PACP Committee Meeting

     Welcome to meeting number 14 of the House of Commons Standing Committee on Public Accounts.

    Pursuant to Standing Order 108, the committee is meeting today on report 14, “Regional Relief and Recovery Fund”, of the 2021 reports of the Auditor General of Canada.

     Today’s meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. Regarding the guidelines from the Board of Internal Economy of March 10, 2022, everyone participating in person must wear a mask, except for members of Parliament when they are seated at their place during the proceedings.

     To ensure an orderly meeting, I would like to outline a few rules to follow. Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. Please keep your microphone muted when you are not speaking. For interpretation, for those on Zoom, you have the choice at the bottom of your screen of floor, English or French audio. For those in the room, you can use the earpiece and select the desired channel.

    I remind you that all comments should be addressed through the chair. For members in the room, please raise your hand if you wish to speak. For members participating via Zoom, please use the “raise hand” function. The committee clerk and I will do the best we can to maintain a consolidated order of speaking for all members, and we thank you for your co-operation.

     In accordance with our routine motion, I am informing the committee that all witnesses have completed the required connection tests in advance of the meeting.

    I would now like to welcome our witnesses.

    Welcome, everyone. It's lovely to see you again. It's the second time this week for the Auditor General.

    From the Office of the Auditor General, we have Karen Hogan, Auditor General of Canada; Philippe Le Goff, principal; and Lucie Després, director. From the Federal Economic Development Agency for Northern Ontario, we have Manon Brassard, interim president, and Lucie Perreault, director of programs. From the Federal Economic Development Agency for Southern Ontario, we have Chris Padfield, acting deputy minister, and Linda Cousineau, vice-president, business innovation and community development. From Prairies Economic Development Canada, we have Dylan Jones, interim deputy minister of PrairiesCan and president of PacifiCan; Hicham Aitelmaalem, director general; and Sundeep Cheema, chief financial officer.

     Witnesses will have five minutes to make their opening statements.

    Ms. Hogan, you have the floor.

    Thank you, Madam Chair.

    Thank you for this opportunity to discuss our report on the regional relief and recovery fund, which was tabled in the House of Commons on December 9, 2021.

    I would like to start by acknowledging that this meeting is taking place on the traditional unceded territory of the Algonquin Anishinabe people.

    Joining me today are Philippe Le Goff, who was the principal responsible for the audit, and Lucie Després, who led the audit team.

    As part of the response to the COVID‑19 pandemic, the federal government announced the regional relief and recovery fund in April 2020. The fund was managed by the federal government’s regional development agencies across Canada. It was meant to help businesses and organizations that could not access other federal pandemic support programs and emergency funding or that required additional assistance. In total, the government allocated more than $2 billion to the fund.

    This audit focused on whether Western Economic Diversification Canada, the Federal Economic Development Agency for Southern Ontario, and the Federal Economic Development Initiative for Northern Ontario designed, delivered, and managed the fund effectively and efficiently, and whether they reported on results.

    Overall, the regional relief and recovery fund was successful at providing last-resort assistance to thousands of businesses and organizations affected by the COVID‑19 pandemic. Also, according to data provided by the regional development agencies, the program will likely succeed in reaching the objective of providing at least 25% of its funds to the tourism sector.

     However, the management of the program was weakened by a lack of efficiency, consistency, fairness and transparency, which may have resulted from the efforts to administer the program quickly. Applicants from different regions of the country faced different requirements because of the various approaches taken by regional development agencies and the agencies' different interpretations of the eligibility criteria.

    We found that, as a result of these differences across regions, funding was awarded in some cases to applicants who did not meet all of the eligibility criteria set out under the national fund, and ineligible expenses were funded.

    In addition, in some regions, not-for-profit organizations were directly invited to apply for funding, without an open call to all potential eligible organizations.

    We also found that the system put in place to report on the fund's performance relied on inaccurate information for key indicators. For example, the number of jobs maintained was based mainly on information provided by applicants, without further verification. In our view, the number of jobs saved was often overstated.

    The three regional development agencies that were covered by our audit expected that between 25% and 42% of the total amount of repayable contributions granted would not be repaid. This is due to the fact that the regional relief and recovery fund was designed as a last-resort funding program and therefore carried increased risks.

    We made three recommendations to the regional development agencies, including one recommendation that we also addressed to Innovation, Science and Economic Development Canada. The regional development agencies only partially agreed with our recommendations.

    Madam Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.

    Thank you.

    Thank you, Ms. Hogan.

    I now call on Mr. Jones to make his opening statement.

    Thank you.

     Good morning, Honourable Chair and members. Happy spring, everyone.

    My name is Dylan Jones. I'm joining you from Edmonton, which is Treaty 6 territory within the Métis homelands.

    I am the president of PacifiCan and the interim president of PrairiesCan. These are the successors to WD, Western Economic Diversification Canada, which delivered the RRRF in the four western provinces.

    The RRRF was, as the Auditor General has noted, an urgent relief program that targeted businesses and organizations that did not qualify for other pandemic support programs. It was a backstop program. It launched with almost $1 billion for regions across the country and was recapitalized twice, to a total value of over $2 billion, to deal with unprecedented need.

    This was emergency funding to help eligible businesses to pay their bills and pay their employees at a time when their revenues were significantly reduced. The program created certainty for thousands of families and hope for the future. From conception to delivery, the RRRF took less than seven weeks to stand up.

    In western Canada, the pandemic arrived just as key sectors of the economy were reeling from depressed energy prices and international trade shocks to our exporters. It wasn't just oil and gas. We had problems in global sales across a broad range of commodities. Businesses were very vulnerable in western Canada at the outset of this. That's why demand for the RRRF in the west exceeded all other regions of the country combined.

    WD took swift action to provide more than $700 million to 10,000 businesses and organizations. To give you some examples, we supported individual businesses like Rocky Mountain Flatbread, a family pizza and pasta restaurant with locations in Alberta and B.C. They used RRRF funds to develop a home pizza kit and started growing their own salad sprouts, which they now sell to other restaurants.

    As you know, a portion of the funds was set aside for tourism businesses. We were able to help the Tunnels of Moose Jaw to retain staff, renovate and prepare for when the attraction could reopen. The reduced risk of permanent closure kept key employees of this year-round tourist attraction working, but also hopeful. I have to say, I really felt like we were in the hope business throughout this crisis.

    I would like to note that in western Canada, many under-represented groups were funded at a rate that was significantly higher than their representation in the western market. Rural RRRF approvals accounted for more than double the percentage of rural small and medium-sized enterprises. Women-owned businesses were approved for RRRF funding at a rate that was one and a half times the percentage of women-owned businesses in the population. On the indigenous front, it was a similar story, with twice the baseline percentage.

    Altogether, the RRRF in the west supported over 2,700 women-owned businesses, 349 indigenous-owned businesses, at least 97 official language minority community businesses and at least 74 LGBTQ+ owned businesses.

    That's a snapshot of how the program was implemented in the west. The picture looks different in other regions of the country and for good reason. Canada is a big country, and it's not the same everywhere. RDAs designed their rollouts of RRRFs to maximize speed and local accessibility. Given the urgent need to quickly deliver this funding, it made sense to use existing application processes that were already available and with which customers and clients were already familiar.

    The Auditor General has made some recommendations that we will act on, such as improving the consistency of measurement reporting. Lessons learned will inform the design of performance measurement strategies for future initiatives of this urgent nature. We appreciate the work of the Auditor General. We're always happy to learn and improve.

    I will close by noting that the Auditor General found that the regional relief and recovery fund was successful at providing last-resort assistance to thousands of businesses and organizations affected by COVID. Indeed, the RRRF largely did the job it was designed to do, and it did so under pressing circumstances and quickly. Businesses continued operating, and Canadians kept their jobs in a volatile time.

    The people of PacifiCan and PrairiesCan, the public servants who delivered this program, were incredibly thankful and humbled by the opportunity to help others.

    Thank you.

     Thank you.

    Thank you.

    We now move on to Manon Brassard.

     Good morning. It is my privilege to appear before this committee today.

    I will start by saying that I am joining you from Gatineau, which is located on the unceded territory of the Algonquin and Anishinabe peoples.

