On—
I'm sorry. Go ahead.
Evidence of meeting #39 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was projects.
A recording is available from Parliament.
Evidence of meeting #39 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was projects.
A recording is available from Parliament.
2:50 p.m.
Chief Investment Officer, Canada Infrastructure Bank
I was just going to say that with regard to the second part of your question—about brownfield versus greenfield—just so we're on the same definitional page, we view brownfield as being existing infrastructure and greenfield as being new infrastructure. At the moment, we're very firmly in the camp of.... Our mandate is to build new greenfield infrastructure. To the extent that there's any brownfield element of it, it could be a new greenfield portion of an existing asset, so an expansion or what is, in effect, an overall replacement of something because it's at the end of its useful life or something like that, but very squarely greenfield.
2:50 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
When I think of the Canada Infrastructure Bank, here in Ontario, we have Infrastructure Ontario, and in the City of Vaughan we have a $2 billion hospital near completion in my riding, and a $700 million expansion of Highway 427 that is going on right now. We have Infrastructure Ontario playing its side with the appropriate procurement process.
When I think of CIB, I think of our Canadian transportation corridor and strategic investments in that. It was great to hear the announcement with regard to the City of Calgary, and the review of that process of potential investment there. Those are the types of projects I think of when I hear about the Canada Infrastructure Bank.
I would love to see some equity investments come from the bank, albeit not just on the debt side, the loan side, though I understand that. We need to come out of this COVID-19 pandemic with key infrastructure expansions taking place, key announcements taking place, to literally move, or continue to move, our economy forward, but also what we like to call “longer-term increases”. We need to strengthen and raise our standard of living, our productivity within our economy. I view CIB as a critical link in that process. If you'd like to comment on that, it would be appreciated.
2:50 p.m.
Chief Investment Officer, Canada Infrastructure Bank
Yes, you've accurately portrayed it. We're actively seeking out priority projects, important projects across the country, with the provinces, municipalities, first nations, Inuit, and Métis groups across the country. We're having active, daily discussions with all of those groups to ask how we can help with their priority needs, but priority needs that are going to have some revenue generation, because that's how our investment will be repaid. If we're going to crowd in private capital, private capital expects a return, and that needs to be repaid as well.
Good things can happen by capitalizing that private capital by our involvement, giving them good high-level advice at the beginning of the structuring to put them in the right direction, and help them to structure something that achieves all of their goals, while being responsible stewards of taxpayer money.
2:50 p.m.
Liberal
The Chair Liberal Wayne Easter
Mr. Ste-Marie for a couple of minutes, then Mr. Julian, and then we can get to Mr. Morantz, Mr. Fragiskatos, Mr. Cooper, and Ms. O'Connell.
Mr. Ste-Marie.
June 22nd, 2020 / 2:50 p.m.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
Thank you, Mr. Chair.
I will begin with two comments.
My first comment is about what my colleague Mr. Poilievre said. I think it would be important for the severance pay of the Canada Infrastructure Bank's former CEO to be made public, since that is public money. We must be transparent. At the Caisse de dépôt et placement du Québec and at Hydro-Québec, among others, compensation—including premiums and indemnities—is disclosed. In my opinion, the public would benefit from that. We have no reason to hide it.
My second comment has to do with what my colleague Ms. Koutrakis said about the high-frequency rail. I don't have the right words like the ones she used about that project. It in no way replaces the high-speed train. As far as the environment goes, a high-speed train would directly compete with air connections. There would be several advantages to pass along. That's not really the same thing.
As far as cars go, they will be built in California rather than in Quebec or in Ontario. In Europe or in the United States, rail projects support rail companies set up on their territory. It would not have been complicated to impose a minimum of local content in order to maximize Canadian economic benefits. It was not a great idea.
I now go to my question. As I was saying earlier, the CIB is essentially used for project funding. Does the CIB eventually plan to undertake direct participation, such as a portion of infrastructure.
If so, I would like to bring your attention to the following issue. If the bank became a direct partner and had an interest in a municipal infrastructure project, the infrastructure would become federal in terms of jurisdiction because the bank is a federal corporation. When infrastructure under federal jurisdiction is involved, municipal regulations and provincial laws no longer apply. What should be done to guarantee that municipalities will still be masters of their own domain to establish environmental requirements, for instance?
Do you intend to accept direct participation? If so, what will you do for municipalities and provinces to remain masters of their own regulations?
2:55 p.m.
