The recent catastrophic flooding in the Fraser Valley at locations like Sumas Prairie – where an overflowing Nooksack River in Washington state was a key cause – should spark a renewed interest in a Canada-U.S. infrastructure bank.
That is the view of one analyst who broached the idea five years ago and now notes a permanent platform for Canadian and American stakeholders to fund cross-border infrastructure projects could have mitigated flooding from the Nooksack.
“It’s hard, if not close to impossible to prove the counterfactual,” said Carlo Dade, director of the Trade & Investment Centre at the Canada West Foundation, about whether a Canada-U.S. institution could have reduced the flood’s magnitude. “But logically, one can work through the problem and arrive at reasonable conclusion that, yes, it would have made resolving the issue easier.
“I am told by former provincial officials that, if we had gone to Washington state with the funding, they would have taken it to fix the problem,” he noted. “We could have engaged engineering companies in Washington to run cost estimates.… The point with the bank is that it would have been easier; you’d have a formal mechanism to do it.”
Dade first touched on the idea of a joint Canada-U.S. infrastructure bank in November 2016 in a report jointly written with Shafak Sajid. The report argued for the creation of a North American Border Infrastructure Bank (NABIB), because the North American free trade bloc is the only continental trade bloc without a corresponding, centralized infrastructure mechanism that manages cross-border planning, funding and building of such projects.
The creation of a Canada-U.S. infrastructure bank, the report argued, would enable public and private investors to have essentially a one-stop shop not only to finance cross-border trade infrastructure for shared benefits, but also to provide access to data on infrastructure needs across the Canada-U.S. border on a more holistic level.
Such data, Dade said, would be key “to provide advice and assistance … to all levels of government on design, building, regulation, management of border infrastructure and security protocols to improve the quality of decision making and return on infrastructure investment.”
A North American Development Bank (NADB) does exist, based in San Antonio, Texas. But the NADB is a bilateral institution between the United States and Mexico – a setup Canadian officials have been reluctant to join (given the NADB’s focused mandate on the U.S.A.’s southern border).
But the NADB providez an example for a potential Canada-U.S. bank, Dade said, in that it started with a narrow focus on sustainable developments but grew to include transport or even telecom infrastructure.
A number of Vancouver tech-sector officials would welcome that development, including Ken Thorpe, CEO and managing partner of the Cascadia Gateway fibre optic project that would link Vancouver with Seattle at a cost of $60 million.
Thorpe, who has been working at the Cascadia Gateway project for the last four years, said while interest is high on both sides of the border, there has been no uniting entity to sort out regulations and funding requirements, dramatically complicating the project’s development.
Proponents of a joint Canada-U.S. institution say funding could come from the likes of the Canada Infrastructure Bank (CIB) by changing its mandate. The CIB was founded in 2017 to support “revenue-generating infrastructure projects” within Canada, with an original spending target of $35 billion towards new projects over 11 years.
A Parliamentary Budget Officer report released in April said it was on pace to come up short of that goal by $19 billion as “CIB has been spending much slower than planned.”
John Law, former president of the Transportation Association of Canada and chair of the Canadian Council of Deputy Ministers Responsible for Transportation and Infrastructure, said the CIB has not gained a strong reputation among the private sector – a key business segment the bank was originally supposed to attract.
“It’s like a solution that doesn’t have the problem,” said Law, who is also a senior fellow at Canada West Foundation.
Law said there may be a need to change the CIB’s mandate beyond Canada.
“All I can tell you is that many of my industry colleagues have not been interested – nor excited – and frankly, they’ve been shaking their heads in their early experiences dealing with the bank and have kind of written it off.”
He added that a joint Canada-U.S. bank would be able to deal directly with climate-change mitigation, such as flood prevention measures in B.C., and improve the cross-border supply chain by harmonizing systems to create efficient transport.
But the CIB’s potential to deal with these issues on its own – without a change in mandate or structure to include U.S. stakeholders internally – should not be discounted, said Tamara Vrooman, who took the helm as chair of the bank in January.
Vrooman said that those who haven’t looked at CIB’s activities closely in the last year – since both she and new CEO Ehren Cory came aboard – may be surprised to find that the bank has completed 19 deals in the last 11 months, far outpacing the previous pace of one deal over a span of three years.
“When the bank was first created, like any new organizations it went through its growing pains,” Vrooman said. “But we’ve now done almost $18 billion in deals, and we are pretty proud of the fact there are projects across the country.”
Vrooman added that, even without a mandate change, the CIB could fulfil some of the functions that a joint Canada-U.S. bank would, given the nature of the projects that the CIB is looking to support. Those projects include building broadband access, reducing GHG emissions, improving transportation, aiding sustainable agriculture and co-operating on Indigenous communities’ infrastructure.
Law, however, said that the current approach, involving ad hoc case-by-case meetings with U.S. federal and state officials, rather than having a set platform with a full-time staff to facilitate such meetings, isn’t sustainable for the type of cross-border challenges both countries are likely to face.
He added that he understands the Canadian public may be leery about public money being used to build projects in the United States, but said it’s a necessary process if the project ultimately benefits the Canadian public.
In such cases, a Canada-U.S. infrastructure bank may ensure Canadian funds are properly used, Law said.
“I don’t see any other way – other than having this type of institution with a mandated activity – where you wouldn’t have had to go to the [U.S. side] and offered to foot the bill,” he said. “Our experiences in dealing with projects on a continuous string of one-offs doesn’t give a lot of comfort and security on the Canadian side. If you look at who has paid for the major cross-border infrastructure up to this point in the recent past, Canada has paid a disproportional share, even when there are shared benefits.” •