THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, April 24, 2018
The Standing Senate Committee on National Finance met this day at 9:30 a.m., to continue its study on the federal government’s multi-billion dollar infrastructure funding program.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Honourable Senators, welcome to this meeting of the Standing Senate Committee on National Finance.
[English]
I’m Senator Percy Mockler from New Brunswick, chair of the committee. I wish to welcome all of those who are with us in the room and viewers across the country who may be watching on television or online.
As a reminder to those watching, the committee hearings are open to the public and also available online at sencanada.ca.
[Translation]
Now I would like to ask senators to introduce themselves, starting to my left.
Senator Pratte: André Pratte from Quebec.
[English]
Senator Gold: Mark Gold, Quebec.
[Translation]
Senator Moncion: Lucie Moncion from Ontario.
[English]
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Eaton: Nicky Eaton, Toronto.
[Translation]
The Chair: I would like to recognize the clerk of the committee, Gaëtane Lemay, and our two analysts, Sylvain Fleury and Alex Smith, who team up to support the work of this committee.
[English]
Today, honourable senators, we continue the committee’s special study on the federal funding of infrastructure, with a special focus on municipalities. In October 2016, senators who were committee members at the time will recall that we had quite a few municipalities appearing to discuss the federal infrastructure funding program. Eighteen months later, we wanted to reinvite them to get an update. Some were invited but could not accept our invitation -- for example, Edmonton, Yellowknife and St. John’s, Newfoundland. We also invited Montreal and Quebec City’s mayors, who were not available, and we appreciate the information that they have shared with us either through telephone conversations and/or sending a written statement.
[Translation]
However, two cities were willing to appear and are with us this morning.
[English]
First, by video conference, the City of London, Mayor Matt Brown.
Your worship, thank you for accepting our invitation to share with us your comments and recommendations.
Mr. Brown is accompanied by Adam Thompson, Manager of Government and External Relations. We will be asking you to make your presentation shortly. Mr. Brown and Mr. Thompson appeared before the committee in October of 2016.
We also have Jerry Dobrovolny, General Manager of Engineering Services from the City of Vancouver, and Patrice Impey, Chief Financial Officer.
Thank you for accepting our invitation so that we can hear your comments and your views.
[Translation]
We would also like to hear the comments of small municipalities. From the Association francophone des municipalités du Nouveau-Brunswick, we are pleased to welcome Luc Desjardins, president, and Frédérick Dion, executive director.
[English]
We will start with the City of London, then the City of Vancouver, to be followed by Mr. Desjardins.
Mr. Mayor, please make your presentation. After the three presentations are completed, the senators will have questions.
[Translation]
Mr. Brown, you have the floor.
[English]
Matt Brown, Mayor, City of London: Thank you very much for having us here today. It’s hard to believe that so much time has gone by since the last time we had this conversation. It’s really important for London to be able to communicate directly with you as a mid-sized city. We are very focused on this opportunity to inform your study of the federal infrastructure programs in general.
If you’re not entirely familiar with London, we’re the largest urban centre in southwestern Ontario. We provide economic and social opportunities for all 2.5 million people living in our region, and we also embrace our role by providing services and supports that citizens rely on each and every day. Of course, there is nothing more fundamental to how a city functions than infrastructure. The way we travel across the community, the water we drink and the spaces where we connect have a profound impact on every aspect of our quality of life.
Again, I’d like to thank the government for the Investing in Canada Plan, especially for recognizing the critical need for investment in capital repair in communities like London right across the country.
Repairing and maintaining existing infrastructure is not always exciting work, especially the infrastructure that’s underground, but it’s absolutely essential for the continued growth and success of our communities.
It’s because of the essential nature of this work that I’m pleased to be able to provide an update on the projects and process we have undertaken in London since our last appearance before this committee in October 2016. Phase one funding enabled London to advance over $116 million in important municipal infrastructure priorities, including critical repairs and upgrades of our water and waste water systems. We worked on key transportation corridors and also planned and designed work for our transformative bus rapid transit system. London is the largest community in Canada without a rapid transit system, and its council’s single [inaudible] largest infrastructure funding at the 50 per cent level allowed us to advance a great deal of work.
Providing federal infrastructure investments through an allocation-based model represents an important recognition for communities like London as we plan for our infrastructure needs over the next 10 years and beyond. It allows us to build a better city not just for us but for our kids and grandkids.
An allocation-based model ensures greater fairness, enabling all communities to advance local priorities and to advance plans with a greater sense of confidence.
Looking ahead to phase two of the Investing in Canada Plan, we know that its success is going to hinge on program design negotiations with provinces and territories. The bilateral agreement that we signed between Canada and Ontario represents a very important recognition of our local role in nation-building.
First, this agreement includes a commitment to support a fair and balanced perspective for municipal and provincial projects. As we move forward with our rapid transit plan that I spoke about earlier, we know that reducing congestion in our community will also boost our national competitiveness. As London makes important water and waste water investments to reduce phosphorous emissions that make their way into Lake Erie, for example, we know these investments will help achieve Canada's climate change goals as well.
Second, these agreements establish meaningful cost-sharing commitments to move our projects forward. Our city’s greatest contribution to important local projects is not money but expertise in delivering solutions that work for our local environment.
The Government of Canada’s commitment to fund up to 40 per cent of project costs under the Investing in Canada Plan, and a signal that provinces must fund no less than 33 per cent of project costs, is a breakthrough for cities in Canada and we’re grateful for that.
The last point I want to make in my formal remarks is focused on investment into social and affordable housing through the National Housing Strategy and how important that is as a component to nation-building. After years of downloading, after years of neglect, the housing crisis has emerged in many of our largest cities, including London, and the National Housing Strategy is giving us hope.
It’s unfortunate that the government missed a crucial opportunity in the most recent federal budget to advance funding to begin repairing existing social housing.
The Big City Mayors' Caucus, through the Federation of Canadian Municipalities, had called on the federal government to advance funds earmarked under the National Housing Strategy to avoid losing units that are badly in need of repair, which is a signal that we are ready to go to repair some of our degraded existing infrastructure.
As I said, cities are facing a housing crisis, and while the National Housing Strategy gives us hope, we are in urgent need of a stopgap measure to ensure we can keep existing units open while we plan to build more to address the waiting list that all of our communities are experiencing.
Once again, thank you very much for the opportunity to present London’s perspective. I’m looking forward to your questions and to our discussion.
The Chair: Thank you, Mr. Mayor.
Now the chair will recognize Ms. Patrice Impey to make the presentation on behalf of the City of Vancouver.
Patrice Impey, Chief Financial Officer, City of Vancouver: Good morning, and thank you to committee members for extending the invitation to the City of Vancouver to again participate in your study on infrastructure funding. On behalf of Mayor Gregor Robertson I’m pleased to share our perspectives on the critical role that infrastructure funding plays in the city’s long-term financial strategy. My colleague, Jerry Dobrovolny, our city’s chief engineer, will speak about the importance of federal funding for our major infrastructure projects.
The city greatly appreciates the support the federal government has provided to infrastructure projects over the past years. But most recently, the commitment for transit in the investment in Canada infrastructure program is a key example of the strategic alignment of our priorities. Transit is a critical infrastructure for a growing city like Vancouver.
From a financial point of view, there are several key points we would like to bring to the committee’s attention reflecting the need for consistent and stable investment flow for municipal infrastructure.
First, the City of Vancouver maintains over $20 billion worth of existing infrastructure, and that’s roads, sidewalks, pipes, civic buildings and community centres. In many cases, those initial investments were made in partnership with senior government as the city grew, 30 and 60 years ago, and we’re now in the renewal phase where we have a high volume of renewal coming forward again following that cycle of investment.
Second, in addition to maintaining our existing assets, the city is once again in a rapid growth phase. While development is a vehicle for building new infrastructure, growth does not fully fund growth at the municipal level and we rely on senior government funding to support our growth needs. For example, the planned Oakridge Municipal Town Centre will be a city within the city, with over 50,000 new residents coming to Vancouver in that area. That will require new infrastructure: water, sewage, housing, child care and community policing facilities.
And third, while Vancouver has had the strongest economy of cities in Canada for the past few years, we do face major challenges. Homelessness is at record levels; the vacancy rate for renters is less than 1 per cent — a healthy rate is 3 per cent to 5 per cent; and land values continue to drive up housing prices far out of reach of local residents. So we are also very pleased to see the National Housing Strategy re-establish federal leadership in housing. It really is a breakthrough for families who can’t find decent, affordable housing in municipalities like Vancouver that are really striving to build more livable, inclusive and competitive cities across Canada.
