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Liberal infrastructure plans to be paid for via privatization

mark_alfred
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mark_alfred
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http://www.theglobeandmail.com/news/politics/mps-grill-morneaus-growth-a...

If they follow through on this plan, then it's another broken promise.

Quote:

Parliamentarians got their first chance to debate ambitious plans for a national infrastructure bank as a hearing revealed general support from the Conservatives, strong concern from the NDP and signs of division within the Liberal caucus.

Speaking via video link from Seoul, Mr. Barton [the head of Finance Minister Bill Morneau’s Advisory Council on Economic Growth] argued that Canada faces a $500-billion infrastructure gap and that public money alone is not enough to address the problem.

He said private investors such as pension funds have so much money parked in low- or even negative-interest savings that they would be willing to accept relatively small returns in exchange for long-term equity in reliable Canadian infrastructure like airports, seaports, rail lines and energy grids.

Mr. Morneau has expressed support for the concept of an infrastructure bank and the government recently hired Credit Suisse to conduct a detailed study of options for fully privatizing Canada’s airports, but it is not clear exactly how Ottawa will respond to the growth council’s advice.

“I’m trying to see how this privatization, or this move, will actually be to the benefit of the country. Especially since most of the risk will be assumed by the federal government,” he [NDP member Guy Caron] said. “We never had this debate in this country. I don’t recall the word privatization being said during the electoral campaign and now this is the direction we’re going towards.”

ETA:  the title of the thread is a bit more definitive than it should be. This is still in the discussion stage; so there hasn't been a concrete decision.  Yet there are very strong indications that this is the direction the government plans to go in, which is simply more ceeding control of government and ultimately social policy to the private sector, IMO.


mark_alfred
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Of note too is that MP Robert-Falcon Ouellette, a Liberal member of the comittee (Standing Committee on Finance),  also spoke against this.  From the article:

Quote:
“I’m glad to hear some of my colleagues are for the sale of public infrastructure like roads and hospitals,” Winnipeg Centre MP Robert-Falcon Ouellette said sarcastically. “I fail to understand why private investors like BlackRock would invest in infrastructure projects unless they could make a profit, and even an infrastructure bank seems like a means of ensuring … that that investment money will be making a profit on the backs of Canadians. It almost seems like a massive transfer of public funds toward the private funds in order for them to make money – a subsidy towards business.”

Ouellette is the same MP who was pretty well coerced by the Liberal whip into stalling and later voting against Guy Caron's motion to look into setting up a trial study case for basic income (an idea Ouellette supports).  I'm guessing he's frustrated with his party.


Badriya
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mark_alfred wrote:

http://www.theglobeandmail.com/news/politics/mps-grill-morneaus-growth-a...

If they follow through on this plan, then it's another broken promise.

Quote:

Parliamentarians got their first chance to debate ambitious plans for a national infrastructure bank as a hearing revealed general support from the Conservatives, strong concern from the NDP and signs of division within the Liberal caucus.

Speaking via video link from Seoul, Mr. Barton [the head of Finance Minister Bill Morneau’s Advisory Council on Economic Growth] argued that Canada faces a $500-billion infrastructure gap and that public money alone is not enough to address the problem.

He said private investors such as pension funds have so much money parked in low- or even negative-interest savings that they would be willing to accept relatively small returns in exchange for long-term equity in reliable Canadian infrastructure like airports, seaports, rail lines and energy grids.

Mr. Morneau has expressed support for the concept of an infrastructure bank and the government recently hired Credit Suisse to conduct a detailed study of options for fully privatizing Canada’s airports, but it is not clear exactly how Ottawa will respond to the growth council’s advice.

“I’m trying to see how this privatization, or this move, will actually be to the benefit of the country. Especially since most of the risk will be assumed by the federal government,” he [NDP member Guy Caron] said. “We never had this debate in this country. I don’t recall the word privatization being said during the electoral campaign and now this is the direction we’re going towards.”

ETA:  the title of the thread is a bit more definitive than it should be. This is still in the discussion stage; so there hasn't been a concrete decision.  Yet there are very strong indications that this is the direction the government plans to go in, which is simply more ceeding control of government and ultimately social policy to the private sector, IMO.

I'm not quite sure why you consider the Trudeau government's use of PPPs to be a broken promise.  It was announced during the election campaign, though sadly the NDP did not pick up on it and criticize it.  Am I missing something?

