Transport Committee on May 18th, 2023

[The Chair, Liberal, Peter Schiefke]

I now call the meeting to order.

Welcome to meeting number 70 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

Pursuant to Standing Order 108(2), the motions adopted by the committee on Tuesday, February 14, 2023, and on Thursday, May 4, 2023, the committee is meeting to study the role of McKinsey & Company in the creation and the beginnings of the Canada Infrastructure Bank.

Today's meeting is taking place in a hybrid format, pursuant to the House order of Thursday, June 23, 2022. Members are attending in person in the room and remotely using the Zoom application.

I wish to inform the committee that all witnesses have been sound tested for the benefit of our interpreters and have passed the sound test.

Committee members, appearing before us today, as an individual, is the Honourable Bill Morneau, former minister of finance. He is joining us by video conference. Welcome, Mr. Morneau.

As an individual, we have Ms. Janice Fukakusa, inaugural board chair of the Canada Infrastructure Bank. Welcome.

As an individual, we have Dominic Barton, former global managing director of McKinsey & Company, who is joining us by video conference. Thank you very much for being here.

From the Canada Infrastructure Bank, we have Mr. Bruno Guilmette, former interim chief investment officer, who is also joining us by video conference.

We will begin today with opening remarks.

I will now turn the floor over to you, Mr. Morneau. You have five minutes, please.

[Bill Morneau, Former Minister of Finance, As an Individual]

Thank you, Mr. Chair.

I'd like to start by saying it's a pleasure to be here with all of you in a virtual format.

I'm pleased to talk a bit about the Canada Infrastructure Bank this morning, and in particular, I'm happy to have the opportunity to talk about the importance of infrastructure investment in our country.

As you may know, my interest in this topic goes back a long way. As far back as 2012, I led a project for the Ontario government to look at how pension funds that were not already in a large public sector pension fund could be brought together to increase their opportunities to invest. In particular, one of the objectives was to invest in—

[The Chair, Liberal, Peter Schiefke]

My apologies to you, Mr. Morneau, but we're having some complications with interpretation. If you could, we're going to ask you to go last, and we'll ask the other members to go before you.

Does that work for you, Mr. Morneau?

[Bill Morneau]

That would be fine.

[The Chair, Liberal, Peter Schiefke]

Thank you very much. My apologies once again.

We'll turn the floor over to Ms. Fukakusa.

Ms. Fukakusa, the floor is yours. You have five minutes for your opening remarks.

[Janice Fukakusa, Inaugural Board Chair of the Canadian Infrastructure Bank, As an Individual]

Thank you, Mr. Chair.

Good morning, Mr. Chair and members of the committee. Thank you for the invitation to be here today.

My name is Janice Fukakusa. I served as board chair of the Canada Infrastructure Bank from July 2017 until April 2020. I'll be speaking in a personal capacity and referring to the Canada Infrastructure Bank as CIB for ease of reference.

I accepted the invitation to speak to this committee because I know that Canada's infrastructure deficit is vitally important for our own productivity in Canada and for our quality of life. Canadians have every right to ask questions about the government's plan to address this deficit in a way that's efficient, sustainable and transparent. In my view, the CIB plays an important role in that plan.

As members of the committee know, the concept of the CIB was introduced to the Canadian public in the 2015 Liberal platform. The idea was a very important one, but it wasn't unique to Canada. Similar models worked very well in the U.K. and Australia. In 2016, the government announced the creation of the CIB in its fall economic statement. The proposal was studied in pre-budget consultations, then passed through the Canada Infrastructure Bank Act in June 2017.

Around the same time, I was moving towards a new phase in my career. In January 2017, I retired as the chief financial officer and chief administrative officer of the Royal Bank of Canada after 31 years with the bank and was looking for new ways to give back. While I've been fortunate in contributing meaningfully to various charitable organizations, I never had the opportunity to work directly with government in a day-to-day role. I applied for the position of inaugural board chair and was honoured to be offered the job in July 2017.

Many of my early days as chair were focused on standing up the CIB and ensuring it had the governance, talent and operating structure to deliver its mandate. Much of the time, I worked with a committee comprising government representatives from infrastructure, finance and other departments to hire a board of directors, and played a hands-on role on CIB's initial risk management, establishment of investment processes and procurement guidelines.

Before I hired CIB staff and got everyone together, I received support from Infrastructure and Communities Canada, in particular the CIB transition office. My principal contact there was the assistant deputy minister, Glenn Campbell. Given that this idea was novel to Canada, we knew it would require outside analysis. We approached McKinsey & Company, the Boston Consulting Group and PricewaterhouseCoopers.

On the strength of McKinsey's infrastructure advice and practice, the firm was awarded two contracts: one to provide advice on investment criteria, awarded in January 2018, and one for risk management advice, awarded in March 2018. Both contracts complied with the CIB procurement policy and amounted to a total of $940,000. McKinsey was not contacted to offer advice on specific projects, and I would not have accepted such advice.

