Proceedings of the Standing Senate Committee on
National Finance
Issue No. 15 - Evidence - October 18, 2016
OTTAWA, Tuesday, October 18, 2016
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to continue its study of the federal government infrastructure funding program.
Senator Larry W. Smith (Chair) in the chair.
[English]
The Chair: Good morning, colleagues, visitors, mayors and members. We have a great turnout today. I see there are two young men on our video conference here, Mr. McNeil and Mr. Chartier. How are you? You both have big smiles on your faces because the Bombers are now 10-6. Are you football fans or just hockey fans? It's been many years since the Bombers were — you have to understand that I'm an old guy, so as a former Montreal Alouette who was killed by Dieter Brock and the Winnipeg Blue Bombers many times, it's very hard for me to smile when I see Winnipeg people always winning and we're always losing down east.
Anyway, welcome to the Standing Senate Committee on National Finance.
Colleagues and members of the viewing public, the mandate of the committee is to examine matters relating to federal estimates, generally, as well as government finance. Today we continue our study on the design and delivery of the federal government's multi-billion dollar infrastructure funding program.
My name is Larry Smith, senator from Quebec, and I chair the committee. Let me introduce briefly the other members of the committee.
To my left, from New Brunswick, Senator Percy Mockler; from Montreal, Senator André Pratte; from Ontario, Salma Ataullahjan —
[Translation]
— from Montreal, Senator Jean-Guy Dagenais.
Welcome everyone. We're very pleased to have such a well-known person here.
[English]
And we have the former Auditor General of the Province of Newfoundland, Senator Beth Marshall. Sorry, Elizabeth Marshall — let me be more formal.
[Translation]
Today we're meeting with the representatives of Canadian cities to hear them speak about their experiences and expectations regarding infrastructure funding.
[English]
I would like to introduce witnesses from four important Canadian cities. First, on our screen, we have two remote participants from Winnipeg, Manitoba. They are with us for the first hour only. They are Doug McNeil, Chief Administrative Officer, and Georges Chartier, Chief Asset and Project Management Officer. Wow. What a title. Congratulations.
Then, with us here in Ottawa, from the City of Fredericton, New Brunswick, we welcome His Worship Michael O'Brien. Mayor, welcome. From St. John's, Newfoundland and Labrador, we have His Worship Dennis O'Keefe. Mr. Mayor, thank you for your presence today. Finally, do we have the mayor of Victoria with us? No, we don't, but we have senior officials — good-looking young people — Jason Johnson, City Manager, and Susanne Thompson, Director of Finance.
Thank you all for your presence with us here today.
I understand that representatives of each of the cities have opening statements of five to seven minutes. We'll begin with Mr. McNeil from Winnipeg, followed by Fredericton, St. John's and finally, but not least, Victoria. Then we will open the floor to questions. We're excited to have you all here.
Mr. McNeil, would you please proceed?
Doug McNeil, Chief Administrative Officer, City of Winnipeg: Thank you, Mr. Chair and honourable senators. Thank you for inviting the City of Winnipeg to contribute to your discussions today. We're pleased to join municipalities from all over Canada in taking part in this committee's cross-country study of the federal infrastructure program. We want to thank the committee for its focus on this pivotal issue and ways to make infrastructure partnerships more effective.
Infrastructure is front and centre for the City of Winnipeg, just as it is for municipalities large and small across the country. Winnipeg has an estimated infrastructure deficit of over $7 billion. In citizen surveys, infrastructure has topped the list of issues of greatest concern to Winnipegers. Mayor Bowman and city council have made infrastructure a budgetary and policy priority. The city has worked closely with partners across Canada in the Federation of Canadian Municipalities to argue for more strategically effective approaches to funding infrastructure in Canada. The City of Winnipeg has unquestionably benefited from close tripartite infrastructure partnerships over the years. With experience, our knowledge about making these partnerships effective has grown.
We're encouraged and enthusiastic about the federal commitment to increase infrastructure funding through the new Public Transit Infrastructure Fund, the Clean Water Wastewater Fund, and the updated New Building Canada Fund.
Like other Canadian municipalities, our experiences have led us to some conclusions about how to make infrastructure funding more effective in Canada. These thoughts stem from our being so often the project planners, deliverers and operators.
Our biggest desire for infrastructure-related partnerships in Canada, and particularly for federal funding, is that they increasingly reflect predictability, flexibility and practicality. As a city, we're increasingly trying to hold ourselves to those standards in order to use our capital investment dollars more effectively.
We recently established the position of Chief Asset and Project Management Officer to champion best practices in our approach to capital development, and we introduced Georges earlier. We're implementing a new asset management system. Its goal is to achieve national and international best practices in project planning, costing, project management and the use and disposition of established capital assets.
The watchword for all our improvements in our asset management process is, of course, planning. Realistically, the city has long-term planning horizons for major projects — from six to ten years. These long horizons are necessary for good planning for every kind of project we undertake, by every delivery method, from P3s to design, bid and build projects. Sufficient timelines enable better solutions in assembling financing, identifying partners and contractors, developing sound designs and executing projects effectively.
The most crucial factor to achieving good planning horizons is predictable funding. The longer timelines in turn yield better results. That's why we are very supportive of the senior levels of government considering means to ensure predictable infrastructure funding. Predictable funding also has a major impact on industry capacity to build the major infrastructure projects we need. When funding isn't predictable, it's a major disincentive to maintaining industry capacity, and the effective project execution can be threatened, even when the will is there and the money is put forward.
In one of the committee's earlier sessions, Professor Christopher Stoney noted:
. . . from a municipal point of view the Gas Tax Fund is very popular, certainly compared to the other types of funding. They feel they have more control over local priorities, that it's predictable and sustainable, and that they can actually rely on it.
That's a judgment the City of Winnipeg, for the most part, agrees with. Our program and planning staff, the people who have to plan and deliver large capital projects, see the Gas Tax Fund as a beacon in terms of predictability.
Our hope is that through the focus of discussions like this one and the growing awareness of infrastructure as crucial to the national economy, safety and the environment, the Gas Tax Fund will be an inspiration for other predictable and sustainable forms of infrastructure funding. The quality of asset development and management can only benefit.
As far as programs like the Public Transit Infrastructure Fund, the Clean Water Wastewater Fund and the New Building Canada Fund, the City of Winnipeg believes flexibility and practicality are crucial as regards program criteria and the recognition of municipal priorities.
Obviously, every federal infrastructure initiative has public policy goals in mind, and we're not suggesting that these should be forgotten or that program criteria should be infinitely flexible. We welcome all the new federal infrastructure initiatives, and we think that open lines of communication and reasonable flexibility in terms of program criteria will yield much better results for everyone.
If project completion deadlines are too short or abrupt, quality asset management isn't possible. If an incremental nature or project newness is always a requirement for funding, it has the potential to shut out some of the community's most important and desirable infrastructure projects.
An important example for Winnipeg is modernizing our sewage treatment system. This project is staggering in size, projected to cost over $1 billion. It has major environmental benefits. It has been identified as a key economic driver for Winnipeg and the region by the Conference Board of Canada.
The question is, because it already appears in our capital budget, does it count as an eligible project under the Clean Water Wastewater Fund criteria? We think it certainly does in purpose and intent, and we're intent on working further with our partners on this issue.
It's an important illustration, though, of how a consultative approach in developing program criteria and having some practical flexibility in their interpretation could help to prevent important capital projects, which meet significant public policy goals shared by all partners, from being excluded from funding.
These are very significant issues for the City of Winnipeg. We are very encouraged by an increased focus on infrastructure, increased funding and increased flexibility in project funding formulae, as between the Government of Canada, the provincial government and the city. We're also encouraged by conversations like this — national conversations at the highest level that put the focus on infrastructure and the improvement of our partnership systems.
Thank you very much for the opportunity to take part in this discussion today, and, as a city, we are looking forward to further exploration and development in this important sphere.
Michael O'Brien, Mayor, City of Fredericton: Good morning, Mr. Chair and honourable members, and welcome from my city council and the people of Fredericton. Thanks for the invitation to appear here this morning. I appreciate it.
An outline of my brief presentation will be our management of infrastructure, how we deal with it at the City of Fredericton, and our need for assistance in the infrastructure funding, and our knowledge of the documents prepared by the Federation of the Canadian Municipalities and the Canadian Association of Municipal Administrators and specific comments about the federal infrastructure program related to municipalities.