Ongoing, stable federal funding is needed, as property tax, which is our city’s primary revenue tool, cannot fill the infrastructure gap or keep it from growing. I think you would be surprised to find from a financial point of view that incremental property tax the city gets each year from all the new construction is $5 million to $7 million. If we increase property tax by 1 per cent — and generally property tax increases fund the cost of existing services, such as wage growth, which is a big component of our costs — it will only bring another $7 million to the city. These are small numbers compared to the tens and hundreds of millions of dollars of infrastructure investment needed in a growing city like Vancouver. Property tax is a key revenue structure. We really do rely on that ongoing and sustained funding from senior government.
We recently updated our 10-year capital strategic outlook, and we mentioned that last time we were here. It’s part of our long-term strategy and helps us determine those long-term infrastructure investments that are needed based on what I have spoken to you about. While those needs far exceed the funds available at the municipal level, we feel we are well positioned to continue to work with the federal government on those priorities. For us, that stable funding is key,and we really appreciate what has come through in the investment in Canada programs to identify that.
Before I pass this over to Mr. Dobrovolny, I want to recognize the strong partnership we have had with the federal government on projects that have been funded. Our experience over the past three years is that while 50 per cent of the projects our city submitted for funding were accepted, which is great, a very small percentage, close to 10 per cent, of the dollars were funded. Funding a number of small numbers is great, but we have some fairly significant projects that do require funding. We would be looking for the federal government to continue to look at infrastructure funding as a key need for the city.
With that, I will pass it over to Mr. Dobrovolny, our city engineer, and he will speak to the city’s infrastructure needs.
Jerry Dobrovolny, General Manager of Engineering Services, City of Vancouver: As you’ve heard and as you know, across Canada there is a critical need for funding to support green strategies, including safe water and clean air and reducing greenhouse gases. In Vancouver we are addressing this through our Greenest City Action Plan and Renewable City Strategy, where we will transition to only renewable sources of energy by 2050. There is a need to support social strategies, including adequate affordable house and child care, cultural and recreational facilities. In Vancouver, we’re addressing this through our Healthy City Strategy, which also looks at physical and mental health issues of our citizens.
There is also a need to support trade and transportation strategies, including safe, sustainable and efficient transportation systems, to bring all of Canada closer to global markets. In Vancouver this includes support for the port, which is the largest in Canada, contributing significantly to the city’s economic impact, and also working with our Gateway Council, which is a collaboration of entities to improve key corridor improvements throughout the region.
I wanted to start with that overview to show how well Vancouver’s goals and the federal goals are aligned, and I will now touch on a few projects and initiatives that are both under way and completed.
Two recent examples that are completed are the Burrard Bridge project and the Knight Street intersection improvement project. These projects benefit the local, provincial and national economies through enhanced safety in the movement of goods and people. More specifically, or to make it real, for trucks, buses, bikes, pedestrians, these were the two highest crash locations in the city formerly. Now they are providing safer, more efficient connections down to the U.S. border for trade. And the Burrard Bridge is a beautifully restored heritage structure, which also provides one of the busiest bike connections to the downtown, with tens of thousands of bike trips regularly.
In response to rapid growth and congestion, Vancouver is looking at funding for projects that improve walking and cycling opportunities and in particular connect to our largest Rails to Trails active transportation corridor, the Arbutus Greenway, which is a nine-kilometre pedestrian and cycling connection that spans the length of the city from the Fraser River through to False Creek. This project also provides an amazing opportunity to celebrate the culture and the history of our Indigenous population, as it connects to several very significant historical sites in the city. One of them being Cesnam, the city within the city, which is a 10,000-year-old Musqueam city at the mouth of the Fraser River. The greenway connects with the Granville Bridge, which also requires major upgrades and provides an opportunity for us not only to upgrade the bridge but to provide a greenway connection into the downtown.
I don’t know if anyone realizes this, but for the past 15 years, all of the growth and trips that have taken place in Vancouver have been accommodated through increased walking, cycling and transit. Continuing with these types of investments is the only way we will be able to accommodate the growth and maintain walking, cycling and transit as our preferred transportation choices. Car trips now make up less than half of our overall trips in the city.
Vancouver is also rethinking utility planning and design to a one-water strategy, where water, waste water and rainwater services are integrated, where water is considered a valuable resource and green infrastructure features are used to replenish aquifers, reduce runoff and optimize any needed investments in water-related utilities.
Vancouver continues its efforts toward zero waste, maximizing the production of renewable natural gas from our landfill, and we’re pursuing more RNG generating capacity through targeting biogas production from organic waste. Our entire garbage fleet runs on renewable natural gas.
Supporting the significant growth in the city, key investments are also needed in renewing and upgrading community facilities, as Patrice mentioned. The city’s strategy now is to bring together community centres, pools, rinks, libraries, along with child care and housing, to improve efficiency and access to these services as we rebuild. However, because of the scale this introduces by combining all the features into one facility, it requires significant funding as well.
Federal contributions are required for Vancouver to achieve its goals related to climate adaptation and community resilience, address our infrastructure renewal gap and add new infrastructure to ensure acceptable service levels for an aging population. We’re very pleased to see the new Disaster Mitigation and Adaptation Fund that has been set up to help communities adapt to changing climate while mitigating impacts of future disasters.
In Vancouver, we’ve already seen significant changes in storm intensity and flooding, and we’ve changed our design standards a couple of times already. Vancouver has joined an organization of 100 resilient cities globally to tackle these challenges. While we have made real progress in understanding the impact of climate change and the potential of seismic events, as well as the mitigation requirements, the funding requirements far exceed the ability of an individual municipality to respond to these needs.
In closing, recent federal investments have been welcomed. It shows what we can achieve when municipalities, the provinces and the federal government work together. We aim to build on this success with the new Investing in Canada Plan. We look 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 very much for inviting us to speak. We’re happy to answer questions following the presentations.
[Translation]
The Chair: We will now hear from the president of the Association francophone des municipalités du Nouveau-Brunswick, Luc Desjardins.
Luc Desjardins, President, Association francophone des municipalités du Nouveau-Brunswick: Honourable Senators, I would first like to thank you, on behalf of the Association francophone des municipalités du Nouveau-Brunswick and its 50 member municipalities, for offering us this opportunity to tell you about our experience and the experience of our municipalities regarding the federal infrastructure funding program.
Before getting to the crux of the matter, I would like to briefly introduce our association. The membership of the Association francophone des municipalités du Nouveau-Brunswick is composed of francophone and bilingual municipalities from six major regions extending from northeast to southwest New Brunswick. Our member municipalities represent over 300,000 people, or nearly one third of the population of the province. They are generally small, with fewer than 5,000 residents.
Although the Constitution of Canada officially recognizes only two levels of government, federal and provincial, the way in which our society has evolved and the nature of the services delivered to the public have called for the creation of a third level of government, to which increasing responsibilities have been assigned over the decades. In the Local Governance Act, which has been in force in New Brunswick since January 1, 2018, the province has legally recognized municipalities as a fully fledged level of government, as have a number of other provinces where the local government level has been officially recognized. This new status is more than just symbolic. It must take shape in the form of a new culture of collaboration in the way infrastructure programs that bring together the federal government, the provinces, and municipalities are implemented.
We have seen this change of culture reflected, for example, in the correspondence sent by the federal Minister of Infrastructure and Communities, the Honourable Amarjeet Sohi, in July 2017, concerning the integrated bilateral agreement for the Investing in Canada Plan. In that letter, he stated that the order of priority for these projects must be established in consultation with the municipalities, which must, in particular, be partners in developing the three-year plan to be provided by the province under the federal-provincial agreement.
We also welcome this new approach that reflects the importance of the role played by municipalities in relation to infrastructure. We have seen a definite effort on the part of the Government of New Brunswick to consult municipalities more, through the municipal associations, in order to determine certain principles of the federal-provincial bilateral agreement. However, the level of coordination is not what we were entitled to expect for an agreement of this importance that will have a major impact on planning and carrying out infrastructure projects for municipalities over the next 10 years.
Provincial-municipal collaboration through a formal mechanism would have ensured that the needs and aspirations of municipalities were taken into account from the outset. In addition, this approach would have been consistent with the spirit of the new Local Governance Act, which now recognizes municipalities as a level of government.
In addition to the essential principle of federal-provincial-municipal collaboration in infrastructure programs, there are other principles that are essential to ensure that investments support both small and large municipalities.
