Proceedings of the Standing Senate Committee on
National Finance
Issue 13 - Evidence - May 28, 2014
OTTAWA, Wednesday, May 28, 2014
The Standing Senate Committee on National Finance met this day at 6:39 p.m. to study the Supplementary Estimates (A) for the fiscal year ending March 31, 2015.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, tonight we will continue our study of Supplementary Estimates (A) for the fiscal year ending March 31, 2015.
[English]
Our committee began consideration of the Supplementary Estimates (A) yesterday, when we heard from officials from Treasury Board, as well as from Natural Resources and from Atomic Energy of Canada Limited. This evening, we will continue that study by hearing from a few other departments with some of the larger appropriations. In our first panel this evening, we will hear from Employment and Social Development Canada, Alain P. Séguin, Chief Financial Officer, and Paul Thompson, Senior Assistant Deputy Minister, Skills and Employment Branch. And from PPP Canada Inc., we have Greg Smith, Chief Financial Officer and Vice President of Finance, Risk and Administration. Shall we begin with Employment and Social Development Canada? You have some introductory remarks, and then I will move to Mr. Smith.
Alain P. Séguin, Chief Financial Officer, Employment and Social Development Canada: Thank you, Mr. Chair. Just a few introductory remarks. Good evening, members of the committee. I am pleased to appear before you in my capacity as the chief financial officer at Employment and Social Development Canada. I'm accompanied by Paul Thompson. As you heard, he's the senior assistant deputy minister of Skills and Employment Branch at ESDC.
[Translation]
The department I represent helps Canadians at crucial stages in their lives, whether they are still in school or raising a family, looking for a job or retiring from the workforce. The department is responsible for delivering high quality services that are timely and accessible, through Service Canada.
[English]
We also have the mandate to maintain strong, productive, healthy and competitive workplaces within the federal jurisdiction, through the Labour Program.
Allow me to offer the committee an overview of ESDC's portion of the 2014-15 Supplementary Estimates (A), tabled on May 14, 2014.
[Translation]
As you know, Supplementary estimates (A) present information on spending requirements that were either not sufficiently developed in time for inclusion in the Main Estimates or have subsequently be refined to account for developments in particular programs and services.
[English]
The 2014-15 Supplementary Estimates (A) for ESDC amount to $485 million. For ESDC, an adjustment of $500 million is requested in these supplementary estimates to fund the new Canada Job Fund, including the Canada Job Grant announced in Budget 2013.
[Translation]
The Canada Job Grant will ensure direct employer involvement and investment in the skills training system, helping address Canada's skills shortages while assisting workers in obtaining the skills they need for available jobs.
[English]
Also, $30 million will be transferred over two years, $15 million for 2014-15 and 2015-16, from the Youth Employment Strategy program to the National Research Council. The National Research Council delivers the Industrial Research Assistance Youth Employment Program under Career Focus. Given that this very successful programming already aligns with the priority of providing job experience to youth in high demand fields, Budget 2014 announced that $30 million would be provided to the NRC to support youth internships in small and medium-sized enterprises undertaking technical research and development projects.
I hope this very high-level overview has given you a better understanding of our Supplementary Estimates (A), and my colleague and I will be happy to answer questions.
[Translation]
Greg Smith, Chief Financial Officer and Vice President of Finance, Risk and Administration, PPP Canada Inc.: Mr. Chair, thank you for inviting me to speak to you today. I am pleased to be representing PPP Canada, and to answer any questions that you may have with respect to Supplementary Estimates (A).
[English]
My appearance before you today comes at a time of great importance, a milestone really, for PPP Canada Inc. — its five year anniversary and the beginning of the second piece of the P3 Canada Fund, a $1.2-billion fund and merit-based program designed to incent innovation in P3s, as well as to encourage inexperienced governments to consider P3s in public infrastructure procurements.
When I appeared before you in March 2011, PPP Canada had just closed applications for round three of funding. Today, we are currently accepting applications for round six, and we have committed the entire $1.2 billion allotted over the past five years. The replenishment of the P3 Canada Fund through 2018-19 will allow PPP Canada to run four more annual rounds of funding in addition to round six.
Our first five years of operation saw us commit the $1.2 billion in strategic investments, leveraging more than $6.4 billion in public infrastructure. We have announced the funding of 20 projects spread throughout eight provinces and territories. Our business has matured and grown dramatically. PPP Canada's expertise now spans along three business lines: P3 knowledge development and sharing; advancing federal P3s; and advancing provincial, territorial, municipal and First Nations P3s.
PPP Canada continues to invest in knowledge development and sharing to reinforce its brand as a leading source of expertise. The work is focused on five broad areas: P3 tools and guides for clients and staff, sector and case studies, broad-based P3 studies, external knowledge-sharing activities and, finally, internal knowledge-sharing activities.
The publication of P3 tools and guides remains a dominant focus for the corporation and includes a series of documents to enable federal, provincial, territorial, municipal and First Nations clients to develop and execute P3 projects. It also includes tools for PPP Canada staff to enable them to provide expertise and advice to clients and to conduct fulsome analysis on projects. It allows staff to conduct their work in a more constructive and systematic manner.
Just recently, PPP Canada published five guides and tools and is preparing to publish a suite of tools targeted directly to federal clients. This suite will provide government departments with a beginning-to-end handbook, starting with assessing the P3 suitability of a project and ending with best practices to ensure a successful procurement. We've seen great success with our federal business line and are working hard towards becoming an integral part of the capital delivery service of the Government of Canada.
Since 2011, all federal departments and agencies with an infrastructure project that creates an asset with a lifespan of more than 20 years and having a capital cost of $100 million or more must be screened by PPP Canada to determine whether a P3 is a suitable procurement option.
Once a federal project is screened as viable, PPP Canada staff work closely with project managers in the preparation of their procurement options analysis and business case. As the Government of Canada's centre of expertise on P3s, the corporation has become a trusted P3 adviser.
We are currently providing advisory services to Transport Canada on the new bridge over the St. Lawrence, the largest P3 in Canadian history. We will soon be engaged in another large project, the Detroit River international crossing.
I already mentioned the success that we have enjoyed with the P3 Canada Fund, and I must use the word "success" appropriately today because our third business line was just recently expanded. Under Economic Action Plan 2013, it was announced that a new P3 screen would be put in place under the New Building Canada Fund to include all project funding applications with total eligible costs of over $100 million to assess their viability for P3 procurement. We have sustained our growth through flexible and resilient structures with the capacity to evolve alongside the corporation.
Since incorporation in 2009, we have worked towards building a high-performing corporation with extremely skilled and qualified staff and ensuring the implementation of sound processes, procedures and policies. This includes sound fiscal management, adherence to Government of Canada policies and guidelines, ensuring responsible management of our three business lines and effective performance management.
Excellence is continuous. Efforts must be ongoing to ensure the achievement of good results over the long term. PPP Canada is a dynamic and evolving organization committed to operating within our public policy mandate and our resource allowance.
When we last spoke in 2011, the corporation was only two years old. Since then, we've matured. Over the years our staff complement has grown from approximately a dozen to over 50, and we are still growing, looking to attract the best and brightest minds and retaining top-level talent. We strive to be one of the best-managed federal organizations. We've built a solid track record of success during our first five years, and we see maintaining this trajectory into the future.
