Transport Committee on Nov. 8th, 2018

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you, Madam Chair.

Mr. Giroux, I would like to thank your team for these two status reports. As you pointed out, the need for infrastructure is great. The communities we represent have high expectations. Most of Canada's population lives in major centres, but the communities we represent are often small. In my case, 22 of the 25 municipalities that I represent have populations under 5,000.

One thing the government did to help small municipalities with populations under 5,000 was to provide for a federal contribution of up to 60% for infrastructure projects. However, in the implementation of phase 1 of the most recent agreement between Canada and Quebec, for example, only one of the programs has a federal contribution of 60%. The contribution is 40% for all the other programs.

If the federal contribution was 60% and the provincial contribution was 33%, the smallest municipalities would only be responsible for 7% of the cost. According to what I have seen, this would result in projects that would otherwise not go ahead given that municipalities cannot cover 33% of the cost.

Based on your analysis, do you believe that this would be a way to expedite the project implementation process?

[Yves Giroux]

I do not know if it would speed things up significantly, but this contribution would definitely make things easier for municipalities. In fact, I believe that this would actually help the process because municipalities would have to pay less out of their own coffers.

If the federal government covers a larger portion of infrastructure expenditures, municipalities will certainly be more likely to fund a smaller portion of the projects. Therefore, this should generate more projects and probably do so more quickly. There would not be much of a difference in regions experiencing labour shortages, but it would really make things easier for municipalities if their contribution was reduced.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

With respect to the study of your status report on phase 1, the committee heard that small municipalities had problems with their internal resources.

In the municipalities that I represent, the chief administrative officer is responsible for the funding applications, welcomes visitors, answers the phone, drafts the minutes of the last council meeting and prepares the next agenda, among other things. It is therefore difficult for these municipalities to benefit from a program with complex criteria, particularly when they lack the resources to properly identify their needs, obtain the expertise they require and complete documents on time.

Would you say that this complex process is one of the reasons why small municipalities have difficulty accessing these funds? Could this also explain the implementation delays?

[Yves Giroux]

It cannot be denied that such complex measures as accountability, which are imposed on municipalities, are completely justified, in my view. They are asked to submit detailed information for a project to be approved and this creates a far greater burden for small municipalities.

That said, the federal government faces the same dilemma when dealing with indigenous communities, for example. In some cases, there are programs to help indigenous communities increase their capacity in that regard.

It is easy to envisage federal or provincial assistance for municipalities. This would help them acquire the capacity, with their staff or third parties, to meet the infrastructure program criteria. The example you gave is probably quite common. Many municipalities and governments definitely find themselves in the same situation. It is the norm for small organizations to have one person who performs many roles.

I have a great deal of empathy for the chief administrative officers of small municipalities. They have to meet a set of criteria, fill out many documents, collect information, and liaise with elected officials and public servants at various levels of government. That is probably an important factor in the delays experienced or the time taken by certain municipalities to meet the requirements.

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Thank you.

You mentioned that the amount of $247 million will be transferred from phase 1 to phase 2. We know that the need for phase 1 projects is great. Many mayors in my riding have asked me when they will receive funding for water, wastewater and sewer systems, which were funded in phase 1.

According to your information, could amounts transferred to phase 2 be allocated to projects that were actually eligible under phase 1?

[Jason Jacques]

The short answer is yes. With respect to the precise amount of money, it's $247.5 million that's being transferred for a specific project in Manitoba, but all of the assurances that we've been provided with by Infrastructure Canada indicate that the overall spending envelope will remain unchanged.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

On we go to Mr. Iacono.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Madam Chair, please note that I will be sharing my time with my colleague, Mr. Sikand.

Your reports on infrastructure spending mainly focus on Budget 2016 measures. Yet, Budget 2017 provided for more long-term funding and bilateral agreements with the provinces and territories.

Does your modelling focus on the impact of overall infrastructure spending as opposed to the impact of only a few measures?

[Yves Giroux]

Are you referring to Budget 2017 investments or all investments? With regard to modelling, we have measures that let us determine the impact of the suite of infrastructure programs. I do not believe that our model is suitable for each individual program because some are quite large and others much smaller. It would be difficult to measure the annual impact, for example, of the $30 million Canada Cultural Spaces Fund. Our model accounts for all infrastructure spending.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

All right, thank you.

The Governor of the Bank of Canada mentioned several times that infrastructure spending contributes to Canada's economic growth.

Can you tell us how these federal investments directly or indirectly contribute to economic growth? Can you provide concrete examples of this?

[Yves Giroux]

There are several concrete examples of how investments contribute to economic growth.

First, there are the direct effects, which I mentioned in my opening remarks. For example, the construction or acquisition of infrastructure generates employment and economic activity.

There is another aspect, which is more difficult to measure and which is identified more in the long term: infrastructure investments facilitate economic activity. Take the example of Ottawa's light rail line, which will pass right under our feet. It will make it easier for people to travel in the Ottawa area, which will make it easier for people to work without having to go into debt to buy a vehicle.

