I am going to call this meeting to order.
I would like to welcome all of you to meeting number 22 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. So that you are all aware, the webcast will always show the person speaking [Technical difficulty—Editor].
To ensure an orderly meeting, I would like to outline a few points to follow. First off, members and witnesses may speak in the official language of their choice. Interpretation services are in fact available for this meeting. You have the choice, at the bottom of your screen, of floor, English or French.
For members participating in person, proceed as you usually would when the committee is meeting in person in any given 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 to unmute yourself. For those in the room, your microphone will be controlled as normal by the proceedings and verification officer.
I remind you that all comments by members and witnesses should be addressed through the chair. When you are not speaking, your mike should be on mute. With regard to a speakers list, the committee clerk and I will do our very best, as always, to maintain the order of speaking for all members, whether they are participating virtually or in person.
I also want to remind everyone that when you see the hand go up from my end, it's the one-minute warning. Of course, with that, once the one minute is done, I will lower the hand and expect you folks to complete your statements, questions or comments.
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 welcome and introduce our witnesses today.
First off, from the Canada Infrastructure Bank, we have Ehren Cory, the chief executive officer; and John Casola, the chief investment officer.
For the second hour, we're going to have, from the PBO—the Parliamentary Budget Office—Yves Giroux, Parliamentary Budget Officer, and Nora Nahornick, economic analyst.
With that, we'll start off with Mr. Cory.
You can start us off for five minutes. The floor is yours.
Thank you very much, Mr. Chair.
As you say, I'm Ehren Cory. I am the chief executive officer of the Canada Infrastructure Bank. I really thank you for the opportunity to appear today.
I am meant to be joined by my colleague John Casola, as you mentioned, Mr. Chair. I believe John continues to have technical difficulties. Hopefully, he will join me.
John is our chief investment officer. Together, our intention is to provide you with an update on our work and an outlook on the CIB, in particular our potential to contribute to Canada's economic recovery and long-term sustainability.
We share with the committee the consistent objective of investing in Canada's infrastructure and modernizing it, so that Canadians can benefit from it. We believe that the Canada Infrastructure Bank, or CIB, is an important and innovative tool, and that it can help address the infrastructure deficit in Canada.
In my opening, I'd like to highlight five things for you today.
First, I'd like to talk about the significant pipeline of investments the CIB is currently working on, which will deliver results.
The $10-billion growth [Technical difficulty—Editor] was an inflection point for the CIB, and since then our momentum has grown. We announced the $407-million investment in the Alberta irrigation project, which will kick-start the largest agricultural irrigation expansion in the history of the province. The project will result in up to 6,800 direct and indirect permanent jobs and up to 1,280 construction jobs. It will also open an estimated 200,000 acres of more productive agricultural land.
We also announced the Oneida battery energy storage project, which will be the largest battery storage project in Canada and among the largest in the world. It is a partnership between an innovative Canadian company and the Six Nations of the Grand River Development Corporation. It is another project we are very excited about.
Finally, our first zero-emission bus investment has been finalized, and we will be announcing it in co-operation with our partner in the coming weeks. This is another important step in delivering outcomes.
In addition to these three new projects, we are in detailed negotiations for, and have confidence in, a critical mass of additional projects coming by Canada Day, and in many cases sooner. In fact, we believe eight additional projects can and will be approved and announced in the coming three months.
We estimate that from the time we launched the growth plan last October to Canada Day of this year, new CIB investment commitments will total $2.5 billion. When these investments are added to the previous investment in the REM project in Quebec, this portfolio will have $3.8 billion in CIB investment in total, with approximately $5.8 billion in private and institutional capital for these projects. This private and institutional capital comes from pensioners who are part of organizations like the Caisse and farmers who are part of irrigation districts. These pension funds, private companies, first nations, broadband service providers and building owners are all non-governmental investment partners working closely with the CIB to deliver new infrastructure, as intended by the CIB Act.
We will have investments in all of our priority sectors and all five pillars of the growth plan by this summer, while continuing in parallel, of course, to work diligently to advance the longer-term transformational nation-building projects that the CIB is engaged in with our partners.
Second, we are doing more than just projects. Beyond the individual projects I've outlined, last week we announced our new indigenous community infrastructure initiative. We expect this will create a significant number of new project opportunities and have benefits with and for indigenous communities and partners at the scale of infrastructure they need to make their communities more successful. Similarly, our initiatives for zero-emission buses, as well as our building retrofits program, are open for business and being well received, and we will see new investments as a result.
We launched our unsolicited proposals framework, the first of its kind in Canada. All this was done in the last three months.
