Public Accounts Committee on June 13th, 2024

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

The CIC, the Canada Innovation Corporation, which is the new corporation that combines SDTC and NRC's IRAP, is going to be established by 2026-27. That's a long time away.

[Simon Kennedy]

Mr. Chair, what I would say is that there are two things happening here. I think it's important to distinguish between the two. One is an immediate plan to effectively move the programming and the staff, who are all being invited to join the National Research Council, to the NRC. The plan is for that to happen as quickly as is practical—later this year, for example.

In the longer run, and the government has noted this, the plan is for the industrial research assistance program to form part of a new Crown corporation that will have additional resources to support innovative activities in the economy. That's a future step several years away.

If or when the IRAP program ultimately moves over, it is envisaged that this programming would move over as well. The fact that IRAP was to be joining the new Canada innovation corporation is a matter of public record. It was discussed in previous budgets. Because SDTC's programming would be joining IRAP, ultimately it would move to this new home, but that is still several years away.

[The Chair, Conservative, John Williamson]

I'm afraid that's your time, Ms. Yip. Excuse me. We went generously over.

Ms. Sinclair‑Desgagné, the floor is yours for two and a half minutes.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you, Mr. Chair.

Mr. Kennedy, I want to be sure I understand what you want to do. The goal is for Sustainable Development Technology Canada, or SDTC, to be managed by a Crown corporation. Have I understood correctly?

[Simon Kennedy]

Yes. For the immediate future, SDTC is being managed by the National Research Council of Canada, the NRCC, and it will eventually be managed by the new Crown corporation.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Since it is a Crown corporation, and those corporations can also carry on their operations with a degree of independence from federal departments and do not have the transparency and accountability standards that apply to those departments, how are you going to make sure these funds are properly managed? What you are describing is a scenario in which, ten years from now, we will find ourselves with exactly the same problem.

[Simon Kennedy]

I want to point out that the plan consists first of transferring management of SDTC to the NRCC.

It will then be several years before the final transfer to the new innovation agency. However, as I said in my remarks at the start of this meeting, SDTC was even more independent than a Crown corporation, which must comply with a whole framework of rules and structures that did not apply to SDTC.

We can debate the choice of vehicle, but there are definitely more transparency requirements and more rules that apply to the activities of a Crown corporation than to the SDTC.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

I agree, but there are much fewer than for a government department. We cannot find out where Crown corporations' money goes. It is problematic for the government to keep making more use of Crown corporations to do its work, knowing that the transparency and accountability standards that apply to those corporations are less stringent than its departments.

So, fundamentally, if the government is thinking of creating a fund, recreating a fund, or managing funds or programs to assist businesses, it should do it using its own departments, not by way of Crown corporations that do not have the same duties and responsibilities as the departments do when it comes to transparency.

I think what you have just announced raises a problem. I see you have no comment, so I am happy to see that you agree.

[The Chair, Conservative, John Williamson]

Ms. Sinclair‑Desgagné, your time is up.

Do you have a response to that, Mr. Kennedy?

[Simon Kennedy]

No, Mr. Chair. I accept the concerns the member has raised. I don't have a response.

[The Chair, Conservative, John Williamson]

Thank you very much.

Turning to Mr. Desjarlais, you have the floor for two and a half minutes, please.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I want to turn to one of the findings in the Auditor General's report in paragraph 6.31, which reads:

We found that through the foundation’s milestone management, the foundation terminated 37 project funding agreements that had been approved during our audit period. It determined that $6.2 million needed to be recovered from 12 ultimate recipients because they could not demonstrate that funds were used for eligible project costs.

To the Auditor General, do you want to highlight any additional information about that finding before I turn my questioning over to the deputy minister?

[Karen Hogan]

I think the only thing I would add is we also found that the foundation did not inform ISED of that so it could take the appropriate action.

That being said, ISED never really inquired about a cancelled project, so I think there's two-way accountability there.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

I see.

Deputy Minister, on the fact that ISED never inquired, why didn't it?

[Simon Kennedy]

Mr. Chair, as I noted at the outset of my remarks, we accept the Auditor General's finding that there needs to be enhanced oversight from the department. There were a variety of activities taken, such as the reviewing of minutes, regular evaluations, attendance in meetings—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

On that point, you say “regular evaluations”, but the audit spoke particularly about the fact that there were several times that departmental plans, which are required under the act, simply didn't have the satisfactory information that would make your decision-making at ISED more accountable.

It seems to me that there's a situation of wilful ignorance and that there is a lack of true accountability, because they were supplying annual reports that really had no information, which has ultimately led to the charge of guilt that you, by your own admission, were relying on minutes.

That shows me that the level of information that the ministry was getting was not sufficient. Is that correct?

[Simon Kennedy]

I think, Mr. Chair, that it's fair to say that the level of information that was flowing into the department was not sufficient. I think we certainly acknowledge that.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Why not ask, then? Why not ask SDTC to provide more information?

[Simon Kennedy]

Mr. Chair, very briefly, as I tried to say at the beginning, if ISED, for example, is administering a program, then we are directly responsible. As the deputy minister, I want to know where every nickel is going, and when there are problems, it's—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Why didn't you, then?

[Simon Kennedy]

Mr. Chair, the point here is that this is an organization that's actually at quite some distance from the government—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

So it's not your problem.

[Simon Kennedy]

No. I'm not saying that at all. I'm saying that many of the day-to-day functions that we might otherwise be directly involved in are actually being run by a third party at some distance from us.

We agree with the Auditor General and we agree with the findings of the reports. The lesson is that we can't be relying even on a well-regarded board to always follow its own processes and procedures and to be fully transparent with us when they find problems. We actually have to be doing more checking—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Are you going to get the money back?

[The Chair, Conservative, John Williamson]

Thank you. That is the time. I'm sure we will come back to that.