Evidence of meeting #100 for Transport, Infrastructure and Communities in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was projects.
A recording is available from Parliament.
3:50 p.m.
NDP
Brigitte Sansoucy NDP Saint-Hyacinthe—Bagot, QC
Good afternoon.
I'll be splitting my time with my colleague Robert Aubin.
3:50 p.m.
NDP
Robert Aubin NDP Trois-Rivières, QC
Thank you.
I have a few quick questions for Ms. Fukakusa.
I'm going to use a specific example, which should provide a comparison everyone following our proceedings today can understand, especially those in Quebec and Ontario. Via Rail is planning a terrific project, a dedicated passenger rail track for the Quebec City–Windsor corridor, one of the most densely populated corridors in the country, if not the most densely populated. A comparable project is the Réseau express métropolitain, or REM, in Quebec.
To what extent would potential customers benefit from having the Canada Infrastructure Bank finance the project? If the government were simply to finance the project with taxpayer money, the borrowing rate would be around 1.5%. In contrast, private investors working with the bank will expect a rate of return in the neighbourhood of 7% to 9%.
3:55 p.m.
Chair, Canada Infrastructure Bank
That's a great question. I can't speak specifically to those two projects, but I can speak to the fact that when you attract private funding, the objective is to get sources of capital in addition to the government for building out that sort of infrastructure. It would be a case of looking at risk profiling, looking at the benefits and at how the return can be acceptable for our citizens as well as acceptable to the pension fund. It is a balancing act, and part of why we're there is to look at the public interest along with the government.
3:55 p.m.
NDP
Robert Aubin NDP Trois-Rivières, QC
I have two other questions.
Again, we can consider the two projects in parallel, although they are different.
When people first heard about the REM plan, just about everyone supported it. As project details emerged, so, too, did some criticism over the route and community benefits. The cars are going to be built in India, for instance.
When the Infrastructure Bank of Canada leads a project, what parameters will you follow to maximize benefits to the community? What parameters will you follow to make sure you don't work with private investors and companies who do business with tax havens, for instance?
3:55 p.m.
Glenn Campbell
Given that this is more of a policy question than an infrastructure bank question, I'm happy to answer it.
In the first instance, the Canada Infrastructure Bank is a tool for governments to use to help fund projects. It's the government sponsor and its proponent that lead an infrastructure project. The bank is there to help where appropriate and to crowd in private capital if the model fits. Making decisions that pertain to procurement, local regulation, and how that's being built are really the domain of the government sponsor of that asset, wherever it may be, and of course, it's better for us to deal in hypothetical terms rather than talk about any specific project.
3:55 p.m.
NDP
3:55 p.m.
NDP
Brigitte Sansoucy NDP Saint-Hyacinthe—Bagot, QC
My question is for the chair of the Canada Infrastructure Bank, Ms. Fukakusa.
On March 19, the office of the Parliamentary Budget Officer asked the Canada Infrastructure Bank to provide a list of planned infrastructure projects by March 31, 2018. According to the 2018 budget, the Canada Infrastructure Bank will spend $149 million on infrastructure projects in 2017-18.
When officials from the office of the Parliamentary Budget Officer appeared before the committee on April 16, they told us they did not know why the Canada Infrastructure Bank had not responded to their request.
I'm not sure whether the committee clerk has received an update since, but given that you're here, can you tell us whether you provided the requested information to the office of the Parliamentary Budget Officer, and if not, why?
3:55 p.m.
Chair, Canada Infrastructure Bank
I confirm that we have now sent the information to the parliamentary budget office.
I would say that part of it is the start-up nature of the bank, so we received the request through a general line. We were discussing it with the ministry because everything like that is quite new to us, and the ministry has been very helpful.
With respect to the funding, as I said, we have had a board appointed for five months now. We're in start-up mode, and we're trying to build—
3:55 p.m.
NDP
Brigitte Sansoucy NDP Saint-Hyacinthe—Bagot, QC
Sorry, but I have to stop you there.
I have another question, and if you don't have enough time to answer, I'd appreciate it if you would send the information to the committee in writing.
You mentioned your board. The government committed to a transparent selection process regarding the board. Could you describe the selection process that led to your appointment and that of your fellow board members? If we run out of time, could you kindly send the answer to the committee in writing?
4 p.m.
Glenn Campbell
We're happy to follow up, given that the board members were Governor in Council appointees. They were appointed on behalf of the minister. If there are any questions pertaining to that process, we're happy to provide to the committee, via the department, information on how that process unfolded. As someone who was involved, I can reiterate that it followed the new transparent process. It was publicized to Canadians, had open applications, and had meritorious and representative selection. It led to having a suite of very capable Canadians on the Infrastructure Bank board.
April 23rd, 2018 / 4 p.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Thank you, Madam Chair.
I want to preface my comments by saying that this is one of the reasons I ran at the federal level. I was a mayor for 14 years. There was a great frustration with the last government, with respect to the disconnect between the local level and the federal level, and with that, some of the programs that were brought forward. I have to disagree with the comments made by Mr. Chong, a member of the official opposition, with respect to his earlier comments in where this is leading; why we're going down this road; the benefit it's going to place on local municipalities and private sector; the outcomes it's going to accrue over time when it comes to our economic growth; as well as, quite frankly, creating jobs and ensuring that projects get off the ground to do just that.
