.
The blueprint was prepared by Thomas Marois, a Canadian of Metis ancestry who is a world-leading researcher on public banks and the economy.
The CIB was launched in 2017 with $35 billion in seed funding, with the expectation that the investment would attract up to five dollars of private financing for every public dollar. The bank was supposed to invest and attract investment from private sector and institutional investors for infrastructure projects.
However, the CIB has not been able to close deals to support its mandate and the House of Commons standing committee on transportation infrastructure and communities recommended that the bank be abolished.
CUPE is critical of the mandate and wants government to change the bank’s focus. Instead of being driven by private-for-profit investors, the union is recommending the CIB be rebuilt to serve the public interest.
“The CIB’s focus on expensive private financing, combined with the risks and delays of privatization, have been a recipe for failure,” notes Hancock. “A parliamentary committee came to this conclusion in 2021, and many other experts agree.”
An analysis of CIB’s spending and investment commitments by the Parliamentary Budget Officer also found the bank was dispersing funding much slower than planned because the focus on privatization ruled out many projects.
CUPE maintains requiring the bank to attract private investors and revenue-generating privatization deals is a losing proposition, as the federal government already offers a lot of options for low-cost financing and direct funding from local jurisdictions, which is preferable and crowds out the CIB schemes.
“It’s no surprise that over the past five years, the CIB has failed to meet its own goal of attracting private investors — let alone meet the real and pressing needs of local governments,” says Hancock. “Our report shows the CIB was designed to fail from the start and calls for the bank to be fundamentally transformed.”
The report suggests the Canadian government draw a page from successful European public bank models.
Specifically, CUPE wants the government to rewrite the Canada Infrastructure Bank Act which governs the bank and its operations to change the mandate of the bank and scrap its focus on privatization as it delays projects and drives up costs.
According to CUPE, lending directly to cities, towns and Indigenous communities keeps projects affordable with low-cost loans and speeds them up by removing the delays that come with complex privatization deals.
The union cites the experience of Mapleton, Ont., a few years ago. The township had asked for CIB support to upgrade its water and wastewater systems. Instead, the bank pushed a P3 on the community. Mapleton started down the road to privatization, spending hundreds of thousands of dollars in legal fees, before deciding it was too risky to hand its public water systems over to a private operator.
CUPE also wants the CIB to zero in on supporting communities and local governments and providing financing to projects that use renewable power, as they will create green public and private sector jobs. The union maintains a public bank would lend money at lower interest rates than the private sector, support projects that communities need, and would not come with a requirement to privatize through public-private partnerships.
CUPE is also pushing for more transparency and for it to more closely reflect the communities it serves.
“Right now, the bank keeps project details secret, and there are harsh penalties for sharing information,” says Hancock. “No-one who works at any level of government can sit on the CIB board — that’s the law, and it’s no way to run a public institution. CIB project information should be open to scrutiny.”
The report was released to spark public discussion about the CIB’s track record and be a catalyst for change.
“The review is an opportunity to stop making the same mistakes over and over, and instead build a bank that works for us all,” Hancock says. “Our report shows how communities in other countries benefit from public banks that work for them — not for profit-seeking investors and corporations.”
The report is presently being circulated among civil society organizations to create momentum for legislative change. CUPE will also be presenting the recommendations to members of parliament and senators.