STANDING COMMITTEE ON GOVERNMENT AGENCIES
COMITÉ PERMANENT DES ORGANISMES GOUVERNEMENTAUX
Tuesday 4 April 2017 Mardi 4 avril 2017
The committee met at 0902 in committee room 2.
The Vice-Chair (Ms. Daiene Vernile): Good morning, committee members. Before we start our intended appointments review for today, our first order of business is to consider a subcommittee report. Mr. Oosterhoff, could you please bring that forward?
Mr. Sam Oosterhoff: Sure. I move adoption of the subcommittee report on intended appointments dated Thursday, March 30, 2017.
The Vice-Chair (Ms. Daiene Vernile): Thank you. Is there any discussion, members? All in favour? Opposed? The motion is carried.
Now we move to the appointments review. We have two intended appointees to hear from today. We’re going to consider the concurrences following the interviews.
Mr. Ehren Cory
Review of intended appointment, selected by third party: Ehren Cory, intended appointee as member, Ontario Infrastructure and Lands Corp. (Infrastructure Ontario).
The Vice-Chair (Ms. Daiene Vernile): Our very first intended appointee today is Ehren Cory, who is nominated as member to the Ontario Infrastructure and Lands Corp. I would ask that you come forward. Please have a seat and get comfortable.
Mr. Ehren Cory: Thank you.
The Vice-Chair (Ms. Daiene Vernile): You can begin with a brief statement, if you wish. Members of each party are then going to have 10 minutes to ask you some questions. Any time that you use for your statement will be deducted from the government’s time for the questions. Begin by stating your name for the record.
Mr. Ehren Cory: My name is Ehren Cory. Thank you for having me.
I joined Infrastructure Ontario four and half years ago, with an idea of the opportunity to work and a commitment for public service. I’m excited to be here. I’m excited to continue my work at IO and to have this opportunity in front of you to join the board.
As you will have likely seen from my CV, in my role over the last five years at IO I have played two main roles. One was as the executive vice-president of our transaction structuring group. That’s the team that does the financial structuring procurement and manages all of the process behind the AFP program for procurements.
More recently, I’ve been overseeing the project delivery group, the team of project managers, engineers and architects who actually manage construction of our large projects here in the province.
Before that, I worked for 15 years in the advisory business, the last 11 or 12 of those at McKinsey and Co., a global firm. I was based here in Toronto. My work there was similarly focused in the delivery of large infrastructure projects and in work for the public sector. I did consulting work for governments in Canada and beyond, and also for the private sector, mostly on the delivery of big capital projects. That was my background.
By education, I have a business background. I went to Western—I have an undergraduate degree in business—and then INSEAD, which is an MBA program in France.
As I mentioned earlier, in my current duties, until a few weeks ago, I was responsible for leading the division within IO that delivers major projects, like our hospitals, courthouses and public transit projects. That means we are overseeing the current pipeline of work: 33 project that are in procurement and construction. The total capital value of those projects: just over $22 billion. Our agency’s mandate, which is to deliver those projects on budget and on schedule and at quality, has been key to the infrastructure development the province has been doing over the last decade.
Every year, we commission a third party to do a review of our projects, to look at the performance of them. The most recent of those looked at the 51 projects that have been completed to that point. By “complete,” I mean they reached completion of construction. Forty-nine of those had been delivered on or under budget, and about three quarters of those were delivered within a month of the intended schedule date, or earlier.
That’s a track record that we’re really proud of, and it stands up well when you benchmark to anywhere else. It doesn’t mean we’re perfect in delivering a project, but it’s a track record we’re proud of.
Everything we do is based on a few core principles. They’re the core principles we uphold as a management team. They’re the core principles I would uphold as a board member at IO. Those are around openness in procurements, fairness and transparency in the work we do.
In my role now as CEO of the agency, and as a board member in front of you today—I’ve been talking a lot about the AFP program, but would also point out that it also involves overseeing the government’s real estate portfolio. The other thing that IO does is oversee the 5,000 buildings and 44 million square feet of property that we own across the province, ensuring that that’s managed efficiently and effectively.
The last of our three business lines—just to mention, in case there are any questions, I should flag that it is our lending program. In the lending business, we lend to low-risk borrowers: municipalities, local distribution companies and the like. Those are our borrowers. In our existence, we have lent out, in total, over $8 billion of money to those entities. Essentially, we are extending our borrowing capabilities to municipalities who don’t have the ability to go to capital markets and raise money in the same way, so it’s an opportunity for them to fund their infrastructure projects and pay us back. The average size of those loans is something like $2 million. They’re quite small, on average. They enable municipalities and others to invest in their own projects in local communities.
Last but not least, I’d just say that Infrastructure Ontario is an agency that—everything I’ve been talking about is about delivery of new infrastructure and management of existing. Clearly, our role as an agency is an interesting one, because we’re a partner to other ministries, sponsoring ministries, who have programs that they are trying to deliver; and other agencies, like Metrolinx, who are building things. So our agency is really founded on the idea that we work across government, and we have to work in close collaboration with our peers. At the heart of what we do is the ability to work with others in government.
Thanks for having me. I’m excited about this opportunity to continue, as I say, my work at IO over the last few years, and the contribution that we’re making in our small way to the province. Thanks for having me. I look forward to your questions.
The Vice-Chair (Ms. Daiene Vernile): Thank you, Mr. Cory. Our first line of questioning for you is with the government side: Mr. Colle.
Mr. Mike Colle: Thank you, Mr. Cory, for being here. It’s quite daunting to see the scope of Infrastructure Ontario’s projects. It’s just beyond comprehension, sometimes.
I was wondering, with the Eglinton Crosstown, which is very dear to my heart—we’re building the world’s largest transit project right now. Are you involved at all with that project, with Crosslinx or Metrolinx?
Mr. Ehren Cory: We are, yes.
Mr. Mike Colle: And have you played any role in that?
Mr. Ehren Cory: I have. As I say, my current role is leading project delivery. The way we’re structured, we have a project team for every project we’re working on in the province. On the example of the Crosstown, we have a team that reports to me. In that case, the Crosstown, our team is partnering with Metrolinx, and each of us plays our role.
In any project, it’s almost like a triangle. There’s the sponsoring ministry—that is, in this case, Metrolinx—there’s IO, and then there’s government.
