I call the meeting to order
Before I get into my usual introduction, can I receive consent from the committee that when the bells do start ringing, we can continue with our meeting up until about five or 10 minutes beforehand? Do I have the consent of the committee?
Some hon. members: Agreed.
The Chair: Thank you.
With that, I will start this meeting.
Welcome, everybody, to meeting number 21 of the House of Commons Standing Committee on Transport, Infrastructure and Communities. Today's meeting is taking place in a hybrid format. Pursuant to the House order of January 25, 2021, the proceedings will be made available via the House of Commons website. As all of you are aware, the webcast will always show the person speaking rather than the entirety of the committee.
To ensure an orderly meeting, there are a few points I do want to highlight. Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of either the floor, English or French. For members participating in person, proceed as you usually would when the whole committee is meeting in the committee room. Keep in mind the directives from the Board of Internal Economy regarding masking and health protocols. Before speaking, please wait until I recognize you by name. If you are on video conference, please click on the microphone icon to unmute yourself. Those in the room, your microphone will be controlled as normal by the proceedings and verification officer. A remind everyone that all comments by members and witnesses should be addressed through the chair. When you're not speaking, your mike should be on mute.
With regard to a speaking list, the committee clerk and I will do the best we can, as always, to maintain the speaking order of all members, whether they are participating virtually or in person.
Pursuant to Standing Order 108(2), and the motion adopted by the committee on Thursday, October 29, 2020, the committee is meeting today to continue its study on the Canada Infrastructure Bank.
It's my pleasure to introduce and welcome all our witnesses. From Canadians for Tax Fairness, we have Toby Sanger, executive director. From CUPE, we have Robert Ramsay, senior research officer; and Mathieu Vick, researcher. From the First Nations Major Projects Coalition, we have Chief Sharleen Gale, chair; and Niilo Edwards, executive director. From the National Trade Contractors Coalition of Canada, we have Sandra Skivsky, chair. From Queen's University, we have Dr. Ryan Riordan, associate professor, Institute for Sustainable Finance.
Welcome to all the witnesses.
Mr. Sanger, you have the floor for five minutes.
Thank you very much, Chair and members of the committee, and thank you for inviting me to this meeting.
I'm going to start by talking about how the initial idea for the Canada Infrastructure Bank was fundamentally flawed. It involved low-cost public financing to leverage much higher-cost private financing to fund public infrastructure. The CIB's initial model was a version of a public-private partnership. However, not one of Canada's P3 projects has transparently demonstrated its value for money. Instead, they've relied on inflated calculations of risk avoided and inflated discount rates to minimize future costs in order to justify what is essentially a much more expansive off-book financing of public infrastructure.
In her review of 74 Ontario P3s, the Ontario auditor general concluded that these value-for-money assessments were fundamentally flawed and that the P3 projects cost about 28% and $8 billion more than publicly financed alternatives would. It makes no sense for public infrastructure to be financed with expensive private financing at rates of 7% and higher when governments can borrow at a fraction of that, now less than 2% over 30 years. No homeowner or business would do that. It is especially absurd now for governments to use much higher-cost private financing for public infrastructure when the federal government is so widely using low-cost public financing to lend to private businesses through the BDC, EDC, CMHC and now the CEBA program.
The only purpose that P3s fill is to engage in some off-book financing and provide private finance with lucrative low-risk investment opportunities that taxpayers will cover for decades to come. If these projects are really privatized, we will undoubtedly end up with some really inadequate infrastructure, as the U.K. has. A recent survey of U.K. businesses found that three-quarters were unhappy with the state of infrastructure there and that they have started renationalizing it.
In a report I wrote four years ago, I argued that the CIB model was flawed and that the federal government should establish a truly public infrastructure bank instead, similar to the BDC, EDC and CMHC. I’m relieved to say that the past four years have shown that the critics of the CIB were right. Even Bay Street and Canada’s financial sector were highly skeptical of the CIB, and it struggled to find any projects beyond the REM to invest in. It hasn’t come close to leveraging the additional $4:1 ratio in private finance initially proposed.
After four years, the REM is the only project with a realization somewhat consistent with its original vision, and it can hardly be considered a success. It is controversial—the environmental review raised big concerns—and despite forging ahead, it will be delayed for a number of years and likely go significantly over budget. However, I'm very happy to say that I don't see these failures of the CIB to achieve its original vision as negative. Instead, I think this government and the CIB are on their way to turning a sow’s ear into a silk purse.
