Some excellent points!
In the UK, they actually own the infrastructure (as in the rail corridor).
Actually not with HS1:
[Milmo, Dan (28 January 2011).
"Highest bidder asks why it lost Channel tunnel rail link sale".
The Guardian (London). Retrieved 2 February 2011. [the] transport secretary … stressed that the deal did not include the railway's freehold or the land itself.]
https://en.wikipedia.org/wiki/High_Speed_1#cite_note-15
This is an very important point, as D-S addressed this (in gist if not detail) with using CN and CPs' RoWs. The track investors would have to come to some sort of arrangement with the two, and CN is on record as stating: "We don't have anything for sale"...."Sale" is key! This is where the Railway and associated Acts will have to be changed. Certainly precedents have been established legally in the past in Canada to doing this. Tricky....but it might be necessary unless some *fair* arrangement is bartered, which is what the Feds would prefer. In the UK's case, ostensibly the Crown owns the lands. CN and CP would also still own theirs. It's the *access* to it that an Act of Parliament can mandate. I'll delve on the Railway Act to find the relevant section, as it is a crucial point, and will come up in discussion. It has to.
Are you sure it will ultimately just be interest?
Answered by another poster, but I'll add that they can flip it at any time, albeit it would have to be run past a Federal agency to do it (approved or not, with conditions and caveats or not). As Paul discusses, done right, these folks are *extremely adept* at doing what they do. Canada is now noted for their prowess, not just in the investments, which are many worldwide, but in *accumulating the wealth to begin with*. There is a bit of stridency about them though, as other unions will attest. They're out for number one! But those are the people you want to do business with. They know how to succeed.
The Ontario Teacher's Pension Fund has been powerful enough to lobby foreign governments and government-owned corporations into changing rules for them....sometimes. Almost a fifth of a trillion dollars already. It is right up there in one of the world's biggest gorillas, virtually in the same leagues as Norway's trillion dollar sovereign wealth fund and other world's biggest pots-at-end-of-rainbows.
[...]
But do not underestimate Ontario Teacher's Pension Fund's ability to rewrite government rules a little bit.
They carry a *very big stick* and one
Governments like to swing, even by association. I'm sure if Alexander's details of back-room machinations are correct (and I have confidence they are) then most of what they will be discussing is financial and legal logistics as much as the rail logistics themselves.
Really? I am not aware of any huge pools of money in this country that are sitting idle.
I've just done a cursory dig to ascertain what many of us know: Cash is in large pools from Corporations, let alone Retirement Funds *worldwide*!. Canada is very much in that camp. That's exactly why IRs are so low, velocity of money is very slow, Central Banks are *enticing* that money to move and multiply. The Feds can stimulate fiscally by making deals exactly like this one. Good for all concerned! It's an investment in the future multiplied again by using private capital.
Pension plans aren't looking for enormous rates of return. What's most important is that the asset base is protected from drops in value, and the return is stable and assured over the life of the investment. In this respect their interest in infrastructure is because it looks more like a GIC or a bond than a credit card. Pension plans have fairly long horizons. Slow and steady is good, what they don't want is to ever have to recover from a drop in value.
Bingo! Extremely important. And that brings MD's point back into play. Gov'ts will bend over backwards to (in effect if not directly) underwrite their investment. It won't completely allay all risk, but enough to allow leveraging that investment with money borrowed (from other pools on the wholesale market) at the lowest rates possible. That's where Gov't Bonds might also come into the picture, considered the safest investment you can make. Next are projects like this one. People will always need transport. Do it right, and risk is absolutely minimal.
Thanks! It seems like infrastructure would definitely be a good investment for them then. I wonder what types of steps the government(s) could take to encourage pension plan investments in Canada, instead of abroad?
Excellent question. Finance is typically a very droll topic, but it's *key* to making this work, so the Guv will do *anything within reason* to underwrite this if need be. That will probably get nasty in the House, someone will always accuse any government of 'giving away too much'...that's just good oversight and accountability, but again, I suspect Morneau is in as deep as Garneau is on this. Remember, Transport has to "slash spending". Watch for that to be wound into this.
I forget who asked the question "What pools?".
Just realized I still have this up on the taskbar:
[...][The data herein is designed to illuminate the role that large institutional investors can play in providing a source of stable long-term capital, consistent with the objectives and directions as set for in the February 2013 communiqué from the G20 Finance Ministers and Central Bank Governors. This data will help to provide insights and detailed investment information which complement the administrative data gathered by the OECD at a national level through the Global Pension Statistics project.][...]
https://www.oecd.org/pensions/private-pensions/2014_Large_Pension_Funds_Survey.pdf
To answer another excellent question someone asked, pardon me for not referencing, rushed here: How to get that money invested in Canada? *Sovereign Tax Breaks*. I'm really out of my element now, but it's an excellent point. There are ways, and sheltering it domestically is one. We *do* have to get them interested in doing this. If they're saying nothing right now...that's actually a very good thing. They didn't say "no!". They're thinking about it, and probably waiting for sweeteners, and as Paul indicates, that's not just cash, its an *assured long term investment* with a government that will cover their backs.