Our role in that project is helping to oversee and project-manage the procurement phase. Now that it’s in construction, our role is really as commercial advisers—that’s the way it’s described.
Metrolinx has the carriage of it from a technical perspective. They know the requirements of the transit system. What we bring is that commercial expertise. When Crosslinx, who is the contractor building it, makes a claim, we help decide whether it’s legitimate or not. When there are any issues in the construction, we work with Metrolinx to deliver it.
But in the earlier part, in the procurement, we were in the lead, and we helped procure the winning bidder.
Mr. Mike Colle: As you know, one of the unique things about the Crosstown project is the community benefits agreement that it came to that basically supports the hiring of youth at risk or underemployed segments of society. Was Infrastructure Ontario at all part of that, or was Metrolinx essentially the active participant in implementing the community benefits program?
Mr. Ehren Cory: We did it together. I signed the community benefits agreement, along with Bruce McCuaig at Metrolinx and many others from MAESD, internally and externally.
I think what we are seeing increasingly—and the Crosstown is a great example of it—when you’re into the transit world in particular, they just have so much more interaction with the public. It’s one thing when you’re building a new hospital and it’s on a site. Mackenzie Vaughan: We’re building a new hospital just north of Wonderland. There’s hoarding. It’s on its own property. It’s a bit removed until it’s done. For transit projects, that’s just not the case. They cut right through communities—that’s why we’re building them, usually—so that means a different engagement with the community.
The community benefits agreement which we did on the Crosstown and which I suspect there will be some form of when we get into the other mega-transit projects—Finch would be the next example—is really a reflection of the fact that these are projects that happen in communities and they have to work with communities.
You mentioned the agreement we signed a few months ago, but it’s only, I would say, part of an overall community engagement strategy. A different example is to think of it like a job fair. We had a fair where local businesses could meet with the contractor, when we first picked the contractor. That could be for things like catering, because we need foodservice for the hundreds of workers working on the line. The flower business that lives along the business came and met with them. We try to create some of those interactions. The community benefits agreement is a critical part of it, but I’m just saying there’s a broader sense of, “How do we make these projects work in communities?”
Mr. Mike Colle: Yes, especially on Eglinton. As we witness every day, you’ve got this incredible activity from Mount Dennis all the way to Scarborough. When you talk about construction cutting through a community, one of the pieces of that which is hard to deal with—and I don’t think we’ve come up with the answer, and it’s not just Infrastructure Ontario’s mandate. As you know, there are sometimes long-term disruptions, where there’s hoarding; there’s mining taking place next door to an active small business. I know some of the small businesses are impacted very negatively. Traditionally, there is no way of compensating—
The Vice-Chair (Ms. Daiene Vernile): Thank you, Mr. Colle. I’m sorry to interrupt, but that’s 10 minutes on your side.
Our next line of questioning for you is from our opposition side. MPP Pettapiece.
Mr. Randy Pettapiece: Good morning.
Mr. Ehren Cory: Good morning.
Mr. Randy Pettapiece: I’d like to expand a little bit on the community involvement you were just talking about with Mr. Colle. We have seen, at least where I’m from—and I’m sure this is something that’s throughout most of Ontario—a shortage of qualified tradespeople. Right now, where I live, I have calls once a month or whatever: “What are you doing to help with the shortage of tradespeople in Ontario?”
When you talk about community involvement, which you were just talking about with Mr. Colle, people in the areas where you’re working on it—I know you talked about foodservice and whatever else—is there an opportunity for somebody to come out to these job fairs and possibly get into a trade with these construction companies?
Mr. Ehren Cory: Yes. The community benefits agreement Mr. Colle was asking about—the concept at the heart of it is that, especially on a transit project that has a four- or five-year duration, there’s a real opportunity to create lasting employment opportunities out of those. What we’ve done on the Crosstown is engaged the contractor who’s doing the work, and they have signed up to a goal of creating 10% total hours of work on the site for tradespeople and journeypeople from the local community as a means to try and gain entrance, for many of those people, into their career. So that’s the Crosstown.
If we look more broadly—and we just did a study on this. We did a bunch of interviews with industry, because we have the same concern, especially when you look at what’s coming not just in Ontario, but the federal government talking about infrastructure and the US talking about a massive build. If you add them all up, you start to say, “Where will the labour come from to do this work?” What we learned in our research—this is our current view—is that for the next few years, we’re tight on labour, but okay. But there are two lines that are going in opposite directions as the workforce ages: There aren’t enough people coming into the trades—the workforce line is going down slowly—and as the projects ramp up, the volume of work is going up. This is not scientific, but somewhere in 2022, those lines really cross, especially in a few key trades. The work we’ve done is on what those are and what skills we are going to be particularly short on.
We’re an execution agency. We’re not in the education business and we’re not in the policy business. But that’s a problem for us in our role of trying to deliver projects. An ideal like the community benefits agreement is, selfishly, very important for us, because anything we can do to increase involvement in the trades is really critical.
The one other pinch point that came out of that study—which we knew about, but I think it was even more illustrated to us—is at a level higher than the trades, which is the project management level: the engineers, the site superintendents, that sort of thing. When you get into multi-billion-dollar transit projects, it’s not so easy to take a person who’s been managing a $10-million project and put them on a $100-million project, or a $100-million project and put them on a billion-dollar project. There are only, actually, a small number of people who are trained and qualified to lead those true mega-projects. And actually, they’re not all here, so you’re competing for that talent from elsewhere too.
You asked about skilled trades. I think that’s an important one. I also think that how we bring in and train up the next generation of project leadership is also going to be important over the next few years.
Mr. Randy Pettapiece: I know you said that you aren’t an expert on education, and neither am I, but any thoughts as to how some of these goals can be achieved? In rural Ontario, we see a migration of our young folks out of rural Ontario, going somewhere. A lot of them have missed the trades business; they’ve skipped over that part of it. We’re trying to get that reversed, because you can make a very good living with a trade. You don’t have to go to university. There’s nothing wrong with going to university, but that option is there and it maybe hasn’t been put to the young folks the way that it should have been. I wonder if you have any thoughts on that.
