Volume 25 (November 17, 2022)

Isabelle Jacques, ADM (GC-FIN)

I swear.

Volume 25 (November 17, 2022), page 9 25-009-08

Isabelle Jacques, ADM (GC-FIN)

The Bible.

Volume 25 (November 17, 2022), page 9 25-009-11

Isabelle Jacques, ADM (GC-FIN)

Isabelle Jacques, I-S-A-B-E-L-L-E J-A-C-Q-U-E-S.

Volume 25 (November 17, 2022), page 9 25-009-14

Michael Sabia, Deputy Minister (GC-FIN)

Bible's good.

Volume 25 (November 17, 2022), page 9 25-009-19

Michael Sabia, Deputy Minister (GC-FIN)

Michael Sabia, M-I-C-H-A-E-L S-A-B-I-A.

Volume 25 (November 17, 2022), page 9 25-009-22

Rhys Mendes, ADM (GC-FIN)

I'll swear on the Bible.

Volume 25 (November 17, 2022), page 9 25-009-27

Rhys Mendes, ADM (GC-FIN)

Rhys Mendes, R-H-Y-S M-E-N-D-E-S.

Volume 25 (November 17, 2022), page 10 25-010-02

Michael Sabia, Deputy Minister (GC-FIN)

Yes, I can.

Volume 25 (November 17, 2022), page 10 25-010-24

Michael Sabia, Deputy Minister (GC-FIN)

In my case, yes.

Volume 25 (November 17, 2022), page 11 25-011-04

Rhys Mendes, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 11 25-011-05

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 11 25-011-06

Michael Sabia, Deputy Minister (GC-FIN)

I'm the -- Commissioner, I'm the Deputy Minister of Finance. So I'm the most senior non-elected official in the Department. And we all work, and I report directly to the Deputy Prime Minister and the Minister of Finance Chrystia Freeland. Do you want me to talk about what the Department does?

Volume 25 (November 17, 2022), page 11 25-011-14

Michael Sabia, Deputy Minister (GC-FIN)

Well, how I oversee those activities is the interesting question, but the... So we're -- I guess it would be fair to say we're the government department that's charged with the oversight, stewardship if you will, the oversight of the Canadian economy. That has several dimensions in our work. So we're responsible for tax and fiscal policy on behalf of the Government of Canada. For -- we're responsible for the financial and fiscal dimension of federal/provincial relations. We're responsible for international economic policy, especially related to trade and some other things. We're responsible for the spending side of economic development and social policy of, again, across the government. And my two colleagues, who will introduce themselves, we're also responsible for economic analysis and economic forecasting on behalf of the Government of Canada. That's what Rhys Mendes on my left is responsible for. And then on my right, another dimension of our work is our responsibility for policy with respect to the financial sector in Canada, and Isabelle Jacques is the Assistant Deputy Minister responsible for that.

Volume 25 (November 17, 2022), page 11 25-011-23

Isabelle Jacques, ADM (GC-FIN)

Yes. I'm Isabelle Jacques. I'm the Assistant Deputy Minister responsible for the financial sector policy. We're responsible for the development of policy in the financial sector, as I mentioned. In my team, I have five directorate, five divisions. Two of them were involved in the work that we did for the Economic Order. The first one was the Financial Crime and Security Division. The second one was the Financial Institution Division. So we are involved in a number of policy work. And in this case, we worked on both the Proceeds of Crime (Money Laundering and Terrorist Financing Act and also did work with respect to potential amendments to the Bank Act that made their way into the Emergency Order.

Volume 25 (November 17, 2022), page 12 25-012-19

Isabelle Jacques, ADM (GC-FIN)

That is accurate.

Volume 25 (November 17, 2022), page 13 25-013-13

Rhys Mendes, ADM (GC-FIN)

Yes, I'm Assistant Deputy Minister for Economic Policy in the Department of Finance. I report to Mr. Sabia. My branch is divided into two divisions. The first division focusses on assessing the current state of the economy, monitoring the evolution of the economy in the near term, and assessing the economic outlook. That was the division that was involved in assessing the economic impact of the blockades. The second division focusses more on longer term research and analysis of structural issues and policy issues affecting the Canadian economy.

Volume 25 (November 17, 2022), page 13 25-013-16

Michael Sabia, Deputy Minister (GC-FIN)

We, as a standard practice, review on a real-time basis, events that we believe that are occurring that can have a meaningful impact on the Canadian economy. That's a core part of what Rhys's group does. So this issue came on our radar screen, I would say, sort of late January as events were unfolding and there were the beginnings of blockades at the Canada/U.S. border. So let me just back up a little bit from that and explain why this became such a focus of concern on our part. There are two, I think, quite important things playing out in the background here. First, as you'll recall, at the time, there was a great deal of speculation, and indeed in retrospect, Russia's invasion of Ukraine was imminent, and that was something that we were very focussed on and very concerned about the economic consequences that that would have globally and the therefore spillover consequences that that would have for Canada. And then second, because it was late January and February in the usual budget cycle, we were fully engaged in the preparation of what became the April '22 budget of the Government of Canada. And as you know, budget making is a lot about understanding what the next period of time looked like for the Canadian economy. And this is, I think, important in understanding the origins of our concerns. So if you'll recall, January/February of '22, our economy was just exiting from all of the COVID lockdowns. And we were very concerned about the extent of that recovery, the pace of that recovery, how fast we would recoup lost output, how fast we would recoup lost jobs, because really, throughout the COVID crisis, one of the government's objectives had been to minimize any economic scarring, longer term scarring that would be the result of the COVID crisis. So that, given our focus on economic recovery and the pace of recovery, there were two or three things in the environment that we were especially concerned about. These are not necessarily new things. One, as everyone knows now, the extent of the damage to supply chains and the impact that that would have on the pace of recovery. Relatedly, the, at the time, incipient issue of inflation, something that was partly the result of the supply chains, but also, it likely would flow from events in Ukraine because of the sanctions, et cetera that would follow, and the impact on the energy markets, and how that would also flow through into inflation. So supply chain was an issue, inflation was an issue, and then third, so was the level of business investment, which is a chronic issue for Canada. So all of these things, and business investment, as you know, Commissioner, they -- business investment is very much something influenced by business confidence. So you take together all of these factors, and then these disruptions come along, and they obviously contribute to the extent of the concern that we have because the Canadian economy, in our view at the time, was at a very, very fragile moment. So that was one set of concerns and very significant concerns on our part and on the part of the government. Relatedly, particularly to the issue of business investment, playing again in the background of all of this activity was pretty big changes in what was going on in trading patterns in the world. Now, that sounds like an abstract idea, but it's actually not because the Americans at the time, with Build Back Better, with the rejigging of their own supply chains, of the tendency within the United States to want to have more resilience of supply chains, many of them anchored in the United States itself, that represented a very, very major challenge to Canada because of the degree of integration of our economy with the United States. Seventy-five (75) percent of our exports go into that market. So as a result of that, and we were doing work with the Americans at the time, for instance, with respect to the treatment of electric vehicles, something that was critical to the future of the automotive industry in Canada, there was a tendency in the United States to want to treat that as an America only issue. And then again, these disruptions come along and raise issues in the eyes of the United States and in the eyes of the U.S. administration, raise issues around the reliability of Canada as a trading partner. Significant issues. To the point where issues -- you know, I'm sure we'll end up discussing this -- where issues that rose to the level of President Biden and our Prime Minister in bilateral conversations. So these were very meaning -- very meaningful issues that arose in the Canada/U.S. relationship. So that too very much entered into our thinking here that if these border disruptions that we were experiencing at the time, if they were to continue for a period of time and became a more -- an even more significant threat to the American perception of Canada as a reliable trading partner, that that was something with very severe long-term consequences, not just for the Canadian automotive industry but for a whole range of industries that we export into the United States, but the automotive industry was the centre piece, at least at that time. So that was the backdrop of why this was on our radar screen and how it became increasingly important on our radar screen going forward.

Volume 25 (November 17, 2022), page 14 25-014-08

Michael Sabia, Deputy Minister (GC-FIN)

So now I don't feel so bad about having talked so long.

Volume 25 (November 17, 2022), page 17 25-017-20

Michael Sabia, Deputy Minister (GC-FIN)

No, I think for now that's probably all right. I mean, I think that sets the scene of why this was an issue for us. It had meaningful macroeconomic consequences for us in the near term, particularly given this point I’ve made about just the sensitivity, the specific moment we were at, from an economic point of view. I mean, this was a very, very delicate time, coming out of COVID. And I think, in retrospect, we’ve seen all that now; we’ve seen how it was easy to shut down an economy but very difficult to open it up again. And we were in the process of opening up the economy, as every other country in the world was, at this -- for pretty well, at the same time. So that was -- you know, it was a very, very sensitive, delicate moment, from our point of view. And then this broader issue with the United States. I mean, we were -- there was, you know -- the Governor of Michigan, was very active and very critical of what was happening; there were multiple comments in the public media from Members of Congress, from Michigan, and other states. There was concern within the American federal government within the White House, about this issue, hence my reference to a conversation between the Prime Minister and President Biden about this. I mean, this was -- you know, this was not -- how can I put this? This was not a second-tier issue in the Canada- US relationship; this was a first-tier issue. And, you know, we were subsequently able to negotiate an arrangement with the Americans on electric vehicles, but there was no doubt that this -- these disruptions coming when they did in that process brought with them the risk that we would not be able to get the North American treatment that we were eventually able to negotiate with the Americans with respect to electric vehicles. And as I said, electric vehicles are the future of the automotive industry. So if we had not succeeded in doing that, then the particular consequences of that for the central Canadian-based automotive industry would’ve been, you know, very, very serious. So I think probably I’ll leave it there.

Volume 25 (November 17, 2022), page 17 25-017-28

Michael Sabia, Deputy Minister (GC-FIN)

I would like to say it’s nice to see you and be there again, but that would be playing fast and loose with the truth.

Volume 25 (November 17, 2022), page 19 25-019-18

Michael Sabia, Deputy Minister (GC-FIN)

Here we are. Here we are.

Volume 25 (November 17, 2022), page 19 25-019-22

Rhys Mendes, ADM (GC-FIN)

Yes. I mean, the second one was an updated version of the first, ---

Volume 25 (November 17, 2022), page 20 25-020-05

Rhys Mendes, ADM (GC-FIN)

--- but yes.

Volume 25 (November 17, 2022), page 20 25-020-08

Rhys Mendes, ADM (GC-FIN)

I shared them with Mr. Sabia. I -- you’d have to ask him beyond that.

Volume 25 (November 17, 2022), page 20 25-020-11

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 20 25-020-14

Michael Sabia, Deputy Minister (GC-FIN)

Now I need some guidance, Cabinet confidences and stuff.

Volume 25 (November 17, 2022), page 20 25-020-18

Michael Sabia, Deputy Minister (GC-FIN)

Yes, she did.

Volume 25 (November 17, 2022), page 20 25-020-22

Michael Sabia, Deputy Minister (GC-FIN)

Yes, she did.

Volume 25 (November 17, 2022), page 20 25-020-24

Rhys Mendes, ADM (GC-FIN)

Yeah, so I would say the principal source of information that we were receiving was from Transport Canada. There was information on the amount and type of trade that was disrupted, or potentially disrupted. And there was also Transport Canada’s analysis on the impacts of the trade disruptions on economic activity.

Volume 25 (November 17, 2022), page 21 25-021-01

Rhys Mendes, ADM (GC-FIN)

It was, yes.

Volume 25 (November 17, 2022), page 21 25-021-12

Rhys Mendes, ADM (GC-FIN)

Well, as you said, I didn’t produce the specific scenarios, and we relied specifically in our quantitative work on the first scenario.

Volume 25 (November 17, 2022), page 21 25-021-18

Rhys Mendes, ADM (GC-FIN)

The first scenario really focuses on a shutdown in the automotive sector, that -- a shutdown in the automotive sector that is -- the logic of that, I believe, is really the just-in-time nature of inventory management in the automotive sector. So in the automotive sector, you know, a short disruption to transportation -- because it’s so integrated across the Canada-US border, a short disruption to transportation, even if there’s rerouting possible, can cause disruptions, because oftentimes trucks are making multiple trips back and forth between plants. And so just an added couple of hours can disrupt the timelines, cause drivers to time out, in terms of the amount of time they can safely and legally drive. So that’s why I think they focused on the ---

Volume 25 (November 17, 2022), page 21 25-021-22

Rhys Mendes, ADM (GC-FIN)

Yeah.

Volume 25 (November 17, 2022), page 22 25-022-10

Rhys Mendes, ADM (GC-FIN)

So it’s a form of inventory management in which, in the case of an auto plant, the various parts that they need to produce the automobiles that they’re building at the plant come in literally just in time to be used in the production process, so they don’t store a stock of inventories to any great extent. So, really, even a 24-hour disruption to sort of the flow of these inputs can cause production to shut down, or at least be reduced.

Volume 25 (November 17, 2022), page 22 25-022-13

Rhys Mendes, ADM (GC-FIN)

Yeah, and it allowed for other sectors, I think they’d -- they assumed that they could largely mitigate the effects of the blockade and continue to operate fairly normally.

Volume 25 (November 17, 2022), page 22 25-022-24

Rhys Mendes, ADM (GC-FIN)

Yeah, so Scenarios 2 and 3 really focus on an escalation. So Scenario 2 expands to take account of other manufacturing sector -- other parts of the manufacturing sector, beyond automobiles. These sectors also rely a lot on trade across the Canada-US border. They are somewhat less reliant -- they tend to have more inventories in stock, and so they can continue for somewhat longer than the automobile sector before they face large shutdowns. So I sort of think of that second scenario as, you know, had the blockades continued, you could start to move into that second scenario. And then the third scenario is a case where really the -- it becomes very difficult to reroute, difficult or impossible to reroute around the blockades. And in that case, they -- the shutdowns become more widespread across the economy.

Volume 25 (November 17, 2022), page 23 25-023-02

Rhys Mendes, ADM (GC-FIN)

My recollection is that that - - those emails were around February 14th, and so that was after the situation at the Ambassador Bridge had been resolved. And so I think that there was a clear direction at that point, in terms of -- so I think that it was the additional information that they had ---

Volume 25 (November 17, 2022), page 23 25-023-20

Rhys Mendes, ADM (GC-FIN)

--- at that point that allowed them to have that view of Scenarios 2 and 3.

Volume 25 (November 17, 2022), page 23 25-023-27

Rhys Mendes, ADM (GC-FIN)

Scenario 1 we used as the basis for our main approach, in terms of thinking about the economic impact, so yes. I mean, I think Scenario 1, you know, didn’t play out perhaps exactly as it was modelled, but largely as it was modelled.

Volume 25 (November 17, 2022), page 24 25-024-03

Rhys Mendes, ADM (GC-FIN)

So this is the February 10th ---

Volume 25 (November 17, 2022), page 24 25-024-14

Rhys Mendes, ADM (GC-FIN)

--- version. So in this version we really focused on highlighting, number one, the amount of trade that was at risk; the fact that at the Ambassador Bridge alone, 30 percent of all road trade between Canada and the US crosses that bridge alone. Every year about 390 million goods crossing each day. That, to us, was the thing that we wanted to focus on in terms of communicating just how much the risk was in terms of a prolonged disruption there, a prolonged disruption there that causes a prolonged disruption in trade traffic, and therefore a significant impact on economic activity. I believe we also highlighted -- if you can scroll down. Can we scroll down a bit further, please? Yeah, so at the end of that last paragraph, we also highlight the reputational risk that several U.S. lawmakers had pointed the situation to argue for “Buy America” policies and other protectionist policies, which would mean less reliance on buying goods from Canada and obviously would have an adverse impact on Canada, even over the longer term.

Volume 25 (November 17, 2022), page 24 25-024-16

Rhys Mendes, ADM (GC-FIN)

We did not attempt to quantify the impact in this document.

