How the Caisse’s “Public-Public-Partnership”
is Privatization in Disguise

August 10th, 2016 by ant6n

I’ve been staring at the documents of the REM projects for months now. The more I look at them, the more I feel we’re about to make a big mistake.

I’ve been having this sinking feeling in my stomach, the feeling you have as you watch a trainwreck unfold in slow motion and there’s nothing you can do to stop it. The feeling of the guy in the Titanic’s bird’s nest, as the iceberg approaches, doing the math on distances, speed and momentum and coming to the inevitable conclusion: it’s too late.

Because that’s what the Caisse is: the iceberg to our transit.

And we are running out of time: the BAPE process started two weeks ago, this is one of the last steps before it becomes unfixable. If we do not wake up soon, we may be making a mistake that will haunt us for years to come


In 2015, the Government of Quebec passed a Bill to allow the creation of CDPQ Infra, a subsidiary of the Caisse de dépôt et placement du Québec (CDPQ) that engages in transit-related projects. An agreement between Quebec and the Caisse subsequently laid out the groundwork of the collaboration between the two entities.

This newfound model was proudly touted as a new form of PPP, a “public-public partnership”. But for the government, this whole thing comes down to an accounting sleight-of-hand: the government refuses to invest enough money in transit infrastructure, so if the Caisse takes responsibility for its construction, then these projects get taken off the government’s books. Any debt or deficit incurred belongs to the Caisse, not the government. Or, as the government puts it: “ce projet-là se ferait à l’extérieur de notre périmètre comptable”.

If that sounds like a good idea, here’s what it means, according to the agreement between the Caisse and Québec:

This agreement also aims to minimize the impact on the Government’s debt and deficit in compliance with Canadian accounting rules. Thus, in order for the main objectives of this agreement to be reached, the portion of assets or of investments financed by Caisse in connection with any project must comply with the following criteria and, as such, the Government:

  • must not exercise control over the assets of the project;
  • must not assume any risks and derive any benefit inherent to the ownership of such assets;
  • must not automatically become the owner of the project or benefit from an option to purchase at a preferential price;
  • must not pay for the majority of the assets through its contributions;
  • must never have the authority to direct the financial and administrative policies of Caisse.

“Who cares?” you might think. If the Caisse builds infrastructure, shouldn’t they own it and manage it outside of the Government’s purview?

Maybe, if they built a whole line from scratch, using their own money. Maybe even with the public paying for half the construction costs (i.e. billions), we could perhaps, after much consideration and some public planning, allow the Caisse to own the infrastructure.

But that’s not what they’re doing.

In their REM proposal, the Caisse lays claim to the existing Deux-Montagnes line (the most profitable line in the AMT network) AND the Mount-Royal tunnel, the backbone of Montreal’s commuter rail network. It’s our only direct access downtown, and one of the most important pieces of transit real estate we have. Both assets belong to the AMT, an organization that is currently being slowly dismantled and whose people can offer little resistance if they want to get hired at the newly formed organizations next year.

Taking over this transit line is a bold move, one that the government itself may not have seen coming. After all, Mr. Leitao, the Minister of Finance, who is responsible for the government side of the deal (and not the Minister of Transport, as one would assume) and whose West-Island riding will benefit from the REM, repeatedly assured that the Caisse would only own new lines, not existing ones:

“(…) c’est un partenariat avec une entité publique qui va devenir… qui va non seulement construire mais devenir propriétaire et va exploiter cette nouvelle ligne de transport, ça ne s’applique pas aux existants.” (May 12, 2015)

“Donc, c’est très précis, c’est dans le transport collectif, une nouvelle… Et donc c’est doublement clair, parce que c’est une nouvelle infrastructure, donc ce n’est pas une infrastructure existante, on ne va pas prendre une ligne de métro existante, c’est une nouvelle infrastructure de transport collectif.” (May 27, 2015)

Now, the Caisse wants to take our most valuable public transit asset and privatize it.

The Caisse will have us believe that they are the public, and no doubt they believe it too. And sure, in theory, their assets belong to the State. But a legal fiction is not the same as policy on the ground.

For all practical purposes, privatization is what this is: the elected government loses control of the asset to some independent entity. It says so black on white:
the Government:

  • must not exercise control over the assets of the project;
  • must not assume any risks and derive any benefit inherent to the ownership of such assets;
  • must not automatically become the owner of the project or benefit from an option to purchase at a preferential price;

Privatization is the proper word here. And we’re doing it without any competitive bidding process, we’re simply handing over public assets in return for some amount of money we don’t even know.

The Caisse is a crown corporation, a legal entity in its own right. Its mission, by law, is to

“receive moneys on deposit as provided by law and manage them with a view to achieving optimal return on capital within the framework of depositors’ investment policies while at the same time contributing to Québec’s economic development.”

