Proceedings of the Standing Senate Committee on
National Finance
Issue No. 15 - Evidence - October 19, 2016
OTTAWA, Wednesday, October 19, 2016
The Standing Senate Committee on National Finance met this day at 6:48 p.m. to study the federal government's multi-billion dollar infrastructure funding program.
Senator Larry W. Smith (Chair) in the chair.
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The Chair: Welcome to the Standing Senate Committee on National Finance, colleagues and members of the viewing public. The mandate of the committee is to examine matters relating to federal estimates generally as well as government finance. Today we continue our study on the design and delivery of the federal government's multi-billion- dollar infrastructure funding program.
My name is Larry Smith, senator from Quebec, and I chair the committee. Let me introduce the other members of our committee: To my right, a former Auditor General of Newfoundland, Senator Elizabeth Marshall; from the beautiful region of Toronto, Senator Nicole Eaton, our Speaker pro tem; and from Toronto, Senator Salma Ataullahjan.
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From Montreal, formerly of La Presse, Senator André Pratte.
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The Chair: From Saskatchewan, Senator Raynell Andreychuk.
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On my far left, Senator Maltais from Quebec, a former member of the National Assembly.
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Beside him, a man with many, many skills and trades, an active politician and of course a provincial politician, a businessman, Senator Grant Mitchell.
And our veteran.
Senator Neufeld: Our veteran?
The Chair: With more experience in parliamentary affairs than probably most of us in this room.
Senator Mitchell: Put together.
The Chair: And still able to talk about it, from the northern parts of British Columbia, Senator Richard Neufeld.
Senator Neufeld: Thank you, sir.
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The Chair: Today, we have with us representatives of Canadian cities who will share with us their experiences and expectations relating to infrastructure funding.
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This evening, we will have witnesses from five important Canadian cities. During the first part of our meeting, until 7:30, we will have witnesses from two remote locations appearing by video conference.
First, from the City of Yellowknife we welcome His Worship Mark Heyck. From the City of Calgary, we have officials Brad Stevens, Deputy City Manager; and Chima Nkemdirim, Chief of Staff, Mayor's Office.
Mark Heyck, Mayor, City of Yellowknife: Thank you very much, senators, and good evening from Yellowknife and the Great White North. We are very grateful for the opportunity to provide some feedback on current and past federal infrastructure funding grants.
Certainly we're very pleased with the recognition from the Government of Canada of the importance of community infrastructure, and we have seen that not only in the last year but over the past several years. I want to touch on a number of the items that were raised in the order of reference for the study you're conducting.
First of all, one of the things we recognized from the perspective of Canada's northern territories is the critical importance of base-plus funding, meaning that before funding is allocated on a per capita basis, it's absolutely necessary to ensure that each provincial and territorial jurisdiction is getting a certain base percentage of that total funding pot.
That has certainly benefited the three northern territories, and I'm sure it's benefited some of the smaller provinces as well, because, as you all know well, on a population basis alone, we would not get enough money to pave a single kilometre of roadway or put in half a kilometre of pipe. That is absolutely critical to us.
We also recognize that one size does not fit all in terms of infrastructure funding programs, and that has been a challenge in the past. It continues to be a challenge in some respects with some of the funding that's available.
For a relatively small community in the Canadian context, we are grateful for the new public transit funding that's available. There are many communities in the Northwest Territories that have transit and transportation needs but may not have that public transit system where those dollars can go. For a community such as Yellowknife where we contract out our transit services and therefore don't have a lot of infrastructure related to transit, other than bus shelters and things of that nature, it can be a challenge sometimes to allocate those dollars. I hope in the course of conducting this study you remember that one size will not fit all, all the way across the country.
In terms of some of the current infrastructure funding that's been made available, I wanted to highlight some of the challenges that we face in the Northern Canadian context. Number one is some of the timelines that are attached to the current funding that's available. Some of the work must be completed by March of 2018. Other work has to be completed by March of 2019; and for Northern communities in particular, where we have very short construction seasons, trying to meet the ask of those timelines in terms of the funding that's available can be quite a challenge.
In the future, it would be useful to consider some flexibility in the timelines and deadlines assigned to those infrastructure projects to make the most effective use of the available funds.
In Yellowknife it's less so, but to a degree here as well, for some northern communities, capacity can be an issue. There may be questions at times about the amount of funding available to do the work that's needed, because we do face a significant infrastructure deficit in the North. But the capacity of local staff and Public Works departments, local contractors can be a challenge at certain times and in certain communities. That's something to keep in mind.
We wanted to recognize, from Yellowknife's perspective, the benefits in the current funding model that applies to northern jurisdictions in terms of a 75-25 funding split, where the federal government is willing to pick up 75 per cent of the tab on some of these infrastructure projects, and the municipal government is picking up 25 per cent, which is different than the way the funding has been applied in southern jurisdictions.
We wanted to point out the benefit in that, and that it's recognizing that the federal government has recognized some of the unique funding challenges we face in Northern Canada.
Regarding some of the criteria that have been applied to federal funding, and particularly the Building Canada Fund and some of the Clean Water and Wastewater Fund that's recently been announced, we would like to see a broadening of that criteria. The federal government has recognized that they want to apply this funding in consultation with people who are closest on the ground to where those dollars are going; and so narrowly applying some of these funding pots, in the most recent example, to water and sewer projects only may not necessarily meet up with the priorities of the communities where that funding is going.
Timely and efficient funding is very important, and that was one of the other things raised in the order of reference. For some of these funding pots, we don't actually receive the funding until the project is completed or substantially completed. Particularly for smaller communities, and especially those communities in the North where our pockets may not be as deep as some of our southern neighbours, a certain percentage of funding provided at start-up and then at certain milestones throughout the project would help, because we often have to look to bridge financing and other financing mechanisms to get these projects off the ground.
I'll conclude because I want to allow time for other speakers and for questions. I've thought long and hard about what the ideal funding model would be, and we've already realized it; in my opinion it's the model we've achieved with the Gas Tax Fund. I think you would find that many community governments across Canada would agree with that. Now it's indexed. It's predictable. It's a stable source of funding. Community governments know how much they're going to get from year to year, and they can appropriately do their capital planning over a longer time frame to meet the criteria that are associated with that Gas Tax Fund.
It gives us the opportunity to understand what an eligible project is under this funding, but also to know that it's not a question of putting in an application and then perhaps getting the money or not getting the money. It's not a question of how the funding is going to be allocated across communities within a particular territorial or provincial jurisdiction, but it's that long-term, stable, predictable funding that municipalities in Canada have been looking for for a long time, and we finally achieved that.
My suggestion is that the Government of Canada look toward more funding models such as the gas tax model, rather than application-based. I want to thank you for the opportunity to provide some feedback on infrastructure funding projects.
The Chair: Thank you very much, Mr. Heyck.
Chima Nkemdirim, Chief of Staff, Mayor's Office, City of Calgary: My name is Chima Nkemdirim. I'm the Chief of Staff for Mayor Nenshi. I'm joined by my colleague Brad Stevens, who is the Deputy City Manager, and we have a very short presentation to allow lots of time for questions.
First of all, I want to thank you for the opportunity to speak to the Standing Senate Committee on National Finance.
Infrastructure is something that we are all preoccupied with, and we work hard every day trying to figure out how to fund critical projects for our city. Especially in these economic times in Western Canada, we believe that we have an opportunity to leverage the resources of the three orders of government to build infrastructure while prices are low and get people back to work.
Brad Stevens, Deputy City Manager, City of Calgary: There have been significant growth challenges in Calgary. We have some aging infrastructure. We want to take advantage of some of the technology that's being offered, and as a result that's driven the need for some massive infrastructure investment in capital projects in Calgary.
To give you a bit of a framework, each budget cycle we do an infrastructure status report, and in the last cycle we identified approximately a $7 billion funding deficit. Now since that time we've also identified the need to expand our LRT, our Green Line. You probably heard about that. So we're looking at a significant infrastructure funding gap, well in excess of $7 billion as of the last cycle, plus anything associated with the Green Line. Federal funding is critical to help Calgary close that infrastructure gap and help build the supporting infrastructure that Calgarians need.
Mr. Nkemdirim: I want to touch on our experience with past federal funding. Citizens of Calgary have certainly been the beneficiary of previous federal funding. For example, between 2006 and 2015 we received $477 million through the Gas Tax Fund and $97 million through the new deal for the Public Transit Infrastructure Fund. I would like to echo the comments from our colleague in Yellowknife that we find the Gas Tax Fund to be generally well administered and relatively easy to comply with and report.
One of our challenges has been with some of the other funding programs. For example, in the second iteration of the Building Canada Fund, commonly known as the New Building Canada Fund, in Alberta not one penny of the money went to municipal infrastructure. All of it was taken by the province, even though there had been an expectation by the federal government that some of that money would go to fund municipal needs.
We also found application-based programs to be extremely difficult to administer and time-consuming to get projects into the ground.