    I'm here in my capacity as FedNor's interim president. As noted in the Auditor General's report, FedNor was previously an initiative under the Department of Industry. FedNor was established as a stand-alone regional development agency on August 12, 2021, and I joined FedNor on that date.

    I am pleased to talk to you about FedNor's experience in delivering the regional relief and recovery fund—the RRRF—in northern Ontario, and the agency's response to the Auditor General's audit. The audit has provided input that will help us better serve Canadians when implementing national programming.

    FedNor was able to deliver the RRRF quickly and effectively, thanks to the proven and established processes and mechanisms built into its system and the dedication of its employees.

    In northern Ontario, the COVID‑19 pandemic has had wide-ranging impacts on local economies, affecting businesses and communities that, in many cases, depend on single industries.

    The RRRF has been vital for one of the hardest-hit sectors in northern Ontario, the tourism industry. The region's tourism products are primarily geared towards the American market and tend to attract tourists who are seeking to experience the great outdoors. With the extended closure of the United States border, the industry found itself in a precarious situation and its very survival was at stake.

    While the tourism industry was perhaps the most hard-hit sector, it was not the only one. As a result, there was significant demand for support through the RRRF from the manufacturing sector and businesses engaged in agriculture, forestry, hunting and fishing, all of which were significantly impacted.

    Funding offered through the region's community futures organizations supported rural, main street businesses and small and micro enterprises located in communities across northern Ontario, including in indigenous, rural and remote communities.

    FedNor took swift action and, with the 24 community futures organizations, delivered more than $100 million across the region, effectively providing support to key sectors like tourism, agri-food and manufacturing, and contributing to the economic stability and well-being of the region.

    In total, more than 1,200 businesses and organizations benefited from RRRF in the region. More than 30% of our total funding went to support tourism. Approval for businesses led or majority owned by women has almost doubled the percentage of women-led or majority-owned SMEs in the business population. Approvals for indigenous-owned or indigenous-majority-owned applicants were over one and a half times the percentage of approvals for indigenous-owned or indigenous-majority-owned SMEs in the general business population.

    The audit process, which took place as FedNor and its partner RDAs were still delivering the RRRF, enabled FedNor to work with other audited RDAs to quickly respond to concerns. It also provided valuable recommendations to help us better serve Canadians.

    The agency immediately sought to improve its practices and has already taken action to address the recommendations of the audit report. In fact, lessons learned from the delivery of the program and the audit process have been applied to budget 2021 programs.

    As we work together to better serve Canadians, FedNor and the audited RDAs will continue to move forward on our action plan.

    I'd be pleased to answer any questions you may have. Thank you.

    Thank you, Ms. Brassard.

    We now turn to Chris Padfield.

     Thank you very much, Madam Chair.

    Good morning, committee members, and Ms. Hogan, Mr. Jones and Madam Brassard.

    Thank you to the committee for the invitation.

    Before I begin, I'd like to acknowledge that I'm participating today from Ottawa, the traditional territory of the Anishinabe and Algonquin nations.

    I am pleased to be here on behalf of Ms. Nancy Gardiner, as the acting president of the Federal Economic Development Agency for Southern Ontario—or FEDAV Ontario, as it's known—to participate in your study on report 14, “Regional Relief and Recovery Fund”.

    I'm joined today by my colleague, Linda Cousineau, vice-president, business innovation and community development.

    FedDev Ontario is the regional development agency responsible for managing the RRRF in southern Ontario.

    At the outset of the pandemic, when it became clear how badly Canadian businesses and communities would be impacted by restrictions to keep Canadians safe, Canada’s regional development agencies, or RDAs, quickly pivoted to design and deliver the RRRF.

     This fund was a critical federal tool to help businesses and organizations mitigate pandemic-related financial pressures. It also provided an important backstop to other federal business supports, such as the wage and rent subsidies and the Canada emergency business account.

    We thank the Auditor General for her work and the work of her team. We are pleased to see the recognition that the RRRF's design aligned with the government's objectives for helping businesses and organizations deal with the impact of the pandemic and addressed gaps not covered by other COVID-related programs.

    The report also acknowledged that leveraging existing experience and systems, as well as the direction to accept greater risks, allowed the RDAs to design and deploy the program within weeks of the onset of the pandemic.

    Southern Ontario is a key driver of Canada's economic growth, representing more than 39% of the country's GDP and employment. However, the region was hard hit by the pandemic. More than a million jobs were lost in southern Ontario by April 2020. To provide critical support to small businesses and their employees when it was needed most, FedDev Ontario was allocated more than $500 million to deliver the RRRF in southern Ontario.

    FedDev Ontario’s direct delivery of RRRF provided relief to more than 1,300 businesses across the region.

    We also worked with Community Futures Development Corporations, or CFDCs, to provide targeted relief to more than 1,950 rural small businesses.

    In addition, to maximize the program’s reach and impact, we worked with regional partners to provide targeted support that reached more than 39,000 small businesses, including sectors hardest hit by the pandemic, as well as under-represented groups that were disproportionately affected.

    Overall results for the RRRF in southern Ontario show that funding was provided to businesses that needed it most, with almost $160 million supporting southern Ontario's tourism businesses, surpassing the commitment to provide at least 25% of RRRF funds to the hardest-hit tourism sector; more than $150 million supporting women-owned or women-operated businesses; $10 million supporting indigenous businesses; and more than $140 million supporting rural areas.

    The Auditor General's report noted that overall, the RRRF was successful at providing last-resort assistance to thousands of businesses and organizations affected by the COVID-19 pandemic.

    Work is under way to address each of the recommendations, and the audited RDAs have developed a detailed response and action plan.

     We have taken steps to continue to look for ways to better support under-represented groups. For example, based on a GBA+ analysis, dedicated funding was set aside for indigenous businesses under the tourism relief fund. Activities that foster inclusive recovery are also being prioritized in the delivery of the jobs and growth fund.

    We agree that it would be helpful to examine practical ways to improve transparency in the future and, when appropriate, leverage common regional development agency approaches to program delivery, assessment and approval.

    RDAs were established to be place-based and reflective of the regions they serve. Delivery of national programs by RDAs should of course be coordinated, but also delivered in a way that reflects each regions’ unique needs and circumstances.

    Harmonizing processes to accurately report on program outcomes is an area for further improvement. Lessons learned from the RRRF will inform the design of performance measurement strategies for future initiatives.

    Since spring 2021, all new initiatives delivered by multiple RDAs have been developed to foster harmonization of program indicators and the collection of data.

    Under the leadership of Minister Jaczek, FedDev Ontario will work with its RDA colleagues to take the lessons from the delivery of the RRRF during this unprecedented time to refine and improve its approaches to supporting businesses and organizations in the regions.

    In closing, Madam Chair, I'd like to acknowledge the efforts of the public servants within our organization to quickly design and deliver this program while themselves navigating a once-in-a-generation pandemic. During an extraordinary and uncertain period, they successfully worked together to provide timely support that helped to make sure that businesses could keep operating and employing Canadians.

     Thank you.

    Thank you, Mr. Padfield.

    I too hope that this will be only a once-in-a-generation pandemic.

    I would like to acknowledge the efforts of the public servants during this challenging time and also the work of the Office of the Auditor General in the delivery of this report.

    We will now proceed to the first round of questioning, for six minutes.

    Mr. Lawrence, please go ahead.

     That's perfect.

     Thank you to the witnesses for appearing today and for your work throughout the pandemic. All your efforts are much appreciated.

    Thank you to the chair for filling in today for Mr. Williamson. It's much appreciated.

    I just want to start out with a brief statement, and then I'll get into my question.

    I believe that a robust economic development department is absolutely critical to a prosperous economy, because it spurs innovation in both the public and private sectors. Throughout the world we've seen numerous examples—in Europe, in Asia and even in some of the states in America—of how they've worked through impressive public-private collaboration and an unrelenting commitment to results, and economies have been materially lifted by competent, agile economic development departments.

    Unfortunately for Canada, I fear we're not there yet. We appear to be a laggard in both innovation and economic development. As a starting point for reform and improvement, having accurate information will be required as the foundation for critical decisions that will need to be made in the coming years to reform Canada's economic development investments.

