Government Operations Committee on Feb. 26th, 2008

[The Chair, Liberal, Diane Marleau]

Mr. Warkentin, your five minutes are up, and I've been very strict with everyone.

We'll go with Mr. Holland.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Thank you, Madam Chair.

We know the Privacy Commissioner in fact was never called in on this matter. The Ethics Commissioner, now we are learning, did not even talk to any of the key individuals involved with this affair. And thirdly, the reason the matter was referred by the public accounts committee to this committee was because this is the appropriate committee to deal with it.

What we have also learned from Mr. Moore is an agreement that this was in fact a political decision. It was political interference. We're left with one of two conclusions from that. The first one is Mr. Baird's explanation that it was a boondoggle. But this is a project that received a national award for procurement. It was approved by seven federal departments under the current government. It was approved by the Treasury Board president himself and by Treasury Board. It was approved by the provincial government. So we can accept that conclusion, which is very hard to believe, given all of that, or that Mr. Baird wanted to interfere in a municipal election.

Those are the questions I'm asking. I ask them here. I ask them outside the House. I ask them in committee and I ask them outside committee, because they are important questions.

Mr. Kirkpatrick, on December 6, 2006, there was a vote by Ottawa's newly elected council that affirmed its support for the federal contribution agreement for the LRT contract to go forward. I'm just wondering if you can take us through some of the details surrounding this decision. You confirmed that it was Treasury Board's decision not to sign the contribution agreement made by the December 14, 2006 deadline, which led the city to terminate its contact with Siemens-PCL/Dufferin.

[Kent Kirkpatrick]

Through you, Madam Chair, the decision by the council on December 6 is best referenced in terms of the wording of the resolution that they passed. It was a multi-part resolution. The first part of it, as I said, spoke to meeting the condition that the Treasury Board had set for the existing project and the condition to get the contribution agreement from the federal government, which was to reaffirm support for the north-south LRT project. And the first part of that resolution did that.

The resolution then went on to say furthermore that the city was interested in making scope changes to the downtown portion of the project. The motion directed me and the mayor to negotiate with the consortium for scope changes and adjustments to the contract price as a result. It then went on to say furthermore that I'd be directed to negotiate approval from the federal and provincial governments under the terms of the existing contribution agreement, which specifically stated that significant scope changes would require the approval of both the federal and provincial governments and could not be made unilaterally by the city. Council was aware of that when they passed the first part of the resolution, which was to reaffirm commitment to the north-south LRT project under the existing contribution agreement.

In other words, it was the decision of council to approve the project, unamended, and then to state the intent to go to seek from the consortium a fair credit to the project for scope changes and to go to seek approval from the federal and provincial governments for those scope changes, recognizing that this was within the control of both the provincial and federal governments independently to agree to that or not.

[Wayne Wouters]

Can I just make a point again, Madam Chair, for clarification?

As I indicated, the Treasury Board decision authorized the Minister of Transport to enter into a contribution agreement, so it was up to the Minister of Transport to make that determination as to the scope of the project and whether the scope of the project had changed significantly to allow the Minister of Transport to go forward. That was the decision of the board: to give the authority to the Minister of Transport to proceed.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Mr. Kirkpatrick, can you confirm that Ontario did in fact sign the contribution agreement on December 14, 2006, and that this was achieved because it was not a new project?

Just to be clear on this, what I'm trying to establish is that the light rail project would have proceeded had Minister Baird agreed to honour his word that the newly elected council's vote was all that was needed for the federal government to sign the contribution agreement.

[Kent Kirkpatrick]

Madam Chair, through you, as Mr. Wouters just said, it was at that time the decision of Minister Cannon to execute the contribution agreement under the authority that had been delegated to him by Treasury Board.

[Mark Holland, Liberal, Ajax—Pickering, ON]

To Mr. Wouters, if the decision was Minister Cannon's, on December 16, 2006, why was the letter then written by the Treasury Board president?

[Wayne Wouters]

Sorry...?

[Mark Holland, Liberal, Ajax—Pickering, ON]

If the decision was Minister Cannon's, why on December 12, 2006, was the letter written by the Treasury Board president, Mr. Baird?

[Wayne Wouters]

I can't speak for that letter. All I can say is that government often decides which minister should communicate on behalf of the government, and often it is the regional minister that does so.

[The Chair, Liberal, Diane Marleau]

Thank you very much.

We will go to Mr. Albrecht.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Thank you, Madam Chair.

I would like to just read something into the record, and then I have a question if my time allows me.

There have been a number of questions today regarding the letter from the Ethics Commissioner. I just want to read a letter to the honourable Navdeep Bains dated November 22:

Dear Mr. Bains: Further to your letters of October 18 and 31, 2006, I have considered your request to conduct an investigation into the conduct of the Honourable John Baird, President of the Treasury Board, on the alleged improper release of certain information to the media on the Ottawa North-South light rail project.

