Evidence of meeting #96 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was project.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Patricia Brady  Director General, Investment Review Branch, Innovation, Science and Economic Development Canada
Andrew Brown  Executive Director, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
Sébastien St-Arnaud  Senior Policy Strategist, Strategic Policy and Legislative Reform, Labour Program, Department of Employment and Social Development
Marie-Pier Côté  Director, Express Entry Policy, Department of Citizenship and Immigration
Glenn Campbell  Assistant Deputy Minister, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
Shawn Grover  Senior Policy Analyst, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
Niko Fleming  Chief, Infrastructure, Sectoral Policy Analysis, Economic Development and Corporate Finance Branch, Department of Finance
Victoria Henderson  Acting Director, Cost Management, Department of Citizenship and Immigration
Louis Marcotte  Director General, International Business Development, Investment and Innovation, Department of Foreign Affairs, Trade and Development
Roger Ermuth  Assistant Comptroller General, Financial Management Sector, Office of the Comptroller General, Treasury Board Secretariat

10:15 a.m.

Liberal

The Chair Liberal Wayne Easter

Are we ready for the question?

10:15 a.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

I'd like a recorded vote.

10:15 a.m.

Liberal

The Chair Liberal Wayne Easter

Madam Clerk, this will be a recorded vote.

(Motion negatived: nays 8; yeas 1 [See Minutes of Proceedings])

We're still on clause 403, and we're now at NDP-30.

10:15 a.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

I will be quick.

This is still about section 31 and the offence. My amendment seeks to impose a fine or a prison term on those who violate section 29. I am not including section 28. Section 29 prohibits the use of the name, the initials or the acronyms of the bank.

Because my amendment was not adopted, I think it is better to remove section 28 from offences that could result in penalties of up to $10,000 and imprisonment of up to six months. I assume this is about formal requests, or informal ones from investors seeking more protection for the information. BlackRock got what it wanted. As it stands, those who commit an offence like the one described in subsection 28(1) are going to be subject to harsh penalties. I think it is appropriate to remove section 28 from the proposed legislation completely.

10:15 a.m.

Liberal

The Chair Liberal Wayne Easter

So moved.

Is there any discussion on NDP-30?

Do you want a recorded vote?

10:15 a.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Yes, please.

10:15 a.m.

Liberal

The Chair Liberal Wayne Easter

Madam Clerk.

(Amendment negatived: nays 8; yeas 1 [See Minutes of Proceedings])

Turning to PV-19, it's deemed moved. Ms. May had to go back to the House.

Is there any discussion on PV-19?

(Amendment negatived on division)

I have one question, Mr. Campbell, coming back to Mr. Albas' question earlier on the debts and liabilities of the Canada infrastructure bank. How are those liabilities recorded in the public accounts? Do they go against the long-term debt of the Canada...? Can you explain a little further the liabilities of the corporation? They seem to be handled differently from other crown corporations, if I understand correctly.

10:15 a.m.

Assistant Deputy Minister, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada

Glenn Campbell

I'll let my colleague Mr. Fleming answer.

10:15 a.m.

Niko Fleming Chief, Infrastructure, Sectoral Policy Analysis, Economic Development and Corporate Finance Branch, Department of Finance

Thank you.

The net liabilities of the infrastructure bank would be recorded in the public accounts on a consolidated basis. Therefore, they would be a part of the total assets, liabilities, and debts of the Government of Canada.

10:15 a.m.

Liberal

The Chair Liberal Wayne Easter

Okay.

Mr. Albas.

10:15 a.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

On that point, I guess that in the nature of the activities of the crown corporation itself, it would look quite strange to have such a heavily leveraged.... Again, the government is counting on your putting in a dollar, and at least it sounds like they're hoping they'll get two to four dollars from private sources. That's going to be highly leveraged.

I guess it would actually make the infrastructure bank look less over-leveraged, by having it in the government. Is that part of their policy rationale?

10:15 a.m.

Assistant Deputy Minister, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada

Glenn Campbell

I would say, Mr. Chair, it's the opposite, in the sense that it's transparent. A project would not necessarily be leveraged, as every participant would have a tranche or a share in that project. The Government of Canada's share through the bank would be transparent. To the extent to which there's a value of that investment that goes below par, it gets recorded against that profile of $15 billion, and recorded as a net liability against the Government of Canada's books in a very transparent way.

10:15 a.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

I think you and I can agree reasonably it's a transparent number as long as it's made public. Whether it's on the government's books or on the books of an independent crown corporation, that's still transparent because they're still reporting every year. The question is the magnitude of the debt compared to.... It looks far less leveraged when you put it in the overall categories of liabilities of government.

I'm just saying that to me if you were to have the other arrangement, it would just stick out like a sore thumb on a regular basis, while this way, the government can achieve its policy goals while—to me—minimizing that perception of the crown corporation.

10:20 a.m.

