Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 3 - Evidence, May 4, 2016
OTTAWA, Wednesday, May 4, 2016
The Standing Senate Committee on Transport and Communications met this day at 6:45 p.m. to study the development of a strategy to facilitate the transport of crude oil to eastern Canadian refineries and to ports on the East and West coasts of Canada; and to study emerging issues related to its mandate and ministerial mandate letters.
Senator Dennis Dawson (Chair) in the chair.
[English]
The Chair: Honourable senators, tonight our meeting will cover two topics. During the first part, we will be continuing our study into the transportation of crude oil. After, we will be receiving the Minister of Infrastructure and Communities to discuss his mandate letter from the Prime Minister.
I would like to introduce our first witnesses from the railway industry.
[Translation]
Please welcome Michael Bourque, President and Chief Executive Officer of the Railway Association of Canada.
[English]
And we have Mr. Glen Wilson, Vice-President, Safety, Environment and Regulatory Affairs, Canadian Pacific Railway.
We will begin with Mr. Wilson and then we will hear from you, Mr. Bourque. Afterwards, the senators will have questions for you.
Glen Wilson, Vice-President, Safety, Environment and Regulatory Affairs, Canadian Pacific Railway: Good evening, members of the committee. Thank you for the opportunity to appear before the committee today to discuss the important issue of railway safety and preparedness in the context of crude oil transportation in Canada.
CP, of course, has a very rich and proud history dating back to Confederation as a strong nation-building company that played a crucial role in binding Canada's national economy together, connecting communities and enabling trade and prosperity. We are enormously proud of that history, and we embrace our role in further enabling Canada's economy today and into the future.
Today as one of Canada's two Class 1 railways, we operate a 22,000-kilometre network throughout Canada and the United States, from Vancouver to Montreal and into U.S. hubs such as Minneapolis, Chicago, Kansas City and the northeast U.S. region, including New York and Pennsylvania. We link thousands of communities within the North American economy and with international markets. In 2015, CP moved over 2.6 million carloads of traffic, and approximately two thirds of that traffic moved to or from a port or border gateway as a part of Canada's global trade.
I recognize that I have only a few minutes, so I want to focus now on safety and emergency response, in particular.
Safety is at the heart of everything we do at CP. We are working tirelessly to ensure rail operations are conducted safely and that we continually improve our safety record. Fortunately, the Canadian railway industry is one of the safest in the world. We are very proud that CP has, for the tenth year in a row, earned the distinction of being the safest railway in North America.
As you can see from the graph on my first slide, CP is achieving unprecedented levels in the American railway industry for prevention of train accidents, averaging only 1.3 reportable train accidents for every million miles of train operations in 2015. That's just slightly over half of the industry average. So far in 2016, as you can see on the graph, CP achieved a remarkable 0.69 FRA reportable train accidents per million train miles — over two thirds better than the industry average at the end of 2015.
I could go on at length about all the things that we do at CP to prevent train accidents, but prevention is just one aspect. My understanding is that you are also interested in talking about mitigation and response.
My second slide displays an image of the new DOT or TC-117 tank car. Tank cars, and the DOT-111 specifically, received a lot of attention after the terrible tragedy at Lac-Mégantic. Canada led the way in driving significant improvements to the North American tank car standards. The new 117 car is better in every sense, and when all those enhancements are put together, it reduces the probability of a release in the event of an accident from 19.6 per cent with the DOT-111 car down to just 2.9 per cent with the new 117 car. This is a huge step forward in mitigating the potential severity of an accident for those rare times when they do occur.
The last topic I want to touch on, and one which I understand you have a strong interest in, is emergency response.
CP has been in the business of hauling dangerous commodities for more than a century, and we have been investing in emergency response preparedness for many decades. In today's economy, we move over half a million regulated shipments each year made up of 350 to 400 distinct dangerous goods products, including products which are classified as toxic inhalation hazards and considered to have far greater risks than crude oil.
Our industry averages over 99.997 per cent of those dangerous good shipments reaching their destination safely and without an accident-based release. In some years, that number at CP has been 100 because of our industry-leading train accident rate. You should also understand that those figures include some very minor events where the release of a regulated product was literally scooped up with a shovel. My focus will not be on how we prepare for that but how we prepare and respond to those very rare events when a train accident involves a more significant release.
There are five pillars to CP's approach to emergency response. I have one brief slide to show you for each.
The first pillar of CP's emergency response program is expertise. We have a team of highly trained experts available 24-7 across our network, and that includes both our own internal team of dangerous goods officers and the access we have to hundreds of contractors who can rapidly deploy experts in any field we might need. It also includes the shippers, who are required in Canada to maintain 24-7 support for certain dangerous products while they are in transport.
By the way, one of the pictures on the slide, the one on the left, shows members of the CP team delivering training on Lake Champlain in New York, a training program that our team developed from methods of dealing with an oil spill into iced-over waterways. This training has since been mimicked by various others and delivered to many responders in the U.S. and Canada.
The second pillar of our response program is equipment, and you should know that CP has invested millions of dollars into the kinds of response equipment you see in the photo on the next slide. This includes 12 foam trailers around our network which are designed to fight fires involving crude oil and other flammable liquids.
Railways have access to more than just their own equipment. CP and CN work together in Canada through a mutual aid agreement that has seen CP trailers deployed numerous times to incidents on CN. In fact CP started to buy fire trailers as part of its normal response program when crude oil transportation was growing in 2011 and 2012 and long before Lac-Mégantic happened. CP was in fact able to deploy one of its fire trailers to assist with the response in Lac-Mégantic.
The third pillar of CP's response program is the extensive training we provide to help emergency responders better understand railways and prepare for any railway emergencies. In 2015 this involved 272 events and 7,506 responders or emergency personnel being trained by CP's dangerous goods team. In addition to those community-based events where we bring the training and exercise into communities on our network, our team also delivers specialized training courses at firefighting colleges, like the one pictured on the left in my next slide, in Ontario; and we have sponsored over 200 firefighters in Canada going to the world-class facility at Pueblo, also pictured on the slide. As you can see from the quotes, the feedback about the quality of this training is extremely positive.
The fourth pillar of our program is donations to assist fire colleges or fire departments with equipment or training needs. You can see a loading-rack fire mockup on the next slide for a training facility in Melville, Saskatchewan, to which CP donated two tank cars.
The fifth pillar of our program that I have referred to is information sharing. The images on the slide show our community planning guide that is available through CP's website, as well as the disclosure that CP does under Protective Direction 32 to allow emergency planners to know what products are moving through their community and to plan accordingly. As you likely saw, enhancements to this approach were announced last week by Minister Garneau, and CP is preparing to implement these changes.
The third element of information sharing is the real-time access that emergency responders have through a tool called AskRail. Any responder with the app can enter a car number and instantaneously receive information about the product in that car and then link to the emergency response guidebook for that product. It's a powerful tool that has received glowing praise from those who have used it.
While I'm very proud of our approach to emergency response, what matters most is that it delivers on those rare occasions when it's needed. The final slide I will show you has a picture of one of those rare events when we had a derailment in early 2015, the result of which was tank cars of ethanol going into the Mississippi River in Iowa. The quotes from the slide come from that derailment and another one in Watertown, Wisconsin. In both cases they show the confidence of the regulators and communities involved that CP brings significant expertise and resources to a rapid and highly effective response. It's that assurance that I want to leave you with: CP is the safest railway in North America, derailments are very rare, releases of dangerous goods are even rarer, but CP is continually planning for emergency response and brings top-notch response capability to those rare events when they do occur.
Thank you, Mr. Chair and committee members.
The Chair: Thank you, Mr. Wilson. Mr. Bourque?
Michael Bourque, President and Chief Executive Officer, Railway Association of Canada: Thank you and thanks for having me here again. I'm glad to be on your frequent flyer program. I'm really delighted to be here to talk about this topic, and I'm going to pick up on a couple of points that my colleague Mr. Wilson mentioned. You'll see that on my first slide in fact I have a chart which supports the CP position because it shows a very good safety record in relation to U.S. railroads and just a very excellent safety record in general.
