Evidence of meeting #49 for Public Accounts in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was funds.
A recording is available from Parliament.
Conservative
The Chair Conservative John Williamson
I will ask you to wait one second, Mr. Falk.
Yes, Mr. McKinnon.
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
Again, I desperately ask for relevance.
This has nothing to do with the $34 million or these five particular projects. I would like to hear legitimate reasons that we should support this motion to recover these funds from these five projects, but I'm not hearing anything from anyone over there that makes this relevant.
Conservative
The Chair Conservative John Williamson
Mr. McKinnon, you're on the list. You'll be up shortly. You'll be able to make these points. These are not points of order.
I'll allow Mr. Falk to continue. He might be using language that some members might not agree with, or descriptions they might not agree with, but it certainly falls within the scope of this program and of the audit this committee reviewed over 10 meetings.
Conservative
Ted Falk Conservative Provencher, MB
Thank you, Mr. Chairman.
That point of order is exceptionally interesting to me. That he wouldn't be interested in the facts surrounding why Canadians would want $34 million of their money recouped, which was—
Liberal
Conservative
The Chair Conservative John Williamson
Raising points of order is not a debating technique. I'll hear this last one, Mr. McKinnon.
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
Mr. Falk is misrepresenting what I just said. I definitely want to hear the facts—
Conservative
The Chair Conservative John Williamson
Mr. McKinnon, don't abuse points of order to make statements.
He has the floor. If members are going to speak out and misuse points of order, then he'll be given even more latitude to talk about what you said, and you'll have a right of rebuttal soon enough.
Mr. Falk, you have the floor.
Conservative
Ted Falk Conservative Provencher, MB
Thank you Mr. Chairman.
I want to thank the Auditor General for the fine work she did on this report. She did a tremendous job. She took a non-partisan approach to the use of public funds, and she provided a scathing report to this committee on the green slush fund. There was the appointment of directors who clearly had conflicts of interest and the inability, seemingly, of these directors to excuse or recuse themselves from discussions or voting inappropriately on applications for the distribution of this fund.
That totalled $59 million, but the $34 million is part of this motion, which requests that it be recovered by the Government of Canada from ineligible recipients. It's so blatantly wrong that they received the money. Even Minister Joly recognized the inappropriate distribution of the money to these individuals or businesses.
Why she wouldn't want to recover Canadian taxpayers' money, I don't understand. How can any minister of the Crown say that $34 million is not in the public interest to recover for Canadian taxpayers? It may not be in the Liberal interest, but it is certainly in the public interest.
I want to support MP Hallan's motion that we report to the House, and I hope we can do it unanimously.
I want to remind this committee that, back in 2024, this committee unanimously condemned the work of the green slush fund. We should, as a committee, again take the approach that we, around this committee, are good stewards of taxpayer money. We want to be good stewards, and we should be. We have to send the House a clear message that this $34 million of taxpayer money needs to be recouped.
Thank you, Mr. Chair.
Conservative
Liberal
Jean Yip Liberal Scarborough—Agincourt, ON
Thank you, Chair.
I understand the Conservatives' knee-jerk reaction of wanting to see that the money is paid back.
When we hear that the money was awarded in error, we want to correct the error and try to restore things to the way they were, but collecting money from these organizations wouldn't do that. These funds were awarded to organizations that completed projects, advanced research and development, provided innovation and created jobs.
The newly independently formed board at the National Research Council made an informed decision, with independent legal advice, not to ask for funds to be returned, because the funding agreements were entered into in good faith and resulted in positive results, such as good projects, as I mentioned, and the creation of jobs.
We also note that legal action was unlikely to be successful, given that firms had acted in good faith, and smaller firms would not be in a position to repay the amounts in question.
The recommendations from the Auditor General were taken seriously and have been acted on by the government and the new, independent board of the National Research Council. Its strengthened oversight ensured that there is support for clean technology innovators under enhanced governance and accountability measures.
Thank you.
Conservative
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
As I've mentioned several times, whether they were dubious points of order or not, I was—
Conservative
The Chair Conservative John Williamson
If you want to take it up with your whip and your legislative affairs, they will confirm that.
Liberal
Conservative
The Chair Conservative John Williamson
If you're going to take a shot at me, I will correct you. You can take all the shots you want at your opponent. If you see the clerk poking me over a point of order, it implies that I'm wrong, but so far it's been pretty good up here.
Mr. McKinnon, I'll ask you to aim your words at the opposition, not at the chair for doing his duty.
