Transport Committee on April 18th, 2018

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

Thank you, Madam Chair.

I thank all of the witnesses for their presence here.

My first question is for the FQM representatives.

I represent a riding where the only town of more than 15,000 inhabitants is Saint-Hyacinthe, as you no doubt know. It's a riding that is very similar to other ridings in Canada. We have major needs regarding cellular infrastructure and access to broadband Internet. It's important for us to reduce the gap between urban centres and the rural environment. The CRTC has in fact declared that the Internet is an essential service.

However, we realized that with regard to Internet services funding, the demands are much greater than the sums that were promised. And yet, the economy in our regions really depends on it.

I'd like you to tell us about the cellular infrastructure and Internet access needs of the municipalities you represent. How are we going to be able to bridge that digital gap with the very small sums that were promised for the next five years?

[Yvon Soucy]

There are still many regions in Quebec that are poorly served by cellular networks. I am from the Lower St. Lawrence region. In the Kamouraska RCM, there are still several inland villages where the geographic configuration means that the cell network does not work at this time. The needs are indeed great. I've given you that example, but it's the same thing everywhere in Quebec.

In order to be eligible under the Connect to Innovate program, municipalities had to be located in one of the priority areas. There were some disappointments, because some of our municipalities did not meet the program criteria. The funding is good, but it is not sufficient for all of Canada. The municipalities also had to come to an agreement with a supplier, but the suppliers may have chosen the larger projects. Consequently, the more rural communities were left behind.

However, we are happy to see that among the projects that were announced, 61 are in Quebec. That's good, but the needs are indeed very great.

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

Thank you.

My next questions are addressed to the FCM representatives.

Before being an MP, I was a municipal councillor for six years. I saw that the gas tax program funding model was beneficial because it allowed us to plan our work. We knew exactly what amount was going to be allocated. This benefits municipalities like the ones I represent, for instance Saint-Hyacinthe or Acton Vale.

In your statement, you said that infrastructure funding could resemble the gas tax model. Did I understand you correctly?

[Brock Carlton]

I said that it would be preferable that the infrastructure program be similar to the gas tax program. The gas tax program model is preferable to those that depend on presenting a request. In a sense, the government prefers to have programs that are based on submitting requests, as the decision then belongs to it, but the fact remains that it's important to reduce the administrative burden as much as possible, especially for small towns.

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

Okay, thank you.

A few months ago, the government announced the National Housing Strategy. Unfortunately, we see that a part of the investments for that strategy will only materialize after the next election in 2019.

The 2018 budget was a missed opportunity to invest in that strategy. We know that the national social housing stock is in great need of repair. I can see that that is the case in my riding, and I know that it is the same in many other locations.

I'd like to hear what you have to say about that.

[Brock Carlton]

We were very clear in response to the budget that we were very happy to see a national housing strategy.

It's such an important milestone for our country to have a housing strategy.

We were very disappointed that the money for social housing repairs would not come sooner in the time frame. As you said, the money is profiled later in the time frame, so for the social housing repairs that are urgent, that are needed now for Canadians who are living on the street or in shelters, those dollars are not available fast enough to do the repairs that are needed right now. That's the disappointment for us in the national housing strategy.

Otherwise, it's a great opportunity for the country to focus on housing and to get the housing right over the longer term.

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

Thank you.

In the brief time we have left, I'd like to hear about the priorities of the municipalities you represent for the second phase of negotiations that are getting under way.

[Brock Carlton]

As I said in my comments, the priorities are the following:

cost-sharing; a fair balance of municipal and provincial projects; and a focus and an understanding of the unique needs and nature of rural communities and their lack of capacity, as compared to the larger cities. Those were the three priorities that we brought from phase one into the discussions around phase two.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Madam Chair, and my thanks to all of you for coming out today.

It was my request that brought you here today and there was a strong reason for that. In my former life, you guys became great partners, and now in my current life as a federal member, this is even more true. We need to consistently check in with one another to ensure that better outcomes and returns on investments are made with all three partners—municipal, federal, and provincial.

I want to say, as Mr. Chong outlined, that we are here to deal with the PBO report, and we are looking at ways to do things better in the future. We've seen some challenges in the past, primarily due to project delays, because of costs not being expensed quickly enough to allow us to react in a reasonable time, and because of bilateral agreements that took some time to come to an agreement on. Although we have faced challenges in the past, we want to ensure that the way ahead will prove more helpful to our partners.