Many of the projects the CIB is involved in haven’t involved private financing, at least not yet. Instead, they use federal dollars to leverage projects in the broader public sector, leveraging additional public funds, and that’s a very good thing. They seem to be reinventing the CIB into a bank that operates more along the lines that I had suggested, and I’d like to commend the government and the for doing that. Other planned initiatives appear to be excellent ideas, including the zero-emission bus initiative and commercial building retrofit initiatives. These will harness low-cost public financing to help both the public and private sectors make major strides in the transition to a more sustainable economy.
I strongly urge the government to go further and remake the CIB into a truly green infrastructure bank for Canada. The bank should also set up funds and programs in other areas to provide low-cost public financing for things such as community renewable energy projects and energy retrofitting of public infrastructure buildings: schools, hospitals, public and low-income housing, municipalities, indigenous communities and some private and non-profit projects as well. As the CIB has a high threshold for consideration and approval of projects, it could partner with regional development agencies to deliver these financing programs more broadly. The CIB could also make a virtue out of these projects by issuing green bonds with a federal government guarantee to raise additional funds for the many investors interested in impact investing.
One thing the bank shouldn’t do is use high-cost private financing to privatize public infrastructure. Instead, there are a lot of really important and exciting things the bank could and should do to help Canadians recover from the pandemic and build back better.
Thank you very much. I look forward to your questions and discussions.
Thank you for the invitation to speak.
First I'll say that CUPE agrees that infrastructure investment is one of the best ways to drive economic growth, and I think we all share that understanding.
Next, I’ll say this. The Canada Infrastructure Bank is not what we were told it would be. In 2015, many of us from across the political spectrum got very excited about the idea of a public infrastructure bank. The purpose of this proposed public bank was to provide low-cost financing for infrastructure projects. There are very good examples of public infrastructure banks, both internationally and domestically. These entities provide low-cost loans in both the public and private sectors for infrastructure projects on many scales. They are public entities that pool assets and share risk. The state can guarantee the bonds it issues on the capital markets, so they are stable and highly attractive investments.
In Canada, the Municipal Finance Authority of British Columbia provides a good example of what a national infrastructure bank could achieve. Originally seeded with public money, the MFA has evolved to offer not only long-term capital financing but also a range of financial tools to municipalities, some of these in partnership with private financial institutions.
I could also mention, as Mr. Sanger did, the Canada Mortgage and Housing Corporation, the Business Development Bank of Canada and the EDC, all lending institutions that provide low-cost loans well below the private sector borrowing rate. The CIB, on the other hand, provides Canadians with less value for money. The federal government can borrow at significantly lower rates than the private sector, almost historically low rates, making any CIB project financed with private equity much more expensive. This is not consistent with best practices.
Here are three things the CIB could do immediately to become a more effective financier of public infrastructure.
The first is to fund projects directly. This is the fastest and most effective way to get infrastructure built and to begin addressing the infrastructure gap. The government already does this via the gas tax fund with great success. As I mentioned, we have other good examples of public financing institutions right here, so why not look to a model that works rather than one that clearly doesn’t?
The second is to scrap the P3 mandate. Privatization and P3s do not work for public infrastructure or public services. Countries that went down this road over previous decades are reversing course. Indeed, a 2019 study by the Transnational Institute, which we contributed to, found over 1,400 cases in 58 countries where privatized or P3 public infrastructure and services were brought back into the public sector. Why? Because privatization and P3s have failed. It’s a dead-end model for the public sector and wholly inadequate in this moment to address the prevailing challenges of our time: climate change, inequality, escalating public health crises and more. Only a strong public sector can do this.
The third is to amend the governance model so that provinces and municipalities have a seat at the table. A governing model that includes rather than excludes the municipal stakeholders will better ensure that the CIB keeps the public interest at the fore.
Thanks for your attention. I'm going to give the rest of my time to my colleague Mat.
Hi. Thanks for having me.
As Bobby said, this bank could do a lot of good for municipalities, and CUPE would like this to work well. The problem is that you can’t build public projects in the public interest while also letting investors take control of the asset and make decisions based on profit. If you try to do that, what you get are some of the problems we've been having with the bank. There's a huge trade-off as the public loses control over the asset, loses oversight and loses accountability, and the infrastructure is no longer built where and how it makes the most sense for the public, but where and how it will make the most money for the investor.
The Réseau express métropolitain, or REM, in Montreal is a perfect example. And don't get me wrong, the Canadian Union of Public Employees, or CUPE, is pro more public transit, and I honestly hope I'm wrong about the REM because I live in Montreal.
