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.
12:45 p.m.
Liberal
12:45 p.m.
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
You can have big projects in small communities, and you can have big projects in big communities, and likewise. Clearly, it would be activity that would not have otherwise taken place in the absence of this vehicle.
12:45 p.m.
Conservative
Dianne Lynn Watts Conservative South Surrey—White Rock, BC
Thank you.
I'm going to go through some of this fairly quickly.
I want to say, Mr. Khan, that I agree with you and your comments about putting the horse before the cart. We've heard from the Senate reports, the PBO, the C.D. Howe and Fraser Institutes, and others about transparency and the need for a robust infrastructure plan, first and foremost, to lay the foundation and as we move forward.
I want to get into the question of the infrastructure bank, because I'm hearing that there's nothing new and innovative in it and there are no projects being built. I would remind you—and this is my question to you, Mr. Campbell—that back in 2009, PPP Canada, which is a crown corporation, was specifically set up to leverage private sector dollars, and in fact did on a number of projects. For an initial investment of $1.3 billion, it leveraged more than $6 billion.
The KPMG report that I have here, the part that's not redacted, talks about using it as a mechanism. It talks about using PPP Canada, which is already set up, saying that it could utilize an existing crown corporation such as PPP Canada. If there are some functions under it that need to be expanded, or if the mandate needs to be expanded, they could have a look at that. It would be cost-efficient. It would be efficient, effective—all of those things.
I wonder, then, why you didn't take a look at an existing mechanism already in place, which already has a track record of success, and if you wanted to expand the mandate a little bit, why you wouldn't use that existing mechanism.
12:45 p.m.
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
In the first instance, the KPMG report, which was commissioned last spring, provided a lot of background without knowing where the government was on any of its policy determinations. Of course, there were many internal consultations about a whole range of what the art of the possible was.
You would see in what the government announced a particularly unique, new vehicle that is involved more upstream, in the financing aspect of infrastructure, particularly around equity underwriting and debt underwriting. That is really a different level of expertise from what is played in among P3 agencies, and quite frankly a different skill set, a different capacity, with different tools required. It still allows a project to be financed and put together by the infrastructure bank using any of the P3 agencies, given that this model of procurement still exists. If you were in Ontario, they could use P3—
12:45 p.m.
Conservative
Dianne Lynn Watts Conservative South Surrey—White Rock, BC
I'm specifically talking about the federal government's PPP Canada. If there is expertise required, you can bring that expertise in. We're talking about its having always been the municipalities or the public sector that have done so; otherwise, nothing would get built.
Just off the top of my head looking in my area, right now there's a biofuel facility in my city that had municipal, provincial, federal, and private sector involvement. It's opening in June. There was a rapid transit line, the Canada Line, that again leveraged private sector, federal, provincial, and regional dollars; likewise the Port Mann Bridge and the Golden Ears Bridge. This has all been done in the same context. The only difference with that mechanism is around, as you've said, underwriting loans.
It escapes me why, when you have a track record like this, you wouldn't, if that's where the government wants to go.... I know they want it new and shiny and “nobody's ever done this before”; however, it would seem reasonable and rational, since you already have that mechanism set up, that if you need additional expertise you would just bring it in and expand the mandate.
PPP Canada is still there. It's still leveraging, albeit it has gone under the minister's office and they can dispose of assets and get rid of it, which I think is the ultimate goal, and then replace it with this. Again, a $35-billion investment under the PPP Canada model would generate $170 billion in infrastructure money that would have no risk to the general public. I still don't understand why you wouldn't just expand an existing mechanism.
12:50 p.m.
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
Thank you. There are many points there to untangle, and—
12:50 p.m.
Conservative
Dianne Lynn Watts Conservative South Surrey—White Rock, BC
We don't get a whole lot of chance to discuss this, so....
12:50 p.m.
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
Speaking as an official and also as the former official in charge of banking, and banking at Finance Canada, there is a reason I am leading this project. This is a bank, a merchant bank, that is designed to do something very specific in credit and equity, underwriting sophisticated, highly complex projects that go far beyond what is done in a P3.
P3 is a different type of expertise that's more government to government and government to construction procurers. We are creating—
12:50 p.m.
Conservative
Dianne Lynn Watts Conservative South Surrey—White Rock, BC
The private sector is always involved in that.
12:50 p.m.