The government has, in fact, approved more than 4,000 infrastructure projects across this country since the fall of 2015, with a combined investment of more than $35 billion. Those projects are already creating economic growth and opportunities for Canadians. They're building healthy, livable, and sustainable communities. Re-profiling the dollars within the years of our plan is an issue of cash flow management, not one of lack of activity.
Our government has now signed bilateral agreements with seven provinces and territories that now have long-term, sustainable, and predictable funding. Through these agreements, our government will invest $33 billion to improve public transit and communities to reduce congestion and pollution, to invest in green infrastructure to make our communities more resilient to climate change, and to invest in cultural community and recreational infrastructures to build healthier, more inclusive communities. Our government is investing $2.4 billion in rural and northern communities to support them in a way that they were never supported by the previous government, as I mentioned earlier.
Going to my earlier comments, the new plan is not a one-third, one-third, one-third plan like previous governments had offered, therefore having “have” and “have-not” situations. We had some communities— most communities—that couldn't afford to participate in some of these programs because of the expected one-third contribution. The new investing in Canada plan that we're proposing, with the federal level investing up to 40%, 50%, to 60% for some projects, eases the burden of municipal partners. This now leads me to some of my questions.
Mr. Fraser mentioned bundling and ensuring that the partnerships that we're trying to create through this program happen—especially with the infrastructure bank—and that they're realistic.
My first question is to the infrastructure bank folks. Will you actually encourage, first, the bundling of projects? Therefore, we get a greater rate of return, a greater clustering being created in certain parts of the country, especially as it relates to trade corridors that are economic in nature.
Second, are you encouraging bundling that may be binational? Investment coming in from the United States that is transportation related.... It may be a bridge, it may be a road, it may be a cluster of business opportunities between two or three countries. Are you encouraging that kind of investing as well?
4 p.m.
Chair, Canada Infrastructure Bank
That's a very good question. In terms of bundling, our expectation is that the municipalities or other governments would come to us with the suggested bundling. I think that one of the areas of bundling is that you have to recognize what is common, what can be done together, and how you can speed up the development. When we look at projects, we're looking at a lot of the sponsorship coming from the different levels of government and the different users of the infrastructure in order to bring those ideas forward, so that we can match those ideas with the appetite for private investment and feasibility. It is about getting a groundswell from the communities going forward, which is what we're here for: to build the infrastructure for our Canadians. With respect to the cross-border issue, I would say that the infrastructure is, generally speaking, for Canadians.
Glenn, you may have some views on the public policy nature of that.
4:05 p.m.
Glenn Campbell
The act stipulates that the Canada Infrastructure Bank can support a project that is in Canada, or partly in Canada. Clearly, that's intended to capture, in certain circumstances, where we have borders with an important neighbour. There may be an infrastructure asset that attaches those two, so that's permissible.
I have a comment on bundling. The Canada Infrastructure Bank model is designed to attach, not just an investor, but the private sector to a project. Thus, for a rate of return, they're also going to participate in extracting the efficiencies in building, managing, and operating that project. Bundling has been a challenge, even though it's something the bank's going to look at. The more you group assets that are, perhaps, dissimilar, the more you detach the risk transfer from the investor to the actual project. This is something a lot of governments are looking at. I think the Infrastructure Bank and the ministry are also looking at the prospect of bundling, particularly for smaller projects in the future.
4:05 p.m.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Thank you, Madam Chair.
Welcome to our witnesses.
Ms. Fukakusa, you indicated that the Infrastructure Bank would operate somewhat differently from the P3 that some of us would have experienced in some of our past lives. What would the difference look like?
4:05 p.m.
Chair, Canada Infrastructure Bank
I think the major difference is that the private sector, in terms of the investors who are there with us, is earning its return from use of the asset, so it's not like a transfer payment in terms of performance. It's more about the private sector taking on those risks. It is a different tool than the triple-P tool because it accommodates the revenue-generating nature and ensures that investors are getting returns from the revenue-generating nature of the project.
4:05 p.m.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Digging a little bit more deeply into that, would you not be concerned that the public might fear turning over the cost of a toll on a bridge or a transit fare to be set by the private sector?
4:05 p.m.
Chair, Canada Infrastructure Bank
The actual rate of tolls and fares is part of the public interest test, and it wouldn't.... The flip side is that the investors would not be setting the tolls because that would not be in the public interest. That wouldn't be how the project is structured. I think it's about sharing the tolling.
4:05 p.m.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
In a normal P3, at least the ones that I've observed, there's a transfer of risk from the public sector proponent to the private sector that's involved either as a design-build, or as a design-build-finance-operate kind of model. We have seen in the past that the payoff is that the public gets a project delivered on a specific time at a fixed budget and the return for that is that we pay a little extra through higher interest rates, etc. Is this how you would see the trade-off working with the Infrastructure Bank?
4:05 p.m.
Chair, Canada Infrastructure Bank
The trade-off is like that, but I think that the fact you have all the parties at the beginning is a recognition of the distribution of that risk and the diligence around what is acceptable. Also, the Infrastructure Bank is there to judge the acceptability of the private sector in saying these are the sorts of returns they want in the overall public interest and in what can be accomplished. It's keeping everyone at the table honest to make sure this is a good deal for Canadians.
4:10 p.m.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
By good deal, would you foresee the average project financed through the Infrastructure Bank coming in at a lower public cost than, say, the standard P3?
4:10 p.m.
Chair, Canada Infrastructure Bank
It may or may not. The real value would be to get additional capital into infrastructure investments.
