Public Accounts Committee on May 23rd, 2024

[The Chair, Conservative, John Williamson]

I call the meeting to order.

Good afternoon, everyone.

Welcome to meeting number 124 of the Standing Committee on Public Accounts.

Today's meeting is taking place in a hybrid format pursuant to the Standing Orders. Members are attending in person in the room and perhaps remotely using the Zoom application, although I don't see anyone online yet.

I would like to ask all members to consult the cards on the table for guidelines to prevent audio feedback incidents.

Please take note of the following preventative measures in place to protect the health and safety of all participants and in particular our interpreters. Only use the approved black earpieces that are in front of you. The former grey earpieces must not be used. Please keep your earpiece away from the microphone at all times. If you're not using your earpiece, place it face down on the sticker to your right generally, although there's one on the left as well.

Thank you for your co-operation in this matter.

Pursuant to Standing Order 108(3)(g), the committee commences consideration of “Report 4: National Trade Corridor Fund—Transport Canada”, of the 2024 reports 2 to 4 of the Auditor General of Canada referred to the committee on Tuesday, March 19, 2024.

Before I bring in our witnesses, I'm going to truncate the fourth round a little bit. We don't always get to it anyway. I understand there are some time pressures, and I want to make sure we have enough time with our delegation that's coming in. If we do get to our fourth round, instead of five minutes, it will be three minutes, three minutes, and then 90 seconds each for the other two parties. I understand people need to leave here by 6:15 p.m. instead of 6:30 p.m.

Without further ado, I welcome our guests.

From the Office of the Auditor General, we have Andrew Hayes, deputy auditor general; Susie Fortier, director; and David Norman, principal. Thank you all for coming.

From the Department of Transport, we have Stephanie Hébert, assistant deputy minister, programs; and Joshua LaRocque, director general, transportation infrastructure programs.

Each organization will be given a maximum of five minutes for their remarks, after which we will proceed to the rounds of questions.

As is customary, Mr. Hayes, you have the first five minutes, please.

[Andrew Hayes, Deputy Auditor General, Office of the Auditor General]

Mr. Chair, thank you for this opportunity to discuss our report on the national trade corridors fund, which was tabled in Parliament on March 19, 2024.

I would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinabe people.

Joining me today are David Norman, the principal responsible for the audit, and Susie Fortier, the director who led the audit team.

This audit examined the design and implementation of the national trade corridors fund, which is intended to improve the movement of goods across the country by strengthening the network of roads, rails, airports and seaports.

The fund was launched in 2017 with an initial budget of $1.9 billion. This budget was later expanded and currently stands at $4.6 billion.

At the time of our audit, Transport Canada approved $3.8 billion to fund 181 transportation projects for completion by 2028.

Overall, we found that Transport Canada did a good job in designing and implementing the fund. The department collected and used evidence on the state and performance of transportation corridors to identify bottlenecks and other fluidity constraints. This evidence-based approach supported the selection of projects to address infrastructure gaps.

However, weaknesses in the way Transport Canada monitored and reported on performance made it difficult to determine whether the projects were having the desired effects. Infrastructure programs, such as the national trade corridors fund, take years to deliver results. Since time is running out, it is all the more important to have a rigorous system to track performance so that Transport Canada can determine the extent to which the fund has contributed to improving freight transportation.

We would now be pleased to answer any questions the committee may have.

[The Chair, Conservative, John Williamson]

Thank you very much, Mr. Hayes.

I now give the floor to Stéphanie Hébert for five minutes.

[Stephanie Hébert, Assistant Deputy Minister, Programs, Department of Transport]

Good afternoon. I would like to acknowledge that we are gathered today on the traditional territory of the Algonquin Anishinabe peoples.

Thank you for inviting me to speak about the national trade corridors fund.

I am Stéphanie Hébert, and I am the assistant deputy minister of programs. I am responsible for the oversight and delivery of the national trade corridors fund.

I am pleased to be accompanied today by Joshua LaRocque, DG responsible for the transportation infrastructure programs at Transport Canada.

As you may know, the fund is key to ensuring that Canada’s supply chain functions effectively.

The national trade corridors fund supports projects that are designed to help improve Canada's supply chain, making it more seamless, efficient and resilient to disruption. Since its inception in 2017, Transport Canada has launched seven calls for proposals focused on the following themes: enabling the movement of goods along trade corridors, addressing the unique transportation needs and priorities of Canada's Arctic and northern region, alleviating port congestion and optimizing supply chains through digitization.

Through the national trade corridors fund, more than $4 billion in federal funding has been invested in 213 projects. The projects span all provinces and territories across Canada. The projects are under way at ports, airports and highways. They range from infrastructure and construction projects to technical or feasibility studies and to projects that aim to bring partners together to use data and information to alleviate supply chain congestion.