Third is our focus on outcomes. Delivering new infrastructure is about getting projects built and dollars invested. However, new infrastructure is also a means to an end. Investment in construction leads to connecting more people's homes and businesses to broadband, producing and using cleaner electricity, living and working in energy-efficient buildings, exporting crops produced on better irrigated land and increasing transit ridership on zero-emission buses and transit systems. Our investments process and due diligence are informed by the goal of not only investing money in new projects and getting new infrastructure built, but achieving tangible outcomes for Canadians.
Fourth, we are working to reduce the infrastructure gap through partnering. Nearly every country in the world faces a significant infrastructure gap. Increasingly, not only Canada but other countries, including the U.S. and the U.K., have announced intentions to renew their investment infrastructure with institutions like infrastructure banks similar to the CIB. This is important to have in context.
Certainly, governments could increase budgets and provide traditional grant funding, but that has fiscal limits and that approach doesn't always achieve performance results or transfer risks in the real world. There is a limit to it. On the other hand, many infrastructure projects get built on purely commercial terms because there is private sector investment to do that. Government can expect to have the private sector do more of this on its own, but that does not necessarily address the importance or shape the kind of public infrastructure that serves the public good.
That is why the CIB presents a third way. To be clear, the CIB does not provide grants and does not invest when the private sector can do so alone. The CIB is instead a credible made-in-Canada way of doing things to stretch public dollars further and attract private capital to get more infrastructure built for the benefit of Canadians.
In practical terms, the CIB can finance projects at lower rates, absorb some risks that are impediments to projects happening, catalyze private sector investments and performance to deliver projects, and get our capital back when our long-term low-interest loans are repaid. And we can also take equity positions and invest in other ways.
Simply put, the CIB is another alternative in the tool kit, and often a better one, especially in large-scale revenue-generating projects.
A key element of the CIB is our collaboration with governments at all levels, including provinces, territories and municipalities, as well as indigenous communities.
Finally, I would like to be clear that [Technical difficulty—Editor] the CIB has no mandate at all to sell private assets.
My fifth and final point is that we're in a new phase at the CIB, with new leadership and clear direction. The CIB is well positioned to play a meaningful role [Technical difficulty—Editor] deficit. I was pleased and humbled to join the organization a few months ago. We have a strong leadership at the board, which has responsibility in investment decisions. We have an excellent team of investment and finance professionals in place. In addition to the leadership at the CIB, we have a clear understanding of the policy priorities that the government and the have for us and their expectations and urgency for us.
First of all, thank you to our witnesses, Mr. Cory and Mr. Casola, for taking the time to be with us here today.
Several witnesses have touched on the Canada Infrastructure Bank's potential to create a market for much-needed investments in infrastructure that will play a crucial role in helping to combat climate change and make our country greener.
Our new initiative, which is very exciting, is committing $1.5 billion in the next few years to fund zero-emission buses and their charging infrastructure, which I know residents of Brampton would love. This new commitment was very well received here in Brampton. Transit investments are always welcome in Brampton, such as the federal government's $45-million investment into Brampton Transit, which is the largest federal investment for Brampton Transit in over 10 years.
Mr. Cory, do you think this kind of acceleration in the rollout of zero-emission buses would be happening without the CIB's involvement?
Thank you for the question.
The challenge in many types of infrastructure—and zero-emission buses are a wonderful example—is that there is a revenue source. In this case, it's the savings that are generated over time as you switch from diesel to electricity. I could say the same thing about our building retrofits program. It is similarly a way to try to retrofit buildings, make them more energy-efficient and over the long term create savings.
The problem with those types of projects is that the payback period is long and it's quite uncertain. It depends on the technology, on the speed of conversion, the reliability. So there are technological challenges. There are also commercial and market factors, what happens to the future price of both diesel and electricity, just to give an example.
What happens is that the private sector alone doesn't actually make those investments, even though they might over the long, long run be ROI-positive. The bridge that the bank fills.... To answer your question as asked, yes, I think the CIB plays a critical bridging role to making those projects happen by taking on some of the upfront risk and sharing in it with the private sector—not taking it on alone but sharing it together. That also drives investment and allows us to make projects happen certainly much faster than they would have, and many that wouldn't happen at all under purely commercial terms.
I would appreciate that very much.
In an interview you recently gave, you said that, owing to the current low interest rates because of the pandemic, you had to get involved in riskier projects, as private sector investors can obtain loans at low interest rates.
