Finance Committee on Sept. 25th, 2018

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

Welcome to the witnesses. Thank you for coming.

As you know, we're continuing our pre-budget consultations in advance of the 2019 budget. I want to thank everyone who put in a submission prior to August 15. We look forward to your remarks this morning. All these submissions are on our iPads so people will be referring to those from time to time.

To start, here is a former colleague, Sergio Marchi, with the Canadian Electrical Association. Welcome, Sergio.

[Sergio Marchi, President and Chief Executive Officer, Canadian Electricity Association]

Thank you, Mr. Chairman. Thank you to the members for the opportunity to address your committee.

Reliable electricity has become indispensable to a competitive economy and a high quality of life. Moreover, our sector is over 80% GHG-free, making it one of the cleanest sectors in the world. But we're not done yet, as electricity can help further power Canada's clean energy transition through the electrification of other industrial processes.

Electrifying the Canadian economy will be neither easy nor cheap. The Conference Board of Canada estimates that our sector's electrification will need an investment of $1.6 trillion by 2050 if we are to meet Canada's climate and clean growth objective.

On behalf of our members, our pre-budget submission offered four specific program recommendations and two broad policy recommendations that we hope will be addressed by budget 2019. I will recap, as it relates to the former: one, recapitalize oversubscribed NRCan funding programs; two, allocate funding for a zero-emissions vehicle strategy; three, expand investments in northern energy infrastructure; and four, allocate funding for the development of a national electrification strategy.

With respect to the two more macro proposals, first, if we are to attract clean energy investment and for our companies to sustain their health and viability, Canada must ensure a competitive fiscal environment. We're pleased that the theme for the upcoming budget will focus on competitiveness and growing the economy. Second, Canada's burdensome regulatory environment must be urgently addressed, as it has become dangerously heavy and remains uncoordinated among the three senior levels of government.

I believe that Canada's business sectors are united in expressing concerns regarding the current Canadian investment climate. These concerns stem in part from a growing competitiveness divide with the U.S., and an uncertain regulatory process for approving large capital projects in the country. This climate is also exacerbated by the uncertainty surrounding the NAFTA negotiations, and the imposition of various U.S. trade protectionist measures.

Obviously this also impacts our sector. For example, this year, seven of the top 10 largest infrastructure projects come from the electricity sector. As well, our members are investing some $20 billion annually towards renewing our aging infrastructure. Every single cent of these monies must be approved by the regulator, and therein lies the political risk.

This energy transition, and positioning Canada to be a global clean energy leader, will require additional and sustained investments from the federal government in both infrastructure and innovation support mechanisms. In this regard, while electricity is provincially regulated, the federal government does play a significant role in its development, since some 34 federal departments and/or agencies are involved in the electricity space. That's one reason we need governments to complete the Canadian energy strategy, so we can strategically leverage all of our energy assets for the benefit of all Canadians in all regions.

In closing, the work of nation building, as you know, never stops. Building transformative and resilient infrastructure is our obligation to the next generation. Throughout our history we have met this challenge. Think of the great railroads of the 19th century; the highways, seaway, and broadcasting systems of the 20th; or the Canadian arm that extended mankind's reach into space. These transformative accomplishments, I would suggest, were all made possible because Canadians knew the importance of thinking ahead. It is now imperative that governments work together, make wise investments and earn the trust of Canadians and industry if we are to succeed in another great moment of transformation.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Sergio.

Turning to the Canadian Gas Association, we have Mr. Egan, president and CEO; and Mr. Cheliak, Vice-pPesident.

Welcome. The floor is yours.

[Timothy Egan, President and Chief Executive Officer, Canadian Gas Association]

Thank you, Mr. Chairman. Thank you for the opportunity to appear today.

By way of introduction, the Canadian Gas Association is the voice of Canada's natural gas delivery industry. We deliver natural gas to over seven million customer locations; that's homes, businesses and industry right across the country. In each location there's a meter reaching many people, and by our estimate, well over 20 million Canadians currently benefit from affordable, clean-burning and safe natural gas.

