Finance Committee on Feb. 12th, 2009

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you.

Thank you, Mr. Minister and other witnesses, for giving us your time this morning.

I'm sorry, I know you would really much prefer my colleague, but I'm afraid you're stuck with me for the next five minutes.

In your opening statement, Mr. Minister, you acknowledge the benefits of the gas tax fund, specifically how it flows unhindered automatically twice a year. My colleague here has pointed out that the other processes for spending infrastructure money have not been nearly so successful and, in fact, have been rather dismal in getting money out the door.

You also mentioned that pre-budget you engaged in significant consultations with, among others, representatives of the municipalities. I'd like to ask you what advice and recommendations the municipalities gave you.

[John Baird, Conservative, Ottawa West—Nepean, ON]

They wanted money to flow directly to them immediately.

[Martha Hall Findlay, Liberal, Willowdale, ON]

In the sense that they explained about shovel-ready projects and getting the money out the door, expressing significant concern about the matching processes of the Building Canada Fund, can you give me the reason you chose not to do a gas tax fund type of process, which has proved so successful in the past?

[John Baird, Conservative, Ottawa West—Nepean, ON]

I can tell you that just about everyone we consulted with--and this goes far beyond just the work I did with provinces.... At the first ministers meeting the provinces called for a model of a trust exchange of money, where the money could flow to the provinces, and then they would be in control with--

[Martha Hall Findlay, Liberal, Willowdale, ON]

But in my limited time, my specific question was with regard to recommendations from the municipalities and the recommendation for a gas tax fund process. I wasn't asking about the provinces.

[John Baird, Conservative, Ottawa West—Nepean, ON]

We wanted to take a balanced approach. We didn't want to give all the money to the provinces, all the money to the municipalities, all the money to colleges and universities, all the money to ports, all the money to airports. We wanted to take a balanced approach.

[Martha Hall Findlay, Liberal, Willowdale, ON]

No, I wasn't speaking to the quantity of the money. I was actually speaking about the process and the recommendations, which were very clear. Because we engaged in significant pre-budget consultations of our own, and the recommendations were overwhelming that given the challenges faced by municipalities, the matching process...that unless there was a gas tax fund type of process, which has proved so effective both in the flowing of money and the accountability, it simply was not going to be possible for many municipalities. For some, yes, but for many, they simply would not be able to do this. And in that sense, that message was very strong that despite all of the rhetoric, if there was required matching, much of that money simply would not be able to flow because of the difficulties for the municipalities in doing that.

In view of all of those recommendations, can you tell me why you chose not to do so, given the need for this money to flow as quickly as possible?

[John Baird, Conservative, Ottawa West—Nepean, ON]

Because municipalities are not our only partners. Provinces are also our partners and I mentioned a good number of other groups whose names I won't repeat. What we want to do as well, for example, in the economic stimulus fund, is that if we could take $4 billion and turn that into up to $12 billion, then we'd get three times the bang for the buck and be able to support three times as many projects.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I'm sorry, Mr. Minister, you're still not answering my question. There was a specific recommendation to allow the money to flow quickly and you chose a process that has proved in the past to be dismally bad at funding the money. Despite all of the rhetoric about wanting multiple partners, that they're not our only partners, history has shown that under the process that requires matching it simply hasn't happened.

I'll take a slightly different take on this. In your opening statement you also referred to changing the legislative authorities that you have shown have proved to be somewhat barriers, have provided barriers to the flowing of funding. But in the Infrastructure Stimulus Fund you specifically say funding will be available for two years for projects that will begin construction during the 2009-10 construction seasons. But with that requirement, only a short while ago you said that you would be working on those legislative authorities over the next couple of years. So how do you reconcile that?

I'm very concerned about a conscious effort on the part of this government to make announcements that it's clear will have very strong difficulty in getting out the door.

[The Chair, Conservative, James Rajotte]

Minister, you have about 30 seconds to answer.

[John Baird, Conservative, Ottawa West—Nepean, ON]

You want a quick response, but you've raised about five issues that I would like to respond to.

We've decided to take a balanced approach and not to simply give all the money to municipalities. Provinces have projects as well. We think there are many municipalities that can have matching funds. Some do not have the money, as you said. We came forward with a $2 billion loan program, which will provide access to capital and at a modest rate, given the historic low interest infrastructure rates.

