Transport Committee on Feb. 1st, 2024

[The Chair, Liberal, Peter Schiefke]

I call this meeting back to order.

Thanks for your patience, colleagues.

We'll go to Dr. Lewis. The floor is yours.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Thank you, Chair.

While I have the floor, I'd like to move a motion that I have had on notice since Friday, January 26.

I move:

Given that,

a. The Canada Infrastructure Bank (CIB) recently admitted that it lost nearly $900,000 in consulting fees on the failed Lake Erie Connector project;

b. The Liberal government has refused to implement this committee’s recommendation to abolish the Canada Infrastructure Bank;

the committee conduct a study pursuant to Standing Order 108(2) on the Canada Infrastructure Bank (CIB) involvement in the Lake Erie Connector project; that the study be comprised of no fewer than three meetings; that the committee invite the Minister of Housing, Infrastructure and Communities, the Chief Executive Officer of the Canada Infrastructure Bank (CIB), the Chief Investment Officer of the Canada Infrastructure Bank (CIB), and the Chief Financial Officer of the Canada Infrastructure Bank (CIB) to appear as witnesses for no less than two hours each; and that the committee report its findings to the House.

Mr. Chair, I'd like to briefly comment on this motion, if I may.

It was recently revealed through an Order Paper question that the Canada Infrastructure Bank lost $900,000 on a failed electricity project, which the opposition members had big concerns about from the very beginning when this project was announced. There were concerns when the government first announced the project, and these concerns were voiced by members of the opposition.

The government announced an investment of $655 million in an underwater electricity project, which, had it been viable, would have brought jobs and investment to my community of Haldimand—Norfolk. It promised billions in GDP from this project and hundreds of jobs in the low-cost energy sector. Ironically, due to interest rates and inflation, which were largely caused by this government's overspending, the project was indefinitely suspended.

No one seemed to know at the time that the project was cancelled until the Conservatives demanded answers from the government. That was several months after the project was cancelled. Even then, we couldn't find any information about the project. We couldn't even find information on the Canada Infrastructure Bank's website.

Now we're finding out, through a written request for information, that Canadian taxpayers paid a lot of money for high-priced consultants and lawyers, and that this project was suspended. Canadian taxpayers reaped absolutely zero benefit from this project, despite spending a substantial amount on consultants and lawyers.

As you know, this committee recommended in a 2022 report that the CIB be abolished. Meanwhile, Canadians continued to see the inappropriate use of taxpayer-funded dollars by this bank, including the ones we're discussing here today in committee.

We also heard in this committee of the Infrastructure Bank's close connections to McKinsey & Company and its problematic overreliance on external consultants.

I believe that increased scrutiny and a timely investigation into this matter are needed to ensure that the bank is not continuing on a path of ill-advised investments and spending on high-priced consultants and lawyers at a time when Canadians can least afford it and many Canadians are finding themselves relying on food banks.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Dr. Lewis.

I believe Mr. Badawey wanted to speak to Dr. Lewis's motion.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chairman. Yes, I would like to speak to it. I do want to speak to it at a high level, and then I'll get a bit more granular on the motion itself.

Mr. Chair, the Canada Infrastructure Bank, I think we all—at least on this side of the table—understand, is an innovative approach to get more infrastructure built for Canadians, while leveraging funds with all sectors of the Canadian economy to, in fact, in terms of the overall project costs, save Canadian taxpayers' dollars by including other partners as leverage partners to get projects off the ground and have them built for the benefit of Canadians but at a lesser cost because of the leveraged funding that's being made available from all those sectors.

By leveraging public dollars, the bank has attracted—and this is fact—over $10 billion and enabled 28 billion dollars' worth of infrastructure projects across the country that would otherwise not have gone forward. Some of these include the purchase of approximately 280 electric zero-emission buses and associated charging infrastructure over the next five years in British Columbia; the procurement of up to 450 zero-emission buses to replace the City of Brampton's current fleet; and better Internet connectivity for almost 200,000 households in under-serviced Ontario communities, including, quite frankly, in an adjacent community to mine and, ironically, in the community that Ms. Lewis represents.

Canadians can rest assured that every public dollar spent on infrastructure is creating jobs. It's unlocking the housing Canadians need, and it fights climate change by building the economy of the future.

I can speak a lot more to this, Mr. Chair, but I am going to get a bit more granular on the background of what Ms. Lewis is referring to in her motion. The proponents made the decision not to move ahead with the proposed project in July 2022 as the project's economics had significantly deteriorated, according to their business plan expectations, in comparison to what the reality was back in 2022.

