Public Accounts Committee on Oct. 7th, 2024

[The Chair, Conservative, John Williamson]

Good morning. I call the meeting to order.

Welcome to meeting number 143 of the House of Commons 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 remotely using the Zoom application.

Before we begin, I'd like to ask all in-person participants to read the guidelines written on the updated cards on the table regarding the interpretation system. These measures are to help prevent audio and feedback incidents and to protect the health and safety of all participants, including, and especially, the interpreters. You'll also notice a QR code on the card, which takes you to a short video, should you be interested.

This is a reminder to all of those in person and online that, for the safety of our interpreters, it is very important that your microphone is muted when you are not speaking.

Thank you for your co-operation.

I also remind everyone that all comments should be addressed through the chair.

Pursuant to Standing Order 108(3)(g), the committee is resuming consideration of Report 6, “Sustainable Development Technology Canada” of the 2024 reports 5 to 7 of the Auditor General of Canada.

I'd like to welcome our witness. From Sustainable Development Technology Canada, we have Marta Morgan, board director.

Thank you for coming in this morning. You have five minutes for your opening remarks.

[Marta Morgan, Board Director, Sustainable Development Technology Canada]

Thank you, Mr. Chair.

I would like to recognize that I'm speaking to you today on the traditional lands of the Anishinabe Algonquin nation.

I joined the board of Sustainable Development Technology Canada on June 4, 2024, alongside fellow board members Paul Boothe and Cassie Doyle. Together, we bring a long track record of public service experience to our one-year appointments to the board.

When we were appointed, we were given a three-part mandate by the Minister of Innovation, Science and Industry: to implement the recommendations of the Auditor General; to restart funding for Canadian clean technology companies, both those previously approved for funding and new applicants; and to transition the programming and staff of Sustainable Development Technology Canada, or SDTC, to the National Research Council, or NRC.

Our work as a board has been informed by extensive and comprehensive reviews completed over the past year, including the Auditor General's report, the McCarthy Tétrault report, and the Conflict of Interest and Ethics Commissioner's reports.

From the outset, the board has been in close contact with the Office of the Conflict of Interest and Ethics Commissioner. We have reviewed the contribution agreement and the organization's implementing legislation. Our focus since day one has been on ensuring that SDTC is governed and operated with the highest level of oversight.

Our focus since day one has been on ensuring that SDTC is governed and operated with the highest level of oversight.

Specifically, we have worked to ensure that SDTC maintains the highest standards in the management of public funds, ensures fairness for the clean-tech companies that rely on SDTC support to develop sustainable technologies in Canada, and successfully transitions the deep expertise that has been developed at SDTC since its founding in 2001 to the National Research Council.

Since our appointment in June, we've been working on all three components of our mandate. First, we were tasked with implementing the Auditor General's recommendations. Out of 11 recommendations, 10 have been fully implemented. This includes enhanced documentation of the approval process, increased reporting to ISED and enhanced management and disclosure of conflicts of interest. The final recommendation is currently being addressed through an independent process overseen by the board. Further to this, SDTC has fully complied with Parliament's order for the production of papers, providing over 10,000 documents.

Second, we were mandated to restart funding for Canadian clean-tech companies. To this end, we have initiated a third party review of previously approved projects to ensure compliance with the eligibility requirements. This work is still ongoing, and no funds have been disbursed in the interim. We expect that funding could be disbursed shortly to companies where no eligibility issues were identified by the Auditor General. In addition, we are prioritizing cases where payment is due to companies that have fulfilled all of the requirements under their agreements, and where funding has been paused.

Finally, we were tasked with transitioning SDTC programming and staff to the National Research Council. As Minister Champagne stated in his June 4 announcement, the employees' dedication and hard work will ensure the continued success of our clean-tech start-ups in Canada. This process is well under way, with working groups from both SDTC and the NRC actively identifying areas of alignment in programming and personnel to ensure a smooth transition.

Allow me to conclude with a personal reflection. Throughout my time in the federal public service, I saw the potential for innovative Canadian companies to drive economic growth, productivity, and job creation for Canadians. I'm hopeful that the transfer of programming of SDTC to the NRC will enable the NRC to continue to support innovative Canadian companies. Our board will continue to focus on enhancing accountability, transparency and integrity as we move forward with this mandate.

Thank you, Mr. Chair, and I look forward to answering your questions.

[The Chair, Conservative, John Williamson]

Thank you very much, Ms. Morgan.

We'll now begin our first round. It consists of four members with six minutes each.

