Decoding the Major Projects Office, the centrepiece of Carney’s nation-building plans

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Rarely has a new government agency received so much hype, with so little known about it.

When first promised by Prime Minister Mark Carney last spring, the Major Projects Office appeared to have a relatively narrow purpose: To handle the regulatory fast-tracking of large energy, mining and infrastructure investments under the controversial Bill C-5, which allows projects to bypass normal legal requirements if deemed by Ottawa to be in the national interest.

Since high-profile energy executive Dawn Farrell was announced in August as the MPO’s first chief executive officer, it’s become clear that Mr. Carney’s government has much greater ambitions for it.

By this week’s federal budget, which commits $214-million to the MPO, it was being described as “a single point of contact to get nation-building projects built faster” – not just those designated under Bill C-5, and not just in terms of regulatory expedition. It’s now also tasked with structuring project financing, including by helping co-ordinate backing from existing government financing agencies such as the Canada Infrastructure Bank and the Canada Growth Fund.

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But what exactly that means, particularly on the financing side, has not been publicly explained in detail by either the government or by the Calgary-based MPO itself, which for now is rerouting all media requests to Ottawa.

As a result, confusion has swirled – including around whether the other financing agencies now answer in some way to the MPO, an interpretation fed by unclear wording in the budget.

In fact, that level of authority is not at all what Mr. Carney intends, based on conversations this week with five people in or around government who are familiar with the MPO’s development. The Globe and Mail is not identifying those individuals because they were not authorized to speak publicly on the subject.

The picture they painted of what the MPO is instead expected to do still suggests an extremely central – if not fully defined, and potentially contentious – role in determining whether some of the investments most central to Mr. Carney’s vision for Canada’s economic competitiveness and sovereignty get across the finish line.

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It adds up to the office serving proponents as some combination of project manager, champion and concierge – all depending on the stage of the extremely wide range of potential investments falling under its purview.

The first tranche of referrals to the MPO, announced by Mr. Carney in September, was, in retrospect, telling of that range and of the variation in the office’s mandate.

An initial set of five projects – the Darlington small nuclear reactor in Ontario, an expansion to the Port of Montreal, phase two of the LNG Canada liquefied natural gas terminal in B.C., the expansion of the Red Chris mine also in B.C., and Foran Mining Corp.’s McIlvenna Bay Project in Saskatchewan – are far enough along that the MPO’s job is mostly to help navigate last-minute permitting hurdles or financing gaps as they arise. This is the concierge service.

By contrast, another six referrals also made by Mr. Carney that day are abstract and unadvanced. Some, such as a national critical minerals strategy and an Arctic economic and security corridor, are not even projects so much as concepts that could beget projects. The rest – high-speed rail between Toronto and Quebec City, a massive offshore wind farm in Nova Scotia, huge upgrades to Manitoba’s Port of Churchill and the Pathways collection of potential carbon-capture investments in Alberta’s oil sands – are nowhere near investment decisions.

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Those might be where the MPO wears the project-manager hat, trying to work with potential proponents to shape their ambitions into practical plans that align with permitting and financing realities, while identifying what policy changes or government-backed capital structures could help.

“The MPO has created business development teams to work with provinces and territories, proponents, and Indigenous Peoples to further develop and make these projects a reality,” was how the Privy Council Office – the federal department to which the MPO is referring media requests – put it in an e-mailed reply to The Globe and Mail this week.

The next tranche of referrals to the MPO, which during a speech in Toronto on Friday Mr. Carney reiterated will be coming next week, may include projects whose advancement falls somewhere between those two extremes. That is to say, tangible prospects that are currently not in reach because of obstacles the office could help remove.

Across these different assignments, the MPO’s role on the regulatory side seems relatively clear. It includes helping proponents navigate the byzantine processes in place, trying to light fires under government departments to move faster and in some cases identifying how regulations could be pared back. It may also serve the purpose first ascribed to it, by shepherding projects under Bill C-5’s fast-tracking provisions.

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Some of the financing implications, when the MPO gets involved, are also now coming into light.

But that is also where Ms. Farrell and her team may have to work even harder to find their sweet spot, particularly in terms of maximizing the value of the Infrastructure Bank and the Growth Fund – Ottawa’s two biggest project-financing vehicles – rather than getting in their way.

Both of those entities, launched under then-prime minister Justin Trudeau with a focus largely on low-carbon investments, are already highly active. The Infrastructure Bank, after an infamously slow start, has committed approximately $17-billion – mostly in concessional loans – to about 100 total projects. The Growth Fund, which usually strikes more complex deals involving tools such as equity stakes and offtake agreements, has committed approximately $5-billion to 16 projects or companies in its first two years of operations.

In one regard, the Infrastructure Bank – and project proponents seeking to borrow from it at below-market rates – is a beneficiary of the MPO’s arrival on the scene. That’s because, per the budget, it will now be allowed to invest in any project that’s referred to the MPO, even if that project doesn’t fit within the sectors the government has otherwise mandated it to invest in.

(Those sectors currently include public transit, clean power, green infrastructure, broadband, and trade and transportation, and the government is now planning to add data centres.)

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That does not mean, the people interviewed for this story stressed, that the Infrastructure Bank will be required to invest in anything just because it’s on the MPO’s list. And neither will the Growth Fund or any other agency.

What the MPO will do, they suggested, is work with proponents to determine which of those entities – as well as government grants programs – are best suited to their capital needs and what’s reasonable to expect. It will also help them structure their requests and to some extent serve as a go-between.

Ideally, that will provide some degree of traffic control, minimizing overlap, and determining if and when supports from different entities could usefully be stacked.

It could also lead the financing agencies to be presented with a greater number of well-constructed, investment-ready, large-scale applications than they are currently.

But the Infrastructure Bank (which is a Crown corporation) and especially the Growth Fund (which is run under contract by the pension-fund giant PSP Investments) derive much of their value from the ability to make independent decisions.

Each has teams of sectoral investment experts, who have the tricky assignment of settling on deals to advance public-interest projects that take on a level of risk that private investors won’t absorb alone, but also stand a strong chance of earning back their investment.

So a challenge for the MPO, which is itself putting together sectoral teams, will be to strike the right balance in advocating for referred projects.

Too aggressive, and it could create friction that throws the financing agencies off the rails.

Not aggressive enough, and it could become an ineffectual layer of bureaucracy.

What is clear, on both the financing and regulatory side, is that the MPO’s creation reflects Mr. Carney’s belief that government and its agencies need to better and more swiftly row in the same direction, and that Ms. Farrell has the credibility to compel them to do so.

Absent much direct authority, other than on the Bill C-5 projects that have yet to materialize, Ms. Farrell’s overarching imperative will be figuring out how best to wield that undeniable but ambiguous clout.

With a report from Jeffrey Jones.