Evidence of meeting #70 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 mckinsey.
A recording is available from Parliament.
Liberal
Bloc
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
What we understand from the quotes here—
Liberal
Liberal
Jennifer O'Connell Liberal Pickering—Uxbridge, ON
Mr. Chair, thank you.
We can't speak over witnesses because the interpreters need the opportunity to hear. Also, it is customary in committee that if you ask a question, you give reasonably the same amount of time for the witness to answer.
I'd like to hear the answer from Mr. Barton.
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Ms. O'Connell.
Mr. Barsalou-Duval, I had stopped the clock. You have 30 seconds left. You may begin your question to Mr. Barton again so that he can answer.
Bloc
Xavier Barsalou-Duval Bloc Pierre-Boucher—Les Patriotes—Verchères, QC
Thank you, Mr. Chair.
Mr. Barton, you told us that the Canada Infrastructure Bank was not McKinsey's idea, and your associates have said the same thing. However, what we understand from all the quotes we've heard today, both from Mr. Sabia and from the McKinsey people's own contract submissions, is that you were extremely involved in the recommendations that led to the bank's creation.
Worse than that, you said that this bank idea was part of the Liberal platform. However, as I've already pointed out, the Liberal platform proposed an infrastructure bank different from the one proposed by the Advisory Council on Economic Growth, over which McKinsey had a strong influence. McKinsey had a significant influence, then, didn't it?
Former Global Managing Director of McKinsey & Co, As an Individual
Thank you for your question.
Number one, what I'm saying is the idea of an infrastructure-type bank was already a part of the Liberal Party policy.
Number two, the growth council, in looking at many other different infrastructure banks and approaches around the world, is the one that came up with the recommendations, again led by a subteam, which was Michael Sabia, Mark Wiseman and Ken Courtis. They were the key drivers of it. The McKinsey work, as you've heard from Janice in a conversation, was done through an official procurement process and other people were looked at for it.
As it relates to the—
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Mr. Barton.
Thank you, Mr. Barsalou-Duval.
Next we have Mr. Bachrach.
Mr. Bachrach, the floor is yours. You have two and a half minutes.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Mr. Chair, my question is for Mr. Guilmette.
Mr. Guilmette, early on in the bank's evolution, it pursued a pilot project in Mapleton, Ontario, that sought to privatize the community's drinking water and waste water. I can assume that since it was characterized as a pilot project, the bank wanted to learn something that could inform future such projects. Obviously, it is a controversial proposal to privatize what traditionally is public infrastructure.
That project didn't go ahead. In the end, the community assessed the risk and the value to residents and decided against it, and was stuck with a $300,000 legal bill as result.
What did the bank learn from that pilot project?
Former Interim Chief Investment Officer, Canada Infrastructure Bank
Thank you for the question.
First of all, the bank is not looking to privatize infrastructure, but to integrate private capital, with the support of public authorities, be they municipalities, provinces or the federal government. So we're talking about partnerships between government authorities and the private sector, whether operators or investors. We want to leverage capital, increase capital to augment public capital and accelerate infrastructure growth.
I don't precisely remember the example you gave, but as you say, the project was not implemented. The decision not to implement the project was made, and in my opinion, it was certainly made collaboratively, in the context of discussions between bank staff and public authorities. The philosophy of the bank as a whole is that there should be public support for this type of investment.
NDP
Taylor Bachrach NDP Skeena—Bulkley Valley, BC
Mr. Guilmette, you said that the bank does not pursue privatization, but it's certainly involved in projects whereby private investors come in and invest in building infrastructure, and then are responsible for operating that infrastructure and charging the users of the infrastructure fees. That sounds to a lot of people like privatization. Isn't that a fair characterization?
Former Interim Chief Investment Officer, Canada Infrastructure Bank
No, it's not privatization. I've said it and I insist on it: it's a partnership that involves the public authorities. Private and public capital are mobilized. Various levels of government can be involved. It's not privatization: It's collaboration, partnership. Incidentally, you also alluded to the P3 Canada Fund. In the past, these were also partnerships. The difference, with the bank...
Liberal
The Chair Liberal Peter Schiefke
Thank you very much, Mr. Guilmette.
Next we have Mr. Genuis.
Mr. Genuis, the floor is yours. You have five minutes.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Thank you, Mr. Chair.
Mr. Barton, I'm going to give you one more chance to shed some light with respect to my previous questions about your engagement with McKinsey while you were the ambassador to China.
You told the operations committee regarding that engagement that it was “excommunicado”, but Zak Cutler at McKinsey knew details of your schedule, was discussing them with Annie Ropar at the Infrastructure Bank and was convening a meeting involving you, McKinsey and the Infrastructure Bank. The emails prove that McKinsey was intimately involved, which clearly contradicts your earlier testimony.
This is important, because McKinsey's special access to government allowed it to massively increase its take of taxpayers' money, and your presence helped make that happen. You may not have been selling directly, but your presence helped McKinsey facilitate these sales before and after you were ambassador. You were, by all indications, fine with that.
Given that McKinsey was convening meetings with you, are you prepared to acknowledge that your relationship with McKinsey after you received the appointment as ambassador was not, as you had previously described, excommunicado?
Former Global Managing Director of McKinsey & Co, As an Individual
As I said before to your question, I have no idea how McKinsey was involved or not, in that I received a request from Michael Sabia and his office to speak to him, and that's what I did. I had only 30 minutes, because I had a dinner that I had to finish. I joined late. I don't know how long that had been going on for. I know that Mark Wiseman was there.
As far as I was concerned, that was a request from Michael Sabia. It had nothing to do with McKinsey.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Mr. Barton, I've questioned you before, and your routine willingness to say that you didn't know things you should have known has always struck me as profoundly odd.
