Transport Committee on March 9th, 2021

[The Chair, Liberal, Vance Badawey]

Good afternoon, everyone.

Welcome to meeting number 20 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

Today's meeting is taking place in a hybrid format, pursuant to the House order of January 25, 2021. The proceedings will be made available via the House of Commons website. The webcast will always show the person speaking, rather than the entirety of the committee.

To ensure an orderly meeting, I would like to outline a few points to follow.

Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of floor, English or French.

For members participating in person, proceed as you usually would when the whole committee is meeting in person in a committee room. Keep in mind the directives from the Board of Internal Economy regarding masking and health protocols.

Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute. For those in the room, your microphone will be controlled, as usual, by the proceedings and verification officer.

A reminder that all comments by members and witnesses should be addressed through the chair.

When you are not speaking, your mike should be on mute. With regard to a speaking list, as always the committee clerk and I will do the best we can to maintain the order of speaking for all members, whether they are participating virtually or in person.

Members, pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, October 29, 2020, the committee is meeting today to continue its study on the Canada Infrastructure Bank.

Now I would like to welcome our witnesses.

We have with us Heather Whiteside, associate professor, political science, University of Waterloo.

She will be followed by the Canadian Construction Association, Mary Van Buren, president.

From the Canadian Council for Aboriginal Business, we have Tabatha Bull, president and chief executive officer.

From the Canadian Council for Public-Private Partnerships, we have Mark Romoff, president and chief executive officer.

From Efficiency Canada, we have Brendan Haley, policy director.

From the Heating, Refrigeration and Air Conditioning Institute of Canada, Martin Luymes, vice-president, government and stakeholder relations.

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

[Professor Heather Whiteside, Associate Professor, Political Science, University of Waterloo, As an Individual]

Thanks very much for inviting me here today to comment on the mandate, activities, projects and financing of the Canada Infrastructure Bank.

I've noted the types of witnesses that you have spoken to thus far—the advocate, the critic, the defenders—and I'm sure my answers will make clear where I fit here too.

I have certainly published a few things that have been quite critical of what the CIB might be. I say “might” because it hasn't done much yet. I remain very concerned about particular possibilities such as asset recycling, which, hopefully, we can discuss more in the Qs and As, but since not much has happened yet with the CIB, I think we're in quite a great spot to do something different to build back better in a meaningful sense.

Before turning to your questions and to the other witnesses, who I'm sure represent very diverse views on the subject, I would like to establish seven foundational premises that I hope we can all agree on across the partisan divide.

One, public infrastructure is important generally but also in particular priority areas, and this has been all the more heightened by the pandemic.

Two, public infrastructure is needed. There is an infrastructure gap in this country, with much at the end of its life cycle or inadequate for meeting modern needs.

Three, public infrastructure is services. Hospitals are health care, transit is urban planning and schools are education. Public infrastructure serves a public good and is a public asset in more ways than one.

Four, there are several ways to finance public infrastructure, but only a few ways of funding it, namely, through Canadians as taxpayers and service users.

Five, there is no financing crisis in Canada. Our pension funds are well capitalized, the bond markets are friendly towards all levels of government and many of our Crown corporations are already self-financing.

Six, some forms of finance are preferable over others. Canadians' pooled savings and Crown corporations should be investing in our public infrastructure, not Wall Street hedge funds looking for P3 equity ownership.

Seven, commercialized public infrastructure offering private equity isn't the solution to the infrastructure gap we face. User fees are often insufficient to repay capital costs, megaprojects often remain reliant on public grants and subsidies, and private equity gives unaccountable entities ownership rights over vital public services.

With these seven points in mind, I think it's plain that the CIB's link to private equity and commercialized infrastructure undermines other key parts of its mandate, such as operating in the public interest. We do not need to give away ownership rights to achieve our infrastructure aims.

A few months ago, the new CIB CEO promised P3 enthusiasts that, “In [the] future the CIB will be more active in soliciting partnerships rather than waiting for offers” and that he'll “start with the market and work backwards”.

