Evidence of meeting #108 for Transport, Infrastructure and Communities in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was project.
A recording is available from Parliament.
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
Are you not concerned about a partner that is spending an exorbitant amount of money, 27%, on bonuses?
Liberal
Chris Bittle Liberal St. Catharines, ON
I let the first question go. This is nowhere in the range of relevance for what we're studying, and he's not even a witness who has any direct information—which he has testified to.
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
It's absolutely relevant, because we're looking at the waste of taxpayer funds. I understand that the Liberals are not interested in transparency. They're interested in cover-ups. That's certainly their pattern.
The question was whether that was a justifiable level of bonus structure at NextEra. Let me ask the same question of the IESO, which is an employer—
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
Is that, do you think, a justifiable level of compensation for bonuses?
Liberal
Chris Bittle Liberal St. Catharines, ON
These may have been valid questions for the Infrastructure Bank witnesses, who were here the other day. I believe the questions about the bonuses were asked.
The Conservatives wanted a lengthy study specifically on the Lake Erie connector project, and now they're asking questions that are completely irrelevant, which seems to be a pattern. They were doing it yesterday.
I'm hoping they can get back to the actual project. If they're out of questions, maybe they can just pass the floor on.
Liberal
The Chair Liberal Peter Schiefke
Thank you, Mr. Bittle.
I'll ask all colleagues to stay on point and ask questions directly related to the Lake Erie project. Thank you.
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
Again, I understand the efforts of the Liberals to cover up a ridiculous amount in bonuses.
Let me switch gears. I'll ask this of the Honourable Lisa Raitt.
When we look at the macroeconomic environment—that has to be an important consideration when we're looking at the costs of infrastructure projects, which keep going up and up—the CEO of CIBC last week made a comment that in the upcoming budget, there needs to be an effort to pursue policies that will tame inflation.
You were part of a government that did an incredible job of keeping on the inflation target, managing spending and delivering infrastructure projects. Maybe you can comment on that.
As an Individual
I can actually comment, MP Muys, on the question you had just before, with respect to bonuses. You may recall that we dealt with major infrastructure projects in our government through the P3 Canada model, which was a Crown corporation. Within a Crown corporation, any kind of bonusing actually goes through the Prime Minister, so it's a really good way to ensure that you are accountable for the bonuses and that they're kept to a certain level.
I can understand the structure of the CIB. It can grant its own bonuses without being tied back to the government and the taxpayer. That can be difficult to see, without question. That's why I always preferred the P3 model and the Crown corporation model when it came to funding these infrastructure projects.
To the second question, you raise a really good point. You can see that the Province of British Columbia actually suffered from a downgrading of its creditworthiness by Moody’s, and then a levelling off or a negative call from Standard and Poor's—or Standard and Poor's was the reduction, and then it was Moody's. The reason why they did it was that they were very concerned about the continuous deficits that we're having, and there was no ability to understand whether or not we were ever going to come out of them.
There's a very real danger. Even though B.C. is spending a lot of money on infrastructure, it can't just spend on infrastructure and assume that it's all going to be okay on the credit rating side, because banks want to see that there's going to be a way out and that there's a plan out of all these deficits.
In the case of B.C., it's a living example for all of us to look to the federal government in the same view: Are you sure that what you're doing isn't going to cause us to have a downgrade in our borrowing accreditation?
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
The inflation and the interest rates are obviously going to have another macroeconomic impact on the cost of financing projects and building infrastructure projects in Canada.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Mr. Muys.
Next, we will go to Mr. Bittle.
The floor is yours. You have five minutes, sir.
Liberal
Chris Bittle Liberal St. Catharines, ON
Thank you so much, Mr. Chair.
I'll continue with Ms. Raitt. It's good to see you.
I'll build on the point from Mr. Muys. When he says the CIB has accomplished zero, would you agree with that assessment, Ms. Raitt?
As an Individual
I haven't taken a look recently at what it has done or has not done. I know the CIB has lots of activity with various banks here in Toronto, whether or not it has had projects completed.
I went to an announcement of one project that the CIBC was involved in. I don't know whether or not it's been constructed or whether or not it's been completed, but they were certainly involved in it. It had to do with distributed energy in Markham, Ontario.
Liberal
Chris Bittle Liberal St. Catharines, ON
I'll turn you back to comments you made. I believe you were with Mr. Cory—whom we heard from the other day—and you said, “you're doing a lot of work. You're getting...projects done, and you are, I think, filling a need that has been shown to be necessary in order to get projects going here in Canada.”
