Proceedings of the Standing Senate Committee on
National Finance
Issue 28 - Evidence - March 11, 2015
OTTAWA, Wednesday, March 11, 2015
The Standing Senate Committee on National Finance met this day at 6:45 p.m., in camera, to consider a draft report on Supplementary Estimates (C) for the fiscal year ending March 31, 2015; and in public to examine the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2016.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on National Finance.
Honourable senators, it is our plan to deal first with a draft report on Supplementary Estimates (C). Could I have a motion to go in camera? Thank you.
Contra minded? Nobody is contra minded.
It would be quite appropriate, if you agree, to allow staff to remain.
(The committee continued in camera.)
——————
(The committee resumed in public)
[Translation]
The Chair: We are continuing our study on the 2015-16 Main Estimates.
[English]
On our first panel this evening, we are pleased to welcome officials from Canada Mortgage and Housing Corporation, Brian Naish, Chief Financial Officer; and Charles MacArthur, Senior Vice President, Regional Operations and Assisted Housing.
From the Royal Canadian Mounted Police we welcome Alain Duplantie, Deputy Commissioner, Chief Financial and Administration Officer; and David Wiseman, Executive Director, Corporate Budgeting.
I understand each department has brief opening comments and then we will proceed with a question, answer and clarification session. We will begin with CMHC, to be followed by the RCMP.
[Translation]
Brian Naish, Chief Financial Officer, Canada Mortgage and Housing Corporation: I am pleased to be here on behalf of Canada Mortgage and Housing Corporation. I am joined today by my colleague Charlie MacArthur, Senior Vice-President, Regional Operations and Assisted Housing.
As a federal crown corporation and Canada's national housing agency, CMHC's mission is to help Canadians meet their housing needs. As I mentioned when I last appeared before the committee in October, we do this in three main ways.
First, CMHC's housing finance activities — mortgage loan insurance and securitization — contribute to the stability of housing markets and Canada's financial system. Our commercial programs serve all parts of the country and support all forms of housing, including homeownership, large multi-unit rental properties and nursing and retirement homes.
CMHC also helps Canadians meet their housing needs by providing market analysis, information and research that helps businesses, governments and the public make informed decisions about housing. In fact, CMHC is the most comprehensive and trusted source of information on housing and housing markets in Canada.
And third, we work with the provinces, territories, First Nations communities, municipalities and other stakeholders to support low-income households and others whose housing needs are not being met in the marketplace. The federal investment in housing assistance is provided under various housing programs and initiatives that, together with our market analysis, research and information transfer activities, are funded through appropriations voted by Parliament.
[English]
CMHC is estimating budgetary expenditures of $2 billion in 2015-16, which require approval by Parliament. Most of this funding will be used to provide assistance to Canadians in housing need, including low-income families, seniors, people with disabilities, Aboriginal people and victims of family violence. Just under $1.7 billion will be used to support close to 600,000 households living in existing social housing units across Canada, including close to 29,000 housing units on reserve.
CMHC will also provide more than $150 million in 2015-16 to improve living conditions on reserve. This funding will support the construction of new homes, the renovation of existing homes, ongoing subsidies for existing social housing as well as capacity development in First Nations communities.
As well, some $250 million is provided annually for new, affordable housing, renovation, shelter allowances, rent supplements for social housing, and accommodations for victims of family violence. This funding is delivered through the Investment in Affordable Housing, a collaborative initiative with the provinces and territories to help reduce the number of households in housing need. To date, more than 217,000 households have benefited from the Investment in Affordable Housing, which has been renewed through to March 2019.
The balance of our budgetary expenditures, some $43.3 million, will support our market analysis on policy, research and information transfer activities.
CMHC's total budgetary expenditures for 2015-16 reflect a net decrease of $71.7 million from last year's Main Estimates. This reduction in spending is explained by a number of factors. Most notably, there will be a decrease of $70 million in funding for housing in Nunavut as a two-year commitment provided for in Budget 2013 expires in the current fiscal clear.
[Translation]
We also estimate a decrease of $5 million due to the updated pace of spending for renovation programs on reserve. These reductions are partially offset by an increase of $4 million in funding for housing construction and rehabilitation on reserve.
This year's Main Estimates also reflect non-budgetary expenditures for CMHC. As has been the case for the past two years, the number in the estimates is negative, as we will repay more than we borrow from the Consolidated Revenue Fund in 2015-16.
CMHC is estimating non-budgetary repayments of $139 million next fiscal year. This number is substantially lower than for the current fiscal year because the final repayments under the Insured Mortgage Purchase Plan have now been made.
Thank you again for the opportunity to be here. My colleagues and I would be pleased to answer any questions the committee may have.
[English]
Alain Duplantie, Deputy Commissioner, Chief Financial and Administration Officer, Royal Canadian Mounted Police: Honourable senators, I'd like to thank you for this opportunity to appear before you this evening to discuss the RCMP's 2015-16 Main Estimates. I would first like to share with you some background information on our organization and then continue with the highlights of our Main Estimates.
The RCMP has a complex and multifaceted mandate to provide federal, provincial, territorial, municipal and international policing services. As we look to the future, increasing concerns over terrorism, extremism and rapidly changing technology are reflective of the ever-evolving environment faced by the men and women that make up the RCMP.
The RCMP's overall spending authority for 2015-16 will be in the order of $4.4 billion, which is a combination of appropriations and vote-netted revenue. This funding will support the Government of Canada's commitment to providing for the safety and security of Canadians by tackling crime on international and domestic levels.
On the international stage, the RCMP works to further Canada's global peace and security agenda through the provision of police liaisons abroad who work with the international law enforcement community to address terrorism and transnational crime. In addition, we actively participate in multiple peacekeeping missions as well as providing support to nations at risk and building their law enforcement capacity.
As Canada's federal police force, we provide general law enforcement activities at all levels of government by upholding the laws of Canada and the laws in force in any province or territory. The RCMP contributes to our national security through a number of mandates and responsibilities, including national security criminal investigations, protective policing, border integrity, drugs and organized crime, to name a few.
The RCMP also delivers policing services under 162 provincial and municipal contracts covering eight provinces and the three territories, as well as most of their respective municipalities, excluding larger municipalities which normally provide their own police service; for example, Vancouver, Edmonton and Toronto. Additionally, the RCMP provides First Nations policing services through 133 tripartite agreements.
The RCMP discharges its mandate by managing activities under three main service lines: contract policing, federal policing and specialized policing services, with a focus on five key strategic priorities, which include reducing the threat and impact of serious and organized crime, countering criminal threats to Canada's national security, countering threats to Canada's economic integrity by disrupting the flow of financial support to organized crime, contributing to safer and healthier Aboriginal communities, and initiatives to support the prevention of youth crime and victimization.
The RCMP is seeking federal appropriations of $2.63 billion in the 2015-16 Main Estimates, which is complemented by $1.8 billion in vote-netted revenue that the RCMP will earn from its contract policing operations. These Main Estimates reflect a net increase of $4.1 million, or 0.2 per cent, from the previous year.
Some major contributing factors to the increase in our Main Estimates include an increase of $17.9 million for the grant to compensate members of the RCMP for injuries received in the performance of their duties. The purpose of this grant is to provide members of the RCMP and their families with financial security in the event our members are injured as a consequence of their duties and prevented from continuing to provide service to the Crown. These benefits are provided for life.
A further increase in funding of $9.5 million is to support the implementation of integrated cross-border law enforcement commitments under the Beyond the Border action plan, as announced in Budget 2012.
