The new Canada Infrastructure Bank plans to use federal support to attract private sector and institutional investments to create infrastructure projects that are in the public interest for Canada.
Infrastructure plays an important role in the day to day lives of Canadians which is why new projects are needed. To help attract private sector and institutional investment to new revenue generating infrastructure projects in Canada, the Canada Infrastructure Bank was established in 2017. Currently, there is a half-trillion-dollar infrastructure gap in Canada. The government understands this, and in order to try and fix the problem, they have pledged to invest up to $35bn in infrastructure projects over the next 10 years as well as drawing in additional private-sector capital.
How does it work?
The Canada Infrastructure Bank was created as a public-private partnership model to transfer construction and operating costs to the private sector. In turn, these infrastructure projects will be primarily funded by revenues from the usage of the infrastructure, ie. a toll bridge or road.
The rules under the Canada Infrastructure Bank in terms of who will get the money and how it can be used are as follows.
- Borrowing party must be arm's length from the government
- The project must be revenue generating
- The risk will be transferred to the investors.
Since infrastructure projects tend to be very large and complex, the projects that are supported must align with the Government of Canada's high-level priorities of:
- Public transit
- Green infrastructure
- Trade and transportation
This new type of partnership with the Canada Infrastructure Bank opens options for government and private sector investors to build new projects in Canada and creates a wider variety of opportunities. Investors in these projects will also help to bring jobs, a cleaner environment and enhance the middle class in Canada.
The government of Canada sets the policies of the Canada Infrastructure Bank but it is governed by an independent board. The bank works to identify the potential projects and decides if they will be revenue generating and how to structure the project financing. The Canada Infrastructure Bank is expected to create more than $200bn worth of projects over the course of the next 10 years.
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Canada Infrastructure Bank allows for the opportunity for engineering and construction firms from all over the world to do business in Canada and TMF Canada has the services to help.
Our team on the ground can provide full administrative support for these opportunities, including entity incorporation, local directorship services, escrow, HR and payroll and accounting & tax services for local and global companies looking to work in Canada.
Contact our experts in Canada to find out how we can help grow your business.
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