Information & Ethics Committee on April 9th, 2019

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Am I right, then, to say that we recommend a significant overhaul of the Privacy Act for government collection of information at the federal level, but also a significant overhaul of PIPEDA? If there were that significant overhaul, we would be seeing cities' data policies that would have to comply with our federal rules, or provincial rules if they were substantially similar. You'd have your public data, whether it's the library or some other civic data trust that would make decisions about what to approve, but cognizant of the federal and/or provincial rules that govern. Is that right?

[Brian Kelcey]

The original structure of how the federal legislation was implemented in the early 2000s was actually a very good case of Canadian federalism, in that it set broad standards and all jurisdictions had to comply with those standards, especially with respect to federal interests. Below that, there was the option at the provincial level, and it would be just as easy to provide that option at the municipal level, provided that local and—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Is it easy, though? That's sort of what I'm driving at. We have a federal system, for good reason, and it mainly works, although sometimes there are frustrations with different rules. Businesses certainly face frustrations with different rules across provinces. We can see that with interprovincial trade.

If you have significantly different data policies between Vancouver and Montreal, Toronto, Edmonton, Calgary, Halifax, is that not a potential problem?

[Brian Kelcey]

I think it depends on what the significant differences are. A jurisdiction might be more inclined to do more in terms of commercializing its data, provided it was consistent with protecting the rights that the federal legislation would protect. An urban jurisdiction that had more to do with that data might be willing to be more aggressive about how much of it it captures and processes if it's for its own or public uses, relative to a smaller jurisdiction that didn't have that capacity. So it depends.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Here's my last question, as I'm running out of time. The idea is that cities would be able to make those determinations, but within the context and following the federal and/or provincial rules. Is that right?

[Brian Kelcey]

We hope they would. I retreated from partisan politics by being a cities guy for the rest of my career. Around the world, cities are leading a lot of the innovation in a lot of these close-to-ground technology areas. My hope—our hope, the board's hope—is that there will be enough room in whatever federal legislation, new standards or even guidelines might be created to say, here are the broad ground rules but there's some room for local governments, in the spirit of federalism, to make their own decisions about what's within their value set in that purview.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks.

[The Chair, Conservative, Bob Zimmer]

Thank you, Mr. Erskine-Smith.

Next up is Mr. Kent, for seven minutes.

[Peter Kent, Conservative, Thornhill, ON]

Thank you, Chair.

Thank you, Mr. Kelcey, for appearing. My apologies for the coincidental conflict with committee business.

A lot of the concern, the opposition and the driving force behind the calls now for the cancellation of this project have been based on this sort of dance of seven veils that Sidewalk Toronto has been performing. There's a lot of secret information and conflict with regard to getting people on the strategic advisory board to sign oaths of confidentiality, even on some of the most basic discussions of privacy by design, for example...Ann Cavoukian.

I know the board of trade has been very supportive of Waterfront Toronto over the years and encourages the responsible development of a magnificent piece of property in downtown Toronto. Was the board of trade not concerned as this entire controversy began to unravel, when the Toronto Star got that leaked information that seemed to suggest that this has been a real estate deal all along, rather than the simple 12-acre Quayside project based on what most of us thought was a magnificent proposal?

[Brian Kelcey]

I'll try to answer several strands of that as bluntly as possible, and we can follow whatever other strands you want. Part of why I may be more comfortable with this personally, and why the board is, is that this is very much a development proposal. It's an innovation proposal. It's a services-to-development proposal.

On one level, it's very complicated, in that there are a lot of different features that firms can plug in, and the bidders were, after all, asked by Waterfront Toronto to do that, to try to use the addition of civil engineering innovations, IT innovations and other services to make this development more interesting and more compliant with the goals in terms of environmental friendliness, affordable housing, construction and so forth.

I think that's part of what's driving that. We've said we're supporting Sidewalk going through the process, but we've also said that support isn't unconditional. We can speak later to other details of the process that got us here, but we have a legal agreement that came through a competitive RFP, and nobody has yet presented specific grounds to say—

[Peter Kent, Conservative, Thornhill, ON]

The Auditor General challenged it.

