Finance Committee on Oct. 20th, 2014

[Michael Roschlau]

Clearly, making the P3s in our sector more attractive is a step in the right direction. One of the recommendations we had of increasing the maximum federal share from 25% to the usual one-third would be a big step in that direction.

[The Vice-Chair, NDP, Nathan Cullen]

Thank you, Mr. Roschlau. Thank you, Mr. Brison.

We'll go over to Mr. Allen, for up to seven minutes, please.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you to our witnesses for being here. I'm going to start with Ms. Reynolds and then Mr. Mattina after that.

Ms. Reynolds, when you talk about your recreation and sport infrastructure, I tend to agree with you that there are a number of our small communities and others that are facing renewals or whatever in recreation, whether it be fields, whether it be arenas and those types of things, and maybe some refurbishment. What I would like to understand when you're talking about the $3 billion ask here is exactly what kinds of things you're hoping to achieve with that money. Maybe more important, as you see things change.... I've always struggled a little bit with the communities that set a priority of building a new arena, for example, and then can't maintain it after. Sometimes it's easy to get the capital money, but then the communities suffer because they don't have the tax base to actually support it.

Is there some way that you would look at maybe regional facilities bringing together multiple communities so that these things could be better afforded on a long-term basis?

[Jennifer Reynolds]

Thank you for your question.

To your first point, the fund would allow communities to do major renovations or rehabilitation to any manner of sport and recreation infrastructure. First of all, municipalities are probably the owner of the largest sport and recreation asset base across this country. It ranges from trails to sporting fields, tennis facilities, seniors centres, cultural facilities, arenas and pools. The challenging part is when those facilities have major renewal requirements, quite often they can be taken out of service for a short or a longer period of time, for example, the roof or the pipes in an arena, which really can take that asset away from a small community when it's the only community hub available for all ages. The fund would allow directed funds to look after the rehabilitation and rebuild of any manner of infrastructure.

To your second point, and I think it's probably a key one, is the requirement for municipalities to have really strong asset management plans. You see that more in roads and bridges where they're inventorying and valuing the state of their infrastructure in order to calculate what the replacement costs would be in order to put into a reserve fund so that these are planned refurbishments and that municipalities are able to help fund those requirements going forward. I think you're seeing that. I think that there are municipalities that have strong asset management plans. Many facilities though were built at a similar time, for example in 1967, and are nearing the end of their useful life. These asset replacements take them out of commission for a period of time. That makes it challenging in terms of shutting down the facility in order to re-roof it, or put in a new HVAC system. I think it's a balance and I think we're working significantly within the sector to ensure that communities have strong asset management plans so they are protecting for their own future going forward.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

You don't actually believe that a 1967 Confederation facility necessarily should be replaced because maybe the tax base in that certain community has gone down when in 1967 it could afford it and had industry and other things there, but maybe now it's not the right move. Would there be a recognition of that in the process?

[Jennifer Reynolds]

There would be. To your point of municipalities working together, I think there are examples where there have been facilities built that have crossed jurisdictions and they figured out a way to both build them on the capital side and then share an operating cost, whether that's on percentage of use, or working with academic institutions, etc. To keep an asset beyond its useful life or to replace it for the sake of replacing it isn't what we're recommending at all. Communities need to look at what their current needs are, what their current income base is, to allow them to set those priorities. I use it as an example because many communities in fact did build facilities at that time, and there are many small communities where it might be their only facility, and it's going to be detrimental if they're out of commission.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay, thank you.

Mr. Mattina, you talked about the job targeting funds and I just want to get your perspective.

Do you have an estimate? This is one question, but it has four parts. The first part is, do you have an estimate of the size of these job targeting funds that are being held? Is Canada alone in this concern with these job targeting funds and the infrastructure investment? Has the situation gotten worse or better in the past decade or two? The last piece is, with the job grant and the apprentice loans—and I know Merit does a lot of work on their own area in terms of bringing young people into the trades—is this type of thing curbing the development of young people entering the trades?

[Domenic Mattina, Chairman, Merit Canada]

I'm going to ask you to repeat a couple of the questions as I get into them. That last one....

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

I'll prepare a question.