I would also like to touch on P3 Canada. We've had challenging experiences with P3 Canada where we had a major project to fund recreational centres get through their process, costing us millions of dollars in the application, only to be stopped by the cabinet for approval, even though it had been unanimously approved. That's money that could have been invested in actual projects.
Mr. Stevens: We'll conclude our comments by providing a bit of input on our comments on the future federal infrastructure funding and what that might look like. Based upon the infrastructure gap that I mentioned to you previously, the $120 billion in new and previously announced funding in the 2016 federal budget is a welcome investment in our communities. We will say to you, though, that trying to track what is made up or how many programs are made up in that $120 billion is becoming difficult. It's not quite clear which projects and programs make up the $120 billion. I think we can probably account for about half of it, but the other half, we're not sure where that money is or how one might apply for it.
On the Phase 2 infrastructure plan, we support the funding approach that talks about population growth factors as we determine disbursements. In preparation for this program, and all of our infrastructure programs, the City of Calgary selects infrastructure projects based upon five key criteria: reducing carbon use and improving adaptive capacity; enhancing the quality and reliability of our systems; strengthening the local economy — that's of particular importance to us right now; building a strong community; and improving affordability and accessibility.
An example of some of the innovative funding is our Green Line, our LRT expansion line, which will serve more than 27 communities and will move more than 41 million passengers every year on a 40-kilometre line.
I won't talk about our agreement yet again about the federal gas tax and what a successful model that has been for us.
Debt capacity and financing costs are also key. Thus the difference in actual capital available for construction between a project financed between 10 years or over 30 years obviously can be very significant when you take financing costs into account. So we'll be looking to hopefully provide further input to the federal government as to how we might be able to address some of those opportunities.
Again, thank you for the opportunity to share some of our experiences, and we would be more than happy to answer any specific questions you might have about the Calgary experience.
The Chair: Thank you, gentlemen. One of the things I should have mentioned earlier is framing some of the thoughts that we want to have, and I think the Calgary folks and to a certain extent Yellowknife have addressed this: Did the previous programs get concrete results? Is there anything measurable that could be used to assess effectiveness? What methods or programs were effective? What reporting requirements were worthwhile? Was the PPP a positive model? How could we assess the effectiveness of infrastructure spending?
If we could keep that in the back of our minds when my colleagues are asking the questions, I think that might be helpful. To a certain extent, Mr. Heyck, I think you started to address some of these issues, and of course our folks from Calgary certainly got into some of the issues right off the bat.
I would like to make sure that we talk about two issues: what's gone on in the past and framing the future. It will help our focus in terms of questioning and a conversation moving forward.
Senator Eaton: Thank you. Very interesting. We had the Minister of Finance here, and we asked him about this Gas Tax Fund. He's not too keen on giving you guys more gas tax. That said, would you all be in favour of cutting the provinces out? In other words, if the federal government still wanted an application process, would it simplify it if cities were allowed to apply directly to an infrastructure fund as opposed to getting the provinces that have to agree to your priorities?
The Chair: We will start in Calgary and then go to Yellowknife.
Mr. Nkemdirim: The answer to the question is yes, it would make it easier, certainly as an application-based program, to deal only with one order of government.
The one important thing to note is that in the Building Canada Fund programs and in the current Phase 1 infrastructure programs for public transit and green, the federal government has required the provinces to put in the matching component. That is how we wind up with a process where there are two orders of government. But if the federal money is leveraging provincial money and there's more money available to actually complete a project, then that makes sense. What we should be thinking about is how to streamline that application process so we're not duplicating efforts and recreating the process.
The Chair: Mr. Heyck.
Mr. Heyck: Thank you. I couldn't agree more. I think it's time to toss off the constitutional shackles to a degree and start building a relationship between federal and municipal governments across the country.
I'll give you a couple quick examples of past infrastructure programs that have run through the territorial government where right off the bat 85 to 90 per cent of the money is taken for territorial transportation projects, which leaves very little for municipal governments to work with.
In addition to that, in recent years, in the territorial government's total community funding allocation, Yellowknife, which has about half the population of the Northwest Territories, has received between 12 and 13 per cent of the funding that's available. So I think there is something to be said for a direct relationship between municipal governments and federal pots of infrastructure funding.
Somewhat different from the situation in Calgary, we, as I mentioned in my opening remarks, have that 75-25 split. In the current iteration of the federal funding, there isn't a portion for the territorial government to step in.
Senator Eaton: I live in Toronto, and Toronto has so many problems that I won't get into, whether it's streets that need paving, lack of public transportation, garbage pick-up that doesn't happen often enough. It goes on and on. I think it would be easier if municipalities were accountable. In other words, as you say, if you became more independent, dealt with the federal government, the federal government dealt with you, it would be a lot easier than if you get a provincial government that might not be the same political stripe as your municipal government or the federal government. It becomes a bit of a maze.
Mr. Heyck: Agreed.
Senator Eaton: We learned from one of our witnesses last week that in a lot of the past infrastructure building no sustainability audit was done. In other words, the infrastructure wasn't built for flood or for ice storms. None of those environmental things was taken into account.
In these new infrastructure projects you're thinking about, are you taking the environmental challenges into account? Is that part of your sustainability?
Mr. Stevens: Absolutely. We are one of the first municipalities to adopt a gold standard when it comes to environmental testing on all of the structures. We go through a thorough environmental review, particularly following the floods here in Calgary, when we build infrastructure in or around that area or around our rivers. So it is absolutely a key part of any form of due diligence that we would require as part of the application process.
Senator Eaton: Thank you.
Mr. Heyck: Thank you. Similar to Calgary, we've adopted higher building standards for not only municipal facilities but all new residential, commercial and institutional developments in Yellowknife. Some of the funding we've accessed from the federal government in the past has gone towards those. We are now grappling with climate change adaptation and what that means for a place like Yellowknife.
I would note for the purpose of your study that at some point in the past few years environmental criteria used to be applied to the gas tax funding in particular, and that criteria was removed by the Government of Canada. As we're focusing in on climate change over the next several years, perhaps that lens can be put back on some of these major funding pots.
Senator Neufeld: Mr. Heyck, when we had Finance officials here, we asked them about the funding and how long it takes for communities like yours to get the money. If I remember correctly, I was told that all you have to do is submit an invoice back to government and they would immediately write a cheque. That has not been your experience, I guess you would say. Is that correct? Why does it have to wait until the end of the project?
Mr. Heyck: To a degree. It depends on which funding pot we're talking about. In terms of the gas tax, that's a little easier for us because it's more predictable and we can submit invoices as we're going. But some of the other projects we've undertaken in the last several years, more so on the application-based side, we have been required to substantially complete the project and, for a project that can take several months or more than a year to build, that can cause challenges for small communities such as ours.
Senator Neufeld: Thank you. To Calgary, regarding the Green Line transit that you were talking about, carrying 41 million passengers 40 kilometres or something, I assume you have to determine how much GHGs you're going to save by doing that. If it's a long explanation you can write that to us. How do you determine how many GHGs you actually save by doing that kind of public transit? If there is a short answer, give it to me. If you want to give me a longer answer through the clerk, that's fine too.
Mr. Nkemdirim: We certainly can send that to you. The short answer is we've done a calculation, a modelling of how many passengers will be taken out of automobiles and other forms of transport and going onto our new Green Line. The Green Line will also be wind powered, so it will be an emissions-free project. We've got modelling we can certainly send to the committee.
Senator Neufeld: Okay, if you would do that. Just one observation: I can appreciate the communities saying they'd like to deal directly with Ottawa until you don't get funding, and then the story will be Ottawa is making the decisions for someone in Manitoba, Saskatchewan or Alberta, wherever, and there would be a great uproar. As a federal government, I don't think you'd ever want to do that because it's pretty tough to make a decision in Ottawa about whether Yellowknife gets money or not when there are so many cities and communities applying for it. You might be better off having those arguments with your provincial or territorial counterparts than trying to argue with Ottawa, which might be pretty tough.
Senator Marshall: Are you doing anything in the area of social infrastructure? Previous witnesses all seem to be focusing on water, sewer and transit, but there is not much discussion on housing and daycare. There is funding for that. The federal government in the budget gave equal weight to the different kinds of infrastructure, including the social.
What's happening in your jurisdictions with regard to social infrastructure?
Mr. Heyck: I think what you'll find is in different jurisdictions across the country you've got different powers and authorities resting with different orders of government. We recognize that in a lot of parts of Southern Canada, municipalities are actually responsible for social housing and things of that nature. Here in the Northwest Territories that's a territorial responsibility. We do want to see that kind of investment in that sort of infrastructure, but we're more of an influencer than a direct player.
Senator Marshall: How about Calgary?
Mr. Stevens: We absolutely do. We have an investment plan entitled culture and recreation. We actively participate in the national affordable housing strategy. We've just done some with respect to rec centres. Our cultural plan is an integrated plan; one specific area is the responsibility of one of our businesses in the city of Calgary, so it is very much part of the social infrastructure that would be part of the plan.
