CANADA - The Ontario government should take advantage of growing infrastructure demand from pension funds and the current low interest rate environment to promote private and public infrastructure partnerships, said David Dodge, governor at the Bank of Canada (BoC).
Speaking at the 2006 Ontario economic leadership summit, Dodge said: "Now is the right time to encourage partnerships between the government of Ontario and private providers, given the climate of low nominal interest rates and the presence of large pension funds that are searching for these kinds of investment opportunities."
Dodge added that having modern, reliable infrastructure in place allowed businesses to invest with greater certainty, thus furthering the ability to adjust and compete in a changing global economy.
"Ontario needs public policies that can support both public and private investment in infrastructure so that firms can become more productive," he said, adding that evidence from other countries had showed public-private partnerships could "both increase the efficiency of investments and support their financing".
Some of Canada's largest pension funds have long been calling on the government to make infrastructure investments more accessible, and claimed they were being prevented from investing by erratic regulation and a lack of government initiatives.
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.”
The People's Pension, Atlas Master Trust and The Cheviot Trust have been granted authorisation from The Pensions Regulator (TPR), taking the total number of authorised master trusts to 18.
Pension schemes have been warned they may now face a more challenging legal test if they wish to fix drafting errors.
The Greene King Pension Scheme has appointed XPS Pensions as its actuarial and investment adviser following a competitive tender process.
Professional Pensions has compiled a list charting the progress of master trust authorisation. View our list in full here...