Evidence of meeting #67 for Transport, Infrastructure and Communities in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cory.
A recording is available from Parliament.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Mr. Cory, it's a public bank. This is taxpayer money. Don't you think Canadian taxpayers deserve to understand some of the thinking behind how the bank makes investments?
Chief Executive Officer, Canada Infrastructure Bank
For sure, and we try to be really transparent.
If you go to our website, for every investment, you would find the thesis for why we made the investment.
But to answer the member's question, Mr. Chair, we try to be as open as possible, so if it's the will of the committee, I'm happy to take it back and figure out what could be shared from our materials.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
I'd appreciate that.
Why did the board of the CIB not approve the investment in the Lake Erie Connector?
Chief Executive Officer, Canada Infrastructure Bank
The chair of my board's here, so I can turn it to her momentarily.
Just factually, the board did approve the investment initially, so the premise of what happened, just to reframe this... I'll pick up on where you ended your questioning the last time, when you asked why we didn't then invest.
The answer is that, subsequent to our investment commitment....
This is why we talk about “investment commitments”. We sign a term sheet, then we move through due diligence, and then we eventually get to a financial close, a credit agreement, a signed document.
Chief Executive Officer, Canada Infrastructure Bank
In that time frame, one important thing happened, which is that the supply chains in our world went pretty haywire. Cost escalation in the project was quite significant, and the cost of the project.... Both we and the private sector operator, ITC, deemed that, given the cost increases, it was no longer good value for money.
NDP
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Could I request that the committee formally ask for the analysis regarding the Lake Erie Connector and greenhouse gas reductions? Maybe we could deal with that at the end of the meeting, but I know there's a process by which we can formulate—
Liberal
The Chair Liberal Peter Schiefke
Sure. I'll make sure we have time to deal with that. It looks like we will have, indeed, five minutes to do that.
Liberal
The Chair Liberal Peter Schiefke
Thank you, Mr. Bachrach.
Next we have Dr. Lewis.
Dr. Lewis, the floor is yours. You have five minutes.
Conservative
Leslyn Lewis Conservative Haldimand—Norfolk, ON
Thank you. My question is for Mr. Duguay.
Going back to the Order Paper response, in the first box of the document dated February 12, 2018, McKinsey provided advice to the Infrastructure Bank investment. Essentially, McKinsey advised the bank which types of projects were viable, and it also states that McKinsey was hired to define the CIB's mandates and objectives.
My question to you is this: If McKinsey defined these mandates and objectives, would that include defining a fair tender process? What did that look like?
General Counsel and Corporate Secretary, Canada Infrastructure Bank
Thank you for the question.
At the time, the first contract in 2018 was, as I said in my opening remarks, really tied to investment criteria. At the time, as Mr. Cory explained, there was one individual. The board had received direction from the minister in the form of a statement of priorities and accountabilities to inform the drafting of the corporate plan that really, then, would provide the CIB with the authorities necessary to start receiving investment proposals and make investment decisions. That contract was to help the board in working in the definition of “investment criteria” to then inform the drafting of that corporate plan.
McKinsey was never hired to provide advice on procurement policies generally. At the time, there was an interim procurement policy that was adopted, and it was formed, really, to provide the framework in place to make these initial decisions with respect to procurement activities, to help accelerate the bank as part of its start-up activities. That interim procurement policy was then updated once the CIB was stood up, and there were more resources that had joined the organization.
I joined in November 2018—
Conservative
General Counsel and Corporate Secretary, Canada Infrastructure Bank
—and in January 2019, there was a revised procurement policy approved by the board.
Conservative
Leslyn Lewis Conservative Haldimand—Norfolk, ON
Thank you.
My next question is for Mr. Cory.
I will turn back to your letter of the contracts. The CIB entered into a contract in April 2020 with McKinsey and on page 3 of your letter you say that “McKinsey & Company was retained in May 2020 to provide strategic advice to inform strategic planning in response to the coronavirus pandemic and”, to paraphrase this, the transition to net zero.
Further down in your letter, you also stated that strategic advisory services were provided and that these services informed the CIB's three-year, $10-billion growth plan that was announced in 2020.
