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Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources

Issue 11 - Evidence

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OTTAWA, Tuesday, June 5, 2001

The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill C-4, to establish a foundation to fund sustainable development technology, and Bill C-3, to amend the Eldorado Nuclear Limited Reorganization and Divestiture Act and the Petro-Canada Public Participation Act, met this day at 5:50 p.m. to give consideration to the bills.

Senator Nicholas W. Taylor (Chairman) in the Chair.

[English]

The Chairman: This meeting is to consider both Bill C-3 and Bill C-4. Bill C-3 amends the Eldorado Nuclear Limited Reorganization and Divestiture Act and the Petro-Canada Public Participation Act. It will basically change the ownership percentages.

I believe that we plumbed the depths of the bills in earlier meetings. We heard from the chief executive officers of both companies. This bill is sponsored by Senator Banks.

Are there any questions?

Senator Banks: Mr. Chairman, I would ask that you make that question even more specific. If we are to proceed with clause-by-clause consideration before the minister arrives, I would suggest that you ask for either the unanimous consent of the committee or, in the alternative, if anyone on the committee wishes to ask any question of the minister with respect to Bill C-3.

The Chairman: Does anyone on this side of the table wish to ask a question of the minister concerning Bill C-3?

Senator Adams: I have a question about Petro-Canada and whether the shares of the government will be put on the open market.

The Chairman: The shares they hold are open market shares and they can always be sold.

Senator Adams: Can they be held by either Canadians or for foreigners?

The Chairman: The bill would allow anyone, foreigner or non-foreigner, to own up to 20 per cent. Shares could be sold to a foreign owner or sold on the open market.

Senator Adams: Is there already 25 per cent foreign ownership in Petro-Canada?

The Chairman: That ownership is about 14 per cent.

Senator Banks: I believe 85 per cent is owned by Canadians.

Mr. Don Cunningham, Economist, Economic and Fiscal Analysis Division, Natural Resources Canada: It is at least 20 per cent foreign-owned. Approximately a year ago, it was 16 per cent or 17 per cent foreign owned.

The Chairman: The question was how much the Canadian government owns.

Mr. Cunningham: That is 18 per cent.

The Chairman: When they divested in the past, it was done through the public market. I do not know why they would change that procedure.

We could adjourn the meeting again, if you wish. I was hoping to proceed to clause-by-clause examination so that we would only have Bill C-4 left. However, if there are some questions for the minister, I will suspend the meeting until he arrives.

Senator Spivak: I wish to ask something that we asked the head of Petro-Canada. We know that 85 per cent is owned by Canadians. He was quite clear that the reason for lifting the foreign ownership was to encourage investment. That investment will come from the big mutual funds, because that is where the money is. The question I asked was: Of what benefit is that to Canadians? This is a company that was formed with a considerable amount of public investment, and we are changing the law to enable it to be a corporation like any other. That is fine. I asked them about the loans; however, I do not know if we got that straight.

The Chairman: You were talking about PIP grants, which are different.

Senator Banks: What loans? We may be able to answer that question here.

The Chairman: I had a question about any past Petro- Canada loans that had been forgiven by the Canadian government. I was not referring to PIP grants. PIP grants are totally different. My question was concerning a plain, old-fashioned loan.

Senator Spivak: The question remains. We are here to represent the public interest.

The Chairman: I will use my prerogative and suspend the meeting until the minister arrives. Does the staff want to answer questions without the minister here?

Mr. Cunningham: That was one of the questions that you raised, and we did prepare a response.

Senator Spivak: If we are on the public record, it would be a good idea to get the minister who is responsible for this policy to tell us what benefit there is to Canadians. We understand the benefit to the corporation.

The Chairman: I hear you. You won the day. If the committee members were unanimous, we would be able to proceed to clause-by-clause consideration. However, there is no unanimous consent to do that. Therefore, we will suspend the meeting until the minister arrives.

The sitting of the committee was suspended.

The committee meeting resumed.

The Chairman: We will address Bills C-3 and C-4 in this meeting. We will deal first with Bill C-3.

Senator Adams: Last week, our committee heard from the representatives of Petro-Canada. The government still has an 18 per cent shareholding in Petro-Canada, which amounts to approximately 120,000 shares. After this bill is passed, will those shares be placed on the open market? Is there a regulation that foreigners can only hold up to 25 per cent? Presently foreign ownership is limited to 16 per cent. I know that foreigners, especially Americans, are anxious to buy our oil company shares. Is there a guarantee that foreign ownership cannot go above 25 per cent?

Hon. Ralph E. Goodale, Minister of Natural Resources and Minister Responsible for the Canadian Wheat Board: Under the present law, individual shareholdings are limited to 10 per cent. This legislation proposes to increase that to 20 per cent. In terms of aggregate shareholdings, the present limitation is 25 per cent, and we are proposing to remove that restriction. Under the new law any individual shareholding, whether it is domestic or non-resident, will be limited to 20 per cent.

There is also a clause in the bill which amends section 9 that prohibits groups of shareholders coming together in an association to combine their individual holdings in such a way as to defeat that limitation of 20 per cent.

I believe Mr. Brenneman explained the impact of that limitation in the act. It is intended to safeguard against the situation where a group of shareholders, whether they are domestic or foreign, would come together to act in concert to circumvent the limitation. Section 9 effectively protects against that.

Senator Adams: During the 1980s Petro-Canada did not find much oil in the Arctic or even in the Mackenzie Delta area. Since the 1980s a few Inuvialuit have settled their land claims and we now have the Government of Nunavut. I do not know how interested the Government of Nunavut and the Inuvialuit are in buying shares in Petro-Canada. I would like to protect those 18 per cent of the shares of Petro-Canada. I do not know if those people have money or not. At least those people already have an interest. Some companies are Canadian-owned to the extent of 100 per cent, and others are Canadian-owed 75 per cent with 25 per cent foreign owned. I do not know whether the people in the western Arctic have any majority ownership in oil and gas. Perhaps the first to buy has the choice. Is that the way it works with the government?

Mr. Goodale: I gather the question is, what is the government's intention with respect to the 18 per cent of the shares that we own.

Senator Adams: Yes.

Mr. Goodale: When that original divestiture took place a number of years ago, the Government of Canada essentially undertook to conduct itself as a passive shareholder. That is, they did not interfere in the management or the direction of the corporation but simply held its shares in a passive manner. That is how the Government of Canada has conducted itself. We have been asked what our plan is regarding the 18 per cent, and we have indicated on a number of occasions that we propose, at the appropriate time, to dispose of that 18 per cent. We have one objective in mind, and that is to maximize the advantage to the shareholder.

No decision has been made as to when that action will be undertaken. That is a judgment call to be made at some future date. However, we do propose to dispose of that 18 per cent at the appropriate time when, in our judgment, we would maximize the result for taxpayers.

