Evidence of meeting #120 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 noise.
A recording is available from Parliament.
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
Thank you, Madam Chair.
Thanks to all three of you for being here and for recently testifying at the Senate transportation and infrastructure committee. We saw a lot of that testimony and we'd love to get some of it on the record here in the House of Commons as well.
I have just two quick questions for you before we get into some of the bigger questions. You've indicated in your report and in previous testimony that between 9,700 and 11,600 jobs were created. Can you indicate if those are part-time, full-time or temporary jobs that were created?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
These are on a full-time equivalent basis. There might be some part-time jobs in these numbers, but we have converted them into full-time equivalents, so these would be full-time jobs. Of course, if they are part-time jobs, they're converted to a full-time basis.
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
Okay, like on an hourly basis. Thank you.
Also, this report is about phase 1, and phase 2 is the longer approach. It's the 10-year plan. Is that something you plan to do a yearly update on at your office, as opposed to you, at the end of 10 years, suddenly being facing a bunch of projects and you to try to figure them out? What has been communicated to you, I guess, or what is your intent for phase 2?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
My intent, given the amounts that are at stake, would be to provide regular updates. I haven't decided yet whether it will be semi-annually or once a year. I'm open to suggestions depending on the interest of parliamentarians in that, but given the amount at stake, it would be at the very least an annual update.
We're talking about well over a hundred billion dollars over a 10-year period. Given that these are very significant amounts, personally I think it warrants at least annual updates, but again, depending on parliamentarians' interest, it could be more frequent. Personally, I think Canadians—and parliamentarians, of course—deserve to have regular updates about this plan.
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
I think that's absolutely appropriate. Anecdotally to you, Mr. Giroux, I'd say that it would be appropriate at least per year.
Your critique of the current phase 1 of the plan, including your opening comments of your Senate testimony, is about how provincial and municipal governments can spend.... Can you go into details on why they aren't investing the money right now? We hear time and time again, particularly from our municipal counterparts, that infrastructure is lagging in this country. I'm curious if in your investigation you've determined why that has happened.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It varies significantly across jurisdictions. In some instances, there are labour shortages that make it more difficult to invest quickly and promptly. In other instances, it's probably a lack of identified projects that are shovel ready, to use a widely known expression. It also speaks to the fact that some jurisdictions are financially constrained and it's not always easy for them to match dollar for dollar what the federal government is investing, especially when we—
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
Excuse me, if I could just pause on that point. There are five pillars that the federal government has identified. In terms of not matching dollar for dollar, is it because those pillars aren't necessarily encompassing what the municipalities want to do at the end of the day? Are they not being lined up directly with those pillars of infrastructure investment?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I wouldn't venture on that specifically, because there are a number of programs. I would keep my remarks probably at a higher level and more general in saying that it's probably a lack of funding. We've seen that through an absence of evidence of any incrementality in the federal funding. As I said in my opening remarks, our data to date suggests that the federal funding has displaced provincial and municipal funding to a large extent, rather than generating additional investment. To me, that speaks to financial constraints at the municipal and provincial levels.
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
If the program were structured similarly to the gas tax fund, I would note that we haven't heard too much criticism of it. There are 18 criteria for investments under the gas tax fund. If those types of criteria were in place, would that be more helpful to these municipalities and provinces?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It would certainly be easier for municipalities and provinces if they got some transfers similar to the gas tax fund's, which they wouldn't have to match. In essence, it would be free money for them. The fewer conditions attached—especially with cost matching—the easier it is for other levels of government to spend, obviously.
November 8th, 2018 / 9:50 a.m.
Liberal
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Thank you, Madam Chair.
You noted that the impact in 2017-18 was an increase in GDP of between 0.13% and 0.16%. In an economy of $2 trillion—help me with the math here—what's the actual dollar value of that lift?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Would that be $20 billion?
Jason Jacques Chief Financial Officer and Senior Director, Costing and Budgetary Analysis, Office of the Parliamentary Budget Officer
No. It would be about $3.5 billion.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Does that account for the multiplier effect of the dollars going in?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, and that multiplier effect is relatively small because the economy is running at or slightly above capacity. There's no slack in the economy for these investments to pick up, so the multiplier effect in these instances is quite small.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
It's interesting. If you step back and kind of look at the macroeconomics of this, notwithstanding the fact that we have this enormous infrastructure deficit in the country, it doesn't sound as though the country was actually ready for the magnitude of this kind of investment.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
The fact that provinces and municipalities are not incrementally spending and, to a large extent, not matching dollar for dollar but rather displacing provincial and municipal funding suggests that there might be a lack of shovel-ready projects. More likely, there may be financial constraints at the municipal and federal levels that prevent them from matching this funding or increasing the funding that they would otherwise have devoted. The evidence so far shows that federal funding has displaced provincial and municipal funding to a large extent, so I'm not sure if there's a lack of projects.
As you said, we hear a lot that the infrastructure in this country desperately needs investment, and we see that. For any of us who drive or take public transit, there is more than anecdotal evidence that suggests that roads are in need of repair and public transit needs improvement, yet we don't necessarily see the results fully reflected.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Being shovel ready means things like preliminary engineering have been done so that they're actually ready to put the money to work. Perhaps it's a capacity issue in many municipalities, that they simply don't have that kind of capability just sitting there waiting for a government program to come along. You also mentioned labour shortages, and again, with record-low unemployment, that has to be a factor as well.
This leads to a couple of thoughts, which may take us beyond where your focus was. Should we, for instance, as a government, look at increasing the percentage of the total project costs that our contribution can cover, expanding what's allowable, or, for the longer term, should we start looking at complementary improvements to the municipal ability to raise money so that they in fact are ready to take advantage of programs like this when they come along?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's something that the government could consider. I don't think I'm in the best position to speak on that, but that's a policy decision the government could indeed make.
Liberal
Ken Hardie Liberal Fleetwood—Port Kells, BC
Similarly, if we are looking at labour shortages, does that not perhaps speak to a better strategy for getting underemployed people—and I'm thinking particularly of indigenous people—more involved in the economy? Should we be looking very specifically at our immigration strategy to ensure that we are getting the people coming to Canada with the skills that we need to actually fill the jobs?
We've heard a statistic that there are 114,000 jobs going wanting in Quebec right now. That suggests that the immigration strategy should be part of what it takes to balance this engine off so that it's running efficiently, as well as being more inclusive in some underemployed communities.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, and when I said there are labour shortages, that's something that is well documented. There are not that many ways to solve such a situation. Tapping into under-represented groups, you mentioned one, namely indigenous people, and there are older workers, disabled persons and the immigrant population are the obvious ways to address labour shortages.
You mentioned unemployment being at record lows. That's true. Also, the employment rate is not at record highs but it's quite high, and higher than in the United States. That's the share of the population of working age that has a job. That suggests there is not that much slack in the labour force, which leads to labour shortages.
There is room to do better, especially for under-represented groups that still have employment rates below the average and unemployment rates above the average. There is indeed room for improvement in this area.
NDP
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?
