Transport Committee on May 5th, 2015

[David McGuinty, Liberal, Ottawa South, ON]

That would be great.

Can I also ask another question around that? It's almost irrelevant in my view to talk about where Canada fits with other OECD countries in terms of what we're spending combined—what percentage of GDP—unless you're in a position to tell Canadians what the needs are. What are the real needs in infrastructure? One of the things your presentation skirts around, Mr. Moore, with all due respect.... Perhaps you don't have the number, which is fine. Maybe you can get it for us.

What would be very helpful for this committee as it looks at this study is what the needs are. What criteria and metrics are you using to assess the needs? I'm going to be very specific here. What metrics are you using to assess the needs? What is the gap? We hear all kinds of numbers thrown around by any order of government, any city, to be frank. It's very convoluted. We don't really know whether we're comparing apples and oranges.

Do you have or can you get a number and an explanation with real statistics and metrics to tell Canadians what the gap is, say, going out 10, 20, or 50 years? It's irrelevant to tell us that 3.9% of GDP is going to infrastructure because you have to compare it to something. I would submit that comparing it to other countries is one way to do it, but the more important comparison for me would be—and for us, I think—comparing it to what in terms of needs.

You say in your presentation on page 8 that numbers don't provide any indication of the optimal level of investment needed to support a competitive and resilient economy. Well, isn't that what we're supposed to be doing here with infrastructure investments? Aren't we really supposed to achieve the optimal level of investment so that we have a competitive and resilient economy? Can you get us a number? Can you give us what the indication should be in order to have an optimal level of investment to support a competitive and resilient economy?

[Jeff Moore]

It would be very difficult to do that. A number of think-tanks and organizations have tried to quantify what the infrastructure gap, deficit, or need is in the country. Depending on who you ask, you'll get a different number, whether it's $200 billion, $100 billion, or whatever the case may be.

[David McGuinty, Liberal, Ottawa South, ON]

Where does the problem lie in achieving that outcome? Is it metrics, is it data, is it StatsCan information? Where is the problem?

[Jeff Moore]

The key problem goes back to how municipalities and other asset owners collect information and if they're able to collect information. There's a bit of a capacity issue there in terms of various organizations and municipalities being able to tell us what kind of infrastructure they have, what they own, how much it is worth, what kind of deferred maintenance they are involved in, what the condition of the asset is, what the remaining service life of the asset is, and what they are going to fix first.

It all comes back to the issue of asset management. If communities and municipalities had proper asset management in place, we'd be able to have a better idea in terms of what some of the challenges might be in the municipalities.

[David McGuinty, Liberal, Ottawa South, ON]

In conclusion, Mr. Chair, we don't have an assessment nationally in terms of.... If someone stopped you on a city bus in Winnipeg and asked you, “How great are these shortfalls? What's the order of magnitude of the challenge here in terms of infrastructure?” We don't have an answer, do we?

[Jeff Moore]

We only have the answers that may have been provided to us by the Federation of Canadian Municipalities or other national think-tanks that have tried to do some work on this.

[The Chair, Conservative, Larry Miller]

Mr. Braid, you have seven minutes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Mr. Chair.

Thank you, Mr. Moore, and officials from Infrastructure Canada for being here today. It's really helpful as we embark on our study on infrastructure that we begin with this presentation by you. It's been a very helpful and comprehensive overview. Thank you as well for your role in helping and, as you concluded your presentation by saying, working diligently to deliver the new building Canada plan.

With respect to the new building Canada plan, could you outline the objectives of the new building Canada plan, simply put?

[Jeff Moore]

The objectives of the new building Canada plan are really to increase the economic competitiveness of Canada. There are also other objectives in terms of the type of asset classes that we're supporting, support for the environment, and support for other key objectives of the Government of Canada. I guess you could say there are a number of sub-objectives to the plan as well.

The plan is very comprehensive in terms of its approach because we have the gas tax fund, which supports a variety of asset classes for municipalities.

As I said previously in my other answers, as you move your way up though the spectrum of the type of support we can provide through the plan, we get much more into areas of economic development. A good example of that is the national infrastructure component in the new building Canada fund, where we actually look at increases in economic activity related to projects we might support. We look at trying to mitigate potential disruptions related to economic activity and we also look at increasing economic productivity through the national infrastructure component of the NBCF.

There are a variety of objectives that are contained within the plan itself, but at the end of the day, it's about improving the economy in Canada.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Is that why, even though 95% of infrastructure in this country is owned by municipalities and provinces, the federal government is participating in this space?

[Jeff Moore]

Yes, I would agree with that statement. That's one of the key reasons.

The Government of Canada does have a role to play in the space of economic development, so the new building Canada plan does support those types of objectives, yes.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

With respect to the new building Canada plan, could you outline or explain the role of other levels of government with respect to applications under the plan; so the role of the municipality and the role of the province? For example, under the provincial-territorial infrastructure component of the plan, could you outline the respective roles and responsibilities?

[Jeff Moore]

Under the new building Canada plan, as I said, we have three key funds. We have the community improvement fund, which includes the gas tax fund as well as the GST rebate. Infrastructure Canada has nothing to do with the GST rebate because that's administered by CRA.

