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Marquee Moments in Public Service History: The 2008 Financial Crisis (TRN4-V32)


This event recording features a discussion with a panel of senior public servants about the origins of the 2008 financial crisis, the conditions in Canada before it happened, and the government policy responses that allowed Canada to persevere through this challenging period.

Duration: 01:28:54

Published: January 31, 2023

Type: Video

Event: Marquee Moments in Public Service History: The 2008 Financial Crisis

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Marquee Moments in Public Service History: The 2008 Financial Crisis



Transcript: Marquee Moments in Public Service History: The 2008 Financial Crisis

[The CSPS logo appears. Taki Sarantakis is standing at a podium.]

Taki Sarantakis, President of the Canada School of Public Service:

Welcome everyone! I'm so happy to be here today before you to talk about the financial crisis of 2008 to 2011. There are often in the Government of Canada things that we do as officials and civil servants and members of Parliament and members of Cabinet that affect the lives of people every day in meaningful and powerful ways. But every once in a while, there are moments that are extraordinary.

Every once in a while, there are moments where the Civil Service of Canada rises to an occasion, and we use the power of a state, the power of the state in a very powerful way. And at the Canada School of Public Service, we have begun a new series called Marquee Moments, which allows us to look back on some of these moments and to examine them, to explore them. But most important, to learn from them, because a lot of crises have commonalities and a lot of the things that we do today, we learn from what we did yesterday and hopefully what we will do in the future. And I know among the crowd today, there are decision makers. There are past decision makers. But most particularly, we want to speak for the next hour and a half to the future decision makers, to the people who one day will find themselves with these with these great moments.

Our first marquee moment several months ago was the Syrian Refugee Crisis, which was a wonderful success. Today is the Financial Crisis, which we hope will also be as stimulating as the first our third marquee moment, which we will do in the spring, will be 9/11, and we will relive the events of that momentous day and how the Government of Canada and how the bureaucracy in the government of Canada dealt with that tragic but historic day.

With that, I'd like to introduce Nathalie Drouin, who is the Deputy Minister ofJustice for the Government of Canada and also the Deputy Attorney General. Nathalie is one of the great colleagues in the DM community. She joined us from the Government of Quebec and today she is introducing the Financial Crisis, because back in 2008 she had a critical role to play in the oversight of the banking sector. Nathalie?

Nathalie G. Drouin, Deputy Minister of Justice and Deputy Attorney General of Canada: Thank you, Taki, for that lovely introduction. Of course I am happy to be with you and especially to recall the historic moment that was the 2008 crisis. I would like to take this opportunity to commend you, Taki, for this initiative of marquee moments in the public service. I think celebrating our successes is a way to ensure Canadians' trust in our public institutions. Before I start, I would also like to acknowledge that we are gathered today on traditional Algonquin territory. Today, I will share with you my point of view, through the lens of my role at the time, in 2007. I will speak about some lessons learned and why, in my opinion, Canada was able, to a certain extent, to shield itself from some of the very negative effects of the crisis.

We're here today to talk about the Financial Crisis of 2008, but in fact the crisis actually began or at least firmly took place and took shape in Canada in the summer of 2007. The genesis that summer was the created turmoil in the United States that affected also our Canadian and set back commercial paper the famous ABCP market. For those of you unfamiliar with ABCP, I can take the rest of the hour and a half to try to explain it.

But in fact, I should say that there are banks or other financial institutions offer at that time short-term, 30 or, to 100 days depths instrument backed by a pool of underlying assets like mortgages, auto loans, credit cards and other type of debts. At the maturity of their paper, two things can happen. Investors could sell them or roll them for another term. In 2007, the non-banking market totalled approximately $35 billion CAD. There worry in 2007 was that the American subprime market, collapse already on the way, was contaminating the ABCP market. So in fact, if you do remember during the period from March to June 2007, increasing defaults in the U. S. subprime mortgages as already started to place strain on credit markets in the U.S..

The lack of understanding of the nature of the ABCP products, even from sophisticated investors, combined with the lack of transparency of the type of assets underlying ABCP really aggravated and created some worries. Many investors were not aware to what extent they were exposed to the American surprise. So losing confidence, many investors decided to sell products instead of rolling them for another term.

At the same time, across the industry, everyone was afraid. If clients and customers started to liquefy assets, then that would lead to a bigger crash. So in order to avoid a catastrophe, members of the industry decided to ask for a freeze of the market while they were trying to restructure the product. At that time I was head of the enforcement team at the Autorité des marchés financiers, Quebec's financial regulatory and oversight body. So I was responsible for enforcing the laws that govern Quebec's financial industry. And at one particular point I was in charge of the large-scale investigation of non-banking ABCP market activity. So working together with the Ontario Securities Commission and IIROC, the Investment Industry Regulatory Organization of Canada, we discovered that some industry participants knew what was going on, but withheld information from their clients. Hiding out, out of a fear of a mass sell-off, they actually continued their trading activities and exposed more of their clients.

This investigation led to one of the biggest regulatory settlement of the time. Eight financial institutions paid $138 million in penalties, investigation cost and implemented compliance measures.

Our speakers this afternoon will explain what happened next in the economic crisis, including the impacts on stock markets, companies, jobs, interest rates, and pension plans. They will also discuss what Canada did to push back and to support our economy, especially the action plan and the economic stimulus with all the measures that were proposed.

One of the takeaways of this financial crisis is that everything is connected. In order to fix a problem, all parties across the financial industry need to work together using the tool available. This means working together at all levels, both domestically and internationally. In fact, a number of post-crisis G20 financial subcommittees established at the time still exist today.

One bad move can trigger many more and this crisis was a wake-up call that really underscored the importance of, as I said before, collaboration, cooperation and connection between regulators. Systemic risk, that was the buzzword of the time started to draw attention, and I like the connections between markets. We all started keeping a close watch on what was going on elsewhere.

The crisis made us better at monitoring systemic risks, which is really a routine today. Following the crisis, many reforms were made across the banking, insurance and securities industries. Canada played a key role in man y G20 initiatives. This crisis was a financial one, but the insights we gain can be applied across the board. To successfully manage. To successfully manage a crisis, you need the trust of those affected.

And that trust must be earned through honesty, transparency and respect. When communicating during a crisis, you have to tell the truth, the ugly, and you have to tell it quickly. And let's be honest about what happened here in Canada. Yes, Canadian investors suffered heavily from financial losses, but at the same time, it could have been much worse. Canada was resilient.

We can and should be proud of our banking industry, including and especially the heavy regulations they faced, even if they complain from time to time. In the end, this is really what contributed to save us. We need to continue to push our banks and ensure we have a proper oversight in place. So I am really excited to hear today from our very experienced panelists, who were at the forefront of Canada's efforts and will speak first-hand about our approach and why it was a success.

Now, just before we hear from our panellists, we will all watch a short video, "Back in Time," which will take us back to a difficult but formative period earlier in our careers. I think this video will help start an interesting discussion with our seasoned panellists. Thank you! Enjoy the presentation!


[A video begins showing news media clips from the Financial Crisis.]

[Text appears:

"September 15, 2008

Lehman Brothers files for Bankruptcy"

"September 29, 2008

U. S. government financial bailout plan, TARP, rejected by Congress

DOW plunges 777.68 points, largest one-day drop in history"

"October 3, 2008

$7 billion TARP enacted

by President George Bush"]

Peter Mansbridge, CBC News, The National [clip]: The world's stock markets answered a desperate call today; Sell. They torpedoed into new territory as the financial crisis tightened its grip on the global economy.

