Finance Committee on June 5th, 2012

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Thank you, Mr. Chair.

Division 3 of part 4 of this budget implementation bill asks that PPP Canada Inc. be recognized as an agent of Her Majesty for its activities with federal agencies, including the provision of advisory services to departments on P3 capital projects. As a result, PPP Canada Inc. will act as a source of expertise on P3s for federal departments.

As you know, Mr. Chair, the Champlain Bridge is in my riding of Brossard—La Prairie. When we asked the witnesses questions, I was sort of taken aback, because the Minister of Transport made the famous statement “No toll, no bridge”, and he also said that the project was going to be carried out according to the P3 model. Engineering experts have carried out some studies. One of those studies was the consortium BCDE study mandated by the federal and provincial governments and it looked at the various options for building the new Champlain Bridge. According to those studies, the construction costs for a bridge based on the P3 model would be higher than if the construction was funded by the public.

As far as we are concerned, PPP Canada Inc.'s objective is to convert everything into P3s. We also asked the officials from the Department of Finance some questions and they told us that no decisions had yet been made at the Department of Finance. So we have two versions.

The goal of this amendment is to convert everything into P3s. And since the NDP is not in favour of the P3 model overall, because we want a more thorough study to be done, we are going to vote against that division.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Mai.

Mr. Adler, please.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Chair.

I want to preface my response by saying what a magnificent job you're doing as chair of these hearings, the longest in two decades. I commend you for that.

I want to respond by saying that PPP Canada is a wholly owned subsidiary crown corporation and by order was made a parent crown corporation under the Financial Administration Act. At its incorporation, it was decided not to make PPP Canada an agent of Her Majesty.

This division aims at confirming that PPP Canada does not act as an agent of Her Majesty except for certain mandated activities. It is proposed that PPP Canada be recognized as an agent of Her Majesty for activities related to: one, the P3 screen on federal capital projects; two, the provision of advisory services to federal departments and crown corporations on federal P3s; and three, acting as a source of expertise and advice on P3s for departments and crown corporations.

In essence, this measure would better align PPP Canada's corporate structure with its activities related to its federal business line, including providing expert advice to federal departments.

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Thank you very much, Mr. Adler.

Mr. Jean, please.

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

Thanks, Mr. Chair.

I wasn't sure about what I heard from the NDP member, Mr. Mai, because we heard evidence here that most of the P3 projects have come in under budget and have over-delivered more quickly. In fact, we heard from PPP Canada previously that taxpayers get very good value for money.

I just want to make sure that's on the record today, because it clearly came from the witnesses. We've seen it in the Edmonton ring road. We saw it in the Kicking Horse bridge. We've seen it in a lot of things in the last decade, where taxpayers get good value for money on P3 projects.

I'm not sure where his information is from, but I understand that what he's suggesting is that the price, or at least the projected price, may come in higher, but we have seen that the delivery, the actual delivery, is much more efficient for P3 projects than we see normally.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Jean.

Mr. Mai, the floor is yours once again.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Mr. Jean was generalizing. Perhaps that is not the case at the federal level, but in Quebec, there have been cost overruns in P3 projects. There have also been projects that took longer than anticipated. So it is not accurate to say that all P3s are efficient and within budget. Actually, it appears that taxpayers have to pay more. The fact is that there are cost overruns. When the auditing responsibility goes to the private sector, the follow-up is not as appropriate as if it were done by the public sector.

There is no need to go into ideology and say that everything should be done under P3s, as Mr. Jean said.

[The Chair, Conservative, James Rajotte]

Merci.

Can I call the question, then, on clauses 209 to 213?

(Clauses 209 to 213 inclusive agreed to on division)

We'll now go to division 4, which is amendments to the Northwest Territories Act, the Nunavut Act, and the Yukon Act.

I have six amendments—three NDP, three Liberal—and if members are agreeable, can I have them speak to the issue generally and the division generally, and then we'll address amendments?

