Transport Committee on June 10th, 2010

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

I have only 30 seconds left. I just want to repeat your position, in order to clarify the principles. We want to establish these principles in order to pressure the government and ensure there is some flexibility. That's why I asked the question about the government. There is another partner, and that dynamic must be clearly understood.

[Gilles Vaillancourt]

I appreciate the question. I would just like to say that it was perfectly logical for the government to impose a deadline, because otherwise, people would not have felt the urgency. We accepted the fact that both governments subscribed to a deadline. However, the same logic of accountability for the use of public money should now prevail, and the deadline should be extended. At the time, it was important—the federal government wanted to stimulate economic recovery and inject money into the economy, so that work could actually be carried out. That worked very well. However, municipalities should not be deprived. Ultimately, the ones who will end up funding economic recovery through various projects—some parts of which will not be subsidized—are the poor municipalities who, by the very fact of that, will be the only ones not to really enjoy the spinoffs.

[The Chair, Conservative, Merv Tweed]

Merci.

Monsieur Laframboise.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Thank you, Mr. Vaillancourt, for your eloquence in dealing with this important issue.

If I am not mistaken, the dynamic has now been reversed; it is not the same one that prevailed when this initiative was first launched. This is not about asking for new money. All these projects are already underway or about to begin. All we are asking is that the money the federal government expected to spend be paid out at the end, even if there are delays. Otherwise, what will happen to the money earmarked for Quebec?

You say that this is not an isolated case. There are several other similar cases in municipalities which are experiencing the problems you mentioned, and there will be an increasing number of them. Did I get that right?

[Gilles Vaillancourt]

Yes, you certainly did, Mr. Laframboise.

Some municipalities will be penalized by having to pick up the slack from the government, which wanted to stimulate the economy, and dip into municipal tax money in order to do so. However, municipal taxes, as opposed to money from the federal and provincial governments, are definitely not intended to be used to stimulate the economy.

Furthermore, some municipalities—as I said earlier, there are several of them, although we only mentioned a few—have had to abandon their project, because they simply could not take on the financial risk they would have incurred after the deadline. This runs counter to the spirit of the initiative, which was intended to be a recovery plan. The municipalities became partners in this initiative—albeit, the smallest financial partners. And yet it is they who will ultimately be the most important financial partners in this economic recovery initiative, despite the fact that this is not the mandate of municipalities in Quebec or in the rest of Canada.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Thank you.

Incidentally, I would like to convey special greetings to Mr. Fauteux, who advises the Minister in Quebec.

When the Minister appeared and presented the plan, we asked him questions about the deadline. The Minister then appeared again before the committee, once work had already begun. We already knew, because of municipal elections… The Minister told us that the City of Toronto already had a reserve fund. Are there reserve funds in Quebec?

[Gilles Vaillancourt]

No, there are no reserve funds in Quebec, unfortunately. The mechanism for funding municipalities in Quebec is completely different from the process in the other municipalities across Canada.

I always compare myself to my good friend, the young and dynamic Hazel McCallion, from Mississauga, who never seems to age. I am in charge of a city with a population of 400,000. Mississauga has a population of approximately 550,000. It is a city that is part of the Toronto suburbs, just as Laval is amalgamated with the Montreal region. The City of Mississauga has $720 million in its investment fund and not a penny of debt. Even if the City of Laval were able to reduce its debt by $160 million—and it would be the only large city in Quebec to have succeeded in doing that—I can assure you that it would still not have $720 million of funding available to it. No municipality in Quebec—and I would say Laval is probably the one that is on the soundest financial footing of all the large cities—has investment funds in reserve and, in any case, no municipality would be able to dip into its investment fund for that purpose, even if the municipalities did have a lot of money.

One day the federal government decided to introduce economic stimulus, and allocated money for that purpose. I was the first to subscribe to the idea of a deadline. There must be deadlines so that people don't spend too much time thinking but actually carry out their projects. That is the fundamental objective of the recovery plan. Once projects are underway, everyone is working and all the partners are at work, everything is fine as far as you're concerned—you just write the cheques. It's not too difficult to write cheques. You expected to be doing that, the money is all allocated, and you just send out the cheques.

However, it's the municipalities that have to develop the projects, hire the engineers, supervise the tendering process, supervise the work, and deal with the realities associated with that work. So, you have to trust your partner right up until the end. That partner is honest and is working with governments. When the federal and provincial governments invest $1, they quickly recover it—that is what all the OECD studies show. But the municipalities do not recover it—in fact, they pay taxes on top.

For all these reasons, I think it would be terribly unfair if the deadlines that were set to ensure the work would get started quickly—and that was perfectly appropriate; indeed, I subscribed to it—resulted in the municipalities having to bear the burden for part of the recovery plan, when they certainly don't have the capacity to do that—at least, not in Quebec.

