Transport Committee on May 5th, 2015

[Jeff Moore]

We know a little, but I don't think we know enough. I think it comes back again to the issue of asset management.

[Jeff Watson, Conservative, Essex, ON]

Sure.

[Jeff Moore]

If we had proper asset management in place across the board we could much more easily answer that question.

[Jeff Watson, Conservative, Essex, ON]

I ask because my local municipality, my home town of Amherstburg, has just been grappling with this in terms of their budget and decisions about whether to float debt or become a pay-as-you-go community. But no one had ever taken a look at what the asset inventory looks like, what its needs might be, nor whether the budget takes into account year over year their ability to replace and whether they set aside reserves sufficient enough to replace. Therefore they're amortizing their infrastructure. That's an important question for us to understand if the municipalities own the lion's share of infrastructure.

[Jeff Moore]

Some municipalities do asset management very well.

[Jeff Watson, Conservative, Essex, ON]

Right.

[Jeff Moore]

Edmonton has been cited as a best practice in terms of asset management, and obviously larger municipalities perform very well. Our concern is the smaller municipalities, where, to give you probably the worst example, there's an individual in the community whose name is Joe Smith, who works for the municipality, and who is the asset management knowledge container of where everything is underground and how the asset works. If that person were to leave that municipality, that knowledge leaves with that individual. We're very concerned about those municipalities and the type of asset management intelligence they have.

[Jeff Watson, Conservative, Essex, ON]

The other question linked to that, of course, is that if municipalities are not properly amortizing their infrastructure, then what is their incentive if there are matching programs to ever manage their assets at a top-notch level? Municipalities that manage them very well out of their own funds wind up being penalized, because they're not accessing shared-cost programs. These are not unimportant questions for us to grapple with.

How much of this so-called infrastructure deficit is based on replacement cost of existing infrastructure? Is that what it's entirely about, people figuring out what their existing inventory is and what it would take to replace it, or are they adding on that new infrastructure that they think they'd like to have? Can you give us a sense of what goes into defining what the so-called deficit looks like?

[Jeff Moore]

Part of it is the state of the current assets themselves and the cost to replace them, as well as, I believe—and my colleague can correct me if I'm wrong—new assets that are required.

[Jeff Watson, Conservative, Essex, ON]

Is it even fair to call it an infrastructure deficit if it includes new assets not yet funded? Who should decide whether something is necessary or to be accounted for as well? Should that solely be a decision of a municipality and they therefore throw it into the deficit number, or do we have an interest in whether or not we think an asset might be necessary and therefore included in that measurement?

[Jeff Moore]

It's a good question. I think we would have an interest in that, and I think from a capacity-building perspective we want to do as much as we can to ensure that municipalities have the capacity they need in order to make those decisions.

[Jeff Watson, Conservative, Essex, ON]

Are we helping them with that?

[Jeff Moore]

Through the gas tax fund, we do have an eligible category called “capacity building”, so—

[Jeff Watson, Conservative, Essex, ON]

They have to choose it.

[Jeff Moore]

They have to choose it. Yes, they have to prioritize it. Under that element, they can actually support introduction of software to try to manage assets better, and they can pay for better planning processes or plans themselves.

[Jeff Watson, Conservative, Essex, ON]

When considering new growth projects, should municipalities be required to evaluate whether they can amortize them successfully over time? Will growth actually pay for itself, not just to build it now but to replace it later? An infrastructure deficit could be literally an unending number. Infrastructure is always aging. It is expanding, and we are putting more in. Will we ever eliminate the infrastructure deficit?

[Jeff Moore]

It is a tricky question for us because, as a federal government, we want to respect provincial and territorial jurisdictions, and municipalities are creatures of provinces and territories. We hope that the gas tax fund and other programs we have might help them in terms of building some capacity to be able to answer some of those very good questions that you have.

[The Chair, Conservative, Larry Miller]

Thank you.

Mr. Sullivan, you have five minutes.

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

Thanks.

Thank you, Mr. Moore, and the rest.

In terms of transit and the upcoming P3 transit fund, is there a recognition that transit generally is not sustainable? It doesn't fund itself. It requires a municipal subsidy to continue. How will that work with a profit motive on a P3? For example, with the York Region bus system, the province entered into a P3. The provider provides it. It is a four-dollar fare, but the province gives the provider five dollars per rider to subsidize that bus. Is that what we are anticipating with the P3 system that is coming up?

[Jeff Moore]

The devil is in the details. Unfortunately, we don't have the details yet. Those are still being worked out.

What I can say is that you have to look at the merits of a project on its own. On a project-by-project basis, you have to look at what the revenue-generating capacity of that project is and how it relates to the public benefits of that project. How can you combine the two? You have to answer questions like, what is the tolerance of risk transference? The financial risk transference is transferring the risk for making sure that the project gets done on time and on budget. There are a lot of questions that you have to ask yourselves as you think about what kind of financing model you want to apply to projects like this. I am sure that if PPP Canada were to come forward as a witness, they could give you a very robust answer in terms of some of the aspects.

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

I'll leave it to them.

In 2013, we had some pretty serious flooding in my riding, and in a lot of Toronto, that was clearly the result of very inadequate infrastructure. The drain pipes just aren't big enough to handle the kinds of storms that are now coming with climate change.

Has Infrastructure Canada asked the municipalities to evaluate what they would do if the 100-year storm comes every 10 years, and what they will need in terms of infrastructure to expand the capacity of the drainage systems?

[Jeff Moore]

We have not asked municipalities to evaluate that. We more or less depend on municipalities, provinces, and territories to undertake that work on their own, identify their priorities, and bring them forward. Certainly, if stormwater management was a priority of the City of Toronto or Ottawa—for example, in Ottawa we just funded a project related to expanding the capacity of stormwater management—we would look at that project. Potentially, it would be an eligible project, given the nature of the project we are talking about and the nature of the recipient. Again, it all comes down to prioritizing the types of projects that eligible recipients want to bring forward.

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

On the matter of the budget of 2013, the finance minister, Mr. Flaherty, rest his soul, said that, going forward, the government would attach a requirement to infrastructure spending that would require apprenticeships to be part of builds that are coming. A few weeks ago, the minister suggested before the committee that there is a conversation with the provinces happening as we speak. I haven't heard any more about that. Can you fill us in on where that is?

[Jeff Moore]

Yes. In economic action plan 2013 three commitments were made to create opportunities for apprenticeships. One was through federal procurement practices. Another was in requirements under the investment and affordable housing program. The third one related to a commitment to encourage provinces, territories, and municipalities to support the use of apprenticeships in infrastructure projects receiving federal funding.

Recognizing that apprenticeship is really a provincial-territorial responsibility and that approaches related to apprenticeship can vary from jurisdiction to jurisdiction, we're working currently with provinces and territories to increase mutual understanding of opportunities to use federally funded infrastructure projects to further jurisdiction-specific apprenticeship objectives. At this time, it's mainly an awareness type of work that we're doing with provinces and territories. That work will continue.

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

So there are no firm commitments as of yet.

The final question, because I probably don't have any more time, is concerning the GO Transit infrastructure renewal in and around the city of Toronto and the air-rail link, which was partially funded through Infrastructure Canada or through the federal government. Both the province and GO have indicated that they will be electrifying this system but that they will be looking to the federal government for help in doing so.

That's one of the reasons they keep stalling. It has been stalled now for going on five years, maybe six since the province agreed that they were going to electrify the system, and now they're pointing to the federal government. Have they actually asked the federal government for any help with electrifying the rail system in Toronto?