Transport Committee on March 25th, 2014

[The Chair, Conservative, Larry Miller]

I'm going to call the meeting to order.

Minister, thank you very much for being here. You have some of your departmental staff, Ms. Dazé, Ms. Laroche, and Mr. Lévesque, here also.

With that, Minister, I'm going to turn it over to you.

[Denis Lebel, Conservative, Minister of Infrastructure]

Thank you very much, Mr. Chair.

Thank you committee members. It's a pleasure to see all of you again, and I'm looking forward to continuing to work with you.

Today my officials and I are here to discuss the 2014-15 main estimates for the infrastructure, communities and intergovernmental affairs portfolio, for the federal bridges in Montreal, and for the Economic Development Agency of Canada for the Regions of Quebec.

The following Infrastructure Canada representatives are joining me: Louis Lévesque, Deputy Minister; Yazmine Laroche, Associate Deputy Minister; and Su Dazé, Assistant Deputy Minister, Corporate Services Branch. I am accompanied by a few other individuals, both from Infrastructure Canada and the Economic Development Agency of Canada for the Regions of Quebec.

Today, I will provide you with an update on the work that has been done by Infrastructure Canada, the team responsible for federal bridges in Montreal and the Economic Development Agency of Canada for the Regions of Quebec over the last year, and on our plans for the coming months.

As you know, our Conservative government is building on our historic infrastructure investment by providing $70 billion for public infrastructure over the next decade. This includes the $53 billion new building Canada plan, which is the largest and longest federal infrastructure plan in our nation's history. The plan will provide funding for provincial, territorial, and municipal infrastructure over the next decade. It will build on our past successes under the original building Canada plan as it continues to focus on supporting projects that enhance economic growth, job creation, and prosperity.

Since 2006 our government has supported more than 43,000 infrastructure projects in Canada. We have been able to achieve this level of success by always working in partnership with the provinces, territories, and municipalities and always respecting their jurisdiction. It's important to remember that in Canada, provinces, territories, and municipalities own more than 95% of public infrastructure.

The projects we have funded have generated economic growth, have created jobs, and have contributed to a higher quality of life for Canadians. We understand the vital importance of quality infrastructure to the success of our country and the health and well-being of our citizens. Modern, efficient infrastructure helps get our goods out to market, connect people and businesses with the world, and reduce gridlock on our roads and highways. The new building Canada plan will continue to support infrastructure projects that help to meet these goals.

Our $53 billion new building Canada plan will provide funding for public infrastructure through several funds. It's always important to remember that this is a global plan for 10 years. Don't split that period when comparing things.

First is the community improvement fund, which is made up of the renewed $21.8 billion federal gas tax fund and the $10.4 billion GST rebate for municipalities. It will provide more than $32 billion to municipalities for projects in a wide range of categories. In fact, as part of the new building Canada plan, the categories for the gas tax fund have been doubled. As well, the gas tax fund has been indexed at 2% per year, to apply in $100-million increments. This indexing will provide $1.8 billion over 10 years to municipalities across the country.

Second is the $14 billion new building Canada fund, which consists of $4 billion of a national infrastructure component for projects of national significance and a $10 billion provincial-territorial infrastructure component for projects of national, local, and regional significance. Of the provincial-territorial infrastructure component, $1 billion will be dedicated to projects in communities with fewer than 100,000 residents.

Third is the P3 Canada Fund, which has been renewed with a further $1.25 billion over five years to continue to support innovative ways to build infrastructure projects that will be delivered through a public-private partnership arrangement.

Finally, there remains $6 billion in funding that continues to flow across the country, this year and beyond, under our existing infrastructure programs. So the Building Canada program—which began in 2007 and will end on March 31, 2014—will again make it possible to invest $6 billion in the country's infrastructure this year.

Putting every construction season to work is very important for us. For our 2014-15 main estimates, Infrastructure Canada is seeking a total of $3.3 billion for investments in public infrastructure. This funding will support the $2 billion renewed federal gas tax fund and includes close to $850 million to support ongoing projects under the 2007 building Canada fund, such as the Evergreen Line in British Columbia, the LRT here in Ottawa, Les Grands Ballets Canadiens de Montréal, and the Halifax Discovery Centre.

It also includes $550 million for projects in other sunsetting programs. These funds are in addition to the amounts that will be requested under the new building Canada plan, which are not reflected in our 2014-15 main estimates. Given the difference in timing of the preparation of the main estimates and the budget, it is not always possible to include emerging priorities and items announced in the government's budget in the main estimates.

We are putting every construction season to work. This year is no different. We expect to flow funding to about 3,000 projects across the country under our existing program. The renewed gas tax fund will support about 2,500 public infrastructure projects this year alone. We are making sure that every construction season is put to use and that our partners have the support they need from the Government of Canada.

