Human Resources Committee on Feb. 7th, 2017

[Pierre Poilievre, Conservative, Carleton, ON]

What if the project loses money? Does the subordinated equity-holder lose before the prime equity-holder?

[Jeff Moore]

Again, it would depend on the situation.

[Pierre Poilievre, Conservative, Carleton, ON]

The reason I ask all these questions is that we're talking about poverty, and one of the causes of poverty is the transfer of wealth from people of modest means to people who are extremely wealthy, and it strikes me that the investors in projects like this would be fairly affluent. Otherwise, they wouldn't have money to invest in multi-billion-dollar projects.

Do you think it is fair for the broad scope of Canadian taxpayers to have to insure the risk and help guarantee the profits of wealthy investors in infrastructure projects?

[Jeff Moore]

I think you have to go back to the intent of the bank. There was a huge infrastructure gap in this country, and it was probably not possible for public money to bridge that entire gap. The idea of the bank was to bring private capital into the mix with respect to infrastructure projects. Thereby, if you crowd in private sector equity investment, it would allow provinces, territories, and municipalities to perhaps save some money and then invest the money that's saved into other projects that are required.

[Pierre Poilievre, Conservative, Carleton, ON]

I agree with that objective; there's no doubt about that. I emphasize that I know you're not the policy-maker. You're explaining the policy that's put in place by cabinet, so I'm not being critical of you. But right now private sector investors can build, own, operate infrastructure wherever provincial and municipal governments agree to let them do so. We have a very advanced financial system that allows such projects to be privately financed.

Where I have concerns is when we nationalize the risk, and then privatize the profit. My concern with this model is that we're going to have investors who are looking for their 6% or 7%, which is fine, but then they're taking the risk that's necessary to get those kinds of returns and putting it on the taxpayer, people who are, on average, worse off economically than the profiteers. I think as a committee that's focusing on poverty, we should be very concerned whenever the government puts in place a deliberate wealth transfer from middle- and modest-income people, to extremely wealthy people. There's a very serious risk of that happening with this bank.

[Jeff Moore]

Realizing what the bank, as well—

[The Chair, Liberal, Bryan May]

We were well past the time; I let you go a little long.

MP Sansoucy, please, for three minutes.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Chair.

My next questions will be about infrastructure.

Mr. Moore, you must have taken great interest in the parliamentary budget officer's report that was made public on February 2, dealing with phase 1 of the new infrastructure plan. We have learned that the budgets were allocated to 31 departments and government agencies.

However, neither of them published the list of funded projects. They did not even show the new infrastructure plan in their departmental performance report.

Phase 1 has to do with public transit and social infrastructure. Those are investments that may help Canadians come out of poverty, which is what interests us in our committee's study.

Could you provide us with an exact list of the infrastructure projects funded in phase 1?

You gave Prince Edward Island as an example, which is interesting but incomplete.

Can you also elaborate on the anticipated project results?

[Jeff Moore]

Yes, we'll do that for you.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you very much.

As I read the report, I was wondering whether the objectives would be met by the end of 2017-18 or, in other words, whether all the budgets would be spent.

How will the communities that are waiting be affected if the budgets are not spent by the end of the next fiscal year?

[Jeff Moore]

Thank you for the question.

I hope we will achieve our objectives although I cannot predict the future in the area. However, as I said at the outset, we are working with the other departments. We communicate with them regularly about the projects they are funding.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Could you tell me what criteria are used to select the projects and determine what communities will be targeted?

[Jeff Moore]

That depends on the program. I'm not sure whether your question is related to a program, but for public transit, which is managed by Infrastructure Canada, we have an agreement with each province and territory. The provinces and territories are the ones establishing the order of priorities for the projects under review by the department.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

That takes me in the same direction as my colleague, Mr. Ruimy.

The parliamentary budget officer's report indicates that almost all the funding earmarked for phase 1 was spent on large urban centres.

I think the reality is the same in most ridings in Canada. In mine at least, the largest municipality has 56,000 residents and the second largest has about 10,000. Twenty-two have less than 3,000 people.

In your presentation, when you talked about the Canada Infrastructure Bank, you said that large infrastructure projects would benefit from that investment, but that this would also be the case for rural and northern communities. I have trouble seeing how that will be possible. Why is the funding for small communities so low when we know that they are the ones that need it the most and have the fewest resources?

Your co-operation with the Federation of Canadian Municipalities is interesting, but, in my riding, the only municipality that is a member keeps wondering every year whether it will still have the means to pay the fee. The municipalities that are represented feel excluded from the process.

[The Chair, Liberal, Bryan May]

We're past the time, but I'll allow a very brief answer.

[Jeff Moore]

We work as closely as possible with the provinces and territories. It is they who determine the priorities. We have a process within the department to check whether the projects are balanced, but, as I also pointed out, we have some programs designed to respond to the needs of small communities.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Not enough, unfortunately.

[The Chair, Liberal, Bryan May]

Thank you.

We have about 15 minutes before the time we were planning to wrap up, so we're going to finish with three more questions, one from each, if that's okay.

I think we are going now to Ms. Vecchio.

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

Thank you very much. I'm going with both Brigitte's and Dan's lines of questioning.

One thing I find in Ontario, especially in the small municipalities, is that we are having problems getting funding. You talked about the management of assets and a variety of things like that. Out of my 10 municipalities, I have one that's larger, the City of London, but of my smaller municipalities, there has been only one that fits the criteria under the Province of Ontario's asset.... I'm saying they've been told they are too wealthy.

These are rural municipalities where people travel down the roads to go to their businesses or their farms, or whatever they may be, and none of the infrastructure funding is being seen because of these things. What can we do as a federal government about bad decisions by the province when it comes to deciding who gets funded and who doesn't? What can we do to ensure that rural municipalities are not out of this calculation?

[Jeff Moore]

I won't comment on whether a province's decision or territory's decision is bad or not. It's not for me to decide.

As I said, we have a few mechanisms to address smaller communities. The other one is Canada's gas tax fund, which every community gets a component thereof. We have the small communities fund, which is for communities under 10,000 population. We're going to have the northern and rural program, which is going to come on stream under phase two of our infrastructure plan.

There are a number of ways in which communities can benefit from infrastructure funding. They're not precluded from applying for other programs, like the new building Canada fund, as well as some of our phase one programming. In fact, if I had the information with me today, I know there are some small communities that have taken advantage of the public transit fund, as well as the wastewater fund. There are also all the investments we've made for indigenous communities.

I think there are a lot of points of entry, for all communities, with respect to infrastructure funding. Can we do more? Absolutely, we can always do more. The infrastructure deficit in this country is huge. However, I think the work we're doing with the Federation of Canadian Municipalities is also very important, in terms of building the capacity of small communities to be able to access the types of programs we have, whether it's through asset management or other means.

[The Chair, Liberal, Bryan May]

You still have almost four minutes—

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

I thought it was one question per person.

[The Chair, Liberal, Bryan May]

No, no, it's a full round.

You can share your time, if you wish.

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

I'm going to pass it over to Pierre.

[The Chair, Liberal, Bryan May]

Mr. Poilievre.