[Brian Kelcey]

I'm familiar with that. I've read the report twice, and we'll get to that. But nobody yet has specifically said that there's cause to overturn the legal agreement these two parties have, and as I noted in my preliminary remarks, as a civic government expert I see that there are literally dozens of points of gatekeeping between here and what Sidewalk wants to get to do.

We have concerns. The data piece is the number one concern right off the bat. We made some public comments. I spoke to reporters after the release of what we'll call “the leak” for shorthand. I said that I don't think, from the standpoint of how civic government works in the city, that this model is going to work, but there may be others worth exploring, and we're taking the approach that Sidewalk is legally obliged and has won the legal right to file a master innovation and development plan. Let's judge on the basis of that plan.

The seven veils routine may be teasing for some and excruciating for others, but for large developments in many cities across this country, having multiple proposals that go through changes to try to deal with public opinion and anticipate regulatory issues is pretty standard, candidly, and it often takes years for a proposal of this size to actually work through the process.

[Peter Kent, Conservative, Thornhill, ON]

When a company's fourth-quarter profits were $40 billion last year, and the City of Toronto's operating budget for 2019 is less than $14 billion Canadian this year, one can see the reason for concern, and it's heightened by the fact that Sidewalk Toronto's sibling has taken a huge series of reputational and legal hits in the last few years because of business practices that have been found to be unacceptable, most recently in Europe.

[Brian Kelcey]

With respect to concern, I'll put it this way. I want to say, at every opportunity that I can get a chance to, that many of Sidewalk's harshest critics are not close friends of mine, but I admire them. I've worked with them. I've had more than one consecutive drink with them on occasion. I respect and understand why they're in the debate.

I disagree with a lot of their rhetoric. I disagree with the scale of their rhetoric. I believe there's a lot of room in this process to manage some of the concerns this committee has spoken about in previous meetings. I think that's the biggest difference. There's a lot of room for a positive win, from the board's perspective, for our economy and for our city from Sidewalk's presence.

There are also legitimate public policy views and, as we've already done on the data piece, we're quite happy to say that if we think there is.... There's room to speak out on those things, and there's lots of process left for us to have Sidewalk jump through legitimate public policy hoops if they have to, or to have all the various actors who are involved negotiate through Sidewalk Labs to get the best result for the city and for the country.

It's understood that there's a lot to watch on this. That's a challenge, but it's also a by-product of the complexity, not just of what Sidewalk is proposing, but of what Waterfront has asked bidders to do on a complex site that's owned by many parties.

[The Chair, Conservative, Bob Zimmer]

You have 30 seconds.

[Peter Kent, Conservative, Thornhill, ON]

I have just one last question. Has the board of trade called for discussions with individual members of council or members of the government from Queen's Park, or with Ms. Cavoukian or Mr. Balsillie, for example, for the differing and sort of conflicting points of view?

[Brian Kelcey]

By way of example, Jan De Silva, the board's president, and I had an extensive conversation with Julie Di Lorenzo, who was the other witness scheduled to be here, to hear her concerns. We spoke to at least one other individual close to...a board member who had been concerned about those things. We've made an active effort to try to seek out the opposition on this. We haven't spoken to Mr. Balsillie yet, but I've spoken to a few representatives of CCI, which he's very active in.

One thing I want to flag as well, as a veteran of two governments, is that it's a legitimate question to ask whether we, as Canadians, are giving Canadian firms a competitive shot in RFPs. Are we doing what people used to do with Big Blue in the 1970s, where you just always go with the safest party, and the safest party happens to be a large American firm in these cases?

I think there's a difference between asking those questions—and we've certainly talked to city hall in the last few weeks to ask those questions internally—and talking about preferential treatment for Canadian firms, which raises trade risks, or chucking out a firm in the middle of an agreement just because it isn't Canadian, which is the stated objective of some of Sidewalk's most vocal critics. We're saying, look, we can both grow here, and let's watch the margins to make sure that mistakes aren't made.

[The Chair, Conservative, Bob Zimmer]

Thank you, Mr. Kent.

