Today, Prime Minister Justin Trudeau and nine members of his cabinet met with domestic and global institutional investors, including pension funds, in Toronto to persuade them to invest in the country’s infrastructure.
The meeting is the latest move by the government to attract private sector capital as part of its long-term economic strategy.
Read: Trudeau hopes to attract billions in private capital for infrastructure projects
Two weeks ago, Finance Minister Bill Morneau announced the government’s plans to invest significantly in infrastructure. As part of that goal, Morneau said the government plans to launch an infrastructure bank next year, which it pledged to pump $35 billion into over the coming decade.
Shortly after the finance minister’s announcement, the Ontario Teachers’ Pension Plan advised the government to implement a governance structure in order to ensure success in attracting private capital. Critics, meanwhile, have questioned whether Canada has the right infrastructure projects available to attract investment by big pension funds and whether there may be downsides to the active involvement of outside capital.
As The Canadian Press reported yesterday, New Democrats have vowed to fight “every step of the way'” what they called Trudeau’s scheme to privatize public infrastructure. It reported NDP finance critic Guy Caron as saying private investors would wind up controlling about 80 per cent of roads, bridges, hospitals and other infrastructure built through Trudeau’s proposed infrastructure bank, designed to leverage $4-5 in private money for every $1 invested by the federal government.
And those companies will want a return on their investment of as much as seven to nine per cent, which Caron said require Canadians to pay tolls and user fees and will wind up costing taxpayers more than twice as much.
So what you think of the federal government’s new infrastructure bank as a way to leverage investments by institutional investors such as pension funds? Will such a strategy work? Have your say in the week’s Benefits Canada online poll.
Have your say: Will federal efforts to interest pension funds in infrastructure work?
As for last week’s poll, it looked at the recent report from the City of Toronto’s auditor general that raised significant concerns about the high number of claims for drugs to treat erectile dysfunction. The poll asked whether plan sponsors should consider a cap (such as $500 per claimant) to address such issues. It found 77 per cent of respondents felt the claims patterns found by the auditor general were a significant concern, while 23 per cent said there may be legitimate reasons for them.
