Introduction

Public infrastructure includes a wide range of facilities that enable a country or community to function. It includes cultural and recreational facilities, roads, drinking water systems and public transit. In Canada, most public infrastructure belongs not to the federal government, but to municipal governments, provincial and territorial governments and Indigenous communities.^[1] Although it owns little public infrastructure—only about 3% of the total—the federal government plays a key role in funding projects undertaken by other infrastructure owners.

Launched in 2016, the Investing in Canada plan is a long-term federal infrastructure plan that provides for some $188 billion in funding over 12 years. As the federal government was approaching the midpoint of implementing this plan, the House of Commons Standing Committee on Transport, Infrastructure and Communities (the Committee) adopted the following motion on 29 October 2020:

That, pursuant to Standing Order 108(2), the committee undertake a study on the ability of targeted infrastructure investment to influence social economic and environmental outcomes and improve the lives of Canadians, and underserved vulnerable communities; that the committee examine the socioeconomic profile of where infrastructure funding has flowed historically; and that the committee study the best practices in Canada and abroad for ensuring infrastructure investments reach communities most in need with a specific emphasis on rural Internet.

The Committee dedicated six meetings to this study between 15 April 2021 and 6 May 2021. It heard from 30 witnesses and received two briefs. The following sections outline the discussions that took place with various stakeholders regarding Canada’s current and future infrastructure needs.

Structure of Infrastructure Programs

The Investing in Canada Plan is administered by more than 20 federal departments and agencies.^[2] The structure of the programs, including the cost-sharing agreements and application criteria, can vary substantially from one program to the next. In general, the programs require recipients to apply for funding for a specific project. The federal government determines which applicants are eligible, as well as the types of projects that can receive funding through the program in question. It also sets the deadlines for submitting applications. For certain programs, an agreement between the federal government and the provincial and territorial governments makes the latter responsible for identifying and prioritizing eligible projects.

More Flexible Programs

A number of witnesses argued that infrastructure programs should be less prescriptive about the types of projects that are eligible and provide more flexibility and long-term predictability. They cited the example of the Canada Community-Building Fund (CCBF), previously known as the Gas Tax Fund.^[3] The CCBF is a federal program that drew high praise from many witnesses. It is a long-term funding source that provides about $2 billion per year to the provinces, the territories and First Nations on a per capita basis.^[4] These funds are then transferred to municipalities, which can engage in long-term planning because the funding is predictable. The CCBF has 19 categories of eligible projects and offers some leeway in the use of the funds; municipalities can pool them, save them or use them as a loan guarantee.

Regarding the categories of eligible projects under the CCBF, Jacques Demers and David Boulet, respectively President and Economic Advisor of the Fédération québécoise des municipalités, said they would like to see the program expanded to include dams and municipal buildings that are not currently eligible, such as city halls and municipal garages.^[5]

According to Paul Kariya, Senior Policy Advisor at the Coastal First Nations Great Bear Initiative, one of the problems with application-based infrastructure programs is that they result in unfair competition between communities of different sizes that may not all have the skilled staff available to complete the required documentation by the deadline. Similarly, Jim Bradley, Regional Chair of the Regional Municipality of Niagara, said it would be simpler to provide stable and predictable allocation-based funding that would enable municipalities “to effectively budget for small and, especially, large-scale projects and aid in the region’s overall long-range infrastructure planning.” He also stated that, with a robust asset management plan, projects could be matched with the federal government’s priorities.

Asset Management Plans

Broadly speaking, asset management is a set of practices that support informed decision-making regarding a municipality’s current and future infrastructure maintenance, repair and replacement priorities.^[6] Matt Gemmel, Director of Policy and Research at the Federation of Canadian Municipalities (FCM), discussed the Municipal Asset Management Program (MAMP), a joint initiative of Infrastructure Canada and the FCM that he said helps strengthen municipalities’ asset management capacity. Mr. Gemmel made the following comment about the MAMP:

There’s an opportunity there to support municipalities at the local level to improve technical expertise, human resource capacity and training around how to design, plan and build infrastructure so that it achieves those outcomes. That capacity-building element is an important solution to this juxtaposition between federal conditions on the funding versus ultimate flexibility on behalf of municipalities.