[Text appears:

"October 6, 2002

Canada's TSX down 35%

One of its worst years on record"]

Peter Mansbridge, CBC News, The National [clip]: Here in Canada, the crisis and the impact on the economy has become the issue of the election campaign.

Unidentified speaker [clip]: You're going to probably be looking at Freedom 75 for me.

[Text appears:

"October 2008

Bank of Canada injects billions into financial system"

"Conservative party campaigns on 'spending management' to avoid an increased deficit.

"October 14, 2008

Conservative Party forms minority government

led by Stephen Harper"]

Unidentified CBC Election reporter [clip]: It's going to be a Conservative minority government.

Unidentified CBC Business reporter [clip]: Shrinking GDP. The U. S. economy declines for the first time since 2001, the U. S. GDP report has left many businesses here in Canada worried.

[Text appears:

"October 30, 2008

Central banks around the world cut interest rates to prevent global credit crisis from worsening"

"October, 2008"

"CMHC implements an insured mortgage purchase program, giving financial institutions more funds to keep lending."

"November 4, 2088

Barack Obama wins U. S. election"]

The Honourable Tony Clement, Industry Minister [clip]: We need a business plan and a business model that will work for the future. Barack Obama is saying that, Dalton McGuinty is saying that and the Prime Minister is saying that and we're proud of our Prime Minister.

[Text appears:

"November 26, 2008

Pressure mounts for stimulus plan"]

Gerard Kennedy, Liberal MPP [clip]: Will there be a plan for the economy? People want to hear about the pensions, they want to hear about the jobs.

[Text appears:

"November 27, 2008

Finance Minister Jim Flaherty releases fiscal update with no stimulus measures"

"Fiscal Update

No immediate economic stimulus spending

Projected small budget surplus for 2009-2010 changed to deficit by stimulus spending

Economy in recession now to April 2009"]

The Honourable Jim Flaherty, Minister of Finance [clip]: Canadians have a right to look to the government as an example. We have a responsibility to show restraint and respect for their money.

[Text appears:

"December, 2008

Economic crisis becomes Constitutional crisis"

"December 1, 2008

Party leaders form historic coalition to defeat Conservative government over economic crisis"

"December 4, 2008

Government saved: Governor General agrees to prorogue Parliament"]

Unidentified speaker [clip]: Parliament will be prorogued until March 3rd.

[Text appears:

"December 19, 2008

U. S. government bails out GM and Chrysler"

"Citibank on verge of collapse"]

The Honourable Jim Flaherty, Minister of Finance [clip]: The global economic situation has deteriorated further and faster than anyone predicted. The stimulus initiatives in Canada's Economic Action Plan are for this year and the next. There will be no long running or permanent deficits.

[Text appears:

"Canadian government presents stimulus budget announcing Economic Action Plan, tax cuts and $4 billion towards infrastructure."

"Estimated deficit of $34 billion for 2009."

"April 2, 2009

G20 countries agree to stimulate global economy to avoid depression"

"April 21, 2009

Bank of Canada reduces interest rate to 0.25$, as low as it could go to stimulate economy"

"June 1, 2009"

"Governments of Canada and Ontario announce bailout of nearly $14.5 billion for Chrysler and GM"]

The Right Honourable Stephen Harper, Prime Minister of Canada [clip]: Today's announcement is a regrettable, but necessary step to protect the Canadian economy during the worst global recession in half a century.

[Text appears:

"Government announces most of EAP funds have been committed"]

Rt. Hon. Stephen Harper [clip]: 80% of our plans funding has been committed and is being implemented across this country.


[Text appears:

"Opposition claims government is inflating the number of projects and jobs created"] 

Unidentified speaker [clip]: Only 12% of the projects were generating jobs, had shovels in the ground.

[Text appears:

September 14, 20009

Government proposes EI changes to provide additional benefits for workers.

Cost: $935 million]

The Honourable Diane Finley, Minister of Human Resources and Skills Development [clip]: Our Conservative government is proposing additional support to workers who have paid EI premiums for years while they look for jobs in our recovering economy.

[Text appears:

"400,000 jobs lost that year"]

Mark Carney, Governor of the Bank of Canada [clip]: We believe the economy will grow this quarter 1.3% on an annualized basis, and that rate of growth will pick up to the end of the year and into 2010.

[Text appears:

"Stimulus measures are working"


Over 30,000 Economic Action Plan projects completed"]

Rt. Hon. Stephen Harper [clip]: We are seeing stabilization and the early beginnings of a recovery. Canada's unemployment rate today is a full point, lower than it is in the United States. The first time that's happened in over 30 years.


[16:44 The video showing news media clips from the Financial Crisis ends.]

Taki Sarantakis: What a way to open a show. So as our panelists make their way up to the audience and watch that last step.

Richard Dicerni, retired Deputy Minister, Executive Council of Alberta; former Deputy Minister, Industry Canada: That was quite a show stealer.

Taki Sarantakis: Well, you can't top that. So as you can see, we went back in time to 2008 and the world was collapsing. General Motors was about to go bankrupt. Citibank was going to go bankrupt. Lehman Brothers did go bankrupt. Merrill Lynch. There were questions about at least two of Canada's big major banks. November 27th. The Government of Canada says no stimulus, everything is fine. So why don't we start with Mr. Stewart? Rob, where were you in in 2008? And tell us a little bit about why there was no stimulus in November of 2008.

Rob Stewart, Associate Deputy Minister and G7/G20/FSB Deputy for Canada, Department of Finance Canada: By all means, I was a lowly EX-03 hidden in the bowels of the Department of Finance. The deputy didn't know my name, but fortunately I had acquired some knowledge about financial markets and as it turned out, that was in pretty short supply at the time. So it was kind of a battlefield promotion situation. And as a matter of fact, Jeremy Rudin, who is now our Superintendent of Financial Institutions here today, and I were both promoted a week before Lehman fell, which is a moment we won't forget, because then the deputy knew my name. In fact, if I recount it and I won't go into details, the crises, as Natalie mentioned, did start well before 2008. But I think the hallmark and the answer to your question is how little we knew, how little we understood. We were very taken by surprise, by the way, in which the crisis came to pass, the depth, the dimensions of the crisis, its international character and I think on the economic front, likewise, because when we entered 2007 and if those of you who were around then will recall, we cut the GST. We cut the GST. It was cut. And so the economy was actually doing very well. It was stimulated. And so there was a prevailing mindset in the fall of 2007 going right into the update that we might actually skate past this. We might not be as badly affected as other countries.

Taki Sarantakis: Mr. Dicerni, where were you in 2008?

Richard Dicerni: I was the Deputy Minister of Industry Canada and in some ways we were at the cusp of the emerging crisis as auto sales were plummeting across North America that I remember specifically couple of weeks after the election being in Washington with the Minister and provincial minister of Economic Development and as we were walking down the halls of the Senate getting a call from the CEO of a major Canadian parts company saying you've got to do something because GM and Chrysler, which represent maybe, 50%, 55% of our business, is not paying our bills, which means that we are experiencing a serious cash flow. We cannot, in turn, pay our suppliers whatever you do with the U. S. You need to ensure that there's a covenant. Make sure that U. S. companies pay their Canadian suppliers. The additional small wrinkle is that when we were in Washington, the administration was in transition. So as we were talking to people in Treasury. The guys were packing their boxes and saying, I'll give you my best advice, but no commitment as to what the new incoming administration is going to do.