Volume 25 (November 17, 2022), page 25 25-025-09

Rhys Mendes, ADM (GC-FIN)

Well the situation was fluid. So at this stage, you know, quantifications would have been what if scenarios. And I think that the -- you know, quantifying sort of what ultimately happened, which was, you know, a limited, more short-lived disruption, wasn’t really going to convey the larger point. And the larger point was really that the risk that, you know, if these -- if the blockades spread or if they persisted, that there would be a very significant impact on economy activity, and that there was a building reputational impact.

Volume 25 (November 17, 2022), page 25 25-025-12

Rhys Mendes, ADM (GC-FIN)

Could I just add something to that?

Volume 25 (November 17, 2022), page 25 25-025-24

Rhys Mendes, ADM (GC-FIN)

In thinking about the quantitative impact, so we actually, as part of what we do on a regular basis, we monitor economic activity in the Canadian economy. So that means we try to come up with a view of what economic activity is in the current quarter, so before Statistics Canada puts out the official statistics and it will be in the next quarter. And we rely on various high frequency data to do that, but we’re also look at significant events that may have an impact. And so part of, you know, our ultimate quantitative assessment of the GDP impact was to feed into that monitoring process, but of course that requires having a more concrete sense of how the situation is playing out than we had at this stage.

Volume 25 (November 17, 2022), page 25 25-025-27

Rhys Mendes, ADM (GC-FIN)

Yeah, so the Ambassador Bridge was completely shut down at this point, but there were other bridges nearby through which traffic was being rerouted. I mean, you can see that in the statistics in terms of the increases in traffic at other bridges, which I believe is later in this document.

Volume 25 (November 17, 2022), page 27 25-027-01

Rhys Mendes, ADM (GC-FIN)

Increases in traffic at other nearby bridges. We say most manufacturers here, and that’s because, as I was saying earlier, it specifically, within the set of manufacturers, it’s specifically auto production that tends to have -- tends to carry very little in terms of inventory on hand, and so is most at risk of being disrupted very quickly. So as you’ll note, the last sentence of the paragraph you were referring to, we were already seeing some plants starting to see reduced production.

Volume 25 (November 17, 2022), page 27 25-027-08

Michael Sabia, Deputy Minister (GC-FIN)

Can I ---

Volume 25 (November 17, 2022), page 27 25-027-20

Michael Sabia, Deputy Minister (GC-FIN)

Is it okay if I ---

Volume 25 (November 17, 2022), page 27 25-027-22

Michael Sabia, Deputy Minister (GC-FIN)

So just to build on what Rhys just said, just to elaborate a little bit on Rhys’ last sentence, given how time sensitive the supply chains are in the automotive industry and how integrative production is, I mean, I think it’s -- parts -- a car being assembled, actually the parts cross the border between Canada and the United States six different times in the process of producing a car. So there’s a high degree of integration here. And you add to that the just in time delivery of Rhys’ point that Rhys made. So we were seeing, at the time, I mean, this was having real world impacts. In Canada, on the Canadian side of the border, Ford, GM, Toyota, Stellantis, and Honda were either reducing shifts or in fact had shut down some plants because parts were no longer available. And then on the U.S. side, they were experiencing the same thing because of that integration. So Ford, GM, Stellantis, and Toyota in the United States were again either shut down or had substantially reduced shifts, which obviously has a pretty significant impact on not just the companies, but on workers. So that was actually -- that was happening at the time. I mean, this was not something that was going to happen. These plants were being affected in real time.

Volume 25 (November 17, 2022), page 27 25-027-25

Rhys Mendes, ADM (GC-FIN)

And the context, as Mr. Sabia alluded to earlier -- okay. The context here was that auto production had been adversely affected prior to this by shortages in semi-conductors, principally, and so we were coming into this after a period where we already hadn’t been producing as many autos as we normally would have. And that was having an obvious effect on the market. Anyone who went to buy a car would have noticed that.

Volume 25 (November 17, 2022), page 28 25-028-22

Rhys Mendes, ADM (GC-FIN)

In terms of the economic impacts, we believe the border blockades posed the greater risk.

Volume 25 (November 17, 2022), page 29 25-029-27

Rhys Mendes, ADM (GC-FIN)

Yeah, so the impacts -- the impacts of the border blockade, because the effected sectors have linkages to the -- greater linkages to the rest of the economy, did have the potential to have much broader effects.

Volume 25 (November 17, 2022), page 30 25-030-03

Rhys Mendes, ADM (GC-FIN)

Yeah. So there’s a distinction here between short delays, ---

Volume 25 (November 17, 2022), page 30 25-030-23

Rhys Mendes, ADM (GC-FIN)

--- and a short disruption, and a longer disruption.

Volume 25 (November 17, 2022), page 30 25-030-26

Rhys Mendes, ADM (GC-FIN)

And the reason is, so if you imagine an auto plant, for instance, if they lose a short period of production, it may be feasible to make that up to a significant extent in subsequent weeks, but there’s a limit to how much production can be made up because, you know, there’s only 24 hours in a day, people can only work so much, you can only work the plant for 24 hours a day at most. And, you know, even that there are limits, because there’s downtime needed for maintenance, et cetera. So a short production -- a short disruption to production, it’s possible to make that up. It’s not free, because, you know, there’s a reason that the plants and the workers weren’t working those extra hours to begin with. Most likely, you know, there’s time needed to maintain the plant, for people to rest, et cetera. But it is possible, with a short enough disruption, to make up at least some of the lost production. With a longer production, as the amount of loss production accumulates, it just becomes more and more difficult to actually feasibly make that up, given the constraints in terms of how much you can actually increase production once the disruption ends.

Volume 25 (November 17, 2022), page 31 25-031-01

Michael Sabia, Deputy Minister (GC-FIN)

Can I just...?

Volume 25 (November 17, 2022), page 31 25-031-24

Michael Sabia, Deputy Minister (GC-FIN)

Again, I just want to draw this out because I think in the subsequent discussion, this point, I think, is important, and it’s got to do with, a short disruption is one thing. As Rhys has said, a longer term one is a completely different story, and that is what led us, within the department, to be so focused on this question about finding measures that could be delivered with speed, because the objective was to try to keep the disruptions to as short a period of time as possible, for two reasons. First, if shorter, based on Rhys’s analysis, then the macroeconomic effects of them are -- other things being equal, are more likely to be relatively more modest. But second, and really important, if they were to continue, then on this other point that I made earlier about the impact on the Canada/US trading relationship and the longer-term consequences of the Americans reassessing Canada’s reliability as a trading partner, that if we could keep things short, the damage to that overall relationship is something that we would probably be able to manage our way through. If, on the other hand, the disruptions continued for a period of time, then a core concern we had was that that could have at a time when the Americans were reassessing their trading relationships with the world, and certainly with us, that that could have a very significant and durable negative impact on Canada’s economic prospect. So this issue about trying to move quickly to keep the disruptions to a relatively finite and short period of time, this is something that was -- it was just right at the core of all of our thinking within the department.

Volume 25 (November 17, 2022), page 31 25-031-26

Rhys Mendes, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 33 25-033-08

Rhys Mendes, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 33 25-033-11

Rhys Mendes, ADM (GC-FIN)

Yes. So the level of GDP is essentially what you just described; the flow value of the goods and services produced in an economy during a period of time. The growth rate is the change in that level between two different periods.

Volume 25 (November 17, 2022), page 33 25-033-15

Rhys Mendes, ADM (GC-FIN)

I should say the growth level if the change in the level between two different periods expressed as a percentage.

Volume 25 (November 17, 2022), page 33 25-033-22

Rhys Mendes, ADM (GC-FIN)

Yeah. So it’s basically reducing the rate of growth by .1 percentage point in this case, is what they’re saying. And what -- I don’t know exactly what they mean by “drag” because my recollection is that the Bloomberg article in question doesn’t specifically lay out the methodology and detail. But I would suspect it means the impact on the sectors that are directly affected by the trade disruptions.

Volume 25 (November 17, 2022), page 34 25-034-16

Rhys Mendes, ADM (GC-FIN)

Yeah. And so, again, I don’t know what that means. That language often -- indirect is often used to refer to the impact of a disruption in one sector as it spreads through the economy onto other sectors.

Volume 25 (November 17, 2022), page 34 25-034-26

Rhys Mendes, ADM (GC-FIN)

I don’t recall having a specific view at the time on the Bloomberg estimates. I’ll say part of what you’re seeing here is just in the normal course of, you know, assessing all of the incoming information, we do try to play a bit of a challenge function, and I think, you know, and trying to take a sceptical view of things in order to assess the validity of a given number. And over time, you know, as more information comes in, that can change. I think the .1, you know, that ended up being, you know, in the same vicinity as the sorts of numbers we came up with. If you add up the .1 plus the .2 to .3 and get .3 to .4, that ends up being a larger number than what we came up with. But of course that -- we hadn’t done that analysis at this point. So at this point they were just trying to sort of have a discussion around what they thought of these numbers.

Volume 25 (November 17, 2022), page 35 25-035-05

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 36 25-036-04

Michael Sabia, Deputy Minister (GC-FIN)

Right. That’s correct.

Volume 25 (November 17, 2022), page 36 25-036-08

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 36 25-036-12

Rhys Mendes, ADM (GC-FIN)

Well, if it’s from the Bloomberg article they were referring to growth.

Volume 25 (November 17, 2022), page 36 25-036-16

Rhys Mendes, ADM (GC-FIN)

From the minutes, it’s -- you’re right, it’s not ---

Volume 25 (November 17, 2022), page 36 25-036-19

Rhys Mendes, ADM (GC-FIN)

It’s ambiguous.

Volume 25 (November 17, 2022), page 36 25-036-22

Michael Sabia, Deputy Minister (GC-FIN)

And that’s something -- Rhys may want to elaborate on this but the way the Bloomberg piece got done, it established a set of numbers, and it conveyed that if it went on for X-number of weeks, you would just add up that number; it was, like, .1 or .2 for each week. And I think that’s what the Minister, given hat this is based on Bloomberg, that that’s what the Minister is commenting on here. Our thinking, and eventually in a further discussion with the Minister, was that actually while Bloomberg may have got some things right, what we think that they did not get right was that the impact grows over time. So for every unit of time, you get more impact than just if you’re able to contain the disruptions to whatever; a week, two weeks, whatever, but a very short period of time. That’s one thing. But as it goes on and the indirect effects spill over into other sectors, you get more disruptions of supply chains, then that number will tend to grow over time as you go through it week by week. So, again, coming back to this point I made earlier, sort of time is everything here.

Volume 25 (November 17, 2022), page 36 25-036-24

Michael Sabia, Deputy Minister (GC-FIN)

If you can contain it, that’s one thing. If you can’t and it gets bigger and bigger, then you’re facing bigger and bigger economic flow.

Volume 25 (November 17, 2022), page 37 25-037-16

Rhys Mendes, ADM (GC-FIN)

Yeah. And as we were discussing earlier, inventory plays a key part in this, that the auto sector got hit first because it tends to operate with a just-in-time delivery model.

Volume 25 (November 17, 2022), page 37 25-037-19

Rhys Mendes, ADM (GC-FIN)

Other manufacturing sectors would have been hit subsequently as they started to draw down their inventories. You know, sectors like food and beverage that rely on perishable inputs that cross the border would have started to be more affected also. So I think that the -- the economic impact would spread the longer it lasted, and so the number wouldn’t be the same for each week, it would grow.

Volume 25 (November 17, 2022), page 37 25-037-24

Rhys Mendes, ADM (GC-FIN)

Less than it otherwise would have in the absence of the disruptions.

Volume 25 (November 17, 2022), page 38 25-038-26

Rhys Mendes, ADM (GC-FIN)

Yeah. So that is just saying that the change, the percentage change in GDP between the first quarter of 2022 and the fourth quarter of 2021 would be reduced by .1 to .2 percentage points.

Volume 25 (November 17, 2022), page 39 25-039-03

Rhys Mendes, ADM (GC-FIN)

Yeah. So again, we had a discussion earlier around, you know, a short disruption makes it feasible to catch up on that lost production subsequently, and so given -- you know, this email was February 22nd. By this point we knew the duration of the disruptions, in the event, you know, that they were limited in duration, and so at this point, we believed that it was possible for the lost production to be made up by subsequently, you know, people working overtime, factories running overtime. As I said earlier, that's not free because, you know, there's a reason you don't run your factory overtime in a day, just because you need downtime for maintenance, you need downtime for people to actually rest, and you know, running overtime can lead to productivity issues and stuff. But overall, we believed it was possible, given the limited time of the disruption.

Volume 25 (November 17, 2022), page 39 25-039-10

Rhys Mendes, ADM (GC-FIN)

It may not completely offset. There's -- you mean in terms of annual growth quarter to quarter? So basically what this means is that you'd see growth in the second quarter being a bit stronger than it otherwise would have as you see the catch-up in production.

Volume 25 (November 17, 2022), page 40 25-040-01

Michael Sabia, Deputy Minister (GC-FIN)

If I could?

Volume 25 (November 17, 2022), page 40 25-040-10

Michael Sabia, Deputy Minister (GC-FIN)

When I look at that, and indeed, when that analysis surfaced, I hope you'll understand what I mean when I say this, but that analysis says to me success. Success in that the disruptions, at least at that point, it seemed as though they -- we had succeeded, the government had succeeded in keeping those disruptions at -- within a relatively short period of time. So the fact that almost ex post Rhys and his folks could do that analysis and say, "Well, we pretty much know what the duration is; therefore, we have a pretty good idea of this", that said to us that, well, as I said, that's pretty much success, given the disruptions that we faced earlier on and the decisions that needed to be made when the duration of the disruption was still an open question. The fact that we were able to do this ex post said to us, you know, in a way, success or mission accomplished.

Volume 25 (November 17, 2022), page 40 25-040-12

Michael Sabia, Deputy Minister (GC-FIN)

(Inaudible response)

Volume 25 (November 17, 2022), page 41 25-041-02

Rhys Mendes, ADM (GC-FIN)

I think we've ---

Volume 25 (November 17, 2022), page 41 25-041-18

Rhys Mendes, ADM (GC-FIN)

Yeah. I think we've covered the first point in terms of the length of the disruption is really what drives the ability of businesses to catch up in part. On the last bullet, I mean, I think that just speaks to the point Michael just made, that, you know, it was really the fact that the blockades had been ended within a limited time is what prevented the economic impact from escalating much further.

Volume 25 (November 17, 2022), page 41 25-041-21

Rhys Mendes, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 42 25-042-07

Michael Sabia, Deputy Minister (GC-FIN)

Well, look, I think that's just another way of -- Rhys may want to elaborate on the point because there's an analytical point here. But I mean, that's consistent with the point I made earlier about the strength of the reaction that was being reported in the public media from U.S. lawmakers at a time when they were attempting to pass legislation that could have a pretty significant impact on the re-engineering of their supply chains to repatriate. I mean, you'll recall, I mean, this issue is still very much, you know, in front of us today, that as we move to a different structure of global trade than we have had for the last 25 or 30, 40 years, all of these issues about sourcing and structure of supply chains, these are all -- they've all become open questions. So you know, the concern that we had here was, again, that this is in the world of confidence and perception, if American companies or the American government began to think that they could not count on us as a reliable source of supply, then they probably would shift production. And if they were to shift production, that would have a, obviously, pretty significant, very, not pretty, a very significant impact on, well, both the level of GDP and the growth rate of GDP. But do you want to...

Volume 25 (November 17, 2022), page 42 25-042-25

Rhys Mendes, ADM (GC-FIN)

Yeah, and I guess I would say that this sentence is in part trying to convey the longer term uncertainty.

