A Conversation With Canada’s Minister of Infrastructure
Originally recorded at the International Economic Forum of the Americas Toronto, 2017
Amarjeet Sohi: So honored to be here. Thank you so much for having us.
GS: So let me let me just sort of set a bit of the stage. We’ve had a great discussion here at the Toronto Global Forum around infrastructure and the magnitude of the infrastructure deficit globally. I think on the panel yesterday we were discussing that it was going to take about 3.5% of global GDP every year for the next 10 to 15 years. To just address the infrastructure deficit. And when you sort of take a step back the types of infrastructure that we need is changing. They’re saying by 2050 75% of the infrastructure that the world will need doesn’t actually exist today. That means we’re effectively rebuilding our infrastructure over the next two or three decades. And we know that it enhances productivity and quality of living. But Canada seems to be taking a leadership role in the world in terms of how it’s looking at its infrastructure and how it’s addressing its infrastructure deficit as well. As the introduction said, we’ve got a 180 billion dollar plan. I guess it’d like to start off and ask you, Minister Sohi, why did your government make infrastructure investment a central commitment to its campaign, and how are you making that happen?
AS: Well our government’s main focus has been, and this was clear during the campaign and the work we have done for the last two years, is to really build a strong middle class and provide opportunities for the middle class to grow and for those people who are working hard each and every day to be part of the middle class. So focus on economy, focus on economic growth. Focus on building inclusive welcoming communities and moving toward a more resilient green economy has been the overall focus. And the governmental infrastructure plan falls into that – it’s part of that integral plan.
So when we talked about investing 180 billion dollars into infrastructure, we focused on five areas of investment. Public transit is one of that. Green infrastructure, which is making sure that communities have clean water to drink, and that water used is also cleaned when it goes back to the to the rivers. And we’re building more housing through these sorts of infrastructure opportunities for recreational and cultural infrastructure, then we focus on trade transportation infrastructure as well as supporting of small communities to help their unique needs that they have in a particular area. So those five areas have been where we are making investments. We started by supporting other municipalities and provinces to rebuild the existing infrastructure they have. So the Budget 2016 was focused on rehabilitation and repair of existing infrastructure but also planning for the long term. And that’s where the focus has been for the last the last two years.
GS: It’s been an interesting focus. It’s about enhancing productivity but also lessening inequality and helping the middle class sort of grow. Now it seems a lot of discussions over the past few days here at the Global Forum that a lot of the infrastructure activity is actually at the provincial and municipal level where the federal government is actually acting as an enabler. There was quite a shift, I think, when the government took power, in terms of collaboration with provinces and how you’re doing that. Can you talk to us a little bit about how you’re helping the provinces prioritize their projects?
AS: So, in Canada almost 95% of infrastructure is owned by the provinces or municipalities, so federal government does not own that much of the infrastructure. So our focus, rightfully, has to be supporting those people and organizations that actually build the infrastructure, so the provinces and municipalities. I come from a municipal background. One thing that really frustrated me as a local councillor was this attitude of the federal government toward municipalities where they always felt that “our ward knows best” and that local decision-makers are not making the right decisions. We fundamentally changed that discussion. We believe that decisions made at the local level are more appropriate to decisions because those people are connected to their local communities and those are the decisions that we need to support, and that’s exactly what we have done. So we work very closely with big city mayors, we work very closely with the Federation of Canadian Municipalities, provincial and municipal organizations, as well as provinces and territories. And we believe that if you focus on having a true partnership, and federal government plays a role in supporting local decision making, and providing appropriate funding, then that’s what all federal government should play.
We have also changed the ad hoc thinking of the previous government. In the past the focus was more on individual projects, not giving long term predictable funding to our partners, and we have changed that. We are developing a 10-year plan. With that plan, every province and municipality is going to know how much money they’re going to get from the federal government to build public transit systems or to build housing or to build recreational infrastructure. But they also get sustainable, predictable funding from the federal government over the next 10 years to move their communities toward a more green economy, making choices that allow them to reduce greenhouse gas emissions. So that’s the vision that we have and we’re implementing that now.
GS: And a stable predictable environment that enables collaboration and long term planning which is important for it.
I’d like to shift maybe a little bit. One of the pillars under the platform, of course, is the Canadian Infrastructure Bank. That’s been getting in a lot of attention. If I take a step back and I look at Canada’s position in the world — and knowing that it’s a competitive world for dollars and investment in infrastructure. Canada has always had a very stable regulatory fiscal and banking system. It wasn’t the first country to get into public-private partnerships, but it actually became a global leader in public-private partnerships. We even had Ontario teachers on our panel yesterday and they made their first infrastructure investment in 2001. It’s a very new asset class. It seems to me that you’ve looked around the world scene while other countries have done around infrastructure banks, and have taken the idea and Canadianized it and really created a sort of a new and innovative approach to looking at how we deliver some of our — a part of the infrastructure plan — and moving through that. How do you see the infrastructure bank — how do you feel about the interest of brand taking shape and how do you see as priorities in the first year?
AS: Well I am very excited about the creation of the Canada Infrastructure Bank. You know, we talk about federal government making historic investments in infrastructure. We will invest over 180 billion dollars over the next decade or so, and we leverage that with the federal and provincial resources. Having said that, there is still, and it will continue to remain, a huge infrastructure deficit in our communities despite all those investments. And we see the opportunity to engage the private sector more and bring the public sector and private sector together to undertake large projects that otherwise may not happen.