Thank you.
October 8th, 2026 / 12:40 p.m.
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
I apologize. I was not disputing the chair's determination. The dubiousness of the points of order was, perhaps, on my part. I agree with that.
Anyway, I was interested in hearing the arguments from the mover and the opposition for why we should be of the opinion that this $34 million should be recovered. All I've heard is innuendo and slander. We don't know who these five firms are, in fact. How can we assume that they're Liberal insiders? Why would we assume that?
This was a determination made by an independent, non-partisan board. There is no evidence and no indication whatsoever that there was any wrongdoing in these cases.
In the broader case that Mr. Falk mentioned, in which this committee voted unanimously to condemn the previous actions, absolutely, but that's not the case here. This is an independent board that decided these contracts were awarded.
They may have decided that the people who made the decision to award these contracts misapplied the eligibility criteria, but there's no evidence this work was not done. This work was done. The companies entered into this work in good faith. They completed their activities. They carried out research and so on and so forth, as they were required to do. There's no evidence whatsoever of any malfeasance, fraud or misrepresentation on behalf of these companies.
The board, subject also to independent legal counsel, has decided that these funds are not likely to be recoverable in any case, because of the good faith participation of the companies involved and because they delivered on their requirements.
I'm still desperately looking for some reason that we should see evidence to support this motion. I have seen none—nothing but innuendo and slander. Give us some facts. Give us some evidence that says these companies did not perform or that these companies did not do the jobs they were hired to do. Give me some evidence that says they committed some wrongdoing. There is none. No one has ever brought forward evidence of any wrongdoing.
It looks to me as though the people who were awarding these contracts may have misapplied the criteria for which project ought to be funded. That may be. I'm perfectly willing to accept that, but this doesn't show any wrongdoing on companies' behalf when they did the work and received the funds.
I'll leave it there.
Again, Mr. Chair, I apologize for any insult.
Conservative
The Chair Conservative John Williamson
I appreciate that, Mr. McKinnon. Thank you very much.
I have three other people on the list at this point.
Mr. Hallan, would you like to speak again?
Conservative
Conservative
Liberal
Tom Osborne Liberal Cape Spear—Mount Pearl—Paradise, NL
Thank you.
I want to talk about some of the real facts, Mr. Chair. The real facts are that, a few years ago, this committee unanimously supported making a recommendation to the House. By virtue of the fact that it was unanimous, it included Liberal members. There was nothing to be hidden. The government recognized, Liberal members recognized and the minister at the time recognized that funds had perhaps been disbursed in a way that they shouldn't have.
The fact is that SDTC, according to its legislated status, is a non-agent of the Crown.
The fact is that it was not a minister or a member of the House of Commons who made the decision to disburse these funds or decided who they should be disbursed to. The department representative who attended the board meetings had no authority over governance or management processes at SDTC.
Another fact is that the Auditor General had decided not to release the names of these companies. There was good reason for this. It was determined that the companies that received the funds did nothing wrong. There was perhaps a bad decision by board members who may have had a conflict, but those decisions were not of a member of the Crown or a member of the House of Commons.
As acknowledged by the Auditor General, Ms. Hogan, before public accounts in a June meeting, the department reacted proactively, quickly and well in response to the findings of the Auditor General's report. There were 22 action items aimed at improving SDTC's governance, conflict of interest management, human resources and enhancing ISED's oversight of SDTC. They were done to correct what had happened.
Grant Thornton, an independent company, and independent legal counsel—if we are going to look at the facts—both determined that legal action is extremely likely to be unsuccessful. It would increase costs to the Canadian public and Canadian taxpayers, and it would punish Canadian companies that fulfilled their obligations and acted in good faith. The companies themselves created employment and good programs. The companies acted in good faith.
Part of the reason these companies were not aimed.... The financial impacts to companies that did nothing wrong would have been devastating to these companies and would be devastating now in the middle of a trade war, and smaller companies would be unable to repay. It could have an impact of having lost jobs and lost economic benefit to Canada.
The independent review found that the funding agreements had been entered into and carried out in good faith and resulted in concrete benefits. This is the reason the minister had said that it is not a good idea to go after these companies. It was legal counsel and Grant Thornton who gave this advice. It's highly unlikely that monies would be recovered, and these companies had, in fact, created jobs and benefits to Canadians and to Canada and had acted in good faith.
