Madam Speaker, as we know, on June 10, the House voted on a motion ordering the government, Sustainable Development Technology Canada, or SDTC, and the Auditor General of Canada to each table documents with the Law Clerk and Parliamentary Counsel, within 14 days following the adoption of the order, and for those documents to be turned over to the RCMP.
The Bloc Québécois is of the opinion that the documents not being produced as requested is a breach of privilege. I would remind members that, on Thursday, September 26, the Speaker ruled that this is a prima facie case of privilege.
We have been debating the motion to refer the matter to the Standing Committee on Procedure and House Affairs since last Friday, which has changed the House's agenda since privilege motions take priority. Since last Friday, the work of the House has been monopolized by this question and there is no legislation on the orders of the day.
Let us go back to the genesis of this foundation. SDTC is a foundation that was designed to lose control of public funds. Sustainable Development Technology Canada is condemned to inefficiency and waste because it has a design flaw. Let us go back to its creation to understand what is happening today.
When the 1995 referendum happened, Ottawa got spooked. After realizing that it was was essentially absent from Quebeckers' lives, the federal government began a major government restructuring that would benefit the federal government at Quebec's expense. At the time, Paul Martin was the finance minister, and the president of the Treasury Board was Marcel Massé, who was also a former clerk of the Privy Council. He used his expertise on the machinery of government to make some major changes that would make it so that Quebec would be stretched to the limit, while Ottawa would have plenty of financial leeway.
By doing so, he thought Quebeckers would begin to see the federal government as their government, the one they could turn to to meet their needs and to help them get things done. Perhaps they would change their allegiance. Perhaps Quebeckers would become Canadians.
Marcel Massé made no secret of what he was doing. He said, “When Bouchard”, referring to Lucien Bouchard, then premier of Quebec, “has to make cuts, those of us in Ottawa will be able to demonstrate that we have the means to preserve the future of social programs.” That says a lot.
He succeeded in part. Deep cuts to health and social services transfers—a 40% reduction in transfers over three years—forced the Quebec government to make cuts of its own. Everyone remembers nurses retiring en masse. The health care network never fully recovered. The Parti Québécois and the independence movement lost their progressive sparkle and were at death's door as a result.
Ottawa began running large surpluses, surpluses so indecent in a time of austerity that they had to be covered up and camouflaged. That is how Marcel Massé came up with the idea of creating a series of foundations. By pouring large sums into these foundations, he emptied the federal coffers, shrank its surplus on paper and was able to then continue refusing to increase transfers that would have kept services afloat for the people under Quebec's jurisdiction.
However, to ensure that the money paid to the foundations was taken out of the books, the government could not have direct control over it. The loss of control over public funds is no accident. It was necessary for the scheme to work.
In 2005, former auditor general of Canada Sheila Fraser published a scathing report, one chapter of which was entitled “Accountability of Foundations”. She found that the federal government had transferred $9 billion to 15 foundations from 1998 to 2002 alone. Those $9 billion are equivalent to $17 billion today. She also found that the government had no control over $7 billion of that $9 billion.
These foundations provided scholarships, through the Canada Millennium Scholarship Foundation; supported research, through the Canada Foundation for Innovation and Genome Canada; supported public infrastructure, through the Canada Strategic Infrastructure Fund, which dealt directly with the municipalities in order to circumvent Quebec City's control; and fostered industrial innovation. The message was clear: The future is in Ottawa.
Created in 2001, Sustainable Development Technology Canada was one of the 15 foundations that were mentioned by the auditor general of Canada in 2005 and that were operating with practically no government oversight.
The loss of control over public funds at Sustainable Development Technology Canada is no accident. The foundation was created with that goal in mind.
Nineteen years after the former auditor general published her report in 2005, including ten years of the Harper government, SDTC still exists, and the loss of control over public funds has not been resolved. The same goes for the other foundations.
This brings us to the scandal and the issue that we have been debating for the past week. The Conservatives would like to turn this into a Liberal scandal, but the problem runs deeper than that and it transcends party lines. The situation at SDTC points to a widespread problem within the federal level. This foundation is only a symptom of a generalized cancer. The federal government is appallingly inefficient and treats public funds like Monopoly money.