Senator Marshall: Mayor O'Keefe from St. John's met with us yesterday, and one of the restrictions he raised is the short season for construction in Newfoundland. Is that an issue in Yellowknife? Even in Calgary, I know the weather out there tends to be almost something like Newfoundland. Is that a big factor in your capital program?
Mr. Nkemdirim: I think the issue is about restrictions that are placed on programs. For example, on Phase 1, there is a timeline to get the projects completed. Certainly, other factors cause limitations. Weather could be one, and climate could certainly be one. But for other aspects, like the availability of labour or the availability to get a project designed, we have to go through proper tendering procedures to get proper tenders. Sometimes what happens, as in Phase 1, there is a deadline to get the projects completed, and if you haven't actually done a bunch of pre-work to do it, you might not be eligible for the money. I know many municipalities have had that problem. Typically, we don't spend a lot of money doing engineering and design work when we don't have a funding source. So making sure we have enough time to actually complete a project is a really important factor.
Senator Marshall: Thank you. Mayor, you did make reference to this in your opening remarks, so could you comment on it also? For example, there was a March 2018 deadline that wasn't realistic.
Mr. Heyck: Absolutely. Just to echo my colleagues in Calgary, for some major infrastructure projects, you're looking at several months, potentially up to a year, simply to do the engineering for it, and then you've got the actual construction of whatever it might be. So some flexibility needs to be built into these deadlines that have been set for some of this Phase 1 funding.
Our experience with the gas tax funding, to come back to that point, is that we have the ability to carry over some of that funding from fiscal year to fiscal year, which, if we're not able to complete all of the projects on schedule — again, it comes down to that short construction season quite often — we do have the ability to carry that money over to get the project done in the following fiscal year.
Senator Marshall: What is your construction is season in Yellowknife, from when to when? Is it July to August?
Mr. Heyck: Pretty much. Probably June to the end of September.
Senator Mitchell: Mr. Stevens, you talked about the issue of financing and 10-year versus 30-year horizons. You had ideas or suggestions you would be making to the Minister of Finance. Can you discuss those with us at this point? That's clearly a critical issue.
Mr. Stevens: We certainly do. You can imagine the criticality of it. The program of $120 billion was announced over 10 years. If you take that Green Line we've been talking about and finance it over 30 years, another 20 years of financing, you're going to build less of the line in order to be able to do that.
I know there has been discussion about an infrastructure bank and whether or not there is a different vehicle to fund that. For funding it over a short period of time, if the $120 billion or a portion that comes out is actually financed over 20 years or 10 years, as has been talked about, there is a great amount of capacity that can be done by flowing the money quicker rather than over the traditional period of time. The City of Calgary has been trying to find its one-third share. We've only been able to do it over 30 years. We have taken an amount. We've been trying to find a way to actually advance that financing.
Senator Mitchell: It was the infrastructure bank I wanted to emphasize, so thank you.
All three presentations have emphasized the problem of climate change mitigation and anticipation costs. The argument has been made that it was too expensive to deal with climate change, that it would hurt the economy. Now we know it's too expensive not to deal with climate change.
Calgary mentioned you have a five-criteria evaluation process. One of them is climate change impacts. Could you give us an example, other than the obvious one of the Green Line, of the kind of climate change-emphasized projects that you're doing in Calgary and perhaps in Yellowknife as well?
Mr. Stevens: In Calgary, I think I also referenced the LEED gold standard. We were one of the first municipalities to adopt the gold standard. It's a proactive desire to reduce the operating costs of our buildings. So when we built the four new rec centres which came online over the last little while — and there is one still to come — they're all built to that standard. They are all built with the carbon economy in mind. It's a standard we have for our own buildings and our own infrastructure.
What we're looking at right now is from a regulatory perspective. What impact can we have with respect to third- party infrastructure that's being built and seeing how far we can expand that policy? That's just an additional example of how we're looking across our infrastructure and how we might look at the effects of carbon.
Mr. Heyck: The City of Yellowknife adopted its first community energy plan towards the end of 2006. We made a conscious decision shortly after the gas tax funding was first announced and created. We made the determination at that time that we were going to allocate half a million dollars from our gas tax funding allocation towards funding community energy planning projects. Since that time, for the past 10 years, we have taken at least half a million dollars, sometimes more, to basically move through our municipal operations and ensure that we are carbon-neutral by 2030. We've converted the heating at a number of our facilities from diesel fuel to biomass. We have begun to implement solar panels in many of our facilities. We're trying to convert our fleet into a more fuel-efficient fleet. The federal funding has been a critical part of that. As a country, we recognize we now need to ramp up those efforts from coast to coast to coast.
The Chair: What are the two things you would like to see improved with the rollout of this major infrastructure commitment and program by the federal government?
Mr. Heyck: First of all, it's the flexibility municipal governments are asking for. Municipal governments across the country, regardless of size, have reached a degree of maturity where they can certainly be trusted to make some of these decisions about what their citizens' priorities and elected officials' priorities are. I come back to the ideal model, which is the gas tax funding model — long-term, stable, predictable funding which we can ensure has a positive impact on our citizens' lives.
There was a question about what these funding pots have been used for. We have a new water filtration plant up and operating, which has helped us already avoid boil water advisories, because we had gas tax funding available to put towards those things.
We fully agree with setting out that criteria and the accountability for municipal governments in terms of using tax dollars, but give us flexibility in the types of projects we want to fund and in terms of the timelines which will work for each individual community.
Mr. Nkemdirim: I'll give you three things. Block funding, like the gas tax model, is very efficient. It flows through to the municipalities. Then we report back to the federal government on how we have used that money and the federal government has set out the criteria of how that money may be used. We think that's a very good model to get projects into the ground in a timely fashion. Second, the gas tax is very predictable. The more predictable the funding is, the more it allows us to plan our capital investment over time and also to stack over types of funding onto that source of funding.
Third, for funding that is not block funding, it's really timeliness of the process. We spend a lot of time preparing applications. In the case of P3 Canada, it's millions of dollars for projects. It's an enormous investment, so getting a quick decision on those projects really makes a difference on how soon we can get it in the ground.
Senator Marshall: Mr. Heyck caught my attention on that. He referenced the solar panels, but it is dark up in Yellowknife for half the year. Do you use solar panels?
Mr. Heyck: Absolutely. The other half of the year we have 24 hours of sunshine, so it's the opposite. November, December and early January are really the only time it's not viable to use solar. And with the cost of electricity what it is —
The Chair: Do you have a 30-second comments each? Mr. Heyck, anything to end with?
Mr. Heyck: I want to thank you for taking a look at this issue. We're encouraged by the signals the federal government is making over some of the announcements over the next 10 years. The devil is in the details. We look forward to seeing those. We appreciate the work this Senate committee is doing to delve into the subject. Thank you for having me.
Mr. Nkemdirim: We appreciate the opportunity to be able to speak directly to the Senate. This infrastructure funding is very critical to get the money into the ground so that we can get people back to work and build projects which help improve our citizens' lives. Thank you for the time and opportunity to speak with you this evening.
The Chair: Gentlemen, on behalf of our colleagues here at the Senate Finance Committee, we thank you very much for your time, your involvement and your enthusiasm in speaking with us. We wish you a great evening.
We'd like to welcome His Worship Matt Brown, who is the Mayor of the City of London. He is accompanied by Adam Thompson, Manager of Government and External Relations. Welcome.
Secondly, we have His Worship Don Iveson, Mayor of the City of Edmonton, of course, with probably one of the greatest young hockey players with Connor McDavid and, of course, all of the Grey Cup victories you've had at the expense of an old Montreal Alouette. I could have had two more rings if we had beaten you in '78 and '79, which we didn't, which is a major catastrophe in a football career.
Mr. Iveson is also speaking in his second capacity — and this is a point of reference for all of us — as Chair of the Big City Mayors' Caucus of the Federation of Canadian Municipalities. I believe you had meetings during the day with the big city mayors. Thank you very much, sir, for your presence.
Thirdly, but not the last on our list and not the last in our hearts, we have, from the City of Vancouver, Patrice Impey, Chief Financial Officer, and former Montreal Concorde — were they still the Alouettes when you started? — Jerry Dobrovolny, General Manager of Engineering Services.
Mr. Dobrovolny: One year a Concorde, one year an Alouette.
The Chair: Welcome to you all, and thank you for accepting our invitation.
If you could keep your comments to about five minutes if you have presentations, that would be great so that our panel has enough time to get out all of the issues.
At the beginning of the meeting, we had six questions. I don't think I was fair in asking the questions before, but what we'd like to do is give you a copy of these questions. Did the previous programs get concrete results? Is there anything measurable that could be used to assess effectiveness? I'm not sure we talked about that issue with our other panel. What methods or programs were effective? We talked about it, but we really want to home in on it because everyone has said the Gas Tax Fund. But there are a myriad of programs and also provincial programs. So when you look at the number of programs, probably one of the questions you folks have is, "My goodness, this is a plethora of programs; it's a lot to go through.'' What reporting requirements were worthwhile? You've talked a little bit about that. We didn't have a chance to get much feedback on the PPP, but was the PPP a positive model for the bigger cities that may have had more opportunity to get involved with PPP? Of course, could we assess the effectiveness of infrastructure spending, which is a general question?
