Government Operations Committee on Feb. 14th, 2008

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Did you sense that there was an additional reduction in real estate appropriations around 2005, 2006 and 2007, or whether it was continuous from about 1990? That's a good question, isn't it?

[Michèle Demers]

I can't answer your question because I don't know the answer. However, I know that the government, regardless of the party in power, was a bad manager of federal buildings and did not devote enough attention or care to the maintenance of buildings and infrastructure. We're seeing the results of that today. On the other hand, buildings and assets that belong to Canadians and for which we should at least...

We're not opposed to all sales of federal buildings. We're asking that they show us that it's a good deal in the short, medium and long terms. For the moment, we have no information, we don't know what the Canadian government is basing its decision on. In the short term, of course, this is going to bring in money.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Ms. Demers, the majority of federal government witnesses who have appeared here suggested that there had been bad management and that, ultimately, that was due to public servants. What do you think of that?

[Michèle Demers]

I don't think public servants can work miracles when no money is allocated to building maintenance. Public servants do what they can with what they have. No money was invested, or virtually none. One need only walk through the buildings in Ottawa to see how pitiful it is. Go to National Defence headquarters on Colonel By Drive and walk through the upper corridors; walk down Booth Street and Tunney's Pasture, and you'll see that the state of federal buildings is shameful. Someone must take the bull by the horns and say these buildings belong to Canadians, that they have to be renovated and fixed up in order to restore their value.

[The Chair, Liberal, Diane Marleau]

Thank you, madam.

Mr. Moore, go ahead, please.

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

Thank you very much.

I've read the booklet you've given to us. Thank you very much for providing that and the information. I appreciate it.

You mentioned that there was no consultation, that this was ideological, and that there was no background information. Minister Fortier came before this committee five specific times, three times specifically on this file. Have you read the Hansard transcripts and the blues of his presentation to this committee?

[Michèle Demers]

No.

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

Minister Fortier tabled before this committee, more than five months ago, supporting documents outlining all the research that was done by the Department of Public Works under the Liberal government and under our Conservative government supporting this transaction.

Have you talked to the clerk to get that supporting information?

[Michèle Demers]

We have the documentation provided by PWGSC in the BMO Capital Market Real Estate Group and the RBC Capital Market Real Estate Group analysis. We have that. The only thing this indicates to us is that the government started with the premise that it needed to sell the government buildings and then fabricated rationale in order to support that.

The best example of that is that the reason given for the sale of the first nine buildings that were put on the sale block was that they needed too much renovation and repair and they needed to be sold in order for the government to be able to handle the situation. It so happens that the first buildings that were put on the sales block, that were put on the market, were the best, top-shape, new buildings owned by the federal government. So where's the logic, where's the link, where's the rationale?

So yes, we did read some reports that came from PWGSC, which told us nothing.

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

I would suggest that you read all the documents, that you read the minister's presentation before the committee before you declare what the minister's intent was. I think that would be more than a little bit fair.

When I look at most public policy issues, I often take them and turn them around and ask what the inverse would be. Do you know what I'm saying? So if you're saying it's bad to lease government buildings, that we should own then, then let's look at it the opposite way. The government currently leases buildings all across this country. I'm thinking about my district, where the Department of Human Resources leases a large building because it doesn't occupy the entire building and the job of the federal government isn't to be a landlord and to assume that responsibility and risk for taxpayers.

Of all the buildings that the government currently leases, is it your position then that we should purchase those rather than lease them?

[Michèle Demers]

Not at all.

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

So leasing does make sense?

[Michèle Demers]

Absolutely. Absolutely.

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

If we have buildings, and private sector analysis has demonstrated clearly, both to the Liberal government.... The Liberal government had an RFP to sell more than 360 federal government buildings. We've sold seven. Then we have two-thirds of the seats in the House of Commons occupied by political parties that support this public policy, so you're clearly in the minority in terms of your public policy position.

When we have clear indications from the two governing parties of this country, from private sector analysis, from our consultations, that this is the correct public policy decision, I don't understand how you can develop this position when you haven't even spoken to the minister or read his testimony.

[Michèle Demers]

I don't understand how you can say to this committee that you have clear indication that this is the best policy for this country, because who has shown you the long-term economic benefit of selling buildings, of paying for the repairs to those buildings, and in addition to that, leasing them back over 25 years? Where's the financial benefit in that? Where are the numbers?

We received a document from—what is this here?—Public Works, Deutsche Bank. Everything is blacked out in what was released through access to information. The numbers are all blacked out. Why is that? Why is it not transparent? We're going to sell these buildings, we're going to lease them back, and in the end the government and the taxpayers will be ahead of the game.

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

With respect, I think you owe it to the people you're representing here, frankly, to get the new documents that have been presented before the committee. In the documents you have, those numbers were blacked out because of a confidentiality agreement that the government signs with the people with whom we do that business. To not black out that information in the time period while we're negotiating the best value for taxpayers' dollars and the lease/sellback of these buildings would be to rob taxpayers of the best value for these buildings. This is common practice at all levels of government. It's in order to protect taxpayers and to protect the confidentiality agreements that the government signs with those with whom we're doing business.

But the documents are available. They've been tabled with this committee, and you didn't answer the question that I asked a moment ago. Have you contacted the clerk of this committee to get all the supporting information we have tabled at this committee?

[Michèle Demers]

We have been asking PWGSC--

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

Have you contacted the clerk?

[Michèle Demers]

We have contacted PWGSC, which is the employer of the members we represent, to request all the documents pertaining to the sale of government buildings.

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

So you haven't contacted the clerk. I appreciate that.

[The Chair, Liberal, Diane Marleau]

Thank you, Mr. Moore. Your five minutes are up.

We'll go to Mr. Angus and then Madame Folco.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you very much for coming this morning.

I found your presentation very interesting. You raised a number of the questions we ourselves have been asking.

I'm very interested in this fire sale of public assets based on our obligation, after we've sold off our assets, to continue to pay for the upgrades. We've looked at the numbers, and what is very clear is that as soon as we sell these assets, there'll be an initial first-time bump that Mr. Flaherty will no doubt be able to claim as great fiscal management on the part of the Conservative government, but then we will be faced with the costs that go three and four times higher than what we're normally paying, and we pay that for 25 years. The end of that 25-year period is what interests me; what happens then?

When I was a young lad back in 1982, if someone offered me a deal for 25 years, I would certainly have agreed, because 25 years is a lifetime. Now as I get a little older, I realize that Faustian bargain we get ourselves into: in the life of a country, 25 years is not very long. In key urban centres we've already sold off key pieces of urban real estate that we will now be on the hook for in 25 years. If we want to continue to use those, we will be paying full market value.

Have you looked at the issue of what happens at the end of the 25-year period and what it means for the government departments that will have to be paying full market value either to access the buildings we once owned or to buy them back?

[Michèle Demers]

It's difficult to estimate what that's going to cost 25 years down the road. What we know is that 10 years down the road, the federal government is on the hook for paying half of the maintenance and repairs for those buildings that have been sold off to Larco Investments. In addition to the rent, they'd be paying for half the upkeep costs.

[Charlie Angus, NDP, Timmins—James Bay, ON]

That's capital.

[Michèle Demers]

It's capital.

After 25 years, I don't know. Do you have an idea what the implication would be?