The federal government’s new infrastructure bank would deliver a much-needed boost to Canada’s aging infrastructure, according to a new TD Economics report.
The federal government announced its plan to create an infrastructure bank by attracting billions of dollars in private capital in its Fall 2016 Economic Update, and is expected to offer up more details when it tables its 2017 federal budget on Wednesday. BNN first reported earlier this month that Toronto is a front-runner for the Bank’s headquarters.
The TD report, released Monday, said successful infrastructure banks that exist internationally would serve as a good guidance for Canada’s bank while it’s in the design phase.
“The biggest thing here is the bank could really be a net additive,” Brian DePratto, a senior economist with TD Economics and co-author of the report, told BNN in an interview. “There’s lots of [funding] agencies doing this sort of thing, but no one is really doing it the way that the Canadian infrastructure bank is proposing to do it.”
DePratto noted there are risks associated for the private sector because of the uncertainty around returns and overall success of the projects tied to the bank – projects the government has been fairly quiet about disclosing so far.
“The devil’s always in the details,” DePratto said. “But what we are seeing, what we are hearing is that [the private sector is] really looking for the government to take that little bit of risk out.”
When it comes to projects the bank could fund, DePratto said they will have to be the ones that are most economically viable, such as roads, rail, and other transportation projects.
“It’s going to have to be the projects that make the most sense economically to attract that private capital,” he said, providing the Toronto-Montreal corridor as an example as a project would help improve transportation infrastructure.The report also stressed that a focus on new and larger projects, staffing the organization with experts, establishing a clear framework, and ensuring accountability would be crucial for the bank to truly add value to the Canadian economy.