We do have a very low accident rate in Canada, despite our carloads having increased year over year, and so it shows that Canada's rail system is a safe way to transport dangerous goods, millions of carloads of essential goods, such as heating oil, gasoline and jet fuel, and many other dangerous goods. In fact, there are over 250 dangerous goods that travel by rail, and they move safely every year; 99.99 per cent of them reach their destination safely.
The other point that Glen mentioned is that a majority of train accidents occur in yards. So when you look at the statistics produced by the Transportation Safety Board, they can maybe raise questions, but the fact is everything is counted and many of them are yards and are small releases.
I will turn briefly to some of the measures that have been taken by government since the accident at Lac-Mégantic. Often we hear these days that safety on rail is the number one concern. Many new people have been elected in the other place who don't know that much about the regulation and actions that were taken by the previous government over these last couple of years, but these are just some of these actions, including new rules for train securement; insurance; rules for operating what we call key trains, which are trains moving dangerous goods; the new tank car standards that Glen mentioned; and the phasing out of the old DOT-111s.
I could go on, but it's safe to say that a number of new rules and regulatory requirements have been put into place following that tragic accident and in response to the TSB report.
Over that same period — and my next slide shows a little bit about what we do beyond what's required — we've launched a number of new initiatives. Glen mentioned many for his company. In fact all the companies are engaged in outreach to their communities, in emergency response training. The Railway Association itself has railway response training. We have a training tank car that we use. We move it around the network and train first responders in various communities.
We have people out training employees of plant communities, first responders and the like, and we participate in a number of outreach activities known as TRANSCAER, which was invented by the chemical industry and stands for Transportation Community Awareness and Emergency Response. So we do thousands of these outreach events with our expertise. We do this with some of the logos you see here, some of the organizations we collaborate with.
The other thing I thought I'd mention today relates to real-time information. Glen mentioned it briefly, but I think it's really worth noting. We are often asked about the information of dangerous goods going through communities and the information about those goods.
We provide this information in real time. We do that using an app for your smartphone which we provide to first responders. There are over 2,000 first responders in Canada who have this app on their phones. They enter the number on the tank car into their phone, and it tells them what's in that car and what's on that train. So they can look at that at any time, but obviously it's there in the case of an incident so that they have accurate real-time information about the contents of that train.
We also provide information in advance. It's historical information, but we provide it to the cities that register for it. It's quite detailed, and they can use it for training and response planning.
This is my final slide. I'll try to be brief on this, to stay within our time limit. What I have talked about so far relates to our obligation around transporting dangerous goods. I hope we've conveyed the fact that we are very concerned about safety. Our record of 99.99 per cent is excellent, and we are always pushing for 100 per cent. We're doing our utmost to prevent accidents but also to be prepared for them, to provide information to communities, and so on.
Since today is May 4, for those of you who pay attention to these funny things, I will briefly talk about what I think is the next frontier in terms of rail safety. I'm pleased to hear that you have the Minister of Infrastructure coming in to see you next because I'm hoping that I will leave you with some questions for him.
Ninety-one per cent of rail fatalities over the past 10 years have been at railway-roadway crossings or the result of trespassing incidents. When I say trespassing, that includes everyone from snowmobilers and ATV drivers using railway property, to people walking home from the pub wearing earphones. It also includes suicides.
In other words, these are areas that require a partnership approach from society. Railways own and operate the crossings, and the municipalities maintain the road at the crossing. It's a partnership, but these are high-risk areas where we need to do a better job in protecting crossings and, especially, eliminating crossings, because the safest crossing is the one that has been closed.
From a trade standpoint, we need to take a corridor approach the way we did at Roberts Bank when there was a concerted effort around the Vancouver gateway. All the partners came together — railways, municipalities, federal and provincial governments — and there was an assessment of that corridor. Crossings were closed, others were grade- separated, and the result has been fewer accidents, better safety, a better trade route to the port and, obviously, a lot more convenience for the residents who now have a bridge instead of having to wait at a level crossing.
Going forward, we need to talk about how we can improve the safety record in the areas of crossings and trespassing. I will tell you briefly about the three approaches that we have and leave you with that.
The first is funding for crossings. The federal government has a Grade Crossing Improvement Program. We would like to see additional funds put into it, and we'd also like to see provincial railways have the ability to apply for funds under that program.
There is a railway Grade Crossing Closure Program where you pay municipalities or private landowners to close a crossing. Some years ago, Via Rail effectively used that program to pay a number of small landowners to close crossings, and they saw safety improvements as a result. We'd like to see more funding for that program.
We also have a proximity initiative. These are guidelines for municipal development within proximity of railway property. They were developed by the Railway Association with the Federation of Canadian Municipalities. It's a joint partnership document. We'd like to see more municipalities adopt these guidelines, which are entirely voluntary.
Finally we have Operation Lifesaver, which you may have heard of last week, which was Rail Safety Week. It is a program jointly funded by the Railway Association and Transport Canada to educate people about the dangers of trespassing. This is where we send a lot of CP and CN police into schools to talk to little kids, and we use a lot of social media and have a lot of other activities.
Those three items, I think, are the future of railway safety.
The Chair: We have the minister coming at 7:45, so even though I am known to be generous, I will probably ask colleagues to ask short questions, and perhaps the people at the table could give shorter answers, too.
I would like to introduce the senators around the table: Senator Black from Alberta, Senator Runciman from Ontario, Senator Eggleton from Toronto, Senator Mercer from Nova Scotia, Senator Doyle from Newfoundland and Labrador, Senator Unger from Alberta, Senator Boisvenu from Quebec and, the first person who will ask questions, Senator MacDonald from Nova Scotia.
Senator MacDonald: Thank you, chair, and thank you, gentlemen, for your presentations this evening.
The first thing I'd like some reflection on is the catastrophic event at Lac-Mégantic. If you had been carrying bitumen in those cars, would the result have been the same? What's the flashpoint of that stuff?
Mr. Wilson: I do not know the precise flashpoints, but they are very different. Heavy bitumen is a much different product, and its flashpoint is far higher, meaning it is less likely to ignite.
Senator MacDonald: I was looking at some data today, although I don't have it in front of me. There has been a lot of growth in railcar movement of petroleum over the last four or five years, particularly when there was a large gap between the Brent pricing for oil and the West Texas, or discounted, price. That's tightening up now, and I notice the increase in exports by rail. I assume that most of that is exported to the U.S., based on the data I'm looking at.
Mr. Wilson: I would say all of it.
Senator MacDonald: Okay. Of course, oil that goes to the U.S. is either going to be sold at the West Texas price or a discounted price. If that oil was to go by rail — let's say to the East or West Coast — you have the ability to get Brent pricing. What are the economics of that? Naturally, I believe that a fixed pipeline would theoretically be safer than moving it by rail car, although rail's safety record is very good, but the economics are different in rail, of course.
My understanding is that the big cost is the first 15, 20 or 100 miles, but when you start moving things over 1,000 or 2,000 miles, the economics get better in terms of a product of this nature.
Let us say we were to take this oil to the East Coast by rail. Is the Brent price strong enough to make it economically viable until we get to the point where a pipeline can be established and finalized?
Mr. Wilson: I'm afraid I will have to start with the caveat that I'm a little beyond my depth of expertise and role in striking out on this one. One of the things about transportation by rail is that it's very scalable, and the service, as you alluded to, can be ramped up very quickly, and it has been coming down quite quickly as well, quicker than we'd like.
The economics of transporting oil to a port, for the shipper or the oil company, would have to take in the marine transportation and other factors. For the rail portion of it, the length of haul you referred to is a factor, but it is only a starting point for rail economics. In all, I think the rail piece of it can be economic with some increase in the base price of a barrel of oil, but I don't think it needs a lot.
Senator MacDonald: There is no doubt that the price of a barrel of oil that's exported out of a port that gets Brent pricing will be more lucrative than a barrel of oil that goes to the U.S., in terms of its price point.
Mr. Wilson: I would say that's correct.