From the G & M, on May 12, 2015

Attracting more pension investment in Canadian infrastructure would require selling Canadians on a much larger role for public-private partnerships than is currently the case. It would also mean going further in a direction that is already preferred by the Conservatives. It is the Harper government that created a Crown corporation – PPP Canada Inc. – in 2009 focused on public-private partnerships for infrastructure. The 2015 federal budget promised a new public transit fund that would run through PPP Canada and would receive $1-billion in annual funding starting in 2019-20

http://www.theglobeandmail.com/news/politics/liberals-to-encourage-pensi...


mark_alfred
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Joined: Jan 3 2004

Interesting.  Unless I'm mistaken, their platform doesn't mention it though.  It does mention the proposed Canada Infrastructure Bank and the use of deficit financing, but it never mentions using privatization as a means to fund this.

Liberal Platform wrote:
We will run modest short-term deficits of less than $10 billion in each of the next two fiscal years to fund historic investments in infrastructure and our middle class.

After the next two fiscal years, the deficit will decline and our investment plan will return Canada to a balanced budget in 2019.

There is no mention of pension funds, divestments, or private funding of infrastructure within their platform.


welder
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Joined: Dec 1 2009

Why is this Canada Infrastructure Bank even being proposed,other than to line the pockets of the corporate and financial classes who will profit the most from it?? 

I forgot...The corporate Lib's are all in in the public to private wealth transference game...

 

Why not use the BoC,like we did until 1974,to finance these things?...

 

Over to you,Rocco..


mark_alfred
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http://www.theglobeandmail.com/news/politics/liberals-prepare-to-pitch-i...

Real Change = privatization, user fees, and tolls.


welder
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Public to private wealth transference...The neoliberal politician's favourite game...


mark_alfred
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mark_alfred
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http://news.nationalpost.com/full-comment/stephen-gordon-the-liberals-lo...

Quote:

As an electoral strategy, the Liberals’ campaign promise to increase infrastructure spending and use deficit financing to pay for it was bold and clever.

[..]

But now that the Liberals are in power, that deficit-and-infrastructure mandate is looking more and more like a lobster trap.

Quebecers of a certain age will recognize that reference: it’s the analogy that then-Quebec premier Jacques Parizeau used in relation to his strategy of turning a Yes vote in a referendum into a unilateral declaration of independence. Once Quebecers had voted to negotiate with the rest of Canada for some form of autonomy, so the reasoning went, there would be no going back, even though many of them didn’t know they were voting for a unilateral declaration of independence.

The Liberals’ lobster trap mandate works much the same way. Canadians voted for deficit-financed infrastructure spending, and that’s what matters. The fact that they also voted for a small and short-lived deficit, and that nothing at all had been mentioned about tolls and user fees is no longer important. Once you enter the lobster trap, there’s no backing out.

[..]

When NDP MP Guy Caron asked where user fees were mentioned in the Liberal platform, he was told, in effect, that increased infrastructure spending was a good thing and that Canadians had voted for more of it. But the question of user fees deserves a better answer than that — especially if you’re also promising “inclusive growth,” as there may well be people who end up paying more in tolls than they receive in benefits. These distributional issues are real and cannot be dismissed so easily.

[..]

The decision to expand the use of tolled infrastructure and abandon balanced budgets in favour of a stable debt-to-GDP ratio is not entirely indefensible. But the Liberals chose not to defend those positions in the last campaign.

[..]

This is not a promising trend: the Liberals have casually blown past every fiscal limit they set themselves. It may be that the decision to hold a constant debt-to-GDP ratio is a line that they will not cross, and that we won’t end up in the sort of deficit-and-debt cycle that started 40 years ago under similar circumstances. But I’m not as hopeful as I used to be that the state of public finances will eventually stabilize. Stopping before things get worse is not how lobster traps work.


Mr. Magoo
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Someone should convince this Gordon fellow to join babble.  It would be nice to hear economic analysis from someone with a PhD in it.  But would he be welcomed?


quizzical
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mark_alfred
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http://www.cbc.ca/news/politics/trudeau-public-private-infrastructure-1....

Quote:

Prime Minister Justin Trudeau and a cadre of cabinet ministers are meeting with major Canadian and international investors Monday as part of an effort to convince them to invest their billions in the country's infrastructure.

The prime minister was asked repeatedly by reporters about the election of Donald Trump as president, but declined to answer. Trump has also pitched pairing public money with private funds to fund $1 trillion in infrastructure investment.

These investments are made in return for tolls and fees from users, something that would likely be replicated here in Canada if pension firms take the lead on building new projects.

So, selling out to private investors is something both Trudeau and Trump have in common.  Get ready for user fees and tolls in the future.


quizzical
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T & T they're dynamite.....


mark_alfred
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Good ol' TNT. 

The NDP's Finance Critic Guy Caron had a press conference on this scheme.  He feels the Liberal plans are ripe for conflict of interest.