Don’t be fooled by the fancy words. The Caisse is nothing more than a holding company whose primary purpose is to generate profits for its clients (or “depositors”). As such, it has fiduciary duties first and foremost towards its depositors, not us, the public.

Many, including the Minister of Finance, want to believe that the public is the depositor:

“le rendement que la caisse obtiendrait, c’est un rendement qui va bénéficier à tous les Québécois, tous les déposants dans la caisse.”

But the devil is in the details.

Exactly who are those depositors?

Common knowledge says the CDPQ manages Quebecers’ retirement fund, and it’s known as “le bas de laine des québécois”. In reality, the CDPQ manages the assets of 32 depositors, consisting of mostly pension funds and some public insurance funds.


The Caisse’s numbers show that the actual “bas de laine”, the Quebec Pension Plan, only accounts for 23% of the total assets managed by the CDPQ. The bulk (61,7%) is actually composed of pension funds belonging to government employees, which are essentially private pensions.

So who is going to benefit from the bulk of the CDPQ’s activities? The private pensions.

And those depositors are not happy either.

The Caisse and transparency

Mr Donald Tremblay, president of the “association québécoise des retraité(e)s du secteur public et parapublic” (AQRP), already expressed concern over the Caisse’s handling of the question. Back in May 2015, during the parliamentary hearings on Bill 38, the Bill that allowed the Caisse to create CDPQ Infra and carry out infrastructure projects, Mr Tremblay complained that:

“[D]ans ce cas-là, une entente aussi importante, pas un déposant n’a entendu parler de ça avant le 13 janvier, et c’était le matin assis devant notre téléviseur. Il y a anguille sous roche ou c’est complètement à l’inverse de ce que croit M. Sabia par rapport à la transparence, la consultation, la qualité des investissements.”

If the Caisse’s own depositors, whose money the Caisse is managing, question its transparency, how can we the public, the broad, non-depositor public, have any hope of any kind of accountability? If one of the Caisse’s biggest clients only get to hear about major critical actions on the news, how are we expected to be aware of anything the Caisse does?

The same happened when they announced the REM project this year. Everybody I talked to was taken by surprise: municipal politicians, groups pushing for transit to the West Island, people working at the MTQ. Based on how mayor Coderre and Prime Minister Couillard spoke about the project just before it was announced in April, it seems even they were unaware of the plan:

En entrevue à La Presse, Philippe Couillard a toutefois spécifié que ce lien n’irait pas au-delà de l’aéroport puisque « la fréquentation au-delà de l’aéroport soulève des questions de rentabilité ».

Many knew that the Caisse was supposed invest and implement the South shore light rail, the airport and the West Island train, but nobody expected them to take over and privatize the Deux-Montagnes line to do it.

The Caisse’s behaviour after they announced the REM project is also not very reassuring. They held no real public consultations. The only thing we got was PR poster sessions (the “town hall meetings”), and only in boroughs that would benefit from the REM, not the ones that are going to get screwed over.

Moreover, they are still refusing to provide very important documentation:

  • Ridership study
  • Cost estimates
  • Evaluation of route Options (they just claim “this is the best trajectory”)
  • Evaluation of technology (they just claim they studied diferent technologies and this is the best)
  • Any documents describing the overall economics, and how this scheme will work with respect to real estate development
  • More information about the tax-increment financing scheme
  • Information about fares

On top of that, we don’t even have access to the actual mandate they received from the government (according to 3.1.2 & 3.2.1 of the agreement). All we have is a Press release where they announce they’re going to build light rail to the South Shore, West Island and airport.

The Caisse promises that some of this information will be available in the future at some point. But maybe only after the BAPE hearings, which they tried to have expedited supposedly in order to maintain their unnecessarily tight schedule. (Why are we in such a hurry to build transit all of a sudden?) That’s not good enough. How can they claim that we can have a meaningful environmental review process if the public doesn’t have access to basic information?!

The Caisse has so far played its cards masterfully. It got a legal mandate to engage in infrastructure projects. It offered the government a sweet, sweet deal: take transit off the Public’s books, build more transit, and make money in the process, a win, win, win! Armed with a government mandate (we take their word for it), they dazzled us with a daring, ambitious network we couldn’t even dream of and were probably hoping to surf on a wave of public approval to get its papers rubber-stamped before people started asking too many questions.

What does a privatized tunnel mean for transit?

What the Caisse plans to do with the tunnel is painfully clear from their REM plans: they are planning to “upgrade” the tracks, and consciously chose a new technology that will be incompatible with any other rail line, which means that the REM will be the only trains able to go through the tunnel.