Taki Sarantakis: Mr. Forester, where were you in November 2008?

John Forster, retired Deputy Minister, Department of National Defence: I don't know. My therapist has blocked it out. [laughter]. No. I'm just kidding. Well, I was the ADM Policy at Infrastructure Canada. I worked with Taki, and Louis and Roger. I remember you and I had been participating in some of the preliminary discussions around the budget and what could be in a budget. And it was a very different moment. Usually as a public servant, when you go to a budget lockup and you come out and you've been given some funding for one of your programs, you're usually quite happy. And I remember you and I being in the lockup and coming back from that where the budget, we expected maybe a couple of billion dollars of infrastructure money to spend, and we had like about eight or $10 billion to spend in the next two years, this stimulus. I remember walking back with you sort of staring at each other. Our faces were kind of white and our jaws were dropped. Like, we are so rude.

Taki Sarantakis: Yaprak, you joined the story a little later.

Yaprak Baltacıoğlu, former Secretary to the Treasury Board: Yeah. In 2008, I was happily the Deputy Minister of Agriculture and Agrifood and I was having a wonderful time with fascinating issues. And I think April of 2009, the then clerk, Kevin Lynch, asked me to have breakfast with him. Now, you have to understand, Kevin would call you as a deputy if he needed something quick, and it would be a one-minute call. It would be right to the point, and it would work really well. If he wanted to talk to you longer, he would invite you to a meeting, which would be 15 minutes and it would be over. If your files were in trouble, he would call you to a Deputy Minister meeting for a longer period, and then that would be it. Except when he asked you to ingest anything with it, it was guaranteed something bigger was happening, like to your career. So, I'm kind of thinking I'm barely- I've been in agriculture for two years as a deputy. Where am I going to go? So it's breakfast on top of everything else and I'm not a morning person. So, 7AM, we're having breakfast and I figure before he says anything I should eat my eggs because I'm sure after that I'm not going to be able to eat anything. Well, Kevin looked at me and said, "Well, Prime Minister and I decided that you, we're going to shuffle you and you will be going to be the new Deputy Minister of Transport, Infrastructure and Communities." I looked at those eggs for a long time, like John Forester. I went home. Of course, you can't tell anybody you're going to be shuffled. And it took a long time, two months or something. And July 1st, I think I started as the Deputy at Transport and Infrastructure. What a ride for the next three and a half years.

Taki Sarantakis: Great. Rob, we had a little bit, we talked for a moment about how some of this stuff started in the arcane world of finance and spilled out. How does that start to happen? You have kind of bad mortgages in Florida, in Arizona. You have people starting to buy houses with no money down. You have people getting mortgages for more than the value of the house they're buying. How does that start and how does that spill over into Canada?

Rob Stewart: I think as many people know, the subprime mortgage lending that was going on in the United States is the root of many of the troubles. And it was accommodated, would probably be the best word, by the system in place at the time, which made it very easy to originate the mortgages and then sell them to other people. Structure them into securities and sell them to other people. And the discipline on the system was lacking, quite frankly, to spot that these were likely to be bad assets under certain circumstances. So, interest only mortgages and adjustable rate mortgages were all trouble waiting to happen. But the fundamental reality of the situation was that once they were distributed, they were widely distributed and into many hands, in particular banks around the world and that was the trigger. So in fact, I think, you know, it was a financial crisis because what it did was it froze the availability of credit at the end of the day through the banking system and from other investors to the economy. And it quite simply was a moment of truth for people about what was solvent. And that was just a sequence of events that was almost inevitable from the point in time that the Americans over-lent for houses in Florida and Arizona.

Taki Sarantakis: So people basically start becoming afraid that your credit's no good, your credit is no good, or what's backing your credit is no good. And all of a sudden, Chrysler and General Motors stopped paying their suppliers and parts companies. So everything is kind of very connected in today's world. And we can't kind of disaggregate ourselves from different things. So, Richard, tell us a little bit about you're Deputy Minister of Industry. A lot is going on in industry right now. You've got the Auto companies; you've got parts manufacturers. What else do you remember from that time? Just for a little bit of context?

Richard Dicerni: I think you can break it into two parts. Part one is leading up to the economic stimulus, where we at Industry Canada were extraordinarily focused on the auto sector. The reality was that all three North American companies, GM, Chrysler and Ford were extraordinarily badly managed companies. Ford simply didn't get into the crisis mode because they had leveraged themselves to the hilt by borrowing a tremendous amount of money before the credit markets shut down. They had leveraged their brand, their oval. So, they had accumulated credit that permitted them to continue paying for their operations. General Motors and Chrysler had not done that, and they were caught flat footed. They were basically making cars that people were not buying. So, dealers' lots were backing up and production lines had to stop and they didn't have any money. We started meeting on weekends to determine the approach we should take. Paul Boot was the associate and we agreed that he would take the lead and start being the interlocutor with the U. S. government, with the U. S. Obama transition team, with Finance and assembled within Industry Canada, a SWAT team made up of senior officials as well as hired guns that we retained through the very quick, quick work of Public Works at the time to facilitate us acquiring needed talent to get into the negotiations with GM and Chrysler, who were kind of saying, ah, gosh, it's not my fault. We just had a run of bad luck. People stopped buying our cars and there was this fundamental lack of understanding that they had, to paraphrase Forester, 'screwed up'

Taki Sarantakis: John. It's now January 27th. You're walking back from the budget lockup. You've got untold billions of dollars. You've got the Infrastructure Stimulus Fund at $4 billion. You've got the Green Infrastructure Fund at $1 billion. You've got this little thing called the G8 Infrastructure Fund. That nobody likes to talk about you've had a big hand in the Recreational Infrastructure Fund, but then there's some constraints on you, right? You didn't just get a wad of money. You got money that was two years. You got money that you were told starts today and under no circumstances goes beyond March 31st, 2011. How do you build the bridges in two years? How do you build buildings in two years? How do you build highways in two years?

John Forester: Well, actually, that money didn't start right away. It only started April 1st, and then you had two years. And in the infrastructure world, it's hard enough to approve projects and commit that many projects, even just to commit to those projects in two years. But the challenge was, as you say, you had to get the programs designed through Treasury Board, the projects approved, you had the leverage two-thirds dollars from provinces and municipalities and get the money all spent, the program wrapped up in two years and avoid going to jail.

Taki Sarantakis: So, mission impossible?

John Forester: No, I mean, basically we had to start from a total premise and I think one of the things that helped us was normally with infrastructure, you're weighing your objectives as clean water, safer roads, better transit. And these projects were designed with the objective of- the objective of the program is to get things moving, get money out the door, get projects going and get construction moving. The interesting thing was you had help. All of government kind of pull it together. It was really kind of an interesting experience where everybody criticizes the federal government for being slow, bureaucratic, risk averse, but in a crisis like this and I'm sure you'll find the same in your 9/11 one, where everybody's kind of focused together, Treasury Board is going, okay, how do we remove barriers? PCO is like, how do we remove barriers? Finance is helping. It's quite remarkable at how fast and nimble the federal government can be when it needs to be. So it was a question of getting a program designed through Treasury Board, and you saw that in the clip there by June, having to have at least a good chunk of it under underway.

