Transport Committee on March 23rd, 2021

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

Yes. Based on the way the bank is funding these entities now, would it be safe to say that the bank has become just another traditional funding envelope, that there is no innovative financing structure here because the private sector involvement isn't coming in? Is it just like any other government envelope of grants?

[Yves Giroux]

Based on the first four years of operations of the bank, or almost four years, it would certainly seem that it behaves like a traditional government entity in providing grants or loans or whatever type of financing that is typical of government institutions without leveraging private sector involvement.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Giroux; and thank you, Mr. Scheer.

We'll now go on to the Liberals.

Mr. Fillmore, the floor is yours.

[Andy Fillmore, Liberal, Halifax, NS]

Thank you very much, Chair, and thank you, Mr. Giroux, for being here with us today.

Mr. Giroux, I want to ask you about your puzzling blog today. It was puzzling not only because of its timing. As Mr. Scheer said, it was very timely. It's odd that it's on the same day as your appearance here. It would have been a day that perhaps Mr. Scheer would have chosen himself. It was puzzling, moreover, in its—

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

Mr. Chair, on a point of order, I hope Mr. Fillmore is not impugning the Parliamentary Budget Officer, an independent officer of Parliament. I just want to raise my objection to that. I found it very unethical.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Scheer.

Go ahead, Mr. Fillmore.

[Andy Fillmore, Liberal, Halifax, NS]

Thank you. I was just noting Mr. Scheer's appreciation for the day.

Coming back to the blog post, what's puzzling to me about it is that it characterizes the CIB's two investments to date as being funded exclusively by government. That seems like a very odd conclusion. It makes it sound as though these projects are made up of just CIB money and government grants.

The money that CDPQ, la caisse, put into the REM project doesn't belong to any level of government. It belongs to the Quebec pensioners who worked very hard to earn it and who will benefit from the returns on this investment.

To me, it seems as though the CDPQ, a pension fund that is one of the largest infrastructure investors in the world, would certainly count as an institutional investor, and having Canadian pension funds invest more in Canadian infrastructure projects is exactly the type of activity that we want the CIB to be fostering.

Further, in Alberta, the irrigation districts contributed, as we heard earlier, $163 million to that project. Those irrigation districts are funded by the private farmers whose farms are served by the district, so I wonder how you see those projects as being funded exclusively by government.

[Yves Giroux]

We use the definition that's used by Statistics Canada to define a government entity. There is no doubt that the Caisse de dépôt uses the funds entrusted to it by future pensioners in Quebec and is mandated to make these funds fructify or generate revenues, but it is still a government entity, at least in the eyes of Statistics Canada, and in that sense we don't consider it as a private sector entity.

I don't think anybody in Quebec, certainly, would dispute the fact that the Caisse de dépôt is a government creature. In that sense, that's why we say that the bank has not leveraged private sector funding, because at least for these two projects, it's in partnership with government entities. Even though the funds may be entrusted to them by hard-working Canadians, it is still controlled by the government. That's why we say this is not private sector involvement.

[Andy Fillmore, Liberal, Halifax, NS]

It seems to me that this question of nomenclature is leading to reporting that's inaccurate. I mean, this is about institutional investors and private sector investors. That's the intention. That's the yardstick by which we measure the success of the CIB. You're just wiping away one element of that yardstick by saying that institutional investors do not contribute to the success of the CIB. I'd suggest there's a little bit more work to be done on the nomenclature and definitions here that need to correlate back to the stated intention of the CIB.

Now, we heard it characterized that lapsed funds are akin to cuts. Of course that's not true. Lapsed funds are not cuts; they're simply lapsed. The money remains in the bank for future use, for projects as they come along, as the bank builds up steam, which we discussed in the first hour of today's meeting. These projects are large, complex beasts that exist over many years and across multiple jurisdictions. They have to exist under multiple jurisdictions of legislation and multiple levels of expectation from different stakeholders. They're complex. That's what infrastructure is, so lapsed funds are not cuts.

Of course, usually when we talk about cuts on this committee, it would be the cuts that Mr. Scheer ran on, the $18 billion of cuts to infrastructure investment into Canadian communities, cuts that of course Canadians refuted. They in fact supported our platform to create the CIB.

If I have a minute left, I'd like to hear Mr. Giroux's reaction to Ehren Cory's characterization of the bottleneck not being about access to capital but about the higher risk that's associated with these complex, long-term projects, and his characterization that this is why the CIB needs to get in there to help them mitigate that risk.

[Yves Giroux]

Let me first talk about lapses.

Generally speaking, governments are funded by appropriations that work on an annual basis. If any department doesn't spend its allocated funding in a year, it usually lapses. It doesn't get spent. That is unless the government re-profiles that and makes the conscious decision to take the unused amounts and re-profile them to put them into subsequent years. In that sense, you could say that lapsing can amount to a cut in the absence of any subsequent decision to re-profile, which the government has indeed decided to do in the case of infrastructure projects. It has [Technical difficulty—Editor] lapsed at the end of any given year.