We will hand these out to you at the end of the session, and we would ask that you take them back home. You could submit your responses to our clerk, if that would be okay. Would that be okay for everyone? All right.
So would we like to start, then, with His Worship Matt Brown from London, Ontario, home of the Western Mustangs?
Matt Brown, Mayor, City of London: Thank you very much, chair, and thank you, everyone, for the invitation to bring the perspective of London forward to inform your study of federal infrastructure programs.
Now, I think, is a very good time for this committee to be studying the principles and the priorities of federal- municipal infrastructure programs. We are at the one-year mark, of course, of the new federal government, a government that's currently consulting wildly — widely —
The Chair: Mayor Brown, that has been recorded and will go direct to the Prime Minister's Office here.
Mr. Brown: Yes, let the record show.
The Chair: And to the Minister of Infrastructure.
Mr. Brown: We'll let him know.
I think the scale and the scope is one not to be taken lightly, at $60 billion in terms of infrastructure spending. As for the City of London, if you haven't been there, you should go. It's Canada's eleventh-largest city. It's the home of nearly 500,000 Canadians in the greater London area, and our city is the urban hub of southwestern Ontario. Southwestern Ontario represents 2.5 million people, and it's a hub of health, education, economic and cultural amenities.
We are also an export platform for the region. We are located along the 401, 402, 403 corridor that sees $1.5 billion of trade each and every day, and over 160,000 individuals commute from the region to and from London every week to access employment, social services, amenities and others. Our international airport is expanding rapidly, and London provides connections to regional transit links by bus, rail and of course air.
London is an incredible site for social innovation. We're home to over 1,800 not-for-profits and charities; over 60 per cent of Londoners volunteer in some manner and contribute more than $600 million of in-kind contribution to the local, regional and national economy each year. We are a city of dedicated, passionate and innovative leaders.
As one of the 21 big cities in Canada, London has our share of challenges as well. Of course, with access to only 8 cents of every tax dollar, our city must build, operate and maintain the infrastructure that businesses and families depend on each day. As the Government of Canada moves ahead with designing the most ambitious municipal infrastructure plan in the country's history, we must all recognize this plan for what it represents to Canadians: a once- in-a-generation opportunity to invest in the services that Canadians rightly deserve.
All governments must work together to get the plan right. Cities are the engines that drive our economy. They're where we go to work; they're where we raise our families, where we create and where we innovate. They're where we connect with each other and where we connect with the world.
Today I want to speak to three primary questions. First, what can we learn from past federal infrastructure programs that can guide us to get this current plan right? Second, how can we unlock the potential of our cities through smart investment into infrastructure? And third, where do we go from here?
To begin, what can we learn from past infrastructure programs? Two factors stand out amongst many.
The first is that the majority of past programs have been application-based, and the complex application process that has gone hand in hand with these programs has often required significant resources from our cities to compile the information. Second, past programs like the Building Canada Fund and the Infrastructure Stimulus Fund have been designed around federal priorities with sometimes limited consideration for local priorities.
As a mayor, I can tell you that these types of programs lead to a perception of infrastructure lottery in some respects. Cities like London would develop applications, send them to Ottawa and hope the projects would be selected. This is precisely why the decision of this government to endorse a different model was met with concrete support and significant support from the municipal sector. With a transfer-based model, cities like London can have a more predictable, more flexible and more sustainable way to identify with certainty which projects will result in the highest return on investment and know that the money is there before the work begins.
It's important to recognize that the federal government has taken some very positive steps in this direction. For example, a permanent indexed gas tax is a predictable funding source for municipalities that allows us to plan for the future. It allows municipalities to focus on their unique priorities as well.
Ensuring that kind of predictability and flexibility is critical to unlocking the potential of our cities. Municipalities need to plan for our infrastructure needs for 10-, 20-, 30-year horizons, and predictable and transparent federal investments enable us to do that, and, as mayors, to keep the economic engines of Canada running.
In London, our top priority is bringing rapid transit to our city. London is the largest city in Canada without a rapid transit program. We call it Shift. It's a rapid transit initiative that will see 22 kilometres of dedicated bus RT lanes connecting our vibrant downtown to all four corners of our city. It will transform the city. It will change the way that we move across the city and it will change the way that our community grows. This is the most ambitious infrastructure undertaking in our community's history. The size and scale of this project means that we are monitoring keenly the discussions happening across the country on the design of the Government of Canada's infrastructure plan.
Where do we go from here? The Federation of Canadian Municipalities has developed a number of principles that should inform the design of these programs.
First, as I've mentioned, federal investment must be long-term and it must be predictable. Knowing where investments will be made and what types of priorities will be targeted will greatly help our communities plan for the long term.
Second, the Government of Canada needs to provide flexibility on project selection for municipalities because we know our communities best. In London, our priority is Shift, the rapid transit program. However, other types of investments for other municipalities may yield stronger returns on investment. We strongly believe that there can't be a one-size-fits-all approach.
Third, the Government of Canada has demonstrated real leadership in recent months by upping the federal maximum contribution to individual projects to up to 50 per cent. This is truly a game-changer, and it must continue in the future.
The last thing that I want to touch on is that the Government of Canada planted what I would call an important flag in the sand on critical issues for cities: homelessness prevention and housing. Mayors have long called on the development of a national housing strategy, and I applaud the government for starting these discussions.
Canadians are facing a true housing crisis. As federal operating agreements come to an end without a clear plan for reinvestment over the long term, the City of London is facing the closure or the potential closure of numerous social housing units. This hurts vulnerable Canadians the hardest.
The federal government needs to come to the table with an urgency, with a willingness to work with municipalities, provinces and territories to develop real solutions to our affordable housing crisis.
In conclusion, it is clear that collaboration between governments is going to be the key to tackling our shared challenges. In fact, none of the shared challenges or opportunities we have talked about today can move forward if we are not working together.
Thank you for the opportunity again to allow me to bring the London perspective to the table. I look forward to His Worship's presentation, as well as the opportunity to answer any questions that you might have.
The Chair: Thank you very much.
Don Iveson, Mayor, City of Edmonton: Well done, Your Worship.
[Translation]
My name is Don Iveson. I am the Mayor of Edmonton and Chair of the Big City Mayors' Caucus, the BCMC. For those of you who are not familiar with the BCMC, it brings together 22 mayors from Canada's largest cities to study issues that concern our major urban centres.
[English]
We are part of the Federation of Canadian Municipalities, of course, Canada's national voice for local government. We know that the federal government's infrastructure program is in fact a remarkable opportunity to transform this country, to create new jobs, grow our economy, improve the lives of Canadians, achieve our greenhouse gas reduction goals.
Phase 1 of this plan is delivering good first steps, but the transformative opportunity lies in how we shape the much larger Phase 2. Our message is that to address the challenges Canadians face in their daily lives, where they live in their communities, we need to invest in those places where they live, work, raise their families, learn, invest, start businesses.
Municipal leaders are the natural partners in this work. Municipalities, after all, own, operate, maintain, refurbish and sometimes replace roughly 60 per cent of Canada's public infrastructure: roads, arenas, parks, light rail infrastructure.
We've been effective partners. Local governments, in fact, have a strong track record of delivering infrastructure projects efficiently, fairly and with accountability. We have the expertise to identify projects that match local needs and to offer the best return on investment. That's why we have been a trusted partner of the federal government for many, many years.
This government has made bold commitments specifically in the areas of transit, green and social infrastructure. They are framing this as a project in nation building, and we agree entirely. City building is nation building.
It's in our communities where we tackle national challenges, like climate change and job creation, and it's in our communities where we drive the innovation that's the hallmark of a knowledge-based economy and a globally competitive Canada.
In fact, I pointed out earlier today to one of the ministers that in Alberta 51 per cent of Albertans live in Edmonton and Calgary proper — not the metropolitan areas, the cities proper. Sixty-seven per cent of the GDP in Alberta is found in just the two big cities.
How do we unlock this innovation and create this wealth and build this nation in Phase 2?
I'd like to quickly highlight three core points that you may wish to return to in the question phase.
First, in Phase 2 we should empower local governments to plan for the long term and leverage local expertise to move the most cost-effective projects forward. Phase 1 really set the right standard by choosing predictable, allocation- based investment, starting especially with the transit fund. Now, to ensure progress across Canada, Phase 2 should continue empowering local governments to act, consistent with what you heard from Mayor Heyck and our friends in Calgary.
Second, Phase 2 needs to get the cost-sharing right. Traditionally, at best, each order has contributed one third of a project's upfront cost, but that's just the capital cost. Over the full life cycle, including operations and maintenance, municipalities have paid well over half, and remember we have 8 to 10 cents of the taxing authority and fiscal capacity.