Taki Sarantakis: So, one of the big objectives of the government at the time of the Economic Action Plan was jobs, jobs, jobs, obviously. And I think the specific commitment was that the Economic Action Plan would either create or protect in the order of 200,000 jobs. Yaprak and Richard, maybe talk to us a little bit about how you counted those jobs. Did you every time you found a shovel, you went to job, a job, job?

Yaprak Baltacıoğlu: Everybody thought that you found a shovel and attached two people to it and multiply it, then you'll get job numbers. We resisted using the project by project collecting job numbers from any of our projects. First of all.

Taki Sarantakis: So let me get this straight. You got gazillions of dollars to create jobs, but you resisted counting jobs?

Yaprak Baltacıoğlu: Well because at the same time, I think the Americans were a few months ahead of us and they actually were trying to collect job information per project, which turned into a complete incoherent calculations, because how do you calculate what a bridge project or a building project is going to, how many jobs it's going to create? What are you going to count? Are you going to count the actual engineers and the people who actually are working on the project or are there spinoff jobs? People who have the food truck by the construction, like there's no end to this. And also what we found is that people, well-meaning people, to get money, they would say they would inflate how much jobs a project was going to bring in. So there was nothing reliable. So we all resisted, I think at least in Infrastructure Programming we really resisted to not count jobs, but to defer to Finance that, if we do the right things as a government and with the provinces, with the municipalities, everybody puts out the money. There will be jobs created, economy-wide, and Finance will pick that up in the macro numbers, and we would report on that, which was easy to say, impossible to sustain, because every time we testified in any Standing Committee or our Ministers stood up, we got endless grief for 'how do you know that you're actually getting something for all these billions of dollars, you're basically shovelling out the door?' and in time it turned out that we created the jobs. But this whole deadline was pretty difficult for many of us for a long time.

Taki Sarantakis: Richard, what was your take on jobs? In addition to the role in the auto sector, you also got to fund during the course of this to deal with universities and knowledge and you also ostensibly had to count jobs.

Richard Dicerni:  Well, just specifically on that point, I do remember a meeting, and I think Louis Ranger was there too. Either Finance or a PCO circulator form, which deputies would sign to validate the number of jobs that would be created. I vaguely remember saying something to the effect of 'this cowboy ain't going to sign that form and you can do what you want'. It was a modelling number. So here are the inputs and whomever came up with that 200,000 fill your boots with the actual expenditures we're going to, because I thought it was extraordinarily important to maintain credibility and integrity in program delivery and this as Yaprak would say would have led us down a bunch of rabbit holes from which we would never recover. The budget stimulus had four specific mandates, activities for Industry Canada. One was the knowledge infrastructure plan, two billion to improve infrastructure in colleges and universities. It mandated Industry Canada to create the Federal Development Economic Agency for Southern Ontario. It established also a marquee tourism program to support major tourism activities that were bleeding because Americans weren't coming to visit some of our major tourist attractions.

And lastly, and this has not gotten much coverage, to work with the Business Development Bank to increase liquidity in the economy. As the video was saying and Rob was mentioning, credit facilities were tightening up around the world. GE Capital was pulling back. The banks were pulling back. So, the Government of Canada did not have a lot of instruments, apart from EDC and BDC, to directly intervene to enhance liquidity.

So, we worked closely with the Chair and the President of the BDC to encourage them to go higher on their risk profile in order to loan more money and if it meant for the bank to lose money during that year, that was a cost the government was prepared to bear.

One thing that made all of that work, and John was referring to it, public sentiment across the country was very supportive of governmental actions across the board which, yes, we had to be rigorous in our program administration, yes, we had to be transparent in how we delivered these programs, but generally speaking, we had the win at our backs in regards to the public wanting governments to intervene.

So, across the five programs that Industry Canada had stewardship over, I always felt that if we did a good job, we would be supported by public opinion.

Taki Sarantakis: John, one of the things that is important in this is that each new dollar or each new project that the Government of Canada undertakes is actually kind of new net economic activity, that you're not just kind of putting in a federal dollar for a dollar that would have been spent by a province or a municipality in any event.

So, there's a fancy word for that. It's called incremental, and we talk about that a lot in kind of budget circles in PCO.

Tell us a little bit about your relationship with the word incremental.

John Forster: You're really opening old wounds. Well, I mean, that's an understandable premise of the fund. There's no point in the federal government borrowing billions of dollars, going into debt, if you're simply going to replace it.

But at the same time, you have to have projects that are, the other famous word we had was, shovel-ready, and to be shovel-ready, they already would have had to have advanced them.

So, two points to that, one was the leverage rule. So, if it was a provincial project, they had to match it and if it was a municipal or university project, it was one-third.

And there was a lot of political pushback on that too, that the federal government should increase its share and we stuck pretty hard to that. So, right off the bat, you're at least generating a two-for-one contribution of the federal dollars you multiply.

Two, we have to work with the opponents to sort of say, right, the project needs to be complete, you have to be able to complete it within two years, but if it's already been funded, so you've already funded it in your budget, you have a funding commitment to it, then we wouldn't support it. So, it had to be something that was advanced and designed but they didn't have the money to proceed.

Taki Sarantakis: So, it had to be new net and quick and ready enough to fund, but not ready enough to actually do without the federal government. So, it was like impossible, impossible, and then impossible.

How did you test for that? I think if I remember right, you had a one-page application form and at the bottom of your one-page application form, you had something.

John Forster: Well, that was the other big change for the program and how we implemented it. You had to move from- infrastructure projects tended to have larger submissions and in this one, the test and the direction from the Minister at the time was it had to be one page.

Fortunately, we got him to agree to go from 8.5 x 11 to 8.5 x 14 which helped, but then he had to attest to the fact that it was incremental.

Taki Sarantakis: So, you were giving people-

John Forster: So, it's part of your audit frameworks and so on, you'd go in.

Taki Sarantakis: So, you were giving people hundreds of millions of dollars, in some cases, on the basis of a one-page application. How did you sleep?

John Forster: Well, first of all, we had a very good team and we brought Bryce Conrad in from Transport, Louis facilitated, and we created a whole group just for the stimulus, outside of our normal programs, and the use of technology ended up being quite critical. We moved to totally online application forms. Everything had to go in which facilitated a lot of reporting.

So, the other thing to remember is provinces and cities also had skin in the game, so they were in for an equal share. So, there was an element of trust with provincial governments, municipal governments, that they're also putting forward credible projects. You have an audit plan in place to do verification. They had to have third party verification as well.

Taki Sarantakis: So, you relied a lot on other orders of government.

John Forster: You had to in this case, otherwise you would never get there.

Taki Sarantakis: So, we're moving along now and it's April, May, June. The budget of January has passed. We saw from the video clip that there was a minority government. We saw that there was a government that kind of got the House prorogued and took a deep breath for three months, and then the House came back and it was hyper charged. It was a minority government but a minority on steroids.

Yaprak, you came into an interesting situation. So, you came into this world July 1st from Agriculture, and tell us a little bit about that because now the stimulus is announced, we're all off and running, but are things really being funded? Is the ground- are shovels really in the ground? We've committed 70%, 60%, 40%, but we see signs. We don't see activity. Tell us a little bit about that.

