THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, April 25, 2023
The Standing Senate Committee on National Finance met with videoconference this day at 9:01 a.m. [ET] to consider the Main Estimates for the fiscal year ending March 31, 2024.
Senator Percy Mockler(Chair) in the chair.
[Translation]
The Chair: I wish to welcome all of the senators as well as the viewers across the country who are watching us on sencanada.ca.
[English]
My name is Percy Mockler, senator from New Brunswick and Chair of the Standing Senate Committee on National Finance. I would like to ask senators to introduce themselves.
[Translation]
Senator Forest: Éric Forest, senator from the Gulf region in Quebec.
Senator Gignac: Good day. Clément Gignac, senator from Quebec.
Senator Loffreda: Hello and welcome, everyone. Tony Loffreda, senator from Quebec.
[English]
Senator Bovey: Good morning. Patricia Bovey, from Manitoba.
Senator Yussuff: Hassan Yussuff, Ontario. I’m glad to see you’re startling on the left this morning.
Senator Boehm: Peter Boehm, Ontario.
Senator Pate: Kim Pate, I live here in the unceded, unsurrendered territory of the Algonquin Anishinaabeg.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Smith: Larry Smith, Quebec.
[Translation]
Senator Dagenais: Jean-Guy Dagenais, from Quebec.
[English]
The Chair: Today, we continue our study on the Main Estimates for the fiscal year ending March 31, 2024, which was referred to this committee on March 7, 2023, by the Senate of Canada.
To assist us with this study, we have with us officials from VIA Rail Canada, VIA High Frequency Rail Inc., Canadian Heritage and Innovation, Science and Economic Development Canada.
Welcome to all of you and thank you for accepting our invitation to appear in front of the Senate Committee on National Finance in order to look at your budgets.
Since there are many of you and to save time for questioning, I will introduce the four people who will be making the statements. I will then ask the other officials to introduce themselves before answering the questions, for the record.
[Translation]
Our guests are: from VIA Rail Canada, Marie-Claude Cardin, Chief Financial Officer; from VIA High Frequency Rail Inc., Marc-Olivier Ranger, Corporate Secretary and Interim Chief Executive Officer; from Canadian Heritage, David Dendooven, Assistant Deputy Minister, Strategic Policy, Planning and Corporate Affairs; and from Innovation, Science and Economic Development Canada, James Burns, Senior Director, Policy and Outreach, Investment Review Division.
[English]
To all, thank you for accepting our invitation.
[Translation]
Marie-Claude Cardin, Chief Financial Officer, VIA Rail Canada: Thank you, Mr. Chair, for the opportunity to answer the committee’s questions about VIA Rail’s main expenditures and modernization projects.
With me today are my colleagues Danielle Boisvert, Vice-President and Corporate Controller, and Philippe Cannon, Senior Director of Public Affairs and Government Relations.
VIA Rail is committed to ensuring its vision, mission and values are the foundation for best achieving its mandate from the Government of Canada.
We are working hard to modernize our services and infrastructure. Our goal is to provide our passengers with a safer, more reliable service and a more enjoyable, fully accessible experience, while helping to protect the environment and stimulate the Canadian economy. We are laying the foundation for the future of sustainable travel in Canada from coast to coast. This means we must continually evolve.
[English]
The challenges of the past few years have been significant, as we complete a major modernization program and recover from the impact of the pandemic on travel.
In the current fiscal year, we have been very careful to balance maintaining essential services to Canadians while carefully managing the fiscal impacts of this crisis on our finances.
Through prudent management, VIA Rail Canada has been able to extend the COVID-19 funding over two fiscal years instead of one. In addition, thanks to this government, our operating budget is now granted over a five-year period, which allows us to plan for the longer term and in a more optimal manner. The demand for travel continues to grow, and we should be back to a level of activity similar to 2019 in the next few months.
We are incredibly proud of our work to modernize our services. We are particularly excited about the gradual introduction of our new train sets in the Quebec City-Windsor Corridor. I can’t stress enough that this is one of the most environmentally friendly fleets in North America, fully accessible, that will allow VIA Rail Canada to be a leader in rail transportation.
[Translation]
These new trainsets are undergoing extensive testing over several months to ensure the technology is safe and suitable for Canada’s harsh winters. We look forward to the full deployment of these 32 bidirectional trainsets by 2025. To ensure state-of-the-art maintenance, we are upgrading our Montreal and Toronto maintenance centres.
Thus, VIA Rail is proud to contribute to Canada’s sustainable recovery by creating jobs by modernizing these facilities by 2026.
In the spirit of this modernization, we are looking for new ways to improve our customers’ journey. We are excited to soon launch a new, more user-friendly and modern reservation system that will introduce a wide range of new features. The result will be a more convenient, accessible and autonomous travel experience. This new system is designed to evolve over time so that we can adapt it to the changing needs of our passengers.
[English]
As VIA Rail Canada is a public service provider, these major projects all benefit from federal government investment. As I mentioned, multi-year funding now makes it possible to develop long-term strategies and is a critical component of our ability to provide the level of service Canadians have come to expect from their national passenger carrier. In this context, VIA Rail Canada will continue to strive to increase its revenues, limit its operating deficit and reduce its reliance on government funding.
We are excited about the great projects we are working on and the increased demand for transportation and tourists, while recognizing that it is time to reimagine the way Canadians travel across our vast and beautiful country. We look forward to answering your questions.
The Chair: Thank you very much, Ms. Cardin.
Now I will recognize Marc-Olivier Ranger. Mr. Ranger, you have the floor.
Marc-Olivier Ranger, Corporate Secretary and interim Chief Executive Officer, VIA High Frequency Rail Inc.: Thank you, Mr. Chair, for inviting us this morning and providing us with the opportunity to discuss VIA HFR’s and our requests within the Main Estimates. My name is Marc-Olivier Ranger and I am the Corporate Secretary and interim Chief Executive Officer of the new Crown corporation that was established nearly five months ago under the Canada Business Corporation Act to develop and implement the high frequency rail project in Quebec and Ontario provinces.
I’m joined today by the corporation’s Chief Financial Officer, Tom Roberts, to provide you with an overview of VIA HFR’s proposed funding and how it will support the corporation in fulfilling its mandate.
On December 15, the Honourable Omar Alghabra, Minister of Transport, announced the establishment of VIA HFR — VIA TGF Inc. VIA HFR’s mandate is to develop and implement the high-frequency rail project for passenger rail services in the Ontario and Quebec corridor in collaboration with the private sector and in cooperation with the Minister of Transport.
VIA HFR was incorporated as a new, wholly owned subsidiary of VIA Rail Canada to act as a dedicated project office for the high-frequency rail project. VIA HFR was designated as a parent Crown corporation. Similarly to VIA Rail, the corporation reports directly to Parliament through the Minister of Transport. The head office of VIA HFR is located in Montréal.
As you may know, the HFR project is focused on improving intercity travel from Toronto to Quebec City, using mostly dedicated tracks that will pass through Peterborough, Ottawa, Montréal and Trois-Rivières. The overarching goal of the high-frequency rail project is to move passengers to their destinations faster, reliably and with reduced delays, using green technologies. VIA HFR will offer convenient departure schedules and provide enough seats so that Canadians can simply jump on the train to a different city, just like they do to board urban transit. It will achieve this by building more than 1,000 kilometres of railroad dedicated completely to passenger rail.
This will be very different from today’s railway experience. VIA Rail Canada operates almost entirely on tracks owned by freight railroads. Thus, cargo rules the rail, and passenger trains must pull over and stop to let freight trains through. By building a network of dedicated passenger rail tracks, VIA HFR will achieve reliable, on-time performance in the range of 95%. VIA Rail achieves that now on the track that it owns in Eastern Ontario and Western Quebec. By having a dedicated passenger track, the government will have the flexibility to consider options for faster travel time where it is safe and affordable to do so.
[Translation]
Let me tell you about the current procurement process. In the near term, the Government of Canada is leading a procurement process to select a private sector developer partner for the project. Once this partner is selected, VIA HFR will work with the partner to design and develop the new High Frequency Rail. This will be done in what is called a co-development model.
VIA HFR is preparing itself to work in close collaboration with a world-leading private sector partner.
The government completed the second step in the procurement process yesterday with the closure of the request for qualifications. The third step will follow this summer, when the government invites up to three qualified teams to propose their solutions to our challenge.
It is expected that the government will select the successful team in the summer of 2024 to be our private sector partner. That partner will design, partially finance, build, operate and maintain the intercity passenger rail network. VIA HFR will oversee all the private sector partner’s work, on behalf of the government.
Together we will develop a comprehensive proposal for the government’s consideration.
Our goal is to meet Canadians’ needs while protecting the public’s interest and public finances. This includes amongst other things ensuring that the project scope is clearly defined, and that there is rigorous oversight of all costs, schedules and risks. I would now like to tell you about the corporation.