In a way, those investors no longer see the need to use the Canada Infrastructure Bank. We are actually seeing that they already did not see the use of doing so, as we have learned from the Parliamentary Budget Officer that all the projects you are involved in are related to investments targeting institutions, such as municipalities, the provincial government and pension funds, and that there are no private investments. In any case, private investors were already not turning to you.
You also said you had to take more risks to attract private sector investments. Do you plan to gamble with taxpayers' money?
I think that's a very important point.
The point in my previous comments, which I think is important, is that low-cost financing alone is not the bottleneck to getting projects done. Instead, it's about long-term, stable, low-cost financing, coupled with smart risk taking.
To the member's question, I think it is important. You have to go back. What's the bottleneck? Why are projects not built today? It's not because of access to capital; financing is plentiful. Many projects still don't get done, and that's one of the great conundrums that we face in the world: There's all this capital and yet this huge infrastructure deficit. Why don't the two ever meet? The answer is that projects often have really long time horizons and come with quite a bit of risk.
The point is that the CIB is meant to be engaged as the bridge to take on a share of that risk and provide a tranche of low-cost capital, and by doing so make projects financeable with private sector partners.
Thank you very much, Mr. Chair, and thank you, Mr. Cory, for appearing today before the committee.
Mr. Cory, I read the Parliamentary Budget Officer's report this morning with great concern. This reads to me like a pretty stunning indictment of the Canada Infrastructure Bank to date. These are some of the things mentioned in that report.
The bank is now on its third chair and its second CEO. It has paid millions of dollars in severance—we're not quite sure for what, because it couldn't have been for performance.
It has only invested $1.23 billion [Technical difficulty—Editor] out the door. That's only 3.5% of the 10-year investment target for the bank, so it's way behind. Of the 420 applications [Technical difficulty—Editor] 45% of them were rejected because they didn't fit the bank's mandate. This raises huge questions.
Of course, what's making headlines this morning is the fact that the bank hasn't delivered on what was really its biggest promise [Technical difficulty—Editor] much-lauded private investment. We had the saying, “the infrastructure bank will allow us to create new historic investments in infrastructure that go well beyond what we are putting on the table.” But of course, it hasn't. This is an utter failure by the very terms of success set by the bank itself and by the minister.
The other thing that's very concerning is the way the bank has defined success. We've heard from all kinds of witnesses who have pointed out that the ideological fixation with leveraging private capital is deeply problematic. The Canada Infrastructure Bank has promised private investors returns of somewhere in the neighbourhood of 7% to 9%. The question is, where does that return come from? Well, it comes from communities; it comes from citizens. The costs for those projects are higher because of the profits that have to go to the private investors, and that's simply not in the public interest. We've heard that again and again.
The fact is that the Liberals have spent considerable time and money trying to make this model work, and what the PBO's report today shows is that it's been an utter failure.
Obviously, you've only been on the job for a few months, so you can't shoulder too much of the blame for this failure, but my question for you is, how did we get here? How did we get to the point where four years in, the bank has so little to show for itself?
Thank you for the question.
I don't accept the premise that we have so little to show, and I'd like to talk about why I say that. In a moment, I will ask John to talk about our investment funnel. I think it's really important.
The PBO—and we will continue to engage with them—has taken a good look at our funnel. I'd like to give you a bit more context for it. I think it's very important to understand.
To your question, first, I think we define success exactly as this committee would want us to. I'm absolutely clear about this. We have one and only one definition of success—to get more infrastructure built faster than it would have been otherwise, to the benefit of Canadians. It's very simple.
We do that with outcomes in mind, four in particular. I mentioned them in my opening remarks, but I'll summarize again: one, reduction in greenhouse gas emissions and movement to a net-zero economy; two, improved connectivity for Canadians, both transit and broadband; three, accelerated economic growth in jobs, creating a path of GDP, like our investment in irrigation and trade infrastructure; and four, investment in participation of and in benefit to indigenous communities.
That's our frame, and that's how we measure results.
I do think we're in a different era. That is true. I think it's really important for the bank—and this has been my push since I joined—that we think in multiple time horizons. There are those transformational, long-term projects that the bank has been engaged in. REM was one of those out the door. As you know, there are a dozen or so other MOUs that are long-term, really important projects. They'll happen, but they do take a while.
The growth plan we launched in October, and certainly my push since becoming the CEO, has been to also focus on the nearer-term types of opportunities—the investment in buses in Brampton, the investment in building retrofits or irrigation projects—that can actually go from a conversation to due diligence, negotiation, term sheet and money out the door in a 12-month cycle.
