A Crisis Of Confidence – Part II (August 2011)
This is Part 2 of a four-part series that outlines the crisis of confidence in national governance and the urgent need for Canada to develop clear long-term national goals for which our federal government is directly accountable. Part 1 outlined why such a project is needed in Canada. Part 2 focuses on a first case study: the building and maintenance of our national infrastructure.
In Part 1, I wrote about the need for long-term and transparent commitments in areas of public policy where Canada has stagnated, and where the national government has fallen into a pattern of reaction rather than action. I highlighted how our national leadership has failed to offer a coherent narrative that transcends regional interests and divisions, losing the confidence of Canadians in turn. Here, I will address one of these areas in greater detail: our crumbling infrastructure.
Recently, two major transportation arteries in Montreal have been disrupted because of partial structural collapses involving the Champlain Bridge and the Viger-est tunnel. These events are only the tip of the iceberg in terms of crumbling bridges, tunnels, roads, and sewers, and inadequate municipal transit and water-purification systems across Canada. Because of our neglect and lack of foresight, the massive physical infrastructure deficit is now conservatively estimated (by the Federation of Canadian Municipalities) at $100 billion. The investment funds needed to upgrade to 21st-century standards and ensure our competitiveness are now well beyond what the private sector can supply, and what current taxpayers could reasonably contribute to public action by way of increased taxes.
To avoid locking our children in a financial straitjacket and making them suffer through debilitating and preventable catastrophes, we must consider new institutional arrangements for long-term financing of infrastructure. For example, we could establish a Canadian Infrastructure Financing Authority to build advanced energy, transportation, and information platforms, similar to the bipartisan proposal currently before the U.S. Senate.
The authority would be owned and operated by citizens, not shareholders. Debt would not be sold to investors, and funds would not be allocated through federal grants and formulas. Instead, with a significant one-time infusion of funds from the national government, the authority would operate much like the World Bank and international regionally-based development banks; it would extend targeted loans and limited loan guarantees to viable projects that will be financially sustainable over time after receiving initial start-up money. Examples include toll roads, energy plants that collect user fees, a port that imposes fees on goods entering or leaving the country, etc. The aim would be to get private capital now.
An authority structured in this way would be able to mobilize large amounts of private capital in pensions, private equity, sovereign funds, and other funds to move into much-needed infrastructure projects so essential to sustainable long-term economic growth. To ensure clear accountability to Canadians for the commitment to build and maintain our national infrastructure to the highest, most-advanced, standards, the authority would regularly report to Parliament. It would be led by a non-partisan board of directors with impeccable ethical standards and relevant credentials, and a CEO appointed by the government but subject to confirmation by a reformed senate. Members of the authority’s administration could appear, on a periodic basis, before a powerful committee of the House of Commons or Senate that would be dedicated to the national government’s infrastructure responsibilities, and that would have real powers to influence government policy and expenditures.
Building and maintaining world-class infrastructure will require bold action from our national leaders. The establishment of an Infrastructure Financing Authority would serve as a valuable first step towards making the federal government accountable to this pressing national priority.
In the next article in this series, I will suggest a fresh approach to pursuing the national interest in another critical policy arena where we have been failing badly: the development of a national environmental and energy strategy.