Liberals look to infrastructure bank to finance rural, remote broadband internet

Canada's federal infrastructure minister says he is looking to connect private backers with some of the country's rural and northern communities to pay for badly needed broadband internet connections.

Provincial governments have leaned heavily on the Liberals to use whatever influence they have with the Canada Infrastructure Bank to get it to fund broadband internet projects, particularly in rural and remote locations.

The Liberals created the bank in 2017 to take $35 billion in federal financing and use it to leverage three to four times that from the private sector to help pay for major highways, bridges and water and electrical systems to ease the financial burden on public coffers.

Provinces argue broadband yields a long-term revenue stream that would be enticing to any private investor willing to pay the connection costs.

Infrastructure Minister François-Philippe Champagne says a single broadband line into one rural community is unlikely to grab the attention of large institutional investors, such as pension funds. He is therefore looking at how different revenue models could entice private backers or help bundle several smaller projects into one large proposal.

"I often say it's about us in 2018 thinking like our founders were thinking about a railway connecting Canada," Champagne said during a recent wide-ranging interview with The Canadian Press.

"So we're looking at different business models, which would be possible because now we have a new tool, which I think is allowing us to accelerate the process."

$500M pledged

The Liberals have pledged $500 million to build broadband connections, but provinces told the government in late 2017 that "doesn't scratch the surface" of what is needed across the country, according to internal federal documents.

As a result, provinces turned their attention to the infrastructure bank. It operates at arm's-length from the federal government, although Ottawa has to sign off on any loan the bank intends to make.

Notes from a September 2017 meeting of federal and provincial infrastructure officials show provinces argued the mandate of the agency included funding broadband internet systems. Provincial and territorial ministers said helping bankroll broadband "doesn't have to take a long time. Push the button and make it happen."

Amarjeet Sohi, infrastructure minister at the time, said the only thing the federal government could do was ensure any project funded through the agency was in the public interest. After that, "it is hands off and no political involvement," the notes say.

The Canadian Press obtained copies of the notes under the federal access to information law.

Champagne said he has told provinces, territories and municipalities to make sure their broadband projects are "bankable," meaning they must be able to generate revenue.

Revenue concerns

Broadband internet, an issue in Champagne's own, largely rural, Quebec riding, can be transformative for businesses, giving them reliable access to the outside world, the minister said.

"Now, in its execution you have to see, because some of these networks are usually very local and part of the challenge to 'crowd in' investment is to find a revenue model that would be self-sustaining for that particular project."

The bank hasn't published a list of projects it is working on and it's not clear when such a list will become public.

Federal officials noted a number of project proposals that could be eligible for financing through the nascent agency, which they then "set aside for the bank to take the lead on," the internal documents say.

Only one project has been approved for financing through the bank: a $1.28-billion loan to help build a $6.3-billion electric rail system in Montreal — known by its French acronym REM — largely managed and funded by Quebec's pension regime.

The bank's most recent quarterly financial report says it is securing $1.28 billion of debt for the project between now and 2021 — debt that must be repaid within 15 years.