Senator Kenny: Welcome, minister. Following on from Senator Adams' question, what is the case for retaining an interest in Petro-Canada? You talked very much in the future tense. I did not get the impression you had retained an investment counsellor.

Mr. Goodale: They come to me all the time offering their services.

Senator Kenny: They are like that.

Mr. Goodale: It is a judgment call as to when the circumstances are appropriate. Quite frankly, if I were to speculate about timing or, more particularly, if the Minister of Finance were to speculate, because it is the Department of Finance that is legally the shareholder, we would find ourselves inadvertently influencing the marketplace.

There were good and valid public policy reasons for the shareholdings in the first place. Over time, that has changed. Those public policy reasons no longer exist. Accordingly, we would propose to divest the remaining shareholdings whenever the circumstances are right.

I probably should leave it at that, because any speculation on timing might well have an influence on public markets, and I should not do that.

Senator Kenny: The government holding has been described as an overhang. You can read "overhang" as being pejorative. When we asked the president of Petro-Canada why it was an overhang and deemed to be one that would reduce the value of the shares so long as the government stood in, he said it had to do with how the government would need to dispose of the shares, that it would need to dispose of them broadly.

Given your goal of maximizing return to the people, was consideration given in the recent past to actually disposing of the shares in a lump, or in larger lumps than is currently contemplated?

Mr. Goodale: Senator, at this stage, in terms of methodology for the disposal of the shares, all options are open. No option has been either accepted or rejected. Our guiding principle will be: How can we, at the right time, dispose of these holdings to maximize the return to the shareholders?

Senator Kenny: Perhaps I misunderstand. Are you saying that the government can dispose of 18 per cent to one entity?

Mr. Goodale: Hypothetically, that is possible, if the price is right.

Senator Kenny: This is an important distinction. Perhaps the minister should seek counsel on this. If you want advice, go ahead.

Mr. Goodale: I wanted to check as to whether there was any legal restriction that would prevent us from doing that. There is none to my knowledge at this moment.

Senator Kenny: Certainly, I thought the gist of the testimony of the president of Petro-Canada when he appeared before the committee the other day was that he viewed the holding as being an overhang, and there would be restrictions on the number of shares that could be sold to any individual, therefore, there was no control premium potentially there.

I put the question to him: Why do you view this as an overhang and potentially negative and, on the other hand, someone who picks up 18 per cent of Petro-Canada has a control premium?

Mr. Goodale: I am not exactly sure what the line of questioning was with respect to Mr. Brenneman, but he may have been referring to the fact that, with a government as a shareholder, the agility and the attractiveness of Petro-Canada in the commercial market is obviously affected, and other players in the commercial marketplace with whom Petro-Canada would be competing do not have that limitation or that situation to cope with. It has been the judgment in the marketplace that, when there is a government shareholder involved, the flexibility of the company, the agility of the company, its ability to move with respect to potential acquisitions and other corporate arrangements, is constrained and therefore Petro-Canada's position may be undervalued.

Senator Kenny: I will wrap up by simply saying that I did not see one director being the drag, and I can see how PEMEX or other similar companies seem to be able to manage their affairs without having a problem.

My question was about the way that you would dispose of the shares, and my impression was that there was no possibility of them being sold in a block. If they can go in a block, I would be glad to know that. I have no further questions.

The Chairman: There is no guarantee that the government will dispose of the shares.

Senator Kenny: The minister stated that he wants to maximize the value.

The Chairman: Maximizing the value may mean holding the shares.

Senator Spivak: That would be contradictory to the statement that the company is lacking in agility - whatever that means.

Petro-Canada is repeatedly mentioned in the business press as a takeover target. I have a two-part question. One part relates to the concerns of the chairman. Since the Canadian taxpayer has contributed to Petro-Canada, at least to the establishment of Petro-Canada, do you feel that, by the sale of 18 per cent of the shares, Canadian citizens or taxpayers will benefit from this proposal? In other words, the chairman of Petro-Canada told us quite frankly that what they were looking for in terms of removing the foreign ownership restrictions was American investment, because that was where it was going to come from.

My question is, what is the benefit? Perhaps you could put on the record the benefit to the Canadian taxpayer of this bill that we are considering, because we are all supposed to be around the table protecting the public interest, as are you. What is the value?

The second part of my question is: Are there forgivable loans involved here?

Mr. Goodale: First, senator, I am absolutely confident that when the final 18 per cent, which is presently in government hands, is disposed of, the value from that transaction or transactions, coupled with the value that the government has already received in terms of the previous disposition of holdings, will be very handsome when compared to what the government has put in over the years. In terms of money in, money out, the results will be very positive from the point of view of the taxpayer.

Second, it is fair to say that, during its early years prior to privatization, Petro-Canada performed an important function, part of it is a public policy function that served Canada extremely well. There are lasting dividends from that.

Third, after the divestiture, we will have a major corporation that has a long and very successful record in oil and gas that will be headquartered in Canada, specifically in Calgary. A majority of its directors will be Canadian. It will be one of the most significant players in the Canadian oil patch as a flagship enterprise. All of that taken together, the cash-in cash-out equation will be positive; the public policy function that was performed historically under different circumstances which have now changed was a very valuable function for Canada; and with the change, Petro-Canada will be a significant player and one that will provide a great deal of ongoing credit to Canada.

Senator Spivak: You will forgive me, minister, with respect, but the money-in and the money-out situation depends on how the Government of Canada spends it, especially if it spends it only in supporting Bombardier and not the western farm economy. That is a gratuitous comment.

If Petro-Canada is a target for takeover by an American source because of our dollar, how is this fulfilling a public policy objective? There is constant speculation in the press about such events happening to many of the oil companies. I assume that the initial public policy was to create a major Canadian company in oil and gas. If by removing these restrictions you succeed in the sale of Petro-Canada to American interests, even if the headquarters is in Calgary and even if there are Canadian directors but it is basically controlled out of the country, is that a good thing? Is this key to the industrial strategy of Canada?

Mr. Goodale: This is a matter of confidence, in part. Petro-Canada has grown to a certain stage in its development. As a result of this overhang or continuing participation of the government shareholder, Petro-Canada has reached the glass ceiling. The company is performing well, but its future ability to perform even better in the corporate world is constrained by its present share structure.

We may say that is good enough or we may decide to take off some of these limitations and have the confidence that Petro-Canada can be even better in the future. I know the concern you are expressing. In many ways, instinctively, I am sure, many of us share that. It is the old story about having the pet canary. If you are always concerned that you must keep the canary in a cage for fear that it might fly away, do you really have the canary if you must rely on an artificial constraint in order to keep the canary in your home?

