Newspaper article The Canadian Press

C.D. Howe Paper Urges Liberals to Abandon Promised 'Infrastructure Bank'

Newspaper article The Canadian Press

C.D. Howe Paper Urges Liberals to Abandon Promised 'Infrastructure Bank'

Article excerpt

Dump infrastructure bank, Liberals urged

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OTTAWA - The authors of a new research paper are urging the federal Liberals to break two infrastructure-related election promises, arguing both proposals could saddle taxpayers with unexpected costs as the years drag on.

The first is a promised federal "infrastructure bank," serving as middleman between lenders and cities so local and provincial governments could benefit from the lower interest rates the federal government commands on loans.

The money would then help finance new infrastructure projects that local governments can't afford on their own.

The second promise would eliminate the requirement of cities to look for a private-sector partner to share the financial risks and windfalls of any project.

A paper being released Wednesday by the right-leaning C.D. Howe Institute argues the Liberals should scrap both ideas.

Combined, the two ideas would shift the financial risk solely onto taxpayers, who would be on the hook if a project goes over budget, the paper warns. The cost to the economy could negate any of the economic benefits the Liberals hope to gain from billions in infrastructure investments, it adds.

Benjamin Dachis, the paper's author, said the government shouldn't give up on trying to "crowd-in" private sector funding for projects, either through a public-private partnership or through a private sector loan.

The public purse simply can't finance every single infrastructure project needed in Canada, Dachis said, arguing that the government should only fully fund a project if it is socially worthwhile, but of zero interest to the private sector.

"There's a lot of focus right now on 'stimulus,' but what the government should really be focused on is the right projects for the overall economy in the long-term," says Dachis, a senior policy analyst with C.D. Howe.

Those projects, he said, may not necessarily be the shovel-ready ones the government wants to target to get infrastructure funds out the door quickly. …

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