Following the recruitment of Annie Ropar as CFO and Pierre Lavallée as president and CEO in June 2018, my role shifted primarily to board governance activities.

Sadly, Pierre passed away earlier this year after a battle with cancer, and I want to take this moment to recognize his valuable contributions to the CIB and his insights and professionalism in working with us. He did an outstanding job in laying the groundwork for success.

I stepped down from the role in April 2020 following the conclusion of my term so that I could focus on other commitments in the not-for-profit and private sectors. I'm very proud of our board's work in standing up the CIB so that it would be positioned to support Canada's 21st century infrastructure needs, and I left the organization with full confidence that the team could build on this work.

I recognize that many questions have been raised about the CIB's effectiveness and efficiencies in the current context. I'm not adequately up to speed with the current operations to answer those questions. I would only say that I continue to support the mandate and believe it has great potential to accelerate the pace of private infrastructure investments in Canada.

I would be happy to answer any questions from this committee on my work as board chair.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Fukakusa.

Next we have Mr. Barton.

Mr. Barton, the floor is yours. You have five minutes for your opening remarks, sir.

[Dominic Barton, Former Global Managing Director of McKinsey & Co, As an Individual]

Thank you, Mr. Chair and members of the committee. I appreciate your inviting me today.

At the outset, I want to emphasize that I'm appearing as a private citizen on my own behalf. I am not here as a representative of McKinsey, and obviously I don't speak for the Government of Canada.

In January, I had the opportunity to speak to the government operations committee on these same issues. I do not propose to repeat today everything that I said there, but I am happy to answer your questions.

As I noted to OGGO, I am non-partisan. I am not a member or supporter of any political party in Canada. I do, however, believe in giving back to Canada. I have been an unpaid adviser to different Canadian governments several times.

As I noted to OGGO, in 2010 I was among a number of Canadians advising former finance minister Jim Flaherty. In 2013, I was asked by Prime Minister Harper to serve on the Canadian advisory committee on the public service. In 2016, I was asked by Minister Morneau to chair his advisory council on economic growth with 13 other Canadians.

I believe the growth council did important work for Canadians. Its recommendations included building more Canadian infrastructure, speeding up approvals for resource projects, cutting red tape, attracting foreign talent and capital, unleashing key sectors such as agriculture, and providing the basis for re-skilling Canadians to deal with technological change. I'm very proud of that work, and I'm honoured to have served Minister Morneau and the government on that council.

As I've stated previously, I had no involvement whatsoever in any awarding of paid work to McKinsey by the federal government, including the CIB, since I relocated to Asia in 1996. In joining the public service as ambassador to China in 2019, I underwent a thorough conflict of interest process with the Ethics Commissioner to ensure that my prior roles with McKinsey and elsewhere would not conflict with my public service obligations. That included a full, proactive recusal that screened me from dealing with McKinsey and, of course, any decisions made by the federal public service relating to McKinsey.

I did participate in one meeting relating to the CIB while I was ambassador. This was a meeting on June 23, 2020, that I joined as part of the strategic refresh project in 2020. My participation was requested by the chair of the CIB at that time, Michael Sabia—that's who requested the meeting—and I gave my perspective and context on the direction of the CIB. I was, obviously, not compensated for this meeting.

Finally, as I said to OGGO, I think it's important to separate the work of McKinsey from the times that I, as a private citizen, sat on several advisory councils as a volunteer at the requests of, again, Prime Minister Harper, Minister Flaherty and Minister Morneau. Those advisory councils made recommendations to elected officials. Sometimes they accepted the recommendations, and sometimes they did not.

In these instances, advice came from a panel of volunteers convened by the government, not from McKinsey. I chaired the growth council, and McKinsey supported the growth council’s work by providing data and information to help the council on a pro bono basis.

Again, I appreciate the committee’s invitation today, and I hope I can be helpful to your review.

I'm happy to answer your questions.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Barton.

Finally, we have Mr. Guilmette.

Mr. Guilmette, the floor is yours. You have five minutes for your opening remarks.

[Bruno Guilmette, Former Interim Chief Investment Officer, Canada Infrastructure Bank]

Thank you, Mr. Chair.

Good morning, committee members.

I am pleased to be here today to testify as part of your study on the role of McKinsey & Company in the creation of the Canada Infrastructure Bank.

My name is Bruno Guilmette and I am a member of the board of directors of the Canada Infrastructure Bank, or CIB. I was appointed to the CIB's first board of directors in November 2017. My presentation today will focus on my background, on the need for Canada to have an institution like the CIB to invest in the next generation of infrastructure that is essential for Canadians, and on my role in starting the CIB.

I would like to begin by talking about my background and experience. I am a chartered professional accountant, or CPA, and I also hold the designation of a CFA, a chartered financial analyst. During my career, I have held senior positions in the investment, financing and management of infrastructure project assets, including at the Caisse de dépôt et placement du Québec and at PSP Investments. I'm currently the chief financial officer of a publicly traded company in the renewable energy sector. The requirements of this role, a very busy schedule, as well as the quarterly disclosure obligations over the past few weeks explain why I was not able to attend the previously scheduled meetings.

