Finance Committee on May 23rd, 2013

[Ian Morrison]

You have that in common with many politicians.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Mr. Carlton, very quickly, you've been with the FCM for a long time. You've seen what's happened. You've negotiated with the government. Are you confident with the government's position on an ongoing basis of a positive outcome for the Federation of Canadian Municipalities?

[The Chair, Conservative, James Rajotte]

Very briefly, Mr. Carlton. Thank you.

[Brock Carlton]

We believe that Budget 2013 has established a new base camp for a good relationship for productive discussion between the municipalities and the Government of Canada around the needs of communities.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

So you're very happy with the changes currently.

[Brock Carlton]

As I said in my commentary, the solutions for the infrastructure deficit are not in place at the moment, but the progress has been noticeable.

[The Chair, Conservative, James Rajotte]

Thank you very much.

Mr. Côté, go ahead.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

I want to thank all our witnesses for joining us today.

I am very happy for you that my colleague Mr. Adler did not ask you any questions about your political affiliation. I think some people were interested in knowing that.

Mr. Carlton, I will talk to you about borrowing costs and economies of scale related to the federal government's involvement, as I think that information is very important.

Let's take the example of the hydroelectric project in Muskrat Falls, Labrador. In that case, the federal government's loan guarantee is helping the province of Newfoundland and Labrador save a significant amount of money. That is one of the reasons we have been supporting this project, despite the fact that the vote-buying approach is truly appalling.

Can you tell us about the impact with regard to economies of scale? How important is the federal involvement in shared programs when it comes to the assistance provided to municipalities to help them save money?

[Brock Carlton]

I am not sure I understand what you said. I can understand the interpreters, but I am not sure what the question is. I think that you asked about the

cost-sharing programs.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

I am not sure I understand.

My question was about the cost-sharing programs, but more particularly about the savings municipalities can make in terms of borrowing costs when the federal government gets involved, since they consequently need to borrow less overall.

[Brock Carlton]

Municipalities borrow money on the market if they need it. With the gas tax, the long-term and predictable funding nature of the gas tax will allow them to borrow in the market on a longer term because they have stable predictable funding against which to borrow. So that is a strong advantage.

I don't understand the reference to Newfoundland and Labrador with respect to the municipal context, so I can't really respond to that.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

That's okay. I was just using this as an example, since the province is saving $1 billion in borrowing costs.

In my riding, two private community centres have managed to secure funding from the Community Infrastructure Improvement Fund, and I would like to congratulate them. That obviously makes their job a lot easier and helps them balance their project budget. That also helps other backers jump on board.

So the federal government's involvement facilitates the process and helps get projects underway, thus enabling other backers to come on board. Would you like to comment on that?

[Brock Carlton]

Sure. As you know, in the building Canada fund program, the expectation is that there's one-third/one-third/one-third cost sharing. This is a really important opportunity for municipalities to leverage their dollars to do larger pieces of work. The problem is that with program funding, you have to invest a lot of money in preparing your program proposal, then you have to wait and see if you are lucky and happen to get a project selected.

As a result, those municipalities will invest a great deal of money in advance once they have secured the funding their project needs, as in the case of the municipality you just mentioned. That can be beneficial for the municipalities because, in addition to investing their own money, they have an opportunity to obtain funding from federal, provincial and territorial governments.

[The Chair, Conservative, James Rajotte]

Mr. Côté, you have one minute left.

[Brock Carlton]

However, if those municipalities don't win the competition, they lose the resources they have invested in their whole project preparation.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Yes. As you said, there is a huge infrastructure deficit. If I have understood correctly, according to the federal announcement, the program will unfortunately not reduce that deficit.

Even in the case of an increase, to what extent would that deficit not be reduced by the program? Could you give us some idea of that?

[Brock Carlton]

There are no specific figures indicating how the deficit will be addressed. The deficit is currently somewhat stable thanks to the investments under the Economic Action Plan. That initiative helps a lot in this area, even though it is short-term.

We think that the main idea is to ensure long-term investments, such as those made under the Gas Tax Fund. That's the best way to tackle this issue because the initiative is predictable and long-term. Obviously, those involved know that the funds are forthcoming and can calculate how much money they will have going forward.

[The Chair, Conservative, James Rajotte]

Okay, thanks.

[Brock Carlton]

So a long-term program—such as the Gas Tax Fund—is needed to eliminate the municipal deficit.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Thank you, Mr. Côté.

I'll take the next round.

Mr. Carlton, I did want to follow up with perhaps not a question but a few comments in terms of how I appreciate very much your comments here today in terms of the indexing of the permanent gas tax fund, which will add, as you mentioned, $9 billion over 20 years.

I do want to compliment very much your work, your organization, Karen Leibovici—who comes from Edmonton and is your current president and chair—for the work you did with the finance department and their office in terms of ensuring this was in place well in advance of the other program ending in 2014. So I did want to compliment you publicly on that.

Mr. Georgetti, I did want to ask you with respect to your comments.... You're one of the longest-running labour leaders in the country, one of the most respected across the country, a very intelligent guy, so I'm going to see if I can get you to agree with me on this issue.

[Voices]

Oh, oh!

[Kenneth V. Georgetti]

I'm not that smart.

[The Chair, Conservative, James Rajotte]

To me there is a fundamental distinction between a negotiation between a corporation and a union, and a crown corporation and a union. Between a union and a corporation, the union leadership represents the members. The corporation obviously has to answer to shareholders.

You know as an experienced member when you're sitting across the table from, say, TELUS or whoever that they have to answer to their shareholders and they have to find financing. You have an interest obviously in them not going bankrupt because there is nowhere else they can go for funding. They have certain economic realities they have to deal with that you and your members are very much well aware of, so it's very much a two-party discussion and negotiation.

With respect to a crown corporation, if you're CUPW and you're sitting across from the crown corporation, you know in the back of your mind the taxpayers are the ones behind. So there is in fact another party and as Mr. Charette pointed out, since 2008 taxpayers have contributed an additional $2.4 billion in bailout contributions to eight of the 48 crown plans. Despite the bailouts, the shortfall in these plans is now $4.7 billion.

First of all I'm not sure how people don't see the distinction between those two types of negotiations. In the second type of negotiation, who is supposed to represent the taxpayers? Because it's not the crown corporation representing the taxpayers. That's why it's logical to have Treasury Board represent the taxpayers in those cases.

[Kenneth V. Georgetti]

First of all let's make sure we put on the record that in all of these crown corporations and in the public service, those people you call employees make significant contributions from their own pay package to their pension plans.

[The Chair, Conservative, James Rajotte]

Absolutely.