Caron on user fees wrote:

Caron told reporters these private investors who control pools of capital worth as much as $21 trillion are not joining an infrastructure bank out of the goodness of their hearts.

The Caisse de dépôt et placement du Québec said it wants seven to nine per cent return on investments, Caron said. “How do you get that type of return on waste water plants or roads or other types of infrastructure? ...

“There is not a thousand ways to do it. It is through tolls and it is through user fees.”

Even if the infrastructure itself isn’t sold off, the NDP critic said, the user fees generated from the public will go to private companies and line investors’ pockets.

Caron on conflict of interest wrote:

Caron also used his press conference Monday to accuse the Grits of placing themselves in a perceived conflict of interest. Finance Minister Bill Morneau’s advisory council on economic growth includes, as chair, Dominic Barton, of McKinsey & Company, “whose bread and butter in the last five years was to promote the leverage of private capital with public funds for infrastructure.” Michael Sabia of the Caisse de dépôt et placement du Québec and Mark Wiseman, the senior managing director of BlackRock — the world’s largest asset investment firm with more than $5 trillion under management — are also on the council.

“All three stand to gain from this scheme. Their groups will make hundreds of millions, maybe even billions out of the return of this scheme and they personally, obviously, stand to gain a lot as well, in terms of bonuses,” Caron said.

“The Trudeau Liberals were supposed to be for the middle class, they were supposed to be for the little guy. They are now showing their true colours — those of the party of wealthy private investors.”

So, big business is determining Liberal government policy for its own profit.  Real change?  I think not.


mark_alfred
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Joined: Jan 3 2004

Here's some further information on BlackRock, the private investment firm the Liberals plan to sell us out to.

http://rabble.ca/columnists/2016/11/trudeau-liberals-offer-shangri-la-to...


mark_alfred
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Stephen Gordon
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Mr. Magoo wrote:

Someone should convince this Gordon fellow to join babble.  It would be nice to hear economic analysis from someone with a PhD in it.  But would he be welcomed?

 

Yeah, funny story about that


Timebandit
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Stephen Gordon sighting!!! Hi, Stephen, long time no see!

Stephen Gordon
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It has been a long time - I was a bit shocked to see that it's been more than 13 years since I first signed up. I still have a soft spot for babble, because it's where I first learned about online engagement.


Stephen Gordon
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Double-post. Can't figure out this new-fangled editor.


Timebandit
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:)

mark_alfred
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http://canadafactcheck.ca/justin-trudeaus-big-infrastructure-mistake/

Quote:

Put bluntly, the government’s case for involving private capital in the bank’s projects is bad policy because private investors in these schemes demand a much higher rate of return than the government borrowing rate.

Why is the government choosing to do this?


Martin N.
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Why? Because they have already debt financed programs that *should* be financed from income, ie: current obligations from income vs long term assets from long term debt with the interest as a current obligation. This PPP scheme is akin to using a home equity line of credit to finance toys and vacations and then paying the line of credit interest with a credit card.

Martin N.
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Think of it as the taxpayer walking up the down escalator with the national debt as the baggage carried and interest rates controlling the escalator's speed. Little Potato himself is watching from a safe distance because he has no idea how this will turn out.

josh
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You mean Joe Taxpayer has the power to levy taxes?  And to borrow large sums at prime rates?


milo204
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hmmmm, i wonder what that lawyer who was arguing canada should be financing it's programs throught the bank of canada, rather than high interest loans from private banks would think of all this?


Martin N.
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No, I mean that Joe is the one who gets hurt when he can't keep up. It's called 'other people's money'. When government has spent it all they devise deferral accounts to access more, hoping that the payments will stick to the next guy, not them.

Martin N.
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milo204 wrote:

hmmmm, i wonder what that lawyer who was arguing canada should be financing it's programs throught the bank of canada, rather than high interest loans from private banks would think of all this?

Most likely how to leverage fees out of it.

josh
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Martin N. wrote:
No, I mean that Joe is the one who gets hurt when he can't keep up. It's called 'other people's money'. When government has spent it all they devise deferral accounts to access more, hoping that the payments will stick to the next guy, not them.

 

Yes they just spend for the heck of it.  With no concommitant benefit to the society and public at large.  Either through jobs, and the resulting tax revenue, or the end product, whose benefits often have ripple effect that can last many years.


Martin N.
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If you think excessive debt spending trickles down through the economy because it is public, not private spending, I have a bridge to sell you. Consider it a PPP. I have no issue with "benefits to society", my problem is with excessive debt spending that results in redirecting funding for "benefits to society" into debt maintenance.

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