    Therefore, I'm deeply troubled by the inaccurate information that was revealed in the Auditor General's report. One of the key metrics in determining the success of taxpayers' investments is jobs maintained or created.

    Could the Auditor General please enlighten this committee with her thoughts and maybe expand on her earlier comments with respect to how accurate the reporting of jobs maintained and created by the CFDCs was?

    You're absolutely right that having accurate information is always needed to make well-informed decisions, and in this case it's needed in order to demonstrate that the outcomes of the program were properly achieved.

    What we noted in the audit was that the information being gathered when it came to demonstrating what jobs would be maintained as a result of receiving the funding was often overstated. The applications were just taken at face value. There was very little challenge function.

    We noted a few examples. In one case, an agency indicated that 200 jobs would be maintained when the recipient received only $60,000. At times, forms indicated that more jobs would be maintained than the number of employees the applicant had indicated they had. That led us to believe that the number of jobs being maintained through the funding deployed was often being overstated, so it was really evident that a challenge function was needed.

    Thank you very much.

    I'll ask the same question to the representatives of the federal development agencies. I'll maybe start with Mr. Padfield, but any one of you is welcome to comment.

    How would it be that you would have more jobs maintained than actually existed at a given time? There were a number of glaring inaccuracies, or at least what appeared to be glaring inaccuracies. How did that happen, and were you as disappointed as I was at the reporting of such documented numbers?

    I can start.

    I think there were a few one-off discrepancies in that regard, but I think there's a multi-stage process for reassessing those job numbers, and it's important to understand that within the program, the job numbers weren't actually an indicator used to choose which projects were or were not funded. They were indicators of the outcome afterwards.

    There are two stages to calculating the number of jobs. There are initial assessments from the companies, and then, as we close out files, they're further evaluated. With respect to the core information used in evaluation of the projects—their costs and the detailed analysis in terms of whether they were eligible and whether or not they'd received funding from other things—I think we had a fair degree of accuracy in terms of those discussions.

    I'm sorry, but my time is short here.

    My challenge, Mr. Padfield, is that I want to use these numbers going forward. I can only think that you all can have a huge role in the economy going forward and in being extremely beneficial, but it is very hard to make those decisions when numbers aren't solid.

    You'd have to agree that even if they're one-offs—and the auditor didn't review every transaction—regardless of where they are used, when the ministers and the government are looking at this and they're trying to make decisions and they see these claims about jobs that clearly can't be true—for example, with the agency that indicated that over 200 jobs would be maintained for a recipient receiving less than $60,000, or when an agency simply reported the number of jobs as the total number of employees, meaning that they said, “Okay, because you got the money, you would have gone bankrupt without it, and therefore we're going to report all your jobs”—this is troubling. As I said, I want the government to have accurate information so that it can make the best decisions possible, so to just say that these are one-offs is troubling and challenging.

    Would you also please table the formulas for the calculation of jobs? Would you be good to do that for us?

     Give a very short answer, please. You have 15 seconds.

    We didn't use a formula. The job numbers were provided by the individual organizations on the first go-around with their application estimates, and then they were further reviewed after.

    Thank you.

    We move now to Mr. Fragiskatos, for six minutes.

    Thanks very much, Chair. It's great to be with colleagues again and to hear the presentations this morning.

    My first question will go to FedDev. It could go to any of the respective agencies, but FedDev is the one that has supported my region through this particular fund and in other ways over the years.

    I look at a press release that came out around the time the regional relief and recovery fund was really being implemented. I'll point to two businesses. One is in London and one is down the road, in Ingersoll, Ontario.

    This is for URSA Manufacturing. The release reads, “The RRRF”—the regional relief and recovery fund—“has helped URSA cover its short-term fixed operating costs and diversify into non-auto markets—keeping the company in business.”

    The other business, in Ingersoll, is Chocolatea, and is described as an artisan chocolate and premium tea retail shop. Here, the funding was delivered in partnership with Community Futures Oxford. It “provided working capital to help the company with its cash flow needs”.

    We've heard the phrase “last-resort assistance” mentioned a few times here today.

    This is for Mr. Padfield. If this fund did not exist, is it reasonable to assume that these businesses simply would not have been able to survive? Let me just be that blunt about it.

    I think they would have been challenged in a lot of circumstances.

    You have to understand that to get to our program, they had to have gone through and either exhausted or been ineligible for all the other relief programming that was available. In many of the circumstances for the companies, we were the lender of last resort within the federal frame of supports. They'd exhausted the HASCAP, the BCAP, the CEBA, the wage subsidy and the rent subsidy. They were either ineligible for those for one reason or another, or they had costs in excess of that.

    We were able to provide funding tailored to specific needs and circumstances where a company may have been more impacted than another.

    Thank you very much for that.

    I'll stick with Mr. Padfield.

    The digital main street program supported businesses in my community and in many other communities as well. Could you expand on how that program worked and the support it offered to businesses in need?

    We were really excited to be able to partner with the Ontario Business Improvement Area Association, the Toronto business improvement area association, Communitech and Invest Ottawa to provide multi-layer support.

    I think it's important to realize that the regional relief and recovery program was about relief on one side, but also about recovery and being able to prepare for when the pandemic ended.

    A number of companies did not have digital presence. The digital main street program worked directly with communities and with main street businesses to help get them online with small grants of $2,500. We were able to support 30,000 different businesses across southern Ontario through this program.

    There is a really interesting company here in Ottawa that was a great example of this. It's called Hippie Mylk. It's a non-dairy, plant-based milk company. It was able to go from being a farmers' market-based company—of course, all the farmers' markets were closed during the pandemic—to being an online business. It is now an online/delivery business. It actually increased its revenues, thanks to the digital main street program that we were able to develop with our partnerships across the region.

    Thank you very much.

    This is probably the final question, if I'm looking at the chair and mindful of time. It will go to all three of you, Mr. Jones, Mr. Padfield and Ms. Brassard.

    In terms of lessons learned, can we expect regional economic development agencies to better coordinate going forward? I'm not just talking about during the pandemic, which we're still in, but on a go-forward basis to ensure consistency of outcome? Are there lessons learned here in terms of the need for the agencies to coordinate as far as having consistent eligibility criteria and driving for consistent outcomes overall?

    One thing that comes out in the report, as we heard in the presentation this morning from the Auditor General, is that there does not appear to have been much coordination among agencies. I realize that probably has a lot, if not everything, to do with the fact that this program was introduced at lightning speed to deal with something that had been completely unseen before. That's understandable from one perspective, but I would hope that there would be a lesson learned as far as coordination among agencies and bureaucracy.

    We'll start with Mr. Padfield and go to the others, too.

     Since we launched the RRRF, we've moved on and have been delivering a host of recovery projects. Across the regional development agencies we've established tiger teams to work together on the implementation of these, ensuring that we have a common look and feel, and that we're looking at and tracking data in a consistent way across the agencies.

    There's a lot of back-office work going on across the regional development agencies to make sure we are collecting similar information around the programs, and doing so in a joint manner.

    Thank you very much.

    Ms. Brassard.

    Please give a very short answer.

    I agree with what Chris Padfield said. We are consulting a lot more.

    I would just add that there are things, on a practical level.... A good example here is the definition of tourism. It seems obvious that we should be defining “tourism” in the same way, but it's actually stunningly difficult. Is a restaurant on the border of a tourist area a tourism business or not?

    Depending on what definition you use, how would you assess it? The next question then is, are you [Technical difficulty—Editor]? What proof are you using and what burdens are you creating? This stuff [Technical difficulty—Editor].

    Mr. Jones, I believe you may have some technical issues on your end.

    Thank you very much.

    We now will move on to Monsieur Lemire for six minutes.

    Thank you, Madam Chair.

    I would like to thank all committee members for welcoming me as I replace my colleague today.

    It's truly an honour for me to be here, especially for this study, because we can look back at the circumstances surrounding the beginning of the pandemic. As the member for Abitibi-Témiscamingue, a region that in some ways may be similar to the FedNor area, I've learned a great deal about the major needs of our businesses, particularly the very small ones. The federal programs put in place have overlooked partnerships and business owners who pay themselves in dividends, as well as many farmers.

