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Good morning, everyone.
Welcome to the Standing Committee on Transport, Infrastructure and Communities, meeting number 24.
Pursuant to Standing Order 108(2), we are doing a study of the impact of the government's deadlines of March 31, 2011, for infrastructure stimulus projects, and of December 31, 2010, for the completion of projects under the recreational infrastructure Canada program, RinC, and the water and waste water pipeline renewal program, PRECO.
Joining us today, representing the Union of British Columbia Municipalities, is Mr. Harry Nyce, president; Barbara Steele, first vice-president; and Gary MacIsaac, executive director.
Also, from the Federation of Canadian Municipalities we have Hans Cunningham, president, who is director for the Regional District of Central Kootenay, British Columbia; Brock Carlton, chief executive officer; and Michael Buda, director of policy.
Welcome. I know some of you have been here before. Basically, the floor is open for 10 minutes for presentations; then we'll move to questions and answers from the committee.
I understand, Mr. Nyce, you're going to start us off.
Please proceed.
Good morning, honourable members. My name is Harry Nyce. I am president of the Union of B.C. Municipalities. I'm joined here today by Barbara Steele, first vice-president, from Surrey, and Gary MacIsaac, who is the executive director for UBCM.
UBCM is an advocacy organization that acts on behalf of local governments in British Columbia. Membership of UBCM is voluntary, but we are proud to say that all municipalities and regional districts in B.C. are members of UBCM.
In preparing for this submission, we were instructed to provide examples of situations facing local governments in British Columbia. We will do so, presenting several instances today.
First of all, we wish to state that the commitments made by the federal government to local government infrastructure in the 2009 budget were substantive and welcomed by the communities of British Columbia. The stimulus funding programs are proving to be successful. For many years, local governments have made the case that there is a need for all governments to work together to renew and expand community infrastructure. We believe there are some localized issues with respect to the March 31, 2011, deadline that are best dealt with on a case-by-case basis in an administrative manner, rather than by wholesale program change.
In preparation for this submission, we surveyed our membership. In every instance, the survey respondents indicated that they are working towards completing projects in advance of the deadline; however, there are some instances in which certain concerns have been voiced about the March 31 deadline.
As you consider the impact of the deadline for these programs, we would ask that you do so in consideration of another date: when the funding decisions were made. The rollout of the infrastructure stimulus fund and the Building Canada community top-up fund was slower in British Columbia than in most other provinces. We understand that as soon as funding announcements in most other provinces and territories were made, in late spring or early summer of 2009, they were in effect allowed two construction seasons to complete the projects. This did not happen in British Columbia. The vast majority of announcements involving local governments did not occur until the end of September 2009.
The principal reason for the delay was that there was a provincial election in May of 2009 and a need for the newly elected government to bring forward a budget update, which was not introduced until September 1, 2009. Not all of the British Columbia approvals were announced in September. Some were later.
Let's take a look for a minute at Metro Vancouver, with a population of 2.3 million. In Metro Vancouver's case, funding for Annacis Island Centre for Excellence was not announced until January 2010. This is despite the fact that their application was submitted early in 2009. The project was indeed shovel-ready when it was submitted early in 2009, but almost a full year passed before it was approved.
Metro Vancouver has reported that while they plan to substantially complete construction for the $9 million centre by the deadline, they are aware that the short timeline allows no room for any delays.
Our most important message to you, the committee, as you consider the March 31, 2011, construction deadline is that the late announcement of funding decisions effectively limited the period of construction for these projects to a single season. In many communities, the construction season is April to October, with key suppliers such as asphalt plants closing operation in mid fall and opening in spring. So while the funding announcements in B.C. might have been four months later than in other parts of the country, some communities effectively lost a year when you consider that we lost a full construction season.
To offset the challenges resulting from the late announcements, some local governments are taking aggressive steps to implement projects.