That's what you're seeing from us. As I've talked about today, we've made three of those actual commitments, with signed term sheets that have gone through our board. It's not just the Alberta irrigation project; it's also Oneida, and we also have a bus deal. Those aren't speculative or prospective; those are real, and we have an additional eight for which we have drafts of term sheets. I've already gone to my board on some of them, so they will happen.
I understand the sense of wanting to see it to believe it, but I'm here to tell you that we have real projects in the pipeline. That puts us in a very different place.
Now, we do continue to advance those longer-term things, but we are also much more active on immediate investments.
If I could, I'll just get John to talk a little bit more about the funnel—
Thank you very much, Chair.
Thank you very much to both of our witnesses for being here today.
Before I move to questioning, Chair, I'm going to start with moving my motion, which I put on notice on Wednesday, March 10. I think it's very timely, given the activity last week relative to flight PS752 and the Liberal government coming out, as they should, so strongly against the report issued by the Iranian government indicating that, according to their report, they believe it was human error.
I'm very happy to see both and stand up for the 176 individuals who perished on board, including 55 Canadian citizens and 30 permanent residents.
I think further in support, taking the team Canada approach as we like to do, it does merit a study here at the committee, and that is the reason I put forward the notice of motion. Given the activity that took place last week, with the Iranian government issuing...their civil aviation authority blaming human error, and the dismissal of this information by both the transport minister and the foreign affairs minister, I certainly think we owe it to the victims' families, as well as to our beliefs here in Canada of justice, human rights, the rule of law, democracy—I could go on, but certainly standing up for justice abroad—to undertake this study.
At this time, Chair, I will read the motion into the record again, and I would ask, please, that we go to discussion and a vote today.
The motion is as follows, as given notice of on Wednesday, March 10, 2021:
That the Standing Committee on Transport, Infrastructure and Communities undertake a study of no less than five meetings on the government’s response to the Ukraine International Airlines Flight 752 tragedy and that the committee report its findings and recommendations to the House.
Thank you, Chair.
Thank you very much, Mr. Chair.
I certainly understand where Mrs. Kusie is coming from. Several Iranian Canadians in my riding perished in the catastrophic misadventure with the downing of that flight. I think we understand that this is the transport, infrastructure and communities committee, and I would really like to see an emphasis on the safer skies agreement, should we look at this particular study. We know that Canada is taking a leadership role in that agreement—where there is conflict and what protocols should look like.
I would be interested in that aspect because, overall, I feel it is much more a foreign affairs issue. Obviously, both ministries would have an interest, but if we could put the emphasis on that, I'm wondering if we need as many meetings as you're suggesting. I would have thought maybe two would suffice, quite honestly, because we have so many studies lined up already that we have determined need to be looked at.
I just want to offer those comments.
I am interested to hear what our colleagues have to say about this as we talk about the motion.
I would say that I agree with Ms. Jaczek. This seems to be, on its face, more of a foreign affairs issue than a transport one, quite frankly. I think a lot of the information surrounding this case either is likely to be classified or has not been shared by Iran, which may mean that a study would be of limited use anyway.
I would say that, with regard to the point about the safer skies, Canada is leading our international efforts to forge a safer skies agreement that is going to create new protocols on how we manage airspace in conflict zones, and that could be worthy of a study, I think. It's not clear, if we were to proceed, that it would require five meetings. Again, the incoming information is going to be fairly limited.
As is always the case, we have a number of studies that are waiting to be dealt with, which we've already said we want to get to—more than we can realistically complete over the next year.
On a personal note, I would say that many Canadians were touched by this disaster. In fact, my own father's dentist was in this terrible tragedy, so it does reach a lot of people.
I am interested to hear more about what our colleagues have to say on this matter.
Mr. Chair, I think Ms. Jaczek and Mr. Fillmore captured most of the points I wanted to make.
I understand, of course, that this is a very sensitive and difficult topic—my deepest condolences to all the people who were impacted by this particular tragedy.
I just wonder if there are other committees studying this, and whether or not it should be in a different committee, like foreign affairs.
Number one, if we were to proceed, what do we drop from our list of studies that we've already agreed on?
Number two, if we do decide to move forward, I'd suggest, like Ms. Jaczek, that we certainly reduce the number of meetings we could do so that we can get some of our other studies completed as well.
I certainly recognize the comments of my colleagues indicating that other committees would have an interest in it, but I would like to specifically point out the supplementary mandate letter to , delivered by the on January 15, 2021, where it explains very clearly:
Work with the Minister of Foreign Affairs to implement recommendations and lessons learned from the report of the Special Advisor for Canada's ongoing response to the Ukraine International Airlines tragedy, including commemorating the lives of the victims and supporting their families, pursuing truth and accountability from Iran, and preventing future disasters through the Safer Skies Initiative.