Mr. Ehren Cory: I will say that with the community benefits agreement on Eglinton, which is our first crack at it, one of the things that’s really important—I mentioned that we signed this declaration; so did the contractor. But so did some important local community groups—the United Way, the Metcalf Foundation—and they actually have a responsibility in it too. I think it’s an interesting way to think about it. Their responsibility is to help identify and bring—because it’s going to be hard for the contractor who is doing the Eglinton Crosstown to go out into the community and find people who are interested and employable in the trades. So actually, I think partnering with others, like the non-profits, to help bring in the supply side is one thing we’re trying, at least in the case of the Crosstown.
Mr. Sam Oosterhoff: I’m just sort of curious: What are the specific trades that you think you’re going to have a huge shortage in?
Mr. Ehren Cory: The biggest—electrical is going to be a challenge, for sure, especially because, as we do transit, there is a lot of electrification work involved in that, so the demand for it is going to go up quite a bit. Linked to that, there are also some specialties around rail—rail technicians, which are specialties that really are cyclical, because you go through 10 and 20 years where you don’t do much of that in a jurisdiction, and then suddenly there’s a ton of that work. There are only a few companies in Canada that do that work on an ongoing basis. And then, a little bit later out, so the next wave: Pipefitters and boilermakers eventually will also become challenging—just technical, and working with materials.
Mr. Sam Oosterhoff: I’m just curious: Have you found people moving from Alberta, for example, because of that? I know lots of pipefitters from Alberta—lots of my cousins. Have you seen people come out here to sort of address that shortage as the declining oil prices impact Alberta?
Mr. Ehren Cory: Totally. It’s funny. I’m smiling because we did these interviews I was describing, and in the best interview I had, someone said to me, “It’s a lot shorter a flight from St. John’s to Toronto than it is to Fort Mac.” So I don’t know about Albertans, but I know Newfoundlanders are coming here and stopping.
I mentioned all the infrastructure build that’s coming. But you’re absolutely right. One of the things that was reassuring in the study we did is that right now—and that’s why I say the problem is more when you look at 2022 or something like that—for all the talk we have here about infrastructure and how much we’re building—and we really can work ourselves up too. It’s like, “Where are all the workers going to come from?” But you do have to look more broadly at the slowdown in Alberta. It does balance out, so, yes, we do see a flow of people from other jurisdictions. We think we will continue to, over the next few years, and that helps us.
Mr. Sam Oosterhoff: Do I have two?
The Vice-Chair (Ms. Daiene Vernile): Yes, you’ve got about two and a half minutes left.
Mr. Sam Oosterhoff: Excellent.
What would you say is one of the challenges facing Ontario Infrastructure and Lands Corp., moving forward? We saw an enormous flurry of infrastructure investments back in the 1970s and whatnot. Now as that tax base, that aging demographic, moves, what do you see the future of infrastructure here in Ontario being? Specifically, what do you see your role being in this corporation, to help that?
Mr. Ehren Cory: We have been talking about a few of the challenges that we do spend a lot of our time worrying about. One is the infrastructure investment. Yes, it’s increasing, but the nature of it is also changing. As we do more transit projects—they are different. They’re different for the community reasons we were talking about. There’s an old adage in construction: “Once you’re out of the ground, you’re safe.” That’s where all the risk is. Transit projects never get out of the ground. Literally, they will be out of the ground when you’re done. Issues of soil condition, environmental issues, utilities—the issue of relocating utilities is a huge one. So transit projects just come with a different risk profile.
When we started 10 years ago, our focus really was in the buildings sector. We started with a massive infrastructure build-out on the hospital side. Those are challenging, for sure. They’re challenging because of the need to deliver clinical programming. Hospitals are complex things.
But buildings are different than transit. If you look at the team I have that oversees these projects, it’s interesting. When we started 10 years ago, we had 80 or so project managers, and 78 of them were from the buildings side of the world. They were architects or engineers from the buildings world. We’re still about 80 or 85 people—that team hasn’t really changed in size—but now 50 of them are civil engineers and transit. We’ve had a huge talent shift for us, and that’s matching where the projects are going. So that’s a big change.
Mr. Sam Oosterhoff: Something you touched on reminded me—you mentioned the changing soil conditions. Have you seen climate change impacting infrastructure needs as well?
Mr. Ehren Cory: We have, in some ways. That’s a big question because the fact that we’re building more transit is, in some ways, a response. As an execution agency, again, we build after someone tells us, “Build something.” But I think part of—
Mr. Sam Oosterhoff: You mentioned “once you leave the ground,” right? Have you seen the conditions change under which you’re building that infrastructure?
Mr. Ehren Cory: I understand. Not really, except one example here in Toronto that’s relevant is down at the mouth of the Don. The work—
The Vice-Chair (Ms. Daiene Vernile): Thank you, Mr. Cory. Sorry to cut you off there. That’s time. Our final questions for you are from MPP Gates.
Mr. Wayne Gates: Thank you, Chair. Good morning.
Mr. Ehren Cory: Good morning.
Mr. Wayne Gates: Are you the son of a prominent banker or a private czar for the government, like your predecessor was?
Mr. Ehren Cory: No.
Mr. Wayne Gates: Do Infrastructure Ontario executives receive bonuses related to the number of P3 procurements?
Mr. Ehren Cory: No, we do not. We receive a portion of our pay in incentive. It’s based on our performance in delivering on all corporate objectives.
Mr. Wayne Gates: Okay. The next part is going to be, really, a statement, and hopefully I’ll get to my question.
Mr. Ehren Cory: Okay.
Mr. Wayne Gates: As you know, in 2014, the Ontario Auditor General found that Ontario’s 74 P3 projects cost $8 billion more than the base costs under traditional public procurement. This was the equivalent of a 30% cost overrun on every single P3 project.
Infrastructure Ontario justified this additional expense, saying that its studies showed that had the government managed these projects, they probably would have gone over by 50%.
It certainly is better to spend an extra 30% if it means you can avoid having to spend an extra 50%, so I understand that. But the Auditor General said that IO’s risk assessment was based largely on guesses from consultants and experts, including many who had an interest in supporting the P3 industry. There were no detailed actuarial tables or objective data to support IO’s risk assessment, according to the Auditor General. So maybe the public saved money, or maybe the $8 billion in public money was wasted. We just don’t know.