According to Mr. Gemmel and John Gamble, President and Chief Executive Officer of the Association of Consulting Engineering Companies—Canada, both types of infrastructure programs—application-based and allocation-based—are needed, but municipalities do prefer the latter. Garth Frizzell, President of the FCM and Councillor of the City of Prince George, maintained that “directly empowering local leaders who know what’s needed and what works on the ground” is essential.

Like multiple other witnesses who underscored the key role local leaders play in identifying local infrastructure priorities, Mr. Gamble suggested that the federal government use asset management plans as the basis for funding rather than the application-based model.^[7] A municipality or community could therefore receive funding to implement its plan, which would enable it to better determine the timing of infrastructure projects and eliminate the need to submit an application for every project.

Some witnesses were pleased by the federal government’s announcement in Budget 2021 that it would conduct Canada’s first National Infrastructure Assessment.^[8] Together with asset management plans, it will provide a better understanding of the current state of Canada’s infrastructure and an accurate estimate of the country’s long term infrastructure needs. In the same vein, Ian Hamilton, President and Chief Executive Officer of the Hamilton–Oshawa Port Authority, said that Canada lacks data to assess the effectiveness of its supply chains and identify capacity issues in its goods transportation networks. Mr. Hamilton applauded the creation of the Canadian Centre on Transportation Data in 2018 and expressed the hope that Canada’s supply chain stakeholders will work together to “build a database that allows us to look at transportation in terms of integration between the modes rather than three individual silos.”

Infrastructure Needs

The witnesses confirmed to the Committee that the federal government’s infrastructure programs are appreciated. However, some also said the funding often fails to meet the demand given the size of the infrastructure deficit, especially in remote regions.^[9] Graydon Smith, President of the Association of Municipalities of Ontario, pointed to the example of the Community, Culture and Recreation Infrastructure stream of the 2018 bilateral agreements between Infrastructure Canada and its provincial and territorial counterparts.^[10] Mr. Smith argued that the $400 million allocated to Ontario under this stream was inadequate since, when “that program came out, it was oversubscribed 10:1.” Mr. Boulet asserted that the same was true in Quebec, as most of the projects eligible for this stream were rejected because of a lack of funds. Jim Parsons, Mayor of the City of Corner Brook, deplored that some eligible projects were too costly for the provincial allocations in the bilateral agreements. Mr. Parsons referenced a single wastewater treatment plant whose cost would have used an entire year’s allotment for Newfoundland and Labrador under the Green Infrastructure stream. To ensure such projects are funded, he proposed establishing targeted large-scale funding for priority regional projects.

Sandra Skivsky, Chair of the National Trade Contractors Council of Canada, said the federal government needs to find a way to speed up infrastructure project approvals and the delivery of short-term funding. Shoshanna Saxe, Assistant Professor in the Department of Civil and Mineral Engineering at the University of Toronto, also observed that the most common speedbump for infrastructure projects in Canada “is the time it takes to get to the starting line, to prioritize and to get dedicated funding.” As for community, cultural and recreational infrastructure, Ms. Saxe hopes that, in the future, investments will be directed more toward multi-function infrastructure, such as schools that are also community centres. She argued that this would make more efficient use of land, which is subject to increasing competitive pressures.

Ms. Skivsky remarked that, when infrastructure is built in rural or remote regions, contractors often bring in workers, materials and equipment from urban centres. She believes that local labour should be trained and brought into a project as soon as construction starts, which would ensure maintenance could be done over time and eliminate the need to call in workers from other areas when repairs are necessary. Likewise, Jean Paul Gladu, President of the Alaska–Alberta Railway Development Corporation Canada, argued that working with Indigenous communities from the very start of a major project, such as a railroad linking Alberta to Alaska, is critical to its success.