Of course, Member Jaczek indicated that.
It continues, “You will be supported in this work...” and it goes on.
Certainly, the supplementary mandate letters are very clear. They are directives from the , the highest office in this country, and I am certain that would like to fulfill his mandate. I genuinely believe that our study would help him in fulfilling this mandate.
I somewhat share the opinions expressed by most of the colleagues around the table. I think this is a sensitive and important topic, since lives are at stake. As for whether this issue could have been handled by the Standing Committee on Foreign Affairs and International Development, that is a good question. I don't know whether that committee has looked into this, but I would like to know.
The number of meetings could be high. This committee has many topics on its agenda. It may be necessary to hold a subcommittee meeting to plan meetings, including the next one, which will be held after our current study. Our work is starting to progress in terms of the studies on the agenda.
At first glance, I don't have anything against my colleague's proposal, but for the time being, I am unsure I can commit and vote. I would rather propose that this be submitted and that we come back to it soon in subcommittee. I don't know whether the chair has planned something in that direction. This way, we could really determine what direction we want to take.
Does that meet the test of a two-to-one return on investment? I'm not willing to concede that that's a private sector entity. I mean, you have something that is a creature of a provincial government, that is created by an act of provincial parliament, that receives money for funding its operations and its investments from the provincial taxpayer. Certainly the Parliamentary Budget Officer doesn't seem to agree that this counts as private sector money.
What we were led to believe when the came back from the fanciest cocktail circuit you could ever imagine, that of the uber-rich, the 1% of the 1%, was that he had been convinced that if he were to create this infrastructure bank, these private sector entities from all over the world would just trip over themselves to put their cash, their investors' cash, into these projects.
So far, the only two projects you can point to that have private sector money are the REM project in Montreal, which is using Quebec pensioners' contributions, the funds that Quebec pensioners have been mandated to pay through their payroll deductions, and the irrigation project, which is being funded by the irrigation districts, which, as I mentioned, are creations of the provincial government itself. Those are the only two projects.
Where are the independent private sector hedge funds, the private sector mutual funds, the private sector banks, the private sector capital that this government promised when it made the announcements for this corporate plan? Your own mandate states that you were going to be leveraging two to one. In the October 2016 economic statement, former finance minister Bill Morneau said that it could be as high as four to one, and it's just not there: $163 million to $400 million is not two to one.
Yes, of course. Thank you.
Pools of capital.... The member mentioned mutual funds and pension funds. All of it ultimately, of course, is the money of individuals, of individual investors, people who invest in their pensions, who save money. Pension funds are no different, you know. We have some of the largest and most sophisticated pension funds in the world here in Canada, and they invest in infrastructure all over the world. Historically, they haven't done much of it in Canada, whether that's Teachers' here in Ontario, CPP or AimCo out west.
These are large pension funds. They represent private pools of capital—yes, absolutely—and they are investing that money on behalf of their members, just like a hedge fund is investing money eventually on behalf of individual investors. Absolutely, just to the foundational, definitional question, to us those are pools of private capital.
Second, I would mention a third example that didn't get cited. We talked about our Oneida battery storage project. It's a different one. I mention this only to say that those are three different projects with three different kinds of non-government capital. I want to stress the words “non-government capital”. With Oneida battery storage, it's actually a private entrepreneurial company called NRStor. They have shareholders. They're a private company with owners. They're investing their equity. They're also partnered with a first nation [Technical difficulty—Editor] from other pools of capital—pension funds, etc. That's a third project.
All three of those, in our mind, do meet the test, as John said. Those are different forms of non-government money. They're not getting paid for from grants or subsidies. They're getting paid for, instead, by other pools of capital, and those pools of capital are getting paid back by the revenues of the project. That's critical—it's not getting paid back by taxpayers.
Whether it's the savings from converting diesel buses to electric or the energy in the Oneida battery storage project, the idea is that we'll be able to sell that power to the grid, displace gas and instead take the renewable energy. That project is in Ontario. It's going to take renewable energy when it is created, store it in batteries and then sell it back to the grid. That's what's going to pay back those investors. That's what's going to pay back the CIB as well.
This is an important question. It is often a source of confusion.
It is crystal clear: We have no mandate whatsoever to privatize public assets. We work with the owners of those assets to deliver, and we're actually....
