Finance Committee on July 22nd, 2020

[Bill Morneau, Liberal, Minister of Finance]

Thank you, Mr. Chair, and thank you for allowing me that extra amount of time. I do want to make sure that my remarks today give a complete understanding of the issue we're discussing.

I know there's been a lot of discussion about the Canada student service grant, the now cancelled contribution agreement with the WE organization to administer this program and my personal involvement with the organization. I'm here today to speak to these matters and provide answers to questions that you may have.

I first came to know the WE organization when I became the member of Parliament for Toronto Centre where WE has its headquarters. I attended numerous student events at its offices and came to understand and appreciate its work on behalf of Canadians, both in Canada and abroad.

My daughter, Clare, spoke at WE events, among other venues, about her book documenting the lives of refugee girls. She was never compensated for any of her speeches. All of the proceeds from the book she wrote went to provide university education for refugee girls.

Grace, who joined our family from Uganda in 2010 and who we've raised as our daughter, worked as an unpaid co-op student at the WE organization in February and March 2019 while pursuing a community development degree at university. After graduation, in July 2019, she was hired for a one-month position with WE, and then, after that, was offered a one-year contract as an administrative assistant in its travel department. That contract concludes at the end of August this year.

In the summer of 2017, my wife and daughter Clare travelled to Kenya to learn about WE school projects. Later that same year, I travelled with my family to Ecuador to see and participate in WE's humanitarian work there.

In recent days, our family has conducted a review of our personal records. We found documentation to confirm our payment of expenses for these two trips, including flight and personal hotel costs of approximately $52,000. However, we were unable to locate receipts for any expenses related to WE programming, including accommodation. This was to my surprise. Yesterday, I asked my assistant to reach out to the WE organization regarding these trips, and for WE to provide me with the amount of total expenses incurred. Today, I wrote a cheque in payment of $41,366.

I expected and always had intended to pay the full cost of these trips, and it was my responsibility to make sure that was done. Not doing so, even unknowingly, is not appropriate. I want to apologize for this error on my part.

My practice has always been to personally pay for expenses incurred in my role as finance minister whenever I've believed there to be any perception of potential personal benefit. The error this time, even though I was not travelling in my role as minister, should not have happened.

I can also confirm that my family made two significant donations to the WE organization, each for $50,000. My wife made one in April 2018 to support students in Canada, and another one in June of this year to support COVID-19 relief in Kenya and Canada.

The work that WE and organizations like it do is important to me. For over a decade my family has been passionate about education efforts in Africa and Canada. After our family sponsored Grace to come to Canada for her education, and before I ran for office, our family led the development of a girls' school at the Kakuma refugee camp in Kenya. Over the last three years, our family has personally committed over a million dollars to help refugee students from Kenya continue their education in Canada.

As I've stated previously, I participated in deliberations on the Canada student service grant program. I do not believe I had a conflict, although I fully recognize that there are legitimate questions about the perception of a conflict. In hindsight, I should have recused myself from discussions involving the WE organization, and I will do so in the future. Most of all, I regret that not recusing myself has delayed this important support for young Canadians.

Again, I want to apologize for any mistakes I've made in this situation. I'm sorry that they've occurred.

As I said earlier, I participated in the deliberations on the Canada student service grant. I do not believe that I was in a conflict of interest, although I fully recognize that there are legitimate questions about the perception—

[The Chair, Liberal, Wayne Easter]

Mr. Minister, I don't want to interrupt, but can you switch the interpretation icon that looks like a globe to French when you're speaking French? Both languages are coming through at the same level. We love to hear your voice, but we want to hear what is said in the other language.

[Bill Morneau, Liberal, Toronto Centre, ON]

I apologize. As I said earlier, I participated in the deliberations on the Canada student service grant. I do not believe I was in a conflict of interest, although I fully recognize that there are legitimate questions about the perception of a conflict of interest.

I think, in hindsight, I should have withdrawn from the discussions on the WE organization, and I will do so in the future. Most of all, I regret that I did not recuse myself and that this has delayed this important support for young Canadians.

Once again, I want to apologize for the mistakes I made in this situation. I am sorry that they have occurred.

I apologize.

Earlier today, I formally asked the Ethics Commissioner to review this information as part of his examination. To provide this committee with an understanding of my role in the development and administration of the Canada student service grant, I'd like to provide you with a timeline of events.

Since early March our government has been working to roll out Canada's largest peacetime investment, doing so at a speed and a scale to meet the rapidly evolving nature of this crisis. We've worked to deliver a comprehensive set of over 70 different measures, which are delivering targeted support to meet the needs of millions of Canadians.