First, equitable cost-sharing is crucial. The fiscal framework has not evolved to enable municipalities to shoulder their constantly expanding responsibilities. Municipalities’ primary source of revenue is still property taxes, a fiscal tool that is poorly suited to enabling them to take on a number of new responsibilities, particularly when it comes to infrastructure. As you know, municipalities are responsible for 60 per cent of public infrastructure in Canada.
Like the Federation of Canadian Municipalities, we believe that a cost-sharing scheme in which the federal government bears 40 per cent, the provincial government 40 per cent, and the municipal government 20 per cent would be equitable. That division would enable small municipalities in rural areas to invest based on their limited means, to provide a high quality living environment for their residents.
We also welcome the federal government’s initiative to raise its share of the funding from 50 to 60 per cent for the “Rural and Northern Communities Infrastructure” component of the Investing in Canada Plan for municipalities with fewer than 5,000 residents. We think this approach should be adopted in all of the other components of the program, in order to provide better support for rural communities throughout Canada.
The agreement signed by New Brunswick and the federal government also contains an obligation for the province to cover a minimum of 33 per cent of projects. That was not the case in the previous bilateral agreement relating to water systems and wastewater management. At that time, the province’s contribution was only 25 per cent. The province will now increase its share to 33 per cent, but the federal government will reduce its share from 50 to 40 per cent, and this causes a problem. This is therefore not acceptable to municipalities, particularly the smallest municipalities.
The criteria also have to take the realities of rural life into account. Second, it should be mandatory for the criteria for the various infrastructure investment programs to be analyzed so we can be sure they do not exclude rural and small municipalities. On that point, we can take the example of the component dedicated to public transit. In the federal-provincial agreement, that component is accessible to only four municipalities in New Brunswick. We understand that increasing the use of public transit in the four municipalities in question is important and doing that calls for investment. Opening up access to regional or inter-city public transit to a larger number is equally important. Specifically identifying those four municipalities in the agreement seems to us to be too restrictive. A provision of that kind automatically closes the door to other municipalities that might want to put a mass transit system into operation, for the duration of the agreement.
We also recommend an expansion of the criteria and the projects that are eligible under the components and programs to better reflect the realities of rural life in New Brunswick and to allow more municipalities to plan for solutions that are better suited to their situation.
Third, municipalities need stability and predictability in order to be able to plan their infrastructure projects. A large segment of municipal infrastructure was built some years ago, or even decades ago, and they need major investment to ensure the proper delivery of services to the public.
The federal government also requires that municipalities adopt plans by 2027 for managing their assets, including their infrastructure, in order to predict and plan future investment. It would be a good idea for infrastructure investment programs implemented by the federal government to be based on the information in the municipalities’ asset management plans, so that they are tailored to the necessary infrastructure investment cycles.
We also conducted a survey of member municipalities to identify immediate and future infrastructure needs. A sample of 20 municipalities representing over 208,000 residents showed immediate needs totalling $809 million, and future needs, spread over 20 years, amounting to $965 million. If we might venture to make a projection, applying the total needs to the number of residents per municipality, we get immediate needs of a little over $2 billion, in New Brunswick alone. While the agreement signed provides for an envelope of $673 million over 10 years, the funds are not intended solely for funding programs carried out in partnership with the municipalities and provinces. They are also intended to fund the programs belonging to the province alone. There is therefore a real loss of revenue in the envelope.
In conclusion, there are principles that should guide the development of the federal government’s infrastructure programs. Those principles must reflect genuine collaboration among the three levels of government. They must also be based on equitable cost-sharing and on criteria that take the realities of rural life into account. Small municipalities must also be able to access the funding programs so they can offer their residents a high quality living environment. Last, funding programs must be stable, predictable, and integrated into municipalities’ asset planning process.
The Chair: Thank you, Mr. Desjardins.
[English]
Before we move on to questions, I would like, for the record, to ask three senators to introduce themselves: Senators Cools, Andreychuk and Neufeld.
Senator Cools: Hello. I’m Senator Cools, a senator from Ontario. I am in my thirty-fifth year of service here in the Senate and I retire on August 12.
Senator Andreychuk: I’m Raynell Andreychuk from Saskatchewan. And I’m not going to tell you about my years of service.
Senator Neufeld: I’m Richard Neufeld from British Columbia.
The Chair: Thank you.
Senator Marshall: I’m interested what appear to be delays in projects and in getting money out the door. In its budget this year, the government showed the money that had been allocated each year for infrastructure. For example, one of the programs is $14 billion. Last year, they thought they were going to spend almost $4 billion, but over $2 billion has been pushed ahead to future years.
I’m looking for insight into why the funding is slow getting out the door. I’m hoping you can give us some insight into that. It’s not just that program but all programs. The pre-2016 program is a couple of years old. Even money from that program is being pushed ahead into future years.
I know from your opening remarks that you have lots of projects. Could each of you talk about that? Can you give us insight into why funding is being delayed or why the projects are slow getting off the ground?
Mr. Dobrovolny: First of all, there was a bit of a different approach in terms of programs being outcome-driven. So it did take a little while for Vancouver to understand the different programs that were available, and then the goals and objectives, which is why I referred to it as outcome-driven. There were different groupings of the funding, so we needed a bit of a road map to understand, for the long list of projects that we had, how those projects fit with the different categories and outcomes that the federal government was looking for. We are certainly there now.
The other thing that I think delays delivery — and we own this in the engineering world — is that there is a sequence. For our largest project in the region, the rapid transit expansion, we had been going in circles for more than a decade, almost two decades, to try to advance our project on Broadway. It wasn’t until the federal commitment was made that it then unlocked the provincial commitment, which brought the region together to fill the regional gap. So the funding was all committed, and once the funding was committed, we could then finish the procurement process.
We had done a lot of the design and work, but it wasn’t until we were comfortable that the funding was going to be there that we could then go out to market. We’re just about to go out to market this year to get the bids back, and then it will take five years to build the project.
These big projects are slow, and they certainly require somebody to step forward first and say, “Here is the money,” and it resulted in the other partners coming in. That is one example.
We’re definitely up and running now, and we have geared our 30-year plan, our 10-year plan and our 4-year capital plans, now that we have a sense of what the programs are and how much funding is available. We have brought forward projects, we can show what our gaps are, and we can target different programs to fill those gaps to bring those projects forward. We are ready to roll now.
Senator Marshall: Is there a slowness in the city getting projects into the federal government for approval, or is there slowness with the federal government approving the projects? Are you requesting your reimbursements fast enough? Or maybe you are, and the government is slow getting back.
Is either the city or the federal government slow in any of those areas?
Ms. Impey: I can speak to some of the reporting. We have a couple of projects we’re working on with the federal government. I think the reporting structure is very good. We have quarterly meetings. They are co-chaired by myself and someone from Infrastructure Canada. I think that piece of the flow and understanding the requirements is very clear.
To reinforce what Mr. Dobrovolny said, with the uncertainty of funding, it takes time for projects to get started. Even though an application may go in, the city can only go so far until they are approved. Then, once they are approved, we get to the next step.
That’s why stable and predictable funding is so important. If we know that kind of funding will go through, it’s approved and it’s this amount — because we don’t even necessarily know the amount that will be approved — we can go ahead with the project. We could do a lot more upfront planning for a project so that when the funds are available, it’s just execution. It’s key for us to have something predictable and not one-off, transactional. It takes a lot of time to get a transaction moving.
Senator Marshall: I would be interested in hearing from the City of London if we have time.
The Chair: Yes, we do.
Mayor Brown, do you have any comments on that question, please?
Mr. Brown: I do. I think it was a learning experience for all involved. This was a massive funding commitment, both phase one and phase two. It was good news when the bilateral agreements were established for phase one and we could get things rolling. But engineering does take time, and that’s all part and parcel of the process.
In London, we were very pleased to see the extension that was offered on the phase one funding to 2020 so we could undertake a significant amount of work over a period of time.
I will say that in terms of the relationships that were established through the phase one funding model, the learnings that occurred have strengthened how we’re going to respond to phase two funding, which is a significantly larger envelope of funding, spread out over a significantly longer period of time.
Although we saw some delays at the beginning of the process, I do have to say that to be able to look out 10 years and know there is funding we can rely upon for infrastructure in many different areas allows us to do the work that we need to do in order to deal with our infrastructure gap, with sewage and with water separation to improve our local environment, and also to focus on our single largest project here in London, which is the rapid transit project.