Another example is the construction of a bridge, which will help a manufacturer with sales and exports. Or, water treatment infrastructure that gives people access to good quality drinking water. This would also benefit companies that use water in their production process by giving them access to normal and reliable quantities of potable water. Wastewater treatment plants result in a healthier environment.

These are some examples of how infrastructure investments facilitate economic growth.

Another fairly obvious example is Montreal's Champlain Bridge. The flow of people and goods travelling between the South Shore and the Island of Montreal creates a bottleneck. Building a better bridge, which does not run the risk of crumbling, facilitates the flow of goods and provides some assurances to businesses to that effect.

[The Chair, Liberal, Judy Sgro]

You have two minutes, Mr. Sikand.

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

Thank you. I'll just ask one question.

In August 2018, in the report titled, “Status Report on Phase 1 of the Investing in Canada Plan”, the PBO indicated that the infrastructure spending delays were largely attributable to implementation delays by the provincial governments.

What can the federal government do to help alleviate these delays?

[Yves Giroux]

I think the government can assist municipalities and provincial governments in developing capacity, and that relates to an answer I gave Madame Sansoucy.

There's a level of assistance that could be provided in developing capacity at the provincial and municipal levels. I think there could be better planning at the federal level. It's well understood that when you try to invest massively—and I think it's significant investments that we're talking about here—there are always delays.

It's a bit like HR. You try to—

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

Sorry, I'm going to jump in, because I have limited time and it's the same answer.

If I were to rephrase that to ask, generally how do we get all the money that we're spending to translate to a streamlined version to have shovels in the ground, would that change your answer at all?

[Yves Giroux]

No, it wouldn't change my answer.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Now, on to Mr. Rogers.

[Churence Rogers]

I was surprised when you referenced in your comments the delays and some of the reasons outlined for them. From my municipal background, I know that for years we've been lobbying hard for major infrastructure spending programs. I'm surprised to learn that the money is not being spent as quickly as anticipated.

When I talk to mayors and councillors in my riding, many of them are in very small towns, some with 500 people or fewer, and no large town is bigger than 10,000, they talk about how they've applied for funding for infrastructure programs for waste water, roads and those kinds of things, and it seems that they're waiting for long periods of time for responses. Some of that I know we can attribute to the provincial government, because it's all channelled through municipal affairs in a province.

I talk about the cost-shared ratios with municipalities, yet when the information hits their desk from the provinces, I see some discrepancies.

Do you monitor whether provinces are following the conditions outlined in the bilateral agreements for cost-shared ratios?

[Yves Giroux]

We don't monitor whether provinces are following the rules in the agreements that Infrastructure Canada establishes with them. It is more the role of Infrastructure Canada to ensure that provinces and municipalities abide by the terms of the agreements that the federal government has signed with provinces and municipalities. Our role has more to do with the spending at an aggregate level, whether it's being provided or spent at the rhythm or pace the government has set and whether the outcomes are as expected.

When it comes to auditing the results or whether or not the rules have been followed, that's within the mandate of Infrastructure Canada and ultimately the Auditor General.

[Churence Rogers]

Okay.

The other big concern around infrastructure spending has to do with waste-water treatment facilities. I was the mayor of a small town of 1,200 people, and one of the earlier requests we put out was to get information about treating waste water, which has to be done by 2020 for high-risk systems, by 2030 for medium-risk systems, and so on, as outlined in the regulations.

One of the earlier requests we submitted to some engineering firms ended up with a price tag of $4 million to $5 million, which is a significant amount of money for a small community with a very limited tax base.

One of the challenges I keep hearing about from the municipal sector is how to access federal funding programs to help them meet these waste-water requirements. I suggest to them that they think about the gas tax fund, which is intended for these kinds of projects.

Are there any other suggestions arising from the bilateral agreements that have been signed with provinces as to where some of these municipalities might go for a funding program? Is there any particular fund they should be examining and applying for?

[Yves Giroux]

There are so many programs under the investing in Canada plan and the infrastructure plan. I have a list here on a bigger than legal-sized piece of paper, so I'm sure there is at least one program.

Not being an infrastructure specialist myself, I'll ask my colleagues whether they have ideas as to which specific program such a project could be funded under.

Diarra or Jason.

[Jason Jacques]

To Mr. Giroux's point, as part of phase 1 and phase 2, there are 35 discrete programs around infrastructure that have been implemented by the federal government, and there are at least 10, or roughly a dozen, under the pre-2016 programs. That gets you nearly 50 federal infrastructure programs. Amongst those 50 programs, beyond the gas tax, there's probably one that will meet municipalities' needs for water and waste water.

[Churence Rogers]

My recommendation to municipalities, then, would be to deal directly with their provincial municipal affairs departments on those issues if they were to try to seek out funding, because as Ms. Sansoucy said, capacity in staffing, and so on, is an issue in some of these small municipalities.

What about in terms of finding out which program might fit their particular needs, which direction would be best for them to go?

[Yves Giroux]

They could probably talk to their excellent member of Parliament—