First, our city is a city of 60,000 people, but, during the day, we're a city of about 100,000 because we have 30 to 40,000 people come into the city to work, so we provide infrastructure for 50 per cent more than our population. We have a long history of paying attention to our infrastructure assets.
Our water system services just about everybody in the city. There are very few residential parts in the outlying areas of the city that are not on municipal water or municipal sewer. Our water system meets the Canadian drinking water guidelines, and we have achieved 100 per cent separation of the storm water sewer from the sanitary sewer system. We put in a big investment over the years to make sure that those are all separated so that they can be managed separately and treated separately.
We will be able to meet the new Canadian Council of Ministers of the Environment, the CCME, guidelines without much difficulty. We put a lot of emphasis on that.
For the newest standards for meeting guidelines, we're well on our way, and, with the assistance of Gas Tax Fund funding, we will be able to meet the new guidelines quite readily. We've put ourselves in a good position to meet the new standards.
We are compliant with the Public Sector Accounting Board, PSAB, 3150, on accounting for capital assets in our financial statements. As a matter of fact, I might be mistaken, but I think we were one of the first two or three municipalities in Canada to achieve that. We did this in 2008, with a great effort, and we now have a complete accounting back since 2008 of our complete infrastructure assets, our deficit and where we need to tackle and prioritize.
We have two long-term financial plans in place, one for our general fund and one for our water and sewer fund, which are separate accounts in New Brunswick. We have identified that our infrastructure deficit for the general fund is $56 million for the size of our city, and our water and sewer fund is $135 million.
We do have long-term goals to eliminate those. In 2010, we implemented a long-term financial plan to tackle the infrastructure deficit. Within a 20-year target, we will hit a theoretical zero infrastructure deficit, and we're 30 per cent along that plan right now. We're sticking to plan, and we're making big dents in our infrastructure deficit.
The city was selected for FCM's Leadership in Asset Management Program, the LAMP, for both Phase 1 and Phase 2, and we are currently working through that program. We are one of the 12 municipalities in Canada that are part of this unique program that enables municipalities to better integrate sustainability goals into their decision making.
While we're spending on our infrastructure deficit, we do have limited access to revenue. Water and sewer rates and property taxes are how we generate revenue, so we certainly do appreciate funding assistance from the Government of Canada for municipal infrastructure.
Recognizing the need to focus infrastructure investment, we have been aggressively improving our operational efficiencies by the use of Lean Six Sigma methodologies and tools. We now have this integrated completely through our business corporation, led by a city administrator who is a black belt himself, and, for the size of our city now, we are getting annualized savings of about $7 million annually that we've put towards cost-of-living increases and reductions in funding from the provincial government so that we can maintain our aggressive infrastructure spending.
We have committed our funding from the Gas Tax program to water and sewer infrastructure renewal for a 10-year period, starting in 2014.
We support the position set out in the FCM's document Cities and Communities: Partners in Canada's Future, which was prepared after the federal election in 2015, and I do have copies with me, which I'll leave. Those are available to your committee, obviously.
We do support the Canadian Association of Municipal Administrators, CAMA's, document, Report on Proposed Federal Funding Programs for Municipal Infrastructure, prepared in March 2016. I have a copy of that with me as well.
I won't reference everything in those documents by any means. However, I would really like to point out that we really do appreciate the model used for the Gas Tax Fund. It's predictable, it's indexed to inflation, and it allows the city to establish its own priorities. This is very important.
We would like to see the various federal infrastructure funding programs structured similarly to the Gas Tax Fund program.
It is important that the criteria be clear. City staff must know what each program is intended to address, and that has not always been clear in the past. The city already has robust financial controls in place and is already subject to audits, so federal funding programs should rely on the systems already in place, without creating additional onerous requirements.
Long-term predictability of funding is important for such a significant issue. Municipalities are, like any other level of government, in the best position to make the decisions for our own municipality. We invite, but we do not require, direction from other levels of government on what's best for our community. However, we require your assistance at the funding level.
We should be able to select the projects that make sense for us, provided that we meet the program schedule.
A municipality should not be penalized for good management. The City of Fredericton prefers a model where municipalities receive funding according to population and not whether infrastructure is in a bad state of repair. We are managing our issues and should never be penalized for being on top of this file. The Gas Tax Fund model is allocated in this respect, according to population.
In closing, we appreciate this opportunity for input, either as an individual municipality or through our associations, the FCM or CAMA. The infrastructure funding programs are important to us, and we would appreciate further opportunities for input. Thank you very much.
Dennis O'Keefe, Mayor, City of St. John's: Thank you, Mr. Chair and senators and ladies and gentlemen, and I bring you greetings from the oldest community in North America, the City of St. John's. I'm delighted to be here today to speak to you about the important financial issues that confront all of our cities.
We are a city of 110,000 people. We serve a metropolitan area of a little over 200,000 people, and, within another few short years, half of the population of Newfoundland and Labrador will live in the St. John's metropolitan area.
We have a strategic plan, and we have a 10-year capital works plan that amounts to $1.25 billion. One of the things that we highlight in our strategic plan is fostering a culture of cooperation — a culture of partnerships, if you wish. One of those partners, of course, would be our federal government. Another would be the provincial government, and private partnerships in addition to that.
We have some very, very good MPs in this partnership. Our local members of Parliament include Seamus O' Regan, Nick Whelan, Minister Foote. We have some wonderful senators, one of whom is here today, Senator Marshall. All of these individuals we meet with or talk with on a regular basis, asking their advice and asking for their cooperation. We've also received many communications from the Prime Minister's Office on a whole range of issues, and we value the open relationship we have with the Government of Canada.
Having said that, I will outline four concerns that we have as a city and that I would like to bring to this table today. One is the challenge that we face to go to a secondary wastewater treatment plant by 2020. Another is the importance of infrastructure priorities, as well as the need for consideration when it comes to cost overruns and the importance of flexibility when it comes to projects and the dates.
We are required, by 2020, to go to a secondary wastewater treatment plant — we currently have a primary treatment plant — and the cost of that project will be $200 million. The annual budget of the City of St. John's is $300 million, so obviously we will need partnerships to do that project.
We have a number of options. One is including the wastewater project as an eligible project under the national infrastructure component of the New Building Canada Fund. Another option would be to increase the size of the provincial-territorial infrastructure component of the New Building Canada Fund.
Wastewater is eligible under that fund, but the provincial government has indicated to us that the amount available isn't large enough to fund this project given the other work required around the province. They obviously can't use up the majority of the fund on one project. The other option is finding another source of funding.
The second issue is infrastructure priorities. Like Mayor O'Brien, we would like to retain control over choosing our priorities. We know what they are and we know what we need. We live where we are, so we know our environment. We would like to see this issue addressed in federal funding agreements. When federal funds are provided for municipal infrastructure projects, the city is asking that the federal government place a condition on the funding that would require the provincial government to respect the municipality's identification of priorities. We are best able to select our priorities.
The issue of cost overruns is the third one I want to bring to your attention. Funding currently provided by the federal government does not take into consideration cost overruns. Projects can span several years and economic impacts can drive changes to construction and labour costs, which can result in cost overruns. Increased flexibility to allow for the movement of funding between approved projects under the same funding source would help to alleviate this issue. As an example, one project may be over budget by $100,000 and another project may be under budget by the same amount of money, but the flexibility currently isn't there to transfer between projects, and remaining funding can be lost even though the eligible costs exist under another approved subject.
Lastly, increased flexibility on projects and dates is required, especially in consideration of Newfoundland and Labrador and the environment and climate in which we live. As a result of that, there is a significantly reduced construction season compared to other parts of the country. Major infrastructure projects require detailed design and very significant construction work. The city makes every effort to plan projects and allocate resources according to the funding deadlines, but due to a whole variety of factors — beyond our control, quite often — the funding can expire before the projects are completed. This leaves the city responsible for funding the remainder of the project. Flexibility on project dates would allow for the completion of the project and the ability to avail of all the approved funding.
I want to thank you for inviting me here today and ask you to give very serious consideration to these issues. Thank you very much.
The Chair: Thank you very much, mayor.
We will move on now to Mr. Johnson. I see you have a brick that you have given us, which is very impressive, but will you try to make sure you get through it in five minutes, please?