The NDP was very concerned about the fact that we don’t know. If we’re spending an extra $8 billion on P3s, we should have objective data that proves the public is getting value for this money. So we decided to look more closely on how the value for money of the Eglinton Crosstown was determined.
According to the value-for-money report that was published by Infrastructure Ontario, if the project was publicly managed, the base cost of the project would be $6.6 billion for design, financing, construction and 30 years of maintenance. But as a P3, the base cost would have been $7.1 billion: about half a billion dollars higher.
P3 procurement looks like a bad deal. But hold on; Infrastructure Ontario then applied a risk adjustment to these figures, and these risk guesstimates were added on. The likely cost of the project under public management raises it to a walloping $9.9 billion, the equivalent of a 50% cost overrun. But the risk adjustment cost of the P3 raises it only to $7.7 billion. I know these figures are hard to do, but you’ll get it. Now, instead of wasting half a billion dollars on P3 procurement, we miraculously save $2.2 billion.
To understand this miracle, the NDP filed a freedom-of-information request to find out how these risk assessments were determined. It turns out that the consultant that prepared the risk matrix upon which these assessment were based, MMM Group, didn’t look at the TTC’s actual historic performance when assessing the risk of public procurement. The TTC has built more rapid transit than any other public agency in Canada—vastly more—and yet your consultant didn’t bother to consider the TTC when deciding how risky public procurement might be.
This is very strange because, in 2012, the Auditor General specifically criticized Infrastructure Ontario and Metrolinx for not looking at GO Transit’s actual historic performance when performing the value-for-money comparison for the Union-Pearson Express, and yet, a year later, Infrastructure Ontario did the exact same thing when it performed a value-for-money comparison on the Eglinton Crosstown. In 2012, the Auditor General also criticized the fact that Metrolinx and Infrastructure Ontario used consultants that stood to benefit from the outcome of the value-for-money assessment.
As it turns out, according to documents obtained through freedom of information, the consultants prepared the risk matrix for the Eglinton Crosstown line based on risk estimates provided by industry experts such as SNC-Lavalin, ACS, EllisDon and Aecon. Your consultant apparently didn’t consult public sector transit experts or independent academics who didn’t have a direct financial stake in P3 industry. Instead—and this important—it apparently only consulted experts that directly benefit from P3 procurement. In fact, all of the companies I just named are part of the consortium that won the Eglinton Crosstown contract. Very interesting.
My question is pretty simple. Why should the public trust Infrastructure Ontario value-for-money assessments when it uses made-up risk numbers provided by consultants and industry experts with a direct financial interest in the outcome of these assessments to justify the extra billions of public dollars that are spent on public-private partnerships? And you can take as long as you want to answer that.
The Vice-Chair (Ms. Daiene Vernile): You actually only have five minutes left, as Mr. Gates has used up half his time just to ask the question. Go ahead, please.
Mr. Wayne Gates: It’s my right to do that.
The Vice-Chair (Ms. Daiene Vernile): It is.
Mr. Wayne Gates: It’s very important information as we try to get to the bottom of why to use P3s.
The Vice-Chair (Ms. Daiene Vernile): Let’s hear from Mr. Cory.
Mr. Wayne Gates: I appreciate that. Thank you.
Mr. Ehren Cory: Thank you. Lots there. Let me start with a simple statement. Our agency—and in my role certainly, our job is to help sponsors deliver their infrastructure projects. We don’t start the day with a dogmatic or ideological view that P3s are the best or only way to do projects. The language we often use is that there’s a hammer for every nail. Remember, Infrastructure Ontario—and I’ll talk about the Crosstown and the example you’ve raised. But we’re also today delivering dozens of projects in buildings like this one, renovation projects that we do all sorts of construction on. So it’s not just about P3s.
What we’ve found over time is that for the big projects—when you get over $100 million, when we’re into large-scale construction projects, the AFP model has, in our view, proven to be the most effective at ensuring quality, managing budget and delivering on schedule.
As I say, we don’t start from the idea that we have to do P3s and then go hunting for projects; we start from the idea that, “We have big projects to deliver; what’s the best way to do them?”
You talked about value for money. In our legislation, when OILC was created, value for money—that concept is at the very heart. It’s one of the principles that was enshrined in us, that we must demonstrate positive value for money in any project we do bring forward as a P3.
Value-for-money calculations are done all over the world. It’s like building a business case. You’re trying to compare two scenarios: build it one way; build it another. They are all going to be based on some level of assumptions because they’re weighing two theoretical cases: if I do it this way or if I do it that way.
You’re absolutely right, and I agree with the thrust. If you’re doing that, it’s going to come down to the quality of the assumptions, because it is; it’s a test of assumptions.
We hire third parties. You mentioned MMM. They’re an engineering firm here—well, they’re a global engineering firm; they’re here. We hire firms like them and many others to give us their best estimates of the risks in a project. The project is going to get done either way. MMM—you used them as an example so I’ll just follow that example—have no particular bias or stake, and they put their reputation and their engineering stamp on their work. I think they would dispute the notion that they have a bias or that they’ve guesstimated. Rather, what they do is, they look at a large number of projects around the world.
Big projects do come with a lot of risk. If we look at the history of big projects in any jurisdiction, including our own, they have a lot of history of big cost overruns and big-time overruns, not small ones. The fact that we can deliver on time and on budget is a testament to the fact that our model seems to work.
Mr. Wayne Gates: Are you finished?
Mr. Ehren Cory: Sure.
Mr. Wayne Gates: I can understand what you’re saying, but I think you could see where people are saying, “Why would you go to people who are directly going to benefit from procurement to ask them for their opinion?” It doesn’t make sense to me. Ellis-Don, Aecon: I mean, come on. Go through the notes, what I read out—I know it’s tough to get all in one time. I’ve only got a minute, but I’m going to give you an example.
We can talk about hospitals. Well, in hospitals, there was a hospital built in Peterborough, publicly funded, publicly delivered on time, almost the exact same hospital as St. Catharines. I think St. Catharines has 30 more beds. In Peterborough, the cost of that hospital was $365 million. The cost of the hospital in St. Catharines was $1 billion.
Imagine what we could have done if we would have built the St. Catharines hospital the same way we built the Peterborough hospital, took that $700 million and put that right back into health care, into mental health and some of those issues.