So we'll get a general discussion first, and then we'll deal with the amendments.

Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you, Mr. Chair.

I'm here today to speak to these particular amendments to the three acts. I think the committee should understand the nature of the three acts herein. These acts are actually the closest thing to being the constitutions of the three northern territories. In regard to public government across the Northwest Territories, these three acts outline the political rights of the people I represent, and of course the same applies to the other two jurisdictions.

So these acts are very important to the people of the Northwest Territories. They are actually the only thing that gives us a legislative assembly and anything approximating the political rights of every other Canadian and every other provincial jurisdiction. So when it comes to amending these rights, these acts, I think there's a need for a great deal of sensitivity on the part of the government as to what is being accomplished. These aren't simply the powers of the federal government; they are the expression of the rights of the people of the three territories.

So on what we've seen here, I can go back to the testimony given by the Deputy Minister of Finance of the Government of the Northwest Territories last year, before a similar committee, in speaking to another act, one that talked about borrowing limits. The history of borrowing—and the fact that there is anything within the NWT Act, the Yukon Act, and the Nunavut Act on borrowing—goes back to a time when the Northwest Territories, Yukon, and Nunavut could only borrow from the federal government. The maximum allowed to be borrowed was set by regulation of the Governor in Council.

Today, all borrowing in the Northwest Territories and the other territories is done through private market borrowing, just as every other province takes care of it. Every piece of borrowing that's done in these three territories is under the scrutiny of the same financial services that carry every other province in this country.

Three years ago, the GNWT position going into negotiations about raising the borrowing limit was that their preference—and this was stated by the deputy minister—was for the federal government to remove itself from any responsibilities for a borrowing limit or for any other matter therein. What we've seen here is that a government, such as the Northwest Territories government, for instance, has a Moody's rating that exceeds that of every province except British Columbia and Alberta. That testimony was given as well. So what we have here is a government that has very strong financial management policies and a government that is mature and takes care of its citizens.

But what we see in this act is a bill that is going to amend the NWT Act, the Yukon Act, and the Nunavut Act—and I'll speak to all three of them—and not simply for the aggregate of all borrowing, because the borrowing limit was already in the NWT Act and the Yukon Act and was set by the federal cabinet. So really, the new portions of this bill are on the conditions of borrowing. This is a very important consideration, because “conditions of borrowing” mean what constitutes or deems to constitute borrowing, and one of the largest debates in this category was over whether self-financing loans should be considered “borrowing” under the limit. In other words, if the Government of the Northwest Territories enters into borrowing that is going to return the cost of the borrowing to that government, should that be held as part of the borrowing limit?

This is a very important factor to us, because just as provinces have responsibilities to invest in their territory or their province, so do we. When it comes to the plan the Government of the Northwest Territories has to expand its hydroelectric system, where the estimated borrowing requirements for something that is going to be returned are in excess of the borrowing limit that has already been designated...in other words, it's virtually impossible for those plans to go ahead under these circumstances if the conditions for borrowing include self-financing loans under the limit.

We have a situation where the future fiscal capacity of the Northwest Territories to expand its services to provide opportunities to grow an area of 1.2 million square kilometres—an area that is considered by many people to be one of the new areas of economic strength for Canada—will perhaps be constrained by the conditions, the regulations, that are going to be set by a federal cabinet. It could be this federal cabinet, it could be the next federal cabinet.

Within that, within these amendments, we see no provisions for consultation, no guarantee to these separate governments that their conditions for fiscal capacity will have a considered point of view from the governments they represent.

This is really not appropriate. That's why both ourselves and the Liberals have put forward these amendments. To my mind, this is the very least that should be done to this bill. This is the very least, because it does give voice to responsible governments in the three northern territories in a fashion that should be there. I think most people of equal mind in this country would say that's the case, that this would be the least that should be provided to those governments. It's not there, so we're asking for that to be put in place.