With respect to the bottleneck, I don't think I'm the best person to talk about the bottleneck. While we did do that blog post on the bank, we have not studied in wide detail the reasons for delays and how infrastructure projects work, generally speaking. It's widely understood that infrastructure projects span several years, but an institution like the bank is probably fully aware of that and in our opinion should probably be able to plan accordingly.

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Giroux and Mr. Fillmore.

We will now go to the Bloc Québécois.

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

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

Thank you, Mr. Chair.

In the document titled “Status Report on Phase 1 of the New Infrastructure Plan”, which you published in 2018, you pointed out significant discrepancies per capita. The report mentioned that investments in infrastructure represented on average $703 per capita nationally, but that they accounted for only $97 per capita in Quebec.

What are the concrete consequences of that investment gap for the economy and for Canadians?

[Yves Giroux]

The cause of those disparities must first be taken into consideration. Are they caused by different needs? The disparities may be explained by needs and readiness varying from one province to another.

However, if the needs are essentially the same from one province to another, but there are discrepancies in per capita funding, that leads to underinvestment in certain regions or yet, although this is unlikely, to overinvestment. Underinvestment means that needs are not being met in certain regions—in other words, they are receiving less money per capita. So needs would not be met in certain sectors, such as public transit and roads. All projects funded through those programs are affected.

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

Thank you.

To my mind, the difference between $703 and $97 per capita is pretty large. On average, investments made across the country are seven times larger than in Quebec, according to those 2018 documents.

Do you think this difference is significant and may have important consequences?

[Yves Giroux]

Yes, it is a discrepancy that can be telling, but we should still take it with a grain of salt, as the program is only at its beginnings and the time frame is about a dozen years. It is possible, and even probable, that such discrepancies are related to the time frames of certain projects, especially in the smaller provinces that have benefited from investments a bit earlier than the larger provinces. We obviously have to look at annual profits, but the moving averages over several years are a more important indicator to ensure that no imbalances occur.

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

Earlier, you said you could not obtain information on a large number of infrastructure projects authorized by the federal government. You finally obtained a bit more information on certain projects. This has been talked about for years.

As far as I understand, it is apparently still impossible to obtain information on a certain number of projects, or between 800,000 and 900,000 of them. What are we talking about in terms of dollars?

[Yves Giroux]

Perhaps I misspoke. I was rather talking about 8,500 to 9,000 projects for which we don't have all the information. I cannot give you the value of those projects off the top of my head.

Ms. Nahornick could perhaps give you information on that.

Nora, do you know the...?

[Nora Nahornick]

As Mr. Giroux mentioned, when we did our report, we could identify that there were 8,556 projects with CMHC, which we were told about but for which we didn't receive an associated project list.

We did mention in our latest report that we did receive 12,000 from the gas tax fund, and we can also say that we didn't receive any project lists under legacy projects when we filed our report.

It's difficult to be able to tell you that there were x dollars spent from a specific department. We don't have a list to tell you the value of the associated amount.

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

What does this mean in concrete terms?

There are thousands of projects for which no federal documentation is available.

I am trying to understand the problem. Does this mean there is no accountability? Is the problem a lack of will on the bank's part to share the information with you or has the information been lost? Is the point to prevent the assessment of the work's effectiveness? Is incompetence to blame?

[Yves Giroux]

I would not want to impute intent to the Canada Infrastructure Bank's employees.

I don't think there is malicious intent. I think the problem is rather the fact that there had never had been intent to gather all the information on all infrastructure projects in a single place. Given that there are many projects, the department has been unable to or is still unable to obtain information on all the projects. As a result, it is very difficult to determine whether all the funds—$187 billion—will be spent and when.

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

It is still worrisome to see that there is such a large number of projects that will be authorized and funded by the department, while the department has no trace of them. It is difficult to conceive from an administrator's point of view.

The Canada Infrastructure Bank has existed for nearly four years. So far, it has supported 13 projects and disbursed $1.7 billion, but it is difficult to obtain information on the spending.

According to you, based on the annual reports you have read, is this institution properly managed when it comes to its administrative expenses compared with what is declared?

[The Chair, Liberal, Vance Badawey]

Thank you, Mr. Barsalou-Duval.

Thank you, Mr. Giroux.

We're going to have to move on to our last speaker.

Maybe, Mr. Giroux, you can get that answer into the dialogue you're going to have with Mr. Bachrach.

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

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

Thank you, Mr. Chair.

Thank you, Mr. Giroux, for being with us today.

We heard from Mr. Cory that, in his view, the Canada Infrastructure Bank is on track when it comes to the goals that it set for itself and the progress that it had hoped to achieve. Is that consistent with the conclusions you came to as a result of your work?

[Yves Giroux]

Quite the opposite. Based on the information we were provided by the Canada Infrastructure Bank, we came to the exact opposite assessment.

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

In terms of value for money, we've heard about the executive turnover at the Canada Infrastructure Bank. We've heard about performance bonuses and all sorts of other high levels of compensation. I guess the question is, are Canadians getting good value for money when it comes to the Canada Infrastructure Bank, in your view?