Evidence of meeting #58 for Transport, Infrastructure and Communities in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was projects.
A recording is available from Parliament.
Conservative
Jeff Watson Conservative Essex, ON
Okay.
Different countries take different approaches. Australia, for example, encourages municipalities to privatize their utilities or other revenue-generating assets. If they redirect them to other revenue-generating infrastructure, say public transit or other utilities, the taxpayers top that up with 15% of the privatization, if you will, of that particular asset.
How do you feel about pairing taxpayer funding with privatization of revenue-generating assets like utilities?
Director, Policy and Partnerships, Clean Energy Canada
That's not an issue we've looked at specifically, so off the top of my head I don't have a particular perspective on that. Looking at our electricity system, obviously there has been significant pressure on electricity prices, in large part because our electricity infrastructure is now very old and in need of renewal and upgrading. I think we need to be looking for the best opportunities to be delivering the reliable, clean power that people expect, but doing so in the most cost-effective way possible. We're certainly open to innovative and creative ways to do that.
Conservative
Jeff Watson Conservative Essex, ON
An example would be privatizing Hydro One in Ontario, or public transit. I'm not going to say whether that's a good or bad investment, but in terms of revenue generation it's not a break-even prospect typically. Expanding Ontario's clean energy grid, maybe with more hydroelectric, for example, could have been the result of a privatization.
Would that approach be much more effective, for example?
Director, Policy and Partnerships, Clean Energy Canada
That's very specific to different jurisdictions. For example, in British Columbia, wind and micro-hydro developments have been undertaken by independent power projects. I think that's been a successful model in British Columbia. I don't think it's necessarily the model for every province. Those types of decisions are best made by individual provincial governments, based on the system they have and the system they aspire to.
Conservative
Jeff Watson Conservative Essex, ON
Turning to Mr. Corrigan and the City of Burnaby, I return to the question of the gas tax fund, which is a direct allocation. Am I hearing you correctly that your current gas tax allocation is not going to the City of Burnaby for local municipal projects? Did I understand that correctly?
Mayor, City of Burnaby
You're absolutely correct. The fund, by agreement, is all going to TransLink to fund capital for TransLink. That was by agreement of the mayors around the region in the first 10 years. It was an agreement that was made, and then it has been again, the same agreement.
Conservative
Conservative
Jeff Watson Conservative Essex, ON
That's very interesting.
Measuring the infrastructure deficit has been alluded to several times. We've had the FCM and many others in to try to help us get a handle on how you measure infrastructure deficit at any given point in time. Presumably, assets have to be replaced on an ongoing basis across the country, so I don't know that we'll ever get rid of an infrastructure deficit, if you will.
Is that an accurate way to measure the particular problem? Do you measure infrastructure deficit in Burnaby, for example, and if so, what is it and how do you measure your progress against that?
Mayor, City of Burnaby
We do. What we do in the City of Burnaby is that immediately after bringing an asset into operation, we begin reserving for replacement of that asset. Ours is one of the most progressive ways to continue a sustainable approach to assets and it's the model that other cities are attempting to emulate to ensure that we are reserving against future potential deficits.
Conservative
NDP
Jinny Sims NDP Newton—North Delta, BC
Thank you very much.
Derek, my first question this time is going to go to you.
I've done a fair bit of research on P3s and their effectiveness. As you know, there is a wealth to read out there and not all of it is good, though. As you pointed out—and Linda did as well—there can be some projects that specifically because of their high tech or their specialization could benefit from such a partnership.
Budget 2015 announced new investment in infrastructure, with funding set to flow through PPP Canada, and a requirement that municipalities use alternative financing and funding mechanisms involving the private sector. It seems to me the federal government is putting down some very, I would say, strict criteria that you're only going to get the money if you do P3s.
Do you think forcing municipalities to exclusively adopt P3 funding models for funding eligibility is the right approach for the federal government to take? Is it the best way to maintain and grow that infrastructure?
