:
Chair of the committee Tweed, Vice-Chairs Laframboise and Volpe, ladies and gentlemen members of the committee, the Union des municipalités du Québec eagerly accepted your invitation to take part in the committee's work regarding the impact of the March 31, 2011 deadline set by the government for the completion of infrastructure stimulus projects. This is an issue for all municipalities in Quebec, and particularly for members of the Union of Quebec Municipalities.
The UMQ represents municipalities of all sizes in every region of Quebec. Its mandate is to promote the fundamental role of municipalities in enhancing social and economic progress across the province, and to support its members in building democratic, innovative and competitive living environments. More than 5 million Quebeckers are represented by the UMQ.
For Quebec municipalities, the pressures caused by the deadline have been made worse as a result of several factors, including the lengthy negotiations between the federal and provincial governments, which meant that measures were really only put in place several months after the announcement. This had the effect of slowing down municipal processes which must go forward before any work can begin.
In addition, municipal elections held in November of 2009 all across Quebec also slowed the pace at which projects got underway. Almost 50% of city and town halls saw changes to their elected officials, something which had a major impact.
Finally, Quebec municipalities have to deal with harsh winters, which means that there is no construction work being done between the end of November and the end of March under the Water and Wastewater Pipeline Renewal Program, or PRECO.
Taken together, these factors have resulted in increased pressures on Quebec municipalities as a result of schedules being shortened. Despite that, the municipalities have acted quickly and diligently to respond to requests from governments.
As we were frequently reminded by ministers of both the Government of Canada and the Government of Quebec, without quick action by municipalities to get major infrastructure projects underway, the effects of the economic crisis would have been far worse. We hope this partnership will continue.
Municipalities are currently doing everything possible to meet the tight deadline that has been imposed, which means important concessions on their part.
The City of Laval, for example, has stepped up the pace of its work to renew water and wastewater pipelines. In 2010, we are planning to carry out all the work approved under the PRECO, which represents an investment of almost $45 million. However, factors beyond our control may result in part of the work not being completed on time.
Furthermore, engineering principles recommend that paving work be done in two stages, with a period of freezing/unfreezing between the first and second layers, in order to ensure a longer life. This standard cannot be followed if the deadline of December 31, 2010 is to be met.
However, the City of Laval is certainly not the only city to be facing these challenges and the work done by municipalities across Quebec is worthy of mention. That is the case for Sainte-Marie, Beauce, which has been commended for its efforts by elected members from the region, both federal and provincial.
In that specific case, the municipality only has 12 months to carry out work that would normally take almost twice as long. Despite the fact that it will not be able to meet the March 31, 2011 deadline, Sainte-Marie began work last March on the construction of a sports and multi-purpose complex at a cost of $28 million. It is doing so in order to meet the pressing needs of its residents.
Moreover, in spite of the diligence they have demonstrated, municipalities have to contend with an administrative process that always extends over many months. For example, for a relatively simple project submitted on January 29, 2010, the deadline for committing projects under the stimulus measures, the municipal process will result in the work only beginning five or six months later, around the month of July or August, depending on contingencies.
First of all, at the same time that it proposes a project, the municipality moves forward with approval of its borrowing by-law, which takes approximately three months. In the meantime, the municipality will have received approval for the project from the Ministère des Affaires municipales, des Régions et de l'Occupation du territoire.
This year, because of the large number of projects that came forward in January of 2010, most municipalities only received their memorandum of understanding in March, almost two months after submitting their project. Very often, it is only once that confirmation has been received that a municipality will begin preparing plans and estimates, something that may take two to three months, which brings us to the month of April. Once the plans have been completed and the borrowing by-law has been authorized, the municipality issues a call for tenders and examines the bids approximately one month later, in June.
Based on this accelerated process, and assuming that the bids come in within the budget set by the municipality, it will only be possible to begin work in July, at the earliest. In the specific case of street infrastructure work funded through the PRECO, the deadline for the completion of work is December 31, 2010. Because the month of December is automatically out of the question because of the weather, that leaves only four or five months for the municipality to carry out its programming, whatever the magnitude of its projects.
