Transport Committee on May 9th, 2018

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll move to Mr. Aubin.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you, Madam Chair.

Thank you all for participating in our study.

I think we all agree that we are far behind in updating our infrastructure, and in building new infrastructure. Let's not argue about the numbers, but, according to the Parliamentary Budget Officer's last report, only 50% of the projects are underway, whereas the minister said 70% during his last visit. Let's be good sports and use the minister's numbers. We are left with 30% on hold, which represents $2.5 to $2.6 billion of non-distributed funds that will probably be assigned to another year. Each time that funding is reassigned, projects do not see the light of day, jobs are not created, and costs go up. It's indeed rare to see costs go down from one year to the next.

I have two questions.

My first question is mainly for both mayors, even if Mr. Lapierre has already answered it. Is our current formula the right one, or would it be better to opt for an ongoing funding model, as Mr. Lapierre suggested?

I will ask my second question right away. Given the current backlog, can you tell me what percentage of your funding requests is intended for catching up on your infrastructure upgrades? Also, what percentage is truly dedicated to developing new, green infrastructure projects that would take us into the 21st century? I'm asking for a general idea here, of course, not specific figures.

[Yvon Lapierre]

I'll mainly answer the second question, since you already know my opinion on the stability of funding for aging infrastructure.

Green infrastructure has enormous potential. It isn't for a lack of ideas. The goal is to be able to invest and get things rolling in the municipalities. My colleague Mr. Savage talked a lot about public transportation and how to improve it. Population density is a factor. Our small municipality has a population of 26,000, whereas Moncton, the city next to us, has a population of 100,000. Given that we aren't facing the same debt, or even the same deficit, in aging infrastructure, we have the invaluable opportunity to make long-term improvements on our infrastructure. We are therefore in a position to invest substantially in sustainable projects, particularly public transportation. We can also increase population density by getting help to build buildings, such as apartments and condos.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

Mr. Savage, do you have anything to add?

[Mike Savage]

Yes. In getting caught up, I mentioned that in Halifax, we have an integrated resource plan of $2.6 billion. Of the $2.6 billion, $600 million is for the CCME guidelines, which are forced upon us by the feds, which we understand and support; $700 million is the catch-up on work that could be done, and $1.3 billion is to accommodate growth. Most of it is to accommodate the anticipated growth.

On the formula question to be specific, we appreciate the fact that the feds have invested 50% in the first round and 40%, with some cases going to 50%, for recapitalization. The issue for a city like Halifax, which is a city that is doing reasonably well in a province that has real financial problems is we have to get a little creative. For example, the province hasn't funded public transit, so to say that you're going to do 40% from the feds and 40% from the province only works if the province has the money. Under phase one, the province didn't contribute.

Generally, I think the formula works, but it's not equal across the country, depending on the financial circumstances of the provinces and the individual cities.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

...

[Mark Romoff]

Mr. Aubin, if I could make a point, I think it's also important to recognize that cash flow doesn't always follow project approval, and particularly with respect to public-private partnerships, no funding is provided to the firms that are building these projects until they've been substantially completed. There could be a period of up to three years from when the project was launched to when a first payment might flow.

The other reality, particularly in public-private partnerships, is that these projects take place over 25 to 35 years because of maintenance, and therefore, while the project may have significant value, the cash flow will be over a period of up to 35 years.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Romoff.

Now we'll go to Mr. Fraser.

You have five minutes, please.

[Sean Fraser, Liberal, Central Nova, NS]

Excellent.

It's good to see you again, Your Worship.

I'll focus my questions on you, given our shared constituency in Central Nova.

I know the Parliamentary Secretary to the Minister of Infrastructure and Communities, sitting to my right, has a cottage in your municipality as well. He'll be very interested in my line of questioning, which will focus on the rural portions of your riding, which you raise.

One of the things I hear back at home from the folks who live in the rural part of HRM is that since the amalgamation took place, it seems hard for the city to sometimes justify the bigger projects in the rural areas. There are a handful of initiatives afoot which I know you're well aware of.

When it comes to doing big things in small communities, if the money is there at the federal level, is the city going to be there to play ball as well?

[Mike Savage]

It certainly depends on the project. As a city, we're trying to expand our mandate, but there are certain things we have a responsibility for and certain things that we don't.

I think that since amalgamation there have been a lot of improvements, I would say, in services to rural communities, for example, the fire departments and the equipment that has been invested. The beauty of a municipality the size of HRM is that everyone across the municipality thinks they're getting ripped off the most. That's what pulls us together: that we all agree with that.

We're happy to work with you. I think I'll be with you maybe this Saturday when you're going to be making some announcements. I look forward to seeing you then.

[Sean Fraser, Liberal, Central Nova, NS]

Excellent.

