Evidence of meeting #20 for Government Operations and Estimates in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was contract.
A recording is available from Parliament.
Liberal
The Chair Liberal Diane Marleau
I'm calling the meeting to order. I'd like all the cameras to please leave. Thank you.
We have Minister Baird before us. Minister Baird is quite used to coming before committee. As you know, we generally allow the person appearing in front of committee to have up to 10 minutes to make a presentation or to say a few words. We will give you that chance now.
John Baird ConservativeMinister of the Environment
Thank you very much, Madam Chair.
In 2006, our government was elected on a mandate to replace the culture of entitlement and corruption, which was out of control here in our nation's capital, with one of accountability.
We all remember the gun registry fiasco, the HRSDC boondoggle, and the sponsorship scandal, Adscam. It's a shameful legacy for our country and one that we, as a government, have made significant efforts to put behind us.
In February 2006, I was asked by the Prime Minister to serve as President of the Treasury Board and to bring forward our government's number one priority, the Federal Accountability Act, the toughest piece of anti-corruption legislation in Canadian history. Through that legislation we have forever changed the way the federal government conducts its business and have given Canadians both responsible and accountable government.
I was proud of my term as President of the Treasury Board, and I believe my record there speaks for itself. Contrasted with the former Liberal administration that preceded us, one that the Auditor General said “showed little regard for Parliament, the Financial Administration Act, contracting rules and regulations, transparency, and value for money”, the Treasury Board, under our government, took its responsibility to the Canadian taxpayer very seriously.
We provided relentless scrutiny of government spending and challenged countless submissions that came before us. That was our role as we saw it, to be the final guardians of the public purse. In some cases, submissions were outright rejected. Some were deferred in order to obtain more information or to make necessary changes directed by the board. And many times, submissions were approved with conditions imposed in order to ensure the greatest accountability.
This was the case for the Ottawa light rail transit project. On September 28, 2006, the contribution agreement on the Ottawa LRT was put before the federal Treasury Board. This happened right in the middle of a municipal election campaign during which the future of light rail was a hotly contested issue for the people of Ottawa and a major flashpoint in the election.
Many local groups and organizations, city councillors, and civic leaders had come out opposed to the project and called for it to be held back until after the municipal election. In fact, Gord Hunter, a city councillor and a former Liberal Party candidate who had run against me in a previous election, wrote to me in August 2006 and urged me to, in his own words,“Help save the City of Ottawa and withdraw funding Support for this project until the City comes up with a plan that makes more sense. It is your right to do so and it is the right thing to do.”
Two hundred million dollars had been committed by the Government of Canada towards Ottawa's transit, and we had a responsibility to ensure that this federal money was spent wisely and in the best interests of taxpayers. That's what we were elected to do; that's what I was elected to do.
The scrutiny given to this project was just as rigorous as any other brought before the Treasury Board. An added challenge, however, was that the submission was brought to the Treasury Board in the middle of an election campaign, a campaign during which the public was either deeply opposed to the project or had many unanswered questions.
Being put in this undesirable position, many questions come to mind. First, why was it presented to the Treasury Board in the middle of an election? And why was there a sense of urgency to get it approved? Was it because the two leading candidates for mayor were opposed to the project? Would it not be more prudent to wait a few weeks until after the people voted? Why potentially bind a new mayor and council to something they would ultimately be responsible for if they had no say in its design? Would it not be better to let it be their decision? After all, this was the largest investment of infrastructure dollars ever put before the city.
The editorial position of the Ottawa Citizen stated at the time that “A reasonable voter might ask: Why not hold off a few weeks and let the new city council call a vote of its own, just to ensure that, in the eyes of the public, this massive infrastructure project has full legitimacy?”
The former mayor had told his council, as he had told me and the public, that there was an urgency to approve the contribution agreement. He stated that the deadline was October 1, 2006, well in advance of the November 13 municipal election date. In fact, the then mayor went so far as to publicly warn of the dire consequences if the project was not approved prior to Ottawa voters casting their ballots. Ottawa residents were warned of penalties of between $60 million and $80 million if the contribution agreement wasn't signed immediately.
Oddly enough, when that date passed, we were told that the real date was October 4. Then it was October 5, and then, of course, it was October 15.
