A Capital Project: Building Canada’s New Infrastructure Bank

Some long-awaited details of the Canada Infrastructure Bank (CIB) were unveiled on April 11, 2017, when Finance Minister Bill Morneau tabled Bill C-44, the Budget Implementation Act, 2017, No. 1. The omnibus budget bill contains numerous measures relating to the 2017 federal budget and includes legislation to establish the CIB.

While still in the early stages of the legislative process, Bill C-44 provides a first look at how the CIB will likely be structured and governed and what powers it can be expected to exercise.

MANDATE

As we discussed in our March 2017 Blakes Bulletin: Infrastructure Spending, Blueprints Pending: 2017 Federal Budget, the CIB was initially announced during the government’s Fall Economic Statement 2016 and mentioned again (albeit briefly) in the 2017 federal budget (Budget 2017) with a funded allocation of C$35-billion. Bill C-44 confirms that the CIB will have access to that C$35-billion and that it will operate under a mandate to “invest, and seek to attract investment from private sector investors and institutional investors, in infrastructure projects in Canada or partly in Canada that will generate revenue and that will be in the public interest”. The inclusion of the “partly in Canada” language seems intended to grant the CIB the ability to invest in both domestic and cross-border infrastructure projects.

POWERS

Bill C-44 outlines in broad strokes the powers of the CIB, which are targeted at a number of key areas in the infrastructure industry. As envisioned in Bill C-44, the CIB will have the ability to:

  • Structure proposals and negotiate agreements, with the proponents of infrastructure projects and with investors in infrastructure projects, with regard to the Government of Canada’s support of those projects
  • Invest in infrastructure projects, including by means of innovative financial tools, and seek to attract investment from private sector investors and institutional investors in infrastructure projects
  • Receive unsolicited proposals for infrastructure projects that come from private sector investors or from institutional investors
  • Support infrastructure projects by, among other things, fostering evidence-based decision making
  • Act as a centre of expertise on infrastructure projects in which private sector investors or institutional investors are making significant investment
  • Provide advice to all levels of government with regards to infrastructure projects
  • Collect and disseminate data, in collaboration with the federal, provincial and municipal governments, in order to monitor and assess the state of infrastructure in Canada and to better inform investment decisions in regards to infrastructure projects
  • Perform any other function conducive to the carrying out of its purpose that the governor-in-council may, by order, specify

While the CIB will clearly have fairly broad powers with which to pursue its mandate, of note Bill C-44 also provides that cabinet retains a high degree of control over CIB’s operations. In particular, the CIB will not be allowed to provide any loan guarantees with respect to an infrastructure project without the approval of the Minister of Finance.

GOVERNANCE

Bill C-44 stipulates that the CIB will be established as a corporation and governed by a board of directors, chairperson and CEO. Importantly, cabinet (via the governor-in-council) is to be solely responsible for selecting and appointing the directors, chairperson and CEO. The base eligibility criteria for appointment set out in Bill C-44 include, among other things, that appointees cannot be employed in the federal public administration or by a provincial, municipal or local authority, nor can they be members of the Senate or House of Commons or a member of the legislature of a province. We note that, however, the board, chairperson and CEO will serve at the pleasure of cabinet, as cabinet (via the governor-in-council) is granted complete authority to remove any such individual after “consulting” with the board. Further, pursuant to Bill C-44 it is the governor-in-council — rather than the board — who is responsible for other key matters, such as setting the remuneration of the CEO and approving corporate plans. Accordingly, while some degree of separation is envisioned between CIB executives and the legislative branch of government, the institution itself will not retain a significant degree of independence from government.

FUNDING

As noted above, Budget 2017 promised that the CIB would be responsible for investing C$35-billion in capital over 11 years and Bill C-44 does confirm that the Minister of Finance may pay to the CIB up to C$35-billion out of the Consolidated Revenue Fund. The implementing legislation contemplates that the Treasury Board must approve the CIB’s annual operating and capital budgets, but does not make clear whether the CIB will have access to the full C$35-billion immediately or whether the C$35-billion will be made available on an as-needed basis over the 11-year timespan originally mentioned in Budget 2017.

CONCLUSION

The broad powers granted to the CIB provide a solid foundation from which the CIB can pursue potentially innovative funding solutions for Canadian infrastructure projects. However, while we do note that Bill C-44 is only at the first reading stage, the current version of the CIB-enabling legislation grants cabinet a significant degree of control over the governance and operations of the CIB. It remains to be seen what impact, if any, such a degree of control over the CIB will have on the CIB’s flexibility to pursue innovative public-private partnerships and funding solutions for Canadian infrastructure deals.

Before Bill C-44 receives Royal Assent and becomes law, the bill must progress through study by a parliamentary committee, two more readings and debates in the House of Commons and additional reading and debates in the Senate. We will continue to monitor CIB-related developments as Bill C-44 progresses through the legislative process.

For further information, please contact:

Catherine Doyle                         416-863-4160
Mark Johnson ​                          416-863-3318
Vivian Kung​   ​                           416-863-4253
Judy Wilson  ​                            416-863-5820​
Marianne Smith​                         416-863-3156
Christine Ferguson                    416-863-3094
Alain Massicotte                        514-982-4007
Jeffrey Merrick      ​                    604-631-3386
Carrie Fleming​​                           ​604-631-3367

or any other member of our national Infrastructure group.

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