TRAN Committee Report

DISSENTING OPINION OF THE OFFICIAL OPPOSITION
THE NEW DEMOCRATIC PARTY OF CANADA

Standing Committee on Transport, Infrastructure and Communities

Updating Infrastructure in Canada: An examination of needs and investments

Introduction

Due to the omission of highly relevant aspects of the state of infrastructure in Canada from the final report, the NDP members of the Committee feel compelled to issue a dissenting opinion to better reflect the entirety of evidence that was presented at committee and to put forward recommendations that flow from and are consistent with the evidence that was received by the committee.

It should be noted that infrastructure related to First Nations Communities was considered by the committee to be outside the scope of this study. Consequently, limited and certainly insufficient evidence was submitted to the committee to address the state of First nations Infrastructure. This is particularly unfortunate in light of the single brief received from a First Nations Community which said that:

“Kashechewan First Nation suffers the same dilemma as municipalities across Canada with aging infrastructure. The unique difference is that infrastructure is subjected to a rapidly growing population, in some cases the quality of workmanship during the initial construction of some of the facilities was sub-standard and a financial challenge to bring it to today’s current technical standards.”

A study of infrastructure needs and investments in Canada merits an objective consideration of the full suite of evidence available to the committee and an understanding that the state of infrastructure at the local level impacts the social, economic, and environmental life of Canada. It follows that the Federal Government needs to be a more reliable partner to our provinces, territories and municipalities when it comes to building into Canada’s towns, cities, and First Nations communities the infrastructure needed to ensure that they will be prosperous, fair and sustainable.

Past and current infrastructure programs have failed to get funding out the door, with complicated application processes that shut out smaller communities while adding years of uncertainty and delays to important projects. Failing to maintain investment in vital infrastructure such as transit, roads and bridges means we are passing the cost on to future generations and preventing our communities from transitioning towards a cleaner and more innovative economy, with a prosperity more equally shared.

The following recommendations aim to:

A. establish a partnership between the three orders of government with regard to providing Federal infrastructure funding to municipalities and managing assets effectively;

B. to address municipal challenges in relation to financing mechanisms;

C. to improve the state of infrastructure on First Nations communities; and

D. to learn from other models of infrastructure funding in Federal jurisdictions around the world.

A. A new governance arrangement to ensure effective asset management

Witness testimony throughout the study has suggested that a new governance arrangement should be developed to improve the relationship between the three orders of government with the aim of managing assets across Canada in a coordinated fashion and ensuring that sustainability criteria be applied to all infrastructure projects.

Mr. Brent Toderian, an expert in city planning with 21 years of experience in advanced urbanism and urban design appeared at committee and advocated for an improved relationship between the Federal, provincial, and municipal governments with regard to infrastructure:

“I would suggest that a new relationship between the federal government, provinces and cities—and, of course, given the constitutional nature of cities, the provinces have to be part of that conversation—a new relationship between the feds, the province and the cities could work together to come up with a series of criteria that I think would include the cities' definitions of “success.” I do believe that cities understand the success of cities better than any other level of government clearly. So I think the cities should take a lead through maybe the Big City Mayors' Caucus, or other things, in defining “success” in cities.” - Mr. Brent Toderian

Mr. Brock Carlton, Chief Executive Officer at the Federation of Canadian Municipalities (FCM), expressed concern in his testimony with regard to the Federal government failing to recognize the opportunity to mitigate Climate Change through the infrastructure in our cities and implement a National strategy:

“There is no question that there is a need for this country to look at its infrastructure from the perspective of resilience and from the perspective of the impacts of climate change and greenhouse gas emission reduction. We believe there are great opportunities. Municipalities own directly or indirectly the sources of about 44% of the GHG emissions in this country. […] Our concern is that there's an opportunity being missed by not creating a way of having a national perspective on this that can mobilize the knowledge and experience at the municipal level for the kinds of things municipalities are responsible for so that, rather than having municipalities left alone to do their work that needs to be done, they are supported in a framework that is all orders of government rowing in the same direction.” - Mr. Brock Carlton, Chief Executive Officer (FCM)

During testimony and in a written brief, Ms. Kealy Dedman, President of the Canadian Public Works Association, shared her enthusiasm for a sustainability rating system in the United States and her hope of seeing something similar applied in Canada:

