Transport Committee on May 7th, 2015

[The Vice-Chair, NDP, Hoang Mai]

Mr. Watson, you have five minutes.

[Jeff Watson, Conservative, Essex, ON]

Thank you very much to our witnesses for appearing.

My apologies right off the top. I was speaking in the House, so I missed your opening presentations. I was speaking to Bill C-52, our safe and accountable rail act, which was important. If any of my questions relate to something that I may have missed, you'll understand why.

First of all, Mr. McBride, I think earlier you suggested that the so-called rise of public-private partnerships came out of problems identified with traditional procurement. I've been listening closely today, and I think you mentioned only three of the four. I wasn't sure what the last one was. You said the first one was when you pay but you don't necessarily get what you want. The second was that creditor oversight is a strong discipline on the contractor. The third was the tendency to ignore the life cycle of an asset when doing design and build only. What was the fourth?

[John McBride]

There are two others that I would know. They're sort of in the sphere of risk, or at least one is.

One is contractual interface risk. In the normal process you would issue a contract for somebody to design it. Then you would take that design and you would issue another contract to build it. Who takes the contractual interface risk between the design contract and the build contract? It is the government. If the design is wrong, and something happens with the build, they both point at you. Package them together, and you reduce risk because you're not taking the contractual interface risk.

The thing that people miss most is the innovation potential that you get. I mentioned that a bit, but in a P3 you can tell them what you want them to achieve, for example, to carry passengers from downtown Vancouver out to the airport, or to build a road from here to there.

I've been in the public sector a long time. The public sector is really great. Its core mandate, in my view, is to figure out what citizens need and how to pay for it, but leave it to the people who are the experts to figure out how to deliver it. I have thousands of little anecdotes ranging from the small to the very large that if you give them the freedom to bring their expertise to bear, it's amazing the results you can get. I'd be happy to share some of those anecdotes.

Governments tend to over-specify in their contracts: they want the bolt to be this big, or they want something to be that size. That disables the ability of the private sector to innovate.

[Jeff Watson, Conservative, Essex, ON]

In listening to the upside of P3s, I think the success of a P3 really is in getting the design proper on how you enter into a P3. That is to say, if I understood you correctly, not affecting a proper P3, but thinking you're getting a P3, a proponent may in fact be incurring some serious risk and serious cost, if it's a municipality, for example, to taxpayers. It's not that in venturing into the realm of P3 there aren't risks for proponents to be looking at; it's making sure that we get the right design.

If I'm a municipality that requires that kind of expertise, can I approach PPP Canada for that type of advice?

[John McBride]

That's what we're here for. Number one, we're a source of expertise for all levels of government, if you want advice on whether something makes sense as a P3.

That's why I say that, yes, we provide funding to projects, but I think if you asked the municipalities.... We've worked with lots of municipalities across the country. They'll tell me that the funding was great but it was being with them along the way that really made the difference. Sometimes it's helping them to pick the right project or helping them to structure it in the right way. We're with them right through the procurement process. I have a whole team who will be with them as they're doing the whole thing, writing the contractual agreements.

That's why I talked a bit about our hopefully leaving a legacy of expertise with these municipalities so that over time they can start to use this to go on their own.

[The Vice-Chair, NDP, Hoang Mai]

Thank you, Mr. McBride and Mr. Watson.

We'll do another round of five minutes, and we'll see how much time we have left after.

Mr. Kellway, for five minutes.

[Matthew Kellway, NDP, Beaches—East York, ON]

For both CUTA and you, Mr. Mayor, or your councillors, I have essentially the same question.

Infrastructure Canada was here the other day. In terms of the amount of funding that is put into the building Canada fund or to the new public transit fund, it seems very much that these are arbitrary numbers without a view to any policy objectives, except the notion that it's all good for the economic competitiveness of Canada. But the actual quantum, or the number, the funding level that comes out of this process, doesn't seem to have any particular relation to any policy objectives.

Let me start with CUTA. I understand you're at $18 billion now. As the urban affairs critic, infrastructure critic, and deputy critic for transport for our caucus, I talk to a lot of your members, and you've facilitated some of those conversations. The ones I talk to all say, “Well, that's not enough money”.