Here are some of the perverse things that can happen when you try to make money at the expense of the public interest.
The first phase of the REM was announced as 24 new stations, but in reality, 12 of those stations were for a commuter train that was already electrified and was basically almost new and worked very well. It was the best-performing commuter train we had, and we're going to bulldoze this commuter train and spend $1.2 billion to rebuild this new REM in exactly the same place. I think most would say that it's not money well spent when we could have used that $1.2 billion to go into areas where there's not enough transit and where people have been asking for transit for many years.
There was also a law that was created whereby the REM and the construction along two of the antennas were carved out completely from past and future environmental assessments. I don't think there are many people here who could tell me that is in the interests of the environment or the public—
Good afternoon, everyone.
I want to begin by acknowledging that I'm speaking to you from the unceded Treaty 8 territory of my home, Fort Nelson First Nation, located in the northeast corner of British Columbia.
With me today is coalition executive director, Niilo Edwards, who leads our organization's service delivery to our members.
The coalition is a first nation-led, non-political, not-for-profit business capacity organization. Our mandate is to provide impartial and independent business capacity to our members and support their ability to make informed business decisions regarding their participation in major natural resource and infrastructure projects.
We have roughly over 70 first nations located across Canada that have become members of the coalition. Our services are active on five major projects, which represent a combined total capital cost of $7 billion.
We see a role for the Canada Infrastructure Bank to play in filling a critical gap concerning capital access to first nations and all indigenous people. Access to capital at competitive rates is a barrier to achieving broad-based economic participation by indigenous people in major projects. Capital markets require a certain level of equity to be placed at risk in order to lend at normal commercial terms. The requirement for at-risk capital is a barrier to most indigenous communities across Canada, which do not have the financial standing to meet the basic terms set by the capital markets.
For Canada, inaction poses a risk to the investment climate, in addition to the stagnation of economic growth that would otherwise see a boost from unlocking new activity. For indigenous communities, inaction means a continuation of the status quo, no increase to standards of living and no advancement towards achieving self-determination.
In 2019, the First Nations Major Projects Coalition put our tools to the test on a real-time commercial equity opportunity at the request of 12 first nations. From the beginning, the First Nations Major Projects Coalition supported our members' ability to form a limited partnership. We submitted a bid, formed a bidding partnership with two other institutional investors and conducted a commercial market sounding—all in a matter of five months.
This exercise resulted in an opportunity cost for the first nations when they were forced to forfeit their equity interest late in the project due to uncompetitive cost of capital. This result validates the coalition's position that capital markets remain a challenging place for first nations to raise competitive cost of capital without credit enhancements from the government or third parties.
We understand that the CIB was established in part to serve the financial needs of projects that are commercially viable, but which may not qualify for traditional financing through the capital markets. Canada has no national strategy to support indigenous capital access, so expanding the CIB'S mandate to include equity-style loans to support indigenous ownership of major projects would correct that gap.
Doing this does not involve setting up more government bureaucracy and it does not come at an increased cost to taxpayers. What does have a cost is the opportunity of not expanding access to capital for equity ownership by indigenous communities. Delays and increased costs of achieving the informed consent of indigenous people concerning major project development within their territories has an impact on the economic future of indigenous and non-indigenous Canadians alike.
A recent analysis by National Bank of four major projects concluded that the average increased cost per project was 28.5% and the average construction timeline was delayed nearly three years due to delayed timelines and various lawsuits.
At the same time, the way in which the world invests is changing. Sustainable investing with a focus on ESG standards is rising. Investors want to know what the socio-economic impacts of their investments will be on indigenous and non-indigenous populations before they decide whether they are going to invest or not.
Canada must act to support a national strategy on indigenous capital access. Not doing so will increase investors' risk in Canada and will lead to trends of capital flight and capital avoidance.
Our coalition finds that including indigenous nations as equity owners is a very effective way to get our informed consent while ensuring that we benefit from resource development and have control over environmental and social impacts.
The bottleneck right now is for our nations to access that capital. There is a natural role for the Infrastructure Bank to play that will remove that bottleneck and unleash economic growth.
I look forward to your questions.
When the Canada Infrastructure Bank was created in 2017, we looked forward with anticipation to the new private-public partnerships to bolster infrastructure spending on projects across Canada. These investments are instrumental to job creation and growth for our sector, and for the economy. However, we're disappointed with the delay in committed infrastructure dollars making their way to projects, including the $35 billion that was initially allocated to the CIB. Detailed data is either not readily available or I couldn't find it, but it appears there are 12 or 13 projects that the CIB was involved with. Only five have financial commitments of about $4 billion, and only a small portion of that—I think $1.2 billion, as I heard mentioned earlier—has been forwarded to an active project.
