Remember this phrase: asset recycling.
It's a favourite buzzword circulating in the halls of power in Ottawa and many provincial capitals.
And the concept could reshape what governments do, and what they don't do, in the future.
Asset recycling is essentially privatization with a hip new name. Because it's 2016.
The idea is to sell off older "legacy" government assets – wholly or partly – and redirect the cash earned into badly needed new infrastructure, such as bridges and urban transit. Think trading in an old port for a shiny new subway.
At the federal level, ports and airports are the most obvious government assets to sell.
But the possibilities are limitless, and could include Crown corporations, such as Via Rail, buildings and computer systems. Even services, such as delivering passports, training or government data, could be wholly or partly privatized.
The government isn't talking specifics yet. The federal Liberal's March budget briefly mentioned asset recycling as one way it could "increase the long-term affordability and sustainability of infrastructure in Canada."
Expect the next budget to push the idea forward, judging by the range of groups talking about the subject in prebudget wish lists. Ottawa, for example, could create a new infrastructure bank, or agency, to fund projects.
There is a certain poetic symmetry to asset recycling. It even sounds green. The country has enormous infrastructure needs, but many governments across Canada are squeezed by high debt and deficits.
The Liberals have so far promised to spend $120-billion on infrastructure over the next decade. But Dominic Barton, who chairs Finance Minister Bill Morneau's 14-member Advisory Council on Economic Growth, said recently that Canada needs about $500-billion worth of new infrastructure to stay competitive.
There is another crucial factor driving asset recycling: the quest by pension funds for higher returns in a low-interest-rate world. Canada's largest pension funds – including the Canada Pension Plan Investment Board, Caisse de dépôt et placement du Québec and Ontario Teachers' Pension Plan – have all become huge infrastructure investors. They complain, however, that opportunities are scarce in Canada, forcing them offshore.
A 2014 report by the Mowat Centre at the University of Toronto succinctly captured the potential benefits: "Done properly, the cycling of public assets … can reduce public debt, attract new investment, provide competitive returns for pension funds and other investors, and allow new needs to be met from legacy assets."
A growing circle of influential proponents is now working for the Liberal government. Matthew Mendelsohn, a former top Ontario government official and Mowat Centre founder, is the government's first deputy secretary responsible for "results and delivery" at the Privy Council Office, the hub of the federal bureaucracy. Mr. Morneau has also created a special unit at the Finance Department, which is working quietly with other departments, identifying what assets could be sold and consulting with potential investors.
Mr. Morneau is also getting advice from other outspoken advocates of asset recycling, including Mr. Barton, the global managing partner of McKinsey & Co., as well as Caisse de dépôt chief executive officer Michael Sabia and Mark Wiseman, the former head of CPBIB who recently moved to private equity giant BlackRock Inc.
Ottawa is clearly inspired by Ontario, and the recent part sale of Hydro One.
A federal review of the Transportation Act, released in February, highlighted what the United States, Britain and Australia are doing in the area of asset recycling, suggesting that Ottawa do the same for ports and airports. "Privatizing would not result in the loss of transportation assets, but rather become a source of new funding required for strategic investments in the system," the report concluded.
In some cases, the private sector can bring fresh expertise and management know-how to government.
But asset recycling is not a panacea. Just because pension funds want a piece of certain government assets doesn't mean it's the right thing to do.
Critics warn that asset sales may lead to unnecessarily high tolls and fees, and lower the wages and benefits of government workers shifted to the public sector. Doubts have also been raised about whether there is adequate expertise within the government to negotiate the best deals for taxpayers.
The overriding objective should be to protect the national interest, not to create attractive investment vehicles.