Natural Resources Committee on Nov. 4th, 2024

[Charlie Angus, NDP, Timmins—James Bay, ON]

So we'll sell it for $34 billion, or are we going to take a haircut in the—

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I hope that we're going to sell it for more.

[Charlie Angus, NDP, Timmins—James Bay, ON]

—interest of reconciliation?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

The way we get our money back is how much we sell it for. You're absolutely right that the tolls are important. Right now, the CER has arguments before it about what the correct level of tolls should be. Certainly—

[Charlie Angus, NDP, Timmins—James Bay, ON]

Yes, the companies say it's it's too high.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Certainly TMX is presenting a strong case for an appropriate level of tolls. That's absolutely the case.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Is it 100%, or only 53%? He said it could go up. I think he said something like 50¢ a barrel, and he thought that would be fair. I said, “Wow, okay, we're subsidizing him $13 a barrel?” He said, “Well, we'll increase the toll 50¢ a barrel.” I mean, you're hosing the public at that rate in a substantial way, right?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I absolutely disagree. There are two revenue streams, two direct sources of revenue from the pipeline. One is the tolls. The second is the ultimate value that the people of Canada get from the ultimate sale.

I am absolutely confident that simply as a stand-alone infrastructure project, this is going to deliver value for money for Canada and Canadians. That is not even including all the jobs that it supported during its construction and is supporting today. That is not even including all of the tax and royalty revenues that it is supporting. That is not including the economic security value.

I am absolutely sure that, any way you slice it in economic terms, this project is in the national interest.

[The Chair, Liberal, George Chahal]

Thank you, Ministers.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

I have a point of order.

[The Chair, Liberal, George Chahal]

Yes, go ahead on a point of order, Ms. Goodridge.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

We started our meeting a little bit late. I would just ask if we could have permission to complete even a partial third round. This is critical for Canadians. We don't often have an opportunity to have two ministers—

[The Chair, Liberal, George Chahal]

Ms. Goodridge, I was just about to address that. Thank you.

We are unfortunately at the end of our time. The ministers did give us the first hour at committee today.

I want to thank both Ministers Freeland and Wilkinson for joining us.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

Mr. Chair—

[The Chair, Liberal, George Chahal]

The meeting is suspended.

[The Chair, Liberal, George Chahal]

We are back for our second hour.

Joining us in our second hour today is Anne David, director of corporate finance and asset management, Department of Finance.

We will start our first round of questioning this hour with Mr. Chambers.

Mr. Chambers, welcome to committee. I'd like to give you the floor.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Thank you to the officials for appearing.

I want to get a better handle on the process by which the asset is valued.

My understanding is that the entity that owns or controls the asset, CDEV, as a third party, provides a methodology. That valuation is then confirmed by an external auditor. My understanding is that the Auditor General's office looks at that valuation and enlists a third party external auditor to validate that valuation. Then, that number is rolled up into the government's balance sheet.

Do I have that about right? There are two external evaluations—an evaluation by CDEV and an evaluation by the Auditor General.

[Greg Reade, Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance]

Let me say it back to make sure we're saying the same thing.

CDEV has audited financial statements. A third party firm audits CDEV's financial statements, including its subsidiaries, which include the Trans Mountain Corporation. That can be subject to an Auditor General special examination, but it's not every year. It is available and can happen.

When the financial statements are presented and tabled, they represent that third party's audited financial statements.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you very much.

You mentioned that the Auditor General's office may review that valuation. Could you confirm the last time it reviewed that valuation and signed off on it?

[Greg Reade]

They signed off this year.

In fact, my colleague just corrected me. The Auditor General signs off every year.

[Adam Chambers, Conservative, Simcoe North, ON]

They sign off every year. Okay. I understand.

I would think, then, that it should be very unlikely that there would be a surprise writedown in valuation. If you have two external auditors plus the Auditor General's office plus CDEV, we should be very confident there won't be a surprise writedown in the future.

Is that correct?

[Greg Reade]

Yes. There was a significant amount of attention this past year on all of the financial statements, including the carrying value of this asset.

[Adam Chambers, Conservative, Simcoe North, ON]

Okay.

My understanding is that the government has already written down the goodwill portion of that investment rate of about a billion dollars.

[Greg Reade]

That's correct, yes.

[Adam Chambers, Conservative, Simcoe North, ON]

Okay.

What do you think should happen to ensure the integrity of the accounting process along the way? I'm concerned that we're going to be in a situation where something will happen and there will be a surprise writedown. I'm trying to understand how we can protect against a surprise for taxpayers. It sounds like we have a robust process.

If there is a surprise valuation, I'm wondering about accountability for the process.