Volume 25 (November 17, 2022), page 43 25-043-20

Rhys Mendes, ADM (GC-FIN)

But you know, the limited duration, the fact that the blockades were ended within a limited duration I think helped to avert some of the near term risks. You know, Michael talked about the negotiations with the U.S. over electric vehicles and... So that is clear that there was a helpful -- that it was helpful in the near term. What we don't know, is, you know, five years from now, when an automaker has to decide where to put their new plant, will this be a consideration. Hopefully the fact that the disruptions were relatively short-lived mitigates that issue, but that sentence was just a reminder that there is that longer term uncertainty.

Volume 25 (November 17, 2022), page 43 25-043-24

Rhys Mendes, ADM (GC-FIN)

Yeah. So the first column is the sum of trade at the Ambassador Bridge and at the points of entry at Emerson and Coutts that were blockaded. The second column is our estimate of the economic impacts, so the impact on GDP per day during the week where we think the impacts peaked, so that was I guess the week of February 6th or 7th when the -- the week during which the Ambassador Bridge was blocked. So that second column, the way we come up with that is we start -- we take as a starting point Transport Canada's scenario 1, which we discussed earlier, which estimated an impact from the Ambassador Bridge disruption at $45 million a day. We then make assumptions to get effects on -- you know, get estimates of the impacts stemming from the disruptions at the points of entry at Coutts and Emerson, and that gets us from the 45 to the $56 million a day. The 28 million reflects the -- you know, there was uncertainty about the overall impact. You know, we -- you saw in discussions earlier and in one of the emails I think you put up earlier there was a discussion around how should we think about the $45 million disruption that Transport Canada had? Should we think of it as an upper bound? So the 28 reflects that uncertainty. So we wanted to be cautious in terms of the economic impacts that we estimated. So it's simply half of the 56 million to reflect that there's a range of uncertainty about what the true impact is.

Volume 25 (November 17, 2022), page 44 25-044-20

Rhys Mendes, ADM (GC-FIN)

I remember a draft being sent to me. I don't remember the precise date.

Volume 25 (November 17, 2022), page 45 25-045-23

Rhys Mendes, ADM (GC-FIN)

I had asked for the reference to the GDP impact be removed, yes.

Volume 25 (November 17, 2022), page 46 25-046-10

Rhys Mendes, ADM (GC-FIN)

So a few reasons. One is that the -- you know, the -- we hadn't completed our GDP impact estimates ---

Volume 25 (November 17, 2022), page 46 25-046-14

Rhys Mendes, ADM (GC-FIN)

--- because in part we were still evaluating the situation. It was evolving.

Volume 25 (November 17, 2022), page 46 25-046-18

Rhys Mendes, ADM (GC-FIN)

I did not think that the -- as Michael discussed earlier, the per week characterization I thought missed the point that the GDP impact would rise with each subsequent week, it wouldn't be the same every week, the longer that the effects went on. And I think most importantly, the real issues here were the risk of a more prolonged or more widespread disruption to cross-border trade that would have led to a much larger GDP impact and the reputational risk that affected our reputation as a reliable trading partner and as a good destination for investment.

Volume 25 (November 17, 2022), page 46 25-046-21

Rhys Mendes, ADM (GC-FIN)

So I think this -- the last estimate we did of this was the .1 to .2 percent impact on the first quarter, quarter over quarter growth. And so we haven't revisited that. That said, I think that the -- it's fair to say that the economic impact was limited, but it was limited because the duration of the blockades was limited. So I think, again, it comes back to the fact that because the duration was limited, there was some ability to ramp up production after the blockades had ended and trade had resumed. Because the blockades weren't more widespread, as in affecting bridges that were being used to reroute some of the traffic that would have gone over the Ambassador Bridge in particular, that helped to limit the impact. But had the blockades been more widespread or longer lasting, the impact would have been much bigger. I would also just add that it's not possible to say that they didn't have any impact because we know that auto plants had either shut -- many auto plants had either shut down or reduced hours, reduced shifts, so there was clearly an impact in real time. That's -- that information is clear in the public record.

Volume 25 (November 17, 2022), page 47 25-047-24

Rhys Mendes, ADM (GC-FIN)

When we look at the data, so data collected, for instance, by Warren's, which is a company that collects data on the automotive industry among other things, if you compare their forecast for what February production would have been at the -- when they made the forecast at the beginning of February versus when it actually turned out to be, it ended up being close to 10 percent below what their initial forecast is. And I think it's reasonable to assume that at least part of that was due to the blockades, given that we know that there were shutdowns and reduced hours at many plants.

Volume 25 (November 17, 2022), page 48 25-048-17

Rhys Mendes, ADM (GC-FIN)

Yeah, so, I mean, you know, we often do assessments of things -- of events that are likely to have an economic impact in real time, because as I was mentioning earlier, we are trying to monitor the evolution of the economy. You know, we try to come up with an estimate for GDP in the current quarter and the next on an ongoing basis. So we're often doing real-time assessments, whether it's, you know, a flood or other weather event, or something like the blockades. We generally don't do ex post assessments of the impacts of events like this. The reason is, it's very difficult to actually identify the impact ex post. So, you know, you think about all of the February data that we're looking at, so whether it's the trade data, or GDP, or labour force data, there were confounding factors affecting things. So, you know, for instance, there was an Omicron wave in January of this year, which adversely affected -- which would have adversely affected economic activity, and therefore, would have affected the growth rate of economic activity between January and February, would have affected hours worked. And so there was also -- for instance, there were auto production issues in January unrelated to the blockades but related to shortages of semiconductors and other inputs, which caused auto production in January to be adversely affected. So, you know, there would be normally some ramp up in February to try to make up for that if the parts started to come in. That sort of confounds the ability to see the full effect of the blockades on auto production. So there were these various confounding factors that are always in play because there are always multiple things going on in the economy that make it difficult to provide an ex post estimate of the impact with any degree of confidence.

Volume 25 (November 17, 2022), page 49 25-049-03

Rhys Mendes, ADM (GC-FIN)

Precisely.

Volume 25 (November 17, 2022), page 50 25-050-08

Rhys Mendes, ADM (GC-FIN)

Thank you.

Volume 25 (November 17, 2022), page 50 25-050-11

Michael Sabia, Deputy Minister (GC-FIN)

Sure. Let me start, and then Isabelle, you may want to add. So look, as the disruptions, on the one hand, continued to materialize, and in some cases intensify, and the disruptions in Ottawa continued on, there was a general sense across the government and, you know, an interest that was expressed to have every department trying to think about are there ways in which we can develop ideas that would help bring to an end, in a good way, this very difficult situation. So there was a general interest in developing ideas, which obviously included us, but beyond that, the sort of general interest, there were a couple of other things in our minds motivating our work to try to find things that could contribute to a solution. On the one hand, I won’t belabour this again, because, you know, with the previous conversation and Rhys’ comments, I think the extent of our concern with respect to the economic issues is pretty straight forward, pretty clear. And this intense focus we had on are there things that can help end this quickly? Because as Rhys and I have tried to explain, duration is everything here in terms of its disruptive impact on the Canadian economy. So quite aside, or in addition to the general interest in various departments, can they develop ideas that can be helpful here, we wanted to, given our responsibilities for the Canadian economy, we wanted to find ways, and that was a significant motivator. The other one was we are also, given our responsibilities for the financial sector, we also take seriously our responsibility to ensure the integrity of Canada’s financial system. And Canada’s financial system being used for these kinds of purposes is not consistent, in our view, with maintaining the integrity of the financial system. So it was both our response to a general request for ideas, but within the department, it was what can we do to shorten the duration of these disruptions, given their economic consequences, and then finally, this concern that we take very seriously about the integrity of Canada’s financial system and that we safeguard that integrity all of the time. So those three factors led us to start some work on what can we do, given the legislation that we’re responsible for. So we began thinking about are there ways in which we could use the Bank Act or other pieces of legislation really centred pretty heavily on the Bank Act, also the Money Laundering and Terrorist, the ---

Volume 25 (November 17, 2022), page 50 25-050-27

Rhys Mendes, ADM (GC-FIN)

PCMLTF.

Volume 25 (November 17, 2022), page 52 25-052-16

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 52 25-052-17

Michael Sabia, Deputy Minister (GC-FIN)

Yeah.

Volume 25 (November 17, 2022), page 52 25-052-18

Rhys Mendes, ADM (GC-FIN)

The acronym is too long.

Volume 25 (November 17, 2022), page 52 25-052-19

Isabelle Jacques, ADM (GC-FIN)

Yes. Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Volume 25 (November 17, 2022), page 52 25-052-20

Michael Sabia, Deputy Minister (GC-FIN)

That’s -- that’s -- she’s got it. Those two pieces of legislation. So we started thinking about, “Well, is there something constructive that could be done through FINTRAC?” Which is the agency responsible for Proceeds of Crime (Money Laundering) and Terrorist Financing -- or terrorist activity. Could we do something there? And could we do something using the Minister’s authority for the Bank Act? And then to make a long story short, in the media, it was widely publicized, and it was very public, that crowdsourcing platforms were being used as a source of financing for these activities. Similarly, payment processors. And neither of those were within the regulatory perimeter of FINTRAC. So one thought process was, “Well, is there something we can do around that?” And then the second, with respect to the Bank Act, is, is there some way that we can use the Bank Act to have -- to give banks the capability to freeze bank accounts if, in their judgement, those bank accounts are being used for an inappropriate purpose? Now, again, just high-level summary here, there were a series of issues with that. One, we couldn’t do anything outside of federal jurisdiction, because the Bank Act only applies to federally regulated financial institutions. But there’s a whole wrath of financial institutions in Canada that are not federally regulated, particularly, say, credit unions, types of insurance companies, et cetera. So because we couldn’t do anything outside of federal jurisdiction, that really made pretty academic whether we could or could not do anything in federal jurisdiction, because money is fungible and it can just move from institution to another. So if we couldn’t do something that was more comprehensive, that was a pretty significant limitation on what could be accomplished. There was also a fairness issue there. I’ll give you an example. In Quebec, Banque Nationale, that’s a federally regulated institution, but Desjardins is not. And Desjardins, anyone who lives in Quebec knows that Desjardins and Banque Nationale compete pretty intensively between the two organizations. So to treat one one way and the other another way, that seemed to us to be -- you know, that’s just one example, but that seemed to us to be a pretty big problem. So that was one piece. The second piece, coming back to something earlier that I said, was whatever we could do, we wanted to do quickly, because doing it quickly meant shortening duration, and shortening duration meant avoiding the worst economic consequences that we were concerned about. But of course, pretty much anything that we could do would require a legislative change, and legislative changes, by their nature, take an extended period of time. So if our thinking process was how do we manage duration here of the disruptions, anytime we bumped into something that required a legislative change is something that was, by its nature, less attractive because we couldn’t do it quickly, and by not being able to do it quickly, it didn’t really deliver what we needed, which was relatively speedy action to shorten the duration of these disruptions.

Volume 25 (November 17, 2022), page 52 25-052-22

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, that's about right. February 8 or 9, yes ---

Volume 25 (November 17, 2022), page 55 25-055-11

Michael Sabia, Deputy Minister (GC-FIN)

--- that's about. If it makes you feel any better, it drives me crazy too.

Volume 25 (November 17, 2022), page 55 25-055-14

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 56 25-056-07

Isabelle Jacques, ADM (GC-FIN)

That is correct.

Volume 25 (November 17, 2022), page 56 25-056-13

Isabelle Jacques, ADM (GC-FIN)

That's fair. They had to review their business relationship to see whether any of the funds were used in a manner that was concerning.

Volume 25 (November 17, 2022), page 56 25-056-19

Isabelle Jacques, ADM (GC-FIN)

And in these options, of course, under the Bank Act, these would not apply to, you know, provinces nor territories.

Volume 25 (November 17, 2022), page 56 25-056-23

Isabelle Jacques, ADM (GC-FIN)

Correct.

Volume 25 (November 17, 2022), page 57 25-057-07

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 57 25-057-08

Isabelle Jacques, ADM (GC-FIN)

But at the time, certainly when we're looking at these options, you know, the situation was evolving. So we started from a situation when we're monitoring these activities where the, you know, the -- there seems to be peaceful manifestation ongoing, and certainly the situation degenerated. So when we started looking at this we were looking at options under the Bank Act.

Volume 25 (November 17, 2022), page 57 25-057-09

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, that -- that started, I don't recall the exact dates, but sometime in the week of this memo, I think a little bit earlier. I had some -- I mean, as the principal regulator, OSFI and ourselves, in terms of financial -- higher-level financial policy, we have a lot of contact with the Canadian banks, Canadian financial institutions in general. So I am, as is Isabelle and her team, we are in regular contact with Canadian financial institutions pretty much of all kinds, A, because of our role in that sector; and B, because they're a very good way of listening and understanding more about what's going on in the Canadian economy than any one point. So I had some conversations, particularly with bank CEOs, during that week to get their sense of what was happening and reaction to these disruptions, and in those conversations, we were talking about that, the general -- their general take on these events and what they thought the government should or shouldn't be doing about it. And then second, general conversations around what could be done. In those early days, I did not raise the specifics of these options which would have been inappropriate at the time. We were not at that point, and we had not had a conversation with our Minister about it. So these specifics in those early conversations were not really on the table. Then a little bit later, I think toward the end of that, we have to check these dates, but toward the end of that week, the -- I started having conversations, collective conversations with all of the bank CEOs, and the Minister eventually joined me in some of those conversations.

Volume 25 (November 17, 2022), page 57 25-057-24

Michael Sabia, Deputy Minister (GC-FIN)

Yeah. Well, we need to be careful here. Prior to the possibility or likelihood that the government would invoke the Emergencies Act, that was a very important dividing line here. So prior to that, in the week that we're talking about here, my conversations there would have been much more general and much more general -- much more focussed on, you know, what are they hearing from companies, what are they hearing from investors, how do they gauge the situation? It was much more our trying to understand by talking to other people whether or not our perception of the situation was aligned with how other people were perceiving it. I would say there was very much alignment around the concerns that Rhys and I have talked about earlier, and what we were hearing from institutions that basically spanned the Canadian economy and are constantly in touch with clients, and their clients are businesses and individuals across the Canadian economy, so they're good listening posts. So that was prior to the possibility of the Emergencies Act. Because as per this memo, as you can see, the conclusions that we were coming up to, they were arriving at, were conclusions that actually there wasn't really, other than through FINTRAC and that side, there really wasn't a lot that we could do in the near term without passing legislation, which as I said, would take a considerable period of time. Now, as the possibility or likelihood of the Emergencies Act being invoked, then that changed the nature of those conversations. And through I think that weekend, I forget -- the dates would have been sort of the 12th, 13th, or something of -- you have to check -- you'll have to doublecheck the dates, but you know, 11, 12, 13, somewhere in there, we then began to have conversations about in the event that the government were to decide to move down this path, because it hadn't been decided yet, how could this be done. And I would say that the reaction that we got to those initial conversations was pretty much, you know, consistent with what I had heard in the earlier conversations, which is, you know, to shorten what were long conversations that, you know, this is a serious issue and a threat to Canada's economy, what can we do to help. So there was an openness on the part of the bank CEOs to working with us to try to find solutions that would bring a peaceful end to what was a difficult circumstance. So in those conversations, we did talk about, you know, how could this work? What would you do? What would be feasible for you? Because we wanted to learn as much as we could about the actual operation of this from the people who actually operate in the day-to-day financial system of the country. So that was the nature of those conversations. And then as the weekend and time progressed and it became more apparent of the possibility that the government would move in this direction, then Minister Freeland joined me for one or two of those calls, where at that point, we were saying, okay, well, if we're going to go down this path, you know, our expectation would be for you to be able to do A, B and C. Are those feasible things? How would you do that?

Volume 25 (November 17, 2022), page 59 25-059-01

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, I think the less, I think, statement to the obvious, the less discretion that they had, or in other words, the less onus you were putting on the financial institutions, you know, from their perspective, the easier for them.

