Evidence of meeting #68 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 cib.
A recording is available from Parliament.
Former Minister of Infrastructure and Communities, As an Individual
Can you repeat the question please?
Liberal
The Chair Liberal Peter Schiefke
Mr. Barsalou-Duval, could you repeat the question? I'll give you an extra 25 seconds.
Bloc
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
Thank you, Mr. Chair.
Mr. Sohi, Mr. Cory told us that, in 2018, when the Canada Infrastructure Bank had only one or two employees and was in the process of structuring itself, of building up, it decided to award contracts without a call for tenders to McKinsey & Company.
As you were the minister when the Canada Infrastructure Bank was created, were you aware that such contracts had been awarded? Were you informed of that? Were you involved in any of those discussions?
Former Minister of Infrastructure and Communities, As an Individual
The way the Canada Infrastructure Bank is structured is that the day-to-day decisions are made by the Infrastructure Bank, independent of the infrastructure ministry. Those decisions would have been made by them, not the ministry.
Bloc
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
So you would not have been aware of that.
Bloc
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
However, if I am not mistaken, in 2018, as Minister of Infrastructure and Communities, you awarded a contract worth $9.6 million, or nearly $10 million, to McKinsey to develop a national infrastructure strategy.
However, $10 million to develop a national infrastructure strategy is a lot of money. I imagine you were aware of that.
Former Minister of Infrastructure and Communities, As an Individual
I don't know the details of that demonstration, but I can tell you that in 2015, when we got elected, we had a huge commitment to put together a $180-billion infrastructure plan to help support municipalities and provinces to build the infrastructure necessary. It was a stand-alone ministry that we needed to establish. We did engage a lot of expertise on how to do it, and we did a lot of consultation with the private sector, public sector, unions and non-profit sectors to understand what our infrastructure plan should look like.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Mr. Sohi.
Next we have Mr. Bachrach.
Mr. Bachrach, the floor is yours for two and a half minutes.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Thank you, Mr. Chair.
Mr. Cartwright, one of the interesting aspects of this whole P3 debate is the concept of risk. We often hear from advocates of P3s that P3s allow the transfer of risk off the public sector and onto the private sector. However, at our last meeting Mr. Cory, the CEO of the Infrastructure Bank, said that the bank was considering a $655-million investment in a power line in order to transfer risk from the private sector to the public sector to “de-risk the project”.
What does the record say about risk transfer and public-private partnerships?
Chairperson, Council of Canadians
There are a variety of experiences, but largely what happens is one of two things. The proponents are largely consortia, and it is important to understand how big these projects have become and why it's often many global firms that are bidding on infrastructure here in Canada. The proponents have to put in extra cost to take into account the unknown.
When you have a construction contract, that's one kind of thing. When you're talking about taking over the entire maintenance and operation of it, then you increase the unknown, so they pad the numbers to go in. If something happens, they come back to government and say, “I'm sorry, our hand is out. We want money back”, and we just saw that happen with the crosstown line in Toronto.
We saw in the U.K. that, when they decided it was too much, they just went bankrupt and walked away. We saw that with the Hamilton sewage situation, where a P3 was put together, and it changed hands three times. We've seen that with Highway 407, where there was supposed to be the risk to say they would make sure that trucks could operate on 407 so they could support our manufacturing industry, and then, when it didn't suit them and they priced it out of the market, they were forgiven $1-billion penalty they should have paid in order to serve the public interest.
Time after time after time, you see that the set-up works in theory one way and in reality in a very different way, and the public interest is not served. This bank should go back and focus its investment on supporting public enterprise and public assets.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Mr. Bachrach.
Next we have Mr. Muys, followed by Mr. Genuis.
Mr. Muys, the floor is yours.
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
I have a question for former minister McKenna. Maybe you can elaborate on the due diligence that was done when you were the minister responsible for the bank to ensure that McKinsey and Company wasn't inappropriately benefiting from the deep relationship. We certainly heard about that over the course of this meeting.
Former Minister of Infrastructure and Communities, As an Individual
The bank is an independent arm's-length Crown corporation, so it makes its own decisions. That's a very important principle, so any questions with respect to that I think should go to the Canada Infrastructure Bank—
Conservative
Dan Muys Conservative Flamborough—Glanbrook, ON
What did you do as the minister responsible to make sure that there was that due diligence done?
Former Minister of Infrastructure and Communities, As an Individual
They are an independent arm's-length bank, but I will tell you that I was very clear that they needed to get projects done. When I came in, there was the REM project, but that was it. Given that, as a government, we were committed to getting infrastructure built across the country as much as possible as quickly as possible, that was really my focus. As I said, it's great to see that the Canada Infrastructure Bank has hit its stride and is getting more infrastructure built, leveraging more money and doing it a lot faster than it was doing before.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Mr. Pickersgill, it's good to see you because, frankly, you've been hard to find. We wanted to have you appear at the government operations committee to report on the important study we're doing there. I'm not sure if you declined that invitation or just have not responded to it, but we would still like to hear you at the government operations committee.
Nonetheless, I'm glad I was able to find you here at the transport committee, because I think you are a very important piece in this puzzle in terms of the relationship that existed between the government, McKinsey and various other institutions.
Could you tell us what your relationship was with Kelly Murdock at PSPC and what kind of contact you had with this person?
Senior Partner, McKinsey & Company
Mr. Chair, I have a point of clarification since there was a question of my willingness to appear here. I'm appearing in front of the TRAN committee, enthusiastic to share whatever I can on this topic and—
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
That wasn't the question, but while we're on it, are you prepared to appear at the government operations committee?
Senior Partner, McKinsey & Company
I've never received a formal invitation to appear in front of the OGGO committee.
As I think the committee may know, McKinsey provided two hours of testimony on the OGGO committee and provided 90,000 pages of unredacted documents.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
I know, but there were multiple questions that he couldn't answer because they were dealing with a time when you were the managing partner of McKinsey.
Let's move on. You said that you haven't received an invitation from OGGO. Is that correct? Is that what you're saying?
Senior Partner, McKinsey & Company
I've not received any invitation from the OGGO committee.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
All right. We can certainly follow up with the chair.
Back to my original question, which was about your relation with Kelly Murdock at PSPC, could you respond on that point, please?