Evidence of meeting #22 for Transport, Infrastructure and Communities in the 43rd Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was projects.
A recording is available from Parliament.
NDP
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Mr. Cory, we recently had Professor Heather Whiteside at the committee. She quoted you as saying that in your role as CEO, you were going to “start with the market and work backwards”. When it comes to public infrastructure, this seems to me to be backwards. Isn't it more appropriate to start with the communities that need the infrastructure and then look at how those projects can be funded?
What did you mean by “start with the market and work backwards”?
Chief Executive Officer, Canada Infrastructure Bank
I really appreciate the question. Of course I think that infrastructure needs to start with communities, and so I thank the member for the question. Unfortunately, many communities have infrastructure projects that they have been desperately in need of and that have not happened for decades, in many cases.
My comment was really about market sounding. One of the lessons I certainly learned in my time in Ontario is the value of conducting rounds of market sounding, going out and talking to constructors and investors and the people who might actually help make a project work to better understand what the bottleneck is. What's the risk they are concerned about? What's the financial, commercial or technological barrier that we're trying to overcome?
By doing that, we can structure the CIB's role in a way that does crowd in that investment and gets the project done.
That was what I was referring to, and I appreciate the question.
Liberal
The Chair Liberal Vance Badawey
Thank you, gentlemen.
Mr. Bachrach, thank you as well.
Mr. Casola and Mr. Cory, we are very appreciative of your time today. I apologize for some of the delays that resulted from the motions. However, that's part of committee work.
With that, I am going to excuse both of you. Once again, thank you for your time today.
We're going to take a two-minute suspension to allow our next set of witnesses to go through sound checks, and we can go from there.
Liberal
The Chair Liberal Vance Badawey
We're going to reconvene.
Members, we have two witnesses who are coming to us from the PBO.
We have Ms. Nahornick. Welcome. It's good to have you out.
We also have Mr. Giroux. It's great to have you out today as well.
To both of you, I appreciate your time.
With that, I'm going to give you five minutes to make your presentation. I'm not sure who wants to present. I will give both of you the opportunity if you so prefer.
Mr. Giroux, we will start off with you, for five minutes.
Yves Giroux Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Thank you, Mr. Chair.
Good afternoon, Mr. Chair and members of the committee.
Thank you for the invitation to appear before you today. We are pleased to be here to discuss my office's work as part of your ongoing study of the Canada Infrastructure Bank.
With me today I have Nora Nahornick, the author of our two most recent infrastructure reports.
The Office of the Parliamentary Budget Officer, or the OPBO, gained prominence when the government committed $81 billion to infrastructure investments in the fall of 2016. Since then, the investing in Canada plan has grown to $187 billion spread over 12 years, including $35 billion in start-up funding for the Canada Infrastructure Bank.
The OPBO has published five reports on infrastructure spending since February 2017. In these reports, we have quantified successive delays in infrastructure spending, estimated additional economic growth from infrastructure spending and foregone economic activity associated with those delays, and shown that the investing in Canada plan has contributed to increases in capital spending for municipal, but not for provincial governments.
Four years into the federal government's infrastructure expansion, we're unable to provide parliamentarians with a full status update because the government has not kept track of information on all funded projects.
The PBO determined in 2018 that the complete plan for infrastructure did not exist. Since 2017, we have repeatedly identified reporting gaps in tracking the inventory of infrastructure projects, and the government has been unable to provide my office with the complete project data for four years.
Today we published a blog post demonstrating that spending by the Canada Infrastructure Bank has also not kept pace with plans. The bank has committed to 13 projects, but has finalized investments on only two. Roughly 3% of its $35 billion in capital has been disbursed. The bank has received hundreds of project proposals, but many are screened out because they don't fit within the government's targeted sectors: transit, green, clean power, broadband, and trade and transportation.
Finally, while the bank is mandated to leverage funding from private sector partners, it has yet to do so. CIB projects funded so far have been supported by federal, provincial and municipal levels of government exclusively.
Additional analysis on the Canada Infrastructure Bank is under way, and we plan to publish our work later this spring.
This afternoon we would be pleased to respond to questions you may have regarding our work on the Canada Infrastructure Bank and federal infrastructure spending in general.
