Transport Committee on March 9th, 2021

[Mark Romoff]

I would say, first of all, that there is lots of private capital around. As Mary Van Buren mentioned, there is capital available; there are projects available.

The challenge here is, in fact, to ensure—and this is really where the bank can play a significant role—that large, complex, revenue-risk projects can be brought successfully to market. This is an area where private capital has been somewhat reluctant because there is revenue risk attached to these projects. We're talking about toll roads maybe, even waste-water projects, anything that has a revenue element to it, because there is a risk attached to that.

The real benefit of the bank engaging in these projects is, in fact, to help de-risk those projects and to make them more attractive to private capital to partner with them in order to enable these larger, more complex projects to come to market. That's a very significant piece of the equation.

There was also reference made to some of the criticisms of P3 projects coming from Ontario's auditor general. You may recall—and I know Professor Whiteside will recall—an earlier report by the Ontario AG, and she claimed that these projects were costing the province $8 billion, but you have to read her narrative very carefully, because what she actually said was that the money could have been saved if governments were able to deliver infrastructure projects themselves on time and on budget.

That's the challenge. Governments have demonstrated, time and again.... It's not unique to Canada; this is a classic phenomenon around the world. As for projects that are undertaken through traditional procurement, if they were delivered on time and on budget, then we wouldn't need P3s, but the reality is that you see projects all around you, anywhere across Canada, that are way behind schedule and way over budget. That's why you need to bring a discipline to the procurement process and to the delivery process in order to get the very best return on your and my tax dollars that are being invested in these projects. That's really a critical element in this equation.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you.

On the issue of public ownership, once the asset has been constructed I, like most people, feel that the asset built in these projects should remain in public hands. Surely there is a way of constructing the whole P3 in such a way that in a relatively short period of time, or from the word go, the asset remains in public hands.

Minister McKenna said to us that there was no mandate in the Canada Infrastructure Bank to actually pursue privatization of ownership. How do you look at that?

[Mark Romoff]

There are a couple of points here.

We need to remember that the Canada Infrastructure Bank is not a procurement agency. It does not decide on the model to be used, whether it's P3 or another approach to delivering on infrastructure projects. It is there simply to partner with other entities to enable the financing necessary to bring these projects to market.

We need to understand that there is a lot of confusion about whether the bank is a P3 agency or is going to pursue only P3 projects. It is agnostic around model and should be. Its mandate is to make sure that it's providing financing in order to get the very best outcomes on the projects it is pursuing.

That is really critical. If left to that mandate, I think you'll see that it can be a very effective tool in the government's tool kit to bring more and more projects successfully to the marketplace.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Romoff.

Thank you, Ms. Jaczek.

We're now going to move on to Mr. Barsalou-Duval for two and a half minutes.

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

Thank you, Mr. Chair.

In his opening statement earlier, Mr. Romoff said something that interested me greatly. He emphasized the fact that public-private partnerships do not mean privatization.

Ms. Whiteside, would you be able to comment on that and tell us to what extent it is true or not true?

[Prof. Heather Whiteside]

This may be in a sense an age-old debate—in academia, anyway.

To some extent it depends on how you define privatization, and I'm sorry to give that kind of answer. Which parts of the P3 are private? The land remains public, most often, in Canada. I think in every case I've ever looked at, the land remains a public asset.

No, the infrastructure that's built isn't outright sold; it's always structured as a lease, as far as I'm aware. The lease terms, however, vary from 25 years to 30 years or more; it's at least a generation.

In terms of the financing, one thing I'd like to respond to, from a point that was raised earlier, is the question of whether the public can take on debt or whether we should be using P3 financing.

The P3 is a long-run obligation of the government precisely because it is owned by the government and structured as a lease. Within the P3 financing itself, typically 70% is debt-financed and 30% is equity-financed.

If all those things are equal, essentially what becomes different or privatized about a P3 is the equity portion. It's that the private partner has ownership stakes, rights, decision-making and control over the aspects that the project agreement divvies out to them. In the case of a hospital in Canada, while practice varies, these can be anything other than clinical care. That leaves a wide range of services and maintenance and other forms of decision-making.

Is it privatization or isn't it? It really involves the privatization of decision-making, depending on the particular project, and the equity portion is central to this.

[The Chair, Liberal, Vance Badawey]

Thank you.

Mr. Bachrach, the floor is yours for two and a half minutes.

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

Thank you, Mr. Chair.

With apologies to the witnesses, I'd like to take a brief moment to move the motion of which I provided notice, if you would allow me.

I believe this is a time-sensitive and pressing matter, particularly because of the concerns being felt in the region that I represent.

The motion reads:

That the Committee hold a minimum of one meeting to study the Follow-up Audit on Rail Safety, that the Auditor General of Canada be invited to appear for the first hour, that the Minister of Transport be invited for the second hour and that this meeting occur no later than 25 March 2021.

I believe that members of the committee have this motion in both official languages.

[The Chair, Liberal, Vance Badawey]

Members, do you have any questions or comments on this motion?