An increase of $8.7 million will support the implementation of modernized HR management processes in accordance with provisions of the Enhancing Royal Canadian Mounted Police Accountability Act, which received Royal Assent on June 19, 2013.
Finally, the estimates reflect a reinstatement of $11 million to our capital vote related to a temporary, one-time transfer to Public Works for the creation of new office space to replace the RCMP headquarters facility in British Columbia. These funding increases are offset by a further and final transfer to Shared Services Canada of $39.7 million. The RCMP has now transferred a total of $175.6 million to support the creation of Shared Services Canada.
That said, it will now be my pleasure to answer your questions in regard to our Main Estimates.
The Chair: Mr. Duplantie, thank you very much for that. Senators have indicated an interest in clarifying some of the points, and I will begin with Senator Eaton from Toronto.
Senator Eaton: Good evening. It's nice to see the gentlemen from CMHC again. I asked you the same question in October, and I'm wondering if there have been any changes. The money you allocated for renovating and upgrading existing houses on reserve, you told me, I think in October, or it was told to me that you gave the money to the reserve, but they were not inspected and did not have to follow guidelines that other Canadians have to follow. You did not train Aboriginals to inspect the housing they're building, so once you gave the money, you had no way of going in and checking to see whether it was built or built to code. Is that still the case?
Charles MacArthur, Senior Vice President, Regional Operations and Assisted Housing, Canada Mortgage and Housing Corporation: I would like to clarify what we said then. The First Nations have the jurisdiction and are responsible for code enhancement. The First Nations are to ensure that the houses built under our section 95 programs are built to code.
Senator Eaton: Sorry, I don't mean to interrupt you, but does anyone inspect them the way you would? Who inspects them?
Mr. MacArthur: The First Nations are responsible for hiring qualified inspectors to do inspections of the houses that we are funding on reserve, and the chief and council are required to provide us with an attestation to that.
As well, an eligible program expense that we've implemented is they have to do three inspections by a qualified inspector during the course of the construction of a section 95 house. The First Nation is the jurisdiction with responsibility.
Senator Eaton: They are being inspected. Thank you very much.
Mr. Duplantie, this morning there was a report that the RCMP's records of criminal offences are not up to date. They're a couple of years — if people move from one jurisdiction to another and the police go on to see if somebody has a record, they're not up to date. Is that right? Was the news correct?
Mr. Duplantie: In part.
Senator Eaton: I'm wondering whether it was a lack of funds or personnel.
Mr. Duplantie: This is a legacy, a long-term challenge of moving from paper-based systems to automated systems, and the progress has been and is being implemented in phases.
In the first phase, the repository that captures all the images of fingerprints and is used to manage those fingerprints has been automated through a project that actually came to completion in 2013, and by the spring of 2015, we anticipate full compliance with the delivery of fingerprints at the charge approval period into that repository.
The court dispositions are not yet automated. Our project is in place. We spent $10 million last year; $10 million is projected for the coming fiscal year and a further $5 million in the fiscal year that follows to close the automation of the receipt of court dispositions so that it will be virtually live, updated within minutes. So that brings the automation in place. By 2018, it should be caught up.
In the interim, the RCMP has put in place risk mitigation strategies to deal with the existing backlog. The community of law enforcement agencies, prosecutors and court systems are aware and have been made aware over time that when there are cases that may require insight into up-to-date information, there is a mechanism to contact our centre and have a file prioritized to ensure that the information is brought to their attention and made available for use in the court's process, wherever they are at.
So we are closing the gap from an automation perspective. That takes a little bit of time. We're financing the criminal justice information management system internally through our capital vote, and the risk mitigation strategy will carry us to the point of 2018 when the two converge.
[Translation]
Senator Bellemare: My question is for both of you. Could you tell me what criteria the Canada Mortgage and Housing Corporation uses to provide funds to individuals? You said that you are helping seniors and people with low incomes, but do you have any specific criteria? How is the policy applied in general, without going into details?
[English]
Mr. MacArthur: In general, the funding we have now for senior citizens, for folks with disabilities, and the like is funded through our investments in affordable housing. Those are agreements that we have in place with the provinces and territories, and they make local decisions on what's best for them in their particular area.
[Translation]
Senator Bellemare: That brings me to the second question: Is the regional breakdown of funds and appropriations available by province? Or do you perhaps have the breakdown by program? Do the provinces have a measure per capita, based on the percentage of the population?
[English]
Mr. MacArthur: We can provide that breakdown by province for you. That's not an issue. We can follow up with that.
[Translation]
Senator Bellemare: Generally speaking, is it based on the percentage of the population or the needs?
[English]
Mr. MacArthur: I believe, but I'll make certain.
[Translation]
Senator Bellemare: In terms of the RCMP, I see a decrease in the general appropriations. In 2013-14, the total budgetary expenditures were $2.892 billion, and today they are $2.630 billion. Furthermore, in your speech, you told us that the total budget that you have with the contract police is $4.4 billion. To cut to the chase, has your budget increased, decreased or stayed the same?
Mr. Duplantie: Overall, the budget has decreased. The cuts in the past three years are largely related to the deficit reduction plan. The total budget of $4.4 billion includes $1.8 billion of revenue mainly from contracts with the municipalities, provinces and territories, as well as a small portion under "other." That is minor.
Over the past few years, the overall budget has certainly decreased — with the deficit reduction project — by $195 million.
Senator Bellemare: The needs are still significant in the current context; how do you manage to meet them? Do you reassign your budget? Do you reduce the capital budget to add to the operating budget so that you can have more officers on the ground, for instance?
Mr. Duplantie: The budgets are earmarked and distributed in such a way that they cannot be reassigned within certain parameters. A capital budget is used for capital expenditures only, whereas the operating budget can be used for personnel and operating expenditures. There is a line, and we cannot cross it. We would need to go through Parliament and a bill approved.
The operating budget can be divided. The contract policing expenditures are closed off; they cannot be used for anything other than contract policing. Apart from this closure, other small portions are frozen, say for overseas deployment. Those expenditures can be used for specific purposes only. It is very specific.
Other than that, we have some flexibility. Within the limits of our financial authorities, we must reassign the budgets internally to meet priorities. That is what is happening right now.
You are talking about the operational constraints that we have been facing for a while, especially since October. We are reallocating resources within the budget of the federal police, so internally. We do so according to the type of file to which the assets are assigned. The files are determined through a priority-setting process. The more sensitive cases require more resources.
The Chair: Mr. Duplantie, I'm sorry, but we are running out of time. If you wish to add to your answer, you can mail it to us. We will be happy to read it.
[English]
Senator L. Smith: Mr. MacArthur, my question is to you. In the notes that you gave us, you talked about a decrease of $70 million in the funding for housing in Nunavut as a two-year commitment, provided in Budget 2013, expires. What was the objective and number of units to be built in Nunavut and did you accomplish your objective?
Mr. MacArthur: It was a one-time allocation to the Government of Nunavut that was made as an extension of the Investment in Affordable Housing. Costs are very expensive in Nunavut, so they built 213 units.
Senator L. Smith: Was that their objective, 213?
Mr. MacArthur: I believe it was 260, but I will have to check.
Senator L. Smith: If they built 216 and their objective was 260, was there a reason they didn't continue on with a project or ask you to continue funding? Might it have been because of weather logistics, whatever, that they weren't able to complete the project on time? If they needed that for housing for the folks in that particular area, I'm wondering what the repercussions were.
Mr. MacArthur: It would be up to them to make the local decisions. I'd have to check the 260 number. They could have made some decisions locally on the ground that they went with different types of units, different styles.
