Proposed infrastructure bank legislation strikes the right balance
Jim Leech, former CEO of the Ontario Teachers’ Pension Plan, has been appointed as special adviser to Canada’s national infrastructure bank. (Tim Fraser For The Globe and Mail)
Jim Leech is special adviser to the Prime Minister on the Canada Infrastructure Bank and former president and CEO of the Ontario Teachers’ Pension Plan.
The current debate over the establishment of the Canada Infrastructure Bank seems to be more about politics and ideology than about securing Canada’s economic future through renewed infrastructure. Infrastructure is the foundation of a strong economy. It is an axiom that sounds trite, but things such as efficient trade and transit routes, safe water and waste-water treatment facilities, and reliable energy transmission are what allow economies to prosper. Without them, economic growth is stunted by lost productivity and people cannot fully engage in either their economy or their society.
In Canada, we are lucky to live in a safe country where most of us take for granted certain basic infrastructure that those in many parts of the world cannot. And yet, we can do much better than the status quo. Our country’s infrastructure has suffered from underfunding for decades, leaving an infrastructure deficit that hinders our potential. The government recognizes this, having committed to invest more than $180-billion in green and social infrastructure, public transit, trade and transportation corridors and in rural and Northern communities. To augment these wholly taxpayer-funded investments, they have also proposed the creation of the Canada Infrastructure Bank (CIB).
The CIB would engage private capital to build more infrastructure across Canada. The benefit of doing so is twofold: First, tax dollars are made more productive by leveraging private investors to partner with the CIB on projects and thereby allowing more needed infrastructure to be built. Second, by using a minimum amount of taxpayer funding necessary to make a project viable alongside a private partner, more traditional grant funding is freed up to fund the kinds of non-revenue generating projects that the private sector is not interested in but are important to our country’s prosperity.
The CIB is being proposed as an arm’s-length Crown corporation with the necessary independence to structure market-based deals for projects while being accountable to Parliament for the public funds it will invest.
As someone who spent a large part of my career at an independent yet accountable institution, I have pushed hard to get this governance balance right. The fact is, at Teachers and other world-leading Canadian pension funds, the “shareholders” appoint and can remove the board if they wish. No one raises questions about independence or political interference when it comes to the management of these pension plans. Well, that is the same independent model proposed for the Canada Infrastructure Bank. On the other hand, we must remember that the bank would also be responsible for prudently investing $35-billion of taxpayer money for which it must be accountable to Parliament and the government. The proposed legislation has found that appropriate balance between independence and accountability.
The critical piece right now is to get the leadership in place to flesh out the detailed processes that will ensure the bank’s success. This means getting highly skilled, independent and respected individuals that are representative of Canada’s talent and diversity on the board and in management to build a world-class institution that will be able to negotiate good deals for the people of Canada.
The CIB has the potential to be an important piece of the plan to build the additional infrastructure that Canada needs to succeed. The governance of such an institution is critical to its success and having found the right balance between independence and accountability, the government will be well served by this institution should Parliament approve its creation.