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Is Justin Trudeau Picking Your Pocket?

Critics warn infrastructure bank, privatization costly for taxpayers.

By Jeremy J. Nuttall 22 Mar 2017 | TheTyee.ca

Jeremy J. Nuttall is The Tyee’s Parliament Hill reporter in Ottawa. Find his previous stories here.

Last November at the Chateau Laurier in Ottawa, Vancouver Councillor Tim Stevenson stood up after Finance Minister Bill Morneau spoke to the Federation of Canadian Municipalities.

Are you going to sell the Vancouver airport, he asked? Months earlier it was learned Ottawa would be looking at selling Canadian airports to raise money to pay for infrastructure projects. The Vancouver airport authority was created in 1931 and has run as a not-for-profit agency since then. Last year it handled more than 22 million passengers.

But Stevenson didn’t get a straight answer.

“I had hope that they would just bring that to a close and say we don’t sell off our airports, but obviously they’re not doing that,” Stevenson told The Tyee.

Stevenson fears a wave of privatization and asset sales by the Trudeau government.

And its proposed infrastructure bank will drive the process, he warns, while citizens will pay the price.

“Whoever buys that airport will have one hell of a bill, one huge debt that will have to be reimbursed through putting up fees at the airport,” he said. “That’s a very big issue for us.”

Ports, bridges, roads and more could all be up for grabs with the Liberals’ infrastructure bank, warn critics.

There is little information on how the bank will actually work. Reports suggest the government will kick in $35 billion to start the bank, expecting much larger investments from the private sector. Communities will then borrow from the bank to pay for infrastructure projects.

While the Liberals have said interest rates will be competitive, critics disagree.

The Canadian Centre for Policy Alternatives released a report this week suggesting any plan to allow private investment in the infrastructure bank could double construction costs.*

The report notes the federal government can borrow at a 2.5-per-cent interest rate, while private lenders expect a return of eight to nine per cent.

The government’s plan for the bank could also force communities to pay big fees or high interest rates to borrow for needed infrastructure, say New Democrats.

Guy Caron, former NDP finance critic now running for the party leadership, said he worries the bank will prey on poorer communities with weaker credit ratings. Wealthy communities can get a three-per-cent interest rate from a regular bank and don’t have to pay more to an infrastructure bank, he said.

That leaves the bank to loan to communities with depressed economies.

“We’re talking about regressive user fees and tolls on the people in poorer communities,” Caron said. “Possibly for the lifespan of the infrastructure.”

Smokey Thomas, president of the Ontario Public Service Employees Union, says he has seen this approach before. Former Ontario Liberal premier Dalton McGuinty launched a similar push for public-private partnerships.

“The people that appear to get richest are contractors, the consultants, Bay Street lawyers,” Thomas said. “Taxpayers seem to get left holding the bag.”

He pointed to a 2014 Ontario auditor general’s report showing the province had spent an additional $8 billion for infrastructure projects procured via Infrastructure Ontario.

The federal government is going down the same failed path, says Thomas — and he isn’t surprised.

Trudeau’s principal secretary, Gerald Butts, held the same position for McGuinty when Ontario was promoting public-private partnerships. And Dwight Duncan, McGuinty’s finance and energy minister and a privatization enthusiast, supported Trudeau’s Liberal leadership bid in 2013, telling the Globe and Mail Butts personally asked him to.

Ontario’s privatization spree in the energy sector kicked off during Butts’s time has also been blamed for increasing electricity costs in the province.

Thomas and his union say the same privatization agenda is being played out again.

“I think the people of Canada should really, really question it,” Thomas said. “How about Canada savings bonds? How about just borrowing the money yourselves at a low interest rate?”

Stevenson too wonders where the privatization push will end.

“If you go down that American route, the sky’s the limit,” Stevenson said. “What’s next, medicare?”

*Story correction, March 23: A previous version of this story misattributed a report to the Broadbent Institute, instead of the Canadian Centre for Policy Alternatives.  [Tyee]

Read more: Federal Politics

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