As with any organization constantly seeking innovative ways of improving performance and efficiency, much work remains to be done in all of our business lines and potential new avenues to explore.
I look forward to hearing from you and welcome your questions.
Senator Gerstein: Thank you for being in front of us. Mr. Smith, I'm interested in the remarks you've made. If I may, I'm going to deal with the second, third and fourth paragraphs of your opening remarks.
The one item that is consistent in each of the paragraphs is I believe you've got $1.2 billion. I'm not sure. In the first paragraph you talk about the second tranche; in the third paragraph you talk about in round six you've committed; and in the third paragraph you say you have announced 20 projects. I don't understand any of it.
What are the 20 projects? Where are they? Who are our partners? What is the current status? Are they in the ground, in process or are they completed? Do you give gifts, grants or loans? Thank you.
Mr. Smith: That was one question with many parts. Let me begin. We do have a list of projects, and I could go through them, Mr. Chair, or we could provide that.
Senator Gerstein: Just give us an example of a couple of them so we have some idea of what it is you're dealing with.
Mr. Smith: Sure.
The Chair: Except you are undertaking to provide us with that.
Mr. Smith: We have the list of the 20 projects, and we'll provide that. It has all the locations, the size of the project and the model that's used for all the announced projects.
Let me back up a bit. The original fund for PPP Canada was $1.2 billion, and that was the first tranche.
Senator Gerstein: And you got the money?
Mr. Smith: That's correct.
Senator Gerstein: You got the $1.2 billion and it was in your account, as I recall?
Mr. Smith: That's correct. For the purposes of the P3 Canada Fund, PPP Canada is a non-agent Crown. Therefore, for us to commit funds to projects, the government has chosen to advance us the $1.2 billion and we then invest that money in a way to achieve capital preservation. That allows us to actually sign financial contractual arrangements with the projects that we are supporting, knowing that the cash is in our bank to pay those project commitments when they come due.
So the first $1.2 billion has been advanced to us, and that supports the 20 projects that we'll provide you the list of.
Budget 2013 provided a replenishment of $1.2 billion, and that's what's included. The first year's appropriation for that is what's included in the $200 million that you're seeing in supplementary.
Senator Gerstein: How much of the $1.2 billion in the first tranche has actually gone out of the account?
Mr. Smith: Cash out the door is probably about $30 million.
Senator Gerstein: In five years, $30 million out of $1.2 billion?
Mr. Smith: The $30 million has gone out the door. You'll have to remember that with P3 projects a lot of planning has to go into developing. We make our commitment. It probably could be up to a year-and-a-half to two-year process that the city, the province, or whomever is going to go through their RFQ, their RFP process. Then they will choose their preferred proponent, then the shovels go into the ground and whatever construction takes, it could be another two or three years.
With the federal money that is given to us, and in an effort to transfer all of the construction risk associated with on- time delivery and on-budget delivery, we do not pay our contribution until substantial completion, when that asset is done and is starting to provide service to the public.
Senator Gerstein: I'm sorry, Mr. Chair, if I'm asking too many questions here on my time.
The Chair: We're all interested.
Senator Gerstein: Just so I understand what you've said, $1.2 billion went over in 2010, and of that $1.2 billion you have spent $30 million, so, if I do the addition, I think you've got a billion something still sitting in the account five years later.
Mr. Smith: The first $1.2 billion was provided to us over a five-year period. You would have seen those in your Main Estimates documents on an annual basis. That money is sitting in our bank accounts, and you'll see it in our audited financial statements. That money serves as the backdrop to support the financial commitments that we are making to those 20 projects. Our full commitments total $1.2 billion.
We have commitments to projects and, other than the $30 million that we've paid out in cash, we have the remaining cash sitting there for those 20 projects we've committed to.
Senator Gerstein: The monies that you give out, they're grants, loans or forgivable loans? Give us some idea of what it is that you're passing out, how you participate. Do you take equity?
Mr. Smith: No.
Senator Gerstein: How does it work?
Mr. Smith: Our financial arrangements are with the procuring jurisdiction, so we are supporting them with a non- repayable contribution, for the most part, in support of their cost to procure that asset.
I say "for the most part" because if cash and profits are being generated from that asset through user fees or whatever and if there is a return of capital to the procuring jurisdiction, we will share in that return of capital to the extent that we contributed to the project. For the most part they're non-repayable, but they could become repayable. We monitor those projects and will monitor those projects in the future to see if there has been a return of capital.
Senator L. Smith: To follow up, I have a supplementary to Senator Gerstein's question. You mentioned that $30 million plus the rest of the $1.2 billion is committed to 20 projects. Is that correct?
Mr. Smith: Correct.
Senator L. Smith: When will these projects come into force in terms of when you dispense that money? Over how long a period of time will that be?
Mr. Smith: Out to 2018.
Senator L. Smith: If I understand correctly, by 2018 that money will be into projects that are operational?
Mr. Smith: Yes. When you say "money into," we will only pay when the asset reaches substantial completion and the asset is providing services to the public. That distribution of cash is planned between now and 2018-19.
Senator L. Smith: What type of projects are they? Are they infrastructure projects? Are they businesses or a combination of, so we understand? You mentioned that you're going to invest in a bridge over the St. Lawrence River, which is interesting, and the Detroit-Windsor bridge, which we all understand. Are the 20 projects fixed structures, or are they a combination of structure and infrastructure and/or a form of business?
Mr. Smith: I should clarify one thing. Under the P3 Canada Fund, the only eligible recipients are provinces, municipalities, First Nations and the territories. That money cannot go into federal projects. We have another business line, as I was saying. Our federal business line is to support federal departments and agencies when they're considering their public infrastructure needs. We do not fund that. The departments have to fund that. We are part of the transfer payment system to provinces, municipalities and territories. For them to procure, it has to be public infrastructure and a public benefit, such as roads.
The earlier question was to give you an example. The Chief Peguis Trail in Winnipeg is one project that has reached substantial completion. It was completed by the private sector one year earlier than planned because they decided it was to their benefit to get that piece of infrastructure up and running as quickly as possible. It was done significantly faster than it would have been done under public sector procurement and has been up and running for two years.
The second project is in Lac La Biche, northern Alberta. The waste treatment facility is in operation; and we've contributed to that project. As well, we've made a commitment of $200 million to the Edmonton light rail project, which is worth $1.8 billion in total.
Senator L. Smith: What is the measurement of success for your organization? If there are say three measurements of success, what would they be so that we can understand? Your report was very positive and upbeat, but how do you measure what you're doing so that we can define what success means for your organization?
Mr. Smith: Before I answer, I'll give you some of the best practices followed in Canadian P3s. The procuring jurisdiction will go through an RFQ process and normally select three bidders. Those three bidders will go through an RFP process. They will evaluate, choose a preferred proponent, and enter into significant contractual arrangements with that private sector that last for 25 or 30 years. Construction begins, and at the end of construction, normally there is a substantial completion payment. The rest of the financing for that project is done by the private sector. The private sector pension funds or life insurance companies are providing their due diligence on the developing contractor because they will get paid only if they provide the service to the public. That's how the cash flows.