I would like to thank the Auditor General and her team for this report. Transport Canada found that the audit and its findings were very informative and equally found working with the Office of the Auditor General to be very helpful. The OAG examined all seven calls, project decisions, contribution agreements and our processes and controls.

I was very pleased to see that the report found that Transport Canada did a good job of designing and implementing the program. While the audit had positive findings, it also shared two areas for improvement. Transport Canada agrees with the two recommendations included in the report.

The first recommendation, as you have heard from the OAG, is about improving Transport Canada's documentation processes. The audit found that the calls were designed using evidence and that the criteria were transparent and open. I'll quote the Auditor General, who in an earlier appearance before this committee, noted that the program was “a great example of well-informed decision-making”.

That being said, Transport Canada needs to do a better job of documenting elements of the decision-making process. The department has not always documented its methods for project prioritization.

Transport Canada has developed a plan to address this recommendation, and we will ensure that all processes and guidance for staff are updated. The approach will be used for the next call for proposals, and all guidance and process changes will be made this summer.

The second recommendation focuses more on how Transport Canada tracks the results of projects and then collects and analyzes them to understand the overall impact of the program.

We agree with the Auditor General that there is more to do and that now is the time to do it. Since the launch of the program, completed projects represent less than 10% of the total funding envelope of the program, so there is ample time for us to improve.

As noted in the report, we have completed some work to identify consistent project‑specific indicators such as the number of jobs created, or the length of road or rail constructed and what additional capacity is added to the transportation network.

For all agreements going forward and for ongoing projects, we will work with recipients to include these indicators so that we can better understand the impact of projects and the program overall. We will also introduce tools and guidance for staff to ensure that we collect and can easily report on and analyze the results of projects. We expect this work to be completed by September 2025.

To conclude, we thank the Auditor General and her team for the work on this report. It is extremely important and will help inform our work as we continue to deliver this program for Canadians.

Thank you, Mr. Chair.

[The Chair, Conservative, John Williamson]

Thank you very much for your opening testimony.

Mr. Muys, you're the first one off the bat. You have the floor for six minutes, please.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

Thank you, Mr. Chair, and thank you to the folks who are here as witnesses today.

We're talking about a program that is over $4 billion in taxpayer funds. I hear there are 213 projects. However, the report from the Auditor General found important weaknesses in how the department, Transport Canada, tracked and reported on performance. That's what we're going to zero in on. As a result, it was unclear whether these projects had the intended impact, which is important, because the fluidity of our supply chains is critical to trade and the Canadian economy.

Given this, what specific challenges did the department face in tracking and reporting these outcomes?

[Stephanie Hébert]

Within the project agreements, or the agreements we had with recipients, we had project specific indicators. These were indicators that the proponent had provided and that we used to sort of manage the agreements and performance.

What was found was that our ability to take these project specific indicators and ultimately roll them up in a consistent fashion so we could tell the overall program story was lacking. We have since developed that, so it's noted in the report. We have established five themes, and within those five themes there are 16 indicators. We have now included them in our contribution agreements going forward.

That said, though, we do acknowledge that we will have to go back. There are some agreements that we will have to negotiate with recipients to be able to include that consistent set of indicators which will allow us to tell the consistent story in terms of how the program is doing, and the overall impact of the program.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

I think, as you've alluded to, the original performance indicators in the Auditor General's report indicated that these were either impractical or not measurable.

Can you specify and elaborate on why these indicators were deemed impractical? How are the revised performance indicators going to address this going forward?

[Stephanie Hébert]

Part of it is in the creation of a new program and in working with recipients. We really worked with recipients to try to have indicators that were measurable. With time we learned, and we had very good feedback in terms of how they needed to be approved, so that they could be more measurable. The consistency across all of the projects was something we also needed to introduce.

To give a tangible concrete example, economic impact is an important outcome we want to have. It's an acknowledged role of this program in terms of facilitating trade and supporting the Canadian economy.

Some of the indicators which we are now looking for and are tracking with specific projects are jobs created, investment we have leveraged through federal investment, impact on the gross domestic product, and the movement of additional goods. Those are some examples of specific indicators we will be using to really be able to tell the story of the economic impact of a particular project.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

You've indicated that, according to the criticism from the audit, there was not a demonstrable impact of these projects on the fluidity and resiliency of trade corridors. You've indicated some of the indicators, like jobs created, GDP, etc.

How can Transport Canada better align these indicators to reflect the actual improvements in these areas?

[Stephanie Hébert]

I'm sorry, but I'm not sure I completely understand the question.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

Maybe there were complicating factors in the first few years of the program. You've indicated there's been a revision in some of those indicators and metrics and that you're tracking them.

What can we expect to see?