I have every confidence that Petro-Canada can be a big, strong player, and that it will do very well. With the limit of the 20 per cent on individual holdings, the restrictions that will be contained in section 9 against associate takeovers, if you will, and with the broad base of its shareholdings among a wide variety of investors, coupled with a Canadian board of directors and a Canadian head office, I think we have struck the right balance. The kinds of rules needed to ensure the Canadianism of the company are included in this bill, while allowing the company to function on a fully competitive basis with other companies.

The Chairman: It sounds like you are trying to design a 200-pound canary that will scare the hell out of all the cats.

Mr. Goodale: It depends on who the cats are.

The Chairman: If you can be patient with us for three to five minutes, minister, we will proceed to a clause-by-clause consideration of Bill C-3 so that we may report it tomorrow. We will then have some questions for you regarding Bill C-4.

Mr. Goodale: Senator Spivak asked me a question about outstanding loans.

The Chairman: There are no outstanding loans to the federal government. However, has the Canadian government in the past 15 years forgiven any loans?

Mr. Goodale: If you will bear with me, I had this point researched, and it will take me about two minutes to read this into the record, but it might be wise to put it on the record.

I am not aware of any outstanding debts that Petro-Canada owes to the Government of Canada. Department of Finance officials have advised me that, when Petro-Canada was privatized in 1991, the company did not owe the government any debt. Petro-Canada did, though, have some publicly issued debentures that, while not government guaranteed, were so similar to government-backed debts, that they are treated by the markets as government-backed debts.

At the time of privatization, the company paid a lump sum to the government that was sufficient to fully pay off these seemingly government-backed debts as they became due in the form of bonds with a series of maturity dates.

That lump sum was administered by a single-purpose Crown corporation called Petro-Canada Limited. As it turns out, the amounts paid by that company to the government were more than enough to retire the debts as they fell due.

Early in 2001, the Department of Finance dissolved Petro-Canada Limited, putting the remaining cash and any remaining outstanding obligations, that is oustanding bonds, directly into the government's accounts. Therefore, Petro-Canada has no debt obligations to taxpayers arising out of its privatization. That has been the case for more than a decade.

The Chairman: Honourable senators, shall we dispense with clause-by-clause consideration of Bill C-3, and report this bill without amendment?

Hon. Senators: Agreed.

The Chairman: Carried.

Bill C-4 was originally scheduled for Thursday, but we will take advantage of your presence here today. We have two problems on Bill C-4. One you cannot fix. I think you have read the Auditor General's comment. You have spoken to the Leader of the Government in the Senate. We are somewhat unhappy and we will probably slap your wrist a bit on setting up the $100 million fund without going through the House of Commons and so on. That will not cripple you. There is no amendment pending.

The Auditor General felt that the clause that sets up the audit of the sustainable development fund may not result in the same kind of information being available as would be the case if the Auditor General were to do the audit. Could you set our minds at ease? What does that clause mean to you?

Mr. Goodale: First of all, Mr. Chairman, I would comment briefly on your point about establishing the fund without first completing the parliamentary process. The fund was created in the 2000 budget. The money was announced and allocated to be utilized before the end of the 2000-01 fiscal year. If that money was not utilized for the purpose of a sustainable development technology fund before the end of the fiscal year, then, in the normal procedures of government, it would lapse. We would have to start all over again and who knows if in another budget cycle, the Minister of Finance would be inclined to be so generous and come up with an another $100 million? We felt it was extremely important to get an administrative apparatus in place before the end of fiscal year 2000-01.

We attempted to do that by legislation the last year, but we were interrupted by the process of an election.

Quite frankly, if the original legislation in the old Parliament had stayed on track, as I believe it would have, the bill could have been passed in the fall of last year, well before the end of the fiscal year, and the apparatus that is now in Bill C-4 would have been in place. Unfortunately, the timing of elections being what it is, we were unable to do that. When Parliament resumed at the end of January this year, we were faced with a very tight time constraint to get all of the legislative procedures concluded before the end of the fiscal year.

This was, as you can see from its number, one of the first bills we introduced on day one, when Parliament came back. However, the parliamentary process takes some time.

There is another way to proceed. That is, by operating under the Canada Business Corporations Act to establish a not-for-profit entity that has some of the attributes of the entity being set up under Bill C-4, but is governed by the rules that apply to the Canada Business Corporations Act. They are of a general, generic nature.

We regarded that as an acceptable way to proceed on a temporary basis, in order to make sure that the funds allocated in fiscal year 2000-2001 were actually provided to an operating entity before the end of the fiscal year.

The not-for-profit organization under the Canada Business Corporations Act provided us with that vehicle, but we still feel that it is important to have not just the generic legislation of the CBCA, but specific legislation about sustainable development in order to ultimately accomplish our objectives.

Accordingly, Bill C-4 has been proceeding through the system. I appreciate the attention that you have given to it. I also appreciate the support that it received in the other place. As soon as it is in place, by virtue of this legislation, the intention will be to roll that not-for-profit entity into the new creature that will be created by Bill C-4.

There are certain restrictions on that not-for-profit entity to ensure that it primarily focuses on administrative functions and does not get into the business of adjudicating on applications, because that is most properly done by the entity that is being created in Bill C-4.

The not-for-profit organization was, if you will, a holding action to make sure that the funds did not lapse, that we still had them for sustainable development purposes. As soon as Bill C-4 is enacted, then all of the provisions that particularly relate to sustainable development will come to bear as we roll the not-for-profit entity into this new entity.

I wish, quite frankly, that the timing had worked out differently, but I did not want to see that $100 million disappearing into the atmosphere and not being directed toward sustainable development purposes.

We will come back to the question about the audit.

Senator Kenny: Minister, you have described this as two acceptable ways of operating. We do not think it is. Bluntly put, it is not two acceptable ways of operating.

Nobody is saying that the government did anything illegal. We are satisfied that you proceeded in a legal way. Let us push that aside.

Would you consider this to be best practices? Are you telling us that the government can be expected to act this way in future?

Mr. Goodale: Senator Kenny, I would say that it is an acceptable procedure where there are circumstances at play that prevent the timely creation of subject-specific legislation.

Senator Kenny: Minister, you said the real problem was that the money would lapse. You people are all on the same team. You are not really telling this committee that Paul Martin would take the money away and not give it back to you. That will not work here. We do not think that is the case.

Mr. Goodale: Quite frankly, Senator Kenny, once you make the case and get an item as a budget allocation, you cannot expect the circumstances that came together to produce that decision to necessarily replicate themselves in subsequent fiscal years. This one is a good example.

Senator Kenny: The Minister of Finance changed his mind and would not give you the money, so you felt you had to park it somewhere - legally, but you had to park it somewhere because you were afraid that he would not give you the funds?

Mr. Goodale: Look at the circumstances of this fiscal year. If the government had to be making decisions about a budget cycle in the early part of the year 2001, the circumstances would have been much different from those that applied in the budget cycle of the previous year.