Let us take the District of Chetwynd, for instance. Chetwynd is a municipality of 3,000 residents in the Peace River region of northeastern British Colombia. In their case, they decided to award a construction contract to implement a communities component top-up storm drainage project in advance of securing a signed agreement with the funding partners. While the grant had been announced, and verbal commitments in relation to the funding agreements were given, the decision to award the construction contract was not without risk for the municipality, a risk that Chetwynd was willing to take to ensure the project could be completed by the deadline. Chetwynd comments that it simply would not be possible to have completed the full scale of the project in the timeframe allotted had they not taken this extraordinary step.
We provide the District of Chetwynd as an example to show the commitment of B.C. local governments to meeting the March 31, 2011, deadline. Other local governments also reported fast-tracking various parts of their projects to do everything possible to ensure they could meet the construction deadline. This was a common response to our survey.
However, we all know that despite best efforts, unexpected events and delays do occur. Many of these were outside of the direct control of the local governments. We think there needs to be a level of flexibility around the March 31 deadline on a case-by-case basis. We will provide a couple of examples of the need for this flexibility.
When it comes to managing local government infrastructure projects, there are many aspects of the process that lie outside a local government's scope of power or authority. As projects move through the design, engineering, and construction stages, federal and provincial bodies play a vital regulatory role.
Most of these projects involve approvals from multiple regulating entities, including everything from approval of work plans, to environmental assessments, to a host of permitting requirements. Consider the case of the city of Kamloops, a city of 86,000 in the Thompson Nicola area of south central B.C. The city received approval for the Westsyde riverbank protection under the Building Canada fund's communities component.
An environmental assessment is required for the project, and the city began preparing the environmental assessment document months ago. One of the components of the document was an archeological overview assessment to be provided by the Kamloops Indian Band. As of last week, the archeological assessment had not been completed, which means the city's environmental assessment document remains incomplete and the project cannot proceed.
Kamloops is working to meet the expectations of the Department of Fisheries and Oceans, which requires that the construction occur within the limited timeframe due to fish habitat constraints. If the timeframe is missed due to the issues associated with the environmental assessment, the project could potentially be delayed until the next appropriate window, which will likely be some time next year. This would mean that Kamloops would not meet the March 31, 2011, deadline.
There are a number of examples of situations in which the regulatory process can delay a project. These delays are often out of the hands of the local government, and indeed may be out of the hands of the regulatory agencies, particularly where several approvals from multiple agencies are required.
Some of our members, particularly in the northern, rural, and remote regions, are experiencing delays due to shortages of material, qualified workers, and professionals. A good example of this is a project under construction in Tumbler Ridge. The District of Tumbler Ridge is located in northeastern British Columbia, 1,200 kilometres from Vancouver. It received funding to upgrade its recreation centre under the recreational Infrastructure Canada program.
The panelling specified for the project is a new, high-energy-efficient product, carried by only three suppliers. The product is popular due to its energy efficiency, and the suppliers are unable to keep up with demand, resulting in delivery delays. In the case of this project, delivery has delayed the project by about six weeks.
Tumbler Ridge is also experiencing a shortage of qualified professionals and has experienced lags of up to a month to obtain approvals from structural engineers at critical points in the construction process. This problem is exacerbated by the limited number of contractors in the area, since their work must be coordinated with that of the engineering professionals.
While these delays may seem minor, they must be considered in the context of a construction season that is extremely short. A delay of even a month or two will mean that construction cannot be completed before winter sets in, delaying further construction until late March 2011.
As stated earlier, we are not recommending an overhaul of stimulus programs that by and large are working well. Instead we believe there may be opportunities to provide some flexibility around the March 31, 2011, deadline, on a case-by-case basis, while maintaining Canada's objectives for the program. Two specific ideas to provide this flexibility relate to claims management and an integrated management approach for regular and top-up communities component funding. Claims could be managed by using the federal portion of the grant towards costs incurred prior to March 31, 2011, and for those projects that are not fully complete at that date, withholding provincial funding pending project completion. Integrated management of the regular and top-up funding would provide an opportunity to recognize any communities component project completed by March 31, 2011, as a stimulus project.
While we have shown some examples of top-up projects that are behind schedule, there are examples of regular communities components that are ahead of schedule and will be complete prior to the March 2011 deadline. Integrating the management of both programs would provide the needed flexibility to designate any project completed by March 31, 2011, as a stimulus project.
