Statement of Priorities and Accountabilities – Canada Infrastructure Bank



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Ms. Janice Fukakusa
Chairperson of the Board
Canada Infrastructure Bank
150 King St. W
Toronto, Ontario M5H 1J9

December 20, 2017

Dear Ms. Fukakusa,

Investing in Canada's infrastructure builds strong communities and helps to strengthen and grow the middle class, setting the stage for sustained economic growth in the future. Through the Investing in Canada plan, the Government of Canada is making historic, long-term investments in infrastructure. As a key component of the plan, the Government has established the Canada Infrastructure Bank (the "Bank") to help public dollars go further and be used more strategically by attracting private investment to help more infrastructure projects get built. The Bank will be an innovative financing tool designed to work collaboratively with public and private sector partners to transform the way infrastructure is planned, funded and delivered in Canada.

As inaugural Chairperson you lead the Board of Directors, which has responsibility for overseeing the Bank's start-up formation, ongoing governance and supervision of its business and affairs, and providing strategic direction for the Bank. It is, therefore, my pleasure to provide you with this Statement of Priorities and Accountabilities for the attention of the Board and the Bank's management. This letter is intended to be a guide for the development of the next corporate plan.

As set out in the Canada Infrastructure Bank Act (the Act), the Bank's mandate is to make investments in revenue-generating infrastructure projects that are in the public interest, and seek to attract investment from private sector and institutional investors to those projects. To fulfill its mandate, the Bank's investments should be made alongside private sector and institutional investors as well as any other government sponsor, to maintain cost and risk sharing where appropriate. The Bank's investments should be designed with the objective of minimizing the amount of any federal government support required to make a project's business model financially viable.

Under the Act, Parliament has approved providing the Bank with $35 billion over the next 11 years, as needed, and the authority to participate in complex infrastructure deals in new and innovative ways, using loans, loan guarantees and equity investments. The Bank is expected to prudently manage its portfolio such that the total net fiscal expense over this period will remain under $15 billion. You will find in Annex A the Government's priorities for the Bank's investments, as well as criteria that the Bank is expected to follow when making its investments, in addition to other investment criteria that the Bank determines appropriate.

The Bank is structured as a Crown corporation that operates at arm's length from government. It is governed by an independent Board of Directors and led by a Chief Executive Officer. This provides it with significant independence in its operations, which is important in order for it to be a credible commercial counterparty with investors and to make recommendations to governments based on commercial assessments and analysis. The Bank, of course, is accountable to the Government and must comply with its enabling legislation, cited above, and Part X of the Financial Administration Act (FAA). The Bank should also be guided by the Government's foundational policy statements in the Fall Economic Statement 2016 and Budget 2017, as tabled in Parliament.

In its role of oversight of the Bank, the Board of Directors should act as financial stewards, to ensure that the Bank effectively manages public resources. Furthermore, the Board will be responsible for ensuring that the Bank's governance, including its by-laws and policies, are informed by corporate governance best practices in both the public and private sectors. The Board should work with the Bank's senior management to develop and monitor policies and practices for the Bank that are beyond reproach regarding values and ethics as well as preventing and managing against conflicts of interest. In addition, the Bank should be guided by best practices with respect to managing and disclosing climate-related risks and opportunities.

As with other Crown corporations, the Bank is required under the FAA to submit an annual corporate plan, with operating and capital budgets. The annual corporate plan provides an opportunity for the Bank and the government to align on a strategic vision for the organization. While an initial plan was approved in July 2017, the next plan is expected to more fully set out the evolution of how the Bank will operate, including working with my department and other federal officials on how a potential pipeline of projects will be identified, and how the public interest will be determined prior to the Bank independently finalizing negotiations and executing projects. You will find my expectations for the next corporate plan in Annex B.

Looking forward, the Bank should be open and transparent with Canadians about its operations, investments, and decision-making process, while respecting the confidentiality of commercially sensitive information obtained from counterparties, as required under the Act. The Bank should monitor its performance along key dimensions and transparently report results as part of its annual report. The Bank should engage broadly with stakeholders to raise awareness about its role and the advisory services it offers, demonstrate the value of the Bank model, and better understand the infrastructure needs of Canadians and potential revenue-generating projects to help meet those needs.

Recruiting and developing the right talent in a competitive marketplace will be crucial to the Bank's success. The Bank has the flexibility to hire qualified employees with the commercial experience and professional skills needed to enable the Bank to execute on its mandate. In so doing, the Bank should take into consideration Canada's gender, linguistic, cultural and regional diversity. The Bank should develop a hiring and compensation policy, which reflects the best practices of Crown corporations and other comparable organizations, in order to ensure that the hiring and compensation practices followed by the Bank are fair and appropriate.

In developing the Bank's innovative new model, the Government drew extensively on international best practices and consultations with peer jurisdictions and international bodies. As other countries face the same challenges of closing the infrastructure gap with private and institutional capital and finding new ways to fund infrastructure, our global partners will be watching and learning from the Bank. To the extent possible, as part of becoming a centre of excellence, the Bank should strive to collaborate internationally and domestically to demonstrate Canada's innovation and leadership, and to foster mutual learning and experience on mobilizing long-term institutional investment in infrastructure, and facilitating more evidence based decision making to prioritize and better plan future investments.

The recently appointed Board of Directors have been entrusted with the opportunity to shape the development of a new national institution, which will deliver transformative results that will benefit Canadians for years to come. The Board has my full confidence that you will meet the highest standard for good governance of the Bank, carry out your duty of care to act in the best interests of the Bank, and secure public trust and support by delivering infrastructure projects that Canadian communities need.

On behalf of the Government of Canada, I look forward to working with the Canada Infrastructure Bank as it moves expeditiously and prudently to deliver on its ambitious, innovative mandate for the benefit of Canadians. I hope that the Bank can make some early investments to clearly demonstrate the value of its model by showing what is possible when investors from the public and private sector work together in the public interest.

Sincerely,


The Honourable Amarjeet Sohi, P.C., M.P.

cc The Honourable Bill Morneau, P.C., M.P.

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