We are leaders in P3s, absolutely, and I think we can go beyond that. We can go beyond by tapping into pension funds into institutional investors. There’s a lot of money sitting in those organizations that could be invested into infrastructure, and those institutions are actually looking for a more stable predictable return over the longer term. And I think that if we can find products that can generate revenue and there’s a return on their investment, I think there’s a potential for us to work with the private sector.
What we see is that the traditional role of the government, we will continue to play that. We will continue to provide grant funding. A vast majority of it the plan exactly based on providing grants and giving contributions to provinces and municipalities, but we can go beyond that. We feel that if a project that needs to be built, and it’s too risky for the private sector to undertake, it’s too large for public sector to build, why would we not look for opportunities for collaboration and cooperation, and working together to make that project a reality? And, you know, an example I can give you: it could be a project between two large urban centers connecting through a public transit system. Or it could be to interdize the transmission infrastructure from one province to the other where the private sector has the expertise to do so. But it’s too risky for them to undertake because the uncertainty it around the investment. So I think there’s so much we can do in collaboration with the private sector. That’s the idea of the bank.
GS: It’s actually to bring in the private sector both domestically and internationally. To enhance the pipeline of projects too. It is an interesting approach, and in the U.S. they set up programs, and whatever project a city or state would want do, they have to actually meet the rules of the program. Here it seems to have enhanced flexibility to work in collaboration, again, back to the municipality.
AS: Absolutely. You know, the local jurisdictions we will continue to respect that, we do that now, and the bank would have to follow some of the same rules that offer community engagement, or environmental regulations, or in relation to indigenous rights. All those things need to be followed. I just wanted to give you an update of where we are on the bank. The bank will be located here in Toronto. We have appointed the chairperson. We are in the process of appointing the board of directors and hiring the CEO. It will be up and running by the end of this year. I’m very excited that it will be structured in a way that it’ll be independent organization. A Crown corporation that reports to Parliament but makes decisions on its own on the projects. We will apply an early screening of whether the project is in the public interest, and once that is done it’s up to the experts at the bank to determine the feasibility of it.
GS: You’ve done a great job starting off with Jim Leach and Janice Fukakusa, they’re amazing people, so I think we’re in good hands there. Let me just turn a little bit now to innovation.
There was a large discussion here at the Toronto Global Forum around innovation. Innovation from ideas, innovation around technology, innovation around resiliency, as we sort of as we talk about it. I just think about smart cities for example, and how smart cities can help solve some of our environmental and economic solutions. What are some of your views you have around smart cities?
AS: I think Canada is a very well positioned to tap into creative ideas and different ways of solving problems. That’s what innovation is: looking at a particular issue and then finding different ways. And because of our multiculturalism because of our diversity and people coming to this country from all over the world. And when people from different backgrounds come together they have different perspectives of solving problems. I think that really has the ability to foster that innovation. And we also see a lot of potential in using technology and using data and, bringing technology and data together to solve community problems. That’s what the Smart City Challenge is about.
Sometimes people don’t relate to data in a way – or technology – in a way that it’s kind of isolated from their day to day lives. You don’t see that if you use that data you can actually solve problems. And we see a lot of opportunities in that. So we have softly launched the [Smart Cities] challenge. We will be giving more information in the next couple of months on that. The idea is to allow local organizations, communities, nonprofit sectors, municipal sectors, institutions, and post-secondary institutions to come together and think about it. What they feel how data and technology can allow them to solve their local problems. So we’re not defining what a smart city should look like, we want people to think about what technology and data do for their city, and we will provide them the necessary support. And there are five awards that’ll be given. The largest award is for four major urban centers – fifty million dollars. Then two awards for midsize cities and one award for small communities and one award for Indigenous communities.
GS: That’s amazing. It’s amazing just getting the thoughts out there. I think Sidewalk Labs here are in collaboration with Waterfront Toronto and Google is an interesting step in terms of trying to get people to visualize what could be. So this smart city challenge is interesting.
AS: Absolutely. I had the chance to visit Sidewalk Labs in their office in New York. What an amazing, amazing group of people and how they look at solving problems. I’m really excited about their partnership with the Waterfront Toronto. We, the federal government is providing necessary support for the revitalization of that area. We have provided some funding to the flood mitigation project there. I think, again, when you look at technology, when you look at, how you can use technology to make people’s lives better.
As I said, I come from a municipal background. I am also a former bus driver, and being in the public service and using public services as a citizen, you always wonder why our public services are not as efficient, or as connected to people. In today’s day and age, there’s so much information available that you should not be waiting at the bus stop 15 minutes in advance of the bus coming. You should be able to actually see that a bus coming on your smartphone, and you should be out there within a couple of minutes before the bus comes. Or how you monitor your water systems. Or when your garbage truck is going to come to your neighborhood pick up the garbage. I think there’s so much at a community level that you can do it. Technology and data and I think that’s what a partnership such as Sidewalk Labs has the potential not only to create new communities from scratch and have a very holistic approach to community building, but also when that community is built, how you actually improve services and accessibility.
GS: This has been an absolutely amazing conversation. It’s not just about the physical assets and the dollars a cents that goes into it but it is the quality of life in that distinctive sense of community.
AS: Absolutely. The U.S. has undertaken some of these smart cities initiatives. One of the initiatives they’ve implemented was the use of autonomous vehicles and a public transit system to improve outcomes and reduce the infant mortality rate in a very challenging neighborhood. So just imagine using technology and data to save lives. And that’s what the potential is.
GS: Amazing potential. Thank you very much for taking time into your schedule to join us today. Very much appreciate it.
AS: I’m very happy to do that.
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