Trudeau Bestows $26 Billion Infrastructure Bank on TorontoBy
Government begins hiring process, aiming to launch this year
Calgary mayor had hoped to bring headquarters to oil patch
Justin Trudeau is setting up his new infrastructure bank in Toronto, rebuffing a campaign from the heart of Canada’s oil patch to see it headquartered outside the country’s financial hub.
Infrastructure Minister Amarjeet Sohi announced the location Monday as he launched a search for a chairperson, board and chief executive officer of the bank, which will be financed with C$35 billion ($25.6 billion) in government funds. The “goal” is to have the bank in operation late this year.
The bank’s objective is to attract private capital to build new projects, particularly those with revenue streams that can generate a return for investors. Finance Minister Bill Morneau has said government will look for five or six dollars of private money for every one from government. The bank will “build more infrastructure for Canadians that will create growth and equip our communities for a more sustainable and productive future,” Sohi said in a statement.
The hiring process will consider “the desire to achieve gender parity and to reflect Canada’s linguistic, cultural, and regional diversity,” according to a statement from Sohi’s department.
Montreal, Calgary Snubbed
Calgary, the corporate heart of the oil patch, had lobbied the prime minister to award it the bank, with Mayor Naheed Nenshi arguing that doing so would help “shape the future of Canada’s powerful financial services industry.”
The Chamber of Commerce of Metropolitan Montreal also criticized the decision, saying it was “extremely disappointed” the city -- the corporate hub of the largely French-speaking province of Quebec, a key Canadian political region -- was snubbed.
The Toronto Financial Services Alliance welcomed the announcement, noting the city is home to the country’s major banks, several of its largest pension funds and insurance firms.
“Locating the headquarters in Toronto region also gives the new organization the best chance of tapping into the excellent talent base that supports our leadership in financing, infrastructure and P3 partnerships,” Janet Ecker, president and chief executive officer of the group, said in a written statement. The city “sets the infrastructure bank up for success.”
The government unveiled details of the bank last month in a proposed law enacting parts of its annual budget, including that it will be led by a chairperson and at least eight directors. It gave Trudeau’s cabinet broad power over the bank, including to appoint or dismiss the chair and directors, and to approve the board’s appointment of a chief executive officer, who government will also have the power to dismiss. The finance minister will also have powers over loan recommendations.
The bank, announced last year by Trudeau’s Liberal government, will operate as an arm’s-length Crown corporation that will work with provinces, cities and other agencies. Of its C$35 billion investment, C$15 billion will be in what Morneau termed concessional capital, direct funding to push projects to approval, while the remaining C$20 billion will be for loans or equity stakes. Federal money will be considered subordinate capital in any funding arrangement, which lowers the risk for private-sector investors.
The prime minister’s two political rivals have criticized the idea. The left-leaning New Democratic Party called it a “massive privatization bank” whereas some lawmakers in the Conservative Party -- which governed from 2006 to 2015 and relied in part on public-private partnerships for infrastructure -- have said the bank will effectively transfer taxpayer funds to billionaires. “Why are the Liberals designing a bank that gives 100 percent of the rewards to their friends and leaves 100 percent of the risk to taxpayers?” Conservative lawmaker Dianne Watts said in Parliament Monday.
— With assistance by Sandrine Rastello, and Doug Alexander