Transport Committee on March 23rd, 2021

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

So that was $163 million, and the contribution from the bank was $400 million?

[Ehren Cory]

That's correct.

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

Does that meet the test of a two-to-one return on investment? I'm not willing to concede that that's a private sector entity. I mean, you have something that is a creature of a provincial government, that is created by an act of provincial parliament, that receives money for funding its operations and its investments from the provincial taxpayer. Certainly the Parliamentary Budget Officer doesn't seem to agree that this counts as private sector money.

What we were led to believe when the Prime Minister came back from the fanciest cocktail circuit you could ever imagine, that of the uber-rich, the 1% of the 1%, was that he had been convinced that if he were to create this infrastructure bank, these private sector entities from all over the world would just trip over themselves to put their cash, their investors' cash, into these projects.

So far, the only two projects you can point to that have private sector money are the REM project in Montreal, which is using Quebec pensioners' contributions, the funds that Quebec pensioners have been mandated to pay through their payroll deductions, and the irrigation project, which is being funded by the irrigation districts, which, as I mentioned, are creations of the provincial government itself. Those are the only two projects.

Where are the independent private sector hedge funds, the private sector mutual funds, the private sector banks, the private sector capital that this government promised when it made the announcements for this corporate plan? Your own mandate states that you were going to be leveraging two to one. In the October 2016 economic statement, former finance minister Bill Morneau said that it could be as high as four to one, and it's just not there: $163 million to $400 million is not two to one.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Scheer.

Mr. Cory, hopefully you will be able to get in an answer to that within the answer to a future question.

With that, I'm going to move to Ms. Jaczek.

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

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

Thank you very much, Chair.

In fact, why don't you respond, Mr. Cory, to Mr. Scheer's point related to hedge funds and all that other opportunity for capital?

[Ehren Cory]

Yes, of course. Thank you.

Pools of capital.... The member mentioned mutual funds and pension funds. All of it ultimately, of course, is the money of individuals, of individual investors, people who invest in their pensions, who save money. Pension funds are no different, you know. We have some of the largest and most sophisticated pension funds in the world here in Canada, and they invest in infrastructure all over the world. Historically, they haven't done much of it in Canada, whether that's Teachers' here in Ontario, CPP or AimCo out west.

These are large pension funds. They represent private pools of capital—yes, absolutely—and they are investing that money on behalf of their members, just like a hedge fund is investing money eventually on behalf of individual investors. Absolutely, just to the foundational, definitional question, to us those are pools of private capital.

Second, I would mention a third example that didn't get cited. We talked about our Oneida battery storage project. It's a different one. I mention this only to say that those are three different projects with three different kinds of non-government capital. I want to stress the words “non-government capital”. With Oneida battery storage, it's actually a private entrepreneurial company called NRStor. They have shareholders. They're a private company with owners. They're investing their equity. They're also partnered with a first nation [Technical difficulty—Editor] from other pools of capital—pension funds, etc. That's a third project.

All three of those, in our mind, do meet the test, as John said. Those are different forms of non-government money. They're not getting paid for from grants or subsidies. They're getting paid for, instead, by other pools of capital, and those pools of capital are getting paid back by the revenues of the project. That's critical—it's not getting paid back by taxpayers.

Whether it's the savings from converting diesel buses to electric or the energy in the Oneida battery storage project, the idea is that we'll be able to sell that power to the grid, displace gas and instead take the renewable energy. That project is in Ontario. It's going to take renewable energy when it is created, store it in batteries and then sell it back to the grid. That's what's going to pay back those investors. That's what's going to pay back the CIB as well.

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

Thank you, Mr. Cory.

Perhaps I can get to what I would really like to ask about. It does relate in essence to the definitions of private and privatization. We've had a number of witnesses here before the committee, and I think their greatest fear was that in some way the CIB was mandating privatization of the asset. In other words, once the investment has been made, there is a public asset.

Again, you mentioned this in your opening statement, but could you just clarify for us? Is there any mandate at the CIB to allow this infrastructure investment to become privately owned?

[Ehren Cory]

This is an important question. It is often a source of confusion.

It is crystal clear: We have no mandate whatsoever to privatize public assets. We work with the owners of those assets to deliver, and we're actually....

The goal of engaging private capital is to do two things. It's to grow the pie of money we have to pay for these projects—because we all have to admit that there's a limit to what we can do from purely tax-based, traditional grant funding. We're trying to grow that pie. Number two, we're trying to grow that pie in ways that create a good alignment of incentives, so that if you have a private sector partner, they have every incentive in the world to build it well and run it well over the long term.

Of course, I've had the privilege of working with the member. I was previously at Infrastructure Ontario. The Ontario program is a good example of this. Hospitals, colleges and universities, courts and a whole bunch of public infrastructure has been built using some form of P3 and without any privatization of any of those assets or the services delivery.

Now, as the CIB—to step back—we're very agnostic on the type of project. We can work in the context of the Ontario-style P3. We can work with other public sector owners. We work with municipalities directly. Let alone to privatize, we also have no edict or mandate that it must be a P3 or not. That's not even in our consideration set.