     I addressed Minister Joly, at the time, on that subject to tell her that something had to be done, specifically that funding should be quickly provided, along with support programs. In my view, the CFDC network was perfectly positioned, in Abitibi-Témiscamingue, to receive this money and make it available right away to prevent bankruptcies. In fact, bankruptcies are still a possibility in 2022, according to a study by the Canadian Federation of Independent Business, because we are not yet fully out of the situation caused by the pandemic. Not all businesses are back on track and doing well.

    I want to take a moment to congratulate our CFDCs, and especially executive directors Thérèse Grenier, Jocelyn Lévesque, Éric Laliberté and Nadia Bellehumeur, for their excellent work in Abitibi‑Témiscamingue. It was possible for us to access decentralized funding to save our businesses in the region. That's why I think that kind of program is a great strength.

    I would like to ask you a question, Ms. Hogan.

    In your report, you say the following:

    I will digress and talk about this for a moment. The “FARR” acronym, which is the French equivalent of the RRRF, is already used in Quebec to refer to the “Fonds d'appui au rayonnement des régions”. Having the same acronym refer to two different regional programs creates some confusion in the regions.

    In your report, you state that the criteria used were different, but also that the “applications considered to be eligible varied from one regional development agency to another”. Well, I think that having programs adapted to each region, according to needs, is a strength. Federal programs are far too often designed with major corporations in mind. That's what Canada's economy is based on. In contrast, the Quebec economy and the rural economies are much more geared towards small and medium-sized businesses. That is why I find that having programs that are adapted to each region is a strength.

    I would like to hear your comments on that.

    I agree with you. The regional development agencies were created precisely because we recognized that the regions had different realities and priorities.

    Here, however, we're not talking about a program that existed before the pandemic and had to be adapted to take that situation into account. This is a program that was created during the pandemic precisely to respond to those specific circumstances. It's a national program with very clear national criteria. Accordingly, the expectation was that the eligibility criteria would be applied consistently across the country and then the program would be adapted to take into account the priorities and particular characteristics of each region. What is at issue here is the eligibility to a national program that should have been consistent all across Canada. That was actually the objective when the program was designed.

    Thank you very much.

    I would also like to hear what Ms. Brassard has to say about this.

    Northern Ontario is more or less Abitibi-Témiscamingue's neighbour, so our regional media often report news about FedNor and its involvement in the region. The autonomy you now have makes it possible for you to take leadership and make your mark in your region.

    I feel that one of the challenges in Abitibi‑Témiscamingue is that there doesn't seem to be any money allocated to programs for businesses that, for instance, want to go into secondary or tertiary processing in our area, which is a region heavy in natural resources. I have the impression that you have a bit more flexibility at FedNor to invest in those programs.

    What is your view on the flexibility of regional funds? How can that become a lever for a given area?

    Indeed, flexibility is important. In our implementation, the stated objective is that this is a national policy. Overall, the criteria were actually still met, in my view. I do agree that it is important to harmonize the definitions.

    You may already know that I am also the president of Canada Economic Development for Quebec Regions. I think that, there too, we have programs for secondary and tertiary processing, but I won't elaborate on that. The important thing is to be able to adapt the way the program is applied, within the limits of what is permissible.

    In northern Ontario, where I'm also currently working, we have placed significant emphasis on projects carried out in partnership with indigenous peoples and projects involving industrial development and tourism. That meets a need in northern Ontario, so that's what we have focused on.

    We have also worked with the CFDCs, since there is a whole network there too. We were therefore able to divide up the work between us. FedNor took on the small and medium-sized businesses in certain sectors and divided up the work so as to be able to coordinate with the CFDCs. That was the second pillar of this program. There was money for the agencies and there was money for the CFDCs. We worked together, while avoiding interfering in each other's work, to make it easier for them, for us, and especially for the client base, who needed quick access to programs, in light of the situation.

    Thank you, Ms. Brassard. I think I will get back to you soon, if you wouldn't mind.

    Thank you, Mr. Lemire.

     We'll now move on to Mr. Desjarlais for six minutes.

    Thank you very much, Madam Chair.

    Thanks to all colleagues for their good questions so far. I understand, however, this was a difficult period for every single one of the regional development agencies.

    To the Auditor General, you've had a difficult job collecting data, in some instances, where data was missing. I want to recognize that.

    I have a few questions to clarify some of the data gaps that I noticed in some of the review—they're very similar to Mr. Lawrence's—and my concern with how this program impacted particular regions.

    I'm from Edmonton, Alberta. It's good to know that Mr. Jones is present. I never had the opportunity to meet Mr. Jones. I worked in the indigenous sector for six years in Alberta. It's the first time I've ever met you. There's going to be a target in these particular questions for you, to make sure we get some clarification on your statements and the glaring discrepancy between them and the report.

    I listened to your statements early on. They sounded very promising, but I think there was some interesting positioning and interesting language you used to avoid some of the particular instances and glaring facts related to this report.

    I'd like to turn the attention of the Auditor General and Mr. Jones to exhibit 14.4, “Businesses led by members of under-represented groups made up various proportions of approved applicants”. In that section, you'll see that there is a comparison graph of three different agencies: northern Ontario, southern Ontario and western economic diversification.

    Within that, you'll see that western economic diversification failed to report youth as one of the categories for this study. I also want to point out that the percentage granted to indigenous people was 2% under the first stream.

    Could the Auditor General, followed by Mr. Jones, explain why this graph and the information presented here are so different from the statements made by Mr. Jones?

    Go ahead, Auditor General.

    I'm not sure that I can explain why Mr. Jones made different statements. What I can do is explain to you what we found in our audit.

    In our audit here, we were able to highlight for you, with this graph, the type of information that was gathered, typically through self-identification application forms. We looked at this information as we were auditing how the regional development agencies applied a GBA+ lens to the program. What we found was that while they gathered this information, it was rarely used to inform decision-making. All I can provide you with is the data that we had.

    In some instances, western economic diversification did not gather that data, so we could not include it in the chart.

    I think the rest of your questions should be directed to Mr. Jones.

     If you can, Auditor General, while I have you on this portion, did Western Economic Diversification report to the Auditor General any information related to youth in terms of their participation?

    As I mentioned, we gathered the data that came off of the self-identification in the application forms. We did not see any information about youth, which is why it's not included in the chart.

    Thank you very much.

    Mr. Jones, could you please tell me and my honourable colleagues why Western Diversification failed to report youth? Then I'll follow up with my second question.

    I hope the sound is working now. Is it? Okay. Perfect.

    First, I should just clarify that the final reports from proponents will be coming in this month. Everything will be in house, I think, by the end of April, so there will be better data. This audit was conducted in the life of the program, so—

    To be very clear, Mr. Jones, there are other agencies here that were able to satisfy the request of the Auditor General. I'm trying to state that there has to be consistency across the board on some of this reporting. It's not appropriate to see Western Diversification take such a lack of reporting when...we've seen the very same from northern Ontario and southern Ontario.

    I can't accept that response, that you're not collecting on time. There are other agencies that are doing this work. I need to know why the agency for western diversification did not report this.

    There will be better data as we move forward. In addition, we were facing or expecting a much higher level of volume, and indeed we had that. We had 10,000 projects, whereas other agencies were dealing with much smaller volumes.

    We took an approach—I think we wouldn't do it the same way again—of having a very streamlined application process. That was not just to reduce the administrative burden on us—because we were expecting a wave, which we got—but also to reduce the burden on applicants. We went very narrow at the beginning of this program in terms of what we collected. We went too narrow; even we would say too narrow.

    The other thing was that no one expected this to go on for two years. It's easy in hindsight, but we were all thinking that this was a three-month program. We needed to get it out quickly. We were going to get a wave of applications. We would have time to gather more data afterwards.

    Our whole philosophy, when we funded this, was to be very lean and to help absolutely everyone. Our basic philosophy was that we were not going to ration the program. Anyone who—

    In response to that—I have limited time here—in regard to the indigenous portion, there was a reporting for 2% of indigenous funding here. Why wasn't it larger, considering there was such a demand?

    The real issue here is that we have a ton of work to do to grow the number of indigenous-owned businesses in western Canada. Our project approval for indigenous was 2.8%. That's nowhere near the population of indigenous people in western Canada, so in a way that's disappointing, but it's also twice the rate of indigenous-owned businesses at large. Indigenous-owned businesses are about half that, proportionally, in the SME population.