We've provided a map where you can see the Canadian natural gas distribution service area. All members of the committee should have a copy.

In 2017, natural gas met 34% of Canada's energy needs, over a third of all energy end use, a number that has grown by 28% since 2007. Growth is expected to continue. The National Energy Board forecasts that natural gas will become the largest energy source in Canada by 2040, at approximately 40% of end use.

The Government of Canada has made competitiveness its 2019 budget priority, and in order to deliver on a more competitive country, our homes, businesses and industries require expanded and innovative access to clean, reliable and affordable natural gas. We included some graphics to showcase the affordability of the product for you. The first chart on delivered energy costs shows how natural gas has been less than 50% of the cost of other energy sources consistently since 2005. The second chart, listing annual home heating costs, shows how a Canadian home using natural gas can save between $1,000 and $2,500 per year over other fuel choices.

Competitiveness turns on energy affordability, and natural gas is consistently Canada's affordable fuel option. We do a lot, but the Government of Canada says do more, and what more can we do? We offer six recommendations where natural gas and our infrastructure can help improve Canadian competitiveness.

First, we propose a $750-million federal renewable gas innovation program to support the production and blending of renewable gases in the gas pipeline system. We propose a program with a six-year duration to be managed by Natural Resources Canada and CanmetENERGY to support projects and technologies including renewable natural gas, like landfill methane and hydrogen. It should be noted that these are fuel supplies that can be blended directly into the existing gas infrastructure system. No new infrastructure is required.

The goal would be to get a 5% renewable gas portfolio into the Canadian pipeline system by 2030, delivering up to 14 megatonnes of additional GHG emissions reduction. Project funding would cover up to one-third of total project cost, provided either by a production incentive, a capital cost contribution or some hybrid option. Finally, most importantly, the program would support the natural gas industry in meeting federally imposed emission reduction targets, such as those proposed under a clean fuel standard.

Second, we would propose a fund of $450 million to connect rural and remote Canadians to natural gas. Well over a third of Canadians do not currently have access to the gas distribution network and they depend on more expensive energy supplies. CGA has heard from many members of Parliament on all sides of the house, particularly those in rural areas, that their constituents have concerns about high energy prices. CGA has developed a proposal to address rural Canada's unique energy needs and we're happy to make this available to all those interested. It builds on many past precedents to deliver key energy infrastructure to Canadians.

Third are measures to expand the use of natural gas as a transportation fuel. CGA has been working closely with Transport Canada and Natural Resources Canada to advance this area. Natural gas vehicles are a solution to Canada's freight emissions challenge, providing up to a 25% reduction in GHG emissions and lower commodity costs.

We recognize the important federal support provided in budgets 2016 and 2017 to support low-emission refuelling infrastructure, including natural gas. Looking forward, we see a role for government working with industry in three areas: to defray higher upfront costs associated with the acquisition of natural gas powered vehicles, to support additional development of public access refuelling infrastructure, and to support NGV implementation projects, including facility upgrades required to promote workplace safety.

Fourth, we focus on creating a natural gas clean-tech innovation fund for Canada by leveraging the work we're already doing in the industry through our own natural gas innovation fund, created in October of 2015. Our NGIF partners with gas utilities and with Canadian and international clean-tech companies that bring solutions to challenges facing our industry. CGA has been working closely with NRCan's office of energy research and development, the office of energy efficiency, and CanmetENERGY by building a trusted partnership where we share information and project funding opportunities. This is a unique arrangement in Canada.

Building on the work we've started, we propose the allocation of $300 million over six years to support clean technology commercialization in our industry. The fund would have five distinct technology categories, along the full natural gas value chain: methane venting and fugitive emissions; heat and power generation; renewable gases; CO2 capture, utilization and storage; and LNG. The fund would address the full value chain of natural gas clean-tech needs, including production, transmission, distribution and consumption.