No funding agreement was completed between the proponents and the CIB. Expenses for legal and technical consultants are a normal part of the due diligence required for all projects to proceed towards an investment stage. Expenses are budgeted annually as part of the CIB's commitment to good governance, which, quite frankly, was established by the members in accordance with what was put before them when the creation of the CIB was put in place. The due diligence completed will be valuable, should the proponents decide to restart the project.

Mr. Chair, I do want to give some project descriptions so we can put a perspective to the comments that were made by Ms Lewis. However, the Lake Erie connector project is a proposed 1,000-megawatt underwater transmission line connecting converter stations in Nanticoke, Ontario, and Erie, Pennsylvania. The 117-kilometre high voltage, direct-current connection was designed to help improve the reliability and security of Ontario's energy grid, while significantly reducing greenhouse gas emissions between both power markets.

The benefit of the CIB involvement is the participation of the CIB, which was structured to enhance the project's viability, improve taxpayer value and provide benefits to all electricity consumers in Ontario. Once again, as I mentioned earlier, with respect to leveraging dollars, it has less of an impact, saving the Canadian taxpayers those very capital dollars. The CIB's participation was designed to address a potential funding gap in the project by providing low-cost financing to reduce revenue needs while satisfying all project development requirements.

Once again—and I do want to repeat what I said in camera, and I'll say it in public—the concept in the business model of the CIB is simply to leverage dollars from all sectors within the Canadian economy. That being said and that being completed, as I mentioned earlier with this specific project and the many more I highlighted, it then does two things. First, it lessens the overall financial impact on Canadian taxpayers. That one dollar then turns into three to four dollars, which would otherwise come out of the pockets of Canadian taxpayers. Instead, the funding is leveraged to come in from other sectors throughout the Canadian economy. Secondly, and probably most importantly, capital work gets done in the best interests of what's needed here in this country.

Thank you, Mr. Chairman.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Badawey.

Mr. Strahl.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you very much, Mr. Chair.

I'm supportive of Dr. Lewis's motion. I think the committee should adopt it as a study to see what happened in this case.

It might have been well intentioned. The project, had it been completed, may have served Canadians well, but the fact is that in this case it was not completed, so it did not improve taxpayer value, as Mr. Badawey said. It didn't save dollars. It actually resulted in an expenditure of nearly a million dollars on consultants on a project that has not gone forward. A million dollars of taxpayer money was spent on a project that has been suspended or cancelled.

That is what we need to investigate. How did that happen? How do we make sure that it doesn't happen again?

I think we should vote to approve Dr. Lewis's motion, so that this can be a future study for this committee.

[The Chair, Liberal, Peter Schiefke]

We will go to a vote.

[Vance Badawey, Liberal, Niagara Centre, ON]

Mr. Chair, before we go to a vote, I'm trying to work on an amendment here.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I have a point of order.

[The Chair, Liberal, Peter Schiefke]

If I'm going in order, it would be Mr. Barsalou-Duval next.

Next will be Mr. Bachrach, Mr. Badawey, Ms. Lewis and Mr. Iacono.

[Vance Badawey, Liberal, Niagara Centre, ON]

Then...?

[The Chair, Liberal, Peter Schiefke]

When there's no more discussion, we go to a vote.

Go ahead, Mr. Barsalou‑Duval.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

I appreciate what Mr. Badawey is trying to do, as far as defending the CIB's record is concerned, and justifying its existence and the work it does. That's his prerogative, and it's perfectly legitimate.

I also appreciate what my Conservative colleague Ms. Lewis is trying to do, get to the bottom of the CIB's involvement in the Lake Erie connector project, which apparently cost $900,000, so nearly a million dollars in consulting fees before the project even got started.

Naturally, everyone is wondering how it is that so much money was spent on planning a project that never got off the ground in the end. Admittedly, $900,000 in consulting fees is a lot.

I also appreciate the desire to have the committee ask questions and request more detailed information on the matter.

I would've liked to see the contracts. I would've liked to examine the file and the expenses incurred to see whether the money was spent properly. It seems to me that we are skipping some steps and that people are trying to play politics. I realize that meeting in public, instead of in camera, is also motivated by the desire to play politics.

I will nevertheless try to be constructive. To that end, we need to ask for copies of the contracts and to meet with the people at the CIB who were in charge of the project. They need to come before the committee to explain how the money was spent and demonstrate that it was spent properly.

Of course, this situation doesn't sound great to ordinary folks. I think the motion before us could be reworked. The motion should really focus on getting results for our constituents, the taxpayers, instead of simply putting on a show.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Barsalou‑Duval.

We now go to Mr. Bachrach.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Thank you to my colleague for bringing forward this motion.

This is a topic that I think my colleagues know is of interest to us as well, perhaps for slightly different reasons. I appreciate that understanding whether Canadian citizens got value for the $900,000 that was spent doing due diligence is a worthy topic for the committee to investigate.

