Industry Committee on June 5th, 2024

[Chandra Arya, Liberal, Nepean, ON]

You have gone through the entire SDTC process. Based on your experience, you must have received funding from different agencies at the initial stage, in addition to SDTC.

Am I correct?

[Dr. Ibraheem Khan]

That's correct.

[Chandra Arya, Liberal, Nepean, ON]

Through your experience dealing with SDTC, is there anything you would suggest when operations are resumed? Are there any changes you would suggest to the current...? Of course, we also want your funding to be released immediately. Once that is done, are you suggesting any changes to the processing techniques there?

[Dr. Ibraheem Khan]

It's a lengthy process. From start to finish, when we received our funding, it was almost a year, and a year is a lifetime in the start-up world. If there is a way to shrink that timeline, that would be wonderful. I think it was often related to a lack of resources. There are only so many files a manager can have.

If you can fix the lack of resources, you may be able to accelerate the funding.

[Chandra Arya, Liberal, Nepean, ON]

When you look at the entire clean-tech funding ecosystem in Canada, are there any gaps that need to be addressed? If I'm not wrong, 30% to 50% of all clean-tech funding is in the form of grants. Personally, I would prefer a repayable loan—at 0%, even.

Do you see any gaps in the ecosystem of funding clean technologies in Canada today?

[Dr. Ibraheem Khan]

Clean-tech funding is often hardware in nature, and that takes a lot of time. It's not like a software, which may be commercial within months. We've been working with our materials technology for over 10 years now. We have commercialized it in the medical device space, but the clean-tech space is extra difficult.

Having that patience is necessary, so there may be...I don't know if it's a gap or if I would call it a gap, but the grant funding helps support that chasm that is treacherous for entrepreneurs. That would be good to back.

[Chandra Arya, Liberal, Nepean, ON]

Going back to Mr. McArthur, you...in all honesty, aren't going to be part of IRAP. Are there any changes you'd suggest for the corporate structure when it relaunches, or should it be taken away into some other structure?

[Peter McArthur]

If the clean-tech expertise at SDTC is going to be preserved—and that's very key, because it helps the funders, the investors and the corporations it's working with—if the funding is going to recommence quickly, and if the administrative process, which I was talking about earlier, is not augmented for clean-tech entrepreneurs, we think it could be quite effective. However, we need to consult with our members and collaborate with them to see what their thoughts are.

[Chandra Arya, Liberal, Nepean, ON]

Thank you.

I have just one last question for you. As a part of the Cleantech Alliance, you know the entire ecosystem very well. I think the numbers you guys mentioned are about 500 companies with a revenue of $3.1 billion and 25,000 jobs, etc.

I'll ask you the same question that I asked Mr. Khan. Are there any gaps in the ecosystem that need to be filled?

[Peter McArthur]

I'm glad you asked that.

Seed-stage funding can be a challenge in Canada for early-stage companies. As my colleague Mr. Khan, mentioned it's a capital-intensive process and it's hard to track that capital in the early days, before there is any revenue. The seed stage is absolutely an issue.

I would also say that scaling for hardware companies is a real challenge. Again, it's very capital intensive. Project financing for first-of-a-kind projects is very difficult the whole world over. If you want to launch a new technology, like the ones Smarter Alloys or some of the other companies in your ridings have, it's very difficult to get funding when it's the first of its kind.

[Chandra Arya, Liberal, Nepean, ON]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Garon, you have the floor for six minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you very much, Mr. Chair.

I thank the witnesses for being with us, today.

Mr. McArthur, in your testimony, you said that Sustainable Development Technology Canada, or SDTC, was a very effective organization. That's a free translation. In your recommendations, you ask that funding be reinstated as quickly as possible for projects that have already been funded.

I'm completely overwhelmed by the fact that the Liberals are defending this fund. There's nothing partisan about what we're doing today. We're talking about an organization whose possible malfeasance is manifold, which has violated at least three laws, and whose several dozen irregularities have been documented by the Auditor General, who, last time I checked, is not partisan.