VIA HFR has already established a strong board of directors, including the Chair, J. Robert S. Prichard, the Vice-Chair, Marie-José Nadeau, and our first Director, Rob Fonberg. The board will continue to take shape over the coming weeks.
Our search for a permanent CEO is well underway. Our executive team is taking shape, as evidenced by the presence today of our Chief Financial Officer, Tom Roberts, and myself.
Since incorporation, we have secured Treasury Board approval of our inaugural corporate plan and budget. The Minister of Transport will table a summary of that plan in Parliament by June 1.
You will see in detail in that document how we are strengthening the corporation to become the project’s Contract Authority and Project Authority.
This fiscal year, VIA HFR seeks $43.7 million in spending authorities. Our spending is entirely operational. We have no borrowing plans. We plan no capital expenses.
Our funding will enable us to achieve three main outcomes.
One, establishing and operationalizing VIA HFR so we can deliver effective project management.
Two, providing expert advice and technological leadership to the procurement process led by government. The corporation will provide strategic advice to the Minister of Transport.
Three, leading on stakeholder engagement and fulfilling the Crown’s duty to consult in advance of the impact assessment that will be required for this project.
Right now, we are staffing up and developing corporate governance policies. We are completing the recruitment of board directors and are in the process of recruiting a CEO.
We are establishing performance management frameworks for the organization and seeking the appointment of the Auditor General as the corporation’s external auditor.
[English]
I hope this gives you a good overview of our progress to date. Thank you for your attention. I would be happy to answer your questions.
[Translation]
The Chair: Thank you very much, Mr. Ranger.
[English]
Now I will recognize Mr. David Dendooven from Canadian Heritage.
[Translation]
David Dendooven, Assistant Deputy Minister, Strategic Policy, Planning and Corporate Affairs, Canadian Heritage: Thank you, Mr. Chair. I am pleased to join you today. With me are Joëlle Montminy, Senior Assistant Deputy Minister of Cultural Affairs; Éric Doiron, Chief Financial Officer; and Terence Stechysin, Director of Trade Negotiations and Investments.
First, we recognize that we are on the unceded traditional territory of the Algonquin Anishinabe people.
We are pleased to share information about the 2023-24 Main Estimates for Canadian Heritage.
The Department will begin the year with total authorities of $1.9 billion, which is a decrease of $244.3 million or 12.8% compared to the previous fiscal year.
This amount includes $1.7 billion in grants and contributions, $202.9 million in operating expenditures and $29.3 million in statutory items.
The net decrease in 2023-24 is primarily due to a decrease of $184.9 million as a result of the end of the temporary Recovery and Reopening Fund announced in the 2021 budget to help the arts, culture, heritage, and sports sectors recover from the COVID-19 pandemic.
Together, over the course of 2021-22 and 2022-23, the Recovery and Reopening Fund provided assistance in every province and territory in Canada.
The funds supported heritage organizations to continue to care for their heritage collections, provided targeted support for the revival of Canadian non-profit organizations in the professional arts exhibition sector, enabled sporting events and supported local festivals.
For example, of the organizations that received funding in 2021-22, 95% reported that the funding allowed them to reopen or stay open. Almost all recipients — 98% — plan to continue operating now that the worst of the pandemic has passed. An additional decrease of $62.1 million is due to the end of temporary funding for the Canada Performing Arts Workers Resilience Fund (CPAWRF). The live performance sector was disproportionately and negatively affected by the pandemic. This temporary program was intended to fund new or enhanced initiatives led and implemented by the sector that improved the economic, professional and personal circumstances of Canadian workers in the live performance sector.
In addition, there was a $65.1 million decrease in Official Languages program funding for the initiative to promote our official languages from Budget 2021, and because of the end of funding to increase support for minority language education in Canada from Budget 2019.
[English]
The decreases mentioned previously are partially offset by the following increases: an increase of $74.2 million to Indigenous communities in their efforts to reclaim, maintain and strengthen their languages, as well as an increase in funding for the Indigenous Languages and Cultures Program for the purpose of preserving, promoting and revitalizing Indigenous languages.
Following Budget 2022, an increase of $23.3 million was announced for supporting local and diverse journalism to ensure that Canadians continue to have access to quality local news stories from a diverse range of media sources at a time when disinformation is prominent and traditional media are faced with lower revenues and higher production costs.
Furthermore, Budget 2023 announced $870 million for initiatives under the Canadian Heritage mandate and $90 million for its portfolio organizations. This funding is not included in the 2023-24 Main Estimates. Although the Main Estimates reflect a decrease for official languages programs, Budget 2023 provided $108.6 million over five years to support new and enhanced federal initiatives under the Action Plan for Official Languages, and $679.2 million over five years to support equal access to services of equal quality in education by working with provinces and territories to make high-level minority-language education, opportunities for second-language learning and bilingual government services more readily available across Canada.
Also, $14 million over two years for the Building Communities Through Arts and Heritage program was announced to support local artists, artisans and heritage performers through festivals, events and projects. These funds will be received through the supplementary estimates once they have been approved by Treasury Board.
Thank you.
[Translation]
James Burns, Senior Director, Policy and Outreach, Investment Review Division, Innovation, Science and Economic Development Canada: Mr. Chair and honourable senators, good morning and thank you again for the invitation to discuss the Investment Canada Act on behalf of Innovation, Science and Economic Development Canada or ISED.
We recognize the importance of foreign investment to Canada’s economy. It is an essential element to foster favourable economic conditions to support Canadian businesses, to help them recover from the pandemic and continue to grow and thrive on the global stage. Canada’s foreign investment review regime helps create the market conditions for sustainable and inclusive economic growth. It can enhance growth, create good jobs for Canadians, result in beneficial knowledge transfers and provide access for Canadian firms to global value chains.
The Investment Canada Act is part of a broader framework to help Canada attract needed, positive foreign investment. That is, foreign investment that is of likely net benefit and that will not compromise national economic security. Under the act, foreign investments to acquire control of existing Canadian businesses valued above a set monetary threshold are subject to review to ascertain that they are likely to bring a net economic benefit to Canada.
The Department of Canadian Heritage is responsible for administering the act as regards the investments proposed by foreign interests for the purpose of establishing new companies or taking control of Canadian cultural companies, such as those involved in the publishing, distribution or sale of books, magazines, periodicals, newspapers or musical compositions in print or machine readable format, and in the production, distribution, sale or presentation of audio music or video recordings, or films or video material.
In addition, all foreign investments, regardless of their value, are subject to a national security review.
[English]
The stated purpose of the Investment Canada Act is to conduct reviews in a manner that encourages foreign investment. Innovation, Science and Economic Development Canada, also known as ISED, take this seriously and works closely with investors and legal counsel before and during a review in order to reduce uncertainty and friction.
Please allow me to spend a moment to discuss economic benefit reviews under the Investment Canada Act. Over the last five years, we have seen an average of eight acquisitions of existing Canadian businesses per year that have been subject to an economic benefit review. These reviews, which can last up to 75 days, are conducted on the basis of legislated factors, including the impact on employment, economic activity and Canadian participation; the effect on productivity and technological development; the effect on competition; the compatibility of the investment with industrial, economic and cultural policies; and, the impact on the ability of Canada to compete in world markets.
Investments are rarely rejected on economic grounds. In fact, there has been only one formal rejection in the 30-year history of the Investment Canada Act.
On the other side of the ledger, the Investment Canada Act requires that is all foreign investments be reviewed for national security concerns. All investments in Canada, regardless of value or whether they are seeking to acquire control or a minority stake in an existing business or to establish a new business are subject to national security review. These reviews are conducted by a multi-departmental team, including both economic and security and intelligence agencies.
Our national security guidelines explain in brief the factors that are taken into account when considering a potential investment. These include the impact on Canada’s defence capabilities, the risk of a transfer of sensitive technology, the impact on critical infrastructure and supply of critical goods and services, the risk of enabling foreign espionage or hindering Canadian law enforcement, the impact on Canada’s international interests and foreign relations, and the involvement of illicit actors such as terrorist organizations and organized crime.
The national security review process is a step-based one that has multiple decision points. It begins when the Minister of Innovation, Science and Industry becomes aware of an investment, and if the review requires cabinet order, it could require some 200 days to be completed. However, the vast majority of investments are cleared within the first 45 days.
The Government of Canada is continuously monitoring the investment environment, global conditions and other foreign investment regimes, including our Five Eyes partners, to ensure that our regime remains efficient and calibrated to market competition and security allies.
In his mandate letter, the Minister of Innovation, Science and Industry was asked to review and modernize the Investment Canada Act, to strengthen the national security review process, and better identify and mitigate economic security threats from foreign investment. To that end, the minister has taken significant action.
In 2022, the government introduced a new voluntary filing mechanism to allow an investor making non-control or minority investments to gain regulatory certainty prior to implementing the investment. It also extended the period in which the government has time to act on such investments to five years.
The government has also issued several policy statements responding to the crisis in Ukraine and to provide clarity on the application of the Investment Canada Act to investments by state-owned enterprises.
