Recently, the Star's business editor, David Olive, offered some cautious optimism about the Canadian Infrastructure Bank, the scheme dreamed up by the Trudeau government,
to “leverage” its $35 billion in CIB seed money by a factor of four, creating roughly $140 billion in infrastructure spending. It will do this by enticing private-sector partners to put up most of the infrastructure funds, backstopped by Ottawa.
Seen in a charitable light, Ottawa means to stretch taxpayer dollars in a way not possible with the traditional model of purely public spending on publicly owned infrastructure.It is the later interpretation I have written about previously, as it seems to me that all of the risks will be borne by the taxpayers who will also, conversely, receive few of the benefits.
Less charitably, the CIB looks like a device for nationalizing the risk and forfeiting the profits from CIB projects that will be largely owned by private interests.
Apparently I am not the only one dubious of the benefits of this proposal. A Star letter writer offers his concerns:
Re: Feds bet on bank as social justice tool, Olive, June 17As the old saying goes, "If it sounds too good to be true, it probably is."
David Olive’s proposal that public pension funds provide financing for infrastructure is flawed.
First, there is no shortage of low-cost government funds when we own the Bank of Canada — witness the recent $200-billion bailout of big banks and corporations after the 2008 financial crisis, or the government’s sudden decision to increase defence spending by $62 billion.
Second, while pension funds may be non-profit, the public-partnership model eats up enormous accounting, legal and management charges, and pension funds expect a 7- to 9-per-cent return. Such financing is expected to double the cost of projects.
Third, while helping retirees may seem admirable, the monies are extracted through tolls and fees, largely from overstretched middle-class families when they can least afford it.
However, Olive makes a good point regarding CPP’s meagre investments in Canada. At a time when 1.3 million Canadians are unemployed, why is our national pension fund sucking money out of the domestic economy and building up competitor companies overseas?
Larry Kazdan, Vancouver
If Trudeau was to properly price carbon and use those funds for infrastructure programmes we would have less dependence on private investment. Ultimately every dime contributed by private "partners" will be recovered by them with a healthy profit margin. That includes the inevitable cost overruns that are a feature of private sector fleecing of the public purse.
ReplyDeleteWhenever a contract is let out, Mound, it seems the private sector salivates over all of the gouging potential. I have never heard of a project coming in on or under budget, have you?
DeleteMakes perfect sense to pay rent on top of interest for utilities and infrastructure. Plutocrats haven't gouged the people enough! There's still a bit more government debt left to loot. Still a bit more flesh for entitled lampreys to tear from the Body Economic.
ReplyDelete(Although these Masters of the Universe of ours don't appear to have put much thought into their end game. If the people end up losing their shirts on shitty Baltic Avenue, the game comes to its ultimate conclusion: global economic collapse and world war.)
Farsightedness has never been been a neoliberal strength, Anon.
DeleteIt follows the neo-liberal credo, Lorne. Privatize profits and socialize losses.
ReplyDeleteOr, as David Lewis said so many years ago, Owen, "corporate welfare."
DeleteLorne, I believe the phrase was "corporate welfare bums." During the 74 election campaign we flew aboard the NDP's rented Convair 220, a clapped out twin engine prop job from Great Lakes Airways. The journos came to call it "Bum Air." On those things, people tend to pick a spot that becomes "their seat" for the tour. Mine was opposite the port engine. At one point I had the flight attendant bring the co-pilot back so I could show him oil streaking out from the nacelle at a fearsome rate. With that we diverted to Winnipeg where the plane - and the campaign - was grounded while someone flew in a spare engine. See, that's what memories are made of.
DeleteThanks for sharing that evocative memory, Mound.
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