Evidence of meeting #18 for Transport, Infrastructure and Communities in the 43rd Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was projects.
A recording is available from Parliament.
Liberal
Bloc
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
My question could be for either of the two witnesses, but Mr. Penner can answer it.
Climate and Social Justice Campaigner, Council of Canadians
I can start. I think that does get to a fundamental problem where the lower lending rates of the Canadian government don't necessarily mean there's less efficiency. As I talked about earlier, these P3 projects actually take much longer and they're therefore less efficient to do. It just highlights again why public financing is the better route to go.
Liberal
Managing Director, Concert Infrastructure
I would just say that at this point in time, sure, the government can borrow at 1.5% or whatever rate, but that rate won't hold forever. I think it's reasonable to assume that the rate goes up.
At the end of the day, this is about risk premium and the value, whether in cost efficiency or schedule, that the private sector is able to deliver in respect of the infrastructure projects.
Liberal
The Chair Liberal Vance Badawey
Thank you, Mr. Bain, Mr. Penner and Mr. Barsalou-Duval.
We're now going to move on to our next set of questions, from the NDP.
Mr. Bachrach, the floor is yours for two and half minutes.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Thank you, Mr. Chair.
Mr. Penner, we had a really interesting question earlier from Ms. Jaczek about projects that aren't necessarily fully P3 models, in that the ownership doesn't transfer over to the private sector. However, we've seen lots of projects where they're set up using the P3 model somewhere along that spectrum. Schools are a good example.
I know the auditors general have looked at the examples of schools that have been constructed as P3s. I wonder if you're familiar with some of those examples and if you could talk about the pitfalls they've experienced.
Climate and Social Justice Campaigner, Council of Canadians
Yes. Just to give you a quick example, Nova Scotia reviewed 39 P3 schools in 2010. That review revealed that “the terms of service contracts are not adequate to ensure public interest is protected”. They also claim there is no child abuse registry or criminal record check of subcontractors. It just highlights that, regardless what sector we're looking at, P3s are plagued with problems.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
I find this question about value for money a very interesting one, and Mr. Barsalou-Duval's previous question about the fact that the government can access more affordable financing than the private sector can.
I often think of these questions in terms of how I can explain this to my 13-year-old daughter.
Mr. Bain, could you explain why the government should use more expensive money to build these projects? We clearly have auditors general who say these projects take longer and cost more. What is the core of the argument for the P3 model?
Managing Director, Concert Infrastructure
Insofar as we have auditors general who say it's more expensive, we have others who have proven that it's more effective and efficient. Again, it's really around the risk premium and assumptions that governments make around the risk of delivering these projects, whether it's delay in development of the projects, delay in approvals of the projects, or whether it's risks of construction delay that they would assume under a traditional model of delivery. When you account for those in the P3 model, that represents the transferred risk, and that represents the premium that you are presumably paying for the infrastructure.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
That is exactly what I think a lot of people have trouble understanding, this concept of a risk premium.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
When we have the auditors general saying that these projects take longer and cost more, that explanation needs to be unpacked significantly.
Thank you, Mr. Chair, and back to you.
Liberal
The Chair Liberal Vance Badawey
Thank you. We're now going to move on to our next set of questions from the Conservative party. We have Mr. Kram.
Mr. Kram, you have the floor for five minutes.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Thank you, Mr. Chair.
Thank you to our witnesses for joining us today.
My questions are for Mr. Bain. I think it's important for people to understand that P3s are not just a catchphrase. Public-Private Partnerships Canada used to be an actual federal government Crown corporation. It was wound down a few years ago and more or less and replaced by the Canada Infrastructure Bank.
From the perspective of Concert's day-to-day operations, can you speak to some of the key differences between the old Public-Private Partnerships Crown corporation and the new Canada Infrastructure Bank?
Managing Director, Concert Infrastructure
Sure. I think the most obvious difference is the P3 assessment screen, which I've referred to previously. P3 Canada or PPP Canada had that screen in place prior to 2015 for any federal infrastructure project investment that was greater than $100 million, so those potential projects had to be screened for delivery through the P3 model, and, as I've laid out, it led to the five federal projects that I referenced previously. By my count, at least 13 major municipal infrastructure projects such as the Regina wastewater treatment plant, the Regina bypass, the Saskatoon civic op centre, among others.... As for that screen, to me, if your objective is to leverage private sector investment, that screen was pretty successful in doing that.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Can you speak to what those screen implications are to project timelines?
Managing Director, Concert Infrastructure
I wasn't personally involved in applying the screen and how that worked, so I don't think I could specifically comment on what the impact of timelines would be.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Okay, fair enough. I've been to Concert's website, and your organization has had a great deal of experience with building housing infrastructure. I would imagine that, if your organization wants to build a housing project, it must be a tremendous amount of work to coordinate with the provincial governments of B.C. or Ontario or with different municipalities. From your perspective and from the perspective of Concert, what can be done to streamline government processes and get housing projects and other projects built faster, better and more quickly?