Volume 25 (November 17, 2022), page 61 25-061-11

Isabelle Jacques, ADM (GC-FIN)

Yes, it was. So, basically, under the Emergencies Act, certainly, financial institution had an obligation to review on an ongoing basis their relationship with their clients to ensure that they were not using property to further the illegal activities that were ongoing. And certainly, in doing so, if they found out that they did have any of these property that they would have to suspend the services they provide and they need to freeze those accounts.

Volume 25 (November 17, 2022), page 61 25-061-21

Isabelle Jacques, ADM (GC-FIN)

So and in trying to come to the knowledge and conclusion as to whether you had business relationship of such nature, they could do two things. The first, they could on their own, on an ongoing basis using their algorithm or processes that they have, identify suspicious transactions, or, as we allowed in the -- as we specified in the legislation, obtain information from enforcement officers, could be from federal or provincial. So we provided for information to be shared by the, you know, federal or provincial or territorial governments with the financial institution to help. What occurred in the end was that the RCMP shared information with the financial institutions, financial service providers, to help them identify those people and to vet the information they received.

Volume 25 (November 17, 2022), page 62 25-062-03

Isabelle Jacques, ADM (GC-FIN)

And vet the information they received. So the obligation was on the financial institution to determine, in the end, whether or not they were going to freeze bank accounts.

Volume 25 (November 17, 2022), page 62 25-062-19

Isabelle Jacques, ADM (GC-FIN)

Yes, I would say so. I mean, if you received information from the RCMP, the financial institution, financial payments service providers would have to review the information they receive and ensure that the people that are named are actually the people that are -- have accounts with that financial institution, so that's number one. Certainly, they had to, you know, ensure they had the right people, but also, on their own, as I mentioned before, they could review the information they have, use the systems they have, their algorithm to detect suspicious transaction, which they did. And on their own, they did freeze bank accounts without information received from the RCMP.

Volume 25 (November 17, 2022), page 63 25-063-04

Isabelle Jacques, ADM (GC-FIN)

What I mean by vetting is being -- they -- if you read the language of the legislation, the financial service providers are responsible for taking the action, ultimately. It's their responsibility under the Act. So, certainly, they received information from the RCMP with respect to persons, entities involved in illegal activities. They looked at the information. They had to certainly confirm. I don't know what their internal process were, but I certainly know that they -- you know, from -- they reviewed the information to ensure that the people that, you know, with whom they had business dealings with people that were signalled or identified by the RCMP. But I'm sure that the financial service providers could tell you exactly how they went about that.

Volume 25 (November 17, 2022), page 63 25-063-24

Isabelle Jacques, ADM (GC-FIN)

Sorry, the file is with respect to?

Volume 25 (November 17, 2022), page 64 25-064-16

Isabelle Jacques, ADM (GC-FIN)

The Regulations or the Order?

Volume 25 (November 17, 2022), page 64 25-064-24

Isabelle Jacques, ADM (GC-FIN)

The Regulations or the Order?

Volume 25 (November 17, 2022), page 64 25-064-27

Isabelle Jacques, ADM (GC-FIN)

Yes, and that's what I mean by vetting.

Volume 25 (November 17, 2022), page 65 25-065-22

Isabelle Jacques, ADM (GC-FIN)

Yes, it was our Emergencies Measure Order, yes.

Volume 25 (November 17, 2022), page 66 25-066-24

Isabelle Jacques, ADM (GC-FIN)

We did not take part in drafting the Regulations.

Volume 25 (November 17, 2022), page 66 25-066-27

Isabelle Jacques, ADM (GC-FIN)

It was -- the policy was developed by the Department of Finance by my branch and the drafting was done by the Department of Justice, yes.

Volume 25 (November 17, 2022), page 67 25-067-04

Isabelle Jacques, ADM (GC-FIN)

Well, you have to go back in time certainly. When we were working and that there was a decision to -- we found out that there's a possibility that the Emergency Act would be enacted, we started looking at policies and options as to how we could implement and take action fairly rapidly. So we did, obviously, develop the policy that would enable for a number of, you know, federal, provincial players, like the -- in the enforcement, the RCMP could share information with the financial service providers, so that was something that was important, to help financial service providers to identify people that could be involved in illegal activities. So that was number one. And number two, we were thinking that -- knowing that on their own they could also detect fraudulent activity or suspicious activity, that they could do that as well. But as far as sharing the information, the Department of Finance does not receive information from the RCMP. That was solely between the RCMP and the financial service providers. And it was up to the financial service providers to make the determination as to whether or not to freeze bank accounts, based on the information they had. So it could be their own information, or a mixture of information received using their own, you know, risk based analysis to make a determination as to whether they would freeze.

Volume 25 (November 17, 2022), page 67 25-067-13

Isabelle Jacques, ADM (GC-FIN)

Well, what I certainly heard is that they heavily relied on it, but that they did, you know, some analysis to ensure that the people that were on the list were banking in their institutions and that knowing that they were involved in illegal activities and that they had accounts, they made a decision to freeze.

Volume 25 (November 17, 2022), page 69 25-069-03

Isabelle Jacques, ADM (GC-FIN)

But it's certainly based on -- heavily I know that they relied on the information provided by the RCMP. That is accurate.

Volume 25 (November 17, 2022), page 69 25-069-10

Isabelle Jacques, ADM (GC-FIN)

Well, in the end, the decision -- maybe not call it exercise of discretion, the decision was -- lied, in accordance with the Emergency Order, lied with the financial institution to make the final decision - --

Volume 25 (November 17, 2022), page 69 25-069-18

Isabelle Jacques, ADM (GC-FIN)

I do not know. You would have to talk to the financial service providers to see what procedure they put in place. Once they receive -- you know, we were not party to that. So I know that the RCMP did provide information. I do not know the nature and the extent of the information. And how did the bank go about freezing the accounts after that, what analysis did they do and how they went ahead, I'm not privy to the details of that operational -- those are operational steps.

Volume 25 (November 17, 2022), page 69 25-069-25

Isabelle Jacques, ADM (GC-FIN)

No. No, I do not. I've never seen that form.

Volume 25 (November 17, 2022), page 70 25-070-13

Isabelle Jacques, ADM (GC-FIN)

I've never seen the form. We were not privy to any exchange of information.

Volume 25 (November 17, 2022), page 70 25-070-25

Isabelle Jacques, ADM (GC-FIN)

Well, if I was -- well, as I mentioned before, I’ve never seen this form, but if, you know, I put my shoes -- myself in the shoes of a financial service provider, seeing this form and saying -- basically, it’s saying that this is information about a person involved in illegal activities, and they’re providing that information to the financial service provider. I mean, that is information on which I would rely. And as it says here, it says that the entities have a duty to determine, as defined in section 3, so I’d have to refresh my memory and look to section 3, but I presume that, you know, once -- yeah, the section 3 says: “...the entities must determine on a continuing basis whether they are in possession or control of property that is owned, held or controlled by, or on behalf, of a designated person.” So if the RCMP comes to them to say this is the information about a designated person, financial institution is reviewing, in an ongoing basis, their relationship, they would, and this is a client of theirs, I would think that, you know, they will do -- as I said, they will do their vetting; “Is this one of my client? I’m informed by the RCMP, yeah, this form that the person is engaged in these illegal activities.” I would rely on that, personally. So if the financial institution did, I wouldn’t be surprised.

Volume 25 (November 17, 2022), page 72 25-072-06

Isabelle Jacques, ADM (GC-FIN)

But I can’t -- again, I’m making a lot of presumptions.

Volume 25 (November 17, 2022), page 73 25-073-05

Isabelle Jacques, ADM (GC-FIN)

We’re seeing ---

Volume 25 (November 17, 2022), page 73 25-073-17

Isabelle Jacques, ADM (GC-FIN)

Yes, I know that.

Volume 25 (November 17, 2022), page 74 25-074-01

Isabelle Jacques, ADM (GC-FIN)

But, I mean, to answer your questions, I have to make a lot of suppositions, but I take it for granted that...

Volume 25 (November 17, 2022), page 74 25-074-03

Isabelle Jacques, ADM (GC-FIN)

I do not know that, but that would seem reasonable to me.

Volume 25 (November 17, 2022), page 74 25-074-09

Isabelle Jacques, ADM (GC-FIN)

We certainly designed the measures and the -- with respect to the implementation, we once, you know, had discussions with various departments as we -- you have to understand that this moved very, very quickly. We went from a situation where we’re looking at potential policy options under the Bank Act, to very rapidly looking at the possibility of implementing the Emergencies -- you know, the Emergencies Act, and developing these Orders. In developing those Orders, we tried to be as practical and targeted as possible. And that’s why we wanted to ensure that information could be shared with various enforcement forces, including the RCMP. We had discussions with the RCMP and with the financial institution to ensure that we basically implemented or helped, to the extent possible, provide the information with respect to the Emergencies Act and these Orders. These are not the type of Orders -- I mean, it was the first time, I think, in 35 years, or if ever, that the Emergencies Act was ever used. We’re working on very tight timelines, and the implementation was quite rapid. We’re also working with evolving facts. We didn’t know what we were looking at. You know, the situation was evolving, there were various information circulating. And when you’re trying -- anybody that has tried to develop policies, even in normal circumstances, and to ensure that these policies are properly reflected into law and to apply that law. I mean, if -- just even that is not a simple factor. So I think to the extent that we develop the Emergency -- the Order, and that we had a successful implementation of that Order, in my view, was quite a feat. Because we focus on the people that were -- the focus was on the people that were involved in illegal activities, and that were, you know, funding those illegal activities. We also told people ahead of time that if they continue to fund illegal activities, or be involved in those illegal activities, that the bank accounts could be frozen. People had notice ahead of time, and if a decision was made to stay on the premises, to continue to stay involved in those activities, these people knew what could happen.

Volume 25 (November 17, 2022), page 74 25-074-23

Isabelle Jacques, ADM (GC-FIN)

Yes, I do.

Volume 25 (November 17, 2022), page 76 25-076-10

Michael Sabia, Deputy Minister (GC-FIN)

I think a better word for how we were thinking about this is to create a set of incentives to bring a peaceful end to these disruptions.

Volume 25 (November 17, 2022), page 76 25-076-16

Michael Sabia, Deputy Minister (GC-FIN)

I think it’s a -- again, a statement of the obvious; ---

Volume 25 (November 17, 2022), page 77 25-077-01

Michael Sabia, Deputy Minister (GC-FIN)

--- a peaceful end to almost anything ---

Volume 25 (November 17, 2022), page 77 25-077-04

Michael Sabia, Deputy Minister (GC-FIN)

--- is a better than a non- peaceful end. And that’s very much what we were focused on here, was to create, as I’ve said, a set of incentives for, the point having been made -- I mean, people have every right to protest; that’s an important part of our democratic system. And there were no easy answers here. But finding instruments that create an environment where people have an incentive to go home having made their point, that seems to us to be a path worth pursuing.

Volume 25 (November 17, 2022), page 77 25-077-07

Michael Sabia, Deputy Minister (GC-FIN)

Well I think, you know, if you -- from what I understand, the testimony that this Commission’s been hearing from law enforcement and I think from Supt. Beaudin as well, I think there’s a pretty wide acknowledgement that these financial measures did help law enforcement to being an end to these in as peaceful a way as they possibly could. And I think law enforcement has been pretty consistent on acknowledging the positive contribution that these measures have made. And if I can, I’d just like to go back to your previous set of questions?

Volume 25 (November 17, 2022), page 77 25-077-19

Michael Sabia, Deputy Minister (GC-FIN)

I mean, I will admit to being a little puzzled about your point. So in my mind, this is actually pretty straight forward. Now, you know, I didn’t go to law school, so maybe I’m missing something.

Volume 25 (November 17, 2022), page 78 25-078-03

Michael Sabia, Deputy Minister (GC-FIN)

Well my daughter is finishing law school. So I don’t know. I’m of two minds about whether this is a good thing or a bad thing. In any event. So what did we do? At the Department of Finance, we basically set policies. So we set a policy that said under the authority of the Emergencies Act, the Emergencies Act having already declared certain activities illegal, we set a policy that said the financial system, bank accounts, other types of accounts, should not be used in support of what was then declared illegal activity. Point 1. Point 2, we -- the way the system worked, which seemed to us to be pretty logical, which is the RCMP working with other areas of law enforcement, the people on the ground who had the information were then providing that information to a set of financial institutions who had their own processes, which they use every day for other types of fraud and other things, as Isabelle has mentioned, and they put those two things together. So that seemed, to me, to be a pretty good outcome, in that the people who had the microscopic information or the micro information of who was doing what was feeding that into financial institutions and financial institutions were using that as a positive input into the decision making that they were going to have to do. And then empirically, I mean, I think of the 280 accounts that ended up being frozen. You might want to check my numbers, but something like 256 or 257 of them came from the RCMP. So obviously there’s a pretty high correlation there. Doesn’t mean that the banks didn’t do some additional things, because obviously there’s a difference between 257 and 280. But yes, your point being that the RCMP’s work, based on in the field, understanding of who was doing what, had a significant bearing on what the banks did. So that seems to me to be pretty reasonable -- in terms of implementing a policy, a pretty reasonable set of ways of going about doing it.

Volume 25 (November 17, 2022), page 78 25-078-09

Michael Sabia, Deputy Minister (GC-FIN)

We set ---

Volume 25 (November 17, 2022), page 79 25-079-23

Isabelle Jacques, ADM (GC-FIN)

No.

Volume 25 (November 17, 2022), page 79 25-079-24

Michael Sabia, Deputy Minister (GC-FIN)

--- a policy.

Volume 25 (November 17, 2022), page 79 25-079-25

Isabelle Jacques, ADM (GC-FIN)

Yeah, we set ---

Volume 25 (November 17, 2022), page 79 25-079-26

Michael Sabia, Deputy Minister (GC-FIN)

We set a policy. And we are accountable for that policy.

Volume 25 (November 17, 2022), page 79 25-079-27

Isabelle Jacques, ADM (GC-FIN)

Yes, as a deterrent, ---

Volume 25 (November 17, 2022), page 80 25-080-15

Isabelle Jacques, ADM (GC-FIN)

--- on your second point. Yes.

Volume 25 (November 17, 2022), page 80 25-080-17

Michael Sabia, Deputy Minister (GC-FIN)

One thing I should clarify, when I say “we”, I mean the Department of Finance, we’re not -- I mean, we as in the government.

Volume 25 (November 17, 2022), page 80 25-080-19

Isabelle Jacques, ADM (GC-FIN)

Well I’m nodding. I mean, I just understand what you’re saying. The question ---

Volume 25 (November 17, 2022), page 81 25-081-09

Isabelle Jacques, ADM (GC-FIN)

Well that’s not accurate. We were not, definitely -- the intent was not to get at the family or to have any, you know, of those impacts. That was not the focus. The focus was to be able to act quickly and it had two prongs. Like, we’re thinking, you know, we wanted to stop the flow of funds to fund those illegal activities and we wanted it to act as a deterrent. So for those people on the Hill or in other border crossings involved in illegal activities, we wanted to dissuade them from continuing their participation. As we said repeatedly, what was important was that one of the key features was we wanted to act quickly, as we said before. So as quickly as we could freeze -- the accounts could be frozen, they could be unfrozen as well. And the person that made a decision to stay involved in those criminal activities or illegal activities, it was their decision to stay there. Certainly are we conscious of the fact that we do not want, of course, you know, we did have questions and we had discussions with the CBA with respect to, you know, court order, like, for child support for example. We certainly said, as you saw in the Emergency Order, there is a section that basically indemnifies people from, you know, implementing -- doing their best to use their judgement to implement the order and the measures that are there. Certainly we said the goal was not to punish or prevent, you know, payments of child support. That was not the goal. The goal was to ensure that people who were involved would make a decision to leave. Those funds would have been unfrozen if they had, you know, made that decision, very quickly.

