Government Operations Committee on Oct. 8th, 2024

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Why was it there, then? If you don't recall, I guess that's just the standard.

[Jerry V. DeMarco]

This is just describing the approval process. That is one of the steps that's available in the approval process. It doesn't mean that in each of the 17 they went through all of these steps.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Have you ever seen anything like that?

[Jerry V. DeMarco]

Well, ultimately, it's ministerial accountability to the decisions being made under this, so we can do an audit, but ultimately the accountability is with the minister in terms of demonstrating the value to taxpayers of these funds.

We do have concerns, not so much about that letter, because we didn't see it being used, but we did find examples—I think it was three of the 17—where they were fast-tracked without due diligence. We do have a recommendation about that:

To ensure that [ISED's] reporting of greenhouse gas reduction commitments is accurate, the department should follow due diligence and complete the assessment for all projects before agreements are signed.

That would be our view in terms of putting into place a better due diligence process before these big-ticket agreements are signed.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Why would you send a special letter to the Prime Minister versus someone else, like a department head in a regular process? This is pretty extraordinary. With an $8-billion access fund, there's a direct pipeline to the Prime Minister.

Why send a letter to the Prime Minister? Was that ever explained to you in your audit, or did anybody ever ask that question?

[Jerry V. DeMarco]

We're auditing their execution of the program, and we have concerns about that in terms of the value for money and the total amount of greenhouse gas emission reductions. It's up to the government to decide the process, and it approved that.

I think that question would be better addressed to the deputy minister of ISED, if he is to appear.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Is the deputy minister of ISED the one who would issue this letter? This is an environment program, so would it not be the deputy minister of environment who would issue it?

Who would write that letter to the Prime Minister?

[Jerry V. DeMarco]

We haven't seen an example of such a letter, but my understanding is that.... Maybe I should explain this a bit better.

The net-zero accelerator fund is part of Environment and Climate Change Canada's emissions reduction plan, but it's administered by ISED, so it's an ISED grants and contribution program.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

These major corporations can still access billions of dollars through a letter to the Prime Minister, though. Is that correct?

[Jerry V. DeMarco]

That's what's set out in the process provided to us in exhibit 4.2, but we didn't see any examples of that letter being sent.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Do you think it's really appropriate that megacorporations can get free taxpayers' money through the net-zero accelerator fund through the Prime Minister?

Do you think there's a better process?

[Jerry V. DeMarco]

Our views on this are wrapped up in recommendation 4.63. Whatever process and approval agents they want to have in their flow chart, that due diligence should happen before the approval of these agreements. That's our view.

It's up to the government to decide who does what in the approval chain, but we would like to see due diligence prior to the commitments.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We will now go to Mr. Bains, please.

Go ahead, sir.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair.

Thank you to the Office of the Auditor General for joining us here today.

Your recent audit of the net-zero accelerator initiative found that the initiative “was not part of any coherent and comprehensive horizontal industrial policy on decarbonization”. Similarly, Environment and Climate Change Canada's internal audit of its grants and contributions programs found them to be uncoordinated.

Can you elaborate a bit on the significance of these findings?

[Jerry V. DeMarco]

I'll pick up on a theme we touched on with the questions from Madame Vignola. Looking at things in an integrated way, let's start at the highest level with the three pillars of sustainable development, looking at the environment, economy and social dimensions all together. That will lead to more effective decisions than looking at them in silos.

Looking across the federal government, it's been set up, obviously, for decades and centuries, in departmental silos. However, the world is facing a number of challenges that do not fit very well now within each of those silos. The government has tried to adapt by putting in some horizontal initiatives to overcome the vertical silos, but it's far from doing that in an effective way. We're still seeing siloed decision-making, and the proof is in the outcomes. We've now had 30 years since Canada's commitments to stabilize and then reduce greenhouse gas emissions, and during that time emissions have gone up.

Obviously, it would be unwise to keep doing the same thing and expect different results. We need to have a better system for tackling these horizontal issues that are whole-of-society, not just whole-of-government. One way to do that would be to rethink the departmental silos that have ruled the day so far.

As we mentioned in our climate change lessons learned report, there may be a need for a more centralized and coordinated approach.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Is that the only measure that can be taken as a recommendation? What, specifically, can be done? Is it just centralizing? How would that work?

[Jerry V. DeMarco]

We've surfaced the issue. Obviously, it's a policy decision of the government to decide how to address the problem that we've uncovered. We've pointed to examples in other countries where there is a more centralized approach to climate change mitigation. Does that mean it will work for sure? No. You could have a central agency that also fails to produce results.

We know that the lack of accountability and the lack of coordination in Canada have been present now for 30 years, and we are the worst performing of the G7 countries in reducing greenhouse gas emissions. Something has to change, but it will be up to the government to recognize that problem and make the policy decisions necessary to rectify it.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

There was some mention of chief executives who audit every different.... Maybe those are the silos you're talking about.

Would it be important to ensure they coordinate in some capacity and establish some type of mechanism to centralize this? Do you establish something like a task team to do this?

[Jerry V. DeMarco]

Are you referring to the chief audit executives in each department?

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Yes.

[Jerry V. DeMarco]

There are chief audit executives responsible within their departmental silos. Would they be the ones able to cut across these silos and effectively implement horizontality? It would be a challenge at that level, I think, to do so. It has to be something that comes from the centre of government—Treasury Board, Finance or one of the other central agencies. They can put into effect something like that.

I don't know whether each individual chief audit executive could be expected to overcome those silos, given that the scope of their work is defined by their department.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

How much time do I have left?

[The Chair, Conservative, Kelly McCauley]

You have 20 seconds.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. DeMarco.

[The Chair, Conservative, Kelly McCauley]

Thanks, Mr. Bains.

You have two and a half minutes, Mrs. Vignola.