Senator Kenny: You are right, sir. None of us sitting here is part of the government. We are in the legislature. We can see someone else a few years from now sitting where you are and saying, "The government did it before. It is a perfectly acceptable practice." This will become a way that government, bluntly put, circumvents Parliament.

Mr. Goodale: No, I do not think so, senator. There are several ways in which one can try to engage the expertise and the active participation of the private sector in dealing with such things as a sustainable development technology fund.

One of the ways to do it is just to keep all of the money within a government department. In that case you do not have an adequate degree of private-sector engagement. It is essentially a top-down system run by public servants. In some cases that is appropriate; in other cases, it is not.

We have a variety of programs, some of which are entirely in-house, some of which are hybrids, and some of which operate at arm's length. One needs a suite of those programs in order to accomplish one's objectives.

In this case, we thought an arm's-length entity was the most appropriate way to get the synergy with the private sector. How does one get that? One can have a subject-specific piece of legislation, such as Bill C-4, or one can proceed without creating a special corporate apparatus by proceeding under the Canada Business Corporations Act as a not-for-profit entity. It is a perfectly legitimate way to proceed. One does not have all of the sections that deal with corporate structure, auditors and so forth. One simply relies on what is in the standing piece of legislation, which is the Canada Business Corporations Act.

Alternatively, one could proceed on contract. That was an option that we weighed very carefully. Senator Spivak would know, of course, that in Manitoba there is a sustainable development institute at the University of Manitoba. There are institutes dealing with sustainable development at several very prominent universities in Quebec. There may be some entities at other universities, or they may be entirely in the private sector.

We could have said we do not need to establish a foundation.

We do not need to use a not-for-profit organization. We could just pick the International Institute for Sustainable Development at the University of Manitoba, have a contract with them and have them do it.

One of the problems with that approach is that that institute may, in fact, be applying for funding and it would be put in a rather difficult conflict situation.

There are various ways to go about this. Each of them is perfectly within the terms of the law, and each is appropriate to different circumstances.

In this particular case, a temporary holding company was the right way to go to ensure without question that we retained the funding for the purposes of sustainable development, while subject-specific legislation was being concluded through the parliamentary process. If the timing had worked out differently, the issue would not have arisen, but I was concerned about another budget cycle at the beginning of 2001 in circumstances, from a fiscal point of view, that were significantly different from a year earlier, and one cannot conclude that the same funding decisions would have been made.

Senator Cochrane: You were worried, Mr. Minister, that the funding would be lost. At our last meeting, the Auditor General told us that the funding agreement was signed in March, and in April the actual payments were made. The payments were made after the year-end.

Mr. Goodale: The funding agreement was concluded, however. That is the critical thing.

Senator Cochrane: If the payments were made after the year-end, the funding must have come out after the year-end.

Mr. Goodale: No, it was booked and paid out of the fiscal year 2000-2001.

Senator Cochrane: The Auditor General was rather concerned about that, and, unlike Senator Kenny, I am not sure if this is legal, Mr. Minister. I have never heard of having $100 million in a holding company out of fear of losing funds for the next fiscal year. I am not sure that is legal, and we may want to get some advice on that, Mr. Chairman.

Mr. Goodale: You are certainly welcome to do that. The Department of Justice is completely satisfied with the procedure. In the private sector there are probably hundreds of not-for-profit entities being created every day under the Canada Business Corporations Act.

Senator Cochrane: The Auditor General is not satisfied, and we should be very concerned about the Auditor General because she is concerned about the public purse.

Mr. Goodale: So am I.

Senator Cochrane: You told this committee earlier that you are not concerned about transparency and accountability because the foundation will appoint its own auditors and file its own annual report. You said it seems that the transparency exists and the accountability is there. You also said that the funds will be coming from your department and the Department of Environment, both of which are responsible to the Auditor General.

We heard a different story from the Auditor General on May 29. She told us she is able to look at the funding arguments and the payments made from the departments to the foundation, but that she is unable to look at what the foundation then does with that money.

Mr. Goodale: That is exactly what I said, too.

Senator Cochrane: She also said that she is very concerned with transparency and accountability, even evasion of ministerial responsibility, and the weakening of Parliament's ability to scrutinize the expenditures of public funds. Would you comment on that?

Mr. Goodale: I would be happy to. First of all, there is an assumption embedded here that the accounting firm selected by the foundation will somehow be devious, opaque and dishonest. That does a profound disservice to the Canadian Institute of Chartered Accountants.

The bill specifies that an auditor, appointed under the terms of the act is a member in good standing of the institute or an association of accountants incorporated by or under an act or legislature of a province, has at least five years' experience, is ordinarily resident in Canada, and is independent of the board, of the members and directors and officers of the foundation and so forth.

Essentially, you are talking about the major public accounting firms of this country who operate in the private sector. They will be obliged to audit the books of the foundation in accordance with the Generally Accepted Accounting Principles, the rules that apply to every one of us in all of our business activities, every day. Every accountant operates that way in doing an audit. That audit will be part of the annual report that will be filed by the foundation.

There is an unfortunate assumption that, somehow, this accounting firm is going to cook the books. This firm has ethical procedures to follow. It has standards it has to apply. It performs this function for tens of thousands of private sector entities across this country and around the world every day. Why would one assume that this firm would do a bad job is beyond me because legal penalties apply if it does not conduct itself in a proper and professional fashion.

Senator Cochrane: Mr. Minister, I do not think we are doing any disservice to the accountants of this country. The job of the Auditor General is to scrutinize every single dollar being spent as public funding. That is why we have the Auditor General. Should we give all the accounts and expenditures to the foundation's own accountant who will scrutinize what they spend on themselves? My comments are not meant to be taken as a disservice to the auditors.

Mr. Goodale: A great many entities functioning for or on behalf of the Government of Canada or any provincial or municipal government across this country are audited on a regular basis by private sector auditors. That applies to virtually any Crown corporation. Many fall into that category.

In any event, Bill C-4 specifies that the foundation will be properly audited by an independent professional firm from the private sector, and that that firm will operate in accordance with Generally Accepted Accounting Principles. That is standard operating procedure.

Senator Cochrane: Is it not an auditor that is appointed by the board, its own auditor?

Mr. Goodale: That is correct. Any other number of corporations in the private or public sectors performs in the same way.

The Auditor General will review the procedures for channelling funds through either Environment Canada or Natural Resources Canada to the foundation. She will also review the terms of the funding agreement between the government and the foundation, and the government always cooperates fulsomely in that procedure that applies to the normal operations of government.

The Auditor General is focused on the departments of government whose audit she is responsible for, and for the relationship between those departments and the foundation.

The foundation is audited in the private sector, but it also has an obligation to provide an annual report, including a fully audited financial statement, a mid-term evaluation of what it is getting in return for the use of the funds, and specific reports on those projects to which it extends public funds. There is a very balanced and transparent process by which scrutiny is made possible.