Senator L. Smith: Would it be possible to give us a one-paragraph response to the question?
Mr. MacArthur: Yes.
Senator L. Smith: The government receives lots of heat from First Nations people, from some of the folks in the North. We give money and it goes through you folks and other people to fund projects and developments. Following Senator Eaton's question, it seems a little frustrating in that we use the point that the local people have jurisdiction and responsibility for making sure the money is used properly. I asked the question the last time, I'm not sure if it was to you folks or Aboriginal Affairs. What type of measurement do you use? It's the government's money; it's your money. How do you evaluate success especially if a third party is responsible but then all of a sudden we read in the newspaper that it's a mess, the houses are cheap and are falling down? Then the government gets a bad record or a bad name. How do we address that?
Mr. MacArthur: Construction costs are expensive.
Senator L. Smith: I understand construction costs are expensive, but how do we ensure that the quality that you expect and we expect, the citizens of Canada expect, is delivered?
Mr. MacArthur: Our expectation would be that the Government of Nunavut is building to the local building code. They're responsible for having a building code that meets the standards of the area, as with all provinces and municipalities.
Senator L. Smith: Let me ask the question in another way. In areas across the country with First Nations folks where there have been problems of new construction that has fallen apart very quickly, and if it has been funded through the CMHC — I'm not saying it has — how do you make sure that you can get the results Canadians want in terms of good, sound housing for these people and not use the excuse that they are locally responsible and, therefore, we wash our hands and give them the money?
Mr. MacArthur: We hold the First Nations to account for having codes and making an attestation to us that they build it to the code, the chief and council. As well, we have a requirement that at three points during the construction there are qualified inspectors that go in, who are qualified by an appropriate body, and do those inspections. They have to provide us with that assurance and that certification that it has been built, which would be similar to a municipal inspection happening in any town. We require that and we have for many years required the attestation from the chief and council.
Senator L. Smith: To be fair, there are many places where these folks have done an outstanding job.
Have you identified trouble spots in some of these areas and, if so, are there steps you can take to make sure that these trouble spots are cleaned up?
Mr. MacArthur: Where First Nations don't have a good supply of qualified First Nation professional inspectors, we would support the training so that there would be a supply of First Nation inspectors available. We would work with the First Nations.
Senator L. Smith: Could that be a condition that you give them money on and have you actually tracked it? Without being rude, it's easy to give the answer. The hardest part is to execute to make sure you get the results.
Mr. MacArthur: Yes. We require the First Nation to attest to us, the chief and council, to provide that attestation, and the certification signed by a qualified inspector, back to us, for CMHC housing that's built on reserve.
[Translation]
Senator Chaput: My first question follows up on Senator Smith's questions and is for the Canada Mortgage and Housing Corporation.
What proportion of the Nunavut residents received the funding for housing? If there were no more funding, what percentage of the population would still need assistance?
[English]
Mr. MacArthur: Through the Investment in Affordable Housing, there was a two-year commitment of $100 million made. Through the most recent Investment in Affordable Housing, 2014 to 2019, there's an investment of $7.3 million. Through Canada's Economic Action Plan 2009, there was an investment of $200 million spread across the North. I'd have to get the breakdown in terms of that investment.
[Translation]
Senator Chaput: Do you have the information about the proportion of the residents who received funding for housing? Would it be 75 per cent of people who received funding and 25 per cent who need it?
[English]
Mr. MacArthur: We would be able to provide information on core housing need, and we would be able to provide information on the number of units provided over that period of time.
The Chair: Why don't you do that for us and provide it to our clerk.
Mr. MacArthur: Yes.
[Translation]
Senator Chaput: What is the average number of people per housing unit in Nunavut?
[English]
Mr. MacArthur: Yes.
The Chair: We're running down on time. We have about six minutes left in this round. Put your questions on the record. Any you can answer quickly, you will answer, and if it takes a little bit more to give a precise answer in writing, then do so.
[Translation]
Senator Chaput: My question is for the RCMP officials. You have transferred a total of $175.6 million to Shared Services Canada to help with its establishment.
Following that transfer, what new services are you receiving now, but were not receiving before? Or what services did you provide in the past and are now provided by Shared Services Canada?
Senator Rivard: My questions are for the RCMP.
The Chair: The answer will be provided in writing.
Senator Rivard: Bill C-51, which is being studied by the House of Commons right now, should be passed with or without amendments by June. When you prepared your budget requests, did you consider the positive or negative effects of the bill on your budget? You can respond in writing.
In your presentation, you said that you anticipate an increase of $17.9 million to allow RCMP members who are injured in the line of duty to receive their full salary for life.
My question is not meant to show a lack of compassion; I am just trying to understand. For instance, a 32-year-old police officer is injured and becomes disabled. Will his salary be established according to the current collective agreement, which states that he will benefit from the increase? At the age of retirement, why would he not receive the same benefits as a person who worked for their entire career? If retirement is mandatory at the age of 60, why would he not stop receiving his salary then and receive the pension benefits according to the amount that he will have contributed?
[English]
The Chair: You've taken notes. Are there any of those questions that you can answer now? Would you please provide us with written answers to any that you can't provide a quick answer to now?
Mr. Duplantie: With respect to Shared Services, it took responsibility on matters of telephony, email and the servers. These responsibilities were previously housed within the RCMP and are now delivered by Shared Services.
As it relates to C-51, a bill currently before the house, there are no budgetary considerations in these estimates in relation to that particular project.
For the grant for members entering the performance of duties, these are Pension Act awards assessed by VAC on the basis of the nature of the injury. They are independent from salary and pension, but if a person loses their leg, their hearing, whatever the injury may be, there are mechanisms and methodologies at VAC to determine what kind of disability benefit they will get.
The Chair: Just for the record, VAC is Veterans Affairs Canada?
Mr. Duplantie: Yes, Veterans Affairs.
[Translation]
Senator Rivard: I have a quick question on the same topic. Can you tell me whether the Ontario Provincial Police and the Sûreté du Québec are using the same structure to provide lifetime compensation?
[English]
The Chair: I'll let you answer that by writing.
We have two other senators. We don't have much time left.
Senator Wallace: Mr. Duplantie, following up on Senator Rivard's question on the increase of $17.9 million for the compensation of injured RCMP members, could give us detailed information on the number of members that would be receiving compensation this year versus previous years? Is that increasing?
The average compensation being paid, is any change projected there? In other words, the complexity of the injuries, are you finding that and that would account, in part, for the increase?
The other question relates to contract policing. As you point out, contract policing provides revenues of $1.8 billion. It is obviously a significant contributor — a significant issue. Can you provide us with statistics so that we can see the trend on RCMP contract policing? Is the number of clients — if I can call them that — to whom you provide contract policing increasing each year?
Mr. Duplantie: The number of contracts?
Senator Wallace: Yes, so we can see the trend. I know many municipalities in New Brunswick are looking to contract policing to replace municipal policing. So what you can provide us to show the trend both in terms of revenue and the numbers of clients you have could be helpful.
Mr. Duplantie: Okay.
Senator Mockler: I have a statement first, and then two little questions.
With respect to the RCMP, there is no doubt in my mind that in this century Canadians will always remember the assassination of our three RCMP officers in Moncton, New Brunswick.
I would like to take this time, if you permit me, Mr. Chair, to thank you for enabling and initiating the creation — and this is our chair, a senator from New Brunswick — of the painting of the three fallen RCMP officers. It was then given to RCMP Headquarters here in Ottawa.
I would ask, if you have some time, that you go and see it. It is a remarkable gesture of remembering those fallen RCMP officers that had devotion and protected our Monctonians and Canadians.
