Government Operations Committee on Feb. 12th, 2026

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Do any of my colleagues have a question they'd like to follow up with that they perhaps didn't get to ask?

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Yes.

[The Chair, Conservative, Kelly McCauley]

Go ahead.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Minister, are you aware of any requests that were denied for a regulatory sandbox from either the Department of Health or the Department of Transport in the last six years?

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

I'm not aware. I can ask my team if they are aware.

[Michael DeJong]

I would point to a specific provision in the proposal that specifically means the minister is not compelled to even consider a regulatory sandbox.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

The whole point is that the minister has said this is absolutely necessary to have in place for innovation and how important it will be going forward, yet you're telling me that for six years, there was only one request and that's it.

[The Chair, Conservative, Kelly McCauley]

Give a brief response, please.

[Michael DeJong]

There were a number of regulatory sandboxes that Transport Canada implemented, and they helped significantly with the evolution of regulatory frameworks. That included, for example, shifting from paper documents to electronic documents, which helps small businesses quite a bit. They also helped to introduce the safe introduction of artificial intelligence with respect to railway operations. There were a number of other important innovations as well.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

If I may—

[The Chair, Conservative, Kelly McCauley]

Let me interrupt. I'm sorry. The time is up.

From what we heard earlier, there was just one use, but you're saying that there are several uses, and we're running out of time. Can you provide in writing to the committee all the times it has been used for Health and for Transport, if that's okay?

[Bill Matthews]

Mr. Chair, only Transport Canada has used it. We will come back with a list of how often. If we can, we'll find out if any have been rejected, but I'm not sure that we'll be able to find that out.

[The Chair, Conservative, Kelly McCauley]

Okay.

Ms. Church, welcome to OGGO. You have the floor for five minutes, please.

[Leslie Church, Liberal, Toronto—St. Paul's, ON]

Thank you very much, Mr. Chair, for having me here today.

Just because we've focused quite a bit on regulatory sandboxes and the confusion that surrounds them, maybe let me focus on a few direct questions.

First of all, perhaps just to clarify a comment that came up from my colleagues across the table, sandboxes are somehow beneficial for the big guys, not the little guys. Actually, my understanding is that, really, sandboxes are designed exactly for the opposite: to help innovators, to help small and medium-sized businesses, to support economic growth and to help us support innovation and productivity.

Deputy Matthews, could you speak a bit to how we ensure regulatory sandboxes are accessible to small and medium-sized businesses, which certainly wouldn't have the same resources as large organizations?

[Bill Matthews]

Certainly.

I think there is maybe a preconception that a sandbox is only available to one company. The idea here is that the minister would evaluate proposals, and a good sandbox would impact numerous organizations at the same time.

What we hear when we engage industry associations is that innovators don't have space to test out and float their new ideas. It's supposed to create that experimentation, which is open to all, if approved by the minister.

Mike has already mentioned one example that benefits small businesses.

Mike, you may want to talk about another one where an innovator came in with something.

[Michael DeJong]

Red tape disproportionately affects small businesses. Providing a clear pathway for small businesses or entrepreneurs to be able to engage with the regulator and suggest innovation or potential targeted exemptions in order to support their technological development or new ideas is part of the idea.

The example I gave was about e-manifests, which would have allowed small transportation companies the ability to apply to Transport Canada for an equivalency certificate and demonstrate that they could safely use e-shipping or digital versions rather than paper copy versions.

[Leslie Church, Liberal, Toronto—St. Paul's, ON]

In the case of concerns around conflicts of interest where the minister or government has been lobbied on behalf of organizations seeking a regulatory sandbox, can you speak to the types of controls that are in place to prevent those conflicts of interest?

[Bill Matthews]

The minister responsible can only create a sandbox in the space where the legislation and regulations are within their purview. That's the initial box.

Conflict of interest rules and those regimes still apply. There's no way around them. If a minister felt that he or she had a conflict, they would still kick in, just as they would now for any proposal. The only area where a minister would be allowed to create a sandbox is where legislation or regulation is involved under their purview. It's not carte blanche across the system.

Mike may wish to add to that.

[Michael DeJong]

I would simply confirm categorically that the conflict of interest rules would still apply in the case of sandboxes.

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

That's why I say there's a lot of misconception around regulatory sandboxes.

All regulations—those on conflicts of interest and in codes of ethics, everything—apply to this. There's no exemption. No one is exempt from it.

To clarify for the benefit of this committee and the Canadians who are watching, regulatory sandboxes are only for certain innovative testing. No one is exempt from any safeguard rules and regulations around that. That's for clarity.

[Leslie Church, Liberal, Toronto—St. Paul's, ON]

Thank you for that, Minister. I agree with you in the sense that I think there are many misconceptions about the constraints. We call it a sandbox precisely because it's boxed in.

This is for Mr. DeJong, or the deputy, perhaps. I'm wondering whether you could very clearly lay out for us what the constraints are around a regulatory sandbox—the fact that they are temporary and that they apply only to specific projects. Could you help us demystify this notion of a King Henry VIII clause?

[Michael DeJong]

Yes. Absolutely.

Foremost, a minister may only authorize a sandbox if it falls specifically within their authority. The sandbox must be narrowly defined and have a specific exemption for the purposes of supporting innovation and technological development, with the intent to eventually amend a regulation. The purpose of the sandbox would be to gather the necessary evidence and data in order to properly inform that regulatory development.

Before a sandbox can be launched, the minister must be assured that it is in the public interest. In other words, there is a proper analysis of the costs and benefits, risks are identified and mitigated, and proper consultations have been undertaken with jurisdictions, stakeholders and indigenous peoples. There are also strict requirements for transparency at every step of the life cycle of a sandbox, including for forward regulatory plans, when a sandbox is launched and in an annual report tabled in the House by the President of the Treasury Board.

[The Chair, Conservative, Kelly McCauley]

Thank you very much, gentlemen.

Before we suspend, perhaps I can ask a couple of quick questions.

You may have answered this earlier, but what is the projected cost of the early retirement buyout? Is it $1.9 billion?

[Shafqat Ali, Liberal, Brampton—Chinguacousy Park, ON]

It's $1.5 billion over five years.

[The Chair, Conservative, Kelly McCauley]

Mr. Matthews, can you clarify something, please? There is the unpermitted surplus above the 25%. I understand that's been cleared out and put back into general revenue. Is that correct?