     The point is that we did well if you compare us against the status quo of indigenous businesses—

    That's what I'm saying. That kind of logic is inaccurate.

    Thank you very much, Mr. Desjarlais. You can carry that over to the next round.

    We will now move on to the second round.

    Mr. Duncan, you have the floor for five minutes.

    Thank you, Madam Chair.

    Ms. Hogan, on some of the funding distribution, there was a general amount announced for the RRRF program. Did you get any information, or do you have the information, on the formula that was used to distribute the money to the respective agencies, and then, further to that, how it was split, maybe to sub-partners or local partners? Do you have that information, or were you asked that at all?

    During our audit, we looked at how the funding was allocated through the regional development agencies. We actually have a chart, exhibit 14.2, that gives you that layout. We noted that they looked at demographic information, but often economic factors were factored into how the allocation was done.

    We saw no concerns with how the allocation was done, and hence didn't dig too much further into it.

    Thank you.

    Mr. Padfield, I'll direct some of my questions, as a member from eastern Ontario, to the experience as an MP in southern Ontario here. I've had some members comment that a local community futures program was ready to accept funding, but was very slow to receive it from FedDev. When it did, it received only a small amount. Despite the RRRF being awarded a large sum of money overall—I believe initially it was $962 million, which increased to $2 billion—the money that was given to frontline agencies to administer the program was smaller than they anticipated.

    One of the other interesting things that was noted in the report was that there was obviously a large subscription into these programs, and they couldn't accommodate all of it, yet at the end of the year there was still money left over.

     I'm just wondering if you could talk about the process. If the staff and infrastructure at community futures programs have been around for the last 30 years, what was the delay in getting funds to them, particularly surplus funds that were still left on the table at the end of the year?

     The CFDCs were a really important partner for us. We gave them, in fact, $83 million out of the $500 million that came into FedDev. They moved very quickly on the ground to support 1,950 different SMEs across the region. They were a critical partner for our organization.

    I think we moved very quickly across the board to get this program set up and in operation. I know everybody was eager to get things rolling, but I think we were up and rolling in a very few weeks, and the CFDCs were quickly onside to help and support. They were a critical partner across the board on this.

    One challenge—and I think it's been raised before—was some of the unclear eligibility criteria. The Auditor General's report, on page 3, indicates that the eligibility criteria were often unclear where funding was awarded to recipients who were ineligible. Going more specifically, there were some cases involving, again, the community futures program.

    They were unaware of some of the nuances of the eligibility program; specifically, recipients who applied for both the RRRF program and CEBA, for example, could claim $20,000 forgivable for only one program, not both. Many of these businesses were unaware of these details and were not provided them by the department, so, by the time the contracts were already lined up and money was awarded, businesses found out that, although they thought they would be forgiven $40,000, in fact, it was only $20,000, obviously a major financial consideration, strain or challenge for them. This was devastating for many businesses, and they had to repay much more than they initially thought and budgeted for.

    Mr. Padfield, can you explain how some of that miscommunication or clarification happened and how many businesses this impacted? Did you hear that as a complaint or a challenge in the process?

    If it was a complaint or a challenge, it would have been very early on. I think things got smoothed out quite a bit.

    To Mr. Jones's point, while we talk about the RRRF—and you talk about it running from May 2020 and moving to closing up in June 2021—there were, in effect, four trunks to the program. We adjusted the program—again, we were at the bottom of the rung, along with our CFDC partners—between changes that would happen to CEBA, to their wage subsidy and to the rent subsidy, so our program had to change to adapt to all those changes as they went along.

    As you know, CEBA was worth $40,000 at the beginning. As the pandemic lingered and needs increased, it moved to $60,000. We likewise had to move our programming to reflect that when we were copying the CEBA-type loans, and we worked with the CFDCs to do similarly.

    Throughout that period, from May 2020 to June 2021, that program evolved at four different periods, so we worked closely with our CFDC colleagues. As the overall package and portfolio of federal supports changed, being the lender of last resort in that regard, being the safety net, we had to adjust to all that. We worked closely with our CFDC partners to make sure we were able to do that and that they were given the information they needed to make sure that what they were providing was in line with where the rest of the federal supports were going.

    Thank you, Mr. Padfield.

    We now move on to Mr. Patzer for five minutes.

    I have a point of order, Chair.

    I just want to get on the record that I will cede the floor to Mr. Patzer.

    Voices: Oh, oh!

    Mr. Han Dong: I'm sorry, Chair.

    That is duly noted and appreciated, Mr. Dong.

    Thank you.

    On budget day, this is rare.

    Voices: Oh, oh!

    Thank you, Mr. Dong, for your generosity of spirit there.

    Yes, thank you very much. It's very much appreciated.

    Mr. Jones, I just want to start off by thanking you for recognizing that some ideologically driven decisions prior to the pandemic put western Canada into a precarious position and left a lot of these businesses in a vulnerable position when we entered the pandemic. The financial footing they had before was systemically erased.

    I have a question for you regarding access to community futures buildings. How many community futures offices are there under your watch? Given that you were WD before and that now you have the two organizations that you're responsible for, I'm just wondering how many offices you have under you.

    I'm sorry. Is the question how many CFs there are?

    Yes. How many community futures offices are there?

    Hicham, do you know the answer to that? I don't know offhand the number of offices.

     Yes. There are 90 CF offices in the west.

    Throughout the last couple of years, how many of those offices were closed to somebody coming in person to apply for these programs?

    Sorry, but can you repeat the question?

    Were any of these offices closed, so that the public was unable to come in person to apply for these programs? I'm curious because we had the issue at Service Canada, where all the offices were shut down and our constituency offices basically did all the work for Service Canada.

    I'm just wondering about community futures and all these organizations. Seeing as we have such a large number of applicants in western Canada, on the accessibility side of it, were there any issues with offices being shut down and people being unable to get help applying for programs?

    Hicham can supplement, and it's a really good question, but I'm not aware of any complaints. This certainly wasn't raised with me. On our side of the program, most people want to access the documents electronically and there's a high degree of automation, but in terms of people going into CF offices, I'm not aware there were any issues.

    I'm curious, generally speaking, because of the area that I serve and our broadband access. I'm sure that all across the country people would say that broadband access is a problem. It's a barrier at times to applying for specific programs, because sometimes the file size is so large that it takes forever to download and upload, and there are issues generally with trying to apply. That's why I was curious if there were any issues.

    Ms. Hogan, did you find any issues, when you were auditing, with access to offices or with resources being unavailable?

    No. We did not reach out to community futures themselves. There are hundreds of them, so I can't comment on whether any of them remained open.

    Thank you very much.

    I want to expand on a point that my colleague Eric Duncan was making with respect to paragraph 14.50. This is for the Auditor General.

    What was the total dollar amount of ineligible expenses that were approved?

    This is a bit of a difficult question. I do have a dollar amount that would include paragraphs 14.49 and 14.50. We did sampling, so the dollar amounts that I have relate to the three regional development agencies that we looked at that were included in our audit.

    We extrapolated the elements that we thought should not have been paid—the ineligible expenses—and we found 25 cases, for a total dollar value of $2.9 million. That would cover both paragraphs 14.49 and 14.50. When you extrapolate, because our sampling was representative across just the three regional development agencies, it could, if the incidence of occurrence remains the same, be up to approximately $55 million. However, again, there were so many different methods of looking at applications across all the regional development agencies that it was impossible for us to extrapolate across all the regional development agencies. This really does relate to the three that we looked at.

    Because those dollars were ineligible expenses, are they being recouped? Will the taxpayer get that money back?

    I'd like a short answer, please.

    In our perspective, these are ineligible expenses because we believe that with the national eligibility criteria and the national outline of what was eligible, they should not have been paid out. However, the regional development agencies did not apply that consistently, as I said previously. At times they applied them differently, and that's why this occurred, hence the difference of opinion on our recommendation.

     Thank you.

    We will now move on, for two and a half minutes, to Monsieur Lemire.

    Thank you, Madam Chair.

