SOURCE: Watershed Sentinel

Watershed Sentinel

March 23, 2016 05:00 ET

Editorial Exclusive - Budget 2016: Liberals Snub Free Infrastructure Loans

COMOX, BC--(Marketwired - March 23, 2016) - Lost in the din of debate over the Trudeau government's deficit budget is a mostly unnoticed civil lawsuit with potentially huge consequences to the way Canadian governments borrow money and how much interest they pay. The lawsuit was launched in 2011 by the Toronto-based Committee on Monetary and Economic Reform (COMER) with constitutional lawyer Rocco Galati and went to appeal on March 3 of this year. A recent article, "Bank of Canada Lawsuit," by Joyce Nelson in the Watershed Sentinel explains that the suit "...would require the publicly-owned Bank of Canada to return to its pre-1974 mandate and practice of lending interest-free money to federal, provincial, and municipal governments for infrastructure and healthcare spending."

Galati considers it his most important case to date and, asked why Canadians should care about it, responded, "Because they're paying $30 or $40 billion a year in useless interest. Since '74, more than a trillion to fraudsters, that's why they should care." COMER estimates the interest is closer to $60 billion per year, and $2 trillion since 1974. With figures like that, fiscal conservatives bemoaning the Liberals' deficit budget and promised billions in infrastructure spending may just have to sit up and pay attention.

The Bank of Canada was created during the Great Depression and as Nelson explains, "funded a wide range of public infrastructure projects from 1938 to 1974, without our governments incurring private debt ... the Trans-Canada highway system, the St. Lawrence Seaway, universities, and hospitals were all funded by interest-free loans from the Bank of Canada." A Liberal Party backgrounder cited in the article touts the party's "transformative investment plan" by waxing nostalgic about those very projects, but fails to mention that they were funded by the interest-free loans of the past. (Ironically, it was the first Trudeau who was "quietly seduced" into joining the Bank for International Settlements (BIS), which "encouraged" Canada to borrow from private lenders.)

The federal government is already taking steps to establish a whole new bank, to be known as the Canada Infrastructure Bank (CIB). Part of the Liberal election platform, the CIB is supposed to make it "easier and more affordable" for municipalities to finance much-needed infrastructure projects. The same backgrounder does not mention a public bank but states "...we will work with the private sector and pools of capital that choose for themselves to invest in Canadian infrastructure projects."

Of course, the finance minister could easily kill two birds -- the lawsuit and the need to establish a costly new infrastructure bank -- with one stone. A direct order to the Bank of Canada to return to its pre-1974 mandate would be within his rights and in line with his ministerial directives to "reduce ... wasteful spending," and "avoid escalating conflicts unnecessarily."

In the face of the federal government's attempts to block the lawsuit and dismiss it as "frivolous and hypothetical," Rocco Galati has maintained that "The case is on solid legal and constitutional grounds." According to COMER, if it were to pass, it would restore the Bank of Canada to its original purpose, which includes making interest-free loans to all levels of government in Canada for infrastructure as well as 'human capital' investments; including education, health, and other social services.

If not, as Nelson points out, "It's those 'pools of capital' -- including Wall Street titans like Goldman Sachs -- that are set to profit handsomely from Canada's new infrastructure lending and spending spree."

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Contact Information

  • For further information or to arrange an interview about this media release please contact:

    Joyce Nelson
    nelsonbeach9@gmail.com
    416-686-7780