It would seem that the benefits flowing from these investments are really long-term considerations. Long-term, large-scale projects are important for updating and transforming Canada's infrastructure for the future. However, they do not address the more immediate issues faced by communities and that the construction industry is currently experiencing.
The construction industry performed well in 2020, but there are signs that 2021 could be a far more difficult year for the sector, based on a number of issues related to supply chain, workforce development and limited access to the public and private funding that begets projects. The CIB has very specific target sectors for investment, and while all of them are critical to Canada, work in those sectors only applies to a portion of the construction industry. Other sectors of construction are equally important to sustaining and creating growth in communities of all sizes and should be part of an infrastructure plan.
CIB's growth plan may address some of the gaps being faced by trade contractors, which are obviously involved in building new transport facilities, in broadband, in retrofitting and in green infrastructure. However, again, it's only a benefit if those projects are at the shovel-in-the-ground stage, which is not quite the same as shovel-ready. Getting investments to the construction industry now is imperative for ensuring economic growth and prosperity as we recover from the COVID-19 pandemic. However, given the systemic lags between the planning stages and the project start dates, it is unlikely that the infrastructure spending, even if accelerated, will reach the stage where it will aid the industry in navigating the impacts of the pandemic by the end of 2021.
There is a perceived shortfall of work that's looming on the near-term horizon for the industry. When the industry's view of the market is uncertain, it tends to curtail investment and workforce development, even in light of long-term forecasts of labour shortages. Without investments in new construction projects, trade contractors will be reluctant to hire in the short term, as they will be cautious about expanding and maintaining their workforces. This hesitancy created by the uncertainty around future work has significant impacts on training regimes and creates difficulty in supporting initiatives that bring more people into the trades. Without the ability to create jobs and facilitate workforce development, the industry faces significant challenges in meeting Canada's future infrastructure demands.
There needs to be some short-term adjustment to the deployment of infrastructure funding to bridge the uncertain waters that the industry is treading. There also needs to be a clear and long-term vision of future work—and I believe a 25-year plan was mentioned in one of the presentations—that will instill confidence and allow the industry to optimize its role in Canada's recovery. We look forward to seeing how the CIB evolves into supporting that role. The construction industry has historically led Canada's economic growth, and we are ready to help rebuild that economy again.
Thank you. I am happy to take questions.
Good afternoon, Mr. Chair, and members of the committee.
My name is Dr. Ryan Riordan. I'm a distinguished professor of finance at the Smith School of Business at Queen's. I'm also, and probably the reason I'm here, the director of research for the Institute for Sustainable Finance. It's a first-of-its-kind collaborative hub that fuses academia, the private sector and government. Our sole focus is increasing Canada's sustainable finance capacity.
I'd like to thank you all for the opportunity to appear here today on behalf of the institute, and to contribute to the study of the Canada Infrastructure Bank.
I would like to make two proactive disclosures. First, the Institute for Sustainable Finance is supported by Queen's University, the Ivey Foundation, the McConnell Foundation, the McCall MacBain Foundation and the Chisholm Thomson Family Foundation. Importantly, in November 2020, Canada's five largest banks—TD Bank, Scotiabank, CIBC, BMO and RBC—announced $5 million to support the ISF. Second, and more pertinent to the conversation, I want to disclose that Ehren Cory, CEO of the Canada Infrastructure Bank, is a member of the Institute for Sustainable Finance advisory board, effective as of February 2021.
In furtherance of the institute's goals, we established a Canadian sustainable finance network, which is a national independent research and educational network that consists of nearly 73 academics and 23 universities from across Canada.
If I could return to the focus of the committee's study, I'd like to highlight a report from September 2020 that the ISF released called “Capital Mobilization Plan for a Canadian Low Carbon Economy”. It was a landmark research report that provided a concrete, data-driven capital blueprint for Canada's low-carbon transition. In the study, we looked at regional and sectoral investments necessary to reduce carbon emissions in line with the Paris accord 2030 target of a 30% reduction over 2005 emissions.
The most salient conclusion from our report was that Canada requires an investment of roughly $128 billion over the next 10 years to achieve these targets. It's substantial, no doubt, but far from insurmountable. For a bit of context, and I'll get to the private sector soon, the $12.8 billion annual investment represents 0.62% of Canada's 2018 GDP or 2.7% of annual provincial tax revenues.