When I look at your vote, could you break down the capital expenditures for the provinces and send it to us, please?
Number two, during that horrible scene and as we followed what happened afterward, people were quoted as saying that in the Moncton area, under the Codiac RCMP Division, we had problems in communication. Could you provide for New Brunswick, not for the rest of Canada, what you have identified — I see capital expenditures, but I don't see communication. I don't know if your vote on communication is in the operating expenditures. If it is, I would like to know what amounts are targeted to improve the communication of our RCMP forces and other forces with the RCMP in New Brunswick.
The Chair: Thank you, Senator Mockler.
Senator Eaton, you were on the list for a second round of questions.
Senator Eaton: Yes, I was, but Senator Rivard asked my question about Bill C-51.
The Chair: I have a couple quick questions and I would ask you to send us a written answer.
CMHC is estimating non-budgetary repayments of $139 million during the year. Could you explain to us, from an accounting point of view, how that is non-budgetary and how much after the $139 million is back in? These are funds, extraordinary mortgages, I guess, that you bought up during the economic downturn. Could you explain that to us? How much more can we anticipate in the future?
Finally, from CMHC, are you familiar with the term "lifecycle management"? If you are, let us know. We would be interested in knowing what it is.
With regard to the RCMP, roughly $1.9 billion is from your contract work. Does any of the appropriated amount go to helping you perform your functions from the contract point of view or are they totally separate? If you could help us with those, that would be appreciated.
Senator Chaput, for the record, do you have a question?
[Translation]
Senator Chaput: My question is for the RCMP. In the training plan that you have developed for your employees, whether for those already working with the RCMP or for the new employees, have you addressed the issue of mental health and the specialists they need to consult if they have problems?
Would it be possible to have a copy of this training plan?
[English]
The Chair: I apologize that we don't have more time to develop some of these questions. I'm sure other questions would have arisen from them. Unfortunately that's the time we have allocated.
Thank you very much, Royal Canadian Mounted Police and the Canada Mortgage and Housing Corporation. Keep up the good work for us. We look forward to hearing from you as soon as you possibly can, since this will deal with interim supply. If we don't put a report in, there won't be any interim supply.
I'm pleased to welcome, in the second session, two additional departments. From Infrastructure Canada, we welcome Darlene Boileau, Assistant Deputy Minister, Corporate Services and Chief Financial Officer; Thao Pham, Assistant Deputy Minister, Federal Montreal Bridges; and Jeff Moore, Assistant Deputy Minister, Policy and Communications.
From the Canada Revenue Agency, we welcome Roch Huppé, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch; Rick Stewart, Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch; and Richard Montroy, Assistant Commissioner, Compliance Programs Branch.
I understand that each of the departments has brief introductory comments. We have approximately 50 minutes set aside for this session. We will begin with Infrastructure Canada and then go to Canada Revenue Agency.
Darlene Boileau, Assistant Deputy Minister, Corporate Services and Chief Financial Officer, Infrastructure Canada: Good evening, Mr. Chair and committee members. Thank you for inviting me to speak to your committee about our department's spending plans for the coming fiscal year. You very kindly introduced the members of our team, so I won't go through that again. We very much appreciate the opportunity to explain our proposed expenditures for the 2015-16 fiscal year.
[Translation]
Our forecasted expenditures for fiscal year 2015-16 are $3.6 billion. That's a net increase of 9 per cent over last year's Main Estimates. They are based mostly on the cash flow needs projected by the provinces, territories and municipalities that own and manage the infrastructure projects we fund.
Due to the difference in timing between the preparation of the Main Estimates and Budget 2014, it was not possible to include funds for the New Building Canada Plan or the New Bridge for the St. Lawrence Corridor project in last year's Main Estimates. These funds were included in our 2014-15 Supplementary Estimates.
Much of our work in the coming fiscal year will be focused on the $53 billion New Building Canada Plan, which consists of: the Community Improvement Fund that includes the federal Gas Tax Fund and the Goods and Services Tax Rebate for Municipalities; the New Building Canada Fund; funding for the P3 (public-private partnerships) Canada Fund administered by PPP Canada; and funding that continued to flow across the country in 2014-15 and beyond under existing infrastructure programs.
[English]
In 2015-16, we will again be releasing two semi-annual installments under the renewed federal gas tax fund agreements to provinces and territories. The gas tax funding, which is allocated on a per capita basis for provinces and territories, will flow to municipalities to address their local infrastructure needs.
Overall, under the renewed Gas Tax Fund, close to $2 billion was made available to municipalities in 2014 alone and over 2,000 new projects were funded. As announced in the Economic Action Plan 2013, the renewed federal Gas Tax Fund is being indexed at 2 per cent per year, to be applied in $100 million increments, which means that it will grow by $1.8 billion over the next decade. With this indexation included, the renewed Gas Tax Fund will total $21.8 billion over the 10 years of its life span.
Within the new Building Canada plan, we are seeking an increase of $142.2 million over last year's Main Estimates to invest under the components of the $14 billion new Building Canada Fund. The first is the $4 billion national infrastructure component of this $14 billion Building Canada Fund. This program supports projects of national significance that have a strong impact on Canada's economic well-being and have advanced national priorities that are important to all Canadians.
The second is the $10 billion provincial-territorial infrastructure component, which includes two sub-elements: the National and Regional Projects component, and the Small Communities Fund. Money under the National and Regional Projects component is targeted to projects of national, local or regional significance. It recognizes the important role that provinces, territories and municipalities will play in building Canada's public infrastructure.
We are also seeking funds to support the $1 billion Small Communities Fund, which is dedicated to communities with fewer than 100,000 residents. I'm pleased to report that several provinces and territories have already started and/ or have completed the intake of project proposals under the Small Communities Fund.
[Translation]
Now, as the department responsible for the management and delivery of the New Bridge for the St. Lawrence Corridor project, I would like to highlight that we have been diligently working towards meeting the accelerated timelines for the project.
The new bridge will be in service by December 2018 and the rest of the corridor, including a new Île-des-Soeurs bridge and a reconstructed and widened Highway 15, completed by 2020.
This is one of the largest public infrastructure projects under way in North America, and will be carried out as a public-private partnership. A rigorous financial and technical analysis confirmed that a public-private partnership is the most cost-effective method to deliver the project within the accelerated timeline. Every project milestone to date has been met, including prequalifying three consortia, which were invited to participate in the request for proposals launched in July 2014. The eligible consortia provided their technical submissions in mid-February 2015 and have until early April 2015 to submit their financial proposals. Once these proposals have been evaluated, it is expected that the project's preferred proponent will be named in late April 2015, and construction is expected to begin soon after.
[English]
As always, we will continue to support our partners across Canada through our existing programs and agreements. Approximately $1.5 billion is being sought to continue supporting progress under the Inuvik and Tuktoyaktuk highway program, the National Recreational Trails Program and the Canada Strategic Infrastructure Fund, the Border Infrastructure Fund, the Green Infrastructure Fund and programs under the original Building Canada Plan.
Finally, we are seeking $59.8 million to cover operating expenses and ensure the efficient and effective delivery of our infrastructure programs as outlined above.
Thank you again for inviting us today, and we would be pleased to answer any questions.
The Chair: Thank you very much.
Roch Huppé, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency: Good evening and thank you very much for the opportunity to appear before the committee to present and then to answer any questions you may have on the Canada Revenue Agency's 2015-16 Main Estimates.
