Must-read book on stopping wholesale privatization of Canadian public infrastructure

Please chip in to support more articles like this. Support in its summer fundraiser today for as little as $5 per month!

The Contradictions of Pension Fund Capitalism shows that the tens of trillions of dollars held by pension funds around the world are increasingly being funnelled into investments in public infrastructure. The result is short-term lower costs to governments and higher returns to pension funds -- along with privatization of vital assets including water and electricity systems, highways, ports and public transportation. Kevin Skerrett is one of the book's editors, and a senior research officer with the Canadian Union of Public Employees (CUPE) in Ottawa. In this interview, Skerrett explains how pension fund capitalism is part of the general trend towards privatization that is robbing Canadians -- along with hundreds of millions of other people around the world -- of safe and affordable infrastructure, and what can be done to stop this.

In the chapter you authored, you show how public-sector organizations, such as the Canadian Pension Plan Investment Board (CPPIB) and the Caisse de dépôt et placement du Québec, are among the world leaders in investing in public infrastructure, both here in Canada and abroad. So it seems they're operating exactly like fund managers on Bay Street or Wall Street?

Absolutely. And it's really troubling, because this is something a lot of public-sector workers and public-sector trade unions like CUPE are actively working to challenge and to expose as not being in the public interest. In many ways, it's a rip-off by private operators that's increasing the cost to taxpayers and public infrastructure users, and putting at risk the quality and the character and even the design of that infrastructure.

We're seeing that being taken to a new level by the Caisse de dépot, which in 2015 was given a contract by the government of Quebec to be the manager of all future transit projects in that province for the next 10 years. The Caisse is already set to manage and operate the REM (Réseau express métropolitain, a 67-kilometre rail line linking downtown Montreal with the suburbs), which last month also became the Canada Infrastructure Bank's first investment.

The Caisse is thought of by many people as a public body, but in fact it's a private corporation. Yet it doesn't pay taxes, giving it a major competitive advantage over other companies in Canada and elsewhere.

This raises the question of who is infrastructure for: is it to maximize somebody's profits or is it to actually meet social needs? Increasingly, it's the former.

You also note that a root of the problem is today's unprecedented low interest rates and stagnant economic growth, which mean that government bonds, which used to be the backbone of pension funds, have been wiped out as a viable investment.

Yes. One of the major consequences of the way central banks have been operating over the last 20 years is that the bond market offers historically low levels of return, 1.5% to 2%, to pension fund investors. And this has been devastating for public pensions that historically were earning 4%, 5%, 6% or more from the bond market. That's a big part of why public pension funds are moving more and more heavily into areas like real estate, private equity and infrastructure: that’s where they've been getting rates of return of 8%, 10%, 12% or more.

But at the same time, many of these investments are seriously damaging the long-term financial well-being of governments and taxpayers and the public sector simply to generate the returns that they've been structured to need and deliver. So this has to be rethought and redesigned.

How do you respond to the many people -- including members of all three levels of government who are pushing public-private partnerships -- who say we must do this: that there may be some negatives associated with these investments, but pension funds desperately need the high rate of return that's available with these kinds of investments, because they're still recovering from the 2008-2009 meltdown, and also we desperately need to fix our degrading infrastructure?

As I highlight in the book, both the Old Age Security system, and our Canada Pension Plan up until 1998, were basically "pay as you go" plans -- that is, current contributors funding the pensions of current retirees. There wasn’t a large fund set aside and generating an investment rate of return that was depended on to deliver money to retirees. Just like our healthcare system still is: we don't have a big fund from which we pay healthcare expenditures. And the American social security system and CPP up until 1998 were proven success stories for "pay as you go." But public-policy decisions over the last two decades have shifted them toward being far more deeply integrated with the financial markets.

My co-author Sam Gindin and I demonstrate in the last chapter of the book that there's nothing to stop us from recognizing that this isn't working. That our financial system in general is becoming too dominant and too predatory, and pension funds are playing a big part in that. We outline how we can develop a stronger and more universal public pension system that's not reliant on financial markets.

Can you give an example of some of the other stark contradictions these investments involve?

We have the strangest contradiction of the Ontario Teachers Pension Plan becoming the owner -- through this operator called Busy Bees -- of the largest chain of private, for-profit, childcare centres in both the U.K. and, as of last year, Canada. And this is all while teachers in Ontario are -- together with CUPE and other childcare advocates -- campaigning for public, unionized, not-for-profit childcare.

So this is one of the contradictions that we really have to grapple with and come to terms with.

In the book you list several features of infrastructure projects that the financial sector uses to define good investments. These include public use, monopolistic power, and being essential and cash-generating. Ironically, those same characteristics were viewed for 100 years by governments and the business sector as precisely why it was important that they be public.

Yes. And I think this is the crux of the matter, why today so many people in government and the financial sector are touting the Canada Infrastructure Bank -- which is going to be a portal for hundreds of billions of dollars of private investment in Canadian public infrastructure -- and Trump's trillion-dollar infrastructure program. People who shape economic thinking and economic policy are viewing massive privatization of the public sector and capturing value out of that as the way to turn around the downward trajectory of economic growth capitalism.

But of course, what that means is capturing value out of taxpayers, out of workers that won't be able to afford to pay the costs -- in the form of fees and tolls that also will very likely rapidly increase -- when infrastructure across the continent is moved into private hands.

But aren't governments, as well as many in the financial sector and the mainstream media, telling us that public-private partnerships provide efficiencies and other positive gains?

That's right, that's the argument they make. And yet any time a serious independent analyst turns her or his attention to the record of the costs and the quality of delivery of privatized infrastructure, any time a serious analysis looks back historically, they show that it's been a disaster, it's been a fiasco. One reason it will always add a substantial cost to an infrastructure project is that governments can borrow money at much lower interest rates than private bodies can. This is what Bonnie Lysyk, the Auditor General of Ontario, calculated in her 2014 analysis: that had the 74 projects she analysed been done on a public basis they would have been billions cheaper.

But this is not just a technical policy question. There are very powerful interests that want that money. And if they can convince governments to support it, they will

Can things turn around?

Yes. We're seeing that possibility in the U.K., which is much farther down the privatization path than we are. One of the key reasons Jeremy Corbyn has generated such support for his leadership and for the Labour Party is because he's being honest and recognizing that rail privatization is a fiasco, that water privatization is a disaster, because there's been a severe degradation of quality and service coupled with a sharply increasing cost.

So there's a growing appetite to redirect public policy in the U.K., but it's a ferocious battle. I hope that we don't have to go through that process in Canada and we can reorient more easily.

We've already seen that public-infrastructure space shrink in Canada. The proposal is to shrink it further. We need to regenerate the public-spirited, public-interest concept of public infrastructure. We need to ask ourselves: is this is part of what do we want democratic control over in our lives?

I'm arguing we need to re-expand and redevelop the scope for democratic control over our economic lives and over our public services.

Rosemary Frei enjoys poking into the underbelly of political and economic decision-making.

Help make rabble sustainable. Please consider supporting our work with a monthly donation. Support today for as little as $1 per month!

Further Reading

Thank you for reading this story…

More people are reading 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. 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! 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 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.