Adam Thompson, Manager of Government and External Relations, City of London: To support Vancouver’s point, the movement at the federal level towards an allocation model has also proven to be a way to expedite investments.
In terms of the uncertainty around funding from other levels of government, moving to an allocation model allows us, as the mayor said, to plan on these 10-, 20- or 30-year cycles knowing that that money is going to be there. It provides a greater sense of comfort of the circumstances of individual infrastructure projects and allows us to move forward more quickly, most evidenced in the way that the federal government has advanced public transit funds specifically, which have been allocated to municipalities based on their share of ridership.
I think you have seen through the last number of months, or the last year, maybe even a little longer, that a lot of the public transit projects under phase one, which has a focus on capital repair, were moved forward more expeditiously than potentially some other pieces.
The last piece I’ll add to the discussion is in terms of the timeline from phase one. We can certainly speak from an Ontario perspective. We understand it might be different in B.C. The federal government announced phase one, the conclusion of the bilaterals, in August 2016. The province responded to municipalities asking for projects with a deadline of October 2016, so a couple of months later. I think all municipalities complied with that short turnaround time. Then we saw the announcements roll out in the spring.
So from a brand new project type and a new delivery model moving forward, we believe both the federal government and the municipal governments responded to those quick timelines, and the projects we put forward were funded and are now in development.
Senator Marshall: There is more, certainly, on the dollar amount, but the projects still have to be approved on an individual basis. That is correct, isn’t it? They still have to go through the federal government?
Do I have time to hear from Mr. Desjardins? He indicated quite a substantial dollar amount that he would like to have and then a substantially lesser amount that he was going to get. Perhaps he can just give us some insight into —
The Chair: It will be Mr. Dion. Mr. Dion, please.
[Translation]
Frédérick Dion, Executive Director, Association francophone des municipalités du Nouveau-Brunswick: I am going to follow up on what Mr. Thompson said about negotiating agreements. We signed the agreement in March; the fiscal year starts on April 1; and we still have no indication about the calls for projects that are being done right now in New Brunswick. There will be a few more weeks’ delay and a bid, and the projects will be studied. Obviously, the construction season has already begun; the ground has thawed and we can start digging, and we probably will not receive the approvals before the end of the summer. That means that we may have lost a year. Just as for phase 1, the process of negotiating agreements has happened too late, and a year has been effectively lost, in some cases.
When projects are launched, the market heats up. Engineering firms already have full order books. When it comes to procuring certain materials, the prices are inflated astronomically. In addition, the projects have to be completed by a deadline. As funds are released, there may be requests for extensions, because the municipalities are not able to carry out the projects, at least not for the amounts they estimated, and certainly not within very tight deadlines. So there are all these mechanics that are somewhat complex, but often what is not realized is that the agreements are signed and implemented late, and, as I mentioned, that results in the market heating up.
Also, of course, there is the fact that there are small municipalities that have still not prepared a project. In the big cities, where there are engineering departments, that is not a problem and they have already done a clear needs assessment, but the small municipalities are not going to spend money to analyze project studies before knowing whether they will be able to get financial support, since these are large sums of money for their financial capacity. That is the reality for small municipalities.
[English]
Senator Marshall: One last question. Based on what you’re saying, you have started some projects and you have some learning under your belt. It would seem to me that the delays now shouldn’t be as significant as they were when the programs were starting up. Is that correct? The delay that the federal government is trying to cope with, given that you’re now up and running, shouldn’t be as substantial as it is now.
[Translation]
Mr. Desjardins: There is a new angle in these agreements. The federal government is requiring that the provinces consult the municipalities in order to draw up a list of priorities for three years that is renewable every three years after that. This is a change of political culture at the provincial level. The provincial governments are used to approving projects that appear on a short list that is kept very close to the premier’s office. Now, the governments are being asked to open their books and sit down with the municipalities to draw up lists of priorities.
This new approach is particularly important since municipal governments are now recognized in most places in Canada as a level of government, which is certainly the case in New Brunswick. That is important because it now requires us to manage our assets using the asset management method, where we have to factor in the replacement of our assets in the long term. If we have not instituted predictability in the funding programs, it is impossible to do this, particularly in the case of small municipalities.
In our town, one cent on our tax rate represents $10,000. We are not going to get far with that, so a program like the Federal Gas Tax Fund, which calculates the amounts to be received over the next five years, is important. We then have to predict our needs based on those amounts. And because predictability applies over five years, it is easier to plan.
That is what we are trying to do with the three-year plans, but it is a fairly major change of culture for the provincial governments, and that is certainly the case in New Brunswick.
[English]
Senator Pratte: In phase two, the bilaterals — I think they call them bilateral integrated agreements -- have a set of targets that have to be met by the provincial and, I suppose, municipal governments also. I guess they are shared targets. Do municipal governments have any say regarding the targets or are these targets chosen by the federal government and you have to reach those targets? The targets increase — and I’m reading from the B.C. Canada agreement -- by at least 25 per cent the motor share for public transit and increase by at least 5 per cent the number of rural households that have access to the highest broadband speed range available in B.C., for instance. Do municipal governments have any say in choosing those targets? And does this approach of targets — outcomes, the government calls them — change anything in your approach to the selection of projects and how projects are approached, designed and built?
Ms. Impey: Certainly the focus on outcomes is different. We tend to historically think of asset categories. We have shifted in Vancouver, and I think in many major cities, to outcome-based in our planning as well. So while we have a 10-year capital outlook that identifies these various projects, they come from, first, strategies with strategic outcomes.
I think it maybe makes it a little more challenging to put together packages and for people to read through them and understand which assets we are specifically talking about. But I think the concept of outcome is correct and I think everybody is moving towards that. It’s a really good shift in the way we look at allocating funds. I think we’re well on our way, although it is still new.
With regard to municipal input into choosing the target, it’s very much a federal to provincial agreement. The municipalities are not party to the agreement, so it really is about our relationship with the province and where we can influence and share information. We have some good common views and others maybe not as much. But there is not a formal structure.
Mr. Dobrovolny: You asked whether our input was taken into account. I would like to think yes.
I can say that we have made available our plans, goals and objectives, and the programs that have been announced align very well with the way ours are organized. I would like to think there was some input. I don’t know if there was or not, but I can say right now that the programs align very well with our objectives and our deliverables. We have structured our 4-year and 10-year capital planning exercises so that we can plug our projects into those programs. We are ready to go.
The Chair: To Senator Pratte’s question, Mr. Brown, do you have any comments?
Mr. Brown: I think the most important message we received from the federal government during the phase one funding announcement was that municipal priorities would be considered. The federal government recognized that it was the local government, the local leadership that understood what a community’s priorities were.
From a provincial perspective, our priorities align very closely with our province’s priorities, whether that’s clean water or waste water funding. In total, I believe we received from the federal government through phase one about $19 million. What did we do with that? It gave us an opportunity to separate our sewer and waste water flows so that we aren’t polluting our river any more than necessary. I mentioned in my earlier comments that that means good things for Ontario. It means good things for Canada, including reducing the phosphorus levels that are discharged into Lake Erie.
From a public infrastructure transit perspective, there is really good alignment among the three levels of government as we work on introducing rapid transit. It’s a $500 million project. We’ve already received a $170 million commitment from the province. We initially received $8 million through phase one for our rapid transit project, as well as an allocation that has been identified at the $204 million level, the bulk of which could be directed to rapid transit once we make our way through the approval process.
So I would say there is good alignment here. Certainly expectations have been placed on municipalities by both the provincial government and the federal government, but we’re all on the same page in that regard when it comes to greenhouse gas reduction, changing the way we move across our communities, making sure that our waste water treatment facilities are designed for the 21st century, and being very responsible from an environmental perspective as well.
[Translation]
Mr. Desjardins: Thank you for the question, Senator Pratte. That has been an issue for us particularly. One of the four components that was not appropriate for us was the rural and northern infrastructure. That component was created from a Canada-wide perspective. It targeted needs and objectives unique to northern Canada, but when it is applied to the New Brunswick context, it has little impact and does not reflect what we actually need in rural communities. The only thing I can say is that there are areas that need better broadband connectivity. Apart from that, the other criteria do not apply. The difficulty we have is that at the national level, what is considered to be a rural community is 100,000 or fewer residents. That is practically all of New Brunswick. We have tried to adapt it to our communities. We have had little success, in terms of the objectives to be achieved under the program.