[Translation]
As you are aware, the Canada Revenue Agency is responsible for the administration of federal and certain provincial and territorial tax programs, as well as the delivery of a number of benefit payment programs. Each year, the CRA collects hundreds of billions of dollars of tax revenue for the governments of Canada, and distributes timely and accurate benefit payments to millions of Canadians.
In order to fulfill its mandate, the CRA is seeking the approval of a total of $3.8 billion through these 2015-16 Main Estimates. Of this amount, $3 billion requires approval by Parliament whereas the remaining $800 million represents statutory forecasts that are already approved under separate legislation.
The statutory items include Children's Special Allowance payments, Employee Benefit Plan costs, and the spending of revenues received through the conduct of CRA operations pursuant to section 60 of the CRA Act for administered activities on behalf of the provinces and other government departments. Disbursements to the provinces under the Softwood Lumber Agreement are also statutory, although the amount has fallen to $0 for 2015-16 as I will explain next.
[English]
These 2015-16 Main Estimates represent a net decrease of $56.4 million, or 1.5 per cent, when compared with the 2014-15 Main Estimates authorities. The largest component is an $80 million reduction in the projected statutory disbursements to the provinces under the Softwood Lumber Products Export Charge Act, 2006. The CRA's 2014-15 Main Estimates included an amount of $80 million as the forecast disbursement to the provinces. Based on the changing prices and volumes in the Canada-United States lumber market, the Department of Finance has revised the forecast to zero for 2015-16, resulting in a reduction of $80 million to the statutory authority.
Other changes to the agency budget include a $14 million adjustment associated with the implementation of efficiency measures in CRA operations introduced as part of the 2012 Economic Action Plan. This amount represents the incremental change between the 2014-15 and 2015-16 fiscal years. Most of these measures can be categorized under two broad themes: making it easier for Canadians and businesses to deal with their government, particularly through the provision of faster, more efficient online services; and modernizing and streamlining the CRA's back office.
Forecasted payments under the Children's Special Allowance Act have also fallen by $9 million. These measures are partially offset by new funding approved in a number of areas, including: first, $29.3 million for enhancements to non-audit compliance programs, which will be used to implement and administer measures aimed at improving the fairness and integrity of the tax system as well as strengthening tax compliance; second, $14.1 million for the administration of tax measures affecting individuals and businesses as announced in the 2013 Economic Action Plan as well as the administration of the Harmonized Sales Tax and Harmonized Sales Tax Credit in Prince Edward Island, which came into effect April 1, 2013; third, $4.6 million for the administration of tax measures announced in the 2014 Economic Action Plan primarily related to investments to reduce the administrative burden on charities and to strengthen compliance with Goods and Services Tax/Harmonized Sales Tax registration.
The incremental funding for tax measures announced in both the 2013 Economic Action Plan and the 2014 Economic Action Plan will be used to introduce information technology system modifications, develop and implement business processes, develop forms, and update publications and information products related to these measures.
In closing, the resources sought through these estimates will allow the CRA to continue to deliver on its mandate to Canadians by ensuring that the taxpayers meet their obligations, Canada's revenue base is protected, and eligible families and individuals receive timely and correct benefit payments.
[Translation]
Mr. Chair, at this time, my colleagues and I will be pleased to respond to any questions you may have.
[English]
The Chair: I was just looking for the annex that will appear. Does Canada Revenue Agency budget for two years as opposed one year like most departments?
Mr. Huppé: Yes, we are one of a few departments that have a two-year appropriation versus a one-year appropriation.
The Chair: The figures you've just gone over, are they for two years, or is this what you anticipate spending this year but it can go over into the next year?
Mr. Huppé: It's for one year, but we're entitled to carry forward some of these amounts to the next year. We're not bound by the 5 per cent carry-forward rule. That's why we manage our appropriations over a two-year period.
The Chair: When Parliament approves, it's for two years.
Mr. Huppé: The $3 billion that we're seeking Parliament to approve is the projected budget for the next fiscal year within a two-year appropriation.
The Chair: That is important for honourable senators to be aware of.
[Translation]
Senator Rivard: My question is for Ms. Boileau.
Are proceeds of the gas tax remitted to the municipalities or to the provinces? In your presentation, you indicate that this goes to the provinces and that it is based on population and not on property assessments. The answer is there. The provinces are not the ones claiming that their population has increased by 3 or 4 per cent in a given year. I believe Statistics Canada's censuses provide these data to you. Is this how you determine the allocation of the gas tax revenue?
Ms. Boileau: There is a per capita calculation. My colleague, Mr. Moore, could provide further details.
[English]
Jeff Moore, Assistant Deputy Minister, Policy and Communications, Infrastructure Canada: The Gas Tax Fund is a 10-year program, as you're probably aware. With respect to the Gas Tax Fund, we tie the allocations to the census and then do a mid-year check along the way. So we'll base the first five years of the allocations under the GTF on the most recent census. Once we get half way through, we'll do another check once we have the next most recent census so we can right-size the numbers if needed.
[Translation]
Senator Rivard: I was wondering about the impact of the sharp decline in the price of oil. If the price at the pump is lower than before, the government is collecting lower taxes. However, the provinces' funds are indexed at 2 per cent per year, as I can see in your text.
Are you in a position to evaluate — and I understand that you do not have a crystal ball — how much the government will lose? The provinces will have their 2 per cent increase, but tax revenues will go down because of the lower price of oil. Do you know if we are talking about tens or hundreds of millions, or billions of dollars?
[English]
Mr. Moore: The price of oil or gas doesn't have an impact on the Gas Tax Fund. The Gas Tax Fund is a permanent legislated fund. The funding is predictable over the next 10 years with the exception of having the midway point check with respect to the census.
The other thing that has been done with the program in addition to making it permanent and predictable, we've also added the escalator that my colleague spoke about. A 2 per cent escalator is added to the predictable amounts that we have and is provided in increments of $100 million per year.
[Translation]
Senator Rivard: I understand that the provinces, and so the municipalities, are not affected by the price of a barrel of oil. However, when the government collects taxes at the pump, if we pay $1 a litre, the taxes apply to that $1, whereas a few months ago, it was $1.40. This means that the federal government is collecting less revenue, even though it increases its contribution by 2 per cent a year, even if this is based on price that used to be much higher than the current one. My question is this: are you in a position to assess the shortfall due to the drop in the price of oil?
[English]
Mr. Moore: That's not my forte, but I can say that the Gas Tax Fund is not linked to the amount of gas tax that's collected by government. A defined amount of money has been set aside. It's been made permanent. It's very clear and predictable in terms of how much money municipalities will receive on a year-by-year basis. Even though there may be a fluctuation in the price of gas or the price of oil, it will not affect or impact the amount of money that municipalities are going to get under the Gas Tax Fund.
The Chair: While you're warmed up, could you explain the comment that you made to Senator Rivard about the 2 per cent escalator in $100 million increments? How does that work?
Mr. Moore: It's almost like a way of rounding it. You're not going to get any less than $100 million. The 2 per cent escalator will work in increments of $100 million. That's the way it will work on an annual basis.
The Chair: You've got a designated pot of money and then it should increase by 2 per cent.
Mr. Moore: Yes.
The Chair: What's the $100 million increment aspect?
Mr. Moore: I'm not the greatest mathematician in the world, but depending on the percentage — we're using 2 per cent, but it has to be done in increments of $100 million. So whatever you're closest to in terms of the percentage, it has to be done in $100 million increments. It's either $100 million or $200 million, et cetera.
The Chair: Senator Bellemare is shaking her head. Could you send us an example?
Mr. Moore: Absolutely.