The goal of engaging private capital is to do two things. It's to grow the pie of money we have to pay for these projects—because we all have to admit that there's a limit to what we can do from purely tax-based, traditional grant funding. We're trying to grow that pie. Number two, we're trying to grow that pie in ways that create a good alignment of incentives, so that if you have a private sector partner, they have every incentive in the world to build it well and run it well over the long term.
Of course, I've had the privilege of working with the member. I was previously at Infrastructure Ontario. The Ontario program is a good example of this. Hospitals, colleges and universities, courts and a whole bunch of public infrastructure has been built using some form of P3 and without any privatization of any of those assets or the services delivery.
Now, as the CIB—to step back—we're very agnostic on the type of project. We can work in the context of the Ontario-style P3. We can work with other public sector owners. We work with municipalities directly. Let alone to privatize, we also have no edict or mandate that it must be a P3 or not. That's not even in our consideration set.
For us, it's all about revenue-generating assets that draw in private capital to take on some of the risk in this and to provide some of the upfront capital and get more built that way.
Mr. Cory, when I asked you earlier how many employees of the Canada Infrastructure Bank spoke French, you told me you did not know. I must say that this surprised me a bit, as the bank employs only 80 people. It seems to me that this is not a lot and that you should be able to give an approximate number. It's not as if the bank employed 5,000, 25,000 or 100,000 people. We would appreciate it if you could clarify this for us. I think it is important to Quebeckers.
In addition, people were promised that, after the bank was created, money from the private sector would be flowing in. Many of us feared there would be a wave of privatization. That wave has not taken place so far because the private sector has not invested any money. As the Parliamentary Budget Officer says [Technical difficulty—Editor], projects are carried out in partnership with public organizations. Your promises have not materialized, as the private sector has not invested any money.
What is even worse is that disbursements have not followed the promises. We were told that $35 billion would be invested in infrastructure projects. However, that money has not been invested so far. Almost no projects have been announced and almost no one wants to do business with the Canada Infrastructure Bank. We thought that you would perhaps try to catch up. Three people have come and gone as chairs of the board of directors or within the bank's leadership. So I understand there being instability and difficulty in being effective.
The Parliamentary Budget Officer's latest document tells us that 90% less has been invested than anticipated in the first nine months of 2020-21. So the situation is not improving, and things are not accelerating.
Do you find it difficult to justify the Canada Infrastructure Bank's existence?
Thank you, Mr. Chair. I'll tackle a few things quickly.
First, I appreciate the member's question.
Let me be very clear on people. As of today, we have precisely 74 employees at the bank. I rounded it to 80 employees, but we have 74 employees. About 30% of them, 23 employees, are qualified as fully bilingual. That includes a team we have based in Montreal. We have folks in Montreal, Toronto and Calgary. In Montreal, we have a dedicated team who work on investments in the province. Those are our bilingual statistics, so thank you for the chance to answer that question.
On our activity, I would only say to the member that I joined the organization four months ago because I believe very much in the opportunity to be part of the way that we close the long-term infrastructure gap. As I said, we're not at all the only country in the world to move in this direction. A number of leading jurisdictions think there is a way to expand the universe of infrastructure projects.
In terms of the Government of Canada, it is actually something that has been tried before and something that I believe in the long-term potential of. I think we're absolutely headed in the right direction. I'm really proud of the progress we have made in the last few months since I joined.
To answer Ms. Jaczek's question of a few moments ago, the growth plan is our attempt at doing some of the shorter-term, more pragmatic investments that go from idea to dollars out the door quickly. That's track one. For track two, we have our longer-term, more substantial, transformational type of projects that we also continue to pursue.
Thank you, Mr. Fillmore, for the question.
There are two things that I would like to receive and have tabled with the committee.
We just received the PBO report, which shows the utter failure of the Canada Infrastructure Bank to deliver on any of its promises. We understand there are millions of dollars that have been paid to executives and to others who are no longer with the organization. I think the Canadian public deserves to know where those dollars went and how many of those dollars were performance bonuses for performance that didn't exist.
The two kinds of documents are, first of all, any policies around performance bonuses. Most organizations that provide performance bonuses have some sort of policies guiding those bonuses. I think it would be very interesting for the committee to know what those policies are. The second is any documents detailing whether or not performance bonuses were provided to the outgoing personnel involved in the Canada Infrastructure Bank.
I think Mr. Fillmore understands the concern of Canadians, and certainly of many members of this committee, which is that you have an organization that's created.... Four years down the road, it's not delivering on its mandate, and it has gone through all of these leadership positions. We're on the third chair and the second CEO, and the people who are no longer with the organization, on leaving, left with compensation. We should know why. Frankly, I don't think the performance of the bank, to date, has warranted bonuses, and I think many Canadians would share that view.