One of the best practices is when you reach what's called "financial close." When you've actually signed the contractual arrangements with the preferred proponents, we demand that the procuring jurisdiction make public their value-for-money analysis. Our measure would be the value for money that was generated by doing the P3. That is a comparison on an analytical basis using sophisticated discounted cash flow techniques to say what the cost of the P3 is versus the public sector comparator. If the P3 costs less, then the delta is the value for money. On the six projects that have made public their value-for-money analysis on their websites, there is an average of 12 per cent value for money. The other 14 projects are in various stages of procurement and cannot make those numbers public yet because they could impact the competitive process of the RFP.
Senator L. Smith: One of the measures is the value for money. Another one would be your ability to leverage. If you invest $200 million in a project and you are able to get two other investors who put in another $600 million or $800 million, you have your measurement. Leveraging is another one.
Mr. Smith: In my remarks I noted that our $1.2 billion has leveraged $6.4 billion in public infrastructure.
Senator L. Smith: On the first tranche.
Mr. Smith: On those 20 projects.
Senator L. Smith: For the next tranche, do you try to increase that amount? You had $1.2 billion leverage $6.4 billion so on your second tranche, do you want to leverage $7.4 billion? You know what I'm saying, in terms of increasing your objectives so that your successes build over time.
Mr. Smith: Perhaps. I'll give you the third measure. We talked about making the model available to other jurisdictions. If a jurisdiction has not considered the P3 model, then we can show them how they can generate value. That's another measure. Dealing and promoting the model to inexperienced jurisdictions or jurisdictions that have done P3s but not in a certain sector. They may have done a transportation project but not a water waste water project. We can move them into different sectors or new jurisdictions. We have many new jurisdictions. You'll see the city of Sudbury on the list.
The measures are value for money, leveraging and promoting the use of the model to the extent that we can create new sectors or bring new jurisdictions to the table. Those would be our measures of success.
The Chair: That was a good grounding of the issues. It's important, with all due respect, that you try to give us quick answers. If you've a more fulsome answer that you can give us in writing, then we would be pleased to receive that from you. I would like to get all of the senators' questions on the record. Each senator can think in terms of three minutes for question and answer.
[Translation]
Senator Bellemare: My first question is for the representatives of Employment and Social Development Canada. The $500 million in Supplementary Estimates (A) were funds that were already there for agreements with the provinces. This is money that comes from the government's consolidated revenue.
We know that slightly different agreements were signed with Quebec and the other provinces. We also know that funds for the Canada Job Grant do not account for this entire amount of $500 million, but for a portion that will be financed over time.
How are you going to ensure that businesses contributed to skills training and development in the different provinces?
That is the objective. Are the provinces going to be checking that, or will you do it? Are you going to ensure that we are not funding training that was already being given, that is to say training that would have taken place in any case?
Paul Thompson, Senior Assistant Deputy Minister, Skills and Employment Branch, Employment and Social Development Canada: Thank you for that question.
[English]
As it pertains to the transfers to provinces, these were indeed from the continuation of existing revenues that were from the consolidated revenue funding that expired at the end of the previous fiscal year and are being made available to provinces in the form of the new Canada Job Fund. As part of that, as you correctly point out, a portion of the $500 million available is to be dedicated to the Canada Job Grant, which is the employer-driven portion. We are working with the provinces to finalize all the negotiations. We're optimistic those will be completed soon. It will be the provinces that will deliver and be responsible for achieving the level of employer commitment with respect to the delivery of the program. It will be delivered by the provinces, not by the federal government.
[Translation]
Senator Bellemare: As for the private-public partnerships, as you no doubt know, Quebec had a PPP agency which was set up in 2004 by Monique Jérôme-Forget; it was dismantled in 2009 for all sorts of reasons I am not really aware of.
That agency had a mandate that was very similar to yours. We know it was not successful in Quebec, although it was supposed to create a lot of partnership projects. It met approximately 10 per cent of its objectives.
Do you know any of the reasons that would explain the failure of that Quebec agency? Have you taken steps to protect yourself against those features so that you have better success?
[English]
Mr. Smith: I'll start by staying I'm not sure I agree that Infrastructure Quebec failed. There was a significant number of P3s, from A25 to A30 to CHUM to University Hospital. There were many P3s in Quebec that started around 2004 and have reached financial close or are in construction, and some have finished. I think there has been some success in Quebec.
In the most recent past, there was a change in policy so there was a basically shutdown of the P3 model. With the new government, there appears to be some interest in P3s, so we're hopeful it comes back again. Again, for the money that we give to other provinces and municipalities, we wait for them to apply to our fund, so making sure that they're successful is to make sure they're aware of the model and how it works. That's how we would hope for their success.
[Translation]
Senator Bellemare: So, you are aware of the attempts that were made.
The Chair: Senator, your three minutes are up.
[English]
Senator Hervieux-Payette: Am I right in thinking that, by providing funding, your main task is to provide some expertise for the realization of these projects in partnership with the private sector?
Mr. Smith: No. Our client is the public sector, the procuring jurisdiction, whether that's a province, municipality, territory.
Senator Hervieux-Payette: I understand that. I'm saying in a public-private partnership, the owner of the project at the end of day won't be the federal government; it will be the private sector.
Mr. Smith: No. In the P3 model, the procuring jurisdiction always owns and continues to own the infrastructure asset. It's recorded on the financial statements of the public sector, and the care and custody are returned back to the procuring jurisdiction.
In the case of Chief Peguis, the private sector will run and maintain and snowplow and everything on that road for 25 years. At the end of 25 years, they have to say "Here you go, City of Winnipeg. Here's your asset. You're responsible for it now." The contractual arrangement details out the state that you're going to hand back that asset in for the care and custody of the procuring jurisdiction.
Senator Hervieux-Payette: I was under the impression, probably from my Quebec experience, that the private sector was involved, so that's why —
Mr. Smith: The private sector is involved in designing, constructing, operating, maintaining and financing, but the asset remains in the procuring jurisdiction.
Senator Hervieux-Payette: Before, during and after. Before, do you look at design for the cost, the calendar and make sure that we have value for money? During, do you do the quantity surveying and also cost control? And after, do you monitor the maintenance?
Mr. Smith: The costing ahead of time? We have published a costing estimate. It's on our website. When you're costing these transactions, our advice is that you have got to be at about a 30 per cent design in order to get to a plus or minus 15 per cent costing. You need that kind of costing surety when you go into your procurement. We make sure and we help the procuring jurisdiction to get their cost estimates in line so that their business case is sound before they go to the market. We also do market soundings to make sure the market is ready to accept the transaction.
During. In fact, the beauty of a P3 is to transfer to the private sector. Whatever it costs you, if prices go up, that's all to your account. There is no auditing of what it's actually costing the private sector. That's transferring that risk to them. They just have to deliver the asset in accordance with the contractual arrangements.
Afterwards, there has to be significant monitoring, and we participate in a management committee with, say, the City of Winnipeg, and our key there is to make sure they have the resources in place, the people, to make sure they understand and can manage the long-term commitments, where the biggest part is making sure that the private sector is performing. If they don't perform, deduct their payments.
Senator Mockler: Mr. Smith, you've mentioned about the P3s. One of the first P3s in the history of Canada was in the early 1990s in New Brunswick. Of the P3s we have now, are there any projects on the table for the province of New Brunswick among those 20 projects you mentioned earlier?
