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

Changes coming to BC Ferries reservations for Vancouver Island routes

Many customers are booking multiple reservations, inflating wait times

Ladysmith Interact Club collecting food donations for those in need

On November 22nd and 23rd, Interact Club will be at the Ladysmith… Continue reading

Caps fall to Clippers in Nanaimo on Friday night

Clippers’ tying and winning goals come in less than a minute

Cowichan school district approves women’s winter shelter

The Cowichan Valley School District’s board of education has approved in principle… Continue reading

Six students arrested, charged in sex assault probe at Toronto all-boys school

The school’s principal, Greg Reeves, described the video of the alleged sexual assault as ‘horrific’

Vancouver Island remembers

Important stories shared as Islanders salute those who made the greatest sacrifice

B.C. to allow ride hailing services to operate in 2019

Fee will be applied to fund options for disabled people

Elections BC keeps eye on Canada Post dispute, but no change in Nov. 30 deadline

Vote No spokesman say an extension of one or two weeks would ensure all ballots are counted

Langley school pulls Japanese ‘rising sun’ flag after student petition

School district promises consultation with students and parents, defends using flag for war history

Calgary bobsled death inquiry recommends infrared technology, safety audits

A judge found the deaths of 17-year-old twins Evan and Jordan Caldwell were accidental and caused by blunt-force head and neck trauma

First ski hill in B.C. opened this weekend

Sun Peaks, near Kamloops, was the first ski hill in the province to open for season

$50k fine and community service for Vancouver Island tax evader

David Gonyea was given a nine-month conditional sentence

Most Read