He goes on to say that:

The sections in the POH Code that you cited are related to the impropriety of a public office holder acting in a way that would inappropriately advance his or her own private interests or those of another person. The information you have provided in support of your allegations identifies the interest of Minister Baird as “political interest”. While the circumstances in a case may support a conclusion that an individual's political interest is also a private interest, for example, a Minister participating in a leadership campaign, this does not always hold true. In the present case, at least based on the information you provided, I am unable to conclude that there are reasonable grounds for believing that Minister Baird improperly furthered his or another person's private interest. [...] On the basis of the information you have provided in support of your request for an inquiry, I am unable to conclude, on reasonable grounds, that the POH Code applies to the allegations contained in your letters. Accordingly, please be advised that no examination of the events in question will be initiated. Cordially, Bernard J. Shapiro, Ethics Commissioner.

I think that clarifies the fact that the Ethics Commissioner has in fact weighed in on this question.

The other point I'd like to come back to just for a moment is this question around the issue of penalties. It appears to me that at one point in October, there was some pressure exerted by council, or the previous mayor, on the federal government to sign by the middle of October or in fact there would be penalties forthcoming. But later Mr. Chartrand corrected the record, indicating that in fact the prices would remain in effect until December 14, in his statement in which he said there would be little exposure.

Mr. Kirkpatrick, you identified the fact that the 60-day extension wasn't the intent of the clause that was there. That may or may not be true, but it's hard for us at this point in history to determine what the intent was. The fact is that it was there. It was in the clause.

It seems strange to me that a council--which was very much aware that a municipal election was forthcoming and the date of that election--and the Ottawa LRT corporation, which was also very much aware of an impending municipal election, would not be more careful in articulating those possible extensions with the impending elections coming up. I find it confusing, trying to understand how these two groups with that kind of expertise and knowledge of the municipal process would not in fact have closed that door more securely if that was not their intent.

[Kent Kirkpatrick]

Through you, Madam Chair, could I confirm that this was a question?

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

I would like you to confirm that you were aware and that council was very much aware that there was going to be an election, and then you do have this opening of an election.

[Kent Kirkpatrick]

Madam Chair, of course senior city staff and members of council were aware that there was an impending election.

In response, because we were part of the negotiations, I can tell you what the intent of those clauses were. It is exactly as I said earlier. They were there to allow for any procedural issues required in getting the pieces done for financial closure. The most significant of those were the contribution agreements from the two senior governments to ensure that the $400 million was contractually committed to.

Why were city officials and the consortium not concerned about that clause and the potential extension and impact in the context of a municipal election? I'd say it never dawned on us, because as we said earlier, the issue was whether we met all the conditions of the senior governments in terms of pursuing the approval of this project, which we did. And as I think we have said many times now, it was unanticipated, and we were surprised, that the issue of whether the existing council, who had made the decisions about this being a top transportation project for this city and how to go about procuring this, and who made the decision to award the contract under the procurement process, would ever be reconsidered as part of another council reaffirmation.

I can tell you, that context was never considered in the construction of the contract. Therefore, I remain very clear in stating that the intent of those clauses was not to allow for a period of time for this decision to be revisited after a municipal election. It was there to allow, under the intent and obligations of that contract, for process and procedural issues to bring financial closure.

[The Chair, Liberal, Diane Marleau]

Thank you very much.

Madame Folco.

[Raymonde Folco, Liberal, Laval—Les Îles, QC]

Thank you, Madam Chair.

Minister Baird stated that he had been lied to after reading the contract concerning the closing date. I will ask Mr. Wouters whether that was Treasury Board's opinion, that they'd been lied to.

[Wayne Wouters]

Again, I can't comment on any discussion or deliberations of the cabinet committee of the Treasury Board. The only....

[Raymonde Folco, Liberal, Laval—Les Îles, QC]

Thank you. I thought you might go on.

Could I ask Mr. Kirkpatrick whether he felt that the City of Ottawa had been lied to?

[Kent Kirkpatrick]

Madam Chair, I'm not sure I understand the question--that the City of Ottawa had been lied to?

[Raymonde Folco, Liberal, Laval—Les Îles, QC]

Yes, that the City of Ottawa had been deceived, rather than lied to, as to the closing dates.

[Kent Kirkpatrick]

No, Chair. It's my opinion that the City of Ottawa was always forthwith in terms of what it said about the issues of timelines in the contract, the intent of those timelines, and any potential extensions to them.

[Wayne Wouters]

For further clarification, I can comment that in reviewing the contract, the Treasury Board Secretariat came to the view that there were no penalties, no additional costs would be incurred if there was delay up to December 15 in signing, and that there were no additional penalties in the contract per se. That was the secretariat's assessment of the contract when we reviewed it.

[Raymonde Folco, Liberal, Laval—Les Îles, QC]

I have another question for you, Mr. Wouters. What is the current status of the $200-million allocation in CSIF funding for the City of Ottawa? Is this funding still tied to the 2005 MOU signed by the three levels of government?

[Wayne Wouters]

I can't comment on the specifics of this, Madam Chair. I know that the $200 million is still available for projects for the City of Ottawa, but how that relates back to the MOU, I really can't comment. That would be something that the Minister of Transport or the Department of Transport would have the details on, or perhaps the City of Ottawa could provide the information.