Transport Committee on May 26th, 2015

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

At what stage is the consideration of that project?

[Derek Corrigan]

It is at the stage of requesting funds from the federal government. We have been attempting to get ourselves into the building Canada fund process. We have been deflected.

There are apparently two systems that are running. One is a straight P3 system, and one is the building Canada fund system, but both are required to go through the screening for private-public partnerships. We've been told informally that it's unlikely for the project to be approved unless it follows a P3 model.

[The Chair, Conservative, Larry Miller]

Thank you.

Sorry, Mr. Braid, your time is up.

Mr. Komarnicki, you have seven minutes.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Thank you very much, Chair.

Certainly we've heard a divergence of opinions on some of the funding and how it goes about. I heard from Mr. Corrigan that there's an infrastructure deficit. We've heard that, but nobody's able to pin down exactly what it is. I do know that the age of core public infrastructure over the past 10 years has shown a decline of 2.8 years from 17.5 years, so we're trending in the right direction. The funding in terms of federal support for provincial and municipal infrastructure programs has increased from $400 million in 2002 to over $4.7 billion in 2013, so we're going in the right direction. There's always a need for more, for sure, and it's good to see, certainly, the City of Surrey listing a host of projects under the various funding programs that have been made available over the years and availing themselves of those.

Of course, the latest one was the P3 you're looking at. I have a question for, perhaps, Mayor Hepner or the city manager. We've heard from P3 support groups that have talked about the complexity of P3s and that not every project is suited for them. Of course, there are contracts to be signed and business cases to be made, not only on the capital side and the construction side but also on the maintenance side. A lot of different designs have to take place and so on, so I'd like to ask you whether you have an internal group or body that has the expertise and ability to review all of these from a legal side and from the various other service sides to say whether this is a good deal or a bad deal to sign.

Have you availed yourself of external experts who are available to deal with the research on the project, to make available their expertise, and to go through with a fine-tooth comb the contractual obligations of the parties and the costs involved and the savings? Can you perhaps answer that?

[Linda Hepner]

I certainly can't, but my city manager can. I would like to sing his praises because we do have a great team. I'll let him speak to it directly.

[Vincent Lalonde]

Thank you.

As with all P3s, the contractual arrangements are quite complex and it's very important to fully understand them. We have engaged with a lot of partners to do this. Partnerships B.C. is a local B.C. group set up by the provincial government that had a lot of expertise, and we hired them to help us. We hired from the private sector. A lot of the large accounting firms and different infrastructure firms have some expertise. Then we also, as you mentioned, developed our own internal expertise. As I was mentioning in response to a previous question, there is a long process to go through, which is quite thorough and it's very important to go through it properly. We developed quite a bit of expertise by going through the biofuel project in order to be familiar with it. Any city that starts on its first P3 has a pretty steep learning curve, I would say.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Thank you. I know those are very critical matters and if you organize well and you have the support you need, you can make the right projects work.

Mayor Corrigan, I know you mentioned that you're debt free and you have $700 million in the bank. That's certainly a bright light there. You were concerned about the fact that you have to, sort of on a merit basis, apply for specific projects and there are dedicated funds for specific funds whether they're for transit or the Asia-Pacific gateway.

There's another fund that is very popular with municipalities and that's the gas tax fund. It has been increased and doubled over the last while from what it was. It's been indexed and the categories for which it can be used have been broadened considerably to include just about any project the municipality might want to undertake. I appreciate that if you have to get ready for a specific application you might let some infrastructure go, but with respect to the gas tax fund do you appreciate that type of fund? Do you like what you've seen over the years in terms of its expansion, its indexing, the broadening of what it can be used for? Do you find that useful in meeting your immediate needs as you prioritize them and not as somebody else does?

[Derek Corrigan]

I am very appreciative and I think all of the mayors in the region are appreciative of the gas tax fund. We find it to be a very useful adjunct to the other programs that are available to us.

One of the problems with the gas tax fund originally was that there was considerable political interference in regard to the dispersion of those funds from both the provincial and federal governments. We in the Lower Mainland were in a position to be able to transfer all of those funds to TransLink for transportation improvements, and we agreed as mayors in the Lower Mainland that rather than taking those funds individually, we would put all of our funds together to improve the assets that are available to TransLink.

We would like to see those funds given to us for operating purposes, rather than simply for capital. It would solve many of the problems we have in funding transit if we were given that money on a consistent basis, because we could leverage it to produce more borrowing power than is available to us now. But even as a capital fund, it's useful to us.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

I appreciate that. Because you know exactly what you're getting and it's based pretty precisely, you can bank on it, you can pull it, you can borrow against it, and as you say, you can leverage it for all the kinds of things that municipalities would like to see. I might say, when you add that to the GST rebate it's about $33 billion over 10 years, which is a fairly significant contribution.

I have a question I wanted to ask with respect to Clean Energy Canada. When I heard the testimony about the requirement for infrastructure funding for various clean energy programs, I didn't hear anything about the carbon capture and storage that is undertaken by provinces that produce electricity through coal, such as the production of electrical energy in my riding of Souris—Moose Mountain, where considerable funds have been invested in respect to carbon capture and sequestration. Not only is it captured, but it is also used for enhanced oil recovery. Is that not also something that should be considered, or at least added to the listing that you made of the type of infrastructure projects you would like to see funded?

[Dan Woynillowicz]

That list was by no means exhausted in terms of the types of projects that did receive funding from those various programs. Certainly, carbon capture and storage has been a significant beneficiary of federal support, and provincial support, in both Alberta and Saskatchewan for both oil sands and coal-fired power.

