Industry and Technology Committee on Nov. 3rd, 2025

[Philip Jennings]

The policy direction that this government took is really about trying to ensure that the automotive sector remains relevant in the future to what the automotive sector should look like, and the view at the time, which continues to be the view, is that electrification will be the future of this sector—

[Brad Vis, Conservative, Mission—Matsqui—Abbotsford, BC]

Do you believe that the provision in clause 4.2, allowing the.... I'll just read it directly, at the end of page 55:

If at any point during the Term of this Agreement, and assuming that the Recipient had located its battery cell and module productions in the United States, the Recipient would become ineligible to elect the AMPC's cash payment option, but would remain eligible to receive the AMPC's tax credit, the minister will continue to offer the Recipient the Contribution payments as described in this Agreement.

Is that really in the interests of Canada? Could you comment on that clause specifically? Is it really in the interests of Canadian taxpayers to subsidize Stellantis in this contract if they go to the United States?

How does that protect Canadian sovereignty? How did this contract do that? Look at where we are, Deputy Minister.

[Philip Jennings]

I apologize. I don't have that actual clause right in front of me.

What I can say is that the direction at the time when this was negotiated was really, as you mentioned, about trying to make sure we had a level playing field with the United States so that we could attract the investment we wanted. The subsidies that are offered, an “up to” amount, were really based on production that would take place out of the NextStar plant. As much as they produce, they get more subsidy up to a maximum amount that was negotiated.

[Brad Vis, Conservative, Mission—Matsqui—Abbotsford, BC]

Right, but in the contract, through you, Mr. Chair.... I apologize for the emotion, but there are a lot of people who are really hurt right now, and I'm just trying to convey that.

In the contract, it does talk about still subsidizing NextStar if they move their production to the United States. Was that a wise provision to have in a contract?

[Philip Jennings]

Again, Chair, I apologize. I don't have that exact clause in front of me, but I'm happy to come back to this committee with more specifics around it.

My understanding of the contract—I wasn't in the department at the time—was really that the production subsidy was for things produced in Canada, so you'd get a subsidy for battery or module production at the NextStar plant in Canada.

[Brad Vis, Conservative, Mission—Matsqui—Abbotsford, BC]

Okay. I would refer, then, to section 4.2 on “Adjustments”.

Small businesses in Canada are having a very challenging time right now. What's come to light in these contracts is that we had the then minister of industry, now the Minister of Finance, and the parliamentary secretary to the then minister of industry speak about all these offshoot benefits and all of these new opportunities in the supply chains.

Since this contract was signed two years ago, have we seen any realization of those supply chains growing as a result of what the government has done, or was it all just words?

[The Chair, Liberal, Ben Carr]

You have about 20 seconds, Deputy Minister.

[Philip Jennings]

Yes, what I can confirm is that certainly there are some companies in the supply chain that have also gone electric. They essentially are continuing to support the combustion engines from the past and currently, but also they are now trying to supply the electric vehicles. At the end of the day, we do anticipate that as assembly becomes more electric, so will the supply chain in Canada.

[Brad Vis, Conservative, Mission—Matsqui—Abbotsford, BC]

I have one quick one, a yes or no. Will the audit—

[The Chair, Liberal, Ben Carr]

Mr. Vis, I'm sorry.

[Brad Vis, Conservative, Mission—Matsqui—Abbotsford, BC]

Thank you, Mr. Chair.

[The Chair, Liberal, Ben Carr]

Thank you.

Mr. Bardeesy, the floor is yours.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

Thank you, Mr. Chair.

There's been mention made a few times at this committee and in the House of the $15 billion that is the maximum possible contribution between the Ontario and federal governments.

Could you outline what the actual fiscal impact has been so far of the contribution of both the SCA and the SIF for the Stellantis-LG plant?

[Philip Jennings]

Thanks for the question, Chair.

I'll turn to Charles Vincent, who will probably have what's in the public domain for what's been issued to date.

[Charles Vincent]

Thank you.

As was highlighted earlier, the $15 billion is an “up to” amount that is linked to both the production and the sale of both cells and modules. The facility has not yet started production of any cells. The production is of modules at this point. I believe we highlighted in the public accounts that at this point the total fiscal outlay is about $42 million.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

Thank you for sharing that.

Presumably, the public accounts will continue to be updated as those disbursements are made.

[Philip Jennings]

That's correct, yes.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

The minister alluded to this a bit, but I wanted to hear more from you about the conversations you have had about the Ontario government's engagement on the specific situation right now with Stellantis and, more generally, the ways that Ontario's equivalent ministry and Industry Canada relate when it comes to supporting the auto sector.

[Philip Jennings]

I would say that we really work hand in glove with the Ontario government when it comes to the auto sector and, actually, even beyond in terms of some other industrial sectors.

