Public Accounts Committee on March 30th, 2015

[Philip Jennings]

Federally it's 15%.

[Colin Carrie, Conservative, Oshawa, ON]

Fifteen percent, that's right.

I would say if we're looking at jurisdictionally federal to federal, Canada has a really good story.

Let's talk about something that may not be hunky-dory because this is what my constituents are talking about right now in Oshawa. When I talk to businesspeople, people who are retired, and pensioners living in their homes, they're talking about the highest electricity rates in North America. I believe Ontario has the highest rates for industry in North America. They talk about bringing in a job-killing carbon tax that would increase the cost for manufacturers not only of heating their plants but providing electricity to their plants and transporting goods in just-in-time delivery systems through their plants.

This is what we're talking about at the provincial level. They're also talking about raising payroll taxes though something they've invented called the Ontario retirement pension plan.

When we're looking at jurisdiction to jurisdiction, I was wondering.... You know that Ontario competes against many jurisdictions across North America. Is there any jurisdiction, any whatsoever that you'd know of that at this time, any state in the United States that is raising the price of electricity for manufacturers, threatening to put in taxes such as a job-killing carbon tax that would raise the price of anything, or payroll taxes with these pensions? Are you aware of any jurisdiction that we compete against that is doing the exact same thing that would raise the cost of doing business to Canadian companies or international companies?

[Philip Jennings]

Unfortunately, I don't think I'm able to answer that question.

[Colin Carrie, Conservative, Oshawa, ON]

Well, I can tell you. I did some research. I don't think that there is any other jurisdiction that, when they want to attract investment like we're trying to attract, is raising the cost of business such as that. Thank you very much for that.

While I have some time I'd like to talk to Finance. We heard today that the Ontario Liberals...Jerry Dias made a few comments about how the Ontario Liberals bailed on the stocks they had invested in the auto industry. What entity manages the government's equity in General Motors?

[Richard Botham]

The entity that holds the shares on behalf of Canada is Canada GEN Investment Company. It is a subsidiary of the Canada Development Investment Corporation, which is a crown corporation that reports through the Minister of Finance to Parliament.

[Colin Carrie, Conservative, Oshawa, ON]

You can confirm again that the Canadian government, the federal government, still has our investments and the Ontario government has sold theirs, right?

[Richard Botham]

That's correct.

[Colin Carrie, Conservative, Oshawa, ON]

That's correct.

While you have the floor, could you explain a bit about Finance's role during the restructuring?

[Richard Botham]

Sorry?

[Colin Carrie, Conservative, Oshawa, ON]

What was the Department of Finance's role during the restructuring of these companies?

[Richard Botham]

There are two parts to the department's role. One took place during the period in which the financing was arranged. The financing was provided through Export Development Canada, but through a specific business line referred to as the Canada Account. The Minister of Finance has a responsibility in respect of authorizing. His concurrence is required in respect of authorizations for using that particular instrument .

There was also a role for the Department of Finance in working with colleagues in the way that Phil outlined in terms of deputy minister committees. Our department wanted to keep apprised of developments because of potential fiscal implications, so we were involved in that work. The department has been involved—because as you asked in your first question in terms of where the holdings are managed—and has a role in maintaining relationships with the crown corporation on this, and other files as well, but has a role in monitoring that.

[The Chair, NDP, David Christopherson]

Thank you. The time has expired.

Mr. Allen, you have the floor, sir. You will be our last questioner.

[Malcolm Allen, NDP, Welland, ON]

Thank you, Mr. Chair.

Mr. Berthelette, you already walked through this with Mr. Watson, but on page 9, paragraphs 5.32, 5.33, and 5.34 talk about the nature of concessions in the sense of whether or not Industry Canada had enough information on those concessions to do an analysis. You seem to indicate that they took the company's word for certain expectations that were met, that they had a basic understanding of what they thought they needed as concessions, felt that was met, and said, okay, we'll advance the loans based on that.

But could they have underestimated or overestimated those concessions, with the lack of analysis? In other words, could there have been more concessions from the unionized side on the health care benefits, with an analysis that wasn't totally complete? Is the suggestion here really about a deficiency of analysis so that you really don't know whether there were enough concessions made or whether there were more concessions made than what they anticipated?