In terms of the gas tax fund, that funding is allocated on a per capita basis and actually flows through the provinces and territories for the most part. There are some exceptions to that, of course. In Ontario, we actually flow the gas tax fund directly to Toronto, as well as through the Association of Municipalities for Ontario. In B.C., there's an exception where we also work through the Union of B.C. Municipalities.

The provinces and territories act as a facilitator through the gas tax fund to ensure the funding gets out to municipalities and to ensure that there's proper reporting done as well in terms of the types of projects that we're supporting under the gas tax fund.

The other key fund that we have under the new building Canada plan is the new building Canada fund. Under that, we have the national infrastructure component, or NIC, as we like to call it.

The way that NIC works is that applicants come directly to Infrastructure Canada. Whether it's a province, territory, Canada port authority, or the private sector, they come in directly to Infrastructure Canada. It's a merit-based program. We look at projects as they come in and assess them. There's not necessarily a direct role for provinces and territories through NIC, but they can certainly apply for funding through the program.

Then we have the provincial-territorial infrastructure component, or PTIC, as we like to call it. Under PTIC, we have two components. One is the national-regional component, which is made up of $9 billion, and the other is the small communities component, which is $1 billion. The way we allocate the funding under PTIC is that each province and territory receives base funding of $250 million, and what's left of the $10 billion in total is allocated on a per capita basis. Then we look at the allocations for each province and territory, the federal set-aside for each, and 10% of that is for small communities. That is funding for municipalities with a population of 100,000 or less.

The way the relationship works with provinces and territories under the PTIC national-regional, which is the $9 billion, is that it depends on how the provinces and territories want to determine their priorities. In some cases, they may refer back to their 5-year or 10-year capital plan. In some cases they may consult with the municipalities in terms of their priorities. In other cases, they may have an outright intake process where municipalities and other eligible recipients may apply for funding.

Once provinces and territories have gone through that process, they then come to the federal government with a list of priority projects related to the funding we've set aside for them, and we do a basic review of the project to make sure it's eligible. Once we determine that it's eligible, we'll require a business case in order to do full due diligence on the project to make sure it's a sustainable and viable project. Once we have approved the project, or if a project is approved, then we enter into an agreement with the province or territory, or directly with the recipient, if, for example, the recipient is a municipality or some other eligible recipient.

In terms of the small communities fund, which is the $1 billion of the $10 billion under the provincial-territorial infrastructure component, we negotiate agreements with each province and territory. It's like a very high-level contribution agreement, which will outline the terms and conditions of the relationship—the governance, decision-making process, auditing, due diligence, and so on—undertaken in terms of the small communities fund projects.

Once that agreement is signed, the province or territory may decide, again, to have a distinct intake process for small communities with a population of 100,000 or less. Or they may already have projects that are prioritized, which they may want to bring to the attention of the federal government.

Usually we will get a list of projects from a province or territory under the small communities fund. We will do our assessment, as we always do. Assuming that the projects are eligible and viable, we will fund those projects through the province or territory, or in some cases maybe even directly with the municipality.

[The Chair, Conservative, Larry Miller]

Okay—

[Jeff Moore]

That's basically how the relationship works.

[The Chair, Conservative, Larry Miller]

I'm sorry, I thought you were done.

I didn't mean to cut you off.

[Jeff Moore]

I'm good. Thank you.

[The Chair, Conservative, Larry Miller]

Mr. Watson, you have seven minutes.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Mr Moore, you said that full due diligence is conducted on projects to determine whether they are “sustainable and viable”.

What do you mean by sustainable and viable?

[Jeff Moore]

I'll back up a little bit because one of the first things we do when we receive a project is look at the eligibility. We determine if the requested—

[Jeff Watson, Conservative, Essex, ON]

I want to know what “sustainable and viable” means, though.

I understand the other metrics. I just don't know what you mean by sustainable or viable.

[Jeff Moore]

Sure.

We will look at the governance related to the project to make sure they have a viable governance structure in place to manage the project. We also look at their fiscal capacity and all sources of funding to make sure they have the financial wherewithal to support the project. We also look at the technical requirements related to the project, and the technology being used, to make sure it's viable and sustainable technology, and that the technology will actually solve the issue they're trying to solve by either expanding the asset or building a new asset.

Those are some of the key things we look at from that perspective.

[Jeff Watson, Conservative, Essex, ON]

I appreciate that.

One of the challenges I think we're trying to zero in on here is the idea of an infrastructure deficit and how one properly would define it in order to appropriately measure our progress against it. I think we can all measure how much money and how many projects we do.

I remember when we started this, I think the infrastructure deficit was somewhere in the neighbourhood of $40 billion. Once the federal government got into being a funding partner with municipalities and provinces it escalated, notwithstanding the amount of money being put in, to somewhere upwards of almost a quarter of a trillion dollars in terms of a deficit now. So this is not an unimportant question for us to be able to settle on.

The 95% ownership of infrastructure being at the municipal, provincial and territorial level, what's the breakout between municipalities and the province and territory in that ownership?

[Jeff Moore]

We don't have that number here, but we can certainly try to get that number for you.

[Jeff Watson, Conservative, Essex, ON]

I'd appreciate knowing the split on that as well.

How much do we know about how municipalities are doing, for example, in properly amortizing their infrastructure, that is their ability year over year to account for replacing their infrastructure, not only current but even new infrastructure they're contemplating? How much do we know about that question?