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.
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
You referenced third party audits. Are there any additional external audits that are done?
General Counsel and Corporate Secretary, Canada Infrastructure Bank
As a federal Crown corporation, the CIB is subject to annual audits by the Auditor General of Canada. We also have a joint external auditor, who is recommended by the board and deployed by the Governor in Council. Jointly with the Office of the Auditor General they audit our annual financial statements. We're also subject to a special examination requirement every 10 years, and this will come up shortly in the bank. As we said earlier, it was founded in 2017 and usually a special exam is done once every 10 years. Definitely by 2027 there will be a special examination completed.
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
Are you satisfied that the CIB and, by extension, the taxpayers are getting good value for money in these contracts?
Chief Executive Officer, Canada Infrastructure Bank
I'm sorry, Mr. Chair, just one clarification. What do you mean by “in these contracts”?
Conservative
Chief Executive Officer, Canada Infrastructure Bank
Okay. Thank you for clarifying.
As Mr. Duguay outlined in some of his responses, and I would say briefly, we are satisfied.
I think that in the early work around investment criteria and getting a place started, as Mr. Duguay said, it was incredibly important to create some guardrails around which investments the CIB would and wouldn't do. The risk management framework was also created, and they both created a really good foundation. We're five years on and we've refined and improved both those pieces of work, but they were really important at the time.
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
To elaborate on that, you talked in your opening about hitting the stride, but it's six years on. Are you satisfied with that pace? If it was six years on in the private sector, the business would be dead.
Chief Executive Officer, Canada Infrastructure Bank
Thank you. I appreciate the question. I think it ties back to an earlier discussion we were having about infrastructure and its time frame. Many of our projects that we've invested in are four- and five-year construction cycles.
The other thing worth noting is, when the CIB was created, it was explicitly created not to finance shovel-ready projects, which is such a buzz word in infrastructure, but truly shovel-worthy but stuck projects. I say that only to provide the context of those first few years of identifying challenging projects in our country that would not happen—not the broadband that's getting built, because that's happening, but the broadband that isn't getting built.
The electricity transmission project that is stuck—and some of them have been for truly decades—meant that the early work of the CIB was very much in cultivating and nurturing those projects to a place where they were investable.
I think the progress certainly has accelerated. Right now, we're really excited about where we are, and we're looking forward to getting lots more built.
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
Were the three or five contracts that we're talking about, whether under the old procurement processes or the new revised processes, sole-sourced? What changed between the old processes and the new processes on those?
Chief Executive Officer, Canada Infrastructure Bank
Of the three of them, the first two were not. They were done under invitation, but the third was single-sourced.
As we started to outline in our response, I think the reason why is fairly apparent. It was in April and May 2020. It was immediately in the aftermath of the shutdown of the infrastructure world. Given their global expertise in infrastructure, and given the first two studies they had done in 2018 and their understanding of the investment approach the CIB was taking, they were deemed a natural partner to that work, so that work was single-sourced.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Mr. Cory.
Thank you, Mr. Muys.
Finally for today, we have Ms. O'Connell.
The floor is yours. You have five minutes.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Thank you, Mr. Chair.
I want to pick up on some areas of questioning. The first being the suggestion that so many former McKinsey employees work at the Infrastructure Bank. You said it's a total of four out of 125.
Mr. Cory, you said at OGGO when you testified previously.... You are one of the former McKinsey connections, although I should note that, even in the opening statements of witnesses today, speaking about their employment as well as their education history, it wasn't direct. It wasn't a case of working for McKinsey and then going to the Canada Infrastructure Bank. You all had very successful, long careers in this field.
With that, when it came to the actual issuing of McKinsey contracts, were any of you who had any former employment with McKinsey there at that time?
Chief Executive Officer, Canada Infrastructure Bank
None of us were there, and none of us, in the time we've been here, have engaged McKinsey for any work.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
No one with previous employment at McKinsey ever engaged the McKinsey contracts then or now.
Chief Executive Officer, Canada Infrastructure Bank
That is correct.
As you point out, none of us came directly from there. If you listened to Mr. Robins' opening statement, you'll note that he can't get rid of me. He joined McKinsey in 2011. I interviewed him at the time. We worked together. When I went in for Infrastructure Ontario, I knew he cared about public policy in the same way I did, and I convinced him to come and join me twice—
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
I think that's.... I'm sorry. I don't mean to cut you off.
I think that's pretty fair. When I was at the city, I stole the employees I thought were excellent and offered them jobs, too, because they delivered and had great experience.
You mentioned that $9.7 billion of public funding, so to speak, has turned into $27 billion of actual project money. It's safe to assume that without the Canada Infrastructure Bank and leveraging the institutional sectors...instead of $9.7 billion of investments from Canadian taxpayers, it would be $27 billion from Canadian taxpayers.
It's not only that. The question was asked by Dr. Lewis about why these other private sector companies and telecoms aren't building broadband. I can tell you. Anyone who lives in rural communities.... I'm semi-rural, next to the city of Toronto, but these companies refuse to build and invest in rural Pickering and in Uxbridge. Anybody who comes from rural areas or understands rural areas at all knows that there isn't the business case for these private companies.
It would have been $27 billion of taxpayers' money to build infrastructure, and there still wouldn't be that private sector investment if the infrastructure hadn't worked the way it did, if it hadn't attracted the capital and hadn't gone to those very places which the private sector just refused to touch. We're at 2023 and my community still has to rely on satellite or some sort of dial-up system.
Chief Executive Officer, Canada Infrastructure Bank
Exactly. I would only add this to say it's always worth remembering that, as a loan, we are also getting paid back. Even the $9.7 billion is repaid with interest now. The benefit that we're providing, to be clear, and why we're a public institution is that we're taking longer terms or providing lower interest rates or sharing in the risk in appropriate ways to get the projects done. That's the benefit. However, it's not a grant, and by the end of the project, that $27 billion will all have come.... As we get replaced, we get paid back. That's coming from users of the infrastructure, from other private capital, and it will go away.
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
When it comes to contracts, you spoke about their being really specific to the project. If you have a energy project, you might have a contract dealing specifically in that space. If you didn't do that, you would have to hire probably hundreds of employees who might sit there and don't engage in every single potential project, and instead of doing it on a contract-by-contract basis for some of this expertise, actually more money would go to salaries and employees instead of dollars to infrastructure.
Chief Executive Officer, Canada Infrastructure Bank
That's right.
Mr. Chair, as a firm doing investments across the country, and across transit, transportation, ports, transmission lines and clean power, we wouldn't possibly be able to have all of the expertise across all of our geographies, across all of the sectors in this country. We might see an investment every few years, and next month it might be about port and trade access in our north. We don't have someone on staff to do that, but we would want to get some help to understand, as the Northwest Passage opens, how trade is going to change. These are trends that would help drive investment activity. Yes, external expertise would be the right place to go.
Liberal
The Chair Liberal Peter Schiefke
Thank you, Ms. O'Connell.
Thank you, Mr. Cory.
On behalf of all members of this committee, I'd like to thank all of our witnesses for appearing before us today.
I promised Mr. Bachrach that I would ensure that we formally request the report, the documents that he had requested on behalf of the committee, and a written response.
With that, this meeting is adjourned.