What is he talking about here? He's actually referring to reversing the procurement relationship, shifting from the question “what's needed in Canadian communities?” to “what's wanted by global investors?”

Not only is this is a dangerous position that aligns infrastructure decisions with dogma rather than merit, it also directly contradicts what Minister McKenna said to this committee just two weeks ago: that the CIB would develop projects within “priority areas” for the public good and that it “isn't about privatizing” infrastructure.

For the Bloc, the CIB's commercialized mandate intrudes on provincial decision-making. For the NDP and Greens, the CIB threatens progressive values. For the Liberals, the CIB presents deep contradictions. For the Conservatives, it violates their 2016 party position. As MP Poilievre wrote in 2017 in a Maclean's op-ed, with the CIB, powerful financial interests “get the rewards and taxpayers get the risk.”

We need the CIB to do better than this. We need a knowledge bank pooling talent, a source of very low-cost public financing and an ex post evaluator, an entity that evaluates projects during operational and long-run multi-decade phases. We need an entity that values public assets above all and is guided by a public sector ethos.

To amend, as those French-speaking members will certainly know, means to make better. Building back better requires amending the Canada Infrastructure Bank mandate, unshackling it from private equity and commercialization so that it can make good on its commitments: commitments to operate for the public good, to provide infrastructure for indigenous and rural populations, to help with the green transition and to support local needs, as I'm sure we'll hear about from the other witnesses as well.

[The Chair, Liberal, Vance Badawey]

Thank you, Ms. Whiteside.

We're now going to move on to our next witness, Ms. Van Buren.

Ms. Van Buren, the floor is yours for five minutes.

[Mary Van Buren, President, Canadian Construction Association]

Thank you for inviting me to speak to you today. I am speaking on behalf of the Canadian Construction Association's 20,000 member firms who operate across Canada as general contractors, trade contractors, civil and professional manufacturers and suppliers who work, obviously, in the commercial side, institutional and industrial sector.

One of the key messages that we're bringing today is the importance of infrastructure in not only building for our future, but certainly in addressing the deficit that we know about. In 2019, we produced an infrastructure report that showed the very worrisome state in many of our assets across Canada.

Looking at the future, of course we see that the pandemic does bring us an opportunity to build back differently. One of the key areas of concern is, of course, workforce and the construction industry. We need a workforce, and we can hire and train many of those people who have been displaced in other sectors. We can do that in a way that gives them great, meaningful jobs.

Building for our future and building to eliminate the infrastructure deficit require a 25-year plan. The investing in Canada plan with its 12-year commitment is a great start, but it's not enough, and we have to all urgently focus on getting those funds flowing today. There's no point in having billions of dollars if they sit unallocated and not being used.

In terms of the Infrastructure Bank, this is a bit of context. We know Canada is a large land mass. We know that we have a small population. We have very ambitious goals to be the best country and remain the best country in the world, but we are not alone in that. Australia, the U.K. and the U.S. are facing many of the same challenges that we are. They don't have enough workforce. They don't have enough capital to make these projects go forward, and we're all facing, in Canada, some protectionism trade winds with the buy U.S. program, and, even within some provinces, we've seen some trade barriers crop up.

Our contractors are concerned that Canada won't be as attractive to this capital that we need to have that investor confidence to keep our country moving forward.

Certainly Crown corporations like EDC are very helpful, and we believe that the Canada Infrastructure Bank can also play a pivotal role; however, its mandate is a promise, but it's not yet realized. Certainly we've met with the leadership on many occasions.

P3 models can be very useful, but it's a model that does need some rethinking. We need to make sure that Canadian companies can compete without taking a disproportionate share of the risk, and we're certainly looking forward to many of the Infrastructure Bank's announcements and how they can help be a catalyst for more investment in Canada. We need these projects, again, to start now. We've seen the bank have a bit of a slow start, but we're certainly counting on them to pick up the pace and make a real contribution to the country.

Another role for them would be helping with productivity gains, de-risking innovation and making sure that that's part of the criteria when they're looking at projects.