Mr. Smith: Yes. The Saint John Safe Clean Drinking Water Project was announced a few months ago, and we are working with the City of Saint John. They are just getting into their RFQ process and developing their RFPs. They have had meetings with the construction industry down there, and the construction industry is really excited to get into that project. That's been announced and should be unfolding.
Senator Mockler: It's noted in my discussion with P3s that there could be strict penalties that can be imposed for poor performance. Have we had those from the organization in areas that some have performed as per standard?
Mr. Smith: The poor performance happens when the asset is in service and providing those services, so it's after construction has been completed. We only really have the two examples. But I can tell you that, in Winnipeg, almost the second payment, the private sector did not deliver the as-built drawings on time, and they got dinged. There is a lot of incentive for the private sector to comply with the contractual arrangements.
Senator Callbeck: Thank you for coming this evening. Two quick questions: For the Canada Job Grant, how many provinces have signed with the federal government?
Mr. Thompson: At present, senator, we have four agreements concluded with provinces, but the negotiations are proceeding very well with the remaining jurisdictions. We are optimistic that —
Senator Callbeck: That's Manitoba, Ontario —
Mr. Thompson: British Columbia and Alberta.
Senator Callbeck: Mr. Smith, you mentioned, about projects, that $100 million or more must be screened by PPP Canada to determine whether a P3 is a suitable procurement option. A new procedure has been put in place here, hasn't it? I was reading in the press, on May 26, about this program being altered to require these projects to go through a mandatory and binding vetting process to determine whether private participation was required, and that process will delay things by six to 18 months. Is this new with round 6?
Mr. Smith: I think the article that you are referring to is on the New Building Canada Fund of Infrastructure Canada. Budget 2013 said that the applicants to Infrastructure Canada for funding, if they had a project over $100 million, would have to be screened for P3 viability. So we provide that service to Infrastructure Canada. That's probably better asked of the group that's coming afterwards.
Senator Callbeck: But there has been no change with your fund?
Mr. Smith: For our fund, we accept applications, and we start our call in April. It closes in June. We'll accept applications from anyone, and we screen them on a merit basis. What you're referring to is part of the New Building Canada Fund.
[Translation]
Senator Rivard: We know that traditionally, Quebec was responsible for the labour force training program. Quebec did not want to opt into that program and there was an agreement during the last election. Has that agreement had a positive impact on the budget of the Canadian government?
My second question is for the representatives of PPP Canada. In your presentation you alluded to the Detroit National River crossing. Are you referring to the bridge and the custom facilities? A few weeks ago I read and heard that President Obama did not want to participate financially in the cost of equipment for customs control of goods.
Is it true that this is a dispute over close to half a billion dollars? And in your opinion, how will it end?
[English]
Mr. Thompson: I mentioned that we have reached four agreements with provinces. There is also, in addition to that, an agreement with the Government of Quebec, which doesn't include the Canada Job Grant, and it recognizes the long-standing employer engagement. So the objectives of the job grant are already enshrined in legislation and in the program delivery structure of the Government of Quebec. In recognition of that, there is an ongoing agreement with the previous funds from the labour market agreement. That, as I say, doesn't include the job grant portion.
Mr. Smith: The Detroit River crossing is a federal project. The government announced that it would be a P3, and it is the bridge. We are providing advice to Transport Canada on the P3 aspects of that project, but the scope of the project, the customs plazas or where they are, is best asked of Transport Canada, who is responsible for that project.
[Translation]
Senator Chaput: Is PPP Canada incorporated?
[English]
Mr. Smith: Yes, our legal name is PPP Canada Inc.
[Translation]
Senator Chaput: Do you report to a department?
[English]
Mr. Smith: The chair reports to the Minister of Finance.
[Translation]
Senator Chaput: Have you turned down any projects?
[English]
Mr. Smith: We accept applications, and we hold those applications and work with them to mature the projects, ultimately making an investment decision. If not, we ask those applicants to reapply for the next round. It's up to them to reapply, and they are then re-evaluated on our merit principle.
[Translation]
Senator Chaput: You publish guides, tools and even manuals for your federal clients. How much time to do spend preparing and publishing these guides and tools for federal clients? I presume those are other departments?
[English]
Mr. Smith: We had developed a lot of the tools that we have for the P3 Canada Fund, which is our transfer payment program. We then modified them and adapted those for the federal P3s. So we've learned from the fund side of things, and we're applying that knowledge and that learning to develop the federal tools.
It's hard to say. It could be one, one and a half full-time equivalents to develop those over a period of time. They're in final editing for publication very shortly.
The Chair: I have two senators left, and we are in overtime now.
Senator Eaton: I'm not quite sure I understand what private means. Do you consider something like the TTC in Toronto private? Would you consider the AC private? If it's municipally owned is that considered private?
Senator Neufeld: Of the 20 projects, if I heard you correctly, you expect that some of them will pay a dividend — I'll use that term — or something that PPP Canada expects to get back. Can you tell me, of those 20 projects, how many do you expect will maybe return some money to the federal government? The rest would be just more or less straight grants. How are those grants allocated across the country? Are they fairly allocated from west to east? That would be my question.
The Chair: Who wants to answer the private question first?
Mr. Smith: I guess TTC is public. The private would be the economy sector that is actually trying to generate profits and privately owned. They are the providers of the services that are being procured.
Senator Eaton: What about waste management, water treatment plants?
Mr. Smith: Those are all examples of public infrastructure, and what the P3 does is go into a procurement process and select the best private sector consortium that can provide that service in the long term. They have to bid, and they will select the best one.
The Chair: Can you answer Senator Neufeld's question?
Mr. Smith: When I provide the list of the projects, you will see the distribution. I will say, though, that it is a merit- based program that we have, so we accept applications and assess them based on readiness, how new it is, how innovative, whether it is an inexperienced jurisdiction and all those kinds of criteria. That's how we select. There is no allocation. We do the best project in the round.
The Chair: Will it be obvious for us, when we look at the list, as to how many of the projects involve Aboriginal communities?
Mr. Smith: Yes.
The Chair: Colleagues, unfortunately we have run out of time. I know there is a lot of interest. This is only Supplementary Estimates (A); there are Supplementary Estimates (B) and (C) as well. We also have jurisdiction to deal with the Main Estimates throughout the year.
Thank you very much.
We are pleased to welcome officials from Public Safety Canada and Infrastructure Canada to complete testimony on Supplementary Estimates (A).
From Public Safety Canada we welcome Mr. Mark Perlman, Chief Financial Officer and Assistant Deputy Minister, Corporate Management Branch; and Shawn Tupper, Assistant Deputy Minister, Emergency Management and Programs Branch. From Infrastructure Canada we welcome David Cluff, Assistant Deputy Minister, Corporate Services Branch; Mr. Jeff Moore, Assistant Deputy Minister, Policy and Communications; and Ms. Thao Pham, Assistant Deputy Minister, Federal Montreal Bridges. They have their own assistant deputy minister now.
Could I ask Public Safety if you have some introductory remarks and, if so, who will be your spokesperson?
[Translation]
Mark Perlman, Chief Financial Officer and Assistant Deputy Minister, Corporate Management Branch, Public Safety Canada: Honourable senators, I am pleased to be here on behalf of Public Safety Canada. I am joined by Shawn Tupper, Assistant Deputy Minister of the Emergency Management and Programs Branch.
