Bank a bad investment

Most of the noise in Ottawa this week has been from the outrage related to a statement by Prime Minister Justin Trudeau on the passing of Cuban dictator Fidel Castro. 

The Prime Minister’s statement and comments on his death has been widely criticized internationally for not referencing the numerous human rights violations that have occurred under the Castro regime. 

While I believe the statement could have been worded in a manner more reflective of these human rights violations, it is also important to not allow this to overshadow other important concerns, such as the Liberals pending new infrastructure bank.

Nov. 3, I shared several concerns about the promised new $35-billion federal infrastructure bank. 

I questioned the need to develop yet another federal agency as well an expensive new federally run bank. 

I also pointed out one of the advantages of government borrowing is that government can do so at rates much lower than the private sector can. 

In order for the infrastructure bank to gain any private sector investors, the bank will need to pay competitive rates of return.

These interest rates will be higher than the rates the government can borrow at, so this new infrastructure bank could ultimately end up subsidizing private investors who would enjoy lucrative and guaranteed rates of return.

This is not the role of government.

This is in stark contrast to what the Liberals proposed in their election platform. Originally, they said it would be set up to help all Canadian municipalities to access lower cost borrowing rates and would be largely used to finance social housing.

Since writing that report, the Liberals have now announced further details on the infrastructure bank that should be of very serious concern to citizens in our region. 

The most troubling aspect of the mandate for the infrastructure bank is that it will only fund projects with a price tag of $100 million or more. 

While major cities such as the Liberal strongholds of Toronto and Vancouver have projects within this price range, for smaller and rural municipalities these types of projects are completely unaffordable. 

As Canadian Press recently reported, the Finance Minister has admitted that global investors will only invest in "large transformational projects" that produce enough revenue from which they can earn a high rate of return on their investment. 

The Liberal Government is borrowing money it does not have at reduced rates so that Canadian taxpayers can finance and subsidize high rates of return for private international investors.

What is more disappointing about this scheme is that taxpayers in rural, smaller and even mid-size municipalities will be taking on this debt.

They will help pay for the high interest paid to private investors and will not even be eligible or able to afford the projects in question because of the  pricey $100 million minimum price tag. 

Worse is that the roughly $32 billion the Liberals are borrowing as seed money to create the investment bank is money that could but will not be spent on building infrastructure in the very same municipalities that will not be able to participate in this expensive program. 

This infrastructure bank will be detrimental to not just our region but many regions across Canada.

As it is my practice to not just oppose but also propose, I have a different idea. 

Instead of paying lucrative returns to private, global investment firms the Liberal government could increase the rate of return on Canada Savings Bonds.

Then, Canadians could benefit and at the same time lower the $100 million project minimum so most Canadian municipalities can participate.  

I welcome your views on this or any subject before the House of Commons. I can be reached at [email protected]  or call toll free 1-800-665-8711.


Comments are pre-moderated to ensure they meet our guidelines. Approval times will vary. Keep it civil, and stay on topic. If you see an inappropriate comment, please use the ‘flag’ feature. Comments are the opinions of the comment writer, not of Castanet. Comments remain open for one day after a story is published and are closed on weekends. Visit Castanet’s Forums to start or join a discussion about this story.

More Dan in Ottawa articles

About the Author

Dan Albas, Conservative member of Parliament for the riding of Central Okanagan-Similkameen-Nicola, is the shadow minister of innovation, science, economic development and internal trade, and sits on the standing committee on finance.

Before entering public life, Dan was the owner of Kick City Martial Arts, responsible for training hundreds of men, women and youth to bring out their best.

In British Columbia, Dan has been consistently one of the lowest spending MPs on office and administration related costs despite operating two offices to better serve local constituents.

Dan is consistently recognized as one of Canada’s top 10 most active members of Parliament on Twitter (@danalbas) and continues to write a weekly column published in many local newspapers and on this website.

He can be reached at [email protected] or call toll free at 1-800-665-8711.

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

Previous Stories