Government Operations Committee on Feb. 5th, 2009

[Pat Martin, NDP, Winnipeg Centre, MB]

You seek to; do you think, in your honest, professional opinion, it is going to save the taxpayer money, the sale of these seven buildings? Or would we have been better off...?

My point is that Larco is going to have to fix the roof too, so they're going to fix the roof and still charge you. They'll pass the cost on to the taxpayer, plus their profit of 10% or 20% or whatever it is. Why can't we just keep the building, fix the windows as needed, and still own it?

The United Kingdom doesn't allow it. They don't sell the property. They lease them for 99 years maximum, and it reverts back to the crown.

We don't just get rid of them.

[John McBain]

In the sale-leaseback?

[Pat Martin, NDP, Winnipeg Centre, MB]

Yes.

[John McBain]

No, those are 25-year leases. At the end, we have no obligation to stay there beyond the 25 years.

[Pat Martin, NDP, Winnipeg Centre, MB]

Yes, but you don't own the building anymore, either. They keep them.

[John McBain]

Correct.

[Pat Martin, NDP, Winnipeg Centre, MB]

If you don't want the operating costs, is there not a way you could contract out the building management and the building maintenance, pay a premium, and still own the building at the end of the day?

[John McBain]

We do that with the majority of our other assets through another contractual arrangement we have in place. But in this case, the benefit we see is the cost, certainly, over that extremely long period of time of 25 years and in the identification of risk in terms of the delivery of those major aspects of owning the building, accepting and recognizing the benefits of private sector delivery.

[Pat Martin, NDP, Winnipeg Centre, MB]

Well, I'm in favour of public sector delivery as well. You shouldn't have to come to the committee asking for more money if you've just sold seven buildings for $1.4 billion. Where's all that money gone? Where's the saving to us if we have to spend more so you can sell off our property and then rent it back at a higher rate of pay?

It doesn't make any sense to me. I don't buy it.

[The Chair, Liberal, Derek Lee]

Thank you, Mr. Martin.

I want you to know that there was, to use the words of the witnesses, some “swing time” on your round there.

I'll go to Ms. Hall Findlay for the next round, which is five minutes.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you, Mr. Chair.

Thank you very much to the two witnesses for coming on such short notice. I recognize that some of these questions are.... I mean, it's our obligation to hold the government to account, but I recognize some of the challenges in dealing with departmental questions as opposed to questions on political pronouncements. I'm afraid I will continue on with my colleague's questioning.

I was quite stunned, as a matter of fact, to hear you say that you do not have a next tranche planned. My question had been this: has your department been asked to supply a list of the new assets to be sold in order to comply with the finance minister's new promises? But I take it that in saying that you do not have a next tranche, it hasn't even been contemplated yet by your department. Is that correct?

[John McBain]

Not in respect to that pronouncement. We have been assessing and we will continue to assess our portfolio to see what opportunities exist, but in terms of relating specifically to the idea of selling surplus assets, no, we have not engaged in discussions yet.

[Martha Hall Findlay, Liberal, Willowdale, ON]

So when the finance minister announced the large asset review, that has not been started yet in your department with this in mind. Is that correct?

[John McBain]

Correct.

[Martha Hall Findlay, Liberal, Willowdale, ON]

You talked about the opportunities to sell assets at fair market value. In your view--and I recognize that this may be putting you in a bit of a spot--isn't the notion of fair market value somewhat taken away from when you put a finite timeline on the timing of a sale, particularly if you haven't even identified the asset yet?

In your view, in the upcoming year in terms of fair market value and your experiences so far in selling other assets, is it really possible to announce in advance the sale of assets that have not yet been identified and to expect in effect a fair market value that is not affected by the fire sale aspect of the announcement?

[John McBain]

Mr. Chair, PWGSC owns 350 buildings. There are in excess of 5,000 buildings in the federal government inventory, so we are a very small player, actually, if you look at the number of buildings. And if you look at the holdings of land, they are quite extensive if you look across the full range.

I think in terms of looking at the potential to disposal of assets, including properties and buildings and other things that are no longer required by the government, one could predict there would be a certain amount of revenue that would be generated by those surplus assets.

With respect to Public Works and the Real Property Branch, we're looking at our assets in terms of delivering the accommodation portfolio. And in terms of the sale-leaseback, the value was in offering a 25-year lease with the federal crown. So it wasn't just the straight disposal of the asset and seeing that money as revenue.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I guess that begs the second question, that in terms of the assets that are going to be looked at to be sold to fulfill this particular political promise, it may seem to be a sale, but the other side of the balance sheet would suggest that it's not necessarily going to be financially beneficial.

So on an ongoing basis, we'll certainly be looking, as my colleague has said, to see some business cases that suggest that these sales are in fact good overall, from a financial perspective. It's not a question for you now, because you don't have that tranche identified yet, but I would ask that we have continuing communications, in terms of being able to see the business cases as they arise.

My apologies, but I have a couple of other questions that aren't necessarily related to real estate.

Mr. Hawkes, maybe you can answer these, again recognizing that this is on short notice.

I have a couple of questions. On page 193, there's a reference to Canada Post, and there's a fairly significant amount allocated for special purposes. Is there any way of determining what those special purposes are?

[Mike Hawkes]

You'd have to ask Canada Post, I'm sorry.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Okay, understood. I'm just going through the questions as they come up.

Also on page 196, there's a list of infrastructure projects. We do have some concern, given the track record of announcements made of infrastructure spending and the money not being flowed, and there are significant amounts of money that have actually lapsed.

Is there anything to back these up, in terms of an expectation that they will actually be spent?

[Mike Hawkes]

I don't think those infrastructure projects on that page refer to assets of PWGSC.

I don't have that page in front of me, I'm sorry.

[Martha Hall Findlay, Liberal, Willowdale, ON]

No, and I know we're trying to focus on PWGSC, but we also have a challenge, in that overall, we have a very limited time to deal with these supplementary estimates. So I guess I'm asking questions that are beyond your specific reach.

So, perhaps, Chair, when we have other witnesses who may be better positioned to answer....

[Mike Hawkes]

Those are the assets and investments of the Department of Transport, who I think would be best able to answer those questions.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Yes, okay. So I'll just leave those questions out, and hopefully we can get....

[The Chair, Liberal, Derek Lee]

We'll try to stick to our knitting here. Anyway, that's fine.

That round has concluded.

We now go to Monsieur Roy, for five minutes.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chairman.

One of the requests in the supplementary estimates concerns the Public Service Human Resources Management Agency. This is a budget increase of 24.3%. What disaster has occurred for you to have to increase the agency's budget by 24%?

I don't know, but there must have been a problem in the planning or forecasts. Clearly, you can't request a 24% increase without there being a problem somewhere.