Transport Committee on Feb. 21st, 2017

[Vance Badawey, Liberal, Niagara Centre, ON]

It's therefore where you'll get your performance measures from.

[Bruce Lazenby]

Right.

[Vance Badawey, Liberal, Niagara Centre, ON]

Great.

Thank you.

[The Vice-Chair, Conservative, Luc Berthold]

Thank you very much, Mr. Badawey.

I now give the floor to Ms. Block for six minutes.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much. I'll be sharing my time with my colleague.

I want to pick up on a couple of observations that were made early on in testimony.

Mr. Lazenby, you talked about increased urbanization, and you referenced it again. We tend to think about this happening more in developing nations, but we see this right here in Canada. I want to follow up on that. Is that necessarily the best thing to be happening in a country the size of Canada? Is that driven by the policies of a government, or are government policies following the population? I think that's a good debate that we need to have.

We talk about small, medium, and large communities, and I appreciate Mr. MacKay's observation that we're not talking about smart cities, but smart communities. There's perhaps a regional focus that needs to take place when we talk about smart communities, because small communities can't do it on their own. There is an interdependence here between urban and rural Canada.

I'm wondering if you could speak to our attending to not only smart cities but also having a smart rural component to what we are talking about. Then I'd really like you to talk more about government regulatory freedom, because to me that sounds like an oxymoron.

[Bruce Lazenby]

I think that trying to engineer the desires of the population is a really slippery slope. Regrettably, we're now experiencing the result of that with the community schools and some of the programs we had in northern Canada. That attempt to engineer society, to do something it didn't want to do, didn't work out so well, so I think that trying to do that again would be a bad idea.

People will go where they want to go. All we can do then is to try to accommodate that as best we can. If you choose to live in New Glasgow for some good reasons, then let's try to make that community able to support that. Do we want to see the hollowing out of all of rural Canada into municipalities? I don't think so. There is some tweaking around the edges, but the reality is that this is where people are going, especially young people. That's where they choose to be. I think if we try to reverse-engineer that somehow, we'll be setting ourselves up for a lot of unintended consequences that might not work out for us.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I want to follow up on that, because I'm not sure that's what I was suggesting.

[Bruce Lazenby]

Sorry.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I think my question was around how you encourage a regional approach to the whole concept of smart communities.

[Bruce Lazenby]

Right.

There have been lots of initiatives. This government currently has a plan to put more bandwidth into rural communities. The challenge with that is simply the expense. I was in India recently, working with a company that is installing 25,000 kilometres of high-speed fiber optic cable in the ground to connect 80% of the Indian population to 4G LTE. That's better than we have, and this is India. But they also have 1.3 billion people in a country a fifth the size of what we have. I think we could blow our brains out trying to get high-speed bandwidth into the final ends of the communities. Speaking as a business guy, from the point of view of return on investment, I think it would be so expensive it probably wouldn't make sense.

As far as the communities are concerned here, we need to beef them up. This is a globally competitive marketplace. As Karen knows, the unemployment rate in the technology sector in Ottawa right now is 1.0%. Everybody's hiring. There is global competition for us in attracting people from all over the world. The most innovative people in the world are the ones who create jobs—the Tobi Lütkes of the world, from Shopify.

I often say there are two types of immigrants—those who take jobs and those who make jobs. The ones who make jobs are the ones we want to come here. Given the current situation south of the border, we used to be number two in the world for places people wanted to go. Now we're number one. We have an opportunity.

Where do the most innovative people want to live? They want to live in the most innovative cities. To the extent that we can be that, and make those kinds of investments, I think we'll be attracting the kind of talent that will continue to keep Canada one of the best countries in the world.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Okay.

[The Vice-Chair, Conservative, Luc Berthold]

Mr. Rayes, go ahead.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

Thank you, Mr. Chair.

I want to thank my colleague for the time she is giving me.

Mr. Lessard, I want to tie back to what was just said. You are the managing director of a central municipality in a region, in an RCM. I know that the Bécancour RCM, which is not very far from yours, has a project to connect all its municipalities. You are also working on something.

How could that be done directly by the municipal world if the government agreed to decentralize the money in order to help move the project forward? Would there be a potential solution?

[The Vice-Chair, Conservative, Luc Berthold]

Mr. Lessard, I just want to let you know that you have 35 seconds to answer.

[Martin Lessard]

So I will answer by simply saying that the beauty of the thing is that the municipalities already have a number of powers needed to propose projects. One of those powers is to conclude intermunicipal agreements. Obviously, they can band together. In addition, if a government program happened to seek to enhance those project clusters through some sort of criteria, it would be in the realm of possibility. So we have to work through intermunicipal agreements.

[The Vice-Chair, Conservative, Luc Berthold]

Thank you very much, Mr. Lessard.

Mr. Sikand, unfortunately, I won't be able to let you ask your question, as time is running out.

I want to thank everyone for their testimony.

This completes our study on smart cities and communities.

We will suspend the meeting for a few moments, so that the witnesses can give up their seats to the next group of witnesses.

I ask that the committee members be fairly diligent, since we have another nice meeting with the people from the Office of the Parliamentary Budget Officer right after.

[The Vice-Chair, Conservative, Luc Berthold]

Good afternoon, everyone. I call this meeting back to order.

Pursuant to Standing Order 108(2), we are now beginning our briefing on the report titled “Canada's New Infrastructure Plan: 1st Report to Parliament - Following the Money”, which was published on February 2, 2017.