In summary, certainly one of the goals we share with Canadians and all parliamentarians is including more Canadians in economic recovery. Infrastructure is a natural fit. Every community in Canada needs something, whether that's a community centre or a hospital. They need their curbs, and they need their roads fixed. Again, we can come up with an economic stimulus that ensures that it's shared across Canada in large and small communities and all sizes of business.

We are happy to work with the government.

Thank you for this opportunity to speak to you today.

[The Chair, Liberal, Vance Badawey]

Thank you, Ms. Van Buren.

We're now going to move on to Mr. Romoff.

Mr. Romoff, you have the floor for five minutes.

[Mark Romoff, President and Chief Executive Officer, Canadian Council for Public-Private Partnerships]

Thank you, Mr. Chair, and members of the committee, for inviting the Canadian Council for Public-Private Partnerships to contribute to the study that the committee is undertaking of the Canada Infrastructure Bank.

I know the committee is aware that Canada, like all countries around the world, is confronting a significant infrastructure deficit while facing the additional challenge of fiscal restraint. Despite this reality, it is absolutely critical to invest in infrastructure, because it is well-known that such investments drive economic growth and prosperity, create jobs, increase productivity and promote global competitiveness. These are outcomes that couldn’t be more timely, and more relevant as governments focus on post-pandemic economic recovery.

The council commends the federal government, provinces, territories and municipalities for stepping up to the plate, earmarking significant funding to address this issue. Notably, the federal government set the bar with its $186-billion investing in Canada plan, and together with other creative vehicles, such as the Canada Infrastructure Bank and the smart cities challenge, is moving Canada’s innovation and economic yardsticks forward.

Our council is a national, not-for-profit, member-based organization consisting of nearly 350 public and private sector organizations, which works closely with all levels of government, indigenous communities and the private sector to enable them to become smarter, more innovative, and more effective at delivering sustainable infrastructure in Canada. I should add that the council is not a lobby group; rather, we partner with governments to achieve the very best performance, and return on their infrastructure investments while enhancing the quality of life of Canadians.

While we are proponents of public-private partnerships, P3s, we also recognize they are not a panacea. If used for the right reasons and on the right projects, P3s have delivered very strong economic outcomes in terms of projects being delivered on time. In fact, they are 13% faster than traditionally procured projects, and on budget, with savings to governments exceeding $27 billion. This is clearly excellent value for taxpayers. We now have 290 projects across the country and across a wide range of industry sectors. The value of those projects that have reached financial close today now exceeds $140 billion.

It's important to note, though, that P3s are not privatization. In every instance, governments retain ownership, control and accountability for the projects they've invested in. It's important to remember that P3 is simply a procurement model, nothing more.

Today’s unprecedented challenges, the reality of climate change, cybersecurity threats and now the COVID-19 pandemic, demand unprecedented action.

The Canada Infrastructure Bank, under its new leadership, its $10-billion growth plan, a new unsolicited proposals framework, and updated statement of priorities and accountabilities, is well positioned to play a central role in the government’s economic recovery plan. The council is eager to support the bank to enable it to be successful.

In particular, we commend the recent direction that the CIB established a target of $1 billion for indigenous projects. This is an important and timely step to address the serious infrastructure deficit that these communities are confronting, estimated to be anywhere between $25 billion and $30 billion. Indigenous people are also keenly interested in participating in major infrastructure projects. The Tlicho all-season road project in the Northwest Territories is an outstanding example of one of the first P3s in North America with an indigenous cash funded 20% equity stake.

In reality, however, access to capital at competitive rates for indigenous communities is a major hurdle, and the CIB has a unique opportunity to step in to redress this inequity.

The bank can make an important contribution to strengthening municipal project procurement and delivery. Municipalities account for the vast majority of infrastructure throughout the country, and will be lead players in delivering stimulus projects. At the same time, complex infrastructure issues often challenge local government officials. The CIB has the expertise, and specialized knowledge that can prove invaluable to advancing and completing these infrastructure projects.