If you use a private sector comparator, this is less than 10% of annual capital expenditures for TSX-listed firms. In fact, if our large publicly traded Canadian firms devoted just 5% of their annual capital expenditure to GHG abatement projects over the next decade, that would provide more than half of the investment that we require to meet our 2030 goals. Importantly, there is already significant evidence to suggest that private capital is committed and already flowing.
As outlined in our report, the Canada Infrastructure Bank will be an effective avenue to encourage, and stimulate public-private partnerships as one of the many avenues to help mobilize private capital.
The report highlighted four sectors as critical: buildings, transportation, oil and gas, and electricity. Importantly, these make up 70% of Canada's emissions.
The building sector is Canada's lowest hanging fruit. It's the only sector that we identified where reducing carbon emissions is less expensive than maintaining them, so a small financial or behavioural nudge in this sector will help us to unlock large environmental but also economic benefits.
Transportation is important, of course, in a country as large as Canada. It's our highest stakes play. Public-private partnerships can be an effective way to mobilize capital.
Electricity and oil and gas are the big bets that we need to get right. Co-operative efforts between these two sectors will help to accelerate our capital, and our expertise shifts from oil and gas to electricity.
We expect capital flow to continue and accelerate over the next decade, not only despite the unique economic challenges brought on by the pandemic but as a result of it.
Financing mechanisms such as green bonds, transition bonds, green investment trusts, and blended finance models in the form of public-private partnerships will help form the basis for these new financing vehicles.
Finally, both the ISF and I think that Canada must invest in a robust data and reporting infrastructure that will allow our public and our private firms to publicly display their successes in reducing their environmental impact. Timely, granular, and accessible environmental data will support the government and the CIB in identifying opportunities for investment programs with the most impact. Importantly, it will also help to attract the required domestic and international private capital to Canada to finance the Canadian transition to a low-carbon economy.
Mr. Chair, and members of the committee, thank you once again. I look forward to answering any questions that you may have.
Thank you, Mr. Riordan. I appreciate it. Great job.
Members, we do have 15 minutes left before we have to vote. I'm not sure if any members have to shoot over to the House from your offices in Ottawa. Is that the case for any members? Does everyone have some flexibility here to go a bit further? I was thinking about running it right down to five minutes. Is that fine?
Some hon. members: Agreed.
The Chair: Great.
We have our list of speakers in our first round of six minutes each.
Starting off for the Conservatives, we have Mr. Scheer, followed by the Liberals' Mr. Sidhu, the Bloc's Mr. Barsalou-Duval and, finally, Mr. Bachrach for the NDP.
Mr. Scheer, you have the floor for six minutes.
Thank you very much, Mr. Chair.
Once again, I'd like to thank all of the witnesses for some very thoughtful presentations. While there may be different perspectives expressed, I certainly do appreciate all of the time and effort you've put into this as the committee tries to understand exactly what is wrong with the Canada Infrastructure Bank. This institution that was supposed to lead to billions and billions of dollars of private sector money rushing in to help get big projects built has, of course, delivered zero completed projects in the four years it has been in existence. Its recent quarterly report shows that it has lost over $110 million in taxpayers' money without anything to show for it.
That's what this committee is all about. It's great to hear some perspective from those who may object philosophically to P3s—public-private partnerships—and those who support them as a concept but understand that the bank itself has a flawed model. That's what this committee is trying to get to the bottom of.
I'd like to start with Ms. Skivsky about some of the comments she made, in particular, the perception that there could be a looming shortfall of work. What we hear from a lot of municipalities is that there are a lot of shovel-ready projects and that many applications have been put in for work, so what is causing this perception that there's going to be a shortfall of work? Is it that the dollars aren't working out? Maybe you can delve into that a little bit.
Approval, financing; there are many reasons, and there are other issues going on.
The supply chain for a lot of different materials and products has been disrupted. We haven't recovered full labour force in construction. We are still below pre-pandemic levels. There are a lot of issues, but not having certainty of work has all sorts of implications for construction in terms of hiring, investing in your own business and the ability to take on work.
When a whole bunch of work comes out all at once and it looks really busy, that's not good either because it's very hard to take on many projects from the start, especially for trade contractors, whom I represent. We're talking mostly about small and medium-sized enterprises. When they start a job, they're in two months of their own money before they get paid, just from the way the contracts roll out, so if you take on too much work, you could damage your cash flow and have a hard time. When you don't have enough work, you're very cautious about adding to it. There are a lot of plans at the federal level—and we appreciate them, obviously—to look at the workforce and develop that workforce, but it needs—
According to you, Dr. Riordan, we need a financial plan to be able to properly develop the country's infrastructures. It would also be important to have a responsible vision for the environment. I think this is in line with what Mr. Sanger was saying earlier.
