This presentation looks at infrastructure spending across Canada

1. Infrastructure and
Business Investment
Canada
PAUL YOUNG CPA, CGA
JUNE 7, 2019

2. Paul Young - Bio
• CPA, CGA
• Financial Solutions
• SME – Business Process Changes
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Financial Solutions
• SME – Supply Chain Management
• Academia – Advance Accounting, Public
Finance and Advanced Management
Systems
Contact information:
Paul_Young_CGA@Hotmail.com

3. Agenda
 Building Permits – June 2018
 Money Flow / Fiscal Management – May 2018
 Canada Infrastructure Bank
 GDP and Construction
 Issues with the Liberal Infrastructure Plans
 Transit
 Trudeau and the Provinces
 FDI – Canada
 GDP / Capital Investment
 Business Investment
 Capital inflow and outflow
 VIA Rail and High Speed Rail

4. Building Permits – March 2019
 “The value of permits in the residential sector declined 1.5% in
March with non-residential permits gaining 7.9%, Statscan said.
The non-residential increase was due to higher institutional and
commercial construction intentions, while the value of industrial
permits declined. ”Source -
https://ca.reuters.com/article/businessNews/idCAKCN1SG1C1-
OCABS
 “Total spending in the Liberal infrastructure program reached
$25.6 billion over the last three years, according to a new report
which suggests signs of progress on a signature government
ambition that has been hampered by an inability to get money
out the door.”Source -
https://nationalpost.com/news/canada/liberal-infrastructure-
program-shows-signs-of-progress-but-frustrations-linger-over-
delays
Source - https://www150.statcan.gc.ca/n1/daily-
quotidien/190510/dq190510b-eng.htm

5. Fiscal Monitor / February 2019
Source – Fiscal Monitor - https://www.fin.gc.ca/fiscmon-revfin/2019/2019-01-eng.asp
• CCA raised concerns that money
was not flowing - http://www.cca-
acc.com/press-release/ccas-2018-
budget-reaction/
• Transit Funding -
https://www.cbc.ca/news/canada/ot
tawa/mayor-watson-says-nothing-
on-cancelled-gas-tax-1.5095560
• Ontario scrapping the plan hikes to
gas tax -
https://dailyhive.com/toronto/ford-
scraps-gas-tax-increase-2019

6. Canada Infrastructure Bank
Source - https://ontarioconstructionreport.com/a-new-sustainable-model/
The federal government is looking at partnerships through the Investing In Canada Lens. In the 2016 Fall Economic Statement and Budget
2017, the government gave its long-term vision for its infrastructure plan and committed to invest an additional $81 billion through to 2027-
2028 in public transit; green infrastructure; social infrastructure; trade and transportation infrastructure; and rural and northern communities;
and introduced the Smart Cities Challenge.
Of that money, $33 billion in funding will be delivered through Integrated Bilateral Agreements between the federal government, and each of
the provinces and territories. And of that $33 billion, $9.2 billion will go towards green infrastructure projects.
• Infrastructure bank and China (infrastructure) - https://globalnews.ca/video/5217703/liberals-defend-250m-investment-in-asian-
infrastructure-bank
• “As for sustainable infrastructure, there was already a Canadian Infrastructure Bank but why stop there? More bureaucratic institutions
needed to be set up. Private capital needed to be “crowded in.” Meanwhile “Cleantech” was a “massive cross cutting opportunity.”
Just forget Germany’s disastrous Energiewende, or Ontario’s Green Energy Act, or a thousand other climate policy snafus. What was
needed were more green banks, more green bonds and more green procurement.” -
https://business.financialpost.com/opinion/peter-foster-mark-carney-and-michael-bloombergs-
sustainable-scheme-to-dismantle-canadas-economy

7. Building Permits / GDP - Construction
Source – Stats Canada - https://www150.statcan.gc.ca/n1/daily-quotidien/190510/dq190510b-eng.htm
• The national value of permits for non-residential buildings rose 7.9% in March, due to higher construction
intentions for both institutional (+$175 million) and commercial (+$166 million) buildings. Gains in both of
these components stemmed from Quebec. A high value permit for an addition to the Centre hospitalier de
l'Université de Montréal drove the increase in the institutional component. (This is same hospital tied to
Lavalin - https://www.bnnbloomberg.ca/quebec-settles-suit-over-montreal-hospital-linked-to-snc-bribery-
allegations-1.961916
• In the industrial component, the value of permits declined 15.6% in March (-$102 million). The decrease was
largely the result of lower construction intentions in Quebec, where multiple high-value permits were issued in
February.

