Government Operations Committee on April 24th, 2007

[The Chair, Liberal, Diane Marleau]

Thank you, Mr. Fortier.

We will continue with Mr. Moore, who has three and a half minutes since he is sharing his time with Ms. Thibault.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Five minutes divided by two equals three and a half minutes each? I don't have a problem with that.

[The Chair, Liberal, Diane Marleau]

No, this is the seven-minute round.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Mr. Fortier, I wanted to close the loop on the CGI contract issue. It's an interesting moment, I guess, in Canadian politics and maybe a sad moment that you get a banner headline in the Ottawa Citizen saying “$400 million conflict of interest” over a contract that you didn't personally get involved in, in any way, directly or indirectly.

And Mr. Rodriguez mentioned, as well, that he's convinced that there is no conflict of interest, and never was one.

It's important that this point be driven home with regard to the process associated with this contract and how the minister himself, directly, does oversee projects within Public Works and how the contracting is done for these types of events. Mr. Marshall made mention of that.

Just to reaffirm, on this CGI contract and then on this issue, with regard to your involvement in this, can you just make it crystal clear to this committee and to Canadians that you were not involved in any way with regard to this contract, as Mr. Rodriguez has confirmed?

[Michael Fortier]

Thank you, Mr. Moore.

I have not directly or indirectly been involved in the selection, awarding of any contract--not just this contract--any contract since I was sworn in as Minister of Public Works in February 2006.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Very good.

And the final point, because I have about four seconds left—

[The Chair, Liberal, Diane Marleau]

A minute and a half.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

I'm going back now to buildings. There are no heritage buildings in the nine.

[Michael Fortier]

No.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Will you confirm again that there will be no heritage buildings at all in the foreseeable future?

[Michael Fortier]

There is a heritage aspect to the Sinclair Centre. But in the offering documents, the owners will have to respect the heritage policies with respect to that building.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Is there a broad timeline for...? Each of these nine buildings will be brought forward, as I understand, through its own RFP; they will be presented publicly, individually, one by one. What is the timeline for the first one to be coming forward?

[Michael Fortier]

I'll let Tim talk about this, but my understanding is that basically the banks will be out there seeking interest in all nine of them. I can't tell you today that they'll be sold to nine different people. They could go to the same consortium. It will depend on the types of offers we get for those buildings.

To answer your question, we are flexible—isn't that right, Tim? We're flexible on the type of offers. We're not going to be dogmatic about this—“You have to buy the nine, or else...”—because I think that's detrimental to taxpayers. We're going to try to get the best offers possible, whether for the nine or individually, for these buildings.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Thank you.

[The Chair, Liberal, Diane Marleau]

Mr. Simard.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you very much, Madam Chair.

I would like to welcome the minister and our guests.

Minister, this is the first time in 15 months that our paths have crossed. We know that in theory, you exist somewhere. You have a rather important portfolio. It is a good thing that we are able to meet with you today. Here is my first question.

Last week, Minister, we had the President of the Treasury Board here, and we established quite clearly that the Conservative government was spending at three times the rate of inflation, and as a matter of fact, on $54 billion of the $220 billion, spending at an increase of close to 12%.

When it comes to the proceeds of the sale of these buildings—if it's $1.5 billion or $1.6 billion—what do you plan to do with these funds? Are you planning to return them to the consolidated revenue fund? You can imagine that there's a bit of a concern on behalf of some members, I can say, that we don't need to add another $1.5 billion to the dangerous spending that's going on already.

[Michael Fortier]

I won't speculate on the proceeds, so we'll see what these proceeds are and see whether we go ahead.

If we do go ahead, my hope, Monsieur Simard, is that we are able to earmark some of these funds for the balance of capital expenditures. We need to invest significant capital expenditures that are required on the balance of the portfolio.

Remember, it's just nine buildings. We are facing significant capital and significant structural challenges with respect to some of these buildings. If you've been around here in Ottawa—and I know you've been around for some time—you know some of these buildings are in really bad shape.

[Raymond Simard, Liberal, Saint Boniface, MB]

With respect to the “savings plan”, I guess it was called when Mr. Poilievre asked you the question already, I want a clarification. You indicated that some consultants were hired to “confirm” numbers, as opposed to maybe “establish” numbers that were right.

If I'm not mistaken, according to some of our information here, the net savings to date were somewhere around $250 million, and we're pretty well on target, if I'm not mistaken. By 2007, those savings were expected to be $573 million.

Are those realistic? Are those the figures you're talking about? If the first ones were accurate, it seems to me the second ones should be accurate as well. Are you going to be able to reach those targets of $573 million?

[Michael Fortier]

To the first part of your question, in the process as I understand it—I wasn't here then, but I've looked at the materials—it appears that the government chose an objective and then went out and hired experts to come into Public Works and to look at processes and areas for improvement.

With respect, I don't consider myself a great expert in this, but I believe that's sort of upside down. I would have hired the experts first to tell me exactly how I can improve my processes and where the savings are; then I would have figured out the savings over a five-year period. But we can disagree on this.

[Raymond Simard, Liberal, Saint Boniface, MB]

But they seemed to be right on for the first tranche—around $250 million. Those savings were established.

[Michael Fortier]

Yes. Well, in the first two years, on the savings—I don't have the figures in front of me—the numbers are close to bull's eye. But the difficulty, Monsieur Simard, has always been in the back end, where it's like a hockey stick: basically you are going from a few hundred million dollars suddenly to several hundred million dollars in one clean swoop, and you need to introduce new RFSOs, new SOs. We went through this last year. We consulted industry, changed our ways in terms of approaching industry, and collapsed a number of open RFPs to much fewer RFPs.

So the new number now, just moving to the second part of your question.... As you know, the Minister of Finance in his budget indicated that the savings he's expecting from government over the next few years amount to $2.7 billion.

[Raymond Simard, Liberal, Saint Boniface, MB]

Okay. I'll move on.

With regard to the sale of the government buildings, the analysis that you had done by the banks, I would assume that those two banks you hired did not analyze Public Works in terms of how it was as a landlord. Have we established if Public Works is a good or bad landlord? Otherwise, why are we selling these buildings? Obviously you must have established at some point that we are not doing a good job, that it could be better managed by the private sector. So is that report out?

[Michael Fortier]

Well, we don't have 19 reports. There was one study—

[Raymond Simard, Liberal, Saint Boniface, MB]

But how can we take you at your word? The two people who are analyzing this thing are the people who will be selling these properties, and they're telling us--I'm assuming they're telling us--that Public Works is not a good landlord. That's a huge conflict of interest, in my opinion.

[Michael Fortier]

No, no, please don't see another conflict of interest. There is—