However, when the Canada Infrastructure Bank invests in a project, it's as though the Government of Canada is investing in that project. That's how it works, and that's the way it was set up in the legislation. We know that the Government of Canada has already decided not to respect provincial or municipal environmental standards and to ignore municipal laws.
Do you see that as a risk, particularly for the environment?
Welcome to all of our witnesses. It's been very interesting hearing from you so far.
My first questions are for Mr. Sanger.
Mr. Sanger, in 2017, you studied the Canada Infrastructure Bank. You found that the private financing model that the bank was pursuing could end up costing the Canadian public twice as much as it might otherwise, if other models were pursued.
I'm wondering if you could speak a bit to your methodology and what is a pretty shocking conclusion, and why the public could end up paying so much more for these infrastructure projects.
I think I alluded to that in my comments.
There are certain types of projects, and they're usually the large-banner projects. They have a big impact but only on some of the construction industry. When you're looking at a recovery mode, you want projects of different sizes and types. They can't all be just roads, bridges, or energy infrastructure. Some of them have to be buildings. There are hospitals and community centres and schools and long-term care facilities. A lot of these other sorts of projects would fit in smaller communities and also spread the benefits to a larger segment of the construction industry, which would have a very good multiplier effect in terms of dollars spent on construction.
In terms of employment and improving communities, the benefit isn't just that immediate employment you see for trades contractors; it's also in the jobs and the economic benefits that accrue to those types of smaller projects in certain communities.
You need a balance of both. As I said, the long-term major projects are transformative in nature and they're needed. That's why we need that long planning horizon to be able to execute those as part of other things that go on.
The issue that we have is that over the years, there have been many announcements, but it has taken a long time before anything has hit the ground in terms of an active project.
Thank you to our witnesses today for their varying perspectives on the Infrastructure Bank and the value of P3s.
The first question is about broadband infrastructure as a project and as infrastructure. I'm going to direct it to Ms. Skivsky and then Chief Gale.
We know that broadband infrastructure is no longer just a nice service to have, but something that's important to Canadians, especially during this pandemic. I've discovered that people are increasingly working from home and learning remotely and need access to reliable broadband. While broadband projects create immediate jobs and economic activity, the key here is that Canadians now don't have access to important sectors of the economy because of the lack of broadband. Those sectors can only be accessed digitally.
Can P3s help to address the needs across the country to have reliable networks where people can work and learn? This question is for Ms. Skivsky and Chief Gale.
I have a few questions for Mr. Ramsay.
We heard Ms. Skivsky talk about the need for smaller projects and for smaller communities to participate in these infrastructure programs. I know that you have worked quite a bit with the municipal sector, and I am wondering whether the private investment model is particularly good. Does it lend itself to smaller communities?
Second, I know you followed very closely the experience in Mapleton. We haven't heard too much about what exactly happened there, and I wonder, if you have time in your response, if you could answer both my first question and walk us through what happened in Mapleton with the proposal for the water and wastewater project there.
Thank you, Mr. Bachrach. I'll try to be brief.
Absolutely, there is a need for funding for infrastructure in small communities. There is a serious need across the country in a number of different sectors, particularly in municipal utilities and other upgrades and retrofits that would meet the government's climate mitigation goals, which are good and we celebrate.
But the CIB model, as we saw play out in Mapleton, demonstrated an unsuitability for that context. The pace of the project start-up, legal consultation and negotiation of contracts was a significant cost to the town, which paid hundreds of thousands of dollars without getting a project in the end. When they looked at the CIB project package they were considering versus funding the project themselves through capital debt, they realized that it would be cheaper to do it themselves because they could finance the project at much cheaper rates themselves.
That experience I think would be for small municipalities across the country that have limited financial resources and are wary of getting into more expensive P3 contracts.
There is a separate answer here, too, to a question you didn't ask, which is the suitability of private corporations being involved in decisions about the public infrastructure that is so vital to Canadians' health, like water and waste water, but you didn't ask that question, so—
Thank you, Chair, and Mr. Kram.
That is a great team attitude, everybody.
To start off, this would be directed to Ms. Skivsky.
