Evidence of meeting #103 for Public Accounts in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was champlain.
A video is available from Parliament.
3:50 p.m.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
Thank you, Mr. Chair. I take it that the point of order won't be taken away from my time.
3:50 p.m.
Conservative
3:50 p.m.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
I'm referencing the report because it's directly tied to the current report being studied by the committee, report number four.
Last fall's report makes it clear that the government's much-vaunted plan on climate change is not going to get us to Paris. It's clear in exhibit 1.5 that the government is 45 megatonnes short of meeting the Paris target of 523 megatonnes. Then when I read your current report, report number four, I see in that report that you indicate the government's decision to remove tolls on the bridge has had a huge impact. In fact, you estimate it's going to increase vehicular traffic over the bridge by some 20%, from 50 to 60 million vehicles a year. This, to me, is not abiding by the government's professed principle of internalization of our economic system; it is doing quite the opposite. It's taking what was an internality for the new bridge, the pricing of traffic over that bridge, and making it an externality. I don't see how this upholds the government's professed belief in being environmentally sustainable.
I just did a rough back-of-the-napkin calculation on your estimate of 10 million more vehicles a year going over that bridge. With the average car using about 2,000 litres of fuel a year and with average carbon emissions of about 2.3 kilograms per litre of gasoline burned, if we multiply that by 10 million vehicles, you will see that you end up with 46 megatonnes of additional emissions that are going to be produced by those 10 million new vehicles. Now I know, ceteris paribus, that this is not exactly a detailed analysis because there will be some substitution to other forms of transit and people may be taking other paths to work, but the point is that if the government is 45 megatonnes short of our Paris accord, every little decision has an impact, and 10 million new vehicles travelling over this bridge is not getting us to Paris. It is not environmentally sustainable.
The second point I wanted to make, Mr. Chair, is that it's not economically sustainable. You say in your report number four that his has blown at least a $3-billion hole in the fiscal framework. We are going to be collecting $3 billion less in revenues over the first 30 years because of the government's political decision to remove tolls on the bridge, so it's not economically sustainable. The additional traffic actually means more wear and tear on the bridge as well, which is going to lead to increased costs.
As well, it's not socially sustainable. It's led to inequity in this country. People have to pay $46 to cross a federal bridge from the mainland to Prince Edward Island and a new proposed federal bridge across Windsor-Detroit, which millions of Canadians will use each and every year, is going to be tolled, yet we have a federal bridge across the St. Lawrence where Canadians do not have to pay. It's not socially sustainable and it's not socially equitable.
I just put those points out there, Mr. Ferguson, and, through you, Mr. Chair, I'd ask if there's any comment on that lack of sustainability in this government's management of this federal bridge in Montreal.
3:50 p.m.
Auditor General of Canada, Office of the Auditor General
Our audits deal with the implementation of government policy rather than the studying or the establishment of government policy. We have indicated in the report that the department has to deal with the private sector contractor in the removal of the tolls, in making adjustments to the contract. I believe that process is still under way, but obviously it's a significant change to the original contract, and when you're dealing with a public-private partnership, part of the value is to establish the contractual obligations up front and then not make many changes to them. This is obviously a significant change.
Again, in this audit we were just looking at this project. That government decision came after the original contract was put in place.
With regard to the report that we issued that you referenced, I should point out that what we said in the fall, I believe, was the measures that have been announced so far would not be sufficient to meet the 2030 target. That's not to say other measures couldn't be put in place.
3:55 p.m.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
When you reviewed the Champlain Bridge in report 4, did you take a look at whether or not the government took into account the increased greenhouse gas emissions that would result as a result of their decision to remove tolls from this bridge?
3:55 p.m.
Auditor General of Canada, Office of the Auditor General
We didn't look at that.
3:55 p.m.
Conservative
3:55 p.m.
Conservative
The Chair Conservative Kevin Sorenson
Thank you, Mr. Chong.
We'll now move to Ms. Sansoucy.
You have seven minutes, Ms. Sansoucy.
June 7th, 2018 / 3:55 p.m.
NDP
Brigitte Sansoucy NDP Saint-Hyacinthe—Bagot, QC
Thank you, Mr. Chair.
I want to thank all the witnesses for their presentations. I also thank them for being here to answer our questions.
My first question is for you, Mr. Ferguson. I think this is my first opportunity to put a question to you. I will use the opportunity to congratulate you and tell you what a great deal of respect I have for the role all your office's employees play and for the responsibilities they assume. I am a new member—I was elected in 2015. Every time your office produces a report, it provides us with so much insight and helps us play our role as representatives of constituents. Thank you for that.
I am the new critic for infrastructure and communities, so I considered this report in particular. What I found interesting in the report was how much it is focused on the future. It talks about lessons that can be learned from this tremendous project and the steps that led to the building of the Champlain Bridge. It enlightens us on decisions we will need to make in other infrastructure projects, as this will not be the last one.
