We Need a Canadian Infrastructure Bank
With Prime Minister Justin Trudeau and Infrastructure Minister Amarjeet Sohi taking a close look at starting up a Canadian Infrastructure Bank (CIB) to support the federal government’s $125-billion program over the next 10 years, it’s important to understand how this new bank could function most effectively.
That's why I am pleased to share an important new report RCCAO recently released on how a CIB can better finance and deliver public infrastructure investments. The report is titled Creating an Effective Canadian Infrastructure Bank. It was written by Associate Professor Matti Siemiatycki of the University of Toronto.
- The purpose of an infrastructure bank is to provide low interest loans and credit enhancement services to provincial and municipal governments investing in priority infrastructure projects. The cost of financing large projects can be greatly reduced by taking advantage of the federal government’s top credit rating.
- The report shows, however, that because of the relatively small difference between the interest rates at which the federal and most provincial and municipal governments borrow money, the lending services of an infrastructure bank would provide significant benefits for only for the largest infrastructure projects – focusing primarily on lending services to projects with capital values of at least $10 million.
Many in our industry are interested in this topic because the federal government has some crucial decisions in the near future and is under a lot of pressure to make the correct choices. We think this report will assist Prime Minister Trudeau and Minister Sohi in implementing a well-designed infrastructure bank. Click here for a copy of the report.