I'll give you an example. We put out a call in September at the Association of Municipalities of Ontario. We asked for municipalities of under 100,000 across Ontario to apply. We had $200 million to give out. We got requests from municipalities of $1.4 billion where they said they had matching funds. So when we had $200 million to offer and there were matching funding for $1.4 billion, I know that there is $1.2 billion worth of projects out there where the municipalities in Ontario do have matching funds.

I know, for example, in your community, in the city of Toronto, they underspent their capital budget by $200 million. They have $200 million that lapsed in December because they couldn't spend it all. So I know they have money too.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Minister, very much.

I'll just remind members that if members ask a number of questions of the minister, it is appropriate to allow the minister an opportunity to answer.

Order.

We'll go to Monsieur Carrier, s'il vous plaît.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Thank you, Mr. Chair.

Good morning, Mr. Baird. Good morning to the officials from the Department of Transport, whom I've met several times in the past few years.

Mr. Baird, I, for one, am deeply disappointed with the current situation. Since last September, rather than meeting to begin reacting to the economic situation, the government triggered an election which brought us back to the same situation. Following that, in November, when we resumed business, we missed an opportunity to present a budget that would have contained an action fund for the economy. That opportunity was missed because of the prorogation of Parliament. Today, in February, we are discussing matters that should have been discussed in September.

Everyone can agree that there is a lot of catching up to do. You want to launch projects quickly. However, we can't just start projects anywhere anyway and anyhow. You are well aware that under our system, provinces have areas of jurisdiction. That is where the problem lies.

I'm told that last September, there was a Canada-Quebec agreement with respect to previous funding from Building Canada. To my knowledge, none of those projects have been implemented because there was no agreement signed with Quebec. Now we are talking about new budgets for shovel-ready projects. My concern is the following: Would you only be choosing shovel-ready projects? Would some provinces be penalized because they were informed too late?

Since you know that you will have the support of the Liberals to pass your budget, have you taken measures to make sure that projects will be implemented immediately, once the budget is officially passed in House of Commons? Since you can count on the support of the Liberals, measures should be undertaken right now so that projects can get started quickly.

I'll hand the floor over to you so that you can give me the reassurance that the issues that we should have dealt with last September are making progress. As elected members of Parliament, we all have an interest in letting people see that you are taking measures to stimulate the economy; we have to prove this, to make sure that our actions follow our words.

[John Baird, Conservative, Ottawa West—Nepean, ON]

I want to point out that I had a very good meeting with Ms. Jérôme-Forget. I respect the fact that many of the areas covered the Building Canada Initiative fall under provincial jurisdiction. The government is working with Ms. Jérôme-Forget and Minister Normandeau. With the stimulus funds, I have no doubt that Quebec will have enough projects that will begin as soon as possible, and be completed by March 2011. New investments provided in the budget could support municipalities' and provinces' infrastructure funding requests. Of course, with respect to cultural infrastructure, that is a shared area of jurisdiction. But for areas that fall under federal jurisdiction such as the harbours located in Sept-Îles, Quebec city and Montreal, all of those play a significant role in economic growth. I have no doubt that we are ready to work with Quebec in areas of provincial jurisdiction, that we can support projects, create jobs, and make investments that will not only improve the quality of life, but also support economic growth.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Is last September's agreement a part of your discussions, so that some of these projects can be started up as soon as possible?

[John Baird, Conservative, Ottawa West—Nepean, ON]

I did not participate in the negotiations on the Quebec agreement, because my colleague, Lawrence Cannon, was Minister of Transport at the time. The Building Canada Initiative is a plan for this year. The stimulus fund will spread out over the next 25 months. A pre-condition to obtaining funds is that projects must begin as soon as possible, and be completed within 25 months. There is no doubt that there are enough projects. I can simply go through the correspondence I've received from Quebec in recent months to choose projects that will stimulate the Quebec economy. However, by working with municipalities, provinces, cultural institutions, we can make more headway.

[The Chair, Conservative, James Rajotte]

All right, thank you.

Thank you, Mr. Carrier.