This process, which is critical for proper municipal management, demonstrates the extent to which this deadline is simply unrealistic in a great many cases. It may result in higher construction costs than the municipalities will ultimately be in a position to absorb on their own. As was recently mentioned by Mr. Dany Lachance, President of the Quebec Municipal Engineers Association, imposing time constraints on a contractor generally results in higher costs. Without a deadline, no such constraint exists.
The Municipality of Matane experienced this with respect to its project to upgrade the local arena when it had to shorten the work schedule from 16 to 10 months in order to meet the deadline. The compressed timeline resulted in increased project costs of approximately $1.7 million which it absorbed on its own, by passing a second borrowing by-law.
The other issue that the Union des municipalités du Québec would like to draw attention to today is the fact that many municipalities which have already begun this work may not be able to meet the March 31, 2011 deadline. That would mean they would be forced to incur 100% of the costs of all work completed after the deadline. I'm sure you will agree with me that this is contrary to the spirit of the partnership between governments and municipalities. This is a situation that several municipalities will face.
I would like to give you another example, because an example is worth a thousand words. The City of Saint-Hyacinthe has just begun construction work on a recreational/tourist complex. Initially, in 2006, this was expected to cost $24 million. Since then, the City has lowered the cost to $16 million, with a view to meeting the deadline. It went even further, by dividing the project into separate work packages in order to speed things up. According to estimates on March 21, 2011, only about 60% of the work is likely to have been completed, leaving the Municipality of Saint-Hyacinthe with a bill of about $4 million that it will have to pay on its own.
The examples I have given of projects that are already underway through the stimulus funding are not the rule, however, because several municipalities are not able to run the risk of having to take on such a heavy financial burden. That is the case for the Municipality of La Pocatière, which has a population of less than 5,000. Faced with the possibility of not being able to complete the work in time, it decided to abandon a $600,000 project under the PRECO to upgrade its water and wastewater pipelines, and believe me, it is in dire need of that work. Yet the project was approved by both levels of government. The municipality has assured us, however, that were the federal government to show some flexibility regarding the deadline for completing the work, it would roll up its sleeves and get the work done, because it is very important that the project be completed.
Although the March 31, 2011 deadline seems far away, municipalities are now having to make decisions, and it is now that they are in need of greater flexibility on the part of the federal government. All across Quebec, there are examples like the Municipality of La Pocatière. That illustrates the fact that, despite the monies earmarked for these economic measures having been committed—more than $1 billion for Quebec—many projects will not go ahead, meaning that much of the stimulus money will remain unused.
In summary, the UMQ would like to remind members that factors such as the slow negotiations between Ottawa and Quebec, the provincial elections, and weather are totally beyond the control of municipalities. And yet, in the context of infrastructure stimulus projects, they are nonetheless suffering the consequences, as an unrealistic deadline is being imposed.
Municipalities which are unable to change or even cancel large-scale projects that improve residents' quality of life will therefore have to take full responsibility for all costs incurred after the deadline. That is contrary to the spirit of a partnership between governments and municipalities.
In closing, the UMQ is asking the federal government to demonstrate some flexibility in this regard and allow municipalities which have already begun construction work to complete it after the December 31, 2010 or December 31, 2011 deadlines, so as to fully benefit from the federal government's financial contribution.
Thank you for your attention. I am now ready to take your questions.
:
You say both governments were well aware of the deadline. I have never had the privilege of sitting in government in Ottawa or in Quebec, but I have had the privilege of working with both governments. I don't know whether it is accurate to say that governments are aware of all the issues.
I think it is important to point out that, if governments had not had the municipalities and if the municipalities had not made governments aware of their needs, you probably would not have found any projects to undertake, even with your own money. Even if you had set yourself up on a street corner with your own money, you probably would not have found any takers. You need the municipalities. The municipalities are the most critical level of government ever created by man. Indeed, it is that level of government that allows the other two to carry out their social or economic mandate. It is unthinkable that a hospital could be built in a field if there are no roads leading to it and no watermains and sewers to service it. The same applies to housing for the people who work in industry or in business.
Without the municipalities, your program would not have worked. There are some realities that you did not factor in when developing your timetable. The time it took for discussions between the federal and the various provincial governments, and particularly the Government of Quebec, cannot be attributed to us or subtracted from the time we need to complete the work.