At that point, since the tunnel will be privately held, the public will not be able to prevent the Caisse kicking out all the rail lines out of the tunnel that need to go downtown. Why not? Because “the Government must not exercise control over the assets of the project”! Once the government agrees to this scheme in a couple of months, there will be no turning back. The line will be privatized, and we won’t be able to undo this decision for decades.

Furthermore, the Caisse’s depositors, who need to protect their own assets, are demanding guarantees that the government shall not interfere with the Caisse’s management of its assets!

Let me reiterate how bad this is: the Mount Royal tunnel is the backbone of regional transit in the Greater Montreal. The public has spent billions to build a regional rail network around it.

It is the gate to downtown, and we are giving the Caisse the key.


The Caisse has no interest in shared regional transit planning beyond their own mandate to connect the West Island, the airport and Brossard. They only have to consider riders from those parts of town, which means they don’t need to deal with the regional impact of their actions. They don’t need to care about the forced transfers they create and how it will cripple the affected lines. Actually, forced transfers are good business: the REM will make more money for everyone coming from the St-Jérôme and Mascouche lines or VIA who has to transfer to the REM.

By privatizing the tunnel, we will have effectively given a profit-driven corporation the ability to block any further transit development that involves the Tunnel.

Yes to transit, no to privatization!

Of course the REM is an important project and we want the lines to be built. The connections to the South Shore and the West Island are important. But we should not let our excitement get the better of ourselves. The fancy technology and pretty pictures are distractions and the Caisse is trying to pull a fast one. And the most discouraging part is that Montrealers are so transit-starved that they are bending over backwards to give the Caisse whatever they’re asking for.


Development should not be made at the expense (now and in the future) of Montreal North and East, Anjou, Laval, Longueuil, and Via Rail. The REM branches have to be part of a larger regional network. They have to use compatible technology. The capacity of the tunnel should be increased rather than decreased. And privatization of our existing infrastructure is out of the question. We have to continue working towards a regional network and hold the liberal government to their promise that no existing lines will be privatized.

The BAPE process started last week, and everybody can participate. This is basically the last time that the public has any direct influence on the project, so everybody who can should get involved.

15 Responses to “How the Caisse’s “Public-Public-Partnership”
is Privatization in Disguise”

  1. Marvelous Ruddy (Boston, MA) Says:

    Wow, what a great piece. Should be required reading for all Québecois.

  2. Brett Says:

    Isn’t the AMT already a Crown Corporation? If so, the Caisse taking ownership of the Mount Royal seems like a transfer of assets from one Crown Corporation to another, i.e. nothing to get excited about.

  3. emdx Says:

    Screw the tunnel.

    Have the REM connect with the Deux-Montagnes line at highway 13, and run trains every 20 minutes off-peak and 10 minutes on-peak.

    They could even use tram-trains to go downtown if they don’t want people to transfer.

  4. ant6n Says:

    It’s not transfer to another crown corporation, that’s the legal fiction of the Caisse that I tried to expose. This is effectively transfer of some of the most important public assets from the public to private retirement funds (the depositors of the Caisse). With complete loss of public control.

  5. Gaël Says:

    @Bret, the AMT was a crown corporation whose only goal was to make transit as efficient as possible in the whole region. The Caisse is a crown corporation whose only goal is to make money.

    It’s like saying “let’s transfer all of the city’s fire trucks from the fire department to the street cleaning department”. It shouldn’t be a problem, both are departments of the city, and the street cleaning department will be able to use these trucks to clean the streets. If they happen to be cleaning a street where there is a fire, they might even put it out ! Great !

  6. Jérémie Dunn Says:

    I would have like to write this article myself.

    This private/public analysis must not be viewed solely with “legal” glasses. The goal of the Caisse and it’s lack of accountability is a major issue. This isn’t that much about left vs right. It just doesn’t make sense to let urban planing to and organisation not accountable.

    Urban planning is a state prerogative because it is the only actor that is ready to make long terme decisions, that will live with these decisions in the future and that is above particular interests and usually prefers the best decision for all of us. These are important factors and those that differenciate urban planning with business administration or paying retired people each month by example.

  7. Hurluberlu Says:

    All this is awfully in line with how private equity more an more run the world. See NYT recent series on the topic: . Because CDPQ behaviour is much closer to private equity than public body.

    Another point that is currently not discussed: more than fees; regional fare integration. Montréal already suffer from a completely incoherent fare structure, not only in transit, but overall. In order to alleviate congestion and improve transit efficiency, there is a strong need to evaluate transportation cost as a whole.

    Currently each new project (A25 bridge, future Champlain bridge, REM) want to come up with its own pricing strategy, mainly to maximize returns or cost recovery, all this in a situation where existing fare structure is already a complete mess. In the context of transportation, pricing should be designed as an incentive to push people where we would prefer them to be. With an increasingly privatized approach, there is not hope to get close to this.