I think that’s what we’re trying to say here. Yes, we’re going to spend the money, but let’s spend it wisely and let’s not get some people just rich. The way this was done and the way I smelled this out, you’re going to companies that are going to benefit from them. I don’t know how your opinion would be, but that wouldn’t make sense.
The last question I want to get to—I just wanted to give that as an example—
The Vice-Chair (Ms. Daiene Vernile): I’m sorry, Mr. Gates. That’s your time. Thank you very much.
Mr. Wayne Gates: I need 15 minutes today. Anybody want to give me five?
The Vice-Chair (Ms. Daiene Vernile): You’ll have to bargain. That concludes our time allotted for your interview. Thank you very much. You may step down. We are going to consider your concurrence in about half an hour.
Mr. Ehren Cory: Thank you.
The Vice-Chair (Ms. Daiene Vernile): You’re very welcome.
Ms. Kathy Bardswick
Review of intended appointment, selected by official opposition: Kathy Bardswick, intended appointee as member, Metrolinx.
The Vice-Chair (Ms. Daiene Vernile): Our next intended appointee today is Kathy Bardswick, nominated as member of the board of Metrolinx. I would ask that you come forward to the table, have a seat and make yourself comfortable. Thank you very much for being here. You can begin with a very brief statement, up to 10 minutes, and any time that is used for your statement will be deducted from the government side. So start by stating your name for the record.
Ms. Kathy Bardswick: My name is Kathy Bardswick.
The Vice-Chair (Ms. Daiene Vernile): And begin any time.
Ms. Kathy Bardswick: All right. Well, I won’t take 10 minutes. You have my resumé in front of you. What I thought I would do is highlight, from my perspective, one of the most significant commitments and areas of involvement and responsibility that I had when I was in fact in the chief executive officer role for the Co-operators Group.
I personally, back in 2005 and then as an immediate next step, I sought to organizationally engage a commitment in sustainable behaviour, sustainable results, sustainable outcomes, sustainable strategic thinking for the organization, in part because we are a bit of canary in the coal mine when it comes to the insurance industry and we see what’s happening globally with climate outcomes, but in part because my organization is structured and owned by the co-operative system in the country, and we see our primary focus as one of contributing to safer, healthier, more sustainable, more resilient communities. So there was kind of a double-edged mission in our responsibility to step up, more so than we had done historically.
I’ve carried that commitment into retirement, and I’m looking at Metrolinx as an area of providing some of my time and energy and contribution, in large part because I think that transportation infrastructure, done well, done effectively, done efficiently is such a core requirement of the resilience of a healthy community, of a safe community. So, as I thought, “Well, how am I going to spend my time now? I’m a little young to go off and sit on the end of a dock or twiddle my thumbs,” Metrolinx really was an attractive opportunity, I thought, to continue contributing in ways that I think are inherently very significant and very, very important for the future of the province and the country, for that matter.
I’m going to stop there and suggest that you’ve got my resumé. I’m not a big capital projects leader. I come from the financial services industry. I carry in risk management capability, financial acumen, leadership, obviously—I led an organization of 8,000 people—governance, you can see in my resumé, extensive governance here in Canada and internationally, and a strong desire to contribute. So I’ll end there.
The Chair (Mrs. Cristina Martins): Thank you very much, Ms. Bardswick. We will begin questioning with the official opposition: Mr. Pettapiece, please.
Mr. Randy Pettapiece: Welcome.
Ms. Kathy Bardswick: Thank you.
Mr. Randy Pettapiece: Thank you for coming here today. There have been some issues with Metrolinx. I’m sure you may have heard of some. I’m going to ask you some questions pertaining to some of the issues.
The implementation of the Presto fare system across the TTC has been quite rocky. The new machines have been plagued with technical glitches, and it has caused the TTC to sustain fare losses. Would you have an opinion as to the best approach to tackle this challenge?
Ms. Kathy Bardswick: If you look far enough back in my resumé, I come from a technology background. My undergrad was in computer science and mathematics, and part of my involvement with the Co-operators actually was leading their technical systems organization. So technology is not foreign to me. I wouldn’t say I’m a technocrat, but I certainly do have an inherent understanding—a broad and strategic understanding—of the challenges associated with technology.
I don’t have an intimate understanding of what may or may not have been done right or wrong as Presto was implemented; I’ve only got the public information to base my views on. I think it was a very complex implementation. It crossed governance boundaries. It was going to affect millions of people. I can only share with you that I sat in the public gallery in February at the Metrolinx board meeting so that I’d have a little more intimate understanding of the challenges that the Metrolinx board is talking about. There were service statistics shared at that board meeting that suggest that the problems are significantly being rectified and that service levels have recovered.
I think at the end of the day the question is, what can we learn from the experiences that we had implementing such a significant and complex technology platform? This platform, if my understanding is correct, is going to be such a core infrastructure requirement of transportation in terms of the technology that will have to be used as we cross municipal boundaries and we expand service to the travelling public. Everything technically now is sitting on your iPhone, and if that doesn’t work, then your future is questionable.
I think, strategically, directionally, it was the right thing to do. I don’t know, not having been there, whether in fact the project management was faulty or needed to be reflected on and whether there are learnings that had been incorporated.
What I do know at this point is Metrolinx does have a subcommittee of experts who oversee the Presto technology requirements of the organization. And from a personal perspective, I use the system all the time. My Presto card works quite well. I mean, that’s a sample size of one, but at the end of the day I do think that the service levels are recovering.
The Chair (Mrs. Cristina Martins): Excuse me, can I just interrupt here? Sorry, Ms. Bardswick; I’m going to ask you just to move back just a little bit with the microphone. I think, really it would make talking that much easier.
Ms. Kathy Bardswick: Sure. Is that better?
The Chair (Mrs. Cristina Martins): Thank you so much. You can continue, Mr. Pettapiece.
Mr. Randy Pettapiece: I was just going to say that I’m glad to hear that it’s working well for you, because, certainly, I don’t come from a technical background in computer science and that type of thing. In fact, computers are not my thing. This type of technology certainly isn’t my thing.