The fact that elections would be held in Quebec in 2009 was known in advance. However, there were changes at the elected official level in more than 50% of municipalities. They began asking their own questions about the programs. And, it is natural for a new team to look at what the previous team has done and question whether or not it is the right decision. The majority of projects are going ahead, but that did created time-related issues.
With respect to the engineering work, in Quebec, asphalting generally stops in late October. If you do it all at once, laying a single coat, you are contravening the proper practices recommended by engineers. That means that it has to be completed before the end of October, thereby jeopardizing the quality of the work.
It is critical that the money be used as effectively as possible. But not using the money effectively does not mean that you just keep telling people that they knew there was a deadline. Of course, people did know, as you have stated I don't know how many times. However, did you know it would be difficult to meet that deadline? That is what I am trying to explain.
:
No, there are no reserve funds in Quebec, unfortunately. The mechanism for funding municipalities in Quebec is completely different from the process in the other municipalities across Canada.
I always compare myself to my good friend, the young and dynamic Hazel McCallion, from Mississauga, who never seems to age. I am in charge of a city with a population of 400,000. Mississauga has a population of approximately 550,000. It is a city that is part of the Toronto suburbs, just as Laval is amalgamated with the Montreal region. The City of Mississauga has $720 million in its investment fund and not a penny of debt. Even if the City of Laval were able to reduce its debt by $160 million—and it would be the only large city in Quebec to have succeeded in doing that—I can assure you that it would still not have $720 million of funding available to it. No municipality in Quebec—and I would say Laval is probably the one that is on the soundest financial footing of all the large cities—has investment funds in reserve and, in any case, no municipality would be able to dip into its investment fund for that purpose, even if the municipalities did have a lot of money.
One day the federal government decided to introduce economic stimulus, and allocated money for that purpose. I was the first to subscribe to the idea of a deadline. There must be deadlines so that people don't spend too much time thinking but actually carry out their projects. That is the fundamental objective of the recovery plan. Once projects are underway, everyone is working and all the partners are at work, everything is fine as far as you're concerned—you just write the cheques. It's not too difficult to write cheques. You expected to be doing that, the money is all allocated, and you just send out the cheques.
However, it's the municipalities that have to develop the projects, hire the engineers, supervise the tendering process, supervise the work, and deal with the realities associated with that work. So, you have to trust your partner right up until the end. That partner is honest and is working with governments. When the federal and provincial governments invest $1, they quickly recover it—that is what all the OECD studies show. But the municipalities do not recover it—in fact, they pay taxes on top.
For all these reasons, I think it would be terribly unfair if the deadlines that were set to ensure the work would get started quickly—and that was perfectly appropriate; indeed, I subscribed to it—resulted in the municipalities having to bear the burden for part of the recovery plan, when they certainly don't have the capacity to do that—at least, not in Quebec.
I would just like to remind you, Mr. Chairman and members of the committee, that 84% of the debt load of Canadian municipalities is in Quebec municipalities. We would not be in a position to provide stimulus, even with the best will in the world.
:
First, I would like to thank the government for not cutting infrastructure programs and for actually creating new ones. Every government has its merits and this one has that particular merit.
What I am telling you today is that the money you don't give the municipalities, if you maintain too rigid a deadline, is money the municipalities will have to borrow. There is already an infrastructure deficit in Canada, as previous governments and the current government have acknowledged. Some Quebec municipalities will be deprived of the opportunity to maintain their infrastructure, thereby increasing their maintenance deficit.
I appeared before several committees, as President of the Coalition pour le renouvellement des infrastructures du Québec, to demonstrate that, in addition to the fiscal deficit that appears on the balance sheet, there is also an extremely significant maintenance deficit for infrastructure, bridges and roads. It's the same for hospitals and schools. This country does not have a very good maintenance culture. In fact, in that respect, we are not exactly a role model among OECD countries—quite the contrary.