Senator MacDonald: The government is talking about going to a greener economy. On all the railways in this country, all of the locomotives run on diesel. Is there planning on the books for the railways to convert their diesels either to LNG or CNG, compressed natural gas? This is, I believe, one of the quickest and most expeditious ways to reduce carbon and everything associated with it. Could you bring us up to date on any plans you have in this regard?
Mr. Wilson: There have been a number of tests of CNG and LNG locomotives, but there are a lot of difficulties in implementing it.
The first point I would emphasize is that railways move in the order of 70 per cent of surface freight transportation and contribute only 3 per cent of the emissions for that sector. Railways, by nature, are part of the solution and not part of the problem. Reliance on diesel, if you look at railways in that light to start with, then you have to look at how do we keep railways efficient? There is no infrastructure built up for CNG and LNG operations. They are being tested, but there is a great deal of horsepower and other needs that diesel supplies that LNG and CNG are still being tested for.
Mr. Bourque: We have a Locomotive Emissions Monitoring Program, an MOU with the Department of Environment. The results are audited. We have reduced our emissions despite growth in traffic. The way we have done that is through more high-efficiency, low-emitting engines, which companies have invested in, and also through measures to make trains longer and more efficient and to take out bottlenecks in the network. This came up recently with respect to interswitching. When you start to add more bottlenecks into the network, you can potentially clog up the network, and also emissions will increase.
To Glen's point, the focus needs to be on getting the long-haul truck traffic onto train because you will get a much bigger lift on an emissions, pollution, congestion, safety standpoint than the lift that you get going from diesel to LNG.
Senator MacDonald: I appreciate that the infrastructure is not in place, but perhaps that is a question for the minister. Thank you.
Senator Unger: Thank you, gentlemen.
My question is about the concept of social licence. It's been discussed with previous witnesses, specifically more in regard to pipeline transportation. Public acceptance can also be applied to railway traffic. Specifically, I hear a lot — and I think since Lac-Mégantic — about railcars. I live in Edmonton, and there is a fair amount of traffic. People are concerned about that.
What is your point of view on the concept of social licence and how has this concept been applied to railways? As you know, with pipelines all sorts of actions are being taken.
Mr. Bourque: First, I know that the committee asked that question with previous witnesses, and I think you received some excellent responses to it. It is a complex and amorphous kind of concept of social licence.
In the rail business, we obviously run through a lot of communities. You often hear the term that communities grew up around the railways. However, one of the things that many people don't realize is that as the CPR was being expanded out west, the railway actually created the municipality, surveyed the land and created the legal entity that was the municipality. We've always been in communities. Therefore, we take our role seriously in terms of talking and working in partnership with municipalities and local communities.
One of the reasons that we spent so much time here today talking about our outreach training and all of the things we do beyond what is required in terms of emergency response is precisely because there have been a lot of questions recently about the safety of rail. We do have an excellent record, but it's not enough to be safe; you have to be seen to be safe. It's our job to ensure that we communicate to people all of the things that we're doing not only to prevent derailments and accidents but also to respond to them when they do happen.
Senator Unger: Secondary to that, historically everyone knows the importance of railways. I agree with you about your comments with regard to "out west'' and that communities grew up around the railroads. Now we are talking about a young generation for whom it seems the concept of social licence can be applied to almost anything. What do you have to say specifically to them?
Mr. Bourque: Over the years, we have done quite a lot of public opinion research to track various issues. Quite frankly, I was surprised, coming from the chemical industry into the rail industry, about how much support there is for rail in this country and even for freight rail. I think people, without even knowing a whole lot about it, instinctively get that it is better to have a lot of this stuff on a railway than it is to have it on a truck.
Admittedly when we are talking about the movement of crude, there is an alternative called a pipeline, but for most goods there is no alternative. It is either truck or rail, and rail is safer. There is a younger generation that's also very different in terms of their driving behaviour. They are very supportive of rail for passenger and commuter service. That's why you are starting to see communities respond with investments in those areas.
Social licence, for all of its meaning, is something that we are very conscious of. The way that we respond is to make sure that we are providing information and that we're dealing with those municipal partners responsibly. The railways are investing considerably in areas, and that helps.
Right now, it's mainly about safety. That seems to be the concern, so we're out there doing a lot to try to ease those concerns.
[Translation]
Senator Boisvenu: Thank you for your presentation. The railway industry has undergone considerable change over the last 100 years. Railways were built first to move people from east to west. The development of the west in the United States and Canada was made possible by the railways. Little by little, there was a shift from carrying people to carrying low-risk goods, and then, over the years, to carrying high-risk goods. You are correct to say that Canadians hold the railway industry in high regard. However, since the railway accident in Lac-Mégantic, people have been very worried about the goods you transport. People have confidence as long as dangerous goods are not involved. What is the total volume of goods that you transport in your rail cars? What percentage of the volume is dangerous goods, like crude oil?
[English]
Mr. Wilson: Dangerous goods in general at Canadian Pacific would constitute 10.8 per cent, if I remember the number.
[Translation]
Senator Boisvenu: So 10.8 per cent, and that includes crude oil?
[English]
Mr. Wilson: Yes, it includes crude oil. The specific percentage of crude oil would be more in the nature of 4 per cent.
[Translation]
Senator Boisvenu: I come from the Montreal region, and when I see the endless tanker trains, my impression is that it is more like 50 per cent. There are a lot of them.
For building the Energy East pipeline, which will carry oil from the west to the east — the thinking is that the project will go ahead — what will be CP's loss in terms of the volume of crude oil to be transported by rail? Approximately how many cars would that represent?
[English]
Mr. Wilson: It's difficult to say. In many respects, the two modes of transport are complementary. The increase in crude oil transportation that started in 2010 through 2014, in many cases it was about the ability to get crude oil to refineries that don't receive by pipeline and don't have competitive alternatives. It was discovering and, in many cases, saving some refineries that may have been closed because of their reliance on foreign import.
When you keep that in mind and look ahead and if there was increased pipeline capacity, it depends on where, how much, and on various factors. Just because of the difficulty of building pipelines, there will always be a role for rail to complement the pipeline infrastructure.
[Translation]
Senator Boisvenu: However, you know, in people's minds, particularly in Quebec, building the pipeline represents a marked reduction in transporting crude oil by rail. People still have the events at Lac-Mégantic in their heads, and they believe in the pipeline project, in that there will not be a constant increase in the same goods being transported by rail. You see the dilemma that people are in? I am talking about the people on the street, and they support the construction of the pipeline, because there will be less crude oil being transported by rail.
Are you telling us the opposite, that is, that there could be the same volume of crude oil being transported by pipeline and by rail?
[English]
Mr. Wilson: Not necessarily the same, but there may be shifts in it. There is a lot of capacity in the rail industry to transport crude oil. There has been a significantly enhanced understanding in the energy sector of rail's ability to match origin and supply points with destination points in a very flexible manner. If some capacity were to go away because of a pipeline in one lane between two points, it probably makes sense to say there would be less rail in that precise corridor.
Pipelines are a fixed infrastructure, and they will only connect the points that they connect. I'm suggesting that the economics of crude by rail and the flexibility that it provides to shippers will survive that and will continue to complement the pipeline sector.
[Translation]
Senator Boisvenu: The previous Conservative government asked the railway companies to convert their cars quickly to comply with the new standards. In fact, that request had been made before the Lac-Mégantic tragedy. The railway companies asked the government for a longer timetable for converting all the cars. Where are you in the process of converting the cars to bring them into line with the new technologies? What percentage of cars have been modified?
[English]
Mr. Wilson: The first thing I want to clarify is that the railways do not own the cars. In fact, railways were the original groups that petitioned the U.S. government in 2011 to change the standard for flammable liquids in tank cars. Railways were pushing for the change, and we have to take the cars that are lawfully provided by shippers; so if the shipper provides a rail car that meets the standard, we have a common carrier obligation that requires us to take and accept it.
Railways couldn't get the change through any other means than petitioning the government to change the standard. That was the initiative of railways, recognizing the weaknesses of the DOT-111 car and pushing for enhancements.
Where are we today? The first phase-out date comes in a year; I believe it's May 2017. For the DOT-111, the non- jacketed car will no longer be permitted for transport of crude oil in Canada. We are one year away from that first phase-out deadline.
