Government Operations Committee on June 7th, 2016

[André Bourbonnais]

Yes.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

It operates in Brazil, India, Mexico, Spain and the United States. You own roads, so—

[André Bourbonnais]

They are toll highways.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

That’s exactly what I was getting at.

As you know, there is a great plan for tolls in Quebec, a third link with tolls. The Caisse de dépôt et placement du Québec has recently invested in a development project. If there were a profit, would these types of opportunities or projects benefit you? Would they generate the return that you would like to see?

[André Bourbonnais]

I think you are asking the right question.

As you know, our mandate is to maximize returns without undue risk of loss. So the first investment criterion is to figure out whether the return is adequate compared to the risk we are taking.

As you say, we have highways around the world. We have ports and airports. We are a major institutional investor in infrastructure. I think we would like to do more in Canada. I think our country must develop an infrastructure policy that encourages investment by institutional investors like us. If such a policy were in place, we would certainly be ready to buy infrastructure here in Canada.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Mr. Bourbonnais, as I listen to you, I feel that we are like the cobbler's children. We are investing our own money in roads and ports outside the country. In the meantime, we are stuck in traffic on highway 20 and elsewhere and we are producing greenhouse gases. I hear your message loud and clear. I hope we will have an opportunity to work together.

Mr. Chair, since we have only one round of questions, I will be sharing my time with my colleague.

Thank you very much.

[Kelly McCauley, Conservative, Edmonton West, AB]

Welcome, gentlemen. You don't have an enviable task of higher returns with lower risk.

Does the 4.1% come from an actuary or...?

[André Bourbonnais]

That comes from the chief actuary.

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm looking at some statistics, and between 2011 and 2015, the average life expectancy of men, thank heaven, has grown four months, 0.3%. This is a huge hockey stick. Does that take that into effect, or when was that last updated?

[André Bourbonnais]

We just manage the money. We leave the assumption to the chief actuary. I assume that he's taken them into account in his report.

[Kelly McCauley, Conservative, Edmonton West, AB]

Oh, it's someone else.

The 14.5% last year, how much was that? I was looking at the diversity, and a lot of it seems to be because the Canadian dollar dropped and we had a lot outside the country. How much of that 14.5% can you attribute to our dollar tanking?

[André Bourbonnais]

Very little, because we were significantly ahead, and actually last year, the fall of the dollar played against us. It was mostly coming from the asset classes.

[Kelly McCauley, Conservative, Edmonton West, AB]

What is your administration cost for $100 invested?

[André Bourbonnais]

Last year, the operating costs were 24 basis points, so 0.024%.

[Kelly McCauley, Conservative, Edmonton West, AB]

CPP is 32¢ per $100. Well done.

You have 570 employees now. I assume when it began it was passive, just following an ETF, following the general stock markets. You switched over to active.

Have you done a study comparing all of the new costs? The CPP is under a fair amount of criticism for out-of-control costs. Have you done a study of this is how much more you've spent but this is what you've gained, as opposed to just following a passive model where you have five or six as you had before but you are just mirroring stock markets?

[André Bourbonnais]

The first thing I will tell you is that we're very focused on our cost structure. I think it's an important thing. It's not our money. It's the beneficiaries' money. That being said, we also think and believe that active management provides better return, and in order to get that you need the proper people, the proper infrastructure. We've made a decision this year that we think that a global footprint.... When I say “global”, I mean a few offices in key markets will also significantly help us. We've already seen the benefit of that to our New York office and our private debt group.

We are very concerned, but at the same time we are growing.

[Kelly McCauley, Conservative, Edmonton West, AB]

Let me premise that. I'm not criticizing the costs. I'm just asking if you have done an apples to apples comparison. How much have you made active? How much would you have made if you'd done a passive...with the lower cost?

[André Bourbonnais]

No, we have not done that.

[Kelly McCauley, Conservative, Edmonton West, AB]

Should you have, considering it's billions of dollars?

[André Bourbonnais]

Probably, but I think we need a more stable environment than the growing environment in which we operate.

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm not saying to switch back; I'm saying compare the two and see how—

[André Bourbonnais]

Yes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Will you?

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

As a comment from the chair, you mentioned that it's not your money, that it's the beneficiaries' money. From this vantage point, I wouldn't mind if you had a little skin in the game yourself. I'd be pleased to see what you'd be able to get as a rate of return then.

The final seven-minute intervention, Mr. Whelan, please.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

No, no, no.