Transportation Infrastructure

Mr. Boulet reported that it is difficult to convince governments to invest in sparsely populated areas, which results in continual underinvestment in the infrastructure and services of remote regions. During his appearance before the Committee, Réjean Porlier, Mayor of the City of Sept-Îles, described the isolation the communities in his area experience owing to the lack of transportation infrastructure. Mr. Porlier said that one way to break this isolation would be to extend Highway 138—which currently stops at Kegaska—an additional 400 kilometres to Vieux-Fort, where it resumes before connecting with Newfoundland and Labrador’s Highway 510. In his view, finishing the highway would give residents a travel option in emergencies, as air and sea transportation is less reliable in poor weather. In addition, Mr. Porlier deplored the state of air transportation in Quebec, especially in the Lower North Shore region, calling it “everything but efficient and accessible.” He also stated that prices are prohibitive and service is inadequate. He believes that a co-operative model, in which customers are also owners, may be the solution.

Mr. Hamilton reported that the Toronto–Hamilton region faces quite a different challenge from that of Mr. Porlier: it is experiencing very rapid population growth, resulting in constant traffic congestion. He believes that increased use of short-sea shipping could reduce the number of trucks on the road, the need for investments in road widening and greenhouse gas emissions. While he acknowledged the value of the National Trade Corridors Fund (NTCF), Mr. Hamilton also said the following:

We would encourage the NTCF program to emphasize increasing Canada-U.S. trade, including imports tied to domestic industrial supply chains such as those for manufacturing and construction, which will be central to economic recovery and employment.^[11]

Public Transit

Mr. Frizzell gave three examples of infrastructure investments that could affect socio-economic and environmental outcomes and improve Canadians’ lives: public transit (which will be addressed in this section), community infrastructure (which includes sports and recreation facilities) and broadband Internet.

Marco D’Angelo, President and Chief Executive Officer of the Canadian Urban Transit Association, explained to the Committee members that the COVID‑19 pandemic and telework have had a major impact on public transit ridership in Canada. Mr. D’Angelo said that, during the lockdowns, ridership fell by about 80%, affecting municipal budgets. Accordingly, given that fares provided about half of public transit revenues before the pandemic, he stated that stable financial support from the federal government would be needed “to keep service levels so that people who rely on transit can get where they need to go.” Consequently, like other witnesses, he supported the new permanent public transit infrastructure fund announced in February 2021.^[12] According to the federal government’s announcement, this fund will provide $3 billion per year starting in 2026–2027.^[13] Mr. D’Angelo said that, in the meantime, governments should work together to “make sure that operational funding continues until [public transit] ridership is close to, if not at, pre-pandemic levels.”

Mr. D’Angelo told the Committee members that small communities need access to funding to offer mobility options to their residents. To foster investments in small public transit projects in more remote communities, he recommended including baseline funding for all of Canada’s public transit services in the permanent fund that will launch in 2026–2027. Mr. D’Angelo explained that federal baseline funding that does not depend on matching contributions from provincial or territorial governments would lead to the completion of small projects that might not otherwise be built.

On a separate note, Teck Resources Limited (Teck) argued in its brief that, since Canada continues to feel the effects of the COVID‑19 pandemic, Infrastructure Canada should work with federal agencies and private-sector partners to integrate the use of copper into high-traffic public infrastructure such as public transit. Copper, which Teck noted has proven antimicrobial properties, could be installed on surfaces to reduce infection transmission.

Affordable Housing

Mr. Smith pointed out that the COVID19 pandemic has highlighted the urgent need for affordable housing and child care services in Canada. In the same vein, Mr. Bradley told the Committee that one of the Regional Municipality of Niagara’s infrastructure priorities is affordable housing, as vacancy rates for this type of housing are at virtually 0% in the region and wait lists are only growing.

Mr. Gemmel applauded the creation of the Rapid Housing Initiative (RHI), which was launched in October 2020 to meet the urgent housing needs of vulnerable Canadians.^[14] In announcing the RHI, the federal government also stated that it was part of its plan to “create jobs and support economic recovery, while eliminating chronic homelessness in Canada.”^[15] The RHI’s budget was initially set at $1 billion, but it received an additional $1.5 billion in Budget 2021.^[16] Although he was delighted by the federal government’s commitment and announced investments in affordable housing, Mr. Gemmel admitted that the amounts were well below the $7 billion that the FCM estimates is needed to provide permanent supportive housing for all Canadians experiencing homelessness.