Jason Johnson, City Manager, City of Victoria: Absolutely. Good morning, Mr. Chair and honourable senators and staff. I'd like to extend greetings on behalf of Mayor Helps and our entire city council, and thank you for the invitation to provide the City of Victoria's views on the federal infrastructure funding program. I'm Jason Johnson, City Manager for the City of Victoria, British Columbia's capital city, and I'm joined by Susanne Thompson, our superb Director of Finance. Mayor Lisa Helps sends her regrets, but she is currently on a trade mission to China representing the City of Victoria.
We have provided a detailed submission for your consideration. I'm not going to review that entire submission here with you, but I will leave that with you, and that brick does have some important information on behalf of the city.
We're familiar with the federal infrastructure funding program and the challenges that established urban cities like ours face in managing competing demands for capital investment and for delivering the greatest return on investment for our taxpayers.
We are appreciative of the federal investment that has been made in recent years in both Victoria and the Capital Region and the benefit it has and will continue to bring for generations to come.
We continue to encourage a bottom-up approach to our priority setting and engaging our community to determine what those priorities are.
We are pleased to see the program continue and the engagement of the municipalities in the review of the essential infrastructure funding program. Despite concerted efforts to increase funding in major capital infrastructure, smaller urban cities face a continual challenge to secure and plan funding for essential quality of life systems and assets while balancing the increasing affordability needs of our communities.
Today there are five points we would like to highlight for the Senate committee for consideration.
The first is increased opportunities for investment in bread-and-butter infrastructure to support roads, existing facilities and municipal fleets that support essential municipal services.
The second is to increase funding for roads, recognizing their role as the backbone to supporting greener, more active transportation systems, including roads and cycling.
Number three is to continue with the gas tax Community Works Fund. That's a program we feel works very well for our community.
The fourth is to provide greater notice of intake opportunities and grant criteria and more time to develop applications for funding. We find that the timelines that are often prescribed with the funding opportunities are too short for our community to respond in a meaningful way.
Number five is to reinforce the benefits of social procurement, and this is particularly important in the City of Victoria in terms of the social issues that we face and the infrastructure programs that we would like to move forward with.
I would like to take a brief moment to paint a picture of Victoria, as it represents dozens of similar communities across this country. Victoria is a well-established smaller city of 80,000 and serves a core city for a rich and diverse region of 350,000 people. When you think of Victoria during the day, that's 350,000 people that come in for jobs within the capital city, and then by night it's the 80,000 residents that are remaining, and it's those 80,000 taxpayers that are carrying the burden of the infrastructure that we have for our community.
Established in 1862, we have a proud history and have evolved over the years to support a variety of economic drivers ranging from technology and advanced education to tourism, government and social enterprise.
A bird's eye view overlooking our city would quickly demonstrate we are a fully built-out, compact community. With a population that is expected to grow by 25 per cent over the next 25 years, the number of construction cranes and new developments currently under way show the efforts in place to support thoughtful infill densification within 19 square kilometres of, in many cases, historic neighbourhoods and buildings and an established road network. It quickly shows the reliance we have on maintaining essential infrastructure established when Victoria first boomed close to 100 years ago.
To give you a sense of the age of infrastructure, 80 per cent of Victoria's underground systems — sewer, storm water and drinking water — are from the pre-1920s. We have a number of storm sewer pipes that are actually still constructed of wood.
As we evolve as a growing community, our reliance on rehabilitating and replacing infrastructure grows.
In closing, we believe that the federal infrastructure fund is an essential and effective program for supporting municipalities and fits with the federal government's spirit of laying the foundation for the future. We believe that the program could be strengthened in its reach by providing greater certainty and flexibility to the intake process, and established communities, like ours, would benefit from a renewed focus on investing in foundational infrastructure such as roads for active transportation, and facilities and fleets needed to support smart, healthy and clean growth communities of the future.
Thank you for this opportunity and we're looking forward to your questions.
The Chair: Thank you, Mr. Johnson. Just before we start the questions, I'd like to welcome our deputyvice chair, Senator Anne Cools — thank you, senator — and Senator Raynell Andreychuk, it's very nice to see you, and, of course, Senator Grant Mitchell. So, we have everybody here. Are we ready to go? We have a list right now of, I guess, five to six people, so we will begin our questions.
Senator Marshall: I have a number of questions. I'll likely get to ask one before we move on. Mayor O'Brien and Mayor O'Keefe talked about setting their own priorities. We have had discussions in this committee previously about the process for identifying projects and the process for selecting projects for funding. Could you give us some idea as to what the process is and why you are emphasizing that you'd like to set your own priorities? I think Mayor O'Brien used the term "establish your own priorities,'' and I know Mayor O'Keefe indicated as a second priority that they would like to control their priorities.
Could you give us some idea as to what the process is? I know what it was 20 years ago when I worked with the provincial government, but what is it now?
Mr. O'Keefe: Mayor O'Brien has indicated I should respond to the senator from Newfoundland and Labrador first. Thank you.
Our priorities are set by our professional staff. They identify the priorities from our planning, engineering and various other departments — public works and so on. On a very professional level, they prioritize the main issues that are facing the city. We then send that list of priorities in to the provincial government. Usually, we identify the 10 that are at the top of the list, in order of priority. Then the decision is entirely up to the provincial government as to whether or not they respect our prioritization of the projects. It's not unusual, including this year, for the projects that are approved to not always reflect the order of our priorities.
Senator Marshall: How do you set your priorities? Is it a ranking?
Mr. O'Keefe: Yes.
Senator Marshall: You assign numbers to various criteria?
Mr. O'Keefe: Yes.
Senator Marshall: Then you send it to the provincial government, and they will do whatever. Is there something further with the federal government? Does it also happen at the federal level? Or maybe there's something between the provincial and federal that you don't know about?
Mr. O'Keefe: It goes through the provincial order, not the federal order. The partnership in terms of funding will flow into and through the province, down into the different municipal communities, based upon the funding that is available and, theoretically, based upon the priorities that these communities assign. We would present a list, let's say, of 10 projects, and they would be prioritized. When the approvals come back, our Priority 2 might not even be funded, but Priority 7 might be funded.
Senator Marshall: Is Fredericton similar?
Mr. O'Brien: It would be a similar process. In the past, some of our projects we've identified may not have beem selected, but in recent years that has not been the case. We're very fortunate. We prioritize all our projects the same as Mayor O'Keefe mentioned. But it's all part of our long-term fiscal plans, so we have everything identified in order of priority. We have prioritized a 20-year fiscal plan; we have a five-year forecast and a 20-year plan. As projects become available and as infrastructure funding programs get developed, we can readily select the most critical projects to tackle, as far as infrastructure deficit.
We stay in close contact with our provincial counterparts. In recent years when we identified these projects and sent them forward, they have accepted our rankings and they've been funded accordingly, according to the pool of money.
When I made my statement that they should — I might have used "must'' — be adhered to, they have been in recent years. So we appreciate that.
The Chair: Could I ask Mr. McNeil maybe to answer? Could the gentlemen from Winnipeg respond to the question that Senator Marshall just asked? Then we'll go to our folks from Victoria.
Georges Chartier, Chief Asset and Project Management Officer, City of Winnipeg: Regarding prioritizing, in a way it's similar, although in the last five years, the city has been allowed to choose the projects. Whatever projects we put forward were accepted. Going back in time, it was more from a list, but more recently — five years or so — the city has been allowed to choose the projects and the funding can be at other levels of government.
Senator Marshall: And how do you choose your projects? Is it similar to St. John's? Is there a ranking with criteria and numbers?
Mr. Chartier: Yes, we have an asset management program that we're instituting. We've gone quite a ways with it. The government gets a 10-year view on our infrastructure, and we prioritize going forward from that. Again, it's through the asset management program, and in the end we have projects going forward from capital budget.
Our issue, though, is that we have many projects where there's a need but there isn't sufficient funding. We have many large projects — bridge projects for going over our rivers — that we don't have enough funding from our end to put them into the capital budget, and so those projects sit on the side. They're on our unfunded list. That's part of our $7-billion infrastructure deficit. The difficulty is that we would like to do certain large projects, but there isn't sufficient funding.
Senator Marshall: If cities are using some sort of ranking system, is the ranking system the same as you move from city to city, or does each city have it's own ranking with its own criteria ad its own weighting? Is the same system used by everybody or does everybody have their own system?