There are a lot of issues with building the car in the slide that I showed, purely with capacity to do it. It takes a long time to build it; there is a limited shop capacity in North America to produce it. However, they are being built to the tune of about 20,000 per year.
Senator Mercer: Thank you, gentlemen, for being here.
One thing we haven't talked about — and I know there have been some improvements, so I want to get it on the record so that our viewers can hear it — is the issue of the movement of dangerous goods, but, in particular, the movement of petroleum products across the country and the stopping and parking of trains. I am not going to talk about whose fault Lac-Mégantic was, but we know that the train was parked before the accident happened.
What have we and you done since to improve the safety of transportation of petroleum products by rail?
Mr. Wilson: I would start by emphasizing first that the factors around the staging of that train on the mainline and the way it was secured, or not secured in many respects, are things that were never permitted at Canadian Pacific or any other Class 1 railway. It wasn't that any of those factors were present in any way, shape or form in our system.
Having said that, since the time of the accident, there have been a number of orders, many codifying what our existing practices were, in any event, regarding train securement, staging and crewing of trains.
The additional factors that are new to Canada and that we have implemented relate to the way we assess routes for risk and identify trains as key trains, which require special handling characteristics.
Is there anything you want to add, Michael?
Mr. Bourque: I have a long list of what has been done. If you go back to the Transportation Safety Board report with the 18 factors that went into that particular accident, it is very clear that it was an anomaly in the history of transporting dangerous goods.
We have addressed a great number of them, including risk assessments and the securement of trains. You have to have a two-person crew, for example; they had one. The tank cars themselves; the emergency response planning for the liquids, because you might recall there was no emergency response plan required for crude oil. There are new rules on the classification of the oil, which goes to one of the questions earlier about the difference between Bakken oil versus heavy oil. There was a complete rewrite of the Canadian rail operating rules, which dealt with a number of the minute requirements. We have seen a lot more emphasis by the department on safety management systems and the auditing thereof.
Senator Mercer: I was impressed by the discussion of the product AskRail where a first responder can call and give the number of the car and get information about what's on board and what's in the rest of the train.
It forces me as the Deputy Chair of the Agriculture Committee to ask this simple question: If you have the software to do this, why don't you know where all the container cars are in the country and empty cars are being hauled from Saskatchewan when farmers are looking to ship product to market? Is the product only useable for the discussion of dangerous goods, or it is useable to track other cars that would be useful in other markets?
Mr. Wilson: I want to clarify that it doesn't require the first responder to phone anyone. It's an app so you can simply observe.
Senator Mercer: I apologize.
Mr. Wilson: They see the car, they enter the number, and it immediately tells them what's in it.
The technology in the app was designed specifically for dangerous goods, and there are a lot of additional billing features in the transportation of dangerous goods that give us a great deal more information than what we would have for non-dangerous, non-regulated products, so it is a unique application in that sense.
Senator Black: Thank you both for being here. As a senator from Alberta, I can say that Albertans and Calgarians in particular are very proud of CP Rail because that's where the head office is, and we've seen through your presentation why we are proud of the work that CP Rail does.
I have a general question that might help me and perhaps my committee colleagues understand the future direction of the carriage of oil by rail. There are a number of press reports circulating today, and in particular I have in front of me today's business section, May 4, of the Financial Post, and the headline is "Crude-by-rail is running out of track as the economics behind it lose steam.'' And you have seen this article. They give certain statistics, and the conclusion of the article, which I will ask you to comment on, is that because of the differential in price that Senator MacDonald was talking about, transportation of oil by rail is quickly becoming uneconomic. That's the conclusion of these articles. Would you comment on that please?
Mr. Bourque: I will take a quick stab at it, and then Glen, who is our resident economist, can pick up.
I was going to comment for Senator Boisvenu that even though it may appear that you're seeing a lot of railcars, tank cars, I do believe that it's because you notice the tank cars whereas the boxcars and the automobile cars — if you're actually paying attention right now, one thing that's moving a lot on the network is automobiles, so you see those funny-looking railcars that carry automobiles. There are quite a few of those.
At the peak of crude by rail, the industry was moving less than 5 per cent of its carloads as crude oil. Put that in another context, of all of the oil that's produced in a year, we were moving around two weeks' worth, maybe approaching three weeks' at the peak, so it's a very small percentage.
Now that the price of oil has gone down and those differentials have shrunk, that has taken away a lot of the business for the lighter oils because it's less competitive with pipeline. Pipelines have done a good job of expanding their own capacity, but the overall demand is down because now you're seeing more world oil being delivered by ship.
The article discussed the importance of heavy oil, and heavy oil is more competitive for rail because we don't move diluent, so when the heavy oil is moved, there is no diluent. Diluent typically is 30 per cent. Diluent is made up of things like pentanes and other "anes.'' I'm not a chemist, but lighter hydrocarbons allow it to flow through a pipeline. You don't need those to get it into a railcar, so there is a safety dimension, but also it's more economic to move those products by rail.
I think over the medium term, as the price of oil is depressed here and production is depressed, you will probably see that rail is less competitive, that more heavy oil gets moved because the competitiveness is better. Over the long term, we'll wait and see.
Mr. Wilson: I thought that was a complete answer. I will add briefly. As I was trying to articulate a few minutes ago in response to another question, regions like the Bakken are not pipeline-served. It's not a question of alternatives. It's a question of do we produce or do we not produce. Those are things that certainly as railways we're in constant dialogue with our customers about. I don't think they know necessarily where the lines are and what the future holds to some of these questions.
On the heavy side that Michael alluded to, I read the article that you're referring to, and it didn't seem to me to factor the diluent into the economics. It talked about spread and it talked separately about diluent, but the diluent can make as much as a 30 per cent, I believe, impact on the cost.
Senator Black: Is the conclusion then that you would say that the premise of this article is flawed?
Mr. Wilson: I wouldn't say flawed. I would say it's a very truncated analysis, and there are many more factors. It touches on some of those factors, but I didn't get the sense that it incorporated them. It's a much more complex analysis than I think the article provides.
Senator Black: Thank you very much.
Senator Unger: Just a quick question. Mr. Wilson, you mentioned crewing of trains. I wonder if you would comment about your crews. How long are they trained? What type of training? I assume there's a percentage. You emphasized the safety of CP, so I would imagine there is a fair safety component. Would you speak to that?
Mr. Wilson: Our typical new hire, we typically would hire a class of, say, 12 to 20 people to add to the population of a crewing location, and those 12 to 20 people would receive I believe it's four weeks of initial training, and then they cycle through fieldwork as trainees and classroom work for up to six months. There's some variability in that because it's very much about the individual has to qualify, so different individuals will demonstrate the skills more quickly than some others. But roughly six months and then they're monitored as new-hire employees with special attention for compliance to rules and such for up to two to three years.
Senator Unger: A seasoned employee, member of a crew, what kind of shifts do they work? How long are they on? How many hours directly on duty?
Mr. Wilson: The maximum on-duty time is 12 hours. They have the ability through their collective agreement to give notice that they don't want to be on duty for more than 10 hours. Those are the maximums that typically are applied, but the average crew run is less than eight hours and in many cases can be five and six hours.
The Chair: Probably the chair was a little too severe in asking for short questions and short answers. This is a first for this committee. I think we will finish before the next witness arrives, unless colleagues have another question.
Senator MacDonald: We were talking about transporting by rail, and you said 100 per cent of it went to the U.S. Did it all go directly to the U.S. over land, or did any of it go through Vancouver? I'm just curious. Did any of it go to the West Coast?
Mr. Wilson: There is some traffic that goes into the U.S. and to terminals, and it can then be barged back into Canada or even exported further, I guess. When I was clarifying the 100 per cent, I was referring to 100 per cent of Canadian crude exports by rail would be to the United States.
Senator MacDonald: That's what I'm referring to as well. I'm curious about the economics of this. Maybe my assumptions are wrong, but I'm assuming that if it went by rail to Vancouver and went to New Orleans by ship bottom, rail is cheaper and ship bottom is cheaper than rail. If it goes by ship bottom, I assume they would they get Brent Crude pricing for their oil and not West Texas Intermediate or discounted price. I'm wondering about the economics of that.