I would say, Mr. Chair, that Canada has become a globally recognized hub for infrastructure development, and in particular, for public-private partnerships. We have earned a reputation around the world for being “best in class”, with an approach and achievements that are the envy of many countries. My council believes that over the coming months, as the CIB delivers on its ambitious agenda, it too will be seen to be best in its class.

I would be pleased to elaborate on the points I've made, and I look forward to your questions.

Thank you very much.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Romoff.

We're now going to move on to Mr. Haley.

Mr. Haley, you have the floor for five minutes.

[Brendan Haley, Policy Director, Efficiency Canada]

Thanks, everyone, for the invitation. I am the policy director for Efficiency Canada. We're a research and advocacy organization focused on creating an energy-efficient economy. We are based at Carleton University.

I would like to start by inviting you to think about energy efficiency as infrastructure that we need to move to a net-zero emission economy.

We usually think about energy efficiency on a building-by-building basis, and we leave the financing and the project management of retrofits to a building owner.

In a net-zero economy, we're really concerned with the large-scale, aggregate impacts of improving energy efficiency. That includes GHG emission reductions from buildings directly, as well as freeing up some of our existing clean electricity resources that can be used for further reductions in areas like transportation and industry.

To reach the scale of energy retrofits, we need to create a functioning market for deep energy savings. That's where customers can access stable bills, comfort and indoor air quality benefits that can come with energy efficiency, in the same way that they can now pay for a cellphone plan or lease a car.

The convenience on the customer end exists in those areas in part because you have private investors ready to back particular business models and buy portfolios of smaller loans.

Today, private investors are not directing their capital towards substantial energy upgrades because we have not created the necessary market structures. Investors see high transaction costs for each retrofit project and they do not have the data to accurately assess investment risk.

The Canada Infrastructure Bank can take on what I call a “market-creating” mission, with a goal to direct capital into building retrofits as a new area for productive investments. Strategies that it could follow include taking the lead on investments and then producing data to demonstrate the potential to the private sector, aggregating individual retrofit projects into larger portfolios that can then attract investors, and promoting standardized energy-savings measurement and evaluation protocols that can reduce transaction costs and perhaps enable trade.

The CIB growth plan announced at the end of 2020 includes building retrofits for the first time, with a focus on large-scale, non-residential buildings. I think that is the market most prepared to demonstrate the investment opportunity.

However, to reach our climate goals, we also need to make energy-efficiency services available in the places people live. In the government’s currently announced or proposed policies and other areas we look at, financing for homeowners is either planned to be attached to the individuals themselves, or perhaps to the homes themselves. Yet in other jurisdictions, they're exploring the aggregation of residential retrofits to achieve economies of scale as well as different business models where homeowners can essentially sign a contract that guarantees home comfort and a stable bill, with a third party handling the financing. To really see residential retrofits take off, I think we need to develop these new market structures and business models.

This will require more than just redirecting financial markets. It will require on-the-ground market development and new innovations in areas such as manufacturing and logistics. If we can develop more market-ready residential retrofit solutions, the Canada Infrastructure Bank should be ready to provide that long-term, patient capital.

Thus, the suggestion I would make to you today is that the Government of Canada could initiate a residential building retrofit strategy that encourages new business models and new economies of scale to create the conditions for Canada Infrastructure Bank investment.

I think that complementary policy would fill a gap and help maximize the impact of the Canada Infrastructure Bank, going forward.

Thanks.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Haley.

We're now going to move on to Mr. Luymes.

Mr. Luymes, you have the floor for five minutes.

[Martin Luymes, Vice-President, Government and Stakeholder Relations, Heating, Refrigeration and Air Conditioning Institute of Canada]

Good afternoon, Mr. Chair and committee members. Thanks for the opportunity to speak with you today.

As you will have been told, commercial and residential buildings account collectively for 18% of greenhouse gas emissions in our country. There are many important ways in which the heating, ventilation and air conditioning and refrigeration industry can and will aid in meeting emission reduction targets. Some of them are obvious, others less so.

