Quebec’s pension fund is getting involved in the construction of transportation some long-awaited projects in and around Montreal.
Premier Philippe Couillard and Caisse de Depot CEO Michael Sabia, said the Caisse de Depot would fund a light rail system for the new Champlain Bridge and a train linking downtown Montreal to Trudeau Airport in the West Island, as well as improved service toward Ste-Anne de-Bellevue.
The investment will cost $5 billion. If all goes well, the new trains will be running by 2020.
The commercial agreement, which would hand over the funding to Quebec’s pension fund manager, has never been done before and represents a major policy shift. The Caisse’s expanding role means they will be more involved in provincial infrastructure projects.
The Caisse de Depot currently invests in rail systems in Vancouver, Europe and Australia. They say those projects are profitable.
Couillard said the province pays $30 million per day in debt interest alone, and instead of investing in infrastructure, found a way to buy $5 billion dollars of new rail service – without the province footing the bill.
“We have said, and I've said publicly since 2012, I don't know how many times, that we want to invest in infrastructure here in Quebec,” said Couillard, who was with Finance Minister Carlos Leitao, Transport Minister Robert Poëti, and Montreal Mayor Denis Coderre to support the new way of funding future projects.
The Caisse said the $5 billion investment will be profitable to pensioners.
“We are not condemned to cost overruns and to everything being late,” said Sabia. “We can run with the best in the world. That's what the case is. We are building an organization here that is among the best in the world and we think we can contribute that to Quebec.”
The projects have been called necessary by the city and the province. Without the Caisse, they may never happen, said Leitao.
“We are constrained by our total level of indebtedness and we have $90 billion in public infrastructure over 10 years so if we can find another way to fund a portion of this,” said Leitao
There are concerns, however. Some worry about transit fares, considering it’s a for-profit endeavour.
The government suggests it may subsidize the project to keep fares low.
“If you want this project to be successful and bring returns, you need people that use it in larger and larger numbers,” said Couillard. “If you don't have low fees they will not do it, therefore there is a commercial incentive to keep the fees as low as possible.”
The Parti Quebecois argued that if the Caisse is meant to be independent of government, it will manage to stay at arm’s length.
Sabia said only the Caisee, and not the government, will chose what they invest in.
“There is no question about the independence of this organization. Let me be very clear about it,” said Sabia. “I would not be here today if this were not an independent institution that takes its own decisions.”
McGill University management professor Ken Lester likes the idea, saying the money being invested would have otherwise been invested in bonds, which nowadays pay almost no interest.
“This is supposed to be low-risk money, it's supposed to be money where the return is determined in advance like a bond. When you enter into these infrastructure deals, everything is set out from the beginning. Now there certainly can be cost overruns and no one would be surprised there,” said Lester.
Leitao said the first step will be to table a bill in the National Assembly giving the Caisse power to invest in the infrastructure projects. He also explained that the government would decide which projects to entrust to the Caisse, as well as decide the plans and strategic priorities of infrastructures in the province.
They plan to table the bill within weeks.
Lobby groups pleased
The announcement came as a welcome surprise for groups who have long lobbied for improved transit to the suburbs.
Longueuil Mayor Caroline St-Hilaire applauded the move, saying this is excellent news for people living on the South Shore who use public transit.
St-Hilaire has been advocating for a light-rail transit system on the Champlain Bridge for years, saying the existing reserved bus lanes aren’t sufficient given the number of people commuting to and from the South Shore.
Proponents of improved train service to the West Island are also pleased with the announcement.
“I was pleasantly surprised. I never expected it. As you know, it's always a battle to obtain financing,” said Clifford Lincoln, a former MNA who has been lobbying for the Train de L’Ouest for years.
“We have financing in place. There's a deadline now, and more importantly our project has been named as such -- Train de l'Ouest -- as one of two projects selected so it's very good news for us,” he said.
He said he hopes the West Island Coalition for the Train de L'Ouest is consulted during the process.
“We want to take part in it and make sure that in addition to serving the airport it will also serve all the commuters all the way to Ste-Anne-de-Bellevue, the industrial sites, the MacDonald John Abbott campus -- all the things that mean Train de l'Ouest for us,” he said.
Mayor Denis Coderre also welcomed the news, saying a rail link from downtown to Trudeau Airport and a light-rail transit system on the Champlain Bridge will benefit Montreal.
“If you want to talk about economic development, you have to talk about public transport,” he said
Aeroports de Montreal issued a statement late Tuesday afternoon, saying it “enthusiastically welcomes” the plan and is “delighted to learn that priority is being given to a public transit system linking downtown Montreal, Montreal–Trudeau International Airport and the West Island.”
The Caisse de depot's involvement in the projects marks a turning point, said Coderre.
“It is a change of culture where you have a public organization willing to find a way to deliver and to have the capacity to make that happen regarding the funding of course,” he said.