As we have indicated throughout this presentation, we are not seeking an across-the-board extension of the March 31 deadline. However, as these examples show, there are circumstances where local governments have acted in good faith but are threatened with circumstances beyond their control. In these instances, we would like to see administrative flexibility to address these projects on an individual basis.
I thank you for this opportunity, Mr. Chairman and honourable members.
I'm here today to deliver three messages. First, Canada's economic action plan is a model for how governments can work together to meet national challenges. The plan established very clear national objectives and brought federal, provincial, territorial, and municipal governments together to achieve them. We should apply the same principles to longer-term national challenges, everything from traffic gridlock to homelessness.
The second message is this: when there are challenges in completing projects, governments must continue working together in the best interests of Canadians. We expect the stimulus plan to stay on track and the vast majority of projects to remain on schedule. When delays, as were mentioned, are caused by forces beyond a community's control, governments need to use common sense to make sure the project is finished and costs are shared fairly.
Finally, our biggest concern about the economic action plan is what happens after it's gone. Stimulus spending will end, but the underlying partnership must continue to grow.
A year and a half ago, Canada was plunged into a recession by the global economic crisis, and governments had to work together to take swift and decisive action. In January 2009 the federal government released its economic action plan, and today that plan is delivering the largest ever one-time injection of federal funds into Canada's cities and communities.
The federal government designed its economic action plan to provide a dramatic but temporary boost to Canada's economy, increasing public investments for a short period while the private sector recovered from the global economic crisis. While the government has stood by its stimulus deadline, it has shown flexibility in response to concerns brought forward by FCM. Initially the government said it would not pay for stimulus projects that were not fully completed by March 31, 2011. This meant that on a cost-shared project, a municipality could end up paying the full cost of construction if any part of the project was not finished on time. The government revised its position and agreed to pay its full share of project costs incurred before the stimulus deadline, regardless of whether the entire project was complete. Of course, this took the threat of 100% clawback of federal funding off the table.
Now the priority for all orders of government is to create as many jobs and complete as many projects as possible during the next 10 months. Governments must continue working together to move the country forward towards full economic recovery. Municipalities are working flat out to finish stimulus projects by March 2011, and according to Infrastructure Canada, virtually all stimulus projects are on schedule. That's good news.
In cases in which there are challenges in specific communities, all governments need to use common sense. If a delay is caused by something outside a municipality's control, as in the examples you heard, then federal, provincial, and territorial governments should work with the municipality to finish the project and share the costs fairly.
Municipal stimulus projects are governed by separate funding agreements in each province and territory. These agreements were signed at different points during the past year and delivered funding through different programs. Some provinces and territories took longer to sign on to the plan than others. FCM is in ongoing dialogue with the federal government and provincial, territorial, and municipal associations. If there are signs that the stimulus deadline poses a substantial risk to job creation or the completion of infrastructure projects, we'll call on all governments to come together to revisit the issue. Of course, our biggest concern about the economic action plan is what happens after it's gone.
For more than a generation, governments looked the other way as Canada's cities and communities fell into disrepair. Cracks formed in Canada's core infrastructure and transportation networks, hurting our economy and quality of life.
Ms. Steele, gentlemen, thank you very much for being here.
I think I want to go back to the issue Mr. Bevington raised, the issue of fairness, if I may.
Mr. Cunningham and Mr. Carlton, I think you were the ones who addressed this. You said that everybody agreed this would be a short-term program. Mr. Flaherty was very clear in the 2009 budget that the economic stimulus plan going into place was to be timely, temporary, and targeted. Everybody agreed that it should be, because it was to create an instant opportunity for jobs in municipalities to keep people who were in their communities working. Construction was going to create those jobs instantly.
I worked for seven years in a drafting office for an engineering company that worked for one of the fastest-growing municipalities in York Region. As a draftsman in that office, I was always tasked with projects that were being looked at by the municipality as viable at some point in their budget. They were doing the environmental assessments. It was an ongoing process, whether it was waste water, an infrastructure project, or a community building. They were part of a wish list that was ongoing. I'm sure your communities have those as well.