To give you an example, we're building a $1.8 billion light rail line right now in southeast Edmonton, and we also know, because there's a 30-year contract attached to it, that we'll spend $1.3 billion on operating and maintenance. So, at one third, one third and one third for the upfront $1.8 billion, and 0-0-100 for the back end $1.3 billion, you wind up with a cost share on this project of one fifth federal, one fifth provincial and three fifths municipal. We're doing our work, and so moving to 50 per cent in Phase 1 recognized this imbalance. This must continue.
To ensure projects move forward in every region, provinces will need to hold firm to at least a one third share as well.
Thirdly, in 2016, no serious nation-building plan can shortchange Canada's housing needs. To build on what my colleague Mayor Brown was saying. 1.5 million households cannot find safe, decent housing, and housing is becoming less affordable at every income level in this country. This housing crisis is actually throttling back Canada's potential as an inclusive and prosperous nation. This Friday, FCM will publish its comprehensive recommendations for the national housing strategy, and our analysis shows that transforming the housing sector will require a significant carve- out for housing in the phase 2 social infrastructure fund on the order of $12.6 billion.
But the return on that investment will be immense. We know this money is already on the table. We just need a clear federal decision to make safe, affordable housing, and the dignity of the people who depend on it, a priority.
In short, unlocking the potential of Phase 2 means building on our partnerships and recognizing each partner's strengths and limits. Canadians expect nothing less of their elected officials. The fact is, the choices we make today are building the Canada we want for tomorrow. So we need to get this right, and municipal leaders are here. We're ready to work together to build a Canada that's prosperous and sustainable with a quality of life we're proud to leave to our children and our grandchildren. Thank you.
The Chair: Thank you very much, Mayor Iveson.
From Vancouver, Ms. Impey.
Patrice Impey, Chief Financial Officer, City of Vancouver: Thank you for your introduction, Mr. Chair, and thank you to the members of the committee for extending an invitation to the City of Vancouver to participate in your special study on infrastructure programs in Canada.
On behalf of our mayor, Gregor Robertson, I'm really happy to be here today representing the City of Vancouver as its Chief Financial Officer and to have the opportunity to speak to you on the real importance of infrastructure investments in municipalities, not just Vancouver but across the country.
I'm here with my colleague Jerry Dobrovolny, who is the general manager of engineering services.
The City of Vancouver has had a very strong partnership with the federal government on many infrastructure projects over the past several years. The Powell Street Overpass project is a recently completed one which was really critical to improve the safety and the efficiency of transportation through the city to the Port of Metro Vancouver by rail. Other investments, such as commitments to transit infrastructure through all of Metro Vancouver and particularly the Broadway subway project in the city of Vancouver, are really critical to the city as well.
Although it's a relatively young city — Vancouver was founded in 1886 — it is old enough to face some significant infrastructure renewal challenges. In fact, more than 75 per cent of our capital expenditures are on renewal. The city owns and manages about $20 billion worth of infrastructure, and that's roads, sidewalks, underground pipes, facilities and parks, and some of those, like our community centres and community facilities, are coming to their end of life. They were funded through major programs decades ago.
Vancouver is also gradually densifying. We are adding about 5,000 new residents each year, and that population growth also requires the addition of new infrastructure in order to maintain an acceptable and consistent level of service for both our existing residents and our new residents.
Being on an active seismic zone, Vancouver must also invest significantly in our infrastructure to become much more resistant to earthquakes.
On the housing front, as you all know, Vancouver has been ranked one of the highest and the most stressed in the spectrum of housing affordability. We are working very closely right now with the federal and provincial governments and other municipalities, including Toronto, to significantly increase the supply of affordable housing.
The City of Vancouver has a very ambitious set of goals — environmental, social and economic policy objectives — and these are guided by long-term strategies. We have significant document strategies, the Greenest City 2020 Action Plan, a housing and homelessness strategy, a healthy city strategy, the Transportation 2040 Plan and our Economic Action Strategy. As well, Vancouver was Canada's first city of reconciliation, demonstrating a long-term commitment to improving the health and well-being of local indigenous peoples.
All of these policies and the success of achieving those goals require significant infrastructure investment. To support that infrastructure investment, the city has developed a 10-year capital strategic outlook, and that outlook guides our infrastructure investment decisions. The document integrates our long-term strategies but also best practices and asset management, and we created a service-based strategy for each of our categories — affordable housing, child care, transportation — and all of those strategies really require senior-level government funding for them to be complete.
Because of that, Vancouver does strongly support the federal government's commitment to strengthen municipal infrastructure to ensure long-term sustainability and resilience. Over the past several months we have been actively engaging with our federal colleagues. We've provided detailed input into infrastructure program design and proposing joint investments in affordable housing, rapid transit, transportation infrastructure, green infrastructure and climate change adaptation, and social and community infrastructure, to achieve both short-term economic stimulus and long- term prosperity.
I think you've all been given a copy of the package that has been submitted to the federal government, and it outlines the infrastructure priorities for Vancouver across all of those areas.
In addition to financial contributions, Vancouver has been encouraging the federal government to explore policy, regulation, financing and taxation tools that can support these ambitious goals. These include incentives to preserve and expand rental housing for moderate incomes and to develop national strategies that would provide clear guidelines to align the provinces, the municipalities and our indigenous peoples, and to streamline the process in the areas of affordable housing, transit, child care and low-carbon projects.
In closing, as noted by the mayors on this panel, and previously by our partners at the Federation of Canadian Municipalities, recent federal investments have signaled the beginning of a renewed partnership with the federal government. It shows what we can achieve when municipalities, the provinces and the federal government work together. We need to build on this success with ongoing investments in housing, transit and other key infrastructure projects that are essential to job growth, Canada's long-term economic competitiveness, and environmental and social well-being.
The City of Vancouver looks forward to continuing our work with the federal government to move our city, the region, the province and the country forward in the years to come. Thank you, and we look forward to answering any questions you may have.
The Chair: Thank you very much. Moving right into questions, we have Senator Mitchell.
Senator Mitchell: Thank you. Thanks to each of you for presenting to us and being here. I'm very interested in the trade-off in how your governments make decisions between projects to renew and projects that are new infrastructure. I would appreciate each of you jumping into that.
Specifically, Mayor Iveson, is it Edmonton that has the Neighbourhood Renewal approach, where you take a whole neighbourhood and just do it? Maybe you could mention how that works out of the federal funding and whether there are adjustments that we need to make to promote that.
Mr. Iveson: That's a great question. I would say that over the last 10 years our approach to asset management has really matured. For a long time, Edmonton has been recognized in the municipal space as having the most advanced data collection when it comes to the state of repair of our infrastructure. We inspect everything on a risk basis: lower- risk infrastructure, like a sidewalk or a local road, maybe every four years, but higher-risk infrastructure like a bridge you would go to at least once a year to do a thorough inspection.
We can also model the deterioration of this infrastructure and add resources into the model to optimize a risk-based infrastructure modelling strategy that we use to determine the optimal allocation of money and sequencing of investment in projects to get best value.
Sometimes you actually let something run down a little bit more before you replace it because it's standard of service. Essentially, it gets a little bumpier, people actually slow down on the road — and that's not always a bad thing — but it's still safe and navigable.
We have a very sophisticated approach to that, but the first premise is that we do not underfund renewal, period. If you went to Edmonton in the 1990s you would see what the effect of not investing in your roads looks like. We were always in competition with a few other cities as the pothole capital of Canada. Now, we have people complaining about all kinds of other things because we fixed the roads and we properly capitalized the renewal of infrastructure. Once you have the data, it would be irresponsible, and even negligent, not to.
Cities with sophistication around this, and even in smaller communities in the North, South, East and West in this country are able to steward this infrastructure. We've used a little bit of gas tax money to do some of these projects, but for the most part it's property tax that has had to fund renewal. Again, federal funding and most provincial funding is only there for new projects. We've had to work "state of good repair'' 100 per cent into our own infrastructure cycle, and that's been very challenging for us. Quite frankly, people ask, "Why have my taxes gone up 60 per cent over the last 10 years?'' The answer is, you're driving on the answer to your question. We could use support for state of good repair, as well.
The Chair: I'd like to give everybody a chance, but I would ask you to try to make your answers succinct. We have so many questions here that everyone is fired up to ask you. I'm excited to hear the answers.
Mr. Brown: We're all striving to achieve pay-as-you-go financing, so when we invest in capital projects, we need to project the kind of maintenance that needs to occur over the course of the life span of the investment. I think we're all mindful in cities of that infrastructure gap. We measure it quite closely. It's okay to have a gap. It's understandable, but it needs to be something that doesn't create issues down the road. We're not saving money if we don't do the repairs. We're kicking the can down the road, and I call that a budget time bomb that will go off at some point in the future, and that's not a responsible way to manage a community.
