Good afternoon, Madam Chair and committee members.
Thank you for inviting us to speak before you on the topic of infrastructure, particularly in the north. I am pleased to be joined here today by Mr. Pierre Lavallée, the president and CEO of the Canada Infrastructure Bank, who will speak directly about the role of this new Crown corporation in helping to meet Canada's infrastructure needs.
As past leader of the transition office at Infrastructure Canada, I welcomed an opportunity to contribute to the policy development and set-up of the bank in becoming operational in December 2017. Since then, as assistant deputy minister for Investment, Partnerships and Innovation, my team's role has shifted to providing departmental support to this new Crown corporation into the portfolio under the and collaborating with Mr. Lavallée and his team.
More broadly, we are active in exploring and supporting ways to promote greater private investment in public infrastructure through partnership and infrastructure investment models. The CIB is one tool in the tool kit to help partner governments build more infrastructure, and it plays an important part of the government's Investing in Canada plan.
Please allow me to just briefly highlight some of the points that my departmental colleagues who were here on October 15 addressed, particularly the programs and activities that support infrastructure delivery, and touch on how this impacts the north.
The Investing in Canada plan sets out $2 billion dedicated to rural and northern communities to address communities' unique needs. This approach is designed to take into consideration the priorities of rural, remote and indigenous communities while helping to grow local economies, build strong and inclusive communities and safeguard the environment and health of Canadians.
Recognizing the federal government's commitment to public infrastructure in rural and northern communities, the government has increased the federal share of project funding to 60% for communities with populations of fewer than 5000 people. Projects in the territories and indigenous community projects are eligible for a higher federal contribution of up to 75%. The federal government's investment includes $400 million through the Arctic energy fund to help address energy security in northern communities. Just last week, the governments of Canada and the Northwest Territories announced the first investment under this energy fund for the Inuvik wind generation project, which will provide a more efficient, reliable and cleaner source of energy for Inuvik residents.
In the traditional cost-sharing area, under bilateral agreements that are covered by the rural and northern funding stream and the Arctic energy fund that I mentioned, the three territories will receive nearly $1.6 billion over 10 years dedicated to a broad range of infrastructure projects in those territories, which will create job opportunities and enhance the quality of life for those living and working in the northern regions.
In addition, the federal government is helping to improve transportation infrastructure in the north through the national trade corridors fund that dedicates $2 billion over 11 years, including up to $400 million for transportation initiatives in the Yukon, the Northwest Territories and Nunavut.
This set of programs recognizes the challenges that can arise when trying to apply various models of infrastructure delivery to northern conditions, and that is why certain programs under the plan have more flexible conditions, such as a higher federal contribution for rural and northern communities.
While there are challenges in delivering infrastructure, particularly in the north and rural regions, alternative financing models that attract private investment are now actively being deployed. Specifically, the public-private partnership, or P3, model has already been applied successfully to deliver important infrastructure in the north, such as the Iqaluit International Airport. The model is also currently being deployed for the delivery of the Tlicho all-season road project in the Northwest Territories. Both of these projects are supported by Infrastructure Canada. My colleague Lisa Mitchell has joined me here today. She has been directly involved and has been recently up in the NWT helping them launch this project.
The Kokish River hydroelectric project in British Columbia is an example of a first nations government participation in a P3 project as an investor partner. The 'Namgis first nation partnered with Brookfield Renewable Partners to develop a $200-million, 45-megawatt hydroelectric generating facility in the design, build, finance and operating phases. These projects are just some examples of private sector interest in partnering with governments to achieve results and outcomes in the public interest.
Earlier this year, together with other senior officials, I participated in the Arctic 360 investment conference at the University of Toronto, which brought together stakeholders from across government, academia, industry, the financial sector and international experts to discuss strategies for more investment in the north to support infrastructure and broader economic and social development.
In terms of other engagement, I had the pleasure of travelling recently to Yukon for meetings at the Carcross First Nation to discuss energy challenges in the north with the Canadian Electricity Association. In fact, the meeting took place in a venue that was newly complete and funded partly through Infrastructure Canada.
I also recently toured the Kivalliq region of Nunavut, visiting communities like Baker Lake and Rankin Inlet as well as the Agnico Eagle gold mines—I understand they were here recently—to talk to community leaders, as well as mining company representatives about infrastructure needs in the north.
We recognize that the north presents unique challenges, but we will continue to engage with northern governments and leaders, as well as academia and the private sector, to work on solutions and generate more interest in delivering infrastructure in the north.