Yaprak Baltacıoğlu: And we didn't have the signs either. Signs came in after. I think that when I joined, there was amazing amount of work done, like the agreements with the provinces were done. That was unbelievable, anybody who runs any program from announcement to signature of all of these deals with the provinces down to the program project level. There was a lot of work already done.

I think when I came in, there was a need to do two things. One is that it was a politically hyper-charged file, well, because it was lots of money needed for lots of action quick, minority government, a Minister who had lots of energy and determination. We had Minister Baird as our Minister, and a workforce that was really small, Infrastructure Canada.

Really, when we started, well, when I started, we had a really good senior team and they had hired as many people they can hire, but we were, in the end, maybe 300 people in total. So, think about per person headcount. There was like hundreds of million dollars per employee that they had to get out the door in a good way.

We didn't have an Associate DM. John became the Associate DM a few months after I became the Deputy, and so my job was to kind of make sure that we could manage the relationship with the Minister which, at that moment, it was critical, manage the relationship with everybody around town because everybody was busy trying to do this together, and then basically support this amazing group of people who were doing outstanding work but they needed the road cleared for them.

So, that's basically what I came into and so that was that was my first couple months.

Taki Sarantakis: Richard, talk to us a little bit about your political context.

So, you had a minister from- you got a new minister and your Minister was an important minister in the Ontario government, so he had a lot of experience. He came in, again, minority government. Your Minister, I think, was tenuous in his own riding, like in terms of just kind of squeaking by and things like that.

What was kind of going on on your floor in terms of the interaction with you and ministers?

Richard Dicerni: First, I want to comment, though, on the incrementality question you raised, because incrementality and shovel-ready are a bit mutually exclusive, and it is like wanting to get to heaven without having to die.

So, you have to pick which one you want, and in terms of a knowledge infrastructure program, the concept of incrementality was a useful consideration to bear in mind within the context of a broader set of objectives that would permit us to achieve the objectives.

But if we had- I had been Deputy Minister of Education and Post-Secondary in Ontario, and I know the rigor that all provinces put into developing their post-secondary education program, and it would have been profoundly silly to disregard the tremendous work that had been done by provinces and post-secondary institutions for the fig leaf of incrementality.

Back to your question about ministers, working out an appropriate role for ministers, minister's offices, and the public service was one of the critical aspects of the implementation of the various programs that I mentioned.

I'll focus on two of them, the knowledge infrastructure and the marquee tourism, which was quite small. It was only $100 million but much more difficult to administer because the recipients were not mature institutions like post-secondary education, especially if you got to a tier 2 level.

From a management perspective, it was important to ensure that the swim lanes of accountability were respected between the body politic and the public service. We did not seek to over-program by coming up with specific lists but we were quite insistent that projects that did not meet criteria would not be fundable, and that applied to both the knowledge infrastructure as well as tourism.

Another aspect from a political consideration, and I'm talking minister here, is that when the program was initially announced, the Minister of Science and Technology, who had oversight over that sector, assumed that he would be the lead minister.

The Minister of Industry, a couple of weeks later, phones me from Cabinet and says, you know, I've been giving some thought and I think I should be more involved in the decision making around the knowledge infrastructure program. I said, fine, Minister, you're the senior minister. Have you passed that on to the Minister of State? No, no, why don't you do that? Then, why don't you work it out with the two chiefs of staff?

So, I provoke a meeting with the two chiefs of staff and they are somewhat akin to North and South Korea in the olden days, and they both have a perspective, what's mine is mine, what's yours is negotiable.

And we actually ended up having to carve out the country that one minister had responsibility for liaising with caucus with the provincial governments and doing the communications in five provinces. The other minister had the same kind of abilities for five other provinces, and they split the territories.

But from a public service perspective, it's important to understand, two ministers, they both wanted to contribute to this program, and secondly, it was important because they wanted to really contribute to ensure program integrity was respected.

At the end of the day, both the knowledge infrastructure and market tourism program, it worked well but there were some difficult moments which required speaking truth to power and committing to paper the reality that, Minister, if you want to do this and that, the program will not work. I would not be doing my job as a Deputy Minister if I did not formally advise you not to proceed down the path that some of your advisors wished to proceed.

You don't want to play the that card too often but, in this case, I remember specifically making that case to the Minister and he felt in hindsight that was the better call to make.

Taki Sarantakis: Yaprak. Ministers pounding the table, 'I want this', 'how dare you rank this lower than that', how did you deal with that?

Yaprak Baltacıoğlu: I think that the magic of what we had in Infrastructure was that everybody did their jobs to the fullest. Public Service did its job to the fullest, so did the ministers, so did the ministers' staff.

I think where I want to go back to is what Richard talked about, swim lanes. Like, whose jobs start where and where do they end?

So, I think that before I came, there was a bit of a tension between the Minister and the senior staff. Me coming in was seen as, I don't know, a different start.

Taki Sarantakis: Like a reset.

Yaprak Baltacıoğlu: A reset. So, the reset was that I remember talking it with my Chief of Staff who's here actually, Dominic [inaudible]. The first memo that came up for a decision for the Minister- and it definitely reflected- for the Minister of State, reflected the whole thing, well, dear Minister, we think you should do this, we recommend you should do this, but we understand you want to do something else, so here's how you could do it, but maybe you should really do the first thing. Like, it just went on and on, and please sign A or B.

And I remember calling Bryce Conrad to say, what is it we're recommending? He says, well, clearly we're recommending A, and I said, well, that's not very clear. He says, well, we're not trying to poke them in the eye. I said, you know what, change the memo, say we recommend you do this but if you want to do something else, here's another way, sign A or B.

I said to Dominic, wait 15 minutes, within 15 minutes, somebody is going to come and ask you to change the memo. Okay, maybe 20 minutes later, somebody comes and says, well, Deputy signed some very blunt memo, and Dominic just looked at them and said, well, she doesn't negotiate her advice, and they never negotiated our advice.

We pounded. We had a very healthy debate, I must say. Minister Baird respected our space, and you both, and so did all this new staff. He respected our space to give our advice. He didn't always take our advice but when he was wrong, he would always tell us, you were right or we were wrong.

So, it worked out fine, but it needed- institutionally, as the public service, we had to be clear what we were supposed to do.

Taki Sarantakis: Rob, tell us a little bit about your minister at the time.

So, your Minister was basically the face of the economic action plan. He was the one that kept talking about March 31st, 2011, that Canada entered the recession last and will come out of it first.

Talk to us a little bit about, like, did you guys brief him every week, every month? What was on his mind? What was preoccupying the Minister and the Deputy during these periods?

Rob Stewart: Well, to begin with, Minister Flaherty hated surprises, and we got lectured repeatedly about, I don't want to be woken up and told something, you know, that is a bad news surprise. So, we were always feeling very much under the gun to stay ahead on the curve.

But when it came to stimulus and to his conversion on the road to Damascus, if I can put it that way, it was really interesting because, and I was going to mention this in the context of incrementality, he had a refrain: targeted, timely, and temporary, and this was the frame within which the infrastructure spending along with tax relief, working income tax benefits, skills investment, there was a package of things and they were sequenced.

We thought about this pretty hard with the Minister and his growth council, which was an advisory group, that you needed to get the economy turned around. You needed to start with some quick hitting things and then the infrastructure would come on as people found projects to pursue, and I think it's a challenge we face today, right? That shovel-ready infrastructure isn't really that available.