Climate Change: Adapting and Building Resilient Infrastructure

Walter Sendzik, Mayor of St. Catharines and Vice-Chair of the Great Lakes and St. Lawrence Cities Initiative (GLSLCI), testified that the main challenge that affects every issue and every decision in his region is climate change. Mr. Sendzik pointed out that protecting the Great Lakes and the St. Lawrence River is not a local issue, but a binational one that requires cooperation between Canada and the United States to develop a joint long-term plan. He cited the following examples of climate change-related issues that cannot be solved locally:

They are access to safe drinking water across North America, the likelihood of year-round shipping on the Great Lakes due to climate change, the cost of erosion to once stable shorelines, which we’ve seen all along the Great Lakes, and the effects of harmful algae blooms that put drinking water at risk and kill native species.

According to Craig Stewart, Vice-President of Federal Affairs at the Insurance Bureau of Canada, the country needs to develop a national climate change adaptation strategy that includes deadlines for protecting infrastructure. Mr. Stewart offered an example target of protecting 30% of high-risk Canadian homes and businesses from flooding by 2030. He acknowledged that the federal government has taken significant steps to improve infrastructure resilience, including through the Green and Inclusive Community Buildings program,^[17] and to deal with climate catastrophes with the Disaster Mitigation and Adaptation Fund.^[18] However, he explained that this funding was insufficient, pointing to the hail storm that hit Calgary in June 2020, which he said cost insurance companies more than $1.4 billion in claims.

Regarding Canada’s National Infrastructure Assessment, Mr. Stewart emphasized that two other initiatives should run in parallel with this assessment: the development of a national adaptation strategy and the preparation of Canada’s National Risk Profile, an initiative of Public Safety Canada that is designed to improve understanding of disaster risks.^[19] He also made the following comment about infrastructure resilience:

Frankly, we have done very, very little collectively to address the issue of our growing climate risk. The amounts that are being allocated in infrastructure programming are too small to meet what the needs are of municipalities across the country. In short, we believe climate resilience should also be prioritized in programming from Infrastructure Canada. The infrastructure assessment will be key to eliminating that.

Moreover, Mr. Stewart said that private capital has a role to play in infrastructure resilience and climate change adaptation, a view shared by the Canadian Life and Health Insurance Association (CLHIA). In its brief, the CLHIA stated that its members are supportive “of all governments taking steps to reduce, mitigate and adapt to the risks of climate change.” The organization also made the following statement about the role that the life and health insurance industry can play as an investor in sustainable infrastructure:

[A]s a substantial long-term investor in the Canadian economy, the life and health insurance industry can play an important role in supporting Canada’s transition to a lower carbon economy. Canadian life and health insurers already have more than $75 billion invested in sustainable products and assets. With the appropriate regulatory conditions, the industry can act as an important partner to government in addressing climate change and promoting resilience.

In 2020, the transportation sector was the second-largest emitter of greenhouse gas (GHG) emissions in Canada, accounting for 24% of all national emissions.^[20] According to Ms. Saxe, governments can take a series of measures to reduce GHG emissions and provide more lower-pollution mobility options. For instance, she encouraged them to stop funding automobile-oriented road widening and instead invest in low-cost, carbon-neutral infrastructure such as cycling facilities and bus transportation. Ms. Saxe also reiterated the importance of providing stable, long-term funding for public transit so that projects that take over a decade to build—such as subways and high-speed intercity rail—can be planned.

Access to Broadband Internet Service

Canadians are increasingly using the Internet to work, study, shop and stay in touch with friends and family. According to Statistics Canada, the share of Canadians aged 15 and older who use the Internet rose from 83% in 2012 to 92% in 2020.^[21] In 2016, the Canadian Radio-television and Telecommunications Commission (CRTC) declared broadband Internet an essential service for all Canadians.^[22] The CRTC defined broadband service as download speeds of at least 50 megabits per second (Mbps) and upload speeds of at least 10 Mbps (50/10 Mbps) for fixed networks, an unlimited data plan option and access to the latest mobile wireless technology from all homes, businesses and major roads.^[23]