I would just like to remind you, Mr. Chairman and members of the committee, that 84% of the debt load of Canadian municipalities is in Quebec municipalities. We would not be in a position to provide stimulus, even with the best will in the world.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Yes, exactly. In terms of municipal elections, perhaps you could explain how they work. When elections are called, there is a period during which no decisions are made by municipalities. After that, because they take place in November, there are budgets to put together and discussions to be had. Quebec was the only province to be holding municipal elections when the stimulus plan was introduced. Perhaps you could explain what the impact of that was.

[Gilles Vaillancourt]

Previously, there were elections in one quarter of municipalities every year. I'm sure you remember that, Mr. Laframboise, from the time when you were mayor and President of the Union des municipalités du Québec. One day, the government changed the rules. Now all the elections are held at the same time in every municipality. In some cases, for 45 days prior to the elections, the municipal council cannot take any action whatsoever, except in emergencies. During the election period, no decisions are made.

When the new council is in place, even if the former council has been re-elected, a week or two is needed to count votes, as the case may be, swear in new council members and appoint new executive committee members in the large cities. All of that leads to delay. After that, the work starts up again. Overall, this makes for a period of between six and eight weeks which is not particularly useful. It is in terms of the democratic value of the process, but not as far as the conduct and continuation of programs are concerned. If that is not taken into account, Quebec will be penalized because it chose to hold elections in 2009. However, that was prescribed by legislation.

[The Chair, Conservative, Merv Tweed]

Thank you, Monsieur Laframboise.

Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

Merci, Monsieur le Président.

Welcome, Mr. Mayor. It's a pleasure to have you with us and to have your excellent presentation in front of us on this particular subject. As an ex-mayor myself, and having dealt with many municipal projects, I understand the concern you have here. I really appreciate that you've articulated it in the fashion you have in front of the committee today.

I was very concerned about a year ago when I heard the finance minister say on television that he would take back some of the infrastructure money through the gas tax if projects weren't completed. That has been modified somewhat now, so we're just dealing with a situation where the government is suggesting that any work not completed, the remaining work, will be under that kind of duress. But your points are well taken that there are many extenuating circumstances that can impact on projects in municipal works.

I think of a project I initiated as mayor to do some horizontal boring to put in a new water supply line in the community. The best company in the country with the best engineers did not understand the situation and failed in their attempt. We had to go back to the project the next year. So with all good intentions, projects at the municipal level--because they're dealing with many situations, and many factors affect how the project proceeds--need to have some flexibility.

Your presentation was excellent. I don't know how to add to what you've said here. Do you have any more anecdotal evidence that you'd like to bring forward at this time about projects in Quebec, so we can perhaps impress on the committee the type of situation...?

[Gilles Vaillancourt]

I can probably send you a list of projects that municipalities will have to support from their own money.

I just want to tell the members here that the federal government came out with an amount of money, saying

saying it was for economic recovery, to stimulate the recovery,

and we're going to use those funds for that purpose. In the end, if you don't give the municipalities their fair share, they'll be stuck with a part and will have to borrow. In Quebec they don't have reserve funds. They have to borrow that money.

I again stress the fact that 84% of municipal debt in Canada is in local municipalities in Quebec. We don't have the money to do it. In other words, the federal government would be saving some money, while stressing the debts of poor municipalities. What's the use, and what good is that for the country? Nothing good for the country comes out of that.

[Dennis Bevington, NDP, Western Arctic, NT]

I'm kind of curious about this government's attitude toward municipalities in this regard, because we are partners. We're all engaged in public government. We're all engaged in moving forward the plans and opportunities our citizens have to have a good life. That is what we're all about here.

I don't see this as an adversarial situation. This is not a case where one corporation is entering into a deal with another corporation. These are government-to-government relationships.

Does this fit with the mould or what we're used to for these types of arrangements?

[Gilles Vaillancourt]

First, I would like to thank the government for not cutting infrastructure programs and for actually creating new ones. Every government has its merits and this one has that particular merit.

What I am telling you today is that the money you don't give the municipalities, if you maintain too rigid a deadline, is money the municipalities will have to borrow. There is already an infrastructure deficit in Canada, as previous governments and the current government have acknowledged. Some Quebec municipalities will be deprived of the opportunity to maintain their infrastructure, thereby increasing their maintenance deficit.

I appeared before several committees, as President of the Coalition pour le renouvellement des infrastructures du Québec, to demonstrate that, in addition to the fiscal deficit that appears on the balance sheet, there is also an extremely significant maintenance deficit for infrastructure, bridges and roads. It's the same for hospitals and schools. This country does not have a very good maintenance culture. In fact, in that respect, we are not exactly a role model among OECD countries—quite the contrary.

Today I am here to ask what will be done with the money earmarked and announced under the stimulus program that is not given to municipalities because of the deadline. It may serve to ease the government's fiscal deficit, but it will also increase either the municipalities' debt or their infrastructure maintenance deficit. Job one is really to wipe out the infrastructure maintenance deficit much more quickly than we ever could, without the federal government's participation. If it doesn't participate and if it maintains this rigid deadline, it is the municipalities and the small taxpayers who will suffer, while the government recovers a few dollars which, in actual fact, when added on to the money from Quebec, would yield much better results if used for the economy, allowing it to access tax money more quickly.

