Transport Committee on Feb. 23rd, 2021

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Penner, and thank you, Mr. Sidhu.

We're now going to move over to the Bloc.

Mr. Barsalou-Duval, the floor is yours for six minutes.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

I will first address Mr. Bain.

Earlier, in your opening remarks, you referred to the need for institutions like the Canada Infrastructure Bank to be independent from the government.

Based on what you are seeing now, is there currently a lack of independence from the government?

[Derron Bain]

Not being directly involved in the specific business of the bank, there have certainly been observations and reports from the outset that the board of the Canada Infrastructure Bank did not have the requisite autonomy and authority to actually deliver the projects. In the October 2020 announcement around their $10-billion growth plan, it's my understanding that perhaps some of the requisite autonomy and authority have now been clarified for the board of the CIB. It will have the responsibility to actually see these projects delivered and advanced without interference moving forward.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Don't you think the Canada Infrastructure Bank is a strange beast? It involves an additional administrative layer, offices and public servants. It distributes money from the federal government that could be distributed through regular infrastructure construction programs.

Is that not taking away means of building infrastructure to allow, in a way, the private sector to make additional profits?

[Derron Bain]

What I would say in response to that is there are obviously different vehicles for financing infrastructure, and its delivery. Certainly a granting approach is one approach. Provincial agencies that have been set up in the provinces, whether Ontario, B.C., Saskatchewan, Alberta, and even Quebec, that were mandated with a delivery of the P3 model, is another approach. I think the CIB model can certainly work. It's a viable approach. But, again, I go back to the point that I've tried to highlight: as part of the CIB's mandate, as part of its core mandate, it's laid out that it is to leverage and maximize private-sector capital investment, as I said, to a two-times multiple of CIB's funding commitment. I think that's the accountability and the focus with respect to the performance and the success of the agency moving forward.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

I think people are still convinced of the famous extraordinary effectiveness of the private sector compared with the public sector when it comes to the use of capital.

Mr. Bain, I would like you to tell me a bit more about the private sector's magic that instantly makes such projects more profitable and of greater interest for the public.

[Derron Bain]

I don't think there's a magic to this. I think there is a successful track record, whether it be in Ontario, Alberta, Saskatchewan, British Columbia, Quebec or Nunavut, whereby the P3 model, with the private sector taking responsibility for these projects, has resulted in significant cost savings and schedule benefits to those governments that have implemented the approach.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Mr. Penner said earlier that the Office of the Auditor General of Ontario concluded, in 2017, that 74 P3 projects had cost $8 billion more than if they have been carried out by the public sector.

Does that not contradict what you just said?

[Derron Bain]

In my understanding, that report made certain assumptions around risk transfer and value for money analysis that were arguable. Insofar as we can quote reports such as that, I can look to Concert Infrastructure's experience with this model in Saskatchewan where it was used to deliver two bundles of schools, 18 schools, the largest Saskatchewan school-building project in the province's history. It generated savings in that instance of upwards of $100 million.

It's important to also think about broader public policy interests and objectives when you're looking at this model. As I laid out in my opening remarks, Concert Infrastructure is owned by 10 management and union pension plans in British Columbia. These investments in the infrastructure are not only being delivered on time and on budget, but they're also supporting the long-term financial security of Canadian workers who are members of these pension plans.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Bain; and thank you, Mr. Barsalou-Duval.

We're now going to move on to the NDP.

Mr. Bachrach, the floor is yours for six minutes.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair; and thank you to both of our witnesses for appearing today.

I'm trying to decide where to start in on this. It has been very interesting listening to the testimony from both of you. Perhaps I'll start with Mr. Penner.

I'm trying to boil these issues down to simple concepts. We recently learned that some of the projects funded by the Canada Infrastructure Bank are going to be allowed to charge users to generate profits for their corporate operators. These projects are also receiving essentially low-interest loans through the CIB. The Canadian public is providing inexpensive financing and then is having to pay again through user fees once the projects are constructed.

Based on your opening comments, I'm assuming that you don't feel this is appropriate. I wonder if you could expand a bit on why.

[Dylan Penner]

Thanks for that. This is a classic problem with public-private partnerships. When essential infrastructure or services are privately operated, there is also this incentive to bring in or increase user fees over time to create profit. As you mentioned, plans for user fees have been confirmed by the CIB itself in its last annual report.