Under parliamentary rules, there is another way to scrutinize. If any member of your committee, Mr. Chairman, has any question about a particular project, or about the operations of the foundation generally, you can invite representatives of the foundation to appear before you and you may ask them those questions directly, if there is any shadow of a doubt.

Senator Banks: Minister, you are absolutely right, of course, about the number of agencies of the government which are not subject to audit by the Auditor General. The Bank of Canada, the National Arts Centre and the Canada Council are not subject to audit by the Auditor General.

Let me be really clear because I got myself in trouble with this before. The Auditor General audits the audited statement before it goes to Parliament. However, there is a provision in sections 1 to 4 of the Financial Administration Act for what is called a special examination. It is like an intrusive audit, where they really go in and audit. Those bodies which I just named are not subject to that kind of audit.

Senator Spivak: They should be.

Senator Banks: No, they should not be. I know why they should not be. My question, minister, is: Why should this body not be subject to those provisions? I know why the Canada Council should not be subject to a special examination by the Auditor General.

Senator Kenny: Are you referring to a value-for-money audit?

Senator Banks: Yes, more or less, an intrusive audit, the kind that strikes fear into the hearts of chief financial officers. It is not just a matter of adding up yesterday's figures and saying that they all add up okay. It is a different kind of audit from that.

Why should this foundation not be subject to that kind of scrutiny by the Auditor General?

Mr. Goodale: Senator Banks, two things are at play here. I have the impression that, and correct me if I am wrong, the concerns expressed by the Auditor General were not necessarily specific to Bill C-4. Bill C-4 is what happens to be before this committee at this moment. The Auditor General, I think, was perhaps expressing a concern that applies more broadly to arm's-length organizations.

Senator Banks: Yes. The Auditor General would like to audit everything and everybody. It is the nature of the post. The Auditor General would like to audit the Canada Council, the Bank of Canada and the National Arts Centre, but her comments were about Bill C-4.

Mr. Goodale: If there are issues of a general nature to be pursued, issues that apply to Bill C-4 but which may apply to a bunch of other things as well, then there are other fora within which those broader arguments can be pursued.

As you know, the Auditor General has raised those issues in a more generic way in various previous reports. The Departments of Justice, Finance and others take them into account. If those broad rules that apply to these arm's-length organizations were to change at some future date to accommodate the concerns of the Auditor General, then obviously those future changes would apply to Bill C-4.

In Bill C-4, we have tried to establish a fair and reasonable balance. On the one hand, of course, the Auditor General scrutinizes the conduct of government departments, how the money flows from Environment Canada and Natural Resources Canada to the foundation, what the funding agreement is, and so forth. We are now, and always will be, fully cooperative with that effort by the Auditor General.

Once the funding is in the hands of the foundation, then it seems to me that it is properly the responsibility of the foundation to discharge the duties and functions with respect to auditing which are laid out in very clear terms in the legislation. It will be handled by a distinguished private sector firm in which, I presume, we can all have the normal trust and confidence.

If there is something that warrants a more thorough or penetrating examination, that can be determined at a future date. As we have said, we will have procedures in place for a mid-term and a final evaluation of all the projects that are funded. If the audit, those evaluations, or some other information revealed that a problem or a difficulty were emerging, then corrective measures would be taken at the appropriate time. There are permissive clauses in, for example, the Auditor General's legislation that would allow us to do that.

Senator Banks: I accept everything you have said which is, essentially, that the "arm's lengthness" of the foundation would be abrogated to some extent by the same kind of audit that is given by the Auditor General.

I want to be sure that we are right. In the case of this foundation, if we wanted to fix it later, as you suggest, there are only two ways that the Auditor General could ever make a special examination of this foundation. One is by changing this legislation, which exempts it from that, or at the invitation of the board of the foundation.

Mr. Goodale: Either way it would be a parliamentary initiative or a foundation initiative.

Senator Banks: The Canada Council has, for example, on two occasions, invited the Auditor General to perform an audit on the council.

I wish to come back to Senator Kenny's first question which, if you answered it, I did not quite understand. I think you gathered that this committee has some concerns about the mechanics of the $100 million. To make an observed comparison, I think what we are saying is that if, at the end of a fiscal year, I have $30,000 left in my office budget and I really want to buy some new furniture for my office, and if I have not put into place the proper purchasing orders, et al, by March 31, then I cannot write a cheque for $30,000 to a trust some place and buy the stuff later. That may not be a perfect analogy. However, as Senator Kenny said, we do not think it is right, and we do not think it should happen again.

I will ask for your comment on this because when Senator Kenny asked you about this, you gave a thorough examination of what the different styles. However, we are talking here about one specific thing, that is, whether the inconvenience of having to go back to zero again - like mere mortals have to do - at the end of the fiscal year or at the end of a government, we can just say, "Well, that is what is supposed to happen, according to normal practice and the rules, but in this case, because that would be inconvenient and risky, we will go around it and will park some money over here."

If we were going to be doing that more than once, which I hope we will not, I would have questions about exactly what the restrictions were on that private corporation, about precisely what it could and could not do, and about whether it was proper, reasonable and prudent to pay $100 million to that corporation, regardless of how clear the restrictions were.

To reiterate Senator Kenny's question: Does the government think it is proper to do that? Does the government think that it is okay, at the end of a Parliament, to park the money, notwithstanding that the proper device through which to appropriate money has not been put in place? Through this legislation we would be ratifying the body to which the $100 million ought to have been given but did not exist, so we could not give it.

Mr. Goodale: Senator Banks, I cannot answer your question in relation to other programs or initiatives that other ministers and other departments might be undertaking. However, I can refer to this one. Frankly, my preferred order of priority was to get the money committed in the budget, which we did in February of 2000, and use the ensuing fiscal year to get the foundation fully in place through legislation and have it up and running before the end of fiscal year 2000-01. Through this legislation, we will have terms and conditions to specifically shape a sustainable development entity.

The process was interrupted by the election. We lost a lot of time and it became impossible to have the legislation dealt with within the fiscal year, so we pursued an alternate route temporarily. That was not my first choice. I would have preferred to have the specific legislation concluded.

Senator Spivak: I wish to commend the government for increasing the funding for research and development. It is vital and we all know why.

There are two issues: access to information and parliamentary oversight. I disagree totally with Senator Banks. Federal taxpayers' money cannot be exempt from scrutiny by Parliament.

I ran a school board that was audited by a top firm. It is not the same as an audit of value for money. Value for money is essential in an area like this where people are getting grants. It is important to look at that without embarking on a witch hunt. I do not think the Auditor General has engaged in witch hunts.

Why is this legislation not subject to access to information legislation and scrutiny by Parliament? We need transparency and accountability.