The Canada Infrastructure Bank can help meet part of this challenge, whether it's providing advice to governments and sponsors, structuring and investing in projects, or contributing to evidence-based decision-making through its data and information role as part of its centre of excellence. The bank is about transforming the way infrastructure is planned, funded and delivered in Canada, and can strategically use federal support to make public dollars go further in building more of the infrastructure Canada needs. The bank model can also free up scarce resources for governments to allocate to projects that are not appropriate for revenue and partnership models.
There are many tools to attract investment to build infrastructure in rural, northern and indigenous communities, and there is a lot of co-operation taking place among many different players to get more infrastructure built in these communities. The federal government is providing new tools to help local communities make decisions about their infrastructure that are right for them.
Thank you again for the opportunity to speak today. I'd like to turn the floor over to Mr. Lavallée. I'd be happy to take questions, as would Lisa, following the presentation.
Thank you, Madam Chair.
Good afternoon to you, and to all the members of the committee.
I am pleased to appear before you and I would like to begin by acknowledging that we are meeting today on the unceded territory of the Algonquin people.
Thank you for the opportunity to discuss the Canada Infrastructure Bank, and how we plan to help get new infrastructure built from coast to coast to coast.
A few remarks about our organization and our role will set the stage for our discussion.
I joined the bank in mid-June 2018, and since then, it has been a whirlwind. We moved into our permanent office space, we met provincial and territorial ministers of infrastructure to launch our dialogue on future infrastructure priorities, and we have met with potential sponsors to discuss opportunities in Canada.
CIB is a Crown corporation and our mandate is to invest $35 billion of capital alongside private investors in new revenue-generating infrastructure that is in the public interest. Our mandate also includes gathering and sharing information on infrastructure projects and practices. This will support better planning and decision-making in Canada. It will also be a key ingredient for us to provide advice to all levels of government.
Whether in the territories or the northern and remote parts of the provinces, I understand that many challenges to economic development revolve around transportation, communication and energy infrastructure.
Experience has taught me that the best advisers are very good listeners. We will listen and learn from territorial and indigenous leaders about the priorities in their communities. Then, we will determine how the bank can assist, either as advisers helping to make projects more attractive to private sector investors, as co-investors in projects that meet our criteria, or to support public sponsors to identify alternative sources of funds.
It's worth spending a bit of time on the main elements of our mandate.
In terms of making investments, fundamentally we're looking to fill a gap that prevents a project from seeing the light of day. The bank was created to complement existing approaches to building infrastructure. Traditional government procurement and traditional public-private partnerships, PPPs or P3s, will continue to happen. Some infrastructure projects will continue to be entirely financed by the private sector, but there are still more opportunities. Many projects can raise some but not all of the capital required from the private sector. This is where the bank can play its defining role.
Since June I've heard many times from institutional investors that they are interested in looking at opportunities for new or greenfield infrastructure. We're promoting innovative models to finance infrastructure with federal, provincial, territorial, municipal and indigenous governments and their agencies. In support of this goal, we offer another option to help structure and partially finance new infrastructure projects. We also offer a way to access the expertise, innovation and capital of the private sector.
Our priority sectors are green infrastructure, public transit, and transport and trade. We can also invest in other areas of infrastructure, if they are supported by government policy.
Each project must pass a public interest test to ensure that the project is well aligned with the relevant governments' priorities and policies, that it contributes to economic growth and that it contributes to sustainability.
Each project must also have a revenue generation component. This could take the form of tolls or shadow tolls, fees, fares, tariffs and mechanisms based on appreciating land values. Revenue generation is important to the financial structure because we expect the private investors to take on some of the revenue or usage risk.
We realize that there are extensive needs for infrastructure in northern and remote communities. In fact, the statement of priorities and accountabilities provided by the to our board chair states that:
|| When assessing potential projects located in rural and northern communities, the Bank should take into account the specific challenges of developing infrastructure in these regions. The Bank should also consider how it can contribute to the government's commitment to achieve reconciliation with Indigenous people through renewed nation-to-nation, government-to-government, and Inuit-Crown relationships.
We are deeply engaged in discussions to structure support for a number of projects across the country.
In recent meetings, we have discussed the challenge of attracting private capital into smaller projects. The most active investors in greenfield infrastructure are looking for very large potential investments. So, we are looking at ways to support individual projects, which on their own, are too small to attract private capital; but when bundled or aggregated, and with CIB support, might attract the attention of investors.