I know the municipalities that I represent in Newmarket--Aurora have ongoing wish lists. They are always in the process with the economic development office, in cooperation with their budget office, to know what's doable when and what money is available. When the money became available for economic stimulus, Newmarket--Aurora, both municipalities, had projects ready to go.
With all due respect, Mr. Nyce, I have a little bit of a problem when people talk about the environmental assessments for archeological digs. That can be never-ending, as we know. Likewise, environmental assessments with Fisheries and Oceans are not short-term projects. Those are ones where I think we expect they are going to be protracted because of the nature of them. With an archeological dig, you never know what you're going to encounter, unlike doing an assessment for putting in a water pipe or redoing a road that needs to be redone.
Getting back to the issue of fairness, my question would be this. There are many communities that have had these projects, have applied for the money, and have been able to do the projects and get them done. I look at some of the ones where I have done announcements on behalf of ministers not in my community, but in ridings around me, in Vaughan, in Richmond Hill, and in Toronto. I did announcements and subsequently have done ribbon cuttings for subsidized housing units. In Aurora, there was a waste water project. In Newmarket, the old town hall renovation, which is under construction and will be completed by the deadline, is something that qualified for the economic action plan. In Scarborough, I did the ground-breaking for a community centre not three weeks ago. Their community centre is going to be done by March 31. Probably one of the most spectacular ones I did was in the riding of Etobicoke--Lakeshore, where the opposition leader is the member. Humber College made an application for money for their new drama centre, which has been completed in the space of about six months.
So when these projects are doable--when they are doable--how is this fair to communities who have stepped up to the plate, who have undertaken a project, have gotten it done, and they're ready to undertake more should the opportunity rise...?
Any comment on those?
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The notion is that all municipalities knew the deadline was March 31, 2011. In most cases they selected their shovel-ready projects for completion by March 31, 2011, in early winter of 2009, so it was a year and a half ago.
In fact it was even before the budget announced the stimulus funds because they knew they would have to move as quickly as possible to get their projects into the application process. They knew there would be some time for the provincial and federal governments to review those applications and make their decisions.
So people started planning these projects...actually December 2008 is when we first made a call to our members to identify shovel-ready projects. When the budget was announced, they knew roughly how much money was available. The province, working with the federal government, started to work on programs they could apply for, so people began to adjust their lists.
I think your point is that in some cases municipalities that had identified these projects as early as January or February of last year may have had to wait six or eight months before they heard whether their projects had been approved.
So the projects were originally identified. They anticipated having one and a half or two full construction seasons. They may have only had one construction season. But in all cases, those projects were identified. They had planned to be able to get them done by March 31, assuming they had two years.
The idea of a global extension would be challenging. If the municipality had known they'd have more time, they probably would have taken more time or chosen a different project. The challenge is that they had, as you said, different starting points.
I think that's what we're trying to get at here. Some municipalities in some provinces had starting points as late as eight months later than others. It's difficult to meet the same deadline when you're starting eight months later. In those cases we're suggesting there should be some flexibility required. It may not actually require more time. There are other administrative solutions that could allow a municipality to finish part of the project but still ensure that the federal share is contributed.
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Thanks, Mr. Chair. I appreciate the witnesses making the time to be here today.
I couldn't help but note a comment that was made by the Liberal member, Mr. Kennedy, in his remarks. I'm paraphrasing here, but basically what he said was that there's a difference between making an announcement and delivering on a project. I certainly couldn't agree more with that. That's why I'm so proud of the unprecedented, very quick action that's been taken by our government on this municipal funding for the infrastructure projects.
I look over a list of projects and I know there are a number from B.C. in it. Just to highlight a couple of areas that I really enjoy holidaying in, I see that one of them is Tofino, with some highway work that is 100% completed. Another area I enjoy going to, to hit the links, is the Radium–Fairmont area. I notice a project in Radium: some trails, which are 100% completed. There are dozens and dozens of examples.
