Evidence of meeting #67 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 cory.
A recording is available from Parliament.
11:30 a.m.
Conservative
11:30 a.m.
Conservative
Leslyn Lewis Conservative Haldimand—Norfolk, ON
It's 125 employees and you have highly diverse and qualified employees.
Why do you need so many outside consultants?
11:30 a.m.
Chief Executive Officer, Canada Infrastructure Bank
Thank you for the question.
In my breakdown, what's important to note is that the vast majority of our spend on external advisers is on those deal-related items. When we're doing an investment in, for instance, hydrogen, which is one of the important areas of exploration, we've engaged people on a transaction to help us assess what the market for hydrogen looks like for the next five to 10 years and what the delivered cost is going to be. We're getting a lot of technical advice. Those are investment-related costs.
As I say, there are also financial advisers, legal advisers, engineering services and support to help us cost the projects. It's those sorts of things.
The vast majority of our external expenditure is for those deal-related activities.
11:30 a.m.
Conservative
May 9th, 2023 / 11:30 a.m.
Chief Executive Officer, Canada Infrastructure Bank
None of that has included McKinsey consultation.
11:30 a.m.
Conservative
Leslyn Lewis Conservative Haldimand—Norfolk, ON
If I can turn to a letter that you wrote to government operations and estimates, on page 2 you listed essentially three contracts, Mr. Cory.
11:30 a.m.
Conservative
Leslyn Lewis Conservative Haldimand—Norfolk, ON
The contracts totalled $1.43 million. Is that correct?
11:30 a.m.
Conservative
Leslyn Lewis Conservative Haldimand—Norfolk, ON
Isn't it true that there were actually more than three contracts? There were actually five contracts.
11:30 a.m.
Chief Executive Officer, Canada Infrastructure Bank
I appreciate the chance to clarify.
Some of the work was done in two phases. When we say three contracts, there were three contracts, in point of fact. In two cases, there was a phase A and a phase B and two invoices were sent. The $1.43 million covers all work done with McKinsey. We describe that as three contracts, but the member's question is fair.
Mr. Duguay can, perhaps, elaborate on the two phases of work.
11:30 a.m.
Conservative
Leslyn Lewis Conservative Haldimand—Norfolk, ON
Your letter was written February 22, 2023, to the government operations and estimates standing committee and it outlined three contracts. However, as you said, Mr. Duguay responded to an Order Paper question on March 9, 2021 and listed five contracts and five invoices. Today his testimony is very different.
Can you elaborate on why you only listed three contracts and why they were not broken down?
11:30 a.m.
Liberal
11:30 a.m.
Chief Executive Officer, Canada Infrastructure Bank
Of course, Mr. Chair.
I'll just say there is no discrepancy. They represent the same scopes of work. There were three contracts—three stroked items of work. Two of them had a part A and a part B. In response to the Order Paper question, we listed them by invoice, so it showed up as five line items. It's the exact same scope of work, quantum and time frames.
11:30 a.m.
General Counsel and Corporate Secretary, Canada Infrastructure Bank
If I may add, Mr. Chair, all of those materials were provided to OGGO. The materials provided to OGGO show the work that was provided under each of the statements of work for these contracts, as well as the invoices received. As Mr. Cory points out, and regarding the risk management work I alluded to earlier in my remarks, there were two invoices because there were two scopes of work with respect to that. In the last contract concluded in 2020.... There were also two invoices provided for that contract.
11:35 a.m.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Mr. Duguay and Dr. Lewis.
Next, we have Mr. Badawey.
Mr. Badawey, the floor is yours.
11:35 a.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Thank you, Mr. Chair.
I want to preface my comments by saying thank you for being here today, and also that my questions are going to concentrate on the business of government versus the politics of government. I'm not here to cross-examine you. I'm here to contribute to the overall study.
With that said, to be productive in how we move forward on the business of government specifically.... As your website states, and you said earlier, CIB is “partnering with public, private and Indigenous groups to fill gaps—structural, economic and commercial risk—which will result in a more resilient, sustainable and prosperous” communities throughout the country.
