Transport Committee on May 9th, 2023

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

My time is very limited.

I note that's not the one. I want to point you directly to the one that I'm speaking about, which you probably blurred, and that was the May 2018-19 one.

However, counsel, it's not just me who is concluding that. You answered a March 9, 2021, Order Paper question. The question was, “With regard to contracts provided by the government to McKinsey & Company since November 4, 2015, broken down by department, agency”, etc. You answered in providing the five different contracts.

I submit to you that when the number of contracts is reduced, it creates the impression that there was less connection between McKinsey and the Infrastructure Bank, but I'm going to move on, counsel.

Mr. Cory's letter references a May contract. For clarification, would this be the one that you labelled as being for June and July in the Order Paper disclosure, which is referenced on page 2? It's dated June 25, 2020 and July 20, 2020, for $390,000 and $100,000.

Is that the reference to the May contract in Mr. Cory's letter?

[Frédéric Duguay]

Mr. Chair, that would be correct. I believe the member is speaking about the third contract, which was signed in May 2020. The invoices with respect to that contract were paid in June and July 2020.

As I was explaining earlier, at the CIB, in terms of our information management systems and with respect to how financial records are kept, in responding to OPQs, we usually go back to those records as a source of truth, so I would disagree that there's a discrepancy with respect to the record between the signature of the statement of work and a contract, and when invoices are actually paid upon receipt of deliverables. In responding to OPQs, that's how we usually go back in our records and use that as a source of truth for our responses.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Thank you, Counsel. I want the record to show that—

[The Chair, Liberal, Peter Schiefke]

Thank you, Dr. Lewis. You're 20 seconds over your time.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Okay.

[The Chair, Liberal, Peter Schiefke]

We'll now turn to Ms. O'Connell. The floor is yours for five minutes.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you, Mr. Chair.

Thank you, witnesses, for appearing here again.

Let me summarize something—and correct me if I'm wrong—on this whole issue of contracts versus invoices. When I was in municipal government, we often contracted out for people who might have expertise if we were building a community centre. We didn't do that all the time, but the engineering might not be the engineering that we could do in-house.

However, even for a regular person who hires a contractor to do a renovation on their house, they sign a contract or they engage in a single contract, but you may be invoiced on that contract multiple times.

Is it fair to say that there were three contracts with McKinsey, with a total of five invoices among those contracts, totalling $1.4 million?

[Frédéric Duguay]

That would be correct.

As indicated earlier—and the CIB provided a complete response to the motion for the production of documents with respect to contracts for McKinsey—CIB has produced contracts related to three separate contracts that were concluded, as I explained in my opening remarks. Within two of those contracts, there were two invoices that were issued—

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Right. That's fair enough.

[Frédéric Duguay]

—because there were two separate scopes of work within the statement of work.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

That's fair enough. I'm sorry. I'm just a little rushed for time.

It's not a scandal. You have three contracts and five invoices, all for $1.4 million.

I want to also go back to some of the line of questioning that suggested that there was some connection between the growth council's recommendation for an infrastructure bank and McKinsey contracts.

First of all, part of that calculation is actually missing quite a bit. I was on the finance committee for four years during this. From the growth council's recommendations, the finance committee also conducted a study on economic growth—that was a theme for our budget process—where we actually met with groups like the Inter-American Development Bank. They talked to us a lot about how infrastructure banks are an incredible way to build infrastructure and also to achieve actual economic growth.

We met with investment firms in New York talking about how desperate they were to invest in things like infrastructure—things like broadband. I can assure you that Dominic Barton was not at any of those meetings, nor were any McKinsey staff. This was the role of the finance committee.

We then made recommendations to the minister. Sometimes they get accepted; sometimes they don't.

From the time of the growth council, as well as committee doing its own studies and reports and then from the time when the Canada Infrastructure Bank was proposed, we also had an introduction in the budget and then a BIA—a budget implementation act. That went to the House for a vote, then to the finance committee, then to the Senate, then to the Senate committee, then it comes back to the House for a final vote, and then it gets implemented.

For this mysterious scandal where McKinsey or Dominic Barton wanted to create an infrastructure bank, go through that entire legislative process, have the finance committee meeting with individuals about the benefits of infrastructure banks that were completely the finance committee's prerogative, all to receive three contracts and five invoices totalling $1.4 million....

I just quickly googled McKinsey's revenues. It's a company of $10 billion in 65 countries. They went through all of that legislative process and through all of this mind-reading, I guess, of the finance committee to know where we were going to study, where we were going to go and who we were going to meet with for three contracts.

I lay that out there, Mr. Chair, because it is like this weaving of a connection that really just doesn't exist when a lot of work done was actually done at the time on the finance committee about infrastructure banks all over the world.