Over the last number of years there have been a number of systems implemented by government—Metrolinx, in health care and in whatever else—that haven’t worked. I wonder if you have some expertise as to—maybe we can get it right the first time. I understand that there are always glitches here and there, but when you’re talking about millions of dollars put into a system and then it doesn’t work, and then other millions of dollars are asked for to fix what maybe shouldn’t have been broken in the first place, it’s very frustrating, certainly to us and certainly to the people of Ontario when this is done.
I just wonder if you have some expertise, maybe trying to get this done right the first time.
Ms. Kathy Bardswick: Let me assure you, the experiences that the Ontario government, or any government for that matter, has when it comes to technology implementations is not unique. I think that technical implementations, at the best of times, in my experience—I’ve had many years of being a part of, either directly through the Co-operators’ involvement or in my governance roles—I’ve overseen, or experienced, or watched many technical implementations. I think that when you can deliver on time and on budget, you have a wonderful celebration at the end of the process.
I think in part—technology is ever-changing. The assumptions that you make heading into technology projects are changing under your feet. It is very complex to ensure that, at the end of the day, you are, as quickly as you can, implementing what I think we have learned as technology specialists shouldn’t be the Cadillac. We need to be able to constantly iterate improvement when we’re implementing technology. I think that’s been a learning that the technology industry has come to over the years. Now, in part it’s because the technology has helped us to that, to be more iterative in our development processes. But, I think that as a matter of statement, it’s been a chronic challenge associated with large technology implementations that certainly isn’t unique to governments.
Mr. Randy Pettapiece: That may be a fair statement, but I think you can understand that we’re not talking about $10 or $20 if something goes wrong; we’re talking about millions of dollars. This is a frustrating part of putting these systems in place.
Ms. Kathy Bardswick: As I said, to the extent that we can be more iterative in our development processes, I think it bodes for better success outcome.
Mr. Sam Oosterhoff: So what do you think is one of the primary ways we can have better success in these sorts of projects? You mentioned iterative ways, but what would be one area that you feel we can improve and that we will improve? You obviously want to get into this to make a difference, but what is that? What’s that difference?
Ms. Kathy Bardswick: You know, it’s difficult for me sitting here, not knowing the architecture and some of the development challenges that may have existed in these projects. I would really like a much more intimate understanding of the architecture and the overall objectives associated with these large projects.
What I can say is that best practice is driving out more iterative development capabilities, and the technology is allowing you to see outcomes more quickly without all of the bells and whistles, so that you are committing and able to be more flexible in your development path as you go forward. But to comment specifically on anything that Metrolinx may or may not have experienced—I can’t do that at this stage.
Mr. Sam Oosterhoff: So then maybe I’ll make it a little broader. Personally, and I think most of us here, got involved in politics because we believe that there’s something that we can do to make a better difference in the lives of the people of Ontario. The impression that I got from you is that you want to get involved with Metrolinx because you believe the same thing. You believe you can make a positive difference.
I’m just curious: What would that positive difference look like in specific terms? Do you have any particular goals, or is this just a desire to serve, essentially?
Ms. Kathy Bardswick: When I look at Metrolinx, let’s face it, this organization has been required to beef up, to grow, and to incorporate these huge projects over a limited amount of time. When you look historically at where it has come from and what it’s expected to do over the next number of years, the demands on this organization are substantive. The rapid rail system requirements, the Presto implementation, the UP Express implementation, the need to ensure that we are, in fact, defining our vision for the next 10, 15 or 20 years associated with urban planning, moving people, population, density, demographics and you name it: It’s a very demanding set of expectations for Metrolinx to respond to.
I think I’ve got some expertise. I think I have a strategic mind. I’ve executed strategically. I’ve defined strategies for organization within the context of risk frameworks that I’ve been accountable for. I think you all know how regulated the financial services industry is, particularly in terms of our risk appetites and our risk frameworks. I think I have a contribution to make.
I’m certainly not carrying in a knowledge of trains, buses or, as I said earlier, very large capital projects, but I am carrying in a lot of experience associated with aspects of the Metrolinx challenges that I can contribute to.
The Chair (Mrs. Cristina Martins): You have 20 seconds.
Mr. Sam Oosterhoff: Are there any particular areas of interest that you have within the Metrolinx area?
Ms. Kathy Bardswick: I think that one of the most significant challenges we will face, and this is not just a Metrolinx challenge, but the whole sustainability journey that we’re on—and we’re on it; whether we agree with it or not, whether we believe it or not, whether we like it or not—we are on the sustainability journey. I happen to be very passionate about that journey.
The Chair (Mrs. Cristina Martins): Thank you, Ms. Bardswick. That terminates the time there.
We’re going to turn it over to Mr. Gates right now. You have 10 minutes.
Mr. Wayne Gates: That seemed like a long 20 seconds. I don’t know; I think you’re favouring the young guy. I think that’s what’s going on. I’m just saying.
Good morning, Katherine. How are you?
Ms. Kathy Bardswick: Good morning. I’m fine, thank you.
Mr. James J. Bradley: You’re young at heart, Wayne.
Mr. Wayne Gates: I know; I’m young at heart. There’s a lot of truth to that one.
Do you take transit?
Ms. Kathy Bardswick: I do. I did this morning.
Mr. Wayne Gates: How often would you do that?
Ms. Kathy Bardswick: Whenever I come into Toronto, if I can.
Mr. Wayne Gates: Pardon?
Ms. Kathy Bardswick: I live in Burlington. Whenever I’m coming into Toronto, I don’t get in my car if I can at all avoid it, which is 95% of the time.
Mr. Wayne Gates: So you don’t live in Toronto, then.
Ms. Kathy Bardswick: I live in Burlington.
Mr. Wayne Gates: I’m going to go with the next part, so you’ll understand—
Ms. Kathy Bardswick: Yes, okay.
Mr. Wayne Gates: You are a very accomplished professional.
Ms. Kathy Bardswick: Thank you.
Mr. Wayne Gates: Your resumé is outstanding. With some of this question I’m kind of making an assumption, but we’ll see where it goes and you can answer the best you can. At the risk of making an assumption, I expect your past income, and perhaps your current income even in retirement, is very different from the incomes of most of the people who depend on transit each day, particularly in Toronto. That’s where that next question is going go. How would you be able to reflect the needs and expectations of transit riders whose perspectives may be very different from your own?
