Transport Committee on May 16th, 2023

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

Let me jog your memory. An access to information request, in fact, showed that McKinsey was awarded $6.5 million in contracts between 2019 and 2021.

Does that refresh your memory, sir?

[Michael Sabia]

Yes, but that doesn't necessarily mean it was involved with anything to do with the REM. Those would have been broader sets of contracts that we would have issued that could have been for a whole variety of things. As you know, CDPQ manages a portfolio today of over $400 billion of assets invested around the world. The activities of CDPQ are very extensive and touch a full range of asset classes. That number doesn't necessarily imply any particular involvement in the REM.

As I sit here this morning, I can't recall whether or not McKinsey was specifically involved in that, but I believe not.

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

That's a fair answer.

When you were appointed chair of the board of the Canada Infrastructure Bank, did you have any concerns about the perceived conflict of interest around engagement with McKinsey by the bank and McKinsey actually benefiting from the deep understanding of the CIB, and by extension benefiting McKinsey clients, one of which would have been the organization you were CEO of, the CDPQ?

Did you have any concerns about that?

[Michael Sabia]

No, but wait a second. You don't have the chronology right. When I accepted to chair the board of the Infrastructure Bank, by then I was no longer the CEO of CDPQ.

[The Chair, Liberal, Peter Schiefke]

Thank you very much Dr. Lewis and Mr. Sabia.

Next, we have Mr. Rogers for six minutes.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Thank you, Mr. Chair.

Welcome to all of our guests today.

I have some questions that I would like to focus on with Mr. Sabia.

The Infrastructure Bank, of course, has not been around very long. I've sat on the transport committee for the last four years, and I've seen some numbers that are encouraging in terms of growth, progress and the number of projects being completed or under way.

Mr. Sabia, for the benefit of the committee and the public at large, can you tell us about your role on the advisory council on economic growth? What were your contributions to conversations surrounding the creation of the Canada Infrastructure Bank?

[Michael Sabia]

As I mentioned in response to the previous question, I was asked by the former minister of finance, Mr. Morneau, to join the council, which I accepted, along with about a dozen other people.

We took on this pretty broad challenge of developing some ideas for the government to consider and for the government to elaborate on. These were ideas that could have the effect of boosting Canada's potential rate of economic growth. As you know, particularly at that time, the outlook for Canada's potential growth rate was not very inspiring. It was running at a rate lower than it had been historically in Canada.

Action on the part of the government—all levels of government, not just the federal government—was required and continues to be required to deal with this very substantial challenge that we have as Canadians.

The work of the council was focused on a whole variety of possible levers that governments could use to address this pretty pressing issue. We worked as a group on all of those. The work of the council was subdivided into various working groups, etc. Given my work in the world of investment, my work at the council was focused significantly on issues around investment and how to improve levels of investment in Canada, which continues to be a significant challenge going forward.

Part of that was work on infrastructure because ultimately that is about finding ways to enhance levels of investment to provide Canada with the kind of infrastructure that we need to make our cities more habitable and more efficient, to make transit systems work better and to help us deal with the pressing issues of climate change, etc. There are a whole variety of things where infrastructure can contribute to helping meet many of the challenges facing the country.

That was pretty much the work we did.

You also mentioned, sir, the activities of the bank. We are encouraged, given the hat that I currently wear as the deputy minister of finance for the Government of Canada, that we've seen, really about three years after the start of the Infrastructure Bank, a substantial pickup in the velocity of activity. Now I think the bank has done more than 40 different investments. It has invested something in the order of more than $9 billion or $9.5 billion, and it continues to ramp up its level of activity.

After what was—let's be honest about it—a fairly slow start for the Infrastructure Bank, now, under the leadership the bank currently has at both the level of the board, the CEO and the senior executives of the bank, I think we're seeing a Canadian institution really beginning to hit its stride.