Mr. Wilson: I understand. I would have to get back to you on that kind of question. I'm afraid I'm a little outside on that.
Senator MacDonald: Senator Black, do you know anything about that?
Senator Black: I haven't got a clue about that. I'm way outside my area of expertise.
Senator MacDonald: I am, too. That's why I'm asking.
The Chair: I would like to thank the witnesses.
The minister is in the other committee room and will be here in a few minutes, so we can take pause a few minutes and await the arrival of the minister.
Mr. Wilson and Mr. Bourque, thank you very much.
Colleagues, on January 28 the Senate adopted a motion to authorize this committee to hear from the Minister of Transport, the Minister of Canadian Heritage and the Minister of Infrastructure and Communities about their mandate letters. We met with Minister Garneau and Minister Joly on February 17, and tonight, we are completing our first round.
I am pleased to introduce our panel: the Honourable Amarjeet Sohi, P.C., M.P., Minister of Infrastructure and Communities; Jean-François Tremblay, Deputy Minister for Infrastructure Canada; and Jeff Moore, Assistant Deputy Minister for Infrastructure Canada, Policy and Communications.
Mr. Sohi, please begin your presentation.
The Honourable Amarjeet Sohi, P.C., M.P., Minister of Infrastructure and Communities: First of all, thank you so much for having me and giving me the opportunity. You have rescheduled to have me here, so I appreciate that.
Before I go into my presentation, as I mentioned at the Finance Committee, I do want to convey that, as you know, my province has been going through a very difficult time for the last day and a half. The impact of the wildfires in Fort McMurray on nearly 80,000 people has been felt in that community, the entire province and, I would say, throughout the country.
But also, I want to express my appreciation for the outpouring of support from Canadians across this nation for the people in need. It's a very difficult time for people, and all the support that has been demonstrated will hopefully help to show that Canadians care for each other. Our hearts ache for them, and we hope the situation gets better. Thank you, through you, to all Canadians for the generosity they have offered to my province.
You introduced my staff members, and as you know, I have been asked to appear today to speak with you about my mandate letter and, in particular, my role in the development of a 10-year infrastructure plan and the delivery of a refocused New Building Canada Fund. I also want to talk about what my department is doing to support our government's commitment to transparency and openness.
Senators, everyone in this room knows that there are significant benefits to infrastructure investment, in both the short and the long terms.
Well-planned investments in infrastructure generate economic growth, create jobs and leave a lasting legacy for Canadians. Infrastructure is the foundation that shapes our communities, making them more livable and sustainable and providing the places we want to live, work and play.
I believe that infrastructure is not an end in itself. It is the means with which we build a more prosperous, inclusive and sustainable country. Our infrastructure investments must be made strategically, collaboratively and with a long- term vision. They need to focus on projects that are not only shovel-ready, but also shovel-worthy.
All levels of government have an equal role to play in building strong communities. I am working collaboratively with our government partners and indigenous communities, as well as our stakeholder and municipal association partners, to build the infrastructure this country needs. Collaboration will be key to our success, and our government's new approach to infrastructure will be designed in collaboration with our partners. By working together, we will provide the long-term, dedicated and predictable funding that will help build communities for the 21st century.
So let me talk about our plan. We are committed to doubling federal investment in public infrastructure over the coming decade. This will equal $60 billion of new investments over the next 10 years that will focus on public transit, green infrastructure and social infrastructure.
Our work and investments over the next two years must lay the foundation for longer-term and transformative investments. Most recently, we announced that phase one of our infrastructure plan will provide an immediate $11.9 billion over five years, which includes $3.4 billion to upgrade and improve public transit systems; $5 billion for investments in water, waste water and green infrastructure projects; and $3.4 billion for social infrastructure, including affordable housing, early learning and child care, cultural and recreational infrastructure, and community health care facilities on reserves.
On April 22, one month after Budget 2016 was tabled, I wrote to my provincial and territorial counterparts to continue the conversation that will lead to the signature of our bilateral agreements. These agreements will allow funding to be transferred to the provinces and territories under the new programs.
Under the new programs, my department is looking to encourage a focus on projects that promote innovation, optimization, and the rehabilitation of existing assets, because we also know that infrastructure across the country is not in a state of good repair.
The Federation of Canadian Municipalities' recent report card reported that one third of municipal infrastructure is in between fair and very poor condition. At current reinvestment rates, this infrastructure will continue to deteriorate. My consultations with partners confirmed that this critical aspect of our infrastructure, recapitalization and repairs demand attention. By focusing on repairing our existing infrastructure, we can fix what we have now instead of delaying and paying more to fix it later.
So as we begin to invest in infrastructure, we propose to make investments that can enhance municipal planning, asset management and data collection capacity. This will help all orders of government make evidence-based decisions and put us on a more sustainable path.
By providing targeted infrastructure investments in social, green and public transit projects, and accelerating funding under the New Building Canada Fund, we will be able to address the real needs of Canadian communities.
Finally, as I mentioned in my introduction, I want to speak about my department's commitment to transparency and openness. My department, along with several others, has posted on our website the table of contents to the briefing binder I received when I was sworn in as minister. Anyone can reach out to the department and request to receive a copy of my briefing material at no cost.
We have posted the signed project agreements for the work being done on the new Champlain Bridge. We have posted a breakdown of funding remaining in the New Building Canada Fund for each province and territory. And we have posted the letters to the provinces and territories I mentioned earlier, which provide details of the new programs related to public transit, water and waste water infrastructure. They also provide details of the improvements that have been made to the New Building Canada Fund.
In March, Infrastructure Canada launched an interactive clickable map that provides a single location for information regarding our programs and projects. The department has also published more detailed program data and information through the Open Government website. The list of projects funded by Infrastructure Canada can be sorted out by any of the included criteria, including funding program, location or region, and the information will be updated regularly and on an ongoing basis.
By creating and implementing a long-term infrastructure plan, we will be working to improve the future of our communities and our country. By focusing on repairing our existing infrastructure, we can fix what we have now instead of delaying and paying more to fix it later. And by providing open and easy access to the department's work, we are providing Canadians with the information they need and want about public infrastructure benefits for them and their communities.
To conclude, our government has an ambitious plan to build communities that are sustainable and inclusive, communities that every Canadian can be proud to call home. Our budget plan is showing how some of that plan looks, and the letters we sent to provinces and territories provide even more. Thank you so much for having me. I look forward to the questions.
[Translation]
The Chair: Thank you, Minister. On behalf of the committee members, I would like to express our solidarity with the people of your province in respect of the crisis there. We hope to see the crisis end in the next few days.
[English]
I would like to start by introducing my colleagues around the table: Senator Black from Alberta; Senator Eggleton from Toronto, Ontario; Senator Mercer from Nova Scotia; Senator Doyle from Newfoundland and Labrador; Senator Unger from Alberta; Senator Boisvenu from Quebec; and the first one to ask questions will be Senator MacDonald, my deputy chair, who will be chairing the rest of the meeting, from the wonderful province of Nova Scotia.
Senator Michael L. MacDonald (Deputy Chair) in the chair.
The Deputy Chair: Minister, looking at your mandate letter, I can't help but notice that one of the articles of your mandate letter is to move forward on a toll-free replacement for the Champlain Bridge, which is apparently a project that will cost at least $5 billion.
The previous government established a plan for the Champlain Bridge where it would be a user-pay bridge, like really all bridges are in this country for the most part that are run by provincial governments or municipalities.
Nova Scotia has two bridges, large bridges across the capital city of Halifax and Dartmouth. These bridges were built and paid for by the Government of Nova Scotia and the municipality and the people that use that bridge, and they have been paying for those bridges for half a century.
If the government is going to build and pay for municipal bridges in this country, is the Government of Canada prepared to purchase these bridges from the Government of Nova Scotia and to pay for them?
Mr. Sohi: Senator, thank you so much for that question.