I look to my own province of Alberta and to projects in my riding. There are Highway 1A improvements near Cochrane. I look at work on Highway 1 near Banff and on Highway 27 near the Olds area. I have a number of other projects: roadworks in Airdrie and rinks in places such as Olds and Airdrie, and waste water infrastructure in places such as Crossfield and Didsbury. In my riding, and everywhere else, I hear that people are very impressed with how quickly these projects are rolling out and how quickly they're being completed.
Obviously, that's to the credit not only of our government but of the provinces and the municipalities as well. We can all take great pride in the work we've done together to make this happen as quickly as we have.
I contrast that with other times when you would see programs drag on for years and years with very little progress. We've certainly seen that in the past. A great example of it was the Liberals' infrastructure program, called the municipal–rural infrastructure fund. That was a program, a billion-dollar fund, that they announced in their budget in 2003. It took them three years just to negotiate and sign agreements with all the provinces. It took until 2006 to do it. The amount of money spent on the first year of their program was zero dollars; the money spent in the second year of the program was zero dollars again; and the amount spent in the third year of the program was very insignificant—we're talking about less than one-tenth of one per cent of the announced funds.
When you look at examples like that, I guess I would ask the panel today, is there anyone who thinks that is the kind of example they would want to see us follow on infrastructure funding?
I note a complete lack of support for the Liberal approach to infrastructure funding among the panel.
Maybe we'll just look at another question that I have for you. I'll ask you. In terms of our infrastructure stimulus program, obviously we had a number of unique features that ensured quick rollout of some of the funding. For example, there were very short—in some cases one-page—applications, streamlined environmental assessment processes, and of course reliance on attestations from the project proponents.
I'd ask anyone who'd be interested in answering: overall, do you feel that these new features we've included have been helpful in advancing the funding? If so, why?
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Thank you, Mr. Chairman.
Thank you, witnesses, for coming today.
First of all, I just want to point out some facts. I've been here six years now--in this job, four and a half--so I've had an opportunity to work with the FCM. I've found that partnership very good, and I think we've developed some good programs together with the federal government.
I see you nodding your head in agreement, so I see you're happy.
In 2007 the FCM identified that there was a $123 billion deficit in infrastructure across this country. We came forward, as a government, with a $45 billion plan to put some infrastructure back—$45 billion from the federal government, which, if you utilize three ways, includes $33 billion through Building Canada and Canada's economic action plan and the stimulus fund.
I notice that you're questioning the $45 billion, but if you add it all up, it's $45 billion--for sure the most money ever spent by a federal government in the history of our country to revitalize infrastructure. In fact, if you times that by three, which is the idea of all of the programs, you have, funnily enough, enough money to cover the entire deficit that the FCM identified. So I'm not surprised that you're very happy with this federal government.
I think it's clear; we've talked about the purpose of this particular fund, which is, I might remind members, less than 10% of the entire infrastructure money. It's $4 billion, so we're talking about less than 10%. And if 10% of the projects have some sort of shortfall, or you don't have enough money, or they aren't completed in time, that's less than 1%.
I just want to remind everybody of the big picture here. This is a federal government that came forward with $41 billion in money outside of the infrastructure money. We're here today talking about less than 10% of that fund, and less than 10% of that, really, is an issue, in my mind. I just want to point that out.
You see, representing governments in northern Alberta... As you mentioned, northern Alberta has a lot more challenges than most communities across this country. We have no employees; we have nobody who can do the work, in essence, in northern Alberta. You have to get them from somewhere else.
We have some of the worst weather across this country. We have a lot of problems getting material that's reasonably priced. Yet I have no complaints from my constituents.
Now, maybe you do, Mr. Carlton, but...
I have a mayor who told me over a year ago, “Listen, I'm not going to apply for that, because I can't get it. I can't do it in time.” So now I'm going to go back to that mayor and tell him, “Well, you could have applied for that. You could have applied for it. You didn't need to get it done. The FCM has come forward and said that you don't need that deadline for infrastructure stimulus.”