Is that what I'm seeing in those three paragraphs?

[Jerome Berthelette]

Yes, Mr. Chair, that's a fair statement.

[Malcolm Allen, NDP, Welland, ON]

So in essence the government maybe needed to lend the company less money, based on.... Of course, there was $1 billion that GM eventually did need because they self-financed the pension plan. Perhaps they needed to give them less money because there were greater concessions given by the labour force to the company than we perhaps knew about because there was a bit of deficiency in the analysis—albeit it's difficult to do, Mr. Jennings; I understand the timeline you were up against.

Listen, some of us have a real vested interest in making sure that General Motors actually succeeds. I'm one of those people in this country. I happen to be a retiree from General Motors, so I have a vested interest. It goes beyond my general community. I have other colleagues around here as well who have folks in those communities and represent those folks—as Mr. Carrie said, “real” folks in those communities, and I agree with him.

On page 15, Mr. Berthelette, you talk about the lack of comprehensive reporting to Parliament.

I do accede, Mr. Jennings, that your department finally finished the report by the end of last year.

Mr. Berthelette, from what I'm reading at paragraphs 5.62, 5.63, and 5.64, are we talking about the sense that Parliament actually didn't receive any timely reporting in any succinct way, other than unless you chased three or four departments to figure things out, as to what actually happened with a report back on where the moneys were spent? Is that what I'm reading there?

[Jerome Berthelette]

Yes, Mr. Chair. As we say in paragraph 5.63, we found it impossible to gain a complete picture of the assistance provided, as no single entity had pulled the information together and put it forward in a clear or coherent manner.

[Malcolm Allen, NDP, Welland, ON]

Mr. Jennings, in the recommendation...which you agreed with, by the way. Congratulations on finally pulling this thing together at the end of 2014. It seems to be taking the lead.

Heaven forbid we ever have to do this again, but in life one never knows. On a go-forward basis, there has to be a group of departments involved. Clearly you can't do it as Industry Canada, by yourselves. You need Export Development Canada, you need Finance, and you need all the rest of the folks.

As part of your analysis, sir, would there be a lead now so that there's a lead report-back group? In your view, would that be important, based on Mr. Berthelette pointing us to appendix A in the chapter? Is it something that you might want to think about doing, or make a recommendation at some point to your own group internally that there be some lead?

[Philip Jennings]

I think the departmental response to the Auditor General's report is that we agree with the finding that having clear, comprehensive reporting on the support would have contributed to the public understanding of what the government did in terms of restructuring support.

I'll just add that all the information in the report was public but not put together in one place. Obviously putting and pulling together the information in one place does add to a better understanding of the success of the restructuring assistance.

[Malcolm Allen, NDP, Welland, ON]

There's no question that if it's different places, and I read one part that looks negative, you look bad. But in the overall report you might actually look good. It's not even a question of finding the good part; we might find the bad part before we find the good part. That wouldn't necessarily be helpful.

Going back to Mr. Carrie's point about going forward—I'm certainly not going to talk about Ontario Hydro—it would seem that all this good work will go for naught if indeed there is no placement of product in those two plants in Oshawa. There's one running out in 2016 and one running out about a year to 18 months later. It would seem, as much as Mr. Carrie's told us all about the great things that are getting done, that General Motors of Canada, in Oshawa at least, doesn't recognize them very well, because they're still refusing to put product.

That's not a question, that's simply a statement. I'm not asking Mr. Jennings to respond to that, unless, of course, GM of Canada has told him something that he hasn't told the rest of us in this country yet—that they're going to put a great product in Oshawa, which is deserving of the folks who work in Oshawa.

No doubt you're going to tell me that my time is up, Mr. Chair.

[The Chair, NDP, David Christopherson]

You're right again. Thank you.

[Malcolm Allen, NDP, Welland, ON]

Thank you very much.

[The Chair, NDP, David Christopherson]

With that, this hearing has concluded.

I want to thank our guests. Our apologies for the interruption, but these things do happen.

Thank you all very much for being here.

There being no further business before this committee, it now stands adjourned.