Finally, Bill C-34 was introduced into the House in December 2022, which proposes a series of amendments to the national security provisions under the act. In doing so, the government has committed to promote economic security and combat foreign interference by modernizing the ICA to strengthen the national security review process and better mitigate economic security threats from foreign investment. These measures included in Bill C-34 bolster Canada’s visibility on foreign investments and enhance transparency and greater investor certainty, and they ensure Canada has strong authorities to take action quickly and where required.
To conclude, I’d like to emphasize that the Government of Canada aims to ensure that our country remains open to positive foreign investment. We continue to strive to improve our review processes in order to reduce friction with foreign investors and foster positive market conditions to attract investment. We, of course, remain committed to being as open and transparent with investors as possible.
Thank you very much for your attention.
The Chair: Thank you, Mr. Burns.
Honourable senators, we will proceed immediately to questions. For the first round, we will have five minutes each.
Senator Marshall: My first question is for Mr. Burns or Mr. Lapointe. I want to ask about the $13 billion for the Volkswagen deal. Is any of that money in your Main Estimates?
Mr. Burns: Thank you very much for your question, senator. Unfortunately, I’m not in a position to answer that question.
Senator Marshall: You don’t have any information about it at all?
Mr. Burns: At this point in time, I don’t have any information.
Senator Marshall: Well, we’re here on Main Estimates.
[Translation]
Jean-Philippe Lapointe, Director General, Business Development and Strategy, Strategic Innovation Fund, Innovation, Science and Economic Development Canada: Hello. I am Jean-Philippe Lapointe, Director General of the Strategic Innovation Fund. The funds allocated to the Volkswagen PowerCo project were included in the department’s reference levels.
[English]
Senator Marshall: When you say “the reference levels,” do you mean that it is in the budget or your fiscal framework, and if it is in the fiscal framework, where is it? I’m just trying to get a feel for the impact of what that $13 billion will be on the government’s deficit, so I want to know — the budget projects over five years, so I would think the money is in there somewhere. However, if it is not, it will have an impact on the deficit. That’s what I’m trying to find out.
Mr. Lapointe: I can speak to the contribution from the Strategic Innovation Fund, which was $700 million. That money came from money that had been allocated to the Strategic Innovation Fund through Budget 2021, specifically the Net Zero Accelerator Initiative. We received $5 billion in Budget 2021 to do decarbonization and industrial transformation and also to support the development of a battery ecosystem. This is where the funds came from.
Senator Marshall: So is that money in the Main Estimates that we’re talking about today? It is in the Main Estimates. Okay.
I have a question on the Strategic Innovation Fund. I was looking at your website, and it actually lists a lot of organizations and companies that receive funding. Has there ever been an evaluation carried out that looks at the results of the Strategic Innovation Fund? Because there is a substantial amount of money — billions of dollars — going out. I know there was an internal audit carried out in 2021, but it was by your own internal audit group. Has there been any evaluation looking at the results of the funding to these different companies? A lot of them focus on reducing carbon emissions. Has an independent evaluation been done?
Mr. Lapointe: Thank you for your question. The answer is no. There has been another internal evaluation in addition to the audit that you mentioned. The results were positive. In our recent memorandum to cabinet, we provided an annual report on the historical performance of the funds. We are now in the process of turning this into a public-facing report — to your point.
Senator Marshall: Is there anything available on your website that I could look at? I saw the 2021 audit, but it focused on process. Is there anything available?
Mr. Lapointe: No. You may be able to find statistics on expenditures, jobs, commitments and that sort of thing.
Senator Marshall: I notice in your 2023-24 Departmental Plan, in support of the 2030 Emissions Reduction Plan, you talk about the interdepartmental team that will be established. They will be presenting a plan that will support the 2030 Emissions Reduction Plan.
I noticed that the report of the environmental commissioner last week or the week before says that we’re not doing that great yet with regard to reducing emissions. He says that in order to meet the 2030 target, which is what this group will look at, “ . . . the greatest share of emission reduction will need to occur in the next 7 years.” It says that the framework will be published in the spring of 2023. We’re in the spring of 2023, so is that available?
Mr. Lapointe: Sorry, I am not familiar with the framework that you are referring to. I can say that there was a significant amount of funding provided through the Strategic Innovation Fund to pursue the decarbonization initiatives. Out of the Net Zero Accelerator, $4 billion was to be allocated to projects that would have a direct contribution toward our 2030 goals.
Senator Marshall: Could you or someone from the department follow up and see if that framework is available? I’d appreciate that very much.
[Translation]
Senator Forest: We are talking about major investments and investment support for the development of batteries with Volkswagen. We are here to review the Main Estimates. Do you have a schedule? Do you have disbursement conditions? For this project, which represents a capital investment in this sector, does the budget that the committee is examining today include conditions? Is there a disbursement schedule? How is it all structured with respect to innovation, depending on what happened the day before or that morning?
Mr. Lapointe: Thank you for the question, senator. I would say there are two stages. First the funds are allocated to the Strategic Innovation Fund, typically for a period of 5 to 10 years. It depends on the budget decisions. We monitor our recipients’ expenditures very closely. When we see that the expenditures are not as planned — because the way the fund works is that companies claim their expenditures and are then reimbursed — we can request reprofiling as part of the estimates update.
As part of a specific project such as the one you mentioned, we do, of course, have a contribution agreement that sets out the project implementation timelines, the period for claims for expenditures and the period for reimbursements, if applicable. We track the company’s expenditures on an ongoing basis, and make adjustments. The fund reflects those expenditures, and departmental officials manage the projects.
Senator Forest: So an agreement is concluded in advance by the parties?
Mr. Lapointe: Yes.
Senator Forest: Is it a public agreement? Can we see it? It is public funds.
Mr. Lapointe: The agreement is not public; it is a confidential agreement between the company and the Government of Canada. Through proactive disclosure, we eventually disclose the expenditures that were reimbursed to a certain company under active contribution agreements.
Senator Forest: With regard to Tourism Week, I have a question for Canadian Heritage. In the 2021-22 budget, the amount is $1.9 billion. Is assistance still earmarked for the cultural sector, which suffered tremendously during the pandemic? You mentioned various funds that no longer exist, such as the resiliency fund or the recovery or re-opening fund. Are there still any programs to help this sector which was most affected by the pandemic?
Mr. Dendooven: Thank you for the question. Yes, the department still has $1.7 billion in grants and contributions to help that sector. We also work closely with our colleagues from other departments, including regional agencies, because they also receive funding. I was actually speaking with my colleagues from regional agencies last week about the needs of the arts and culture sector in Canada, to make them aware of those needs. We meet regularly with members of that sector. Once again, last Friday, we met with members of RÉMI, an organization in the arts and events sector, to hear their concerns. We have programs in place and we continue to work with that sector.
Senator Forest: You announced $108 million in financial assistance for events and festivals, which is wonderful news. These activities are so important in all regions of Canada, especially those with smaller populations than the major urban centres. The risk we face regularly is that, in many cases, the big festivals in major urban centres eat up a large part of that funding. Does the program provide for continued balance among the various regions in Canada? Relatively speaking, a festival can be more meaningful for North Bay than for Toronto. In developing criteria, do you address balance with Canada’s outlying regions?
Mr. Dendooven: We always confer with our colleagues from the regional agencies. With respect to the announcement made in Budget 2023, some details of the programs still have to be worked out. We have regular discussions with our colleagues from Innovation, Science and Economic Development Canada, or ISED, including the regional agencies. This illustrates what you just mentioned, namely, that it is important to hold festivals and events not just in Montreal, but also in places like Saint-Tite or elsewhere in Quebec.
Senator Forest: Thank you. I understand that you will address this concern.
Senator Gignac: My first questions are for the officials from Innovation, Science and Economic Development Canada, to continue our discussion of the Strategic Innovation Fund.
Since 2017, close to $7 billion has been spent. I would like to know the status of the votes. Can you explain how the program operates and the criteria that you use? In my past life, I had the privilege of serving as Quebec’s minister of economic development, innovation and exports. Programs always include parameters, and once a certain threshold is exceeded, it has to be discussed in cabinet. What is the threshold? In the case of Volkswagen, did you have to request cabinet approval?
Mr. Lapointe: Thank you for the question, senator.
Innovation, Science and Economic Development has a maximum authority of $50 million per project. Minister Champagne has the authority to conclude contracts with companies for contribution agreements valued at less than $50 million. For amounts above $50 million, there is a double test. Cabinet has to be consulted to ensure policy alignment. Once the terms have been negotiated and due diligence has been completed, we go back to Treasury Board to sign a contribution agreement with the company in question.
Senator Gignac: There are some grants and some loans. There are also minimum investment requirements for the company. Can you provide further details? Of the $7 billion spent since 2017, how much was grants as opposed to repayable loans?
Mr. Lapointe: I can get back to you later with the exact percentage. I might have the information on my computer, but it is not in my head.