The Chair: That would be helpful. Then we would all understand. Thank you.
[Translation]
Senator Chaput: My first question is addressed to Ms. Boileau. In your presentation, you say:
We are also seeking funds to support the $1 billion Small Communities Fund, which is dedicated to communities with fewer than 100,000 residents.
How many communities of this size are there in Canada? What is the average amount of the envelope they receive, and how does this break down by region?
Ms. Boileau: I am going to ask my colleague to reply, because this concerns the program.
Senator Chaput: How many of these communities are there?
[English]
Mr. Moore: Just to explain the context behind the Small Communities Fund, under the New Building Canada Fund, there are two components: a national component and a provincial-territorial infrastructure component.
Under the provincial-territorial infrastructure component, $10 billion is set aside. The way the funds are allocated to provinces and territories is that we start with a base allocation of $250 million for each province and territory. Once we've made that base allocation, the remainder of the $10 billion is allocated on a per capita basis based on the population of each province and territory. The provinces and territories then have to set aside 10 per cent of their allocation from the $10 billion to be focused on communities with a population of 100,000 or less, which is the Small Communities Fund.
What I can tell you in terms of the Small Communities Fund, if you're interested, is we've been negotiating agreements with provinces and territories. We currently have 10 agreements signed, three more to go, and we already have 26 projects announced under the Small Communities Fund.
The way the Small Communities Fund works is it's the provinces and territories that actually present their priorities under the Small Communities Fund. Normally provinces and territories will have their own call for proposals from municipalities, and then they will either rank or choose the projects that they want to bring forward. Then there's a discussion between the federal government and the province at large or the territory at large in terms of what projects we will consider.
[Translation]
Senator Chaput: I have one last question: who has the last word, the province or the municipality? The municipality develops its project, the province has its word to say, and the federal government allocates the money.
[English]
Mr. Moore: Thank you. That's a very good question.
The way the process works is that normally a province or territory will run a call for proposals, as I said, so municipalities have the choice to apply for funding or not. The province and territory will assess the proposals that come forward to make sure that they're eligible first of all and then they will look at the viability of the project. Eventually, the province or territory will put together a list of projects based on that analysis or due diligence and present that to the federal government for approval.
[Translation]
Senator Chaput: I would like to put a brief question to Mr. Huppé. You say that the additional funding for the tax measures announced in the plan will be used for changes to information technology systems, and for the development and implementation of operational processes. My question is the following: do you provide the services yourself, or do you purchase the services from Service Canada?
Mr. Huppé: The agency provides services to citizens if they concern tax matters. However, like several other departments, we receive infrastructure management services, including telecommunications and email services, through Shared Services Canada.
Senator Chaput: So will the additional funding you mention here be for yourselves or for Service Canada?
Mr. Huppé: The funding that is mentioned here is allocated to the agency for the modification of certain systems. That said, that does not mean that Shared Services Canada will receive part of the funds to do the work they have to do for us, because, of course, they are responsible for everything regarding infrastructure.
Senator Chaput: If I were to pore over your budget, would I find a transfer somewhere to Shared Services Canada?
Mr. Huppé: When Shared Services Canada was created, the agency participated in the transfer of resources. We transferred a considerable sum from our resources to them so that they could offer these services. Every time we receive funding, for instance to develop a new system, the share that belongs to Revenue Canada is sent to us and the amount that is allocated to Shared Services Canada is sent to it when we access the funds. This does not mean that Shared Services Canada did not receive funds. In fact, Shared Services Canada received funds for the development of certain systems at the agency in the context of budgetary announcements.
Senator Chaput: However, this would not be indicated in your agency's budget.
Mr. Huppé: No.
Senator Bellemare: I would like to put a brief question to Infrastructure Canada: where do the funds you manage appear in the budget document?
Ms. Boileau: They can be found on page II-195 of the English version.
Senator Bellemare: I was not looking in the right place, then. There they are. Thank you for that reply.
The Chair: In the French version, it is on page II-62.
Senator Bellemare: Regarding the infrastructure fund as such, I cannot see where that is.
Senator Chaput: In French, what page is it on?
The Chair: On page II-62.
Senator Bellemare: Is this $10 billion amount for your operational, management expenses?
Ms. Boileau: They also cover expenses for the fund-related contributions.
Senator Bellemare: The contributions for this year?
Ms. Boileau: Yes. If you look at the contributions section, you will see the allocation. You will see the portion of the $10 billion, and of the $4 billion. You will also see the total $53 billion amount, but that is requested for fiscal year 2015-16.
Senator Bellemare: So that is in the contribution we see there?
Ms. Boileau: Yes, precisely.
Senator Bellemare: That answers my question.
As for the CRA, I would like a clarification regarding page II-21: under operating expenses, why did you add the heading "Operating expenditures, contributions and recoverable expenditures on behalf of the Canada Pension Plan and the Employment Insurance Act"? That is a distinct element, both the operating expenditures and the capital expenditures. Is that amount large, and why is it specified? We know that you recover. . .
Mr. Huppé: Yes, we recover funds. We administer certain activities in the context of these funds — that is to say employment insurance, employers' contributions, et cetera. For these types of activities, we have the right to access employment insurance funds and pension plan funds, precisely to offset our costs in connection with these activities.
Senator Bellemare: This is a large amount, I expect?
Mr. Huppé: If memory serves, we recover approximately $300 million a year from the fund.
Senator Bellemare: Through contributions? No, it is more than that. It is from overpayments?
Mr. Huppé: We support certain pension plan and employment insurance-related activities, and the collection of certain sums to be recovered.
Senator Bellemare: But what about contributions from individuals?
Mr. Huppé: Yes, I am sorry. The contributions from individuals which we administer total — I do not have the figure in mind, but it is much more than that. We do collect that as well.
Senator Bellemare: So, you collect the contributions and afterwards you collect the overpayments.
Mr. Huppé: In fact, we collect approximately $43 billion a year in contributions, an amount that is remitted as tax. We also collect that revenue.
Senator Bellemare: That explains that.
Mr. Huppé: These are our costs in relation to the collection of these amounts. We are entitled to access the pension fund and the employment insurance fund.
Senator Bellemare: As for the capital expenditures that have increased, I suppose they are related to information technology?
Mr. Huppé: Generally speaking, regarding capital expenditures, we have an investment plan that includes the development of certain systems. So expenses will vary from one year to the next. Supposing we spend $100 million to build a system over 10 years; we will not spend $10 million a year, this will fluctuate. It is the fluctuation in the funds spent for the development of our systems.
[English]
Senator Eaton: In your presentation to us, you spoke about the national infrastructure component and stated that this supports projects of national significance. Can you give me an example of a project of national significance?
Mr. Moore: Absolutely.
Senator Eaton: The Parliament Buildings?
Mr. Moore: We recently funded a project in Quebec, the Port of Montreal, where we provided $44 million to support an expansion of their capacity at the port. It's considered a project of national significance because it directly relates to how we support international trade agreements with other countries. It allows for better flow of goods from Europe into Canada and throughout Canada, so from a trade perspective it's a fairly important project. It does increase the amount of economic activity in the country. It increases productivity. It also provides benefits that extend beyond the province and territory as well, which are all criteria we have to look at.
Senator Eaton: I think it was Senator Chaput asking you about small communities. Do the provinces present you with projects and then you decide? Who would decide what a project of national importance is?