Consistent with the Auditor General's report, the names of the five ineligible recipients were not made public as they were not found to have committed any wrongdoing. The recipients in question completed the projects, advanced research and development, supported clean tech innovation and created jobs.
If we are going to look at the facts, Mr. Chair, the reason there was no action brought about for these companies is that they had done no wrong. They had created real benefits. The decisions were made at arm's length by a board that was not connected to the Crown, an arm's-length board, and there was a very high unlikelihood that any funds would be recovered.
The opposition is asking for the government to spend good money for a bad cause.
Conservative
Liberal
Kristina Tesser Derksen Liberal Milton East—Halton Hills South, ON
Thank you so much, Mr. Chair.
Coming into this as a newish member in comparison to some of my colleagues, I first want to thank the Auditor General.
I also want to thank the witness who came forward, the former employee, because those are important roles. They turn our minds to transparency and accountability. This is something we always need to be mindful of in government.
I don't think anyone's denying that there were grave problems and that the department had a lot of mismanagement issues. I wasn't elected when the news hit, so I consumed it from the perspective of a normal person. I think the framing requires a lot more nuance.
I want to talk a bit about the scope of this.
From what I understand, five of those 173 projects that received funding were later found through the review to have fallen short of those eligibility requirements. It wasn't the fault of those businesses or organizations that they were improperly deemed to be eligible. This is important because of the way our colleagues have framed it: that there was something very nefarious about these companies. There's no evidence to support that.
These five companies received $34 million. They were legitimate Canadian small and medium-sized businesses and organizations. They put the money towards projects and jobs that were beneficial to their sectors and their communities. They acted in good faith. Those of us who have legal backgrounds would know how important that piece is to this analysis. They fulfilled the requirements of the funding as well. They didn't misuse the funds they received. The money went into the Canadian economy.
As far as proportion goes, SDTC was established in 2001 and funded Canadian enterprise, business innovation and green tech with approximately $2.1 billion. The $34 million given to those companies that were subsequently deemed ineligible—through no fault of their own—and used for purposes of business growth and creating jobs, represents 1.6% of the total funding that was managed by SDTC. This is not to say that $34 million is not a lot of money. It has to be managed well, with accountability and transparency. I just want to put this into a bit of a proportional perspective for folks. That's 1.6% of the total funding so far.
There were solutions that we acted on. Once the mismanagement at SDTC was identified by the employee who came forward—we thank them for ringing the alarm on that—funding was suspended, managers at fault were dismissed, investigations were launched, the Auditor General had recommendations and those were adopted.
This new board, which was at arm's length, started to manage that. SDTC was dissolved by the minister, and its responsibilities were moved to the National Research Council. There was additional rigorous accountability, which was recommended by the Auditor General.
We're following the lead in not disclosing the names of those companies. Given some of the language used by my colleagues, I'm sure it would result in a bit of a witch hunt that would not yield very useful results.
The problem of the mismanagement has been identified, investigated and addressed. How much more taxpayer money do we want to throw at this? We've spent tremendous resources rehashing this saga. I know my colleagues on the Conservative side previously ground parliamentary work to a screeching halt over this. Right now, there's a plethora of other very pressing issues facing our country that we should be spending our time and energy on.
I want to turn really quickly to the point of the legal counsel that was used in this decision. Legal counsel stated that there was a very low likelihood of successfully yanking back these funds. First, because the funding agreements that were entered into were carried out in good faith, there was nothing to suggest that there was misleading...or misappropriation of funds by these enterprises, as I mentioned. The funds were used to carry out the completion of the agreed activities in the contracts: to advance research and development and to support innovation. They created jobs, Mr. Chair. Additionally, the smaller firms—and this has already been touched on by my colleague—would not likely be able to repay the money. Are my colleagues suggesting that we bankrupt Canadian small businesses to repay this money?
I used to run into this with clients sometimes when I was practising litigation. Clients would sometimes respond emotionally to what they perceived, rightly or wrongly, as an injustice done to them. As lawyers, we need to counsel them on the merits of their case, the legal merits of their position, and explain to them that sometimes those principled positions, which might be based on emotion, can be very costly and that you end up in a sunken-costs fallacy loop.
I'll close here, Mr. Chair.
The Auditor General confirmed in her appearance—Mr. Osborne mentioned this as well—before the committee on June 4, 2024, that the department responded proactively, quickly and well. Weaknesses were identified and addressed.
Let's not throw more good money at this. It is not in the public interest to do so.
With that, Mr. Chair, if I may, I will move that we adjourn. We're close to one o'clock.