With all of that laid out, my question for the witnesses then is this. It was mentioned that over 340,000 households are going to be connected to broadband through the Infrastructure Bank investments. If this committee had moved a motion that was not unanimous to cancel the Infrastructure Bank, what would happen to those 340,000 households where there is currently construction to connect them to broadband? Would those projects fall apart? Would those households no longer be connected to broadband?

[The Chair, Liberal, Peter Schiefke]

Give a 20 second response, please.

[Ehren Cory]

Thank you, and I appreciate the question.

The only thing I'll add to the earlier part of the member's comments is, as I mentioned in my opening remarks, is that we know right now of 28 other versions of infrastructure banks around the world. I talked to colleagues in Scotland, in the U.K., in Germany, in Australia and all over the world. The idea is really ubiquitous.

To answer the question, those projects would not be happening. We ran competitive processes and often partnered with provinces and with ISED to run bidding competitions so that broadband providers would provide to those remote areas. Otherwise, those projects would not be occurring.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Cory. We'll have to end that there.

Mr. Barsalou‑Duval, you have the floor for two and a half minutes.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair.

I want to pick up on one point. After my questions, I was a little surprised to hear Mr. Cory say it was okay for Canada Infrastructure Bank to award contracts to McKinsey because, basically, that's its area of expertise.

I think we need to come back to the whole notion of ethics, but also to how we view volunteering.

Is the concept of for-profit volunteering widespread in the private sector? Does working at firms like McKinsey lead to a different conception of ethics?

I feel like if the average person knew that if they went out and volunteered, they would pick up $1.4 million in contracts a few years later, for example, quite a few would want in on that.

Two other witnesses who are here also walked from the private sector to the public sector, from McKinsey to the CIB or other such organizations.

Mr. Jaswal and Mr. Robins, could you tell me the difference between the public sector and private sector view of ethics?

[Steven Robins]

Perhaps I can start. I can confirm for the committee that I didn't do any work with the federal government or with respect to the CIB during my time at McKinsey.

In my experience at McKinsey, I would occasionally do a pro bono engagement, and that would be the end of things.

As a public servant, the thing that I think we do across all of our projects is follow our procurement policy. When we need to engage external advisers, we engage with the various market participants. We reach out through an RFP or through some form of invitation, solicit feedback from the market and then select the best proposal that delivers the most value for Canadians.

Perhaps Mr. Cory could add something more to that.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

I'd also like to hear your comments, Mr. Jaswal.

In your opinion, what's the difference between the way we think about ethics in the public sector and the way we think about it in the private sector? Is there a difference that might explain why we don't understand right now?

[Aneil Jaswal]

Thank you, Mr. Chair. I'm happy to comment.

I think it's an interesting question. It's a bit of a broad question. Commenting on the ethics of different sectors of the economy, I've been fortunate to work in a few of them. I think every place I've worked had its own ethics guidelines in policies and procedures, and I'm really excited to be in the public service, because I think you get to work on things that deliver impact for the public, for Canadians.

In the private sector, you are sometimes working on different objectives of helping a company sell more of its product or achieve growth.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Jaswal.

We'll have to leave that there for that line of questioning.

Next we have Mr. Bachrach.

Mr. Bachrach, the floor is yours. You have two and a half minutes.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Picking up where I left off, if I understood Mr. Cory's responses to my previous questions correctly, the CIB conducted some sort of analysis of the Lake Erie Connector and concluded that it would reduce emissions by exporting clean energy to the United States.

Mr. Cory, would you be willing to table with the committee that analysis so that we can better understand the assumptions behind it?

[Ehren Cory]

I'll maybe clarify this first. The reduction in greenhouse gas emissions actually occurred in both exports and imports. Let me talk about why.

In our modelling, the Ontario grid goes through a period, especially once the nuclear plants—which provide about half of the energy in Ontario right now—go through either shutdown or refurbishment, depending... There's quite a bit of import, or, if not import, there's a lot of increased gas production projected in Ontario's grid for the late 2020s and 2030s. That was the modelling at the time. This was a few years ago.

Of course, things have changed since then. There's a small modular reactor now under construction at Darlington, and there's the potential for life extension at Pickering.

To the member's question, at the time, two years ago, from my recollection of the analysis, the GHG benefits were significant on both sides of the border, and it depended on time. This is a 40-year project, so the electrons flow both ways.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Are you going to import clean energy from Pennsylvania? Was there a surplus of clean energy available?

[Ehren Cory]

In the medium term, we were going to be importing energy that would be less carbon intensive than using gas to fill baseload in Ontario. That was our analysis.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Back to my original question, would you be willing to table with the committee that analysis? I'm sure it's based on publicly available information. I think committee members would find it very instructive to have the analysis and understand the assumptions.

[Ehren Cory]

The analysis is proprietary. As I mentioned, we hired a third party firm to develop models with us—