It's simple. It won't upset this budget bill and it won't change the nature of the bill, but it will give some surety to those governments that they will actually be consulted, that they will actually have a chance to put their point of view about their borrowing capacity, about what they need to make their territories whole, in front of the federal cabinet before it makes decisions about that.

I think it's imperative for this committee to look at this not simply in a viewpoint of the political state of Canada, where a budget implementation bill is being fired through without amendments, but to think of it in terms of what this actually means to the people of the north.

It's a very simple thing to do. It sets us on a course that is a correct course. It sets us on a course that may bring us more equality with the rest of Canadians. As a person who's lived his entire life as a second-class political citizen of this country, I appeal to all this committee to respect us in the three territories, to give us our due.

And accepting these amendments would be simply that. It would not upset the financial state of the Government of Canada and it would not tie the Government of Canada to any particular course of action. It would guarantee that we have a voice, albeit a small voice, in a decision that is so important to the future of our three territories.

So I would ask that these amendments be accepted. I would say that the two amendments can be combined. They are for each act, they are similar, and they constitute a good and sensible compromise to what has been proposed here.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

I have Mr. Jean, and then I have Mr. Brison.

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

Thank you, Mr. Chair.

I would speak against this. I understand how Mr. Bevington feels about this, but it's frankly unnecessary in order to put it into legislation. First of all, the territories approach the federal government for any change in classification, any change in borrowing limits, any change in relation to their financial position. They approach the Government of Canada and speak to it. Don't take my word for it. On May 24, 2012, the Minister of Finance for the Northwest Territories stated that

We worked collaboratively with Canada to secure an increase to our borrowing limit from $575 million to $800 million.

The Government of the Northwest Territories went on to state in a news release on March 15, 2012, and I quote again:

The increase represents the successful discussions between the federal Minister of Finance, the Honourable James Flaherty, and the three territorial Ministers of Finance about the definition and adequacy of the territorial borrowing limits.

It is very clear from the record and from what has been stated by all governments of the territories that there has to be consultation, and it would only make sense, because they actually approach the government based upon their own need in relation to the financing.

I would say as well to Mr. Bevington that the population base—and I know he's from a very large area, as I am in northern Alberta. Mine is much smaller than his, but we have a population of 43,000 in the Northwest Territories, 36,000 in Yukon, and 33,000 in Nunavut. The number of square kilometres that his constituents cover is huge, as is the case with my constituents in northern Alberta, but this arrangement is much the same as that of the municipal government in Alberta. For instance, in Fort McMurray, with all of our problems with infrastructure, etc., we had to approach the provincial government to ask for a change to our borrowing limit, which is the highest, I understand, of any municipality in Canada as far as percentage goes, because of the growth. But it's very common, and none of these discussions would take place without bilateral discussions between the different levels of government. It wouldn't make sense.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Jean.

Mr. Brison, go ahead, please.

[Scott Brison, Liberal, Kings—Hants, NS]

This amendment seeks the recommendation of the Minister of Finance after consultation with the Government of the Northwest Territories. It simply requires that there be consultation. But I think this speaks to a broader issue, which is the diminution and the demise of federal, provincial, and territorial engagement under this government, whether it is on health care or the effects of federal changes to EI on provinces.

Mr. Chair, you've been in the House for some time. For a lot of us who have been around for some time, there was a time, going back even further, when the role of the minister responsible for intergovernmental affairs was considered a very senior role. Former Prime Minister the Right Honourable Joe Clark was a minister of intergovernmental affairs under Prime Minister Mulroney. Stéphane Dion was a minister of intergovernmental affairs under Mr. Chrétien. They were well recognized and respected individuals.

Very few Canadians would be able to name the Minister of Intergovernmental Affairs in the current government, or recognize him in a police lineup. The reality is that he is like a minister without portfolio in the current government. There is no consultation. There is no engagement. And the fact that government members are averse to simply having a requirement for consultation with the Government of the Northwest Territories speaks to that diminution of this very important role.

[The Chair, Conservative, James Rajotte]

Thank you.