First of all, the cost to build the new Champlain Bridge was already built into the fiscal framework so that revenue from the tolling was not designed to be paying for the capital cost, the maintenance cost or the operational cost of the bridge.
The new Champlain Bridge is a replacement bridge. It's not a new bridge, so I think that's the distinction we have to make.
The other part is that the tolling on the replacement bridge was done without any consultation with the local communities, businesses and area, and the regional municipalities.
The examples senator, that you have cited, I appreciate the question, but I also want to state and bring to attention that the tolling that is charged on, for example, the Confederation Bridge does not cover the entire cost of the capital, the entire cost of the operation or the maintenance of that bridge. So there is still a subsidy involved for that bridge, too. So it was a new bridge and this is a replacement bridge, so that's the distinction we make in both projects.
The Deputy Chair: With respect minister, I guess I don't see it the way you do. I believe strongly in the concept of user pay when it comes to this type of infrastructure. I'm disappointed to think that the government does not, or that you do not, but I also believe Canadians should be treated equally when it comes to infrastructure, and it's the principle that's involved here.
If the Government of Canada is going to build a bridge and pay for the bridge, they should be doing it across the board in every part of the country.
Why are Nova Scotians being treated differently than people in Montreal when it comes to the payment and the cost of these bridges?
Mr. Sohi: Thank you for your concern. Again, the distinction I can stress again is between building new projects and replacement projects.
Mr. Tremblay, do you want to address the history on the Confederation?
Jean-François Tremblay, Deputy Minister, Infrastructure Canada: At least on the Champlain Bridge, this was already a federal bridge that we owned; it is not a municipal bridge. We never transferred it to the municipalities or the province.
The Deputy Chair: That is the old bridge. We are talking about the new bridge.
Mr. Tremblay: The government decided it was a replacement of a federal bridge by a federal bridge, and they decided they will do it the same way as it was, without tolling.
The Confederation Bridge was a new bridge, and we built a toll at the time. As the minister said, the toll covers some of the cost but not necessarily all of it. It is also an interprovincial bridge, which is a bit different. I understand that your point of view is different.
The Deputy Chair: I have to put it on the record that I don't find the answers very convincing.
Senator Eggleton: Thank you for being here, minister. I have a particular interest in your visit. First, I am one of your predecessors, having started the first infrastructure program in the Chrétien government in 1993.
Last year, I led a project on behalf of the Mayor of Toronto with respect to Toronto Community Housing, which is the largest social housing provider in the country and one that has a $2.5 billion backlog. Several hundred of its buildings need repair. I am sure Toronto and its mayor hopes this fund will help. They are ready to go.
My question is related to how the program will function vis-à-vis municipalities. The program that I instituted in 1993 was a bottom-up. It was the municipalities, community organizations or universities that put in the applications, through the province, of course. The municipalities started with a third of the funds, the province added a third and the federal government the last third. Generally that was the formula.
What is the formula with respect to municipalities? Will it be similar to that or vary?
Mr. Sohi: Thank you, senator, for that question.
We engaged with the municipalities, the Federation of Canadian Municipalities, big city mayors, the Canadian Urban Transit Association, and with the provinces to help us design the delivery of the 10-year plan.
After those discussions, we made a decision to take a two-phased approach. The first phase was included in Budget 2016, which will focus on fixing what we have, but also increase the federal commitment to the project.
We are moving away from one third. We will provide 50 per cent of the funding for projects. The reason for that is to reduce some of the burden on municipalities. They don't have the resources that the provinces and the federal government have, but they are also responsible for the ongoing operation of the system. They actually contribute more. Not only do they have to contribute to the building of the infrastructure, but they also have to contribute to replace the structure.
We believe if we up our contribution to 50 per cent that whatever the difference is between one third and 50 per cent should lower the municipal contribution by 17 per cent. We expect the provinces to continue to contribute one third of their share, unless the provinces and municipalities come to a different arrangement.
Senator Eggleton: You are trying to work out bilateral agreements with the provinces. My recollection is that some of these can take time. Municipalities like Toronto and its housing want to see the money yesterday.
Will this take a long period of time? Are you getting any signs that they are ready to sign on and help flow the funds to municipalities? The municipalities want to know when they are going to get this money.
Mr. Sohi: We are ready. We have sent letters to all the provinces and territories explaining what is in the budget and our desire to sign bilateral agreements. We sent out template agreements, the framework, to all of the provinces and municipalities. So far our conversations are progressing at a speed that we feel we will be able to sign bilateral agreements with the majority of the provinces and territories within the next month. That is our goal.
Senator Eggleton: We will not miss the construction season?
Mr. Sohi: That is my goal. If there is one thing that I lose sleep over, it is that. We don't want to miss the construction season. We already missed two construction seasons because of lack of federal involvement in the last two years.
Senator Eggleton: You are absolutely right.
I am looking at a chart that is the spending for the first five years, although I am kind of confused by that because I understood you were doing two phases and the first phase was only two years. You might clarify that.
This funding for the first five-year chart shows a division of the $11.9 billion, so much for social infrastructure and First Nations, culture, recreation, early learning in childhood and affordable housing. You have it all worked out.
If there isn't a take-up in one category, will you be flexible enough to move some of this money around into other categories where there may be higher demand?
Mr. Sohi: At this time the money we want to spend is the money that we have identified where it should go. For public transit $3.4 billion over three years, for green infrastructure $5 billion over five years, and housing is $3.4 million, and social infrastructure.
Our goal is to invest where we have identified those investments should go. If the money is unspent in those categories, then the money will roll into the long-term plan, which we have already started discussions on. Our goal is to conclude the long-term plan by the end of this year.
Senator Eggleton: What you are doing is very good, namely transferring some of the unused funds into the Gas Tax Fund. I think the municipalities will very much appreciate that.
What programs are you taking the funds from?
Mr. Sohi: When I took over this portfolio and met with my staff, and we came to know that there were legacy funds that go back a decade, or longer in some cases, where money was allocated but never spent, that should be a concern for every government.
What we said to our partners is that you either give us new projects to be funded under these legacy funds or we will transfer this money through the Gas Tax Fund.
Our goal is to invest money. We used that leverage, and I am pleased that the majority of those legacy funds are re- profiled for new projects. We are looking at those projects to be funded in a short time.
Moving forward, if the money is not committed to projects, we will look at flowing that money through the gas tax as well.
Senator Eggleton: Has any money flowed to the gas tax over and above the regular funding level at this point?
Mr. Sohi: Not at this time, no.
Senator Mercer: Thank you, minister, for being here. First, I would like to express our concern about what is happening in northern Alberta. Many of those people living in northern Alberta temporarily are constituents of mine, from Nova Scotia, along with Senator MacDonald's constituents. We join with you in expressing our concern.
You have confused me a bit. You mentioned in an answer to Senator Eggleton that money that is not used will be rolled over into future programs. But your mandate letter states that you are working with the Minister of Finance to ensure that unspent infrastructure funds are automatically transferred to municipalities through a temporary top-up to the Gas Tax Fund. That was brought in by the Chrétien and Martin governments and is extremely popular with municipalities. This is a legacy of those governments that will live a long time at the municipal level.
You talked about money being rolled over into future projects, but it seems to me that under this provision there will be no money to roll over. If you don't spend the money, it is going to go to the municipalities by topping up the Gas Tax Fund.
Mr. Sohi: I want you to look at this in stages. This is a 10-year plan. Phase one is what we introduced in Budget 2016 and phase two is what we are developing in consultation with the provinces and municipalities as we speak. We will conclude that phase in the coming year.
Because this money is in phase one, it will roll over to phase two if it is unspent. That is how we look at it.
Having said that, we are also dealing with the existing Building Canada Fund, which is $9 billion. Our goal is to allocate that money or commit it to projects within the next two to three years. Any money that is uncommitted or unallocated under the Building Canada Fund will flow to municipalities through the Gas Tax Fund. The distinction is namely in the expiry of the old programs.
Let me give you an example. We are putting $20 billion into public transit over 10 years. It takes five or six years, or even longer, for a project to be built. When we allocate money in year one, money is not spent in year one; it is spent over a number of years. That's why we can't transfer that money over to the Gas Tax Fund even though it is not spent in that number of years.