Mayor, City of Burnaby
No, I don't. As I said earlier, looking at that as one of the alternative procurement models is a fair request from the federal or provincial government, and it's one that should be examined during the process. It's one that should receive a fair consideration, but it is not the only alternative that should be presented in order to gain funding from the federal government. We have a similar situation here in B.C., with Partnerships B.C. being the organization that we're required to go through. Having gone through the Canada Line P3, and having been one of the involved members of TransLink throughout that process, I found it to be one of the most frustrating and disappointing times in my career. All of the information was kept secret from the public. We were not allowed to even go to our staff to get support in our opinions. Much of the advice we were receiving was from outside consultants who had often a vested interest in the project proceeding. It was very problematic.
While there are places where a P3 partnership can be a huge advantage to the public and to the private sector, there are other places where it isn't a valid consideration. Recently we went through exactly that process with the Lions Gate treatment plant. At the end of the process, KPMG, which was investigating and examining on behalf of this, through Partnerships B.C., agreed that this wasn't a good project for a P3. But we end up in a situation where the funding that's available is only going to go to P3 projects, so our project is down at the bottom of the list.
NDP
Jinny Sims NDP Newton—North Delta, BC
Thanks, Derek.
Would you agree that the rules that govern P3 infrastructure projects keep infrastructure investment for shovel-ready projects from getting out of the door in a timely manner?
Mayor, City of Burnaby
I would say that exactly. The lengthy process it takes to go through a P3, even on a simpler project, works against us. We can accomplish exactly the same thing using a design-build, which is a very efficient construction method that offers up the opportunity to have a compacted work schedule so that we can have other options in construction that will allow us to achieve the same purposes but without giving up control of the project to the private sector, or the eventual operations and maintenance, which must necessarily be integrated with other services that are provided.
Having the Canada Line operated by the private sector, while the rest of the SkyTrain system is run by a corporation that is part of TransLink seems to me to be a ludicrous waste of funds. It certainly puts the private sector partner in the middle of planning for a system that requires integration.
NDP
Jinny Sims NDP Newton—North Delta, BC
Thanks, Derek.
My next question is a very short one, and I'm hoping both of you will answer.
Is the process the government's adopting a better mechanism than direct federal funding to support public infrastructure projects?
Mayor, City of Burnaby
It's not a better system. I would prefer to have direct federal government funding for public infrastructure projects.
Mayor, City of Surrey
Thank you.
Value for money is something I know every level of government would be looking for. Direct federal funding is always welcome, but I agree with Derek in terms of the P3 process. While it can be onerous, if at the end of the day it shows value for money, it's a good process. If on the other hand you see, as Derek also mentioned, an immediate announcement of the celebration 150 and we don't have projects ready, more time will be necessary.
Direct funding is always welcomed by local government.
Conservative
Conservative
David Yurdiga Conservative Fort McMurray—Athabasca, AB
Thank you, Chair.
Thank you to the witnesses for being here via video today. My first question I want to address to all three participants here.
Innovation is key to achieving the transit industry's goal of greater efficiency and effectiveness. However, emerging technologies often prove to be way more expensive than the conventional alternatives. Many municipalities, due to budget constraints, continue to invest in conventional technology. What has been your experience in dealing with the cost differential between new or emerging technology versus conventional technology?
Mr. Woynillowicz.
Director, Policy and Partnerships, Clean Energy Canada
I think with cutting-edge technology, it does tend to be more expensive at the outset until you can achieve certain economies of scale. I think that's why we haven't seen technologies like solar and wind becoming cost competitive for some period of time. Now we're achieving that scale, and I think there is the ability to scale up deployment, including by public utilities at lower risk and lower cost. I think it is a challenge for crown corporations to be at that cutting edge of deploying new and innovative technologies because they tend to come with higher risks and higher costs.
By the same token, I think there are often ancillary benefits to being at the leading edge, particularly for jurisdictions that can tap into local homegrown talent at universities and in the private sector, and to help encourage that.
I think it depends on the technology and it depends on the jurisdiction as to what the risk tolerance is for being at the bleeding edge of new technology.
