Transport Committee on June 8th, 2023

[Bill Morneau]

Again, of course, I've personally been involved in signing off on documents, but I didn't see this document, nor do I have the—

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

That wasn't the question, either. The question was if you are familiar with the legal concept of perceived or apparent conflict of interest.

[Bill Morneau]

Yes, of course, I have had exposure to these concepts in the past, but I, again, did not have anything to do with this part of the development of the advisory council or the membership.

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

You can't describe for the committee what kind of situation might bring up such a conflict in the context of the advisory council.

It's right in the document. They talk about people who are both involved in designing and setting the table and then sitting down to eat at the table. That would be an apparent or perceived conflict of interest.

I think that really gets to the nub of what some of the concerns are in the context of this hearing, which is that you have the same individuals involved in the advisory council providing the government with advice on how to, in your words, activate the platform of the Canada Infrastructure Bank. They then just move over two seats at the table, sit down and eat from the menu they set. That's the problem here, Mr. Morneau.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Bachrach.

Thank you, Mr. Morneau.

Next we have Dr. Lewis once again.

Dr. Lewis, the floor is yours for five minutes, please.

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

Mr. Morneau, given that the advisory council was led by Dominic Barton and supported by McKinsey & Company, did you see a perceived conflict of interest in that McKinsey was right away awarded consulting contracts by the bank in the amount of $1.6 million, that these contracts were not advertised and that they were sole-source contracts?

Did you see a perceived conflict in that?

[Bill Morneau]

Thank you for the question.

I was pleased, as I mentioned earlier, to have Dominic Barton take the role of chair of my advisory council. The fact that he did that on a pro bono basis was important, and I saw that as a good contribution to what we were trying to achieve.

I had no exposure following that to any decisions that the Canada Infrastructure Bank took on how it was going to determine the best way to execute its mission. I have no knowledge of any contract you're speaking of, so I really have no way to respond.

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

Mr. Bachrach was asking you about whether or not you had any understanding of the legal concept of a perceived conflict.

I'm asking you about someone who you said acted out of altruism, worked for free on an advisory council and then their company was awarded $1.6 million in a contract that was not advertised and was a sole-source contract. Does that jibe with your legal concept, which you said you have an understanding of, of a perceived conflict?

[Bill Morneau]

Again, I have no way of answering that question. I have no knowledge about any contract that was or wasn't reported. I have no understanding of any process that might have taken place.

I just have no way of responding other than to say that during the period in which I was engaged in working on the advisory council, we sought out people who could help us with thinking about long-term economic prosperity and develop ideas that we then had as part of our decision-making framework as we considered our plans.

Some of those decisions and those discussions were helpful and some weren't.

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

On a point of clarification, are you telling me that you were not aware that McKinsey was later awarded or benefited from obtaining a sole-source contract from the Canada Infrastructure Bank during your tenure? You weren't aware of that?

[Bill Morneau]

I was at no time aware of that. I had no knowledge prior to any of these committee meetings.

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

As part of the pitch to the CIB's executive, McKinsey actually referenced its deep understanding of the bank and surrounding context, which it gained from the economic advisory council. It seems obvious to me that as a minister or as government, you would have made some effort to ensure that the consultant clients are not inappropriately benefiting from inside knowledge.

In this study, we also confirmed that many McKinsey clients have been or are currently clients of the bank.

Were you ever concerned that McKinsey might be benefiting in any way from the work that it did on the economic advisory council?

[Bill Morneau]

I was at no time involved in any meetings with McKinsey about work they might have been part of for the government. I have no exposure to any of that work. I had no concerns with working on the advisory council. It was an effective council. It helped us with thinking about long-term economic decisions.

Again, I had no meetings during my entire time as minister of finance with McKinsey.

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

You were the minister in charge of creating the bank, so wouldn't it be normal for you to put in place some due diligence to ensure that a company that was predominantly working on the advisory council did not then inappropriately benefit from its deep knowledge of the bank?

[Bill Morneau]

As I mentioned earlier, one of our key goals with the set-up of the Canada Infrastructure Bank was to make sure that it was able to operate independently of government. We saw that as an advantage.

Of course there would've been significant deliberations on the right processes to put in place in that institution. I know that the public service, the department of infrastructure and the Department of Finance would have worked on making sure those processes were put in place and then of course it would've been up to the Canada Infrastructure Bank itself to follow those processes that had been agreed to at the outset.

I was not involved in that.

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

Were you aware—

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Dr. Lewis. Unfortunately, there's no time left.

Thank you, Mr. Morneau.

Next we have Ms. O'Connell.

The floor is yours for five minutes, please.

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

Thank you, Mr. Chair.

Thank you, Mr. Morneau. It's good to see you again. We've done this a lot at committee together over the years.