However, what the contract revealed, and I am one of the few people to this day who've actually read the contract as it is still unfortunately kept secret from the people and taxpayers of Ottawa, was that the city had the right to extend the deadline for another 60 days--well after the municipal election--keeping the prices fixed and allowing the deal to be signed at the latest December 15, 2006, with absolutely no penalty. In other words, we were all lied to in a blatant attempt to further a political agenda.
On October 10, 2006, the Government of Canada gave approval for the project subject to ratification by the new city council that would be elected on November 13. I made it clear at the time that while it was not our place to micromanage the affairs of the city or to choose sides in municipal elections, we felt it was important that a project of such magnitude should have the full support of the people of Ottawa and the soon-to-be-elected city council as they would be the ones who would ultimately have to stand behind the project.
From the very beginning, this project had been shrouded in secrecy with very little information being shared with the public and even city council. In fact, a poll of almost 2,000 people conducted by the Ottawa Business Journal in February 2006 showed over 90% of respondents were “unsatisfied about the city's enforced secrecy amid rumours the project could top $1 billion when all is said and done”. Remember, this was a project that was originally going to cost $600 million, and then $760 million, with an eventual price tagged at $919 million, and there were still many, many uncosted items revealed in the contract that would have kept that price escalating.
In May 2006 former city councillor and mayoralty candidate Alex Munter stated:
I am deeply dismayed by what's happened with light rail expansion. It's been dividing people, dividing communities, because of concerns over secrecy, bad process and potential cost overruns.
It was easy to see that in no time, if it was not brought under control, it would become a $1 billion boondoggle.
To quote again the Ottawa Citizen on this issue:
Turns out there are some people who favour secrecy, who are happy to keep the taxpayer in the dark, and not surprisingly they belong to the federal Liberal party--the same party that when in power was hardly famous for openness and transparency.
On November 13, 2006, Ottawa voters finally had their say. More than 244,000 of them cast ballots in favour of two candidates who did not support the Ottawa LRT project, compared to just 46,000 voters supporting the mayor and his plan for light rail. That's a margin, Madam Chair, of five to one against the proposed light rail deal. The message was loud. The message was clear.
On December 6, 2006, the newly elected city council passed a motion to not proceed with the previous LRT project that was presented to the federal government, but instead chose a new direction that eliminated the downtown portion of the project from the initial proposal. I sent a letter to the City of Ottawa soon after reaffirming the support of the Government of Canada. Our $200 million commitment was, as it always had been, still on the table.
Because the project had not changed, I also indicated that it would take some time for us to ensure due diligence was performed on behalf of taxpayers due to the scope of the project. I also indicated that I believed the consortium would respect the wishes of a new city council and allow them to have additional time necessary to move the project forward.
The provincial government also said they would have to take a look at the new project but were uncertain as to their commitment. Later, on December 14, Ottawa city council had a new vote and decided not to proceed with either plan, opting instead to start from scratch. That was the decision of council, and it was entirely theirs.
This committee is asking whether or not there was political interference in the federal government's decision to approve this funding subject to ratification by the new council. Some would argue that redirecting the O-Train out to Barrhaven on the eve of a federal election campaign in an attempt to save David Pratt was political interference, or that Dalton McGuinty's government sending a letter to the City of Ottawa just 72 hours prior to voting starting in what the Ottawa Citizen described as a push to help Bob Chiarelli “win the election after the polls showed his support sinking” would be political interference.
All I can say is what we did was right for the taxpayers. We made a decision to approve the contribution agreement and let the newly elected city council come up with its own conclusions on the future of light rail. That's what they decided to do from that point on. It was up to them.
Thank you. Merci beaucoup.
Liberal
The Chair Liberal Diane Marleau
Thank you, Mr. Baird.
It always was up to city council and you know that. You are here to answer questions about your involvement and using your position as the President of the Treasury Board in a municipal election. That's what you're here to answer for, not whether the project was good, bad, or indifferent. It's about your role in this.
I'm going to go to the Liberals here, to Mr. Mark Holland.
Liberal
Mark Holland Liberal Ajax—Pickering, ON
Thank you, Chair.
Thank you, Minister, for coming to the committee today.