[English]
The 2014-15 Supplementary Estimates (A) for the Public Safety portfolio are brief this year, consisting of a $95- million increase in grants and contributions for one specific program. As this committee may be aware, the damages associated with the tragic events of the train derailment and explosion in Lac-Mégantic were quite extensive.
[Translation]
Although Public Safety Canada typically works to help in the recovery from major natural disasters, the magnitude of this particular event resulted in the government committing to share 50 per cent of the costs with the Province of Quebec.
[English]
Since man-made disasters are ineligible under the Disaster Financial Assistance Arrangements, or the DFAA, Public Safety received authority in July of 2013 to establish a specific contribution program.
Through the 2013-14 Supplementary Estimates (B), Public Safety provided the first $25 million for its share of costs associated with response and recovery. This was in addition to the $30 million Quebec received through the Canada Economic Development for Quebec Regions for economic recovery. The Quebec government's preliminary estimate of decontamination costs has been established at a further $190 million. Recognizing the burden this would place on the Government of Quebec, the Prime Minister pledged to provide $95 million, or 50 per cent of this, to help decontaminate depleted soil and water of that community.
If these estimates are approved, a payment of up to $95 million will be provided to the Province of Quebec within six months of our receiving the detailed cost estimates.
[Translation]
In summary, this funding request will allow Public Safety Canada to continue our important work, while ensuring we are using Canadian taxpayers' money in a cost-effective manner.
[English]
Thank you for your time. We would be pleased to answer any questions you may have.
David Cluff, Assistant Deputy Minister, Corporate Services Branch, Infrastructure Canada: Good evening, Mr. Chair and committee members. I'm pleased to be part of a panel appearing before you today. I'm joined by Jeff Moore, Assistant Deputy Minister, Policy and Communications; and Thao Pham, Assistant Deputy Minister, Federal Montreal Bridges.
This evening I would like to provide you with an update on our activities as they relate to the New Building Canada Plan and the new bridge for the St. Lawrence. I will also highlight Infrastructure Canada's Supplementary Estimates (A), where these items appear prominently.
The past decade has seen the delivery of an exceptional level of infrastructure investments across the country.
[Translation]
In 2007, the original 7-year $33-billion Building Canada Plan was introduced to allow provinces, territories and municipalities to undertake long-term infrastructure planning.
In 2009, the $4-billion Infrastructure Stimulus Fund was developed to support job creation at the height of the global economic crisis.
Through these and other infrastructure initiatives, over 43,000 projects have been supported across the country.
[English]
The $53 billion New Building Canada Plan builds on these important investments. The plan includes the Community Improvement Fund, consisting of the Federal Gas Tax Fund and the incremental Goods and Services Tax Rebate for Municipalities.
The federal gas tax, as you know, provides $2 billion every year to municipalities for their local projects. The federal gas tax has been indexed at 2 per cent per year in $100 million increments starting this April, which means it is expected to grow by $1.8 billion over the next decade.
The plan also includes the $14-billion New Building Canada Fund that will support projects of national, regional and local significance that promote economic growth, job creation and productivity. In this $14 billion there is $1 billion dedicated specifically to projects in communities of less than 100,000 residents. Also part of the plan, P3 Canada Fund has been renewed with $1.25 billion over five years, and this funding is managed by PPP Canada.
As well, existing federal infrastructure programs continue to support over 2,500 ongoing or new infrastructure projects across Canada during 2014 alone. Under our existing infrastructure programs there remains $6 billion in funding that continues to flow across the country.
[Translation]
Infrastructure Canada is also responsible for the management and delivery of one of the largest infrastructure projects in North America: the new bridge for the St. Lawrence corridor project in Quebec.
Replacing the existing Champlain Bridge, one of the busiest in Canada, the new bridge for the St. Lawrence will have six vehicular traffic lanes, a dedicated mass transit corridor and a multi-use pathway. The project also provides for the replacement of the Nuns' Island Bridge as well as approximately four kilometres of urban highway infrastructure.
A rigorous financial and technical analysis confirmed that a public-private partnership would be the most cost- effective method to deliver the project within an accelerated timeline.
[English]
The Government of Canada is committed to having the new bridge open by 2018 and the rest of the corridor completed by 2020.
As you are aware, Infrastructure Canada's Supplementary Estimates (A) were tabled in Parliament during the week of May 12. They include an increase of $312.7 million in new authorities, bringing the total available funding for us from $3.3 billion to $3.6 billion for 2014-15.
The additional funding is divided in the following manner: first, $142.2 million in contribution funding for the New Building Canada Fund for the 2014-15 construction season — program funding for future construction seasons will be secured through upcoming parliamentary allocation processes; second, $93.2 million in capital funding for preparatory work for the new bridge for the St. Lawrence corridor project; third, $71.1 million in operating funding to implement the New Building Canada Fund to manage existing programs and for the new bridge for the St. Lawrence corridor project; and fourth, $6.2 million in statutory funding, which covers the employee benefits associated with the administrative funding I mentioned.
Infrastructure Canada has a strong track record of delivering federal infrastructure funding. Since the launch of the New Building Canada Fund on March 28, we have signed and announced four agreements with provinces and territories for a renewed federal Gas Tax Fund. Just this week, we announced the first major project since the launch of the New Building Canada Fund, the Edmonton light rail system. Minister Ambrose announced that the government has set aside up to $150 million under the New Building Canada Fund for this project. Moving forward, we will continue to work with our partners, the provinces and territories to identify new projects for funding under this fund.
Thank you again for inviting us here today. We are pleased to answer your questions.
Senator Eaton: Mr. Cluff, the federal Gas Tax Fund provides $2 million every year to municipalities for their local projects. Is it a matching fund?
Mr. Cluff: I believe not; it's $2 billion to the municipalities.
Senator Eaton: Is it allocated by province? Is it allocated on merit?
Mr. Cluff: There is a national distribution by province, and there's is a distribution inside the province to the municipalities. Each municipality knows what it's going to get.
Senator Eaton: What would the City of Toronto get this year?
Jeff Moore, Assistant Deputy Minister, Policy and Communications, Infrastructure Canada: I don't know the answer to that question, but we certainly can get it for you.
Senator Eaton: Senators represent different provinces, so perhaps you could send us the breakdown for each province, and send me the breakdown for Toronto within Ontario.
Mr. Cluff: That will be no problem.
The Chair: There's a per capita figure in there, is there not?
Mr. Cluff: It's based on the census. That's how the allocation to the provinces is done.
Senator Eaton: It's by population.
Mr. Cluff: Yes, by population.
Senator Eaton: How many projects of national significance will be funded with the requested funding this year?
Mr. Cluff: That's very difficult to say because projects of national significance can vary considerably in size. You could have one project for $1 billion or four projects at $250 million, so what you get in and what you approve will determine the number of projects that are funded.
Mr. Moore: The National Significance Component is merit-based.
Senator Eaton: Do you have an upper limit as to how much you will allocate to any one province? Is there a ceiling?
Mr. Moore: There is no particular allocation at a provincial level for the National Infrastructure Component under the New Building Canada Fund. It's a merit-based program, so we receive and review applications, which is different from the Provincial-Territorial Infrastructure Component.
