Thank you, Madam Chair.
Madam Chair, members of the committee, thank you for inviting us to join you to discuss the Auditor General's status report on leased office space. With me today is Mr. Tim McGrath, who is the acting assistant deputy minister for the real property branch.
I think it is well understood by all, as the Auditor General has pointed out, that meeting the accommodation needs of federal public servants across the country is a very complex operation. It involves some $3 billion a year, thousands of transactions, and many trade-offs that have to be made. Among these is the need for the government as a whole to consider various budgetary demands and pressures and various priorities for federal programs themselves.
As well, Public Works and Government Services must deal with the volatility of the real estate market in every region of the country and various pressures that arise on the cost of accommodation from one source or another. Despite these challenges, PWGSC has been making steady progress over the years. You will find as you examine our estimates, for example, that despite an increase in demand from our clients the cost of our accommodation program has not only levelled off but is actually going down as a result of actions that have been taken by our managers.
We've made good progress on most of the recommendations made in the last Auditor General's report on this subject, issued in 2002, notably in the area of better forward planning, and as the Auditor General has pointed out, in assessing the full cost of various options for office accommodation before we make a recommendation.
As well, over the past two years we've taken several steps to improve the management of the real property program, and these are yielding concrete results. Included among these steps is enforcing a tighter space allowance, as the Auditor General has just mentioned, for public servants and a less expensive fit-up package than previously allowed. I must say we are receiving very good cooperation in this matter from the Treasury Board Secretariat, and as well from our clients. The result is a saving of several millions of dollars to the Crown on an annual basis.
By doing more forward planning on lease negotiations and negotiating leases more aggressively in the market, we've reduced our average lease cost to below the industry average in most markets across Canada and we are now ahead of our plan in meeting our savings goals in this area. We've also been reducing our own overhead, taking out something close to 400 to 500 person years in the process from the effort. Finally, we are improving the management of our inventory, where we already have one of the lowest vacancy rates of any major real estate operation in the country.
Notwithstanding these achievements, much remains to be done. The Auditor General has pointed out that we need better information systems, and we fully agree.
Probably the most important issues that the AG has raised are, first, the shared or split responsibility for the cost of office accommodation that now exists, and secondly, the various anomalies of annual funding cycles.
In terms of shared responsibilities, decisions must take into account the operational needs of a department and so cannot entirely be assigned solely to Public Works or to one or the other party. As well, budgetary trade-offs need to be made, in this case by the ministers of the Treasury Board. So there's no simple solution to this problem. However, I do believe that improvements are possible and necessary, and we are working with the Treasury Board Secretariat to see how far we can go. In fact, in my opinion this area is probably the single most important area contributing to time delays and costs for the portfolio over the longer term.
Madam Chair, I would be pleased to answer questions you or any members of the committee may have.