rabble blogs are the personal pages of some of Canada's most insightful progressive activists and commentators. All opinions belong to the writer; however, writers are expected to adhere to our guidelines. We welcome new bloggers -- contact us for details.

Trump and Trudeau's 'stealth privatization' will be at the taxpayer's expense

Please chip in to support more articles like this. Support rabble.ca for as little as $5 per month!

Interstate 80 near Berkeley, California

As with most of Donald Trump's policy ideas, details are still sparse on his plan for rebuilding America's crumbling infrastructure. But two main pillars of the plan, outlined during the election campaign, stand out. First, he's talking a big game -- a proposed $1 trillion in infrastructure investment to be "spurred" over 10 years. Second -- and here's the rub -- the Trump plan would move to privatize infrastructure on an unprecedented scale, lining the pockets of investors with huge tax breaks in the process.

South of the border, warnings are growing that Trump's plan is a "trap," "stealth privatization" and a "privatization scam," as Nobel Prize-winning economist Paul Krugman puts it. Krugman explains:

"Crucially, it's not a plan to borrow $1 trillion and spend it on much-needed projects -- which would be the straightforward, obvious thing to do. It is, instead, supposed to involve having private investors do the work both of raising money and building the projects -- with the aid of a huge tax credit that gives them back 82 per cent of the equity they put in...You could try to come up with some justification for the complexity of the scheme, but one simple answer would be that it's not about investment, it's about ripping off taxpayers."

It's no coincidence that Trump's transition team and early appointments are stacked with privatization advocates and those with deep ties to firms that will profit from privatizing public assets -- whether it's private prisons, private schools, or private infrastructure. One of the main tools Trump says he'll use in his infrastructure plan is to "leverage public-private partnerships" (P3s).

But as I described recently in the Canadian context, these "partnerships" have proven enormously costly:

"P3s are simply less efficient -- on average costing dramatically more than the public sector alternative. And it's not hard to understand why...Traditional publicly-funded and operated projects...don't require paying out profits to private investors and, importantly, have lower financing costs, since government can secure much better interest rates than a private corporation.

"This has all been well understood since the 1990s and documented over the years in a wholerange of research on P3s."

In fact, the Ontario Auditor General recently reported that the province had lost a jaw-dropping $8 billion over a decade by building projects as P3s rather than as traditional public infrastructure projects.

Our own federal government is working from the same playbook as Donald Trump, planning a major privatization of Canadian infrastructure.

To top it off, privatization tends to increase inequality by driving down wages and ramping up user fees, while eroding the capacity of our public sector. That's why many cities across Canada and around the world have begun bringing services back in-house after failed experiments with P3s.

Now, ignoring this body of evidence, our own federal government is working from the same playbook as Donald Trump, planning a major privatization of Canadian infrastructure.

As part of the fall economic update, the Trudeau government announced the new Canada Infrastructure Bank (CIB). The CIB will be seeded with an initial public investment, but the plan is to "leverage" up to $5 of private investment for each $1 of public funding.

What does this mean in practice? Large institutional investors, hungry for returns, will get to invest in Canadian infrastructure projects as P3s, earning a steady stream of profits from government payments and/or user fees. Michael Sabia, head of the Caisse de dépôt pension fund -- one of those large institutional investors -- says he expects investment returns of seven to nine per cent per year from these projects.

Now, compare that with the government's interest rates of less than 2 per cent a year on 10-year bonds. As my colleague David Macdonald explains, "whether the feds sell bonds or use P3s for infrastructure, the money comes from the same place: large institutional investors like pension plans. The difference is in how much money private investors will take home at the end of the day."

That difference -- between 2 per cent and 7-9 per cent interest -- is a central reason the privatization route will cost Canadians billions of dollars more than simply using traditional, publicly-financed infrastructure.

As with Trump, it's also worth looking at the government's key advisors for some clues on who is shaping the infrastructure agenda.

So why would the government choose such a wasteful path? Academic analysis of P3s from the UBC Sauder School of Business offers an explanation:

"To an incumbent government, a key advantage of PPPs is the ability to avoid upfront costs...allowing politicians to take the credit for new infrastructure while passing future maintenance and operating costs off onto future politicians, taxpayers and/or users."

That's one important reason. But as with Trump, it's also worth looking at the government's key advisers for some clues on who is shaping the infrastructure agenda.

Recall Michael Sabia, whose firm is a major investor in privatized infrastructure. He sits on the Trudeau government's Advisory Council on Economic Growth. The Advisory Council's chair is Dominic Barton, Global Managing Director of McKinsey & Company, a firm which is also in the business of P3s. In turn, the Advisory Council authored the October 2016 report advising the government to create the Canada Infrastructure Bank, with a particular focus on wooing private investors.

Groups like the Canadian Council of Public-Private Partnerships are also getting face time with Minister of Infrastructure Amarjeet Sohi, who told reporters government will "listen to the private sector" as it fleshes out the design details of the Canada Infrastructure Bank.

This should all be deeply worrying to Canadians. The push for privatization illustrates how neoliberalism is alive and well -- in Trump's America and Trudeau's Canada. Yet the evidence is clear: selling out our public infrastructure is both unnecessary and incredibly costly. And it's taking us in precisely the wrong direction at a time when we need a renewed public sphere to meet huge collective challenges.

If Trump's infrastructure plan is a "privatization scam," what should we call ours?

This piece originally appeared on the B.C. CCPA's Policy Note blog.

Image: Wikimedia Commons

Thank you for reading this story…

More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.

rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.


We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.