Time for creativity to finance Canada’s infrastructure, Frank Swedlove, President and CEO, CLHIARelease Date: 02/25/2016 Source: National News Watch> Staff Reference: Frank Swedlove
As the federal budget approaches, and a weaker global economy buffets Canada, many political leaders are agreed that this is a good time to invest in building the infrastructure the country will need to rebound in the future.
But with softening tax revenues and many competing demands for the public dollars, the time is right for governments to be creative about how to get the financing in place to support the $350-$400 billion in investment that is needed. To put that in perspective, it equates to the need to invest approximately $30,000 in infrastructure funding per household.
Some observers describe a hobson’s choice: scale back Canada’s infrastructure ambitions or run a larger than anticipated federal Budget deficit.
But there’s a better option.
Canada’s life and health insurers have money available to fund a huge array of infrastructure projects. These companies are among the largest investors in the country, holding $630 billion in assets for the long-term.
The nature of the life and health insurance business means our companies invest funds from consumer premiums for the longer term, when claims are made. That means we need reliable, long term, high quality things to invest in – exactly the sort of projects that fall into the category of infrastructure.
Traditionally, public policy in Canada has skewed towards using mainly tax dollars to fund infrastructure. It wouldn’t take much to shift our thinking and policies to enable Canada to build more infrastructure, more quickly, without putting more pressure on taxpayers or creating massive deficits.
It makes good sense for Government to harness the strength of the life and health insurance sector, by increasing the ability of infrastructure projects to be funded through private-public partnerships, which are also commonly known as “P3s”. Right now, our companies are forced to look abroad for places to invest – the irony being we are often investing in important infrastructure projects in other countries, when we could be doing more here at home.
One simple step to cut red tape and duplication of effort would be to give Public Private Partnerships Canada, a federal Crown Corporation, a leadership role in standardizing project documentation for all projects under $50 million. This will allow P3s to be used for a wider variety of projects than currently possible. The solutions to opening up more investment in infrastructure with less pressure on deficits are simple, and only require a bit of policy imagination and political will.
Canada’s insurers are very able, and more willing than ever to play a larger role in making sure Canada builds the infrastructure the country needs in a timely and affordable fashion. The time is right for the federal government to take full advantage of the opportunities that P3 financing can create.
President and CEO
Canadian Life and Health Insurance Association