That's more than I intended to comment on, Mr. Chair, but I hope that helps Mr. Fillmore understand where we're coming from.
There are a couple of things here, Mr. Chair.
The first is that items like bonuses and salaries are all a matter of public record. They either have been or will be published in the annual report of the CIB. Last year's is out, and next year's will come out in due time.
I'm still struck by how some members of our committee just aren't embracing, I feel, the nature of large, complex infrastructure projects. The Trans-Canada Railroad took more than five years to complete. By the measure of Mr. Bachrach's motion, the Trans-Canada Railroad was a failure. Some very colourful adjectives were being employed there to describe what a serious failure we're facing here.
It's not a failure at all. As we've heard from Mr. Cory, these infrastructure projects are complex, and they have very long timelines. They involve multiple jurisdictions, often between provinces, and there is a question of the risk that's involved in terms of long-term capital. Of course, that's exactly why the CIB exists—to help mitigate that long-term risk.
I agree with Mr. Cory's assessment that we're exactly on track. I feel like I'm on a bit of a soapbox here, as the committee's resident city planner, but this is what infrastructure is: complex, time-consuming, with long periods of planning, long execution, and after that long periods of maintenance and operation.
However, I do believe that everything Mr. Bachrach is asking for is on public record. This is a redundant motion. This stuff is all available.
I appreciate where Mr. Fillmore is coming from, but it's also quite clear that we've heard from many witnesses that there are many projects that are not getting built, the types of projects that don't take four, five, six or seven years, but which could normally be completed in the normal time frame of less than three years.
The bank has been up and running for almost four years now. If the bank were to come to this committee.... If Mr. Cory were to come to this committee and say, “We're planning on building another trans-Canada railway” or “We're going to build a railway up to Churchill, Manitoba” or “We're going to twin the track in some places”, we could all understand that, and yes, that would take a great deal of time. However, you could also see visible stages being completed.
The mandate of this bank was that it was going to unleash private sector investment. That is not happening. The mandate of this bank was that it was going to complete projects that otherwise would not get built. That is not happening.
We have a situation where the bank itself is reporting over $100 million in operating losses in the last year, combined with an $87-million loss on the REM project in Montreal, or perhaps that $100 million captures the $87 million.
The point here is that we have bonuses and payouts to people involved with this bank who have not met expectations. A bonus is reserved for someone who has exceeded expectations. That is in the Treasury Board guidelines. They talk about performance reviews and evaluations. Senior civil servants who score very high on those are given a performance award for going above and beyond.
When a bank has zero projects completed in almost four years, I think this committee deserves to know the basis on which those bonuses were paid out.
We have witnesses waiting. In fact, the PBO is here at the request of the Bloc and the NDP. There are important things to hear from these witnesses. We've already heard, from the last motion, that we have too much on our docket as it is—too many studies, too many things to do here. I feel this is a bit of a waste of time.
However, I heard Mr. Bachrach talk about transparency, and he opined that he thought maybe the Liberal members were trying to block some [Technical difficulty—Editor].
To prove that, in support of the transparency that we live by and will continue to express, I'll support the motion, but with an objection that we're just wasting time here.
That's all I wanted to say.
We're going to reconvene.
Members, we have two witnesses who are coming to us from the PBO.
We have Ms. Nahornick. Welcome. It's good to have you out.
We also have Mr. Giroux. It's great to have you out today as well.
To both of you, I appreciate your time.
With that, I'm going to give you five minutes to make your presentation. I'm not sure who wants to present. I will give both of you the opportunity if you so prefer.
Mr. Giroux, we will start off with you, for five minutes.
Good afternoon, Mr. Chair and members of the committee.
Thank you for the invitation to appear before you today. We are pleased to be here to discuss my office's work as part of your ongoing study of the Canada Infrastructure Bank.
With me today I have Nora Nahornick, the author of our two most recent infrastructure reports.
The Office of the Parliamentary Budget Officer, or the OPBO, gained prominence when the government committed $81 billion to infrastructure investments in the fall of 2016. Since then, the investing in Canada plan has grown to $187 billion spread over 12 years, including $35 billion in start-up funding for the Canada Infrastructure Bank.
The OPBO has published five reports on infrastructure spending since February 2017. In these reports, we have quantified successive delays in infrastructure spending, estimated additional economic growth from infrastructure spending and foregone economic activity associated with those delays, and shown that the investing in Canada plan has contributed to increases in capital spending for municipal, but not for provincial governments.
