OTTAWA—Parliament’s budget watchdog says a federal infrastructure financing agency has yet to meet a key aspect of its mandate: pulling in private dollars for major projects.
The Justin Trudeau Liberals created the infrastructure agency in 2017 to use $35 billion in federal financing to pull in two or three times that in private dollars.
What the Liberals wanted was to finance projects that would generate revenue, meaning there could be a return to investors, to free up grant money for other work.
Parliamentary budget officer (PBO) Yves Giroux wrote in a report released Tuesday that the Canada Infrastructure Bank (CIB) has committed just over $4 billion for projects, or about 11.5 per cent of its spending envelope, but none involve funding from private investors.
Instead, the money from the bank is coming from other public-sector entities like municipal and provincial governments, as well as the Quebec pension plan.
Nor is it clear that private dollars are involved in any of the remaining 13 projects in which the agency is participating, Giroux wrote.
The PBO report says eight of the 13 projects have yet to announce a financial commitment and are currently under either a memorandum of understanding, in a project acceleration phase or receiving advisory services.
“Of the projects for which contracts have been signed, there is no evidence that any private investment has been leveraged,” Giroux wrote in the report.
“CIB’s two current projects are exclusively funded by federal, provincial, and municipal levels of government.”
The Reseau express metropolitain, Montreal’s electric-rail system better known by its acronym REM, and an expansion of the GO Transit network in the Toronto area comprise most of the announced capital investment at the CIB at $1.28 billion and $2 billion, respectively, the PBO report says.
The report landed hours before Giroux and the agency’s chief executive, Ehren Cory, were scheduled to appear before a parliamentary committee probing the four-year-old agency.
Cory’s appointment was one of several the Liberals have made over the last six months after years of criticism that the bank was too slow to approve financing, and projects too marginal to lure big investors.
The government has redone the marching orders for the agency to get shovels in the ground, trying to stimulate the economy out of the pandemic.
In a recent interview with The Canadian Press, Cory said the agency had a short runway to prove its worth – a nod to the political spotlight the agency is under.
The Conservatives and New Democrats have previously promised to dismantle the agency if elected to govern.
Cory said internal changes at the agency to speed up reviews should put the bank on pace by the summer to have made 10 or so investments, he said, with a value of about $2.5 billion in CIB capital, and $6 billion in total project value.
Giroux’s report notes that the CIB has received 420 project proposals, but four-fifths have been rejected or are no longer under active consideration.
Nearly half of those rejected fell outside the agency’s mandate, the PBO report says, largely because they either were in an ineligible sector, were insufficient size, or lacked scalability.
The remaining rejected projects passed the agency’s initial screening criteria, but were removed from consideration or are no longer under active consideration, the PBO said.
© 2021 The Canadian Press