You take it from Burlington because you don’t want to fight the traffic, and I get that. That’s why Mr. Bradley and I are trying to get GO all the way to Niagara Falls, and we’re trying to get it sooner. We would like to get it by 2021 or 2019. I thought I would throw that in for my colleagues down in Niagara. Anyway, that’s kind of what the question is.
Ms. Kathy Bardswick: First of all, I remind you that I have led a co-operative organization and have been involved all of my life in the co-operative system, which grounds us in community need, owned by 43 co-operative institutions across the country who bring 22 people to my board and ground us in community need. If any of us forget where our roots are, we have many of us around the table who continue to remind each other of why we’re there and where we came from.
I’m from a very large family in Cape Breton with an ethos that I was raised in that drove a belief and an inclusiveness and an understanding that we are only as good as our communities, and our communities are diverse and vast and representative of all walks of life and all cultures and all economic backgrounds. If we are to drive results and outcomes that in fact do deliver community health safety resilience, then we are representing all of those requirements and inherently ensuring that we understand and respond to all of those requirements.
Mr. Wayne Gates: Thanks. GO Transit is a division of Metrolinx. But Metrolinx also makes funding and planning decisions that affect the TTC and other local transit agencies. GO Transit and, say, the TTC have very different missions and serve very different riderships. GO Rail, for example, focuses on regional commuters who gather at a few collection points in Toronto and the 905 area each morning—very similar to what you did this morning—
Ms. Kathy Bardswick: Though I did get on the TTC too.
Mr. Wayne Gates: —and then expect to take fast trains downtown, stopping as infrequently as possible. After work, the process is obviously reversed, and the trains leave downtown and whisk peak-hour commuters back to GO stations outside the area. But the TTC serves a rider who demands access to transit more than speed, although both are important. They expect to be able to find a transit stop within walking distance anywhere in Toronto and access to the transit system wherever they need to go somewhere at all times of the day. They expect to pay a single fare and then go anywhere in the city. Can you see how these are very different missions?
Ms. Kathy Bardswick: I’ll start by saying that your opening comment was that Metrolinx makes decisions that affect the TTC, but I think it is also true that the TTC in other municipalities makes decisions that affect Metrolinx. So, I would like to suggest that there is a mutual interdependence and need for collaboration and co-operation amongst and between the various municipal systems and Metrolinx.
On that note—and I was watching as I was preparing to decide whether I was interested in Metrolinx—I was watching a board meeting that had been held about a year and a half ago. It was a board meeting between Metrolinx and the TTC governance bodies. It occurred to me that that kind of collaboration and co-operation is absolutely essential to drive out the commonalities associated between the two systems and to ensure that each has an understanding of the differences that the other is required to respond to so that there is a mutual understanding of where they can work together, where they do have to work together, where they do have to work together, where the decisions need to be integrated and where they have a clear understanding of where they diverge. There are exclusive responsibilities associated with each of the systems. I would suggest it’s a codependency, as opposed to one way in or another way—a one-way street.
Mr. Wayne Gates: I understand what you’re saying. My next question may get to where I did that question.
Ms. Kathy Bardswick: Okay.
Mr. Wayne Gates: It’s my understanding that Metrolinx is currently trying to integrate these very different missions with a common fare structure based on the single philosophy of the value of the trip. A Metrolinx staffer in charge of fare integration recently asserted to the board without really explaining himself—so it was obviously a male—that fare by distance best reflects the public’s value when it comes to the value of a trip. He actually used Uber as an inspiration. But I can’t understand how he decided that Uber-style or taxi-style pricing rules make sense for that type of transit. Metrolinx’s fare integration process does not seem to have considered the role of transit in city building, social cohesion or economic growth, not to mention ridership growth. Metrolinx seems to think that local transit agencies like the TTC are just glorified taxi companies providing a personal consumer service that has nothing to do with the public good. Worst of all, fare integration seems poised to increase fares. I think this is important for affordability in Toronto. Worst of all, fare integration seems poised to increase fares for people who depend on transit the most, such as captive riders in places like Scarborough, North York, or Etobicoke who need to travel long distances each day.
Do you think it’s fair to have riders pay by the kilometre, like Uber or a taxi company, in Toronto? You said you were an expert at math or did some studying in math. Imagine the costs that would be for everyday people in Toronto for places that are far out, like Scarborough, North York and Etobicoke.
Ms. Kathy Bardswick: When I sat in on the February board meeting—I was in the public gallery—this issue actually was tabled at the board. The presentation suggested that this was a really complex issue and they didn’t have a position that they were tabling for the board to ratify or support at that point, and that there was further study to be had, given the complexities that were raising those very issues. What about equity? What about different economic situations associated with ridership? What about the math associated with crossing one boundary into another municipal boundary etc.?
My sense of it was that this issue is complex. It is engaging the municipalities in a conversation. There is not a position that has been recommended to the board at this point. It needs further study, because those questions have to be answered, and answered appropriately, before a solution is to be found.
Mr. Wayne Gates: Well, it’s being discussed.
Ms. Kathy Bardswick: Yes.
Mr. Wayne Gates: And it would certainly be complex if I lived in Scarborough—how I’m going to afford to get downtown to get to my job. I can understand that part. I do like the part that you talked about: They’ve got to talk. This is one they had better talk out very clearly, again, for affordability in Toronto.
Ms. Kathy Bardswick: And if memory serves, when I was listening to the presentation, one of the significant to-dos was the collaboration and the involvement of municipal voices in that.
The Chair (Mrs. Cristina Martins): You have just under one minute, plus the 10 extra seconds.
Mr. Wayne Gates: I appreciate that. I’m good.
Thank you very much. I appreciate your response.
Ms. Kathy Bardswick: Thank you.
The Chair (Mrs. Cristina Martins): We’re now going to turn it over to the government side. Ms. Vernile, you have seven minutes and 12 seconds.
Ms. Daiene Vernile: Good morning, and welcome. I want to thank you first of all for your public service. Looking at your resumé, you bring a great deal of expertise to this board. I would say they’re lucky to have you.
These are very exciting times for Metrolinx. It’s building out an unprecedented number of rail projects right across Ontario. Just this past week, we had a very important announcement, a partnership with the federal government. It is committing almost $2 billion to help build and pay for regional express rail. That’s very important to my community in Kitchener Centre, where we have a growing high-tech sector looking at and depending upon improved rail between the Kitchener-Waterloo area and the GTA.