The other component is public transit. We focused on the four municipalities that already have a transit service. The federal government proposed to spend $165 million in those programs over the next 10 years. We will never need $165 million for the other provincial and municipal contributions in the case of New Brunswick. We asked that these objectives be corrected to meet the needs of New Brunswick’s rural community, where there is no public transit.
Yesterday, we appeared before the Standing Senate Committee on Official Languages. We explained our problem in relation to the francophone community. We are seeing an exodus of young people. Rural communities are emptying. We want to use immigration to rebalance the population. In rural francophone communities, there is a crying need for labour in the natural resources sector, in industries like fishing, forestry and poultry processing.
Today, immigrants are taking an increasing interest in rural communities, but one of the weaknesses of the settlement infrastructure is the lack of public transit. Last year, the Collège communautaire du Nouveau-Brunswick in Bathurst admitted 75 African students, but there is no public transit to serve them. How can we keep them there? How can we adapt to this situation? The program is not designed for that, but it should be. It should allow for a determination that in a particular situation, the objectives can be customized. However, that is not the case. That is why we are making our case to you.
[English]
Senator Eaton: This is something I think neither the former Conservative government nor the Liberal government realize about cities. I live in downtown Toronto. The potholes, it’s like driving through a course. Our streets, sidewalks, traffic bottlenecks and public transportation is perhaps 20 years old. I feel for Mayor Tory because he has to deal with the province and the federal government.
I don’t understand why the federal government — you guys are accountable to your voters. People are going to judge John Tory at the next election by how many potholes they have hit, whether the garbage is being picked up and whether the subways are being built, not the federal government.
I would like to know how you all feel if you were given greater gas taxes or this government or the next government simply said to you, “This is what we’re allocating you. What you do with it is your business. You’re accountable to your voters.” I’m stunned that we still go through this system by which the provinces and the federal government, which does not build infrastructure for the most part — very small percentages compared to what you have — still have the money but give it to you under so many conditions.
Mr. Dobrovolny: When we use the terms “predictable,” “sustainable,” “reliable” funding, you’ve hit the nail on the head. That often allows us to use that money in programs for infrastructure that are not big, glamorous or high-profile projects.
Senator Eaton: Not sexy.
Mr. Dobrovolny: I was trying to avoid that word, but yes. Exactly. So we’re absolutely looking for that as well.
You mentioned potholes. In Vancouver, you might have seen in the press two years ago that we had winter, and so we had 50,000 —
Senator Eaton: Two years ago you had winter?
Senator Moncion: We have it every year.
Mr. Dobrovolny: Being an engineer in Vancouver, I can’t imagine what most cities in Canada deal with every year. Two years ago we had to deal with that. We had 50,000 potholes that year, more than double or triple what we normally have, and our infrastructure is taking us two years to come back in terms of street lights out and electrical problems from the salt. So we got walloped as your cities get walloped every year.
Senator Eaton: Every winter.
Mr. Dobrovolny: We recognize that. We need a combination of both. We recognize that infrastructure is one component to it. There are also other large projects that are high-profile, really important projects, projects that will transform the way our cities function and transform the way our country functions. So we think there is a role for both, if there is a way that we can have reliable funding for our programs, for our infrastructure, so we’re able to replace 1 per cent of our sewer mains each year and 1 per cent of our water mains each year.
Senator Eaton: I can understand it takes time to plan these things. It takes time to prioritize them.
As you said, Mr. Desjardins, smaller municipalities have different priorities than large- and medium-sized cities. Do you ever lobby? Have you ever gotten together and lobbied the federal government and said, “Please, no more strings. Just allocate the money every year on a constant, sustainable basis”?
Mr. Dobrovolny: We do, and I think we’re seeing the results of some of that now. We do lobby and express our needs.
Ms. Impey: The FCM has been a very good team to bring together some of the big cities, certainly. The transit funding, that commitment of 40 per cent, was an outcome of a lot that lobbying through FCM.
Senator Eaton: But why is there still $7 billion left in Mr. Sohi’s pocket that we can’t seem to get out the door?
Ms. Impey: I would agree. It is about that stable funding and also recognizing that for municipalities, property taxes are for your basic services — fire and police — and are not really a good funding source for all of that infrastructure. I know Peter Wallace in Toronto has stated that there are just not enough funding options for the city.
Coming now and then with infrastructure in pointed areas doesn’t solve the deep-down structural problems, so having that consistent funding is really what we need.
[Translation]
Mr. Dion: I was going to throw out the idea of setting up a commission to revise the Constitution to recognize municipalities as a level of government, and revise the tax system so that it reflects their needs. That is a path that we may not want to venture down, but it is certainly the difficulty faced by municipalities today. They have inherited numerous responsibilities since the time our country was created, and those responsibilities are important to individuals’ socioeconomic development and success.
Unfortunately, as has been said several times, the tax system, which is essentially based on property tax, does not allow for these needs to be met. There has been some openness on the part of the federal government to contributing more to infrastructure funding, but it is still insufficient, and it depends on multi-year agreements, as has been noted. That is the difficulty: predictability, which is so important.
With respect to the gas tax program, the Federation of Canadian Municipalities has to be recognized for the great job it does and for playing an essential role in securing this tax that municipalities count on. However, there could be other similar programs, or the shares of that tax that are distributed could be raised, to allow for more predictable funding, and funding that would be paid directly to municipalities and would not get filtered through political considerations, as is the case when we go through the provinces in allocating projects; that is when it gets more complicated. What happens is that it becomes political.
[English]
The Chair: Does the City of London have any comments on Senator Eaton’s question?
Mr. Brown: Of course the more autonomy the better, and through the Big City Mayors’ Caucus, through FCM, we have advocated strongly for that. I think that our voice is being heard.
We talked about the importance of investing in affordable housing. There has been a multi-billion dollar commitment to that. We talked about the importance of investing in infrastructure, and we’ve seen significant commitments towards things like infrastructure and transit.
Senator Eaton: Yes, you’re aligned on your priorities, but what if you, as the City of London, decided that you wanted social housing, that that was your big priority for the next five years, and the government in Ontario said, “Our priorities are more building a Sputnik in your environment,” I don’t know what, but their priorities were not aligned with yours? All of a sudden, the money could stop.
What I’m saying to you is it's fine if all provincial and federal government priorities are aligned with your priorities, but you, who are accountable to the voter, if your priorities don’t align, are you not in trouble? Are you not more vulnerable?
Mr. Brown: You’ve heard the percentage of 9 per cent of all taxes collected are collected by the municipality, and the remaining 91 per cent are federal and provincial. We need to work in partnership. Some of the partners have 91 per cent of the taxes collected, and one of the partners has 9 per cent, so we can be, hypothetically, at a disadvantage.
But I can tell you right now that our two largest priorities in London would be the bus rapid transit system, a $500 million project; and, second, the Adelaide Street underpass, which is a $50 million project. We see great alignment with the current federal government phase two funding priorities as well as at the provincial level.
What we have had to do is work within the environment, the reality that we find ourselves in, but it seems to be working. If you have a better option, I’d love to hear it. But we are at a disadvantage because we collect a small amount of the taxes, and we are responsible for a significant amount of the infrastructure maintenance and repair.
We have infrastructure deficits in our communities right across the country, but we’re working towards sustainability. The way we work towards sustainability is a flow of predictable funding like the gas tax and some of the other programs.
[Translation]
Senator Moncion: I quite liked the comments made about a more integrated approach based on infrastructure in the long term.
You said, for Vancouver, that it was not so much the delivery of the funds that was important, in terms of speed, it was alignment with projects. You also spoke about the new approach that seems to be more structured, with a more long-term perspective for projects in the pipeline and projects that you would like to set up.
How do you incorporate that into infrastructure renewal? I am comparing your comments and the condition of the roads and the sewers and all that, in relation to all the projects so much has been said about. In rural communities, how could you plan your activities and other actions so that you are also in a position to benefit from this long-term planning that could possibly help you in the projects you are talking about?
My question therefore relates to everything involved in the planning and the work you do, in each of your municipalities, to benefit from the existing funds and move forward with your projects.
[English]
Mr. Dobrovolny: When we do our long- and medium-range capital planning, we have many needs, as everyone does, but we do have priorities. Our first priority is the renewal of aging infrastructure. Our first priority is always that we look after what we have first. We keep it in a state of good repair, and that is a challenge. Our next priorities are to accommodate growth and to look at transformational change. Because of the tight competition that we have and the many competing needs, all of the projects that we bring forward advance all three of those goals.
