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Minister of Finance Bill Morneau says 'we do not see any need around the issue of federal, provincial or municipal laws for any changes' to legislation creating a national infrastructure bank.Justin Tang/The Canadian Press

The Liberal government's plan to create a $35-billion infrastructure bank is facing a new source of opposition as Quebec's national assembly is calling for amendments to protect provincial powers.

Quebec's concern that the bank could interfere with provincial authority to regulate in areas such as environmental protection is now a key focus of a Senate review of the legislation.

The Senate banking committee heard Thursday morning from Laval University law professor Patrick Taillon, who said that with a new federal bank, projects that would traditionally be regulated by the provinces and municipalities – such as water systems or highways – could become federal projects subject to federal regulation.

Mr. Taillon said that does not appear to be Ottawa's intention and suggested amendments to ensure that the bank would not interfere with the powers of other orders of government.

That is in line with the motion approved Wednesday in a 115-0 vote by Quebec's National Assembly, which called for "amendments to Bill C-44, currently being studied by the House of Commons, that would ensure the Canada Infrastructure Bank is subject to the laws of Quebec."

The Canada Infrastructure Bank Act is part of Bill C-44, an omnibus budget bill that the Liberal government would like to become law before Parliament rises for the summer. The government is currently conducting a search for executives who would lead the bank.

Quebec's motion came on the same day that the Commons finance committee reported Bill C-44 back to the House of Commons following its review. The committee amended some of the bill's provisions that relate to the Parliamentary Budget Officer, but did not make any amendments to the sections that deal with infrastructure.

Senate committees are currently conducting a pre-study of the budget bill, and the banking committee has held several hearings specifically focused on the infrastructure bank.

The Senate banking committee will submit a report to the full Senate next week. Senators on the committee are still debating the issue; however, the chair of the committee, Conservative Senator David Tkachuk, indicated that questions remain about the legislation. Several senators have discussed the possibility of removing the infrastructure bank provisions from the budget bill in order to allow for a more thorough review.

"Senators still have concerns," he said. "I think there should be more study. I'm in favour of splitting it."

On Wednesday evening, Finance Minister Bill Morneau appeared before the Senate banking committee and urged the Senators to support the legislation. Mr. Morneau rejected suggestions that the bill requires amendments in order to address concerns that the bank will veer into provincial jurisdiction.

"We do not see any need around the issue of federal, provincial or municipal laws for any changes. We've sought expertise in this regard. The bill is clear. We see no issues in that regard," Mr. Morneau said.

Quebec Liberal Senator Paul Massicote, who is on the banking committee, said he is currently debating whether amendments are needed.

"I'm still concerned about the issue of governance," he said.

He also agreed with the Quebec position that there is a concern regarding provincial jurisdiction.

"I certainly like the bank. I like the idea a lot. So I don't want to delay that," he said. "I'm going to speak privately with some of my colleagues to see how much support we would have for amendments, and is it worth the amendments?"

Questions of jurisdiction were raised in a confidential KPMG report conducted for Infrastructure Canada, called "Policy Options for a National Infrastructure Bank or Agency," which is dated September, 2016, and was released under Access to Information. The report noted that most infrastructure in Canada is owned by municipalities.

The federal government is proposing the bank as a partner for large projects that would be led, owned and primarily funded by large institutional investors such as pension funds. The bank would also be a centre of expertise to ensure that the public interest is protected when the large deals are negotiated.

However, the KPMG report raised questions about this role.

"Some stakeholders questioned whether or not it is an appropriate role for the federal government to act as advisers to project sponsors at other levels of government. Historically, the Government of Canada has not generally had a strong role in this area," the report stated, adding that the bank could overlap with services already provided by provincial agencies.

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