While we are here discussing federal waste in Ottawa, Quebec is struggling to fulfill its responsibilities, which include almost all public services. As the Parliamentary Budget Officer reiterates every year in his fiscal sustainability report, the cost of Quebec's and the provinces' responsibilities is rising faster than their revenues, and Ottawa is taking in more money than it needs to fulfill the responsibilities that are strictly its own.
The consequences of this fiscal imbalance are manifold. The Quebec government is stretched to the limit. Once it has paid for the most essential services, there is not enough money left over to enable Quebeckers to make societal choices and shape their own social, economic and cultural development.
The federal government has no such constraints. It has so much money left over that it can afford to meddle in affairs that are none of its business, and it feels no need to manage its programs efficiently.
The waste in the current federal system is a natural result of the fiscal imbalance, and it extends to all areas of government activity. Let me give just a few examples. It costs Ottawa two and a half times more to process an EI claim than it costs Quebec to process a social assistance claim. It costs the federal government four times more to issue a passport than it costs the Quebec government to issue a driver's licence. Lastly, before the Sainte-Anne-de-Bellevue veterans' hospital was transferred to Quebec, each procedure performed there cost two and a half times more than a similar procedure performed in a Quebec-run long-term care home. If Ottawa were in charge of health care, we would not be able to afford medicare. Even if every penny of the government's revenues went into the health care system, it would still not be enough.
We cannot say it enough. It is not just a Liberal scandal. Waste and interference are inherent to the federal system, no matter which party is in power.
Speaking of which, in 2014, the Government of Quebec released an expert panel's report on federal intervention in the health and social services sector from 2002 to 2013. The Harper government was in power for nearly all of that period.
The report identified 37 federal programs that interfered in health care under the Conservatives. The transfers in question were not very generous in terms of dollar amounts, but the interference was very significant and very costly to manage, and the public did not get its money's worth. In fact, the expert panel calculated that the amount it cost the Government of Quebec to deal with this interference exceeded the amount of the transfers, leading the panel to conclude that it would be more cost-effective to just turn down the money.
In other words, many federal programs are a complete waste of taxpayers' money. There is $1 billion being spent here and $10 billion being spent there, with no oversight and no obligation to produce results. Even though Ottawa does not provide any direct services to the public—except to indigenous peoples and veterans, and we all know how that is working out—it found a way to hire an additional 109,000 public servants since 2015. Imagine what those 109,000 people could have accomplished if Quebec and the provinces had hired them to care for the sick, teach children or even repair roads.
Once again, let us come back to SDTC. This time, let us consider the recent report of the Office of the Auditor General. On June 4, the Auditor General published her performance audit report on SDTC. She analyzed the organization's activities between April 1, 2017, and December 31, 2023.
In short, the Auditor General's report indicates that there were serious governance issues with the fund. The main problems were mismanagement of conflicts of interest and a lack of clarity surrounding the criteria for awarding grants.
The Auditor General determined that the foundation's management of conflicts of interest was flawed. As a result, the board of directors was not informed of conflicts of interest in a timely manner. According to the report, some directors voted on or participated in discussions about certain items even after declaring a conflict of interest. The Auditor General found that the board of directors relied on members to declare conflicts rather than maintaining a register of conflicts of interest. The foundation set up a register in 2022, but there were inconsistencies between the meeting minutes and the register. The Auditor General identified 90 cases, involving $76 million, where the conflict of interest policy was not followed. According to the directors, the inconsistencies identified by the Auditor General were not policy violations, but errors in the minutes. However, the Auditor General pointed out that the board of directors is responsible for correcting the minutes when they are approved.
In the case of COVID-19 payments, the Auditor General found that some members apparently voted in violation of the policy. The directors argued that they had obtained legal advice to the contrary. Lastly, the Auditor General noted that the policy lacked specific guidance to address potential cases of perceived conflicts of interest. She identified five cases where directors' business or personal relationships gave the appearance of a conflict of interest.
As for the criteria for awarding funding, the Auditor General found that, since the eligibility criteria for projects were vague, some projects were approved even though they did not meet the goal and objectives of the fund. This also led to situations where the external consultants in charge of providing advice on project selection contradicted the fund employees, since the instructions that had been sent were vague. SDTC disputes some of the Auditor General's findings, claiming that the documentation she analyzed did not reflect SDTC's extensive analysis of the projects. SDTC says it did its due diligence on each of the projects and that the comments from the external consultants were incorporated into its analysis. Who are we to believe?
