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Five things we learned this week when McKinsey came to Ottawa

News

The first week back in Ottawa after the holidays for MPs began and ended with non-stop chatter about the consulting firm McKinsey and Company.

Conservative leader Pierre Poilievre kicked off question period on Monday with five straight questions about McKinsey and cronyism and, on Wednesday, the former ambassador to China Dominic Barton appeared at a House of Commons committee to push back on these allegations.

As a former executive at McKinsey, Barton has been the subject of opposition attacks about the eye-popping amount of money the government spent on consulting contracts last year. Here’s five things we learned this week in Ottawa.

1. Barton says Trudeau isn’t one of his 50 closest friends

The most memorable exchange of the week came between Barton and Liberal MP Anthony Housefather when the two tried to pin down the true nature of friendship.

The most frequent line of attack this week from the Conservatives was that the McKinsey contracts represented cronyism, based on Barton’s relationship with Prime Minister Justin Trudeau. Barton said he had no involvement in the McKinsey contracts with the government and denied even being friends with Trudeau.

In an exchange with a Conservative MP, Barton volunteered the information that he didn’t have Trudeau’s phone number and that he had never been in a room alone with him.

Later, Housefather drilled down ever deeper, in the prosecutorial manner of House committees, giving viewers one of the oddest exchanges of the day.

“Would you say he’s one of your five best friends?”

“No.”

“One of your 10 best friends?”

“No.”

“One of your 25 best friends?”

“No.”

“One of your 50 best friends?”

“No.”

Barton also admitted that he had never been to dinner with Trudeau or exercised with him.

2. Barton says he had no involvement in obtaining government contracts

In his opening statement, Barton denied any knowledge of the McKinsey contracts with the government and repeatedly argued that the dollar value of the contract was a drop in the bucket for both the government and McKinsey.

“With all respect, I love Canada, I’m from Canada. Canada does not move the dial,” said Barton.

3. McKinsey is the focus, not other consulting firms

In question period, Poilievre has touted the full, $15 billion value of the government’s business with contractors in 2021-2022 and then pivoted to McKinsey and accusations of cronyism.

The only problem? At most, the McKinsey contracts total about $100 million and are dwarfed by contracts with other consulting firms like Deloitte, PwC, and KPMG.

NDP MP Gord Johns argued that, since some of the contracts go back to the years of the Harper government, the Conservatives are not inclined to study them.

“Why do you think this committee is not looking at all of those companies? Do you actually think they really want to get to the bottom of the outsourcing issue and how to stop it? Because right now we’re seeing millionaires getting richer on contracts off the public tax dollar,” said Johns.

4. Conservatives are not shy about attacking big business

One thing has become clear in the first week of this sitting of the House of Commons: the Conservatives are not afraid to take shots at big business.

Poilievre relentlessly hammered McKinsey during question period, and in a speech addressed directly to Trudeau on Sunday, he tied the consulting firm to the opioid crisis and referred to the companies involved in it as “scumbags.”

“You favoured policies that flooded our streets with heroin and fentanyl and you tied the hands of our police and prevented them from doing anything about it. You failed to hold the scumbag corporations who brought the drugs to our streets accountable. Companies like McKinsey, Mr. Trudeau,” said Poilievre.

In fact, the rhetoric of Poilievre and the Conservative MPs at committee was sometimes indistinguishable from that of the NDP MPs as they took turns blasting consulting firms.

“We know McKinsey’s strengths, that they’re able to swing sole source contracts and get money out of Canadians, that their weaknesses are scandal after scandal. And we know that McKinsey sees any crisis, whether it be the opioid crisis or a pandemic, as an opportunity,” said Johns, the NDP MP.

5. Barton suggested a backchannel to China

In trying to deflect accusations that he was appointed Canada’s ambassador to China because he had a cozy relationship with Trudeau, Barton explained the appointment came out of early discussions about how to free Michael Spavor and Michael Kovrig from detention in China.

Barton said he told Ian Shugart, then the clerk of the Privy Council, that Canada needed to get a dialogue going with China.

