Evidence of meeting #69 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 sabia.
A recording is available from Parliament.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Thank you, Mr. Chair.
Ms. Therrien, we heard an earlier witness state that taxpayers and ratepayers can't afford to pay for all the infrastructure Canada needs—it might be more of a paraphrase. Does the P3 model let taxpayers and ratepayers off the hook? It sounds like there's free money and that this is really taking a burden off Canadian taxpayers. Does that narrative bear out?
Senior Research Officer, Canadian Union of Public Employees
I don't believe so. Again, obviously, everything is tight financially, particularly in municipalities, as you've heard. Their sole real ability to generate revenue is through property taxes. I think we need to be mindful of what people can pay.
Again, the transfer of wealth from senior levels of government down to municipalities is a key component in financing a lot of these capital projects. I would, personally, be an advocate for proper tax reform. It gets people paying their fair share, which can then be transferred down to the communities and people who need it the most.
With regard to P3 models, we've seen and have experience with the fact that, again, it puts municipalities in particular in a precarious situation when they have reliance on these private corporations, if anything goes wrong. We've seen examples of that across the country. There was one in Edmonton where private waste collectors went bankrupt, and then trash wasn't picked up for a couple of weeks until the municipal government and the public works figured out a strategy to do that.
There is a bit of a loss of control when you're overly reliant on that private capital. Again, we haven't been seeing that private capital coming in and being invested at the rates that were promised or speculated by McKinsey and BlackRock at the beginning. Having a public focus on these projects is more efficient, more effective, more accountable and transparent, and ultimately bears better results for communities.
Again, there are billions and billions of dollars in infrastructure deficits. Like I said, it's over $52 billion in Ontario alone, and that's just one province. We really need to take a hard look at not just what the short-term gains might be but what the long-term issues and long-term losses might be. That's one of the pitfalls of the P3 model that we're aware of.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
My final question is for Mayor Brown.
I'm curious whether the Canada Infrastructure Bank ever discussed a P3 model for the electric buses. It seems like you have a revenue model. There's a fare box on board the buses. There's a way for the private investors to make back their investments. Was that ever discussed, or was only the conventional infrastructure investment model discussed as part of that project?
Mayor of Brampton, As an Individual
Right now, the model that was agreed to is that the savings pay back the cost of the buses. Certainly, I don't think anyone views transit as a revenue tool. Transit loses money, but it is a public good. We subsidize transit. The cost savings are real. I have a number per bus per year.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much. Could you provide those to the committee in written form, Mayor Brown?
Liberal
The Chair Liberal Peter Schiefke
Thank you very much.
Next, we have Dr. Lewis.
Dr. Lewis, the floor is yours. Once again, you have five minutes.
Conservative
Leslyn Lewis Conservative Haldimand—Norfolk, ON
Thank you, Mr. Chair.
My next question is for Mr. Sabia.
The Canada Infrastructure Bank is a taxpayer-funded bank, as you know, so the coziness of the bank with McKinsey creates the impression that there is an actual or even perceived conflict. I'm going to highlight some of the interactions and ask why you believe that the public perception of conflict is not so.
McKinsey provided pro bono research support to the advisory council, which was chaired by McKinsey's global managing partner, Dominic Barton. Then you sat on the council as a member appointed by the minister and as an institutional investor. Then you, Mr. Sabia, headed up the discussions around creating and designing an infrastructure bank. The council then recommended the creation of the Infrastructure Bank. The bank announced its first investment in the summer of 2018, the Montreal light rail project, which your pension fund was running.
To those looking from outside in, it looks like a conflict of interest for you, having benefited from sitting on the council that recommended the bank that then awarded your organization a taxpayer-funded investment. Can you explain why that perception is not so, or if it is so, why it happened?
Member, Advisory Council on Economic Growth
It's not so. First off, to just correct something, Chair, that the member of Parliament has said, I was not involved at all in setting up the bank. That was done by the government following the receipt of the recommendations of the growth council and, I presume, internal deliberations within the government. They then set about the work of setting up the bank itself. Just to be clear, I was not involved in that at all. That's point number one.
Point number two is that the decision on the part of the government to participate in the financing of the light rail project in Montreal was, again, a decision in which I and CDBQ had absolutely no role. That was a decision taken by the government in collaboration with the Infrastructure Bank. I am sure, although I wasn't involved, that it was to ensure that the structure of that financing was consistent with the mandate of the bank and that the bank was comfortable, etc.
Again, those are decisions in which I had absolutely no part. Given that, I fail to see how.... There is certainly not the reality of a conflict, and I cannot even see how there could be the appearance of a conflict, if one knows the facts about what happened.
Conservative
Leslyn Lewis Conservative Haldimand—Norfolk, ON
Thank you, Mr. Sabia.
Again, you joined the bank in 2020 as chair and, within a month, you signed another contract with McKinsey. That was a sole-source contract that McKinsey got because of their previous deep knowledge about the bank. In addition to that, Dominic Barton participates in that work through a workshop. They helped develop a new strategy for the bank and worked on a growth plan that would fund infrastructure projects with a focus on net-zero targets. That summer you participated in a McKinsey-hosted panel on resetting after COVID in June 2020. That October you announced a $10-billion growth plan with the Prime Minister that is partially the result of McKinsey's contributions to that plan.
It seems to me that you have quite a history of engagement with McKinsey, because you even joined the bank and then, while you were at the bank, you continued to interact with McKinsey.