Which is it?
As an Individual
The reference was to a specific project that we were being interviewed on, and it had to do with some work that was being done by the Royal York, by a private entity that was making it more green and adhering to it. It needed some help from the CIB and, in fact, it was given. I have not seen any larger projects being done, other than something like that.
Liberal
Chris Bittle Liberal St. Catharines, ON
I won't belabour the point, but it's plural in terms of “projects”: “You're getting...projects done, and you are, I think, filling a need that has been shown to be necessary in order to get projects going here in Canada.” I guess, just to make the point with respect to the bank, it has 56 infrastructure projects, including 53 that have reached financial close, and 37 in active construction. I agree with Ms. Raitt, in her previous comments when she wasn't at committee, which are different from her comments today. However, I'll move on.
My next question is for Mr. Farmer.
We heard from Professor Winfield last time, who was questioning Ontario's ability to sell lower-carbon electricity to other markets, given the state of the system. I was wondering if you can comment on that question that was called by Professor Winfield.
Chief Energy Transition Officer and Vice-President, Planning, Conservation and Resource Adequacy, Independent Electricity System Operator
What we have to remember about this particular project, and about all of our tie lines, is that they are importing and exporting energy every hour, as opposed to at a peak when you may have a lot of generation online. There are many times during the course of the year when demand is much lower. Demand does vary a lot over the course of the year.
We have a large nuclear baseload fleet, even with our refurbishment program, a large hydro fleet, and substantial wind and solar on the system, so there are many hours when we have available non-emitting energy that we can export to neighbouring jurisdictions.
As we look forward in Ontario, we are investing. We do acknowledge that we will be using more gas in the near term as we meet the significant economic growth that we are seeing, particularly in southwestern Ontario. However, as we move forward, we will use the gas fleet more, but then we will reduce that usage, because we are investing very heavily in storage, in renewable energy and in nuclear to maintain our clean electricity system.
Liberal
Chris Bittle Liberal St. Catharines, ON
I'm wondering if you could expand a bit—and I know you've touched on it—with respect to the benefits to Ontario ratepayers in terms of the infrastructure and what we're actually going to see on the ground if this project is completed.
Chief Energy Transition Officer and Vice-President, Planning, Conservation and Resource Adequacy, Independent Electricity System Operator
It's important to note that we value all of our interties with our neighbours. Our interties provide extremely valuable services to maintain the reliability of the electricity system. They can provide capacity, which means that when we are in tight times, we can import capacity from neighbouring jurisdictions. We do that quite a lot. They can provide energy. They can provide reliability services, like operating reserves. We get a lot of value. The more interties we have, and the more robust our interties are, the more we can rely on them to maintain the reliability of our system.
We looked at each of those value streams when we were looking at this particular project, as we would with any intertie proposal, and came up with assessments of those values. If you require more information on those specific values, my colleague Barbara Ellard would have the details, and we can provide those.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Mr. Farmer.
For our final round, we'll go to Mr. Strahl.
Mr. Strahl, the floor is yours. You have five minutes, please.
Conservative
Mark Strahl Conservative Chilliwack—Hope, BC
Thank you very much, Mr. Chair.
I want to go back to the update to investors that Fortis made. ITC Holdings is another name here. When they bailed out of the Lake Erie connector project, they said, “Macroeconomic conditions relating to rising inflation, interest rates and foreign exchange impacted the viability of the project”. When I talked to Mr. Pawlowski, he said that the situation in terms of our interest rates, inflation and the macroeconomic conditions has not improved since July 2022. What is happening here is that a private sector investor has bailed out of a project because it can't make it work anymore. It financially doesn't work due to the economic conditions.
We saw last week that Scotiabank said that Bank of Canada rate cuts could be delayed by high government spending. That was their CEO. Then we saw yesterday that the Bank of Canada did not reduce its prime lending rate, which means that Canadians did not get a break on their mortgages, lines of credit or loans, and neither did small businesses. These high economic pressures are continuing to fall on Canadian families, Canadian businesses and Canadian small businesses.
Ms. Raitt, your CEO at CIBC said last week that the Canadian government risks reigniting inflation with spending measures aimed at fixing an acute housing crisis. As Mr. Muys mentioned, you were a minister in a government that balanced the budget, kept inflation under control and made record investments in infrastructure. Drawing both from your record in cabinet with a government that prioritized financial responsibility and from your new role with CIBC, how important are the broad financial policies that lead to a macroeconomic environment that encourages investment rather than having investors heading for the exits?