Mr. Chartier: I can answer that: It varies from city to city. There is a very large movement in Canada that most cities are following a similar system, although we do set the criteria individually for each city. It's probably not that different from city to city, and the asset management approaches that we are following, according to the ISO standards — international standards on asset management — most cities are following in sync with that.
There are a lot more similarities than differences, I would say.
The Chair: We will move on to Victoria for an answer to that question.
Mr. Johnson: Our asset management plans identify recommended funding levels and priorities on a conditional assessment. It ends up in our 20-year financial plans so that we can make recommendations to council.
Like the City of Winnipeg, there are a number of projects we've got that remain unfunded simply because the taxpayer can't be burdened with all those responsibilities. The council then has to rank based on a priority or risk assessment in terms of what priorities reach the top. For instance, we have a fire hall that needs replacing, and we have a recreation facility, our Crystal Pool and Fitness Centre that was built in the 1960s, that needs to be replaced. When ranking and looking at those two facilities, considering we're in an earthquake zone and are looking at a fire hall that isn't seismically adequate to withstand an earthquake event, that is a priority that rises to the top, while understanding that recreation is an important asset of the community as well.
Those are our major funding opportunities that come forward to council, and they rank those based on risk assessment and the asset management plans in place.
In terms of consistency, each city looks at that a bit independently. I wouldn't say there are common criteria, but there is a common framework that moves forward in the asset management plans. The PSAB that was mentioned earlier is a part of that as well.
Senator Marshall: Is my time up?
The Chair: For now. We will have you back for round 2.
[Translation]
Senator Dagenais: Usually, I'm not on this committee. I'm replacing Senator Eaton. However, I have a concern. When I was president of the Association des policières et policiers provinciaux du Québec, I was heavily involved in the police officers' employment contracts with the cities. At the time, the federal government provided a $500 million budget. Quebec received $90 million of that amount.
The Quebec government intervened and divided the funds according to the size of the cities. I understand that, when money is distributed across the provinces, it's not necessarily based on the order of priorities you mentioned. Do you think this style of governance is a problem? The federal government funds go through the provincial government. Once the funds are transferred to the municipalities, needs haven't necessarily been met. What do you think of this style of governance?
[English]
The Chair: Can we start with Victoria on that one?
Mr. Johnson: I think, for Victoria, we have a little bit of a different situation. Our police is funded directly through our budget, so our budget funds $32 million to the Victoria PD. and that is requisitioned directly from the taxpayers. So, in terms of dealing with the province, we don't.
The Chair: The senator is trying to tie the argument from a police situation to an infrastructure situation.
[Translation]
If I understand correctly, Senator, he is using an example of the provincial government's involvement in the infrastructure context.
[English]
If I understand correctly, the senator is using the example of a police situation but trying to gauge the involvement of the provincial government with the municipality. How does that affect you in infrastructure decision making?
Susanne Thompson, Director of Finance, City of Victoria: As Mr. Johnson outlined a little bit earlier, I do believe we have perhaps a different situation than other provinces. Very little funding actually comes through the province to the City of Victoria. We do grant applications for specific projects that are quite often the Building Canada Fund, which is, of course, joint between Canada and the province of B.C., but very little actually gets sent to the city, as outlined for the police example that was just mentioned.
Mr. O'Keefe: I think the senator has described the situation which exists, at least in Newfoundland and Labrador and in St. John's. The funding is usually tripartite, and it's shared by the federal, provincial and municipal levels of government. Routinely, in a given year, council will always approve the list, and the list, as approved by council, will then go to the provincial government. The provincial government, based upon the funding, may be able to fund four, let's say, of the ten projects. They could be any of the 10, so Priorities 2, 6, 7 and 8 may get approval, whereas what we're saying is it should be 1, 2, 3 and 4.
The Chair: It should be your priorities.
Mr. O'Keefe: Exactly.
Mr. O'Brien: Our situation is very similar, Mr. Chair. Wwhen a program is identified in the funding amount that would be allocated to the City of Fredericton as identified, we're quite readily able to select the projects that would meet that criteria based on our list. It may not be 1, 2 and 3, but it will be 1, 3 and 4, so we're still satisfied that way.
As far as funding coming to the province and through to the municipality, and maybe not flowing directly, that's not an issue.
In the past, with projects that I can't readily recall, I know there have been times that funding may have been allocated to the province and what we thought the Fredericton region's share would be didn't flow that way but went somewhere else for other reasons beyond my decision making abilities. Or, it could be held up for a year while everything was being pooled for, maybe, another specific project.
Those days seem to be in the past, and in recent years, through my lens, project money that's supposed to be allocated to the Fredericton region through a federal-provincial program has been flowing through, so that's been very good.
The Chair: Could we have some feedback from Mr. McNeil or Mr. Chartier on that particular question in terms of the influence and relationship with the province?
Mr. Chartier: We have been able to work through the province in the last while. Flexibility has been given to the city to choose the priority, and whatever projects that we wanted to put forward, it was through our own initiative and our own planning that we were able to choose them. The province has gone along with whatever list we have put forward. There were more issues going back 10 years or so but I would say that in the last five years, it has been very good.
Senator Mitchell: Thank you to all of you for your presentations. I'm interested in several issues. The bulk of infrastructure is, of course, physical — well, I guess all infrastructure is in some sense physical, but traditionally, it's roads and sewage and all of those things you need for basic services and functioning. Itt's interesting to note that St. John's has, as a selected project, a core sciences facility, which intrigues me because it seems to me as we try to create an economy of the future, we need to be looking at infrastructure differently. Here is St. John's, maybe ahead of the curve, with a core science facility. Was that chosen as a priority because it reflects a different kind of vision for your city as an intellectual and science centre?
Mr. O'Keefe: It is the vision of Memorial University of Newfoundland and Labrador. They would set that priority, and it would be their priority, but considering that the city is branding itself as a City of Ocean Excellence, we would support the university in taking on projects like that. That's very important for the province.
Senator Mitchell: So, it was one of the selected priorities for your city?
Mr. O'Keefe: No. It would have been a priority of Memorial University. Municipal priorities would be different.
Senator Mitchell: So you would be getting infrastructure funding in addition to that funding. The chart I'm looking at is somehow selective in that regard.
Mr. O'Keefe: None of that money would flow through the city or from the city to the university.
Senator Mitchell: But you're not unhappy with that. Would you rather have had that money come to something else?
Mr. O'Keefe: From a provincial perspective, I think it's wonderful, yes. It's building the future.
Senator Mitchell: My second question concerns climate change mitigation and the pressures of climate change. At least two of your cities are right on the ocean. You have port facilities, and there is actually a national security implication for rising oceans and port facilities. Is that getting factored more and more into your particular considerations? I mean all communities, but particularly the oceanside communities.
Mr. O'Brien: In our municipality, we've identified that as a critical issue. We're on the Saint John River, 60 miles from the ocean, so the rising tide is not, per se, the same issue with us, but extreme weather conditions and water issues have been identified. We have begun aggressively redoing our storm water systems to handle what used to be one-in- 100-year floods. We've designed that with one-in-100-year capacity, plus 20 per cent, so we've been aggressively using a lot of our infrastructure funding and some of our projects are identified for that particular reason, especially if it is an aged system.
We have spent a lot of time and effort to redo a lot of our wastewater in the city to manage that runoff and mitigate runoff conditions so it doesn't even get to the storm water. New subdivisions have retention ponds and attenuation ponds so it doesn't even get to the system; we're trying to design them like that.
So yes, it's a critical issue and it costs a lot of money to retrofit old systems and design new ones so that you don't run into these considerations.
Regarding your first question on the green economy, one of the things I think the City of Toronto, or Ontario, has is legislation where municipalities have some responsibility for social housing. We don't, but there's a tremendous need in every municipality, certainly the bigger cities, for dealing with affordable housing and social issues, and I know there's funding going towards the retrofit of the existing, affordable housing units so that they become more energy efficient so that co-ops and non-profits can maintain the systems that they have in place and not have to put more people on the street.
We're dealing with that right now in the city. How do we get a greater social conscience in the city, although it's not our mandate? All of our funding comes through water and sewer revenue, which is supposed to be even, or municipal taxes. We don't have the funding mechanism to put into social issues or affordable housing, although I have chaired a committee for years on that very issue and bring all the non-profits together in the city, and we try to move forward, move the ball down the field. But there's continuing pressure on municipalities to get into this critical issue. One way that you can keep the pressure off of municipalities is with the funding that's coming right now to assist on the affordable housing and retrofits.