Senator Mercer: So, the municipalities will not realize any of the unspent funds until the end of the 10 years.
Mr. Sohi: No, under the Building Canada Fund, which is $9 billion, it is a three-year time frame. If that money is not spent in three years, it will go to the Gas Tax Fund.
Senator Mercer: Now, you further confused me when Senator Eggleton referred to the chart, which, by the way, is supplied by Infrastructure Canada. You have broken down nicely where you have planned for all the money to go, namely the $11.9 billion. But I don't see any mention of the Champlain Bridge in that list. Where is the money for that going to come from if it doesn't show up in that chart?
Mr. Sohi: Thank you for that question. Senator, if you feel confused, it is for the same reason I feel confused, as well. There are so many buckets of infrastructure money within the federal government. You have the federal infrastructure money, gas tax money, Building Canada Fund money and the new $60 billion under transit, green infrastructure and social infrastructure.
The Champlain Bridge is a federally owned piece of infrastructure. This money is for community-owned infrastructure. That is why you don't see the Champlain Bridge under this plan; it is included in the federal infrastructure plan.
Senator Mercer: Okay.
I would suggest, minister, that we find a term other than "buckets of money.''
Mr. Sohi: Envelopes. Maybe even that is not the right term.
Senator Mercer: The visual is not good for you or for us. Perhaps you could work on that.
Senator Black: Minister, thank you very much for being here. It is tremendous to see the contribution that you are making and how well you are representing our province.
Mr. Sohi: Thank you.
Senator Black: I have a general question for you in terms of infrastructure thinking. With this large amount of money that Canadians, through the Government of Canada, are committing to infrastructure, I am wondering if there is an opportunity — and perhaps you are using it as one — to lever other funds. I am thinking about private pension fund monies, other development infrastructure companies and public-private partnerships. What is your view, generally, about those, minister?
Mr. Sohi: Thank you, senator, for that question. As you may know, part of my mandate from the Prime Minister is to explore the creation of the infrastructure bank.
It is very high level thinking at this time, but the role of the bank would be to build the capacity of the municipalities where they lack it. The second role is to provide them with low-cost loans where their borrowing cost is higher than the federal government's borrowing cost. The third is to engage private sector pension funds. How do we leverage private sector financing and expertise to expand or level the federal dollars?
We are having high-level discussions with experts on this. As part of the long-term plan, we will be working toward having that kind of entity in place that will allow us to engage, particularly with pension funds.
Senator Black: Thank you, minister. In terms of that answer, which I very much appreciate, what is your thought process around timing for the launch of an infrastructure bank?
Mr. Sohi: Our next stage is to conclude the second phase of the long-term, 10-year plan. Parallel to that are the discussions we are having with experts on the infrastructure bank and engaging pension funds. It might take a little longer than a year, but it depends on how far we move ahead on the second phase of the infrastructure plan. We are staging it, in a way.
Senator Black: Do you see that in your first mandate, your first four years?
Mr. Sohi: Absolutely. We want to plan on that in our first mandate.
Senator Black: In our talk, then, it is imminent.
Mr. Sohi: I come from a municipal background, so we move a bit faster than that.
Senator Black: I come from the private sector, but I am adjusting.
You must feel like Santa Claus, actually, or maybe it is the Grinch; I'm not sure which one. I will test that right now, minister.
You perhaps have heard conversation about the concept of a northern corridor in Canada, the concept running, basically, from Labrador down through northern Quebec, the Ring of Fire, out to Fort McMurray and over to Prince Rupert. The government would build an infrastructure corridor for rail, fibre optics, transmission and pipelines. That's the concept that you hear people talking about. What is your view?
Mr. Sohi: We have had discussions with various stakeholders and proponents on different segments of the northern corridor. It is not coming together in a coordinated way yet. I just had a chance to meet with Minister Garneau today, and I had a brief conversation with some of the other ministers to put our heads together on how we would facilitate a trade and major transportation corridor, and how that ties into resource development.
If we want to facilitate resource development, we need to have more of a coordinated approach, and also interest from the private sector, so that we know what level they are at in their investments. That is where we are. It's very high level at this time.
Senator Black: Perhaps the Senate Transportation Committee could study such an opportunity. That might be of help to you and your colleagues.
Mr. Sohi: Yes, please. That would be.
Senator Black: It is easy for me to talk for the committee given that I am not on the steering committee, but it might be something of value.
Mr. Sohi: We also want to engage you to help us design a long-term infrastructure plan for phase two. My staff will be reaching out to you. If you can assist in that and if you are exploring this northern corridor, there will be assistance for that as well.
Senator Black: My last question is in the Santa Claus category. Do you have a view on high-speed rail between Calgary and Edmonton?
Mr. Sohi: I personally don't have a view on it because when I was a municipal counsellor this issue was debated. There were discussions in the province about what the priorities of the province should be. At that time I think the consensus was let's build the rail system and LRT systems within the cities first and then connect cities later on. That's where the discussions were before we saw the downturn in the economy.
I am a proponent of sustainable modes of transportation. We need to think long-term — not just about today but about 20 or 30 years into the future. If we build the great network of LRT systems in Edmonton and Calgary and we connect that with a rail link between two cities, the population concentration on that corridor is already larger than people thought it would be.
Senator Black: Thank you, minister.
[Translation]
Senator Boisvenu: Minister, I understand that three major bridges are being built in the Montreal region: the bridges on highway 25 and highway 30, which are toll bridges, and the Champlain Bridge, which is not a toll bridge.
The public finds it hard to understand why there is user-pay in one case, and in the other case, it is the federal government that is paying. These are somewhat complex situations, particularly given that the decision was made during the election campaign. In my opinion, any decision announced during an election campaign is not especially rational.
My question is this. Will the $5 billion that it will cost to build the Champlain Bridge, which will be absorbed by your government, have an impact on the portion of the infrastructure budgets to which Quebec might be entitled?
[English]
Mr. Sohi: I will answer your last question first, and then I will ask the DM to talk about the three bridges.
There will not be any impact of removal of tolls on the share that the Montreal region or the province of Quebec will receive under the Building Canada Plan or the new areas of investments in public transit, green infrastructure and social infrastructure. These are two separate projects, and the areas where the funding is coming from are also separate, so there won't be any impact.
[Translation]
Mr. Tremblay: The bridges you refer to are provincial bridges. Discussions were held, and at that time, the local and provincial governments decided to install toll booths on them.
As you know, that was not as readily accepted in the case of the Champlain Bridge. It is a federal bridge, and a number of questions were raised. It was also pointed out that it is the replacement of an existing bridge that was not a toll bridge.
The highway 30 bridge is a new bridge. The other factor that was taken into consideration, in response to the concerns raised, related to the impact on the other bridges and the tunnel, given that the toll was likely to increase traffic and put pressure on the other infrastructure. In the circumstances, the government made the decision to eliminate the toll.
Senator Boisvenu: What will the federal government's role be in setting priorities for infrastructure projects? I have worked in the government for four decades, and my observation is that there are always disputes between the federal and provincial governments over whether the Canadian flag or the Quebec flag should be flown. What will the federal government's role be in setting priorities for infrastructure projects?
[English]
Mr. Sohi: For the existing Building Canada Fund, each province knows what their allocation is already. We made that known on the website and to each province, so it's very transparent. They know how much they will get under the New Building Canada Fund. They have the ability to decide on which projects they want to bring forward on behalf of the municipalities or the provincial projects.
So far, my experience has been that provinces and municipalities do talk to each other and they have good relationships. The projects that we fund under the Building Canada Fund are wide ranging. They are municipal, community-based and provincial.
For the new money, the public transit, green and social infrastructure, the $60 billion, it is more focused on the areas of investment. For public transit, money will go to entities that own and run public transit. If the province runs it, money will go to the province. If a municipality runs it, money will go to the municipality. It is the same with water and waste water. If the province runs the water system, money will go to the province. If the municipality runs it, money will go the municipality. It is the same with housing.