I understand you've picked this five-year notion of what's unfunded over the next five years, projects that are backlogged. If you were free to think and provide advice to the federal government—and this question is for you, Mr. Mayor, about infrastructure generally—what kind of policy objectives would you put in place to determine the amount of funding that ought to be provided by the federal government?

Does that question make sense to you?

[Patrick Leclerc]

It does, and thanks for the question.

When we refer to closing the gap, this is when we ask our members what they need and what their plans are. This is the what will be, not what could be. We know there are visions for Vancouver, Montreal, and Toronto. There is long-term planning. This is not actual planning. These are all the projects we'd like to implement. The survey covers actual planning over the next five years, so that's what we're looking at.

It's about striking the right balance. Allowing municipalities to have flexibility is very important, and we understand that. It's a key aspect for them and for municipalities. At the same time, we're looking at the policy objectives we're trying to reach. Let's look at the new dedicated public transit fund, for instance. Considering criteria or considering factors such as land use planning or thorough integration of public transit with an overall urban design to make sure it's at the forefront, so you're not building something and at the same time developing other projects that may reduce the impacts, are the things we'll be looking at and engaging in.

As we all mentioned, we don't know much about the new public transit fund, so we don't know what the criteria will be. Certainly we have to know what we want to achieve. If it's strictly to reduce traffic congestion, for instance, then we would not necessarily have an investment in Gatineau, but what about the needs of the citizens there? This is where we need to engage in a thorough policy discussion as well to see what we want to achieve and how we will achieve our goals.

[Maxime Pedneaud-Jobin]

There are two parts to my answer.

First of all, we quantified our needs very precisely and that is in the document we are going to table. The amount of $1.3 billion represents the catch-up work that must be done and that figure is derived from the study we carried out with great precision for each of our activity sectors, waterworks, sewers, asphalt and buildings. This $1.3 billion amount is the cost of catching up. That is the amount needed to repair the damage.

For years taxes were collected to build roads, but there were no taxes levied for repairs. We continued to build and today we have a deficit. Among all the cities in Canada that have this type of need, the amount we need is the best substantiated one.

More generally, we have to change the picture of municipal taxation. I reiterate that cities shoulder 58% of the cost of managing infrastructure, but only receive 8% of the revenue. You don't have to be a rocket scientist to understand that we have a serious problem there.

In short, if we change this ratio of responsibility to revenue, we could choose to invest in public transit without having to go and beg in Quebec or in Ottawa. Through the Canadian Federation of Municipalities, the cities are asking whether they could be partners, in fact. They wonder if they could be considered like real governments, local governments, rather than as entities that go and beg for money whenever there is an election. There has to be a better balance between our responsibilities and the income at our disposal.

[The Vice-Chair, NDP, Hoang Mai]

Thank you, Mr. Pednault-Jobin.

Mr. Kellway, I'm sorry, but your time is up.

Mr. McGuinty, you have five minutes.

[David McGuinty, Liberal, Ottawa South, ON]

Thanks, Mr. Chair.

I'm sorry I'm late, gentlemen. Like my colleague, I've just come from the House where we were debating a bill.

My question will be addressed to Mr. Pednault-Jobin.

Two days ago, I asked the assistant deputy minister responsible for policy at Infrastructure Canada to confirm whether it is mandatory to put up signs in front of every project into which the federal government has injected money. He confirmed that this was obligatory and that only taxpayers' money was used to put up those billboards.

Could you tell us how many of these signs were put up in the city of Gatineau and who is paying for them?

[Maxime Pedneaud-Jobin]

No, I don't have that information. However, I could do some research and send you that in writing. I take note of your question.

Our city is among those that make the greatest use of the Building Canada Plan. So we could certainly determine how many of these signs have been put up in our area.

[David McGuinty, Liberal, Ottawa South, ON]

I would like some information on the signs; where they are placed and how much they cost.

When I asked the former mayor of Ottawa the same question, he confirmed that the City of Ottawa was required to spend $50,000 on them. It was required. The agreement between the feds, the province of Ontario and the City of Ottawa provides for it.