Green economy, yes. We're a university city as well, and we're in the midst right now of developing a renewable energy strategy for our city and where that will take us. The immediate goal is to put some projects up where we can identify to the citizens that we take it seriously and do a solar project or a wind project, but the long-term goal is to grow the economy through the university, to bring research dollars, to bring private-sector money into projects, into the community. But we need the federal initiatives to help us drive that. If you spend a bit of money up front and develop the business sector, the tax revenue will come and the people will come. So we're very appreciative of that. But those are obviously priority areas as well, other than just basic infrastructure.
The Chair: Thank you, mayor. Let's go to Winnipeg. I know you folks are not on the sea, but you have had some major issues in terms of the Red River and flooding over the years and very recently, so maybe you can make a comment on the question that was brought up, please.
Mr. McNeil: Certainly. Climate change is very much a concern for Winnipeg and for the province of Manitoba. The Red River has been a highlight for many years. In fact, I was with the city when we fought the 1997 flood, which eventually led to the expansion of the floodway. Thank you to the provincial and federal governments for funding that.
Wwe have seen climate change affect all corners of the province and all of our river systems. It has affected the rural areas as well as the City of Winnipeg. The rivers are a problem, but also part of it is snow-melt runoff and also rainstorms in the summertime. We've had to change our criteria or our standards. What used to be a 10-year return flood is now a 5-year return event, and so what's impacted our infrastructure in terms of pumping stations, in terms of dyking systems and, for the province and the rural communities, diversion systems or changing flood-proofing, flood plain criteria. So there are a lot of impacts to Manitoba, not just the City of Winnipeg, as a result of climate change.
The Chair: Thank you. Victoria?
Mr. Johnson: Thank you. Yes, climate change is a significant concern for the City of Victoria. One of the events that we deal with quite frequently is significant weather change or weather events. Actually, this last weekend, there were three separate storms that came in and brought significant rainfall, and, really, what it highlights for us is the upgrades that we need to do to our storm water systems in order to make them adequate to deal with these upcoming events that are happening on a frequent basis.
Also, sea-level change. The Capital Regional District has looked at our existing built-out community, looking at what sea-level change will mean to our residents that are currently within what could be sea-level change and what the impact could be, significantly, on our community.
I know the question was asked in terms of ports and what we're doing, obviously, as a port city. One of the significant funding challenges that we've got is re-doing our Belleville terminal. It's the entry point for a lot of visitors, their first entry point to Canada, and that current terminal, when they clear customs, is ATCO trailers. So we're looking to change that so that it enhances the ability, when Americans or other tourists enter the country, to put forward the capital city and have an experience that leaves a memory of what Canada should be, and we don't believe that that's ATCO trailers.
So we've been pushing that forward as an infrastructure project through both the federal and provincial governments, and that remains a priority in terms of making sure that visitors to Canada receive that experience.
The Chair: Thank you very much. Just a little bit of history: when I started my professional football career, we had our first training camp outside the stadium in ATCO trailers, and so I concur that ATCO trailers are not the nicest place to be when you have 10,000 flies.
Senator Mitchell: Being from Alberta, I want to put in a plug for ATCO, but I get it. It is interesting, just to summarize, that, more and more, climate change is becoming an economic demand. All these years, we've said that dealing with it would hurt the economy. In fact, not dealing with it is beginning to hurt economies, and we need to get serious about doing that. So thanks for your input on that.
The Chair: Thanks, Senator Mitchell. We need to move on, just so that we can get everybody and their questions in.
Senator Mockler: I'd like to take this opportunity to follow a door that our chair has just opened. We believe, certainly, in building stronger communities and expanding affordable housing. I want to touch on that one, but, before I do that, chair, I'd like to say, in the other official language.
[Translation]
I want to congratulate Mr. O'Brien on his re-election. You can count on our full cooperation to move matters forward in Fredericton, the capital of New Brunswick. Specifically, we'll highlight the importance of infrastructure projects for the three founding groups — the Aboriginal people, the Acadians and the English — since the capital, Fredericton, is the only bilingual province in Canada.
[English]
I also like what I have heard when we talk about predictability, sustainability, flexibility and growing our economy. The question will be on affordable housing, and I would like to have your comments. When we look at building stronger communities, all Canadians need and deserve housing that is safe, adequate and affordable. If not, when affordable housing is in short supply, we see the outcry from coast to coast to coast.
Two weeks ago, the Energy Committee did a tour of Western Canada, and I want to tell you that, as we were talking about energy and the environment, they surely brought to our attention affordable housing.
That said, when affordable housing is in short supply, regardless of where we live in New Brunswick, Canada's whole economy suffers. As we've seen lately, in small and large municipalities in some parts of Canada, there is an outcry on the infrastructure deficit. I was minister of social housing in New Brunswick, and I see we have an opportunity, with the new government, to enhance and direct, in your communities, the value, and also to upgrade social housing.
My question is to you all. You have not all touched on the social housing deficit. I would like to have your comments, if you have any of those issues, and why and to what extent you're bringing it to the attention of governments.
Mr. Johnson: Affordable housing is a significant issue for the City of Victoria. In fact, earlier this year, we dealt with an emergent situation where we had a number of folks create a tent city on a provincial property, and our bylaws didn't apply. Therefore, that was allowed to entrench itself.
What it wound up with was a significant investment by the Province of British Columbia in terms of providing additional housing for the homeless, but that need hasn't been met in terms of that funding that they provided to provide for that direct need that was as a result of the tent city. There is a significant contribution that is needed in terms of creating additional affordable housing within the city of Victoria.
One of the primary goals of council is to address affordable housing in a meaningful way. Our council has said on a continual basis that additional infrastructure is needed from the federal government to provide additional affordable housing, particularly in a community like Victoria where the average house price far exceeds the median income of a lot of our residents.
Through the CRD, the municipalities in the capital regional area have put together $30 million toward a program of affordable housing. The Province of British Columbia is going to match that $30 million, and we are looking for a contribution from the federal government of an additional $30 million to leverage all of that funding together to address that affordable housing issue that is of significant concern to the City of Victoria.
Our council doesn't like to see people sleeping on the streets. We believe that folks need a place to live. That comes from contributions from government to address that critical affordable housing issue.
The Chair: Could you gentlemen from Winnipeg give us some feedback on affordable housing, please?
Mr. McNeil: Actually, the City of Winnipeg is no longer involved in social housing. It was at least 10 years ago that the social services department was taken over by the Province of Manitoba and, as a result, we've had very minimal involvement in social housing in Winnipeg.
We've been involved with the province if they've wanted to target certain areas to build up social housing in terms of our planning and permits. We have assisted Habitat for Humanities in terms of where they've wanted to build small communities with their housing program, the selling of land for a dollar and that kind of thing, but otherwise we are not very much involved in social housing like other cities.
Mr. Chartier: As a community, it is definitely an issue, but as a city government, we're less involved. Our mayor has flagged the importance of it, but as far as the dollars, it's really the province that funds and manages those programs.
Mr. O'Brien: Again, the municipality is not involved financially in these issues but, morally, we must be and we want to be, and we're trying to find ways to do so without hampering our ability to offer the core services we're supposed to deliver to residents through municipal taxes.
The province has been cooperative. The new programs that are coming, as I mentioned earlier, are a great relief. But our city has approximately 20 per cent — and a lot of it is hidden in a lot of capital cities — but over 20 per cent of our population spends over 50 per cent of their income on housing, which technically puts them in a housing crisis. It puts them one paycheque away from not being able to pay their bills.
It's all relative in the province. We have the highest rents and lowest vacancy rates; therefore the social assistance levels that go to a single mother with a child is a little bit higher than what it costs to rent an apartment in our city. So how do they survive and feed their children?
We have about 700 or 800 people in our city who touch homelessness during the year. Sometimes it's only for a month; sometimes it's longer.
We're working very hard with a municipal coordinated effort, with me involved and some of my councilors, to help the coordination of that to provide the services. But without somebody having a home or apartment to live in, they just cannot become a functioning member of society. It's crucial that the national housing strategy be entrenched, that the funds flow through, that the provinces embrace it and the municipalities that are not legislatively involved in it find ways to become more entwined or ingrained in the community to help.