[Stephanie Hébert]

What you can expect to see from the department is the ability to tell the overall story of the cumulative impact of the 213 projects we have funded and what that means in terms of facilitating trade, transportation fluidity and how we're ensuring that our trade corridors are resilient to climate change impacts.

It now gives me the ability to go from a specific project with specific outcomes to really rolling it up and being able to say that this was the result of the investment and these are the results we are achieving for Canadians.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

You indicated there were seven different calls for proposals and projects. What was the process for prioritizing that? That was certainly one of the criticisms from the audit, that there wasn't necessarily good prioritization in terms of what a deserving project was.

What were the flaws that you've seen, and how have they been improved?

[Stephanie Hébert]

What we heard or what we understood was that, in many ways, we didn't well document how we did that prioritization.

When we do a call and when we have an evaluation, the evaluation is usually done in two steps. First and foremost, we look to make sure that the application is eligible and that the application or the project that is being put forward is well aligned with the program objectives and is going to help us advance the goals.

After that first eligibility assessment, we tend to have multidisciplinary review committees where we bring to bear knowledge and expertise that represent the different modes of transportation that can really help us assess the merits of a proposal. These meetings tend to happen more on a regional basis, so we're looking at all of the projects in a specific region wanting to understand those projects, and then we do it again at a national level so we can take a holistic national approach.

In that process, these various elements were discussed. I think where we really fell down was properly documenting how we may have calibrated and how we may have adjusted. If we felt that one region was particularly generous in its assessment and one region wasn't, we didn't do a good job of documenting how we calibrated that to make sure the assessment process was fair and transparent, but what I would say is—

[The Chair, Conservative, John Williamson]

Madam Hébert, I'm going to stop you there, because we're well over the time—

[Stephanie Hébert]

Okay, I'm sorry.

[The Chair, Conservative, John Williamson]

—but I'm sure a member will come back to you.

In the meantime, Ms. Bradford, you have the floor for six minutes, please.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for joining us today.

Ms. Hébert, I have a couple of questions for you.

Transport Canada approved $3.8 billion to fund 181 transportation projects, yet about 20% or $711 million of the approved budget was all that was spent between 2017 and 2023. Can you elaborate as to why such a small amount of a $3.8-billion budget was expended over those multiple years?

[Stephanie Hébert]

I'm going to turn to my colleague, Joshua LaRocque, to explain our investment strategy.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Sure, thank you.

[Joshua LaRocque, Director General, Transportation Infrastructure Programs, Department of Transport]

Thanks, Stephanie.

Through successive budgets, the program's overall envelope was increased over time. We had projects and calls that were launched ranging from that initial period in 2017-18 until the most recent call on digital projects. Early projects that were funded in 2017-18 and some of the Arctic and northern call projects did see some delays resulting from supply chain issues or pandemic labour market issues, and that resulted in a bit of a slowdown in spending.

We've now seen an acceleration in the rate of spending for projects. We have been working with recipients very carefully to look at the project schedules to understand the rate of spend and the rate of execution for those projects.

Stephanie did note there are about 45 projects completed to date. In the scope of the audit, for example, there were 30 projects completed by the time the scope ended in August, so we can even see an acceleration in the rate of completion of projects.

We think we're getting things back on track, for sure, and that rate of spending will increase.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you for that clarification.

How has the national corridors fund impacted the efficiency and reliability of the supply chain?

[Stephanie Hébert]

To answer this question, I would bring it back to the program objectives, and I would bring it back in terms of how we are achieving those objectives.

Through the various projects that we have funded, we can really demonstrate that we've improved the flow of goods and people and make sure that this is done in a very efficient and cost-effective manner.

Also, we recognize the importance of trade to the Canadian economy. I think this program was really designed and seeks to increase the flow of trade within Canada but also between Canada and other nations. This was something that was acknowledged in terms of the importance of the program in terms of its contribution to the GDP and its contribution to the economy.

We are estimating that, through this program, we're going to create approximately 95,000 jobs.

I think it really underscores our reputation as a valued trading partner when you can have that reliability and that predictability in terms of the movement of goods.

It's also important to underscore that the program is really helping to ensure that our supply chain is able to withstand the impacts of climate change. It's really important to make those investments to have that predictability and that fluidity, but we also have to position our supply chain and our transportation system to be able to adopt new technology and really seize those opportunities to make sure it is a modern and efficient system.

The last thing I would say is that, through targeted calls and investments, we've really acknowledged the unique needs that are encountered in the transportation system in Canada's Arctic and Canada's north. We've made some strategic investments there to make sure that they're able to participate in and benefit from Canada's transportation system.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you.

Can you give us some perspective on the diversity of recipients of the national trade corridors fund?

How has the program supported transportation projects in different regions of Canada?