Four years into the federal government's infrastructure expansion, we're unable to provide parliamentarians with a full status update because the government has not kept track of information on all funded projects.
The PBO determined in 2018 that the complete plan for infrastructure did not exist. Since 2017, we have repeatedly identified reporting gaps in tracking the inventory of infrastructure projects, and the government has been unable to provide my office with the complete project data for four years.
Today we published a blog post demonstrating that spending by the Canada Infrastructure Bank has also not kept pace with plans. The bank has committed to 13 projects, but has finalized investments on only two. Roughly 3% of its $35 billion in capital has been disbursed. The bank has received hundreds of project proposals, but many are screened out because they don't fit within the government's targeted sectors: transit, green, clean power, broadband, and trade and transportation.
Finally, while the bank is mandated to leverage funding from private sector partners, it has yet to do so. CIB projects funded so far have been supported by federal, provincial and municipal levels of government exclusively.
Additional analysis on the Canada Infrastructure Bank is under way, and we plan to publish our work later this spring.
This afternoon we would be pleased to respond to questions you may have regarding our work on the Canada Infrastructure Bank and federal infrastructure spending in general.
Thank you, Mr. Chair.
Thank you. I was just noting Mr. Scheer's appreciation for the day.
Coming back to the blog post, what's puzzling to me about it is that it characterizes the CIB's two investments to date as being funded exclusively by government. That seems like a very odd conclusion. It makes it sound as though these projects are made up of just CIB money and government grants.
The money that CDPQ, la caisse, put into the REM project doesn't belong to any level of government. It belongs to the Quebec pensioners who worked very hard to earn it and who will benefit from the returns on this investment.
To me, it seems as though the CDPQ, a pension fund that is one of the largest infrastructure investors in the world, would certainly count as an institutional investor, and having Canadian pension funds invest more in Canadian infrastructure projects is exactly the type of activity that we want the CIB to be fostering.
Further, in Alberta, the irrigation districts contributed, as we heard earlier, $163 million to that project. Those irrigation districts are funded by the private farmers whose farms are served by the district, so I wonder how you see those projects as being funded exclusively by government.
It seems to me that this question of nomenclature is leading to reporting that's inaccurate. I mean, this is about institutional investors and private sector investors. That's the intention. That's the yardstick by which we measure the success of the CIB. You're just wiping away one element of that yardstick by saying that institutional investors do not contribute to the success of the CIB. I'd suggest there's a little bit more work to be done on the nomenclature and definitions here that need to correlate back to the stated intention of the CIB.
Now, we heard it characterized that lapsed funds are akin to cuts. Of course that's not true. Lapsed funds are not cuts; they're simply lapsed. The money remains in the bank for future use, for projects as they come along, as the bank builds up steam, which we discussed in the first hour of today's meeting. These projects are large, complex beasts that exist over many years and across multiple jurisdictions. They have to exist under multiple jurisdictions of legislation and multiple levels of expectation from different stakeholders. They're complex. That's what infrastructure is, so lapsed funds are not cuts.
Of course, usually when we talk about cuts on this committee, it would be the cuts that Mr. Scheer ran on, the $18 billion of cuts to infrastructure investment into Canadian communities, cuts that of course Canadians refuted. They in fact supported our platform to create the CIB.
If I have a minute left, I'd like to hear Mr. Giroux's reaction to Ehren Cory's characterization of the bottleneck not being about access to capital but about the higher risk that's associated with these complex, long-term projects, and his characterization that this is why the CIB needs to get in there to help them mitigate that risk.
Thank you, Mr. Bachrach.
Thank you, Mr. Giroux and Ms. Nahornick. I appreciate your time today.
I have to say this, because it's been bothering me since the question was asked. I would like some more clarification on the class in which you're placing pension funds as a public entity. I haven't heard, in my experience of 24 years in public office, of public entities being able to invest in government securities, investment-grade bonds and blue-chip stocks, and now, investing in different asset classes such as private equity, real estate infrastructure and securities.
I'm very curious and interested in finding that proper definition sometime in the very near future. Mr. Giroux, if you don't mind, I'd like to set up a call with you to come to some conclusion on that. I don't agree with the conclusions that were brought forward today by you. I'd like to get to the bottom of that, so that way we can bring some information back to committee with respect to that definition on pension funds.
With that, members, I want to take this opportunity to thank all of you and of course all of the witnesses we had both in the first and second hour. We look forward to Thursday's meeting.
With that, I'll take this opportunity to adjourn this meeting.