Today I am here to ask what will be done with the money earmarked and announced under the stimulus program that is not given to municipalities because of the deadline. It may serve to ease the government's fiscal deficit, but it will also increase either the municipalities' debt or their infrastructure maintenance deficit. Job one is really to wipe out the infrastructure maintenance deficit much more quickly than we ever could, without the federal government's participation. If it doesn't participate and if it maintains this rigid deadline, it is the municipalities and the small taxpayers who will suffer, while the government recovers a few dollars which, in actual fact, when added on to the money from Quebec, would yield much better results if used for the economy, allowing it to access tax money more quickly.
We are partners, and this is the first time, as the government's partner, that I sense that the government does not understand the constraints under which we operate on a daily basis.
:
Thank you, Mr. Chairman.
I would just like to provide some clarification. First of all, I would like to thank the Parliamentary Secretary, Mr. Jean, who gave us an opportunity to have this debate, and I also want to thank the Conservative Party. It's important to give credit where credit is due, and he was interested in finding out what was going on.
I would like to come back to some of Mr. Généreux's comments with respect to the MRIF. The MRIF is a completely different program. It was introduced by the Liberals, and the Conservatives then invested more money in it. But what we are talking about is a one-time, “canned” and time-limited program, whereas the MRIF was over five years. In that case, there were specific deliverables.
Obviously, asking for a contribution from Quebec municipalities, which are already carrying 84% of the municipal debt in Canada, in the midst of an economic crisis, is already asking for quite a lot. I understand that some municipalities just did not want to go into debt, but others did take risks because they had specific needs. It is no accident that there is an infrastructure coalition: there are needs in that area and Quebec municipalities have some of the oldest infrastructure in Canada, something we must not forget.
Your Worship, you mentioned that new projects could be started, but I don't think that will be possible. In any case, announcements have already been made. Municipalities which were part of the program found that out when the announcement was made. They learned of this in December and they now have to complete the work before December. They are ready to accept that, but the problem is that their engineers or contractors cannot guarantee the result. They went into action to get the economy going and because monies had been earmarked for Quebec. However, what could well happen now is that the money will go back into the government's coffers and the municipalities will end up with a larger debt. Is that correct?
Your Worship, it's great to have you here today.
I also was a mayor, for eleven years, and a director of the Union of British Columbia Municipalities, so I understand some of the challenges municipalities have.
You mentioned there were three areas in which you felt Quebec was penalized with regard to the stimulus funding. One was the negotiations between Quebec and the Government of Canada. I know that British Columbia was the first to sign on, and we were the first out on the track, but Quebec wasn't that far behind. I don't think those negotiations were delayed any more than they were for some of the other provinces that have been successful in rolling out the stimulus money.
The other thing you mentioned was about municipal elections. As a former mayor, I can recall the transition from when I was first elected. I think the day after being sworn in I was signing a collective agreement with the union. There's a certain flow of responsibilities and decisions that go along even though there's a change in council.
I know that in the municipality I represented, we had a capital plan for roads and for upgrades of our infrastructure. Some of them were shelf-ready. There were various levels, but they were ready for funding, and we would hope we'd get some provincial or federal funding in the future.
I don't know if I, as a former mayor, particularly think the election disrupted that flow of decision-making and planning for infrastructure. The only thing I might buy a little bit is the weather, because I live in the California of Canada, and you get about two or three more weeks of winter here in the east. So I appreciate that.
One of the things our minister did as soon as he announced the stimulus funding was to tell all the members of Parliament to get out there and meet with their municipalities and sit down and find out what projects they had and how these moneys could apply. As a former mayor, the first thing I did was to have meetings with all seven of the communities and municipalities in my constituency. I told them to take the stuff off the shelves they had been hoping to do for a number of years, and it was really interesting, because we were able to get the money out right away. In fact, the chair and I were in the top five as far as MPs who were rolling money out went. So it can be done, but there's a process you have to follow to get it done.
As far as projects and timelines go, we were interrupted in British Columbia because we had a provincial election. There were no capital funding announcements for about two and a half months as we had the government re-elected. The fact is, the ministries changed, so we had a delay too. We had a rollout on May 12, but we didn't have another rollout until after August. There are those challenges, and that's part of the system we live in.
