Public Accounts Committee on Sept. 3rd, 2024

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

Thank you, Chair.

Thank you to the witnesses.

Picking up on that oversight piece, the role of the public accounts committee is to provide oversight of how public funds are spent. The role of ministers within their departments is to provide oversight of the work of departments. We are in no way here to defend any actions of bureaucrats or departments; we are here to provide oversight of what happened and how we can improve that process.

Now, as soon as the minister learned about it and the Auditor General came out with her report with the recommendations, he took action right away.

I want you to help us understand something. Is the NRC going to be capable of fulfilling the recommendations that have been provided by the Auditor General and the work of the minister in providing that oversight? Is it effective at this point?

[Mitch Davies]

Mr. Chair, I would say that we are certainly capable of delivering the programming, and delivering it in line with the recommendations that have been made on two levels that are important.

The first, of course, is ensuring that we're working with clients who are fully eligible in the terms and conditions of the program. That's something that takes place at NRC IRAP now and has for a long time. We're making sure that we're working with clients who are eligible for the program's support.

The second is to do this work in a system that has strong checks and balances and oversight and all the things you would expect to see to ensure that people can see whom we're funding and on what terms and who's taking decisions. Any perceptions of conflict of interest will be addressed by our policies and by our employees actually fulfilling their responsibilities under those policies to ensure that they're adhered to.

Third, I guess I would also say that the governance is different. The NRC IRAP is an organization in the public sector in which we're accountable for decisions we take as employees of government, and not....

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

This program has been running for decades, correct? It has transitioned from government to government over these decades that it has run. Is this the fault of the minister? Is this a corrupt government, as the opposition parties love to accuse it of being, or is there an opportunity that the minister took to clean up what previous governments maybe have created a muck of?

[Mitch Davies]

Mr. Chair, I think the nature of the organization, the set-up of the foundation, which was undertaken a long time ago, and the fairly unique circumstance of setting up an outside organization that operates as it does have been discussed here previously. Obviously, it was meant to operate in close connection with the sector. I think testimony and observations about that have been taken into account. Obviously, there's some serious thought that needs to be undertaken on that.

I think that as far as we're concerned, we're available, obviously, to help on the transition and to continue support to the sector and to the companies that are trying to do challenging and innovative things, and then to do it in accordance with our standards of due diligence and the practices we undertake.

I don't have any comment on the minister or observations on the other parts of the question.

[Iqra Khalid, Liberal, Mississauga—Erin Mills, ON]

Thank you.

Opposition members have been talking about the transition and the lack of oversight. You mentioned that the transition is in process right now and will occur within the year. What does that mean for Canadians? Can you help us understand what that transition will do, ultimately, in terms of increasing oversight?

[Mitch Davies]

Mr. Chair, I think the transition will mean that the stakeholders that look to SDTC now will have an ongoing opportunity to work with the NRC IRAP to be able to assess support and the providing of support for their important projects, which is obviously a goal from an economic point of view and also from an environmental point of view.

The other aspect that I think is critical is that people will be able to understand that it's taking place inside a departmental corporation, subject to oversight at various levels. The Auditor General has jurisdiction over us to come and audit our activities. We have an audit committee. We assess risk across the organization. There are strong processes of internal control and financial management, all of which, under the Financial Administration Act, apply to us in a way that may not apply to an arm's-length foundation set up under its own statute with its own requirements. I think there's a very different world in place in terms of all the rigour and structure that we can provide on an ongoing basis to support the delivery of the program.

[The Chair, Conservative, John Williamson]

Thank you very much. That is the time.

Ms. Sinclair‑Desgagné, you have two and a half minutes.

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

Thank you, Mr. Chair.

Mr. Davies, I would like to go back to the previous topic, which was conflict of interest management at the NRC. You said that, when you arrived, you asked NRC managers to provide you with information about their employees and their teams, specifically to ensure that there were no real or apparent conflicts of interest at the NRC.

I believe you said you're expecting a report from NRC management soon. Is that correct?

[Mitch Davies]

Mr. Chair, I spoke of my asking all of our management to bring up to date their conflict of interest disclosures. Then I indicated that at the end of the summer period, we would be checking to make sure that this had been undertaken and that we would then take any follow-up steps.

I expect to have that complete information very soon, so I will be able to follow up on what I indicated—

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

Will you be able to present findings to this committee so we can make sure that what happened at Sustainable Development Technology Canada is not like what happened at the NRC?

[Mitch Davies]

I'd certainly be happy to follow up with the committee to indicate that this work has been concluded.

That is one part of the work within a larger body of work of training and support for all employees across the entire council. We have 4,300 employees who work under the conflict of interest requirements, so it's a big undertaking. I think—

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

Thank you, Mr. Davies.

Now I'd like to pick up on a topic that my colleagues raised. I would like to talk about Sustainable Development Technology Canada's current management.