In principle, we support the notion of investing in energy efficiency as infrastructure, as submitted by our friend at Efficiency Canada. Indeed, our industry's contribution to reducing energy use is primarily through building-by-building upgrades in technologies or processes that reduce carbon emissions and energy demand at point of use, thus freeing supply capacity for other uses.

Some technologies, however, create very specific benefits to the larger energy system, and specifically to Canada's electricity infrastructure. They should be considered as a form of infrastructure investment because of these benefits.

Today I would like to direct your attention to one such example, just to make the point. The technology in question is ground-source heat pumps or geo-exchange systems.

As you will know, a key tactic for decarbonizing space heating in homes and buildings is to convert carbon-based heating systems to electric heat pumps, while at the same time transitioning electricity production to clean sources. As an end-use technology, heat pumps of all types present a remarkable technology that, instead of burning fuel to create thermal energy, uses a bit of electricity to move or pump thermal energy from one place to another.

The thermal energy in question might be available in the air, water, ground, or even in municipal waste systems. Because of the wonders of the refrigeration cycle and the laws of thermodynamics, these systems can deliver energy efficiencies far greater, even 3.5 to 5 times greater, than the 100% efficiency of traditional baseboard electric resistance heaters.

There is, however, a challenge to this. Like other jurisdictions, Canada's electricity grid and power supply capacity is not designed to meet average demand over the span of a day or a year; it must be capable of meeting peak demand on any given day, and in Canada, energy demand for home heating will of course peak on the coldest days of winter.

Currently, the most readily available and affordable type of heat pump is an air-source heat pump. These have legitimately become popular in many parts of the country. They are super-efficient and able to cool and heat when and as needed. What's not to like?

However, because they rely on the thermal energy available in outdoor air, even the best cold-climate air-source heat pumps drop in energy performance on the coldest days of the year—exactly when they are most needed—to just a little better than electric resistance heat. This means that potentially large spikes in demand for electricity across vast areas of the country will occur during these periods.

For grid planners, the idea of replacing carbon-based fuels with electric modes of heating has created legitimate worries about the system capacity needed to meet those short-term but substantial demand spikes in winter. Some studies have suggested that because of these spikes, the transition to all-electric heating forms will be very costly, requiring investments of up to $1.4 trillion in new power generation and distribution infrastructure over the next 30 years. These studies do not make any distinction among the different heat pump technologies available on the market and the ways their performance varies under extreme conditions.

A recent study commissioned by HRAI highlights the unique advantages of ground-source heat pumps or geo-exhange systems for managing the electricity system. The study found that if the heating of homes and buildings across Canada were electrified using ground-source rather than air-source heat pumps, Canada would save up to $495 billion in grid development costs over the next 30 years. This amounts to a net savings to the grid of more than $40,000 for every Canadian household. That's after allowing for the cost of installing these relatively more expensive systems.

The study highlights a unique and under-appreciated benefit of ground-source systems, namely their ability to perform at consistently high energy efficiencies regardless of outdoor air temperatures, thanks to their reliance on more stable thermal energy stored in the ground. Even on the coldest days of winter, these systems perform at efficiencies of 350% or higher. Rolled out at scale, geo-exchange systems could be used to substantially reduce those winter peaks in demand that would otherwise stress the system.

Our study quantifies the system-wide infrastructure benefits of this technology, demonstrating that avoided electricity system development costs will more than pay for the investment in these heating systems by users.

In classic tragedy of the commons fashion, however, Canadians acting in their own short-term interests will be disinclined to shoulder the higher upfront costs of these systems, despite the fact that societal system-wide benefits would significantly exceed their individual cost burden.

We will need thoughtful policy measures and programs to reconcile these gaps.

The public investment in electricity generation and distribution infrastructure that is needed to power a transition to a low-carbon economy must also include consideration of energy utilization technologies that result in such significant avoided system costs.

Thank you for your time.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Luymes.

Ms. Bull, go ahead for six minutes please.

[Tabatha Bull, President and Chief Executive Officer, Canadian Council for Aboriginal Business]

Meegwetch.