I see my role as mayor is to educate and advocate, and bring people together. We work very hard at that. As long as we can get the right players, our MP, MLAs and the private sector involved together to make things happen, it's to the benefit of our entire community.
Mr. O'Keefe: The City of St. John's puts a high priority on affordable housing. We have an affordable housing plan. We currently have over 400 units of affordable housing, and within the next near year so, we've set a goal in our affordable housing plan to build another 500 units, because we have such a waiting list.
We also have a homelessness strategy. The focus of that, of course, is to eliminate homelessness in the City of St. John's over the next few years.
We are trying to develop innovative ways of doing this. Again, it's all a matter of partnerships. We've reached out to the private sector, to the Home Builders' Association, to use city land to construct affordable housing units.
We have investigated — now I'm not free to identify just yet; there will be anannouncement forthcoming at home in the very near future — reusing institutional buildings that are not being used any longer and converting them into affordable housing, again using funding partnerships with the provincial government and the federal government.
In a nutshell, yes, it's a very high priority. We're dealing with it as best we can. We have plans in place. Again, it comes back to the whole concept of partnerships and working with the province. The initiative that I had mentioned about using institutional buildings will result because of provincial funding for that particular project. As well, it will entail the generosity of a group that, in fact, will hand this building over to the city.
Senator Mockler: I have a quick supplemental. I want to bring to your attention this new program. There's $2.3 billion earmarked for affordable housing, and I think it should be part of all your strategies from coast to coast to coast.
The committee has heard that municipalities face many different sources of provincial, territorial and federal funding. In some cases, we were told as many as 300 different sources of funding — 300 different sources in some areas of Canada. How could provincial, territorial and federal programming be simplified to ease the administrative burden of your municipality when you look at such a program to emphasize and sensitize governments?
The Chair: That's an impactful supplementary question, senator. That wasn't a little one; that was a big one.
Let me just interject for one second. We were told that you folks in Winnipeg had an hour. Are you able to stay with us, or would you like to depart at this time because of other pressures that you have?
Mr. McNeil: No, we're willing to stay. I thought it was a technical issue. We're very happy to stay connected and participate for the next while.
The Chair: Thank you.
Let's address that question, maybe starting with Victoria.
Ms. Thompson: Instead of going into the 300 different ways of receiving the funding, I'd like to just highlight the one fund that actually works really well, which is the Community Works Fund from the Gas Tax Fund. The way the money flows and the way the reporting requirements are work extremely well for our municipalities.
The Chair: That's your vehicle.
Ms. Thompson: Yes.
Mr. O'Keefe: Again, the focus has to be on the flow of the money. To come back to the original point that was made here this morning: Municipalities can identify the priorities, and we have identified affordable housing as a high priority for the city. We work with Newfoundland and Labrador Housing. We work with the provincial government for funding arrangements in order to build more housing, but if the money flowed more directly to the municipalities, then that would make the system more efficient and enable us probably to do more and do it a lot quicker.
Mr. O'Brien: My response would be very similar, so no need to repeat things. I am a little embarrassed to say I didn't realize there were 300-some programs, so I will challenge the federal government to narrow that down and do a process of improvement and find a way to get rid of that.
But, yes, the programs mentioned are the ones that work and that flow to us right now. To reiterate, we can set our own priorities, and we know what they are, but I'm still shaking my head at 300 different resources of revenue.
The Chair: So were we when we found out that piece of information.
Gentlemen, I know that in Winnipeg the province is in charge of the issue of affordable housing, but just give us a quick comment.
Mr. McNeil: The only comment I'll add is that we are actively involved with the End Homelessness Program in Winnipeg. The United Way and other private sector partners are involved, and the Province of Manitoba, so we're looking forward to ending homelessness in Winnipeg.
The Chair: This is a question that would probably come out of those that were just asked. Along with the new fund that is one of three pillars in the infrastructure program announced by the Minister of Infrastructure, affordable housing was one of them. How will that new program affect how you implement and get involved with the province that, right now, is in charge of that particular issue of affordable housing?
Mr. McNeil: You know, to be honest, we haven't had any discussions with the province on the affordable housing issue in relation to the federal program.
Senator Ataullahjan: Mayor O'Keefe, I heard you say you wanted to retain control of your priorities, and similar opinions were expressed by Mayor O'Brien. Is there an issue in that the provincial and federal governments' infrastructure priorities are different and not aligned with those of your cities?
Mr. O'Keefe: No, not really. The process is such that we identify a collection of priorities that go to council, and council will approve that selection of priorities, hoping that they would be funded in the order that they are listed.
Then, the projects that will get funded are entirely in the hands of the provincial government, and the federal funding will flow through the provincial government. We have no idea until we actually see the funding approvals exactly what projects will be funded. Theoretically, the province recognizes that all, let's say, 10 projects are priority projects, but then they will select the order in which they are going to be funded.
Senator Ataullahjan: Do you ever go back to the province and say, "No, this is our priority?'' Does that happen often, or do you just work in partnership?
Mr. O'Keefe: Then we work with them. There is really no point in going back and debating, because the priority list is being addressed. I should make that point. The priority list is being addressed by the province, and they've recognized that all of these projects are important, but they will select the ones that get funded first.
The Chair: Are there any comments from our other panel members on that question?
Ms. Thompson: For us, it works in the way that the city puts forward the priorities that are important to the city. However, some of the grant programs don't look at the bread-and-butter type of infrastructure that we need the most help with, specifically around facilities and greening our facilities and municipal fleets. What is lacking right now is that the scopes of the infrastructure funding programs doesn't take into account things such as fire halls, public works yards, municipal halls and those types of things that are less customer or citizen interface types of facilities.
Mr. O'Brien: Because we have our long-term fiscal plan and asset management program, we know what our priorities are and we're focused on them, and we have a pretty robust capital program in our city as well, so we do not borrow any money for infrastructure renewal. It's all built into our operating budget. When gas tax money comes along, or any other special initiative, we're able, at that time, to work on more projects on our priority list.
You still have to apply and fill out the forms, but in recent years it has been that what we've asked for, as long as we meet the program criteria, has been received.
I will say that come the latest round of funding, there was a short turnaround time on a lot of these, especially for transit. We are in the process of trying to green and renew our fleet and maybe go to more energy efficient or electric buses, et cetera, but all of a sudden we had a week to put our application in for the transit funding. We had a note from our staff, we had a meeting, and we had a week to put it in. We said, "Oh my goodness,'' because we wanted to do a little more research on best practices and what kinds of vehicles to buy to green the fleet. We didn't have time to respond to that, but we still have a fleet that needs renewal so it's very much appreciated.
I would shudder to think about some municipalities, if they weren't in a position to have all their deficits and targets set when some of these quick turnarounds come, being able to do some engineering work to identify the projects. Small municipalities don't have that manpower to do this advanced planning like some of the bigger municipalities. It's not usually the case for us, but in the case of the transit it was, because we weren't able to move forward with the vision that we have. We'll have to wait for a couple more years to work on that vision for the next round of funding and our own budgeting.
Mr. McNeil: We have a very collaborative approach when dealing with the Province of Manitoba. As Georges had indicated earlier, really, the priorities we have put forward, Manitoba has accepted.
I will echo some of the comments of Mayor O'Brien, and that is that we do have a robust capital planning program. We do apply some cash to capital, but we borrow for multi-generational projects, and at the end of the day we always hope that the federal infrastructure funding will go towards some of those huge projects that cost many tens and hundreds of millions of dollars and that are quite unaffordable for even a city the size of Winnipeg. But the problem with the incrementality and deadline for completion of those projects prevents us putting them forward as projects under that program.
Senator Cools: I would like to welcome their worships to this meeting and to thank them for their insightful contributions. I have listened with considerable care here today, and I would like to adopt the position here that these gentlemen have underscored for us very soundly the importance that, in any sharing of fund situations, the local municipalities and governments should be the ones to identify the needs and the priorities of that local community. To that end, chairman, I would like to suggest that we consider building that into one of our recommendations.
In support of that recommendation, I would like to suggest that our researchers do some work for us, like a small paper on the background of the constitutional relationship between the provinces and the municipalities. Most people do not know, but many of these municipalities' powers exist at the mercy of the provinces. The worst thing in the world that can ever happen is that a premier of a province takes a dislike to the local mayor.
