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Lana Payne: Look a little closer at what the promise tracker tracks

Political promises kept? It’s all in the details and the spin.

 

Lana Payne
Lana Payne

 

Halfway into its mandate, the federal Liberal government has created a promise tracker so Canadians can see how they are doing with respect to keeping commitments outlined in the prime minister’s mandate letters to cabinet ministers.

The tracker does not report on the promises made in their 2015 “Real Change” platform, although the mandate letters are rooted in those promises.

This is where the details come into play. What exactly was promised and what was delivered?

Of the 364 commitments made in the mandate letters, the government says it has completed and fully met 66, completed and modified one commitment, has 231 underway or underway with challenges, has abandoned three, and remains committed to 21. The 42 commitments made in mandate letters in 2017 have yet to be assigned a status.

The tracker is being viewed with some skepticism by the pundits. It is not without its problems, and details matter, but it is a handy tool and we should give the government points for transparency.

The devil, though, is in the details.

For example, the 2015 Liberal platform made a commitment to develop a Canada Infrastructure Bank in order “to provide low-cost financing for new infrastructure projects.”

The platform noted that “the federal government can use its strong credit rating and lending authority to make it easier and more affordable for municipalities to build the projects their communities need. Where a lack of capital represents a barrier to projects, the Bank will provide loan guarantees and small capital contributions to provinces and municipalities.”

Two years later, the Canada Infrastructure Bank has been created. Check that commitment.

Or should we? Perhaps more accurately, it should be a checkmark with an asterisk.

This is where the details come into play. What exactly was promised and what was delivered?

Is the infrastructure bank, which has been given $35 billion in funding, still dedicated to its No. 1 “real change” commitment “to provide low-cost financing for new infrastructure projects?”

According to the government’s summary of the bank’s mandate, the low-cost infrastructure financing commitment is no longer a priority. It is not even mentioned. The priority now is finding private investors.

The bank appears to be little more than a vehicle to promote public-private partnerships (P3s) and privatization, raising serious concerns about who will own the roads, transit and water systems.

Once private sector investors get involved with private finance, it is guaranteed that borrowing costs will be higher, making infrastructure more expensive to build.

As pointed out in a 2017 Alternative Budget technical paper by the Canadian Centre for Policy Alternatives (CCPA) “this will mean fewer infrastructure projects, less public funding for other public services and/or higher costs for the public through higher user fees. Involving private finance also opens the door to a new wave of privatization through full or partial asset sales.”

According to the federal government’s own projections, it can borrow at a rate of 2.5 per cent over 30 years. Private investors cannot. Therefore, in addition to a return on their investment, those investors will have to pay considerably more in interest charges on infrastructure projects. According to calculations run by the CCPA in its report, this could end up doubling or tripling the cost of an infrastructure project.

The CCPA analysis notes that the change in direction with respect to the infrastructure bank seems to be “driven by the federal government’s desire to keep borrowing costs off its books, at least in the short term, combined with intense pressure from the private capital investment and finance industry, which wants to gain higher rates of return from investing in public infrastructure or privatized public assets.”

The investment and finance industry is well connected politically and well represented on Finance Minister Bill Morneau’s Advisory Council on Economic Growth, which presumably had a lot to say about the infrastructure bank.

This month, the government announced the new board for the infrastructure bank. There is not one single provincial or municipal government representative, but again the banking and private finance industry is well represented — the very sectors that stand to gain from privatizing public infrastructure.

The CCPA says almost twice as much infrastructure could be built if financed at the lower rates available through direct public borrowing instead of using higher-cost private finance.

So, if building a lot of badly needed infrastructure was the goal, why do it this way, thus paying more for less infrastructure?

While the mandate tracker is a good idea, it needs a closer look to ensure what was promised is actually what is getting delivered — or whether it is a modified version that doesn’t produce what it should and could.

Details matter.

 

Lana Payne is the Atlantic director for Unifor. She can be reached by email at lanapaynenl@gmail.com. Twitter: @lanampayne Her column returns in two weeks.

 

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