I would now like to turn to a project that is a high priority for the Government of Canada—the new bridge over the St. Lawrence, in Montreal.

I would first like to repeat what we have said from the beginning on this file. The new bridge on the St. Lawrence will be built through a public-private partnership, and it will include a toll and a public transit corridor. From the beginning, we have been saying that, without a toll, there would be no bridge, and we are reiterating that statement today.

Since my last appearance before your committee, we have covered a lot of ground. On March 3, I invited stakeholders to participate in the request for qualifications for the project. This is the first step of the process to select our private sector partner for the new bridge. As I have publicly stated, the Government of Canada is committed to opening the new bridge to replace the Champlain Bridge by 2018, and to completing the rest of the corridor by 2020.

I am pleased to say that the project is on track, and the posting of the request for qualifications on March 17 represents yet another important milestone for the project. In the summer of 2014, a limited number of respondents will advance to the request for proposals phase, where they will be asked to submit technical and financial proposals. While we are doing everything we can to ensure the new bridge is built as quickly as possible, we are providing all the resources necessary for the Jacques Cartier and Champlain Bridges Incorporated to ensure the safety of the current Champlain Bridge and of the other federally owned bridges in Montreal.

It is important to remind our colleagues that this is the only part of the country where Canada owns interprovincial bridges. We own 100% of the Champlain Bridge, 100% of the Jacques-Cartier Bridge and 50% of the Honoré-Mercier Bridge. All efforts are being made to keep those bridges in good condition.

In addition to fulfilling my duties as Minister of Infrastructure, Communities and Intergovernmental Affairs, I also have the pleasure of serving as Minister of the Economic Development Agency of Canada for the Regions of Quebec. Since our government has taken office, we have restructured the agency according to its mission in order to support the economic growth of all regions of Quebec, and we will continue to do so.

Allow me to share a few figures from the Economic Development Agency of Canada's activities since 2006. Just imagine. The agency has funded 4,575 projects, granted $2 billion in contributions, and generated $8 billion in total project investment.

The businesses we have funded during this period report that 38,000 jobs have been created, and another 31,000 have been maintained as a result of this support.

The agency's activities are aligned with the government's priorities of jobs and the economy.

To help further these priorities, the agency focuses more specifically on promoting entrepreneurship, business productivity, export, innovation and technology transfer.

The agency maintains a presence on the ground through its 12 business offices and is the Government of Canada's principal economic representative in Quebec. Its advisors provide direct assistance to SMEs, economic development stakeholders and organizations by offering them guidance and financial support.

Ever mindful of the specific needs of communities, in June 2013, the agency introduced the Canadian Initiative for the Economic Diversification of Communities Reliant on Chrysotile. This $50-million initiative aims to help communities and businesses in the Des Sources and Des Appalaches RCMs make the transition to new economic activities.

To support the community of Lac-Mégantic in the wake of the derailment disaster, the agency also launched, in July 2013, an initiative to help with the town's economic recovery. This $35-million initiative consists of the following three components: up to $20 million in aid for the reconstruction of the town; up to $10 million in direct funding to businesses and non-profit organizations; and up to $5 million in financial assistance through two investment funds to be administered by one or more local organizations.

Based on the agency's track record so far on the ground, you can rest assured of our ongoing commitment to supporting SMEs and furthering the economic growth of every region of Quebec. That continues to be our daily motivation.

I would like to thank you for offering me the opportunity to speak to you about the important work being done on behalf of the whole country by Infrastructure Canada for the federal bridges in Montreal and through the Economic Development Agency of Canada for the Regions of Quebec.

Thank you for your time, Mr. Chair, and all the committee. My officials and I will be happy to answer your questions.

[The Chair, Conservative, Larry Miller]

Thank you very much, Minister.

We'll now move to Ms. Boutin-Sweet, for seven minutes.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Thank you very much, Minister. I look forward to hearing your answers to our questions.

As you in part said, municipalities own most of the public infrastructure in Canada—at least 60% of it. However, the criteria announced for project submission—I am talking about the Building Canada Fund and not the New Building Canada Plan—do not specify how the money will be spent, how the projects will be assessed, or whether priority will be given to municipalities or other groups.

Other groups, such as universities and non-profit organizations, now have an opportunity to obtain funds. The Federation of Canadian Municipalities and the caucus of mayors of major Canadian cities have often asked that a portion of that $14 billion be set aside for the Building Canada Fund. They are still waiting for a concrete answer. Will they obtain a concrete response today and find out what percentage of the Building Canada Fund will be earmarked for municipalities?

