Transport Committee on June 8th, 2023

[The Chair, Liberal, Peter Schiefke]

I call this meeting to order.

Welcome to meeting number 74 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, May 30, 2023, the committee is meeting to discuss its study on the role of McKinsey & Company in the creation and the beginnings of the Canada Infrastructure Bank, and pursuant to Standing Order 108(2) and the motion adopted on Thursday, February 3, 2022, its study on the large port infrastructure expansion projects in Canada.

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 members that all of the witnesses appearing before us today have been sound tested and have passed the test for the benefit of our interpreters.

With us today, as an individual, appearing for the first hour, is the Honourable Bill Morneau, P.C., former minister of finance, by video conference.

I'd like to welcome you to our committee today, Mr. Morneau. Thank you for very much for your time.

In the second hour, we will be discussing and going through the clause-by-clause, in camera, of our study on large port expansion projects in Canada.

We will begin right away to ensure that we don't lose any time with our line of questioning.

We do not have opening remarks by Mr. Morneau.

I will turn the floor over to you, Dr. Lewis, to get things started.

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

Thank you, Chair.

Thank you, Mr. Morneau, for coming. It's nice to see you here. I'm glad that your headset is working today.

Canadians are told that the Canada Infrastructure Bank is independent and at arm's length from the government, but right from the very beginning, it seems the government was quite hands on in directing the bank's management and investment decisions.

We heard from Mr. Sabia, who testified before this committee on Tuesday, May 16, 2023. He stated that after you appointed him as board chair in April 2020, you asked him to seek outside advisers for the Infrastructure Bank.

I'll quote Mr. Sabia:

He asked—

That was referring to you, Mr. Morneau.

—whether in working with the management of the bank and outside advisers we could accelerate the activity of the bank and, what was called at the time, the growth plan for the bank.

Yes, you are correct that in order to do that in the quickest and most economical way, the decision taken at the time was to use some of the people from McKinsey who had been involved in the initial thinking around the Infrastructure Bank, to draw on their accumulated knowledge of this so that we wouldn't have to start from ground zero and [we] would be able to move...quickly....

At that time, you, a Liberal minister, steered the Infrastructure Bank to giving a sole-source contract to high-priced McKinsey consultants.

Would you agree that this was inappropriate for you, as a minister of the government, to instruct the Crown corporation about hiring outside consultants?

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

Well, first of all, thank you. It's a pleasure to be back and to have the opportunity to speak to this committee. I appreciate the work that you're doing, the work in particular around looking at how we can have investments in infrastructure. I think that is very important.

I want to make sure I can be heard appropriately.

Can people hear me?

[The Chair, Liberal, Peter Schiefke]

Yes, we can hear you very well, Mr. Morneau.

[Bill Morneau]

Okay, thank you.

I want to say that from day one, it was important, from the government's perspective, in setting up the Canada Infrastructure Bank, that we set up something that was independent from government. The idea behind the institution was that it could accelerate investment in infrastructure in Canada.

Our conclusion was that a Crown corporation, separate from management by government, would be the best way for us to do that. That was the conclusion reached early on, and certainly that was the way we saw the Canada Infrastructure Bank during my entire time in office.

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

Thank you for your background information, but my question was directed at whether or not you instructed Mr. Sabia to hire outside consultants. That was his testimony.

Is that correct? Did you instruct him to do that?

[Bill Morneau]

No.

At no time was I involved in the management or the direction of the Canada Infrastructure Bank. That would be separate from the role of minister of finance. I had no involvement at any time in discussions on who would or would not be used to help the Infrastructure Bank to achieve its goals.

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

Thank you for that answer.

I also understand that you had a meeting between the.... There was a meeting between the Prime Minister, BlackRock CEO Larry Fink and Dominic Barton that announced...and then Dominic Barton became the chair of your advisory council. That advisory council helped conceptualize the Canada Infrastructure Bank. Is that correct?

[Bill Morneau]

The conception of the Canada Infrastructure Bank really came over a long period of time. We had it in our election campaign platform in 2015. My background in this area goes back, though, much further. Back in 2012 I was asked by the Ontario government to help set up a new independent pension organization consolidating smaller pension funds so that we could have the potential for those funds to invest more in infrastructure.

So I have a long history in looking at how investment infrastructure can be increased. That was one of the reasons we came to the table in the 2015 election with the idea of the Canada Infrastructure Bank, which was then, of course, subsequently considered and eventually implemented. But it was a long time in development.

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

How long had you known Dominic Barton? How well did you know him before you appointed him chair?

[Bill Morneau]

I didn't know Dominic. I certainly knew of Dominic's strong reputation as one of Canada's leading international business people. I had pretty limited exposure to him prior to my time in office. I can't remember if I'd ever actually met him, but certainly I was delighted that he was willing to come on board and be part of our advisory council.

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

Did you have any role in getting the Canada Infrastructure Bank to award the first project investment to Mr. Sabia's pension fund, la Caisse de dépôt et placement du Québec, Quebec's largest pension fund

[Bill Morneau]

No.

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

The Infrastructure Bank was set up by an act of Parliament in June 2017. Usually a Crown corporation is set up by an act of Parliament and draws on the capability of the public service. Why did you not draw on the capability of the public service?