[Witness spoke in Ojibwa and provided the following text:]

Aanii, Tabatha Bull n'indignikaaz, Nipissing n'indoonjibaa, Migizi dodem.

[Witness provided the following translation:]

Hello. My name is Tabatha Bull. I am from Nipissing First Nation, and I belong to the Eagle Clan.

[English]

As president and CEO of the Canadian Council for Aboriginal Business, I want to thank you, Mr. Chair, and all the distinguished members of the committee for the opportunity to provide you with my testimony and answer any questions.

I'm speaking to you from my home office. I acknowledge the land as the traditional territory of many nations, including Mississaugas of the Credit, the Anishinabe, the Chippewa, the Haudenosaunee and the Wendat peoples.

As the federal government continues to tackle a national infrastructure gap, noted as potentially as high as $570 billion, a portion of that funding needs to be dedicated to support indigenous infrastructure where this gap is most acute. As reported by the Canadian Council for Public-Private Partnerships in 2016, first nations peoples face an infrastructure deficit of as much as $30 billion. The infrastructure gap facing Inuit and Métis peoples has not been accurately quantified but it is estimated to at least match the deficit of first nations.

We must be mindful about what this means for indigenous peoples. Using the United Nations human development index, Indigenous Services Canada recently found that while Canada ranked 12th internationally in 2016, the on-reserve indigenous population ranked 78th, the same as that of a developing country. Furthermore, CCAB's research has repeatedly found that the lack of appropriate and reliable infrastructure is a barrier to indigenous business growth, including reliable Internet, transportation such as roads and airports, electricity and clean water.

CCAB's report “Promise and Prosperity” found that four in 10 indigenous peoples have either no Internet connection or a connection on which they cannot fully rely. These problems are more common for indigenous businesses located on reserve and in remote areas. The impact of this deficit was highlighted by the OECD, which noted that this lack of reliable Internet makes it more difficult for indigenous entrepreneurs in remote and rural communities to access business training skills programs. While free, online business skills training is widely available, poor Internet connectivity hinders its use. Additionally, infrastructure issues for indigenous people are exacerbated by climate change, as indigenous people in Canada experience warming rates at two to three times the world's average.

What is the solution?

First, infrastructure spending within indigenous communities needs to be driven by the needs articulated by indigenous communities and leaders and support building institutional infrastructure that empowers indigenous peoples and businesses. CCAB data indicates that most indigenous communities are building capacity to service their own infrastructure needs. In fact, in 2018, approximately 75% of aboriginal economic development corporations reported that they have the capacity to take on the work if the federal government put forward contracts to address infrastructure priorities in their communities. This is why CCAB supports, in part, the establishment of the First Nations Infrastructure Institute.

Next, there is a need for predictable and sustained funding so that indigenous communities can reliably plan and successfully maintain their community infrastructure. All levels of government must align funding to reduce duplication and close the gaps. However, successful execution cannot be done without the private sector. Sustainable solutions must leverage capital markets. Although the need is much greater, solutions like those proposed through the direction to the Canada Infrastructure Bank to invest at least $1 billion in revenue-generating projects that benefit indigenous communities can help close the infrastructure gap. The inclusivity of CIB, their management of risk and willingness to pursue creative financial structures can help build out vital indigenous infrastructure. Additionally, CIB instills confidence needed in project financing to help dispel myths of indigenous investment risk, which should facilitate greater investment by private sector developers in future projects.

CCAB commends the CIB on the expansion of its advisory and investment team to include indigenous expertise, and the appointment of Ms. Kimberley Baird, an indigenous leader, to its board of directors.

Projects such as the Kivalliq Hydro-Fibre Link, which will see the construction of a new 1,200-kilometre, 150-megawatt transmission line to Nunavut from Manitoba will bring renewable, reliable electricity and broadband connectivity to communities and industry for the first time, which is crucial for advancing the economy.

While the scale of the deficit is daunting, narrowing the deficit is not insurmountable. Infrastructure development in our communities requires patient capital, private sector investment and development expertise in partnership with indigenous peoples and businesses. Just like for all Canadians, when businesses are thriving, communities thrive. The difference is that indigenous communities have been historically underserved, under-resourced and systemically kept out of the Canadian economy. They have further to go to reach the same levels of well-being and wealth as non-indigenous communities.