As a rule, we only make contributions, which may or not be repayable. There can also be conditions as to the amounts to be repaid. Recently, for example, as part of the Net Zero Initiative, we concluded agreements on greenhouse gas reduction. The companies under contract that meet their targets will be eligible for a non-repayable contribution for a portion set out in the contracts.
The terms are fairly flexible on the whole, and I would say the non-repayable portion is based on the public benefit to the country.
Senator Gignac: Does the type of foreign ownership play a role in funding eligibility? To clarify, the world has changed in the past year. Your minister has told China that it has to divest its interests in critical minerals. Has there been any change since 2017 as to the type of ownership? For example, is a Chinese-controlled company eligible, as has always been the case, or are changes being made in this respect?
Mr. Lapointe: In order to receive a contribution from the Strategic Investment Fund, the company must be registered in Canada. Foreign companies that approach us to make investments here must set up a Canadian company before signing a contract with us in order to receive an investment.
Senator Gignac: For the time being, the type of foreign control does not really figure into the eligibility criteria? Even if there is a Canadian subsidiary, it is clear that the foreign ownership could be entirely European, American or Chinese.
In that $7 billion, there is close to $1.3 billion for Quebec, or 18.3% since 2017. Unless I am mistaken, Quebec accounts for 24% of Canada’s population and 22% of Canada’s GDP. Is there a reason that the percentage is below Quebec’s relative weight? Why is it below 20% for Quebec?
Mr. Lapointe: Dividing up the funds among all the provinces and territories in Canada is a constant concern.
That said, we also receive specific mandates from the government, generally through the federal budget, especially for critical minerals or the establishment of a battery industry. Depending on the mandates, our investments may be concentrated in certain regions.
I do not have those figures in front of me. Based on recent commitments, however, which do not yet appear in the estimates, Quebec is doing well with the Strategic Innovation Fund.
Senator Gignac: I took your figures from the first page of your website, in the funding overview section. Your figures are very current. The amounts are very accurate. Quebec is at $1.3 billion. Perhaps you could provide an answer in writing? Since 2017, the ratio is still below 20%. We asked other officials from other departments. In some cases, they said it was because of the French language. I do not think that is the case here, in Canada. I would be interested in an answer to that question.
The Chair: Mr. Lapointe? Will you follow up in writing?
Mr. Lapointe: Of course, Mr. Chair.
[English]
Senator Smith: Again, for Innovation, Science and Economic Development Canada. Maybe, Mr. Burns, you can take a stab at it.
We have been hearing from Canadian business experts, entrepreneurs, innovators and investors that Canada does not have a complete innovation strategy. We have a patchwork of funding programs that include the superclusters, as an example, but there is no real strategy behind the funding we provide to innovators. One of the biggest concerns I have heard is that we’re very good at funding start-ups but not very good at retaining these start-ups, which are often bought by larger foreign firms, namely American, once they scale up.
Could you explain how your department is working to ensure that Canadian start-ups stay in Canada up to and beyond commercialization?
Mr. Burns: Thank you, senator, for that question. I can speak to the role of the Investment Canada Act in helping to support investment across the Canadian landscape.
Of course, the Investment Canada Act applies to any investment or establishment of a new business by a foreign investor, but I think your question is about the wider innovation strategy. Perhaps my colleague, Jean-Philippe Lapointe, would be helpful in discussing the role of the Strategic Innovation Fund and helping to support that wider innovation strategy. Certainly, I would be pleased to follow up with you to pull together a written response if that would be helpful.
Senator Smith: It would be good if you could send something in writing and Mr. Lapointe, if you could give comments that would be appreciated.
Mr. Lapointe: I can add to Mr. Burns’s answer, and we will follow up in writing.
I think the last one reference or single reference to industrial policy strategy was the innovation and skills plan published in 2017 if I am right. Since then, it has remained a flagship document for us. Sectoral-based strategies have been developed and published, for instance, the bio-manufacturing and life science strategy, the critical mineral strategy, and we are taking these as direction to then implement our program.
Senator Smith: In one of our other committees we had a chance to talk to a lot of investors and people who do the “white knights” in terms of developing young entrepreneurs and businesses. The key thing that always comes back to us is that many of these young investors or entrepreneurs set up, get some funding, possibly from your operation, and then within a short period of time they’re scooped up, especially when you go through the university community? We have no real ownership or attachment to these companies that suddenly get grabbed up and they make national news and we look at this and say, “why is there not some form of connection?” Is there any potential to have some end results that will be positive for our country as opposed to people cherry-picking some of our young entrepreneurial brains, especially in the university setting and are at the point of success? I’m wondering if you have any comments on that?
Mr. Lapointe: I think it’s a fair concern. I appreciate your question. I think it would be best if we come back to you in writing with a proper response.
Senator Smith: That would be great if you could.
Senator Boehm: My questions are for Ms. Cardin and Mr. Ranger.
VIA Rail has doubled its estimates over 2021-22 and I presume that COVID might have been a factor in that, but I would like a little more precision because I am hearing that the prices for travel are higher than ever and, of course, the frequency hasn’t increased, although Ms. Cardin you said in your statement that frequency would be increasing. Where I receive a particular amount of interest from is southern Ontario, particularly the Toronto-Windsor corridor where there is some competition with the commuter trains out of Toronto. So Guelph, Kitchener, Waterloo, London and Stratford, there is some concern there. I would be interested in hearing more about the increased service that you were talking about. While I’m asking the question, Mr. Ranger, I noted that with the high frequency rail — as opposed to high velocity, so we’re looking at high frequency, there’s a difference there — you said that you would be looking for investment partners in the process that would be next. Is it this summer coming or the summer following? I say this because the German president is in Canada and has a business delegation with him. Deutsche Bahn is along and there is a great interest, I suppose, among European competitors as well. I would be grateful to know how you see that competitive process unfolding and what the overall scale might be in terms of a potential dollar value that you could attach to it? Those are my two questions.
[Translation]
Ms. Cardin: Thank you for the question. As to the increase in operating expenditures — you said they had doubled — they are quite stable. The increase is specifically for capital expenditures. In the 2018 budget, a new fleet was approved. It is a $1.5-billion program. For 2023-24, a significant amount is earmarked for the new fleet. Close to a third of that amount will be received in 2023-24. That is the main reason for the difference. We are talking about close to $500 million.
Senator Boehm: I expect that the new fleet will improve the service provided? Is that the general idea?
Ms. Cardin: Of course. I would point out that the new fleet will be fully accessible for persons with disabilities. For those with vision problems, there will be braille on the seats. The aisles will be wider to accommodate wheelchairs, as will the washrooms. The experience aboard the new fleet will no doubt be greatly improved.
Perhaps there is a second part to your question. As to the rail infrastructure, as you know, VIA Rail owns 3% of it. That is a broader issue. It is not included in the Main Estimates, but it is certainly an issue.
In June 2022, in southwestern Ontario, we resumed most of our service, except for 12 frequencies. As we receive our new fleet, we can review our plans and decide whether new frequencies have to be added. That is something we will be looking at over the coming year.
That is my reply, in short. I think the second part of your question was for my colleague, Mr. Ranger.
Mr. Ranger: Thank you for the question. As to the procurement process, to be clear, the request stage ended yesterday. There is an evaluation period. Up to three consortiums will be selected to take part in the next stage, which is the request for proposals.
The request for proposals period will be about one year long. At the end of that process, a consortium will be identified as the private developer to take part in what we call the co‑development phase with the government, which will last a few years to design the project, set out the options, and make proposals to the government for decisions and funding.
In order, this summer, we will identify three consortiums that will be invited to submit a proposal for the project. A decision on that will not be made until the summer of 2024, at the latest, depending on the deadlines stipulated.
Senator Boehm: Do you have any idea of the total amount?
Mr. Ranger: The minister has already announced the value of the project. Given the potential changes to the scope of the project, it is too soon to determine the basic amount to be proposed. There are a lot of options on the table. It would be unwise to indicate the total cost of the project at this stage.
Senator Boehm: Thank you very much.
[English]
Senator Yussuff: Thank you, guests, for being here today.
My question is for Canadian Heritage in regard to museum funding, which I see there is a reduction in. There are museums throughout Canada especially in rural and smaller communities. They play an important role as keepers of our stories in their community, talk about the heritage of their community and serve as a gathering place through the year. During the visitor season, the number of tourists that come into those communities is critical to the work of the museum. I see in the estimates there will be a reduction in the funding going forward. Given that there is a funding reduction that might impact smaller museums especially in the rural parts of the country, can the officials of Canadian Heritage provide the committee with a distribution of the funds and, more importantly, indicate where there might be funding in another envelope that might make up the cuts you have here in the estimates?
Mr. Dendooven: Thank you very much for the question. The one thing that I would note is that during the pandemic Canadian Heritage provided additional funding to museums through the emergency support fund that was put in place. In fact, we provided approximately $50 million in the first wave of emergency funding. Then via the recovery and reopening funds, funding was provided for museums. Of course, we have permanent funding for museums in the country as well.