All of this is in the context that the bank was created with the help of McKinsey, although not created, as you clarified how it was done. However, McKinsey was informing the creation of the bank from its inception and given what seems like preferential access thereafter to the bank. All the while the bank looks like it's a dud, and it has been in operation for six years with no projects yet completed. This looks like there is some sort of perceived conflict. Can you explain why there is or is not for the public, please?
Member, Advisory Council on Economic Growth
Mr. Chair, I'm sorry. I can't respond to that in 20 seconds, because that's just not the case. Number one, the member of Parliament just mentioned that in six years the bank hasn't accomplished anything. That's simply just not true. The bank, after three years of operation, really did step up the velocity of its activity, as another of the panel, Madam Raitt, mentioned earlier. The bank is up and running, and it is delivering and doing what it needs to do.
I already addressed the question about participating in conferences, which at the time I did as a matter of course for all kinds of different organizations. I have already addressed that.
Absolutely, I just cannot see why the member of Parliament continues to come back on this issue about conflict of interest when there aren't any, either perceived or real. These are independent decisions.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Mr. Sabia.
Finally for today we have Ms. O'Connell.
Ms. O'Connell, the floor is yours. You have five minutes.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you, Mr. Chair.
Again, thanks, everyone, for your testimony.
Ms. Raitt, I want to refer back to a podcast that you did with Ehren Cory. In it you spoke about something that you said was very close to your heart, and that was indigenous equity participation. I think this is really an interesting piece. In particular, you talked about how this can't just be indigenous consultation or not just indigenous permission but an actual equity stake in participation in projects. Traditional infrastructure grants or programs would not really allow for an equity stake of partners, indigenous or otherwise. It's an application: You apply and then you receive money or not.
Can you perhaps speak about why the ability for indigenous equity is important, or other thoughts around that, if you have them? I want to give you some time to be able to speak to that.
Co-Chair, Coalition for a Better Future, As an Individual
I appreciate the time, Ms. O'Connell.
I, too, would like to say that I miss being on the finance committee with you all, but I don't. That is the truth, and I'm under oath so I have to make sure that I tell you the truth here.
Indigenous representation, indigenous equity participation, in major infrastructure projects in this country is essential. It's crucial and it's something that indigenous partners are asking for and needing.
What I would urge is that the government of the day move faster in this case, because they're ready, willing and able, meaning the first nations are ready, willing and able to take part. They just need to have the right vehicle. Maybe it's going to be through the Canada Infrastructure Bank for certain projects, but it's not going to be the CIB for fossil fuel projects. Fossil fuel projects are just as important as green projects in terms of having equity participation from first nations where they wish to be participants, such as in Coastal GasLink, such as in buying tank farms, such as in buying other pipelines, as well. These are important assets for first nations to be a part of.
I would say as well, one interesting piece, Ms. O'Connell, is that it's not necessarily a step to have the government involved in some of these projects. Fort McKay is a great example of wonderful leadership that was able to do their own investing through a bond from one of the big six banks here in Canada. They raised their funds in order to be part and parcel of a deal with Suncor on tank farms. I think that's going to happen more and more in this country.
For some larger projects, there will need to be government assistance. I encourage the government to figure out the vehicle for indigenous equity participation as quickly as possible, if I could.
Maybe the panellist who's sitting here with me, as well, today knows that I'm speaking directly though the chair to him at this moment, but it would be delightful if we were able to have some clarity and a path for equity participation for indigenous groups in the country that included facilitation by the government.
Thank you for the time.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you.
I quickly wanted to touch on something to give you a chance to put your response to it on the record as well. There was some insinuation at an earlier meeting that perhaps there was also something untoward with CIBC's involvement with the Infrastructure Bank or in investments in projects.
Have you had any sort of direction or involvement or communications with McKinsey encouraging you, in your role with CIBC, in some way to work with the Infrastructure Bank or to make investment decisions based on...? We heard McKinsey did work with the former Harper government. Was there any involvement with McKinsey in your role at CIBC for investment decisions with the bank?
Co-Chair, Coalition for a Better Future, As an Individual
Any investment decision made at CIBC is made with the same integrity and rigour as at any other commercial bank in the country. They have to make the decisions for the benefit of their shareholders as well as the benefit of their own treasury. No, nothing that I say or do.... I had no contact with McKinsey.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you. I just thought the opportunity was fair to have you, since you're here, put that on the record.
Co-Chair, Coalition for a Better Future, As an Individual
I appreciate that.
I would say, MP O'Connell, just like Mr. Sabia said, I speak on a lot of panels and I may be in the same room with some people at given times, but I have no idea whether or not they were from McKinsey.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Fair enough. Thank you.
My only point, then, would be that a $9.7-billion investment has turned into $27 billion in infrastructure money. Is that a good start in trying to address the infrastructure gap in this country?
Co-Chair, Coalition for a Better Future, As an Individual
I'm never going to take away money. I think it's important.
I would just go to my remarks that I said at the beginning, again, and say that losing time is money. There is a large gap in terms of having the right vehicles for infrastructure spending in this country as a result of a change in government and a change in position.
I would encourage all parties to know that we don't have the luxury of time when it comes to this latest lift.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Ms. O'Connell.
On behalf of all members of the committee, I would like to thank all of our witnesses for having appeared before us today, particularly those of you who are joining us on your vacation.
With that, this meeting is adjourned.