The Chair: Or city manager.
Senator Cools: That's right, or the city manager. There are histories — and thank God, some of them are in earlier times — of wicked angers between premiers and mayors.
If we can look at some of those statutes, I believe they're called the municipality acts. Each province usually has one, but I think we should look that up, because I know that it's all about those powers. Those powers are very jealously held, and I think we should include in our report a section on that, because I have seen huge problems. I've been around for a long time, but I've seen huge problems in that area.
I think we should put the full weight of this committee's support behind a recommendation that they get first dibs at making those decisions.
Senator Pratte: We have heard some of you mention that the other orders of government should trust or respect your budgetary controls or audit systems. From that, I understood from that you did not want to have more requirements from the federal government or the provincial government, but I suppose it's the federal government with more reporting requirements. I don't know if you think there is already too much or you fear that there will be too much.
That struck me, because we're in the process. We've been asking a lot of questions from Infrastructure Canada. We want more information from them, because we want to hold them accountable for all that money that they're spending, of course. They don't seem to have much more information than how much they're spending. Their evaluation of how successful they are in Infrastructure Canada is, "Hey, we've spent so much money, therefore we're doing a good job.''
That's one thing: I would like to know more about whether you think they're asking for too much information from you on the money they're giving you and what is it they're asking you.
Second, many of these programs have as a goal boosting economic growth. Some of you have mentioned that the timeline for those projects is too short. Sometimes they are short because they have as a goal stimulating the economy. If the timeline is too long, then that goal is not reachable.
Please comment on both of these topics.
The Chair: Mayor O'Keefe, you look like you want to answer that question.
Mr. O'Keefe: I do.
The Chair: You look as though you already have an answer in mind.
Mr. O'Keefe: It's going around and around and around.
I think the reporting is fine. We have no issue with that at all. It's very important that there be an accounting on all of these projects.
What does concern us, of course, is getting into cost overruns that are beyond our control, given things that can happen over a long period of time when you're doing specific projects. The flexibility isn't there to transfer money between projects that have a cost overrun and other projects that have come in under the funding amount. That would help alleviate leaving municipalities just hanging in the wind.
The auditing and reporting mechanism is very good. I would just like to see more flexibility involved.
In particular, I recognize that the projects are meant to stimulate the economy, and that's fine. We recognize that. In fact, the last infrastructure program several years ago — going back now maybe eight, nine or ten years — we were able to take great advantage of that. It was that shovel-ready program, if you recall. We got out of the gate very early; we were, in fact, shovel ready and funded many projects that stimulated the economy. Again, though, the issue became one of timelines and flexibility.
I recognize these projects are meant to stimulate the economy, and that can still be done. When I talk about the flexibility of dates, I don't mean they have to be extended in a major way, but there should be recognition that sometimes things happen that are beyond the control of a municipality. I can think of several examples wherein our staff picked up things that had caused difficulties in particular projects and had to actually ask the contractors to take remedial action. The remedial action taken put that particular project beyond the timeline, and we actually lost the funding for it. So that's the issue.
Ms. Thompson: Mayor O'Keefe's comment is exactly our concern. There is also the application window to put in for a grant. Some of our plans are shovel ready, more in the sense that we have the asset management plans and the priorities identified, but that doesn't necessarily mean we have the blueprints ready, nor has the meaningful public consultation process taken place, which is really important to our council.
So that's more around the application window. It's not so much the deadlines to get the projects done, but if we have more time to prepare for putting in the application, that would be very helpful.
When it comes to the reporting side of things, the Building Canada Fund has traditionally been very financially focused, but the Community Works Fund has a lot of more criteria around what we have to report on, such as the green aspects of the project, et cetera. So that could perhaps be something that could be added. It's not onerous to report on, so we found that's not a problem on our part.
The Chair: Could we have some feedback from Winnipeg on that particular question?
Mr. McNeil: We want to be accountable for the funds that are granted to us through those programs. We mentioned earlier we like the predictability of the funding. Quite often, though, we find that it's difficult sometimes to predict the length of time a project will take. We went behind the gun in terms of submitting projects under the current programs that will meet the March 31, 2018 date. We are in our applications indicating what our cash flow will be and what we feel are more realistic end dates. If those projects still get accepted, we are very thankful.
In all the programs we've experienced to date with the province and federal government, we haven't had any issues with extensions of deadlines. However, it makes us nervous under the actual funding agreement or cost-sharing agreement when there are hard deadlines included in there, when we've indicated early on that we don't think that those deadlines are realistic, especially for the larger projects that we're putting forward.
Mr. O'Brien: I have made the comment about not putting any more onerous audit reporting to us. We don't have any issue with accountability either, but we've been a proven partner in these. My comment was premised on the fact that we've heard rumours that there might be more procedures put in place. I just caution that those be done with perhaps almost like an exception-reporting type of thing: If you have a municipality or city that has been completely accurate, on time, and open and transparent, as we all should be, then perhaps it doesn't require some additional auditing or reporting structures than already exist.
What's in place right now works. We have no problems with it. We demand the same of partners we give funding to. You can't improve what you can't measure and you need the reporting. I just caution that you don't have to go too much further than that with some municipalities.
With the time frame, I don't have to repeat what was said. We have our priorities. We can identify them pretty quickly. It's sometimes a challenge to get them done within the time frame. I'm all for the process, and it is to stimulate the economy.
Regarding the one about transit that I mentioned, shame on us. Perhaps we should have been more forward thinking on advancing our own plans for greening our fleet and revising what we do. We were working on it, but when the application came, we just had one week to get the numbers in, so we missed that boat. Because of that, we're going to have a two- or three-year window before we can have federal funding in place to assist us with the next step.
The amount of money we're getting this time is very much appreciated. It will solve some of our immediate problems. However, it doesn't allow us to take a step in our new evolution of transit for the city; it just replaces old buses with new, more accessible buses. They will be more energy efficient because they will be new, but it's not whether we could go with propane or electric or all that. That was a very short time frame but, again, it was welcome money.
The Chair: One of the questions we asked over a period of time with our discussions with witnesses — and it's a very simple question — but we asked Infrastructure Canada if they have any engineers. They said they didn't and that they had people who assess the applications. But I wonder from your perspective, as cities, do you have your engineers interacting with bureaucrats who don't understand engineering? And does that influence timelines and execution?
Mr. Johnson had a sort of look on his face that is very interesting. I've been hit in the head so many times that the only thing I notice is body language.
Mr. Johnson: Well, I'm a planner by trade, so asking a planner about an engineer is probably why.
I think we do have a great relationship with Infrastructure Canada in terms of we've got a bridge project under way, and we've got a lot of reporting that goes back and forth. I wouldn't say there's a technical difference there when we're talking about that particular project. In fact, with that bridge project, that reporting has been great, and there have been a number of extensions that have been provided to us for that. I would say that relationship is strong and one in partnership.
Mr. O'Brien: I am an engineer retired, so I have great respect for that profession. It's against my moral code to criticize them. No, that's not an issue with us, Mr. Chair. Planners to planners on the provincial aspect sometimes have some difficulties, but not on projects like this with the engineering scope, no.
Mr. McNeil: I'm an engineer and have been in the design and construction world for 32 years. I actually led the floodway expansion for Manitoba. I was Deputy Minister of Infrastructure and Transportation for six years before I returned to the city as the CAO for the last year and a half.
In my experience, would it be a little easier explaining and answering questions if the people on the other side of the table were also engineers? Certainly. But has it been a real problem? No. And the reason is because a lot of engineers just don't know how to put things into more simple language, and so it just challenges us as the engineers to explain to others in the room, whether they be planners or lawyers or accountants, what the challenges are, what the difficulties are, how the project works, what the schedule is, et cetera, et cetera. So overall it would be easier, but it's no real big deal.
Mr. O'Keefe: I'm not an engineer, but I have to deal with bureaucrats, very successfully, I must say, quite frequently, and our engineering people, when we meet — again, I speak on the provincial level. When it comes to engineering or public works or any of the projects that we do, we're in constant contact with the upper echelon of various departments within the province. At meetings that I usually attend, along with my city manager, probably one of the city planners and one or two of the engineers, dealing on the bureaucratic level with people who may not be engineers hasn't really been an issue.
