Transport Committee on April 23rd, 2013

[The Chair, Conservative, Larry Miller]

I'll call our meeting to order.

This is the first meeting of our next study on different ways of funding infrastructure.

I want to welcome our guests here today. From the Union of Quebec Municipalities, we have Mr. Coulombe and Mr. Bélanger.

I'll turn it over to you, whichever one of you wants to start. You have 10 minutes, please.

[Robert Coulombe, President ex officio, Union of Quebec Municipalities]

Thank you, Mr. Chair.

Members of the committee, the Union of Quebec Municipalities eagerly accepted the invitation to participate in your committee's examination of how competition can make infrastructure dollars go further. This is a very important issue and one that we are in fact working on at this time.

The UQM represents municipalities of every size and in every region of Quebec. Its mission is to promote the fundamental role of municipalities in social and economic progress in every part of Quebec and to support its members in building democratic, innovative and competitive communities. Its members represent the voice of nearly six million citizens and over 80% of the territory of Quebec.

In the last year, the UQM has launched an important initiative to optimize the management and planning of municipal infrastructure investments in Quebec. The starting point was the exhaustive study done by Deloitte and E&B Data, which enabled us to assess municipal infrastructure needs. The findings are clear: municipal infrastructure as a whole comprises a substantial body of assets, with a total value of over $200 billion; the municipal infrastructure deficit has grown, and today amounts to $3 billion. This means that the need is significant. To rehabilitate our assets and maintain them in good condition, the three levels of government are going to have to increase their tripartite investments by $3 billion.

There is a diverse range of needs. They relate to roads, public transit, cultural and recreational facilities, municipal buildings, and so on. Ultimately, the municipalities themselves bear an unfair burden. They are responsible for 76% of the net cost of the funding for municipal infrastructure. This analysis demonstrates the full extent of the challenge represented by the renewal of our public infrastructure, in circumstances where the state of public finances makes our decisions all the more difficult.

For that reason, the new Long-term Infrastructure Plan announced in the last budget is an important asset. It will enable us to maintain our efforts and continue the catching up that has been begun in recent years. However, this level of investment does not match the extent of the need. The review clause in the Building Canada plan, which provides for the situation to be reassessed every five years, will be an excellent option when our public finances have improved. But between then and now, we will have to work to maximize our investments and optimize the way we do things, with the goal of doing more with the same resources. The issues being examined today are therefore very timely. The UQM believes that optimizing the way we do things will enable us to get more competitive bids and the best work for the best price.

I will now address question 1, reducing red tape.

For several years, the UQM has been calling for red tape to be reduced and for greater municipal autonomy. This is primarily because municipalities are in the best position to know what the needs and priorities of their communities are, and also because they have the necessary expertise to carry out their projects at the best cost. Making dollars go further must therefore mean that they are able to spend the most possible time on carrying out their projects, by reducing red tape to a minimum.

As well, as we have unfortunately experienced in the past, municipalities have often had to pay the costs of lengthy negotiations between the federal government and the government of Quebec, the effect of which has been to delay the start of the work. The UQM hopes that this mistake will not be repeated in the next Building Canada plan, because it would be taxpayers and the economy that would suffer the consequences.

I will now move on to question 2, the contracting process and increasing the number of bidders for projects funded by the federal government.

For several years, the UQM has been calling for stable and predictable long-term funding, to enable municipalities to plan their investments better and to avoid "overheating" of prices. The new Long-term Infrastructure Plan, spread out over 10 years, will therefore be beneficial.

It offers municipalities an opportunity to plan their investments better and foster a climate of healthy competition.

For a long time, the UQM has also been calling for more flexible infrastructure programs to be set up, covering a wider range of infrastructure types, to meet what are increasingly varied needs and to enable municipalities to diversify their investments, to avoid "overheating" prices.

The announcement in the last budget concerning the expansion of the categories of eligible infrastructure is another measure that encourages better competition. The UQM believes that municipalities have to have the best tools for identifying suspicious situations and properly assessing the cost of the bids received.

For that reason, the UQM is proposing a number of measures, including creating a municipal price evaluation board. The board's mandate would be to collect data about public contracts and produce annual indexes for each region of Quebec. We believe this kind of tool would enable municipalities to identify situations where there were flaws in the competitive process, among other things.

