Evidence of meeting #48 for Government Operations and Estimates in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was buildings.
A recording is available from Parliament.
4:25 p.m.
Conservative
Garth Turner Conservative Halton, ON
All right, but we have the power to get whatever we want and to do it in camera. What's around this table stays around this table. We can close that door and we're done.
I'm asking you whether it's reasonable for us to be asking, for example, what the commission rate is. Is it 2%? Is it 6%? It's $1.5 billion.
4:25 p.m.
Professor of Real Property, Academic Director, Real Property Program, Schulich School of Business, York University
It's a reasonable question. I don't know, again, if you'll get an answer. The dilemma, even in my industry, is that every time you sign a lease there's a last sentence that says you will not disclose anything in this lease. So it's an industry that kind of—
4:25 p.m.
Conservative
Garth Turner Conservative Halton, ON
Right, sir, but we are the vendors. Everyone around this table is a vendor. We represent the people who own these buildings. We actually own these buildings, all of us around this table--not just that side, all of us. We are the vendors. That's an important point I think for us to know.
The minister responsible for this portfolio appeared before the committee and he flatly refused to offer that information to these committee members. We were refused to be told what the commission rate is. We were refused to be told what the buyback was. We were refused on any indication of base rent or additional rent. We were refused on a number of technical issues.
If you were sitting on this committee, would you, in your expert opinion, be able to come up with a conclusion as to whether this was a good deal or not for the people you represent, given the fact that you did not have that information?
4:25 p.m.
Professor of Real Property, Academic Director, Real Property Program, Schulich School of Business, York University
Is this committee the approving committee of the deal?
4:25 p.m.
Conservative
Garth Turner Conservative Halton, ON
We are members of Parliament who are on a committee that has oversight responsibility over the minister and the department involved.
4:25 p.m.
Professor of Real Property, Academic Director, Real Property Program, Schulich School of Business, York University
You're asking me a question and I'm not sure—
4:25 p.m.
Conservative
Garth Turner Conservative Halton, ON
I'm just asking you if you would be able, if you would feel competent, given your level of expert knowledge, to render a yea or nay, given the fact that you did not have that information provided to you, or would you feel that you did not have enough information?
4:25 p.m.
Professor of Real Property, Academic Director, Real Property Program, Schulich School of Business, York University
If I was asked to give an opinion on whether the deal was good or not, I would need that information—
4:25 p.m.
Professor of Real Property, Academic Director, Real Property Program, Schulich School of Business, York University
—but that would assume that you were coming to me as an expert who could do those numbers. I wouldn't have the right to make that public. I would have the right to look at that information and render a decision, but I would have to abide by whatever terms and conditions you set for me.
4:25 p.m.
Conservative
Garth Turner Conservative Halton, ON
Absolutely, and as I said, we can close the door and we are in camera and that's just the way it is.
Madam Chair, given what this expert witness has said, I must insist, and I'd like to make a motion, that we call the minister back and we ask for this information to be tabled once again, as we did before. Without that information, this committee is incapable of making a decision as to whether this is in the interest of the taxpayers or not, plain and simple.
4:25 p.m.
Liberal
The Chair Liberal Diane Marleau
I think you can give notice and....
Well, we're into it now, so we can go to a vote on this.
Would you like to write out your motion, and then we'll debate it as we go?
I'll go to Mr. Kramp while you write out that motion and then we'll come back to it.
Mr. Kramp.
May 1st, 2007 / 4:30 p.m.
Conservative
4:30 p.m.
Liberal
Raymond Simard Liberal Saint Boniface, MB
I didn't think I'd get a second round. This is interesting.
One of the questions I have is that some of the bigger private sector organizations, like the banks, got rid of their own real estate just lately. In Winnipeg, a lot of the big banks have sold it off. You would think if anybody knew the business it would be the banks. Why do you think they're doing that right now?
4:30 p.m.
Professor of Real Property, Academic Director, Real Property Program, Schulich School of Business, York University
I think there's a very good reason, and that is, as a bank, you don't want to tell your shareholders you're in the real estate business. I happen to know that one of the banks had a higher return on their real estate than they did on their banking. I don't think that's an easy sell to your shareholders. I think most industries today want their shareholders to know that shareholders' equity and the debt is going toward the core business. Most of them have shed their real estate because it is a distraction, and it's hard to justify why they've got capital tied up in real estate. I think that was the primary motive.
4:30 p.m.
Liberal
Raymond Simard Liberal Saint Boniface, MB
You've spoken of other deals that have happened, for instance, in England and Australia. Would you have any idea of what the commissions would be on a deal of this magnitude? I'm sure we're not talking 5% or 7%. There's got to be an amount that is reasonable.
4:30 p.m.
Professor of Real Property, Academic Director, Real Property Program, Schulich School of Business, York University
The commissions could run anywhere between 2% and 5%. I don't know if there's a base. I don't know how it's structured. I really have no idea how this is done. This is something that the government and the minister are responsible for, and I couldn't say, but certainly there would be lots of benchmarks that he or she would know to establish whether it was a fair commission.
It's not so much the commission; it's to make sure you're going to get what you pay for with the money you pay for that service. I really couldn't comment on that commission or what would be reasonable because I don't know what the task is that has been set out for them.
4:30 p.m.
Liberal
Raymond Simard Liberal Saint Boniface, MB
You've indicated quite clearly that the public sector are lousy managers. Is there one country where they have done not a bad job?
4:30 p.m.
Professor of Real Property, Academic Director, Real Property Program, Schulich School of Business, York University
No, there isn't.
4:30 p.m.
Professor of Real Property, Academic Director, Real Property Program, Schulich School of Business, York University
It's that bad, because I think they all share the same problem, and that is it's really hard to put money into fixing up assets. I was surprised as we went around the world. You'd think a place like Switzerland or Germany...but no. This is a pervasive problem, and that's why every country is looking for solutions today. Some of them are what they call private-public partnerships--there are all these acronyms--but I think when it comes to public property, that is no different. Let's face it, an office building is an office building. It doesn't matter, it's built the same, it's identical, so it gets harder to rationalize why government needs to own it.
At home, one of our problems may be that we need an electric drill. Why do we have to own it? Why can't we have a right to use it?
Our society is fraught with that problem today. Everything we need to use we have to own. You might say ideologically there's no need for us to own some of these. We need to own certain things, but the impediment is ideological. There are people who believe government has to own things.
4:30 p.m.
Liberal
Raymond Simard Liberal Saint Boniface, MB
You also mentioned that our government, or Canada, is quite timid in its approach in selling only eight buildings at $1.5 billion.
4:30 p.m.
Professor of Real Property, Academic Director, Real Property Program, Schulich School of Business, York University
Very timid compared to Australia. Australia has got rid of everything and sold it to a large private consortium.
4:30 p.m.
Liberal
Raymond Simard Liberal Saint Boniface, MB
In your professional opinion, what is your recommendation when it comes to that? Would you wholesale everything outright?
