Transport Committee on April 25th, 2013

[Mike Sullivan, NDP, York South—Weston, ON]

Thank you.

Mr. Moist, earlier you gave us the Regina example. At this committee when we've talked about trying to create strategies to deal with infrastructure and transit. The other side has repeatedly said they do not want to tell municipalities how to do business, that it's not their job, and that municipalities should be independent. Yet we hear from you that some municipalities are being told exactly how to do business, which is one of the concerns we have about being forced into a P3 regimen in order to receive funding.

Can you comment a little further on that?

[Paul Moist]

After reading the Regina Leader-Post, the new mayor of Regina spoke at our convention this spring. I went up and introduced myself and asked him if he was quoted correctly in the Regina Leader-Post, that he has philosophical issues but that they need the 25%, the $57 million. He said he wasn't misquoted. It was pre-budget. The P3 Canada fund was the only pool of money available.

I said, “Well, okay, design-build-transfer is a P3”. He said, “No. It had to be design-build-finance-operate, and it will transfer to the city in 35 years.” I said I didn't think he had to accept that. He told me he had no choice, that the citizens of Regina expected him to access federal money.

You'll have to ask the mayor of Regina, but he has been told that the only pathway to money is design-build-finance-operate. For the first time in the history of the city of Regina, a piece of the water system will be operated by a private entity, which was not the first choice by that council.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Stoney, you talked about inappropriate transit choices, or inefficient transit decisions I think were the words you used. We've seen some of that when our city of Toronto went back and forth over whether or not to build the subway, some of it driven by provincial politicians, some by municipal politicians, but we've also had federal politicians put their oars in the water.

My counterpart on the other side talked about the Canada Line. As I remember the story, the Canada Line has just recently been found guilty of not paying their workers enough when they had Costa Rican and Ecuadorian workers in Canada being paid $3.57 an hour to build the Canada Line. On this side of the House, we don't want a P3 that is finally paying its workers the right amount of money 11 years later, and only those they could find. They were temporary foreign workers and they're back in their countries. It's only through the actions of one of the unions out there that they managed to get a multimillion-dollar settlement for these individuals.

We're concerned that P3 is a euphemism for cheap labour, and we're not in favour of reducing the Canadian standard of living by using cheap labour. Is that what P3s really mean?

That question is for either of you.

[Paul Moist]

They can mean that, and I hope they don't.

Dr. Loxley quotes Larry Blain, the former head of Partnerships BC. They only get funding for Partnerships BC—and they helped to consider the Canada Line—if they get P3s. That's how they get their funding, so it's not an arm's-length, sober second look. Larry Blain said that public sector comparators won’t do you much good anyway because by playing with discount rates and so-called risk transfers he can make the public sector as bad as he wants to, to make the private sector look good.

Through the chair, as the bottom line, I would recommend that any member of this committee go to the FCM convention where there are 2,000 local councillors and mayors, folks from across Canada. We're there every year, and we're not big players there. We have a booth. We have people coming up to talk to us. These politicians are under immense pressure to fix up their towns and cities, and they're quite open to a collaborative way to do that. They don't want to be told how to do it but that's the way many are feeling, way beyond the city of Regina.

[Mike Sullivan, NDP, York South—Weston, ON]

You mentioned 35 years is the deal in Regina, but Highway 407 was 99 years. I believe the deal with the Canada Line with SNC-Lavalin is between 35 years and 50 years, plus the deal is not transparent. Nobody knows what the risk to the public sector will be if the ridership numbers aren't met. There is a guarantee of ridership. If the operators don't meet that ridership they will be given more money from the public purse for that 50 years.

The building of the air-rail link in Toronto was originally to have been a completely private sector operation, with no public money at all. Mr. Collenette said not one nickel would be spent from the public purse. We are now up to $2.5 billion of public money in something that will take 12 people per rail car to and from downtown. It seems like an awfully strange way to spend public money on what started out to be a P1. That private operation is now not even a P3.

[Paul Moist]

Risk invariably ends up in the public realm. The City of Hamilton got out of private operation of their waste water treatment system. In 10 years the consortium changed ownership three times, then they walked away. Hamilton city council can't walk away from providing water treatment services, so who is left holding the bag? It is the citizens of the city of Hamilton.

This is not to say there isn't a proper, historic, completely appropriate role for the private sector to make a profit building infrastructure. Mortgaging debt is never a good thing. Surely to God we have learned that, as a people.

Senior levels shouldn't be prescribing to junior levels of government how they should operate their public businesses.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Holder, you have five minutes.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I would like to thank our guests for being here today.

It is rather interesting. When you imagine the gap in public infrastructure across our country today, it's a pretty significant number. I have a number from the Library of Parliament, but if either of you could hazard a guess, would you comment on what you think it is?