Volume 25 (November 17, 2022), page 81 25-081-20

Isabelle Jacques, ADM (GC-FIN)

Exactly.

Volume 25 (November 17, 2022), page 83 25-083-01

Isabelle Jacques, ADM (GC-FIN)

When we -- certainly when we developed the policy, we were focusing on those people involved in the illegal activities, and certainly in our discussions, daily discussions with the CBA and, you know, we had discussion with the RCMP, certainly these issues came to light. That was not the focus of the policy development. We understand that that was maybe some people were impacted, but we had discussions in the application to say our focus was certainly on these people involved in the activity.

Volume 25 (November 17, 2022), page 83 25-083-10

Isabelle Jacques, ADM (GC-FIN)

That is correct.

Volume 25 (November 17, 2022), page 84 25-084-22

Isabelle Jacques, ADM (GC-FIN)

I have no information to that effect.

Volume 25 (November 17, 2022), page 84 25-084-25

Isabelle Jacques, ADM (GC-FIN)

That is correct. I wouldn't -- that's not information that I'd be privy to.

Volume 25 (November 17, 2022), page 85 25-085-01

Isabelle Jacques, ADM (GC-FIN)

As a -- the Department of Finance did not receive any information to that effect.

Volume 25 (November 17, 2022), page 85 25-085-06

Isabelle Jacques, ADM (GC-FIN)

It's not information that we would ---

Volume 25 (November 17, 2022), page 85 25-085-09

Isabelle Jacques, ADM (GC-FIN)

--- to be received.

Volume 25 (November 17, 2022), page 85 25-085-12

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 85 25-085-15

Michael Sabia, Deputy Minister (GC-FIN)

All I can say in reaction to your question is that there -- the responsible agencies were watchful on that point, and it was not an area ---

Volume 25 (November 17, 2022), page 85 25-085-28

Michael Sabia, Deputy Minister (GC-FIN)

--- where ---

Volume 25 (November 17, 2022), page 86 25-086-04

Michael Sabia, Deputy Minister (GC-FIN)

--- we had any expertise.

Volume 25 (November 17, 2022), page 86 25-086-06

Michael Sabia, Deputy Minister (GC-FIN)

We had no information one way or the other on that issue.

Volume 25 (November 17, 2022), page 86 25-086-11

Michael Sabia, Deputy Minister (GC-FIN)

I said we had no information one way or the other on that.

Volume 25 (November 17, 2022), page 86 25-086-14

Michael Sabia, Deputy Minister (GC-FIN)

Well, I'm not going to give you a yes or no answer because my answer is that we didn't have information on that one way or the other. It's just not an issue that we were involved in, cognizant of, et cetera.

Volume 25 (November 17, 2022), page 86 25-086-20

Michael Sabia, Deputy Minister (GC-FIN)

Well, no, I can't because I don't have enough information to enable me to. What -- I mean, at the time, we are not -- and it's quite appropriate, we are not privy to information that FINTRAC has. That information -- FINTRAC, as you know, is an agency that is all about intelligence gathering, detection, et cetera. It's not about enforcing.

Volume 25 (November 17, 2022), page 87 25-087-03

Michael Sabia, Deputy Minister (GC-FIN)

And so that information -- just hang on one sec. That that information goes directly -- in the case of suspicious transactions or concerns about money laundering, whatever, that information goes directly from the leadership of FINTRAC to law enforcement authorities. It never comes our way.

Volume 25 (November 17, 2022), page 87 25-087-11

Michael Sabia, Deputy Minister (GC-FIN)

I was not informed of anything with respect to money laundering one way or the other.

Volume 25 (November 17, 2022), page 87 25-087-21

Michael Sabia, Deputy Minister (GC-FIN)

No, it did. Maybe I'm misunderstanding your question, but it did in that -- through that process, it confirmed that we needed to adjust the regulatory perimeter of FINTRAC to include crowd-funding platforms and payment processors. So we did do that on a temporary basis under the authority of the Emergencies Act, and we applied it only to -- in that Act, only to crowd funding and payment processors ---

Volume 25 (November 17, 2022), page 87 25-087-27

Michael Sabia, Deputy Minister (GC-FIN)

--- who had information ---

Volume 25 (November 17, 2022), page 88 25-088-08

Michael Sabia, Deputy Minister (GC-FIN)

--- with these elicit activities.

Volume 25 (November 17, 2022), page 88 25-088-11

Michael Sabia, Deputy Minister (GC-FIN)

Then we made it longer term.

Volume 25 (November 17, 2022), page 88 25-088-14

Michael Sabia, Deputy Minister (GC-FIN)

The crowd-funding platforms and payment processors were not subject to review by FINTRAC. Yes, that's ---

Volume 25 (November 17, 2022), page 88 25-088-19

Michael Sabia, Deputy Minister (GC-FIN)

--- that's accurate.

Volume 25 (November 17, 2022), page 88 25-088-23

Michael Sabia, Deputy Minister (GC-FIN)

I can't answer that question because I'm not expert enough in FINTRAC's legislation.

Volume 25 (November 17, 2022), page 89 25-089-01

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 89 25-089-07

Michael Sabia, Deputy Minister (GC-FIN)

I guess that's one, yes.

Volume 25 (November 17, 2022), page 89 25-089-10

Michael Sabia, Deputy Minister (GC-FIN)

So ---

Volume 25 (November 17, 2022), page 89 25-089-12

Michael Sabia, Deputy Minister (GC-FIN)

I'm sure that's probably true.

Volume 25 (November 17, 2022), page 89 25-089-16

Michael Sabia, Deputy Minister (GC-FIN)

Well, I'm not going to answer your question in my capacity as the Deputy Minister of Finance. I guess I'm going to answer your question in my capacity as a citizen. And I guess my answer as a citizen is, yeah, that sounds like it makes sense to me.

Volume 25 (November 17, 2022), page 89 25-089-20

Michael Sabia, Deputy Minister (GC-FIN)

Well, I guess, you know, as you know well, GoFundMe ended up, in effect, refusing to continue to provide its platform for these funding activities, so ---

Volume 25 (November 17, 2022), page 90 25-090-01

Michael Sabia, Deputy Minister (GC-FIN)

--- crowds -- so GoFundMe obviously came to some conclusions about what was underway here that caused them to be uncomfortable enough that they wanted to ---

Volume 25 (November 17, 2022), page 90 25-090-06

Michael Sabia, Deputy Minister (GC-FIN)

--- restrict this from their platform.

Volume 25 (November 17, 2022), page 90 25-090-11

Michael Sabia, Deputy Minister (GC-FIN)

Well, it was set up to support the fundraising activities of the people who were protesting both in Ottawa and I guess across the country.

Volume 25 (November 17, 2022), page 90 25-090-18

Michael Sabia, Deputy Minister (GC-FIN)

Well, they were about a political issue, yeah.

Volume 25 (November 17, 2022), page 90 25-090-23

Michael Sabia, Deputy Minister (GC-FIN)

I think it's asking for donations to support somebody's particular view about a public issue.

Volume 25 (November 17, 2022), page 92 25-092-18

Michael Sabia, Deputy Minister (GC-FIN)

Well, I'm not going to judge whether it is or not. It's a public policy issue that people have a right, perfect right ---

Volume 25 (November 17, 2022), page 92 25-092-23

Michael Sabia, Deputy Minister (GC-FIN)

--- to agree with or disagree with, and I guess this group of people were out using a crowd- funding platform as a source of raising money for it. Obviously, it ended up being pretty problematic because crowd -- GoFundMe walked away.

Volume 25 (November 17, 2022), page 92 25-092-27

Michael Sabia, Deputy Minister (GC-FIN)

I don't know what the numbers are, how many people donated.

Volume 25 (November 17, 2022), page 93 25-093-07

Michael Sabia, Deputy Minister (GC-FIN)

I can't speculate as to why people made those donations or not.

Volume 25 (November 17, 2022), page 93 25-093-13

Michael Sabia, Deputy Minister (GC-FIN)

I don't have any access to that information.

Volume 25 (November 17, 2022), page 93 25-093-16

Michael Sabia, Deputy Minister (GC-FIN)

I do not -- I did not know that at the time, no.

Volume 25 (November 17, 2022), page 93 25-093-22

Michael Sabia, Deputy Minister (GC-FIN)

I'm aware that the Charter protects the right to free expression.

Volume 25 (November 17, 2022), page 94 25-094-01

Michael Sabia, Deputy Minister (GC-FIN)

Yeah. I'm a -- like, the issue here, at least in my opinion, is not about donations, because nobody acted. Even in the context of the Emergencies Act, no one -- I mean, the RCMP was I think quite clear and publicly clear that their intention here was not to take action on people who had made –- in most cases, I think relatively modest donations. So the -- there really wasn't action here, as best I can detect, action here with respect to the activity of making donations.

Volume 25 (November 17, 2022), page 94 25-094-07

Michael Sabia, Deputy Minister (GC-FIN)

Well, I guess that would be the donor's expectation.

Volume 25 (November 17, 2022), page 94 25-094-21

Michael Sabia, Deputy Minister (GC-FIN)

Whether or not it happened or not ---

Volume 25 (November 17, 2022), page 94 25-094-24

Michael Sabia, Deputy Minister (GC-FIN)

--- is something that I can't comment on because I don't know.

Volume 25 (November 17, 2022), page 94 25-094-27

Michael Sabia, Deputy Minister (GC-FIN)

Look, the Government took a decision that these activities were illegal.

Volume 25 (November 17, 2022), page 95 25-095-05

Michael Sabia, Deputy Minister (GC-FIN)

I have absolutely no awareness of that, nor is it relevant to our work in the Department of Finance.

Volume 25 (November 17, 2022), page 95 25-095-15

Michael Sabia, Deputy Minister (GC-FIN)

No, I did not say it was relevant ---

Volume 25 (November 17, 2022), page 95 25-095-21

Michael Sabia, Deputy Minister (GC-FIN)

--- to our work in the Department of Finance.

Volume 25 (November 17, 2022), page 95 25-095-24

Michael Sabia, Deputy Minister (GC-FIN)

I did not say that.

Volume 25 (November 17, 2022), page 95 25-095-28

Michael Sabia, Deputy Minister (GC-FIN)

They're not Federal Government entities.

Volume 25 (November 17, 2022), page 96 25-096-10

Michael Sabia, Deputy Minister (GC-FIN)

And they don't have anything to do with our job in the Department of Finance.

Volume 25 (November 17, 2022), page 96 25-096-14

Michael Sabia, Deputy Minister (GC-FIN)

I guess so, if I go back to civics class. Yeah, I guess.

Volume 25 (November 17, 2022), page 96 25-096-19

Michael Sabia, Deputy Minister (GC-FIN)

It was a long time ago in my case.

Volume 25 (November 17, 2022), page 96 25-096-23

Michael Sabia, Deputy Minister (GC-FIN)

Just so that I understand what you just said, that...

Volume 25 (November 17, 2022), page 97 25-097-04

Michael Sabia, Deputy Minister (GC-FIN)

Well, yes, I think so. I think it's -- yeah.

Volume 25 (November 17, 2022), page 97 25-097-11

Michael Sabia, Deputy Minister (GC-FIN)

Look, all I can do is comment on this from the perspective of, A, the Department of Finance; and B, the Federal Government. And the Federal Government, in the Emergencies Act, declared that these activities were illegal. As with -- as to your point about ---

Volume 25 (November 17, 2022), page 97 25-097-17

Michael Sabia, Deputy Minister (GC-FIN)

--- GoFundMe ---

Volume 25 (November 17, 2022), page 97 25-097-23

Michael Sabia, Deputy Minister (GC-FIN)

--- GoFundMe took an independent decision that had absolutely to do with ---

Volume 25 (November 17, 2022), page 97 25-097-25

Michael Sabia, Deputy Minister (GC-FIN)

--- government activities.

Volume 25 (November 17, 2022), page 97 25-097-28

Michael Sabia, Deputy Minister (GC-FIN)

Look, you're asking me questions that we in the Department of Finance have absolutely nothing to do with.

Volume 25 (November 17, 2022), page 98 25-098-10

Michael Sabia, Deputy Minister (GC-FIN)

If you want to ask me questions about our role in Finance, that's fair enough, but these questions are -- they're not what we do.

Volume 25 (November 17, 2022), page 98 25-098-15

Michael Sabia, Deputy Minister (GC-FIN)

Of course.

Volume 25 (November 17, 2022), page 98 25-098-21

Michael Sabia, Deputy Minister (GC-FIN)

Well, with respect to the -- broadly understood the operation of the economy and other things, yeah.

Volume 25 (November 17, 2022), page 98 25-098-26

Michael Sabia, Deputy Minister (GC-FIN)

But we're not a public safety institution, we're not an institution that is responsible for law enforcement in any other -- in any way. There are lots of other agencies of the Government of Canada that are responsible for those things and are responsible for the interactions that you're ---

Volume 25 (November 17, 2022), page 99 25-099-02

Michael Sabia, Deputy Minister (GC-FIN)

--- drawing attention to, but it's not the Department of Finance.

Volume 25 (November 17, 2022), page 99 25-099-09

Michael Sabia, Deputy Minister (GC-FIN)

I think the answer to that's pretty straightforward. There was a very substantial preoccupation on the part of the Government with respect to the economic consequences of the disruptions that were occurring in the country. And our role at the time, we were people doing quite a bit of work on that issue, and that was extremely relevant to ---

Volume 25 (November 17, 2022), page 99 25-099-13

Michael Sabia, Deputy Minister (GC-FIN)

--- the decision-making that was underway ---

Volume 25 (November 17, 2022), page 99 25-099-21

Michael Sabia, Deputy Minister (GC-FIN)

--- across the Government of Canada at the time.

Volume 25 (November 17, 2022), page 99 25-099-24

Michael Sabia, Deputy Minister (GC-FIN)

Look, I don't know whether you were in the room this morning or not, but I thought we had a pretty thorough discussion of that with Commission's counsel.

Volume 25 (November 17, 2022), page 100 25-100-17

Michael Sabia, Deputy Minister (GC-FIN)

No, I didn't ask you a question.

Volume 25 (November 17, 2022), page 100 25-100-23

Michael Sabia, Deputy Minister (GC-FIN)

No, what I -- what we said, I think what both Isabelle and I said earlier was in the circumstance where our concern was limiting the duration of these disruptions as much as possible, that the legislative process was something that took a considerable amount of time, and therefore, was not really a very effective instrument for dealing with a situation where time was a significant impact, was a significant determinant of the extent of its impact on the national economy.

Volume 25 (November 17, 2022), page 101 25-101-10

Michael Sabia, Deputy Minister (GC-FIN)

Look, I think the Government took a decision as the duly elected Government of the country to invoke a -- the Emergencies Act, which is itself a piece of legislation that was through Parliament, and the Government took a decision to use that in this circumstance, and has been, I believe, scrupulous in how it was used, kept the duration of the Emergencies Act to an absolute minimum, I mean, it was what, seven, eight days maximum ---

Volume 25 (November 17, 2022), page 101 25-101-26

Michael Sabia, Deputy Minister (GC-FIN)

--- for the whole thing. So I think the Government has proceeded in a manner completely consistent with the laws of Canada.

Volume 25 (November 17, 2022), page 102 25-102-07

Michael Sabia, Deputy Minister (GC-FIN)

Yes, but the Emergencies Act had to be -- there was a parliamentary process that followed the Government’s invocation of the Emergencies Act in a manner consistent with the laws of Canada, and that was done.

Volume 25 (November 17, 2022), page 102 25-102-14

Michael Sabia, Deputy Minister (GC-FIN)

I’m not going to comment on that. It’s ---

Volume 25 (November 17, 2022), page 103 25-103-01

Michael Sabia, Deputy Minister (GC-FIN)

Yes, I think so.