[Translation]
Senator Boisvenu: Sir, you know that in 1982, an agreement was signed by the federal government and the province of Quebec. The agreement stipulated that, when the federal government provided funds, it could not deal directly with a municipality or with anybody other than the government of Quebec. This means that it is the government of Quebec that chose the location and set the priorities. Do you believe this principle will be maintained?
[English]
Mr. Sohi: Yes, it will be maintained. That's why we will be signing a bilateral agreement with the provinces. Money will flow through the provinces, and the provinces will work with the municipalities and other community-based entities or social housing agencies to flow their money. The new money is more outcome-based because we know where the investment should be made. For example, a province will get, using a number, for the first phase, the province of Quebec got about $900 million for transit, so they would have to invest that money on transit. They can't shift that money. That's why it's more targeted.
Senator Boisvenu: It is targeted by sector, but the province will not be able to transfer from one field to another field. I understand.
Senator Unger: Welcome, minister.
Your mandate letter contains a heavy emphasis on environmentally sustainable development, focusing in part on developing a plan for green infrastructure.
This would include investments in local water and waste water facilities; green energy; climate-resilient infrastructure, like flood mitigation; and infrastructure to protect against changing weather.
Would you kindly explain to me and to Canadians who are watching at home what "infrastructure to protect against changing weather'' would be?
Mr. Sohi: Well, senator, I said that my background is municipal. My municipality has seen the impact of climate change.
The severe concentration of rainfall within a very short amount of time has really had an impact on the drainage infrastructure. The drainage infrastructure that was designed 50 or 60 years ago in different conditions is not able to handle the high concentration of rain due to climate change.
When we talk about building infrastructure that is resilient to climate change, that's what we're talking about — flood mitigation where we are seeing rising water levels and municipal infrastructure that is not able to deal with it. Building a berm would be the kind of infrastructure we're talking about.
Another one is the regulations that the federal government has passed in respect of untreated water that is dumped into the river. That water has a lot of stuff in it that should not be going to the river, so cleaning it up to meet federal standards is another kind of infrastructure that we're talking about.
Senator Unger: You're saying that it would all be infrastructure like flood mitigation. How would you explain infrastructure to prevent against changing weather? For heaven's sake, please change the weather in Alberta. We need rain. Would you explain that?
Mr. Sohi: Let me give you another example of the impact climate is having on communities. Take the example of northern communities where they used to be able to travel on frozen roads. Now, because of changing weather, they don't have all-season roads. How do you deal with that? That's one example.
Let me talk about some of the other areas where we will invest. As you know, on-reserve infrastructure or northern community infrastructure relies so much on diesel for heating. How do we change that to invest in hydro-based infrastructure? Those are the things we are talking about, as well as developing this plan in consultation with impacted communities and what works for them.
Mr. Tremblay: We know that the infrastructure won't necessarily fix everything in terms of environmental issues and problems that we are facing. In the second phase of this program, the idea is to consult and work with people to look at how the environment as a tool can help in this area. The question is exactly what you asked: What are the domains where investment infrastructure would have an impact? That could include permafrost issues in the North. How do you adjust existing infrastructure in the North when you're losing the permafrost there?
As well in the North, as mentioned, are the famous winter roads that we currently have. In some places, the number of weeks they can be used has diminished. How do we look at infrastructures in the future that may not prevent climate change but may help to address climate change issues?
Senator Unger: To follow up on that, are you suggesting that you're somehow going to change the permafrost in Arctic regions?
Mr. Tremblay: No, we're saying that we're looking at ways of using infrastructure to adapt to the reality of today and tomorrow, which means that in communities where permafrost exists but there's less now because it's moving north, the issue is to reinvest in infrastructure to adapt to that new situation. We're not fixing the permafrost issue. We're helping communities to adapt the infrastructure to the new situation.
Senator Unger: I assume this has been studied.
Mr. Tremblay: This is why we're going with consultation and why phase two will be in a year, so that we can engage with experts and partners to look at different ways. As mentioned by Senator Black, there is the issue of the corridor in the North. We'll look at those different ideas and ways of using infrastructure to address green in the future.
Senator Unger: I would like to switch the focus.
With regard to shovel-ready and shovel-worthy projects, minister, the Petroleum Services Association of Canada asked the Trudeau Liberal government for the reasonable amount, I think, of $500 million in infrastructure money to clean up inactive oil and gas wells in Alberta. There are more than 75,000 of those gas wells across the province that need to be decommissioned. This would give a much needed boost to an ailing industry and would give jobs to several hundred Albertans at a time when we need them, as you know. It's difficult to understand why, when there is an opportunity that would yield immediate work for the economy and long-term environmental benefits, your government chooses to thumb its nose at Albertans by not allocating any money in the current budget for oil and gas well cleanup. Why did your government choose to take that approach to Albertans?
Mr. Sohi: Well, senator, with due respect, I would say our government is very responsive to the needs of Albertans. The Stabilization Fund as well as $700 million that we are expediting for infrastructure, and new investments will be close to, I would say, $0.5 billion for water, waste water, and further investments in housing and cultural and recreational facilities. As well, the EI changes will help Albertans. I am a little distressed that you don't perceive it that way.
Having said that, the area I am responsible for is supporting community infrastructure, which is municipal, non- profit-sector infrastructure. My department does not engage with private companies to assist them in cleaning up the contaminated sites. That's a different area of responsibility, not the area of my ministry. The investments we are making will help us to grow the economy in Alberta and across the country as well as move us toward building more inclusive and sustainable communities by reducing the impact on greenhouse gas emissions. Those are three broad outcomes we want to achieve with the $60 billion in investments we are making as well as the additional money available to municipalities.
Senator Mercer: I'm kind of curious about the Canada infrastructure bank in your mandate letter and an answer you gave about providing low-cost loans for two municipalities. Does that mean the federal government is going to be the bank of the municipalities?
You're a new member of Parliament, so you're not as used to being in Ottawa as some of us around the table are, so you didn't realize when you came here that you were moving into a construction zone. One of the real problems in this city is the fact that everything is under construction. Fundamentally, one of the problems, and I hope that either you or the Minister of Public Works is listening, is that we've allowed the infrastructure around here to fall apart. It's the old television ad: You can pay me now or pay me later. Well we're paying later now. I hope someone is paying attention to the long-range plan of the infrastructure that we're repairing now. We do not want to be at this again in 20 or 30 years. We don't want the buildings provided to the Government of Canada by Canadians to be falling down or unsafe for occupation, as many of them are today.
Mr. Sohi: Senator, you touched on the point that a lot of municipalities don't have asset management plans in place. If you don't have an asset management plan in place, then how will you have a plan to maintain what you have? If you don't know what you have, how will you maintain it?
One of the things we're doing under phase one is to set aside money where municipalities can access that money to do their asset management plan for the long term so that they know what condition their infrastructure is in. That's the responsible thing for us to do, and that will allow municipalities to be more responsible, and also extend the life of the infrastructure. Pay it now, not pay later, but also optimize it.
Senator Mercer: I was talking specifically of asset management of the federal government. Do proper asset management of the billions of dollars the Canadian public has invested in the facilities, particularly in this city, but in other cities as well. In Halifax, we have a number of federal buildings which have been neglected and now are costing a fortune to fix. Let's get a proper asset management plan in place for our own buildings, as well as encouraging others to do the same.
Mr. Sohi: There is about $3.4 billion in this budget for federal infrastructure. We will convey your thoughts to the appropriate ministry about emphasis on asset management.
Senator Eggleton: One of the oldest, continuous but yet unrealized infrastructure ideas around has been a high-speed rail corridor between Toronto, Ottawa and Montreal. Is that still up for consideration, or has it fallen off the track, so to speak?
Mr. Sohi: In this budget there are resources allocated to do some of the design, some studies around the viability and the feasibility of these major corridors. We need to start thinking into the future. Mr. Garneau is responsible for leading that study. It's in the books. It has not been cancelled out. It is the same with the Calgary-Edmonton corridor.
The Deputy Chair: I thank the minister, deputy minister and ADM. I have more questions, but we will have the minister in Question Period next week, so I will ask them then. Thank you for coming.
(The committee adjourned.)