Evidence of meeting #59 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 bank.
A recording is available from Parliament.
Director, Performance, Institute of Fiscal Studies and Democracy
I think what we were suggesting is this: let's get the evidence and the infrastructure regarding our current infrastructure stock, what our future needs are, and what would be the right infrastructure investments for us. That's really what we're looking for, first and foremost.
I think the opportunity here is in the data initiative that was identified in the budget, and that also is one of the functions of the bank. We think that should be the first and foremost priority.
Conservative
Alain Rayes Conservative Richmond—Arthabaska, QC
That's great.
Ms. Ryan, when the Minister of Infrastructure and Communities appeared before the committee, along with some of his senior officials, we asked them on what basis projects would be chosen. A senior official said that it would depend on the investment return or benefit of the project. Obviously, they are looking to do better than the 2% to 3% rates that any government—federal, provincial, or municipal—would seek in terms of financing. There is an attempt to make people think that funding opportunities are lacking right now, but I think that's totally false.
I would add that, this week, the Minister of Finance said that it would be cabinet deciding on the projects. We don't know much. I would say that your concerns are well-founded.
Investors, then, looking for good investments, will be the ones investing the bulk of the bank's money.
Who do you think the Canada Infrastructure Bank is really going to benefit?
Senior Research Officer, Canadian Union of Public Employees
Our position would be that it will be the investors who will really be profiting from the infrastructure projects that are selected, but also, their revenue will be through user fees and tolls on the public, so it will be higher-cost financing, because we know that the investors are looking for 7% to 12% returns—depending on what you look at—from their investments.
If you look at the long-term costs in terms of the financing for these projects, that alone is a lot more over the long term. Then if you look at the revenue generation piece around user fees and tolls, it's going to be the members of the public who will be receiving a really regressive form of taxation, and that will disproportionately affect lower-income Canadians.
Conservative
Alain Rayes Conservative Richmond—Arthabaska, QC
It is therefore clear to you that, under this measure, members of the public will be paying more for this infrastructure at the end of the day.
Senior Research Officer, Canadian Union of Public Employees
Infrastructure doesn't get built for free. We are going to pay for it one way or another.
Our position is that the infrastructure bank will be more costly over the long term, because you are building in this whole framework for profits. If you're looking at the 7% to 10% for the private sector investors, of course it's going to cost more over the long run. If you're looking at revenue generation as well, I mean, not every type of infrastructure can even generate revenue, in general. If you're looking at public transit, it's unclear what the projects would look like under the infrastructure bank, given that the majority of them are publicly subsidized to some extent.
Conservative
Alain Rayes Conservative Richmond—Arthabaska, QC
Mr. Campbell, could you name a project that the bank could finance, one that the government could not get funding for elsewhere, either through bonds or its own coffers if it managed its finances properly? Name one single project that would need a new funding structure, outside what already exists.
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
I can give you an illustrative example. I cannot give a specific example. If that were the case, we'd be talking about—
Conservative
Alain Rayes Conservative Richmond—Arthabaska, QC
We have heard endless illustrative examples. We are looking for a specific case. The Minister appeared before the committee, alongside his senior officials. We asked them to name a single specific project, but they were never able to.
Unfortunately, I didn't specify that I was talking about small and medium-sized municipalities. The $15 billion the government has chosen to invest in the bank is money that had been set aside for all of the country's municipalities. That money was transferred to the Canada Infrastructure Bank.
All we keep hearing is that it will be used for power lines, for example. Those are projects that—
Liberal
The Chair Liberal Judy Sgro
Mr. Campbell, you'll have to try to speak with Mr. Rayes separately from this to give him the information he requires.
Mr. Fraser.
Liberal
Sean Fraser Liberal Central Nova, NS
Thank you very much, Madam Chair.
Thank you to our witnesses for being here as well.
I'll start with Mr. Campbell. My understanding is that the infrastructure bank would allow the construction of new and transformative infrastructure projects that wouldn't otherwise be built. Is that a fair comment?
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
It is.
Liberal
Sean Fraser Liberal Central Nova, NS
Just as a follow-up, it's not going to privatize any existing public infrastructure. Is that correct?
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
There is no intent or any discussion with respect to the infrastructure bank other than with regard to green and new types of projects. Issues around asset recycling and all those other issues really do not pertain to the bank.
Liberal
Sean Fraser Liberal Central Nova, NS
Would the infrastructure bank allow the construction of projects that perhaps provinces and municipalities can't necessarily afford today? Maybe they're near their debt ceiling or they don't have the capital to invest. Is this sort of a solution to allow us to partner with those groups that may not have the borrowing capacity of the federal government?
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
The answer is yes. Many of our municipal, provincial, and territorial partners have come forward in many fora looking for alternative ways to finance public infrastructure projects, particularly those that come through the normal contribution grant scheme, but they are also looking at other alternatives. For example, many of our partners are already using revenue models and considering new ways in which to both finance and fund infrastructure.
Liberal
Sean Fraser Liberal Central Nova, NS
Who would own the infrastructure projects that are constructed under the infrastructure bank?
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
It would largely depend on the agreement and the structure around a project. The infrastructure bank is designed with the idea that there would be a public sponsor. There would be municipal, provincial, and federal together with other parties, to the extent that if the bank itself had an equity position in that project, it would be one of the partners in that project. In most cases, the ultimate steward would be the owner of that asset. In a partnership model, part of that may be assigned to other members of the consortium in whole or in part, more likely in part, and it will all be determined by the partnership agreement structure of that asset.
Liberal
Sean Fraser Liberal Central Nova, NS
I want to shift gears a bit and talk with the representative from the Canadian Electricity Association about the potential to do projects in small or medium-sized communities. I think it would be incorrect to assume that transformative projects can take place only in Canada's largest cities, and you specifically commented on the need for regional aspects. I notice that my colleague Mr. Tootoo is here. I'm from Atlantic Canada. Do you see an opportunity for this bank to have projects in smaller communities?
I'll have a follow-up question for Mr. Campbell after that.
President and Chief Executive Officer, Canadian Electricity Association
We do. In fact, that was one of our recommendations, that the bank take on board a regional sensitivity and a regional balance, as it takes a pan-Canadian look.
There's also the ability of local communities to come together. The illustration of northern Canada is something that we've outlined in our report. For example, here's a place that's truly unique because you have a small population base, which means a small rate base. It's isolated. It's not linked to the North American grid. Transportation is not as good as it ought to be, so the economic development potential of northern Canada is limited, as it is because it's not richly diversified. The role of the federal government traditionally has been huge, so we see this bank as an opportunity to hopefully bring that isolation to a close and also to move from diesel to other forms of power.
So the answer is yes.
Liberal
Sean Fraser Liberal Central Nova, NS
Thank you.
Mr. Campbell, if we're investing through the Canada infrastructure bank in this new infrastructure that wouldn't otherwise be built, which would sop up a great deal of traditional infrastructure funding, are we not creating an opportunity to make those existing traditional envelopes go further for small or medium-sized communities?
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
The concept would be that for every publicly sponsored infrastructure project in which the infrastructure bank is involved, every dollar you attract in new private sector investment would free up public dollars to make public dollars go further, and the government could then invest those in social infrastructure or any other infrastructure, particularly that which Canadians would use and which would never have the potential of generating revenue.