So, essentially, McKinsey gave the Infrastructure Bank the strategic advice for the creation of the $10-billion growth plan. Is that correct?
Chief Executive Officer, Canada Infrastructure Bank
Thank you for the question.
They certainly provided input to the growth plan. For context, in October 2020, the growth plan was CIB's effort to accelerate investment in light of the COVID-19 pandemic, in light of the increasing focus on green infrastructure, and in light of the fact that in the first few years of the CIB's existence there had not been a high enough volume of investment activity. The results of that growth plan are as Ms. Vrooman and I described in our testimony.
To the member's question, yes, McKinsey provided input into that process through market-sounding review of best practices in other jurisdictions, and a landscape analysis, which included meeting with stakeholders. They provided input to the development of the growth plan.
Conservative
Leslyn Lewis Conservative Haldimand—Norfolk, ON
On the contracts that we are questioning, we don't know whether there are two or there is one. It states in your letter that you dealt with advice both for COVID-19 and for a net-zero economy. How do those two things form one contract?
Chief Executive Officer, Canada Infrastructure Bank
As I was just outlining, the lens that the work was done through in the spring of 2020, was how could turbocharge its investment activity? I say “we” in the royal sense, as it predates me.
So, how could the CIB turbocharge its investment activity, and do that in light of the rapidly changing world it faced? The two main forces in the world at that time were (a) the increasing focus on green transition, and (b), the shutting down of infrastructure spending and construction activities in the spring of 2020.
So that's how they're tied together, if I understood the question.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Dr. Lewis.
Thank you, Mr. Cory.
Next we have Mr. Rogers.
The floor is yours. You have five minutes.
Liberal
Churence Rogers Liberal Bonavista—Burin—Trinity, NL
Thank you, Chair.
Welcome to our guests today.
Mr. Cory and Mr. Duguay, I have a couple of questions to direct to you. Either one of you might want to comment on them.
I've been sitting around this committee table for five years. That's as long as the bank's been around, for the most part.
We've heard many criticisms from the opposition members about the fact that even in the first and second year, the CIB had not completed any of its projects. You alluded to that in your remarks. I have to say, based on some of the numbers I've seen and hearing what you passed on to the committee, we seem to have made some significant progress in that short period.
For the benefit of the committee and for Canadians who might be watching, can you explain why large-scale infrastructure projects, in fact, consume and require a fair amount of time to be completed?
Chief Executive Officer, Canada Infrastructure Bank
I appreciate the question.
If it's all right, I'll start and then maybe Ms. Vrooman will have comments. I think she has a unique view of this as our chair.
I'll just say that infrastructure is the stuff. It's a funny word, isn't it? It's a pretty amorphous word. It's the stuff that drives our economy and our society for the next 100 years.
Think of your interactions with infrastructure today. You got here. You used some infrastructure. You're listening to me right now while we're speaking in the same language, but if we were doing translation, you'd be using the Wi-Fi systems in our buildings. It's the transit systems and the electricity. We live on infrastructure.
They are really long-life assets. As I say, they often last 50, 75 or 100 years. They are massive projects. Many of the infrastructure projects we invest in—to the member's question—are billions of dollars, and they are five-plus-year construction projects.
Based on the numbers I've given, we've invested in 46 projects. Those are real projects that are happening. There is money flowing to build those, but it takes time. Over the next three to four years, you'll see more and more of those projects come into the service of Canadians.
Ms. Vrooman, maybe you would add to that.
Chairperson, Canada Infrastructure Bank
Thanks very much, Ehren.
Very briefly, your question is a good one. The bank's role is to get infrastructure built more quickly than it would be otherwise. The measure of our success will ultimately be that the infrastructure is in use for the benefit of Canadians. Getting it started, getting the money out the door and the projects started are very important parts of the work of the bank. Our focus, as a board, has been on increasing the deal flow.
I'm sorry. That's a piece of infrastructure with an aircraft running right outside making that noise. I apologize.
It's been to get the money out the door. Those 46 projects really have signalled a significant increase in the pace and scope. Virtually every province and region in our country has been benefiting from the work of the bank over the past 24 months.