Transport Committee on March 11th, 2021

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

I'm sorry for interrupting you, but I'd like to ask you another question.

The Canada Infrastructure Bank intends to canvass private companies to try to find projects. The fact that the bank had no projects was criticized as a sign of its irrelevance.

Are there risks in having this kind of institution canvassing rather than focusing on the infrastructure needs of the public and our society?

[Toby Sanger]

Absolutely, we've got things backwards on that. I thought it was great that the government identified a number of different areas that it wanted to allocate some funding for, particularly climate change, and to focus on those priorities. It should be focusing on its and Canadians' priorities in these ways, and not the priorities of whatever private financier, or whatever company, comes along. Otherwise you're just playing to the highest profit, and that's not what we need in our society right now. We have increasing inequality and a climate crisis as well. We should be driving the priorities of the government and of Canadians more broadly, and the government can start to do this with the climate change plan

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

You talked about Great Britain, where this approach has failed. Are you aware of other places in the world where a similar approach to the one we're trying to implement in Canada has led to the same result?

[Toby Sanger]

There have been a lot of public investment banks around the world, and we in Canada have some ourselves.

The one in the U.K. was just announced. We don't really know what it's going to do. They want to rely on some private finance. I think that's a mistake. One thing they do have in their proposal is that their federal government could lend at 60 basis points above the gilt rate for the central government. That's similar to what a number of provinces do through their municipal financing corporations. They provide much lower-cost financing for municipalities. It just makes sense: it's pooling capital and getting lower-cost loans for public infrastructure.

[The Chair, Liberal, Vance Badawey]

Mr. Barsalou-Duval.

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

Thank you, Mr. Chair.

According to you, Dr. Riordan, we need a financial plan to be able to properly develop the country's infrastructures. It would also be important to have a responsible vision for the environment. I think this is in line with what Mr. Sanger was saying earlier.

However, when the Canada Infrastructure Bank invests in a project, it's as though the Government of Canada is investing in that project. That's how it works, and that's the way it was set up in the legislation. We know that the Government of Canada has already decided not to respect provincial or municipal environmental standards and to ignore municipal laws.

Do you see that as a risk, particularly for the environment?

[Dr. Ryan Riordan]

I'm certainly not an expert on the statutes of the CIB or its mandate federally, municipally or provincially. I would say that the evidence I've seen recently, with the announcement of the retrofitting programs and with the electric buses, certainly suggests that the projects they're looking to support are consistent with a green transition.

If you look to the recent evidence, yes, I'd say that—

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Riordan, and Mr. Barsalou-Duval.

We're now going to move to the NDP.

On behalf of the NDP, Mr. Bachrach, you have the floor for six minutes.

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

Thank you, Mr. Chair.

Welcome to all of our witnesses. It's been very interesting hearing from you so far.

My first questions are for Mr. Sanger.

Mr. Sanger, in 2017, you studied the Canada Infrastructure Bank. You found that the private financing model that the bank was pursuing could end up costing the Canadian public twice as much as it might otherwise, if other models were pursued.

I'm wondering if you could speak a bit to your methodology and what is a pretty shocking conclusion, and why the public could end up paying so much more for these infrastructure projects.

[Toby Sanger]

I was looking at the difference in the borrowing rates.... In fact, those differences have widened even more, so the cost for it would be even greater right now. As you all know, the federal government's borrowing rates are considerably lower.

Meanwhile, with the example of the REM, the private partner is expecting to get rates of return of 8% or 9% on this and the federal government is lending at 1%. I don't have problems with the federal government lending at low rates for public infrastructure, but I don't think those should go to private profit in that way.

One thing I found surprising, after that, was that even Bay Street was highly skeptical about the CIB, for a number of reasons. I think that certainly explains some of the problems that it's had.

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

Thank you, Mr. Sanger, for that response.

Who exactly ends up paying these higher costs for infrastructure, and are there specific groups in Canadian society who could potentially end up paying more than others under this private model of investment?

[Toby Sanger]

Absolutely. Taxpayers are either paying the cost through their taxes—members have talked about the cost and the losses through the CIB—or else individuals and households are paying it through increased user fees. That was part of the big model for the CIB; they expected each one to be a revenue-generating project.

Those costs largely fall—they're user fees, they're very regressive—on those who are using the service. This was a shift from a lot of the traditional P3s Canada has had that in recent years haven't involved user fees; basically, the public sector has directly paid for them.

However, the idea behind the CIB was to rely much more on user fees, and increasing those would increase costs for households—for ordinary Canadians.

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

What do you feel is the most cost-effective means of financing public infrastructure?

[Toby Sanger]

It's absolutely the federal government lending money at its rate. The federal government can borrow at historically low rates, and it should be doing its part to help other levels of government and the broader public sector to build the infrastructure we need.

It was great to hear from Mr. Riordan about areas in which we could confront the climate crisis. The federal government can certainly afford that and do that in partnership with provinces, municipalities, the broader public sector and indigenous communities as well.

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

Thank you, Mr. Sanger.

I'm going to shift now to our witnesses from CUPE, Mr. Vick and Mr. Ramsay. Either of you can take this question.

Earlier this week, the committee heard from Professor Heather Whiteside of the University of Waterloo, who talked about the CIB's recently unveiled, unsolicited proposal framework that really deprioritizes the public interest in favour of the interests of the investors.

I'm wondering what your take on this is and whether you have concerns about this shift in focus that has been announced whereby the bank is going to be taking projects out to the private sector and trying to get them interested in those projects.

[The Chair, Liberal, Vance Badawey]

Gentlemen, jump in.

Go ahead, Mr. Ramsay.

[Robert Ramsay]

Sure, I can start.

I think Professor Whiteside identified a central contradiction in the CIB model, which is having the objective of building infrastructure in the public interest to meet specific needs that Canadian society has while at the same time meeting the profit imperative of the private sector. The two are in contradiction to each other, and the unsolicited bid program is really a great example of that in its purest form, in which the private sector can approach the CIB and say, “Here's where we'd like to make money. We'd like a public subsidy in order to do it.”

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Ramsay, and Mr. Bachrach.

We're now going to move to the second round of questions. We have the Conservatives first, with Ms. Kusie, followed by, I believe, Mr. Rogers for the Liberals, Mr. Barsalou-Duval for the Bloc and Mr. Bachrach for the NDP.

Ms. Kusie, the floor is yours for five minutes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair.

Thank you to our witnesses for being here today.

Before proceeding, I'm going to move the motion that I had put on notice, if I can, please.

[The Chair, Liberal, Vance Badawey]

Go ahead, Ms. Kusie.

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

Thank you.

It's dated Friday, March 5, 2021:

That, pursuant to the Order of Reference from the House dated February 25th, the Committee invite the Minister of Transport and Minister of Infrastructure and Communities to appear for no fewer than 2 hours each regarding the Main Estimates 2021-2022. That this meeting be televised if possible, and that this meeting take place no later than May 31, 2021.

Thank you, Chair.

[The Chair, Liberal, Vance Badawey]

Thank you, Ms. Kusie.

Are there any questions or comments on that motion?

Mr. Sidhu, go ahead.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

I don't know if we can hold the ministers for two hours or not, but I think one hour might be more feasible. With the department answering the second round, I think that would get to our technical questions as well. I'm not sure how my colleagues feel about that. I just wanted to throw it out there.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Sidhu.

Mr. Bachrach.

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

I just want to note that I believe we only received notice of this motion yesterday, so I'm wondering how this falls within our....

I see the clerk shaking his head, so maybe the clerk can make a clarification on notice.