One of the things that we're particularly proud of in London is our water and waste water services. Significant gaps were identified through the 1990s along with a significant amount of work that needed to occur to bring those up to where they needed to be. What that means is significant increases in water and waste water rates, so for about a decade we experienced increases in the 7 to 8 per cent range on either side of that equation. It was, again, an example of doing what needed to be done to bring the system up to a level of sustainability.
We watch these things very closely. We make difficult decisions. We strive towards pay-as-you-go financing, but we're also dealing with infrastructure that is decades and decades and in some cases a hundred years old. When we dig up streets, we still sometimes find wooden pipes, and we have to deal with those. I think the more sophisticated we get, the better off our communities are, and not just for us, but for our kids and grandkids as well.
Jerry Dobrovolny, General Manager of Engineering Services, City of Vancouver: It's a similar approach. Renew is the priority, and that is certainly the risk-based process we use. The thing I would add is because there is so much redevelopment taking place in Vancouver right now, we look at opportunities to create efficiencies and combine work. Wherever possible, in areas that are redeveloping, we look at some of the oldest to replace so that we can achieve both objectives at the same time. Renew is our highest priority.
The Chair: Can we come back to you, Senator Mitchell, if you have another question? We want to make sure everybody gets a shot in here.
Senator Pratte: We have heard many times from mayors and other city representatives that you like the gas tax, and we really get that. You like the gas tax and the flexibility it provides, and so on.
From our end, our concern is not especially with the gas tax, but we get the impression that sometimes we lack information so that we can hold the government accountable.
What I would like to know from you is when you report on your spending on projects financed by the gas tax, what sort of information do you provide to the government? Do you provide detailed information, more than, "Yes, we built that project and we spent your money?'' Because that's the information we get from Infrastructure Canada, for instance. "We had a great year; we spent that much money.''
But for us that's not enough. We want to know how many jobs we created and how many GHG emissions were prevented. Can you provide detailed information so that we can be confident that, even with a gas tax, we can hold the government accountable?
Mr. Iveson: The short answer is yes. We answer the questions that we're required to in order to complete the grant applications and receive the funding. But I think the main message I would want to say to you is less on what it has been historically, which was investigated and it was determined the reporting and the collection and aggregation of that data should be more robust.
We completely agree. We have to do this, locally, for our own stakeholders, who are taxpayers, the same people we all serve. We have to do this for our provincial governments. We have a transit program called the GreenTRIP in the province of Alberta, and your major eligibility for it is based on your projected greenhouse gas savings, and then you do have to report on that.
We're prepared to do this. We do it for other programs. We would be thrilled to develop a common standard for that reporting across the country. I think the municipalities, particularly the big cities, have the capacity and sophistication to make sure you're getting the information you would need as parliamentary officers to understand that the money is achieving national goals. We know it is on the ground. We'd be happy to report it. We're the most transparent and accessible order of government, and we specialize in open data, so we'd be happy to do a better job of that and meet the government's and the public's needs for transparency.
The Chair: Do you have another supplementary, Senator Pratte?
Senator Pratte: Do any of our other witnesses have any comments?
Ms. Impey: For Vancouver, I would totally agree. There are the metrics around what we spent, but as municipalities we're much more sophisticated now on tracking our performance metrics and the outcomes of the spending we're making. We're holding ourselves accountable to that. I think we'd be more than happy to share that with major funding partners.
Mr. Dobrovolny: I should explain that in Vancouver we actually don't have access to gas tax because the demand for transit was so great in the region that the 22 mayors agreed to have all of the gas tax money go towards transit. So, all of the gas tax money in the Metro Vancouver area goes to TransLink to provide transit service, and it's become a fundamental part of their budgets.
I think one of the things you were getting at was measurable results; it was part of your initial question. We have many examples, but I'll give you a specific example of some of measurable results we've seen from past projects.
The Ninth Street corridor was a series of projects that was funded previously. As you know, Vancouver is a gateway city. About a quarter of all the marine goods that come to Canada come through Port Metro, and Ninth Street is the corridor directly between the port and the American border. We had a series of projects along the Ninth Street corridor to improve the flow of goods. That was the primary purpose, but what we found after we completed all that work were tremendous safety improvements that improved safety along that corridor by 30 to 50 per cent. We have all of this available in a post-project report. In particular, it reduced collisions, but also pedestrian safety was improved significantly. A federal program that was geared towards the entire corridor that was targeted at improving the flow of goods resulted in tremendous improvements in safety, as well, for pedestrians. That's just one specific example.
Senator Pratte: I have just one short supplementary for Mayor Iveson. You're saying you would be willing to provide that information. This information has not been provided up until now, but you would be willing to provide it?
Mr. Iveson: No, we have provided information upon request from the federal government. We would do that for any funding partner. Whether the federal government was asking the right question and what was happening with that data in terms of national level reporting, I think, is something that merits further investigation and has been considered by the Auditor General.
But as far as I know, certainly, our cities have provided data wherever asked, and it's things that we collect for our own internal accountability and transparency to our stakeholders. We're happy to. If there is more specific data you'd like on that, I can go back and check.
Senator Pratte: Thank you.
The Chair: Let's hear from Mayor Brown, and maybe we can summarize the question Senator Pratte asked at the end, because I think there is a follow-up question. Go ahead, sir.
Mr. Brown: I would just say we welcome the questions. We are the most open, most transparent level of government at the local level, and we owe it to ourselves, as well, to hold ourselves to a high degree of accountability. We have the same goals as the federal government at each local government level: economic development, job creation, improving quality of life. I think it is incumbent upon all of us as partners to ensure that we're spending the dollars responsibly.
We know how to spend the dollars on our priorities because we know what our priorities are at the local level, and we would welcome providing additional information, as required.
Senator Pratte: Mr. Chair, that's a question we should ask the federal government: What is it that they were asking?
The Chair: I was just going to ask that question. What did they ask you for in terms of your completion reports? Did you have to set results information in terms of job creation, potential economic returns? Were you asked to report on criteria, or was it just that you spent the money, the money was in completion? What was the definition of the results report that you sent? I think that's what Senator Pratte was asking.
Mr. Iveson: I think we'd be happy to get you some examples rather than have us speculate. Those reports would not necessarily pass our desks for signature, so I wouldn't want to misrepresent what happened. We would be happy to provide you examples of reports that were coming from our municipalities or regional agencies like TransLink, so you can see what we were being asked and what we provided.
The Chair: That will come in the questions we send you. It would be most appreciated if you could highlight that.
Senator Andreychuk: I love Regina, Saskatoon, Saskatchewan, Canada. We got that out of the way.
Mr. Iveson: Roughriders.
Senator Andreychuk: School, education. We have entirely too much football here. I want a balanced Canada.
I'm getting more and more confused. I'm a new member to this committee, and infrastructure in the old days was roads, water, sewer and water. Then we've sort of gradually moved and had multiplexes and everything. It has changed with what the federal government's priorities are.
This government is rolling money over from the previous government, so we knew some of the priorities there because we saw them in action. Now it was job creation. That's what I heard. It wasn't infrastructure, it wasn't long term. So we have an idea of what the first phase is, and now we're looking to the second phase.
I'm wondering whether we have the right policy framework. If we're really going to put everything into infrastructure, daycare, housing — there are ministries that actually look at strategies and how to work with children. How do we attack issues of education?
Are we putting too much into an infrastructure project? Should we be narrowing it so that it's sustainable and works? That's just a policy issue. You keep saying that the provinces should do their fair share. Do you feel they've been doing their fair share or not?
Mr. Brown: I think to answer the first part of the question, which is what is infrastructure, it's all of those things. It's roads, water and waste water, but it's also recreation facilities and cultural facilities. The funding that we understand will be available to our communities through the Phase 1 and Phase 2 funding of this program covers all of those areas. I think it is right to have a broad approach because it allows the municipality, the local government, to identify the priorities that they see fit. For example, one municipality may have invested heavily in water and waste water infrastructure over the course of the past decade. They shouldn't be penalized for having a system that isn't in need of repair. They should be able to identify other priorities within their community.
When we think about the minister's title, Minister of Infrastructure and Communities, infrastructure investment is community development. As we build better cities, we build a better country. That's why it's all connected.
So what are the outcomes? Certainly jobs are a positive outcome. Economic development is a positive outcome, safety, but also a great quality of life. So I think the way the system is set up now is entirely appropriate.
It's difficult for me to speak to every province. I can speak to Ontario. We have traditionally had a system of one third, one third, one third. I think that it's fair to expect the province to come forward with at least one third of the dollars, when we have a federal government that's offering 50-cent dollars. I think it's unfair to expect municipalities to come up with additional or to shift the burden unnecessarily towards the federal government, as if they were subsidizing the province.
It's been our experience that there has been a balanced approach, but I think my colleague articulated very clearly that we have the capital investment challenge with 8 cents to 10 cents of each tax dollar plus the ongoing operating expenses. I do think it's fair to expect the province to come forward with their fair share as well.
The Chair: Mr. Thompson, you had a quick comment that you wanted to throw in?