And in the end, we did all kinds of infrastructure that isn't really long-term growth enhancing. It was mostly just about creating jobs and improving local welfare, but that was a whole sequence of things and he watched that very carefully.

And if you go back to the clips in the movie and other statements he made at that time, he was very determined to turn the economy around and then to get out of debt, and this was a very- the Conservative ethos, and it was a temporary turn for them to go into deep stimulus in line with the G20 plan, but then to take that, hopefully get the recovery to occur, which it did, much faster than it had done in prior recessions, and to get out of debt, and as we know, subsequent years, they became quite insistent on that.

Taki Sarantakis: So, it sounds like it was hard for him in the sense of here I am, priming the pump, so to speak, on the monetary side and the fiscal side, but that's not really who and what he was in terms of his philosophy vis a vis government, right?

Rob Stewart: I would agree, I would agree. Now, he didn't do the monetary side. I mean, that was David Dodge to begin with, thank goodness, and then Mark Carney to follow, both of whom followed what has now become the standard playbook which is to ease interest rates and to take further measures to try and stimulate credit availability and make sure people understand that inflation will stay low.

But he worked very closely with both of those governors and I would say that's another hallmark of the Minister, who was a taciturn man. I mean, he was not loquacious. He did not speak a lot. He listened well and then he delivered his decisions. He was a very experienced minister coming in and he worked really well with other colleagues, and I think the Prime Minister.

Richard Dicerni: One thing about the Minister of Finance, he was also the Member of Parliament for Oshawa with me and he understood the auto sector as well as anybody else did because it was his riding, and you sometimes look back at how decisions get made.

Paul Boothe was in Washington and for one of his meetings with officials and Tiff Macklem was there with Minister Flaherty, and Tiff bumps into Paul, what are you doing, talking about, look, I'm having dinner with Minister Flaherty, why don't you join us?

And Paul briefs him, bounces a few ideas off of him. The Minister of Finance says this is really good, I really like what you're doing, I'm going to phone Harper tomorrow morning and tell him that I'm on board for the package. Had it not been for that chance meeting between Paul and Tiff, I think at the end of the day, we would have got there at the same place but perhaps not as fast, and it helped a great deal.

Luck often has- you know, we're all very smart at doing things. Fortunately, we often have, as a fellow traveller, luck.

Taki Sarantakis: That's wonderful.

So, now, Rob was talking a moment ago, and John talked about this a little earlier, about how we weren't doing traditional things. We were investing to create jobs and we weren't necessary looking at the underlying infrastructure.

So, you're the Deputy Minister of Industry Canada, and Industry Canada historically, vis à vis colleges, well, not even colleges but mostly universities, has done research to the extent that Industry Canada would fund universities. It would be for cutting edge research in Canada, and now you've got the Knowledge Infrastructure Fund.

And you're not funding cutting edge research, right? You're funding infrastructure that's kind of tangential in some ways. You're funding- I think you did a cafeteria, I think you did some student centres.

John, same on your end, like there was, you know, the clearly economic projects like highways and that but there's things like community centres. There's things that some people would say aren't really infrastructure and they're kind of taking the federal government down other paths.

How would you kind of react to some of those statements, Richard?

Richard Dicerni: When you're trying to put $2 billion out in, I don't know, I think, six months- we did two rounds with provinces from April to October, and basically, you had commitments of $2 billion coming from a department that, as you alluded to, was mostly a policy department. We did not have any infrastructure to deal with program delivery.

Fortunately, we had two other things. We had, as a department, invested mightily in talent management. We knew who the problem solvers were versus the problem spotters. We knew what the bench strength was. We knew who could deliver. So, we were able to put together SWAT teams.

Secondly, we invested a lot in network development. People were credible. Dave Maloney was extraordinarily credible with the auto sector. Ian Stewart was extraordinarily credible with the post-secondary community and with the provinces. If you have these two assets, you are able to get a lot of work done.

There may have been a cafeteria that snuck in but for every cafeteria, there was ten labs being built, there was new buildings being established throughout the country, and if there had been too many cafeterias, I'm pretty sure some wise auditor in the OAG's office would have flagged it.

I think we were very rigorous in our criteria application, in part because we are also accountable to provincial governments. We had to make sure the projects we approved were signed off by federal politicians and provincial politicians.

So, there may have been some cafeterias, but fundamentally it was an investment in much needed infrastructure upgrades.

Taki Sarantakis: John?

John Forster: Well, two things. The big thrust of our program was provincial or municipal infrastructure. So, provinces are putting in half dollar, municipalities are putting in one-third dollar. So, there's a certain rigor there as well. If it's a municipal project, they've got to get the province onside as well to match it. So, there's an inherent rigor.

The higher risk ones for us were in a couple of provinces. We had to do non-profit projects from NGOs, could have been food banks, arts and culture, we had humane societies as I recall.

Yaprak Baltacıoğlu: Religious organizations.

Forster: Yeah, and we had some pretty interesting debates with the minister's office and the Minister about that because it took us into a whole different realm of risk.

If you're on a one-page application and you're working with two levels of government who are matching your dollars, there's a certain rigor that comes with that. You move into the non-profit world, do they have their money? Do they have the capability to deliver it? Can they build it in two years?

And that's where our risk was, we had defined categories of projects and we had lots of good debates about what would be in and what would be out, and with the non-profits, we ended up going beyond the one-pager. They had to give us a lot more information to do that.

So, fortunately, it wasn't right across all provinces but there were a few like that.

Yaprak Baltacıoğlu: This kind of connects to something that is applicable to today. I think that we knew we were taking risks because we had no option to take risks. We had to get all these money and projects out. What really helped us was, at the political level, I think even the Prime Minister got up and said, we're going to get this done, we may make some mistakes but that's okay, this is what we're doing.

The fact that at the political level, we had the cover from Prime Minister that certain things may not work as well and we may make mistakes, somehow invigorated the risk-taking at the government's ranks. We ended up not making so many mistakes.

Like, you saw it on the video, like we did actually get a gold star from the Auditor General which doesn't normally happen, but we got it because I think that there was a level of relief that, okay, we're going to do our best, we're going to be innovative, and It's okay, PM said that it's fine. So, it kind of gave us almost like a relief valve for not making so many mistakes.

Taki Sarantakis: So, we're going to shift to the AG report in a couple of minutes.

I want to talk a little bit about reporting during all this because you weren't just delivering stimulus and infrastructure and knowledge infrastructure funds, you were constantly reporting.

So, Rob, talk to us a little bit about one of the things that kept the government alive, ironically, was a condition of the opposition that the government report- I think it was quarterly reports on Canada's economic action plan, and the government itself, at first, hated this but then embraced it, and the opposition that came up with this after a while hated it.

Tell us a little bit about the quarterly updates.

Rob Stewart: The quarterly updates, they were painful, I think, for many of the people, but I think you're right. In fact, the current Deputy of Finance, Paul Rochon, said this to me a couple of days ago, that the reports themselves were the discipline and the accountability necessary to really drive these programs forward, that having to come to terms with what had been done in a 90-day horizon, because they were quarterly, was a very important discipline on the system to track and report and make sure that, you know, things were being counted as well as they could be counted, granted that, you know, shovels and people's hands aren't easy to come up with.