I would note that vis-à-vis museums, the provinces and territories also have a role to play, and they also fund museums. The minister announced a review of the museum policy in this country at the National Culture Summit last year. In fact, consultations are under way presently in order to hear from museums across this country as to their views on museums across this country and what support they might need.
Senator Yussuff: In the context of the reduction in the estimates, there is no other envelope that museums can access that might help them make up the shortfall projected here. Of course, you know that we are going into tourism season and museums are competing for a tight labour market. They want to hire workers. As we know, the costs aren’t going to be the same because if you want to attract people to work there, you have to pay them a little more. Without some support, our cultural community is going to take a tremendous impact. Small museums are critical to the efforts to bring a different perspective about culture, and they’re critical for the community to a large extent.
Mr. Dendooven: Yes, and in fact, I and all in attendance at the summit last year, heard those same comments.
We have continued funding for museums vis-à-vis the Museums Assistance Program. We also have funding that we provide via a program called Young Canada Works, where we provide funding to museums for students to help them. As you rightly noted, certainly during the tourist season, museums need additional people working. Therefore, we do have funds to provide for that.
Senator Yussuff: Has the department done an impact assessment on how these funds reductions might affect museums? They’re not all equal. We live in Ottawa. We’re very fortunate. Canadians come here; it’s the national capital. The frequency of visiting these museums is different than visiting small museums in communities. Have you done an impact study? Do you know the impact the reduction of funds in the budget allocation might have?
Mr. Dendooven: We have done surveys of, for example, museums and others who receive funding via the recovery and reopening funds in order to determine the extent to which the funds were helpful for them to stay open and in business. We have received results vis-à-vis that. As noted in the speech, the funding was very helpful for them. In terms of whether specifically to museums, we have not, although I did note that consultations under way, vis-à-vis the museum policy, to update the policy.
Also, we have funding, which I did not mention, to help museums digitize their holdings. We’re doing that to help museums and to allow more Canadians to see the holdings they have. This is especially true for small museums.
Of course, funding is also provided to the national museums, but I think you’re aware of that, and you did note that.
Senator Loffreda: Thank you to all the panellists for being here this morning. I know it’s never easy because questions come from all directions, but thank you for being here and answering those questions.
My question is for Canadian Heritage. I am particularly interested in the $10.2‑million contribution in the Main Estimates for the Digital Citizen Contribution Program. You’re receiving four times more money than you did last year and the year before that. Your departmental plan explains that this program will continue to seek better understanding of how disinformation affects Canadians differently and to identify potential policy measures and interventions to ensure we can protect and support the most vulnerable.
This is an important initiative. It’s a very interesting initiative. I would like to know more about it. I know the program launched a number of research project proposals over the years. Can you share with us the findings of this research? How are Canadians faring compared to other nations in terms of becoming stronger and improving their critical thinking about online disinformation and their ability to be more resilient against it, which is extremely important in today’s environment?
Beyond gathering data and conducting research, is the program’s role to advise the government on public policy matters?
Joëlle Montminy, Senior Assistant Deputy Minister, Cultural Affairs, Canadian Heritage: Thank you very much for your question. You’re right that since 2020, we have invested over $50 million and funded 96 projects to better understand and build citizen resilience to disinformation. To give you more details in terms of the nature of these projects I will provide some examples.
In 2021, the focus of one project was to map and predict the next issues and types of online disinformation in order to understand the impact of this disinformation on diverse marginalized communities in Canada and better understand the societal factors and psychological characteristics that motivate individuals to take up the call for online and offline disinformation.
A year later, the program’s focus was on projects to better understand the role of algorithms and artificial intelligence on mainstream and fringe online platforms and the domestic and transnational spread of disinformation related to harms and things like that.
In 2022-23, the priority of another project was to evaluate the efficacy of efforts by platforms to counter disinformation and other online harms and understand the role of non-news and alternative media sources of disinformation. In 2022-23, the program was renewed for an additional two years. We received new funding of $8.2 million per year, so we will continue our efforts to strengthen, understand and build resilience on disinformation.
I should also mention that there were also some targeted calls for projects. One was during the middle of COVID. We had a targeted call dealing with online misinformation related to COVID-19. We also did a targeted call related to the Ukraine crisis and threats to social cohesion. More recently there was another call for projects on January 11, 2023. We received a little more funding to raise awareness of non-governmental services to combat online harms.
To your question about these projects, right now, this particular initiative is to fund research for various civil society groups, academics and so on. Your question was also about whether it serves in terms of policy advice. That’s right. It’s a separate program, but it is part of the same unit that is currently looking at developing a new framework to combat online harms as per our minister’s mandate letter commitment.
On that piece, there have been extensive consultations for the last two years. Last year around this time, the government launched a panel of experts that looked at how to design a piece of legislation based on international models. We had the results of that panel of experts. A “what we heard,” report has been released. Following that, there were extensive consultations with round tables with different groups that are typically targeted by online harms. There was also another round of consultations, more broadly, involving the public.
So the policy work is continuing, but to your question, yes, all this research feeds into the policy thinking.
Senator Loffreda: That’s great to know, because it’s an important issue in today’s day and age. Thank you for that thorough answer.
[Translation]
Senator Dagenais: My questions are for Mr. Burns. Given the increasing concern about espionage in recent years and the government’s announced plans to increase monitoring before authorizing investments in strategic sectors, you have had to increase your resources for investigations and scrutiny. I would like you to say a few words about that.
Can you tell us whether a number of investment files are being investigated, in addition to those that are publicly known? If so, which countries are involved? Finally, could the rejection of certain foreign investments have jeopardized the financial health of existing Canadian companies? I know I am asking several questions, but my time is limited.
Mr. Burns: Thank you for your questions.
[English]
I can say that all foreign investments undergo a national security review, no matter the value or where they originate, including greenfield and minority investments. They’re all subject to review of injury to national security. All investments, including those from the United States, Australia and other countries, are subject to the same provisions.
The number of national security reviews is difficult to predict, as we do our reviews on a case-by-case basis, and we review the merits of each and every investment. Reviews are undertaken by several different departments as part of one process. Public Safety Canada and the security and intelligence agencies are responsible for the review of investments for national security harm. I’m not really in a position to speak to the status of ongoing cases.
Obviously, I can certainly confirm that the world is evolving. The volume and complexity of national security reviews are increasing each year. In Canada, we have, over the course of the last two fiscal years, carried out 24 extended national security reviews. That’s the highest that we’ve ever done in the history of the Investment Canada Act, also known as the CA. That number was achieved twice in succession. I can confirm that this year, where the results are not available yet, we will eclipse the record of 24 quite easily. We will report, of course, on those reviews in our annual report, which usually comes out in the early part of the summer.
You note that the risk of foreign interference in investment is something that has been on the rise. Innovation, Science and Economic Development, as a regulator, works hand in hand with national security partners to ensure that only positive foreign investment comes to Canada.
In our annual report for fiscal year 2021-22, we did publish the country of origin and the specific sector of the economy for all of our final orders, so those that have either ended in a block, a divestiture or withdrawal. When you look at the results highlighted in our annual report, you will, obviously, see a certain trend around a particular country that has aggressively and consistently increased their attempts at foreign interference. This is something that we’re well aware of and are working to address through our regulatory function.
I don’t know if I answered all of your questions, senator. If there are any follow-up questions, I’d be happy to try and answer to the best of my ability.
[Translation]
Senator Dagenais: You answered well. I will wait for the second round. Thank you very much.
The Chair: Senator Bovey, thank you for your contribution to the National Finance Committee.
[English]
Senator Bovey: Thank you very much. I couldn’t miss it today with my friends here from Canadian Heritage. You probably know the path I’m going down. I want to thank you all for being here today.
I’m not going to ask about the Museums Assistance Program or festivals as my colleagues have. I’m just going to put an alarm bell out there.
As you know, the Museums Assistance Program used to have a budget of over $40 million. It went down to $24 million. It went down to $8 million. It’s gone up; it’s gone down. It’s a roller coaster and makes it almost impossible for our museums to do their role in the public trust.
I’m going to caution us all that the role of museums is increasing with issues of reconciliation, climate change and public trust. I hope in your review of the museum’s policy that this will be taken into consideration.
My question on the policy is a quick one. Can you assure me that the consultations are really national? That’s not what I’m hearing. If it can be yes or no, because I have other questions.
Mr. Dendooven: You made the reference to reconciliation. I know there are five themes related to the museum policy or the consultations that are under way. One of them, of course, is reconciliation with Indigenous peoples.
Senator Bovey: I’m aware, yes.
Mr. Dendooven: As I mentioned, there is consultation that is under way presently. I don’t have it in front of me where they are going across the country, but I’ve taken note of your comment and will relay it.
Senator Bovey: If you could let me know where they’re going across the country. As you know, this is my field, and I’m getting a lot of complaints that the country is not being heard from. Just be aware of that.
