Public Accounts Committee on May 5th, 2016

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I would agree completely with that. It's building all around that.

For example, we're going to be competing with other people and other venture capital funds that are not government-sponsored or supported. They are private, and would it not be their number one calling card to say “Look, this is the rate of return”.

[Michael Ferguson]

I think ultimately what everybody is interested in is the rate of return, but in the meantime these organizations, whether it's government or anybody else, want to know whether the companies they are investing in are on the road to producing returns or not. It's important to have ways of measuring that. Are they going to be able to commercialize those innovations? They're not mutually exclusive.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I agree with you.

To my point, though, part of your recommendation to the BDC is to publicize those rates of return. Is that correct?

Okay.

I have another set of questions to do with the concept that was chosen. Some sectors were directly invested in, and the rest was invested in a fund of funds. Do I understand that correctly?

[Richard Domingue]

That's right. In the $400-million initiative, $350 million was set aside for the fund of funds and $50 million for what they call the “high-performing funds”.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

The high-performing funds were clean tech, health sciences, and IT. Is that correct?

[Richard Domingue]

They are listed on exhibit 1.3, page 15.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Yes.

You make the point on page 9 that agriculture and natural resources, “where innovation is required to maintain competitiveness”, might have benefited. Did you look at sectors other than those three? Maybe the question is, what brought you to write that and to highlight agriculture and natural resources as an opportunity?

[Richard Domingue]

Mr. Chair, through our discussion with the stakeholders we were told there was a market gap in the agri-food sector and the natural resources sector. The Farm Credit Corporation also does venture capital, but nonetheless there was a belief there was a market gap. The fact that none of the four selected funds of funds has a specific mandate regarding agriculture and natural resources does not prevent them from doing that type of investment.

[The Chair, Conservative, Kevin Sorenson]

Thank you to both.

We'll go back to Mr. Poilievre, please.

[Pierre Poilievre, Conservative, Carleton, ON]

In the post-mortem assessment of the success or failure of the venture capital action plan, how would the Auditor General's office recommend Finance Canada deal with the eternal problem of attribution—that is, the problem of determining what share of the innovation resulted from the public investment and what would have resulted had that investment been absent?

[Michael Ferguson]

Thank you, Mr. Chair.

That would be a type of economic analysis the Department of Finance would have to determine how to undertake. At the end of all the investments and at the end of the plan when they're looking back, I think the number one thing to look at will be whether the federal government made money off it and there was a return on investment.

I think there is also going to be the question of what the impact has been on the economy and whether these companies are still involved in the economy. That's a much harder type of analysis to do, and as you say, what's the cause and effect? An economic analysis would have to be done.

I think the straight financial analysis would be the first and the most obvious. There was an investment, and that investment was supposed to make a return, so has that investment provided a return?

The secondary thing probably would be looking at whether those funds still exist now. Are they able to attract investment on their own without the Government of Canada's support, or do they still need the Government of Canada priming the pump?

The type of attribution question you're asking would be something the finance department would have to look at.

[Pierre Poilievre, Conservative, Carleton, ON]

Even in the event there is return on the investment, there's a risk that government becomes the rooster who thinks he made the sun come up because the sun came up when he crowed. The enterprise may have succeeded without any public investment. The fact the government was injecting dollars into the company or the idea in question might have just meant it was a hitchhiker along for the ride.

I guess I'm trying to ascertain whether there's any way to measure whether the presence of this money made a difference vis-à-vis the absence of this money. Maybe there's a control group that could isolate the effect of government action, but it seems hard even while looking at the rate of return to determine whether the government catalyzed the results in question.

[Michael Ferguson]

Mr. Chair, I think that's very much part of the accountability mechanism for the Department of Finance, and they should be able to do that type of analysis.

For me, one of the crude indicators would be simply that once this investment has matured and the funds have started to get into that world of making a financial return, is the venture capital market in Canada still existing at that same level but without needing the same level of support from government? Has that self-sustaining ecosystem been created, or once these funds shut down and these funds of funds have been shut down and everything has run its course, is everybody coming back to the government saying they need more federal government money going back into these funds? To me, one of the crude indicators is simply whether that self-sustaining ecosystem has come into existence.

As for the the more sophisticated analysis, I think the Department of Finance would have to respond to as to how they would be able to do that.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Madame Mendès.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Thank you, Mr. Chair.

My question is about the PCO's role and the data information responsibilities.

Has the chief information officer provided any guidelines for common software standards and data formats for the purpose of improving interdepartmental sharing of information and at the same time improving service delivery? Has this been done at all?

[Michael Ferguson]

Mr. Chair, that's not something I can answer. We haven't looked specifically into that.

Most of what we were looking at was how the departments themselves are managing it. To your question, there was a concern that even though the three organizations in the citizenship program had decided what information to share and had put in place agreements about what information to share, they weren't sharing it.

I don't know whether those directives have been given. What we've seen is that even when there is that type of directive, it isn't always being followed. We've put the focus very much, as we do our audits, on what the individual departments are doing.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Has it been part of their answer to your recommendations that there would be an effort to apply those directives in a much more forceful way?

[Michael Ferguson]

Certainly the recommendations we have made have been more at the individual department level rather than at the central agency level. I think the departments have agreed with all of our recommendations and understand that it is important to make sure that they are managing this data in an appropriate way. When I have been talking about this issue, either to departments or to central agencies, I think there is a common agreement that it is a problem that needs to be dealt with.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Would Shared Services Canada be the appropriate department to start dealing with this eventually, when it starts working properly, if it ever gets there? Would they be the ones?

[Michael Ferguson]

I would lay the responsibility with each individual department. It doesn't really matter what Shared Services does or what the chief information officer does. That is not going to make Citizenship Canada make sure that they are storing their addresses. Fundamentally, I would start with the need to hold the departments to account.

Yes, there may very well be a role for central agencies such as Shared Services and so on somewhere in this as well, but I think fundamentally the starting point is with the individual organizations themselves.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Thank you very much.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

I don't have any other questions, although I do have a couple of things that I am just wondering about for my own information.

You spoke about the Veterans Affairs formulary review committee. You said that it deals with medications and it doesn't have clear guidelines. What qualifications are needed to serve on that committee? They are making decisions on drugs. Are there doctors there? Are there pharmacists there? Who sits on that committee?

[Michael Ferguson]

I don't have the details, Mr. Chair, but certainly we mention in the report that they do have health care professionals. I don't know whether those are doctors, pharmacists, nurses, or exactly what they are, but they do have people with that health care background. The department would have to give you the details of exactly who they are and how they select them.

[The Chair, Conservative, Kevin Sorenson]

In paragraph 4.23 you say this:

In one case, we found that the Committee’s decision to limit access to a particular narcotic only to those veterans with cancer or in palliative care had still not been implemented more than two years later. In the meantime, the drug remained available to veterans as a standard benefit.

Is this dispensed, then, by any pharmacist out there in communities?

[Michael Ferguson]

What the committee does is decide what the department is going to pay for and the circumstances under which the department is going to pay for it. The prescriptions, of course, come from the physicians, and the department can't tell the physicians what to prescribe or not to prescribe. The physicians have to decide what a particular patient needs in terms of medication.

The formulary review committee in this situation decided that they were going to pay for this particular narcotic only for veterans with cancer or in palliative care. That went through the process of considering under what circumstances the department should be responsible for paying for this type of prescription. They went through that and made their decision, but when we started the audit, which was two years after they had made the decision, they still hadn't implemented the decision, so they were still paying for prescriptions even though the patient wasn't suffering from cancer and was not in palliative care.