Senator Eaton: Have you been receiving applications under the New Canada Building Fund?
Mr. Moore: Yes, we have.
Senator Eaton: When will we hear about them?
Mr. Moore: As I said, we have the New Building Canada Fund with two components: the national component and the provincial-territorial component. As Mr. Cluff mentioned, we announced our first project under the provincial- territorial component.
Senator Eaton: That's lovely for Alberta. I was thinking nationally. When will we hear about something of national significance?
Mr. Moore: The national component is merit-based, so it depends what comes in. We have to assess the projects.
Senator Eaton: Things are coming in.
Mr. Moore: Things are coming in under the national component as well as the Provincial-Territorial Infrastructure Component.
Senator L. Smith: Mr. Perlman, do the folks at Public Safety and Emergency Preparedness have a $100-million fund in that total budget for any natural disaster? We discussed this last year. For Lac-Mégantic, the Prime Minister has committed $95 million because of the scope of the damage. One of the new issues coming up is getting a track built around the town so it doesn't go through the main part of the town, which probably is going to cost a significant amount of money.
If you've got $100 million in that slush fund for major or sudden disasters, are you going to increase that amount? It seems that with climate change and other things happening we're guaranteed to have more disasters that are not man- made. I know the disaster at Lac-Mégantic was man-made, but we're stepping up for the first phase of cleanup; and they will probably come back for more money. Once we've given them $95 million, how do we address the second part, which will be the whole development of that track around the town?
Mr. Perlman: I'll start and then turn it over to my colleague. The $100 million is a notional amount so that we're not going back for minor amounts. It's for natural disasters, not man-made disasters, as you mentioned. This was one of the elements we discussed last year on that. In the Main Estimates there were amounts to deal with disasters that we knew would go out this year. Another $662 million on top of the $100 million has been put into our Main Estimates to deal with that.
Maybe Shawn can speak to the detour of the railway.
Shawn Tupper, Assistant Deputy Minister, Emergency Management and Programs Branch, Public Safety Canada: I want to be clear, senator, that the money that we have, which is under the Disaster Financial Assistance agreements, would never be transferred in response to Lac-Mégantic because it is exclusively for natural disasters, which that wasn't. Indeed, that money escalates as is necessary. We have cycled funding for natural disaster assistance, which is predicated on the work we do with the provinces. We have good intelligence and good partnerships with the provinces. We understand their needs on a cyclical basis through each fiscal year, so those numbers are adjusted as necessary in terms of the level of need, given the range of disasters we might confront in any given year.
Lac-Mégantic was a one-off program effectively, and the government has announced $95 million for decontamination. That is based on the initial estimate of cost that we received from the Quebec government. That is our current commitment. We've established a working group with the Quebec government that is co-chaired by the two governments. We're working together through that as we look at the costs as they start coming in. The difficulty with many of these responses is that it takes so long to get the work done and to understand what the costs are. These are our initial understandings of what the costs may be, and this is the commitment as it currently stands.
Senator L. Smith: Once you commit to spending $2.5 million to contribute to the study to develop the plans, you may be on the hook for more.
Mr. Tupper: The issues around the rail are being dealt with by Transport Canada. They are not included in the work we're doing on decontamination, which is focused on cleanup.
Senator L. Smith: In your report, you announced the amounts in the infrastructure program in terms of 2007 and 2009. Has all that money been spent? Senator Gerstein has been fantastic in another committee in terms of money that has been reprofiled. Are you guys into reprofiling? Has all the money been spent from prior years' commitments? There is a big number from 2007 to present, and then there's a new $53 million or $54 million fund. Has all that money that was previously set aside been spent on infrastructure projects, or is it reprofiled into the new kitty?
Mr. Cluff: If your question is whether this new is money, the answer is yes, it is new money. Now I'll answer your question with more detail.
The 2009 money, which was part of Canada's Economic Action Plan, was by and large put into programs with very limited life. The spending started in 2009 and ended in 2012. That was part of a condition that it had to be spent in that very short time.
Money from previous infrastructure programs, like 2007 and even ones before that, was not time-limited in the same way. When I said that there is $6 billion still left to be spent, I was referring to all those previous programs where there is still money left.
Now, the money by and large has been allocated to projects, and it's a question of those projects being delivered, doing the final reporting, releasing the holdback and so on. There is a small amount that is residual and has not been reprofiled out of that pot, but there is reprofiling each year because of the notion of lapsing. If we don't spend the full amount that we save this year by the end of the year, then it's carried forward to the following year. It's totally independent of where does the $53 billion come from. It's all new money.
Senator L. Smith: The projects themselves you said are short term or short life. Does that mean, if they're infrastructure programs, that they're not going to have a long life, or is it just the timing of the project?
Mr. Cluff: The projects had to be constructed in a short period. The projects themselves would last as normal.
Senator Callbeck: I thank all of you for coming this evening. I want to ask about the new Canada fund. This was announced in Budget 2013, with great fanfare. Ever since, municipalities have been asking for the details so they would know what projects were eligible. Finally, a year later, March 28, they got some of the details three days before the program was to start.
They still are expressing great concern about the lack of details, that they didn't get all the information. I know that the Atlantic Mayors' Congress not long ago passed a unanimous motion expressing concern about the lack of information.
What's the problem here? This program was announced in 2013. Here we are, way over a year later. It's an important program because it creates so many jobs, and those jobs are needed. Municipalities are concerned that they're going to lose the whole construction season this year. Could you comment on that, please?
Mr. Moore: Thank you for the question. I'll start by talking about the actual fund itself, because there are two components. The first component is the National Infrastructure Component, which I spoke about and which is a $4- billion fund. That fund is a merit-based program that is administered by the federal government. We actually have a process in place, material on our website and materials that can help potential applicants in terms of how to apply to the program.
The other part relates to the Provincial-Territorial Infrastructure Component, which is actually allocation-based. Each province and territory gets a base amount of funding plus a per capita allocation. The way that component works is that the federal government will work with each province and territory to identify priority projects for each of their respective jurisdictions.
When the program was launched on March 28, the minister and others engaged with their counterparts to talk about the modalities of the program and how the program was going to work. At the same time, we also shared application guides and business guides, all the information that would be required for potential proponents to make an application to the province. We also have information on our website with respect to those guides, and also with respect to if there is a potential applicant, who they contact at the provincial or territorial level to submit a project.
A good example that we have is with Manitoba. Manitoba took all of our material with respect to PTIC and adapted it for their own use and started their own formal application process with municipalities and others in terms of the national New Building Canada Fund, so it's an example of what one of many provinces and territories has done to engage municipalities and other potential applicants.
Senator Callbeck: You say that the information was given on March 28. Some information was given, but it's very obvious, if you read the press in Atlantic Canada, where I'm from, that there are real problems with this program. They can't get answers. As I say, it's important. It creates a lot of jobs.
There is another aspect of this that I read about yesterday in the press, and I'll quote:
. . . provincial, territorial and municipal officials say they are also worried about missing this year's construction season, pushing the start of work into 2015 or beyond.
Those delays have been aggravated by a last-minute bombshell from federal officials: that provinces and territories, not Ottawa, would now be responsible for setting up the systems needed to process applications for municipal spending plans across Canada.
Is that right? When was this bombshell dropped?