Liberal

The Chair Liberal Wayne Easter

But it would be in both, would it not? It would be recorded in the crown corporation, on the infrastructure bank's books, and on the public accounts.

10:20 a.m.

Assistant Deputy Minister, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada

Glenn Campbell

The infrastructure bank itself would have its own financial statements that would be list its assets and liabilities, and that would be for the corporation on a project-by-project basis. We've already testified that there will be an accounting determination on an annual basis by the comptroller general. We will have two auditors, the Auditor General as well as a private sector auditor, determining the ongoing value of federal support in a particular project.

The government has been transparent that this is a mechanism to deliver federal support, and has set a limit over a period of time, with a maximum of $15 billion against the fiscal framework set out over 11 years in budget 2017. It is going to be very transparent, Mr. Chair, as to how these projects will be reflected both at the bank and on a consolidated basis, as my colleague mentioned, in the Government of Canada's books, to be fully transparent. That number may fluctuate over time.

10:20 a.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

But again—

10:20 a.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Albas.

10:20 a.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

But again, unlike a bank, there will not be a cap or requirement for how much cash it has to have on hand. My understanding is that the government is intending to try to maximize as much private infrastructure funding as it can, so I can't see their, like a bank, having a capital reserve. I think it will take a little while for all $35 billion of the initial investment in money and guarantees to be invested, but to me, that's the purpose. This is going to be one heavily leveraged bank, if you want to call it that, because it won't have capital reserves on its own as part of its mandate, will it?

10:20 a.m.

Assistant Deputy Minister, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada

Glenn Campbell

Thank you for your question.

Mr. Chair, this is not interpreted as a levered corporation in that respect. First, to reduce the cost in the treasury function, unlike other crown corporations, the government is not going to give it a lump sum amount of money that it has to manage. Cash will be released to this corporation as projects come forward, such that it can make investments, i.e. purchases, in a project, either through debt or equity means and other parties will then do the same. The objective is not to bring in additional debt, but equity, so that it will not be levered. The purpose is to try to attract more investment on a project-by-project basis. The bank need not have a capital reserve; it only needs to have the amount of liquidity it needs on a project-by-project basis.

The Government of Canada will raise its debt. The Government of Canada will manage its funds. Prior to transferring it to the crown corporation, it need only manage on a project-by-project basis, as one participant structuring that project.

10:20 a.m.

Liberal

The Chair Liberal Wayne Easter

Okay, next we have Mr. Dusseault, then Mr. Ouellette for questions to witnesses. We're still on clause 403 discussing the infrastructure bank. Go ahead.

10:20 a.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

My question is more about the title. Why did you use the term “bank”? You use the expressions “crown corporation” or “corporation”. Why was it decided to call this the infrastructure bank? In my opinion, for the average Canadian in the street, a bank is not exactly what we have before us. A bank is a place where financial services are provided. Sometimes the expression investment bank is used when investments are made in companies in order for them to make profits.

Why use the term “bank” rather than another term to describe this project?

10:20 a.m.

Assistant Deputy Minister, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada

Glenn Campbell

Thank you.

Mr. Chair, first let me say that, in the previous three years prior to taking on this role, I was in charge of the Bank Act in Canada and I understood banks and banking, name use, and functions. It is quite clear that the entity as constructed, even though it's a crown corporation, is effectively a bank for the purposes of managing risk transfer between parties, and facilitating an arrangement between borrowers and savers.

It is not a Schedule 1 bank that takes deposits, much like other banks, but there are many other private market participants that do project finance, merchant banking, where they're involved in structuring a project, bringing folk together in a very bank-like way of transferring and managing that risk. Therefore, for those intents and purposes, this is a merchant-type investment bank, bringing parties together and structuring that, and it just doesn't have the deposit function.

There is only one Schedule 1 type of bank that takes deposits. There are many other types of banks that are involved in those types of wholesale or other forms of financial structuring.

10:25 a.m.

Liberal

The Chair Liberal Wayne Easter

Next, we have Mr. Ouellette for, hopefully, the last question.

10:25 a.m.

Liberal

Robert-Falcon Ouellette Liberal Winnipeg Centre, MB

Mr. Campbell, you are just fabulous. You should be the director of this bank, when the time comes, I hope that you are going to continue your involvement in this matter because we need your expertise.

I'd like to talk about liability. Sorry, as we've already had this discussion at the government operations committee, but can the bank make profit on a project itself?

10:25 a.m.

Assistant Deputy Minister, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada

Glenn Campbell

Yes, it can in the sense that, if the Government of Canada, through the bank, made an investment in a project that had risk at the outset—meeting the test in the short run of having to absorb some risk—and that project performed and exceeded expectations, then the bank itself could get net proceeds like any other investor in that project. Its equity could be of a higher value over time, or it could get repaid a level of debt with interest that could be the equivalent of a profit in a project.