The document discusses the Canada Infrastructure Bank's purpose of providing funding for essential infrastructure projects using government support, loan guarantees, and private investments. It highlights the challenges faced, including taxpayer burdens, the need for project profitability, and potential reliance on subsidies for public transit. Additionally, it raises concerns regarding the financial risks and transparency of the bank's operations and the impact on middle-class taxpayers.

1. Infrastructure Bank - Canada –
March 2018
By: Paul Young CPA, CGA
Date: February 27, 2018

2. Agenda
• What is infrastructure bank?
• How does an infrastructure bank work
• Bank Rules/Infrastructure Bank
• Transit Systems / Support
• Issues/Risks facing infrastructure bank

3. Summary
• Investors will want investment protection built into their model including returns
• Government would have to back projects with government debt as well as support through
grants and subsidies
• Taxpayers would be paying tolls or higher transit fees
• Middle class is already tax to death as such an new tolls or fees will mean less money for
other goods and services
• Transit cannot exist without subsidies.
• Only 10% of the so called $180B infrastructure is going to support exports -
http://business.financialpost.com/pmn/commodities-business-pmn/agriculture-
commodities-business-pmn/grain-industry-raising-concerns-over-growing-backlog-of-
grain-shipments or
https://canada.constructconnect.com/joc/news/uncategorized/2018/02/scotiabank-says-
pipeline-constraints-cost-economy-10-7-billion-2018

4. What is an Infrastructure Bank?
• https://www.liberal.ca/realchange/canada-infrastructure-bank%E2%80%A8%E2%80%A8/
or http://www.infrastructure.gc.ca/CIB-BIC/index-eng.html
• The federal government can use its strong credit rating and lending authority to
make it easier and more affordable for municipalities to build the projects their
communities need.
• Where a lack of capital represents a barrier to projects, the Canada Infrastructure
Bank will provide loan guarantees and small capital contributions to provinces and
municipalities to ensure that the projects are built.

5. How does an Infrastructure Bank work?
Source - http://smallbusiness.chron.com/infrastructure-bank-work-39194.html
Revenue for infrastructure -- such as roads, highway projects and bridges -- is typically
supplied by state and municipal bonds or federal monies. Unlike Europe, the United
States does not have a central source of financing for large-scale construction projects.
An infrastructure bank would provide a central source of funds for these necessary
construction projects.

6. Infrastructure funding
• It is very important to look at ways to leverage capital as
part of building infrastructure -
https://www.youtube.com/watch?v=ug-bQBtsnvE
• Here are the issues:
• Pensions funds do not take infrastructure projects on
unless they meet an investment criteria
• If projects do not make money then those projects will
likely be bail out with more tax dollars
• The last major toll road built in Canada was the 407.
New toll roads means more taxes to people. So, how is
more user fees actually helping the middle class.

7. Liberal Party of Canada
• https://www.youtube.com/watch?v=7pFjHC_wItg

8. Infrastructure Bank / Funding
• https://watershedsentinel.ca/articles/whose-canada-infrastructure-bank/ or http://www.ctvnews.ca/politics/federal-budget-to-show-how-infrastructure-bank-can-attract-free-up-investment-1.3332522
CTV News – March 20, 2017

