Ever loan a friend some cash just to see them splurge on some questionable purchases a week later? The federal government has found itself in a similarly awkward situation.
What happened: The Canada Infrastructure Bank (CIB) is providing BC Ferries, the company that operates all major ferry services in the province, with $1 billion in loans to purchase new ships, money that BC Ferries has decided to spend on vessels made by a Chinese state-owned shipyard.
-
The revelation about the funding comes after Transport Minister Chrystia Freeland blasted BC Ferries for buying made-in-China ships and demanded assurance that “no federal funding will be diverted to support the acquisition of these new ferries.”
Why it matters: Canada’s newfound interest in re-industrialization is beginning to run into the reality that the feds long ago gave up on the sort of state-directed economic planning that would, for example, force BC Ferries to buy Canadian-made ships rather than cheaper Chinese models.
-
BC Ferries has justified its decision in exactly these terms, saying the chosen Chinese shipyard offered the strongest proposal “by a significant margin” and that no Canadian companies even bid on the contract.
-
For its part, the CIB washed its hands of BC Ferries’ decision, telling the Globe and Mail that it isn't involved in how the company awards contracts.
Bottom line: If Canadian governments want more say over what gets built in Canada and who builds it, they will likely need to embrace a larger role in directing resources and attaching stronger conditions to the money they dole out.—TS