Thank you, Mr. Chair.
Liberal
The Chair Liberal Vance Badawey
Thank you, Mr. Giroux.
We're now going to move on to our second round of questions. We're going to start with the Conservatives.
Mr. Scheer, you're on the floor for six minutes.
Conservative
Andrew Scheer Conservative Regina—Qu'Appelle, SK
Thank you very much, Mr. Giroux.
We are happy to have you with us today.
I just wanted to clarify something. I heard your opening remarks and I just want to make sure I understand this.
Are you saying that even after flagging to the government that you were unable to track all the projects that they claimed to have initiated, the government still hasn't been able to provide you with that documentation?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes.
We've asked the government repeatedly to provide us with that information. As we asked for details, more information that was missing progressively came to light. We are still missing information about [Technical Difficulty—Editor] to 9,000 projects out of the 53,000.
Conservative
Andrew Scheer Conservative Regina—Qu'Appelle, SK
Thank you very much.
When you say that the spending has not led to an increase in provincial spending, am I correct in understanding that what you're saying is that the federal spending is displacing provincial spending?
It's not leading to more projects. It's just that the federal government is assuming more of the cost for itself.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes. That is exactly it.
We found that, generally speaking, federal infrastructure transfers increased. For example, it increased by $1 billion in 2018-19, but overall provincial infrastructure spending decreased by $733 million. Federal spending seems to have displaced at least a portion of provincial spending.
Conservative
Andrew Scheer Conservative Regina—Qu'Appelle, SK
I see. Thank you very much for that.
Before I move on to questions about your blog post today—I think it was very timely and I would like to get onto that—can you also speak to the percentage of infrastructure spending the federal government has lapsed every year? Can you give the committee some idea of what kind of numbers we're talking about in terms of dollars not being spent?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I'm sure Nora can provide better information than I can.
Liberal
Nora Nahornick Economic Analyst, Office of the Parliamentary Budget Officer
Absolutely.
If we compare it to budget 2019, we're looking at about a $2-billion lapse. However, there's been a delay in spending since the end of[Technical Difficulty—Editor]. If we look at budget 2016, we're looking at an $8 billion lapse.
Conservative
Andrew Scheer Conservative Regina—Qu'Appelle, SK
That's a significant amount. You can almost view that as a cut in infrastructure, because it's money not being spent and not going to much-needed projects. That sounds like a very significant amount of money being cut from the infrastructure funding envelope.
If I could now turn to the blog post today, we just heard testimony from Mr. Cory from the CIB. He maintains there is private sector money being committed to these projects. Specifically, he pointed to the REM project in Montreal and the Alberta irrigation project.
Would you like to explain how it is that you stated in your post that there is no private sector investment when Mr. Cory claims there is?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We looked at the projects. We got information from the banks themselves. We also looked at Statistics Canada's definition of “government entities”, and based on the funding for which there have been contracts signed, the two that you are referring to—Réseau express métropolitain and the Alberta irrigation project—are funded by government entities as defined by Statistics Canada.
Unless Statistics Canada got confused in their definition of government, we consider that there is no private sector involvement in these two projects.
Conservative
Andrew Scheer Conservative Regina—Qu'Appelle, SK
I think you just made a very important point, Mr. Giroux. You're telling me that the government itself defines private sector entities a certain way and defines government entities a certain way. According to the government's own definition, the investments in those two projects do not contain any private sector investment. Am I correct in summarizing it that way?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's a very accurate summary.
Conservative
Andrew Scheer Conservative Regina—Qu'Appelle, SK
When the government itself, by its own definition, is not obtaining private sector investment in those two projects and when you look at the other projects—I've been through the project list myself on the infrastructure bank's website—you see that much of the bank's involvement is classified as advisory services or project facilitation.
Is there a way to quantify the private sector investment that this leverages, when they are involved not in terms of reducing risk or underwriting the project, but simply providing consulting services?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Unfortunately, it's very difficult to quantify private sector involvement, because we had to rely on publicly available data. There's no evidence of significant private sector involvement, at least in the funding of these projects. There may be in some of the advisory services, but again, there is insufficient data to [Technical difficulty—Editor] private sector involvement.