Senator Marshall: Everybody likes the Gas Tax Fund, so I'd like to know why everyone likes it so much. Also, can you compare why the other funds don't measure up so positively when you compare it to the Gas Tax Fund? It sounds like the Gas Tax Fund is probably the best, and maybe you would like to see the other funds more closely resemble the Gas Tax Fund. Can you elaborate on that?
Ms. Thompson: I think there are a couple of points there, but the main one is the stable predictable funding that flows to the municipalities, and we do get to set the local priorities. Obviously there are parameters within the program, but they seem to be broad enough to cover a lot of the infrastructure needs, especially for the City of Victoria. Could the scope be broadened? Yes, but the stable, predictable funding comes in.
Also, the reporting works for us. It is an annual reporting process. It's very standardized, easy to follow, and the Union of BC Municipalities is actually the administration partner for the province and the federal government, and we have a good working relationship with them, so it just makes it very easy to work through that program.
Senator Marshall: What do you mean by the scope could be expanded?
Ms. Thompson: There are certain projects that can be funded. It started off as very much green-type projects, so storm drains and bike lanes, pathways, those types of things, and that's of course very important. A couple of years ago, it got expanded to also include recreational infrastructure and arts and culture, but the piece that's really missing from it right now is facilities, the more core municipal facilities like fire halls and city halls.
Senator Marshall: I have the understanding that you can use the money in the Gas Tax Fund for projects under other funds where, say, it's a 30/30/40, whatever. The money in the Gas Tax Fund can be used for the municipality's share. Do I understand that right?
Ms. Thompson: That is correct.
Senator Marshall: So that's also a positive?
Ms. Thompson: Yes.
Mr. O'Brien: I agree. I don't have to put any more words to it. That was succinctly put.
Mr. O'Keefe: Yes, I agree. I probably would put four or five words to it. It's money. It's new money. It's needed. It's direct. It's predictable. It has a broad application, a broader application, and it recognizes that the funding for infrastructure has to be broad. There's recreational infrastructure. Infrastructure is more than pipes in the ground, and I think that is being slowly recognized by the application of the gas tax into areas such as arts, culture and recreation.
Mr. Chartier: I would echo similar comments. It's flexible and predictable, and I guess from our asset management programming and where we line all the projects up over a long period of time, having to do feasibility studies, preliminary designs and detailed design and construction, this funding allows us to plan and insert it in our capital budget six years out, where we are dedicating the money already, and thus we're able to plan the projects properly. So that's a big plus for us as opposed to an infrastructure program that just gets parachuted in with the money to be spent in a year or two. The gas tax money, that flexibility, long-term use of it is very useful. We could also use it on debt payments, which is very positive. And to echo the other cities, the reporting mechanism is very good. It's done at the end. We have no issue with it.
We would encourage, just like the other cities have said, that's the definite target for any program from the city perspective.
The Chair: We're coming to the end of our session, and we thank you for your input. It's been fantastic. After Senator Mockler's question, I'd like to have just a comment from each of you — we'll have about 10 minutes left after this question — to say what is the number one element that can be improved in the infrastructure program in terms of the programs, the management, the interaction, whatever in your own mind is your number one thing that can be improved or suggestion for improvement, because I think that would help our committee.
So Senator Mockler, your question? It's going to be a question, right?
Senator Mockler: Since we did share with you those 300 different sources that are out there somewhere, I'd like to have your comments on this statement: The federal government has in the past suggested to municipalities and provincial governments to consider public-private partnerships, P3s, and is now discussing a few new models. I'd like to know if you've been consulted and what your comment is, including asset recycling and also an infrastructure bank. How would that impact on your projects going forward?
Mr. O'Brien: Being in the mayor's chair for just five and a half months, I haven't been privy myself to those discussions, senator. Not that our senior staff have not been. I'll be asking for a briefing on that when I get back home, obviously.
We don't have any P3 projects currently in the city. We haven't had the need for it yet. There are some larger projects looming where that would potentially make sense, but we haven't had those. There have been P3 projects in our municipality that the province has dealt with on schools and such like that, but as far as municipal facilities or municipal infrastructure, we haven't done that yet.
It's interesting about the infrastructure bank. I can't comment on that too much. I apologize for that, but I'm certainly going to check on it.
Mr. O'Keefe: We haven't given P3s active consideration in any depth to this point in time. It's kind of up in the air. We've unofficially talked about it at city hall. We, as a council, have discussed it superficially as an alternative to funding projects that need to be funded. It's something that we are going to have to give active consideration to in the future in terms of our infrastructure needs.
As I mentioned in the beginning, we have a 10-year capital works plan that amounts to $1.25 billion. Within that plan in terms of funding, because we don't have a $1.25 billion ourselves, we may have to look at the possibility of P3 funding to deal with some of these projects.
Mr. Johnson: At this time, we haven't been consulted on that program, so I couldn't speak to that. That's not to say that some of our additional senior staff might have been, but I don't believe that's the case at this point.
In the past, the City of Victoria has looked at P3 projects. We have an arena that was done through a P3 project, through an individual by the name of Mr. Graham Lee. It's a great facility. They do joint concert promotion. They run the facility. It's built on city land. We've got a long-term contract with them, and that was a good partnership.
With our fire hall, rather than going through the traditional design, tender, procurement and construction process, we went out to the community to say, "What could you potentially do for us as a joint facility?'' and whether or not we could do a combined fire hall with affordable housing, a combined fire hall with residential on top. We've got a number of bidders that we're looking at to potentially do that as a joint project.
So there are opportunities that do arise where they are appropriate, but in other instances, P3s are difficult for municipalities to provide.
Mr. Chartier: I will speak particularly on the P3s. In the City of Winnipeg, we would be happy to use the P3 mechanism delivery method. It worked well with P3 Canada. We have been very successful with it.
One flag with those is that there is a lot of up-front work that's required. There's a lot of planning and discussions, financial components, et cetera, but if you follow the process, PPP Canada has been very helpful in supporting it.
We've had three past projects, and we have one new large rapid transit project that has started construction just in the last few months, so it's been very successful for us.
The Chair: Any comment on the concept of an infrastructure bank?
Mr. Chartier: We haven't really looked at that. When accessing funds, we go straight to the market. We haven't had any issues with that at the City of Winnipeg, so we haven't really looked at the use of an infrastructure bank.
The Chair: Now we're coming to the end, and we'd like to have comments from each of our panelists in terms of the one thing that you look forward to in terms of potential improvement to make this system better? Who would like to start?
Mr. O'Keefe: May I say three things? Very briefly, I like the idea of an infrastructure bank. I didn't get the opportunity to speak to that. That's my own fault. I like that. Flexibility and recognition of municipal priorities.
Mr. O'Brien: The predictability, such as the gas tax, with the funding and the indexing. I think we have been very clear about the flexibility and allowing the municipalities to set their priorities, but the predictability of the funding is key as well, because then you can plan ahead and you know what you're going to get.
I will also put a pitch in, too, for the National Housing Strategy, the funding that's flowing through to that. I know the current government is committed to that. I want to make sure that's entrenched because, if not, that will put a tremendous burden on municipalities down the road to deal with the social issues as they fall in our budget, because it will be unavoidable. Thank you.
Mr. Johnson: Certainty. I think we've talked a lot about that today in terms of the certainty that the Gas Tax Fund program currently provides and how that's working well from a municipal perspective. I also think scope strengthening also is something that should be considered for the existing programs that are there.
I know I'm saying three things instead of one, but timelines. I think timelines are really important. We've all touched upon that today. Often, when these programs come out and you have a two-week turnaround, it's very difficult to get that project in front of a council to get that determination and then get the background information all together to make a meaningful submission for infrastructure projects that are such a priority for local government.
Mr. McNeil: Long-term funding certainty for larger projects like sewage treatment plant upgrades and corresponding longer-term deadlines associated with those large projects is what I'd like to leave you with today.
The Chair: Thank you very much. It has been an outstanding session, and you've given us lots to think about. We appreciate your openness and candour in terms of the comments that you've made. We are excited about continuing on because we have another group of five cities of all sizes coming in to see us tomorrow. This is a process that we're really dedicated to because it's that important to our country. We thank you for your involvement in your cities and appreciate the time that you've taken to be with us today.
Thank you very much, folks from Winnipeg. We appreciate you being with us in terms of participating with this activity today.
(The committee adjourned.)