  8. SG Says:

    AMT is giving the Caisse the key of the tunnel? For free?
    That’s a big assumption. Maybe there’s much negotiation going on.

  9. David Tighe Says:

    Very interesting analysis and worrying. Privatisation is not necessarily bad though. The UK did it both in London and countrywide with from my experience quite good results (if as I have one had lived through pre-privatisation times). In Dublin the trams are privatised, run by Veolia I think. These are just two examples.
    I think privatisation is feasible if regulation of services, tariffs and expansion, by government is firm and competent. here at the moment anyway the government whether of Montreal or Quebec shows no signs of being either. It will be interesting to see what will be proposed (if anything) as a regulatory structure, budget staffing powers etc.

  10. ant6n Says:

    Privatization of operations is not the same thing as what is proposed here. If you privatize operations, you keep the infrastructure public, you keep (at least some) planning public, and you have a competitive bidding process to decide which private operator will run the services for some time. It involves a limited time contract, public control over infrastructure and planning, and you use the market to reduce operating costs.

    The REM proposal is outright privatization of infrastructure and planning; with explicit loss of public control. And that without any competition, there’s no market here. We are creating a monopoly, and allowing a private construct to leverage formerly public infrastructure assets against us.

    The most similar example we have is the privatization of CN, which set back transit in Montreal on the heavy rail network back by maybe 30 years. Oh and btw, it was also organized by Mr. Sabia.

  11. David Tighe Says:

    Thank you for the clarification. It does seem to create quite a precedent. Will the REM be operated to maximize secure returns or ridership? In a monopoly situation the two are far from being coincident. Other similar situations in Canada show they tend to the former (see Air Canada/Westjet or Telecommunications providers). In theory monopolies without regulation normally do this, charging high prices and avoiding risky innovation (look at telecommunications in Europe before the ’70’s). However, the privatisation that took place opened up competition. In this case it replaces one monopoly with another. On the posiitve side something is being done about transport infrastructure and enhanced mobility whereas probably nothing would have been done under the status quo.

  12. Christopher Says:

    This project is a complete and utter joke. What the AMT needs is those billions of dollars to electrify track and improve headways.

    This can be accomplished simply. The Caisse is going to be investing billions of dollars into transit with this project which will no doubt be followed by a memorandum on the further construction of transit infrastructure because of the immense costs of this project.

    Instead the AMT could use the funds to electrify track on the VH line, which has the second highest patronage after the DM line. The AMT should be aiming to emulate S-Bahn systems found throughout central Europe. Electrified suburban trains with low headways, connecting suburban population centres to the metropolitan downtown. Mascouche is probably one of the biggest missed opportunities in recent transit history in Montreal. Those tracks need to be electrified and stations redesigned so it can function as a surface metro for the transit starved Montreal-Nord region which generates tens if not hundreds of thousands of transit users every day.

    With the diesel rolling stock no longer being compatible with the electrified rail, they could be transferred to lines like Mont-St-Hilaire or St-Jerome, reducing headways on those lines.

    I don’t deny the fact that the suburbs need transit, but the existing AMT lines are perfectly poised to bring suburbanites into the city if headways are low enough to allow them to take cheap feeder buses to their nearest station.

    This REM system, which we don’t even know will be integrated into montreal’s existing fare structure, will take sole ownership of the Mount Royal tunnel, meaning no other trains including VIA can travel through it.

  13. Michael Fish Says:

    The privatized network, up and running, can be sold at some time without the permission of the Government to some third party that could hold up the Quebec Government with all sorts of false stories that would mean outsized fare hikes and or demands for increased subsidies, or an expropriation for some quick profit. Who ever made the rules of having PPP’s that don’t in any way connect with eventual public ownership is no doubt in Billionaire financial heaven, (I suspect that this came as a wet dream from the Koch brothers’ ALEC brains trust and accepted by all the big American banks.) God help us….
    Michael Fish, Longueuil

  14. Stefan Says:

    @Christopher: I completely agree. Instead of using billions to replace the current infrastructure with a new one (with lower peak capacity and no possibility for further improvements), a fraction of the money should be used to incrementally improve it. This with the goal of building an S-Bahn/RER style network. I put my idea of such a process here:

    @everyone: Don’t forget to take part in the BAPE process!!!

  15. Sharon Yetman Says:

    Hi Anton,
    You are the very best expert on this whole REM project.So the real question is …
    WHO IS DOING WHAT TO WHOM? AND WHY? Can you answer this question as best as possible. This is a great article! So REM is taking over the whole AMT system, with the forced transfers, so what would be the purpose? And who will benefit? and who will be harmed? The other question is who has the best interersts in mind to stop what might be harmful on a bigger front, to the end user…. transit riders”?

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