I will move on to question 3, which relates to expanding private sector infrastructure.

The first role of municipalities is to offer essential services to the public and to businesses, in order to improve the productivity of businesses and the quality of life for for families, and to enable municipalities to attract and retain workers. Municipalities' investments in infrastructure are therefore essential for creating an environment that is conducive and attractive to private investment. Those investments come before private investment.

To summarize, given the growing infrastructure needs and the precarious state of public finances, we have to work on improving the way we do things and making businesses more competitive. While the new Long-term Infrastructure Plan is a first step, there are other actions that can still be taken.

In concrete terms, that means there should be Canada-Quebec agreements that do not penalize the municipalities and do not delay the start of work, through programs that cover a broader range of infrastructure that will enable us to diversify our investments better, through investment that reflects the needs of our businesses and our residents, and through a strengthened tripartite federal/provincial/municipal partnership that will enable us to continue our efforts and the catching up we have been doing in recent years, on an ongoing basis.

Thank you for your attention. We are now prepared to answer your questions.

[The Chair, Conservative, Larry Miller]

Mr. Aubin.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Mr. Chair.

Welcome, Mr. Coulombe and Mr. Bélanger. Thank you for being with us this afternoon and sharing your expertise with us.

I would like you to tell us about something that is unique to Quebec: the fact that all these infrastructure projects have to go through the government of Quebec. In other words, we do not deal directly with the municipalities.

How do you think the federal government could be more proactive when it comes to signing these agreements, which in the past, in some cases, have delayed a number of projects? Do you have an opinion on that?

[Robert Coulombe]

The new program will come into effect in 2014. I would say we are almost there. This being April of 2013, the federal government should initiate negotiations with the government of Quebec immediately so the new plan can be brought into effect in 2014. They should not wait as they did last time. That resulted in "overheating" of prices. In terms of delay, there was an 18- to 20-month time lag. So much time passed that we hit the deadline. There had to be an amendment, at the federal level, so the projects could be completed in October rather than in March.

In any event, the most important thing is to be able to get to work as soon as the program comes into effect.

[Robert Aubin, NDP, Trois-Rivières, QC]

To your knowledge, did the delays caused by doing things that way, under previous programs, have consequences, so that money that could have been spent on infrastructure projects had to be returned to the government's consolidated fund?

[Robert Coulombe]

In fact, no, it did not work that way. Actually, the projects were not approved, and so we did not have to invest.

Any project could be eligible for a tripartite grant, that is, from the federal, municipal and provincial levels. The projects have to be approved prior to work being done. That means that no funds were really returned to the consolidated fund.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

From reading the government's last budget, do you have the impression that more will have to be done with the same amount of money? Or do you see it as being that more will be able to get done because there is more generous funding? Or do you think the opposite, that the budget for infrastructure investment has been cut?

[Robert Coulombe]

I am perhaps going to answer your question a different way.

The key partner at the municipal level is the FCM. In fact, it is the federal government's interlocutor. When there were discussions, Quebec was called in. We did submit our study that defined the infrastructure deficit in Quebec. The funding for the program that had been requested, through the FCM, was about $5.8 billion. That was what we considered to be the minimum needed for rehabilitating infrastructure and carrying out new projects.

In the current budget context, we are in fact pleased to see that, first of all, the program has been put in place. Funding under it is not the full $5.8 billion hoped for. As well, since there is no indexing, there is a delay. As I was saying, in Quebec, $3 billion should be invested annually. However, if we calculate the ratio, the funding would be at the same level, that is, $1.2 billion rather than the $3 billion hoped for.

[Robert Aubin, NDP, Trois-Rivières, QC]

Right.

On a horizon of how many years would you hope to receive the $5.8 billion you were initially talking about?

[Robert Coulombe]

That was $5.8 billion annually.

[Robert Aubin, NDP, Trois-Rivières, QC]

Right, thank you.

In your presentation, you said you represent a number of smaller municipalities. I would like you to tell us about the capacity of the smaller municipalities to deal with the P3 phenomenon.

Where will these small municipalities go for expertise? For example, can they get that support from you? I would not say the biggest and smallest municipalities are engaged in unfair competition, but certainly the smaller ones have less substantial structures for managing these kinds of projects.