The Canada student service grant was part of a wider support program for youth. It included 10 different support programs totalling $9 billion. This included the Canada student emergency benefit, the extension of the Canada summer jobs program and our initiative to double the Canada student grants.

These are just a few of the hundreds of funding decisions that I have made since the beginning of the COVID-19 crisis to fulfill my responsibility to provide timely support to workers, families, seniors, small businesses, indigenous communities, people with disabilities, and the list goes on.

I would like to take the committee through, in detail, how this particular decision was approached by me, my office and officials, to the best of my knowledge.

In early April, shortly after we'd finished rolling out a broad range of supports, including the Canada emergency response benefit, the CERB, our government began to think about the next set of challenges that lay ahead for Canadians. Our government recognized that post-secondary students, who were about to complete their school year, would be needing opportunities over the course of the summer, not only opportunities that would help them pay for tuition and living expenses during the school year, but also opportunities for invaluable skill-building experiences.

This pandemic hit just while they were beginning their lives. My colleagues and I knew that we had to do something to make sure their dreams weren't derailed and they could continue to pursue their education. Most of all, as Canada is in the midst of a national crisis, our government recognized that students could play an important role in supporting Canada's extraordinary response to this pandemic.

On the evening of April 5, I had a call with the Prime Minister to discuss these and other issues. We identified the need to consider measures to support students and discussed how the Canada service corps and the Canada summer jobs program were areas of possible policy work to address this need.

I spent that night thinking in detail about this issue. The next morning I tasked my officials and my ministerial team to begin engaging across government and to brainstorm different options to support students. My office and Department of Finance officials began working with other government departments to develop these ideas and reach out to youth organizations to get a better sense of the challenges that the young people they serve were facing.

On April 7, the WE organization was one of at least a dozen organizations that were contacted as part of this engagement effort. In the days following my office's initial conversation with WE, the organization shared a proposal on social entrepreneurship, which they had been discussing with other offices. The WE organization had sent this proposal to me, but I didn't review or respond to the proposal at that time.

On April 8 and 9, I had my initial briefing on the potential streams of support for young people, including a potential grant program for students looking to gain experience over the summer.

As we continue to develop these new supports, Youth Service Canada has been identified as a possible model for encouraging national service. This work has been taking place in parallel with implementing the other youth support components. In reviewing this concept, officials identified several major obstacles to quickly implementing an expanded Youth Service Canada program in time for the summer, which was then only a few weeks away.

The government did not have the capacity to urgently develop a system to track hours of service, make large-scale allocations, and disburse specific amounts based on hours completed.

As part of a briefing on April 18, officials raised that a partnership with the private sector or not-for-profit sector may be necessary in order to successfully administer such a program. Officials raised WE Charity, among other organizations, as an example of groups that were already doing similar work. This was the first time that I'd been involved in any discussion related to WE Charity and what would become the Canada student service grant.

As a part of my briefing materials, my officials appended a copy of WE's social entrepreneurship proposal, indicating that other departments had begun engaging on the file. I understand that in the following days WE reached out to my office regarding their initial discussions with Employment and Social Development Canada and shared a second proposal. My office continued discussions with WE Charity about how different types of student programming could be administered.

On April 21, I verbally approved my department's recommendations on the broad parameters of the Canada student service grant, including the potential involvement of a third party. To be clear, no third party such as WE was chosen or directed within this approval. From that point onwards, Employment and Social Development Canada took the lead, including the public service announcement that WE Charity be brought on as an administrator.

With that said, as Minister of Finance, I'm responsible for all funding provided under the Public Health Events of National Concern Payments Act. As such, it's important that Finance officials track every dollar authorized to ensure that they're allocated appropriately. I would expect that the department and my office would remain engaged in the design of the program, in collaboration with Employment and Social Development Canada, the Privy Council and the Prime Minister's Office.

For complete transparency, I note than on Sunday, April 26, I spoke with Craig Kielburger. I know that we would have broadly discussed the impact of the COVID-19 pandemic. He did not raise the Canada student service grant, nor did I.

On May 5, Minister Chagger presented her initial proposal for a Canada student service grant, including WE Charity as the preferred administrator, at the COVID-19 cabinet committee. I was not in attendance and did not discuss the proposal with officials or cabinet colleagues prior to it being presented. I was briefed on the outcome of that meeting two days later, on May 7, noting that the proposal would then be moving to be discussed at full cabinet. The final decision on the Canada student service grant was presented to full cabinet on May 22.