CCAB is committed to continuing to work in collaboration with the government, our members and partners to help rebuild and strengthen the path towards reconciliation and a healthy and prosperous Canada.

Thank you for your time. Meegwetch.

[The Chair, Liberal, Vance Badawey]

Thank you, Ms. Bull. Meegwetch.

To all of the presenters, great job. We've got some great points out there, and I'm sure we'll have some great questions.

In our first round, members will have six minutes each. The Conservatives will be led by Mr. Scheer, followed by the Liberals with Mr. El-Khoury, the Bloc with Mr. Barsalou-Duval, and the NDP with Mr. Bachrach.

Mr. Scheer, you have the floor for six minutes.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Thank you very much, Mr. Chair.

Thank you to all the witnesses. A lot of great topics have been covered. Unfortunately, we probably won't have time to go into depth on everything you've raised, but hopefully we can unpack a little bit some of the points you brought up.

Ms. Whiteside, I want to give you an opportunity to speak about “asset recycling”, which you flagged as a topic that you were hoping to be able to provide more of an explanation on in the Q and A period. You mentioned that it was one of the things you were concerned about and wanted to talk about a little more. I'll maybe give you an opportunity to explore asset recycling a bit more with the committee.

[Prof. Heather Whiteside]

If you don't mind, I'll read from my notes a little bit just to make sure I get the timeline right.

Asset recycling, in case you're not familiar with it, can basically involve several things. Mainly it refers to disposing of so-called legacy assets in order to raise revenue that's needed for additional infrastructure. That may not be, in and of itself, anything particularly new or unique, but it then tends to take two forms. One applies to Canada more than the other.

One form is just straight-up asset monetization that usually occurs in, say, fiscally distressed circumstances—cities like Chicago or Detroit—where they basically scan their public portfolios and turn things like revenue from public parking meters, public parking lots and that type of thing into streams of investable funds. They then take those lump sum payments that they receive from private investors and try to pay down debt and reclaim some kind of investment-grade credit rating to get a better interest rate.

The form of asset recycling that might apply more readily in Canada is one that it appears the Liberals had looked into and are probably following off the Australian model. Basically, profitable or potentially profitable public sector assets are disposed of to private investors in order to generate the revenue that's needed to fund new P3 infrastructure. In the case of Australia, there's a fiscal carrot provided by the commonwealth or the federal government there. If their states dispose of legacy assets and use that money to develop P3s, the central government, the commonwealth government, will give them 15% on top of that.

In Canada, it looks like in 2016 the federal government hired various bankers, let's say, or...aspects of global finance to look into whether they could or would, or maybe should, engage in asset recycling in terms of privatizing federal port assets and privatizing airports. I don't know exactly what happened to that. You guys would be in a better position than me to figure that out. It does look like that's on hiatus, at least for now. I know there was some dissent, at least within the federal boards that oversee airports. Some were maybe more for this option and some weren't.

In any case, this remains a concern for me, and for Canadians in general, I hope, or I would assume so, because in exchange for lump sum up-front remuneration, it essentially gives up and cedes control over rights and decision-making on such really important assets as ports and airports and those sorts of things. In the case of Chicago and Detroit, it's parking meters and that type of thing.

So it does that, and then it tethers the use of those funds to P3s. It's kind of like a double whammy. The Canada Infrastructure Bank purports that it's evidence-based, and these types of policy manoeuvres aren't necessarily seeking out evidence-based solutions. They kind of start with a presumption, like a solution in search of a problem.

Thank you, Mr. Scheer.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Thank you.

I have one quick follow-up. When this type of option is pursued by governments, are these assets relinquished in perpetuity? Are they usually for a 25-year cycle? What kinds of timelines are usually involved?

[Prof. Heather Whiteside]

Thanks.