I hope that it will include issues of repatriation. That’s a very expensive undertaking that museums are responsible for, and the research is intense. I hope you can assure me that that is being taken into consideration.
You talked about the recovery fund. I can tell you that the performing arts have not begun to recover. Theatres, dance companies and orchestras are in desperate straits. Audiences are still fearful of coming back. I hope the recovery fund isn’t really over yet. If you can assure me on that.
I want to ask you about the Creative Export Strategy, the 2018 program that announced $125 million was available to all media for profit and not for profit organizations, Indigenous band councils, tribal councils and other Indigenous governments and organizations — First Nations, Inuit and Métis. It was very clear at the outset that it wasn’t nearly enough money. Where is that in the budget now, and what is the amount? What percentage of requests are you able to fund?
Mr. Dendooven: Perhaps I’ll just react to two of the comments that you’ve made and then I’ll pass it over to my colleague.
I’m just looking at my notes in terms of the consultations that are under way. We will get back to you in terms of where they are, but I wanted to ensure that you were aware that we are, of course, consulting with stakeholders from across the country, including the provinces and territories as well. Once again, the issue of reconciliation with Indigenous peoples is part of that.
I noted earlier, but in French, that we continue to meet with stakeholders. On Friday of last week, our deputy minister met with Festivals and Major Events Canada, also referred to as FAME. We are, of course, hearing from them that they’re reopening their issues of inflation and la main-d’œuvre aussi access as well and just supply issues.
I just note that we, of course, at Canadian Heritage continue to meet with stakeholders to ensure that we’re aware of what’s going on on the ground.
I will pass it over to my colleague.
Ms. Montminy: Thank you very much for your question. With respect to the Creative Export Strategy, as you mentioned, in 2018 we announced a five-year strategy for $125 million. I am glad to say that it was renewed, and it was recently announced that it’s been renewed for three years. We will receive $57 million over three years, and there will be three major components to this strategy.
It will continue to provide support to have a Creative Export Strategy, but instead of sending the money — like you were referring to various programs being eligible to access funding for international activities — we are going to bring that funding into two streams under the Creative Export Strategy. One is the Export-Ready Stream and the other is the Export Development Stream. The organizations that were eligible before will still be able to apply for the export program but through these two different streams.
One is for those who are ready for export, so the type of projects will be different. Export development is to bring more creative industries along that pipeline to get them ready for export. We will be funding those organizations, similar to what we were doing before, but instead of putting the money into all these programs as a separate component, we’ll do it under the overarching program.
We will also continue to fund creative industries in international trade missions. A good portion of the budget will be allocated to that. We will be creating a new creative export advisory service. That will be ongoing advice to support companies, because we realize through the first five years that it takes a lot of support to have different organizations in a creative sector to be successful abroad. We’ve made that addition after doing a lot of analysis in our program to tailor it to the needs of our sector.
Senator Bovey: Thank you. And, of course, the monetary return is huge, far more than the investment.
Ms. Montminy: Absolutely.
Senator Pate: Thank you very much to all our witnesses. My question is for you, Mr. Burns. I also want to start by thanking you for sending the information that I asked for in March — the committee received it yesterday, and I received it this morning — regarding Black entrepreneurs and women entrepreneurs. I notice some of the numbers are still low for disability, but we’ll get back to that another time.
Today, I notice in your departmental results for 2021-22 that the number of small- and medium-sized business enterprises — it was noted that the majority is owned by Indigenous peoples, but there was no target set. The rationale provided there was that you are developing an agreement with Statistics Canada, or perhaps already have an agreement, regarding that indicator.
I’m curious and would like to hear, if you can please explain, what you’re doing in the interim to ensure your department is meeting objectives when it comes to Indigenous entrepreneurship and how you’re ensuring that the accountability is being measured?
Then also, in the Auditor General report, the strategy around rural and remote connectivity, there was a question raised around the affordability, whether in fact affordability was linked to income. My question is what steps you’re taking to implement the recommendation from the Auditor General that you accepted in your departmental plan? There are several questions here.
Mr. Burns: Thank you very much for your questions. Unfortunately, I’m here representing the regulatory function of foreign investment review. I have many colleagues in the department that are much better placed to answer your question than myself or Mr. Lapointe. Apologies that I’m not able to answer your question. I’m not actually familiar with the rural and remote connectivity objectives that have been put forward by our department, but I can definitely commit to engaging with my partners in the department to help provide answers to your questions.
Senator Pate: I would appreciate those answers.
What about the question in terms of Indigenous peoples and the target set?
Mr. Burns: The same response would apply, I’m afraid. Sorry.
Senator Pate: Then my question for Canadian Heritage. Your departmental results indicate that there is a certain percentage of funded festivals and performing arts that are aimed at promoting diversity. A number of our colleagues have asked about that.
I’m wondering if, in the coming year, you have a funding framework that you could provide to us that indicates how you are actually allocating those funds and how you’re prioritizing them as you provide them? And how you’re differentiating between Indigenous and other cultural diversity and ethnicity and some of those areas? It’s building on the questions that some of my colleagues have asked.
Mr. Dendooven: Thank you very much for the question. I’d like to thank you for reading our results reports and our departmental plans. A lot of work goes into preparing those documents, and, as I’m sure you’ve noted, they are very informative.
I’ll respond a little bit broadly, perhaps, to your question. Diversity and inclusion are something that we obviously take very seriously in the department. You may have noted that we conducted a review of our programs from a diversity and inclusion lens. That was something that was announced in our departmental plan over two years ago. We just completed the review. We had a number of cohorts that went through it. It was very intense, and “intense” meaning that it was ensuring that everybody was at the same level when it came to issues of diversity and inclusion. We all come from different backgrounds, and not everyone has the same level of understanding as to lived experiences, for example.
The purpose of that was to look at our programs from a diversity and inclusion lens to determine whether there are barriers that are within the terms and conditions, or barriers of people who review the applications that do come in. It was something that was very helpful for us to determine that we have more work to do when it comes to diversity and inclusion, ensuring that we’re all on the same page, but also to ensure it’s something that we move forward as a department to ensure. It’s one thing to say that we want to ensure an increase in representation. We do have $1.7 billion worth of grants and contributions, but it’s never enough in terms of the demand that’s out there. We want to ensure that when we do provide money that it’s distributed equally and fairly with diversity and inclusion in mind.
When we put in place the emergency support fund and the reopening and recovery funds, we were very mindful of diversity and inclusion. In fact, our results from the emergency support fund demonstrated that we did accomplish that, but there is more work to be done.
Senator Pate: Is it possible to provide a copy of the framework that you used for that?
Mr. Dendooven: We can provide you with a copy of the report because there was a report that was done at the conclusion, which I think you’ll find very informative in terms of how the review unfolded and what we need to continue doing in the department.
Senator Pate: Thank you very much.
The Chair: Now, honourable senators, we will move to the second round.
Senator Marshall: My questions are for VIA High Frequency Rail, so that would be Mr. Ranger or Mr. Roberts. I also have a question on VIA Rail Canada.
When I was reading the news release about the corporation being established and saw it was established under the Corporations Act, I was wondering why the corporation doesn’t have its own act, and then I found out that VIA Rail doesn’t have its own act either.
Where would the governance structure be for the VIA High Frequency Rail Corporation? Is that in your articles of incorporation?
Mr. Ranger: Thank you, senator, for your question.
Yes, so the corporation was set up by an order-in-council that was issued. We’re a federal Crown corporation. There are many federal Crown corporations that don’t have enabling legislation. The Financial Administration Act, or the FAA, is the framework that we use. Usually it’s Part X of the FAA that sets the broad parameters of governance. The FAA in this case applies to the corporation. Its responsible minister is the minister of transport, so just like VIA. We’re a subsidiary of VIA, but it’s a Crown corporation, a parent Crown. The idea was to ensure that the project — given that the corporation is managing the project — is a separate entity with a separate set of books, a separate auditing regime so it can be accountable to Parliament on its own.
Senator Marshall: I’m wondering, where do I find the governance structure? Do you file a separate annual report, or is it included in VIA Rail? Who are your auditors? There must be something somewhere about the board. I know there is a three‑member board now. Where do I go to find out about the structure?
Mr. Ranger: Like any federal Crown corporation, we will be following the same accountability regime. You will see our corporate plan being tabled in Parliament. You will see our annual report being tabled at the end of the exercise. We also will have to disclose, on a quarterly basis, our financial statements. The governance regime that applies to all federal Crown corporations applies to VHFR Inc.
Senator Marshall: So you’re saying the governance structure would be in the Financial Administration Act?
Mr. Ranger: That’s correct. It’s a combination of the provision in the Financial Administration Act, and the order-in-council that established the corporation. The order-in-council established a few things. It provided the authority for VIA Rail to incorporate the subsidiary, and then it set the number of directors on the board to seven.
Senator Marshall: Okay, so there are only three yet?
Mr. Ranger: There are only three, but there will be four more people joining the board soon.