Mr. Moore: If you look at the entire architecture of the New Building Canada Plan, we have various components. One key component is the Gas Tax Fund. We already have money flowing under the existing Gas Tax Fund agreements, which the municipalities can take advantage of. We're beginning to sign agreements with provinces and territories now. In fact, we've already signed four agreements with respect to the Gas Tax Fund to move forward for the next five years, and negotiations are progressing very well with the rest of the provinces and territories. That's one piece of the $53 billion, which is actually worth almost $22 billion. That's actually already working in terms of the New Building Canada Plan.
We also have the National Infrastructure Component. As I said, we're starting to get applications with respect to that program. We're getting applications as well under the Provincial-Territorial Infrastructure Proponent. The money is working. People are applying. We have announced projects under PTIC — Edmonton LRT being a good example of that.
Senator Callbeck: Was it changed, as it says here? Provinces and territories, not Ottawa, would be responsible for setting up the systems. Was there an understanding before that that Ottawa was going to set up the systems?
Mr. Moore: It's actually a structure that was already in place previous to the New Building Canada Fund or plan, under the Building Canada Fund 2007. That was a structure that we were actually using with provinces and territories, where provinces and territories would identify priority projects under that legacy program, I guess you could say. It's not a process that's unfamiliar to jurisdictions that we're working with.
What we're doing with the new plan is we're actually building on those existing processes and structures that are already in place with respect to the Provincial-Territorial Infrastructure Component, for example. They each have their own allocation that they have to manage, and that represents the federal contribution. It's up to them to decide what process they want to put in place in terms of receiving applications. For instance, do they want to create their own specific process related to the New Building Canada Fund, such as the example of Manitoba, or do they want to use their existing capital planning processes that they have in place with municipalities? There are a lot of options are available to provinces and territories in terms of receiving applications.
Senator Callbeck: There are a lot of options, but was there an understanding that Ottawa was going to be responsible here? According to this article, as it says, it's a last-minute bombshell. So is that right or not?
Mr. Moore: We've been having consultations with provinces, territories and the Federation of Canadian Municipalities for the last year and a half, I would say. We've been working through with them what their expectations would be of the program, and in February, actually, the Prime Minister announced what the general framework of the New Building Canada Plan and fund would look like. Since February, there has been an understanding — at a high level, I would say, but still an understanding — of how these programs would function. Since February, we've been engaging very closely with all of the provinces and territories, the FCM and other key stakeholders in terms of trying to sort out what the other details of the programs would be and how those programs would work. There has been constant engagement, I would say, in the last year and a half. Announcements have been made as the engagement has been progressing, and a lot of the systems that were previously in place can be used in terms of the new programs. A lot of the fundamentals, I would say —
Senator Callbeck: They really found out in February that they were going to be responsible, not Ottawa. Right?
Mr. Moore: That's when the announcement was made — in February — in terms of the framework of the program.
Senator Callbeck: I have other questions.
The Chair: I'll put you down for round two. I have a little list building here.
[Translation]
Senator Bellemare: I was happy to hear the answers provided to the questions put by senator Callbeck, because, seen from the outside, indeed, infrastructure Canada and all of these programs seem quite complex. There are criteria by province, funds by source of income, and in each of those funds, sometimes there are normed programs. Am I correct?
[English]
Mr. Moore: There are various elements to the plan itself, so it's good to have an understanding of what that plan looks like. For example, we have the Community Improvement Fund, under the plan, which involves the Gas Tax Fund, as well as the GST rebate. The other key element we have is the P3 Canada Fund, which you heard about previously, and then we also have the third component, or key component, of the plan, which is the New Building Canada Fund. Under that fund, there are two components — the National Infrastructure Component and the Provincial-Territorial Infrastructure Component. So there are various elements to that plan.
[Translation]
Senator Bellemare: Are there other, more specific programs within each of those components?
M. Moore: There is one other which I can talk about a little.
[English]
Under the Provincial-Territorial Infrastructure Component, we have funding for national regional projects, so, under the $10-billion allocation for the Provincial-Territorial Infrastructure Component, we have $9 billion set aside for projects of national or regional significance. We also have a billion dollars set aside for small communities, so those are communities with a population of less than 100,000.
[Translation]
Senator Bellemare: I am not concerned about the nature of the programs. When a government administers a lot of programs, it is more difficult to manage. The projects have to meet program criteria, and sometimes, envelopes are closed.
In your case, are the envelopes closed? Can there be a revision or an accommodation from one envelope to another in a given year, or are envelopes really dedicated to each program? I used to manage federal and provincial labour programs. Each of them had their standards. There were needs, but it was difficult to spend the money because often, standards were too strict. That created problems. We changed the way we did things, but that is the way things worked in the past; there were hundreds of programs, with criteria. I get the impression, listening to you, that something similar is being re-created at Infrastructure Canada. Is that a mistaken impression?
[English]
Mr. Moore: Let me talk about the funding first. You're right in that you can't take any money from the $22 billion set aside for the Gas Tax Fund, for example, and put it into the P3 Canada Fund or into the National Infrastructure Component, unless, of course, there was cabinet direction to do so. So the programs we have are the programs we have, with the money that we have attached to them. Also, I would say that, in some of the components, yes, there are some nuances in terms of the eligibility criteria. For the most part, the eligible recipients can be the same with some small nuances, and in terms of, I would say, the nature of projects that we can support, those can be different, too. So, under the Gas Tax Fund, for example, we have a vast number of eligible categories of types of projects we can support, whereas, under the National Infrastructure Component, we have seven categories, for example. So the types of projects we can fund can differ from component to component of the New Building Canada Plan.
[Translation]
Senator Bellemare: Do you often refuse projects because they do not meet your criteria?
[English]
Mr. Moore: The programs have just been launched, so I can't really comment on that yet.
[Translation]
Senator Bellemare: What leveraging effect do you expect to have on the Canadian economy thanks to federal investment?
[English]
Mr. Moore: If you're talking about leveraging, I would say that if you look at the eligible cost, we can go as high as 33 per cent, 33.3 per cent, in terms of our maximum contribution, but there are some exceptions to that. For example, if it's a project in the territories, we can fund up to 75 per cent of the project. If it's a transit project or if it's a provincially owned highway, for example, we can go up to 50 per cent. So the norm is 33.3, with some exceptions as I've just outlined.
[Translation]
Senator Bellemare: If there were an economic crisis like the one in 2007, would you be ready to roll out major investment projects so that we could get out of the crisis as well as we did in 2007-08?
[English]
Mr. Moore: That's a good question. I don't think I could answer that. I don't think I have that authority. It would be a question for the government of the day, I believe.
Senator Neufeld: Just a couple of questions about the bridge across the St. Lawrence. How does that compare in size to the new bridge that was built in British Columbia across the Fraser to replace or augment the Port Mann Bridge? I think that's eight lanes or maybe even more. Is this bridge currently under construction? You'll have to help me here a little bit because in here you say you are going to have it open by 2018. That's only a few years from now. It will be exciting if it's open in three years, and I just wonder how you'll do that. The last part of that question is, how many bridges is the federal government responsible for that require an assistant deputy minister? Not that you shouldn't have one; I'm just interested. It says "assistant deputy minister, federal Montreal bridges."