Mr. Moore: It's a $4 billion merit-based fund, which means that we administer the program at Infrastructure Canada. Eligible recipients can apply for funding at any time throughout the year. Then we will assess the project. We will do our due diligence. We will make sure the project recipient is eligible. We'll look at whether they hit the four criteria of the program. If you're interested in knowing what those are, again, it's increasing economic activity. We look at whether it decreases the potential disruptions of economic activity in the country. We also consider increase in economic productivity, as well as whether or not the benefits of the project actually extend beyond the borders of the province or territory in which the project occurs.
Senator Eaton: The whole country.
Mr. Moore: Yes.
Senator Eaton: You're not doing it by region, i.e., Quebec got that, therefore the West has to get that, therefore the national territories. It's merit-based.
Mr. Moore: That's correct. There is no allocation for provinces and territories. It's completely merit-based.
Senator Eaton: Is Infrastructure Canada involved in the Parliament Buildings?
Mr. Moore: No, we're not.
Senator Eaton: You're not. Don't you look happy.
Mr. Moore: Slightly, yes.
The Chair: Thank you for clarifying that.
Next on my list is Senator Wallace from New Brunswick.
Senator Wallace: Mr. Moore, following up on Senator Eaton's question and comment about the national infrastructure component that applies to projects of national significance, you gave the example of upgrades to the Port of Montreal, and I'm sure that's very good. I'm from Saint John, New Brunswick, and I know the Port of Saint John is seeking to upgrade its facility as well. Of course, Saint John would be the end terminus of the west-east pipeline, so a lot rides on this from a national perspective, not only in terms of moving petroleum but also container traffic and the like. I take from your comments, then, that perhaps the expansion and upgrade of the facilities in Saint John, New Brunswick, might be treated in a way that would be similar to the Port of Montreal. That would be possible, I would think.
Mr. Moore: If the port were to submit an application, of course, we would treat it like any other project.
Senator Wallace: We'll have to make sure they submit an application.
Mr. Moore: Absolutely.
The Chair: You have three senators supporting it.
Mr. Moore: Given that they are a Canada Port Authority, they would be eligible to apply under the national infrastructure component. We would have to make sure it is a viable project in that it fits the seven categories of types of projects we would support. Given it's a port, we could probably do that. It would have to meet at least one of the four criteria that I talked about in the program.
Senator Wallace: It's interesting at this point in time with projects of national significance, what is projected to occur at that port is definitely of national significance. I think people in Alberta would certainly view it that way. In any event, we'll see where that goes. I appreciate your comment.
Mr. Huppé, you indicated with regard to the net decrease of $56 million in the estimates this year over last year that the largest component is an $80 million reduction in disbursements under the Softwood Lumber Products Export Charge Act, 2006, and in large part it's due to changing prices and volumes. Could you explain how that works, what is happening in that softwood lumber marketplace and why it would result in that kind of reduction?
Mr. Huppé: We administer the softwood lumber program. Under the program, there is a ceiling price, and the program is in place to ensure "competitivity" in the softwood lumber market. Because of the pick-up in the economy in the United States and the increased demand for softwood lumber, the price of softwood lumber is above that price. The price is $355 for 1,000 feet of wood, and every year, the Finance Department reassesses what they think will be the payout to the province. When exporters export under that price, we collect a charge. This, then, is remitted back to the provinces, so it's statutory in nature.
Because the price is above $355, we don't foresee that we'll have to collect any charge from the exporters. Therefore, the forecast for next year is that we will collect no tax from that program, so nothing will have to be remitted back to the provinces.
Senator Wallace: So it's based on good news that the markets are strengthening in the U.S. and there are opportunities for the producers of softwood lumber and their export values.
Mr. Huppé: Exactly.
Senator Wallace: Ms. Boileau, you mentioned the funding for P3 projects. As you pointed out, the new bridge for the St. Lawrence corridor project is a P3. Again, in the city of Saint John, New Brunswick, there's a major P3 project, the funding of a public water project.
Is the trend that P3s have become more popular over the last five to ten years? Is there more of a demand for P3 projects?
Ms. Boileau: It's very much a trend that has gone on. I think my colleague Mr. Moore can explain in more detail. With regard to the new bridge, I do know that it's something we're looking for, whether there are better prices with the partnerships. It seems to be a way of being able to do business.
With regard to the project you were specifically talking about, I think Mr. Moore may help you with a bit more information.
Mr. Moore: The market is strengthening in Canada with respect to P3s. A lot of the provinces at the provincial government level are starting to build a lot of expertise around assessing P3 projects.
From a federal government perspective, we have P3 Canada, so under the New Building Canada Plan $1.25 billion has been set aside for P3s. They've had a lot of success, a really good track record in terms of identifying very good, viable P3 projects across the country.
A great example would be the $150 million we invested in the Edmonton LRT, which, by the way, would have been the first project we announced under the New Building Canada Fund, which we cost-shared with P3 Canada. That's an example of a good P3 project that we have supported.
Under our programs, we also have a P3 screen. For example, if we have a project with total costs of $100 million or more, there's a mandatory P3 screen which assesses whether or not we think this project would be viable as a P3.
After that, we do what we call a procurement options analysis which will tell us whether or not there would be value for money to procure the project as a P3 as opposed to using traditional methods.
We have a lot of tools in our tool kit that we can use in terms of trying to encourage P3s in Canada.
Senator Wallace: Is there any predetermined formula for determining the allocation or the availability of P3 funds geographically throughout the country? Is there any predetermined allocation of how that funding could be used?
Mr. Moore: The way that P3 Canada works is that they actually have calls for proposals as well. I think they're on their sixth or seventh round of calls for proposals. There's no allocation for provinces and territories. It's basically merit-based. Projects come in and are assessed for eligibility and viability, and probably return on investment as well, where they find the most valuable for money. They will make their decisions based on those types of criteria.
It's the same thing for our program. We don't have allocations set aside for P3s, but naturally, for any project over $100 million in total funding, we will take a close look at it to see if it might be viable as a P3.
The Chair: Does Infrastructure Canada handle the P3 initiative? Is that industry Canada?
Mr. Moore: The P3 Canada Fund is administered by P3 Canada, which is a Crown corporation. They report to the Minister of Finance.
The Chair: Their offices aren't next door to yours?
Mr. Moore: They're about a three-block walk away from us.
Senator L. Smith: I thought I was going to have to compete with Senator Wallace to get a new bridge.
Madam Boileau, can you give us an update?
[Translation]
And that is not the Maurice-Richard Bridge?
[English]
I mean on the Champlain Bridge project? I'm adding a little levity at 8:30 at night because some of us have been here since eight o'clock this morning.
[Translation]
Ms. Boileau: My colleague Thao Pham is in a better position to provide you with all of the details on that.
[English]
Senator L. Smith: I know, and you gave a great presentation last time. We would love to have an update of where we are with the Montreal bridge.
Thao Pham, Assistant Deputy Minister, Federal Montreal Bridges, Infrastructure Canada: It's very nice to see you again, senators and Mr. Chair.
The last time we spoke we already launched the procurement for the new bridge for the St. Lawrence. We are still on track. I'm very pleased to report that we have received technical proposals from the three consortia that we retained following the procurement process. That is under way.
We expect to receive the financial proposals from those three consortia by April 1, so in about six weeks, and then following a very thorough evaluation we will be able to announce the winning consortium that will be responsible for building, operating and financing the bridge, probably by late April. Early work will commence as soon as May or in spring of 2015. Certainly 2015 will be a landmark year for the project with construction expected to begin.
Senator L. Smith: If I understand correctly, you said the three bidders will make their final bids by April 1?
Ms. Pham: That's correct.
Senator L. Smith: You will make a decision by what date?