I believe that in government, as far as municipal government goes, you have those plans in place, and you're waiting for money. I think it was great that our government came out with the stimulus. Quite frankly, because this money was needed in the economy, we found that the major projects in my constituency came in at lower than was budgeted. One highway project that the Government of Canada funded to $12 million--it was a $25-million project--came in $3 million under budget. The second stage of that project came in at $1.5 million under budget. A sewage treatment facility was $1.5 million under budget. Because there was no investment by the private sector at that time, there was a capacity of engineers and contractors ready to go. We found we were able to get those projects up and going and get good prices on those projects.
I don't want to argue about the circumstances in Quebec compared to those in British Columbia, but I feel there is some responsibility upon the municipalities.
In most of the communities I had, there were projects on the shelf that they had reserved, set aside, so when the opportunity came up they could use those reserves to fund these projects. Is that not the system with the municipalities in Quebec, whereby they set aside reserves for future capital projects?
:
No, we don't have the same possibilities in Quebec to reserve capital funds. It's totally different.
[Translation]
First of all, I would like to thank the former mayor who is now a member of Parliament from British Columbia. As you were describing how you work in your area, I did feel a little envious.
That being said, we have no Conservative MP or minister in my city; nor is there a Conservative MP or minister from the Montreal region. The work that you did with your municipalities was not all done by the Minister. Mr. Paradis is a very nice man, very dedicated, and someone I really appreciate, but he has a lot on his plate and does not have time to visit the municipalities, other than calling them once on the phone to tell them to get things underway.
Furthermore, you can do all the analysis and make all the comparisons you want between your province and ours. Based on some criteria, you might turn out to be better in five years, but five years from now, we might also be better than you. I don't think we should be comparing what happened in British Columbia with what is occurring now in Quebec.
I don't know what the electoral tradition is in your area. I hope you followed events in the last municipal elections, particularly in the Montreal region. You would have seen for yourself that there was far more disruption than usual this time for town and city councils.
Having said that, I would just like to repeat that we are partners, and what we are asking is to be treated like partners. We acted in good faith, we submitted projects, we took all the appropriate steps to meet the deadline requirement. But now we are to be penalized for the good faith we, as partners, showed our government.
I would say—
[English]
If I may say it in English, great cities make great countries.
[Translation]
If you do what is needed to ensure that cities all across the country are healthy, then the country will be healthy as well. If Canadian cities are not healthy, you may think you have solved an accounting problem, but you will not have solved the country's problem.
Thank you very much for your attendance today.
You've mentioned “penalized” many times, and I have to say that the federal government, the provincial government of Quebec, and all the provinces made an agreement to finish by the end of March 2011. And every municipality actually signed an agreement as well to finish by March 31, 2011. I represent approximately geographically 30% of Alberta, but all my small municipalities told me bluntly they're not applying for some projects because they knew they couldn't finish. So it's not a penalty to fulfill the terms of an agreement. It's fulfilling the terms of an agreement that was well known, well documented, and agreed upon. So I just want to make sure that's on the record.
Now, there is another question I have for you, sir, and it will come after I talk about some things.
As part of this Conservative government's agenda, we have put forward $936 million from the infrastructure stimulus fund for 875 projects in Quebec.
Mr. Gilles Vaillancourt: Yes.
Mr. Brian Jean: We have, in the green infrastructure fund, put forward over $170 million for six projects across Quebec, and 106 projects for $210 million through the economic action plan—a top-up, in fact, because we wanted to make sure we kept it going. We're watching the economy very closely. Through the Building Canada fund, another $175 million in base funding to Quebec. Through the major projects component of the Building Canada plan, another $1.5 billion to Quebec for 18 projects, and $210 million for projects in communities with fewer than 100,000 people to make sure we got the large cities and the smaller populations. There's $200 million for communities with fewer than 100,000 people, for seven more projects.
In fact, if I may, this is the government that actually doubled the gas tax funding, and currently $2.7 billion will be going to Quebec between the years 2007 and 2014. And this is the government that made that permanent, so that communities such as the ones you represent will have that continuous funding, and in fact we've doubled that funding.
So I just want to make that clear on the record, because I think it's very important to see that we have actually transformed as a government and as a country the funding mechanism for municipalities.