Fifth is cybersecurity, which is a growing area of importance for the energy sector at large, and for CGA and our member companies. We recommend that the federal government continue to support collaborative opportunities between the Canadian centre for cybersecurity and the private sector, to share skills and knowledge and enhance risk management in cybersecurity.

Sixth is a focus on the needs of the energy consumer. As Canadian federal and provincial legislators and regulators look at ways to achieve GHG emission reduction targets, we recommend that there be a public and transparent accounting of the costs involved in achieving those targets. No single government is looking at the total cost to the Canadian energy consumer, but rather at their individual piece. Moving forward, our recommendation is to start addressing the situation with an annual joint meeting of energy and mines ministers and environment ministers to discuss regulatory overlap and the consumer impact.

In conclusion, we know that natural gas is well positioned to support the government's objectives. We're working hard to help. Our natural gas innovation fund is an example where our industry is actively pursuing the development of new technologies to build on the value proposition of our product. We encourage consideration of our recommendations in moving forward to do more still, if the government wishes to meet the targets it has set.

Thank you for the opportunity today. I'm happy to answer any questions.

[The Chair, Liberal, Wayne Easter]

Thank you, Tim.

I'll turn to the Fisheries Council of Canada and Mr. Lansbergen.

[Paul Lansbergen, President, Fisheries Council of Canada]

Thank you, Chair and honourable members. It's a pleasure to be with you this morning.

The Fisheries Council of Canada, or FCC, is the national voice for the wild capture sector, representing processors on all three coasts and in inland waters. Many of our members also harvest.

In our submission we highlighted four issues: restore investment confidence, fund science-based decision-making, expand trade and market opportunities, and address labour shortages. However, for my remarks this morning, I'm going to focus on the first recommendation. Without action on it, the others are less of a concern because the first holds primacy.

Instability of access to the resource and policy uncertainty have eroded the confidence to invest in equipment, new technologies and conservation. Without that investment, we won't grow, innovate or create employment. There are three reasons for this lack of confidence.

First, unlike other natural resource sectors, the fisheries sector is beholden to the federal government for access to the resource. Experience has shown that licences and quotas can be involuntarily relinquished without compensation. This has had a rippling effect throughout the sector, leading to a lack of confidence to invest. Operators will not invest if they don't think they can have their licence or quota long enough to earn a return on investment.

Second is the significant push to meet Canada's marine conservation target by establishing marine protected areas or other refuges, discussion of new minimum standards on marine protected areas, and speculation about more ambitious marine conservation targets to come. The fishing sector is getting squeezed into fewer areas where it can harvest.

Third, amendments to the Fisheries Act, and some 15 new regulatory amendments to follow, represent a time of tremendous change in the regulatory framework governing the sector. But none of these changes really address the priorities of the sector. We operate under some antiquated regulations that have not been updated for over 30 years and act as a barrier to efficiency, innovation and improved conservation.

Why does this matter? I can give you three reasons, all relating to growth opportunities.

One, the growing global population and growing affluence are leading to growing demand for protein, including fish and seafood. Second, here at home the federal government has set an ambitious growth target of reaching $75 billion of agri-food exports by 2025. Third, the sector is missing out on $600 million of additional revenue annually because we are not maximizing the value of what we harvest today.

We would like to realize our growth potential, but that won't happen without investment.

I would now like to dive a little deeper into the first issue of involuntary relinquishment. This relates to the government's reconciliation agenda. This only happens in our sector because the government exercises authority of claiming that licences and quotas are a privilege to a public resource, not a right. This does not happen in other sectors such as oil and gas, mining or forestry.

Just because it can doesn't mean it should. Fisheries and Oceans has testified in court that involuntary relinquishment by commercial licence holders is unnecessary and unhelpful to the principles of reconciliation. Moreover, the Supreme Court of British Columbia has iterated that voluntary relinquishment should be the route to reconciliation.

Our recommendation has been urging DFO to resume its use of a willing buyer, willing seller model for reallocations as part of the reconciliation agenda. It has previously done so with the Pacific integrated commercial fishery program. This will respect past investments and facilitate ongoing investment.