We look at how we can create synergy. I mentioned the Cambie Bridge and the Arbutus Greenway. We have a bridge that needs seismic and aging infrastructure upgrading. We said, “How can we also create a greenway there for walking and cycling so we can get transformational change?” If we have a project that only achieves one of those goals, it doesn’t make it into the top echelon, but we start with asset management and aging infrastructure replacement.
Our concern is water and sewer. We are at half a per cent a year replacement. Next year we will be at 0.7 per cent, but we need to be at 1 per cent. That is where we look at different programs that are available and say, “How can we make some transformational change with green infrastructure and change the way we design our systems so we don’t have to put in as many big pipes?” But we still always target the oldest pipes first. We try to combine work, so when we dig the street, we replace water, sewer and pave all at once. We call it a dig-once policy. It doesn’t seem like it because we’re always digging something, but it is a dig-once policy.
We also target the areas that have the most development so we can get developers to help contribute to it as well. So we’re replacing old infrastructure and looking at different ways to do business and at development to pay as much as we can. And we are looking at partners like provincial and federal.
That’s part of that lead time. I understand there is a lot of interesting concern about why it took so long and why things can’t get going faster. In anything we do in life, if we start-stop, change directions, start-stop, change directions, it’s very hard to get that momentum going. Once we have that program in place, which we do now — we have projects that can be completed this year. We have a 12-month construction schedule. We have a whole list of projects for next year and every year after that.
The Chair: Does the City of London have any comments?
Mr. Brown: I appreciate the points being raised. Operating costs are significant. When we deal with big projects like the ones we’ve been talking about today, I can certainly appreciate a desire to go to a 40-40-20 split because we have to remember that all of the operating costs and maintenance costs are then left with the municipality and equate to about a one third, one third, one third anyway.
One of the biggest challenges we have had to tackle over the past 15 years is a water, waste water infrastructure deficit. How do we tackle that? Through funding partnerships with the provincial and federal governments but also through significant increases in our water and waste water rates over a 15-year period to the tune of 7.5 to 8.5 per cent annually. Residents found many cost reductions from a conservation perspective to deal with that, but it took us about 15 years to get to a level of sustainability where we can look at a 2 or 3 per cent increase in those areas.
They are not exciting areas to look at there. Certainly they are realities that communities are faced with, and if we don’t keep our eye on these infrastructure deficits, there can be a significant impact over the long term.
We talked about road repair in the past series of questions. I can tell you that we have now turned our attention to our infrastructure deficit when it comes to roads and transportation, and we will have to put in place similar strategies that we did with water and waste water to ensure we’re planning for the long term.
[Translation]
Mr. Desjardins: Thank you for this question. This is one of the concerns in rural communities. The federal government now requires that an asset management plan be prepared in order to access the Federal Gas Tax Fund. The big municipalities are used to doing this and have the expertise for it, and it has become a management tool. That is not at all the case for small municipalities. This year, our association created a training program, in collaboration with several partners, including the Federation of Canadian Municipalities, the Canadian Intergovernmental Affairs Secretariat (CIAS) and New Brunswick’s community colleges, to assist municipalities. Over 85 per cent of our members participated in it, and the other 15 per cent already have internal programs. That meets a need and sets out targets to achieve and funds to obtain for replacing infrastructure.
People are afraid of this, particularly in rural communities. When you start talking about cost-sharing, such as a 40-40-20 division, for a small municipality like the one where I am the mayor, 27 per cent of contributions in a multi-million dollar infrastructure program is enormous. With the asset management program, we have tried to create a management tool, but we want to avoid it being a way for governments to relieve themselves of responsibility for providing shared-cost programs. In other words, go and tax your residents so you have funds in reserve that will be used to replace your infrastructure, and you will eventually be able to fund it. That is a recipe for grabbing more taxes from taxpayers who are already heavily taxed at the municipal level. That is why it is important for the new federal-provincial infrastructure agreements to provide three-year plans and depoliticize the process of allocating funds. The most important point is predictability. If an obligation to have an asset management plan is created, then the counterpart is that there also has to be a provision that funds will be available to meet those requirements.
In the gas tax program, we have to submit a five-year plan, which can be varied during that period, but it specifies where the funds will be spent. That formula has been a beneficial one for small municipalities. The big cities, in New Brunswick’s experience, carry more political clout than the small rural municipalities, for obvious reasons — there are more people, more voters, more seats, and more power. For them, influencing the political system to get funds for replacing infrastructure works through political alliances, which should not be the case, because the public needs infrastructure. The good thing about the Gas Tax Fund is that it has depoliticized access to those funds. That is what we are trying to do with the new program, and it is a considerable feat. We have no choice but to take that path, because if we are required to create asset management programs, we will have to allocate the corresponding funds for replacing infrastructure.
Senator Moncion: Infrastructure deterioration is one of the problems we have had over the years. It gets built, it deteriorates, and nothing gets done to maintain it. Then we find ourselves with no planning done and everything has to be changed. These are old buildings that get run down. If the old buildings are properly maintained, we can keep them for a much longer time, but we will have to spend 10 times more money, because everything will have to be replaced. The planning for the gas tax is a much more intelligent way to use these funds and get people to do the planning.
Mr. Dion: Yes, you have accurately identified the problem. If the municipalities are dependent on funding programs, when they make plans for what they are going to do, asset management is a smart way to administer public infrastructure and to effectively and efficiently manage what we have. When we plan what is to be done, if we are not able to get the necessary contributions at the right time, it will deteriorate, and at that point it may be preferable to let it collapse, because it is no longer worth the investment. We will invest somewhere else, because there will be a chance of extending the lifespan. That is the kind of approach.
However, the lack of foreseeability and access to sufficient funds often stops it from happening. That is one of the important problems we are facing. Often, there is infrastructure and action that should come from the provincial government, because it may own a road nearby, and so on. There is overlap and it is essential that there be coordination, and that presents challenges, as does the question of transparency and the need to set clear objectives and criteria tailored to our situations. At present, there are gaps, and these are also essential and crucial factors.
[English]
Senator Neufeld: Thank you. This is a very interesting discussion.
I was the mayor of a small community at one time, dealing with the province and the federal government. I’ve been in the provincial legislature where I’ve had to deal with it the other way around. So I know how politics go, and I can certainly understand Mr. Desjardins’ dilemma when he speaks about it.
I have been that way for a long time, as Senator Eaton, that these funds should be made available. Mayors always tell me that they’re the closest to the people. They’re the ones that know what happens, so I would say give it to them and let them make it happen.
From what I understand, I don’t think the Mayor of London agrees with what you’re saying about just giving a pot of money and letting the local people decide. What bigger changes would you make if you had the ability to do that? What changes would you recommend, I should say, to the federal government instead of Ottawa deciding where the money should be spent? Can you give me some sense — all three of you — about what changes you would like to see?
The Chair: Start with Vancouver.
Mr. Dobrovolny: Your question was if there was that allocation, how would we change our business as a result?
Senator Neufeld: I understand that change. Regarding getting the money, I don’t know that will ever happen. But what changes now, from phase one to phase two, would you like to see, or are there any changes you would like to see? Are you comfortable and happy with the way these funds are being delivered, or is there something you would like to see change to make it more efficient? That’s what we’re trying to get at so we have don’t have a whole bunch of money left over at the end of the year which the government has now. There’s a whole pocket full of money that they couldn’t get out the door.
Mr. Dobrovolny: I think the program as laid out, described and structured can be very effective. I think the key will be that all of us at the local, the provincial and federal levels implement it in an expedited way.
We have goals and objectives. We have programs made available to us. We have a process to work through the provincial governments to bring them forward. If we don’t hit any of the pitfalls that have been described, I think we can deliver on a tremendous number of projects very quickly.
If we suffer a misalignment at the provincial level, that could stop these programs and funds from rolling out. If provincial and federal objectives sometimes go awry, then programs and projects could stop dead in their tracks. I think the way the system is set up it has every chance of success and risks for failure, and I think those risks have all been well described around the table.
From our perspective, we’re hopeful because the goals and objectives align. We have projects now that are in with the provincial government. They haven’t been communicated yet to the federal government.
Our indication from the federal government is that when they receive those lists, they’ll be looking more at a yes-no than an opportunity to reprioritize and reprogram them. What has been described to us is that it is more of a check-in as the project lists come in, as the project lists have been prioritized by the provincial and local governments.
Senator Neufeld: You’re happy with the way it is. No changes. I got that.
How about London?