[Domenic Mattina]

With respect to job targeting funds, all I can really say is it's in the tens of millions. One example I can give you is that there's a mandatory dollar per hour due that goes into these funds for all their workers. That can give you some form of calculation. Some go up to $2 an hour. It varies among locals, but it is in the tens of millions. I don't have a definite number. However, for any of my responses, I can have Terrance Oakey, our president, follow up with more definitive information.

With respect to it getting better or worse, it's definitely getting worse. A union local has complete control of the funds and how they use them. If they wish to target a single employer, they can do so. In fact, if they want to put somebody out of business.... I can tell you that personally I was a victim of being targeted in my earlier days, and I had to fight off targeting funds. As I've grown, it's become easier to manage. It's not that easy, but it is a bit easier than it is when you are smaller and you are more of a target.

Your last question I didn't fully....

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Really quickly, because I have only about 10 seconds, does this curb Merit's ability to attract young people into the trades?

[The Vice-Chair, NDP, Nathan Cullen]

Could we have just a short response to this, Mr. Mattina.

[Domenic Mattina]

I couldn't really say definitively whether it does or not. I can't say I would know that.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much.

Thank you, Chair.

[The Vice-Chair, NDP, Nathan Cullen]

Thank you, Mr. Allen.

We'll go to the lightning round with Mr. Rankin, for up to five minutes, please.

[Murray Rankin, NDP, Victoria, BC]

Thank you, witnesses. So many witnesses, so little time.

I'd like to start with Mr. Johal of the Mowat Centre at my alma mater, U of T. I'm delighted you're here.

Not surprisingly given your mandate, you focused on the province of Ontario. The deplorable state of transit and other infrastructure deficits in Toronto and elsewhere have not gone unnoticed across the country.

I have a number of questions for you. The second thing you talked about, and I think I'm quoting, was the need for an “adequate” and “aligned” system.

Could you describe what you meant by those words?

[Sunil Johal]

Sure. Adequate referred to the level of funding. As I mentioned, in Ontario about 12% of infrastructure investments come from the federal government. The other 88% come from the Ontario government and local governments. That's adequate.

In terms of being aligned, I think that with so many different programs from the federal government, we're seeing a lot of overlap and a lot of duplication, and it becomes very challenging for municipalities and for provinces when they are asked to come to the table with matching funds when they may have their own priorities at a local or regional level. There isn't really two-way alignment. It's kind of being forced by the federal government downward.

[Murray Rankin, NDP, Victoria, BC]

Thank you. Right. I understand.

You talked about how only 12% in Ontario were funded by the federal government.

Would that ratio of 12:88 be similar across the country, or are you aware of discrepancies?

[Sunil Johal]

I don't know for a fact. It would be roughly comparable. There may be some variations, but it would be in the same order of magnitude.

[Murray Rankin, NDP, Victoria, BC]

I don't think Canadians are aware of that discrepancy. I'm glad you brought it up.

You mentioned the green infrastructure fund and you used the term $150 million unexplained publicly. What did you mean by that?

[Sunil Johal]

We have looked on Infrastructure Canada's website. This was a $1-billion program from 2009 to 2014, and essentially about $150 million was just unexplained. It's not clear what that money has been used for or whether it has been used, whereas other money from that fund has been described as being transferred to other departments, or reference levels have been reduced so.... We just don't know.

[Murray Rankin, NDP, Victoria, BC]

There's been inaction perhaps. We'll look further into that.

Another phrase you used, which I liked, was that projects are often shovel-ready and they are prioritized over what may be important.

What do you mean? How do we fix that?

[Sunil Johal]

I think one of the ways to fix that is to look at the federal requirements for matching funds and the deadlines for those matching funds, because I think in a number of cases we've seen municipalities and/or provinces being forced to quickly come up with funding to match a federal investment idea that may not actually be, from a strategic perspective, the project that might make the most sense for all parties involved in funding the project.

[Murray Rankin, NDP, Victoria, BC]

I see.

At the end you were talking about the fact that Ontario has 38.5% of the population but gets a significantly smaller percentage of the Building Canada fund. You said that $250 million goes to jurisdictions regardless of their size or need. From a public policy point of view, this seems a rather shocking way of doing business.

Is there any public policy rationale for such a disparity?

[Sunil Johal]

From our perspective, not really. It doesn't really make sense that P.E.I. and Ontario get exactly the same amount of money for a significant portion of a fund, when they obviously have massively different populations and needs.