Statement of Priorities and Accountabilities – Canada Infrastructure Bank (September 2023)
Statement of Priorities and Accountabilities – Canada Infrastructure Bank (September 2023)
In keeping with Government openness and transparency commitments, the Statement of Priorities and Accountabilities letter and Annex A are posted in their entirety here. The referenced Annex B is not posted as it contains commercially sensitive information. Annex B remains subject to formal requests under the Access to Information Act and any exemptions or exclusions that may be applied under this Act, and in turn, may also be protected by provisions in the Canada Infrastructure Bank Act.
September 26, 2023
Ms. Tamara Vrooman
Chair of the Board of Directors Canada Infrastructure Bank
150 King Street West
Toronto, Ontario M5H 1J9
Dear Ms. Vrooman:
I write to outline the Government of Canada's priorities and expectations for the Canada Infrastructure Bank (CIB).
I am encouraged to see that, over the past two years, the CIB has accelerated the pace of its investments. These projects are now driving more than $28 billion in investment into communities from coast to coast to coast, that in many cases would not have come to be without the CIB's financial support. Moreover, these projects are supporting economic growth, creating good paying jobs, facilitating Canada's transition to a clean economy, and delivering on Canada's commitment to advance reconciliation with Indigenous Peoples.
This Statement of Priorities and Accountabilities lays out the Government's expectations for the Bank as an infrastructure investor, an advisor, and a centre of expertise. It also sets forth how the CIB, as a federal Crown corporation, is expected to report its progress and results back to the Government and to Canadians.
The CIB as an Impact Investor
The CIB was conceived as an infrastructure investor, extending the reach of public funds by investing in revenue-generating infrastructure projects that serve the public interest, through collaboration with federal, provincial, territorial, municipal, Indigenous, institutional investors, and private investor partners. Within these partnerships, the following continue to be areas of priority investment: Public Transit ($5 billion), Green Infrastructure ($10 billion), Clean Power ($10 billion), Trade and Transportation ($5 billion), and Broadband Connectivity ($3 billion). The CIB should also continue to support investments in infrastructure projects that advance reconciliation with Indigenous Peoples across all five of these priority areas.
Budgets 2022 and 2023 broadened the CIB's role in new areas, including:
- Private sector-led infrastructure projects that will accelerate Canada's transition to a low-carbon economy in asset classes such as small modular reactors; clean fuel production; hydrogen production, transportation and distribution; and carbon capture, utilization and storage;
- Large-scale zero-emission vehicle (ZEV) charging and refueling infrastructure under its Green Infrastructure priority sector;
- Supporting the development and implementation of Canada's Green Building Strategy with below-market loans to commercial and institutional building owners and operators that drive energy efficiency, emissions reductions and climate resiliency;
- Enabling infrastructure to support Canada's Critical Minerals Strategy; and,
- Providing loans to Indigenous communities to support them in purchasing equity stakes in infrastructure projects in which the Bank is also investing, across all priority sectors.
I am pleased by the progress the CIB has made in these new areas and look forward to seeing more investment in infrastructure projects that will improve the lives of Canadians. I also want to bring to your attention two areas of growing importance for the Government of Canada.
First, we must use all federal tools available, including the CIB, and work in partnerships with other levels of Government and the private sector to address Canada's national housing shortage. The CIB does and should continue to invest in infrastructure that enables housing developments, including water, wastewater, district energy, and public transit. I would ask that the CIB work closely with my officials and other federal departments and agencies to explore further options to attract investment in the enabling infrastructure necessary to accommodate home construction, in line with the CIB's existing mandate.
Moreover, as an advisor and centre of expertise on the use of alternative financing for infrastructure development, I am interested in the CIB's advice on any further actions that the Government of Canada can take or opportunities that can be leveraged to facilitate investment in Canada's national housing supply, and contribute to building more affordable and sustainable housing options for Canadian families and communities. I respectfully request that you report back on them no later than December 1st, 2023.
Second, as you know, climate change poses one of the most significant challenges of our time. Canadians are experiencing the devastating effects of extreme weather events such as increased precipitation, heat waves, wildfires and flooding, and the resulting impact on our communities, environment and economy. As we strive to transition to a net-zero economy, it is also critical that we make our infrastructure more resilient to the effects of climate change. This will both reduce costs associated with climate related damage, but also ensure that Canadians remain safe during severe weather events and have access to vital infrastructure in their communities, including access to broadband and cellular connectivity. Continuing to embed climate resilience into infrastructure development will be critical to safeguarding our infrastructure from climate-related events.
I expect the CIB to continue to work with relevant federal departments, Crown corporations and agencies, as applicable, to advance and expand the use of innovative financial tools in each asset class. In doing so, I ask that the CIB continue to engage with Infrastructure Canada and relevant federal departments and agencies and make use of collaboration tools, such as memorandums of understanding, to ensure federal support is delivered in an efficient manner and the CIB's investments remain aligned with the Government's priorities.