Ms. Pham: I would say by late April we will have finalized all of the evaluation. We are in the process of evaluating the technical proposals currently, and then, come April 1, we will receive the financial bids. We will spend the next three or four weeks assessing the bids, and then we will be in a position to announce the winning bidder.
Senator L. Smith: When would you anticipate announcing the winner if everything goes to plan?
Ms. Pham: By late April of this year.
Senator L. Smith: May 1, we would have the announcement?
Ms. Pham: Hopefully late April, and then in May —
Senator L. Smith: I'm just trying to get an approximate date.
Ms. Pham: Certainly in the spring.
Senator L. Smith: The announcement is that the bridge would be completed by the summer of 2018; is that correct?
Ms. Pham: The bridge will be in service by December 2018. As you probably recall, we are also talking about the corridor, so this is the portion of Highway 15. That portion of the corridor will be completed by 2020.
Of course, the priority component for this corridor project is the bridge. Everything is on track, so we are hopeful to have the bridge open by December 2018.
Senator L. Smith: Is that a realistic expectation to be able to state when the bridge will be completed?
Ms. Pham: Absolutely. I think we have shown that we have been able to meet each milestone. As you probably know, given the scope of the project and the complexity, it's being built as a private-public partnership. The winning consortia will have to deliver the bridge by that date because there will be financial penalties if they are late on delivering the bridge. Therefore, we are very hopeful.
Senator L. Smith: How will the financing work? If it's a $5 billion project, does the consortium have to come up with X number of dollars upfront or some commitment to it or proof of capacity?
Ms. Pham: That's correct.
Senator L. Smith: What would that amount be?
Ms. Pham: That's going to be part of the financial bids. The way it's going to operate is that all three consortia will have to put up financing.
Senator L. Smith: Like a performance bond?
Ms. Pham: That's correct. What they will get in return are milestone payments and then also an important payment at completion of the bridge and also of the corridor. Over the 30 years of the operation of the bridge, they will obtain regular payments by the Government of Canada.
The Chair: As part of the bid, they will be looking after maintenance for 30 years?
Ms. Pham: That's correct.
The Chair: That's part of the package?
Ms. Pham: That's correct.
The Chair: Can we expect in these bids that will be coming this month sometime a proposal for revenue stream through tolls?
Ms. Pham: The way that the toll regime will be put in place is that the government will regulate tolls. Therefore, there is no risk in terms of collecting tolls. The consortium will not set the toll rates; it is the Government of Canada. In return, the Government of Canada will take that revenue and pay the consortium for the duration of the contract.
The Chair: That revenue stream is for the government to get; it is part of the package?
Ms. Pham: That's correct.
[Translation]
Senator Rivard: I would like to go back to the new bridge, whether it is called the Champlain Bridge or something else. When the government qualified the three bidders, the consortium had to name the firms that would participate in the project.
We are all thinking of this Montreal engineering firm, known worldwide, which has had its share of legal problems recently. In fact, everyone hopes that that will all be settled, and in my opinion, it is very much in Quebec and Canada's interest to keep a firm as well known as SNC-Lavalin.
We know that there are cases pending before the courts. When the contract is awarded in a few weeks, if SNC-Lavalin is a part of it, no matter what happens, the firm will keep its place in the consortium. Is that correct?
Ms. Pham: Quite so. Just to provide a little information on the procurement process, we apply the integrity framework managed by Public Works and Government Services Canada very rigorously. That framework stipulates that Canada may deal with enterprises that have not been found guilty. Thus, in this case, charges have been laid against the business you mentioned, but the company has not been convicted. In light of that, we continue the process, but of course we also continue to follow the development of the situation very closely.
Senator Rivard: I agree with you, because it is easy to make accusations. Everyone was surprised to learn that the firm had been accused. Those who commit fraud go before the courts, and we let the courts do their work, but it would be unfortunate if, because of a few people, the biggest engineering firm in Canada was excluded.
I understand that when the contract is awarded, the case against the firm will not have been heard. So if SNC-Lavalin were a part of the winning consortium, there would be no reason to exclude it.
Ms. Pham: That is the case as long as the business has not been convicted.
Senator Rivard: That is very fair and equitable.
Senator Chaput: Mr. Moore, when you explained the public-private partnerships earlier, regarding projects that have been accepted, is there a maximum amount of money that is granted? Is there a minimum? If that is the case, what are these amounts?
Mr. Moore: Normally, we look for a project with a minimum value of $100 million. This triggers a process whereby we assess the value of a public-private partnership.
Senator Chaput: You start with the amount of $100 million and then the amounts added by the other partners are included?
Mr. Moore: Under $100 million, a P3 is still possible, but it would be up to the promoter to present the project as such.
Senator Chaput: How many requests for projects of that scope do you receive over a one-year period, approximately?
Mr. Moore: Do you mean P3s only or projects in general?
Senator Chaput: P3s.
Mr. Moore: Only one, for the time being.
Senator Chaput: That is what I thought.
Mr. Moore: However, we have other projects worth more than $100 million in total. You have to look at contexts where it is possible to conduct a project in the form of a P3. The project is not included in the process as a P3, but we carry out an analysis to determine if it would be possible to execute it as a P3.
[English]
The Chair: This concludes our questions.
Mr. Huppé, before you go, can you refresh my memory on the Softwood Lumber Agreement with the U.S. I thought that was for a period of five or six years and it should be coming up for renegotiation. Mr. Stewart, maybe you could help me on this. Are you involved in the renegotiation and is there any reason to assume it is going to be $355 per thousand feet for the next six years?
Rick Stewart, Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency: The renegotiation responsibility lies with our colleagues at Department of Foreign Affairs. We are part of the discussions from the perspective of being the administrator of the export charge that supports the agreement with the United States. You are correct that the current agreement expires this coming October, 2015.
The Chair: I would have thought it would be prudent to put some money in there just in case, but you put zero dollars.
Mr. Stewart: The reason there is zero dollars, as my colleague explained, is because the export charge is only triggered — or there are collections — when market prices fall below $355 per thousand board feet.
The Chair: The Americans don't want us to undermine their market.
Mr. Stewart: The market conditions have been such in this past year that the export charge has not been activated at all.
The Chair: I understand that.
Mr. Stewart: We take a forecast from the Department of Finance.
The Chair: Based on this agreement being renewed at the same $355 price?
Mr. Stewart: It is based on their perception of market conditions and not wanting to judge whether or not an agreement will be renewed.
The Chair: So what has been put in the budget is zero dollars, correct?
Mr. Stewart: Correct.
Mr. Huppé: It is based on the projection that the price won't fall. If the price fell in the next month, for example, and exports are below $355, our budgets would be adjusted accordingly through the supplementary estimates process.
The Chair: It is also based on the projection that the agreement will continue as it is.
Mr. Huppé: For example, last year in our Main Estimates we had $80 million. This was because the projection at the beginning of the year was that the price essentially could go below $355. The price did not. Through Supplementary Estimates (B) this year, they actually removed $80 million because they were not comfortable that the price would not fall in the remainder of the year.
If the price would go down during the year, supplementary estimates would reinstate some funding for us to be able to redistribute what we have collected because we would continue to collect and then redistribute to the provinces.
The Chair: I guess you are right. We always have supplementary estimates. Thank you very much.
Ms. Pham, I think you are deserving of special congratulations for moving these contracts along efficiently, and we hope that it will continue the same way. Some of us hope that you might work on the bridge project down in Windsor as well.
Thank you to the Canada Revenue Agency and Infrastructure Canada.
Colleagues, that concludes the work on this particular matter. Have a good evening.
(The committee adjourned.)