“I said, ‘let’s try a back channel group to try and get a communication going.’ And that’s the first time I had an interaction with the prime minister on that, which is, how would we do it? We’d have to set this up at the G20,” said Barton.

At the time, Barton said the situation was so bad that there was no communication with China and the government was casting about for ideas.

“It’s the greatest honour of my life to (have been the ambassador), but I did not volunteer to do it,” said Barton.

Barton set to appear at committee as it studies eye-popping consultant contracts

News

If there was any doubt that the government’s penchant for expensive consultant contracts was going to dominate debate in the House of Commons, Conservative leader Pierre Poilievre put it to rest with his first words during question period this week.

“There’s been $15 billion spent on contracts. How many of them went to McKinsey?” said Poilievre, in French, during his first question of the new sitting.

The whopping price tag of $15 billion for the 2021-2022 fiscal year was uncovered by a research team at Carleton University which has been digging through hundreds of thousands of government contracts.

Dominic Barton, the government’s former ambassador to China who had previously served as the global managing director of McKinsey, the management consulting firm, has become a prime target for the opposition’s accusations of crony-ism. McKinsey has received more than $100 million in contracts since the Liberal government came to power in 2015, according to government documents.

Today, Barton will be the sole witness at a House of Commons committee hearing that is trying to make sense of the huge expenditure on consultants. While the committee grills Barton, opposition politicians will likely keep the issue in the spotlight down the road at the House of Commons as they have been doing all week.

“The (prime minister) has always had trouble defining the middle class, now we know his definition: It’s his friends who make $1,500 an hour as high-priced consultants over at McKinsey, where his personal friend Dominic Barton was the boss,” said Poilievre, during question period on Monday. “How much did his government give McKinsey? How much?”

Poilievre stuck with his line of questioning on McKinsey for his first five questions on Monday, while Prime Minister Justin Trudeau parried the interrogation by talking about the government’s signature initiatives, like the Canada Child Benefit and the recently unveiled dental benefit. On Tuesday, Poilievre kicked off question period with another two questions about contracts for McKinsey.

For the Conservative Party, it’s an issue that allows them to simultaneously hit the Liberals on the government’s fiscal largesse and make allegations of corruption, meaning it has the potential to dominate the current Parliamentary sitting while the committee studies the contracts.

Some experts say that it’s perfectly reasonable for a government to use consulting firms, but that it has to represent some kind of savings on the bottom line.

“There are legitimate situations where you’re going to need outside consultants,” said Aaron Wudrick, the director of the domestic policy program at the Macdonald-Laurier Institute.

“What is really kind of mind-blowing here is that we’re basically outsourcing decisions to experts, but then we’re also building capacity in-house at the same time,” said Wudrick, who referred to the massive hiring boom in the federal public service in the last two years. “What the government has to answer for is why they are doing both.”

At a previous committee hearing on the issue on Monday, Carleton University professor Amanda Clarke said by contracting work to non-government firms, it’s possible the public service will lack vital knowledge about programs the government is administering.

“Where we start to see the gutting of the state’s knowledge is the more that your relationship with service users or with stakeholders or with your program is mediated by a contracted party, the less you know about your own operations,” said Clarke. “So governments are actually becoming dumber the more they contract, which has this vicious cycle of needing to contract more because we don’t have the knowledge.”

One former Liberal staffer said the McKinsey controversy had the potential to grow into a big problem for the government.

“By not getting all the bad news out at once—comms 101—the government was put on the defensive,” wrote Eliot Hughes, who had previously worked as an adviser to former finance minister Bill Morneau before joining Summa Strategies. “If they don’t get control of these brush fires or better still, stop setting them in the first place, then they are the ones who will get burned.”

Wudrick agreed that it could be a politically damaging blindspot for the government.

“It’s a pattern. I’m not even accusing them of doing something deliberate, they’re just oblivious to the fact that an average person could look at this and say, ‘Oh, gee, your friends always seem to be getting favours,'” said Wudrick.