Last up is Mr. Angus for seven minutes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, Mr. Chair.

Thank you for this. I might be a boy from northern Ontario, but I spent many years in Toronto. I'm not all that focused on the privacy issue. I think this is probably the most valuable real estate in North America. Would that be an exaggeration?

[Brian Kelcey]

It's the most valuable real estate that's all in one place that hasn't really been touched by external development.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I remember when Liberty Village was a whole bunch of broken-down old factories that punk bands like mine used to practice in, and now it's so hoity-toity. We thought we were at the end of the world when we used to have to go there or to Gooderham and Worts. That was considered the end of civilization, and now it is extremely valuable.

Very few cities have that kind of real estate that hasn't been developed and is in the exact ideal location. When I'm looking at this project, I'm thinking that Waterfront Toronto is looking at a number of potential operations that could really vitalize the city, the way the revitalization of the docklands in New York and Brooklyn did. The question is, was it for 12 acres or was it for the whole enchilada? That, to me, is a pretty straightforward question. We asked Dan Doctoroff, and he said that it's in the RFP, that it was always for the whole thing, that's what Waterfront Toronto.... But I read the RFP and it said that it was for 12 acres.

What was it? Was it 12 acres or was it for the whole thing?

[Brian Kelcey]

Certainly, Waterfront has tried to answer this question from Waterfront's perspective. We're both outsiders on this.

The way I have always understood the distinction is that what's unique about the Quayside parcel, as members will know, is that it's the piece Waterfront owns, over which it can actually have some control; it doesn't have to talk to its constituent shareholders before it sells. I understand a lot of the public concern that the land was going to be given away.

Before, there was a lot more clarity about that in the planned development agreement, but the planned development agreement says, first—and it's important to say this—that if a deal is executed between the two parties on the basis of Waterfront and all the other parties involved saying yes to the MIDP, Sidewalk will have to pay fair market value for that land, and that valuation can include the uplift that is already generated by approval. That is a common problem in municipal sales. They will give away the land and then rezone it, and that's where you get the value pop.

With respect to the rest, our understanding was always that the linkage between the two was such that whatever innovations and services Sidewalk—or whoever the winning bidder might have been—brought to the Quayside site should also be exportable to other sites in the area. As you know, that land is balkanized. Even if Sidewalk wants to access that land, there are layers more of process in terms of getting approval from the three levels of government that own those parcels. The same city development hell that they have to go through for Quayside they now have to go through for each of those individual sites, before they can even access them.

[Charlie Angus, NDP, Timmins—James Bay, ON]

It certainly gives you a good advantage if you have that. When they said it was always for the whole thing.... I mean, I look at the RFP and it's strictly for 12 acres.

My concern is that.... The more questions I ask, the more I expect just straight-up answers if this is a straight-up deal. Waterfront Toronto and Dan Doctoroff were both adamant that this was the second-longest RFP, but the Auditor General said it was an extremely short RFP. I look at the RFP and it looks like 36 days.

Both Waterfront Toronto and Sidewalk Labs kept rolling their eyes about “that crazy Auditor General's report”. Where did that come from? I mean, when the Auditor General does a report, we as officials pay really close attention. Did you have concerns raised out of the Auditor General's report?

[Brian Kelcey]

I cracked it open as soon as I could read it. I'll leave aside at the moment all the other issues they raised with Waterfront, since obviously our focus is on Quayside and you have limited time. However, I want to tell you that with respect to the Quayside bid, I've spent some time criticizing the mayor I worked for, publicly, for what I very politely called “a culture of dealmaking” at Winnipeg City Hall. The ramifications of that are still spilling forth in the news these days. I've spent a lot of time on variations in RFPs.

It's important, from my personal perspective and experience, to be clear that there is a significant difference between saying that an RFP could have been handled differently—in one of six or seven different ways, from the standpoint of what's best public policy—and saying that it had preferential treatment, which the audit did not say. It said that Sidewalk got more—

[Charlie Angus, NDP, Timmins—James Bay, ON]

The Auditor General's report said that Sidewalk received more than the others.