Volume 25 (November 17, 2022), page 103 25-103-21

Michael Sabia, Deputy Minister (GC-FIN)

No. What this is, is just a summary of possible approaches that could be used. These are not, and shouldn’t be construed as recommendations to the Minister in any way. And the description that you see in the second paragraph is really about, well, if one were to go down the path of moral suasion, here’s the kind of thing that it would involve.

Volume 25 (November 17, 2022), page 104 25-104-10

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 104 25-104-20

Michael Sabia, Deputy Minister (GC-FIN)

The Emergencies Act did. That’s my understanding.

Volume 25 (November 17, 2022), page 104 25-104-24

Isabelle Jacques, ADM (GC-FIN)

Can you pull up section 3?

Volume 25 (November 17, 2022), page 105 25-105-06

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 105 25-105-20

Isabelle Jacques, ADM (GC-FIN)

That is accurate.

Volume 25 (November 17, 2022), page 105 25-105-24

Isabelle Jacques, ADM (GC-FIN)

That’s correct.

Volume 25 (November 17, 2022), page 105 25-105-28

Isabelle Jacques, ADM (GC-FIN)

Yes. It can suspend dealings with those individuals and it could lead to the freezing of ---

Volume 25 (November 17, 2022), page 106 25-106-03

Michael Sabia, Deputy Minister (GC-FIN)

Freezes an account, ---

Volume 25 (November 17, 2022), page 106 25-106-06

Isabelle Jacques, ADM (GC-FIN)

Right.

Volume 25 (November 17, 2022), page 106 25-106-07

Michael Sabia, Deputy Minister (GC-FIN)

--- not necessarily ---

Volume 25 (November 17, 2022), page 106 25-106-08

Isabelle Jacques, ADM (GC-FIN)

An account.

Volume 25 (November 17, 2022), page 106 25-106-09

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 106 25-106-12

Isabelle Jacques, ADM (GC-FIN)

Bank accounts.

Volume 25 (November 17, 2022), page 106 25-106-14

Michael Sabia, Deputy Minister (GC-FIN)

Yeah. Yeah.

Volume 25 (November 17, 2022), page 106 25-106-17

Isabelle Jacques, ADM (GC-FIN)

That is true.

Volume 25 (November 17, 2022), page 106 25-106-21

Isabelle Jacques, ADM (GC-FIN)

I don’t recall the CBA voicing concern with the scope of the orders. I do not recall that.

Volume 25 (November 17, 2022), page 106 25-106-25

Isabelle Jacques, ADM (GC-FIN)

The scope, no, but the impact. I mean, one concern that was raised with respect to the impact it may have with respect to child support. That’s the only concern that I recall.

Volume 25 (November 17, 2022), page 107 25-107-03

Isabelle Jacques, ADM (GC-FIN)

That’s very possible. And if they did, I would have said yes.

Volume 25 (November 17, 2022), page 107 25-107-09

Isabelle Jacques, ADM (GC-FIN)

Well not for banks. I mean, we had ---

Volume 25 (November 17, 2022), page 107 25-107-15

Isabelle Jacques, ADM (GC-FIN)

I mean, we had prepared some frequent questions for internal purposes, yes.

Volume 25 (November 17, 2022), page 107 25-107-19

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 108 25-108-01

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 108 25-108-05

Isabelle Jacques, ADM (GC-FIN)

They were not being investigated. Yes. That was not the focus of their investigation.

Volume 25 (November 17, 2022), page 108 25-108-08

Michael Sabia, Deputy Minister (GC-FIN)

I don’t recall. I may -- I honestly don’t recall that. But I mean I think that’s true.

Volume 25 (November 17, 2022), page 108 25-108-16

Isabelle Jacques, ADM (GC-FIN)

Yes, they were captured.

Volume 25 (November 17, 2022), page 108 25-108-18

Michael Sabia, Deputy Minister (GC-FIN)

I think that’s true that they were captured, but nothing ---

Volume 25 (November 17, 2022), page 108 25-108-19

Isabelle Jacques, ADM (GC-FIN)

And on those small donations, just to specify, yes, they were captured, but it’s important to note that certainly the Order was no retroactive. So any donations that would have been given prior to the Emergencies Act being enacted were not captured. And as we said previously, it’s important that you look at the context as to when we came about to draft the order, we didn’t know how the situation would evolve. But in the application of the order, certainly the focus was not on those donations.

Volume 25 (November 17, 2022), page 108 25-108-23

Isabelle Jacques, ADM (GC-FIN)

Can we see?

Volume 25 (November 17, 2022), page 109 25-109-11

Isabelle Jacques, ADM (GC-FIN)

It would be good just to read it.

Volume 25 (November 17, 2022), page 109 25-109-14

Isabelle Jacques, ADM (GC-FIN)

Thank you.

Volume 25 (November 17, 2022), page 109 25-109-18

Michael Sabia, Deputy Minister (GC-FIN)

February 15th.

Volume 25 (November 17, 2022), page 110 25-110-03

Isabelle Jacques, ADM (GC-FIN)

"And what about people"? That one?

Volume 25 (November 17, 2022), page 110 25-110-08

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 110 25-110-11

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 110 25-110-15

Isabelle Jacques, ADM (GC-FIN)

And certainly, we -- yeah, we told them to, and as they have, use their good judgement in applying this Order throughout, yes.

Volume 25 (November 17, 2022), page 110 25-110-20

Isabelle Jacques, ADM (GC-FIN)

That I do not recall if they asked me that question.

Volume 25 (November 17, 2022), page 110 25-110-26

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 111 25-111-02

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, now this is an important point because it goes to what we were trying to accomplish here. So that created the possibility that that could occur. In reality, in actuality it never occurred, but it did have a helpful incentive effect, to use that word again, with respect to wanting to find a peaceful solution to these disruptions. So the RCMP's approach to this was, I think, completely appropriate. The risk to the truck owner was there, but action was not taken because if action -- if the action had actually been taken it could have, in certain circumstances, impeded the movement of the truck, which nobody wanted, but it did create an issue of uncertainty that a truck driver would have to assess and therefore, hopefully, encourage the truck driver to leave peacefully, which was the objective all along.

Volume 25 (November 17, 2022), page 111 25-111-07

Michael Sabia, Deputy Minister (GC-FIN)

But it's instructive that that never happened.

Volume 25 (November 17, 2022), page 112 25-112-01

Michael Sabia, Deputy Minister (GC-FIN)

It's positive that it had the effect that it had, which it was creating a possibility that that might happen, but that it never actually happened. That's an almost ideal combination.

Volume 25 (November 17, 2022), page 112 25-112-05

Michael Sabia, Deputy Minister (GC-FIN)

It did.

Volume 25 (November 17, 2022), page 112 25-112-11

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 112 25-112-18

Isabelle Jacques, ADM (GC-FIN)

When they had information -- yes. I mean, it was their ---

Volume 25 (November 17, 2022), page 112 25-112-22

Isabelle Jacques, ADM (GC-FIN)

No, no. But do you mean - -- it's their responsibility to be compliant with the law, yes, and also, there is a clause that simply that they need to share information that they have with the RCMP and/or CSIS.

Volume 25 (November 17, 2022), page 112 25-112-26

Isabelle Jacques, ADM (GC-FIN)

That is accurate.

Volume 25 (November 17, 2022), page 113 25-113-08

Isabelle Jacques, ADM (GC-FIN)

It was their decision to make and do the assessment and consult internally, you know, and receive the proper advice on their decision.

Volume 25 (November 17, 2022), page 113 25-113-13

Isabelle Jacques, ADM (GC-FIN)

I don't know if there was any such exercise of -- by the RCMP to review compliance with the Order. I've never heard that in the past.

Volume 25 (November 17, 2022), page 113 25-113-22

Isabelle Jacques, ADM (GC-FIN)

It was to provide for the information-sharing to help the RCMP and in pursuing some maybe investigation, yes.

Volume 25 (November 17, 2022), page 113 25-113-27

Isabelle Jacques, ADM (GC-FIN)

Not to go back -- not for the RCMP to take account. That was not the purpose. It was to share information to allow the RCMP to do their job.

Volume 25 (November 17, 2022), page 114 25-114-04

Isabelle Jacques, ADM (GC-FIN)

I -- it was not intended that way. I find that to be a stretch.

Volume 25 (November 17, 2022), page 114 25-114-10

Isabelle Jacques, ADM (GC-FIN)

From the CBA, yes.

Volume 25 (November 17, 2022), page 114 25-114-17

Isabelle Jacques, ADM (GC-FIN)

Certainly, we provided the information, usually via Michael.

Volume 25 (November 17, 2022), page 115 25-115-09

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 115 25-115-12

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, so we were -- no mystery here. We were wanting to track this information, again, as you've said, not with respect to individual names, et cetera, but aggregate data, we were wanting to track that, one, to see whether or not this activity was actually underway, that what we had set out to do was actually underway; and second, again, and this is, you know, very important, we were tracking it because the whole intent here was to have this in place for as short a period as possible so that it could be -- that this kind of activity could be removed as quickly as possible because hopefully it was no longer needed. Because if it had the intended effect of bringing a peaceful end or contributing to bringing a peaceful end to these disruptions, then mission accomplished and this whole thing should go away. So in the interests of being able to do that as promptly as possible, yes, we were tracking this fairly carefully. And as you know, I think the -- I think as of February, what, the 21st/22nd, pretty much all of these accounts had been unfrozen. So it was actually quite -- it came and went quickly, which is what our intent was at the time, because it contributed to the peaceful end in a way that we had intended.

Volume 25 (November 17, 2022), page 115 25-115-13

Michael Sabia, Deputy Minister (GC-FIN)

Well yes, because the disruptions -- as the disruptions were coming to an end, the RCMP was doing a good job of communicating that to the financial institutions, and they were quickly unfreezing accounts.

Volume 25 (November 17, 2022), page 116 25-116-10

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, look, I can’t speculate as to what Alex’s purpose was, or behind that email. The Minister wanted to be kept in the loop on the level of activity and whether we were seeing progress here, and we certainly kept her in formed of that.

Volume 25 (November 17, 2022), page 116 25-116-19

Michael Sabia, Deputy Minister (GC-FIN)

Well I think that period from the invocation of the Emergencies Act to when the Emergencies Act was then rescinded or removed was such a short period of time that it’s, you know, I think quite logical. I think there were only -- I can’t -- don’t hold me to the number of five ---

Volume 25 (November 17, 2022), page 117 25-117-02

Michael Sabia, Deputy Minister (GC-FIN)

--- or six transactions that did surface as a result of that, because we’re talking about a period of what? Six or seven days.

Volume 25 (November 17, 2022), page 117 25-117-08

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, but the issue there, of course, as you know, is that because the perimeter of what FINTRAC was actively reviewing was probably narrower than it should have been, because it didn’t include crowd funding and it didn’t include payment processors, that clearly that was a gap and that gap needed to be addressed, which we did temporarily -- on a temporary basis in the Employment Act -- the Emergencies Act, and then on a longer term basis, in legislation and regulations that followed.

Volume 25 (November 17, 2022), page 117 25-117-16

Michael Sabia, Deputy Minister (GC-FIN)

Hi.

Volume 25 (November 17, 2022), page 118 25-118-03

Isabelle Jacques, ADM (GC-FIN)

Certainly. I mean, looking at it -- you know, one of the key points that we did look at at the outset when drafting, and you must understand we were working on this fairly quickly, looking at a de minimis amount. But you also understand that a number of people were donating small amounts to crowd funding platforms; right? And so there was always that possibility. But looking at it, if we were to do it, I think we could craft some exceptions for the application for very specific cases. It’s not something that we did in the time that we had, but I don’t disagree with you that it’s something, you know, in hindsight that we could look at in being more specific in that regard, because the intent was not to effect -- unduly effect, you know, payments of child support or other payments.

Volume 25 (November 17, 2022), page 119 25-119-07

Isabelle Jacques, ADM (GC-FIN)

But you’re talking about people here that were involved in unlawful activities.

Volume 25 (November 17, 2022), page 120 25-120-16

Michael Sabia, Deputy Minister (GC-FIN)

To our knowledge, no donors were affected by this -- the order.

Volume 25 (November 17, 2022), page 120 25-120-20

Michael Sabia, Deputy Minister (GC-FIN)

There were no accounts frozen -- to the best of our knowledge, based on the information that we’ve received, there were no accounts from donors that were frozen.

Volume 25 (November 17, 2022), page 120 25-120-22

Michael Sabia, Deputy Minister (GC-FIN)

I think that’s an issue for -- I think that’s an issue for the financial institutions and how the financial institutions administered these things. I don’t think that’s something that is the ambit of the Government of Canada. I think if -- I mean, that’s something that, as you know, in how the credit system works, that’s something that the credit system should be able to deal with on its own.

Volume 25 (November 17, 2022), page 121 25-121-01

Michael Sabia, Deputy Minister (GC-FIN)

Well I guess I would dispute that. I think the Government of Canada made some decisions with respect to the cessation of financial services, the freezing of accounts, to individuals who were involved in illegal activities, and all that those individuals had to do was to leave. And the -- let’s put this -- let’s back up a little bit. The government announced its intention to proclaim or to invoke the Emergencies Act on the 14th. It was very clear, very clear, as of that date, and the Minister of Finance was very clear as of that date, that people involved in these disruptions ran the risk of having their accounts frozen. That was very clear. So there was a period of notice there and it was very clear that all that had to happen was for those people to leave and as -- if they did, their accounts would never have been frozen, or that they would be immediately unfrozen if they did leave. So I think people had reasonable notice and it was a very simple solution. All you had to do was leave.

Volume 25 (November 17, 2022), page 121 25-121-14

Michael Sabia, Deputy Minister (GC-FIN)

But that was never -- that was never in our minds. That was never part of the intent of what we were trying to do, because honestly, I think that the credit system itself ought to be agile enough that those kinds of outcomes not happen.

Volume 25 (November 17, 2022), page 122 25-122-08

Michael Sabia, Deputy Minister (GC-FIN)

But it wasn't.

Volume 25 (November 17, 2022), page 122 25-122-17

Michael Sabia, Deputy Minister (GC-FIN)

But it wasn't any part of our intent ever.

Volume 25 (November 17, 2022), page 122 25-122-20

Michael Sabia, Deputy Minister (GC-FIN)

Isabelle's a lawyer.

Volume 25 (November 17, 2022), page 123 25-123-02

Michael Sabia, Deputy Minister (GC-FIN)

Probably should.

Volume 25 (November 17, 2022), page 123 25-123-06

Michael Sabia, Deputy Minister (GC-FIN)

Some day you'll have to explain to us, who comes up with this ---

Volume 25 (November 17, 2022), page 123 25-123-11

Michael Sabia, Deputy Minister (GC-FIN)

--- classification system?

Volume 25 (November 17, 2022), page 123 25-123-14

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 124 25-124-17

Michael Sabia, Deputy Minister (GC-FIN)

And I said that this morning.

Volume 25 (November 17, 2022), page 124 25-124-20

Michael Sabia, Deputy Minister (GC-FIN)

Or this afternoon.

