Liberals prepare to pitch infrastructure bank to investors

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The Liberal cabinet is preparing a major sales pitch to institutional investors this month after announcing plans for a $35-billion bank aimed at attracting private capital for Canadian roads, bridges, transit and other large projects.

In an interview with The Globe and Mail, Finance Minister Bill Morneau said he and several other cabinet ministers are preparing presentations for a Nov. 14 gathering in Toronto of large institutional investors.

The host will be BlackRock Inc., the world's biggest asset manager. The company's senior managing director is Mark Wiseman, who was recently head of the Canada Pension Plan Investment Board and is a member of Mr. Morneau's advisory council on economic growth.

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"My expectation is that investors that we're talking about – some of the biggest investors in the world – are coming here with the idea that they want to make investments here," Mr. Morneau said on Thursday.

"They see the abundant opportunities to make investment in infrastructure and this is them getting more information directly from government leaders about how we can work together to get more activity here and a positive outcome for them," he said. "I expect that it will have a very good outcome in the short term, but also in the long term, where we get our economy growing more rapidly."

Mr. Morneau, Trade Minister Chrystia Freeland, Natural Resources Minister Jim Carr, Infrastructure Minister Amarjeet Sohi and Transport Minister Marc Garneau are among the cabinet ministers who will make presentations to the investors. Prime Minister Justin Trudeau is also expected to attend.

The event will come less than two weeks after Mr. Morneau's fiscal update, which confirmed on Tuesday that the Liberal government will move ahead with an infrastructure bank as early as next year. Advocates – including Mr. Morneau's growth council – say such a bank could group public and private funds together for large projects, allowing more construction to proceed more quickly.

Critics – including the NDP and the public-sector unions – say the Liberals are moving aggressively toward the privatization of public assets that will force Canadians to pay new tolls and user fees.

The Liberals are facing criticism in the House of Commons over the deterioration of Ottawa's bottom line. Conservative House Leader Candice Bergen dismissed Mr. Morneau's update during Question Period on Thursday as "more spending and massive deficits for years to come."

Mr. Morneau's March budget projected five years of deficits worth a combined $83.2-billion, before adding in an annual contingency of $6-billion a year, for a total of $113.2-billion. Tuesday's update eliminated the contingency and showed six years of deficits worth a combined $129.5-billion, a 56-per-cent increase in red ink in less than eight months.

The government is hoping its focus on infrastructure will boost investment and economic growth, which would improve the bottom line through higher tax revenue.

In an open letter to Mr. Morneau, former Bank of Canada governor David Dodge said the government needs to do a better job of persuading Canadians more private investment and user fees are a good thing.

"You need to have the political courage to explain to Canadians why it is in their interest that they should pay for the use of public use infrastructure, at least in part, through user charges," he wrote in his capacity as national council chair of the C.D. Howe Institute.

In an interview, Mr. Dodge said user fees ensure revenue to help cover the maintenance costs of the infrastructure. He said road tolls can also ease congestion by giving drivers the option of paying for a faster commute on either a new highway or dedicated lanes.

"When we're giving away roads for free, it's kind of hard to charge for transit," he said. "That's what our politicians – federal, provincial and local – need to come to, and it's a major effort."

Mr. Dodge's comments echo advice from Dominic Barton, the head of Mr. Morneau's Advisory Council on Economic Growth.

Robert Shouldice, a Vancouver-based lawyer who has represented municipal governments and private companies in negotiating public-private partnerships, said proponents of the infrastructure bank will need to address the aversion to tolls.

"It's just a mindset. It's a cultural thing in Canada that creates the challenge," he said. "I think it does make some sense that the people actually using the infrastructure pay for it in a disproportionate way. That makes sense conceptually, philosophically, as a matter of principle, so I do support that where it makes sense."