Industry Committee on June 5th, 2024

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Turnbull.

I give a bit of leeway, especially given that we have an experienced politician as well, Mr. Bains. I give a bit of leeway, but the general rule is that we try to give witnesses as much time for their answers as for the questions.

Mr. Cooper, please keep that in mind. The floor is yours.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Thank you, Mr. Chair.

I will ask the former minister another yes-or-no question.

Mr. Bains, have you read the Auditor General's report, yes or no?

[Navdeep Bains]

Again, thank you very much for the question. I have not had the opportunity to read the report in its entirety.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Well, I find that incredible, seeing that you're here to answer questions about the corrupt mess that you oversaw as minister at SDTC, the Liberal green slush fund.

If you had read the damning Auditor General's report, you would have learned that when Ms. Verschuren was appointed chair, she changed the conflict of interest policy of the green slush fund with respect to the blackout period so that board members could buy shares in companies they approved monies for within three days.

Were you aware of that change in the conflict of interest policy by Ms. Verschuren?

[Navdeep Bains]

Thank you very much for the question.

I would say that all designated public office holders understand the rules they need to follow in the Conflict of Interest Act, and those rules pertain to people who sat on the SDTC board as well.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Well, clearly not, given that there were 188 cases of conflicts of interest involving members of the board and others at the green slush fund, but I ask you the question again. Were you aware of that change in the conflict of interest policy so that board members at the green slush fund could approve funds to certain companies on Monday and buy shares by the end of the week?

[Navdeep Bains]

This is an arm's-length organization that has a mandate from the act of Parliament, I believe—as I recall in my opening remarks—which was established in 2001 for this organization, and it's very clear that the rules—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Mr. Bains, you're an executive at Rogers. Would that fly? Do you know what it sounds like to me? It doesn't just sound like it to me. I'll call it what it is: It's called insider trading. Does insider trading fly at Rogers?

[Navdeep Bains]

Thank you very much for the question.

I'm delighted to be here today before the committee to answer any questions with respect to Sustainable Development Technology Canada.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

I asked you a simple question, and that is, do you think it's acceptable that a conflict of interest policy at the green slush fund that happened under your watch as minister was changed such that board members could vote to funnel taxpayers' money into companies and, before week's end, buy shares in those companies? Do you think that is acceptable? I will repeat it again; I call that—and it is—insider trading.

[Navdeep Bains]

I believe it's important that all designated public office holders hold themselves to the highest possible standard and follow the rules that are clearly outlined in the Conflict of Interest Act, and that is an expectation that all public office holders should abide by.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Well, Mr. Bains, do you believe that your only role as minister was to appoint members to the board? Is that the only role that you saw with respect to the SDTC and the green slush fund?

[Navdeep Bains]

Thank you for the question.

It is an arm's-length organization. The board and management have clear rules as to how they should conduct themselves—

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Mr. Bains, had you bothered to read the Auditor General's report, you would have discovered that the Auditor General found that your department, on your watch, completely failed to see that contribution agreements were complied with, and completely failed with respect to overseeing conflicts of interest. Taken together, $120 million went out the door from 188 cases.

Do you take issue with the Auditor General's damning findings about failings of your department under your watch as minister?

[Navdeep Bains]

Thank you very much for that very important question.

I would say that I respect the work of the Auditor General and I think it's very clear what she stated in that report.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Bains.

I'll now turn it over to MP Arya.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Chair.

Mr. Khan and Mr. McArthur, I'm coming back to the discussions we previously had.

Clean tech is certainly not software. It involves hardware and quite a bit of it. Once upon a time in my lifetime, I had a small manufacturing company. I was involved in the development of new manufacturing sectors in several countries.

Even with commercially proven manufacturing technologies, with any capital-intensive project or any project with lots of plants and machinery, the gestation period is so long because of a lot of teething problems. To see it come to an industrially accepted capacity utilization rate takes time.

Mr. Khan, when it comes to new technology like yours, which you are now getting ready to implement with the oil sands project, if I'm not wrong, can you tell us how big it is in terms of the dollar amount, if that's not confidential?

What is the implementation period that it takes? When it comes to financing it, what amount or percentage of the project cost is getting financed through SDTC?

[Dr. Ibraheem Khan]

I'll do my best to answer the question. I don't have the exact numbers.

We have put in excess of $10 million into developing the technology. It's not solely for the Alberta site. We've done smaller pilots leading to that larger site because our partners wouldn't be interested in something that's completely unproven.

We've received a small amount of funds from investors in the past, but being a materials technology, we also deploy our materials in medical devices and are fortunate to have revenue that comes from that medical device. This medical device is a dental device. All the revenue we generate from fixing people's teeth we funnel to our clean tech application.

I'd say that about 60% to 70% of it is funded through investors as well as revenue generated from other opportunities so that we can scale our technology.

[Chandra Arya, Liberal, Nepean, ON]

Thank you.

Mr. McArthur, in relation to that, I just joined this committee last month, but I was a member of this committee way back in 2015 and 2016. The only other member who is still here in this committee is Mr. Brian Masse.

During that time, we once had the CEO of BDC—Business Development Canada—here and I asked a very simple question. They were talking about billion-dollar portfolios for various sectors of the economy, etc.

My question was very simple. I asked the BDC team then how many manufacturing start-ups it had financed during that last year. They didn't have the answer. They had to go back and search. Out of the billions of dollars of portfolio they had, they came with an answer. If I remember correctly, it was just about $15 million in new manufacturing start-ups.

There is a gap here. I'm sure it's the same with clean tech.

You were mentioning the gaps in the ecosystem. I'll give you some more time to elaborate on that.

Where is the gap and what needs to be done? Is SDTC a vehicle through which that gap can be addressed?

[Peter McArthur]

Yes, SDTC does address some of that, for sure, as was talked about earlier. It's taking that first commercialization step, developing consortiums and proving out the technology.

There is an abundance of capital available for software solutions. They are low capital-intensive solutions. There is a shortage of capital for the hardware solutions and that's not going away.

There are some funds in the U.S. that do specialize in it and sometimes we're able to attract them up to Canada to invest here, but there's often a lack of it.

I'll go back again to those demonstration facilities and that first of a kind—FOAK is the acronym. It's tough to attract capital there. We're missing opportunities to deploy innovative solutions that are being developed by smart technology guys like Mr. Khan here and others across Canada and have them have the impact on our economy, on jobs and the planet.

[Chandra Arya, Liberal, Nepean, ON]

Thank you.

I'm slightly changing the theme.

Are there any policy recommendations you can suggest for the policy-makers, whether at the federal or provincial level, that can help the clean-tech sector grow, including the financing of the clean-tech sector?

[Peter McArthur]

Again, I would say that if there was additional funding in the venture capital sector, it could benefit the clean-tech space. If there was additional funding available at the seed stage, in particular—that's often a challenge—and first of kind....

I don't mean to repeat myself.

[Chandra Arya, Liberal, Nepean, ON]

Basically, what you're saying is that we need to have a specialized fund specifically for clean-tech seed capital.

[Peter McArthur]

Yes, we do, among others.

[Chandra Arya, Liberal, Nepean, ON]

Can you kindly elaborate? I'm trying to understand.