    As part of this discussion, I would like to put forward an idea that I like and is quite important to me. It is something I did a study on in my riding. It is also included in the Bloc Québécois's demands, in our budget expectations. I'm crossing my fingers and hoping to hear something along these lines this afternoon. We would like to see the government create regional funds to support local innovation. The important point here is that these would be projects carried out by and for the regions. We're talking about economic development and diversification geared towards the innovative secondary processing of Quebec's natural resources, particularly in the areas of electric vehicle batteries, aluminum, forestry, and agriculture and agri-food. We could even have a tax credit for people living in rural areas.

    In its platform, the Bloc Québécois also talks about land development. The Bloc Québécois proposes to regionalize regional development programs by decentralizing Canada Economic Development and entrusting the money to regional funds that will enable the regions to manage their priorities independently. Decisions on the future of our regions must no longer be made from Ottawa, but in the regions. The purpose of a regional agency is to meet a regional need; it is more attuned to the realities of the areas it represents.

    My question is for Ms. Brassard, from FedNor.

    Would you agree that the decentralization of program funding could be more effective in meeting regional needs? Managing their own funds would enable the regions to make decisions together with the community, which would improve consistency and efficiency. We could do more than what is being done now.

    We have offices in most Quebec regions, including Abitibi‑Témiscamingue. Our employees understand the needs of the regions quite well. They are partners in the regions and work together with all local economic stakeholders. They are therefore well positioned to examine projects in collaboration with all parties involved.

    In that regard, I would like to see more transparency and consultation. The discussions could be made public. Personally, I greatly miss the regional development councils we had in Quebec for a long time.

    I will come back to the fund we are discussing now, which was established in response to the COVID‑19 pandemic. Wouldn't it be a good idea to renew this program to provide assistance to our SMEs or very small businesses that are still struggling with the effects of the pandemic, or even to make this funding ongoing?

     Could we have a short answer, please?

    For now, this fund is closed. However, we still have our regular programs, which are designed to make the economy greener and more innovative. We need to consider that aspect as well.

    Thank you very much.

    Thank you.

    Now, for two and a half minutes, we have Mr. Desjarlais.

    Thank you very much, Madam Chair.

     Again, thank you to my colleagues. We've had good questions thus far.

    I want to return to the issue of some of the reporting and the recommendations made by the Auditor General. I'll point your attention to section 14.32 in the report, under recommendations, which mentions that for future programs, the federal economic development agencies for northern Ontario, southern Ontario, the Prairies and the Pacific, and the other regional development agencies “should establish targeted levels of support for under-represented groups and ensure that information is collected” and used to inform decision-making.

    I want to note that the agency said it “partially agreed”. This is concerning in some ways, because we want to make sure that we have real progress on the GBA+ analysis of some of this work, and data is critical to that.

    I want to really remind officials, particularly Mr. Jones, of the fact that not reporting and/or not even collecting this information is a critical error in our ability to make good decisions, and it brings a judgment on our institutions when we don't do this effectively, particularly in light of the fact that other economic diversification agencies have collected it. It's a glaring fact that we're lagging behind, in the western diversification branch in particular, in relation to the other two agencies.

     Why has the agency only partly agreed to this recommendation?

    Thank you.

     Honourable Chair and committee members, I accept the criticism on data collection. Bluntly, if we were going to do this all over again, we would have collected more data at the front end and less at the end, right? We would have collected more up front.

    Our approach was about just being quick and easy for people. That was our approach, but it led to the situation we're in now, and I accept that criticism. On that part, we would do it differently in a similar situation.

    Just to explain the “partly agreed”, it relates to setting targets for this kind of program, so please understand that my comment is not about setting targets in general. There are often programs.... We talked earlier about the importance of getting the number of indigenous-owned businesses up in general. There are places where targets make sense, but for an emergency backstop program, if we had tried up front to ration the program, we would have had to get it right, because if you ration the program, it means that money is not available for people who don't meet however you've rationed it.

    I don't know if that made sense, but the point is—

    I have a point of order, Madam Chair. The interpreter just informed us that the poor quality of the connection is making it impossible to provide adequate interpretation.

    I see.

     Will it help if I speak slowly?

    Your time is up.

    Mr. Lemire, can you hear?

    Yes.

    It is Mr. Jones who is still having the Wi-Fi connection problem.

     Perhaps—

    What I'm saying is that the interpreter just informed us that the connection was too poor for the interpretation to continue. The working conditions of interpreters are vitally important. In fact we just adopted measures to allow—

    I actually can't hear the French translation myself. I think it might be on our end.

    It seems to be working now. Thank you. I think we can continue.

    Let's move on to Mr. Duncan for five minutes.

    Thanks, Madam Chair.

    Ms. Hogan, I'd like to follow up with you on paragraph 14.50. Mr. Patzer talked about that—the money allocated to ineligible applicants and the status of repayment. Just in the interests of time, would you be willing to table with the committee the number of cases you identified that may have been ineligible, and then perhaps the percentage?

    You obviously didn't audit every single transaction or recipient, but could you table the percentage, perhaps, of ones that were identified as ineligible expenses among the ones you audited? Would that be a reasonable request for the committee to make?

    I can probably give it to you now, but we can absolutely follow up with it in writing if you prefer.

    I appreciate that. There are a few things I want to get on the record, so I appreciate your doing that in the interests of time.

    To the economic development agencies, in the interests of time, as opposed to asking all of you for a yes or no, I will put it the other way. Would anybody object to tabling with the committee the following: the number of cases you identified later, in any reviews or perhaps through the Auditor General, of any businesses that were ineligible or had ineligible expenses? Would you be willing to table with the committee the number of cases or recipients identified as not using the money appropriately or as ineligible?

    Regarding the status of the remedy of that, are you looking to recoup that money, or are you just deeming that not an option at this time? What is your plan to do that?

    If our committee were to ask for this in our report, would anybody object to regular intervals for those updates, so that perhaps every quarter or a couple of times a year you'd update those numbers on the number of cases and what those repayment statuses are? I'm not talking specific names per se, but the number of cases and what actions your agencies are taking to rectify that.

    Would anybody have an issue with doing so? I don't see any objections. I appreciate that.

    I will ask the same thing, perhaps, as well—

    On a point of order, Chair, I want to understand the member's question. Was it for the panellists, or was it a question for the committee members?

    Could you please clarify?

    It would be for the respective economic development agencies, that they table that information to us in writing about the number of cases.

    Thank you.

    I could ask the same for high default rates, just in the interests of time as well. The Auditor General commented on the high default rates that could be found, or their potential.

    Ms. Hogan, the interim aspect you have reported in there, but would it be unreasonable to expect that our committee could get updates on a quarterly basis or a couple of times a year—whatever's determined in our recommendations—to understand the progress on default rates and repayable loans that may be considered not repayable if the business has gone out of business or whatever the situation may be?

    Would that be information you would deem reasonable for our committee to have on a regular basis?

    I believe that's the kind of information that the regional development agencies should be providing to you. Because repayment of the repayable portion of the loans is only to begin as of December 2023, there are no expected repayments at this time.

    That's noted. I think perhaps they might receive word.... If a business has gone out of business or if it has defaulted in other ways, they may know early, but again, I think regular reporting would be helpful. I appreciate that.

    I have the opportunity for one last question. I will go back to Mr. Padfield. On page 7 of the report, the percentages show that FedDev for southern Ontario had a higher percentage of rejected applications to some of the programs, 48%, compared with 41% of applications that were accepted.

    The southern Ontario agency was the only region that had a higher percentage of rejected applications than accepted. Could you speak to that discrepancy and whether the eligibility criteria being somehow less clear for southern Ontario was a factor in that?

     I don't think it's a discrepancy. I think it's the nature of the different economies.

    It's really hard to make comparisons between each of the regions. As Mr. Jones pointed out, the west was in much more dire straits just before the pandemic, and when you're making a comparison to southern Ontario.... Even within southern Ontario, we have very different impacts from the pandemic.

    There were a number of regions that were locked down for extended periods. Our demand fluctuated significantly as lockdowns rotated around in various regions within the jurisdiction.

    Our refusal rate was assessments of eligible costs and what have you. It went back to the point at which you had to have gone through all the various other programs to be able to show that you were ineligible or you were not able to meet your financing needs through some of the other mechanisms before you could come to us.