Adam Thompson, Manager of Government and External Relations, City of London: Thank you. The important part of the first part of the question is I think the definition of infrastructure. The scope of infrastructure in our cities has changed over the last couple of decades with the expectations of Canadians. So as cities like London, Edmonton and our colleagues in Vancouver and Calgary and elsewhere are working on attracting top-quality talent to our regions, the businesses and the folks looking to locate in our communities or bring their business or build a business or bring their family are looking for things like world-class transportation networks, transit networks. They're looking at amenities, culture, recreation, pieces that build on the quality of life.
I think what we're seeing, especially in London — I don't want to speak for any other community but I'm sure it's the same — we're seeing in London that those are the difference makers for a lot of businesses or families looking to locate. Does your city have those types of amenities? Can it be competitive?
I think a really important outcome for the federal government's active role in supporting this infrastructure is it's positioning our Canadian cities very well internationally as centres for innovation and investment from across the globe.
Mr. Iveson: I completely agree with those points. To address the second part of the question, which was around the role of the provinces, the short answer is it has been hit-and-miss because we haven't had a consistent national approach to this, which is not to say that there will not be regional differences and different needs. Some provinces are working with their cities to build rail transit systems, which are very expensive to build, much more efficient and high yield to run. Other provinces and municipalities are looking at rapid bus transit, which is less expensive to build, more expensive to operate on a per ride basis.
You need flexibility for those different regional contexts. But to give you a little bit more information about that GreenTRIP transit program from Alberta, at that point the Province of Alberta was putting 67 per cent in and expecting the third from municipalities. So it was zero, two thirds, one third because there was no federal transit funding outside if you could get it into Building Canada or if you could get something going from the P3 fund.
In that case, the province was extremely generous. Ontario funded up to 100 per cent of some transit infrastructure. So it has been very inconsistent. Some consistency would be helpful for everybody for planning, on everything from transit to green infrastructure to social infrastructure.
The other part of your question I'd like to address is about social infrastructure and prioritization within it. We've heard many different needs articulated for seniors infrastructure, which is important for an aging population, for infrastructure for early learning and care, which is critical for our First Nations and newcomer populations who are not able to access affordable child care, which means the parent can't go back to school or work and begin to look after their family in the same way. These are the needs of a complex and evolving country.
Among all of those different needs, the big city mayors remain resolute that the highest priority is the maintenance of our existing social housing stock, which is deteriorating. We have lost 171 units of social housing in Edmonton in the last few years, at a time when we have added 100,000 Edmontonians, and at least some of them, more than 171 of them, need social housing. So we need to protect the stock that we have. By the way, we can create a lot of jobs recapitalizing that stock. We can even put some of the people who use that stock to work in skills development programs to create lasting prosperity for their families.
We also need to grow the inventory — again, a great opportunity to enhance neighbourhoods, create jobs and support vulnerable people who depend on social housing. From the social infrastructure pot, we would say the largest share and the most urgent need is around social housing, inventory preservation and growth.
Mr. Dobrovolny: I can be brief. You asked about provincial involvement. I should just point out that in the past, in the run-up to the Olympics, we had tremendous need, and there was federal money available and there wasn't the ability for the province to partner. We've had times when we've partnered with the federal government directly. The federal government contributed a little over a third. The money flowed through the province, and the city funded the rest of it. So we were able to do a tremendous amount of infrastructure in the lead-up to the Olympics.
You asked about the definition of infrastructure, and I might turn that question a little bit to say we're looking at the variety of benefits we can get from hard infrastructure. We're studying some of the concrete work we do. The Comox Greenway is an example of a project we built to improve walking and cycling through the downtown core. We've partnered with UBC and with Vancouver Coastal Health, our health region, to look at the benefits of that. Not only did more people walk, ride their bike and improve their physical health, as we would expect, but we also investigated mental health and conditions for seniors. By getting out and walking more, they got to know their neighbours more, they improved their mental health over 15 per cent, and they were less fearful about aging in place.
We're changing the definition of some of the results so that we can see what the real bang for the buck is for the concrete we put in place.
Ms. Impey: If I could add a bit to your question around infrastructure versus policies and programs, I think a shift over to infrastructure on housing, child care, community centres — those all support the policy programs and those kinds of outcomes. The infrastructure is a means to that. So I think setting those priorities is very much driven by that policy side.
The other piece is that when it comes to housing, with that kind of infrastructure it's very dangerous to let them deteriorate — not that it isn't for other hard infrastructure, but people are out of homes; it's quite different. When we talk about steady and consistent funding for things like housing, it's really important.
Senator Neufeld: My questions are not so much around social housing, because I agree with what you folks have said about social housing. It's sad what has taken place. Those things have to be dealt with.
Mayor Iveson, you talked about redoing your streets and whatnot, because when people phoned you and asked you for other things, you said they were driving on the good roads because you actually fixed them up. That's great to know.
Would it not be a responsibility of a city to actually maintain what you finally build? And if you are going to apply for money, it would be for new construction, expansion, because your city is growing. But after that — to me, anyhow — I kind of think a city should be responsible for what's in place. That's one question.
There has been talk about an infrastructure bank. I want to know how you folks feel about an infrastructure bank, and if it's something that you want, why you think it's something that you want.
If you could answer those two questions, I might have something after the response, a quick one.
Mr. Iveson: I fully agree — otherwise I wouldn't have voted for all those budgets where we fixed those roads — that that is very properly a local responsibility. Mostly we're talking about 4,600 kilometres of predominantly local roads.
Even where we're up to talking about freeways, the Yellowhead that runs through Edmonton is the busiest part of the Yellowhead transcontinental highway, and it's a key free trade corridor and goods movement corridor that moves into national significance. When we're into a project like that which a key trade enabler, maybe we require all three orders of government to work together on the life cycle costs as well as the upfront costs.
On local infrastructure, please don't mistake us coming and saying we need unrestricted federal funding to deal with the local state of good repair on local infrastructure. The distinction between, say, our neighbourhood renewal program, which is fully funded through pay-as-you-go discretionary dollars — and we're not borrowing to do it, so we've had to come up with a sustainable rolling-over fund, like a reserve fund in a condo, really, of $140 million a year to do sufficient work to get back to a state of repair that we can defend to our citizens.
I'd make a contrast to, say, transit infrastructure. Take any big city that's building either a bus rapid transit system to move tens of thousands of people, or a light-rail system to move hundreds of thousands of people, or a subway to literally move millions of people at a time. Those are the highways. I liken it to the fact that nation building in the 19th century in this country was done with railroads. That's what opened up trade. That's what created prosperity across this country and connected us all together, back when we were very spread out.
Then in the 20th century, nation building — again with a lot of federal investment — was done in highways, ports and other energy infrastructure. In the 21st century, when three out of four Canadians live in our largest cities and their commute to work is getting longer, their productivity is suffering, and their health and quality of life is deteriorating, surely there is a role for all three orders of government to build that defining nation-building, productivity-enabling, greenhouse-gas-emission-reducing transit infrastructure.
For nation building, as we strive to build those globally competitive cities that can keep people in Canada, there is a role for all three orders of government. John and I completely agree on this. But then these are significant infrastructure projects, in the billions and billions of dollars range. In terms of their life cycle costs, I think there is value in talking about how we work together, because if the federal upfront share is going to be lower, then maybe we need to talk about long-term commitment to refurbishment. However, if the federal government share can stay at 50 per cent, then we can more easily use our discretionary fiscal capacity to deal with the state-of-good-repair issues.
The second question was about the infrastructure bank. In short, we're intrigued. We're waiting to learn more about the federal government's desired objectives there. Just a qualification that it's not a panacea. It doesn't replace funding, particularly for infrastructure that provides public good.
So if the returns are in terms of improved public health or in terms of improved productivity across the whole economy, like a road provides, a major trade corridor provides, but it doesn't actually produce revenue on its own, financing isn't the issue. You still need funding.
Now, if there is a funding stream that you can leverage and finance against, then an infrastructure bank that mobilizes global capital, institutional investment, is very interesting to us — say for a utility project, perhaps for a mixed-market housing project, where the grants pay for the social housing units and the market invests in the market units, and you blend those two together to get scale and efficiency.
We think there are lots of interesting opportunities there, particularly also for green infrastructure, say, with district energy systems, for example — very capital intensive but very good at producing stable rates of return for patient capital, but also significant greenhouse gas reductions. We see a role for favourable financing, but it doesn't replace the need for funding commitments up front to actually build public good infrastructure.
The Chair: We'll move on with Mayor Brown. We need quicker answers because we want to make sure we get everybody in. I'm not trying to push you, but I am.
Mr. Brown: I'll answer both questions as quickly as possible. When we think about making investments as a community, it's our responsibility to plan for a future and to make sure we have a business case that considers the initial investment but also the operating costs associated with that. That's why we strive for pay-as-you-go financing, to ensure we can take care of our local neighbourhoods.