I want to shift the focus to transit right now.

One of the struggles that we have throughout rural Nova Scotia—this is not unique to HRM—is that we have a fair number of community transit organizations that aren't necessarily run by municipalities. I'm thinking of things like the MusGo Rider, CHAD Transit down in New Glasgow, or Antigonish Community Transit.

There is a funding formula challenge that we have because they're not necessarily run by a municipality. I know that Halifax is likely going to be looking to upgrade its transportation infrastructure. I'm wondering if this is going to create opportunities with the surplus infrastructure. I'm thinking about used buses that might not be too old to be out of service.

Will there be an opportunity to partner with smaller communities so that they can get a public transit system off the ground where they may not have one today?

[Mike Savage]

For example, we've given buses to places like Bridgewater, Nova Scotia, to start their transit service. Because HRM is so big, over the last 10 to 20 years the fare-box contribution to transit has gone from being two-thirds paid by customers to about a third or 40%. Part of it is that we have a transit system that's been designed by politicians and not by traffic engineers.

What we have to do in Halifax is condense our service and make it more efficient in the core, but be sensitive to fact that things like MusGo Rider.... I think we're prepared to invest significantly in communities that want to get people in to where the transit system works more effectively. We're prepared to put money into that any day of the week.

[Sean Fraser, Liberal, Central Nova, NS]

One challenge that is unique, I believe, in Canada—certainly in Nova Scotia to HRM—is that the rural box of funding under phase two of the federal government's infrastructure plan is done by size of municipality. One of the buckets, or potential types of projects, under that funding that I'm most interested in is connectivity.

If HRM were made eligible for this pocket of funds, is the city interested or willing to participate in cost sharing to extend high speed internet connectivity to rural parts of HRM?

[Mike Savage]

A couple of the councillors in your area, Councillor Streatch and Councillor Hendsbee, have been on this for some time. We're certainly prepared to be part of that.

I would encourage people to recognize that.... This is why I put this in my presentation. People think of Halifax as urban, but we are a large rural municipality. We should not be excluded, in my view, from rural funding.

[Sean Fraser, Liberal, Central Nova, NS]

I know that—including Senator Tom McInnis from Sheet Harbour—we've been partnering quite a bit to work on a large recreational project. I'm curious if the city has plans to help me make the province prioritize this project with the lifestyle centre down in that neck of the woods.

Is this something that's high on your priority list?

[Mike Savage]

Yes. As you know, that's something that's been discussed at council a lot. Initially, we had hoped that it might be part of the new high school that we're contributing to. We're certainly prepared to talk.

Tom McInnis is a very strong senator and a very strong advocate for Sheet Harbour. I talked to him as recently as yesterday. We're prepared to look at that and work with the community, the wonderful community of Sheet Harbour, and the whole eastern shore.

[Sean Fraser, Liberal, Central Nova, NS]

Finally, the parliamentary secretary to my right wants to know if that commuter rail line is going to go to East Jeddore.

[Mike Savage]

Perhaps you could tell him that as we're talking I'm checking his property tax to make sure that it's been paid.

[Voices]

Oh, oh!

[Sean Fraser, Liberal, Central Nova, NS]

Thanks very much, Mayor.

We'll see you soon.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Next is Mr. Sikand.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

My question is for Mark Romoff.

I'm interested in knowing how public-private partnerships work in practice, and in exploring the pros and cons of this approach. I was reading the brief that the Canadian Council for Public-Private Partnerships submitted to the consultations in advance of the 2018 budget. Your organization recommends that the Government of Canada increase its education and capacity-building efforts for public-private partnerships with local governments. It says:

The ready availability of Canadian private capital to invest in public infrastructure is at the heart of the P3 success story - there are now 261 P3 projects across the country either [in operation or] under construction.... The value of those projects...[actually] exceeds $122 billion.

That brings me to my first question. What are the advantages, if any, for involving the private sector in public infrastructure investments?

[Mark Romoff]

Mr. Sikand, this is a good question.

The reality is that irrespective of the way that communities choose to procure infrastructure, the private sector is always involved. The advantage of a public-private partnership over traditional procurement is that the private sector as a consortium takes on responsibility for the design, the construction, some of the private finance, and the maintenance of the asset over a period of 25 to 35 years.

Governments enter a fixed-price contract with these consortia, which take on the risks associated with design and construction, amongst other risks. As you may know, with traditional procurement, many projects come in well over budget and way behind schedule. The nature of the contractual arrangement with P3s precludes that, because the private sector has a responsibility for those cost overruns, and is held accountable for them, and not government, they are therefore very focused on ensuring that projects do come in on budget, and on time.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

On that note, what are the types of public infrastructure projects best suited for these partnerships?