I want to get a bit more granular on that, in terms of the innovative partnerships you've been able to accrue over time. The biggest part is the leveraging you actually provide—and I underline in bold the word “leveraging”—to expedite needed infrastructure work and, secondly, to alleviate the financial burden, for example, on property taxpayers within communities and on water bills, based on the capital work you partner to do. Of course, with that leveraging, the funding you bring to the table, once again, takes that burden off the property taxpayer or waste-water ratepayer.
Can you comment a bit on that, in terms of the productivity the CIB offers those communities?
11:35 a.m.
Chief Executive Officer, Canada Infrastructure Bank
Thank you. I appreciate the question, Mr. Chair.
As Tamara outlined in her comments, you have to start from the deficit we face in our infrastructure across the country. The reality is that there is no one solution to that level of deficit. It's going to take all the tools in the tool kit. There's certainly a place for traditional publicly funded and publicly financed infrastructure. We need that and we have it across our country with our public schools, highway networks and health care system. That will continue to be true. However, there's a class of infrastructure, to the member's question, that has some economics to it—some commercial element—but the private sector can't and won't do it alone, often because of risk or uncertainty.
Let me pick one example we often talk about, and one Mr. Jaswal mentioned in his opening remarks: electric-vehicle charging. There are entrepreneurs across this country looking to build out EV-charging networks, and that's great. Those entrepreneurs also look at a very uncertain world. They look at uncertainty around how quickly adoption will take place, what the supply chains for EV will look like, and how quickly people will get over their range anxiety and make that conversion. If you started a business, Mr. Chair, and you were going to build out a network of EV chargers, you would have to be very cautious. You'd build out a few chargers next year and a few the year after that. You would slowly, in a commercial way, do that.
The leverage the member asked about.... What we're trying to do is accelerate that build-out by providing a loan to a private sector builder of EV charging that allows them to go much faster than they would otherwise. It says to them, “You will pay us back as your business performs.” If it takes longer for adoption to happen, our loan terms will actually defer. It's very different from what a bank would do, or from the kind of loan they would find in the market. That's what we can do with public moneys in a loan.
Just to be clear, everything the CIB does is a loan or an equity investment. We don't have a single dollar of granting. However, what we can do with taxpayers' money in a loan structure is be flexible—take on long time horizons and uncertainty.
That's how we're getting the leverage the member asked about.
11:35 a.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Thank you.
To take it a step further, I'll concentrate my next question on community strategic planning.
Of course, the second part of that is dealing with our official or secondary plans. In Ontario, for example, they have the Public Services Accounting Board, or PSAB, and, with that, the encouragement the province puts on municipalities when it comes to asset management. That's wonderful. It's a discipline that all municipalities should abide by.
The challenge, however—to be disciplined under it and complete it—is, in fact, the financing of an asset management plan—
11:35 a.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
—vis-à-vis the life cycle, repair maintenance and, of course—after 30 or 40 years—the replacement of that asset, which, ultimately, defaults to the property taxpayer or waste-water ratepayer through their water bills and capital fixed rate. That said, the challenge municipalities have on top of that is in trying to promote their economy with partners within the economics and niches within their jurisdiction.
Again, how does the bank add that leveraging within those strategic plans to move the desires of each jurisdiction forward, with respect to advancing their economy?
11:40 a.m.
Chief Executive Officer, Canada Infrastructure Bank
This is a really important question, Mr. Chair, and I appreciate it.
Infrastructure is truly an investment, and I think that word gets overused, but infrastructure truly is that. Spending money to upgrade water and waste-water treatment facilities, for instance—as the member asked about—is a classic example.
There is, over the long run, a way to bring down costs for a community, a community that may be on septic beds or a community that may be trucking their waste to a nearby community to get treated because they can't manage the upfront cost. Over the long run, there is a benefit to ratepayers and taxpayers.
By providing a loan up front and by spreading that out over a very long time frame, what we're able to do is help those communities deliver on—as the member correctly points out—asset management plans, which are great, but they're not great without financing. By providing low-cost, stable financing, letting that stretch over much longer time horizons and sharing in the risk, it really does take down the cost in our water example for ratepayers.
11:40 a.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
As well, your leveraging can be used as an incentive for communities to promote the economic development opportunities they have within their jurisdictions.