    If our default rate was high, it was because either they received funding from one of the other support mechanisms, or they didn't have any other costs that weren't covered that would have been eligible. It's a reflection of our good due diligence on the projects that came forward and our risk assessments of the investments that we were making as they came to us, which we did regularly and throughout the program.

    Thank you.

    We'll now move on to Ms. Bradford for five minutes.

    Thank you, Madam Chair.

    First of all, thank you, witnesses, for appearing today.

    In my previous work in economic development with the City of Kitchener, I was quite familiar with the digital main street program and working with Communitech. I can vouch that many small businesses, retailers in particular, were saved through this program. It allowed them to quickly transition to online shopping, which they would never have been able to do before, so it was very effective in that way.

    Mr. Padfield, I was wondering. This program was launched in a period of seven weeks. Can you explain how that compares with the usual program launch for new programs? How were you able to accomplish that so quickly in this time? I know there was urgency, but I wondered if you could elaborate.

    We all recognized the emergent nature of the circumstance, with a lot of companies having closed their doors, and a lot of retail companies not having other opportunities to find other sources of income as they were forced to shut down. All the regional development agencies moved very quickly to stand up the program.

    We were conscious of the fact that we were going to get a much higher-volume, lower-dollar client than we normally do. We served three times as many clients within the pandemic period as we do normally. We were able to leverage a digital system that we had been advancing within the agency, so we were able to not do this paper-based, and to be able to move forward the number of projects we were able to.

    We were able to put in a digital system that allowed us to integrate some controls into it, to make sure that we didn't see duplications of bank accounts or business numbers. We were able to bring in that digital system to be able to move forward quickly and make sure we were putting the kinds of controls in place that were needed to ensure that we weren't funding folks who shouldn't be funded by the agency through the course of this activity.

    Thank you for that.

    I want to address this next question to each of the three agencies. Please answer the following question, one at time.

    How did you deal with the not-for-profits in your particular area? What do you feel you got with the value for money in funding them? If you could each answer that for me, please, that would be wonderful.

    I'm not sure who wants to start.

    I can start, if you'd like.

    The not-for-profits were supported in two ways. Partway through the program, they became eligible for support through the program itself, to ensure that they had liquidity to continue. There was a circumstance where we provided about $5 million to keep 28 different not-for-profits functioning and to support businesses within the region.

    We also leveraged 14 other not-for-profit organizations to help us deliver recovery activities that included the digital mainstream and working with the Toronto Region Board of Trade to help the digitalization of other companies that were small manufacturers, or the second- and third-floor main street companies.

    Through that work, we were able to support 39,000 different SMEs across the region with that host of activities that we were able to diverge. We also leveraged some organizations to help us deliver support to under-represented groups, including women and official languages communities within the region.

    We have a deep, strong ecosystem in southern Ontario, and we were happy to be able to leverage some of those partners to help us advance this initiative.

     Thank you very much.

    Mr. Jones, would you like to answer, if that's how it worked out in your area?

    Thank you.

    Essentially, the main program provided funds, and through the non-profits we were able to provide supporting services for businesses.

    We focused a lot on dealing with the under-represented groups. We reached out to Indigenous Business Development Services, Small Business Services centres and the entrepreneurs with disabilities program, etc.

    In total, 164 non-profit projects ended up delivering services to 21,000 businesses. It was an important part of the mix, because people needed things other than just money to get through the crisis.

    Thank you for that. I appreciate that.

    Finally, I'll ask Ms. Brassard.

    We had similar results. We went to six particular not-for-profits that helped us in the delivery. We had the Sault Ste. Marie Innovation Centre. We had the

Kirkland and District Community Development Corporation.

    It was also a way to reach out to more diversified clientele and make sure nobody was left behind or forgotten.

    Thank you very much.

    I guess I'm done. Thank you so much.

    Now we move on to our third round, for five minutes.

    Mr. Lawrence.

    Ms. Bradford, was your question brief? You guys have been very kind to us. Would you like to finish off?

    Thank you.

    I was just going to ask Mr. Padfield. Given the high volume of projects in such a short period of time, were you able to accomplish that with the same staff complement, or did it just involve a lot of overtime?

    We added some additional staff to help us out. We have additional staff who will help us when it comes to the recoveries time as well.

    We added 30 or 40 staff to help us do this. We will carry them forward as we go into the back end of the program and look to close out files in recovery.

    Thank you.

    Thank you for that, Mr. Lawrence.

    Thank you.

    My questions will focus on paragraph 53, which talks about the selection criteria.

    I have concerns that business owners are often working extremely hard and don't have time to even look up to ask for the government grants, as many of you who have business experience know. I noticed that some non-profits were invited, while some were not. I'm not alleging any misconduct here. I think there are challenges in making sure that all businesses are aware of some of the solutions you offer.

    What proactive steps do you take to make sure that businesses in the communities are aware of the programs you offer?

    I'll direct that to Mr. Padfield, to start.

    We leverage our social media, for sure. Whether it's Twitter, Facebook or what have you, we make sure we're getting the word out. We also have a whole host of internal contacts that we reach out to in terms of that big ecosystem I was talking about. We have 36 different post-secondary institutions within the region. We reached out to about 130 different incubators and accelerators to explain all of this.

    We also ran technical sessions across the region. We ran 15 different virtual sessions to explain and give details to businesses because, I agree, the last thing any business wants to do is fill out a government form. The more we can make things smooth for them, the better.

    The 36 different CFDCs were leveraging their local networks where they have contacts.

    We engaged everyone, from the chambers of commerce and onward, to make sure we were—

    I apologize for cutting you off. I have a more precise question.

    Other economic development agencies across the world do some very accurate and very involved analysis in terms of looking at their own economies, both locally and nationally, to see where gaps are. They make sure taxpayers' dollars are precisely invested. It's not just based on who applies or—I apologize for the flippancy—based on their review of Twitter.

    We have a lot of that information, I think, from StatCan. Do you take that information and say that this is what the community of Orono needs or this is what the community of Port Hope needs? Do you say that this is how we can work with local mayors and local individuals to make sure we're investing those dollars precisely?

    If not, I think it might be a suggestion for you.

     Far be it from us to tell a region what they need or don't need, but we do that regular analysis. That's part of our core business.

    I want to delineate between the emergency relief program we're talking about here versus our ongoing efforts to develop economic opportunities for the future. Prior to the pandemic, we did 20 different round tables across the region and had deep communications. Linda and I were across the region with hundreds of different stakeholders, talking about what those regional needs were.

    I don't know if you realize, but while we were a temporary agency created in 2009, in 2019 the current government made us a permanent agency. We were just launching ourselves off as a new permanent agency and not an ongoing running program. Those 20 round tables were meant to help us do exactly what you're talking about—build up that deep regional knowledge and understand what particular regions need going forward.

    I think it's really important, and you're completely right about that kind of analysis. That's quite different, though, from an emergency relief project, which is what the RRRF was. It was based on needs from different organizations. We weren't being prescriptive about who we thought had needs and who didn't.

    Thanks very much.

    On that question, though, without that information, I'm just bothered a bit by procedural fairness. If it wasn't your organization, then perhaps the organization.... It doesn't say in the report which one it was. I'm wondering why certain organizations would have been invited and certain ones wouldn't have been.

    Early on in the pandemic, as I think has been talked about, we initially thought this program was going to be three months and we had to get help out. Using that digital main street example, those organizations approached us and said, “We have the capacity here. We've been running a smaller version of this program. We think we could do some more good in this.”

    Invest Ottawa and Communitech both approached us and said they had a number of students. We ended up using 1,400 different students to help us deliver digital advice to companies across the region. Those organizations approached us, and we went back to them and said, “Can you collaborate and pull something bigger together?” They produced the digital main street project, which ended up having four different organizations involved.

    They went on to deliver support to over 30,000 organizations within the region, providing some of the necessary activities and support for companies that had never been digital before, or refining companies' digital presence so that they could move into international markets and refine and expand their coverage and business model.

    That's a bit of the approach that happened in that case.

    Thank you. We will move to Mr. Patzer.

    I would like to acknowledge that Ms. Shanahan has agreed to cede her time to Mr. Patzer for five minutes. Members have agreed to end the meeting at 12:30 p.m.

