Canada Infrastructure Bank: Status of investments up to 2020-21 Q3

Background

The Canada Infrastructure Bank (CIB) was established under the Canada Infrastructure Bank Act in 2017.  The CIB’s purpose is to invest in large, transformational and revenue generating projects that are in the public interest and developed and delivered in partnership with public, private and institutional investors.[1] By design, these investments would be allocated to projects where, absent of CIB involvement, no investment would occur.[2]

The Government has set out five priority areas for infrastructure investing under CIB.[3] These priorities include public transit, green infrastructure, clean power, broadband and trade and transportation. CIB is mandated with investing $35 billion into large, revenue generating infrastructure projects that are inline with these priority areas.

The $35 billion in start-up funding for the CIB is included under the Investing in Canada Plan (IICP) which has a total planned spending of $187.8 billion.

The funding distributed under the IICP is split into two phases over a twelve-year period.

• Phase I was intended to focus on targeted short-term infrastructure plans across Canada between 2016-17 and 2017-18; and
• Phase 2 is aimed at directing funds to broader, long-term infrastructure plans between 2018-19 and 2027-28.

Our previous findings on the IICP as a whole indicated that data gaps existed in the tracking of federal money; spending lagged plans; job creation and economic growth was lower than anticipated; and, increases in federal infrastructure spending were partly offset by decreases in provincial money.[4]

This blog post is designed to assist parliamentarians in understanding CIB’s capability in identifying and investing in infrastructure projects, consistent with its mandate. We aim to build upon our previous reports on infrastructure spending, with a focus on Canada Infrastructure Bank.  

Project announcements

As of March 23, 2021, CIB has publicly announced participation in 13 projects to date.[5] CIB has committed $4.04 billion of capital investment for 5 projects, or 11.5 per cent of the total mandated spending. The Réseau Express Métropolitain (REM) and the GO Expansion Project comprise most of the announced capital investment at $1.28 billion and $2 billion, respectively.

At the time of this report, eight of the thirteen projects have yet to announce a financial commitment and are currently under either a memorandum of understanding, in a project acceleration phase or receiving advisory services.[6]

Canada Infrastructure Bank: Projects

Project selection

In total, CIB has received 420 project proposals to date. Of these 420 projects, CIB has publicly committed to 13 projects at this time. However, CIB has finalized investments in only two projects.

Overall, 81 per cent of projects have been rejected or are no longer under active consideration. Roughly 45 per cent of all projects proposals fall outside CIB’s mandate. The top reasons for a project to fall outside the mandate are ineligible sector and insufficient size and lack of scalability. The remaining 36 per cent of rejected projects met CIB’s initial screening criteria but have been removed from consideration or are no longer under active consideration.

Canada Infrastructure Bank: Projects

% of projects

Investment activity

In total, CIB is mandated to invest $35 billion in infrastructure projects over a 10-year period. Roughly 4 years since incorporation, CIB has invested a total of $1.23 billion, or 3.5 per cent, of its $35 billion mandate.

Gross investments and the disbursement of cash have been delayed relative to plans. As of December 31, 2020, $1.23 billion has been invested, thereby falling $2.0 to $4.1 billion short of prior plans (62 to 77 per cent). Disbursements have slowed in 2020-21. CIB has disbursed $221 million through the first nine months of 2020-21, roughly 90% lower than planned.

Cumulative gross investment of assets to 2020-21

In October 2020, the Government announced that CIB intends to invest $10 billion across six major infrastructure initiatives over the next three years with the goal to create jobs and economic growth.[8] The PBO aims to examine the feasibility of projected spending further in upcoming reports.

Leverage

The purpose of CIB is to invest, and seek to attract investment from private sector investors and institutional investors, in infrastructure in order to reduce costs to government. [9]  The goal of partnering with private investors is to help deliver more infrastructure than would have been possible using only government sponsors.[10]

Of the projects for which contracts have been signed, there is no evidence that any private investment has been leveraged. CIB’s two current projects are exclusively funded by federal, provincial, and municipal levels of government. [11],[12]

Funding sources for CIB projects in financial close

Summary financial data

As of December 31, 2020, CIB has $1.24 billion in assets with a planned future commitment of assets to be valued at $4.75 billion in 2021-22. Negative revenue is recorded in 2020-21 mainly comes from an $87.5 million provision for loss relating to a Réseau Express Métropolitain.

Summary financial data