Public Accounts Committee on March 30th, 2015

[Jeff Watson, Conservative, Essex, ON]

I take it that the Auditor General typically refrains from giving policy advice, but this is suggesting that greater concessions—presumably from unionized workers, for example, or bond holders—would be preferred over public assistance. Do you stand by your advice? Is it typical for the Auditor General's office to give the government policy advice in that regard?

[Jerome Berthelette]

I'm not sure we're giving policy advice; however, we are suggesting that—

[Jeff Watson, Conservative, Essex, ON]

You're saying greater concessions by stakeholders are preferable to public assistance.

[Jerome Berthelette]

—when it comes to private corporations coming to government asking for support and assistance, it should be incumbent on the companies to ensure that all stakeholders have already made whatever concessions are required before asking for public funds.

[Jeff Watson, Conservative, Essex, ON]

Our Unifor knows about that advice, thank you.

[The Chair, NDP, David Christopherson]

Thank you.

Moving along to Madam Sgro. You now have the floor.

[Judy Sgro, Liberal, York West, ON]

Thank you, Mr. Chair.

Mr. Jennings, how and when do you plan to report the final cost of the financial assistance to Parliament?

[Philip Jennings]

As I mentioned before, we put a report on the web. As highlighted by the Auditor General, there was no one place where all the information was together. A report was posted in December 2014, which essentially highlights all the funds that went into the restructuring, as well as all the funds that have been recovered to date.

The final recovery of some funds that make up the equity in General Motors is not yet known. The Government of Canada still owns equity in the company and the two principal factors that will determine the value of those recovered funds will be the share price for General Motors, as well as the exchange rate, so any depreciation in the exchange rate for Canada leads to more recovered funds.

The report highlights what the value of those funds was at the time the report was written, but that has been fluctuating since that point. I should also say that since the report was published, General Motors did call an option on its preferred shares. They bought back preferred shares from the Government of Canada, and Ontario exercised its rights to sell its remaining shares to General Motors, which took place in February of this year.

[Judy Sgro, Liberal, York West, ON]

Why do Parliament and Canadians have to wait until 2017 or 2018 to know whether the program achieved its goals? That's a long time.

[Philip Jennings]

You mean the automotive innovation fund?

[Judy Sgro, Liberal, York West, ON]

Yes.

[Philip Jennings]

As I mentioned, in 2012 we conducted an evaluation of the automotive innovation fund. It found that it was on track to meet the objectives. However, it did conclude that it was too early to be able to have a full assessment of the impact of the program, given that it was four years into the program.

We have committed to another evaluation, so we're able to assess that it is meeting its long-term objectives. That date has been set for 2017.

[Judy Sgro, Liberal, York West, ON]

So we'll have to wait till then to find out how things are going.

[Philip Jennings]

We know that the immediate and medium-term objectives of the program are being met, but to know if the long-term objectives are being met will be evaluated in 2017.

[Judy Sgro, Liberal, York West, ON]

On the finance side, I assume Finance can answer the question, or maybe it's Mr. Jennings again. What are the federal borrowing costs associated with the financial assistance that was provided to GM and Chrysler in 2009?

[Richard Botham, Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance]

I'm sorry, I don't know off the top of my head. I'd have to look at the bond rates at the time and I can do so.

[Judy Sgro, Liberal, York West, ON]

You have no idea what the borrowing costs have been to date?

[Richard Botham]

The borrowing that the Government of Canada undertakes is not specific to particular transactions, so there was no specific borrowing rate for the funds related to support GM and Chrysler. The best rate, the reference rate, would be the long-term rate at the time. I do not know off the top of my head what that was in 2009, but there wouldn't have been a specific borrowing to support these transactions.

[Judy Sgro, Liberal, York West, ON]

To the Auditor General—and again thank you for the good work you've done on this particular file—can you explain why you think it's bad practice for Industry Canada to conduct its own analysis of projects rather than rely on the analysis of companies?

[Jerome Berthelette]

Mr. Chair, I think the analysis of companies is a source of information, but ultimately I think officials should take whatever opportunity they have to seek out additional information, which Industry Canada did in part. But they should also get assistance to help challenge the information that is being brought forward by the company to ensure that the amount of public funds being invested in the company is the minimum required in the circumstances.

[Judy Sgro, Liberal, York West, ON]

Mr. Jennings, have you had any indication that the industry will be seeking additional assistance in 2016? Have they put you on notice for that?

[Philip Jennings]

What I can say is that we have an automotive innovation fund that does have moneys in it. We're in discussions with companies on an ongoing basis in terms of where the federal government could partner in terms of investments that secure the long-term footprint of the auto sector in Canada. As is the case for many investments under the automotive innovation fund, we often partner with the Province of Ontario to support some of the those.

[Judy Sgro, Liberal, York West, ON]

How much is left in the fund currently?

[The Chair, NDP, David Christopherson]

Sorry, Madam. Time has expired.

Back again to Mr. Carrie. You have the floor, sir.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair. As my colleague brought up, this is hugely important in my riding because this represents real families and real people in my community. It was flippant when my Liberal colleague across the way said, “You know, we're talking about these things, it's hunky-dory”. This is a very serious issue and not only what happened in the past. I think everybody is pleased that we were able to save our footprint. It's about moving forward. Maybe we can talk a little bit about what's hunky-dory and what's not hunky-dory and moving forward.

I asked you the question about the automotive innovation fund that she brought up now and with that—if we compare federal Government of Canada versus federal government in the United States—you even stated that the Americans don't even have an equivalent program, a program that has leveraged billions of dollars in investment in Canada. You talked about the support for research through our granting councils that we have here in Canada. You also talked about the corporate tax rates.

I believe, Mr. Jennings, in the United States the highest U.S. corporate rate is 39.1%. Do you know what the Canadian corporate tax rate is?