May 31, 2017
Remarks by the Honourable Bill Morneau to the Standing Senate Committee on Banking, Trade and Commerce
Check against delivery
Honourable Senators, I'm happy to be here today to speak to you.
I just want to begin by thanking the Committee for its work in preparing the pre-study on the Canada Infrastructure Bank.
I understand that you added many meetings to discuss this portion of Bill C-44, and I want to extend my appreciation for giving the issue the time and consideration it merits.
I believe in the Canada Infrastructure Bank.
I believe it has the potential to create good middle class jobs, improve quality of life in our communities and contribute to a thriving economy—and it's why I'm here today to answer any questions you may have.
I want to begin speaking more broadly about our Government's plan and the impact it is having on Canadians.
The steps we have taken to date are having a real, positive impact on our economy—and on Canadians.
Over the past year, the economy created over a quarter of a million new jobs, the large majority of which were in full-time positions and in the private sector.
And forecasters are expecting Canada's economic growth to pick up in the next two years.
Numbers just released today on our economy put growth in the first quarter at 3.7%—the strongest growth in the G7.
Canada still has the best fiscal position in the G7.
We understand that despite these positive signs, people are still anxious about the future.
That is why we are doing everything we can to make sure Canadians and their communities are prepared for the economy of the future—so that they have the best chance at success.
I know that the Canada Infrastructure Bank will play a vital role in building the projects we need to create jobs in the short term and foster economic growth in the long term.
Honourable Senators, we need to get this right, so I welcome a vigorous discussion.
And we are open to your views—in fact, we depend on them to help make these important amendments better, and in the best interest of the people we are here to serve.
Building the Canada of Tomorrow
Our Government has laid out a historic plan to invest more than $180 billion in infrastructure over 12 years.
This investment is unprecedented in Canadian history. And it comes at a time when the need is great.
According to some estimates, Canada faces a $570 billion infrastructure gap.
Meeting these infrastructure needs therefore places significant fiscal pressure on all levels of government.
Financing the infrastructure gap with public funds alone would place a heavy burden on Canadian families.
No level of government can fill that gap alone. It requires new solutions and new partnerships.
So we have set our sights on a new kind of partnership—the kind that could leverage the strengths of private sector investors, and put their skills, talents and capital to work for Canadians.
Investors have told us that they want to invest in Canada. Pension funds and institutional investors are looking for long-term and stable investments.
This money is currently going elsewhere. We want to make sure it's invested in our cities and communities.
Governments can't do it alone.
Mobilizing private capital to support infrastructure projects reduces pressure on government finances, and creates endless potential to transform communities with projects that wouldn't otherwise get built.
Such an approach would allow government spending to focus on other priorities that can improve the lives of Canadians.
That is why Bill C-44 proposes to establish the new Canada Infrastructure Bank as a Crown corporation.
The proposed mandate of the Bank is to make investments in revenue-generating infrastructure projects that are in the public interest, and to seek to attract investment from private sector and institutional investors to those types of projects.
The Bank will amplify federal support by bringing private sector investment to the table to help pay for the infrastructure projects that will help our economy grow.
This approach will bring about the kind of transformative projects that would otherwise not be feasible because of their prohibitive cost, risk profile or limited revenue-generating potential.
It is a key component of our plan to attract investment and build healthier communities.
And by establishing a new organization capable of working with the private sector where it makes sense, public dollars will go farther and be used smarter.
The Canada Infrastructure Bank will invest at least $35 billion over 11 years, through a broad range of financial tools, including loans, loan guarantees and equity investments, and can incur $15 billion in accrual expenses.
$15 billion is the maximum fiscal impact over a 12-year horizon.
And by bringing in investors, risks can be transferred. The Bank's expertise will ensure that the risks to taxpayers are minimized.
A key consideration for the Bank will be whether the project attracts private sector capital that would not have otherwise been invested in public infrastructure.
Investments will be made strategically, with a focus on large, transformative projects such as regional transit plans, transportation networks and electricity grid interconnections.
As a result, these large projects will see more innovation, and we will build more of them.
And projects supported by the Bank provide a greater role for the private sector than public-private partnership (P3) models.
This sharing of capital and operating costs with the private sector can be of particular benefit to provinces and municipalities that may face borrowing constraints.
By bringing in additional funding via partnerships between the private sector and the Bank, all levels of government can reduce their up-front capital contribution, and avoid taking on more debt or raising taxes.
The Bank will reduce the cost of meeting our infrastructure needs, and allow us to get the most out of our new infrastructure. It will result in innovation in design, right-sized and cost-effective projects, and better-performing infrastructure that is durable.
And by reducing costs to all levels of government, more tax dollars are freed up for projects that need to rely on public funding, like social housing, hospitals or community centres.
And it helps to alleviate pressure that comes from solely managing long-term operating costs—a major consideration in cases like public transit, where municipalities bear the majority of operating costs over time.
Provinces, territories and municipalities will only choose to use the Bank when they see clear benefits.
As for the projects themselves, any expected return for investors must be balanced with the benefits a project delivers for taxpayers.
Meaning, an approved project must mutually benefit the investor and the community.
Though arm's length, the Bank will be accountable to the Government and to Parliament. It will balance government oversight with infrastructure investment expertise.
The Government would be responsible for setting the overall policy direction and high-level investment priorities. A summary of its corporate plan and annual report will be tabled annually in Parliament.
The Bank will be led by a Chief Executive Officer and governed by a Board of Directors. And it will hire employees with the talent and expertise necessary to develop and execute transactions in a manner that delivers the best value for public resources.
The Bank's investments will lead to increased economic activity and long-term productivity growth. Canadians will benefit from good, well-paying jobs.
Our plan is already garnering high praise.
This week I met with officials from the International Monetary Fund, who were visiting Canada as part of the Article IV Mission.
They were very enthusiastic about the Canada Infrastructure Bank, and about its tremendous potential to serve Canadians' interests, while partnering effectively with the private sector.
The Mission's Concluding Statement said that "the proposed Canada Infrastructure Bank will be an effective instrument" in supporting infrastructure investment.
This is a very welcome vote of confidence.
Thanks to this innovative approach, Canadians can look forward to all the advantages of good roads, bridges, transit and social infrastructure built to meet their needs, and that help their communities thrive.
If we can be making investments in infrastructure today, it's going to make people's lives better over the long term.
To conclude, the bill before us has concrete measures that move Canada forward as a smart and caring nation.
By supporting this bill, you will pave the way for the next stage of the Government's plan to strengthen and grow the middle class, and all those working hard to join it.
Your support will allow the Government to continue making the smart investments that will create jobs, grow our economy, and provide more opportunities for everyone.
As we remain focused on growth, it won't just be for growth's sake.
We will make sure it helps all Canadians, not just the wealthy few.
And we will help families feel better about the future of their kids and grandkids.
I urge the Senate to support C-44.
And to work with us on those parts of it that could benefit from your own views and ideas.
So that at the end of the day, we meet the high standards and expectations Canadians have of us.
Thank you. And I welcome your questions.