Re-establishing the confidence to invest will enable the growth aspired to by the sector and envisioned by the government. At the same time it will enable innovation, making the sector more competitive and sustainable.

I look forward to your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Paul.

Now we have Ms. MacEwen from the Canadian Union of Public Employees.

[Angella MacEwen, Senior Economist, National Services, Canadian Union of Public Employees]

Thank you, Mr. Chair and honourable members. On behalf of the 665,000 CUPE members who work hard and deliver quality public services in communities across Canada, I thank you for the opportunity to be here.

I will summarize our main recommendations from the written report that CUPE has submitted to the committee, and I'll propose a bit of a twist on what the federal government can and should do to foster a competitive economic environment.

While it's not often appreciated this way, investment in public services plays a very important role in improving any nation's productivity and competitiveness. For example, it's been estimated that each dollar in public infrastructure investment generates an average of 17¢ per year in cost savings to Canadian businesses. Improvements in public health have increased productivity by at least 20% across OECD countries. A post-secondary degree increases individual earnings and presumably productivity by about 40%, and increased educational attainment is responsible for about 20% of overall growth in productivity in Canada.

Public investment in child care provides a social return of two dollars for every dollar invested. It significantly increases employment and economic output, and it pays for itself through increases to government tax revenue. Improved universal public pensions, which this government introduced at the beginning of its mandate, increase economic growth and generate more jobs, because they generate more demand for lower-income families. They improve productivity by reducing barriers to labour mobility during your working life.

For years we've been told that we need to lower corporate taxes, cut back public spending, deregulate, privatize and sign more international trade and investment treaties to create a competitive business environment, and that this would lead to prosperity for all of us. But what we've seen as a result of this policy prescription is a growing concentration of wealth at the top, dwindling productivity growth across industrialized nations and mostly stagnant wages in Canada. If you take out Alberta from wage growth, everyone else's wages have stagnated. Even organizations that have commonly advocated for the previous measures of lowering corporate taxes and deregulation are now starting to rethink their approach.

We think it's time for a new paradigm for productivity and competitiveness, one that focuses on people. For example, the research shows us that improvements in health care are responsible for about 25% of the increase in labour productivity in industrialized countries in recent decades. It makes sense that workers are more productive when they have their basic needs taken care of, when they have high-quality post-secondary education that they can afford, and when they don't have to worry about bridging the gap in their families' various care needs. This is why CUPE recommends several measures to restore the social wage in Canada, which will boost productivity, competitiveness and well-being for all Canadians.

The first is to establish a national, universal, single-payer pharmacare plan. We recommend that it be developed with the provinces and territories to make sure that all Canadians have access to safe and effective prescription drugs, with a national formulary and an arm's-length federal agency to manage the plan.

We recommend that the federal government commit to sufficient long-term funding to establish a national early-learning and child care framework, working with the provinces, territories and indigenous peoples, that will ensure universal, affordable, inclusive and high-quality child care for all Canadian families, and we recommend that in this budget, we invest at least a billion dollars toward that aim.

This is a bit of a higher goal. We recommend that you create a dedicated post-secondary transfer to the provinces, increasing transfer funding by 40%, and work with the provinces to reduce and eventually eliminate tuition fees for post-secondary education.

We recommend a federal minimum wage of $15 an hour. Again, that increases demand for low-income families. It supports local communities and increases economic output. We recommend a modernized fair wage policy that applies to all federal contractors. The federal government should set the standard in establishing fair wages and good work.

We recommend converting the Canada Infrastructure Bank to a truly public infrastructure bank that uses only the lower-cost public funding, and convert federal funding for more costly P3s into funding for publicly financed and operated infrastructure.

We recommend that you level the playing field for national businesses and tax foreign e-commerce companies like Uber, Airbnb, Netflix, Facebook, Amazon and Google on the business that they do in Canada. It's only fair and it would generate about $1 billion in tax revenue.