Mr. Perkins, you have the floor for six minutes, please.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

Thank you, Ms. Morgan, for coming today.

Have you, as an acting board member—I think that's the correct title for SDTC—had any meetings with the Minister of Industry or his office since you were appointed to this position?

[Marta Morgan]

No, I have not.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you.

I'd like to talk a bit about the review of the projects that's ongoing. It's one of your three areas. You mentioned that you're reviewing the projects identified by the Auditor General for eligibility. To your knowledge, has the Auditor General been back at SDTC to look at a broader list of transactions, rather than just the 226 she looked at?

[Marta Morgan]

No, she has not, to my knowledge.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

She hasn't, so the Auditor General's report stands, which means that, during the audit period, she reviewed 226 of 420 transactions approved by the board. Is that correct?

[Marta Morgan]

That's correct. One of her recommendations was that we review individually each of the projects that was undertaken during that audit period, and that is a process we have started.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Does that mean you're focused on the 226 transactions that were mentioned and discussed in the audit and not the 420 in the audit period?

[Marta Morgan]

We are focused on all of the projects that were put in place during the period of the audit. I believe that the Auditor General took a sample of projects and reviewed them, but we are reviewing all of the projects.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

According to the Auditor General's report, that's 420 projects. Are you reviewing them all for eligibility?

[Marta Morgan]

It is for eligibility, yes, as per the recommendation of the Auditor General.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

When you look at the eligibility, I'm presuming you're talking about eligibility relative to the contribution agreements. Is that correct?

[Marta Morgan]

Yes, that's correct.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Are you looking at eligibility relative to conflict of interest?

[Marta Morgan]

We're following the Auditor General's recommendation, which was to review every project for eligibility. We have hired independent firms—two independent individuals—who will assess each project for eligibility. That's per the Auditor General's recommendation.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

That's true, but as a person overseeing the governance of this organization, I would think you would be more concerned not just with the eligibility but with the overall issues that have been identified in the culture of conflict of interest in the organization's board and management. Most of the management is still there. In the culture of conflict of interest, of the 226 projects that the Auditor General audited out of the 420, 82% of board member-approved transactions involved conflicts for board members. To me, that goes to an eligibility issue as well, because there is no way those nine directors represented 82% of the clean-technology community in Canada.

Are you explaining to me that the board, in the review that's going on with the third party, isn't delving at all into the issue of the conflicts of interest that were identified and whether or not these companies got preferential treatment because of their connections with board members? Is that not part of the review?

[Marta Morgan]

A number of the recommendations of the Auditor General were related to strengthening the conflict of interest provisions of SDTC, and those recommendations have been implemented. The board is overseeing the governance of SDTC, and we're doing that with much-strengthened conflict of interest reporting provisions going forward.

In terms of the eligibility reviews, we're following the advice of the Auditor General, which is to review each project for eligibility.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

The whole reason we're here and the whole reason we have a production of documents motion, which was approved by the majority of House of Commons members of Parliament, to collect documents unredacted is that in that audit period, those 420 transactions that were approved by board members represent $856 million of taxpayer money. The Auditor General looked at only half of that and found that $330 million of projects were conflicted and $59 million of projects were ineligible. That's almost $400 million out of $800 million that was conflicted or spent incorrectly.

It boggles my mind that in trying to clean up the governance, which the minister said was his goal, by transferring it, getting rid of the board and having a new board.... Part of that process is saying, “Look, folks. These projects have a problem. They are conflicted. These board members.... The project may be legitimate, but how they got in and how they got funding was clearly preferential treatment over that of other businesses in the clean-technology space that didn't get funding.” For that not to be part of your review boggles my mind.

Will you commit here to mandating that the third party you have doing it ensures that conflicts of interest, which were a big part of the Auditor General's report, are part of your review?

[Marta Morgan]

We have independent advice on conflicts of interest and the provisions of SDTC. As we go forward, we will be taking advice on conflict of interest issues as well, particularly as we look at reviews and as we look at restarting funding for projects.

[The Chair, Conservative, John Williamson]

Thank you very much.

We'll turn now to Ms. Yip. You have the floor for six minutes, please.

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

Thank you, Chair.

Thank you, Ms. Morgan, for coming this morning to answer our questions.

Ms. Morgan, you are among three new board members appointed by SDTC to lead the transition into the National Research Council. What are your qualifications?

[Marta Morgan]

I have a long career in the public service—about 35 years of experience in a number of departments—as well as some experience in the private sector. That brings a lot of knowledge and understanding around public sector governance and management.

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

Do you have any governance experience?