I want to take this time to concentrate the discussion by listening to you. We recognize the current leveraged investments that were made—gas tax, infrastructure funding—through the arrangements that we have currently. More important, we will be looking at future recommendations for a sustainable funding envelope that can be accrued over time, accrued through the three levels of government. This ought to include suggesting a disciplined approach to asset management, looking at community improvement planning, and, again, attaching a sustainable funding envelope to community improvement planning and strategies. We must keep in mind that this investment is meant to offset the burden that's otherwise placed on the property taxpayers as well as water or waste-water ratepayers.

With that, I have two questions. One, notwithstanding the past experiences we have all had, moving forward, how do we better assist you in serving your partners, customers, clients—namely, the municipalities and to some extent the private sector and the residents?

In addition, I want to throw this into the discussion. Right now NAFTA is happening, and, of course, CETA, TPP, and others. How do you find yourselves being more of an asset, in a binational sense, in creating more robust binational economic clusters that are—and this is the key part—enhanced by integrated infrastructure investments? How do we all work together in collaboration with our partners on the American side to ensure that our investments are more global in nature and therefore add to a more enhanced and robust market, versus just staying contained within our country?

[Brock Carlton]

Oh, that second question is quite something.

On the first part, we, as a country, have taken very good steps in taking time to be very thoughtful about learning from phase one and developing lessons learned and then applying those lessons in the bilateral agreements that are coming out to govern phase two. Time was important to get that right, and what we're seeing in the bilateral agreements that have come out so far is pretty good. We have a decent governing framework to go forward. It will be important to find mechanisms for ongoing reflection and lessons learned and adapting as we go along. That would be one thought in terms of better serving the client, so to speak.

We will be seeing some important lessons around the two distinctions, the two differences, where we have the public transit fund, which is an allocation-based approach, and the other parts of the infrastructure plan, which are application-based. We're going to see, as Pat alluded to earlier and we've all mentioned, the growing differences in the effectiveness of those two mechanisms in delivering infrastructure resources to communities.

There are going to be some obvious lessons learned that will help guide the future, and there will be some other lessons—perhaps not obvious at the moment—that will help guide future thinking along those lines.

[Vance Badawey, Liberal, Niagara Centre, ON]

What is your preference with respect to the choice of instrument?

[Brock Carlton]

There's no question. We've been saying for many, many years that the preference is the allocation-based formula. There's long-term, predictable funding, municipalities see the money coming, they can bank it, they can borrow against it, they can do bigger projects, and there isn't the uncertainty of the application-based process where—as some of our members call it—it's like a lottery: you put in your application, and then you don't know if you win or not. The allocation-based formula is certainly more of interest to us.

On the question of NAFTA, there's certainly a need for the municipalities that work very closely in regional clusters to be able to have a vision that is a bit broader than their individual boundaries, and to be able to apply to or use gas tax money in ways that pool resources to create clustered approaches to infrastructure so that the regional issues are addressed. Particularly, we've talked about this in our conversations with the government about the infrastructure bank and the ability that the infrastructure bank should bring to the table for the clustering of mutual interests around infrastructure funding, so that the big projects that are multi-billion dollar and multi-jurisdictional in nature can be supported. That's part of growing of an integrated local economy, which then strengthens, I think, our ability to work in an international context to attract talent, attract investment, and have Canadian companies investing out where it makes sense.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Carlton.

Mr. Hardie.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you, Madam Chair.

Ms. Vanini brought up something that a lot of us were thinking about when this government started to make some fairly major investments in infrastructure funding across the country: the capacity in the smaller communities to actually deal with larger projects. I understand that, I think in budget 2016—I'm guessing here—there was an allocation that was aimed at the FCM to help the smaller municipalities with that capacity issue.

Mr. Carlton, can you give us any idea as to what the take-up has been on that?

[Brock Carlton]

Yes, for sure.

Fifty million dollars was allocated to FCM to develop a national program on asset management capacity building. We have been working very closely with associations like our colleagues here at the table, and other provincial and territorial associations across the country, to ensure that there's training and capacity building that is national in its program nature, but is delivered in a way that is relevant to municipalities in their specific regions and relevant to their specific political and program context. The vast majority of the money that has been allocated so far has gone to small communities, communities of fewer than 10,000, some communities of fewer than 5,000. The uptake is very significant, and we will clearly demonstrate both the value of this program and the need for the ongoing work beyond the time frame and beyond the resources that are currently on the table. In our view, it's a very successful program. If the committee is interested, we can provide a more detailed analysis of numbers and dollars put out the door so far.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

I appreciate that. Thank you.