Dealing with, for instance, some of the real issues that Mayor Brown referred to, what the bank's doing in Brampton, it's also doing in Ottawa and for the electrification of Quebec school buses—just to stay in the area of transportation. It's doing a lot of other things with respect to improving the climate performance of a steel company, etc. There's a whole range of transactions that it has done. We're beginning to see something that's making a very positive and important contribution to the country.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Thank you very much.

I have a question that I'd like to have on the record.

What role did the Minister of Finance's advisory council on economic growth have on the establishment and the mandate of the Canada Infrastructure Bank?

[Michael Sabia]

One idea that came out of the growth council was the idea of the creation of a financial institution that would have the ability to use its capital to enhance the level of investment in infrastructure overall, whether that was working with a municipality, with a steel company or with bus companies, etc.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Sabia.

Unfortunately, we're going to have to cut you off there.

[Churence Rogers, Liberal, Bonavista—Burin—Trinity, NL]

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Schiefke]

Mr. Barsalou-Duval, you have the floor for six minutes.

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

Thank you very much, Mr. Chair.

Thank you to all the witnesses for being here today.

I will begin with Mr. Sabia.

Mr. Sabia, I would like to know if you were ever consulted in any way, shape or form, when the Canada Infrastructure Bank was set up by the federal government, for example, on how it would operate. I assume that your expertise would have been beneficial to the federal government.

[Michael Sabia]

My answer is basically no.

Indeed, I am a member of Canada's Economic Growth Advisory Council. This council makes proposals and recommendations to the federal government. The creation of a financial institution focused on infrastructure issues was one of our recommendations, but we did not play a role in the establishment of the bank. We made a recommendation to the government and they decided to take some of our recommendations very seriously. At that time, the government was responsible for setting up—

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

Thank you, that answers my question.

At the last committee meeting, we had two partners from McKinsey & Company, Mr. Pickersgill and Mr. Palter. They told us that at the time, McKinsey was involved in the Economic Growth Advisory Council on a volunteer basis. You were also on that council.

Were you aware of any McKinsey & Company people other than Mr. Barton who had been involved on a volunteer basis on that board?

[Michael Sabia]

Yes, of course.

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

What was the nature of your involvement? Were you there to provide information, expertise or advice?

[Michael Sabia]

It is important to understand the role of the people at McKinsey & Company. They essentially act as a secretariat, on a volunteer basis. The concepts and suggestions came from the board members. As you know, an advisory board needs a secretariat, and McKinsey played that role. So they have been very involved in our reports and our deliberations.

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

Is it common for a private company to volunteer to provide tools to decision makers about the political and economic directions a country should take? That seems pretty unusual to me.

Moreover, this same firm ended up picking up juicy and lucrative government contracts. Millions of dollars landed at McKinsey.

Is there a connection to be made between the contracts McKinsey received and its volunteer involvement? Is this a common business practice?

[Michael Sabia]

Honestly, I can't answer your question directly.

In my view, as a member of the Economic Growth Advisory Council, McKinsey acted on a volunteer basis. So I personally don't see a connection between its contribution to the council and its business activities. It's normal for a consulting firm to do business, whether it's McKinsey, the Boston Consulting Group, Deloitte or others... As far as I'm concerned, I don't see the connection.

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

Do you often see consulting firms do volunteer work for the government?

[Michael Sabia]

Yes, I do see that from time to time.

What I was able to observe may not have been on the same scale as this activity, but I think McKinsey had the capacity to volunteer for this committee. At least that's what I observed. Dominic Barton, the head of McKinsey at the time, was comfortable offering the time of some of his consultants to support our work.

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

Do you have any idea what a volunteer activity like this is worth? I guess you're providing resources and staff to the government, getting information. I guess that's a lot of research work.

[Michael Sabia]

Unfortunately, I don't know. I can't give you an idea, because I don't have any myself.

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

All right.

The chair has just signalled that my time is up.

In that case, thank you.