Managing Director, Concert Infrastructure
That's a great question. Just to be clear, at Concert there are two separate organizations. One is Concert realty corporation, the other is Concert Infrastructure. I am responsible for the leadership of Concert Infrastructure, so I don't have direct involvement in the real estate company and those projects. Having said that, certainly, whether it's affordable housing, whether it's transit-oriented development opportunities in Toronto or Vancouver, as an example, there is an intersection of infrastructure and real estate.
I think what's probably critical in these types of projects and opportunities, specifically transit-oriented development where the Government of Ontario is trying to deliver a significant subway program but also realize value in the delivery of real estate or condominiums over top of subway stations where the development approval is the responsibility of municipalities, there needs to be stronger coordination and alignment amongst the levels of government as to the overall objectives of these projects and opportunities, because there is a direct conflict in terms of what the municipality wants to see delivered versus, say, the province or the federal government, potentially. Approvals and development coordination is critical.
Conservative
Michael Kram Conservative Regina—Wascana, SK
With respect to the second recommendation from your opening statement, that the Canada Infrastructure Bank should take a leadership role in identifying infrastructure projects, it would seem to me that infrastructure projects should be driven from the bottom up and not the top down. If the Canada Infrastructure Bank were to take more of a leadership role, can you speak to some of the best practices that should be in place to make sure that local stakeholder interests are still heard, and that we don't get into an “Ottawa knows best” approach?
Managing Director, Concert Infrastructure
I think one of the key distinctions to draw here is that in each of the projects the CIB has committed to, they are not ultimately responsible for the procurement, the construction, the delivery of that infrastructure. They are strictly providing funding and financing to those projects, and in some cases, advisory support.
I'm advocating with my second recommendation that the CIB be given a leadership role in the federal government's own infrastructure. Again, whether that is RCMP detachments, first nations housing or other building infrastructure, a huge portfolio of federal infrastructure goes uncoordinated, and it's the responsibility of each individual department to see delivered. I question whether that's the most efficient, effective way to deliver that infrastructure, and I question whether that way of delivering federal infrastructure leverages the opportunity for private sector investment.
Liberal
The Chair Liberal Vance Badawey
Thank you, Mr. Bain and Mr. Kram.
We're now going to move on to the Liberals for five minutes. Mr. Fillmore, you have the floor.
Liberal
Andy Fillmore Liberal Halifax, NS
Thank you, Chair.
Thank you to the witnesses for their testimony tonight.
Just off the top, I want to clarify. The timelines of P3 projects of this scale—Mr. Bain is quite right. They're enormous projects with very long planning and construction horizons. I worked on Boston's Big Dig as a city planner many years ago, and that was a project fully 30 years from inception to completion. We have to allow these projects to take the time they need.
Asking whether a P3 agreement is good is like asking how long is a piece of string. It's all about the way they're crafted and I think early on in the P3 experience some were crafted less well than others and now they're quite sophisticated in protecting the public interest.
This government is involved in a $180-billion infrastructure investment program that is based on cost-sharing with provinces and municipalities, but we know that cost-sharing is not always within reach of municipalities and organizations that need infrastructure built, especially now in the pandemic, where municipalities have been impoverished. More than ever, the additional $35 billion from the Infrastructure Bank is important.
Today, I spoke to a rural transit provider, a company interested in clean power in the north and the Canadian Nurses Association, which is interested in broadband across the country for telehealth so everybody can access it. In each of those three cases: transit for people who need help getting around, clean power in the north and telehealth, there was not sufficient money available to build those things without things like the Infrastructure Bank.
Mr. Penner, when I look at your bio, you're fighting for a livable climate, a just transition, indigenous rights. That's exactly what we're doing here. We are making vast sums of money available so people can get the infrastructure they need in the communities, at a time in a pandemic when municipalities are impoverished, for projects that otherwise will go undone. It seems to me you agree with Mr. Scheer's position, which is that we should be slashing about $18 billion from an infrastructure program at a time when Canadians need it the most.
Mr. Bain, with the pandemic, with municipalities impoverished, with the climate emergency, does this seem like the right time to be talking about removing funding from communities through infrastructure investment?
Managing Director, Concert Infrastructure
As I think I laid out in my opening comments, certainly from Concert Infrastructure's perspective, investment in infrastructure is critical and important. I think I did state that we certainly support the government's $180-billion commitment. I think you're right to point out that today we're really talking about $35 billion of that commitment, which is specifically focused around the CIB. That leaves a significant chunk of change that will support more traditional infrastructure investment, including the smaller projects you've referenced.
As I've laid out a number of times, I think infrastructure as a stimulus in the short term is a challenge. Delivery of our infrastructure is not fast and it's not cheap, but it's powerful. It's powerful in the medium term with respect to supporting economic growth, creating jobs, enhancing our productivity and ultimately providing the core public services that are supported by those buildings or the infrastructure that we are able to deliver.