Canada Infrastructure Bank

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Wallace
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Canada Infrastructure Bank

Post by Wallace » 06 Jul 2017 13:08

Article in The G&M today here about the naming of Janice Kakakusa as the first chairperson of the board for the Canada Infrastructure Bank.

According to the government website the Bank will invest $35 billion from the federal government into infrastructure projects. Specifically:
Invest in infrastructure projects that have revenue-generating potential and are in the public interest;
Attract private sector and institutional investors to projects so that more infrastructure can be built in Canada;
Serve as a centre of expertise on infrastructure projects in which private sector or institutional investors are making a significant investment;
Foster evidence-based decision making and advise all orders of government on the design of revenue-generating projects; and
Collect and share data to help governments make better decisions about infrastructure investments.

The Bank will be accountable to Parliament through its responsible Minister. .
As an arm's length Crown Corporation, the Bank will be led by a Chief Executive Officer and governed by a Chairperson and Board of Directors.

I haven't seen any discussion about this, but it looks like something we should be aware of, particularly with our investments in Canadian banks. Questions include:
1.Is this "helicopter" money? ie Newly-printed money dropped into the economy? A way to distribute the proceeds of quantitative easing?
2. How will this affect the traditional lending institutions? $35 billion seems a lot to be lent out, but how does it compare with the total lending throughout Canada?
3. It sounds like these are loans rather than grants. Seems like it might push municipal and Provincial debt even higher.
Thoughts?
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twa2w
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Re: Canada Infrastructure Bank

Post by twa2w » 08 Jul 2017 14:27

I really don't know how this will work but thought I would kick off the discussion.

Some assumptions on my part? This would be like the hwy 407. Invest the money to build the hwy and get a return on tolls.
Say Victoria needs a new sewage treatment plant. Invest the money to built plant. Recover the money through a user fee to all households?

I can see pension funds investing in this sort of thing. Lower but stable returns on investment. Low risk of default. Perhaps replacing bonds?

I don't see this as the sort of thing that banks would normally lend to although they do do some lending to municipalities.

How different would this be from the city of Victoria issuing bonds to build the infrastructure, selling those bonds to a pension fund? Ultimately it is debt to the municipality? Or does the pension fund via the infrastructure bank, own the treatment plant in perpetuity? Some pensions own waterworks in the UK for example.

Why would the pension fund need to go through the infrastructure bank? Is it to be a clearing house of projects, or to emable smaller groups to cofund a project together?

Is the govrrnments cash injection into the bank to be lent out on the same terms as private money put into the bank so the government will get a return? Or will it be paired with private money money to reduce cast to tax payer.

Is this better than grants to municipalities to assist with projects?

I have a lot of respect for Janice and her abilities but not sure she is the right person for this job. She will run a very tight ship and things will well organized but will she have the marketing/ connections /expertise to pull off the PR needed on this.

Sorry Wallace. More questions than answers in my hungover morning ramblings.

Ultimately the end user tax payer will pay the cost.

gobsmack
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Re: Canada Infrastructure Bank

Post by gobsmack » 09 Jul 2017 05:59

I am biased against the idea of an infrastructure bank because I have always associated them with corrupt practices. It is just too tempting for politicians to try and influence the bank (e.g., similar to cheap loans for Bombardier etc). However, the fact that a lot of the money in the bank is going to be private makes me somewhat more confident that this won't happen in Canada.

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