But I think long before the government became so enamoured of those signs and saw their virtue, they thought the reports were something they really were taking advantage of with Canadians.

Taki Sarantakis: So, we had the quarterly economic reports, one mode of oversight. Standing committees, Mr. Forster, talk to us a little bit about that.

John Forster: Okay, just before that, just on reporting, I can't emphasize this enough. So, it's one thing, you're creating the programs, you've got to get through Treasury Board, get it launched, negotiate with the provinces- and kudos to Bryce Conrad and his guys, like he had these amazing young staff.

Because we started from the beginning, knowing that we're going to get asked 84 questions a day, where's this, where's that, where are you on this?

And the design of the form and the whole program was built around a system that would allow us to do real-time reporting because we knew- and we had to turn it out. We would get ten questions a day, and if you don't have the data and the facts to answer that, then the myths win, right? The myths win, no shovels, no jobs, nothing's happening, and you have the data to substantiate it, whether it's your minister's office or in Parliament or standing committees.

But you also had our friends in Finance doing their quarterly report. We had the Parliamentary Budget Officer doing, what, quarterly? Yeah, quarterly reports, we would have to go through with him. The Auditor General did two audits, you had the Standing Committee.

Taki Sarantakis: Treasury Board had a template for you to fill out once a month.

John Forster: Yeah, so that system and designing it- and I know it doesn't sound like a big deal now, online system, what we do, but in 2008, it was a little not as common, and making sure the whole program was designed to be able to feed that so that you can draw the information out was really critical.

Taki Sarantakis: So, this was inordinately transparent. Again, you had quarterly reports, you had a dedicated EAP website, which again, doesn't sound like a big deal now but it was a very big deal in 2008. We had geomapping which was the first time the Government of Canada actually started saying, here, take a cursor and go over this map and you can see what's going on in your community. You saw projects by types. You had signs, God knows, we had signs. We had signs, everywhere a sign as the song goes. You had the Parliamentary Budget Officer.

And so, some people used to joke that it was harder to report on the economic action plan than it was to implement the economic action plan. How did you find that? Did you spend- how much time did you guys spend in committees?

Yaprak Baltacıoğlu: At one point, I think it was before or after Christmas. I can't remember because it's a blur. In a three-week span, we went to committee nine times and I think John and I basically spent our whole time studying for committee, and that's what we did.

And in the end, I think they ran out of questions at one point and they sent us home like 15 minutes early. It was necessary. We had to be present. We had to show because it was taxpayers' money. It was, you know, country's economy. People were counting on us so we had to actually go do that. Yes, we didn't probably enjoy doing it as much or I'm sure nobody really like doing all this reporting but it had to be transparent.

And actually, in the longer run, at the outset, we got a lot of grief because we couldn't show as much progress, but towards the end, those reports were invaluable. One thing for the future learning thing, the way we organized ourselves and infrastructure was we had like an A-Team and a B-team almost. Like, I think Taki was the policy ADM and he did-

Taki Sarantakis: I was the B-team.

Yaprak Baltacıoğlu: Well, I don't know, it's A, B, team 1, team 2.

But one of the teams just focused on reporting all of the endless questions we got from the House, communications, signs reporting, this and that, like writing MCs, we ended up writing an MC a week and a couple of Treasury Board submissions a week for years, and that team kind of did the firefighting.

Bryce Conrad and his team just basically focused, not that they weren't firefighting, but they focused on the business end in terms of running the projects, getting the projects approved, because if we hadn't separated that thoughtfully, I think that the whole program would have been at risk, because everybody always would drop the important to chase your tail because somebody from someplace Question Period's card has to be written. So, we kind of lined up the work which was wise.

Taki Sarantakis: Richard, what was your experience with oversight/reporting?

Richard Dicerni: I thought it's essential and I never had any problems fundamentally with it or irritated at the multiplicity of forms, but at the end of the day, the need for accountability and transparency, and that was across the board. It included BDC.

I would have, every two weeks, a long discussion meeting with the President of BDC to review their report in terms of how much additional money they were loaning out because as I said before, putting more money, more liquidity into the economy in those first six, seven months was essential in part because all of those great infrastructure projects you're talking about were not going to be, out of the gate, generating economic activity during that January to July period, because they were getting approved, they were gradually coming along. So, I never had any problems.

It goes back to lines of accountability between the public service and the ministers' offices, and there were a number of ministers and a number of ministerial assistants who were seeking to be extraordinarily helpful and were very generous with their advice, and one had to balance.

And actually, all those various reports were helpful because we could say to people in the political office, I have to report on this either in front of a parliamentary committee or to the OAG and unless you're prepared to put your name and have the Minister commit in writing, I'm not going to do this.

So, all those transparency mechanisms were helpful to create an ally in getting the job done.

Taki Sarantakis: So, our story began in Florida, in Arizona, and other places with mortgages and bad commercial paper, and let's kind of finish it now in our last few minutes with the report of the Auditor General.

So, we saw the last couple of clips in the video. It is relatively rare to get a good audit from the Auditor General. Talk to us a little bit about that process, maybe Yaprak, if you could kick us off.

Yaprak Baltacıoğlu: We knew we were going to be audited. Everybody actually should run all programs knowing you're going to be audited, but in ours, we knew we could be audited in no time and there were a number of things done that was very thoughtful. I think early on, there was a clarification with the Auditor General herself that when she came to audit, this is what she would be looking at. So, that defined what the audit universe was.

The second thing was that I think when we designed the program, we were extremely careful. Government was careful about the objectives. It had two objectives and that's what it was. So, every time the auditor will come, how about like the world peace, and we'll say, well, that's not part of the program, you know, how about clean water, we'll say, well, you know, no, it's about stimulus, that's not part of the program.

So, there was really none of that soft, what are those, performance audits risks around it, and our program shop designed everything that was needed, working with our own internal auditors. We knew that we were going to be audited. I think that before they showed up, we had everything organized. So, we were bound to get a gold star because we were auditing ourselves from day one and plus, we had, like, the most amazing team of program officers and amazing leadership that actually ran this thing.

Taki Sarantakis: John?

John Forster: I don't have too much else to add.

Taki Sarantakis: You were actually audited twice.

John Forster: Twice on the stimulus, yeah.

Taki Sarantakis: And you were being audited just at the beginning of the program.

Yaprak Baltacıoğlu: Yeah. I think at one point didn't we have more auditors than the program officers at one point?

John Forster: They did one audit each year and PBO was doing quarterly reports as well.

Taki Sarantakis: So, one last word for each of you. There are current and future decision makers in the audience. Maybe give us a closing word of wisdom for each of them. Rob?

Rob Stewart: Me first? I think I'll just focus on the financial side of this. I mean, the economic side, actually, it's a recipe we're still working with. Be ready. This is the Jim Flaherty message. Think about the contingencies that can happen, have a plan, and then be ready to execute the plan and execute it forcefully, and I think that's the single most important point which is that we tend to think too much about the positive or the hope that things won't get as bad as they could get, and therefore, our first and second reactions tend to be quite modest.

And so, in the case of a financial crisis where confidence is the issue, liquidity is the first order issue but confidence is the underlying issue, you have to overdo the reaction.

And it's something that, actually, the Minister said at the time when he was formulating the budget in January 2009. He said we have to overdo this because if people don't think we're doing too much, it won't work.

Taki Sarantakis: John?