I would just remind members to make their arguments as well as possible with respect to the substance of the argument and to not cast aspersions on any parliamentary colleagues.

Mr. Brison, what you said about the minister was not acceptable.

[Scott Brison, Liberal, Kings—Hants, NS]

Just to clarify, I am not speaking about the minister. I am saying that he's a minister without portfolio in this government. That's not a reflection.... He has a car. He has an office. He has a staff. He just doesn't have a lot of work to do.

[The Chair, Conservative, James Rajotte]

You just proved my point actually. What I'm saying is I've asked members to make comments that are respectful of other parliamentary colleagues.

I'll go to Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

Well, just in response to Mr. Jean, I would not characterize the Government of the Northwest Territories as a municipality.

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

I said it was similar.

[Dennis Bevington, NDP, Western Arctic, NT]

You know, when it comes to these regulations, which constitute borrowing....

I must remind you that the borrowing limit was set by the Government of Canada prior to this budget implementation bill. It really has nothing to do with what you talked about there, because it had already been accomplished.

This bill really speaks to the changes in the nature of borrowing, and that's where the concern lies. Right now about 40% of the borrowing limit is taken up by self-financing loans, mostly through the public utility corporation in the Northwest Territories. The public utility corporation, which has a mandate to return a profit on the investments it makes, constitutes almost half of what the borrowing limit is within the Government of the Northwest Territories.

So the issue in terms of conditions of borrowing, whether the federal cabinet chooses to make self-financing loans part of that overall umbrella of $800 million, is a very serious issue to people in my territory. We have enormous infrastructure expenditures for the future.

I can give a number of instances. In the Sahtu region of the Northwest Territories, there's the need for a road from Wrigley to Norman Wells. In the last year we've sold a billion dollars' worth of oil and gas leases in that region. Without the road being built, the cost of drilling a well in that region is extraordinarily high. We need to move ahead with infrastructure and development so that we can make our economy work for us. Without fiscal capacity within the system, that will simply not happen. We can't plan for it. We have to go cap in hand to somebody else for the opportunity to do the things that we see can return investment to us.

Now, very strongly, by not consulting the governments that are engaged in the work of building Canada, with money to do the work, with their own money, to do the work that they need to do for their people, you're simply....

This is missing the boat. And this is not just for this cabinet. When you pass these laws, they're for every other cabinet that follows, unless there's another amendment made.

So I would ask that these laws be made in a careful fashion that respects the ability of our governments in the three northern territories to be assured that they will be consulted before any changes are made to these very important functions of government. Fiscal capacity is the basis of responsible government.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Bevington.

We'll go now to the amendments.

I'll just highlight for members that we have six amendments—three NDP, three Liberal—dealing with clauses 214, 215, and 216.

In clause 214 we have NDP-40 and Liberal-3; in clause 215 we have NDP-41 and Liberal-4; and in clause 216 we have NDP-42 and Liberal-5.

If you look at the amendments, they're very similar with respect to the first part of the Liberal amendment. I'm not sure how the opposition parties wish to proceed.

If we deal, for instance, with NDP-40, one option is to just have the second part of the Liberal motion amended into NDP-40; or the opposition parties could decide to go with the Liberal amendments, because they include both (a) and (b).

Does that make sense to members?

Frankly, I think it would be easiest if we voted on the three Liberal amendments. That's my perception as chair, but....

Monsieur Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I would like to suggest that we start with the Liberal amendment, since it has an additional element compared to the NDP amendment. If it is rejected, then we can move to the NDP amendment.

[The Chair, Conservative, James Rajotte]

As I understand it, we have to start with.... If the NDP wants to move NDP-40, we have to start with that.

Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

We'll just go with the Liberal amendments.

[The Chair, Conservative, James Rajotte]

Okay.

(On clause 214)

You don't have to read it, Mr. Brison, but I would ask you to move amendment Liberal-3.

[Scott Brison, Liberal, Kings—Hants, NS]

I move amendment Liberal-3.