Over the last few weeks we've been hearing many comments and obviously some frustrations with projects being rolled out by the Canada Infrastructure Bank. I've heard that today from you, too, I believe, not to put words in your mouth, Ms. Skivsky. I'll let you speak for yourself in a moment.
I would like, first of all, to recite a quote that I was given by a municipality when I was doing my own bit of research on the Canada Infrastructure Bank. It was that, “In summary, our point of view was that the CIB process and project structuring was opaque. We could not get any straightforward answers, nor could we get clear commitments from the CIB.” They did not recommend working with them, which is obviously disheartening. We all want to see jobs being rolled out and we all want to see the economy getting back and going.
Ms. Skivsky, I'll direct this towards you because, at the beginning I believe you said that the rollout lag was too slow to help with the economic recovery. I was scribbling awfully quickly when you said that, so if I am wrong, correct me.
Obviously, there is some frustration. Would you say this lag is tied in with what I was saying about this bank's being opaque and tough to get answers from? Is that what you're hearing from your field?
I'd like to welcome the witnesses and thank them very much for appearing before the committee today.
My first question is for Dr. Riordan or Ms. Skivsky.
On the one hand, the Canada Infrastructure Bank's project accelerator program works with developers, provides expert advice and helps to find creative funding solutions.
Could you talk about the important role the Canada Infrastructure Bank can play and how creative funding can help to move projects forward better?
On the other hand, as you know, we're in a health crisis. The pandemic is a global problem, and Canadians aren't immune. The priority of this government and all Canadians is to get the economy moving again and create jobs for Canadians. The Conservatives, and particularly our colleague Andrew Scheer, seem to have another idea: they are calling for over $12 billion in cuts.
I'd like to hear your opinion on that.
Thank you very much for the question. That was an interesting exchange.
I hope I remember the question. I think it was about some examples of projects that can help catalyze investments in the economy and how the Infrastructure Bank can help those.
One of the points that came out of our capital mobilization plan was the building sector. There, I think, the Canada Infrastructure Bank and public-private partnerships, but also just innovative financial solutions, can really help.
There's this odd conundrum that it's both environmentally and economically good for people to invest in wrapping their house in a warm jacket in this retrofitting, let's say, yet people seem not to do that. Institutions like the Canada Infrastructure Bank can nudge people, either financially or behaviourally, towards making decisions that—for reasons even I as an economist don't understand—people don't tend to make. I think that's a really clear example of it.
Dr. Riordan is trying to refer to the rational economic man, which does not exist.
On the types of projects, other than what has already been mentioned in terms of building, there are green building technologies and permeable paving types of applications, like there are for water management, but there are also simple projects for hospitals and health care. If there's anything that the last year has pointed out to us, it's some of what we lack in the area of long-term care and other health care types of facilities. There are also community centres. They all create benefit for local areas, as well as the roads and the broadband.
My point was that there has to be this long-term planning for these sorts of mega transformative projects, but there also has to be a shorter-term scale for projects that go up in a year or two years and aren't quite so extensive but still have that positive impact on that community and the quality of life for the families who live there.
I do apologize, Mr. El-Khoury. Your time is at the limit.
For those witnesses, if you want to try to slide part of your answer to that into some of your answers you're going to have for future questioners, that would be wonderful.
I'm now going to move on to our last round, and yes, I am going to try to get through it. Unfortunately, that little exchange did take some time off, but I'm going to try to get through the next round.
We have, first off, Mr. Soroka, who is going to be up for five minutes, followed by Mr. Fillmore, and then we'll have two and a half minutes each for Mr. Barsalou-Duval and Mr. Bachrach.
Mr. Soroka, you have the floor for five minutes.
I think there are a couple of ways to answer that.
There are varying sizes and scales of projects. With respect to the comments that Chief Gale has made and the mandate of our organization, we're focused on projects with a capital cost of $100 million or more. These are large-scale industrial infrastructure and natural resource projects.
Certainly there are a number of smaller projects across the country that are very meaningful and very impactful for indigenous communities. These projects relate to community infrastructure primarily. There are some economic development projects of course.
When we're looking at community infrastructure, we need to find a better way to deliver projects on tighter timelines for more effective costs. One of the ways we can do that is to empower indigenous communities to have the tools and the capacity to self-deliver projects because, at the end of the day, our members know what is most important for their communities. There are certain initiatives, like the First Nations Infrastructure Institute, that are up and coming and will alleviate some of this backlog. We're certainly watching that unfold.