Finally, I would submit to the committee that Trump's tax cuts are a short-term “sugar rush” for the U.S. economy and are likely to be either undone or result in significant cuts to public services in the U.S. Either way, there is no rush to follow the United States down a path that has seen large U.S. corporations continue a trend of short-term stock price boosting through, for example, share buybacks, and has not seen any significant investment in physical infrastructure or in workers.

I look forward to your questions.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Angella.

Turning to the Public Service Alliance of Canada, we have Mr. West.

Welcome.

[Howie West, Work Reorganization Officer, National Programs Section, Public Service Alliance of Canada]

Thank you for your invitation to appear today. Our president, Chris Aylward, sends his regrets.

PSAC has several recommendations for the 2019 federal budget, which were outlined in our written submission.

The Phoenix pay system is still a matter of great concern to our members and everyone who works in the federal public service. We are in ongoing discussions with the government about damages, among other issues. However, the 2018 federal budget failed to provide a plan to allocate its funding commitments related to Phoenix into the future. What is more, the funding was insufficient to ensure that federal workers are paid correctly, and to compensate them for the damages Phoenix has caused.

The 2019 budget must include sufficient funding for proper compensation. It must include funding for the development and thorough testing of any new system, and funding for the human resources needed to support the current Phoenix system and any new system going forward.

Another big concern is the use of public-private partnerships, or P3s, for federal services and infrastructure. Evidence shows that P3s do not result in cost savings or reduced risks because the public has to pick up the pieces when the private partner fails. The Phoenix disaster tells that story very well. Around the world governments are moving away from the P3 model because cost-benefit analysis supports fully public infrastructure investments. The government certainly does not need P3s, given the lower borrowing costs afforded to it.

We recommend that the government cancel current procurement processes for P3 infrastructure and reissue them as design-build requests with public sector workers providing the operation and maintenance of those facilities. We also recommend that the government develop a process to terminate contracts for other existing P3s and return them wholly to the public service to operate and maintain.

Now I want to touch on precarious or non-standard work, a type of work that is increasingly common in Canada. In the federal public service, 15.3% of employees are categorized as term, casual, or student. This number does not include workers who are self-employed or employed by companies that contract to the federal government, such as temporary-help agencies. While information about the actual contracts and payments to these contractors is available, nowhere in the government reporting is there a consistent and comprehensive tracking of the people who make up this substantial portion of the workforce. This is a reflection of poor oversight.

We recommend the government reduce, with a goal of eliminating, the use of temporary-help agency workers and other types of external contract personnel within the federal public service. Further, we recommend developing and implementing, in consultation with public sector unions, a system-wide process for the comprehensive tracking and reporting on the use of temporary-help agencies and other external contract personnel.

Now a word about pay equity and the legislation we expect the government to table this fall. If this new law is to be effective, there needs to be funding attached to it. Both the 2004 federal pay equity task force and the more recent special House of Commons committee on pay equity called for a federal pay equity commission and a pay equity tribunal, both of which will require funding. Informing and educating employers, unions and employees of their rights and responsibilities as well as enforcing the new law will require funding. We expect to see this funding included in the 2019 budget.

Finally, we have a recommendation about child care. The 2018 federal budget acknowledged that women's participation in the paid labour force has been one of the most powerful sources of economic growth in recent decades. In order to provide the type of child care system that actually advances gender equality and yields economic returns, the government must go forward and beyond its multi-year allocation plan. PSAC supports increasing federal child care funding by $1 billion annually until we meet the accepted international benchmark of 1% of GDP annually on early learning and child care. We also support providing conditional federal transfers to the provinces and ensuring the funding goes directly to public and not-for-profit providers.

Thank you. We'll be pleased to address any of your questions.

[The Chair, Liberal, Wayne Easter]

Thanks to all of you.

We're going to seven-minute rounds initially.

Ms. Rudd.

[Kim Rudd, Northumberland—Peterborough South, Lib.]

Thank you very much, Chair.

Thanks to all of you for coming and presenting to us on this lovely rainy day.