For us, it's all about revenue-generating assets that draw in private capital to take on some of the risk in this and to provide some of the upfront capital and get more built that way.

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

Thank you.

Certainly from your experience at Infrastructure Ontario, I know that you're really familiar with the length of time that it takes to put these projects together. Again, I think some of the criticisms that we've been hearing do relate to the length of time. Can you just quickly give us what you normally expect as a sort of project timeline?

[The Chair, Liberal, Vance Badawey]

Thank you, Ms. Jaczek.

Once again, Mr. Cory, you can try to get that into a subsequent answer.

We're now going to move on to Mr. Barsalou-Duval for two and a half minutes, and that will do it for this first hour.

Mr. Barsalou-Duval, the floor is yours.

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

Thank you, Mr. Chair.

Mr. Cory, when I asked you earlier how many employees of the Canada Infrastructure Bank spoke French, you told me you did not know. I must say that this surprised me a bit, as the bank employs only 80 people. It seems to me that this is not a lot and that you should be able to give an approximate number. It's not as if the bank employed 5,000, 25,000 or 100,000 people. We would appreciate it if you could clarify this for us. I think it is important to Quebeckers.

In addition, people were promised that, after the bank was created, money from the private sector would be flowing in. Many of us feared there would be a wave of privatization. That wave has not taken place so far because the private sector has not invested any money. As the Parliamentary Budget Officer says [Technical difficulty—Editor], projects are carried out in partnership with public organizations. Your promises have not materialized, as the private sector has not invested any money.

What is even worse is that disbursements have not followed the promises. We were told that $35 billion would be invested in infrastructure projects. However, that money has not been invested so far. Almost no projects have been announced and almost no one wants to do business with the Canada Infrastructure Bank. We thought that you would perhaps try to catch up. Three people have come and gone as chairs of the board of directors or within the bank's leadership. So I understand there being instability and difficulty in being effective.

The Parliamentary Budget Officer's latest document tells us that 90% less has been invested than anticipated in the first nine months of 2020-21. So the situation is not improving, and things are not accelerating.

Do you find it difficult to justify the Canada Infrastructure Bank's existence?

[Ehren Cory]

Thank you, Mr. Chair. I'll tackle a few things quickly.

First, I appreciate the member's question.

Let me be very clear on people. As of today, we have precisely 74 employees at the bank. I rounded it to 80 employees, but we have 74 employees. About 30% of them, 23 employees, are qualified as fully bilingual. That includes a team we have based in Montreal. We have folks in Montreal, Toronto and Calgary. In Montreal, we have a dedicated team who work on investments in the province. Those are our bilingual statistics, so thank you for the chance to answer that question.

On our activity, I would only say to the member that I joined the organization four months ago because I believe very much in the opportunity to be part of the way that we close the long-term infrastructure gap. As I said, we're not at all the only country in the world to move in this direction. A number of leading jurisdictions think there is a way to expand the universe of infrastructure projects.

In terms of the Government of Canada, it is actually something that has been tried before and something that I believe in the long-term potential of. I think we're absolutely headed in the right direction. I'm really proud of the progress we have made in the last few months since I joined.

To answer Ms. Jaczek's question of a few moments ago, the growth plan is our attempt at doing some of the shorter-term, more pragmatic investments that go from idea to dollars out the door quickly. That's track one. For track two, we have our longer-term, more substantial, transformational type of projects that we also continue to pursue.

[The Chair, Liberal, Vance Badawey]

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

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

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

Thank you, Mr. Chair.

I would like to bring forward the motion that I believe I've provided notice of in both official languages through the clerk.

[The Chair, Liberal, Vance Badawey]

Go ahead, Mr. Bachrach.

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

The motion reads as follows:

That the Committee request the Canada Infrastructure Bank file all documents detailing the bonus policies and payment of bonuses to executives and the board of directors since the bank's inception.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Bachrach.

Are there any questions or comments on that motion?

I see no questions.

Mr. Clerk, would you like to call the vote?

[Andy Fillmore, Liberal, Halifax, NS]

Mr. Chair, I'm sorry. Could I make a comment?

[The Chair, Liberal, Vance Badawey]

Go ahead, Mr. Fillmore.

[Andy Fillmore, Liberal, Halifax, NS]

Would it be okay to hear the motion one more time? I want to make sure that we all absorb it.

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

It has been emailed around to everyone.

[Andy Fillmore, Liberal, Halifax, NS]

I'm sorry, but I have three screens and a pile of paper here. Perhaps you could read it.

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

Through you, Mr. Chair, to Mr. Fillmore, the motion reads:

That the Committee request the Canada Infrastructure Bank file all documents detailing the bonus policies and payment of bonuses to executives and the board of directors since the bank's inception.

[Andy Fillmore, Liberal, Halifax, NS]

Okay. We may as well get into some discussion, I guess, on the motion here, if that's fine with you, Mr. Chair.

[The Chair, Liberal, Vance Badawey]

Go ahead, Mr. Fillmore.