We are building a project development team, and a key part of its role is to meet with governments and public sector agencies across Canada including in the north.
My team and I will travel to the north over the coming year to better understand the needs and the opportunities for CIB to advise sponsors and to invest.
As I mentioned earlier, we have an important role to play in gathering and sharing information about infrastructure projects across the country. Our project development team will help to provide greater visibility and insight into projects across Canada by managing a new inventory of Canadian infrastructure projects. It will be a core tool for long-term planning as well as the development of the bank's own investment funnel.
The inventory will rely on input from a broad array of public sector sponsors, including federal, provincial, territorial, municipal and indigenous governments. We expect to produce the first version in 2019.
Alongside sponsors, Canada Infrastructure Bank is setting out to build more new infrastructure for Canadians. We are poised to accelerate our engagement, advisory and investment activities over the coming months.
We acknowledge there there are unique challenges and opportunities when it comes to northern Infrastructure. I look forward to learning more about regional priorities in order to find ways to deliver on CIB's mandate from coast to coast.
Thank you. I am now happy to take questions.
Thank you very much, Madam Chair, for the opportunity.
On behalf of Engineers Canada, I am very pleased to discuss the engineering profession's efforts towards safeguarding Canada's northern infrastructure in the face of Canada's changing climate. I'm also here to tell you about the profession's work in assisting indigenous and remote communities build capacity to achieve their desired outcomes for the planning, design, construction and operation of northern infrastructure projects.
Engineers Canada is the national organization that represents the 12 provincial and territorial associations that regulate the practice of engineering in Canada and license the country's almost 300,000 engineers. Together we work to advance the engineering profession in the public interest.
Canada's most severe infrastructure gaps can be seen in the northern, remote and indigenous communities. In 2017, Indigenous and Northern Affairs Canada calculated that the infrastructure gap across first nation reserves alone would reach $9.7 billion by 2018.
Although the frequency of climate-related disasters is expected to increase, northern, remote and indigenous communities are far from prepared to adequately withstand climate-related risks, thus further widening the infrastructure gap in these communities. This stems not only from inadequate national climate data, but also from the lack of consistent assessment procedures to properly address climate risks to infrastructure.
This brings me to our first recommendation: that climate vulnerability assessments be carried out on northern, remote and indigenous infrastructure projects to inform and prioritize adaptation actions that address potential risks associated with a changing climate.
Resilient infrastructure is the driving force behind productive societies, stable industries and increased public confidence. With objective climate vulnerability assessments, infrastructure owners and managers can gain an early awareness of the potential impacts that extreme weather events could have on infrastructure serving indigenous, remote and northern communities.
Engineers Canada, in partnership with Natural Resources Canada, developed a climate risk assessment tool that greatly enhances the resilience of infrastructure projects. The public infrastructure engineering vulnerability committee protocol, also known as the PIEVC protocol, systematically reviews historical climate information and consequences to define current climate risks and vulnerabilities. It projects the severity and probability of future climate extreme events.
This information can be used to make informed engineering judgments to prioritize what components require adaptation, as well as how to adapt them, such as making design adjustments or changes to operational or maintenance procedures.
The PIEVC protocol has already been applied to select northern and remote infrastructure projects, including Yellowknife's Highway 3, as well as the Moose Factory first nation's water and waste-water infrastructure. It has also been used to assess climate risks to three northern airports, located in Churchill, Inuvik and Cambridge Bay.
Engineers Canada takes pride in working alongside first nations communities and indigenous engineers to develop local capacity to plan, design, construct and operate climate-resilient infrastructure. One recent example is our work alongside the Mohawk Akwesasne reserve in Ontario to apply the PIEVC protocol to assess climate risks to their water and waste-water infrastructure in collaboration with the Ontario First Nations Technical Services Corporation. This work included the development of a first nations tool kit that incorporates climate risk assessments as a part of indigenous community asset management plans.
We strongly believe that the federal government must work to build the capacity for indigenous communities to assess, plan and manage their infrastructure.
In addition, Engineers Canada is currently working on initiatives that promote diversity and inclusion in the profession and reflect Canadian society. This includes supporting programs that increase the number of indigenous people entering, thriving and remaining in the engineering profession.