I have a couple of things. Sergio and Tim, I was listening to your remarks. As you know, I know a fair bit about the organizations and the work you're doing jointly with the government, particularly with NRCan. I'm going to ask both of you to comment on the larger energy strategy, or the national energy strategy, which we talk a lot about, and on how you see what you're talking about today fitting into that larger Canadian energy strategy.

As you know, in the Generation Energy report, there really is an all-of-the-above approach as we look at doing a number of things that we're doing right now. Ontario is an example. Nuclear is very prevalent in my riding. In Ontario, 60% of our electricity comes from nuclear. The rest comes from gas, wind and solar. The decarbonization, if you will, of the grid in Ontario has moved forward significantly.

How do we help the rest of the country and work with the rest of the country, with the provinces and territories, to help move that forward as we increase the number of electric vehicles and as we go further into the work that I know you've all been doing?

I'll go to you first, Sergio. On your national electrification strategy, can you tell me a little bit about how you see that fitting into the larger Canadian energy strategy? What would that look like?

[Sergio Marchi]

Thank you very much.

First of all, the position we've taken for a long while is that we hope both the provincial and the federal governments push that national Canadian energy strategy over the goal line. I think it is logical to have governments working together to harness all of our assets in all of our regions and have that blueprint going forward.

Second, I think that strategy would imply a greater degree of coordination. For example, as I said in my remarks, when it comes to regulatory frameworks, we find it dangerously heavy right now. It does affect competitiveness, particularly when you have a government in the United States that is shaving regulatory overhang at a record rate.

I'm not suggesting that we need to follow suit on every aspect. I'm not suggesting that we slash and burn our regulations. We recognize the need for regulatory frameworks for our industry, and we recognize that regulations serve societal goals as initiated by governments. However, the fact of the matter is that we are really experiencing a cumulative regulatory pancaking that no one government, no level of government, is responsible or accountable for.

We've asked that the annual meeting of mines and energy ministers address that. It would be a perfect and legitimate forum for this. As Tim mentioned, every level of government is concerned only with its own respective layer of pancake regulations, but we need to get the whole cumulative aspect right because our industry is asked to eat and pay for each of these pancakes, and then we pass that on to the consumer. A strategy would also inherently make co-operation a priority and, therefore, coherent.

On electrification, I would start, as we suggested to the minister and in this presentation, by beginning the process of having an electrification strategy. We all talk about the need. The Conference Board has some big numbers for what we would need for the electricity sector, but we need to have a national strategy, if you will, which again puts the onus on the federal government to also include provincial and territorial governments. We suggest that we fund that development so that, again, we can all play a part, including having the confidence of Canadians and industry.

But we have to start with a plan, and until we have a plan, the talk is going to be disjointed and, therefore, ineffective.

[Kim Rudd]

Thank you very much.

Tim, I'll move to you. Your second recommendation is to connect rural Canadians to natural gas. As you know, I live in a rural riding, Northumberland—Peterborough South. We have been seeing natural gas come out further and further into the more rural communities. Certainly to my agriculture community it's an extremely important asset. For poultry farmers, for example, who are relying on electricity or diesel to make sure their barns are warm, if something went wrong, there was no plan B.

There are two things here that maybe you can talk about. First is the natural gas as it relates to rural communities. How do you see that unfolding, and again, what might that strategy look like? Second, you mentioned the natural gas in vehicles. I have to confess that I wanted an electric vehicle, but my rural riding does not support the infrastructure as of yet—or not to the degree where I feel comfortable, in January, running around in my riding. I did manage to buy a hybrid last week, so I'm moving there.

One thing that's interesting to me is that in countries like Argentina, they use natural gas almost exclusively in their vehicles. They do so because they have an abundance of it. Can you talk about how you see that working with the electric vehicle strategy, and also how we can accelerate that rural access to natural gas?

[Timothy Egan]

First, on rural expansion, the interest is coming from many members like you. Many of your colleagues on the government backbenches have come to us with a specific request in response to demands from constituents, so it's responding to a reality on the ground. People are saying, “Wait a second, there's cheaper energy over there. Why can't I get access to it?” The point of the strategy is to be able to respond to that.