8. List of Infrastructure Bank loans
 Montreal Transit - https://www.theglobeandmail.com/business/article-
canada-infrastructure-bank-loaning-128-billion-to-montreal-electric/
 Project Review - https://www.on-sitemag.com/infrastructure/canada-
infrastructure-bank-actively-engaged-in-reviewing-10-projects-for-
investment/1003961052/
The institution, which was designed to finance Canadian infrastructure that may otherwise not be built, has
been allotted $35 billion in federal funds over the next decade to help bridge the gap between public and
private infrastructure.
Pierre Lavallée, the CIB’s president and CEO, disclosed the engagement process for the 10 potential projects
in a keynote address at the annual conference of the Canadian Council for Public-Private Partnerships in
Toronto Nov. 6.
“We’ve jumped into our investment mandate with both feet,” he said, adding that the bank has also held
discussions on 45 other projects, some of which may also move onto the active engagement phase in the
future.
Pierre Lavallee – Site Mag – November 6, 2018

9. Annual Report / Infrastructure Bank
Source - https://cib-bic.ca/wp-content/uploads/2018/10/CIB_2017-18_AR_English.pdf

10. 2015 Election Platform / Infrastructure
Source - https://www.theglobeandmail.com/news/politics/the-decisions-behind-the-scenes-of-the-liberals-infrastructure-
plan/article26375251/ or https://thetyee.ca/Opinion/2017/02/14/Broken-Liberal-Promises/ or
https://torontosun.com/opinion/columnists/gunter-numbers-are-in-and-trudeaus-infrastructure-plan-is-largely-useless

11. Infrastructure /
Liberals - Failures
Source -
https://nationalpost.com/news/poli
tics/years-into-the-liberals-
ambitious-infrastructure-program-
have-the-promised-economic-
benefits-borne-out

12.  Stats Canada
Large Urban Transit – Ridership (Express in
millions) • Transit Ridership was growing each
year since 2015
• All groups of people are benefiting
from the transit cut
*** Transit is heavily subsidized by Government

13. Trudeau and the Provinces
Source - https://nationalpost.com/pmn/news-pmn/canada-news-pmn/provinces-not-co-
operating-to-get-infrastructure-projects-underway-trudeau

14. Foreign Direct Investment / FDI

15. GDP by Gross Expenditure / Business Investment

16. Business Investment
Source – Fraser Institute - https://www.fraserinstitute.org/studies/capital-investment-in-canada-recent-behaviour-and-implications

17. Capital Inflow and Outflow
SOURCE – STATS CANADA

18. FDI – 2017
Source - https://www150.statcan.gc.ca/n1/daily-quotidien/180425/dq180425a-eng.pdf
The growth in the value of foreign direct investment in Canada in 2017 was concentrated in the wholesale trade industry, up 8.6% to
$74.7 billion, followed by an 8.0% increase in the finance and insurance industry to $137.0 billion. The stock of investment in oil and gas
extraction dropped 7.4% to $ 162.2 billion, as direct investors from abroad sold some of their assets back to Canadian investors.
Manufacturing declined 0.3%, mainly on a 15.8% reduction in the petroleum and coal products manufacturing industry. Despite
the decrease, manufacturing remained the top industry for foreign direct investment in Canada, with a 21.4% share at the end
of 2017.
Although it remains the largest industry for foreign direct investment in Canada, foreign investment in the manufacturing industry has not
kept pace with overall investment trends over the past decade, with that industry's share down significantly from the 32.7% share it held
in 2008. During the same period, the shares of management of companies and enterprises, finance and insurance and mining and oil and
gas extraction have all increased. In the case of the management of companies and enterprises industry, some of these companies may
also have activities that are tied to other industries such as manufacturing and mining and oil and gas extraction.

19. VIA Rail and High Speed Rail
 https://toronto.citynews.ca/2019/06/07/documents-show-federal-push-for-infrastructure-bank-to-back-via-project/
 The rail company wants to build a multibillion-dollar new network of dedicated passenger-rail lines in Ontario and Quebec, so its trains
would no longer have to yield to freight trains on borrowed tracks
Facts:
 VIA rail already gets a sizable grant from the government - https://media.viarail.ca/en/publications (2017 In 2017 the total grants
(operational and capital funding) were approximately $354M
 High speed rail has to be viable - https://www.cbc.ca/news/canada/london/high-speed-rail-1.4915058 - There are other options to fund rail
 High speed works in Asia to how the population is distributed – http://www.globaltimes.cn/content/1149608.shtml
 High speed rail has been a failure in EU - https://www.ft.com/content/e77dc48e-7894-11e8-8e67-1e1a0846c475 or
https://www.euractiv.com/section/railways/news/eus-high-speed-rail-plan-is-ineffective-unrealistic-say-auditors/
 There are financing issues - https://asia.nikkei.com/Business/Business-trends/Catalyst-or-catastrophe-Lessons-from-Asia-s-high-speed-rail-
failures
Summary
 The liberals never seem to do proper business cases as such throw money at winning votes and not whether a project is either profitable or
viable without direct government subsidies.

20. What’s next
 Liberals need to get the money out the door. There has been delays -
http://cutaactu.ca/en/news-media/latest-news/liberals-infrastructure-
program-problems-detailed-internal-documents
 Liberals are not getting pension fund takers for transit, roads and bridges -
https://www.thestar.com/news/canada/2018/06/01/quebec-pension-fund-
seeks-higher-returns-by-taking-on-transit-project.html
 Liberals are doing little get goods out of the ground and to market. C69
needs to be killed
 Canada needs to be more competitive with all its policies, i.e. taxation,
regulatory environment, etc.
https://www.slideshare.net/paulyoungcga/business-competitivesness-
canada-march-2019