Thank you, Mr. Chair, and thank you to all of you for having us here today.
Actually, I bring regrets from Mayor Doug Reycraft of Southwest Middlesex, who was actually supposed to be here with me today. He got hung up waiting for a much-delayed plane. He isn't able to be here but he does send his greetings, and we certainly bring greetings from our president, Councillor Karen Leibovici of Edmonton.
We always welcome the opportunity to speak on these issues with this committee. On behalf of FCM's 2,000 members, I'm really pleased to share our views on the topic of how competition can make infrastructure dollars go further.
At FCM we believe there's no surer way to create jobs today and strengthen our economic foundations of tomorrow than investing in municipal infrastructure. Where federal, provincial, and territorial private and local partners bring funding and expertise to the table, no other investment, we believe, goes as far or has achieved so much. In a world of economic uncertainty, we believe Canadians want to know that we're taking action to build the conditions for a competitive economy and strong communities. Canadians want to know that all orders of government are working together to make progress on practical priorities, such as good roads, clean water, and a shorter commute.
The new infrastructure plan announced in budget 2013 is set to renew federal funding expiring in 2014. It will index the gas tax fund to protect its long-term value. It commits to a longer-term funding program for projects. It's certainly, we believe, a step in the right direction. Particularly, by protecting the purchasing power of the gas tax transfer and extending program funding for 10 years, the budget advances the principle of longer-term sustainable infrastructure funding, which is going to be a real theme of my comments today. It really responds to the question asked by this committee.
We're particularly pleased with the government's decision to review the effectiveness of its infrastructure plan within five years. This will be a real opportunity to take stock of how effectively the plan is addressing infrastructure gaps, notably in public transit and upgrades required as a result of new federal waste water regulations. Again, speaking to the question raised by this committee, it will be an opportunity to review the policies, procedures, rules, and regulations that are set into the program initially to ensure that every dollar is being stretched as far as it can be, that we're maximizing the value of every federal dollar to taxpayers.
On the specific question this committee is studying, we have the following comments.
As members will know, Canadian municipalities own and operate a little more than 60% of Canada's core economic infrastructure but collect just 8ยข of every tax dollar paid in Canada. Cities and communities are always open to innovative ideas to help address this critical gap.
I want to start on the first subject around streamlining programs and reducing red tape. I want to start by saying that one of the best and surest ways to reduce red tape and increase private sector infrastructure involvement, which means increasing competition and ensuring fairness, is through predictable infrastructure investments, like the gas tax fund, rather than lottery-style investments through application-based funds.
Let me explain why.
Application-based funding programs, like the building Canada fund, are very well-suited to building large-scale projects with exceptionally high upfront capital costs. They leverage matching investments by all orders of government on a one-time basis to make strategic priorities often of regional or even national significance. They're definitely useful in some circumstances, but they can actually make the infrastructure deficit worse unless there's a balance with predictable funding programs that enable communities to maintain or repair existing infrastructure. In fact, the combination of the building Canada fund, as an application-based program, and the gas tax fund really does provide that balance. But nevertheless, there are ways to improve these application-based funding programs.
In the short-term, setting clear priorities and ensuring a significant portion goes to municipally owned projects will improve the predictability of the fund for local governments, which is going to help them improve their own planning. Most critically, it will improve the ability of the private sector, the providers of construction and other types of services to municipalities, to adapt their own supply and resources capacity to the demand, which will almost certainly increase competition locally.
Looking at permanently adopting the economic action plan and streamlining application forms and processes would also enhance the building Canada fund by reducing the amount of time between a project's application and its approval. Again, shortening approval times and increasing the predictability of when a project will begin will encourage more and more private sector companies to bid for projects.
Moving on to the second topic around increasing private sector investments and participation in local projects, FCM views P3s as one tool to consider when assessing projects. But it's important to remember that they're not a magic bullet, and they, alone, cannot address infrastructure needs. While P3s are an important tool available to municipalities to increase their financing options, whether or not to pursue a P3 option is a decision that we believe must be made at the local level.
The newly announced building Canada fund contains a so-called P3 screen, which will ensure that certain applications must consider P3s as a condition of applying for funding for projects of over $100 million. That's a provision we only support as a means to ensuring that a P3 is considered rather than forced. It is important to remember that, in rural Canada especially, P3s aren't really that effective because of the large project scale required. In fact, most of our research and what we've heard from the private sector suggest that a project value of $100 million or more is really required as a minimum floor for making a P3 project work, and most rural and remote and even small town communities really don't have projects of that size. They also have challenges around capacity in terms of assessing and managing a P3 project and even simply accessing the information required to get RFPs out.
Just as a note, since 2007 only 60% of the P3 fund has been allocated, so $715 million out of the $1.25 billion of the P3 fund.
The last thing I wanted to talk about was the procurement process that municipalities follow. I think that's most directly related to the questions of this committee. An important aspect of ensuring job creation and increasing bids for projects at the municipal level, as I said before, is stable and predictable funding over the long term to allow municipalities and the private sector to better plan their investment when it comes to infrastructure and jobs. FCM was really pleased with the additional flexibility added to the eligible project categories and the gas tax fund, for example, to allow for diversification and meeting the most pressing needs. On its own, this measure will create more opportunities for competition locally.
As an example, or an anecdote, we've spoken to several municipalities that for the last few years, up until two or three years ago, had trouble attracting more than one bid to an RFP for a local project. That was mainly because they just simply weren't putting enough RFPs out. They didn't have enough money to spend on infrastructure, essentially, to attract enough local competition for their projects. They have related that over the last few years the leadership shown by the federal government in reinvesting in Canada's infrastructure has increased not just the amount of money that's being put into infrastructure every year, but the sense, especially in the private sector, that this interest in investing in infrastructure, and the continued investment in infrastructure over the longer term, has attracted more and more private sector bidders. In small communities we've heard many examples where people have said that for years they only had one bid. Now they're getting two, three, or even four bids because companies know they're going to be investing in their local infrastructure, not just this year or next year but for the long term. Multiple bids are the very best way, actually, of reducing your costs locally.
On this score, too, I want to mention that municipal procurement processes are regulated by provincial agreements or legislation, and in some cases those provincial regulations create conditions where these types of decisions are outside of the control of local governments.
I want to underscore that any increased federal restrictions on municipal tendering will simply add red tape, additional bureaucratic hurdles, and ultimately, delays and added costs to building core infrastructure and creating jobs for Canadians.
In conclusion, our hope is that the long-term plan announced in budget 2013 can provide all governments with a model for common-sense cooperation and help tear down the silos that prevent them from delivering the very best value for taxpayers. The infrastructure plan that was announced in the budget is an important opportunity for Canada to maximize, and municipal leaders are ready to do their part.
We'd be pleased to take any questions.
Thank you.