Mr. Goodale: Parliament decides on the big question, that being whether to give the $100 million. In terms of operations, there is accountability and transparency, unless you assume that the private sector auditor is not as good as the Auditor General. In addition, there is an annual report, an audited financial statement, project evaluations, a mid-term evaluation, the ability to appear before standing committees of the House of Commons or the Senate, and an annual public meeting. It seems to me that we have struck a fair balance between what is required on the parliamentary side and what is required to enable the members of the foundation to do a good job.

Remember that, whether the scrutiny is done by the Auditor General or someone else, rules of commercial confidentiality apply because a number of the applications that will be made to the foundation will be in competition with each other and the proponents will expect commercial confidentiality for the information they put forward, which is not at all unusual. Competitors will not want their information shared with their competition. That is spelled out in the funding agreement.

Senator Spivak: I am sure you are aware that there is increasing concern about the government's inability to properly oversee spending in this era and that some people believe that Parliament has lost that ability to a certain degree.

Mr. Goodale: We are wrestling with the control and responsibility of one group, that is, parliamentarians, giving way to the professional and technical judgment of another group, that is, the people who will run the foundation. It is Parliament's sovereign right to decide how much we will devote to sustainable development technology. Parliament has made the decision that for now we will devote $100 million.

Are the 301 members of the House of Commons or the Members of Parliament who sit in the Senate the best people to determine which sustainable development project is most deserving? We obviously need an expert group to make that decision. People like Jim Stanford, Dr. David Johnston, Dr. Alain Caillé and Mr. Ken Ogilvie are better positioned to determine how much money should be spent on clean coal, fuel cells or whatever, and Parliament will decide what the overall appropriation will be. We need the expertise from the private sector to determine which are the best projects on which to spend the $100 million to ensure that we have sustainable development technology in this country.

Senator Christensen: I believe that this is wonderful legislation and I approve of what it is trying to achieve. I am trying to find some comfort in fiscal accountability. I know that you, Mr. Minister, are just as concerned about this as we are.

Mr. Goodale: I am.

Senator Christensen: We have heard from the Auditor General. Perhaps that was our downfall. We have heard about the acceptable process for setting up the temporary holding company. We set precedents and each time we do so, it is easier to set another precedent another time. I have not heard anything about legislative authority to do that. To give the Auditor General her due, she did not say it was wrong. She said she needed to look at dates in order to make herself comfortable with the process.

We talked about the chartered accountants and I agree with you. The chartered accountants will do an audit that will be thorough and meet all of the standards required by their profession, but they are not accountable to Parliament. That is my concern. I want some comfort. Certainly, you will be reporting to Parliament by laying the reports each year before Parliament, but I am concerned about the accountability of that money within the foundation and the inability of the Auditor General to be able to follow that through. The Auditor General can only look at the accounts as they are audited by the chartered accountant company. There is nothing wrong with that, and they will do it in a pristine manner, but they are not able to go further and follow things through. I am looking for some comfort, Mr. Minister, because I think it is good legislation and I want to give it my support.

Mr. Goodale: We worked hard to ensure that there is the accountability, that there is the transparency, and that there is the full and proper reporting with respect to public money. In order to make this process transparent - and much of this is spelled out in the funding agreement which is scrutinized by the Auditor General - there is the imbedded requirement for the annual report, the imbedded requirement that there will be an audit and all the terms of that are laid out in the legislation. That audit and the annual report must be laid before Parliament. If there are Parliamentary committees that wish to pursue something further, they are entitled to do that, either through the minister or they could invite the foundation directly to appear. Indeed, you could invite the auditor of the foundation to appear if there was concern.

There is also a requirement for an annual public meeting, and for the publication of information regarding the evaluation of the results achieved and the specific proposals that have been funded. I sincerely believe we have struck the right balance. Where the money comes from, the federal treasury to Environment Canada or Natural Resources Canada, through the funding agreement to the foundation, that is all scrutinized by the Auditor General, as it ought to be. Once the money is in the hands of the foundation, we rely upon the expertise and the professionalism of the directors and the members of that organization to perform their function in a proper manner, subject to the transparency rules that I have just mentioned.

When the money crosses over to their side of the equation, it is their responsibility to perform properly and to do so in a transparent way. It is not that we are handing over $100 million and telling them to go away. We are funding the $100 million and telling them that they are to achieve certain sustainable development technology objectives with that money by using their good judgment. They must be very transparent in the way they function and in the way they make those decisions, and we require transparency because the rules are there establishing the annual report, the audit, et cetera, that I just mentioned.

It is a delicate balance, senator, and I do not pretend any administrative arrangement is perfect and beyond improvement. Quite frankly, we need to watch this as it unfolds. If problems emerge, then we must be prepared to make corrections as we go along. Nothing is ever perfect on a first attempt, but I think this is a good balance that will get us going on sustainable development as perhaps never before.

Senator Cochrane: Mr. Minister, the bill provides that, if the foundation is dissolved, any remaining funds or assets are to be distributed through those that have already received funding from this foundation. In 1997, the Canadian Foundation for Innovation was set up with a fund of $800 million. Since then, that total amount of funding has gone up to $3.1 billion. The fund set up in Bill C-4 could also increase exponentially. However, we do not have accessibility to the details of how that money is spent.

Mr. Goodale: Why not, senator?

Senator Cochrane: We do not have access to information on that. The Auditor General does not have any access as to how the money is being spent. She will only be able to see how the foundation is set up under the $100 million, but not the specific details and not the operation. She told us that.

Mr. Goodale: Why would you not be able to get that from the annual report and the report of the auditor?

Senator Cochrane: We will not get the specifics of the operations.

The Chairman: It should be in the annual report.

Mr. Goodale: Why would you not get the report? It will be public, audited perhaps by Deloitte and Touche. What is wrong with that?

Senator Cochrane: Should this foundation be dissolved, would these huge windfalls that are left in that account go back to the Consolidated Revenue Fund? Why must they go back to the recipients who have already received funding? They probably no longer need the funding. Why would this not go back to the Consolidated Revenue Fund?

Mr. Goodale: Senator, quite frankly, I am not trying to duck this, but that is perhaps a question more properly directed to the President of the Treasury Board. The arrangement made on winding up is completely consistent with the rules and requirements of Treasury Board procedure. That is a detailed science in Treasury Board, and that is the arrangement that Treasury Board has required.

I understand Treasury Board's rationale for the rule, that the money would not come back at the end of the day but be distributed among the worthy projects. There would be a legal interpretation, if the money did come back, that the entity was not at arm's length in the first place. I gather that is both the policy advice and the legal advice that has been provided by Treasury Board. The assumption might be that the money was really only on loan, it was passed over to that arm's length entity for a while, but when you wrap it all up at the end of the day the cash comes back. The legal interpretation is that that means the entity is not really arm's length. That, therefore, changes the whole premise upon which all of this is structured. That is the reason for the money being distributed, upon winding up, among the worthy projects rather than coming back to the Crown.

