The Alberta government is strongly opposed to selling off Canada’s airports and is calling for a national debate about federal efforts to court billions in private funds for major infrastructure projects.
In an interview with The Globe and Mail, Alberta Infrastructure Minister Brian Mason said he questions whether public/private partnerships are in the best interests of taxpayers.
The NDP government has already put a freeze on approving such arrangements in infrastructure, placing the province at odds with other provinces such as British Columbia and Ontario that have embraced the concept.
Mr. Mason said he’s open to a discussion about the federal proposal for an infrastructure bank, but has strong concern that Ottawa is also looking at selling off federal assets such as airports.
“There’s no reason to sell them off,” he said, warning that privatization will lead to higher costs for consumers and will not provide an advantage for Canada’s airports. “But it will put billions and billions of dollars in the federal government’s pockets that they can spend on other things, so I think what we need is a very, very robust national debate on this direction … I think the people of Canada would also have great concern if their key economic infrastructure is privatized.”
The federal Liberal government announced this month that Ottawa will create a Canada Infrastructure Bank that would combine money with private investment from institutions such as private banks and pension funds to build infrastructure.
The federal government has also approved two studies of potential options regarding the full privatization of Canada’s federally owned airports and other ports, but has not committed to proceeding in this direction.
The federal Liberals are engaged in general discussions with global investors about asset sales, but are using abstract terms such as “asset recycling” and an investment “flywheel” to describe the possibility of selling off federally owned infrastructure in order to fund new projects. In these discussions, existing assets are described as “brownfield” projects and new infrastructure is labelled as a “greenfield” investment.
Prime Minister Justin Trudeau used some of that language Monday in Toronto after a day of meetings with institutional investors.
“I think there are a number of different elements that people have been discussing, and looking at how to draw investment – some greenfield, some brownfield – some understanding that existing infrastructure is sometimes more attractive to certain pools of capital. The fact is we’re very much in listening mode,” he said.
Mr. Trudeau said the investors he met with Monday represented a total of $21-trillion in potential investment. The long list of investors included Canadian-based pension funds, insurance companies and banks as well as foreign-based investors including the Abu Dhabi Investment Authority, the Hong Kong Monetary Authority and the Olayan Group, based in Saudi Arabia.
Mr. Trudeau also acknowledged that some aspects of public/private partnerships, such as the potential for tolls and user fees, may not be popular.
“There’s many different models that are being looked at, but obviously Canadians have very strong feelings about various models and we need to make sure that we’re responding to Canadians’ concerns,” he said.
In September, the federal government hired Credit Suisse AG to study several options related to the privatization of Canadian airports. Then, on Monday, the government announced it had hired investment bank Morgan Stanley Canada Ltd. to conduct a similar study of the potential privatization of 18 Canadian ports.
Federal Transport Minister Marc Garneau told The Globe and Mail Thursday that no decisions have been made related to selling government assets such as airports. He noted that an independent review of the Canada Transportation Act recommended earlier this year that the government should consider such a move and that is why Ottawa is studying the idea.
“We’re just looking at these things. No decisions have been made,” he said, after appearing before a House of Commons committee. “But in terms of airports, the No. 1 priority, as I’ve said, is the customer. The traveller. We will do things in the interests of the travelling public. That will be the overarching decision or driver that will decide anything that we do.”Report Typo/Error