Closing the Digital Divide

According to the CRTC’s 2020 Communications Monitoring Report, about 87% of Canadian households have access to 50/10 Mbps broadband services with unlimited data.^[24] However, service availability varies by region: 99% of urban households have access to these services compared with only 46% of rural households. This figure is 35% for First Nations reserves. Consequently, as some witnesses indicated, even though all levels of government seem to have understood the value of broadband Internet, access to this service remains unequal in Canada.^[25] Mr. Boulet and Mr. Porlier said broadband Internet is a key factor in the appeal of remote regions, in part because it allows for remote work and mitigates isolation. Similarly, Mr. Kariya informed the Committee that coastal First Nations continue to be digitally marginalized, as some of these nations still cannot access online services that are a given for most Canadians, including telemedicine and Internet in schools. Noting that many coastal First Nations communities are accessible only by sea or by air, Mr. Kariya said that affordable broadband Internet is critical to these communities’ resilience.

Barry Field, Executive Director of Southwestern Integrated Fibre Technology (SWIFT), testified that Canada’s digital divide exists largely because “there’s a general market failure in this space.” Mr. Field made the following comments on the issue of broadband services in rural areas:

The high cost of implementing fast, reliable broadband infrastructure in rural areas with low population density is not offset by the requisite revenues that would make the investment profitable. Simply put, the ISPs [Internet service providers] have no profit motive to invest in these areas. There is a patchwork of non-profit co-operatives that do an incredible job of addressing rural broadband service gaps, but they are generally small and localized operations, not in a position to address such issues on a national scale.

Furthermore, Mr. Kariya warned that a profitability-based approach tends to put the most remote communities at a disadvantage. Accordingly, Mr. Field argued that subsidy programs are needed to reduce the cost of implementing broadband Internet; Mr. Porlier concurred. Mr. Field praised federal programs such as the Universal Broadband Fund (UBF), which has a $2.75‑billion budget, and the $2.8 billion in funding for broadband infrastructure the Government of Ontario announced in its 2021 budget.^[26] He further noted the involvement of municipal governments, including in his region of southwestern Ontario, where the member municipalities of SWIFT, a regional broadband program, have contributed $24 million to close the digital divide in that part of the province.^[27]

In Budget 2021, the federal government confirmed its goal of connecting 98% of Canadians to broadband Internet by 2026 and 100% by 2030.^[28] During his appearance, Éric Dagenais, Senior Assistant Deputy Minister of the Spectrum and Telecommunications Sector at Innovation, Science and Economic Development Canada (ISED), stated that the goal of 98% by 2026 was achievable given all the programs currently operating to eliminate the digital divide in Canada. As for the remaining 2%, Maryam Monsef, Minister of Rural Economic Development, said it may be necessary to use low-Earth-orbit satellites to reach the most-difficult-to-connect areas. Michele Beck, Vice-President of Sales for North America at Telesat, a satellite operator, claimed that the Telesat Lightspeed project, a network of low-orbit satellites, will “ensure affordable, fibre-like broadband connectivity everywhere in Canada.” Ms. Beck explained that the project’s goal is to provide broadband connectivity in partnership with local Internet service providers, as well as LTE and 5G services, in rural and remote regions. According to Stephen Hampton, Manager of Government Affairs and Public Policy at Telesat, these satellites are scheduled for launch in 2023 and will be in global service in approximately mid‑2024.

Better Program Coordination

Various federal programs that support the development of broadband Internet services have been in place for several years now. For example, the UBF and the Connect to Innovate program are both administered by ISED, while the CRTC manages the Broadband Fund.^[29] In addition, provinces and regions have launched their own initiatives, such as SWIFT in southwestern Ontario and Connected Coast on the west coast of British Columbia. Some witnesses said it can be difficult to navigate the various programs, which can sometimes result in duplication of effort in submitting applications.^[30]

Regarding the UBF, Mr. Kariya congratulated the federal government on setting the goal of connecting every Canadian and on the funding it has allocated to this problem. That said, he pointed out that multiple coastal First Nations communities could not submit funding applications because the deadlines were short and they were overwhelmed by the COVID19 pandemic. Mr. Kariya expressed disappointment that some small communities could not obtain funding for an essential service such as broadband Internet because they lacked capacity. He then made the following remarks:

If we truly are going to take a reconciliation approach, then why are we placed into a competitive situation such that, if for whatever unforeseen reason we don’t get our applications in or if we are the smallest incapable nation—incapable only because of the lack of people and timing—and we are pitted against larger better-serviced nations, we are then told we didn’t make the cut-off, so sorry but there’s no more funding?