“Our association believes in adopting and adapting best practices where possible, which is why in our written submission we provide an example of a sustainability rating system that has been developed in the United States called Envision. Used as a planning tool for projects, rating systems such as Envision can help identify sustainable approaches during the planning, design, construction, and operation of infrastructure.” - Kealy Dedman - President, Canadian Public Works Association

Therefore, it is recommended that the Federal government develop, in consultation with provinces, territories and municipalities, a new cities framework to, in part, bring coherence, efficiency, and fairness to the federal relationship with cities with regard to infrastructure funding by:

i. jointly establishing a metrics system with provinces, territories and municipalities to determine the value of assets, the state of assets in Canada and a process to ensure efficient expenditures and a maintained state of good repair;

ii. collaborating with First Nations, provinces, territories and municipalities to develop a set of sustainability criteria (ie. the core eco-efficiency indicators developed by the National Round Table on the Environment and Economy re energy, waste and water intensity indicators) for the purpose of evaluating infrastructure funding from the Federal government for all projects;

iii. collaborating with First Nations, provinces, territories and municipalities to develop and help municipalities implement sustainable infrastructure rating systems to ensure long-term management of local infrastructure.

B. Recommended principles for financing

1. Allowing more flexibility and barring mandatory financing vehicles

Witnesses at committee attributed a lack of flexibility in the process of applying for infrastructure funding to the imposition of mandatory financing vehicles. Several witnesses expressed their dissatisfaction with the mandatory requirement to apply for infrastructure funds through the use of Public-Private Partnerships, particularly with regard to the New Public Transit Fund announced in Budget 2015.

In its brief to the committee, the Société de transport de l’Outaouais (STO), the public transit operator in the City of Gatineau, noted that the PPP mechanism for allocating new public transit funds “is not compatible with Québec’s public transit infrastructure funding programs.”

Matti Siemiatycki, an expert in transportation policy and planning as well as infrastructure finance and delivery, outlined his concerns at committee regarding the P3 requirement, describing public-private partnerships as “the only game in town”:

“Public-private partnerships are one option, but we have to be very careful that we're not setting up structures that make this the only option that's available for especially municipalities to access senior level government funding. This poses the potential that we're not using public-private partnerships because they deliver value, but really just because we can access money. That can lead to real problems in terms of the incentives and projects being used that are not necessarily the best value. So I think it's very important, then, that when we have funding models for delivering money to municipalities especially, but also provinces, that these are not tied to a specific model. Public private partnerships are one option for delivering infrastructure, but they need to be used in the ideal setting. We shouldn't be choosing in advance so that governments can access money. That can really lead to potentials of not carrying out accurate studies on the incentives and why we're using public-private partnerships.” – Mr. Matti Siemiatycki

The Mayor of Burnaby, Derrick Corrigan, expressed his frustration with regard to the P3 application process, having been through the experience himself:

“Having gone through the Canada-aligned 3P, and having been one of the involved members of TransLink throughout that process, I found it to be one of the most frustrating and disappointing times in my career. All of the information was kept secret from the public. We were not allowed to even go to our staff to be able to get support in our opinions. Much of the advice we were receiving was from outside consultants, who had often a vested interest in the project proceeding. It was very, very problematic” – Derek Corrigan, Mayor of Burnaby

Therefore, it is recommended that:

i. The Federal government abolish any mandatory requirement for municipalities to exclusively apply for infrastructure funding through alternative financing, including Public-Private Partnerships.

2. The need for a National Transit Strategy and increased long-term, predictable funding

The flawed P3 process was a prevalent theme in this study, especially with regard to transit funding. Testimony suggested the need for a more coordinated approach to prioritizing transit investments and to provide more long-term, dedicated, and reliable funding to municipalities for this purpose in particular.

The transit infrastructure backlog is growing, with tens of billions of dollars in new investment needed to reduce congestion, improve productivity, and keep our cities moving. Across Canada, congestion is hurting the environment and costing local economies. In the GTHA alone the cost is $11 billion annually.