I understand that you find this organization effective, because the industry needs funding and you need that funding.

The Auditor General's report states: “the foundation’s staff rejected some projects because of specific risks, but that it put forward for approval other projects with the same risks.” It also mentions that this selection of projects had gone against the experts' recommendations.

For the public, for the intelligent informed person looking at this situation, what you're asking for is possibly to restore funding for projects that may have been funded at the expense of other projects, which carried the same risks and had not been recommended by the experts.

If you're a taxpayer looking at the committee today, do you find your recommendation reasonable?

[Peter McArthur]

Yes, I am a taxpayer, so thank you for that question.

We're not here to suggest that any of the recommendations should not be followed. In fact, we suggest that the recommendations be thoroughly followed and that the rigorous process be applied. We're here to recommend that it be reimplemented as soon as possible on a judicious basis that respects those rules, regulations and processes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

If you don't mind, I'd like to add that you asked for funding for projects to which funding had already been allocated. The Auditor General's report tells us that some projects with the same risks had not been funded, against expert recommendations. As a result, you are possibly asking that we put back on track the funding of companies for which the funding decision was irregular.

Have I understood you correctly? Could any reasonable person want us to start this funding process all over again?

[Peter McArthur]

Thank you again for that follow-up question.

We want the processes to be respected. We want the companies that qualify to get funding. We want that 13% of the world's clean technology companies that are in the top 100 to get funded, so they can grow and prosper throughout Canada and create all those amazing jobs for the future.

We don't want it to be not respected. We want those rules and regulations to be respected.

[Jean-Denis Garon, Bloc, Mirabel, QC]

I'm sorry to interrupt, but you'll understand that speaking time is scarce.

In light of your response, I would invite you to reconsider your recommendation, which is inconsistent with what you have just said.

On the other hand, we have dozens of pages of cases of mismanagement that the Auditor General has been working on for the past eight months. What's more, when Minister Champagne became aware of what was mentioned by the whistle‑blowers, funding was cut off. Therefore, given the deficient management—at the very least—of the sustainable development technology fund and the consequences that followed, do you feel that this did, or did not, harm the environmental cause?

[Peter McArthur]

I'm not sure I completely understood the question, but....

[Jean-Denis Garon, Bloc, Mirabel, QC]

This funding was interrupted because of mismanagement of the fund and because of misconduct.

I conclude that there are environmental consequences to this misconduct; there are environmental consequences to the fact that the Department of Industry has let this go on for so long and that this organization has not followed any of the ethical rules that are prescribed by law.

Do you agree with me that these wrongdoings, which led to the funding being ended, have negative consequences for the fight against climate change, for example?

[Peter McArthur]

It is certain that in this period of eight months where there has not been funding, some of the beneficial impact that could have been achieved by those clean technologies has not been allowed to occur.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you very much.

I could ask Mr. Bains the question.

Mr. Bains, you were head of the Department of Industry. According to your testimony, you were responsible for nothing, you were above it all, on a cloud, and everyone but you was responsible for everything.

However, you had a responsible role. You were responsible for your department, which was entitled by law to carry out audits. These would have allowed you to ensure that funding agreements were respected, but also that Sustainable Development Technology Canada's, or SDTC's, ethics and conflict of interest policy was consistent with federal law.

When you were minister, how many SDTC audits did your department conduct? These audits would have enabled you, several years in advance, to identify the lapses listed today by the Auditor General.

How many audits had you commissioned?

[Navdeep Bains]

Thank you very much for your question.

I would say with respect to SDTC, as I've said before, is it's an arm's-length organization that has clear rules in place based on—

[Jean-Denis Garon, Bloc, Mirabel, QC]

Mr. Bains, how many audits have there been? According to the Auditor General, there have been none—

[The Chair, Liberal, Joël Lightbound]

Mr. Garon, just a moment. I'd like you to pay attention to the volume of your voice. I'm thinking of the interpreters.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair. I'm sorry.

I'm asking you for a number, Mr. Bains. How many audits did you order when you were minister? I don't want you to quote the law. The law is written. How many?