PBO report forecasts CIB will miss spending target by $19B
The Parliamentary Budget Officer (PBO) has released another report criticizing the slow roll out of funding from the Canada Infrastructure Bank (CIB).
In its Canada Infrastructure Bank Spending Outlook document, the PBO calls out the bank for disbursing funds much slower than planned, and estimates that the bank will fall well short of allocating its entire $35-billion commitment by the end of its 11-year mandate. The PBO forecasts the bank will fall $19 billion short.
“CIB has been spending much slower than planned, but funding delays are common for public-private infrastructure investment projects”, says PBO Yves Giroux. “Based on our analysis of comparable organizations, the CIB’s spending is progressing somewhat below the average rate – more slowly than Infrastructure Ontario and the Caisse de dépôt et placement, but more quickly than PPP Canada.”
The CIB was created to invest $35 billion into large, revenue generating infrastructure projects that are developed and delivered in partnership with public, private, and institutional investors and focus on the federal government’s priority areas. These priorities include public transit, green infrastructure, clean power, broadband, trade and transportation, and Indigenous communities.
The PBO report found that as of April 22, 2021, CIB had announced $5.1 billion in investments for seventeen projects, or 15 percent of its total available capital. The report also indicated that announcements do not register as CIB assets until all parties have reached financial close—meaning all contractual steps have been completed.
Of CIB’s seventeen announcements, only two projects—Montreal’s Réseau Express Métropolitain and the Alberta Irrigation project—have reached financial close.
The PBO report finds that the CIB’s funding delays may be due in part to policy choices. Nearly half of project submissions (45 percent, or 189 projects) received to date fell outside the CIB’s mandate. They were too small, lacked a private or public sponsor, or did not fall within any of the government’s priority areas.
The PBO report also compared CIB investment activity against other Canadian public organizations with a mandate to invest in infrastructure, including PPP Canada (P3), the Public Service Pension Investment Board (PSPIB), the Canada Pension Plan Investment Board (CPPIB), the Caisse de dépôt et placement du Québec (CDPQ), and Infrastructure Ontario (IO).
It found that CIB’s disbursement flows are progressing below the average rate of those organizations, and more slowly than IO, CDPQ, PSPIB and CPPIB.
“CIB has been spending much slower than planned, but funding delays are common for public-private infrastructure investment projects,” says PBO Yves Giroux. “Based on our analysis of comparable organizations, the CIB’s spending is progressing somewhat below the average rate – more slowly than Infrastructure Ontario and the Caisse de dépôt et placement, but more quickly than PPP Canada.”
The report concludes that CIB would need to significantly increase its spending to meet its objective of delivering $35 billion by the end of 2027–28. To do so, it must increase its spending by 61 percent per year. Furthermore, to meet its commitment of spending $10 billion under the new Growth Plan, the bank would have to increase its disbursements by 109 percent annually.
Both rates, says the PBO, would be higher than precedents established by five comparable organizations when considering the average lifetime disbursement growth.