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
They are involved. They are involved to the extent to which they're small equity components in a P3 deal. I'm actually a big supporter of P3s. Quite frankly, whether it's in B.C. or Ontario, in our consultations they saw immediately how we were filling a niche that they did not have and that we could work together, in the sense that they could seamlessly work together. The infrastructure bank does the sophisticated investment attraction, manages that whole project, and then works with one of the provincial or other P3 agencies to do the procurement. Whether it's a P3 or other model—
12:50 p.m.
Liberal
The Chair Liberal Judy Sgro
Mr. Campbell, I'm sorry that I have to interrupt, but it's gone over the time.
Mr. Badawey.
12:50 p.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Thank you, Madam Chair.
With respect to some of the comments that were made earlier, I have to ask for clarification on one in particular. That's with the concerns around tolls.
Are there any concerns around tolls?
12:50 p.m.
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
Any decision around a user fee model, whether it is for the funding of an asset or for demand management, rests with the local authorities, whoever is the steward of that asset. Many of them are already telling us they are considering or have employed various forms of user fees. They exist now, whether it's for water, electricity, some bridges, or some other aspect. That decision will not be made by the infrastructure bank. It's really whoever is bringing that project forward.
12:50 p.m.
Liberal
12:50 p.m.
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
It would be a level of government, with their own processes to determine whether they want to bring that asset forward and what revenue model they would like attached to that asset.
12:50 p.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
That would then add the accountability and transparency factor to it, with respect to that decision being made.
12:50 p.m.
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
That's correct.
Ultimately, whoever is the other government party attached to an infrastructure bank project is the ultimate steward and the ultimate accountable agent to their respective citizens about the nature of that project. You can see the Government of Canada, through this vehicle, as a supportive optional vehicle that is there in the public interest, to help them achieve outcomes that may not otherwise have been achieved.
12:50 p.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Good. Thank you.
Madam Chair, I will be splitting my time with Mr. Tootoo.
12:55 p.m.
Independent
Hunter Tootoo Independent Nunavut, NU
Thank you, Madam Chair. Thank you, Mr. Badawey.
I like the analogy that this infrastructure bank is a vehicle. I think everyone realizes that Nunavut has probably got the biggest infrastructure gap in the country. We're hoping that this is a tundra buggy, so we can get that vehicle working up north.
In regard to specific projects, I can think of three right off the top of my head that would not go ahead without the help of the infrastructure bank. I would look at the Grays Bay road and port project, the potential road, the hydro and fibre link from Manitoba to the Kivalliq region, and a hydro project in Iqaluit that uses just about half the diesel that the territory consumes to generate electricity.
One of the concerns that I'm hearing in the north is that these are new, transformative, and nation-building projects, as any projects in the north would be. When they built the railroad, they didn't have to worry about doing environmental assessments and going through the regulatory regime that's there now. It takes time and costs money to get it to a stage where the project is ready to go. The concern is that if we have this pot of money there for these projects, but there's no money to help the already cash-strapped territorial government or the Inuit organizations or the municipalities to get a proposal to the point where it's ready to be looked at, that money is just going to sit there.
I'm just wondering if there's a possibility of looking at providing some funding through here to help some of these major projects that are going to take two or three years. I heard that with Grays Bay, when they were looking at the next few years, just to get it to that stage was over $15 million.
Is there a way to support those initiatives, to get them to the stage where they are ready to go?
12:55 p.m.
Executive Director, Canada Infrastructure Bank Transition Office, Office of Infrastructure of Canada
Thank you for that characterization. As a testament to our consultations, we have been talking to Nunavut in particular, and I'm being briefed on the Grays Bay project.
You mentioned several years. Another motivation, a reason it was important to get the bank up and running sooner rather later is that it's catalyzing this behaviour of people to think through these projects that can take years to develop. As well, through the infrastructure bank, we're building capacity to work with the provinces and territories to help them think through which projects would be amenable to this structure, and that takes time; hence the early investment in the infrastructure bank that hopefully, years from now, will produce dividends of projects that are capable of being financed in this way.
12:55 p.m.
Independent
Hunter Tootoo Independent Nunavut, NU
Right now I think the problem is that they're looking at doing feasibility studies and working it through the environmental assessment process, and that costs money. I'm just wondering if there could be some support and some funding through this vehicle to be able to help with those—and I know it's the territorial government, the regional Inuit organizations, and industry—to support them in getting the project through that process. The territorial government just doesn't have the resources to be able to do that.