I don’t think that’s the way to approach this in a country like Canada. I don’t think this is the way to approach a basic service such as last-mile connection to the backbone.

As regards initiatives such as Connected Coast, a project to install fibre optic cables from Prince Rupert to Vancouver, and then around Vancouver Island, Mr. Kariya commended the various levels of government and other stakeholders involved that are looking to improve access to broadband Internet in his region. Mr. Kariya reminded the Committee that, while investing in a network backbone that connects smaller networks is important, the last-mile infrastructure—the part that links customers to the network—is also vital. He said that “funding for that is quite confused” and often results in communities competing against each other.

During her appearance, Ms. Monsef maintained that the funding provided under the UBF is not limited to network backbones; it also goes to last-mile and cellular telephone infrastructure.

Mr. Kariya added that the challenge for First Nations communities is not simply access to broadband, but also their level of preparation for digital tools. He said communities need more financial support to create a program that prepares people for the shift to digital and ensures that communities can take advantage of the benefits of broadband once it is available.

To close Canada’s digital divide, Rob Foster, Regional Councillor for the Town of Lincoln at the Regional Municipality of Niagara, called for a coordinated funding approach. Mr. Foster’s call was echoed by Mr. Field, who said it would be more efficient to combine all the broadband funds into a single program. Mr. Field asserted that funding should ideally be transferred to the provinces and territories, which can then work with municipalities to determine how to improve broadband access in a given region. He noted the following:

[I]n many aspects [the programs] are competing with each other to solve the same problem. I think that by co-ordinating those efforts, and by collecting the funding at the provincial and the regional level, there is a better opportunity to solve this issue in a more co-ordinated way.

Mr. Frizzell told the Committee that the FCM could play a role in the UBF by coordinating Internet service providers and local governments, as well as federal, provincial and territorial government departments and agencies. To help small communities with few resources, he also recommended streamlining the UBF application process and creating a single window. During her testimony, Ms. Monsef said a single window had been established to help small communities with the UBF application process. She described this orientation service as follows:

A really smart official, usually an engineer, will pick up that call on behalf of the federal government and help applicants navigate the difficult process, connect them with engineers and project managers or others in the region who also want to get connected.

Access to Support Structures and Competition Issues

Mr. Kariya informed the Committee that access to support structures such as utility poles remains a barrier to deploying broadband in coastal First Nations communities. This infrastructure belongs to various stakeholders, including Canadian businesses that provide telephone service, such as Bell, and electricity suppliers, such as Hydro-Québec.

According to Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor Media Inc., restricted access to poles is hampering the emergence of competition in broadband services. Mr. Péladeau emphasized that competition leads to lower prices for consumers and fosters innovation. He added that Videotron, a subsidiary of Quebecor Media Inc., has had trouble gaining access to Bell’s support structures, but not those of Hydro-Québec. Regarding the support infrastructure access problems and the potential impacts of the proposed acquisition of Shaw Communications Inc. by Rogers Communications Inc. on competition in the telecommunications sector, Mr. Péladeau made the following comments:

[I]t is crucial for regulatory organizations and political decision-makers to ensure that large national players cannot take advantage of their dominant position to threaten facilities-based competition. This way, all Canadians could benefit from a competitive environment, numerous choices and lower prices for telecommunications services.

Conclusion

Throughout the Committee’s study, witnesses with an interest in infrastructure investments shared their perspective on Canada’s current and future infrastructure needs and proposed solutions to make federal programs more efficient and effective. A number of witnesses argued that infrastructure programs should be less prescriptive about the types of projects that are eligible and provide more flexibility and long-term predictability. Some also highlighted the importance of affordable transportation and broadband Internet access to break the isolation of remote regions.