Finance Committee on May 30th, 2019

[Michel Leduc]

I might even be able to give it to you before I walk out of this room.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

That's fabulous.

[The Chair, Liberal, Wayne Easter]

He's happy.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

That's very impressive, unlike CMHC.

I'm going to go back to my human rights question one more time on these “concentration camps”, I'm going to call them, because that's what the Uighurs, Canadians of Uighur heritage, have called them. That's basically what they are.

Euphemistically, the Chinese government calls them “re-education schools” where they do training and education, but let's be serious: They're internment camps. Over half the population has been interned in the province of Xinjiang. The Chinese official who runs that province is the same one who ran the Tibetan province and ran the mechanisms of the Communist Party of of China's system of oppression against Tibetans.

I'm going to ask you again. You gave me a very cold answer earlier that these two organizations, these two companies, were red-flagged. Will you commit to divesting CPPIB funds, the funds that Canadians are paying?

Each of us here, every single Canadian, is basically paying into these companies in equity stakes to facilitate the oppression and repression of Muslim Uighurs in western China for nothing more than their ethnicity and their religion.

[Michel Leduc]

Our commitment has to absolutely be tied to our investment programs. It can't be a personal decision.

We could agree with you, but it can't be an individual having a value judgment and flicking a switch and making a divestment. What we're committed to doing is to taking very seriously the issues that you've identified and making sure we put them into the decision-making process for an investment. Otherwise, if you think of, again, 10,000 securities around the world, if we were to make decisions based on what we may believe or we may know or may not know, it really goes to undermining the risk-adjusted returns.

Therefore, our commitment is to applying our process.

[The Chair, Liberal, Wayne Easter]

You have two minutes left.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, sir.

Mr. Leduc, I want to put something on the record so you have the information. Jim Millward, a professor of history at Georgetown University, has done ample research on this case. If you need to find more details about it, I suggest a Sinica podcast, the two hosts of which speak immaculate Mandarin as well. It is a wealth of information on this particular subject. They spent an hour with experts discussing it.

This issue has been covered by the BBC and other international organizations. In fact, Human Rights Watch has written “China's Algorithms of Repression”, which identified Hikvision, one of these companies—the Hangzhou Hikvision Digital Technology Company—as the winner of a contract to supply China's integrated joint operations platform. That is the platform being used to oppress not just Muslim Uighurs in the province, but also dissidents, democracy activists, human rights activists and lawyers across the People's Republic of China.

Again, I know you're saying you can't say right now, but this is both an operational and a board-level decision that needs to be made much more quickly than an end-of-year type of thing. These camps are expanding day to day, week to week, month to month, and there are more Muslim Uighurs who are being oppressed in this way.

Therefore, on behalf of my constituents, I'm pressing the point that you need to make a decision much more quickly than in the next five or six months.

[Mark Machin]

Just to add to what Mr. Leduc was saying, this is something we are aware of. We've been looking at it for a little bit of time now to make sure that we are aware of the risks around these investments. We are going to put them through this very systematic process we now have.

These are not direct investments. Again, just to remind you, these are ones that are just in indices. They're just in the quantitative programs, and they're very small investments that are part of an index. Having said that, we've now expanded these processes so that they capture these passive indexed investments. We're going to put those through that rigorous process we have in place. That was something we'd planned previously to do.

[The Chair, Liberal, Wayne Easter]

We are going to end it there. Thank you for that exchange. I think the message has been put, and hopefully, heard loud and clear.

Go ahead, Mr. Fragiskatos.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair. Thank you to both of you for being here today.

I have one question. How well funded is the fund as compared to other funds in other industrialized democracies where institutions have also been created to prepare citizens for retirement?

[Mark Machin]

I think the important headline is that the fund is sustainable, very comfortably sustainable. Again, I refer back to the Office of the Chief Actuary and the reports that have consistently come out on a triennial basis. When the enhancement to the CPP was made, the chief actuary published two other reports at that point. They have consistently confirmed that the fund is sustainable over the 75-year time horizon.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Okay, that's fine. You've been very clear on that. That's a great thing to put on the record, a great thing for Canadians to know, and it provides enormous reassurance, but how do we compare? How does the fund compare to similar funds in other countries? Where do we rank on the list in terms of the long-term viability?

[Mark Machin]

One of the things to look at is the anticipated investment return level. The Office of the Chief Actuary anticipates that we will make returns of 3.9% over inflation on the base CPP over that 75-year time frame.

I think you'll find that assumptions in other countries.... For example, the U.S. pension funds have much higher return expectations in order to get to their sustainability estimates. The question, in a low interest rate environment, is whether those numbers are achievable. We've comfortably exceeded 3.9% over inflation over the last 10 and 20 years. One way of looking at it and comparing is to ask whether those estimates in other countries are reasonable.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. McLeod.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, and welcome back.

When you came before this committee last year, we discussed CPPIB's efforts to become a more inclusive and diverse organization. In your submission, you noted some of the steps that have been recently taken by your organization. I asked you specifically about having targets for people of colour and indigenous employment. You stated, “It's something that I think we should look at over the next year or so, so by the next time I come here, I should certainly have a crisper answer for you than telling you where we are today and where we aim to be.”

With that in mind, do you have that crisper answer for me today?

[Mark Machin]

I do.

We have a target today of 1.3% of our Canadian office to be indigenous Canadians. That's the target we're aiming for.

[Michael McLeod, Liberal, Northwest Territories, NT]

I have a final question.

You mentioned in your report that your organization is required to host a public meeting in each of the participating provinces every two years. Could you clarify if that includes the north, the territories, and if you have been including the territorial north in your tours?

[Mark Machin]

There are a couple of things in that connection.

First of all, what was required in the act doesn't require specifically the northern territories, but we have presented to the ministers and staff. I had the pleasure of presenting to all of the ministers in the December meeting; the territories' ministers were present, along with their staff, and I think we're going to expand our engagement into the northern territories.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much for the discussion. I believe you're going to get back to the committee with further information, some really fast and some maybe a little more slowly. Congratulations on your efforts in working for Canadians.

With that, we will suspend for five minutes and go into committee business.

There is a point of order. What's the point of order?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Chair, I see in the agenda today that we are moving to committee business. Is that what you're about to do?

[The Chair, Liberal, Wayne Easter]

Yes.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I see that it's in camera. It's not the usual practice at this committee to do committee business in camera, so I'm wondering why we are moving in camera.

[The Chair, Liberal, Wayne Easter]

It was just a decision that was made to move in camera.

If you want to move a motion to do otherwise, we can see where it goes.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Whose decision was it to do that?