This article and lesson plan explore the pros and cons of funding high-speed rail in Alberta and Ontario using the Canada Infrastructure Bill (CIB).

Appropriate Subject Area(s):

Economics, public policy.

Key Questions to Explore:

• What purpose will the Canada Infrastructure Bank serve?
• What are the arguments against the formation of the Canada Infrastructure Bank (CIB)?
• What impacts will a high-speed rail between Calgary and Edmonton have on the economy?
• Is the Canadian Infrastructure Bank an actual bank?

New Terminology:

Canadian Infrastructure Bank (CIB).

• The Canada Infrastructure Bank (CIB) will help bring private sector and pension fund investment into Canadian infrastructure projects that are backed by multiple levels of government. The CIB will be responsible for investing at least $35 billion from the federal government into large infrastructure projects that contribute to economic growth through a broad range of financial instruments, including loans and equity investments.

Materials Needed:

Copies of the article.

Introduction to lesson and task:

The Canadian Infrastructure Bank could fund high speed rail in Alberta and other infrastructure projects across Canada like roads and bridges.

The CIB would utilize federal support to attract private sector and institutional investment to new revenue-generating infrastructure projects that are in the public interest. The projects the bank invests in could contribute to long-term economic growth and support the creation of good, well-paying jobs for the middle class.

The creation of the CIB is part of the Government of Canada’s infrastructure plan to invest more than $180 billion over 12 years. The Bank will serve as an additional tool for the government to gain funding for the development of new infrastructure by attracting private sector and institutional investors to support the construction of infrastructure that Canadian communities need.

According to the Canadian government, the CIB will strive to achieve the following goals:

• Invest in infrastructure projects that have revenue-generating potential and are in the public interest;
• Attract private sector and institutional investors to projects so that more infrastructure can be built in Canada;
• Serve as a centre of expertise on infrastructure projects in which private sector or institutional investors are making a significant investment;
• Foster evidence-based decision making and advise all orders of government on the design of revenue-generating projects; and
• Collect and share data to help governments make better decisions about infrastructure investments.

Amarjeet Shoi, the federal Infrastructure Minister, claims that the formation of the CIB will provide funding and mobilize innovative thinking for the construction of high speed rail links between Calgary and Edmonton and from Toronto to Windsor.

However, both the NDP and the Conservatives argue that there is no need for the Bank because the government can borrow at much lower rates through government bonds, which will cost less than borrowing from private investors seeking high returns. They argue that the CIB will also privatize the most high-return, low-risk infrastructure assets.

Proponents of the CIB, like Amarjeet Shoi, argue that the bank will lead to more development of infrastructure projects, while shifting the risks to the private sector.

The creation of the CIB is included in Bill C-44, which must pass Parliament before the bank becomes operational. The government is working towards the goal of having the Bank operational by late 2017.

Action (lesson plan and task):

• Ask your students to explain the role the Canadian Infrastructure Bank will play in infrastructure projects.
• Ask your students to state the major arguments against the creation of the CIB.
• Ask your students to state the benefits of building new infrastructure. (Hint: to support economic growth, increase job creation, higher standard of living, and increase in productivity.)
• Ask your students to state why investments with the CIB might be compelling for institutional investors and pension funds. (Hint: These investments are relatively low risk, and investors stand to gain high returns from user fees).
• Ask your students to state the benefits of the CIB. (Hint: the CIB will transfer risks such as debt, cost overruns and long-term maintenance to the private sector; private investments will also increase the number of infrastructure projects in Canada)
• Ask your students to state the potential risks the CIB could pose. (Hint: Canadians will be subjected to higher user fees to generate revenue for institutional investors; government will lose an opportunity to borrow when interest costs are low).

Divide your class into two groups:

Task for group 1

• Ask members of group 1 to formulate a compelling argument in favour of the Canadian Infrastructure Bank
  • Pointers
    • How will the CIB affect Canadians’ standard of living and productivity?
    • How will the CIB affect job creation?
    • How will the CIB affect government debt?

Task for group 2

• Ask members of group 2 to formulate a compelling argument against the creation of the Canadian Infrastructure Bank.
  • Pointers
    • What risks are involved with the creation of the CIB?
    • What impact will user fees have on regular Canadians?
• Ask your students to state the benefits that high-speed rail between Calgary and Edmonton will provide to residents of Alberta.

Consolidation of Learning:

• Ask your students to state the difference between the proposed Canada Infrastructure Bank and a regular Canadian Bank like Bank of Nova Scotia or TD Canada Trust.

Success Criteria:

• After completing this lesson plan, students should have a better understanding of the role the Canada Infrastructure Bank will play in funding public projects like high speed rail when it becomes operational.

Confirming Activity:

• Ask your students to indicate by a show of hands if they are for or against the creation of a Canadian Infrastructure Bank and randomly select a number of students to explain their decision.