Now let us talk about whistle-blowers. As we know, whistle-blowers reported concerns in 2022 about SDTC's management of public funds and human resources. Let me provide an overview of the chronology of events. According to the information reported by the media, in November 2022, whistle-blowers initially approached the Office of the Auditor General to raise concerns about the management of public funds and human resources within SDTC. The OAG suggested that they send their complaint to the Privy Council Office. The Privy Council Office received a 300-page document from the whistle-blower group containing allegations dating back to February 2022. Shortly after, senior officials at Innovation, Science and Economic Development Canada, or ISED, took charge of the file.
On November 1, 2023, the media reported that the whistle-blowers had sent them recordings of conversations with senior departmental officials, in an attempt to force the government to change the way it was handling the allegations about the foundation's governance and management of contributions. On the same day, the Office of the Auditor General announced that it was going to conduct an audit on how SDTC was financing sustainable development technologies within the department's portfolio.
The next day, Andrew Hayes, the deputy auditor general, appeared before the House of Commons Standing Committee on Public Accounts and said that his office was still in the process of determining the full scope of the audit. He said he expected that the audit would be completed before Parliament rose for the summer in June 2024.
Four days later, on November 6, the Minister of Innovation, Science and Industry appeared before the House of Commons Standing Committee on Access to Information, Privacy and Ethics to discuss allegations regarding the governance and management of contributions by SDTC. Among other things, he said that his department had requested that the foundation “take the necessary steps to conduct an in‑depth review of the allegations regarding its management of human resources.” That review was to be directed by an independent law firm, which would subsequently inform the minister of its findings.
Two days later, on November 8, SDTC officials including Leah Lawrence, president and CEO; Sheryl Urie, vice president of finance; and Annette Verschuren, chair of the board, appeared before the Standing Committee on Access to Information, Privacy and Ethics.
During this appearance, Ms. Verschuren admitted, for one, to having proposed a motion to the SDTC board of directors that led to $217,000 in additional funding during the COVID‑19 pandemic for NRStor, a company she has run since 2012. She also confirmed to the committee that she receives an annual salary of $120,000 from that company. Ms. Verschuren said she proposed the motion after the board sought and received legal advice that there was no need to re-declare previously declared conflicts of interest regarding ongoing projects, and that the additional funding was for all existing projects, not individual ones. She also asserted that all SDTC-funded organizations received the same treatment and the same amount of money.
On November 10, Ms. Lawrence resigned from her position at SDTC. Media outlets reported that she wrote the following in her resignation letter: “Given recent media reports, House of Commons committee testimony, and the surrounding controversy, it is clear there has been a sustained and malicious campaign to undermine my leadership.”
A week later, on November 17, the media reported that Konrad von Finckenstein, the interim Conflict of Interest and Ethics Commissioner, decided to review the issues raised by the decisions made by Ms. Verschuren in connection with NRStor. Three days later, on November 20, Ms. Verschuren stepped down from her position at SDTC. In a statement thanking Ms. Verschuren, SDTC said, “The Board of Directors will meet this week to review the response to the Management Response and Action Plan put forward by Innovation, Science and Economic Development (ISED), with the objective of submitting the response to ISED on December 1 and getting new funding flowing to Canadian entrepreneurs as soon as possible.”
It seems clear that SDTC did not always manage public funds according to the terms and conditions of the contribution agreements and of its legislative mandate. As I said earlier, this is baked in its very structure, and that has been the case since its creation. It is also clear that the oversight by Innovation, Science and Economic Development Canada did not guarantee that the public funds were administered according to the terms and conditions of the contribution agreements and the applicable government policies.
That is how the saga played out. I would like to remind members that, last June, the House voted in favour of a motion compelling the government to produce documents by a certain deadline, which was not met. The government is refusing to provide the documents. However, Parliament's power to compel the production of government documents has been clearly established. The only limit to the House's ability to demand whatever information it deems necessary from the government is the good judgment of the House, not the goodwill of the government. Otherwise, the very principle of responsible government is meaningless.
On June 10, the House made its position clear. It ordered the government to hand over a series of documents to the law clerk of the House so that he could forward them to law enforcement. The government failed to comply, thereby breaching the privilege of the House. There may be a good reason for this, but it does not change anything. As I was saying, the only limit to the House's ability to demand information is the House's good judgment, not the government's goodwill.
I will stop there so that I have time to answer my colleagues' questions.