Senator Marshall: My last question is for the parent company. When will we see your 2022 annual report? Because that’s where the information is. Last year’s annual report was tabled around this time, so when will we see last year’s annual report?
Ms. Cardin: The annual report will be tabled, if I am not mistaken, on May 5, “-ish,” so in the next few weeks. The subsidiary is an unconsolidated subsidiary.
Senator Marshall: Are you able to tell us the level of funding that the government provided? I am looking at your results from last year, and it showed the five-year trend. I am wondering what it is for this year. Are you able to give us a little advance?
Ms. Cardin: To put in place the subsidiary or —
Senator Marshall: Total funding required last year was $596,668,000. Are you going down or going up?
Ms. Cardin: In terms of funding, we do go up, as I did mention earlier.
Senator Marshall: What was the figure? Did you give the figure?
Ms. Cardin: I will turn to my colleague, Ms. Boisvert, on the calendar-year funding.
Danielle Boisvert, Vice President and Corporate Controller, VIA Rail Canada: For the end of year 2022, it is going up for two reasons. We had more investments, so capital funding adds; it is more. In terms of operating funds, we were about equivalent to the previous year.
Senator Marshall: Do you have a dollar amount, the total?
Ms. Boisvert: Not top of mind. We can write back with the information.
Senator Marshall: That would be great. Thank you.
[Translation]
Senator Forest: Thank you to the witnesses for being here to help us analyze this budget.
My first question is for Mr. Ranger.
Regarding the call for tenders to the private sector for the high-frequency rail project — and by the way, people are talking more and more about hybrid trains for high-frequency and high-speed service — is the call for tenders just for the construction of the project or for the construction and the operation of the trains? This is a big concern for us. The unions have made their position known, given the mission and values of VIA Rail. Its mission is to make rail service cost-effective, while remaining accessible.
To your mind, is the call for tenders for construction and operation or just to build the infrastructure?
Mr. Ranger: Thank you for the question.
For the call for tenders that is currently at the request qualification stage, the model proposed is for the design, partial funding, construction, operation and maintenance of the entire network within the corridor. In the documents submitted, seven main objectives have been set out for the project. You talked about speed. We want passenger service that is quicker, more reliable and more frequent.
Also in the call for tenders, we have challenged the private sector to increase the number of users of rail service in Canada. We want to triple it at least. Those are the minimum levels that have been announced for the industry. The industry has to submit proposals to us in that regard.
We also have the environmental objective of decreasing greenhouse gas emissions. There are accessibility objectives. There are also very clearly stated objectives regarding the participation of Indigenous communities and the government’s priorities as to reconciliation. Finally, there are objectives relating to the safety of the entire infrastructure.
You mentioned the speed and frequency of the service. There are very firm commitments regarding frequency. One of the documents indicates that there must be at least 12 departures daily from each city. Those are the minimum levels. The industry will submit proposals that will be examined.
I hope that answers your question.
Senator Forest: My next question is for Mr. Burns.
I wanted to talk about the development strategy for performance centre clusters, specifically for aluminum in the Saguenay region and for marine biotechnology in Rimouski. Is your policy objective to consolidate those centres or spread the expertise around? In order to be at the international level, we must have the necessary critical masses. In those precise sectors of activity, we must have the knowledge and the mass of research centres and of personnel at the international level.
In your opinion, should the current clusters be consolidated? Or is there an interest, for political reasons, in spreading out these clusters across the country?
Mr. Burns: Thank you very much for the question.
[English]
As my colleague Mr. Lapointe noted, the innovation and skills plan sets out a series of different programs to support innovation and research and development and commercialization across Canada. These include the superclusters, as well as a variety of other — sorry, they’re not called superclusters anymore; they are just called clusters.
This is not an area that falls within my purview of responsibility at ISED, but certainly I can appreciate your comments about consolidating our investments in places, rather than sprinkling money very thinly across the landscape.
That’s where the government has actually taken some significant steps in recent years, by identifying that we’re going to go all in on certain clusters that have the most promise for Canada to develop expertise and to compete on a global scale.
Our regional development agencies, of course, also provide a series of different supports for the growth of small and medium enterprises, or SMEs, and scale-up as well.
To answer your question to the best of my ability, Canada has taken some significant new steps. The policy direction that we have advanced has been to identify those areas of promise for Canada, in particular, geographic locations within Canada, to make sure we are leveraging a critical mass of skill, as you noted.
I will turn to Mr. Lapointe if he has further thoughts.
[Translation]
Senator Forest: Perhaps the individuals in question could provide an answer in writing?
The Chair: Mr. Lapointe, could you provide an answer in writing? We will give you a date to submit the answer to Senator Forest’s question.
Senator Gignac: My question is for Mr. Ranger.
If I understood correctly, you will be selecting three consortiums this summer. In your opening remarks, however, I thought you said the cut-off date for qualification requests was yesterday.
Mr. Ranger: The consortiums had until yesterday to make an official submission for the qualification request phase.
Senator Gignac: How many submissions have you received? Was there a limit to the number of people who could make a submission? Could anyone in the world make a submission?
Mr. Ranger: You want to know if anyone in the world could make a submission for this project? Given the Canadian presence in the project, we expect that Canadian companies will be part of the proposed consortiums.
The procurement process is conducted under the aegis of the Minister of Transport, with the support of Public Services and Procurement Canada; I will let them announce the results. Since we have a protocol for revealing the results, they will make the official announcement.
Senator Gignac: I understand.
Here is my question. In June 2019, the U.S. Senate specifically prohibited Chinese consortia from bidding on transportation infrastructure projects. That obviously includes rail transportation. We are talking about design, operation and maintenance. They explicitly excluded China for reasons of national security. We know that China is a specialist in facial recognition, which can include data control and so on. Do you intend to follow the U.S. lead by prohibiting the participation of consortia that may be controlled by countries that are not really so-called friendly countries?
Mr. Ranger: Thank you for your question, Senator. This particular question is not within our mandate, but my colleagues at the Department of Transport and Public Services and Procurement Canada could answer it.
Senator Gignac: Will you identify the three selected consortia? Who will make the decision? Is it the Department of Transport or your corporation?
Mr. Ranger: It’s the Department of Transport. Once the consortium is selected, the corporation will be the project office responsible for implementing the parameters that will be negotiated in the agreement.
Senator Gignac: Thank you.
[English]
Senator Smith: I have another question for Mr. Burns and Mr. Lapointe. If you would like to send us something in writing if we don’t have the time, that would be great.
A key risk identified in your departmental plan 2023-24 is the potential for foreign governments, militaries and other bad actors to openly target our open and collaborative research environment. This poses a risk not only to the research environment but also to our national security and economic well-being.
Could you please provide updates on the National Security Guidelines for Research Partnerships, which was introduced specifically to combat this risk? How is it progressing? In which areas of research are you seeing the highest-risk levels?
Mr. Burns: Thank you very much, senator, for your question. This, of course, is something that our minister has been very vocal on, as you will have seen on February 14 when he announced the intention to advance with the guidelines. I’m not familiar with all of the details, and I will certainly follow up with a written response.
I can tell you that foreign interference and the flow of IP, or intellectual property, out of Canada to jurisdictions that don’t share our values are acute risks that have been identified and we take very strong action. I know that colleagues within my department are seized with this and are aiming to finalize that guidance for researchers, so I will absolutely engage with them without delay to ensure you have an answer to your question.
Senator Smith: That would be great. I appreciate it. Thank you.
Senator Loffreda: My question is for Innovation, Science and Economic Development Canada. I would like to address more specifically ISED’s $98‑million contribution to the Upskilling for Industry Initiative, which was launched in March 2022. According to the department, this initiative seeks to scale up proven approaches to upskilling and deliver demand-driven, short-cycle programs to meet the needs of employers.
I have two quick questions. Can you provide our committee with an update on your call for applications to select one or eight limited number of projects to allocate up to $250 million over three years? Is this call for application ongoing? How much interest has it generated so far?
Secondly, your results report claims that the initiative is expected to help 15,500 Canadians connect with new work opportunities. Is this over many years? How long is the program expected to be in place for?
Mr. Burns: Thank you very much for your question, senator. I apologize for feeling like it is a bit of a broken record from my perspective, but I know the team within ISED that has been advancing this initiative. At this point in time, I’m afraid I don’t have an answer for your two questions, but once again, I am pleased to respond to you without delay to ensure you have a response.
Senator Loffreda: Thank you.
[Translation]
Senator Dagenais: My question is for Mr. Ranger.
Mr. Ranger, you talk about choosing a partner to carry out the project in 2024. It’s been said that the new rail system would begin operation in 2030, but considering the time frames we’re used to living with on our major projects, is 2030 still a realistic deadline?
Also, is Trois-Rivières still on the map as a possible stop in the new train system? You mentioned it, I think, but I’m not sure.
Mr. Ranger: Thank you, Senator Dagenais.
On the question regarding Trois-Rivières, it was confirmed that the intent of the project was to serve Trois-Rivières.