Madam Chair, the PIEVC protocol has received national attention. The government's recent climate lens lists Engineers Canada's PIEVC protocol as one of three methodologies for assessing climate change resilience that is consistent with ISO 31000. While this investment is an important first step, Engineers Canada encourages the federal government to adopt assessment and prevention tools, such as PIEVC, to be a condition for funding approvals across all federal government departments that own or operate infrastructure or provide services to others. We also urge the requirement for climate risk assessments to become an integral part of environmental impact assessments for northern, remote and indigenous infrastructure projects.
This brings me to my final recommendation: that licensed engineers in Canada be included in the design, maintenance, rehabilitation and decommissioning of Canada's northern, remote and indigenous infrastructure.
In Canada, engineering is regulated under provincial and territorial law by the 12 engineering regulators. The regulators are entrusted to hold engineers accountable for practising in a professional, ethical and competent manner and in compliance with the applicable provincial or territorial engineering act, code of ethics or legal framework in place. Technical and professional standards of conduct are set, revised, maintained and enforced by the regulators for all professional engineers in their jurisdiction. Engineers are required to work with the public interest in mind and to uphold public safety.
For this reason, Engineers Canada strongly supports and encourages the direct involvement of licensed engineers in the design, construction, maintenance, evaluation, use and alteration of all engineering work related to the northern, remote or indigenous infrastructure in Canada—not only to increase transparency and public confidence, but also to uphold public safety and accountability on all infrastructure projects.
Madam Chair, thank you for allowing Engineers Canada to present to the committee today on this important topic.
We hope the committee recognizes the integral role that engineers play in Canada's norther infrastructure.
The Yukon Chamber of Commerce has recommended a pan-territorial transportation strategy with a territorial corridors coordinating agency. That recommendation has been adopted by the Canadian Chamber of Commerce through its territorial policy committee.
I would like to give you a bit of background for that strategy recommendation we put forward, and to do that in terms of current and mid-term future Arctic ports and corridors, all in light of the context of a warming north.
You can turn the page to the first slide. That is illustrating that a warming north means a longer navigation season, which is attracting more ships to the Arctic. I'm sure everybody's aware, but I will just repeat that in Canada, our Northwest Passage cannot really compete with the equivalent, which is the Russian Northeast Passage or the Russian Northern Sea route, as a shortcut between northern Europe and northern Asia. However, we are seeing an influx of what is known as destinational shipping. From our perspective, that's resource shipping, shipping that's going from resource development projects, or will go from future resource development projects, in the Arctic to offshore export positions.
In this picture here is Milne Inlet. That's the port for the export facility for the Mary River Mine at the top northern tip of Baffin Island and for Baffinland mining. That facility right now, over the summer period, which is about two and a half months, is moving about one shipload a week. That's a huge increase in the amount of traffic on the eastern side of the Northwest Passage into the eastern Arctic.
We have other projects as well that have tested the full transit. Nordic Orion took a bulk shipment of coal from the west coast of Canada to Finland in 2013. In 2014 Nunavik took a nickel shipment from Voisey's Bay to Japan. Ships are testing out the prospects of the increasing viability of what amounts to an Arctic seaway across our northern coast.
We've also seen more Arctic cruises moving up to the very large cruise ships. The Crystal Serenity, with 1,600 passengers, did a full transit in both 2016 and 2017, and it will probably be back with more.
In addition, we're seeing increased Chinese and Russian research voyages based on their icebreakers moving through our Northwest Passage, and potentially migrants, smugglers, and worse could be increasing the concern with the threat of marine activity in the Arctic.
The next page shows you that the Russians remain at the forefront of Arctic marine transportation for the same reasons we're going to be experiencing more marine transportation, not because of their shortcut between northern Europe and northern China but because they too are exporting their resources from the Arctic through their Arctic marine seaway, which is the Northern Sea route.
This is the Yamal Peninsula LNG project. It's not dissimilar to the prospects we have for the Mackenzie Delta or that Alaska has for the North Slope. At some point in the future, we might well see Canada and Alaska mimicking the investment of the Yamal LNG project in Canada with this sort of LNG tanker and terminal technology.
The next side basically shows that we're going to have increasing requirements to support what amounts to an Arctic seaway. That's in terms of ice navigation and escort assistance for search and rescue, salvage and spill response, and surveillance and interdiction. The Royal Canadian Navy has under construction a fleet of Arctic offshore patrol ships, the first one of which is already in sea trials. We're looking forward to the Coast Guard bringing in a heavy icebreaker, the Diefenbaker, at some point, and meanwhile leasing some icebreakers that will provide some interim capability in the north.