It does depend. Typically, in the case of some of these distressed cities that I was mentioning, it could be 99 years or it could be 50 years. These are typically agreements that take place over the course of multiple generations, so effectively it's in perpetuity. I haven't seen an example where it's fully relinquished, but 99 years is not uncommon.

[Andrew Scheer, Conservative, Regina—Qu'Appelle, SK]

Thanks very much for that clarification.

I also wanted to also ask Ms. Van Buren a question on her perspective on the issue of lapsed funds.

You flagged in your comments that the dollar amounts this government uses to announce are often not in line with the yearly spending. Can you speak a little bit about what your stakeholders and the people that you work with are seeing on that? Do you have any idea as to the cause of that? What are the barriers?

We hear a lot from municipalities that applications are sitting on desks, money is not getting out the door and shovels aren't getting into the ground. Can you maybe speak to that a little bit?

[Mary Van Buren]

The Government of Canada has a great resource, which is the infrastructure progress tracker. You can see, province by province, how the funds are or aren't flowing.

It's pretty dismal right now. If you look at provinces like Ontario, there is something like $8 billion that still hasn't flowed from 2018 commitments. B.C. is also very much underserved, as is most of Atlantic Canada. Alberta is actually one of the better ones with maybe 80% or even 90% of the commitments.

Where is the blockage? We are hearing that the aspirations of the federal government and the way the buckets are designed are not flexible enough and don't necessarily meet the needs of the communities.

Ms. Bull talked about how the needs of the communities should be the driving force and then the infrastructure flows. One of the issues we are seeing is that in some places—Saskatchewan or, let's say, Kelowna—they just don't need mass transit, so that funding cannot be spent because it just doesn't make sense for those communities. They might need curbs. They might need community centres.

Those are some of the reasons we're seeing some blockages.

[The Chair, Liberal, Vance Badawey]

Thank you, Ms. Van Buren and Mr. Scheer.

We're now going to move on to Mr. El-Khoury for six minutes.

[Fayçal El-Khoury, Liberal, Laval—Les Îles, QC]

Thank you, Mr. Chair.

Welcome to our witnesses.

My first question goes to you all. Whoever wants to answer is free to do so. During the last election, Mr. Scheer and his Conservative colleagues pledged to cut $18 billion from infrastructure. I find that shocking because we are living in a country with an enormous infrastructure deficit.

This question goes to all the witnesses, because it is very important in this extremely difficult time when we are facing a crisis, both in health and in the economy.

Do you feel that Canadian workers and their families can afford cuts of that magnitude?

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. El-Khoury.

Does somebody want to jump in there?

Mr. Romoff.

[Mark Romoff]

Thank you very much. That's a very good question.

As I mentioned at the outset, despite the fiscal challenges the country is facing and the fact that it may be more difficult to dedicate the kinds of funds necessary for infrastructure, making those investments is absolutely critical. We have demonstrated evidence that infrastructure investment truly does drive economic growth. It creates jobs. It makes communities more competitive. Overall, Canada will be globally competitive and play on the world stage.

It is a leader now on infrastructure investment in terms of the amount and nature of the investment and the models that are used. As I mentioned earlier, we are the envy of many countries around the world that are faced with exactly the same kinds of issues.

I am a strong proponent of continuing well-targeted investment in infrastructure in order to get the economic outputs we are looking for. I would be less a fan of shovel-ready and focus on shovel-smart. From my perspective, you want to invest in infrastructure that is in fact going to be able to drive true economic outcomes.

[Fayçal El-Khoury, Liberal, Laval—Les Îles, QC]

My last question goes to Mr. Haley and Mr. Luymes.

Very clearly, as well as the crisis in health and in the economy that we are facing, we are also facing a climate crisis in which no effort must be spared in order to preserve our way of life. Not so long ago, the Canada Infrastructure Bank published its growth plan, which focuses on key areas, such as public transit, clean power and green infrastructure.

Can you tell us about the role that the Canada Infrastructure Bank can play in making Canada more efficient by helping to stimulate the economy and to create good jobs for Canadians?

[The Chair, Liberal, Vance Badawey]

Mr. Luymes.