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Trudeau Should Forget Infrastructure P3s and Support a People’s Bank

Liberals’ infrastructure plan set to pad corporate profits; Canada Post bank offers a better way.

Dru Oja Jay 17 Nov

Dru Oja Jay is executive director of Friends of Public Services.

The Trudeau Liberals’ promise to spend $120 billion on infrastructure was a centrepiece of their election campaign last fall.

But the party hasn’t been quite as eager to highlight the privatization plan at the heart of its infrastructure program.

Since at least 2014, Justin Trudeau and the Liberals have been signalling that public-private partnerships (P3s) will be a big part of their infrastructure strategy.

Last month, Finance Minister Bill Morneau announced the creation of the Canada Infrastructure Development Bank. But Morneau didn’t acknowledge that the bank is really part of an infrastructure privatization plan.

Earlier this year, a Financial Post story headlined “Capital markets expect P3 financing windfall from Ottawa’s stimulus spending” reported that “it’s assumed that a large portion of infrastructure that money will go towards public-private partnerships.”

And last week, Trudeau and Morneau met with banks and fund managers to pitch investment in infrastructure based on a P3 model.

There is a better way. A publicly owned bank, operated by Canada Post, could fund infrastructure, improve service for Canadians, give communities control over infrastructure and provide an alternative to the big banks.

P3s have a long track record of massive cost overruns and contracts that make profits for corporate investors but cost taxpayers.

B.C.’s Sea to Sky highway, built through a public-private partnership, cost $220 million more than it would have under a traditional public model, according to a Canadian Centre for Policy Alternatives (CCPA) analysis. A P3 hospital in Brampton, Ont., ended up costing $200 million more than initial estimates. These kinds of cost overruns have become the norm, and taxpayers and users pick up the tab.

Many municipalities around the world have found that privatizing services like water treatment causes many problems and solves few, and have begun “remunicipalizing” services like water and sanitation.

There is little public support for public-private partnerships, and the Liberals mostly avoid using words like privatization.

Morneau and company have also floated trial balloons about privatizing airports and have hired Credit Suisse to advise them.

And it’s easy to miss if you’re not looking for it, but Morneau’s Advisory Council on Economic Growth has recommended “ancillary funding models” like user fees to ensure that infrastructure pays off for investors. McKinsey & Co., the folks who helped Saudi Arabia privatize its oil company, are advising the council pro bono and the plan is starting to look similar to Donald Trump’s privatization agenda.

Only a few have called this what it is: a long-term plan to funnel billions from the public purse into giant investment firms. Privatization plans have proven deeply unpopular once they are widely understood, as the Ontario Liberals discovered after announcing plans to sell off Hydro One.

Resistance to the Trudeau government’s agenda is heating up, and the NDP has criticized the selloff.

What’s the alternative? Toronto Star columnist Thomas Walkom notes that big institutional investors are looking for safe places to park their money, and would probably be willing to do so for low interest rates to fund infrastructure.

So is the solution is simply do things the old way?

Traditional financing and procurement would be much better than being fleeced by P3 financing and user fees, but we can do better still. When it comes to alternatives to privatization, postal workers are pointing the way forward.

For the Canadian Union of Postal Workers and the Canadian Postmasters and Assistants Association, who have been fighting off attempts to privatize Canada Post for decades, the alternative to a cash grab is based on their Delivering Community Power campaign.

The effort, in partnership with Friends of Public Services and with the backing of more than 60 unions, community groups and environmental organizations, aims to establish a publicly owned bank run out of post offices, something that exists in many other countries.

Postal banking, long sought by CUPW activists, is a solution to many problems, including the always-rising fees (and resulting record profits) of private banks and the lack of banking services in rural areas.

The publicly owned bank would also provide an alternative to payday lenders that exploit low-income people’s lack of access to credit or affordable banking services.

A publicly owned postal bank could take many forms. Delivering Community Power proposes that in addition to providing banking services for communities currently lacking access, thousands of Canada Post outlets also be used to deliver investment and support for green infrastructure in rural areas while creating a coast-to-coast network of charging stations for green vehicles and upgrading Canada Post’s infrastructure.

Democratic structures (or even partnerships with credit unions, could give communities a say in how their deposits are invested.

The goal: upgrade Canada Post into a comprehensive logistical infrastructure for the zero-carbon era, create jobs and redistribute wealth more equally.

What makes a publicly owned bank much more useful than a commercial bank is that it can act in the public interest, rather than focusing solely on generating massive profits.

In this sense, postal banks could be similar to credit unions, but they would reach hundreds of small rural communities that don’t have access to banking at all. A CCPA report on postal banking found that only 54 of 615 First Nations and Metis settlements had access to a bank or credit union branch.

Supported by Canada Post’s vast marketing power, the postal bank would also be a powerful way to finance and fund thousands of small, highly effective green energy and conservation projects, from home retrofits and charging stations to solar panels.

It’s a visionary proposal that does the opposite of the Liberals’ privatization plans. Instead of funnelling money to private banks and investment funds, it would put it to work for individuals and communities.

There’s a small hiccup in the plan. The Liberals appointed a task force on Canada Post, which immediately sided with the Conservative appointees running the Crown corporation, rejecting postal banking, calling for deep cuts to services and continued privatization of post offices.

It may take Liberals a little while to realize how unpopular P3s are. It’s up to us to help them get that message, and focus their attention on solutions that deliver community power, not corporate profits.  [Tyee]

Read more: Politics

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