Mr. Brown: Well, of course, more autonomy. I certainly appreciate your question. Let the communities that are closest to the issue make the big decisions. That’s answer number one.
The other thing we would like — certainly the Big City Mayors' Caucus, through FCM, advocated for it — is a 50 per cent funding model. We pushed for that for phase two. I think the compromise was a 40 per cent funding model. That helps with the challenges we face through the operation afterward, but it’s not all the way there.
Lastly, I think we need to see contingency plans developed for the future years in these funding programs. If there is a backlog of dollars that have not gone through to the municipalities, what are we going to do about it in year three, four, five or ten to make sure we can deal with that and get the projects done on time?
Finally, we haven’t talked a lot about housing, but I would like to talk about housing for one moment. We have a $250 million infrastructure deficit in our housing programs. We have about 2,300 people on our wait list. The average wait time for a family is one and a half years. We made a request for $20 million dollars in federal funding. Part of that request was to receive the first $10 million right away, within the first five years. That is in line with what we did through BCMC as well. The sooner those dollars can flow, the sooner we can address the maintenance needs on our existing affordable housing projects. We can also then deal with the deficit we have with the people on the wait list. We need to fix the stock we have, but we need to build much more. I would like to see the dollars flow sooner and know that you’ll hear from BCMC and FCM during the next round of budget talks as well to make sure we get those dollars flowing.
[Translation]
Mr. Desjardins: Your question is eminently political. What would we do to improve the system? As the president of an association of municipalities, and having collaborated with other municipal associations in New Brunswick to try to persuade the provincial government to involve us in developing federal-provincial agreements, I think the priority would be to require that the municipal associations, or the municipalities and their representatives, be parties to the federal-provincial agreements.
We were consulted with a very short deadline. We voiced our complaints, and the result does not always fit our situation. Some partners were satisfied with an agreement that was signed without the agreement of the municipalities. You are asking me today what should be changed; I will tell you that the very first thing is to make sure that the municipalities sign the federal-provincial agreements. Municipalities deliver the services, but they are not parties to the agreements that set the terms for the services. That is a bit unrealistic.
[English]
Senator Neufeld: Regarding water and sewer — and I’m dating myself because it has been awhile since I was a mayor of a community — when a subdivision is built in a city, whoever builds it and sells those lots to make a profit also pays for all the facilities that were put in. That is, the streets, paving, water and sewer, the lights, all of those things.
The city then begins taxing that. The homeowner has paid for everything up front in the price of that lot. It is all put in there for the city to start with.
No? You’re shaking your head.
Mr. Dobrovolny: Currently, we’re not able to fund all of that because we also bring affordable housing and child care into the mix. Roughly in the order of half of the development revenue coming in to the City of Vancouver, which could otherwise be used to fund some of the infrastructure requirements, is going into affordable housing and child care.
Senator Neufeld: Is water and sewer not supposed to be funded on a foot frontage basis that accepts the debt charge in those things? You tax that but take that money and spend it on other things; is that correct?
Mr. Dobrovolny: Our development cost charges are not fully funding all the growth charges, as our CFO mentioned. The equation doesn’t work. If we look at all of our needs, including infrastructure and the social needs, the equation doesn’t work at the municipal level. When you broaden it out to the other levels of government, it generates tremendous economic activity, which is why we have been leading the country for many years in our GDP. When we look at just the municipal books, our growth doesn’t cover costs.
Senator Neufeld: Regarding affordable housing — and the Mayor of London brought it up — I know that the Mayor of Vancouver said that was one of his top priorities when he became mayor. So I guess the plans must have all been in place for affordable housing in the City of Vancouver.
Can you tell me this: In phase one, was there some money for affordable housing? How well did Vancouver do in getting affordable housing off the ground and meeting those commitments?
Ms. Impey: The majority of our partnership on affordable housing has been with the province and BC Housing, but the city has stepped in. In our last capital plan, we put $125 million toward affordable housing because the funding from the federal and provincial government wasn’t sufficient to really move the dial on our funding. The city also put in land that we have owned, which could be generating revenue in other ways to support the taxpayers, towards housing as well.
It’s an area where the city has made the decision that it is important. It’s the top issue in all of our surveys with our residents and businesses. When we do our budget surveys, housing is the top issue. So the decision was made to fund that in absence of sufficient provincial and federal funding.
Senator Neufeld: How much has been opened up? Phase one had a certain portion for affordable housing. How much has Vancouver opened up since then with that money?
Ms. Impey: How much funding have we got or how many units?
Senator Neufeld: How much affordable housing have you provided to people?
Ms. Impey: I don’t have the exact number, but it is in probably in the range of 5,000 supportive units. We have had a big focus on affordable rentals through incentives to developers, and we have put in more rentals in the last 5 to 10 years than has happened over the last 30 years. That has been a real strategic success.
In our new housing plan, we are going to be focusing on affordable rentals, even through rental zoning, to structure certain areas of the city to only build rental to really incent that.
I think we’re seeing that our developers are starting to realize that there is value in the rental market and are starting to actually support some of that, but there had been almost no purpose-built rentals in the city in the last 30 years -- coming up to the last 10 years.
As we have seen with the housing crisis, I think we have determined that purpose-built rentals are absolutely critical for a municipality to have so that people can come in and feel that they are secure. If they are not able to own a home, they need to rent. Purpose-built rentals will give them that security.
It has been a big focus for us and, as Jerry mentioned, it means we have had to trade off other things in order to make that happen.
Senator Neufeld: How about the City of London?
Mr. Brown: In 2016-17 we received $9 million in total directed towards affordable housing. That’s capital and operating. In 2017-18, that number was $11 million. The $20 million that I referenced in my comments previously, that’s in addition to this operating and capital funding that has been made available to us.
I can tell you that on our local tax base we’re making significant investments as well to our affordable housing needs, but it’s not addressing the gap. We’re finding that rental, particularly affordable rental housing, is very low in our community. I think I mentioned that 2,400 people are on the wait list and that there is one-and-a-half-year wait to get that addressed.
Senator Neufeld: How many doors were opened? Vancouver says about 5,000. How well did you folks do?
Mr. Brown: I don’t have that number for you today. What I can do is send it when we complete this video conference.
Senator Neufeld: Okay. Thank you.
The Chair: Mr. Mayor, if you can provide additional information, we would appreciate it.
[Translation]
Does New Brunswick have any comments?
Mr. Dion: This not an actual problem in New Brunswick from the municipal perspective. It is virtually exclusively a provincial responsibility. The municipalities are not involved in it, except in a few rare exceptions.
[English]
Senator Gold: Most of my questions have been answered. Thank you very much, all of you, for being here.
In many ways it’s very encouraging, actually, that at least from the larger cities your priorities seem to be aligned and that after the planning and engineering and other work has taken place, things have started to happen in a more stable, predictable way. It is a little less encouraging for the municipalities in New Brunswick, though.
[Translation]
I have two questions.
[English]
First, to all three of you, are there any infrastructure projects not covered by the program that are nonetheless priorities for you?
[Translation]
Second, I have a question for our guests from New Brunswick. You said that, ideally, you should be partners in the agreements and be considered to be a level of government. If that does not happen overnight, you said that a change of culture will still mean, at least, that you be consulted, even if that is not fully sufficient. Do you think that this change of culture will bear fruit, over the years, so that small rural municipalities’ priorities will be better recognized and reflected in the projects funded through help from this program?
[English]
Ms. Impey: I think the way that it has been outlined, the main categories, much of what we do could fit into those categories. My fear is more the size of available funds relative to what we need to do as a city. Certainly our core water and infrastructure, environmental, et cetera, can fit in, but there are really not enough dollars set aside for the amount of gap we have on the infrastructure side.
The piece that I worry about a great deal is on climate change and seismic resilience. Those are very significant dollars in a city like Vancouver with the water surrounding it and then obviously with the earthquake risk. We simply have no capacity to deal with the size that we’re talking, hundreds of millions, billions of dollars.
That’s not just city infrastructure. Then you have private infrastructure, buildings, et cetera, and we need to figure out how we put in programs to upgrade to the earthquake levels that we need around seismic.
That’s our big concern going forward. We really need to shift our thinking around some of those big dollar items coming forward.
Senator Gold: Thank you.
The Chair: London, please? Mr. Mayor?
Mr. Brown: I would echo the comments that there is good alignment with the projects, but it’s the size of the funding envelope. Although we are talking about large numbers, when you have the infrastructure deficit, we always have more projects that could be invested in.
