By Tom Parkin, Postmedia Network, November 20, 2016
Last week, Justin Trudeau pushed his privatization plan even farther. He’s now going well beyond anything considered by any previous Canadian government. He’s closing in on Donald Trump.
Don’t believe it? Believe it.
A month ago he asked investment bank Credit Suisse if Canadian airports should be privatized. No Canadian government has ever considered this.
Last week Trudeau asked investment banker Morgan Stanley for an opinion on privatizing 18 Canadian ports. Another first.
And also last week Trudeau held a closeddoor “summit” with some of the world’s biggest investment funds from Canada, United States, China, Abu Dhabi, Qatar and elsewhere. The event was hosted by Wall Street behemoth BlackRock, famous for its iShares brand. BlackRock is the world’s biggest asset manager, weighing in at $5 trillion.
Trudeau pitched his Infrastructure Bank plan and asked for their money. Their investment would be used by his bank to finance Canadian infrastructure projects.
Even Prime Minister Harper never tried this. It’s so far out, Trudeau’s plan brings him in line with billionaire US Presidentelect Donald Trump.
Last week, transition team member Steven Mnuchin, also a Wall Street veteran, reaffirmed Trump’s promise to create a private investment infrastructure bank.
Trump and Trudeau suggest these investments won’t cost anything – as if finance capitalists are pixie angels who scatter magic dust that grows free transit, bridges and roads where it lands. What nonsense.
Michael Sabia is more honest. Sabia, CEO of a $250 billion Canadian investment fund, recently told investors a 7 to 9% return on infrastructure investment is what private capital wants.
That’s a lot higher than the cost of public financing – currently at about 1% interest. Late last month, the Bank of Canada issued $3 billion in 10-year bonds. They sold with an average yield of 1.3%. A week before, the Bank sold $3.2 billion in 3-year bonds with a 0.6% yield.
A private infrastructure bank means paying more for financing. It means getting less infrastructure. Fewer construction jobs. Less for land, materials and equipment. Lower economic spin-off.
Canadian Economist Toby Sanger recently compared 30 year private and public finance costs on a $100 million construction project. Public financing would cost $31 million. Private financing would add $164 million to costs. Who pays that money? Who gets it?
In the House of Commons, NDP Finance Critic Guy Caron – an economist before being an MP – has been firing off questions about the government’s plans. And wider concern is building. Now Conservative Party Interim Leader Rona Ambrose and even Postmedia columnist Terence Corcoran are raising concerns.
Trudeau’s mandate was to use historically low interest rates to fund infrastructure, not Thatcherism. This surprising rightward turn could have wider implications.
Privatization could mean airports and sea ports sold to consortiums from Abu Dhabi and China. And Trudeau’s bank would further concentrate wealth as money from Canadians is pipelined up to global investors.
Economist Thomas Piketty has made the case that excessive concentration of wealth isn’t just “economically useless,” it may lead to “political capture of our democratic institutions.” In 2014 he worried that, when institutions can’t address inequality and social problems, “it’s always tempting to find other people responsible for our problems.”
Wall Street captured the Democrats and Republicans decades ago. Picketty’s next worry couldn’t have been more prescient.
Our Comment
Justin Trudeau should ask Canadians how they feel about his selling of the crown jewels!
Remember Black Rock? If you haven’t meet our Prime Minister’s trusted circle of advisors, you might want to read Joyce Nelson’s book, Beyond Banksters, Resisting the New Feudalism. (Available from the COMER bookstore.)
At least, when military aggression was the way to take over a country, it was easy to understand what was happening, and the enemy was readily identifiable! Élan