While all orders of government across Canada are making significant investments to meet the infrastructure needs of the future, there is a general recognition that Canada faces large and varied infrastructure gaps. This places a significant burden on taxpayers and calls for a larger role for alternative financing models to supplement traditional funding methods such as government grants and contributions. The Government has allocated, and Parliament approved, $35 billion for the CIB, and allocated $15 billion in net fiscal expense within the fiscal framework to invest in revenue-generating projects, using innovative financing structures to de-risk projects and attract private-sector investment to projects that would not otherwise be viable. The CIB is expected to fully deploy its $35 billion in capital and manage its portfolio to use these resources towards achieving its main goal of advancing infrastructure projects which might not otherwise be built.
With this in mind, the CIB should continue to work alongside other orders of government, Indigenous partners, and private-sector and institutional investors to invest in projects that generate revenue, and deliver social, economic, and environmental benefits for Canadians. By doing so, we can ensure that our infrastructure investments are not only driven by financial returns but also enable us to deliver lasting positive impacts to the lives of Canadians.
To fully realize its purpose and functions, the CIB should draw on a diverse range of talent and perspectives from across Canada as well as international best practices. This includes continued commitment to diversity of the workforce in your organization, and efforts to foster the inclusion of a broad range of voices and views in governance and decision- making. In doing so, the CIB should take into consideration Canada's gender, linguistic, cultural and regional diversity, including the unique perspectives of Indigenous Peoples. This should include an effort to invest in projects from coast to coast to coast and should also seek to invest in projects that will reduce socioeconomic barriers and help build a more inclusive society.
In closing, I want to express my sincere thanks to you, the CIB Board of Directors and all CIB staff, for your ongoing commitment and dedication to advancing this important work on behalf of the Government of Canada. I have watched with interest the valuable contributions the Bank has made over the last few years and firmly believe that it is well-positioned for continued success in helping to advance infrastructure projects across Canada that will deliver social, economic, and environmental benefits for all Canadians.
The annexes to this letter provide more details on the priorities and expectations outlined in this letter. As you work to respond to this Statement of Priorities and Accountabilities through the Corporate Plan and Annual Report, sustained and close collaboration between federal and CIB officials will be critical to success.
I look forward to working with you to advance our collective priorities and would welcome the opportunity to meet with you and members of the CIB Board of Directors in the near future to discuss this important work going forward.
The Honourable Sean Fraser, P.C., M.P.
Minister of Housing, Infrastructure and Communities
ANNEX A: Government Priorities and Expectations for the Canada Infrastructure Bank
The following Annex elaborates on priorities and expectations to assist the Canada Infrastructure Bank (CIB) in responding to the Statement of Priorities and Accountabilities.
The Canada Infrastructure Bank as an Investor
Under the Canada Infrastructure Bank Act, the CIB is mandated to invest in – and to seek to attract – private and institutional capital in revenue-generating infrastructure projects in Canada or partly in Canada that are in the public interest. In carrying out its mandate, the CIB is expected to ensure its investments are aligned with the Government of Canada's priorities and policies.
The Government has set long-term investment targets to guide the CIB as it deploys its $35 billion in capital across sectors and asset classes in support of Government priorities and in line with the CIB's mandate. This includes increased investment targets announced through Budget 2023 of $10 billion for clean power and $10 billion for green infrastructure.
The Government understands that progress against long-term investment targets are influenced by a number of factors, such as the willingness of project proponents to make use of alternative financing models and the state of readiness of specific infrastructure projects. The CIB should provide regular forecasts of potential capital deployment by sector, broken down by sub-sectors, through its corporate plans.
The CIB is expected to continue to provide at least $1 billion in investments in Indigenous infrastructure projects in collaboration with federal departments, Indigenous partners and other stakeholders by:
- Delivering on Indigenous infrastructure across all priority sectors, including supporting smaller projects through the CIB's Indigenous Community Infrastructure Initiative;
- Providing loans to Indigenous communities to support them in purchasing equity stakes in infrastructure projects in which the Bank is also investing; and,
- Working collaboratively with Infrastructure Canada, Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs Canada to identify and apply best practices and lessons learned in advancing Indigenous infrastructure.