I wanted to start with that last question in terms of the perceived conflict for a sole source. It was unfortunately a trick question for you, because we heard testimony that there was no sole source contract to McKinsey. In fact, there were three firms that were considered, so it would actually be impossible for you to make a determination on whether something was conflict of interest based on a sole-source contract that was in fact not sole-sourced and in fact had a whole internal process on how to issue contracts that had a minimum of looking at three potential bidders.

In this case, one was deemed to not be able to provide the work, but there was still two that moved forward, so I just wanted you to know that the question presented to you was in fact a trick. When you don't have facts on your side, you have to resort to misinformation, I guess.

Mr. Morneau, it's hard to be anywhere in this country right now and not think about climate change, the forest fires, that Canada is burning and the impact on our country in dealing with that. One of the things that I know was important to you and certainly important to our government was dealing with climate change.

We've heard testimony in other studies about how we need every tool in the tool box to deal with climate change and climate change adaptation. Was dealing with climate change, reducing emissions and doing so with industry partners a factor in why the Canada Infrastructure Bank was something that not only you testified here today was something you had been looking at, but something that was important in terms of the government's overall climate action?

[Bill Morneau]

Well, thank you, and it is nice to be back in at least a virtual meeting with you after a few years.

One of the things that we saw as critically important with the Canada Infrastructure Bank was the need for us to rethink infrastructure in ways that were going to be resilient against climate change. We do need to think about policies that are going to reduce our carbon emissions. We also need to think about how we both adapt and mitigate the challenges that we are facing up to and that in many cases will require significant investment.

We knew that the government couldn't make all those investments itself, that we're going to need to crowd in private sector investments in order to have the kinds of investments that will be there for the long term: investments that range from the kinds of roads we'll have, with the kinds of charging stations that we'll need, to our electricity grids and the way that we're going to be able to get energy around our country.

Those kinds of investments were on our mind, certainly, as one of the potential advantages of the Canada Infrastructure Bank crowding in private sector investment, making it good for the economy but also good for our ability to deal with climate change.

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

Thank you for that.

There has been testimony during this study of what existed previously was P3 Canada, and there was a suggestion of, why not just keep going with that? Why create the Canada Infrastructure Bank at all? I would like to get your thoughts, since you led this creation and recommended it.

P3 Canada had, I think in over 10 years or around 10 years, 25 projects and only 1.3 billion dollars' worth of investment. Meanwhile, the Canada Infrastructure Bank, since its inception to date, which has existed for a lot less time than P3 Canada.... The Canada Infrastructure Bank currently has 46 projects and has leveraged 35 billion dollars' worth of investment. Did you think about continuing P3 Canada? If so, why did you choose to move with the Canada Infrastructure Bank, which seems to be the better decision? What was your thinking at the time?

[Bill Morneau]

Our thinking at the time was that we needed to consider the best ways to ensure that we were going to able to significantly enhance our investment in infrastructure in the country.

We wanted to find a way to make sure that large sources of capital would come into Canadian infrastructure. We were looking at the Canadian pension funds, as an example, that are investors in infrastructure around the world, and we wanted to find a way to make sure that they would have the opportunity to make those similar investments in Canada.

It was really very much about.... It wasn't criticizing what had come in the past. It was ramping up so that we could be much more impactful in the future.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Morneau.

Thanks, Ms. O'Connell.

Go ahead, Mr. Barsalou‑Duval. You now have two and a half minutes.

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

Thank you, Mr. Chair.

I want to go back to something that happened in the past.

Mr. Morneau, you mentioned that Dominic Barton volunteered for you on the Advisory Council on Economic Growth. However, Michael Sabia also volunteered on the same council, which was used to provide advice on how the Canada Infrastructure Bank would operate in the future.

I find that interesting, because Mr. Barton and McKinsey subsequently obtained $1.6 million in contracts from the Canada Infrastructure Bank, just after Mr. Sabia was appointed chair of the bank's board of directors, among others, when he too had volunteered on the board that helped set up the bank and that you yourself recruited. You'll understand that it seems a bit incestuous to me to see that, as one of my colleagues said earlier, the people who set the table are also the ones who will eat at it.

Don't you see that as a conflict of interest?

[Bill Morneau]

It was, from my perspective, important that we sought out people for my advisory council on growth who would be able to bring a perspective to the table. That included people like Dominic Barton and Michael Sabia. It included others who had significant expertise in other domains both across Canada and around the world.

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

Mr. Morneau, what I'm talking about are people who volunteered for you on the Advisory Council on Economic Growth and who subsequently received funding from the Canada Infrastructure Bank. That's what I'm talking about.

Don't you find that odd?

Don't you see that there is at least the appearance of a conflict of interest?