The Trudeau government is putting private profits ahead of the interests of all Canadians with its proposed infrastructure bank. In this column, first published in iPolitics, CUPE National President Mark Hancock zeroes in on the problems with pension funds getting involved in our public infrastructure.

On Monday Nov. 14, Prime Minister Justin Trudeau, Finance Minister Bill Morneau and other cabinet ministers met with powerful private investors to map out a shift in public policy started by Stephen Harper.

At the closed-door gathering, organized by asset management giant BlackRock Capital Inc., Liberal cabinet members pitched a new infrastructure bank to a willing audience that includes managers of our country’s largest pension funds.

This bank would give unprecedented control of our public infrastructure to private, for-profit investors. Whether through all-out sales, or long-term public-private partnerships (P3s), private investors stand to make billions of dollars in publicly-subsidized profits from our energy grid, wastewater systems, transit, roads, bridges, airports and more.

Putting pension funds and other for-profit investors in the driver’s seat to assess and fund infrastructure projects is a dramatic U-turn in public policy.

Infrastructure decisions should be made by cities and other levels of government, guided by public priorities. But Morneau says the bank must meet the private sector’s needs. That means focusing on projects with high rates of return from private financing, as well as guaranteed revenue streams - user fees, tolls, and contracted payments from governments.

The government’s priority shouldn’t be to create investment opportunities for pension funds, but to plan and pay for the public services and facilities that keep our communities safe and healthy.

Our union opposes private, for-profit ownership and control of public infrastructure – even when one of our members’ pension funds may benefit. We want our pension funds to achieve decent investment returns, but not at the expense of the Canadian public.

While some pension plans have built up significant infrastructure holdings – mostly in other countries – others have distanced themselves from privatized infrastructure. The Healthcare of Ontario Pension Plan (HOOPP), with over $72 billion in assets, has become one of Canada’s top-performing funds without any infrastructure holdings.

The reason pension funds want a piece of Canada’s infrastructure is precisely why our government must not carve it up for them.

Caisse de dépôt et placement du Québec CEO Michael Sabia has said private lenders like his pension fund want returns of between seven and nine per cent. Meanwhile, the federal government can issue 30-year bonds at a rate of 1.8 per cent. Over 30 years, the difference in rates means five times the borrowing costs, doubling a project’s overall price tag.

In Montreal, it’s clear how pension fund ownership distorts infrastructure priorities. CUPE is part of a broad coalition opposing a proposed P3 light rail project owned, partly financed, and operated by the Caisse, which manages the Quebec Pension Plan’s funds and other smaller public plan funds.

Morneau has said the rail project is “perfectly suited” as the type of project the bank will support. But the litany of problems with the Réseau électrique métropolitain (REM) highlights what happens when infrastructure gets designed from the ground up to serve private – not public – interests.

Decisions about the route, technology and compatibility with existing transit lines are driven by what suits the profit interests of the Caisse and private developers.

Instead of protecting the environment, the transit project will run through ecologically-sensitive land on a route that increases urban sprawl and vehicle traffic, offsetting any reduction in greenhouse gas emissions. Even worse, it will block the much-needed expansion of some existing transit lines. There are serious concerns the REM won’t be financially viable without high fares, massive public subsidies, or both. This will weaken public transportation systems.

Finally, the project is drawing widespread criticism for its lack of transparency. Inadequate oversight is also a problem with Morneau’s arm’s-length bank. There’s no assurance the tens of billions of dollars of public funds controlled by the bank will be subject to the full scrutiny of Parliament and the Auditor General.

When Ontario’s Auditor General studied 74 P3s, she found they cost $6 billion more in financing alone, and she could find “no empirical evidence” to justify the projects proceeding as P3s. The proposed federal infrastructure bank will supersize this problem nation-wide, and must not go ahead as conceived.

Stephen Harper helped kick-start this privatization plan. Tax cuts for corporations and the wealthiest one per cent over the past 15 years have left a gaping hole in our federal coffers. This starved public infrastructure investment – the problem that Prime Minister Trudeau now intends to “solve” with P3s and asset sales.

There is a better way. Reversing Harper-era corporate tax cuts and introducing other fair tax measures could bring in $30 billion annually. That would go a long way toward renewing our public infrastructure in the interests of all Canadians. Now that’s a plan we can all bank on.

Mark Hancock is the National President of the Canadian Union of Public Employees, Canada’s largest union representing over 639,000 workers.