We are partners, and this is the first time, as the government's partner, that I sense that the government does not understand the constraints under which we operate on a daily basis.

[The Chair, Conservative, Merv Tweed]

Thank you.

Monsieur Généreux, welcome.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chairman.

Mr. Vaillancourt, I am really pleased to see you here today. Welcome to the committee.

First of all, with your permission, I would like to take a few minutes, on behalf of my colleagues, to commend you for your work, particularly as President of the Coalition pour le renouvellement des infrastructures. I recall that in 2005, when I became a member of the UMQ as Mayor of La Pocatière, you had made representations to UMQ mayors. You were very dynamic in ensuring that higher levels of government would invest in infrastructure. The results today, and what we are talking about now, have come about thanks to you in part, and also because you worked very hard. The federal government, particularly ours, has invested billions of dollars in the last two years to renew this infrastructure. So, I want to thank you for the work you have done because all municipalities across Quebec have benefited and are now benefiting from that work.

With respect to your comments, you obviously know that this is a tripartite project or partnership with Quebec. We haven't talked much about Quebec, and we are in Ottawa today, of course, but as you know, with agreements—

[Gilles Vaillancourt]

Pardon me for interrupting you, but could you speak a little louder, please? There is some noise behind me and I am not able to hear everything you are saying.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In the tripartite agreement which concerns us today, the third partner is Quebec. As you know, things are very often done a little differently in Quebec than elsewhere. I agree with you: the agreement between Canada and Quebec was slow to be signed.

I would like to come back to my own experience when I was the Mayor of La Pocatière. A little later, I will address the example you gave with respect to the PRECO. Previously, there was another program in place known as the Municipal Rural Infrastructure Fund, or MRIF, which had three components to it. There as well, there were delays.

Do you not agree that once you sign an agreement, you should abide by the terms and conditions of that agreement, despite the fact that other factors may come into play that interrupt the normal course of events? When the MRIF was in effect, there were also elections being held. In La Pocatière, I delivered more than $20 million worth of projects during my four-year mandate. Dynamism is significant factor.

In terms of equity, what do you say now to the municipalities that decided not to apply because they felt they could not meet the March 31, 2011 deadline?

[Gilles Vaillancourt]

You should announce that you will provide the money if the work is underway before a specific date. If you say that, several municipalities that would like to put forward large-scale projects, but would not be in a position to finance them on their own, will have an opportunity to benefit from the program and make these projects a reality. That is the first thing—to let them know that the legal date no longer applies. Several municipalities have set aside their projects.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

They set them aside in many cases. There are probably as many municipalities as there are different cases. At the time, that is exactly what we did in La Pocatière. We decided not to submit certain projects under the MRIF because we would not have been able to meet the deadline. That was an administrative decision.

As you said earlier, the role of the mayor and municipal council is to be as close as possible to the people. We are careful about the money we spend. We are very prudent. When we decide to get involved in a project, we want to be sure we can complete it within the timeframe and in keeping with the terms and conditions set out at the beginning.

[Gilles Vaillancourt]

Mr. Généreux, what you say is perfectly logical. However, if you look at the overall infrastructure deficit and if you look at the programs that are out there, you will see that there are never enough to help the municipalities do everything they should be doing.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I agree with you.

[Gilles Vaillancourt]

If you agree with me, then tell me why the final deadline should create a greater deficit. That's a simple question, Mr. Généreux. We both agree. You are a former mayor, and so you fully understand the reality and how things work. You say that you set aside certain projects because you knew you would not be able to carry them through. But just because you set them aside doesn't mean the problem is solved.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I agree with you. At the same time, when you make the decision, as a municipal official, to support this or that program, based on the terms and conditions of that program, you are also choosing to abide by the preconditions of that program. Deciding not to participate is also a choice for a municipality, because elected officials may feel they are not in a position to abide by the criteria which have allowed others to avail themselves of the program. Do you understand what I mean?

[Gilles Vaillancourt]

Mr. Généreux, your way of seeing things is very concrete. It's easy; it's not complicated. However, if municipalities had not taken the risk of launching these projects, your program would not have worked.

Was the government's objective to say that it had designed a program but didn't want it to work? That is your decision. If you want it to work, you have to consider the reality.

Also, some had the courage to start projects thinking that they would take the risk and then negotiate with their government friends, who are their partners, and who are not there to make life difficult for them or treat them as though they're bad pupils. Without the municipalities, you would not have had a program. It would not have worked.

Now that we are appearing before you, please don't serve up the example of municipalities that did not participate in the program. Financially speaking, some municipalities simply could not take that risk. Others did. In all the cases I have cited today, the municipalities involved will have a larger debt and will have provided money to their federal and provincial governments for the economic recovery. That is the opposite of the way things should have worked, and that is not the municipalities' job; it's your job.

Today, I am appealing to your sense of fairness to ask that you recognize the good will your municipal partners have shown in taking these risks. You should not be penalizing them for the portion of the program with respect to which they placed their confidence in you. They were very good partners and invested their municipality's money.