Minister, again to the chair's point, the presentation misses the point a little bit. The question is not whether this was a good or bad project. That was certainly a debate in the municipal election. The reality is that your announcement when you went to the press had a major impact on the election. We're trying to figure out why it was you and why you intervened.
The reality is--
Charlie Angus NDP Timmins—James Bay, ON
Do we need a background screen telling everybody that you don't know what you're talking about?
Liberal
Mark Holland Liberal Ajax—Pickering, ON
This is April Fool's Day, and it wouldn't be complete without some tricks and games.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Perhaps we could shut the machine off now that the show is done.
Liberal
The Chair Liberal Diane Marleau
I'm sorry, you'll have to turn this off. This is not about what we're talking about.
Please, I want that to end.
It's not bilingual, for one thing, and I want it turned off--absolutely turned off. You've made your presentation, and that's it. Turn the cameras off on this thing.
Conservative
John Baird Conservative Ottawa West—Nepean, ON
Madam Chair, it is bilingual. There's French right there.
Liberal
Liberal
Liberal
Mark Holland Liberal Ajax—Pickering, ON
Seven separate federal departments under your government approved this project. In fact, even Treasury Board, on October 10, under your leadership, approved this project. In fact, Deputy Minister Wouters, who was before this committee, said it was not even Treasury Board's responsibility to deal with this matter in this way, that it was in fact Transport's. It was Transport's file. It was Transport's decision. Your own deputy minister said it was another minister who should have had responsibility here.
We know there were 10 such other projects going on at the same time, including one in Toronto that was sole-sourced to Bombardier, yet not one of these other projects was treated in this way. This was the only project that was treated in this way. You picked this one out despite the fact that it also won a national award for procurement.
Treasury Board wasn't involved at all in the efficacy of the project--it was Transport--so, first, why were you making these decisions and not the transportation minister? Certainly you could talk to him or say that it's his file and he should be dealing with it. Why was it you particularly, particularly after all the others, including the transport minister and the transport department, had signed off on the project?
In fact, there was no reason given for the funding to be withheld. The only reason given was that there was a single clause in a 600-page document that you interpreted as allowing you to buy some more time, and yet we heard from Mr. Wouters, your former deputy minister, that on that 600-page contract you never consulted him or his officials in your determination of that.
When you were making decisions on this contract, making public proclamations that had a major impact on a municipal election, if you didn't contact or discuss it with even your own deputy minister, who did you review it with? Who did advise you on this contract in the four days that you had it between October 6 and October 10? In those four days, on 600 pages, where did you get your advice, if not from your own deputy minister and his officials?
Conservative
John Baird Conservative Ottawa West—Nepean, ON
I counted about 27 questions. I hope you'll give me an opportunity to respond.
It is Treasury Board's responsibility under the Financial Administration Act to approve contracts of this scope. It had never been brought before the final arbiter of the taxpayers' dollars, the Treasury Board, which is a cabinet committee of ministers. In our government it requires elected officials to make the decision. There are groups that put forward submissions to Treasury Board; Treasury Board is not a rubber stamp. Just because officials in any given department might give a green light to a project, it is ultimately, under the Financial Administration Act, Treasury Board, a committee of elected representatives--
Liberal
Mark Holland Liberal Ajax—Pickering, ON
No, Minister, I think you are missing the point. The question is not whether Treasury Board had a role.
Mr. Wouters said--and it was made very clear to this committee--that you as minister and that department did not have responsibility for dealing with efficacy, and that your whole issue that it was a bad project was not a Treasury Board decision. That was a Transport decision.
I'm asking you very specifically who advised you on this project before you made these public proclamations. You had four days--600 pages--before you made an announcement that had a major impact on a municipal election. Who advised you? What advice did you get? If it was not your deputy minister and his officials, who advised you?
Conservative
John Baird Conservative Ottawa West—Nepean, ON
I will respond to that, but you did ask 29 questions, or 27 questions, before that.
Liberal
Mark Holland Liberal Ajax—Pickering, ON
I'm asking you one question, and I'm asking if you would respond to it.
Conservative
John Baird Conservative Ottawa West—Nepean, ON
I will respond to that, but you did ask about 27 questions before that, and you made a number of comments that I feel I need to respond to. It is Treasury Board's--