There are many precedents for the expansion of energy infrastructure into rural areas by government, on the electric side and on the gas side, and we're talking about a similar expansion. This would be direct assistance to underwrite part of the cost of the infrastructure. Other portions of the cost would be picked up by the utilities and ultimately by the ratepayers themselves. It's an assistance program. Again, there are many precedents for it. We would simply be building on past precedents, both federal and provincial.

I think the response of the government should be to open the doors to those areas that are looking for this kind of assistance and they will come forward. We have a long list of communities right now that have approached our member companies. We've encouraged those communities to talk to provincial governments and to the federal government. We're happy to do that directly. There are lots of precedents we can cite to show you how this can be done.

On the vehicle question, it kind of goes back to a discussion I had with the previous Minister of Natural Resources, Minister Carr, with respect to broader energy issues. It touches on some of the points Sergio was making about the idea of an energy strategy. We're a little concerned about some of the conversation, because it seems to be turning towards proposing technology favourites. I asked Minister Carr if his goal was to reduce emissions or to design what the energy system should look like. We think that of the two, it should be to reduce emissions and then say to industry, “All right, go and be creative.”

With respect to vehicles, we think there are opportunities for electric vehicles more likely in highly dense urban areas, where it's relatively cost-effective to build the infrastructure. For natural gas vehicles, there would be other portions of the transportation market better suited: freight vehicles, rail, marine, etc. Much of this is happening now. We think it can be expanded. We think we can look at the idea of a national transportation energy grid whereby we can be extending the use of natural gas.

Essentially, that's what happened in countries like Argentina, where there was extensive support for the expansion of that infrastructure. It happened to be the fuel that was most available to them for a variety of reasons.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

Mr. Poilievre, you have seven minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

Yes.

My first question is for you, Mr. West. I'm wondering if your organization has a position on the Infrastructure Bank.

[Howie West]

We certainly do. It wasn't directly in our submission, but certainly we agree with our colleagues in CUPE that the Infrastructure Bank ought to be funded with public money, for the same reasons my colleague Angella just enunciated. We believe public financing is cheaper than private financing. We believe the outward costs to the taxpayer are more transparent than the costs are with private financing, and we believe the ability to be transparent and accountable about the infrastructure being built is far more available than it would be with private financing.

[Pierre Poilievre, Conservative, Carleton, ON]

Do you worry about the government's plan to provide loan guarantees and other financial instruments that will protect the profits of private corporations at taxpayer expense?

[Howie West]

Certainly, I think our concern would include that, but it's further than that.

We believe that the public has a borrowing power that's cheaper than the private sector. We believe that it's not a question of supply; rather, it's a question of the financial resources that we ask the public to pay. There's been a general consensus over the last few years—that economists around the world have been starting to dispute—that austerity and filling the gap through private funding have been successful. That is showing more and more not to be the case.

[Pierre Poilievre, Conservative, Carleton, ON]

My next question is for the—

[The Chair, Liberal, Wayne Easter]

Go ahead, Angella.

[Angella MacEwen]

I just wanted to say that loan guarantees are actually one of the things the government can do really well. It often doesn't cost them money and it's useful to sustain industries—for example, right now, where we have the steel tariffs or the softwood lumber tariffs. In particular emergencies, loan guarantees can be a very useful tool for government to help industry weather difficult storms.

In other examples through the Infrastructure Bank, it's not a great plan.

[Pierre Poilievre, Conservative, Carleton, ON]

My concern is that municipalities have successfully put the burden of risk on private companies when it comes to infrastructure procurement, so that if a project goes over budget, the private company has to pay that overrun, which I think is fair. They're the ones that are responsible for the mistake.

I worry about loan guarantees that actually protect the private company against its own failures at the expense of taxpayers. I don't have a problem with infrastructure companies making a profit, but profit and risk go together. If they make a mistake, it shouldn't be my constituents who pay for their mistake. That's my principal objection to its use in infrastructure procurement.

[Angella MacEwen]

I would agree with that.