I’ll give you an example of two. One is an Adelaide Street underpass. We’re a city of rivers and a city of rail, so commuting across the community can be quite a challenge. That Adelaide Street underpass represents, on some days, 100 minutes of wait time for vehicles. It’s bad for the environment. It’s certainly bad from an emergency services perspective. It also creates challenges for our local economy. That’s an example of an application that we have moved forward.
On a larger scale, the Province of Ontario is looking at high-speed rail. The last figure I saw in their budget was $11 billion budgeted for high-speed rail for phase one -- Toronto, Guelph, Kitchener, Waterloo, London. It’s not enough. I know we’ll be looking to see if the Infrastructure Bank could be applied, and we’ll be asking those types of questions.
This is a very important project for southwestern Ontario. It will effectively shrink the distance between those communities and fundamentally change the way that the southwest economy works as we get closer to Toronto and can be in Kitchener-Waterloo within 20 or 30 minutes, which is how long it can take just to drive across the city. So those are key areas that we’ll be watching looking forward.
[Translation]
Mr. Desjardins: I have two comments. First, concerning the aspect that is not covered in the agreement, we said that one of the concerns in New Brunswick relates to public transit outside the four municipalities. Not having this is a handicap when it comes to development planning for our communities, whether in terms of immigration or to serve aging populations.
There is also an imbalance among the various components. The transit component provides for $165 million over 10 years. However, it is not predicted that the municipalities’ needs will be that great. We are told that after three years, it will be recalibrated, when we have taken the first steps under these programs. The $45 million over 10 years for community, culture and recreation infrastructure is definitely insufficient. We have also been told that the full infrastructure programs envelope for Canada as a whole could be spent on arenas and there still would not be enough. We understand the reality of the situation.
The second aspect of your question relates to changes. These agreements call for a change of culture for us. At every meeting of the provincial and municipal councils with the associations, the ministers, deputy ministers and local governments, about infrastructure and sometimes funding, the present minister has made an effort to invite as many senior managers as possible so they can learn about the new way of dealing with municipalities. The example that is always given is that they have to deal with the municipalities somewhat as the First Nations do with the government, equal to equal, and in the areas of jurisdiction that belong to us. This is a new approach, a new mindset. Of course, some senior managers are not used to this new approach, since it is a process and it does not happen overnight. From our perspective, we keep on trying, over and over. When the agreement is renewed, at the end of the first three years, if the degree of consultation is not satisfactory, we will be reporting on the lack of transparency and calling for other methods to ensure that the municipalities are always parties to the process of developing the programs.
In addition, experience will enable us to show that in New Brunswick, in fact, certain aspects that involve various components do not fit the reality of the local situation. For the moment, however, we are talking about it. Then, when the programs are operating, we will be able to give concrete examples.
The Chair: I would like to hear a comment from New Brunswick about the Infrastructure Bank. What role could the bank play in rural communities in Canada?
M. Dion: I think that the reason we are not talking about it is that we do not know much about it. That is the problem with the Infrastructure Bank. It was announced with great fanfare, while everyone was wondering what it is when it’s at home. We don’t know, and we certainly do not know where rural Canada comes into it with the bank and how we could access it. Unless we get more information, we will not be going any farther on that subject.
[English]
Senator Andreychuk: Thank you. I had a lot of questions that have been answered.
I hear you saying there are more needs than dollars and that you have had to adapt your needs with the priorities of this government and perhaps previous governments. That is of concern to me, having been on municipal council as has my colleague.
If we were to really respect municipal government, wouldn’t we give them a gas tax or some reliable funding for infrastructure? Then they are close to the people. They would pick the priorities and be accountable for those priorities. Right now, I think we’re trying to have you accountable for spending the money, but you’re really not accountable for the priorities. I think one of you from B.C. said, “We adapt our reports to their expectations.” It reminds me of working with NGOs in development work. They would say, “But these are not my priorities.” I would say, “Just give me your form. What are your priorities? I bet I can draft them in such a way that they sound like the government priorities and we’ll get the loan.” I hear the same thing happening here.
It seems to me we’re no further ahead. We get optimistic and then we’re no further ahead because governments and their priorities will change. I think we’re still caught in that conundrum, so that’s one part of the difficulty.
The other difficulty that I perceive in this last go-around is that the definition of infrastructure has broadened to include even social programming. That seems to be a very clever way for the federal government to get off the hook. If we went back to traditional infrastructure, which is physical, bridges — because that’s what you have all talked about — housing, roads, whatever it is, it would make the federal government responsible for social programs, and that’s where the dollars are.
Have you taken that approach to federal financing? This seems to have been a problem for decades.
Ms. Impey: I don’t know that we can get away from different levels of government setting their priorities and their funding desires, but I think that’s why we’re all advocating for some standard level of funding, like a gas tax, predictable funding that recognizes there is a lot of core infrastructure that needs to be maintained. That piece shouldn’t be up to changes in priorities.
Certainly as for new funding and new growth, you probably can’t get away from it too much, but it would make a lot more sense to align that level of funding to the level of government that is responsible for that.
Mr. Dobrovolny: If I can add, the short answer to your question is yes. Thank you. You hit the nail on the head. I think the biggest gap maybe is in the renewal category, that regular annual work that needs to be done, whether it’s on water, sewer, streets, bridges or all electrical systems. All of that. I think that’s probably the biggest gap that is not clearly identified and clearly funded. It makes up an awful lot of the funding.
In terms of the priorities aligning our priorities, for Vancouver it wasn’t as difficult a challenge as maybe it is for some. I think that we are striving for the same goals that the federal government has laid out in terms of climate change, greenhouse gas reduction, some of the green projects, the transportation philosophy and transit. Those do align.
It’s not so much that we have had to change our priorities; those priorities fit really well with a large city, and I think certainly with transit, you’re hearing it well aligned with the major cities across Canada. But the infrastructure piece, just that regular pipe replacement or road paving, that work isn’t a big announcement. It’s just regular work that needs to be done every year, and it’s very difficult for us if we start-stop, start-stop. It needs to be regular. But yes.
The Chair: Mr. Brown?
Mr. Brown: When the gas tax was introduced in, I believe it was 2006, it was fantastic news for communities across Ontario and I’m sure across Canada.
So again, my answer would be yes, more autonomy would lead to, I think, great decision making at the local level, but I think it would also lead to efficiencies in the process. We talked earlier today about how long it takes to get through a funding process, and by earmarking dollars and allowing a community to set priorities directly, efficiencies would be found.
I think you also used the term “accountability,” and that’s extremely important, because a community like London has made very difficult, responsible decisions with regard to water and waste water, with significant increases year over year for 15 years to get to a level of sustainability. So we need to be held accountable to do something like that, but we also don’t want unintended consequences to arise where we no longer have a need for significant investments on some of those broader waste water projects and no longer receive an allocation.
I want to make a final comment about the difference between physical infrastructure and social infrastructure, I have to tell you that I was quite pleased when I saw Minister Sohi’s title being announced as the Minister of Infrastructure and Communities because, really, infrastructure is at the core of building a community that has a great quality of life and that takes care of its most vulnerable. Although I see these as separate streams of funding, we do want the federal government talking about social infrastructure just as much as we want to see them talking about physical infrastructure.
The Chair: Thank you.
Mr. Desjardins?
Mr. Desjardins: I’ll answer this in English because it will be better understood. You were talking about adapting the wording to the application. You have heard of creative accounting. This is more about artistic programming.
[Translation]
I would like to add a few comments to follow up on what Mayor Brown told us. With respect to the Gas Tax Fund, the first five-year program was a lot more restrictive and was aimed mainly at sewers and water systems. When the second phase was negotiated and the criteria were applied to other municipal infrastructure, I can tell you that the municipalities were relieved to get that decision. In my small municipality, when the second phase arrived, I was not ready to put the sewer and water infrastructure programs into action, but I had a community hall to renovate. That allowed us to build what I would call “a jewel of a hall”, a real success in my small community. That is the type of flexibility that allows us to do better planning based on the priorities of the moment.
[English]
The Chair: Thank you very much.
Honourable senators, I think for Vancouver, London and New Brunswick, the leverage and the instrument of the Finance Committee of the Senate of Canada is basically to assist Canadians and stakeholders at all levels about determining the objectives of transparency, accountability, predictability and reliability.
[Translation]
Mr. Desjardins and Mr. Dion, thank you for being with us. Our objectives will always be transparency, accountability, reliability and predictability. On that note, thank you very much.
[English]
Honourble senators, I declare the meeting adjourned.
(The committee adjourned.)