In your report, you say that costs will be higher and, even worse, that the government was unable to say how it came to the conclusion that a public-private partnership would help it save $1.75 billion as announced. According to you, a traditional model would have cost less.
Since we will have to make these types of decisions in the future, I would like to know how much money could have been saved by using a traditional model. In addition, what makes the costs escalate when a public-private partnership is used, as in this case?
3:55 p.m.
Auditor General of Canada, Office of the Auditor General
Thank you.
I will begin to answer, and then Mr. Le Goff could provide you with more details.
We stated that the assumptions used to analyze this project had some shortcomings. We examined certain aspects of that analysis. By using more realistic hypotheses, a better way to handle this project could have been found.
I will ask Mr. Le Goff to give you details.
3:55 p.m.
Principal, Office of the Auditor General
Mr. Chair, Ms. Sansoucy, we have looked at a number of hypotheses that were used to assess the value of one procurement model compared with another. In the case of the Champlain Bridge, a lot of the data was piecemeal. I'm thinking of the bridge's design, among other things. Hypotheses involving a level of design of 5% were used, when the standard is more around 10%. The department must have based its analysis on data that, inevitably, made the costs vary considerably.
Our conclusion is not that a public-private partnership necessarily costs less, but rather that studies should have been carried out before a decision was made.
3:55 p.m.
NDP
Brigitte Sansoucy NDP Saint-Hyacinthe—Bagot, QC
Okay, I understand.
In your report, you say that it's unlikely that the Champlain Bridge will be inaugurated by December 21 of this year because, among other things, some 20 changes were decided on during the project and are actually still under negotiation with the builder, the municipalities and the provincial government.
My colleague Mrs. Mendès said it well: decisions were made late. We have been hearing about this issue for a long time in Quebec.
I know it's one hypothesis, but you have looked at a number of them. Had a traditional model been favoured since 2006, would we be facing these types of delays and a cost increase over the course of the process after it was decided to use a public-private partnership, a PPP, without having all the data for a comprehensive analysis?
I have said publicly that I often prefer public infrastructure.
As I told you, I like the fact that your report is looking toward the future. How can we learn from this experience when it comes to future decisions we will have to make? So the government needs to intervene early, as soon as a red flag is raised, and get started on studies.
If a traditional model had been chosen from the outset, would we have faced delays and these kinds of cost increases?
4 p.m.
Auditor General of Canada, Office of the Auditor General
Once again, I will start to answer and then ask Mr. Le Goff to add more information.
When it comes to PPPs, I think that what we should learn from this situation is the importance of carrying out a comprehensive analysis using hypotheses based on the right information, an analysis that includes all the available information in order to decide whether a PPP is the best way to carry out such a project.
So I have no opinion on whether it is better to use a PPP or another option to build infrastructure. However, it is very important to carry out a proper analysis.
I will ask Mr. Le Goff to also answer.
4 p.m.
NDP
Brigitte Sansoucy NDP Saint-Hyacinthe—Bagot, QC
I know that you have not adopted a position.
You are just talking about how a decision is made. I understand that.
4 p.m.
Principal, Office of the Auditor General
Mr. Chair, we definitely take some elements into account, such as the cost of borrowing, which is lower for the state than for a private partner, for example. Usually, money is saved by going that route.
However, a private partner may have expertise the department does not. So it is possible to achieve a higher efficiency rate by choosing a public-private partnership.
Once again, I will reiterate the Auditor General's opinion by saying that it is important to consider all those elements before a decision is made because, often, the decision is down to very few things and the hypotheses we are putting forward are very important for coming to a conclusion.
4 p.m.
Conservative
The Chair Conservative Kevin Sorenson
I'm sorry, Ms. Sancoucy. You were very good, and I really like your line of questioning. I just can't let you have much more.... You're a minute and a half over already.
We will now move to Monsieur Massé. We can come back to you, because I know you have a good line of questioning here.
Mr. Massé, you have seven minutes.
4 p.m.
Liberal
Rémi Massé Liberal Avignon—La Mitis—Matane—Matapédia, QC
Thank you, Mr. Chair.
Perhaps we should have invited the member across the way who was in cabinet at the time the decisions were made. He could've explained why it took so long to make the decisions. We are well aware of the environmental consequences. Because of how much time went by before construction of the new bridge got under way, Montreal is still plagued by tremendous congestion. Greenhouse gases continue to be emitted and the impact on pollution levels is significant. The bridge will alleviate traffic congestion and accommodate a light rail train. Had the decisions been made sooner, it would have cost less and we wouldn't be in this situation. That wraps up my comment.
Now I have a question for Ms. Gillis.
The Auditor General indicated that he had doubts about the December deadline and that it might not be possible to keep costs within budget. How do you respond to the doubts around the bridge being built on time and on budget? Do you think it will be possible?