Senator Cochrane: The excess funding would go to the recipients who had already received the funding.

Mr. Goodale: The exact wording in the circumstances that you have described, senator, of winding up or liquidation, is that the moneys arising from the liquidation shall be distributed among all the eligible recipients that have received funding from the fund and that are, as of the day the distribution begins, still carrying on projects to develop and demonstrate new technologies to promote sustainable development.

There is an alternative to that, and that is distribution of the monies upon liquidation to another not-for-profit organization with similar and compatible objectives.

The Chairman: Thank you, Mr. Minister, for taking this time to attend out committee.

Mr. Goodale: I thank the committee for the very close attention that you are obviously paying to this legislation. It is a priority. We have a huge need in this country to advance our ability to develop technology that pertains to sustainable development. One of the issues that preoccupies me is climate change. From Mr. Anderson's point of view, an equally compelling issue is air quality. These matters bear directly upon the quality of life of Canadians.

We are in a technology footrace of considerable proportions here. It is a footrace, first of all, because we need to have these technologies rapidly to deal with challenges like climate change and clean air. That is the environmental footrace. For the health, safety and environmental integrity of Canadians, it is important that we win that race.

There is another race going on and that has to do with competitiveness. I think of the report that was filed a week or 10 days ago by Vice-President Cheney and President Bush on how the Americans propose to deal with their energy challenge. If you sift through the 105 different recommendations in that report, you will find that a huge number of them relate to technology. They want to position the United States to deal with energy issues by virtue of international superiority in brain power, knowledge, science and the application of innovation.

In many ways, it will be a boon to the world if the United States makes that kind of technological investment. We are their immediate next door neighbour, as well as one of their best customers, one of their best competitors and one of their best suppliers. To maintain our competitive edge vis-à-vis Americans and others, we must insure that our technological sophistication is advancing as rapidly as that of the competition. There is urgency here.

I do not pretend that $100 million can do everything that needs to get done, but it is a good start. It will complement other initiatives we take in the program for energy research and development such as the Climate Change Action Fund, the Technology Early Action Measures, Technology Partnerships Canada, and so forth. Of that suite of initiatives, some are entirely within government; some are partly in government and partly outside; and some are at arm's length.

The challenge is to make all this fit together and to get on with it in such a way that, at the end of the day, all of us are investing more in that technology which is so crucial to our future. Passage of this bill will move us another step along a very positive road. I thank you for the conscientious attention you have paid to it.

When I say that there is a role for this committee and for your sister committee in the House of Commons in the future with respect to what this bill does, I hope you will take that invitation seriously.

I remember, in another incarnation in the other place, when I appeared before the Agriculture Committee, I was frequently asked questions about the Canadian Wheat Board. My advice to the Agriculture Committee is to call the Canadian Wheat Board; call the auditors to the Canadian Wheat Board. If there is something going on that you do not like, bring them into the room and challenge them. You are the members of Parliament and you are providing a chunk of their funding. Invite them to explain themselves to you.

Once this creature is up and running and we have a sustainable development technology foundation, whether it is in a formal hearing or even in a less formal one, I invite you to stay in touch with the members of that foundation. I invite them to be forthcoming with you in answering the kinds of questions that you will have about how well they are doing their job.

The Chairman: I am sure we will.

Mr. Goodale: I find the Senate more proactive on some of these matters than some of your counterparts in the House of Commons.

Senator Spivak: We hear that quite often.

The Chairman: I would apologize for forgetting, when going through Bill C-3, to tell people that I own some shares of Cameco. I have held those shares for a long time. There was no vote on the bill today. However, I will make this fact public in the Senate chamber.

Senator Kenny: Did you send a letter to the Chairman?

The Chairman: I cannot remember if that holding is in my wife's name.

Senator Christensen: You are supposed to write a letter to the committee.

Senator Kenny: Mr. Chairman, we may require a motion to the effect that the clerk should be advised of anyone who has holdings that pertain to the draft legislation the committee is studying.

The Chairman: Does it have to be specific?

Senator Kenny: My guess is that it would not apply if it is a holding in a mutual fund, but if you have a significant holding of shares, I believe the Rules of the Senate state you have to declare your interest and refrain from voting. If the committee agrees, we will raise the matter in the steering committee and make a recommendation. I know other committees have adopted this transparent method, which is transparent.

The Chairman: I will write a letter.

We will now move on to our consideration of Bill C-4. One issue of concern to the committee is the validity of "parking" the money to the side, and the other is the audit. As far as parking the money to the side is concerned, I worked with the researchers and others here on a statement that I suggest we file along with our report.

Senator Kenny: Do you mean as part of our report?

The Chairman: Yes. The statement is as follows:

The actions of the Minister of Natural Resources in creating a private sector corporation as a stand in for the Foundation now proposed in Bill C-4, and the depositing of $100 million of taxpayer's money with that corporation, without the prior approval of parliament is an affront to members of both Houses of parliament.

That is a stiff thought. The last sentence reads:

The Committee requests that the Speaker of the Senate notify the Speaker of the other place plus the Minister of Natural Resources in writing of the dismay and concern of the Senate with this circumvention of the parliamentary process.

I think that is fairly strong.

Senator Christensen: Yes, it is very strong.

Senator Banks: I approve of the tenor of it, and I think we ought not to change any of the operative words. The words "dismay" and "affront" are very appropriate. However, it should read, "the Government of Canada," not "the Minister of Natural Resources."

The Chairman: "The actions of the Government of Canada..."?

Senator Banks: Yes, this is an action of the Government of Canada, and it is wrong.

The Chairman: Do you think that is the way to do it?

Senator Kenny: A cabinet decision caused this to happen, not a ministerial action.

The Chairman: Should we say the Government of Canada? To me the government means both Houses and everything else.

Senator Banks: The government.

Senator Kenny: We are not government.

Senator Christensen: We are Parliament.

The Chairman: Are you sure we should not say cabinet?

Senator Banks: I am not sure, but I think I am right.

The Chairman: I am sure that when this goes out to the editorial papers it has to be technically correct, so that the taxi cab driver reading the comment understands what we are talking about.

Senator Banks: The minister did not do this.

The Chairman: The cabinet did it.

Senator Christensen: That is the government.

The Chairman: When you are driving a taxi and talking about the government, you are talking about actions of the Government of Canada.

Senator Spivak: They do not think the Alliance is the government.

The Chairman: I used to argue that the Opposition was part of government.

Senator Spivak: They are part of Parliament.

Senator Banks: Shall we say cabinet? It is the government.

The Chairman: I am in the hands of the committee.

Senator Banks: I do not think what they did was illegal.

The Chairman: We said that taking this action without the prior approval of Parliament is an affront.

Senator Banks: They had the prior approval of Parliament because Parliament approved $100 million. We must be careful here. We should be correct. Parliament approved this money. Parliament approved the place in which it was going to be spent.