We'll go to Mr. Dechert for five minutes, please.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

Minister Baird, I want to commend you on the very important infrastructure component of the economic action plan. I can tell you it's been very well received in the city of Mississauga, the greater Toronto area, and southern Ontario. These infrastructure projects are important for all of Canada. They're very important for southern Ontario and the greater Toronto area, where we've experienced a lot of difficulty, given the downturn in the auto sector.

The Regional Municipality of Peel has expressed its support for the infrastructure projects and funding you've announced. The mayor of my city, Mayor Hazel McCallion, has said, “If they want the cities to get on with projects to provide jobs, the money has got to start to flow. It can't be tied up in environmental assessments, both at the provincial and federal levels.” I'd like to ask you what more you think can be done at the provincial and municipal levels to speed up the process.

Secondly, could you comment on how the gas tax funding would benefit larger communities such as Mississauga and allow communities like Mississauga greater flexibility in moving forward on the many projects they've submitted to your department?

[John Baird, Conservative, Ottawa West—Nepean, ON]

I learned a long time ago from my days in provincial politics not to mess with your mayor, and I have the scars to prove it.

We've done a significant amount of work already in the GTA. The big, overwhelming priority in the GTA is public transit, whether it's the TTC, whether it's the various metro links proposals. I think you'll see we have made investments already in the public transit there. From what I see in the GTA, that will probably be front and centre in any stimulus, whether that's the TTC, whether it's GO. We obviously mentioned Union Station. My provincial counterpart, George Smitherman, calls Union Station one of the most important buildings in the province, because it's not just important for the subway, it's not just important for GO, but it's important for VIA. It brings so much of the province together. So that's obviously a project we support.

From time to time we'll get into a bit of a verbal tussle with Mayor Miller or Mayor McCallion, but I think the good news is that we are willing to work together, and we have had a pretty good relationship with both of them as well.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Could you comment on the gas tax?

[John Baird, Conservative, Ottawa West—Nepean, ON]

The gas tax, I think, has been a successful model. In last year's budget we made it permanent, which I think is important if municipalities want to borrow on that revenue stream.

I guess we had to take a balanced approach. In the pre-budget process, whoever we spoke with.... When we spoke with municipalities, they said, give all of that money to municipalities because we can move quickly. When we talked to the provinces at the first ministers meeting, all of the provincial and territorial premiers wanted to give it all to the provinces via a territorial trust. Some wanted to build provincial prisons, some wanted to build provincial office buildings, and some wanted to fulfill all of their dreams with respect to infrastructure.

So rather than choosing one or the other, we took a balanced approach. We have a significant amount of money in gas tax and GST rebates for municipalities. We have a $4 billion fund. I would suspect a significant, if not overwhelming, percentage of that will go to municipal projects where we can get deals.

The good news is that while not every municipality can afford.... We do see municipalities like Toronto that have expressed concerns that they can't afford it. They underspent their capital budget by $200 million, which says they could work with us. If they can't, we have a program that Minister Flaherty and Mr. Menzies came forward with to provide low-cost loans to municipalities to allow them to participate.

I know that my own city of Ottawa has already come up with a list of $300 million to $400 million in projects that they could cost-share.

The good news is that, to a t, every single provincial government is prepared to join that effort. Premier McGuinty spoke very strongly that the economic downturn is not a federal or a provincial issue, but has to be shared. I am confident that we will have no problem, particularly with the $4 billion stimulus fund, to be able to identify projects that can be cost-shared. The good news is that if we work together, we can take a $4 billion stimulus and turn it into a stimulus program of up to $12 billion just with that one program. If we gave it just to the provinces with no strings attached, we'd only have $4 billion.

In my home community, as I have said on occasion, the province gave them $16 million for capital and they spent it on snow removal. The provincial government is changing the rules to stop that from happening again, but if we can have some streamlined accountability, I am confident we will work together.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Dechert. I am afraid your time is up.

We have a shortened round of three minutes for Mr. McCallum.

[An hon. member]

They saved the best for last.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair, and I am delighted to have this opportunity to ask a couple of questions to one of my favourite Conservative ministers—which isn't saying a great deal.

[Some hon. members]

Oh, oh!