And it's actually a fund to stimulate an economy; it's not just to build infrastructure. I just want to make sure that's clear.
I want to talk a little bit about not just fairness but about the infrastructure stimulus fund project application. I have the application in front of me. You all have had a chance to read this, I'm sure.
First of all, it talks at the bottom about an attestation, in number 3:
I warrant that this project would not be otherwise constructed by March 31 2011, without the federal...funding requested.
It also says:
(a) all costs incurred before provincial and federal approval and after March 31, 2011, are ineligible;
You didn't get the money unless you signed it. Is that right?
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It's just gives us the time we need to finish the project so that the federal share of the total project cost can be reimbursed to the municipal government.
In some cases, construction costs might be decreased, because of course if you can spread the time to complete a project over a longer period, less overtime might be needed. In that specific case, municipalities have already budgeted those costs, so that really isn't going to be nearly as big a factor. It's simply the time to get things done.
I might add that some of the possible solutions might not actually require more time but might involve changing the parameters of the project or changing who is providing the funding and when. It's not necessarily simply a question of extending a particular project's deadline. It involves looking at other things.
As Mr. Carlton has mentioned, the government has already provided flexibility in removing the 100% clawback. Just two days ago, actually, the department confirmed that originally Treasury Board rules stipulated that the final expense claims, which included all invoices incurred up until March 31, 2011, had to be submitted by April 15, just two weeks after the deadline. Our members let us know that wasn't going to work. If you're renovating a home, you hold back the final 10% so that you make sure the project is done completely. Municipalities have holdbacks that aren't going to be paid until, in some cases, up to three months after the project is completed, even though the work was completed before the deadline. They wanted to ensure that the holdback could be covered. Just last Friday, after a brief e-mail exchange with them, the department confirmed that they understood the issue, and they agreed to extend the deadline for receiving invoices to up to 90 days after the March 31 deadline.
That kind of flexibility has actually made a pretty big difference. I heard sighs of relief from all over the country. Even though, again, it's not specifically changing the deadline for when work needs to be completed, it's making a difference for how municipalities are able to complete the project.
We're asking for those types of administrative changes, again, recognizing that this program was developed to create jobs, which is a national objective within the responsibility of federal and provincial governments. Municipalities are there to offer projects that could help federal and provincial governments create those jobs. In return, we are asking for some recognition of our partnership in other governments' primary objectives.
I'd like to go back to a comment you made about the nature of the last FCM meeting and the fact that you didn't receive a lot of representations on this issue.
Well, it's still a year away from the deadline, and I'm sure many communities probably don't want to raise this issue while they still have hope--perhaps some faint hope--that they can get their projects completed. As well, sticking your neck out as a municipality on these issues may also have some negative connotations attached to it. Municipal politicians are just as smart as any other politician about biting the hand that feeds. So I think we might see that situation change.
What we're trying to do here is come up with a solution that would forestall that kind of action. Of course, a solution on some of it may have to wait until after the next election, but that's something this government has to deal with itself.
Coming back to this idea of the three partners in this, it's quite clear that the one partner who is... The parliamentary secretary indicated the amount of money that this government has put into this. Well, that's actually money that will come out of the pockets of future taxpayers, because of course this is all deficit money. It's all deficit financing that the government has entered into. It puts a burden on future taxpayers. We're all in on this equation. This is not a gift from this particular government but an ongoing debt that all of us will have to take on.
So we see that, you know, we're being a little tough and inflexible on bargaining right now in terms of this limit, but as time moves on, I think this meeting will become very important, because it sets the parameters of what needs to happen. Eventually, I think, the government will come to its senses on this and recognize that.
At the same time, I understand the government's position. They want to continue to put the pressure on municipalities to complete their projects in a timely fashion over this next construction season, and I appreciate that. The government wants to get its conditions met in the development of these projects.
I think the motion perhaps is something that will not achieve anything at this point in time. I think we're going to have to see you come back here a little later on to talk to us again about this when we get a little closer, after this construction season is finished and we have a better understanding of how many projects are going to be in arrears.
Is anybody looking at that scenario, and do you want to talk about that?