[Andy Fillmore, Liberal, Halifax, NS]

Mr. Chair, before we go to the vote, I wonder if the mover of the motion could discuss the intention behind it for a moment, please.

[The Chair, Liberal, Vance Badawey]

Mr. Bachrach.

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

I'd be happy to, Mr. Chair.

Thank you, Mr. Fillmore, for the opportunity.

A little over a week ago, the Auditor General released a report that raised some very troubling concerns about rail safety in Canada, particularly the fact that the recommendations from the 2013 audit on rail safety had not all been implemented. This follows on the footsteps of the environment commissioner releasing a very similar report in which the environment commissioner was quoted as saying, “the window for a recurrence of a Lac-Mégantic-type disaster is still open.”

I live in a region where the volume of dangerous goods being transported by rail is projected to increase dramatically. It has already increased. Communities are worried about the risks that rail transport poses for community safety and for the environment. They want assurances that Canada's regulatory system and the oversight provided by Transport Canada is up to the task of protecting communities and the environment. That's why I bring this forward. The trains are running through northwest B.C. every single day at all times of the day. People deserve to know that they're being kept safe.

I would love to have the Auditor General and the minister at committee to provide more information on this very concerning report.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Bachrach. and thank you, Mr Fillmore.

Are there any further comments? Do the Conservatives or the Bloc have any questions?

Mr. Sidhu, do you have a question?

[Maninder Sidhu, Liberal, Brampton East, ON]

Yes, I do. Thank you, Mr. Chair.

I do believe a study occurred in the last mandate, as well. I think there's another committee studying rail safety issues. It's important for me and for the government.

The minister did appear on February 18. A deadline is set on this motion for no later than March 25. Before we go to that, we should check with the minister's schedule to make sure there's nothing that can stop him from coming here. I know he's going to be coming to speak to us on the main estimates, as well. Maybe we can add something into that meeting.

These are just some thoughts. I don't know what my fellow colleagues think about it.

[The Chair, Liberal, Vance Badawey]

Thank you for the comments, Mr. Sidhu.

Mr. Fillmore.

[Andy Fillmore, Liberal, Halifax, NS]

I wonder if Mr. Bachrach would consent to removing the deadline in the motion. It's the part that reads, “and that this meeting occur no later than 25 March 2021”. We don't want to pass a motion in our committee that will simply be frustrated and then fail because of the minister's schedule or other exigencies.

I think we could probably find some hospitality to it if we could just remove the deadline.

[The Chair, Liberal, Vance Badawey]

Mr. Bachrach.

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

I appreciate the sentiment and certainly recognize that the minister has a very busy schedule.

We have had these types of discussions at this committee before about the minister's schedule. I believe that what we agreed to in the past was to leave the date in the motion and that if the minister were absolutely not able to make it by that date—the date is a fair way off at the end of the month—it could be brought back to the committee and the committee could consider an alternate proposal from the minister.

Given how busy everyone's schedules are, my concern with leaving it open is that this priority—which is really a pressing priority for communities in the region I represent—will simply drift into the future and won't get the attention and scrutiny it deserves.

[The Chair, Liberal, Vance Badawey]

I'll add to the conversation that this is being studied at the public accounts committee. I'm not sure, Taylor, if it would be prudent to wait to see what comes out of that committee and then just go from there. I'll throw that out there for discussion, as well.

Mr. Fillmore, you have the floor.

[Andy Fillmore, Liberal, Halifax, NS]

I was going to say the exact same thing. It's at public accounts now. Why don't we let them do their work? Then we can build on that and respond to it.

The minister did, of course, just appear at the end of February, and we would now be asking him to appear again at the end of March in a busy budget season. I don't want the will of the committee as expressed by a motion to be frustrated by him not being able to show up.

Also, the fact that it's being studied right now at public accounts would lead me to, again, propose an amendment that we remove the deadline.

[The Chair, Liberal, Vance Badawey]

Before I go to that, I am going to go to Ms. Jaczek.

Ms. Jaczek.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

I want to add that the minister will be appearing for the main estimates. Perhaps it might be useful to add this issue to that appearance.

I also think we have so many studies on our list that we have agreed to, and if it's going to be studied at public accounts, it also seems a bit redundant to duplicate their effort.

Again, if the date is removed, I think it gives a lot more flexibility.

[The Chair, Liberal, Vance Badawey]

Thank you, Ms. Jaczek.

Mr. Bachrach.

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

I appreciate all the concerns that are being expressed. My sense of urgency certainly remains on this. I'm not sure what the plans of the public accounts committee are, but this is an area that falls squarely within the jurisdiction of the Minister of Transport. This is after all the transport committee, and it feels very germane and pertinent to our purpose as a committee and is a timely and pressing issue.

I will certainly follow the other committee's work closely. However, I do think it behooves us to hear from the minister and the Auditor General on this topic as soon as possible.

Again, I would welcome a counter-proposal from the minister should his timeline not allow for an appearance prior to March 25.

Thank you, Mr. Chair.

[The Chair, Liberal, Vance Badawey]

Members, are there any further comments or questions?

Mr. Sidhu.