Indigenous and Northern Affairs Committee on May 14th, 2015

[Kyle Seeback, Conservative, Brampton West, ON]

Thank you.

[The Chair, Conservative, Blake Richards]

Thank you. I appreciate that.

Now we move to Ms. Hughes for the next five minutes.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Thank you very much.

Is there a difference between attracting private sector investments for projects on and off reserve?

[Michael Mills]

I would imagine there would be in the sense that there are differences for the private sector.

One area where we see a lot of private sector concern is around permitting and the legal framework for the Canada Labour Code, for health and safety, and what not. I would just imagine with the private sector, from our dealings with them, that their challenge on reserve versus off reserve is more about the legal environment and what kinds of permitting requirements they would have in terms of a typical P3.

They are used to working in municipalities. They know what the permitting regime is. They are used to working under provincial regimes. There is a bit of learning to be done with the private sector in terms of the legal framework on reserve that they would have to operate within.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Is there something your organization could help with in better understanding the framework that the first nations work under and being able to assist the private investors to better understand what they are getting themselves into—

[Michael Mills]

Yes, I believe we could.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

—so they are better prepared so these could be successful?

[Michael Mills]

Yes. I'll give the example of our being part of the team for the new bridge in Montreal for the St. Lawrence. That is a unique transaction because even though it's within a very urban area, it's actually happening on federal lands. Within the procurement phase of that we had to document and produce product for the private sector consortia that were bidding on that project to explain the legal framework.

I think drawing on that experience we could work with the community to draw out the types of information the private partners would need to help them produce materials they could give to anyone bidding on the job or interested in the project. We would try to remove any uncertainty around that and provide the kind of information that's really tailored to helping the private sector understand their risk and their responsibilities in that context.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

You mentioned there were 36 applications. I'm wondering, out of those 36 applications, does that include the one that was approved?

[Michael Mills]

Yes.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Then, out of the 35 applications that are remaining, have they all fallen off the table or are there still some that are trying to move forward?

[Michael Mills]

There are still a couple that are moving forward.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Out of those applications, have some of them been for remote communities? Given the fact you mentioned the process takes anywhere between 18 to 24 months, and there's the technical side, there's the approval side, and then you mentioned one more.... Anyway, given the short construction season in some of these communities, especially the remote northern communities, how difficult is it to try to get P3s going in those areas, and should we be looking at a different model?

[Michael Mills]

It is difficult, but on the flip side of that, part of the appeal of the model is being very clear about the performance you're seeking. When you do have a shorter construction season and people are highly incented to meet the construction season, it can be a very beneficial model.

That was part of the appeal and the actual business case for the Iqaluit airport. The Iqaluit airport is an approximately $300-million transaction in the north. They'll have to fly in all of the material. You're looking at a project that was bid on by international consortia. There is an opportunity to bring global expertise to deal with these very challenging projects. I would argue that they are the most risky and challenging projects to do, so who better to engage in those kinds of problems than global constructors and designers and developers to deliver really high-quality assets?

There are challenges. They have their unique issues in terms of executing a contract, tailoring the procurement process, and being open to short construction seasons, but on the flip side of that, there is a tremendous opportunity to leverage that talent in the private sector to address those concerns. The alternative is to go the traditional route and to expose the normal model to an even riskier environment.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

I'll wait for more time to ask more questions.

[The Chair, Conservative, Blake Richards]

We seem to have reached the end of our list, so if you have just one more question, go ahead and we can finish it off there.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

I have two small questions.

One of them was with respect to the financing piece. Is it difficult for first nations? Have first nations pulled out because they are not able to put their whole part of the P3 in financially? Is there a lack of funding on their part?

[Michael Mills]

I don't believe that's been the barrier to moving in the direction we want to. It's been more a case of the underlying economics of the transaction. If the transaction is too small and it can't carry the transaction cost, it doesn't make sense to go that way. There might not be enough market interest in a certain type of project or location of project, so you can't actually extract the kind of value that you're looking for by having an open competition. You may not get enough people to show up. It's been more about the features of the projects.

We haven't gotten as far along as having a project that has the internal economics, that's demonstrating value for money, and that has market interest but just lacks a funding stream so we can't get there. We haven't seen that yet.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

You mentioned the inability to provide the same level of payment. I'm just wondering if you can explain that. You also talked about non-refundable contributions. I'm wondering if there's a maximum to that or how you judge that.

[Michael Mills]

Could you just give me a little bit more context for the level of payments not being the same?

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Yes. You talked about the inability to provide the same level of payment a while ago. I'm just wondering if you were able to explain this. You also talked about the non-refundable contributions your organization provides. I'm just wondering if there's a maximum amount you provide.

[Michael Mills]

Under the P3 Canada fund we provide up to 25% of the capital costs. That is the maximum.

With regard to restricted ability to provide funds, from my understanding, first nations communities don't have the same level and breadth of own-source revenues that, say, a municipality would have in terms of a property tax base, fees, and even, in some cases, the provincial contributions that you would see in the programs.

[The Chair, Conservative, Blake Richards]

Thank you.

Mr. Seeback just indicated that he would like one more brief question as well, so I will allow that and then we will wrap up there for our witness.

[Kyle Seeback, Conservative, Brampton West, ON]

How much of the $1.2 billion that initially went into the fund has been used for projects?

[Michael Mills]

All of it has been committed. We're now into committing our second wave of the fund. We've committed over $1.3 billion.