    Thank you.

    Thank you once again—

    Madam Chair, on a point of order.

    I agreed to have my third round, but if you give five minutes to Mr. Patzer and then adjourn the meeting at 12:30 p.m. I won't be able to speak. We could end the meeting at 12:35 p.m. so that the NDP and the Bloc Québécois can have two and a half minutes each.

    Thank you.

    Okay.

    I think we have unanimous consent here. We can agree to have Mr. Lemire and Mr. Desjarlais finish the round.

    Thank you.

    Go ahead, please, Mr. Patzer.

    Thank you.

    I'll start with the Auditor General. The report says, “Members of Parliament and the public should have access to transparent, clear, and useful information on the results achieved by federal departments and agencies.” The data collection process throughout the program went back to ISED. For that reason, I find it interesting that they're not here today, so that we can ask them.

    Do you think it would be valuable to gather information from ISED that would be beneficial to this study?

    I'm going to look to Philippe to see if I have this correct, but ISED was responsible for gathering all the data from the regional development agencies and then making a global picture. That is why we included them in the recommendation about gathering data and looking for consistency.

    They can do only so much. It still comes back to the collection of that data and having it be more consistent across all the RDAs, so that you can roll it out properly. It includes having targets, if you want to actually be able to measure and determine whether or not outcomes have been achieved.

    There are some gaps there, which is why the recommendation is addressed to both ISED and the regional development agencies.

    Right, but they have all this data and information. Do you think it would be valuable to this committee if ISED were actually to come here and take questions from the committee?

     I always believe that every entity included in one of our audits should be called to the committee in order to help determine the best way to improve a program and to improve program delivery for Canadians.

    Right on.

    I guess that would include the Privy Council Office as well, because they're quoted in 14.57 as having received information and data too. Do you think it would be beneficial to have the Privy Council come?

    I would leave it up to the chair and the membership to decide who best to invite as witnesses.

    Good answer.

    Elaborating on the point made by Mr. Lawrence to the different RDAs here, what were the specific criteria—I know Mr. Padfield alluded to it a little—you guys looked at when you were inviting specific non-profits to apply versus others who were not reached out to?

    Maybe I'll take a stab and hope the connection works on this one.

    There is one thing I want to flag for the committee, which is that we often think about procurement as a comparison for what fairness looks like. The thing with a standard procurement process is that businesses, when they're doing competitive bidding, lose money on the bids that fail, but they recoup it by charging more for bids that succeed.

    When you're working with non-profits, that doesn't apply. If they're in a competitive process and they spend $20,000 on a bid, if you will, or on an application and it fails, they're out-of-pocket. We don't actually get the same kind of demand from non-profits for competitive processes.

    I'm not making an argument against fairness or transparency. I'm just saying that it's actually not the way it works. It's not really what people want, necessarily. They want to know what's going on. They want to be able to knock on our door and say, “Hey, I've got an idea.”

    On this one, we talked to basically everyone who might be able to help. We sort of know who they are, the people who work in these spaces. We reached out to them—and remember, we were in a massive rush—and said, “Do you have something that you have to offer?” The word was out quite broadly on the non-profit side.

    I take the point that's been raised here, but it wasn't that we decided who we weren't going to talk to. We basically reached out to everyone we thought might possibly be able to help. People like that process, because they know they're not wasting their time trying to put in a bid and then having to eat the cost if it's unsuccessful.

    I appreciate that. That definitely helps.

    Lastly, we're talking about the number of people who applied to this program, particularly in western Canada. This was kind of a last resort program, but there were so many applicants. I'm just wondering, because there were so many applicants.... Was it also a contributing factor that they just didn't qualify for other programs, or maybe the other programs weren't targeted specifically for organizations in western Canada? Do you think there was a discrepancy between the east and the west on which programs worked and which ones didn't?

    Give a short answer, please.

    It's likely a combination of the amount of need.... The vulnerability of people's books also made them less likely to be able to get loans elsewhere, because of their financial state. I also think legitimate questions can be asked about the availability of programs in the west and just the quality of the outreach in general.

    Thank you.

    We now go to Monsieur Lemire for two and a half minutes.

    Thank you, Madam Chair.

    My question is for the Auditor General, Ms. Hogan.

    The regional economic development agencies have only partially agreed to the recommendation made in paragraph 14.55 of your report. How do you respond to that?

    Give me a moment to look at the recommendation you just mentioned.

    According to your report, they do not agree “that common delivery of funding programs is appropriate in all instances.” Of course, there are provincial and other programs that can address needs. In the end, it comes back to intended results versus regional objectives.

    As I said, the program was designed during the pandemic with very clear criteria. When a decision is made on a policy, the government is expected to adhere to that policy in implementing the program. In this case, there were very clear eligibility criteria. However, we found that these criteria were not consistently applied by all regional development agencies.

    Later, the focus can shift to the priorities and realities that are specific to each region.

    This is the aspect of the policy that was not followed, which led to our recommendation, but the regional development agencies don't fully agree with us.

    I understand. At the same time, it's interesting to see how they were able to meet the spirit of their own mission.

    I would like to ask you another question about the agencies.

    In your opinion, did the agencies take a risk by providing funding to businesses that weren't financially viable? In some cases, certain companies apparently even used the funding to repay shareholder loans, provide financial support to family members or purchase a vehicle. I'm referring to paragraphs 14.50 and 14.51 in your report.

    Do you think the agencies might have taken risks that were a bit too high?

    Again, the criteria for eligible expenses were clearly established when the program was designed. However, the agencies didn't apply them consistently. That does increase risk, and, in our view, it contravenes both the policy and the program as designed.

    In such a case, what will be the consequences?

    As I've reported, we believe that some expenses—

     Thank you.

    We'll now turn to Mr. Desjarlais for two and a half minutes.

    Thank you very much, Madam Chair.

    I want to again thank all of the witnesses. I know this has been a difficult study. It was a difficult time that we as a country had to endure, so I thank you all for your service.

    It's incumbent upon our committee and us as elected officials to make sure that the taxpayer and regular Canadians understand how this process works and where this money is going.

    I want to address paragraphs 14.49 and 14.50, which I believe contain probably the most problematic and largest issues facing this program. I'll read one out: “In our samples, we found the following examples where funding was provided, but the applications should have been rejected because they did not satisfy the program’s eligibility criteria....”

    I want to thank Ms. Hogan for very clearly outlining the problem here. There were clear criteria and there was a failure by the organizations to apply those criteria. We expect the regional development organizations to follow through with understanding the impact of this.

    When we look at the findings under 14.50, there is “repayment of shareholder loans”. That's what this money was used for. Taxpayer dollars went to shareholder loans. There is also “financial support to family members” and “purchase of a new vehicle”. These are ineligible expenses, but they're massive expenses. This is a glaring failure of the program, which I hope we can remedy.

    In some instances, businesses had no employees but were still allowed in this program. There were also cases of applicants that had not previously applied to other organizations, and “cases of applicants that were not in operation before March 2020”. That is extreme.

     I really want to make sure we understand Ms. Hogan's report on this and how important it is to truly satisfy the application of fair criteria, so it doesn't end up that taxpayer dollars are going to the repayment of shareholder loans. We can understand how that's a difficult thing for Canadians to understand.

    Will the regional development organizations remedy this issue, or are we simply going to allow the shareholders to have their money?

    If I may, the shareholder issue is not a case that I'm aware of, but it reminded me that in those instances, the loans are repayable. We'll recoup the money. On the issue of—

    Are taxpayers getting interest on this? We're giving it for shareholder loans.

    I'd like a very short answer.

    On the issue of no jobs, I think it was at the early stage, and it was the issue of a full-time employee versus a part-time employee. That situation was remedied.

    As for a business that was not in operation, there had been, to my knowledge, a change in ownership and the business was seasonal. It started the new season with new ownership. Those were issues on which we disagreed with the Auditor General on how to look at those cases.

    Thank you, Madame Brassard.

    I would like to thank all of the witnesses for appearing today.

    Is it the will of the committee to adjourn the meeting?

    Thank you for your diligence, Madam Chair.

    I also want to thank the technicians and interpreters.

     Thank you. The meeting is adjourned.