Mr. Stoney, do you know that number? I can share it with you, but I wonder if you have a sense of that.

[Dr. Christopher Stoney]

I think the last calculation I saw was about $140 billion.

[Ed Holder, Conservative, London West, ON]

Mr. Moist, do you have a thought?

[Paul Moist]

Just the municipal and transportation debt is, according to the FCM, $178 billion.

[Ed Holder, Conservative, London West, ON]

You'd better give some guidance to the Library of Parliament, because they've estimated that Canada's gap in infrastructure is somewhere between $44 billion and $125 billion. Regardless, it's a fairly significant number, and I think we would all accept that.

I share that with you because you'd like to think that every city has its financial act together. I recall us having, in my city of London, Ontario—which is the tenth largest city in Canada—a sinkhole in one of the core parts of the city. It seemed the maintenance that was required was not being done. I recall that at the time, because we are going back some years, it was quite significant and the municipality was looking to see if they could get some extra financial support.

It reminded me of something that my Cape Breton mom once said to me at a point when I was struggling financially and I went to her. She said, don't let your bad planning be my emergency. I then went to my dad, who didn't help either, by the way.

If you imagine the infrastructure gap, the question is: is it necessary? I don't think anybody would disagree on who's responsibility it is.

What I haven't heard anybody talk about is what role the provinces play in this. Municipalities are creatures of the province, but somehow we as a federal government, whether it's for potential political gain or whatever other rational reason, get involved in this and then all of a sudden the federal government—not withstanding that it has a responsibility in certain jurisdictions—starts to own the problem. To me that's where I'm trying to understand that focus.

Mr. Moist, you made a really important point when you talked about the fact that it was our government that introduced the gas tax, and then doubled it. Actually I'm going to tell you we doubled it. I didn't hear that from you, but you did mention that it got indexed. In my city, that's worth $21 million a year. It's not a Toronto, it's not a Montreal, but $21 million indexed is not an insignificant amount. So if my city of London had a $100 million project, we have some confidence that over several years we will know where the money is going to come from.

Mr. Moist, did CUPE take a position on the indexing of the gas tax? Is it bad, good, or otherwise?

[Paul Moist]

Yes, it's on our web page in response to budget 2013 that this was one good move made by the federal government. The gas tax was actually initially introduced by Mr. Martin.

[Ed Holder, Conservative, London West, ON]

I need to ask you a very clear question, because we're talking about making it permanent. Do you think that the moneys raised out of gas tax should be used for sewers and gutters—what I would call maintenance—versus major projects? Have you taken an opinion on that at this point?

[Paul Moist]

No, because that hasn't been put into the public realm.

I think the mayors and councillors across Canada appreciate the unencumbered money, and Mr. Stoney spoke about that.

We do need to trust that local government will make the right decisions. It's not prescribed. It hasn't been prescribed historically, and we've taken no position on that. But we did give accolades where they're deserved for your indexation of it, which was a good move, and you ought to be commended for it.

[Ed Holder, Conservative, London West, ON]

I actually polled my constituents who are readers of my weekly e-mail, and significantly most of them thought that it should go to major infrastructure projects.

Mr. Stoney do you have an opinion on that? I'm just curious about whether that matters to you particularly.

[Dr. Christopher Stoney]

Actually, I do think that the original intention was to put it into green infrastructure, sustainable development-type projects, and we had the ICSPs and so on. We found when we researched that across the country, several provinces were really quite willing to comply with some of the oversight and some of the conditions. Some provinces, one in particular, which shall be nameless, refused to play the game at all, and just said, give us the money, now buzz off. So that—

[Ed Holder, Conservative, London West, ON]

I apologize for interrupting, but I am going to run out of time.

I would like your thoughts on this, please.

Where should the province's role be in infrastructure funding? I'd like to understand that.

[The Chair, Conservative, Larry Miller]

You're out of time.

[Ed Holder, Conservative, London West, ON]

Then I'll stop and say thank you.

[Dr. Christopher Stoney]

It should be absolutely front and centre. There's no doubt in my mind that it is their responsibility.

It's a problem when the federal government tries to make tax room for the provincial governments to step into, and they essentially will take the opportunity to not pass it on. Essentially, I think it's a huge problem.

[Ed Holder, Conservative, London West, ON]

Thank you very much.

That's very helpful.

[The Chair, Conservative, Larry Miller]

Mr. Holder, to one of your comments, there was a news bulletin today that the city of Owen Sound has actually passed the city of London in terms of size, to the tenth largest—

[Ed Holder, Conservative, London West, ON]

Owen Sound?

[The Chair, Conservative, Larry Miller]

Sorry to burst your bubble.