We have estimated that the 9,800 signs placed all over Canada cost $29.5 million as a minimum, say almost $30 million. It would help everyone here to know how much is being spent on these advertising signs. You are telling me that you can do that.

Thank you very much.

[Maxime Pedneaud-Jobin]

We probably cannot do it tomorrow, but we will take the matter seriously and we will do it.

[David McGuinty, Liberal, Ottawa South, ON]

That would help us enormously. Thank you.

Could I turn to Mr. McBride.

Mr. McBride, yesterday we also asked the ADM of policy a number of questions about the criteria that is applied before other orders of government get access to federal infrastructure money. One of my colleagues asked about job creation, for example, and the reply was frankly, inconclusive.

I want to ask about sustainability criteria. Then I want to open it, if I could, to the panel.

We don't seem at all federally to be saying to recipients of federal dollars that we are interested in funding, participating, whether it's in a PPP format or a government-only investment, but we want to make sure that the construction conforms to the highest efficiency standards. For example, if you're going to build a building, we want the highest energy efficiency standards available in the marketplace today. We set that as a criteria. If you're going to use water, we want the lowest water intensity metrics available on the market today. If you're going to build with materials, we want the most efficient use of materials and material intensity today.

It's surprising, because in another life for a previous government, we struck a process that actually devised the first efficiency metrics for this country. They were then taken over to Stats Canada where they were supposed to be implemented, and then the project was killed by the government.

We're not making any progress. The OECD has moved ahead of us. In fact, the work we did in Canada was the baseline for the OECD.

Can you help us understand, should the federal government be requiring recipients of federal moneys for infrastructure to abide by the highest efficiency standards in the marketplace? Would you agree that in so doing, it would pull Canada's sustainability performance forward?

[John McBride]

I can say that we definitely take a look at the public benefits of the project and those include environmental criteria. When it comes to detailed performance specifications like that, there is a question that the mayor raised about exactly who should dictate what performance specifications for the needs of individual municipalities and territories.

I would argue that if you did take a look at the end results, municipalities are already leading in that regard and they require those kinds of things to be part of their things.

What should be dictated by the federal government and to what extent should you leave those choices to municipalities is a choice the people around this table should debate, I guess.

[David McGuinty, Liberal, Ottawa South, ON]

Let me explore that with you—

[The Vice-Chair, NDP, Hoang Mai]

Mr. McGuinty, your time is up.

[David McGuinty, Liberal, Ottawa South, ON]

I'm sorry to hear that. Maybe we can come back to it.

[The Vice-Chair, NDP, Hoang Mai]

Mr. Braid, you have five minutes.

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

Thank you, again, to all of you, for being here this afternoon.

Mr. Mayor from Gatineau, thank you very much for coming across the river to provide your presentation today.

As a mayor of a municipality, what revenue-generating tools do you have in your tool box? Could you list what those are?

[Maxime Pedneaud-Jobin]

Very few.

So 87% of the City of Gatineau’s revenue comes from the property tax. That includes payments in lieu of taxes from the federal and Quebec governments. In our case, those payments from the federal government are significant, more so than for other large cities. Then there are user fees. Using an arena may be free for children or some clubs, for example, but adults using it have to pay a fee.

Basically, our revenue comes from fees and the property tax. There are other fees, like the development charges I was talking about a little earlier. But basically, our revenue comes from the property tax.

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

Thank you.

As a city council, over what timeframe are you planning your capital projects? Is it over five years, seven years, ten years?

[Maxime Pedneaud-Jobin]

Normally, it is for five years. We are trying to extend that. One of the great advantages of the gas tax program is that it provides funding that is permanent and predictable for 10 years.

One of the major challenges facing the City of Gatineau was that we wanted to put a lot of effort into our infrastructure. As a result, any time there was a federal or provincial program, we rushed out to borrow money so that we could pay for our share of the program. So our debt got bigger but we could not plan to take on more debt for a longer time because we did not know whether the program was still going to exist the next year or in four years. This decision to make these programs permanent allows us to streamline our management.

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

It must be very helpful if you're planning your projects over a five-year timeframe and you know to the penny what amount of gas tax funding you are receiving over that five-year period. That must be particularly helpful.