The CIB's priority areas represent infrastructure projects that can deliver significant benefits for Canadians. Across all its investments, the CIB should focus on projects with the greatest opportunity to create jobs and growth, build a clean economy and support the transition to net-zero, promote social inclusivity, and advance reconciliation with Indigenous peoples. In doing so, the CIB should consider the following objectives and expectations:
- Significant GHG Reductions: Prioritize projects that make significant contributions to meeting Canada's 2030 target in the Emissions Reductions Plan and contribute to achieving net-zero by no later than 2050;
- Economic Benefits: Aim to invest in infrastructure projects that foster economic growth and boost the productivity and capacity of Canada's low-carbon economy, with connectivity for people, goods and information;
- Closing the Indigenous Infrastructure Gap: Aim to invest in ways that ensure Indigenous peoples have access to needed infrastructure and can participate in the ownership of infrastructure; and,
- Attracting Private Investment and Catalyzing New Private Markets: Invest with the aim of helping to develop financing markets and models that will encourage significant private and institutional participation and reduce the need for CIB support over time. This includes working to incentivize co-investments for private and institutional investors alongside private-sector project proponents to accelerate Canada's transition to a low-carbon economy.
In making investments across its priority sectors, the CIB is expected to:
- work collaboratively with federal departments, Crown corporations and agencies, as applicable, to promote alternative financing models;
- discuss and collaborate on project pipelines;
- develop innovative structures reflective of sectoral needs; and
- ensure the CIB's investments are aligned with broader Government priorities and complementary to existing and future federal programming. In some cases, this would include putting in place collaborative arrangements to provide clarity on respective roles and responsibilities.
The Canada Infrastructure Bank as an Advisor
Under the Canada Infrastructure Bank Act, the CIB was mandated to provide advisory services with regards to infrastructure projects. It endeavors to do so in a manner that helps to advance projects for potential private, institutional, or CIB investment, or to quickly identify those that are not appropriate for CIB investment. In working with provinces, territories, municipalities and Indigenous communities as a project advisor, the CIB is expected to:
- Make efforts to increase its internal capacity to identify, engage and provide advisory services to rural, northern, and Indigenous communities with respect to revenue-generating infrastructure;
- Provide advice and establish expectations around financial structuring and project/process standardization; and,
- Continue cultivating potential projects for investment and to establish a robust project pipeline.
The Canada Infrastructure Bank as a Centre of Expertise
To complement its advisory work, under the Canada Infrastructure Bank Act, the CIB was also mandated to act as a centre of expertise on infrastructure projects in which private sector investors or institutional investors are making a significant investment. In recent years, the CIB has strengthened this role, partnering with an increasing range of institutions across Canada to advance knowledge on expertise related to infrastructure financing.
The CIB should describe in its corporate plans and annual reports: its ongoing efforts to strengthen its role as a centre of expertise; its plans to strengthen its research capacity; and its external engagement efforts. In particular, this should:
- outline plans to engage with federal, provincial, territorial, municipal, and Indigenous partners, industry, and international stakeholders (including peer infrastructure banks) to deliver more revenue-generating infrastructure projects through models that support private and institutional investment; and
- include supporting, as necessary, the National Infrastructure Assessment with regards to alternative financing models for infrastructure development as well as participating in international dialogues and forums to broaden understanding of the CIB and to share best practices.
Transparency and Accountability
The CIB is accountable to the federal government and the Canadian public through mechanisms set out in its enabling legislation, as well as legislation applicable to all Crown corporations, including the Financial Administration Act, Access to Information Act, Privacy Act, and Official Languages Act. The CIB is responsible for meeting its statutory and legal obligations, including any duty to consult obligations that may arise when it is providing funding that may adversely impact potential or established Aboriginal or treaty rights, and any environmental assessment or regulatory requirements.
The CIB's annual Corporate Plan should set out how the CIB will invest across its priority areas, for example by detailing investment strategies and by ensuring that investments are revenue-generating and in the public interest. It should explain the total capital and operating budget for the organization over a five-year period and should continue to describe how the CIB will conduct due diligence and analysis as it manages its resources and investment portfolio, including under challenging investment scenarios. It should also describe how the CIB plans to implement the Budget 2023 announcement that Crown corporations will achieve spending reductions, starting in its 2023-24 Corporate Plan.
The CIB must remain accountable to the Government and Canadians through its Corporate Plan, which will include plans to achieve objectives and outcomes through its ongoing activities. This should involve articulation of an investment framework with a clear description of the characteristics, thresholds and risks for specific investments or initiatives. Additionally, the CIB should articulate a results framework with a balanced scorecard that highlights: the intended outcomes, such as greenhouse gas emissions reductions and economic growth; the pace of investment activity; and attraction of private and institutional investment over the short- and long-term. The CIB should align its compensation framework to results on this balanced scorecard.
The CIB is required to produce an Annual Report on its operations and activities that must be tabled in Parliament. The Annual Report must include information on the CIB's finances, an auditor's report and information on how the CIB has met the objectives and achieved the outcomes set out in its Corporate Plan. It should seek to publicly communicate the tangible benefits that CIB's investments deliver, focusing on the public interest accrued in certain investments in private infrastructure, including relevant comparisons to capital deployed. It should also demonstrate how the CIB is responding to the priorities and expectations outlined in this Statement of Priorities and Accountabilities.
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