Volume 25 (November 17, 2022), page 124 25-124-22

Michael Sabia, Deputy Minister (GC-FIN)

Well, look, the gap here that crowdfunding and payment processors were not in the ambit of FINTRAC, this was something that people in Finance that had been aware of for some time. This was not a revelation. So the issue here -- so you got to separate two things. On the one hand, this gap needed to be corrected, just because with the rise in importance of crowdfunding, et cetera, this was an obvious oversight. And it was the Department's intention to recommend to the government that this be fixed, and it would have been in the traditional way that you would go about adjusting something like this. So that -- and that was in a -- let's call it a steady state world. So in this circumstance, obviously, we were not in a steady state world. And our intention here was to move as quickly as we could to try to correct this gap. And given the decision of the government to move in the direction of the Emergencies Act, that created an opportunity to address the specific case. But please note that in what we did here, we only applied it to crowdfunding platforms and payment processors who were in somehow, in some control of assets or capital of financing that may be associated with these "illegal activities" as declared by the Emergencies Act. So it was quite limited and it was only in place for, what, a period of six or seven days. We then, this issue having been resolved, returned to the more status quo kind of approach and we did correct this in the April budget I think ---

Volume 25 (November 17, 2022), page 125 25-125-02

Isabelle Jacques, ADM (GC-FIN)

VR Regulation.

Volume 25 (November 17, 2022), page 125 25-125-28

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, yes.

Volume 25 (November 17, 2022), page 126 25-126-01

Michael Sabia, Deputy Minister (GC-FIN)

Well, legislative amendment or even a regulatory change ---

Volume 25 (November 17, 2022), page 126 25-126-11

Michael Sabia, Deputy Minister (GC-FIN)

--- because they too take ---

Volume 25 (November 17, 2022), page 126 25-126-14

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 127 25-127-09

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, and not just as easily.

Volume 25 (November 17, 2022), page 127 25-127-12

Michael Sabia, Deputy Minister (GC-FIN)

Just because the regulatory process, there are several steps to it. It is quicker, you are correct, than ---

Volume 25 (November 17, 2022), page 127 25-127-14

Michael Sabia, Deputy Minister (GC-FIN)

--- in typical circumstances than the legislative process, but there are a number of steps.

Volume 25 (November 17, 2022), page 127 25-127-18

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, big difference.

Volume 25 (November 17, 2022), page 127 25-127-22

Michael Sabia, Deputy Minister (GC-FIN)

Yeah, but I fail to see, given how narrowly the Emergencies Act was used here in applying it only in a very, very narrow slice of crowdfunding platforms and payment processes, you know, I fail to see how there's really a meaningful distinction, and importantly, that that very narrow change was only in place for six or seven days, and we then corrected it later, as per this process.

Volume 25 (November 17, 2022), page 128 25-128-04

Michael Sabia, Deputy Minister (GC-FIN)

So I think we're kind of both on the same page.

Volume 25 (November 17, 2022), page 128 25-128-12

Michael Sabia, Deputy Minister (GC-FIN)

(Inaudible response)

Volume 25 (November 17, 2022), page 128 25-128-18

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 128 25-128-21

Isabelle Jacques, ADM (GC-FIN)

I do not ---

Volume 25 (November 17, 2022), page 129 25-129-01

Isabelle Jacques, ADM (GC-FIN)

Yeah, I didn't want to reply for ---

Volume 25 (November 17, 2022), page 129 25-129-04

Michael Sabia, Deputy Minister (GC-FIN)

Oh, no, go ahead.

Volume 25 (November 17, 2022), page 129 25-129-06

Isabelle Jacques, ADM (GC-FIN)

--- Michael, but we could have never drafted and passed those regulations in those timelines.

Volume 25 (November 17, 2022), page 129 25-129-07

Isabelle Jacques, ADM (GC-FIN)

It seems very simple because, you know, you see the drafting of the amendments, it doesn't seem to be very long, but the process to pass a regulation it's not something that you can do in the timelines that we had to enact and work on the Order.

Volume 25 (November 17, 2022), page 129 25-129-14

Rhys Mendes, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 130 25-130-21

Rhys Mendes, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 130 25-130-26

Rhys Mendes, ADM (GC-FIN)

That is the estimate that Transport Canada had, yes.

Volume 25 (November 17, 2022), page 131 25-131-01

Rhys Mendes, ADM (GC-FIN)

We believed, yes, that the blockade did jeopardize our reputation. There were -- that was based on a number of public statements by officials in the US.

Volume 25 (November 17, 2022), page 131 25-131-07

Rhys Mendes, ADM (GC-FIN)

So we believed that the impacts would grow as time went on, as I explained this morning.

Volume 25 (November 17, 2022), page 131 25-131-13

Rhys Mendes, ADM (GC-FIN)

Yeah. And I mean, more generally, I think that the impacts would’ve spread over time.

Volume 25 (November 17, 2022), page 131 25-131-17

Rhys Mendes, ADM (GC-FIN)

Correct.

Volume 25 (November 17, 2022), page 131 25-131-22

Rhys Mendes, ADM (GC-FIN)

I’m not -- I’m not able to speak to the reason that the blockades were shorter or the manner in which they were cleared, but the date accords with my memory.

Volume 25 (November 17, 2022), page 131 25-131-27

Rhys Mendes, ADM (GC-FIN)

I think a more prolonged disruption at the Ambassador Bridge would have done greater damage to our reputation as a good place to invest, our reputation as a reliable trading partner.

Volume 25 (November 17, 2022), page 132 25-132-08

Rhys Mendes, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 132 25-132-14

Rhys Mendes, ADM (GC-FIN)

I have some passing awareness of that.

Volume 25 (November 17, 2022), page 132 25-132-20

Rhys Mendes, ADM (GC-FIN)

I believe that accords with my understanding of what I’ve read about that, but I don’t have any specific information on that.

Volume 25 (November 17, 2022), page 132 25-132-26

Rhys Mendes, ADM (GC-FIN)

Well, as we said in one of our documents, a renewed blockade would have contributed to escalating economic impacts. I can’t speak to whether or not the measures you’re describing were necessary or not.

Volume 25 (November 17, 2022), page 133 25-133-05

Rhys Mendes, ADM (GC-FIN)

No, we haven’t.

Volume 25 (November 17, 2022), page 133 25-133-17

Rhys Mendes, ADM (GC-FIN)

I haven’t given that a full enough consideration to give you a good answer, but I would -- I don’t disagree with the notion that there would be some impact.

Volume 25 (November 17, 2022), page 133 25-133-22

Michael Sabia, Deputy Minister (GC-FIN)

Those things usually cost money.

Volume 25 (November 17, 2022), page 134 25-134-02

Rhys Mendes, ADM (GC-FIN)

That’s correct.

Volume 25 (November 17, 2022), page 134 25-134-19

Michael Sabia, Deputy Minister (GC-FIN)

I saw the letter but not immediately after it was sent, sometime thereafter.

Volume 25 (November 17, 2022), page 134 25-134-26

Michael Sabia, Deputy Minister (GC-FIN)

We’re not involved in the kind of generalized process that you refer to in the first part of your question. But in the second part, any time we get a letter of this kind seeking funding -- and I’ll let you in on a secret; we get a few of those -- we have -- obviously, those letters they come from, you know, the Mayor of a city of importance of Windsor, or lots of other people, we treat those letters seriously, and there is an internal process around this kind of request, and there will be discussion with the Minister of Finance about it. As -- that’s standard for how we treat this kind of thing.

Volume 25 (November 17, 2022), page 135 25-135-24

Michael Sabia, Deputy Minister (GC-FIN)

I think now you’re negotiating.

Volume 25 (November 17, 2022), page 136 25-136-13

Michael Sabia, Deputy Minister (GC-FIN)

Oh, I’m not sure about planned in advance because the world is a changeable and unpredictable place, so I’m not sure that this is always possible to do, in advance. But if you’re asking me -- to pre-empt, probably, your next question -- whether, you know, trying to find some reasonable outcome here involving the City, the Province, and ourselves, whether we’re open to having some kind of discussion about that, I mean, I think the answer to that is we’re always open to having those kinds of discussions, and we’ll see where it takes us.

Volume 25 (November 17, 2022), page 136 25-136-20

Michael Sabia, Deputy Minister (GC-FIN)

But this isn’t the place to work out a deal.

Volume 25 (November 17, 2022), page 137 25-137-03

Michael Sabia, Deputy Minister (GC-FIN)

It would be if we had advance notice of disruptions of this magnitude.

Volume 25 (November 17, 2022), page 137 25-137-09

Michael Sabia, Deputy Minister (GC-FIN)

Which typically -- typically, we don’t get advance notice.

Volume 25 (November 17, 2022), page 137 25-137-13

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 137 25-137-27

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 138 25-138-02

Michael Sabia, Deputy Minister (GC-FIN)

Not specifically in the way you put it. we were exploring A, their continuing reading of the economic situation and how that was unfolding, and B, what possible solutions could look like or possible actions that could be taken to try, once again, I’ll repeat myself, to bring this difficult situation to a peaceable end. And that had many forms, and there were a variety of options. The Emergencies Act was nothing more than an option at that point.

Volume 25 (November 17, 2022), page 138 25-138-07

Michael Sabia, Deputy Minister (GC-FIN)

Sure. In the same way that we discuss potentialities that might find their way into all kinds of things all the time.

Volume 25 (November 17, 2022), page 138 25-138-18

Michael Sabia, Deputy Minister (GC-FIN)

Yes, because for a certain category of actions that the government might or might not decide to embark on would require the cooperation of those institutions as those measures would be implemented. So conversation with them seemed to us to make sense.

Volume 25 (November 17, 2022), page 138 25-138-24

Michael Sabia, Deputy Minister (GC-FIN)

No.

Volume 25 (November 17, 2022), page 139 25-139-06

Michael Sabia, Deputy Minister (GC-FIN)

Okay.

Volume 25 (November 17, 2022), page 139 25-139-09

Michael Sabia, Deputy Minister (GC-FIN)

Well I think that meeting was -- it was broader than just a discussion of the implementation of the Emergencies Act. There were -- no decisions had been made at that point. That was, to the best of my recollection, a much broader conversation around conditions in the country at the time. There were reports that were inputs into that, meaning from a variety of different agencies across the Government of Canada, including National Security and others.

Volume 25 (November 17, 2022), page 139 25-139-13

Michael Sabia, Deputy Minister (GC-FIN)

So there were a whole variety of things.

Volume 25 (November 17, 2022), page 139 25-139-23

Michael Sabia, Deputy Minister (GC-FIN)

Well if you’re asking me hypothetically could that had happened, I guess, yes, theoretically, that could have happened.

Volume 25 (November 17, 2022), page 139 25-139-28

Michael Sabia, Deputy Minister (GC-FIN)

Well you need to separate things. The Incident Response Group ---

Volume 25 (November 17, 2022), page 140 25-140-06

Michael Sabia, Deputy Minister (GC-FIN)

Well full Cabinet, I have to be reminded of the dates here, but full Cabinet, I believe met on the Sunday evening, ---

Volume 25 (November 17, 2022), page 140 25-140-10

Michael Sabia, Deputy Minister (GC-FIN)

--- but I’m not -- I don’t have a perfect recall as to the timing of that. But I believe there was a full Cabinet meeting on the Sunday evening.

Volume 25 (November 17, 2022), page 140 25-140-14

Isabelle Jacques, ADM (GC-FIN)

I mean, we had been working in the previous week on a couple of options. One, as we said, with respect to amending the Bank Act, and the other when we heard later, much later in the week, that it was possible that the Emergencies Act would be invoked, we started working on potential orders.

Volume 25 (November 17, 2022), page 140 25-140-22

Isabelle Jacques, ADM (GC-FIN)

I certainly did not, nor did any member of my team, consult with Provincial Government.

Volume 25 (November 17, 2022), page 141 25-141-04

Isabelle Jacques, ADM (GC-FIN)

We did not consult.

Volume 25 (November 17, 2022), page 141 25-141-08

Michael Sabia, Deputy Minister (GC-FIN)

Well it depends what you consider consultation. I had had some informal consultations, but in the previous weeks, with some of the leadership of some Canadian insurance companies.

Volume 25 (November 17, 2022), page 141 25-141-10

Isabelle Jacques, ADM (GC-FIN)

Well I became aware at one point in time that there was some misinformation with respect to small donations. People thought that donations that had been made prior to the Emergencies Act being enacted would be subject of potential freeze.

Volume 25 (November 17, 2022), page 142 25-142-13

Isabelle Jacques, ADM (GC-FIN)

I have not seen -- let me see. I have not seen the beginning of the ---

Volume 25 (November 17, 2022), page 142 25-142-26

Isabelle Jacques, ADM (GC-FIN)

--- Q and A document, but -- and at the bottom, does it say that it was prepared by Canada? Of the document. We can’t see it on the screen.

Volume 25 (November 17, 2022), page 143 25-143-02

Isabelle Jacques, ADM (GC-FIN)

All right. Thank you. Okay. Thank you.

Volume 25 (November 17, 2022), page 143 25-143-07

Isabelle Jacques, ADM (GC-FIN)

No, I understand your question. I do not know when this was prepared. I don’t know if there were -- I suspect that there may have been discussions, I know there were discussions with various associations, insurance associations, so I do not know if it’s as a result of those discussion that this answer was provided.

Volume 25 (November 17, 2022), page 143 25-143-24

Michael Sabia, Deputy Minister (GC-FIN)

But look, I would say, as I read this now, I think this is poorly drafted.

Volume 25 (November 17, 2022), page 144 25-144-02

Isabelle Jacques, ADM (GC-FIN)

Well insurance is ---

Volume 25 (November 17, 2022), page 144 25-144-07

Isabelle Jacques, ADM (GC-FIN)

No, they were not consulted about ---

Volume 25 (November 17, 2022), page 144 25-144-19

Michael Sabia, Deputy Minister (GC-FIN)

They were consulted afterwards.

Volume 25 (November 17, 2022), page 144 25-144-21

Isabelle Jacques, ADM (GC-FIN)

Afterwards, yes.

Volume 25 (November 17, 2022), page 144 25-144-23

Isabelle Jacques, ADM (GC-FIN)

Well, what I understand is that they made a decision not to share any information with respect to people that own vehicles that were involved in the illegal activities, and I would, you know, say that that was, in my view, the right decision. The purpose when we drafted the policy and the law -- I mean, as we have said many times, one of the intent was to encourage people to leave and stop the illegal activities in which they were engaged.

Volume 25 (November 17, 2022), page 144 25-144-28

Michael Sabia, Deputy Minister (GC-FIN)

I think we were very much aware of the fact that credit unions, for long historical reason, have a substantial presence in Saskatchewan and in some other provinces Canada.

Volume 25 (November 17, 2022), page 145 25-145-21

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 145 25-145-28

Michael Sabia, Deputy Minister (GC-FIN)

Thank you.

Volume 25 (November 17, 2022), page 146 25-146-03

Isabelle Jacques, ADM (GC-FIN)

Good afternoon.

Volume 25 (November 17, 2022), page 146 25-146-08

Isabelle Jacques, ADM (GC-FIN)

These were no ordinary events, that is accurate.

Volume 25 (November 17, 2022), page 146 25-146-15

Isabelle Jacques, ADM (GC-FIN)

Yes, we wanted to see if we had any tools in place that could be useful ---

Volume 25 (November 17, 2022), page 146 25-146-21

Isabelle Jacques, ADM (GC-FIN)

--- from a financial perspective.

Volume 25 (November 17, 2022), page 146 25-146-24

Isabelle Jacques, ADM (GC-FIN)

Well, certainly, that triggered our interest as -- you know, as people are starting to donate via crowdfunding platforms, we were looking at that. But, you know, it was to support what was a peaceful event.

Volume 25 (November 17, 2022), page 147 25-147-01

Isabelle Jacques, ADM (GC-FIN)

Well, at the time when we found out, we -- well, I suppose it was maybe surprising but we were right in the middle of budget at the time and when we -- we just basically read news articles that were incoming.

Volume 25 (November 17, 2022), page 147 25-147-09

Isabelle Jacques, ADM (GC-FIN)

Well, I couldn’t tell you how many people donated because you can’t tell the size of the donations, so -- but -- I mean the amount was substantial amounts, yes.