Witness testimony suggests the need to simplify application processes and remove funding barriers through direct, stable and transparent transfers to municipalities and provinces for their priorities, especially with regard to transit:

“I could go on for hours about the flawed process that was undertaken to build a transit line operated by the private sector. Suffice it to say that the project has created very little new ridership, at massive costs to local municipalities. We ended up funding well over half the project, and continue to pay higher interest rates on the money borrowed by the private sector.” – Mr. Derek Corrigan

Mr. Brent Toderian advocated for the establishment of a National Transit Strategy at committee - pointing to the economic benefits of doing so:

“The need for a national transit and transportation strategy is really about recognizing that every single city in Canada has recognized that mass transit is a critical component of the region's success, economy, and in every way we measure success. Every single one is struggling with the funding […] A national transportation strategy should include, in my opinion, smart, significant, stable and predictable funding for urban infrastructure projects for municipalities and city regions around Canada. Given the relative percentage of tax dollar funding that actually goes to the municipal level in Canada, the estimate is municipalities collect about 8¢ of every tax dollar, I think the tendency to expect local governments to fund a third of such projects, which is a typical expectation, when they don't come close to collecting a third of the actual tax revenue, really fundamentally needs to be rethought.”– Mr. Brent Toderian

Therefore, it is recommended that:

i. The Federal government establish, in collaboration with the provinces, territories and municipalities, a National Transit Strategy that involves Federal commitments to provide $1.3 billion annually in dedicated and transparent public investment in transit by the 2019-2020 fiscal year;

ii. The Federal Government increase the existing gas tax transfer by $420 million in the 2016-2017 fiscal year and increase up to an additional $1.5 billion by 2019-2020 for a total of $3.7 billion with the continuation of the current indexing formula.

3. De-politicizing funding – The need for a more transparent funding process

Witnesses at committee expressed the need to ensure that Federal funding for infrastructure remain consistent, predictable and stable and provide financing flexibility through transparent processes to provinces, territories and municipalities.

Mayor of Burnaby Derek Corrigan shared his experience at committee with regard to the political influence in the distribution of federal infrastructure funds:

“In British Columbia, many people believe that the political influence on the distribution of federal funds is a major factor in the decisions on infrastructure projects, rather than prioritization of the projects by level of importance and impact. In my 28 years of experience on municipal council, I tend to agree that the process is not sufficiently objective or impartial. In fact, the political lobbying required to get support for much needed infrastructure has become unseemly in a democratic, policy-driven society. We need to know that the process is based on solid criteria and a transparent process. That has not always been the case.” – Mr. Derek Corrigan

“We need a fair and impartial process for infrastructure funds that is based on objective criteria. We need to be sure that there is no political interference in the dissemination of funds that come from our hard-working communities and are redistributed by Ottawa. We need Ottawa to co-operate in an open procurement process, where the best interests of our communities is the highest priority and there is no predetermined political direction that insists on privatization. Canada should be an example to the rest of the world in showing that the even-handed management of limited financial resources can achieve great results for our citizens. We can all accept losing in a fair process, but it is un-Canadian to stack the deck and cheat communities out of their fair share of limited financial resources for political reasons.” – Mr. Derek Corrigan

“This was [Canada 150 Fund], was in my view, cobbled together at the last minute. It smacks of politics to me, as opposed to being a plan that actually looks for communities to be able to develop something that will be meaningful. That, in fact, was the tenor of my statement to you that consistently there's this political overtone to anything that is done as a result of moneys being dispensed to communities as opposed to an open process in which all of us are aware and can participate in a way that is fair.” – Mr. Derek Corrigan

Delays in the distribution of funds were confirmed by Mr. Brock Carlton of the FCM, who represent over 2000 members, and he also suggested that the funding criteria currently in place do not adequately prioritize municipal infrastructure:

“Are the funds being distributed quickly? No. I think the challenge for our members is that the federal government and the provincial/territorial governments are not necessarily prioritizing municipal infrastructure. Whatever the criteria is for the decisions that are being made currently, there's nothing that directs the decision makers to focus on municipal infrastructure; therefore, decisions are being made that sometimes take the opportunities away for the municipal proponent of a project to a provincial-level project or some other piece of work that is not municipal in nature.” - Mr. Brock Carlton

Therefore, it is recommended that:

i. The government establish a fair, simplified, and impartial process for the allocation of federal infrastructure funds that is based on objective criteria in order to reduce political interference in the dissemination of funds and to prioritize municipal infrastructure in a timely manner.

