It has been reported that Bill Morneau, our country’s finance minister has enlisted a group of experts “to help Ottawa find ways to resuscitate Canada’s lacklustre economy.”
One recommendation from this group is for government to direct $200 billion towards our country’s critical infrastructure needs. These experts suggests Ottawa create an independent infrastructure bank. Wait a minute here. Why re-invent the wheel? We already have an national infrastructure bank, it’s called the Bank of Canada.
A quick history lesson. Established in 1935, our publicly owned Bank of Canada allowed the federal government the power to borrow money in huge quantities essentially interest-free, and to make such funds available not only for its own use, but also for provincial and municipal expenditures. Such borrowing helped Canada to get out of the Great Depression, to finance its participation in the Second World War and to finance massive infrastructure projects such as the St. Lawrence Seaway and the Trans Canada Highway.
In 1974, under the Trudeau Liberal government, this national credit regime was abandoned. Our country’s debt of around $60 billion was sold to our Canadian chartered banks and international private financial institutions.
Presently, our national debt is approaching $1 trillion, with a significant portion going to interest payments. Now it would be logical to think that after 40-plus years and accruing such a massive debt there just might be something to show for it. Look around this country, there has been no nation-building economic strategy presented by our political leaders for decades. Our nation needs infrastructure development of “grand design” scale — water management projects, serious railway development targeting high-speed rail and technology-driven development of our Arctic region. A return to the intended purpose of the Bank of Canada policy is the most effective means to provide interest-free loans to address our nation’s infrastructure deficit.
All levels of governments, instead of paying for interest that could double or triple their investment expenses, could be paying only for the principal, thus freeing tax income for other programs. Mr. Morneau doesn’t need these expert’s advice. He needs to restore the Bank of Canada.