Concerning the question about partner selection and the time frame, we are at the beginning of the project. This is a large infrastructure project, so it’s very difficult right now, given the scope of the project — which is still in the definition phase — to tell you exactly when it will be completed.
For any large infrastructure project, the design and project definition phase often takes much longer than people expect. The construction phase is usually shorter.
The project definition and design phase is still expected to take a number of years, so it’s very difficult to tell you exactly at this point how long it will take, given the fact that we don’t yet know the final solution that will be adopted.
It’s true that it will go beyond the 2030 deadline, based on our preliminary estimates, but I can’t get any further ahead of myself at this point.
Senator Dagenais: I have another short question to ask.
Correct me if I’m wrong, but I’m told that, for the installation of tracks for a high-frequency rail system, we would be talking about a rail system that would connect to old tracks, and they say that this could be more complicated because commercial trains run on the old tracks. Am I wrong in saying that there will indeed be a rail system that will connect to the commercial train rail system? So it would be more difficult for a high-speed or high-frequency train.
Mr. Ranger: Concerning system interoperability, you are correct that there are a lot of complexities associated with having passenger train tracks coexist with freight train tracks.
The goal of the project is to have, for the most part if possible, passenger-only tracks. With passenger-only tracks, it is possible to increase frequencies, explore speed options, and have a much more reliable service.
For example, as I mentioned at the outset, the performance and speeds are there on the tracks that VIA Rail owns. The difficulty appears when interoperability comes into play. To the extent possible, what is being asked of the various consortia in the project is to come up with solutions to address these issues. We are trying to minimize the multiple use of certain tracks as much as possible. So we would like to have dedicated tracks for our services.
Senator Dagenais: Thank you very much.
[English]
Senator Bovey: I have two more quick questions and a hope for Heritage Canada, if I may, and you can get me the information back if we don’t have time to talk about it now.
The National Gallery of Canada is in crisis. We have 13 to 17 vacancies in curatorial positions alone, plus others. It was recently reported that the gallery has spent more than $2 million on severance, and we know with the firing of employees with 20-plus years service, there will be a lot more severance added to that.
Can you tell me if that’s from their operating budget? And if so, what does that mean in terms of their ability to serve Canadians and Canadian galleries and museums across the country? Can you follow up with details of how much or if there’s any money in the budget to deal with the big international fraud rings against Indigenous artists in Canada? That’s huge. When can we hope that instead of piecemeal project grants to regional museums there are proper longer-term investments so they can plan forward instead of having to fall back? Those are my three questions.
Mr. Dendooven: I will respond to your first question vis-à-vis the National Gallery. The National Gallery is at arm’s length, so I can’t speak to the questions that you have vis-à-vis the gallery.
I will respond to the museum question. Again, there are consultations under way presently, and I suspect those are things that will be noted during the consultations and, of course, we’ll take note of those.
I will turn to my colleague for your other question.
Ms. Montminy: Thank you for your question, and we do share your concern with respect to international fraud risk. The recent cases are alarming, and we are following the developments.
There are two things we’re doing, and I know you asked the question to my counterpart at ISED a few weeks ago with respect to technology, so that’s one dimension.
On the copyright framework — we share jurisdictions on copyright with our colleagues from ISED — and we are looking, as you know from the mandate letter commitment of our minister, at introducing amendments to the Copyright Act with respect to artists’ resale rights. There have been recent consultations, and we hope to bring this forward quickly. It will not be an answer to this particular issue.
With respect to Indigenous traditional knowledge and cultural expression, we have a small team working on various pilot projects engaging with Indigenous communities to explore ways to adapt copyright acts or intellectual property legislation to their needs. It’s part of the Truth and Reconciliation Commission and UNDRIP, so we are hoping that over time we will create a regime that takes into account the Indigenous perspective on intellectual property.
That is not a direct answer to your question in terms of whether there is a large envelope of money dedicated to that, but the answer to that is no, unfortunately, but I think the recent cases have brought a lot of attention to these issues.
Senator Bovey: You all know I soon have to retire from the Senate, and these are issues I will continue to follow.
Ms. Boisvert: Thank you for your contributions to the arts and culture. We very much appreciate everything you have done, and we hope to continue working with you.
The Chair: To complete answering that question, can you put it in writing please? Thank you.
Senator Pate: Thank you again and also to reassure Senator Bovey, she and I are working together on some of those initiatives, so they won’t be missing from the discussions.
My question is for VIA Rail and VIA High Frequency. You mentioned in your response to one of the questions that there are consultations with Indigenous communities. We know that reconciliation is in the mandate of all the ministers.
Obviously, the history in terms of the railway and the relationship with Indigenous people is not the most positive one historically. What is the nature of the consultations, and how are Indigenous communities being involved? Can you provide us with a list of the consultations that have been provided, what the discussions have been, what the results have been and how you are measuring your work toward reconciliation along those lines?
[Translation]
Mr. Ranger: Thank you for your question, Senator.
[English]
The Indigenous consultation element is very important. It is core to the project. As soon as the request for qualifications was issued, the minister wrote to all of the Indigenous communities along the corridor to ascertain the role he would have and the leadership that there would be demonstrated around the project around proper consultation and duty to consult.
In terms of VIA HFR, we are early in the process, but there have been numerous consultations. We have over 41 Indigenous communities right now with whom we’re interacting.
Those discussions are just beginning, but we’ve already met some of them multiple times, and we’re trying to do three things at this point. The first one is to explain the project and the scope, as we know it right now. The second one is to hear from them in terms of how they would like to be engaged on this project and how they foresee their contribution to the project. The third one is to see what kinds of economic benefits could be in the project for them.
Part of the request for proposals is also tapping the private sector to come to us with a series of measures they can bring to the table in terms of fostering the dialogue with the Indigenous communities. For example, there is a mapping of whom we have met, and we would be pleased to offer that to you. There are over 40. We’ve reached out to all of them, and, in terms of engagement, we’re at various levels, depending on where they are along the corridor.
As an example, in the Quebec region we had multiple discussions with the Huron-Wendat and the Abenaki.
Senator Yussuff: On this new project, as you know, I’m too old to remember when we started the discussion about high frequency rail for VIA Rail. I keep referring to the “Dr. Zhivago railway” we still use in this country, and most people don’t know what I’m talking about because it’s that old. That’s not to say anything about the employees and the people trying to operate this system. It’s long overdue.
My worry is that, like any project of this nature, with time delays, consideration for private-public partnership to fund this project and a change in government at some particular future date, we will go back to the place we started. We will be consulting again to get there.
In terms of your outlook as an agency, you have $47 million to use for this consultation. Do you see any possibility of speeding up this process so we can make a decision as a country that we are going to do this project?
Mr. Ranger: Thank you for your question, senator. The issue of timing is front and centre for everyone. We would like to realize this project very quickly. Right now, we’re in the first phases where we have set up a very clear procurement process. So far, there are no delays, but again, it’s easy to say at the beginning. We closed the request for qualifications on time. The launch for the request for proposals is also being tracked. That’s the extent to which I can commit at this stage. However, in our long-term planning, in diverse phases, we’ve allowed, as I mentioned before, enough time for the design element of this project. There will be an impact assessment requirement, and those processes tend to be lengthy, so I don’t want to overpromise, but we have to respect those requirements.
The Chair: Certainly, don’t overpromise, Mr. Ranger. If you want to complete the answer in writing please do it, because that’s also a pertinent question.
Before we close the meeting, I have a question for Canadian Heritage. I know that you have the responsibility of administering official languages. Bill C-13 is before the House and coming to the Senate soon. In my previous responsibilities in another house, I was responsible for dealing with Heritage Canada as a minister for New Brunswick. I want to be fair with my question, you can answer it in writing, and it’s pertinent.
[Translation]
When I look at the 2022-2023 Main Estimates, and when I look at the 2023-2024 Main Estimates today....
[English]
There is a cut in that vote of 11.2%. In view of the responsibilities you have with official languages, for clarity for this committee, why such a cut of $17 million?
[Translation]
Mr. Dendooven: Thanks very much for the question. The estimates do show cuts to official languages. However, the 2023 budget announced $679.92 million over five years for official languages, including $108.6 million for the Action Plan for Official Languages.
However, these amounts will be included in supplementary estimates. So, we have to make a submission to the Treasury Board to get the funds and then it will be included in Supplementary Estimates (B) or (C). There is more money for official languages.
The Chair: Thank you for the clarification.
[English]
Honourable senators, before we adjourn this meeting, I would like to remind the witnesses to please submit written responses to the clerk by the end of the day, Tuesday, May 9, 2023.
Senators, I would also like to inform you that our next meeting will be held in camera this afternoon at 3 p.m. to review the draft Supplementary Estimates (C) report for the fiscal year 2022-23.
Before closing the meeting, I would like to thank the entire support team for this committee, those in the forefront of the room as well as those behind the scenes who are not visible. Thank you all for your hard work in permitting the Finance Committee to move forward.
(The committee adjourned.)