[Bill Morneau]

I'm sorry. I don't have an appreciation for exactly how that process worked. What I can say is that we went through a process of deliberation on how best we could set up the Canada Infrastructure Bank. We then went through the normal procedures for doing that, including considering the budgetary issues and the implementation.

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

Why was a McKinsey-led economic advisory council chosen over our qualified public service?

[Bill Morneau]

In fact, one of the things I thought were important when we came into office was to make sure we had advice from all sectors of the economy as we considered our economic plans. The idea behind the advisory council on growth—

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Morneau.

We'll go on to our next member. That will be Mr. Rogers.

Mr. Rogers, the floor is yours. You have six minutes for your questions, sir.

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

Thank you, Chair.

It's good to see you, Mr. Morneau.

We are discussing the Infrastructure Bank today. I want to make a few comments about that first, and then I will turn it over to you for a couple of questions.

During Mr. Ehren Cory's testimony last month, he said that the CIB looks to invest in projects that have become stuck and to encourage private partnership investments by reducing market risk.

Looking at the CIB's broadband investments, for example, Mr. Cory stated that if the CIB were to be abolished, those projected broadband connections would be abandoned. The CIB is helping to fill the gaps for profit companies, I guess you would call them, not found a business case to provide service for.

When you look at, for example, the broadband work that's going on across the country, our government has committed to connecting all Canadians to the Internet to give them an opportunity no matter where they live to be able to use the broadband and Internet services of providers. This would never happen without investments from our government.

It's very clear that Bell, Rogers, Eastlink and others in rural Newfoundland and Labrador had eliminated or omitted providing services to many small communities in my riding of Bonavista—Burin—Trinity and other places in Labrador and across the country. Rural communities were being left out of the loop.

The COVID period really highlighted why it was so critically important that we do what we're doing. This was done for school children who spent time on the systems trying to learn while everybody was shuttered during COVID. It was important in the medical field for doctors. Connectivity was critically important to help them deal with treating their patients. Rural Canada is benefiting immensely from our investment in Internet services across the country.

Based on that and based on, for example, continuous upgrades that are happening now because of our investment in fibre optics in communities like Grand Bank at the tip of the Burin Peninsula, Marystown and others, why do you think this is important for Canadians socially and economically?

[Bill Morneau]

First of all, thank you very much for the question and the background. I certainly share your views that it's critically important for us to think about different ways that we can encourage the investments we need across Canada. The Canada Infrastructure Bank was charged, really, as one of the institutions that could help encourage private investment that's more significant.

On the specific issue around ensuring that we have the appropriate broadband coverage across our country, we obviously have a country that has high levels of density and places where there are very low levels of density in terms of people. This makes it challenging for telecommunications companies to make the investment required in the places that are hard to get at.

It's the exact kind of application we thought of when we thought about the Canada Infrastructure Bank. How can we find a way to ensure that private investments will come to places that are important for Canadians and do it in a way that has a positive economic outcome, but also, as you say, a positive social outcome?

I'm encouraged to see that sort of work happening. I think the Infrastructure Bank, as you mentioned in your comments, has the ability to create financial instruments that make it more possible to make those kinds of investments. We would certainly be less well off, both socially and economically, if those investments didn't happen.

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

I would like for you, in the minute or so left, to tell the committee why you feel it's important for all political parties and all levels of government, federal, provincial, municipal, to support getting infrastructure projects built for Canadians.

[Bill Morneau]

Thank you.

That was the backdrop to the discussions we had both prior to getting into government in 2015 and in the early days as we considered the Canada Infrastructure Bank. We recognized that with a growing population, the importance of ensuring we have the capacity to continue to live a prosperous life with strong infrastructure, we were going to need to escalate the amount of investment in infrastructure.

We knew that putting in place the Canada Infrastructure Bank wouldn't crowd out private investment. In fact, it would “crowd in” private investment—increase the amount of investment. We saw the possibility of getting five dollars of private investment for every dollar of investment from the Canada Infrastructure Bank. Moreover, investment in infrastructure has what they call a positive multiplier effect on growth in the Canadian economy. We saw that as a win-win-win: a win for Canadians having better infrastructure; a win for the investors; and, of course, a win for the economy with the growth that comes out of those investments—a very positive outcome in all regards.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Rogers.

Thank you, Mr. Morneau.

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

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

Thank you very much, Mr. Chair.

Thank you for being with us, Mr. Morneau. The last time you were to appear before the committee, you were unable to, much to my regret and the regret of all the members of the committee, I imagine.

Since I don't have much time, I'll get straight to my questions.

Mr. Sabia mentioned in his testimony that it was you who had brought him on board as a member of the Advisory Council on Economic Growth.

Is that correct?

[Bill Morneau]

Thank you for the question.

I'm certainly happy to be here with the committee this morning and am pleased to take your questions.

I can't say that I recall, specifically, a conversation with Michael Sabia. However, I know I held Michael Sabia in high regard and would have been supportive of him joining the advisory council because of the expertise he brought to the table as a former public servant and as someone who had been a CEO.

Yes, I would have been very supportive of that, and I likely made that phone call.