CUPE has released an expert report that’s a blueprint to fundamentally transform the Canada Infrastructure Bank. More than five years after its founding, the CIB hasn’t met its own goal of attracting profit-seeking private investors.
At the same time, the bank’s focus on privatization has failed to meet community needs or tackle the climate crisis. It’s time to create a public bank that works for us all.
The report comes as the CIB faces its first five-year review, required by law. CUPE commissioned renowned public banking expert Thomas Marois to assess the CIB’s track record and outline how to build a better bank. A public bank for the public interest draws on successful European public bank models to make four recommendations.
CUPE is calling on the federal government to rewrite the Canada Infrastructure Bank Act, which is the law governing the bank, guided by these four fundamental changes:
- Change the CIB’s mandate
The CIB is legally required to attract private investment in public-private partnerships and other privatization schemes. Privatization is risky, delays projects and drives up costs. Expensive private lending can double project costs over the life of an infrastructure project.
The CIB’s privatization mandate must change. It should be a public source of low-cost loans that help local governments and Indigenous communities deliver vital projects. A public bank lends money at lower interest rates than the private sector, keeping projects affordable, and does not force communities to privatize.
The Dutch BNG public bank is an example of an institution that makes public needs its top priority.
- Increase CIB transparency and expand board membership
The CIB law keeps vital information secret, with harsh penalties for sharing details about corporations or private investors involved in projects. The CIB law also bars people who work for any level of government from sitting on the CIB board, and doesn’t ensure representative board membership.
CIB project information should be open to scrutiny, and the bank’s board of directors must reflect the communities it serves and advance reconciliation with Indigenous peoples.
The KfW, the German public development bank, is one model of transparent, democratic and representative bank governance.
- Only support environmentally sustainable projects
The CIB isn’t required to focus on addressing climate change. The bank has focused on green projects more recently, but it’s not a guarantee for future projects. The bank should be legally required to only support environmentally sustainable projects.
A public bank that finances Canada’s transition away from fossil fuel extraction and consumption will boost the economy and create good, green jobs. The CIB can play a key role in responding to the global climate crisis by helping communities reduce emissions and adapt to climate change.
The Nordic Investment Bank is one example of a public bank that only lends to environmentally sustainable projects.
- Speed up projects by focusing on local financing
Numerous experts, the Parliamentary Budget Officer, and a Parliamentary committee have all concluded the CIB has failed to deliver. The bank’s privatization mandate creates delays, excludes many important projects, and adds unnecessary complexity.
The CIB must focus on lending directly to municipalities and Indigenous communities. This will speed up much-needed infrastructure projects.
The Finnish Municipality Finance credit institution is a public bank that only lends to cities and communities.
Time for fundamental change
After five years of confusion and delay, it’s clear the bank’s privatization mandate is not workable, and the CIB must fundamentally change. The public banking models featured in CUPE’s expert report provide examples of how the CIB could change to better serve Canadians. That change requires action on all four recommendations.
The Liberal government has an opportunity to fix the mistake it made in 2017 when it launched this ‘bank of privatization.’ If the Liberals do not restructure the bank, their only option is to follow the single recommendation of the Parliamentary committee that studied the CIB: abolish the bank.