Canadian pension fund giants are prevented from investing in local infrastructure by erratic regulation and a lack of government initiatives, industry players have claimed.
Claude Lamoureux, CEO of the C$96bn Ontario Teachers’ Pension Plan (OTPP), said it remained difficult to invest in Canadian infrastructure and accused the government of “changing the rules” after it had agreed infrastructure deals.
“Regulation needs to be there, and be precise,” he said. “Not necessarily investor friendly, but you want to be sure it won’t change after the fact.”
Michael Nobrega, CEO of Borealis, the Ontario Municipal Employees Retirement System-owned infrastructure investment vehicle, claimed increasing private investment in infrastructure would improve accountability and efficiency, and lower the burden on taxpayers.
But he added that most jurisdictions in Canada had gone to the private sector only after they had “exhausted all other resources.”
Nobrega said Canada had a C$125bn infrastructure deficit, and while the government was able to cover that in the long term, the regulatory environment would further draw out the procedure: “At end of the day, government will have to tax the taxpayer to cover that $125bn deficiency, but by the time it is finished that deficit could well be closer to $200bn.”
Unlike countries like the UK, which is a unitary state, Canada is a confederation, meaning there are federal and provincial levels, or layers of government where the lowest common denominator has to be satisfied, said Nobrega.
“That’s one of the difficulties of infrastructure investment: there is no single body on a national interest basis to get this done,” he said.
David Gamble, chief of consultations and media relations at the Canadian department of finance, stressed that responsibility for most of Canada’s infrastructure rested with provinces, territories and local governments rather than the federal government.
“That said, it should be noted that over the past two decades, the federal government has commercialised or privatised much of the infrastructure under its responsibility, which has helped encourage private investment in these areas,” he said.
In its last budget, the federal government outlined an “unprecedented” level of investment in provincial, territorial and local infrastructure, including C$16.5bn over the next four years, he added: “Public-private partnership projects, in which private pension funds may participate, could receive part of this funding.”
The HSBC Bank UK Pension Scheme is to invest £250m in renewable energy infrastructure, such as solar plants and wind farms, with Greencoat Capital.
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