[Robert Coulombe]

In terms of experience in Quebec, the representatives in the House of Commons need to be informed that P3s have not had great success in Quebec. From memory, I can say there have been two projects in Quebec. Regardless of the size of the municipality, whether it is a city the size of Montreal or Quebec City or a small municipality, the fact is that there have really been no public-private partnership projects.

[Robert Aubin, NDP, Trois-Rivières, QC]

So you do not advocate that avenue, but you are not necessarily ruling it out.

[Robert Coulombe]

No. I am not saying we do not advocate it. I am saying that the success of the P3 initiative has perhaps not met expectations.

[Robert Aubin, NDP, Trois-Rivières, QC]

In the last budget, there seemed to be some openness to expanding the programs that could be funded out of the infrastructure envelope.

Have you been consulted in any way about the projects that were not funded or were not eligible in previous budgets and for which you would like to receiving funding starting in 2014?

[The Vice-Chair, NDP, Olivia Chow]

You have about 30 seconds to answer.

Thank you.

[Robert Coulombe]

As I was saying, certainly we hope the programs will be expanded to other types of infrastructure. In the area of drinking water, nearly all of the projects have been completed. We have other types of infrastructure where we have to go beyond that, to ensure our residents' quality of life.

We are waiting to see what openness there will be in the programs. They will also have to be adapted. It is all very well to say we want other types of infrastructure of funding, but we also have to make sure the municipalities will be able to carry out their projects, based on the program content.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

[The Vice-Chair, NDP, Olivia Chow]

Thank you.

Monsieur Coderre.

[Denis Coderre, Liberal, Bourassa, QC]

Mr. Mayor, Mr. Bélanger, I am pleased to meet with you again.

Obviously, as you said, the interlocutor is the FCM, but that does not mean things have not been done in Quebec. In fact, you recently produced a white paper. A lot of things are being done in Quebec. I am trying to be constructive today. Of course, we are always short of money, we all know that.

As had been requested, the government has proposed this for ten years, which is advantageous in that it gives you an opportunity to spread it out a little over time. Spreading it out is the strategy that is to your advantage and our advantage, because it affects all of us. Certainly, the UQM is not the Fédération québécoise des municipalités. If we consider the UQM's perspective, we see that it is increasingly a matter of the smart city concept.

There is also the issue of doing more with less, taking new practices in public finance into account, but in particular in relation to the creation of infrastructure. Have you examined that issue?

Municipalities have always been said to be creatures of the provinces, and I see that as causing a problem. In any event, we should revisit that later. However, there can be a role for the Canadian government in relation to anything involving innovation, because it is not a matter of just green infrastructure, basic infrastructure or recreational and tourism infrastructure. More and more, it is a matter of innovative infrastructure.

Have you looked into this issue, which addresses your problems when it comes to sustainable development, energy savings, traffic congestion and water loss?

[Robert Coulombe]

We have indeed looked into this issue. However, as I said earlier in relation to the infrastructure deficit, it was not as sharply defined as what you have just said. It would mean that the envelope would be even larger than what we have discussed.

In fact, we are extremely happy that this is taking place over a ten-year period, because it is predictable. However, we have still allowed ourselves some leeway to review the content of the program after five years. We appreciate that enormously, because it will help us with our planning in the short, medium and long terms.

[Denis Coderre, Liberal, Bourassa, QC]

Quite often, it presents a problem in terms of tactics when you want to look for funding. The government of Quebec is the general contractor. You make your applications and the federal government is a facilitator and plays a role in the funding.

I imagine you have prepared an inventory of the things to do. I referred to basic infrastructure earlier. Certainly there is the Building Canada Fund. We advocate dedicated funds. I would like to hear your views on that.

So I do not support the reasoning of the present government in Ottawa. All the money cannot be put into a single project, like the Champlain Bridge, which would cost $2 or $3 billion. There are projects throughout the province. What are your views on that?

Essentially, should there not be dedicated funds in terms of sequences? The Building Canada Fund is one thing, and an amount is allocated to that. Another amount is allocated to innovation, and another to public transit or mass transit. Could the existing programs be added up and your deficit be made up that way?

[Robert Coulombe]

In fact, the first dedicated fund, which relates to the gas tax, is an extremely useful program.

To answer your question, I have the impression we are on thin ice...

[Denis Coderre, Liberal, Bourassa, QC]

Welcome to politics.