Evidence of meeting #33 for Transport, Infrastructure and Communities in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bus.
A recording is available from Parliament.
9:30 a.m.
Conservative
9:30 a.m.
Vice-President of Corporate Engineering, The Americas, Global Headquarters, Magna International Inc.
Magna today does natural gas, but only at prototype level, such as natural gas fuel tanks. We've done a natural gas vehicle. We can do the integration. We can do the valving and plumbing and so on. So we know how to get involved with it. We believe it's a big part of the future, so we want to participate.
9:30 a.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Natural gas is something that Magna will be doing, natural gas vehicles?
9:30 a.m.
Vice-President of Corporate Engineering, The Americas, Global Headquarters, Magna International Inc.
Yes, we want to participate.
9:30 a.m.
Vice-President of Corporate Engineering, The Americas, Global Headquarters, Magna International Inc.
Decoma does trim. We have a power train group that does power train. We have Magna Steyr. Most of our development activity was done at Magna Steyr.
9:30 a.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Okay. On to the city of Calgary. When does your pilot project come into place?
9:30 a.m.
Manager, Transit Fleet, Calgary Transit
We expect to take delivery of our first CNG vehicles at the tail end of this year.
9:30 a.m.
Manager, Transit Fleet, Calgary Transit
Probably 18 months. We want to run it through two winters to make sure we address our cold weather concerns.
9:30 a.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
You've anticipated for a larger purchase of, I think, 200 vehicles. Is it 200 or 400?
9:30 a.m.
Manager, Transit Fleet, Calgary Transit
Our original study was on 200, but we are building a facility that can cope with 400.
9:30 a.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Okay, so 400, and you expect to pay out in six years, 10 years max. Correct?
9:30 a.m.
Manager, Transit Fleet, Calgary Transit
That's our estimate right now, yes.
9:30 a.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
That seems like an exceptionally good payout. The question I have is, why would you need any additional help to achieve that?
9:30 a.m.
Manager, Transit Fleet, Calgary Transit
It's the initial capital cost upfront. You need to be able to build the fuelling infrastructure.
9:30 a.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
That said, businesses make investments upfront all the time and they often expect payouts that take much longer. They make enormous capital investments upfront. Presumably a very well-financed and large organization like Calgary Transit, backed by a city and ultimately a creature of the Province of Alberta, one of the wealthiest jurisdictions in the country, would have access to the capital to make that kind of investment, if it made business sense.
9:30 a.m.
Manager, Transit Fleet, Calgary Transit
We are looking at a P3 model for the facility, as I mentioned, which is the biggest part of the infrastructure. In terms of other advanced funding available from the city, I guess we have to fit within the budget of the rest of the city demands.
9:30 a.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
I guess what I'm saying is that there should be no incremental demand from the city. In fact, you should be going to the city and saying you have good news that you're going to be costing less. Presumably, if your plan pays for itself in six or ten years and then thereafter presents an annual cost savings, there should be no need for any additional money. Capital can be funded by debt, which is what businesses do every day.
The reason I'm asking these questions is that we've been burned as governments—all three levels. Whenever there is an exciting new fuel source that comes along, we're approached by organizations that say they have an amazing idea. It's a great business opportunity and no one will invest their own money in it, so they need other people's money.
We have wind power in Ontario, which has driven power prices through the ceiling—they've gone up again today, killing jobs in the manufacturing sector. We have other fuel sources that were promised for automobiles, which are now proving uneconomical despite massive front-end subsidies from taxpayers.
If these are good investments, why don't they pay for themselves, capital cost included?
9:30 a.m.
Manager, Transit Fleet, Calgary Transit
I can't speak for the detail of the city debt, but if we were to procure 400 buses—for argument's sake—even if they weren't CNG, that's still a commitment of around about $160 million. It's not that the city isn't putting money into the investment that's needed. It's just that there is an additional amount needed for the CNG premium that, for the moment, is difficult to find on top of our existing budgets.
9:30 a.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Is there not a way you can shift some of the operating savings into your present day capital budget in order to finance it on a cost-neutral basis?
9:30 a.m.
Manager, Transit Fleet, Calgary Transit
I think essentially that was one of the recommendations I was making in terms of saying maybe we can get something along the lines of an interest-free loan that ends up getting paid back out of our operating budget. That's kind of the model that we're....
9:30 a.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
The Government of Canada has offered some financing through the economic action plan. I'm not sure exactly how that carries forward, but for capital costs, again, the problem with interest-free loans and government-issued loans is that they are ultimately subsidies. The cost of money is real, and the opportunity costs—we have to borrow it. We have a federal deficit, so we'd have to pay for that money.
Again, if this is a good business decision, it should pay for itself, right? It shouldn't need a subsidy.
9:35 a.m.
Manager, Transit Fleet, Calgary Transit
That seems to be easier to say than to achieve sometimes.
9:35 a.m.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
I realize; that's my problem. We keep seeing these ideas. We're told they're such great business concepts, and then they all lose money—other people's money.
We're trying to look for ways here that transportation innovation can fund itself because it is meritorious enough to do so. How do you respond to that?