For autos, typically speaking, for generalized agreements we're kind of fifty-fifty partners. In essence, we provide a certain amount to take some of the risk away from investments, and the Ontario government comes in with an equivalent amount.

For the battery investments, given the scope and the size of what was involved—and again, this is about levelling the playing field with the U.S. in terms of their Inflation Reduction Act—the partnership was actually two-thirds Canada and one-third Ontario. We've essentially taken negotiating strategies together in terms of what we're looking for in those contracts and what kinds of covenants we're looking for in terms of commitments from the companies. That's how we worked.

In the situation that has unfolded in the last week, which is related to the decision by Stellantis to move the Jeep Compass from its planned location in Brampton to a plant in Belvidere, the first calls we made were with Ontario, to really strategize about how we proceed in terms of a potential breach in the commitments that were made by the company, and to work in a group, which includes Unifor as well, in terms of trying to find a path forward to try to attract, in a very short order, a mandate for Brampton to continue operating and to have the workers back on the line as soon as possible.

[Karim Bardeesy, Liberal, Taiaiako'n—Parkdale—High Park, ON]

Thank you.

You mentioned the collaboration around covenants. That made me want to ask about the collaboration and, more directly, the internal work that goes into some of these contracts that we have in front of us, and the subjects for discussion in both a SIF agreement and a special contribution agreement.

What kinds of considerations go into the preparation of those negotiations? What kinds of things more generally would governments of any stripe be looking for to be put into the conditions of those contracts and what kinds of preparations and what kinds of negotiating stances and positions do we take in those discussions?

[Philip Jennings]

Perfect. I'll start answering the question and then turn to Stephanie, who will talk a bit about the due diligence we go through in terms of how we approach these kinds of agreements.

By and large, at the end of the day, it's about making an assessment of what risk the company is taking in making the investments and what their other options are in terms of where they can make the investments. We realize that we're operating in an environment where people and companies sometimes have choices in where the investments can take place. At the end of the day, that helps to inform the cost-sharing ratio that we're comfortable with and that is in the public interest to support, and that can vary from investment to investment. Then, obviously, importantly, related to that is really what you are trying to get in the public interest—what you are trying to secure in the public interest—from public investments in these types of endeavours.

Every SIF agreement, including autos, will always have job commitments. At the end of the day, fundamentally, we're looking to make sure that Canadians are employed through the things that we support with public funds. We ensure that there are always capex investments, a certain scale of investments that we're expecting from the company. That again is about leveraging our investments federally and from Ontario, so that they can leverage larger amounts in the private sector. There are R and D investments that are often standard in terms of what we're looking for. There are sometimes training, co-op and different elements, depending on the type of contract that's put in place and what we're trying to leverage to make sure we maximize the benefit we can get for Canada in the long term.

I think it's important—and I'll turn to Stephanie for just a few minutes—to explain a bit about the due diligence of how that relationship evolves so that, at the end of the day, we negotiate what we think is in the best interests of taxpayers and why we land where we do.

[The Chair, Liberal, Ben Carr]

Mr. Jennings, we're at time.

I think we're a bit ahead of schedule. Members would probably agree that it might be useful for us to hear a very quick, concise response on that. Then I'll turn it over to Monsieur Ste-Marie, so if we could just be tight...?

[Stephanie Tanton, Assistant Deputy Minister, Innovation Canada, Department of Industry]

Thank you, Mr. Chair.

For every SIF project, we work very closely with the company and undertake due diligence on that project. Our due diligence includes an assessment of the technical merits of the project and the market. We do a market assessment of the project to ensure there's a robust market to support the project moving forward. As well, we do a financial overview of the project.

Throughout the due diligence, we also, in most instances and in the case of Ontario, almost always work very closely with our provincial counterparts to ensure we understand where their assessment of the project is moving and where they're looking, and the level of support they're looking to offer. We send a recommendation to the minister with regard to an approach and a negotiation strategy. Then we enter into negotiations with the company, which ultimately will lead to the terms that are in the final agreement.

As the deputy did indicate, all of our agreements include job numbers, co-op numbers, R and D commitments, capex investments and then other benefit commitments depending on the nature of the project.

[The Chair, Liberal, Ben Carr]

Thank you.

I appreciate that. Thank you.

Mr. Ste‑Marie, you have the floor for six minutes.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you, Mr. Chair.

I would like to extend my greetings to the five witnesses.

First, I have a request for you. I would like you to give the committee a table showing the different types of assistance provided to the automotive industry, including subsidies and other assistance, broken down by province. If possible, please send the table to the committee when you obtain it, so that we can take note of it. Thank you.

Second, what lessons can we learn from Stellantis' announcement regarding the Brampton plant to ensure advance notice or a consultation when major employers, such as Stellantis, make strategic changes that affect their operations in Canada?