Chief Financial Officer and Chief Administrative Officer, Canada Infrastructure Bank
I believe the question is really around potentially taking an equity position in any given project. Absolutely that is a tool that is available to us. As part of our act, that is one of the financial tools that is available to us. Whether or not we would use it any particular case.... As John said, what we do is we solve for the gap in the financing. In some cases, equity may be required. In some cases, the best solution or the most efficient use of capital is in fact going to be a loan. However, that will be project-specific, depending on the economic needs of that specific project.
2:55 p.m.
Liberal
2:55 p.m.
Chief Investment Officer, Canada Infrastructure Bank
No, I think Annie covered it. Thank you.
2:55 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
Thank you very much, Mr. Chair.
We've seen a number of collapses of P3 projects. Most recently in British Columbia there were massive cost overruns. The principle seems to be to socialize the risk on taxpayers but to privatize the profits.
My question is twofold.
First, what is the return that is expected around these projects? Of course, that increases the cost of the project. The CCPA estimates it doubles the cost. When we talk about Mapleton, one of the five projects and one of the few new announcements, what are the user fees that are contemplated? One of the former CEOs of the Infrastructure Bank said that “users will fund the bulk of the operations and of the returns to investors through user-fees”. This is actually something that I would say is patently not in the public interest—people paying for water so the return on investment can be enhanced for private sector investors.
What is the bank's plan for privatizing assets like that, assets that should be held in common, to privatize, to impose user fees, and what are the user fees going to be in the case of the Mapleton water and waste-water project?
2:55 p.m.
Chief Investment Officer, Canada Infrastructure Bank
I'm happy to answer that one, Annie.
First, let me make it absolutely clear, without any hesitation, the CIB is not in the business of privatization, full stop. None of the projects we are involved in involve privatization, nor will we go there, full stop.
In the case of Mapleton, it's important to understand the town was embarking on an ambitious and very innovative way to fill a very serious and real need for them. The town had already engaged other experts and was going down a path, and then they approached us and said, “Can you help us out here because despite what we want to do, we still feel there's a gap”. When the mayor of Mapleton approached us, he made it very, very clear that there were two criteria that were non-negotiable, and we absolutely bought in and agreed. One was that the Town of Mapleton calls the shots on the asset. It owns the asset at the end of the day. Two, Mapleton and their representatives set the rates. That's the way that program is being structured.
When you talk about a user fee, what I think we're really talking about is the rate base. You pay for a water bill the same way I pay for a water bill, the same way all of us on this call pay for a water bill every month. That's really what it's about. It's about the user base, not an additional or special fee. The real costs of building new infrastructure, we think, need to be recognized, and they made the decision—“they” being the Town of Mapleton—that they would recognize those costs by having the users of the water pay for the real costs of that water.
3 p.m.
NDP
Peter Julian NDP New Westminster—Burnaby, BC
That's the problem. The increased costs of financing and the return on investment actually mean the project is more expensive, and ultimately, as we've seen in other projects, user fees have to be imposed.
3 p.m.
Liberal
The Chair Liberal Wayne Easter
Peter, we're over your two and a half minutes by quite a bit.
We'll let that statement stand, and we'll go to Mr. Morantz.
I think I missed Ms. Dzerowicz at some point, but we'll get her in.
Mr. Morantz.
3 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Thank you, Mr. Chair.
I just want to get some clarification.
In your mission statement it says your mission is to work with, among others, “private sector investor partners”. Do you have any private sector investment partners currently in any of the 10 projects you've announced?
3 p.m.
Chief Investment Officer, Canada Infrastructure Bank
I think it's fair to say that all projects that are under consideration, those ones that have been announced—
3 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Are there any...? That's in your mission. It's a simple question.
3 p.m.
Chief Investment Officer, Canada Infrastructure Bank
Yes. They're in all those projects. Correct.
3 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
What would that look like? Are they equity owners? Are they lenders? What's an example? Actually, give me a project where there's a private equity investor.
3 p.m.
Chief Investment Officer, Canada Infrastructure Bank
Mapleton, which we just talked about, will have an equity investor with private money in it. Contrecoeur will have equity and private debt in it, and will likely at this point play a role of subordinated debt. However, that's still to be determined.
3 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
How do you define “private" investment, then? Is it a loan? Is it equity? Is it—
3 p.m.
Chief Investment Officer, Canada Infrastructure Bank
It can be any and all of the above. It depends on what it is in the structure.
3 p.m.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Are there any current private equity investors, not debt but equity investors, in any of these projects? Because that's what your mission statement says.