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

I want to begin by saying that 95% of the country's infrastructure belongs to municipalities, provinces and our partners.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

I am now talking about municipalities.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

Since the beginning of this project, Mr. Fletcher, the former Minister of State for Transport, and I have held 13 round tables across the country, and the Federation of Canadian Municipalities was invited to all the meetings. Municipalities have been part of the process since the beginning and are fully aware that 71%

of the total building Canada plan

will go to Canadian municipalities. That figure has already been set at 71%.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Minister, I specified that I was talking about the Building Canada Fund and not the New Building Canada Plan. I know that 71% is earmarked for the plan, but I want to know what the percentage is for the Building Canada Fund.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

You asked me a question. I have to answer it in a comprehensive way because you failed to provide some important information.

In the case of a plan with four phases, four components, when you isolate one component as you did, you are deliberately evading part of the answer.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Minister, this is what municipalities want to know. They want to know what percentage of the Building Canada Fund will be allocated to them. That is the question.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

They should put that question to the provinces. We have already set aside $1 billion of the $10-billion provincial and territorial fund.

I want you to know that we are very respectful of jurisdictions. Our government and our party are very mindful of jurisdictions when we sign agreements with the provinces.

We sent the provinces the gas tax fund renewal on November 5 of last year. I just want to point out that $32 billion of the $53 billion will go to municipalities.

However, $4 billion of the $14 billion will be reserved for infrastructure projects and will be awarded based on merit. Municipalities will be able to apply for that funding.

We cannot say how much money will go to municipal projects until municipalities have submitted their projects. Of the $10-billion envelope, $1 billion is intended for municipalities with 100,000 people, and less than $9 billion will be distributed through the provinces and territories.

You are asking me to answer on behalf of the provinces.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

No.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

But that is what you are asking me.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

I am asking you to answer on your behalf.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

I can tell you that we sign agreements with the provinces when it comes to gas tax. The Building Canada Plan was renewed with $10 billion. Provinces and municipalities will prioritize projects. In Quebec, among other places, all municipalities must....

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

I am sorry to interrupt you, but I have only seven minutes.

So the department has not set an amount or a percentage of the Building Canada Fund that will be allocated to municipalities. Is that the answer?

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

The answer is that 71% of the Building Canada Plan is going to municipalities.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

I was talking about the Building Canada Fund.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

That is the Building Canada Plan.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Yes, but that was not my question.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

But that's because you cannot isolate different parts.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

I have a second question.

If I remember correctly, you limited the federal funds to a third of the total allocated funding for projects of over $100 million. That means municipalities cannot, for instance, obtain a third of the funding from the Building Canada Fund, another third from the gas tax fund, and so on. The federal amount has to represent a third of the total funding. That really reduces municipalities' resources and could lead to a significant increase in municipal taxes.

What do you have to say to municipalities on this matter?

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

I would say that municipalities are very familiar with the principle whereby funding for provincial, territorial and municipal projects is divided into three parts. That's nothing new. The old Building Canada Plan operated on the same basis in terms of anything other than the excise tax on gasoline. They know this very well.

What's different about the renewed plan is that all projects of over $100 million will have to be analyzed using an analytical grid to determine whether Canadians would benefit more from the project being carried out through a public-private partnership.

The approach whereby spending is divided into three parts has been known to municipalities for a long time. No changes have been made when it comes to that.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Regarding public-private partnerships, municipalities will now have to go through this process. That means they will lose a great deal of flexibility. They will no longer have a choice. First, the decision on whether to use a P3 arrangement will be final.

Second, on your website, you say that it takes 6 to 18 months to carry out the study. Earlier, you were saying that you were putting every construction season to work, but this process could result in the loss of one, even two, construction seasons.

[Denis Lebel, Conservative, Roberval—Lac-Saint-Jean, QC]

Absolutely not, madam.

Let's not forget that the $32 billion from the excise tax on gas is something else. It's important not to lump it all in together.

Of the $53 billion, some $33 billion goes to municipalities by way of the gas tax fund, and $4 billion goes to the national infrastructure fund. We're still talking about just that $10 billion. It's sizeable, but it's part of the overall plan. You always have to look at it in that context.

It's important to understand that it does not apply to all projects, just those valued at $100 million or more. Every one of those projects will be reviewed. The plan says very clearly that we will adhere to the P3 review systems already in place in some provinces; we will work with those that have recognized expertise and sound P3 review frameworks already established. We don't want to reinvent the wheel. So no construction seasons will be lost.

Some details still need to be worked out, but the overall plan has been known since February 14. In November, all the provinces and territories received details on the renewal of the gas excise tax. They are fully aware of what it entails. On February 14, we announced the last $14 billion. So it's clear. I am convinced that no construction season will be lost.