We also have questions, though, about the validity of the original assumptions, in particular the idea that this project was going to be an opportunity for Ontario to export clean power to the United States, resulting in a net reduction of greenhouse gas emissions. I think that there have been some questions asked about whether that was going to be the case. It would be very interesting to better understand what those initial assumptions were, what those assumptions were based on and why the CIB felt that this was going to be an advantageous project from the perspective of reducing greenhouse gas emissions.

I will note that the CIB was considering investing $600 million in this project, a private sector project put forward by a huge corporation with very deep pockets that could very easily finance its own project. I think it was one of our Conservative colleagues, who used to sit on this committee, who said that, instead of crowding investment into public sector infrastructure projects, which was the original stated goal of the CIB, this project looked like it was crowding public sector investment into private sector projects.

Understanding the rationale behind that and what the thinking of the people behind the CIB was is very much in the public interest and will help inform this committee's understanding of how this all took place.

I am a little bit concerned about the time allocated to each of the four witnesses listed. If we have a three-meeting study and we allocate two hours to each of the four witnesses, that's a pretty substantial chunk of time. I want to ensure that there is enough testimony time remaining to hear from other witnesses who can provide insights on the aspects that I have mentioned.

I know that often witnesses appear on a panel. If we could have a panel of four witnesses and perhaps allocate one of the three meetings to hearing from the CIB officials, that would be a fair allocation—or one and a half—but I do think that there are other witnesses who would be good to hear from when it comes to understanding the project itself, not just the investment of the $900,000 to do due diligence.

I'll leave my remarks at that. This is something we support. I think folks around the table know that. I would certainly look forward to this being a study of the committee.

We have a tradition at this committee of taking turns proposing studies. This is one of the more cordial committees that I've had a chance to sit on, and I think we want to continue that tradition. Therefore, if this is the Conservatives' offering in terms of a study for this committee, I certainly support that.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Bachrach.

I have Dr. Lewis, followed by Mr. Badawey.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Most of my comments were covered by Mr. Bachrach and Mr. Strahl. However, I do want to highlight that there has been a continuous problem of wasting money on consultants. Taxpayers have very deep concerns about this. Given that $900,000 was spent on consultants with no viable project, I think it is incumbent on sitting members to recognize the concerns that taxpayers would have with this and to call for transparency. This information was not revealed until an Order Paper question was submitted to find out details. It was not posted on the CIB's website.

It's very important that taxpayers have a right to hear about this instrument of the CIB, whereby we are giving low-cost interest rates when the average taxpayer is sometimes paying 8% to 10% on their mortgage and is struggling, and when we have two million people going to food banks every month.

The issue of transparency is very important to see what happened with this $900,000 to ensure that this does not happen again in the future and to ensure that there is respect for taxpayers' dollars.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you, Dr. Lewis.

I have Mr. Badawey, followed by Mr. Strahl.

Mr. Badawey, you have the floor.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chair.

There are a couple of things. To some extent, I look forward to this because it will really clear up a lot of misconceptions that may exist, especially with those across the table, particularly as they relate to the dollars that the CIB is managing and whether they come from the government or the private sector. When that reality is recognized, it may surprise a lot of people.

The second part of it, Mr. Chair, if I can ask for your indulgence, is whether we can suspend for a few minutes so that I can work on these amendments that I spoke about earlier and possibly bring some amendments forward, based on discussions with my colleagues on this side of the table.

I'm asking for a suspension for a few minutes.

[The Chair, Liberal, Peter Schiefke]

I'm going to suspend the meeting for five minutes to allow for members to consult with each other and prepare amendments.

The meeting is now suspended.

[The Chair, Liberal, Peter Schiefke]

I call this meeting back to order.

Mr. Badawey, I'll turn it over to you to speak to your amendment.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chair.

At this point in time, I would like to speak to what was reported in the second quarter, as a preface to my amendment.

When we look at the second-quarter results for the fiscal year 2023-24, since inception of the CIB—I want to be clear on this—investment commitments of $10.1 billion into projects valued at nearly $28.9 billion are currently on the books. At the end of the second quarter, the CIB portfolio included 51 commitments, 45 of which have reached the “financial close” milestone. These are all loans that will be repaid and reinvested into more infrastructure in the future.

I want to give a few more examples, Mr. Chair, if I may.

In Durham region, it's $62 million towards 98 zero-emission buses that will reduce GHGs by 6,525 tonnes per year. Here in Ottawa, with zero-emission buses, the electrification of vehicles is a key to the City of Ottawa's goal of reducing GHG emissions by 100% by 2040. This invests in that direction the city has taken. As well, this demonstrates the city's commitment to lead by example.