Thao Pham, Assistant Deputy Minister, Federal Montreal Bridges, Infrastructure Canada: Thank you, senator, for that question. Actually, I'll start with the second part of your question, and that is in relation to where we are with respect to building the bridge. As you know, Minister Lebel announced a couple of months ago, in December, actually, that because of the state of the Champlain Bridge, we have to accelerate the construction of the new bridge. Indeed, the target is to have the new bridge in operation, open for traffic, by the end of 2018. So we have launched the procurement process. We are under an extremely accelerated timeline, and the way we have launched this project is that we're going to do it by a public-private partnership. We have started the procurement process to select the best bidder, who will start construction in summer 2015.
The procurement process, as I indicated, started in March of this year, with a request for qualifications. We have received, in the last couple of weeks or so, submissions from the best builders internationally but also in Canada. We are in the process of selecting the top three respondents, and then we're going to move on to the next stage of the procurement process in July of this year. So, a couple of months from now, we're going to start discussing with the three highest-ranking respondents, and then in spring 2015 we will have the winning bidder in place to start early work but also start construction.
Indeed, it is a very ambitious timeline, but we have met each milestone up until now, so that's the reason. We will continue to work full-time.
The other element of why we are very hopeful we can deliver this project is that an interdepartmental team has been pulled together since the fall of 2013 comprised of staff from Infrastructure Canada, Transport Canada, Public Works and Government Services Canada, as well as PPP and Justice Canada. It is a team of approximately 100 professionals and experts in each of the areas, and we are working full-time on this project.
In relation to the Port Mann Bridge in British Columbia, that bridge belongs to the B.C. government, as you probably know. It is also managed by a Crown corporation, and it was built and operated as a P3 as well. The costs for that bridge project were $3.3 billion, and the design and construction costs were around $2.5 billion. I will have to get back to you on the technical specs of the comparison between the two bridges because I don't have that with me.
However, for the new bridge for the St. Lawrence, we're talking about not only the bridge that will run about approximately 3.5 kilometres, but we're also talking about a corridor. For those of who know the Montreal region, we're also going to widen Autoroute 15, which is the exit to Champlain Bridge. It is now a four-lane highway, and we will widen that into six lanes for safety reasons. There is a bottleneck right now, so we're going to make sure we have a world-class corridor. It is a bridge, but it's also a four-kilometre widening of the highway.
Maybe just to quickly touch on why there is an assistant deputy minister, as you can imagine it is because of the complexity of this project. Also, my responsibility is to provide oversight and coordination with The Jacques Cartier and Champlain Bridges Incorporated to ensure there is close collaboration. As you can imagine, when construction begins it will require lots of communication and coordination with JCCBI.
Senator Neufeld: What is the estimated cost to build the Champlain Bridge? You're going to complete in three years, and you probably won't even start in the spring, so it will be less than three years, probably two and half if you're lucky. What is the estimated cost?
Ms. Pham: The estimated cost for construction, but also for the operation of the bridge over 30 years, has been estimated to be between $3 billion and $5 billion. With the exact costs of the construction but also the maintenance and operation over the 30-year period, we will know those exact numbers once we have the bidders' final numbers.
Currently, as I indicated before, we are in a competitive tendering process, so the final numbers will be known in the next six months or so.
Senator Neufeld: We just had PPP Canada here, and they said they were contributing $200 million to light rail transit in Edmonton, valued at $1.6 billion. I see in your remarks the government has set aside up to $150 million under the New Building Canada Fund. Do I understand that PPP Canada is coming in with $200 million, Infrastructure Canada is coming in with another $150 million, which would be $350 million? Is that correct?
Mr. Moore: I believe it's $250 million from P3 Canada —
Senator Neufeld: You said $200 million.
Mr. Moore: It's $250 million, and $150 million from Infrastructure Canada.
Senator Neufeld: So it's $250 million —
Mr. Moore: It's $400 million. That's the federal contribution, yes.
Senator Neufeld: That answers my question. It's interesting that Mr. Smith didn't know it was $250 million.
The Chair: It's never been entirely clear to me why the federal government has a responsibility with respect to the Champlain and Jacques Cartier bridges, going from Montreal Island to the south shore, yet if you go over the Fraser River it's a provincial responsibility. What are the criteria that determine that?
Senator Neufeld: We did it on our own.
The Chair: What is it that creates the responsibility? Is this just an historic fact? Is that what we're living with here?
Ms. Pham: Indeed. It's the only instance in Canada where the federal government owns bridges that are entirely within a province because of historical reasons, namely the fact that the seaway was built and then the government decided back in the 1960s to build the bridges to go over the seaway. Therefore we have retained property and ownership of those bridges, and those are the only reasons why. It is indeed the only instance in Canada.
The Chair: Am I correct that in a P3 project you need cash flow afterwards to satisfy all of the arrangements that have been made? Does that mean that there are likely to be tolls on this bridge again to create this cash flow?
Senator L. Smith: We can get the mayor to come in and answer that question.
Ms. Pham: Actually, the government indicated that the Champlain Bridge will be replaced and the new bridge will have tolls.
Senator Neufeld: Further to that, when you say that's the only place where the federal government is responsible for bridges, the Alaska Highway, which I'm quite familiar with, is owned totally by the federal government, maintained, and has dozens of bridges on it. Can you clarify what you said for me? That travels 1,500 miles.
Ms. Pham: Actually, the federal government has ownership of bridges, but only in those situations where those bridges cross provinces. For example, the Confederation Bridge belongs to the federal government because it crosses two provinces. Also an international crossing, so for example eventually the Detroit River international crossing will belong to the federal government.
Whereas if you have a bridge or infrastructure, a road, that is located entirely within a province, it is under provincial jurisdiction.
Senator Neufeld: Actually, it's not. The Alaska Highway is under federal jurisdiction, regulated, maintained and rebuilt on a constant basis by the federal government.
Ms. Pham: I will have to get back to you on that, senator.
The Chair: Would that run from B.C. to Yukon?
Senator Neufeld: It begins in Dawson Creek and was built during the war, all the way to Alaska. So it travels through British Columbia for 600 miles, it travels through the Yukon almost that much, until it reaches the border at mile 1,202 in Alaska. There are 1,202 miles in British Columbia and Yukon that's owned by the federal government, bridges and all. There are lots of bridges.
The Chair: The point Ms. Pham was making is that's provincial-territorial, like the P.E.I. bridge. This highway goes from British Columbia into Yukon.
Ms. Pham: That's right, because it crosses boundaries, exactly. If it is agreeable to the committee, I can certainly get that information for you.
The Chair: That would be great, any information you can provide. I'm hoping that when Mr. Moore goes back to his office he'll take that chart off the wall that has all the different infrastructure programs, and one is a plan and then it's a fund, and give us indication of how they all are tied together with an amount per year. That would be helpful for us.
Senator Eaton: It will be helpful for next year, too, when we can pin him again.
Mr. Moore: We will provide something for you.
Senator Callbeck: I have a question on the Small Communities Fund. Recreational facilities, are they eligible for that fund?
Mr. Moore: Yes, they are.
Senator Callbeck: Thank you.
The Chair: Round two goes fast sometimes. Thank you very much for being here and helping our understanding. Mr. Perlman, we didn't have too many questions for you tonight, but we'll have you here again. You've been here before. Thank you very much.
(The committee adjourned.)