We are very pleased to welcome Jean-Denis Fréchette, Parliamentary Budget Officer.

Good afternoon, Mr. Fréchette.

He is joined by Mostafa Askari, Assistant Parliamentary Budget Officer, Peter Weltman, Senior Director, Costing and Program Analysis, and Jason Jacques, Director, Economic and Fiscal Analysis.

You are all from the Office of the Parliamentary Budget Officer. Once again, on behalf of the committee members, thank you very much for accepting our invitation.

Mr. Fréchette, you will now have up to 10 minutes to make your presentation.

[Jean-Denis Fréchette, Parliamentary Budget Officer, Library of Parliament]

Thank you, Mr. Chair. I will need about two minutes. I know that the members of your committee like to ask questions.

I want to thank you again for inviting the team of the Parliamentary Budget Officer to appear before you to discuss our “1st Report to Parliament on Canada's New Infrastructure Plan - Following the Money”.

As per its title, this PBO report on following the money is the first in a series of reports on infrastructure that we plan to publish in conjunction with our regular reports, such as the “Economic and Fiscal Monitor” and the biannual “Economic and Fiscal Outlook”. We have also prepared a summary table for your committee, based on our expectations of the progress by Canada's new infrastructure plan and its potential economic impact.

As members of Parliament, my colleagues and I are quite aware that the regional aspect of infrastructure spending is, as it should be, important to you. Although we monitor the provincial share of projects, the main focus of our reports on infrastructure is to provide transparency and better clarity on how funds allocated under the new infrastructure plan are being distributed across a variety of locations, programs, and projects. Depending on the availability of data on the nature and timing of these projects, this should allow Parliament to better understand the outcomes and risks associated with the new infrastructure plan. Therefore, it would be in a better position to hold the government accountable.

It will be challenging for parliamentarians to monitor the $12 billion in infrastructure spending, since this funding will be allocated over two years and delivered by 31 departments and agencies. That is why, pursuant to our legislative mandate, we will track these investments.

My colleagues and I would now be happy to answer any questions.

Thank you, Mr. Chair.

[The Vice-Chair, Conservative, Luc Berthold]

Thank you very much, Mr. Fréchette.

I want you to know that the committee is very grateful to you for leaving a lot of time for parliamentarians to ask their questions.

We will begin right away with Mr. Rayes.

You have six minutes, Mr. Rayes.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

Thank you, Mr. Chair.

I want to thank all the witnesses, especially the Parliamentary Budget Officer, for taking the time to meet with us.

This is an issue my team and I are following closely. When your report was published, a number of the concerns we had when we read the data as it became available were confirmed.

In the table you provided, you did indicate that the cost of the program was $13.9 billion and that $3.9 billion of that total has been spent. According to your forecasts in the second table, $2.7 billion will actually have been spent in this fiscal year.

What would you say explains the difference between what the government had announced and the results you have arrived at through your research?

[Jean-Denis Fréchette]

Thank you for the question.

Indeed, we are not talking about $12 billion, since the amount of $13.8 billion obviously includes money given to the Canadian Mortgage and Housing Corporation for housing-related matters. That is for all infrastructure. That is why, in my presentation, I talked about $12 billion over two years. We have to consider the amount of $1.3 billion, in addition to the $700 million announced in the latest update.

You did understand the data in the table. First, the announcement of $3.9 billion was made. To make our forecasts in April, we calculated the potential repercussions. When we redid our calculations in February, we realized that not all that money will be spent and, therefore, that the economic impact will not be what we anticipated. We were a bit more pessimistic in February.

I should point out that supplementary estimates (C), published last week, where we learned that $820 million set aside for infrastructure would be frozen, confirmed that not all the money would be spent this year. But that does not mean it will not be spent within the two-year period; the second year must also be taken into account.

My colleague Mr. Jacques, who is here, often talks about skyrocketing expenses incurred at some point during the period. Former RCM mayors and wardens who are in the room are well aware of what happens.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

Great.

When you talk about this, you also say that you have not found a mechanism to track that money. Investing in infrastructure is not a bad thing in itself, but I think that the government is extremely ambitious. In a context where we are hearing about all those amounts that will be carried over to the next fiscal year, how can we be reassured as taxpayers' elected representatives? We are handling their money, which they worked hard to earn and they put in our hands. Can we have confidence in this plan? The projected budget for the next year is already very ambitious, in addition to everything that is being added. Moreover, you are telling me that there is no mechanism in place to track the money.

[Jean-Denis Fréchette]

I will give my colleague Mr. Weltman 15 seconds to think about it.

I will simply say that that is what we stated in the report: there is indeed no mechanism. I know that when Minister Sohi appeared before your committee about two weeks ago, the people from his office said that an accountability framework was going to be put in place, and that that would also make it possible to track these budgets.

I don't know if Mr. Weltman wants to add something to that.

[Peter Weltman, Senior Director, Costing and Program Analysis, Office of the Parliamentary Budget Officer, Library of Parliament]

Yes, thank you.

Infrastructure Canada has to review the data every six months, and so in theory we are going to follow the progress of the projects. For the other departments we have asked for revised data, and at this time we publish what exists within government regarding the projects and their progress. The other departments do not usually issue monthly or quarterly reports. They generally publish an annual report at the end of the year.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

You know, it will soon be two years since these people have been there, and we are told that they will be publishing a report. As representatives of the opposition, we have reason to be very concerned.