Our focus, when it comes to electricity, really is on tapping into Canada's significant renewable energy resources, which have the benefits of not producing air pollution or carbon pollution in the first place but also being renewable and ultimately inexhaustible. We believe that there's a real opportunity for Canada both domestically and internationally.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Thank you for that.

I see the chair is not allowing me any further questions. We do have a first-class carbon capture facility in Estevan, Saskatchewan.

[The Chair, Conservative, Larry Miller]

Thank you for that advertisement.

Mr. Sandhu, you have five minutes.

[Jasbir Sandhu, NDP, Surrey North, BC]

Thank you, Mr. Chair. Good afternoon to the witnesses. I would also like to call Mr. Corrigan and Ms. Hepner my friends, because I know they're both very hard-working mayors in our region, especially Linda Hepner. I'll call you Linda.

I come from Surrey, of course, and I know the challenges we are facing in regard to the gridlock that is taking place in our city. I've travelled those routes, especially King George Highway. My office is actually on 104th Avenue, which the new route for the LRT shows.... I've seen first-hand the time it takes to travel on those routes during peak hours, rush hours, so this is a welcome sort of announcement, a welcome initiative to ensure that we keep moving forward.

Mayor Hepner, would you like to see the money before the election or after the election?

[Linda Hepner]

Is it available today, Jasbir?

[Jasbir Sandhu, NDP, Surrey North, BC]

I hope the government will make the announcement before the election. My second question is—

[Linda Hepner]

I would like to see the money as soon as possible.

[Jasbir Sandhu, NDP, Surrey North, BC]

We are in a process of revitalizing our downtown Whalley area. There has been a lot of development. The new city hall is built there, and we have the Innovation Boulevard being built right along University Drive. Do you have any other infrastructure plans for the area that the federal government can assist in developing in the city of Surrey, what we now call downtown?

[Linda Hepner]

The number one project right now is our LRT. In terms of making sure that this 27 kilometres of connectivity is going to allow us to shape the community, given the growth we have, I think that will bring those opportunities to us. Right now, LRT is my primary focus.

[Jasbir Sandhu, NDP, Surrey North, BC]

Mr. Lalonde, you talked about some limitations in regard to P3s and how that limits this. Each project has to be judged on its merits. Some projects are friendlier towards P3s, while others aren't. Does this P3 model limit some of the projects that may be ready to go in Surrey?

Also, in Burnaby, Mr. Corrigan, you may want to answer this one.

Does this limit the projects that you're considering for the city of Surrey and the city of Burnaby?

[Vincent Lalonde]

I think you're correct. The P3 is a really good method to shed some risks from the public sector onto the private sector, if properly accompanied by proper agreements that ensure you are actually shedding those risks. It does come at a cost. It's not like a free system either.

In the case of our biofuel, one of the key drivers for that project to be a very suitable project from a P3 perspective was the fact that internationally we had a lot of technologies competing to produce fuel from our organic waste. It was very hard for the city to fully determine which of those technologies would be successfully built and successfully operated. By doing the thorough P3 process, we were able to determine which team—which consortium, essentially—was going to be entrusted with delivering the gas at the end of the day, while not taking any kinds of risks on the technology. Of course, that comes at a price. You have to pay the private consortium to take those risks, but at least you know what you're paying and what you're getting.

That's an example of where a P3 is well suited. It has to have a significant component of innovation, expertise, or shedding risks, because there are some inherent costs with the P3 system.

[Derek Corrigan]

There has to be a sensible review of when it is appropriate or not appropriate to have a P3 arrangement. In the case of, for instance, the waste-to-energy facility that exists now in the city of Burnaby and the new facility that's being planned by Metro Vancouver, it's an area of special technology and special expertise, where a partnership with the private sector, with the public sector providing the capital, has worked extremely well and is the model that we're looking to in the future.

Where we have an area of expertise, as we do in regard to waste water, where our staff has probably the most experienced people in that regard, and where the system is integrated with other parts of our system, moving to privatization is contraindicated. It's not something that you would do, looking at it from a sensible perspective. That's why I'm so concerned when the decisions are based on the ideology rather than common sense and practicality. It should be that in the projects that work for a P3, we're given the ability to utilize that methodology, and that where projects don't work, our view is respected in making sure those projects are integrated into the normal public service.

[The Chair, Conservative, Larry Miller]

Mr. Watson, you have five minutes.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thank you to our witnesses who are appearing by video conference today.

I want to begin with Clean Energy Canada and Mr. Woynillowicz.

First of all, I've been here since 2004, so I have a little bit of institutional memory about things like the eco-trust program. I believe that Ontario's $586-million share was used to shut down coal-fired electricity, which was a major step forward in terms of clean energy in Ontario.

On your preference to see clean energy alternatives, in the context of the discussion about infrastructure today, are you suggesting, for example, that infrastructure funds should be used for things like wind farms, wind turbines, solar farms, or anything of that nature?

[Dan Woynillowicz]

When we look at some of the cost declines we're seeing in both wind and solar, I don't think there's necessarily a requirement for dedicated programs for construction on the generation side. To the extent that is required in some provinces, I think it's best handled by the provinces.

What I was trying to emphasize was the need to lead Canada towards a more rational electricity system. Right now it's very balkanized, province by province. It's not optimized to make sure we're maximizing the integration of renewable energy or tapping into the opportunity to actually export a surplus of renewable power to the United States and help our neighbours to the south.

[Jeff Watson, Conservative, Essex, ON]

For example, if Ontario had struck an agreement for hydro transmission, multi-year, to tap into that instead of, say, wind turbines or another alternative.... You're sort of creating that system, if you will. Those are connectivity choices that could have been made, for example, right?