When we look at larger projects that have a significant impact on the quality of life not only of our residents but also of the country and the province as a whole, then that is a shared responsibility. Our cities, particularly the 21 largest cities, represented through FCM's big city group, represent the majority of the GDP that's generated within the country. I think we all have a responsibility, all levels of government, to invest and to maintain the significant infrastructure that allows that economic engine to continue. Whether it's fighting congestion or ensuring that emergency services can respond in a timely manner, whether it's improving quality of life so that this is a place that can attract and retain the very best talent from around the world, or whether it's reducing greenhouse gas emissions, we all have a role to play there.
In reference to the infrastructure bank, it's intriguing, and I think we all are very interested in learning more about it. We're always looking for more tools in our tool box. Each tool isn't appropriate for every job. But when I think about an initiative that we just launched in London called the Housing Development Corporation, which is a mechanism that allows us to make different investments in affordable housing than we ever have been able to before because it's outside the walls of city hall, there might be good opportunities to link private sector investment with the millions of dollars that we invest as a community and with the significant investments that are being made, both provincially and federally, to ensure that we're providing better and more homes for the people who need them. We're watching this very carefully, and it could well have merit in a number of areas.
The Chair: A quick comment from Vancouver. Senator Cools has not had a chance to ask a question, and she's excited.
Senator Cools: I'm pining away here. I'm suffering terribly.
The Chair: So could we have a quick response?
Mr. Dobrovolny: I'll give you a short, engineer's answer on your roads question. In Vancouver, cars don't break up the roads. It's buses and trucks that break up the roads, that cause them to fail, so the trucks are serving a goods movement purpose that's regional and also national. The buses have a transit purpose for the region, so that's why a different funding model is appropriate, I think, for the road.
Ms. Impey: I just wanted to comment on the infrastructure bank. Most municipalities have access to debt funding. Our challenge is more how much we can take on and what our ability is to actually be able to manage the operating cost and the impact on taxes. Access to funds is not necessarily a limiting factor, but sort of unique opportunities for something like an infrastructure bank, particularly, I think, around, as you say, housing, where you have that opportunity through a mortgage payback, et cetera, to utilize more creative financing to a particular project.
We'd also be interested in understanding whether that could be opened up to our non-profits. A lot of the housing operations in Vancouver are actually managed by non-profits, and so giving them access to lower-cost financing would be of real benefit to them because they have very little access to the markets at all. So that might be a more creative way to address the housing situation.
The Chair: I must comment: Congratulations, Jerry, for the quick answer because you were an offensive tackle and were used to getting your instructions in 20 seconds. I had to throw that analogy in because he was so succinct.
Senator Cools: I'd like to thank the gentlemen and lady for coming before us. I would especially like to thank you for your enthusiastic energetic and persuasive presentations.
Having said that, I think you might have observed that, yesterday, we had witnesses from other cities in Canada, for example, St. John's and Fredericton, and all of these mayors and witnesses were united in one opinion. This opinion concerns the fact of the decisions and who actually should take the decisions with respect to what your cities thought to be their priorities for funding.
The mayors had quite an excellent discussion here yesterday because, apparently, sometimes they would make their submissions and list their priorities in the order that they gave them priority, and the province would ignore that and then choose what should be their priorities.
These gentlemen yesterday were all united and emphatic that the cities, local governments, should be the ones to actually define and determine and set the priorities. I was very taken by that, and I think the committee was as well. I'm just wondering: Do you share their views? How do you feel about that?
The Chair: We need quick responses.
Senator Cools: Very fast. That's why it's such a simple question.
Mr. Iveson: Yes.
Senator Cools: Oh, good.
The Chair: That's a fantastic response.
Senator Cools: This is yes. So you're united in that?
Mr. Brown: Absolutely.
Ms. Impey: And I think, generally, when you look at cities, they may have similar priorities. So, once those are set, moving ahead is really critical.
Senator Cools: Okay, I say to you yet again, chair, that this committee has to put its full support to that recommendation that these people should be the ones to set those priorities.
The Chair: Senator Cools, that was very effective and efficient. Mayor Brown wants a 10-second response on that one because he was excited. I could see his face beaming.
Senator Cools: Oh, good. Well, he's from London, Ontario.
Mr. Brown: The short answer is absolutely. We know our priorities better than anyone. We're a responsible level of government, just like the other two levels of government, and we're all unique. So, when we think about one community versus another, as we set our priorities, we know the direction that we're looking to take the city, and it just makes good sense to provide us with that ability to be autonomous.
The Chair: Last question of the night. Is it going to be a quick one, Senator Mitchell?
Senator Mitchell: It's going to be pretty quick.
The Chair: With no introductory monologue.
Senator Mitchell: Just a really quick introductory monologue. It sounds like you're all students of J. Jacobson, who talks about how the future of the country's economy is the future of the city's economy. Cities drive it. One point that was made, I think, by Mayor Iveson was that we drive innovation. We create a globally competitive Canada through a knowledge-based economy, through —
Senator Neufeld: Time's up.
The Chair: Question?
Senator Mitchell: We talk about the heart of infrastructure — roads and sewer pipes and all of that — but is there a different kind of infrastructure that creates an economy of the future that would be useful to cities that isn't being considered or isn't being funded? Is there some creative approach that we could add?
The Chair: A crystal ball question.
Senator Mitchell: Yes, it's a big question.
Mr. Brown: For London, the model that is presented and is before us is appropriate. It allows us to make some decisions about making significant infrastructure investments. I'll give you one quick example, building a better downtown. The rapid transit system I spoke about, a $560 million program, hasn't just changed the way we move across the city; it will change the way that we grow as a city. So we can grow more inward and upward. For our downtown, we want to create a flex street. That's a street that, during the day, cars will drive along. At night, during weekends, bollards will come up. Restaurants can spill out into the street. It will be a very exciting space. The funding allows us to do that because a great deal of the infrastructure that needs to be replaced is connected to this. The model that we see allows us to build that exciting, vibrant community that a middle-sized city can offer so that then we can bring innovation. We can bring digital, creative. We can bring some of the medical innovation businesses that are looking to operate anywhere to a place where they want to be.
Mr. Iveson: Well, I'm tempted to say NHL hockey rinks. But we already built ours on our own, and you should come to see it. It's fantastic, and it is a catalyst for downtown revitalization because it's bringing people and life to our city. Because the feds didn't fund ours, they shouldn't fund any others.
What I will say is that we have an unprecedented commitment to transit, but transit isn't just the buses. I'm a transit nerd. I love buses, I love trains. My kids love trains. They draw them for fun, but that's not what they're about. They're about mobility, and mobility is the enabler.
As our cities get more and more congested, there's less and less time and freedom for people to create, and if we can unlock that by decongesting our cities, then we can empower innovation and nurture human capital, which is, ultimately, the strongest Canadian capital we have, the potential of people here, particularly clustered in our cities, combining and colliding with each other to create things in spontaneous ways. That's what cities have been doing for thousands and thousands of years, and they're going like this. Canadian cities are going like this because we haven't invested even the same way American cities have, let alone Asian cities, in this kind of infrastructure.
So we have a lot of catching up to do, and what I would urge you to consider recommending, particularly on this transit infrastructure, because of the scale of it, is that Phase 1 was a very good start so that we could design things and fix some urgent issues. Phase 2 is a great next down payment, but we have a generation of building to do. We need a permanent commitment that is ongoing, predictable and sustainable, flexible but allocation-based, so that we can actually tool up, perhaps innovatively finance against those funding streams, the build-out of the transit systems in all of the large cities in this country because that will actually enable the knowledge economy in ways that nothing else, I think, can.
The Chair: Wrap-up answer from Vancouver in 30 seconds?
Mr. Dobrovolny: Thirty seconds, yes. I think it's building communities that make it easy for people to walk and cycle and take transit. We know that the employees that are coming to work in research and digital and medical research as well, all that knowledge base, that creative, have the lowest number of driver's licences. A lot of those people don't drive. In Vancouver, since the mid-1990s, all of our growth in trips has been in walking, cycling and transit, by policy. We have 5 per cent fewer cars entering the city now than we did 15 years ago. We have 20 per cent fewer cars entering our downtown core than we did 15 years ago. The only way we were able to achieve that was massive investments in transit, and now our highest-priority project is a Broadway subway extension. We nickname it the brain train. It will go from UBC through the largest hospital in the province through to an area that's all research. Those people are coming from all around the world. We're the largest post-production city now in North America for the movie industry. And those people don't have a driver's licence. They want to walk. They want to take transit, and they want a vibrant city. We need help to build that kind of city, federal help.
The Chair: Thank you very much. We will send you the questions, and I would ask if you could please respond to us as effectively and quickly as possible. We would like to get a report on the first phase of our study, which probably needs to be done by the third week of November. I know it's not a long time frame, but we would, as a group, appreciate your support. We thank you very much for your participation. You folks did a great job, and we're really encouraged by the enthusiasm that you are showing and the frankness. So thank you very much for your participation. Meeting adjourned.
(The committee adjourned.)