John Forster: Just one other point I would add in closing, is the importance of hiring and empowering and trusting good people. We had really young team and they were given a lot of scope and responsibility. I remember in one meeting we were looking at a project the Royal Ontario Museum wanted to do and the project officer was saying, 'Yeah, but it had all these problems with it'. So I phoned- the guy I phoned ended up being the publisher of The Globe Mail, happened to be on the board of the ROM. And I've got this junior 26-year-old talking to the publisher of the national newspaper. I'm going, 'oh, my God' and actually, he did great and handled it well and did a terrific job and nowhere else would he have gotten kind of that exposure and experience. So it was, you know, higher power. A good team really helped out.

Taki Sarantakis: Yaprak.

Yaprak Baltacıoğlu: I just was going to say it's people basically. I wish we could all sit here and take amazing credit about all the wonderful things that has been done. I think we did our jobs, but actually the people who made it happen is the team. So invest in your people, empower them. I think that these things should be only marquee moments for when it's crisis. Given that we're capable of doing this, I think we can do it more often so it doesn't need a crisis to rally the government.

Taki Sarantakis: And Richard, close us out.

Richard Dicerni: I started with this and I'll end with this. The importance of talent management. You never know when a crisis will occur. If you want to be, as Rob says, ready, you can only be as ready as the talent you have assembled. If I look back, the talent that team, that the executive team we had in '09, six of these individuals have gone on to become Deputy Ministers. It is the importance of not just an ADM, DG at the director level, the EX-01s, 2s, 3s, two three to really, really know what the talent is that you have and be able to stretch them. You can only delegate to them if you know what they're capable of doing and if they need an opportunity to enhance their skill set, obviously go to the Canada School of Public Service to enhance your abilities.

Taki Sarantakis: Or Ivy.

Richard Dicerni: Talent management would be one. My second one is never be hostage to information that flows from within an organization. Too often we are captured by what's happening inside to enhance and multiply the external networking will always pay dividends in a crisis.

Taki Sarantakis: Thank you. Our closing speaker is Mr. Louis Ranger, the former Deputy Minister of Transport, Infrastructure and Communities and unlike me, he will not trip on his way out.

Well, who knows...

Louis Ranger (Former Deputy Minister of Transport, Infrastructure and Communities): Good afternoon. When I got here at Quarter to Four, there was a big welcoming committee. All smiles. And I quickly realized that the Taki had reserved a role for me. This afternoon I didn't know when I came here that I would be asked to try to have some words of wisdom to close the session. So I will obviously improvise. And I'm a poor listener, so I'm not I am going to do justice to my colleagues here and former colleagues. But I when I look back at my own career, I had the- either the privilege or misfortune of being involved in probably the two most significant and marquee moments in the first decade of the 21st century.

With Margaret, I was up to my ears in the 911 crisis, and sure enough, I was also up to my ears in the 2008-2009 financial crisis. A year earlier, I had been called to the clerk's office and asked if I would accept to be the head of two departments, basically Transport Canada and Infrastructure Canada. And I briefly said, 'Look, I've been at Transport for a long time, so I can do that before Christmas- before breakfast and I can deal with Infrastructure Canada where all the money is. And I can do this if there's no crisis. And being a transportation person, I was thinking of, you know, 747 crashing at Pearson Airport or a Lac-Mégantic horrific event, where by definition, you're involved in the investigation and so on. But sure enough, I did not know that the crisis that I would be facing or involved in would be a financial crisis. As I look back at how I responded to both crises.

First, a very deep feeling of not being in control of the situation. That certainly was true for 9/11 on that day, but was true also later for the financial crisis. Situations that are messy by definition and that are bigger than your department, bigger than your government, bigger than your country, actually and in the middle of all that, doing your damn best to make a contribution.

But the single most important challenge is not to put together instantly a plan and deal with the substantive issues. But the bigger challenge is by far to deal with the rest of the town, with the rest of the town, to deal, to communicate that plan to central agencies and all the other departments that need to know. To deal, obviously, with political leaders and the processes that come with that, having to appear before all the Standing Committees in an environment where everybody in times of crisis, everybody has a view on how things should be fixed and surely try to say, I have a 5-point plan and we're going to stick to that.  And you go back to your department and say, 'Better work more on that'.  But basically trying to hold the fort. And as I look back and without really knowing it as it happens.

You realize that as a senior manager, how well you are prepared by government to face extraordinary events. My school was the public service. I had the good fortune of being trained by mentors who never recognized they were mentors, and I certainly recognized me as mentee, but just by observation, watching how others manage crises. We also realized as a senior manager that you're surrounded by such capable people. And there's three names that I have to mention. Did you see how pointed the questions from Taki were? Because Taki was right in the middle of it. Taki was a key player in that crisis, of course, John Forster and Bryce Conrad. Three individuals who didn't know this was coming and yet prove to the world that they were able to manage such difficult situations and in as much as we talk about those painful processes, the quarterly reports, the appearing before Standing Committees overcommitting to the Senate Committee one time that you promised you have more, a more complete report next week on thousands of projects. And of course, when you report back to the Senate, it has to be in both, official languages. And you promised this by 3:00 in seven days from now. Just learning the hard way. So, look, in no particular order, just lessons learned or things that you remember. John Forster, talked about how effectively people can work together.

It's amazing how government can reach quick decisions when there's a will, there's a way. In as much as you can complain about bureaucracy and processes, I tell you, in times of crisis, when decisions are needed. Boy, is the system ever efficient.

Collegiality; there's no doubt that certainly in the DM community this was remarkable, incredible support, including speaking truth to power. And I think Richard and I were remembered many years after for having fought against this idea of measuring the number of jobs created based on a model. And as I resisted that, I was driving home at night. I live in Quebec and there was always a road sign saying 'Detour'.

And you realize that this is creating 13.2 jobs because everybody else was doing it and we were resisting that. And the strong support, the personnel that you get. It's a big family and as you attend those dozens of meetings, people care and say, 'How are you doing, Louis?' 'Did you sleep well?' and I would say 'I sleep like a baby. I wake up every 2 hours and crying'.


I want to compliment Taki for the very pointed questions he had on the political environment. I'm not going to go over that, but that is a very important dimension not to forget and difficult by any measure. So it does take very particular skills and everybody knows that Yaprak did an incredible job. Speaking as economists for 15 seconds. Yes. Milton Friedman did say that, you know, when times you know, you do inject money in the economy and that stimulates the economy, that's I'm sure that's still true fundamentally. But whether infrastructure projects is the right instrument to make this happen instantly is another story. In an environment where normally a good large infrastructure project can take 10 to 15 years.

Once you go to an environmental assessment and even when you decide to go ahead the procurement process easily takes a year to 18 months. So even if you put everything on a fast track, these do take time and whether those are the best instruments to stimulate the economy in times of crisis is a more than an academic question.

Audits. Getting the Auditor General involved. My exit interview when I left government on the last day of June because Taki started on July 1st was with the Auditor General. In as much as we got involved upfront, she became in her own way an ally. And when we got one of the most favourable audits, certainty, far better than we ever expected for reasons that Yaprak explained.

So I think I'm supposed to say thank you to our four speakers. It was really interesting to bring back all those memories. Thank you, Taki, for all those loaded questions.

Taki Sarantakis: Thank you.

Louis Ranger: And thank you for joining us this afternoon.

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