As I've said, I should not have participated in that discussion, and I regret that I did not recuse myself at that time. I provided approval on the final revised funding decision for the program on June 3. It was my last direct engagement with the program's development.

I regret that my not recusing myself has been a reason that students have not been able to get the support on a timely basis.

I know that Canadians are counting on us, and there's still much more to do.

Thank you, Mr. Chair.

I welcome the questions from you and the committee.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Minister, for a very thorough explanation of your involvement

We'll now go to questions for about 53 or 55 minutes, and the first round of six minutes.

The line-up is Mr. Poilievre first, then Ms. Koutrakis, then Mr. Fortin and then Mr. Angus.

Mr. Poilievre, you're on deck, sir.

[Pierre Poilievre, Conservative, Carleton, ON]

Do you expect us to believe that it is a mere coincidence that you repaid over $40,000 of expenses associated with your travel on a WE Charity trip, that you just repaid it today on the same day you were expected to testify under oath about it? Is that just a coincidence, Minister?

[The Chair, Liberal, Wayne Easter]

Mr. Minister.

[Bill Morneau, Liberal, Toronto Centre, ON]

Thank you for the question.

I think what I want to make sure that I communicate is this was a mistake on my behalf. I am responsible for any expenses that I incur on trips being paid for. This was an expense that I was unaware of, that I did not know had not been paid, and when I found that out—

[Pierre Poilievre, Conservative, Carleton, ON]

It was a $41,000 expense. You didn't know about a $41,000 expense? How is that even possible?

[The Chair, Liberal, Wayne Easter]

Mr. Minister.

[Bill Morneau, Liberal, Toronto Centre, ON]

Again, Mr. Chair, I just have to say that in the review of our records, I understood that there was no charge for these expenses at the WE facilities. Once I found that out, I endeavoured to repay them. Of course, it was a mistake on my part which I take full responsibility for.

[The Chair, Liberal, Wayne Easter]

Mr. Poilievre.

[Pierre Poilievre, Conservative, Carleton, ON]

The average Canadian living in Red Deer or Halifax who goes on a trip would notice if there was, say, a $400 expense that they didn't pay, maybe a hotel room for a couple of nights that never got charged, and they paid immediately.

You're telling me that on this obviously very luxurious trip, $41,000 of expenses happened right under your nose and you didn't know about it until it suddenly, through an epiphany, came to your attention the very day you were to testify about it in a parliamentary committee. You expect us to believe that?

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, is this for me?

[Pierre Poilievre, Conservative, Carleton, ON]

There is no one else to answer for you, Mr. Morneau. You're the one on this panel.

[The Chair, Liberal, Wayne Easter]

Sorry, I was muted. Mr. Minister, yes, you have the floor.

[Bill Morneau, Liberal, Toronto Centre, ON]

As I said, this was a mistake on my behalf. We immediately looked at our records. We reviewed those records to find the flights and hotel expenses that were paid and did not find any expenses that were charged to us for the time at the WE facilities.

When we went through our records in detail and concluded that, we—my wife and I—realized we needed to have someone reach out to the WE organization, and did that, in order to pay those expenses.

It is my mistake. It is a mistake that I regret. I apologize for that, and as I said, I will definitely work with the Ethics Commissioner, including this issue, to make sure it's fully understood and accounted for.

[The Chair, Liberal, Wayne Easter]

I'll go back to you, Mr. Poilievre.

[Pierre Poilievre, Conservative, Carleton, ON]

Do you realize that originally accepting these free benefits associated with your trip was strictly illegal under the Conflict of Interest Act, yes or no?

[The Chair, Liberal, Wayne Easter]

Mr. Minister.

[Bill Morneau, Liberal, Toronto Centre, ON]

Mr. Chair, we of course recognize that we are responsible for our own expenses. That is my responsibility. It was something I was unaware of, so that being unaware—

[Pierre Poilievre, Conservative, Carleton, ON]

Do you realize now that it was illegal?

[The Chair, Liberal, Wayne Easter]

Mr. Minister.

[Bill Morneau, Liberal, Toronto Centre, ON]

—that those expenses which I was unaware of were appropriately my expenses and that's why we've repaid them.

[Pierre Poilievre, Conservative, Carleton, ON]

You realize though that it was illegal. You are, as a minister, strictly forbidden from accepting any form of sponsored travel under the Conflict of Interest Act.

I'm asking you, do you realize that the act makes it illegal for you to have accepted these expenses paid for by WE in the first place? Do you realize that that was illegal, yes or no?

[The Chair, Liberal, Wayne Easter]

Mr. Minister, you have the floor.