Courting a trillion dollars in new investment in Canada is a laudable and impressive goal — but if the investments involve selling off our existing public infrastructure, that would be a bridge too far.
Part of me thinks Mark Carney knows what he is doing and we can trust him. He has proven to be supremely competent, deftly handling the country through an international crisis created by the decay of the American empire next door. He has been easy to underestimate throughout, always surprising with new accomplishments beyond anything we would have expected. But part of me looks at the edges of the plans and thinks woah, thar be dragons.
Not all ideas are necessarily good, and we have already seen the development of a lot of soft-right policies. One of the first things this Prime Minister did was to roll back tax increases on capital gains, the act of which only benefited the wealthiest of Canada’s wealthy, in the name of promoting investment and benefitting so-called job creators. The affordability crisis the rest of us are experiencing through endless sticker-shock is caused by greed among that very class of people, and the appetite to give them more gifts is not — or at least should not be — terribly strong.
Last week’s Canada Investment Summit, as advertised, would suggest that Canada’s economy is headed for an unprecedented boom as wealthy investors from around the world inject vast sums into a wide range of businesses and industries in the country. It could open the door to significant job creation, better economic autonomy, and a more prosperous country.
It could also just make a few people fantastically wealthy while leaving the rest of us holding the bag, as we see in Alberta with over one third of its oil wells abandoned. Thousands of those derelict wells are considered to be orphaned, with no environmental mitigation done by those who built and exploited them, with their owners bankrupted or otherwise out of the picture. They will ultimately be left up to the public to clean up. This is one of the many risks of non-renewable resource extraction, and it exemplifies capitalism in its purest form.
It will be important that such investment comes with real accountability and measurable lifetime net benefits to Canada. The half-trillion-plus dollars expected through this process must be genuine investments, and not simple fire-sales of our collective assets that will not actually benefit our country in the long term. One might take a moment to remember enthusiastic summit participant Stephen Harper’s sale of the Canada Wheat Board to Saudi Arabian interests.
Selling off existing infrastructure does nothing to promote the long term viability of the country. Selling off mineral rights to foreign owners to take outside the country, process, and sell back to us, as is already often the case does not offer a significant net benefit over the long term, either, if we pay more for the finished product than we made selling the raw materials. If anything, Canada should be looking to domestically vertically integrate our natural-resource-based industries to the extent possible, and preserve the value we are extracting for our own benefit, selling off the resulting final products on the international market.
Quebec talks often of ‘la troisième transformation du bois,’ — the ‘third transformation of wood’. The first transformation is the conversion of wood to lumber. The second is the conversion from lumber to panels and parts. The third is the construction of finished products. It is a term we need to adopt more widely in English, as well, along with the concept that it represents.
If we are to extract key critical minerals required to make high end computer components, we should also be making more of the computer components. These vast sums of expected investment can achieve that, as long as it is a stated part of our goals, and we follow through.
From that perspective, what is the objective of selling off operations at Canada’s largest airports? What are we hoping to save? According to the Prime Minister’s press release:
To further unleash capital, the Prime Minister announced that Canada will seek private investment through long-term concessions to operate Canada’s four largest airports. Working with airport authorities and other stakeholders, including airlines and local governments, the federal government will retain ownership of the underlying land and assets, while also bringing in new private capital. The tens of billions of dollars of capital raised would then be reinvested into building the infrastructure that Canada needs for the next generation: regional airports, new local transportation infrastructure, and new nation-building infrastructure, including a sovereign broadband backbone that connects Canadians from coast to coast to coast.
It does sound wonderful. Billions of dollars will fall from the sky — or at least land on Pearson’s runway 33R — and we will be able to invest in new infrastructure using that money. But what we are selling is infrastructure already built with public funds, with revenues reinvested in that infrastructure. Private investors will be looking to increase the extractive value of their investments, and that necessarily means increasing revenue while decreasing costs. The tens of billions of dollars promised are not donations, there is a return expected.
Canada’s aviation sector is already lacking competition and our domestic flights are vastly over-priced. Making airports profitable as an objective does not have an obvious path out of that. But perhaps there is a play here that I am missing.
Public private partnerships are almost never good for the country. Like most forms of corporate welfare, they nationalise risk and privatise profit. When we ask private investors to help pay for, say, a new highway bridge in exchange for the toll revenue, the public component becomes a de facto subsidy of that private investment. Nationalise risk, privatise profit, the capitalist way.
The release talks of the need to make a sovereign broadband backbone. Absolutely — all of our backbone infrastructure should be in public hands, away from the greedy grasp of Canada’s large telecom providers. But our track record as a country would suggest that we would partner with those very companies to build such a system, using public funds to build it and leaving it in private hands to exploit.
Selling off assets that we have already built puts us in the bizarro worlds of Ontario’s Highway 407, owned by a mixture of Canadian pension funds and Spanish company Cintra after being sold by the Mike Harris government for a fraction of its real value, or Chicago’s parking meter fiasco. There, the city sold off its entire parking meter infrastructure for a single one-time payment, along with generous revenue guarantees for the purchaser. Short term gain for long term pain is the inevitable result of selling off public infrastructure for a quick buck.
If we are to have massive amounts of investment accompanied by new tax incentives, deductions, or write-offs, there also needs to be some degree of enforceability. When a company receives a billion dollars in tax incentives to create or preserve some number of thousands of jobs, then walks away from those jobs, we need an effective enforcement mechanism.
There needs to be a paper contract, not just a line item, and there also needs to be a social contract. When a company like Stellantis takes over $200 million in federal money for their plants, then closes them anyway, we have to ask ourselves what we are getting for our investment.
It is possible that the benefits outweigh the risks, and Carney’s track record is of consistently exceeding all expectations. There is little doubt that private investment in new industries and development will be economically beneficial to Canada and offer real job opportunities, and further sever our economic dependence on the collapsing United States. We just have to be careful not to confuse selling our assets with selling access to our vast country and what it has to offer.
Selling your house to pay off your mortgage may be very satisfying, but you will still need a place to sleep tonight. The same applies to the country as a whole.
Thatcher destroyed England in her privatization mania.
I have worried about Canada doing this for decades.