There has been some concern about the fact that federal money isn't rolling out the door. We've heard that, in fact, it's pretty common for the federal money to roll out very late in a project. If we start to look at the progression of events, we see that, first of all, the federal government says, “Here's money.” The provinces and the municipalities then start to pull their plans together as to how they could actually use the money. We then have bilateral agreements that need to be signed, and shovels are in the ground. Then, finally, the federal money rolls out.

Do you share the concern that some of our colleagues have had that the federal money, although allocated, isn't rolling out the door as quickly as they'd like to see it?

[Brock Carlton]

No, I don't think we do share that. We certainly are paying attention and watching for any lag that may happen, but the bilateral agreements have been negotiated in fairly short order. The minister had said that we would have these done by the end of March-early April, and he has seven of them agreed to now, so it's in a time frame that's quite reasonable, given the complexity of the task in hand. The mechanisms for application and decision-making will roll very quickly, and the money will flow. The main point is that as soon as decisions are made, work happens, jobs get created, economic activity happens, projects get built. We're not overly concerned about the delay in federal dollars getting out the door because we know that there are projects where things are happening. I mentioned the Surrey project as an example.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

This is very close to home for me because I'm in Surrey.

The other concern was the fact that the plan seemed to lack details. Here I would like to turn to our counterparts from Quebec on this issue.

It's almost like Goldilocks and the Three Bears, if you know that story: too much detail from the federal government; too directive is a problem; too little can be a problem. In the Quebec context, are we in the Goldilocks spot? Is it just right with respect to the prioritization that takes place between municipalities and the provincial government to come up with the projects that need to be funded?

[Yvon Soucy]

In Quebec, the small municipalities met the program criteria well. In the case of the CWWF, approximately 50% of the funding was allocated to municipalities of 10,000 residents or less. So we did well.

However, the fact that there were many projects working to a tight deadline created congestion. That is why we asked for an extension, which fortunately was accepted.

[Patrick Émond, Director, Research and Policies, Fédération québécoise des municipalités]

With regard to the bilateral agreements to come, it's true that the current content is rather general. We see that the details are set out in the bilateral agreements. There are many rather important details in these agreements, concerning, for instance, the application modalities, the administrative procedures, and eligible expenses. There are a lot more details than people realize in those bilateral agreements.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you very much.

[The Chair, Liberal, Judy Sgro]

We'll go to Mr. Chong.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Madam Chair.

I'm somewhat confused about something in this series of meetings we had about infrastructure, and there's something I don't quite understand. Maybe the representatives here could provide some perspective on this.

On the one hand, we're hearing from the government and from some stakeholders that the lapsed money isn't a big deal. In fact, we had a witness here at the last committee meeting who said Canada, in his view, is in fact spending too much money on infrastructure. He referenced a McKinsey Global Institute report of last October that said that the gap between infrastructure needs and infrastructure spending in Canada is negative 0.2%. In other words, we're spending an extra $4 billion a year in this country that we don't need to spend on infrastructure.

On the other hand, we're hearing from the PBO, through two reports now, that this lapsed money is a problem, that economic growth projected from infrastructure spending is not as strong as expected. My first-hand experience tells me we're not spending enough money to address the infrastructure deficit. My riding reaches into the greater Toronto area, and I can tell you that the daily activity that most contributes to Canadians' dissatisfaction is commuting.

The Toronto board of trade, for the last number of years in its annual report on prosperity, has highlighted that Toronto has the worst commuting times in the country and the second worst in North America, even worse than Los Angeles. Commuting times in North America, in Toronto, are only surpassed by New York city, which is a truly global city, a centre of truly global commerce.

StatsCan reported on the most recent census data available last November that commuting times have gotten longer not just in Toronto, but in Montreal and other cities in the country.

I don't understand this disconnect. We have had people say there's not a problem with lapsed money. The last witness at this committee from the University of Ottawa indicated that in fact the government is probably spending too much money on infrastructure—federal, provincial, and municipal governments combined. I referenced that McKinsey report that says we're spending an extra $4 billion a year; we don't need to spend it on the ground. With the PBO, with Statistics Canada, we're hearing a different reality. Our economy is suffering because of a lack of infrastructure investment, commuting times are getting longer, and quality of life is going down.

I don't understand this disconnect here. Maybe you could illuminate why that is.

[Yvon Soucy]

I can answer that.

In Quebec alone, the municipalities will need $9 billion over the next 10 years to meet wastewater needs. As for green infrastructure, we expect the needs to total $1.8 billion.

We explained why there were unused funds in our presentation. The needs are there and these funds are really necessary.