To give you one example, a Food and Water Watch report showed that, in the U.S., private sector providers charged 59% more for drinking water and 63% more for sewage services than public water services. Rising user fees affect the most vulnerable communities first, and in the case of water, could violate the human right to water. I could go on in terms of other sectors, but I think that highlights the seriousness, when it comes to user fees, of just one of the many problems with P3s.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Penner.

I come from a local government background. I was the mayor of a small community and I took great interest in the story of Mapleton. I know that you followed this very closely. I wonder if you could share with the committee some of the lessons that were learned through that experience, and how the conversation between the Canada Infrastructure Bank and the local government unfolded over the months involved in those discussions.

[Dylan Penner]

I think the short version is that, as I mentioned, the council recognized the very serious risks, some of which I highlighted, when it comes to P3s. In the end, they opted to go public.

I want to put this in context, too, because while Mapleton is one important example and very connected to the CIB, this is happening in the context where there is a global movement, which at the council we're proud to be a part of, that is aimed at taking back public control of water. That now consists of 267 municipalities in 37 countries, so it's not just Mapleton. This is a widespread move to “remunicipalization” that is happening, because people, communities and councils are recognizing just how bad water P3s are for their communities.

Another really important example to look at is Hamilton, Ontario, which signed a 10-year P3 deal in 1998 for its water system. Soon after, residents woke up to 135 million litres of raw sewage spilling into the harbour and flooded basements and businesses. Hamilton's water service workforce had been cut in half, which I think is just one of many examples that highlight why P3s aren't about job creation and actually lead to job cuts. Project costs ballooned, and the water contract changed hands four times.

There's a lot to look at in terms of why going down this road is a very bad idea.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Mr. Penner, Mapleton is a very small community. I come from a small community. A lot of the projects that we talk about when we talk about P3s and the Canada Infrastructure Bank are for huge communities and municipalities and urban areas and are projects that range in the hundreds of millions of dollars, if not billions.

Is there a risk here that the emphasis and the focus of government are going to shift onto projects that are the most profitable, where corporations stand to make the most profit? What are the risks for smaller communities in terms of the equity between municipalities and local governments of different sizes in our country?

[Dylan Penner]

It's an important question. I think part of it is also about asking who these projects are profitable for. They're certainly not for the local communities, as we've seen from the reports by the Auditor General.

I live in Ottawa. For those people who don't live in Ottawa, you might not know that for quite some time the P3 for the light rail transit here was basically a bad punchline for pretty much everyone in Ottawa, because of the lack of accountability and democratic oversight and the cost overruns, and because of the fact that it took well over a year past deadline to move forward at stage 2. That's just one example of a very problematic P3 in a slightly larger community.

It really comes down to how these projects aren't in the interests of people or communities, but serve to increase corporate profits.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

In the $10-billion growth plan funded through the Canada Infrastructure Bank, one of the stated aims is to reduce greenhouse gas emissions. Do you feel that the CIB is the best mechanism to deliver on that particular objective of meeting our climate targets? I know that we've had some discussion on this already, but perhaps you could provide your thoughts.

[Dylan Penner]

I think not, if it's continuing down the road of P3s and privatization. What we need to keep in mind is that fundamentally privatization isn't part of the solution. It's a central part of the problem. Also, the deeper problem is neo-liberalism, which is that toxic mix of privatization, yes, but also deregulation, so-called free trade, which has devastated communities. Despite what proponents claim, none of these are about jobs or private interests, but about corporate profits and making the rich richer.

The neo-liberal policies of the last several decades have locked us into the escalated nature of the climate crisis we've faced, including dispossessing and marginalizing the most vulnerable people, plundering our resources and putting our public health at risk for the profit of the wealthy few. Also, there's the pandemic—

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Penner.

[Dylan Penner]

[Inaudible—Editor] and the damage to the public sector that will last for decades—

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Penner.

[Dylan Penner]

The pandemic has really laid bare the damages of decades of gutted public services and—

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Penner.

Thank you, Mr. Bachrach.

We're now going to move on to our second round. Our second round is for five minutes with two and a half minutes each for the NDP and the Bloc.

I'm going to start off with the Conservatives.

Ms. Kusie, you have the floor for five minutes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair.

I'll be passing my time back to Mr. Scheer.

Thank you.

[The Chair, Liberal, Vance Badawey]

Mr. Scheer, the floor is yours.