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CDPQ, BlackRock execs argue for Canada infra bank

Michael Sabia and Mark Wiseman believe a national lender focused on infrastructure could help 'multiply the impact of every federal dollar'.

A national infrastructure development bank could boost Canada's near-term economic growth and free up federal resources for other social projects, according to top executives at two blue-chip asset managers.

CDPQ chief executive Michael Sabia and BlackRock senior managing director Mark Wiseman, both members of the Advisory Council on Economic Growth, argued in a commentary in the Globe and Mail that investing through a national infrastructure bank could “multiply the impact of every federal dollar”.

The Advisory Council on Economic Growth, a 14-member group of Canadian and international business leaders providing recommendations to Canada's federal government, proposed creating a national infrastructure bank to “unlock the full potential of this investment”.

The proposal calls for C$40 billion ($29.82 billion; €27.18 billion) of public money to leverage up to C$160 billion of private investment over 10 years.

“Why not let private capital foot most of the bill for major projects?” the financiers wrote.

Sabia and Wiseman's commentary was written in support of the advisory council's report earlier this month, Unleashing Productivity Through Infrastructure, that said access to institutional capital is key to financing Canada's backlog of infrastructure projects. The amount of institutional capital available for infrastructure investment is in the trillions, the report said, and Canada's infrastructure gap ranges from C$150 billion up to C$1 trillion.

Several municipalities in Canada, which generally administer infrastructure projects, pushed back on this plan, questioning where the C$40 billion in public funds would come from. One solution was to take funds from an already approved C$60 billion federal infrastructure spending plan to create the bank, but some municipalities said this won't work because funds have already been budgeted.

Sabia and Wiseman did not offer specifics for how to fund the advisory group's plan, but said the payoffs for an infrastructure-focused lender are clear. An infrastructure bank, they wrote, would stimulate near-term growth and free up federal resources for other municipal and social projects that cannot be financed with private capital.

“Canada needs to improve national productivity to unlock more growth in the medium term. And we need economic stimulus to deliver growth now. More infrastructure will help a lot, and better infrastructure will help the most. Getting there requires a break with the past and bold steps in new directions,” Sabia and Wiseman concluded.