Transport Committee on May 18th, 2023

[George Chahal, Liberal, Calgary Skyview, AB]

Thank you.

I'm surprised that my Conservative colleagues would be against investments in western Canada in transportation infrastructure and moving more agricultural products to markets. That's shocking and surprising.

Mr. Guilmette, would you like to add to that?

[Bruno Guilmette]

Thank you for your question.

I guess I'll just echo what Dominic mentioned. I worked for two large Canadian pension funds. At the time, we had a few discussions with employees of the government asking why the pension funds were investing money in large projects in foreign countries—

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Guilmette. Unfortunately we have to cut you off there. We're out of time.

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

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

Thank you, Mr. Chair.

I would like to begin by greeting all the witnesses and thanking them for being here today. I will echo my colleague's comments and express my disappointment that Mr. Morneau will not be able to participate in today's meeting. I hope he will be able to come and speak with committee members again.

Mr. Barton, you were appointed chair of the Advisory Council on Economic Growth. You mentioned that you carried out those activities on a voluntary basis. I would like to know whether you held that position as an individual or as the director of global affairs at McKinsey.

[Dominic Barton]

I did that as a private individual. As I mentioned, I think giving back to Canada is good. I've done this in other countries in which I've lived—South Korea, Singapore—

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

That's great, you've answered my question, Mr. Barton, but I have a follow-up question.

We understand that McKinsey employees were the secretariat for the Advisory Council on Economic Growth set up by the Trudeau government. That is what Mr. Sabia told us at a previous meeting. It has also been confirmed to us by former partners of McKinsey. I would like to know whether these McKinsey staff were a permanent part of the council and whether they were also doing it on a volunteer basis.

[Dominic Barton]

I think it was clear from the outset of my testimony, too, that McKinsey provided pro bono support and provided basic facts if there were requests from the growth council.

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

The services were provided free of charge, but were the employees paid?

[Dominic Barton]

Yes, the employees were paid. They were working for McKinsey.

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

Thank you, that's what I wanted to know. I would have been surprised if so many resources had been mobilized and all these people were working for free.

In the 2015 Liberal platform, the Canada Infrastructure Bank was originally meant to ensure a lower interest rate for municipalities for loans related to building infrastructure and housing. This is found on page 16 of the Liberal platform.

However, the conclusions of the Advisory Council on Economic Growth have led to a different vision. In October 2016, in its first report, the council proposed a vision of the bank that focused on public-private partnerships. In fact, a month later, at the Long-Term Investment Summit, Global Affairs Canada even presented the bank as a private investment institution, thereby radically changing its direction.

We can see that the government's actions quickly followed the advice provided by the Advisory Council on Economic Growth. I would like to know whether you think McKinsey's influence played a role in this change of direction.

[Dominic Barton]

There were 14 members of the growth council. I was the chair. Actually, the two key people who were playing a role in it—there were others involved too—were Michael Sabia and Mark Wiseman, who have a lot of experience in the area.

Again, as I said, the growth council thought there was a significant infrastructure gap. We looked for different ways of trying to close it, and indeed from the council's—

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

Thank you. I'm sorry to interrupt again, but I don't have a lot of time.

My question is about whether McKinsey or its influence led to this change in direction. At our last meeting, Mr. Sabia confirmed that, in fact, in addition to being the secretariat for the Advisory Council on Economic Growth, McKinsey has also contributed quite significantly to its reports and deliberations.

Was the volunteerism of McKinsey and its employees, who were paid to provide free advice, not ultimately a back door way to avoid having to register as a lobbyist?

[Dominic Barton]

McKinsey doesn't do policy work. McKinsey wasn't involved in making those recommendations. It was the growth council with 14 members that made the recommendations.

As I mentioned, there were other recommendations we put forward that were not accepted. We believed—for example with brownfield—that we would sell existing infrastructure projects to get private capital in. That was not accepted by the government, so—

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

I understand that it was the council that made these recommendations, and I think you illustrated it well.

However, we also know that McKinsey staff were the infrastructure supporting the council. Even though you were there as an individual, strangely enough, it was also McKinsey staff who were providing pro bono services. So I don't know how you were able to distinguish between those two hats in the context of these activities.

I am convinced that the staff of a firm that has a particular direction and that supports the activities of any company still have some influence on the direction taken, especially if those staff are entirely from a firm like McKinsey.

How much time do I have, Mr. Chair?

[The Chair, Liberal, Peter Schiefke]

You have 20 seconds left, Mr. Barsalou-Duval.

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

Thank you, Mr. Chair.

Mr. Barton, at the World Economic Forum in Davos in 2016, did you host a luncheon between Prime Minister Trudeau and BlackRock's international investors at your initiative, at McKinsey's initiative, or at the initiative of the Prime Minister?

[The Chair, Liberal, Peter Schiefke]

It will have to be about a 10-second response, please.

[Dominic Barton]

At Davos, I organized a group of about 20 business leaders from around the world to meet the Prime Minister.

Secondly, just on your first question—

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Barton. Unfortunately we're out of time.

Thank you, Mr. Barsalou-Duval.

Next we have Mr. Bachrach.

Mr. Bachrach, the floor is yours. You have six minutes.

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

Thank you, Mr. Chair, and thank you to all of our witnesses.

Perhaps I'll start by asking Mr. Barton whether he'd like to finish his response to my colleague's last question.

[Dominic Barton]

Yes. Thank you very much.

Just on the point that was being made about where the recommendations came from, I'll reinforce again that the growth council made the decision. McKinsey wasn't part of those deliberations. When we made recommendations, it was just the growth council there.

Again, the two drivers of the thinking and the work, the leads on the team, if you will—because we had broken into teams—were Michael Sabia and Mark Wiseman. If you know those two individuals, they have strong views of how they feel about it—not necessarily consistent.

The idea that McKinsey was coming up with the recommendations is completely false.

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

Thank you, Mr. Barton.

Much of our discussion at the committee has centred around this perceived conflict of interest. We have a relatively small number of players who are all playing different roles at different times in the same organization.

It feels like there are some questions the Canadian public would want to ask about how that perceived conflict was managed. For instance, McKinsey had you as the head of the advisory council and also landed this $1.5-million contract to advise the CIB. Based on our previous questions, McKinsey clients ended up coming forward, proposing investments and being involved in the bank on a commercial basis. There was a document that members of the advisory council on economic growth were asked to sign to guard against real, apparent or perceived conflicts of interest.

Because there's been a lot of discussion in this meeting, and some qualifiers added, I'm wondering if your acting in a pro bono capacity, versus your McKinsey role, is an effective way to manage perceived conflict of interest, in your opinion.

[Dominic Barton]

We had a lot of discussions on this.

Again, it's unfortunate that Mr. Morneau is not here, because you could hear his view on it, or talk to, I think, Paul Rochon, who was the deputy minister at the time. There was a clear arrangement designed with the McKinsey support team in terms of what they could do and not do.

We discussed it as a council. The view was that we needed facts and support. Again, in the decisions we made, the deliberations were done only with the council. There was no one from McKinsey in those sessions.

It was very much about providing information that we requested, that members of the council requested. It was not to provide any input—

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

Mr. Barton, correct me if I'm wrong, but you were with McKinsey in those sessions, were you not?

[Dominic Barton]

Yes. I was the chair of the council, moving things forward. I don't think that had any linkage to what the secretariat team was doing. Every single member of the council would have had some sort of potential conflict, if you will, but I didn't see any issue with that, nor did the secretariat that we were working with.