Senator Spivak: Is that so?

Senator Banks: Yes.

Senator Kenny: No.

Senator Buchanan: I think what happens here happens all the time in government. Parliament approved an amount of money in a budget which included the $100 million. You must be careful.

Senator Banks: However, it was approved.

Senator Buchanan: In my many years in government, this has happened many times.

The Chairman: Can we say, "without the full approval of parliament is an affront to the members of both Houses..."?

Senator Spivak: I think that is better.

Senator Banks: I would rather we said something about circumventing the normal parliamentary process.

The Chairman: The second part reads:

The Committee requests that the Speaker of the Senate notify the Speaker of the other place plus the Minister of Natural Resources in writing of the dismay and concern of the Senate with this circumvention of the parliamentary process.

Senator Buchanan: Is that something that someone made up for you?

The Chairman: I also worked on it. I am not terribly proud of it and it seems that some honourable senators are a little disturbed by it.

Senator Buchanan: The money must have been approved in Minister Martin's budget.

Senator Spivak: Is this to be part of the report?

The Chairman: This will be part of our report, yes.

Senator Buchanan: Do you not think we should first find out if it was approved as an amount of money included in the budget?

The Chairman: It was not approved, otherwise he would have said that. He took the $100 million.

Senator Buchanan: We heard him say it was approved.

The Chairman: But not a specific amount of $100 million. That is what piqued my interest. I found that out by accident. Jim Stanford, who was the chairman, told me this. It is not a question of appropriating money. It is a question of setting up a private corporation where they park the money. That was not made clear in Parliament. They approved the budget, but they did not specifically have $100 million for this.

Senator Buchanan: Are you saying Parliament did not approve a specific $100 million?

Senator Spivak: For a holding company.

Senator Kenny: Chairman, I would suggest that this is not the right place to draft this. Can we deal with the bill and then you and the clerk, with legal counsel, can come back with the report.

The Chairman: The clerk, legal counsel and I have already looked at this one. It may not have much time. Parliament is expected to adjourn next week.

Senator Kenny: I presume you can have a draft to us by tomorrow.

Senator Banks: Have you already talked with legal counsel?

The Chairman: It would be best to deal with the researcher, not legal counsel. Mr. Audcent cannot do something for us in a day.

Senator Kenny: I am sure he would come now if you asked him.

The Chairman: We will make a note of the things that bother you and we will try to prepare another one and get it to you. We all agree that we want to slap his wrist, but we want to be accurate in what we say, though.

Senator Spivak: We just want to check the facts.

The Chairman: We want to know if Parliament voted this.

Senator Cochrane: Perhaps we should consult an expert.

Senator Kenny: If we are going to continue this conversation, Mr. Chairman, perhaps we should proceed in camera?

The Chairman: We will continue in camera.

The committee continued in camera.

The committee resumed in public.

The Chairman: Is it agreed that the committee move to clause-by-clause consideration of Bill C-4?

Hon. Senators: Agreed.

The Chairman: Shall the title stand?

Hon. Senators: Agreed.

The Chairman: Shall clauses 2 to 8 carry?

Hon. Senators: Agreed.

The Chairman: Shall clauses 9 to 24 carry?

Hon. Senators: Agreed.

The Chairman: Shall clauses 25 to 34 carry?

Senator Cochrane: I move:

That Bill C-4, in Clause 32, be amended by replacing lines 36 to 47 on page 17 and lines 1 to 3 on page 18 with the following:

"liquidation shall be paid to the Receiver General."

The Chairman: Are there any other comments?

There being none, shall the amendment carry?

Some Hon. Senators: Agreed.

Some Hon. Senators: No.

The Chairman: The amendment is not carried.

Shall clause 32 carry?

Hon. Senators: Agreed.

Senator Cochrane: I should like to move an amendment to clause 30. I move:

That Bill C-4, in Clause 30, be amended by replacing lines 41 and 42 on page 16 with the following:

"(c) a detailed statement of eligible projects for which funding was provided and of the extent to which these projects may lead to measurable gains in respect to air quality and sustainable development,"

The Chairman: Is there any discussion?

Senator Spivak: Would you like to explain?

Senator Cochrane: I want accountability. I want detailed auditing and accounting for each project.

The Chairman: Shall the amendment carry?

Some Hon. Senators: Agreed.

Some Hon. Senators: No.

The Chairman: The amendment does not carry.

Shall clause 30 carry?

Hon. Senators: Agreed.

The Chairman: Shall clauses 25 to 29 carry?

Hon. Senators: Agreed.

The Chairman: Shall clause 31 carry?

Hon. Senators: Agreed.

The Chairman: Shall clause 33 carry?

Senator Cochrane: I move:

That Bill C-4 be amended by adding after line 6 on page 18 the following new clause:

"33.1 For the purposes of the Access to Information Act, the Foundation is deemed to be a government institution within the meaning of section 3 of that Act."

That would force the foundation to be subject to the Access to Information Act.

The Chairman: Is it not through the audit?

Senator Cochrane: No, it is not.

Senator Banks: We heard from the minister. This is the case that applies to the Canadian Foundation for Innovation as well, which now has billions of dollars. There are trade secrets that are, by definition, part of that information which cannot and must not be subject to the Access to Information Act. Are you comfortable with having that in this bill?

Senator Cochrane: No.

Senator Spivak: I want to point out that the Access to Information Act already includes all of that. I have dealt with the Access to Information Act before. You do not have to worry about that because it is covered. The government has every right to say that something is commercial, and then not allow that access.

Senator Banks: Where in this bill does it say that the act is not subject to the Access to Information Act?

Senator Cochrane: It does not say that. That is the problem.

Senator Banks: If it is silent, then it is.

Senator Spivak: What does it say about that in the parliamentary report?

The Chairman: I am under the impression that Senator Banks is correct. If you want to except something from the Access to Information Act, you must state that.

Senator Spivak: It is silent.

The Chairman: Shall the amendment to clause 33 carry?

Some Hon. Senators: Agreed.

Some Hon. Senators: No.

The Chairman: The amendment does not carry.

Shall clause 33 as it stands carry?

Hon. Senators: Agreed.

The Chairman: Shall clause 34 carry?

Hon. Senators: Agreed.

The Chairman: Shall clauses 35 to 40 carry?

Hon. Senators: Agreed.

The Chairman: Shall clause 1 carry?

Hon. Senators: Agreed.

The Chairman: Shall the title carry?

Hon. Senators: Agreed.

The Chairman: Shall the bill carry?

Hon. Senators: Agreed.

The Chairman: Is it agreed that I shall report the bill as adopted with observations to the Senate?

Hon. Senators: Agreed.

Senator Kenny: Do the observations need to be read into the record now?

The Chairman: No.

The committee adjourned.

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