You get a sense of the requirement: It's not just seeing a lot of commercial ships, but the need to provide some support for those commercial ships by protecting this new seaway.
If you look at the next page, you'll get a sense of the infrastructure we have in place, and that is basically two ports, Milne Inlet and Nanasivik, which is a repurposed mine site that is now a naval refuelling deepwater facility.
In addition, Iqaluit is getting a deepwater dock, and Churchill has just been reconnected with the Hudson Bay Railway.
In essence, our only deepwater facilities in the Arctic are in the eastern Arctic. If you turn the page, you'll get a sense of the void that we have in the western Arctic. If any of these ships—whether they're navy ships, Coast Guard ships, or commercial ships—is in trouble, there is no place to find deepwater east of Baffin Island, and that is all the way across the north coast of Alaska right around to Dutch Harbour in the Aleutian Islands.
Three potential places for deepwater in the western Arctic are Grays Bay in Nunavut; Tuk, which is problematic because of the long channel entrance; and King Point on the north coast of Yukon.
I'll just come inland for a minute and talk about how the warming north is impacting what was, and still is, a Canadian innovation, which is ice road extensions of all-weather roads. This is the Tibbitt to Contwoyto Road, which goes out to the diamond mines on the border between the Northwest Territories and Nunavut. The season for that winter road is contracting. As a result of that, especially fuel may have to be flown in, as it was in one of the years in the past when the season was extremely short.
The next page shows you that we are transitioning from these winter road extensions to all-weather roads; that's a picture of the construction of the Inuvik to Tuk highway, which is now complete.
If you turn the page again, you'll get a sense of the wish list of new highway corridors connecting to current and future Arctic ports. If you start over in the far west, there's the Dalton Highway, which goes to Prudhoe Bay in Alaska. There's our Dempster Highway that goes through Yukon to Inuvik and now extends to Tuk. Then you have the Mackenzie Valley highway. That's on the wish list of new highways to Arctic ports.
I mentioned Grays Bay before. There's the Grays Bay port and road project that would connect Yellowknife right through the Slave Geologic Province, where all the diamond mines are, as well as some base metal mines further north in the Kitikmeot region of Nunavut right to Grays Bay.
In Nunavut itself, the Nunavut-Manitoba highway connects the Kivalliq region of Nunavut to the Manitoba highway system. I've shown there in Milne Inlet, in the Baffinland mines, the Mary River Mine. They want to go closer to all-season production. They're currently at four million tonnes a year and they'd be going to 12 million tonnes a year, and they would build a railway to do that. They'll replace the 100-kilometre tote road that trucks iron ore to Milne Inlet with a railway that does that, and ultimately goes to Steensby Inlet, which is a port they propose for their ultimate expansion in Foxe Basin.
As I just mentioned, the technology is available. Railway technology is old technology, but you can certainly upgrade it, and the Baffinland mines corporation is actually doing that with respect to the Mary River mine. On a broader scale, we're looking at crude by rail, bitumen by rail, and that's available to us now as an alternative to pipeline.
Part of the impetus for that, which I'm sure you're familiar with, is that the oil sands in Alberta are constrained by pipeline access. They cannot access world markets through export pipelines. Again, bitumen by rail is the prospect that the Alberta government has looked at, a railway from Fort McMurray through Yukon to Delta Junction and then the Alaska pipeline down to Valdez and their export access to world markets and world market prices for bitumen, which they cannot achieve at the moment.
On the other hand, maybe it's pipelines that go northbound instead. Everybody is familiar with the Mackenzie pipeline that was proposed in order to bring delta gas into the south. Maybe it should be the other way around. A pipeline could move bitumen to the north. It could also pick up the Canol shale prospect, which is right adjacent to Norman Wells. Then we're into Arctic ports for the export of oil and gas resources.
If you turn the page one more time, you'll see a myriad of possibilities. My time is almost up, so I won't go through each one. The point is that the myriad of possibilities is a myriad of planning lapses. I'll just touch on these: Arctic ports and northern corridors suffer from dis-integrated plans; northern infrastructure investment is unfolding somewhat haphazardly; projects are often multi-jurisdictional, but they lack a coordinating entity.
The last page contains our recommendations for a strategy: umbrella planning in a territorial corridors coordinating agency; incubating seaway, port and corridor authorities; and collectively advancing northern infrastructure with multi-user, cross-jurisdictional cost-sharing.
I hope I didn't exceed my time by too much. Thank you.