I do want to take just a moment to draw a distinction here. We see a tie-in between indigenous participation in major projects and community infrastructure. There is the ability for indigenous communities to leverage their economic participation in these major projects to secure those revenue streams and to then deliver community infrastructure using the proceeds from their involvement as equity owners. That's certainly something we're looking at as an organization.
As the witnesses and committee members will know, our government has a very ambitious, long-term, well-resourced infrastructure plan, a $180-billion-plus plan, and we're really planning for 50 years out, for our kids and grandkids and for the future here. It's very understandable, and I get it that there can be some frustration in the first couple of years of the CIB, the infrastructure bank, on the pace of projects coming out.
Now, let's just put two examples on the record to provide some context for the question that I'd like to ask. The first is that we have in the first four years invested $13 billion in transit—in just four years. That's approximately 13 times the investment in transit by the previous government in its tenure. The second example is that since last March, since the beginning of the pandemic, in a minority government we have approved over 1,300 infrastructure projects. To put that into perspective, the previous government in its final four years of a majority government approved only 975 projects.
The CIB, despite this criticism by our colleagues, has received great praise. Now, Mr. Scheer may not put much stock in the praise of FCM or Clean Energy Canada or Efficiency Canada, which have said wonderful things about the CIB, but he might put some stock in the things that Premier Kenney, the Canadian Federation of Agriculture, the Grain Growers of Canada, and the National Cattle Feeders' Association have all said about the CIB, heaping praise upon its potential. It's odd, then again, in the context of the $18-billion cuts to infrastructure that the Conservative opposition ran in 2019.
With that context, I'd like to ask a question of Chief Gale or Mr. Edwards about the need for infrastructure in indigenous communities. I'm very aware that the $1-billion commitment from the CIB falls short. It's not going to close the gap. It is substantial assistance, but I know there's a lot to do here. I'm wondering, based on your experiences and expertise, whether there are specific areas or types of indigenous projects that you think would be most impactful for the CIB to focus on, under those first nations' projects.
Yes, retrofitting is certainly in all of the MESH trades, the mechanical, electrical, sheet metal, heating/refrigeration trades. That's a big item for them. Other trades are involved as well, but maybe not to the same extent.
There has been discussion about bundling a lot of these retrofits, especially if they're federal government ones, to the point where the projects get very big. It becomes cumbersome to bid on that, because you have to bid on the whole thing, and it becomes too big. If you're talking about community levels or specific areas, smaller projects, yes, I agree with you, retrofit is a.... Even green construction is a matter of design. We always say, “You design it, and the construction industry will build it”.
However, I don't want to sound critical, but announcing a program isn't the same to trade contractors as having a project that's active. There is a disconnect somewhere. I have been in this industry for over 30 years, and I have asked this question many times of the federal government, provincial government, municipal government, and somewhere in that lineup there, there's a choke point.
Maybe it changes and it's fluid, but that's why it's hard to pin down. There are many projects that have been approved, and then there are many programs with a lot of money still sitting in them. However, a very small proportion of projects have actually been allocated money. Again, approval is a level above where it hits the world that I operate in.
That's absolutely correct.
These are major projects in the transportation sector worth six, seven, eight or 10 billion dollars.
The Canadian Union of Public Employees has made access‑to‑information requests in order to get some information and to understand where this money is going and who is getting the contracts. The documents we received were completely redacted. There were almost 2,000 pages with only a few headers and some titles left. There was absolutely nothing in those documents. It was very difficult to get information.
When you implement these kinds of projects that marry private and public sector interests, the public sector loses out. You lose a little bit in terms of transparency, but also in terms of accountability. It's not a good thing to tell the public that you're going to implement big projects that are in their interest, when the public can't see what's going on behind that screen at all.
Thank you, Mr. Vick, and Mr. Bachrach.
To all of the members, thank you for your interventions at this meeting.
As well, equally and if not more importantly, to all of the witnesses, thank you for your time today. I am sure that your responses and testimony will become part of the final report that we'll present to the House. Again, for your time today, we thank you.
Members, before I adjourn this meeting, I want to remind all of you the next study is on targeted infrastructure investments, as put forward by Liberal member Ms. Jaczek. This is going to be the next study that we're going to embark on and all members should start thinking now about witness lists for that study. Perhaps we could have a deadline for preliminary witness lists of Friday, March 26. Our first meeting back after the break is Tuesday, April 13, and the clerk will need time to book these witnesses. If all of you could have those lists in by those times, it would be wonderful and make it a lot easier for the clerk.
With that, as there is no other business, I will take this opportunity to adjourn this meeting.