Here's a quote from Department of Industry deputy minister Simon Kennedy. At the June 13, 2024 meeting, he told me that, “For the immediate future, SDTC is being managed by the National Research Council of Canada, the NRC.”

Based on what you said, I believe he made a mistake, and that's scary, because we're talking about the deputy minister of the department responsible for SDTC. He was not aware that the NRC plays no part in managing Sustainable Development Technology Canada. That's scary. We'd like to know who's in charge of Sustainable Development Technology Canada and to whom employees are accountable. They've accepted the recommendations, but who will ensure that the recommendations are actually implemented? Can you answer that question? The Department of Innovation, Science and Economic Development isn't doing it, hasn't ever done it and never will do it.

[The Chair, Conservative, John Williamson]

Thank you, Ms. Sinclair‑Desgagné.

We'll wait for the answer.

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

Yes, we'll wait for an answer.

Thank you.

[The Chair, Conservative, John Williamson]

Your question has been asked.

We'll go over to Mr. Davies.

[Mitch Davies]

Mr. Chair, I don't have the quote of the deputy minister of ISED that's been presented and what was said. I can only assume that what was being discussed was our role that is yet to come, which is a role in running the sustainable development programming that SDTC is and has been responsible for. Obviously, that's going to take place once we've completed the transition this year.

Up until that point, it's between ISED, SDTC and its interim board to administer the current contribution agreement and do what they've said in terms of looking over the files and ensuring that they're in line with the recommendations that have been accepted from the AG. That would take place before the transition, so it might be a question of time.

[The Chair, Conservative, John Williamson]

Thank you.

Up next is Mr. Desjarlais. You have the floor again for two and a half minutes.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

Mr. Davies, with regard to the eligibility of projects under your new work to transition the fund, have you taken into consideration some of the recommendations by the Auditor General regarding issues of eligibility?

As you likely know, in the serious case of mismanagement within SDTC, the Auditor General found several instances of projects—not the totality of all projects, but the sample she reviewed—that were actually ineligible for the funding through SDTC. They failed to either demonstrate or develop new technology, or they failed to develop any projects that actually had a potential benefit for the environment.

With regard to the eligibility or the new eligibility that would be required, is there work related to the transition, in your mind, that takes into account the eligibility of new projects?

I'll have a follow-up question related to the existing projects that are under way or are being funded by SDTC and your process of review for them.

[Mitch Davies]

Mr. Chair, the first thing is, of course, the eligibility of the projects that SDTC currently has and the work that's being done between SDTC and ISED to sort them. That will take place before the transfer.

It's a policy decision—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

I'm sorry, Mr. Davies. I'm short on time.

On that point, will there be a review of those existing contribution agreements to ensure that taxpayers get their money back for any ineligible projects that are still pending?

[Mitch Davies]

Mr. Chair, that's a question that's best addressed to the department and SDTC. I think it's been a subject of discussion at the committee before, but it's not something that we're directly involved in.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much.

Turning back to the eligibility criteria for new projects, will they be changing?

[Mitch Davies]

Mr. Chair, as I was saying, the review of eligibility is going on now. Obviously, the files we'll receive will be those that are eligible as established between the department and SDTC.

We'll also have to have approval for terms and conditions for the programming that we'll offer in this space for sustainable technology development. They will be established through appropriate submissions in the government. Terms and conditions for programs are established by the Treasury Board, and we will follow that process to establish the terms and conditions. That's a policy decision that the minister and the department will take, and we're doing that preparatory work now so that we can have this thing up and running in the time frame we've shared here with Canadians, which is within the year.

[The Chair, Conservative, John Williamson]

Thank you very much. That is the time.

I'll turn now to Mr. Genuis, who is joining us from his porch. It's over to you, sir. That looks very comfortable.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Mr. Chair. It's not that comfortable, but it is a beautiful day in Alberta in the beautiful riding of Sherwood Park—Fort Saskatchewan.

I want to zero in on a quick summary of the green slush fund scandal that we're adjudicating today at the public accounts committee. You have a fund that is giving money to companies ostensibly related to green technology. In reality, you have board members handing out this money and giving it to companies that they own. You have a group of well-connected insiders who have been placed on this board who are saying, “Okay, let's give a bit of money to Bob's company over here and Bill's company over there, and my company could use some money too.” That is the essence of this scandal.

In some cases, you had directors stepping out of the room for those votes that benefited their companies. In some cases, you also had individuals voting on disbursements that directly benefited companies they own. It's crazy to me and to many Canadians that this sort of thing could happen. On the other hand, it's part of the pattern of corruption we're seeing under this government over the last nine years. The testimony we're hearing today is to suggest that maybe there have been some changes in the way this program operates, but what I'm getting here is that things have not changed substantially. We are facing the same potential problems of corruption and self-dealing. I want to drill down on that.

You have an interim board right now at the green slush fund that is making decisions about where these disbursements go. Do any members of the current interim board have personal investments in companies that have received money or that could receive money in the future or that are seeking money? Do any current members of that interim board have those kinds of investments?