Can you speak to the need for building out our rail, as it is tied to economic development, and the environmental arguments in favour of it?
Ms. Kathy Bardswick: Yes. As I envision the lineups of cars associated with the QEW and Gardiner as I’m sitting on the GO train, coming in in the morning—and today was no exception, particularly when the weather is like this.
There have been many, many studies done associated with the degree to which there is a direct link between efficient and effective movement of goods, services and people and economic benefit, economic value. We pride ourselves in this province on not only the historic successes that we’ve had and the current successes that we’ve had in terms of our development and our industry and our cultural diversity and our capabilities and our technology build-out—and that’s another very exciting area that I think Ontario is playing a key role in, in terms of artificial intelligence. But that’s not directed to your comment about transportation.
It is all dependent on efficient and effective movement of things and people. Whether that’s movement through technological capabilities or whether that’s physical movement, we are going to be so highly dependent on continuing to get this right and even righter—sorry for the poor grammar, but you get my point—associated with particularly the kinds of corridors we’re looking at.
The Kitchener corridor is an example. I just recently agreed to sit on the University of Waterloo board. I was affiliated with that university when I was on the Guelph board. The excitement that’s going on in that hub—but it needs to be connected and it needs to be able to take advantage of efficiency and effectiveness.
In my work with sustainability—and I will say that we looked beyond just the role that the insurance industry plays because so much of our business is dependent on transportation. Half of the premiums in this country go to paying to insure transportation of some sort.
Our conclusion was that transportation, as a concept, needs to change. We need to put far more bodies in trains and buses and commute them, as opposed to cars. Cars—you can see we can’t keep up, and it’s not a sustainable way of continuing to build out and support the population growth that we will be fortunate to have, given the economic opportunities that that will drive for us. But as I said earlier in my comments, it is just so dependent on effective and much more capability to move goods and services and people around.
I would argue that one of the questions that all of the municipal transit systems should be asking is, is it only about people? Or is it also about goods, services, information and people, and how we ensure that we’re thinking of urban planning developments, demography developments, changing work styles and lifestyles, and the technological implications and impacts that technology is having on transportation? Are we looking at this too narrowly, and do we have a vision for this part of the country that deals with transportation in all of its forms? Only when we are able to get it to be more efficient and more effective, moving goods and services and people around more efficiently, will we get at some fundamental sustainability challenges that we face.
Ms. Daiene Vernile: We know that these projects are very costly and complex. The pressure that I face in my community, not only from the tech sector but from the insurance industry, academia and everyone else, is that they wanted it yesterday. I’ve got people in the tech sector who come to me and say, “You know, I was just in China, where they built a high-speed rail in three years. What’s our plan here?”
Sitting on this board, how can you compel Metrolinx to go as quickly as it can?
Ms. Kathy Bardswick: I go back to my earlier point about technology and iterative thinking. The very nature of the Metrolinx work is long-term. You build infrastructure for decades, not for years. The challenge, obviously, is that you’re making decisions today that need to be good, sound decisions with outcomes 10, 20, 30 years from now, just given the magnitude of the build. To the extent that you can bring iterative thinking that allows flexibility in your strategic execution, the better you are going to be.
As I said, it is very complex. It needs different perspectives; it needs collaboration; it needs municipal co-dependency associated with what that might look like. It is very complex. But to do it quick and get it wrong is going to be more problematic than doing it right and maybe taking longer than some stakeholders would like. I know that’s always a hard message to hear, but it’s one that has, I think, proven itself, particularly given the nature of the business that this organization is in.
The Chair (Mrs. Cristina Martins): You have about a minute left.
Ms. Daiene Vernile: I want to thank you for stepping forward and committing yourself to this.
Ms. Kathy Bardswick: Thank you.
The Chair (Mrs. Cristina Martins): Thank you very much, Ms. Bardswick. That concludes, then, the time for this interview. You may now step down.
We will now consider the concurrence for Ms. Ehren Cory—
The Chair (Mrs. Cristina Martins): Oh, sorry—Mr. Ehren Cory, who is nominated as member, Ontario Infrastructure and Lands Corp. Would someone please move the concurrence?
Mr. Qaadri, please.
Mr. Shafiq Qaadri: I move concurrence in the intended appointment of Ehren Cory, nominated as member, Ontario Infrastructure and Lands Corp., Infrastructure Ontario.
The Chair (Mrs. Cristina Martins): Any discussion? All in favour? Opposed? The motion is carried.
Congratulations, Mr. Cory.
We will now consider the concurrence for Ms. Kathy Bardswick, nominated as member, Metrolinx. Would someone please move the concurrence?
Mr. Shafiq Qaadri: I move concurrence in the intended appointment of Kathy Bardswick, nominated as member, Metrolinx.
The Chair (Mrs. Cristina Martins): Any discussion? All in favour? The motion is carried.
Congratulations, Ms. Bardswick.
There are no deadline extensions to be considered at this time. Seeing that that is the case, the committee is adjourned.
The committee adjourned at 1005.
STANDING COMMITTEE ON GOVERNMENT AGENCIES
Chair / Présidente
Mrs. Cristina Martins (Davenport L)
Vice-Chair / Vice-Présidente
Ms. Daiene Vernile (Kitchener Centre / Kitchener-Centre L)
Mr. Granville Anderson (Durham L)
Mr. James J. Bradley (St. Catharines L)
Mr. Wayne Gates (Niagara Falls ND)
Mrs. Amrit Mangat (Mississauga–Brampton South / Mississauga–Brampton-Sud L)
Mrs. Cristina Martins (Davenport L)
Mr. Sam Oosterhoff (Niagara West–Glanbrook / Niagara-Ouest–Glanbrook PC)
Mr. Randy Pettapiece (Perth–Wellington PC)
Mr. Shafiq Qaadri (Etobicoke North / Etobicoke-Nord L)
Ms. Daiene Vernile (Kitchener Centre / Kitchener-Centre L)
Substitutions / Membres remplaçants
Mr. Mike Colle (Eglinton–Lawrence L)
Clerk pro tem / Greffier par intérim
Mr. Eric Rennie
Staff / Personnel
Ms. Erin Fowler, research officer,