Volume 25 (November 17, 2022), page 147 25-147-17

Isabelle Jacques, ADM (GC-FIN)

Well, as we said, we knew that in the past, from our work with the international association organizations that, you know, crowdfunding platforms and some -- most payment service providers were not captured by the legislation.

Volume 25 (November 17, 2022), page 147 25-147-25

Isabelle Jacques, ADM (GC-FIN)

That’s right.

Volume 25 (November 17, 2022), page 148 25-148-05

Isabelle Jacques, ADM (GC-FIN)

Yes, it does.

Volume 25 (November 17, 2022), page 148 25-148-10

Isabelle Jacques, ADM (GC-FIN)

If it was paid to the bank, yes.

Volume 25 (November 17, 2022), page 148 25-148-14

Isabelle Jacques, ADM (GC-FIN)

Well, I mean the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, I mean, applied at the time, so if information was being provided to FINTRAC, I wouldn’t have known about that.

Volume 25 (November 17, 2022), page 148 25-148-19

Isabelle Jacques, ADM (GC-FIN)

So it’s possible that information was being shared. I do not know.

Volume 25 (November 17, 2022), page 148 25-148-24

Isabelle Jacques, ADM (GC-FIN)

Again, I can’t say that. I do not know what information was shared. I don’t -- FINTRAC would know if any information at the time had been shared with them.

Volume 25 (November 17, 2022), page 149 25-149-01

Isabelle Jacques, ADM (GC-FIN)

That’s accurate.

Volume 25 (November 17, 2022), page 149 25-149-10

Isabelle Jacques, ADM (GC-FIN)

Yes, unlawful act, yes -- activities, yes.

Volume 25 (November 17, 2022), page 149 25-149-14

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 149 25-149-19

Isabelle Jacques, ADM (GC-FIN)

I -- but we were not engaged in drafting the regulations. So we were engaged in what became the Economic Measures Order but not the regulations.

Volume 25 (November 17, 2022), page 149 25-149-24

Isabelle Jacques, ADM (GC-FIN)

Of -- of the -- of what is described as, as you -- I think you were just saying, “illegal activities”. Let me see. You’d have to bring me the -- you know, we didn’t work on those regulations, so which section were you referring to, sorry?

Volume 25 (November 17, 2022), page 150 25-150-01

Isabelle Jacques, ADM (GC-FIN)

Correct, yes.

Volume 25 (November 17, 2022), page 150 25-150-10

Isabelle Jacques, ADM (GC-FIN)

No, but I don’t see the link, I must admit.

Volume 25 (November 17, 2022), page 150 25-150-15

Isabelle Jacques, ADM (GC-FIN)

I’m not sure that -- to see the link. What is your question?

Volume 25 (November 17, 2022), page 150 25-150-18

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 150 25-150-22

Isabelle Jacques, ADM (GC-FIN)

I mean all that that did was to extend the -- so under the PCMLTFA, the only requirement was -- nothing was changing in the Act other than to extend to crowdfunding platform and payment service provider the obligation to register if they were in position of property that were own by those designated people. So it was a very narrow application.

Volume 25 (November 17, 2022), page 150 25-150-27

Isabelle Jacques, ADM (GC-FIN)

Not to my knowledge, no.

Volume 25 (November 17, 2022), page 151 25-151-10

Isabelle Jacques, ADM (GC-FIN)

Well, no, not frustrating. I mean we’re trying to help -- you know, all departments were trying to help to find solutions.

Volume 25 (November 17, 2022), page 151 25-151-16

Isabelle Jacques, ADM (GC-FIN)

Well, under the -- well, it’s not to stop donations. That was not the purpose, but certainly -- I mean we didn’t have the tools to direct, you know, financial service providers to review their relationship with their clients or to freeze bank accounts, and certainly, we didn’t end the Act, the PS -- the Proceeds of Crime, Money Laundering, and Terrorist Financing Act did not apply to a crowdfunding platform and certain payments that was provided.

Volume 25 (November 17, 2022), page 151 25-151-22

Michael Sabia, Deputy Minister (GC-FIN)

I'm sure you're aware that FINTRAC does have enforcement authorities?

Volume 25 (November 17, 2022), page 152 25-152-02

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 152 25-152-08

Isabelle Jacques, ADM (GC-FIN)

Correct.

Volume 25 (November 17, 2022), page 152 25-152-12

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 152 25-152-17

Isabelle Jacques, ADM (GC-FIN)

That’s what I heard in the news.

Volume 25 (November 17, 2022), page 152 25-152-23

Isabelle Jacques, ADM (GC-FIN)

Again, I have no personal knowledge, but yes, I read that.

Volume 25 (November 17, 2022), page 152 25-152-26

Isabelle Jacques, ADM (GC-FIN)

I would imagine.

Volume 25 (November 17, 2022), page 153 25-153-03

Isabelle Jacques, ADM (GC-FIN)

I suppose so, yes.

Volume 25 (November 17, 2022), page 153 25-153-07

Isabelle Jacques, ADM (GC-FIN)

I don’t agree with that. I mean, people can make donations and could still make donations. The only restriction that were imposed was to support illegal activities.

Volume 25 (November 17, 2022), page 153 25-153-12

Isabelle Jacques, ADM (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 153 25-153-20

Michael Sabia, Deputy Minister (GC-FIN)

Yes, and the measures were never -- the application of the Emergencies Act was always from the date prospectively, not retrospectively.

Volume 25 (November 17, 2022), page 153 25-153-22

Michael Sabia, Deputy Minister (GC-FIN)

So that this only captures a donation that is going to then a declared illegal activity.

Volume 25 (November 17, 2022), page 153 25-153-26

Michael Sabia, Deputy Minister (GC-FIN)

I think the objective was to try to bring, as I said before, to a peaceable end a set of activities that were -- had then been declared illegal, and the objective was to try to bring that disruption, for all the reasons we discussed earlier this morning that I won't repeat -- to bring that to a peaceable and timely end. That was the objective.

Volume 25 (November 17, 2022), page 154 25-154-05

Isabelle Jacques, ADM (GC-FIN)

Well, at the time, you know, we didn’t know what was happening with TD Bank for sure, but it doesn’t mean that because there's let's say actions taken one place that money will not be funnelled through other ways. I mean, money is fungible.

Volume 25 (November 17, 2022), page 154 25-154-18

Michael Sabia, Deputy Minister (GC-FIN)

But that only applied in Ontario, and that’s the whole point. Because money's fungible, as Isabelle says, it can flow anywhere in the country, so one provincial government taking action doesn’t resolve the issue. The issue for the national government was trying to do this on a broad-based approach because that’s the way you contain a situation where money can flow anywhere, which it does all the time.

Volume 25 (November 17, 2022), page 154 25-154-28

Michael Sabia, Deputy Minister (GC-FIN)

I think it was just in the Province of Ontario, was my understanding. I may be -- I'm not a lawyer. I may be wrong about that, but I thought it was just -- with just application in Ontario.

Volume 25 (November 17, 2022), page 155 25-155-11

Rhys Mendes, ADM (GC-FIN)

So we tried to implicitly take account of that, but it's not explicitly modelled, but it is -- we assume, basically, a similar amount of re-routing is what we were seeing at Ambassador.

Volume 25 (November 17, 2022), page 155 25-155-28

Rhys Mendes, ADM (GC-FIN)

Yeah. So we took what we were seeing at Ambassador Bridge and scaled it by the amount of trade crossing at Coutts, again, a rough estimate, but -- so it doesn’t specifically explicitly model the re-routing at Coutts.

Volume 25 (November 17, 2022), page 156 25-156-07

Michael Sabia, Deputy Minister (GC-FIN)

I am not aware of that, and that is the first time that I have seen this document. And it seems like if you want to pursue that, it's best to pursue that with the Office of the Minister.

Volume 25 (November 17, 2022), page 157 25-157-19

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 158 25-158-10

Michael Sabia, Deputy Minister (GC-FIN)

Well, I think it's a shorter time period than that, because I think on February the 21st -- I'd have to check the date -- 21st or 22nd, the RCMP had indicated to the banks given the progress on ending the disruptions that all those accounts should be unfrozen. So it was really in a period from the coming into force of the Emergency Act on the 15th and say the 20th or 21st of February.

Volume 25 (November 17, 2022), page 158 25-158-14

Michael Sabia, Deputy Minister (GC-FIN)

Well, that's our understanding. I mean, we were not involved and don't individual level information here, but that is our understanding.

Volume 25 (November 17, 2022), page 158 25-158-26

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 159 25-159-07

Michael Sabia, Deputy Minister (GC-FIN)

Yes, that's correct. It would be much smaller we believe.

Volume 25 (November 17, 2022), page 159 25-159-13

Isabelle Jacques, ADM (GC-FIN)

That's accurate.

Volume 25 (November 17, 2022), page 160 25-160-08

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 160 25-160-23

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 160 25-160-28

Michael Sabia, Deputy Minister (GC-FIN)

No.

Volume 25 (November 17, 2022), page 161 25-161-04

Michael Sabia, Deputy Minister (GC-FIN)

Sure. In the U.S. legislation, since passed, they provide -- there had always been a certain level of subsidy for electric vehicles, and that level of subsidy one way or another was matched because they were quite small on the U.S. side and on the Canadian side. The proposal was a dramatic increase in the level of government subsidy for electric vehicles that were assembled only in the United States. That was -- it is a dramatic increase. So the issue for us was that if that remained the case, and that electric vehicle assembly was done on an American basis not a North American basis, then a Canadian industry would be at a very, very substantial disadvantage, and that in effect, we would either, as a much smaller country, have to match the magnitude of those subsidies or have, in effect, over time the automotive industry migrate into the United States. The automotive industry, you know, is an extremely important part of the Canadian economy, and an essential part of the central Canadian economy. So finding a -- working toward a North American approach to the assembly of electric vehicles was something that was very important to us and to those companies, and especially to autoworkers. So that's why the concern that was being expressed in the United States that Canada's no longer reliable raised such a serious issue for us because if that was the political perception, then our chances of being able to convince Washington to adopt a North American approach to this, which of course required a level of confidence that auto parts and cars could move across the border pretty seamlessly, if we were not successful in doing that then as I say there would be a very severe economic consequence for -- I mean, there are 500,000 workers in Canada directly and indirectly whose jobs depend on - - I mean, it's a very, very important sector.

Volume 25 (November 17, 2022), page 161 25-161-19

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 162 25-162-27

Michael Sabia, Deputy Minister (GC-FIN)

Yes.

Volume 25 (November 17, 2022), page 163 25-163-01

Rhys Mendes, ADM (GC-FIN)

Actually, yeah. There was evidence at the time that given that the semi-conductors had become scarce, there was a need to make choices about where and to which auto plants semi-conductors were being allocated. And my recollection is that they were disproportionately being allocated towards plants in the U.S., so it was affecting Canadian plants to a greater degree.

Volume 25 (November 17, 2022), page 163 25-163-08

Michael Sabia, Deputy Minister (GC-FIN)

Well, I think, because our concern at the time was not only with respect to the Ambassador Bridge, our concern at the time was that while a disruption may have ended in one place there was certainly the very live possibility that disruptions could emerge elsewhere, or in fact, at that same bridge. We had no level -- no reason to believe that those disruptions had come to an end, period, at the time, prior to the time of the Government's decision with respect to utilising the Emergencies Act. And indeed, it was -- that was one of the significant factors that there was no way of judging whether we could find ourselves in a situation of kind of rolling disruptions across various border points of entry. Had that occurred and had we been unable to manage that situation, I think the reaction in the United States, in the politically important State of Michigan and in the Federal Government, would have been to very seriously question Canada's ability to continue to act as a reliable trading partner.

Volume 25 (November 17, 2022), page 163 25-163-23

Rhys Mendes, ADM (GC-FIN)

Can I just add that, you know, in a situation where the Ambassador Bridge became blocked again you'll note that the estimates that Transport Canada did were for peak impacts in the first week of a disruption. Given that inventories had been drawn down during the period of disruption, the return to a disruption at the bridge would have put us more into, like, a second week situation where, based on our own past experience and discussions with Transport Canada, you know, that could reasonably be up to, like, three-and-a-half times the size of the impacts that we were discussing for the first week.

Volume 25 (November 17, 2022), page 164 25-164-13

Rhys Mendes, ADM (GC-FIN)

Yeah.

Volume 25 (November 17, 2022), page 164 25-164-25

Michael Sabia, Deputy Minister (GC-FIN)

Yeah. I'd just like to add something here. You know, we talk about 0.1, 0.2 and the impact on growth rates and this and that, and we talk about it in very antiseptic terms. But what we're really talking about here is, you know, and we were already experiencing it, but we're really talking about what does it mean 0.1, 0.2. It's not just a number. It means layoffs. It means lower incomes for workers. It means communities less able to count on certain companies. I mean, there are real human consequences to these numbers, whether it's an auto worker, or whether it's someone in the food sector in western Canada and their ability to pay mortgages, et cetera. I mean, we had a lot of good conversation today about those who were involved in the disruptions themselves, but there's also a dimension of this about, well, what are the rights of the people who suffered the economic consequences of this kind of disruption, because they are real and they are meaningful.

Volume 25 (November 17, 2022), page 164 25-164-26

Michael Sabia, Deputy Minister (GC-FIN)

Well, I think in an ideal world, these disruptions had already gone on. They varied, the length by where they were in the country, but these disruptions had already gone on for a reasonable period of time, so -- reasonably lengthy period of time. So our objective here was we were thinking about this in a, you know, a period of several days or a week, perhaps a bit more than a week. But what we very much wanted to avoid was what Rhys just said, particularly with the automotive sector, where once inventories were down, then the cost of this thing on a week-by-week basis would really escalate, and that's what we wanted to avoid. As it happened, we were able to avoid it, and therefore, the economic effects and the long-term scarring of all of this was, you know, was quite limited. But that's because it was ended quickly.

Volume 25 (November 17, 2022), page 165 25-165-21

Isabelle Jacques, ADM (GC-FIN)

Yeah, we had this -- we had discussion with Public Safety before the measures were enacted, yes.

Volume 25 (November 17, 2022), page 166 25-166-13

Isabelle Jacques, ADM (GC-FIN)

No, we did not.

Volume 25 (November 17, 2022), page 166 25-166-23

Michael Sabia, Deputy Minister (GC-FIN)

No, and it would have been inappropriate for us to.

Volume 25 (November 17, 2022), page 166 25-166-26

Michael Sabia, Deputy Minister (GC-FIN)

Because we should not have -- in the interests of protecting people's privacy, we should not have access to that information.

Volume 25 (November 17, 2022), page 167 25-167-01

Michael Sabia, Deputy Minister (GC-FIN)

It would be law enforcement.

Volume 25 (November 17, 2022), page 167 25-167-06

Michael Sabia, Deputy Minister (GC-FIN)

Law enforcement.

Volume 25 (November 17, 2022), page 167 25-167-08

Isabelle Jacques, ADM (GC-FIN)

No. Actually, we're provided the -- we have measures so that -- to ensure that information could be exchanged between the RCMP and financial institutions.

Volume 25 (November 17, 2022), page 167 25-167-18

Isabelle Jacques, ADM (GC-FIN)

That's -- yes.

Volume 25 (November 17, 2022), page 167 25-167-23

Isabelle Jacques, ADM (GC-FIN)

No.

Volume 25 (November 17, 2022), page 167 25-167-28

Isabelle Jacques, ADM (GC-FIN)

Well, I think banks and financial institutions on a regular basis use their algorithm to, you know, detect fraud, you know, for example, fraudulent activity in credit cards, or bank accounts even, you know, important withdrawals. So on a regular basis, they have tools to detect these activities and to freeze either the bank account or the card pending resolution of the inordinate activities on the account.

Volume 25 (November 17, 2022), page 168 25-168-12

Isabelle Jacques, ADM (GC-FIN)

That's correct.

Volume 25 (November 17, 2022), page 168 25-168-22