We have the emails in front of us that show this McKinsey partner knowing your schedule and convening the meeting. If you, as ambassador to China, had people walking into meetings or facilitating meetings and you didn't know who they were or who was organizing the meeting, that is also very strange.
Again, the importance of this is the advantage that was provided to McKinsey. We've heard your thoughts on this, but I don't think it's going to be convincing to anyone.
I want to follow up on another point.
During your last committee appearance, you defended McKinsey's track record overall and you called criticism of McKinsey “anti-capitalist”. It seemed to me at the time, as now, that you missed the critical point that free market capitalism only works when everybody is expected to play by the same rules. McKinsey was not required to play by the same rules. You were able to facilitate what constituted, practically, special access, and then McKinsey made over $100 million selling to this government.
The government has admitted.... The Treasury Board released a press release saying that not all rules were followed in the awarding of contracts to McKinsey. Your colleague, Andrew Pickersgill, was serving the growth council that you led while also facilitating informational meetings with McKinsey's so-called experts, which in fact also led to sales.
I would put to you that this is not capitalism as it should be practised; this is cronyism. It may be how things work in the PRC, but it's not how things work or are supposed to work in Canada.
Do you think these kinds of arrangements were acceptable and ethical?
Former Global Managing Director of McKinsey & Co, As an Individual
As I said before, I'm very proud of the work that McKinsey did. I think you heard from Janice about the impact. You should ask them about whether there was an impact or not in terms of the work.
I think McKinsey followed very ethical processes.
As I said, I'm proud to have done the work with the growth council. It was giving back. It was a wide range of things that we were focused on.
I think McKinsey had to follow the procurement rules. As I mentioned in my earlier statement, in terms of the scale of what was going on—and I'm not saying $100 million isn't a lot—in that last fiscal year of 2022, $22.2 billion was given to different consulting firms.
Yes, McKinsey was doing work. They had to follow the procurement processes, and where it was they—
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Mr. Barton, I will jump in to point out again that the Treasury Board has already said publicly—they put out a press release to this effect—that procurement rules were not fully or “consistently” followed in the awarding of contracts to McKinsey.
In terms of your pride in McKinsey's track record, I want to ask you another question.
This federal government has now joined B.C.'s class action lawsuit against McKinsey over their role in fuelling the opioid crisis. You no longer work for McKinsey, so you have nothing to lose by telling us the truth on this point. When it comes to its work on opioid sales, do you think McKinsey engaged in wrongdoing?
Former Global Managing Director of McKinsey & Co, As an Individual
I'll say a couple of things about that.
First of all, I've listened to what Mr. Palter said, who I think was before the committee. He said that McKinsey did “no opioid sales and marketing work in Canada”. I think it's important to reflect that.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
My question was a general one. Do you think they engaged in wrongdoing?
Liberal
The Chair Liberal Peter Schiefke
I'm sorry, but there is no time for an additional question. I was just letting Mr. Barton respond.
You have another round coming up, Mr. Genuis.
Next we have Ms. Thompson.
Ms. Thompson, the floor is yours. You have five minutes.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you, Mr. Chair, and certainly thank you to the witnesses for coming here.
I'm delighted to join this committee today.
I will start with you, Mr. Barton. I want to say, first of all, thank you for making yourself available to this committee. I was present for the OGGO meeting, and I certainly appreciated how you answered the questions. In much the same vein, I want to say today that on a very personal level, I am offended when, in committees, we question the character of any witness.
Mr. Barton, I'm going to ask what I believe I asked in the last OGGO meeting. Is there anything you would like to say to this committee, in light of the rapid-fire questions and the very brief period of time you've been given to answer questions?
Former Global Managing Director of McKinsey & Co, As an Individual
That's very kind. Thank you.
I would just say, number one, that I'm very proud that an infrastructure bank was created and moved forward. I think it's going to help Canadians move things forward.
The second point is that I believe I was very much operating in the spirit of trying to give something back to the country. This is voluntary work. I think we were given one loonie for each year that we did it, but it was an honour to serve the country. There was zero aspect of this being an opportunity for McKinsey. McKinsey is a very large firm that is very busy and has lots of things to do. This is the last thing it needs for generating work. That's not how it's seen.
I don't want to lose the forest for the trees, in that I think it was important work for the country. I'm excited that a lot of the recommendations actually did go through—not all of them did—and I'm excited about the progress.
Just to reiterate, I think McKinsey has followed all of the processes in the procurement approach, and I hope that we'll be able to look at the facts clearly like that.
Liberal
Joanne Thompson Liberal St. John's East, NL
Thank you.
I'll switch to you, Ms. Fukakusa.
Thank you for coming to committee today. I want to acknowledge the work you do in the not-for-profit sector. I think giving your time and expertise to the community is commendable.
In your opening comments, you referenced similar models of infrastructure banks in the U.K. and Australia. Could you speak to that and what you learned from looking at other infrastructure banks around the world?
Inaugural Board Chair of the Canadian Infrastructure Bank, As an Individual
They are successful in those two jurisdictions because they're able to use public funding—Bruno talked about this a bit—and leverage it for private funding. In other words, they multiply the good of government funding by engaging the private sector to build infrastructure, to fund it and to get it done faster.
That's in essence what it is about. It's a very complicated process, so you can understand that when we were standing up the Infrastructure Bank in Canada, we had to make sure that governance was first and foremost in all the building activity we did. We had to make sure that we had the right constructs and filters so that when the independent board was faced with a recommendation from the investment group, they were comfortable that all the due diligence had been done around it.
I think in the other jurisdictions you see that to this day, and it also shows you the excellent co-operation between the public sector and the private sector in working on the same mandates and the same objectives.