Canadian Infrastructure Bank Will Invite Private Investment

The U.S. election is over and President-elect Trump has said he plans for a one trillion-dollar investment over 10 years in U.S. infrastructure. Time will tell what his plan calls for and if Congress is ready to spend or appropriate funds.

In Canada, the federal government is taking steps to fund a $35-billion infrastructure bank, one of its biggest proponents is being very clear about the need to educate the public on the benefits of tolling and other forms of private financing.

The story began to take concrete form in early November, when Canadian Finance Minister Bill Morneau issued a fall fiscal update that doubled down on the government’s previous commitment to infrastructure investment, and put out a bigger welcome mat to foreign investment—both in the hope of tapping infrastructure investment to boost a tepid economy.

"What we want to tell Canadians is we believe that we should be focused on making investments for today and for tomorrow that will allow us to have a higher level of economic growth in this country," Morneau told the House of Commons. "We know we are doing it in a fiscally responsible way."

Earlier this year, the Trudeau government’s first budget called for $120 billion in infrastructure investment over 10 years. The fiscal update increases that tally to $186 billion over 11 years.

And you thought a five-year horizon in the U.S. FAST Act was a long-term commitment! (You were right…)

Making the Case

Following up on Morneau’s announcement, the chair of the government’s Advisory Council on Economic Growth made a familiar argument. Dominic Barton, global managing director with McKinsey & Co., “said Canada lags far behind many countries in taking advantage of private financing to help fund large-scale projects,” the Globe and Mail reports. He added that “infrastructure needs in Canada far exceed the capacity of governments to pay for them alone.”

To close the gap, the paper adds, Barton said Canadians will “need to be sold on the economic benefits of private-sector investment in infrastructure—and the fees and tolls that may come with that.”

“We have to do more on the communication side, because even on this toll thing, in Canada we are just far on the end of the spectrum of not doing this versus other countries,” Barton told the Globe. “It’s not to say that that’s necessarily a bad thing. [But] that’s why some places, Chile, Australia, even Brazil and the UK, their infrastructure is better because they’re able to get the capital.”

For many years, IBTTA’s Moving America Forward Campaign has been telling the story and making the case for tolling as an essential funding option in the toolbox.