Autobus and its zero-emission school buses is another example. Electric buses contribute to Quebec's objective of electrifying 65% of its school bus fleet by 2030 while providing high-quality transit services for students. This will remove 2,146 tonnes of greenhouse gas emissions and support up to 131 buses.

Mr. Chair, we look at and speak about the affordability issues that Canadians have throughout the country and what we as a government are attempting to do to ease that pain when it comes to affordability. This is a mechanism. This is a lever. It's being good at the business of government versus attempting to be good at the business of politics, which we see a lot of in the House, unfortunately, and sometimes at committee.

When we look at the business of government and at what we are attempting to do to leverage funds to alleviate the financial pressure on Canadians, while moving forward with the direction that we brought forward, whether it be climate change, updating our infrastructure or working with municipalities that are, quite frankly, in infrastructure deficits. When a municipality is in infrastructure deficit, it finds itself relying on the property taxpayer or the water bills. This gives a lot of opportunity to leverage funding to then—and I'll say it again, underline it and bold it—alleviate the financial burden on Canadian taxpayers, whether it be at the federal level or at the municipal level with respect to property taxes and water bills.

When we look at owner-operators of properties, primarily in Canada's western prairie provinces, many retrofits—approximately 95 properties—will be represented. This represents 240 buildings. It's just another example. This will facilitate energy-efficient, at-scale housing in the multi-unit sector that aligns with responsible building, especially as it relates to climate change. It will be optimizing energy performance in more than 6,400 residences, significantly reducing greenhouse gas emissions by approximately 50%.

Mr. Chair, I welcome the motion—I really do—so that I can go on ad nauseam with respect to the examples of what these investments are supporting.

However, once again, I want to highlight for those watching what the intent and the business plan of the CIB is. Quite frankly, it doesn't go against a lot of the intents that former governments had, regardless of what party they may have belonged to, with respect to attempting to leverage those dollars to therefore alleviate the financial burden on Canadian taxpayers. The difference is that this is actually doing it.

Yes, there are ups and downs. That's business. However, when we ultimately look at the bottom line, there is a benefit when you see what is being invested or leveraged and, secondly, what is in fact being built. With that said, one of the interests that I have as we possibly move forward with this study and we hear from the partners, whether it be from government or from the private sector....

I guess I'll add this. When the CIB was created, it was created to be at arm's length from government. In fact, we take the experience that was made up of the actual panel of the board. I have to add that the experience they brought to the table is part of reports with respect to members of the advisory council on economic growth. These are folks who are well experienced in business. These are folks who are well experienced in leveraging funding from all Canadian sectors. These are folks who are experienced at getting the job done.

When we as government put forward initiatives, especially as they relate to capital investments, not only to build new assets but also to manage the assets that we currently have, we want to do so in an expeditious manner. Most importantly, we want to do so without the financial burden being placed on the Canadian taxpayer at all levels of government, whether it be federal, provincial or municipal, which is equally as important as it relates to property taxes and water bills. That's in particular on water bills at capital fixed rates, which consumers can't control with respect to their individual water bills.

That's what this is intended to do. Yes, we're making gains, but we're going to make more gains. What's expected is that those gains will be made well into the future as we leverage more money and the private sector gets more involved in those capital investments as needed throughout the country.

As I said earlier, the CIB has the mandate to move forward utilizing that experience, which I mentioned earlier, contained within the advisory council on economic growth, with that, again, being at arm's length from the government.

I noticed that the recommendation Ms. Lewis put forward actually asks for the meetings and for representation from the government to be present at these meetings. I don't think that's appropriate. I think, quite frankly, with government being at arm's length, we can proceed with simply utilizing the representation from the CIB itself.

That's what we're drilling down to on this particular project, the reasons why, how, what and the intentions. I think for the most part that would be appropriate, to receive that representation and, therefore, to receive the answers that we're expecting on this particular project. That's the one amendment I'll start off with, by removing that and just proceeding with those folks who are actually in the game, those folks who are making the decisions and those folks who were actually part of this specific project.

Thank you, Mr. Chairman.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Badawey.

Has that amendment been submitted? Have you submitted anything, Mr. Badawey, or is it just verbal?

It's verbal. Do we need to get it written down and then translated and circulated?

I'll turn it over to the committee.

Do we want a written form of that, or are we okay with what Mr. Badawey said?

I'll turn it over to Mr. Strahl.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Just to clarify, is Mr. Badawey suggesting that the minister responsible for the Canada Infrastructure Bank not be invited to come and speak about this Canada Infrastructure Bank issue? Is it just a deletion of...? Does he want to prevent the Minister of Housing, Infrastructure and Communities from appearing at this committee?

If that's what we're talking about, that's a very simple deletion and we can talk about that.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Strahl.

Go ahead, Mr. Badawey.