In December 2017, at the request of the chair of the Canada Infrastructure Bank's board of directors, I agreed to leave the board of directors to serve as the CIB's interim chief investment officer. I took that job to contribute to the important start-up phase of the CIB's development. I had indicated my interest in holding the position for a short period of time, given my residence in Montreal and my family obligations. I held this position for five months, from January to May 2018, and it was a privilege to take on these responsibilities at a unique time in the CIB's history. In June 2018, I returned to my position and resumed my duties on the board of directors, including as chair of the board's investment committee.

I think it's important to highlight some of the context around the need for institutions like the Canada Infrastructure Bank to finance and attract investment in infrastructure projects. Canada's infrastructure deficit is estimated to be over $100 billion. The last period of significant investment in Canada's infrastructure dates back to the mid-1940s, more than 80 years ago. Much of our public infrastructure is outdated, which affects our quality of life and our economy. The CIB is doing critical work to address this infrastructure gap. Its success means that more infrastructure projects will improve our economy and the daily lives of Canadians for generations to come. The CIB has made tremendous progress over the past five years, including the expansion of the public transit system in Quebec, the rail system in Labrador, high-speed Internet services in Manitoba, electric buses in Alberta, and reliable energy storage in Ontario.

Finally, I want to talk about the Canada Infrastructure Bank's work with professional services firms. When I joined the CIB, it was in the start-up phase and had no employees. It needed a lot of help. We had to develop all aspects of its structure and operations—from initial governance to strategy, to corporate policies on financial management, investment management and risk management—in order to meet the government's deadline and expectations for the CIB to start receiving project proposals and making investments. I took on the role of acting chief investment officer to begin developing the CIB's investment policies, to participate in the preparation of the corporate plan and to recruit team members.

My priorities were to establish the foundation for the Canada Infrastructure Bank's investment function, including the development of investment criteria and project evaluation criteria. As I was the only leader, in collaboration with the chair of the board, who assumed the responsibilities of the CEO during that period, it is understandable that we had to rely on consultants during that busy period to carry out those first core activities.

I worked closely with the chair of the board at the time, Janice Fukakusa. Before hiring consultants, we consulted people from a number of consulting firms, including McKinsey, in order to understand what options would be available to help start up the Canada Infrastructure Bank. In January 2018, the CIB retained the services of McKinsey to develop investment criteria as part of its start‑up activities. In March 2018, we hired McKinsey to support the CIB in developing governance and risk management policy. During my time at the CIB, we talked to other consultants and hired some of them for other assignments related to start‑up preparation work.

The work provided by McKinsey included sophisticated and specialized analyses that reflected its global expertise on infrastructure. I am confident that these contracts reflected value for money and that they made a significant contribution to the start‑up of the CIB's operations.

I am pleased that the committee is studying the Canada Infrastructure Bank, and I would be happy to answer any questions members may have.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Guilmette.

I'd like to bring to the committee's attention that we will be unable to receive testimony from Mr. Morneau. We've received word from interpretation services that unfortunately Mr. Morneau does not have the appropriate equipment necessary for us to receive testimony from him today in a safe manner.

Mr. Morneau, unfortunately, we will not be able to hear from you today. We will, as a committee, have a discussion to determine how members will be able to receive answers to the questions that I'm sure they have prepared for you, and we will get back to you at another date.

For the time being, sir, I welcome you once again. I apologize that we will be unable to hear from you today and I ask that you kindly log off.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Chair, I have a brief point of order on that.

I know that it's been a long-established expectation that people have the headsets. This isn't new information. I'm sure that a headset was sent, and it is very disappointing that Mr. Morneau isn't prepared with the right equipment. I think the committee would certainly like to hear from him.

I think that's important to note. I know we'll be having further discussion on it later.

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

Mr. Chair—

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Genuis.

Yes, Ms. O'Connell.

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

Can I ask whether Mr. Morneau was sent the equipment.

[The Chair, Liberal, Peter Schiefke]

He was. From what I gather from the clerk, he was using a MacBook and did not have the appropriate adapter for the equipment that we sent him.

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

The clerk's office probably needed to confirm it was the proper equipment. It's my understanding that he was confirmed with ample time to provide that equipment.

Why could we not have asked him questions? He could reply to the committee in writing.

[The Chair, Liberal, Peter Schiefke]

I'll turn it over to Mr. Genuis.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Chair, I think we should proceed with the witnesses we have.

That's obviously not how witness questioning normally works. It's supposed to be a dialogue back and forth where we get feedback from the witnesses and can ask follow-up questions.

I think we should maybe just leave it there.

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

Well, that might be—

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

Can I add something?

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

I'm sorry. I had the floor.

That might be—

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

You didn't, actually. He had the floor.

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

No, sorry—

[The Chair, Liberal, Peter Schiefke]

I'll go first to Ms. O'Connell, and then to you, Dr. Lewis.