Quebec Premier Philippe Couillard speaks during a news conference in Montreal, Thusday, February 8, 2018, where he announced details of new automated light rail system for the Montreal region. A nascent federal agency designed to find new ways to finance construction of transit systems is making its first investment in a multi-billion-dollar electric rail system in Montreal. THE CANADIAN PRESS/Graham Hughes

Montreal gets $1.2B federal loan for electric rail

Money comes from financing agency created last year as an infrastructure bank for major projects

A nascent federal agency designed to find new ways to finance construction of transit systems is making its first investment in a multibillion-dollar electric rail system in Montreal.

The Canada Infrastructure Bank will provide a $1.28-billion loan to help build the $6.3-billion system largely managed and funded by Quebec’s pension regime, with interest rates rising from one per cent to three per cent over the 15-year term.

The loan frees up previously pledged federal money for the project, which can now be put towards other Quebec infrastructure plans.

The transit project, best known by its French acronym REM, had been singled out by the Trudeau Liberals as a potential early win for the financing agency that was created last year to hand out $35 billion in federal financing in the hopes of prying much more than that from private backers to fund construction work.

About $15 billion may not be recovered, while the remaining $20 billion is in loans the government expects to recoup. The federal finance minister has to sign off on any financing requests.

The agency’s president said the first financing agreement puts substance to the concept of the infrastructure bank. Pierre Lavallee said the agency will customize its contribution to future projects based on specific financing needs, just as the loan used for REM was tailored to the project.

“We have the capability and the capacity to invest in important projects and to do so at scale,” he said in an interview.

“Hopefully this will send a good signal to future potential partners, both public and private, that we’re here to help.”

The agency has yet to publish a list of projects it believes are ripe for private backing, but government documents show officials planned to work with provinces, territories and cities to form the list that would provide a five-year time horizon.

Lavallee couldn’t say when the list will be published.

The infrastructure bank’s first announcement has been many months in the works, even as critics have complained that the agency — and the government’s infrastructure funding more generally — have been slow to get off the ground.

“What we said from the beginning is that the infrastructure bank would allow (us) to do more for Canadians and this is what we’re doing,” Infrastructure Minister Francois-Philippe Champagne told reporters at a cabinet retreat in Nanaimo, B.C.

“That’s a flagship project where we think we can attract foreign investors as well and this is our first (project), so we need to talk about it.”

Wednesday’s announcement from the infrastructure agency arrived on the eve of Quebec’s provincial election campaign scheduled to launch Thursday. The Quebec Liberals face a steep climb to remain in office after the Oct. 1 vote.

Meanwhile, the federal Liberals’ infrastructure program received another critical review from a parliamentary watchdog questioning spending progress and economic impacts.

A report Wednesday from Parliament’s budget officer estimated the first tranche of money in the Liberals’ infrastructure program boosted the economy last year by at most 0.16 per cent and created no more than 11,600 jobs. Budget officer Jean-Denis Frechette’s report said economic effects from the $14.4 billion budgeted in the first phase could eventually be wiped out if the Bank of Canada continues to raise interest rates.

Frechette also noted that provinces have cut back their planned infrastructure spending — which the Liberals had hoped to avoid — further eroding economic impacts.

Federal infrastructure funding can’t flow to provinces and cities until they submit receipts, which often creates a lag between when work happens and when the federal government pays out.

Frechette’s report said $6.5 billion has been spent to date from the $14.4 billion, with large shortfalls under the “green infrastructure” banner supposed to address climate change and public transit, where $282 million of $3.4 billion has been spent.

The report said $1.4 billion in transit money is scheduled to leave the federal treasury next year — just in time for the October 2019 federal election.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Abundance of candidates for North Cowichan council positions

Three in the mayor’s race and 15 vying for councillor seats

West Coast sailing rough employment seas to help fish processing thrive

Big Read: Fish processors casting a wide net to overcome employment challenges

Municipal spending outpaces population growth 4-fold in B.C.: report

Canadian Federation of Independent Business has released its annual operational spending report

B.C. parents leery of HPV cervical cancer vaccine

Provincial registration uptake among lowest in Canada

Sonic the Hedgehog film shoot in Ladysmith delayed by rain

A rainy forecast for Friday will delay the first day of shooting… Continue reading

U.S. congressman issues dire warning to Canada’s NAFTA team: time is running out

Canadian Foreign Affairs Minister Chrystia Freeland is expected to resume talks with the U.S.

B.C. marijuana workers may face U.S. border scrutiny

Cannabis still illegal federally south of the border

New political party holds an informational session in Vernon

Maxime Bernier’s The People’s Party of Canada draws about 2o interested patrons to Vernon pub.

B.C. MLAs reminded of rural school struggles

Finance committee hears of falling enrolment, staff shortages

B.C. VIEWS: ’Not photo radar’ coming soon to high-crash areas

ICBC deficit now largely due to reckless and distracted driving

Researchers tag great white shark in Atlantic Canada

Information will be used to learn more about where white sharks move in Canadian waters

Mix-up of bodies leads to funeral home reforms in Nova Scotia

One woman was was mistakenly cremated, another was embalmed and presented to family members during a visitation that went horribly wrong

B.C. RCMP turn to Const. Scarecrow to shock speeders into slowing down

New addition will watch over drivers from a Coquitlam median for first-of-its-kind pilot in Canada

Cyclists finish North America trip to highlight Ukraine struggle

The 10,000 bike ride raised over $10,000 for victims of the war in Ukraine.

Most Read