My question to you, sir, is have you ever seen so much money coming to municipalities and the provinces from the federal government for infrastructure funding? Have you ever seen this in the history? Because you've been here a long time, sir.
:
Thank you, Mr. Chairman.
I want to thank you for the neutrality you have shown.
It is important that the members of your association be fully aware of the fact that Mr. Flaherty, , promised that all the stimulus projects would begin at the end of May of last year. The municipalities' efficiency is not the only problem. There are a lot of problems here in Ottawa. I am still asking that this government apply the same standards to itself that it does to its partners. Speechmaking is not enough.
Personally, I have never been the mayor of a city, but my father was. I appreciate that contribution. It is very important not to accept the idea that there is more expertise here in Ottawa. During the 1960s, half of this country's infrastructure was the responsibility of the federal government. Today, it is 11%. The municipalities are the ones with the expertise, and it is very important to put to good use the billions of dollars that the government has requested from Parliament which may have to be paid back by our grandchildren and future generations. These days, there is another problem in Parliament with respect to a small lake in Toronto. There is already a great lake next to Toronto, but the government decided to create another one for the media. That's a fundamental issue. How do we benefit from that?
In terms of this situation, I hope the government has a clear understanding of the issues. I attended the meeting with the Canadian municipalities. I heard the Prime Minister say that there would be no extension. But the real issue is not the extension; rather, it is the fact that the deadline is inflexible and arbitrary. For me, that is an important point. For the Prime Minister, the Minister and committee members, it's a matter of determining which arrangement would benefit the country. This money does not belong either to the government currently in office or to our party. This is money that must be used effectively all across the country, now and in the future.
I do hope it will be possible to secure a recommendation from all committee members on this very practical issue. How can we ensure that the programs are a success? I have the feeling we will need more information in order to convince committee members. Maybe it would be possible to do a survey to have a precise idea of the consequences as a whole, in all the different communities across Quebec. We have a choice: to ensure that, between now and the end of March, 2011, these projects will be beneficial and achieve their objectives, or suffer one failure after the other. Why? Because this committee is afraid to take its responsibilities? I hope not.
Does someone have further comments that could guide this committee's deliberations? As I see it, this is not about a confrontation. It is about finding a way to work together to achieve the best possible outcome.
:
Thank you, Mr. Chairman.
I think the parliamentary secretary is being disingenuous, because at the end of the day, there is only one taxpayer. That's for the record.
I also think the parliamentary secretary is being disingenuous on his commitment, an ongoing commitment, to cities and municipalities. We know for a fact there wouldn't have been an infrastructure stimulus fund if the opposition parties hadn't gotten together and required them after the first prorogation. Let's put that on the record.
The fundamental issue here, as I see it, is the lack of openness and transparency, and we've talked a lot about fairness in the process. Largely, unrealistic timeframes were imposed. Clearly the only municipalities that benefited and that could benefit were those that had projects either under way or almost under way. Certainly those with severe weather issues or union problems were going to be penalized, and many other projects would be ineligible. Certainly projects that were in the vision stage or in the feasibility stage would be ineligible. Legacy projects such as the City of Toronto's subway completion were going to be ineligible. I think the infrastructure stimulus fund was a missed opportunity for a one-time legacy project. Here we have $50 billion being invested. Did it go to a higher-speed rail or an LRT system? No, no, no. The moneys were used for roads, sewers, bridges, maintenance, etc.
You made reference to the City of Mississauga and Hazel McCallion. Of course I'm the member for Mississauga--Streetsville, very proudly, and we have a $1.5 billion infrastructure deficit over the next 20 years, which is $750 million annually. So the money we received, frankly, is a drop in the bucket.
You made reference to our reserve funds. Well, those reserve funds are dwindling. In fact, in 2012 we'll have only $30 million available for infrastructure rehabilitation projects. We know from the FCM that the current needs of municipalities across Canada are $123 billion, and as I said to begin with, there's only one taxpayer. The money has to come from somewhere.
Let me ask you this, Mr. Vaillancourt: how many of your projects were eligible and ineligible? Did you have projects lapse? If the timeframes weren't so punitive, what would you otherwise have used the funds for?