Concern about new federal deputy minister of finance’s involvement in privatization

Ottawa (9 Dec. 2020) — The appointment of Michael Sabia as the deputy minister of Finance raises concerns about whether federal government spending that is supposed to help the economy recover from the COVID-19 pandemic will be used to privatize government services. As both the CEO of the Caisse de dépôt et placement du Québec (the Caisse) and a member of the board of the Canada Infrastructure Bank he has been involved in pushing privatization schemes. Now he will become the second-most powerful person at the federal Department of Finance as the government makes decisions on how to spend funds intended to speed up the economic recovery when the COVID-19 pandemic ends.

REM scheme took privatization to new levels 

As CEO of the Caisse de dépôt et placement du Québec, Michael Sabia was heavily involved in the Réseau express métropolitain (REM) rapid transit scheme in Montreal. REM took privatization to new levels. 

Until now, when services are publicly funded, governments have been making the decisions about what services would be provided, and where they would be provided, even if services had been privatized. With REM, almost all decisions were made by the investor. The government’s only choice was to accept the whole package or turn it down — and by the time the government was making that decision the project was so far along that saying no would have been politically very difficult.

The consequences of privatizing decision-making about things like the route and station locations were predictable. The route was picked to maximize revenues for the investor and will actually harm service on existing public transit routes. An investigation by the Montreal Gazette raised concerns that station locations were based on where the Caisse owned land rather than what was good for transit users.

Sabia played role in Canada Infrastructure Bank being repurposed to fund privatization schemes

Michael Sabia was also a member of the Advisory Council on Economic Growth that was set up by then minister of finance Bill Morneau in 2016. It was a report prepared by this group that was used to transform the plans for the Canada Infrastructure Bank. Instead of being a source of low-cost funds for public infrastructure, as was promised during the 2015 federal election, it was to be used to subsidize privatization schemes.

One more reason to worry about federal government privatization schemes

There are already concerns about federal funds being used to subsidize privatization schemes. In addition to what is happening with the Canada Infrastructure Bank, there are also concerns that the Social Finance Fund could be used to subsidize privatization schemes like social impact bonds. One can perhaps hope that, because his role will be protecting the well-being of all Canadians instead of generating large profits from investments, Michael Sabia will be less willing to champion privatization. However, the appointment of someone linked to schemes to privatize public infrastructure as deputy minister of Finance means those concerned about the impact of privatization on the quality, cost and accountability of public services have even more reason to be vigilant.

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