C. First Nations Infrastructure – “closing the gap"

Although the NDP members are pleased that a written brief submitted jointly by Hatch Engineering Company and Kashechewan First Nation was briefly referenced, the final report has failed to adequately address First Nations Infrastructure and does not do justice to the full range of insight provided or recommendations proposed in the brief. Due to the omission of these key recommendations from the report, the full picture of First Nations infrastructure in Canada is not sufficiently illustrated to reflect key factors that exacerbate its deterioration and prevent it from reaching the standards required to be sufficient for use.

The consideration of First Nations infrastructure was deemed to be beyond the scope of this study. The NDP disagrees with this assessment and considers First Nations infrastructure, which is in a dire state of repair, to be an essential part of this study on infrastructure needs in Canada.

First, the brief describes the unique challenges faced by First Nations communities like Kashechwan, where over 49% of the population was under 19 years of age in 2011. This “reflects the Statistics Canada surveys that aboriginal populations are the fastest growing youthful populations in Canada. This is a very typical demographic for First Nations Communities across the country”.

The brief goes on to say that “This growth of communities across Canada represents a sizeable investment in infrastructure. As these communities grow, they will require more room for housing, roads, water and sewage, let alone education and health services support. However a clear strategy for both the management of these investments and the subsequent maintenance of the investments are needed to be efficient as the growth of these communities require the use of robust and often more complex infrastructure to provide up to date, modern facilities in line with infrastructure investments in other parts of Canada.”

In regards to the process of acquiring infrastructure funds, the brief explains that  “while, through Aboriginal Affairs and Northern Development Canada (AANDC), First Nations have a Capital Planning Study outlining community growth over the next 20 years, in practice, infrastructure is funded on an urgent need basis and/or when excess funds happen to be available. In many cases, this leads to a lack of planning, up front engineering and coordination of work. This in turn leads to inefficiencies and cost increases over what would have been possible had the activities been undertaken following a modern managed approach in which the requirements are well defined and engineered in advance of the actual tendering and implementation of the work”.

In addition to the rapid population growth experienced in these communities and the lack of coordination that stems from receiving funds on a piecemeal basis, First Nations also have had the challenge of “maintaining the systems with insufficient Operations and Management resources which have not increased over a 2% cap in the last ten years.”

The authors of the brief cite the example of the Kashechewan Ring Dyke (outlined in the brief) as being “representative of the engineering related issues that must be rectified if reliable and sustainable infrastructure improvements are to be implemented at First Nations communities”.

The NDP believe it would be an oversight not to include these important perspectives on First Nations Infrastructure in the Final report. It is essential that the Federal government heed the advice outlined by engineering experts and First Nations communities in this written brief. 

Therefore, it is recommended that:

i. The Federal government jointly establish a metrics system with First Nations communities to determine the current state of infrastructure in these communities and to identify the level of investment needed to provide up to date, modern facilities in line with infrastructure investments in other parts of Canada;

ii. The Federal Government establish a clear strategy for both the management of infrastructure investments and the subsequent maintenance of the investments needed to be efficient in rapidly growing First Nations communities;

iii. The Federal government establish a community liaison program to allow for early, effective and ongoing engagement with First Nation communities to ensure that their needs are fully understood and to provide opportunities for capacity building and training; 

D. Comparative study of other federal jurisdictions

Witnesses at committee spoke of the benefit of taking lessons from various models for funding infrastructure in other jurisdictions, particularly when it comes to public transit and asset management:

“Throughout Europe and particularly in Asia, I would say, and even in new places like the Middle East, they are investing massively, by a multiplier of a hundred, in mass transit specifically, and these are parts of the world that until very recently were doubling down on car infrastructure. They've had an epiphany in a relatively short period of time about the smarter investment that public transit represents and they're putting their considerable funding power towards the new bet on public transit.” - Mr. Brent Toderian

“A holistic approach to managing municipal infrastructure assets is being practised in other jurisdictions such as Australia and New Zealand, and is also making inroads in Canada, particularly in our western provinces. Canadian municipalities have a growing interest in applying proper asset management principles and practices to the infrastructure they are responsible for planning, building, operating, and maintaining.” – Ms. Kealy Dedman

Therefore, it is recommended that:

i. The Federal government undertake a comparative study of infrastructure and transit investments/policies/metrics in other federal jurisdictions to identify successful models/precedents that can be applied in Canada, with an understanding that results need to be seen through lens of Canada's unique features (eg. constitution, geography, climate etc.).