9. Transit / Funding
• Public Transit requires subsidies as part of supporting the operations-
https://www.ttc.ca/PDF/About_the_TTC/Annual_Reports/TTC_2016AnnualReport_final_AODA.pdf
• Pensions funds will not sponsor projects unless there is a return -
http://www.cbc.ca/news/opinion/infrastructure-bank-1.4512240 Government will have to back those
returns
• Riders were unaware that tax credits were eliminated -
https://www.thestar.com/news/gta/2017/03/24/killing-the-transit-tax-credit-catches-riders-off-guard-and-
could-hurt-the-ttc.html. The funny thing is ridership is up!
http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=4080013&&pattern=&stByVal=1&p1
=1&p2=31&tabMode=dataTable&csid= (Ridership does go up and down as people are holidays and/or
work from home.
• If the lines are unprofitable then those lines will require more subsidies -
https://www.theglobeandmail.com/news/toronto/union-pearson-express-looks-unlikely-to-break-
even/article35483928/
• Towns are looking at option to control costs, like Uber -
https://www.thestar.com/news/gta/2017/04/03/innisfil-taps-uber-to-fill-public-transit-void.html
• Federal government is funding more transit projects - http://www.infrastructure.gc.ca/plan/ptif-fitc-
eng.php. More transit options mean ridership will be impacted. Yet the liberals killed the transit tax
credit.
• Via Rail also receives subsidies - https://www.viarail.ca/sites/all/files/media/pdfs/About_VIA/our-
company/annual-reports/2016/2016_Annual%20Report_EN.pdf
• https://www.thestar.com/news/queenspark/2017/05/19/wynne-is-all-aboard-21b-high-speed-rail-
project.html - Liberals cannot even make money with existing routes without subsidies, so how would
high speed route make money?
• There are already issues with intercity transportation including profitability -
https://tvo.org/article/current-affairs/the-next-ontario/how-intercity-bus-service-is-failing-ontarians. Yet,
all levels of governments continue to ignore issues facing rural areas of the country
• TTC has lowest subsidy per rider - https://globalnews.ca/news/1670796/how-does-the-ttcs-funding-
compare-to-other-transit-agencies/. Who subsidizes transit? Property tax owners as well as provincial
taxpayers.
Bottom line
I am all about solutions, but unless other options need to be look
at as part of ensuring lines are profitable as well as less dependent
on government:
1. Condos owners should be paying fees if they are on a route. If
you bought near a transit route then part of your monthly
condos fees should include transit costs
2. Transit credits should be restored as way to help reduce the
costs to consumers.
3. Tolls should be charge like London, UK if you drive to core of
major cities in Canada
4. Cities need to look at more advertising models as part of
increasing revenue to transit
5. Transit systems should be merged, especially in large cities
6. Selling off ports to private sector
7. More pipelines to get oil to tidewater
8. Selling off airports to private sector
Source - https://www.slideshare.net/paulyoungcga/government-
policies-transit-canada-february-2018

10. Liberal Party of Canada Infrastructure Banking
Backing
Source - http://www.cbc.ca/news/opinion/infrastructure-bank-1.4512240
• Ports
• Price for exports
and imports would
reflect cost recovery
of capital
• Bridges and Roads
• Tolls
• Transit Systems
received subsidies from
Government
• Supported by
property taxes
Middle class is under attack -
https://globalnews.ca/news/3769136/taxes-middle-class-
liberals/
Trudeau’s GDP and Job growth are also not accurate in terms of
health of the economy -
https://www.slideshare.net/paulyoungcga/real-truth-canada-
and-united-states-gdp-january-2018
Canada is less competitive today than it was when Harper left
office -
https://www.slideshare.net/paulyoungcga/competitiveness-
canada-vs-other-countries-january-2018
Harper had the best middle class in the world, right?
https://www.youtube.com/watch?v=yOl37VcG89c (Trudeau
has failed the middle class) -
https://www.slideshare.net/paulyoungcga/middle-class-
analysis-and-commentary-canada-january-2018

11. Toronto to HQ – Infrastructure Bank
• The Canada infrastructure bank will be located in Toronto, where its members
will have easy access to investors in the city’s financial district whose dollars the
Liberals need to make the agency a success.
• The proposed bank would take $35 billion in government funding to entice
private investment in projects like public transit systems, highways and
electrical grids that generate revenues through user fees or tolls.
• The Liberals predict they can leverage three or four times the federal
investment in private dollars for projects in three key areas: trade corridors,
green infrastructure and public transit.
Canadian Manufacturing – May 9, 2017

12. Risk with Infrastructure Bank
• Cost of Capital vs- return on capital for projects
• Performance and value for money audits required to evaluate the success of this program
• Projects would then require tolls/users fees as part of supporting the requirement
• Pensions Funds have certain requirement in terms of investment
• How will the stress test be completed?
• Banks need to follow the Bank Act as well as Basel and Solvency Reporting
• Who sits on the board for the infrastructure bank
• Is the board independent?
• What happens when projects lose money?
• Are there guarantees? i.e. taxpayers flip the bill for the short-falls
• Municipalities asked for dedicated funding, not loans
• Interest expense would be cover through increase taxes and user fees