Government Operations Committee on May 10th, 2010

[Daniel Petit, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you.

I am going to split my speaking time with my colleague Mr. Warkentin.

Mr. Guimont, there has been a lot of talk about the Economic Action Plan. Half of the funds in that plan have been spent. There is still the second year.

You are surely aware of the results in the first year. What major projects have been carried out, in Quebec, in particular? There has been $455.9 million spent, in fact.

Could you give me some examples?

[François Guimont]

If you will allow me, I will give you a few figures that speak for themselves. I just want to put things in perspective. The total amount, for the two years, is $431 million. The first year, this year, we invested $227 million. We were able to use about 96% of the figure planned—we are in the process of finalizing the figures, which is to be expected. More than 95% of the money has been spent, in terms of the plan established at the beginning of the fiscal year.

As well, we did not receive the money just in a general way. It was assigned specifically to sub-envelopes. For example, we received money for some of our buildings, that we own. The work was performed in part by SNC-Lavalin O&M, as contractor, and in part by ourselves, in a ratio of about 80:20—80% of buildings are the responsibility of ProFac and 20% are the responsibility of the Department of Public Works.

You're asking me for specific examples. We have done work on four bridges, including two here in the national capital region, so infrastructure bordering on Quebec and Ontario. The first was the Alexandra Bridge, to which access was barred. We did seismic stabilization, painted, and rebuilt the span. For the Chaudières Bridge, you will recall that we had to block it last year or the year before, for stability reasons. We are going to add a structure that will stabilize it. So it is very visible and very real. We are working on two other bridges: the Burilngton Bridge and the LaSalle Causeway, in the Lake Ontario region, near Kingston. In these two cases the work involves repainting, which is still important.

As well, $40 million—$20 million last year and $20 million this year—has been given to us specifically to improve access for persons with disabilities and to help people who have difficulties, whether by touch recognition or ramps or whatever. Obviously, this is applicable everywhere there are buildings.

Investments have also been made in the Manège militaire. As you know, we are preparing the plans and specifications for rebuilding it. We have been given $1 million to do preparatory studies. For example, some technical, environmental and archaeological surveys have been done.

The Alaska Highway; I know it's not necessarily in Quebec, or Ontario, but

the Department of Public Works and Government Services is responsible for the Alaska Highway. We have invested $12 million to rebuilt certain bridges—I think there are eight small bridges—and also for paved areas. That has been done, it's finished.

The point I want to stress here is that for the next fiscal year, this year, we have the same money coming in. We are continuing to invest in our buildings. I am going to give you some examples of work that affects various aspects of our buildings. It may be heating systems, windows, walls that have to be repaired, or other external work. We have seen that in some places. That's the type of work being done. Most often, the work doesn't call for huge amounts of money. A lot of the work costs less than $1 million.

There is a lot of work. Over 1,300 jobs have been identified for this year. A little under half of them, about 500, provide some environmental benefits. I have asked that this be documented. In other words, when a heating system is changed, it goes from lower quality to higher quality, and there is an environmental benefit. We have tried to identify this as much as possible.

This year, we are proposing to do the same type of work. It isn't the same work, because you don't do the same work twice, but it's the same type of activities. There is also a breakdown of the work by province.

We also have to take into account the geographic location of our buildings. Obviously, the way the money is allocated, in percentage terms, may vary from province to province. I will give you an example. In this year's budget, $25 million was invested in Quebec, compared to $12 million in the Atlantic region and $108 million in the national capital region. It isn't necessarily that we wanted to invest more money in the national capital region or in the western region and a little less in Quebec. It is based on the location of our buildings, essentially. We have several buildings and infrastructures in the national capital region. I mentioned the two bridges currently being rebuilt, although the region has more. This explains why more money was spent in the national capital region, in the context of the infrastructure program.

I would like to make one last important point to the committee members, Madam Chair. Our infrastructure program is not a different program. In reality, the money allocated to the economic program corresponds to what is called the Accelerated Infrastructure Program. In other words, we establish our base for work to be done, from year to year. We have priorities set by managers, not by senior management.

In these programs, we can do as much as we can with the money we have, about $450 million per year of capitalization. We have had an increase, so we have expedited those projects. We went lower on the scale of priorities, to take action to fix problems that would probably have ended up being fixed over time, but over a longer time. The more money put in, the more we can do to fix the problems. Obviously, that has the indirect effect of stimulating the economy.

[The Chair, Liberal, Yasmin Ratansi]

You have one and a half minutes, Mr. Warkentin, if you want it.

[Chris Warkentin, Conservative, Peace River, AB]

Well, I've been given limited time, but I do want to go down one specific path, and that's as it relates to the deficit that Public Works has in terms of work that needs to be done but work that isn't able to be done because there's a lack of money, so we would call it a deficit.

I know that some years ago our committee did some studies on this, and I was curious as to where we stood. I wonder if you could just give us any kind of an update. Or is there a current calculation of the value of work that would be necessary to bring all of Public Works infrastructure into a state that we'd all like it to be at?

[François Guimont]

I thank you for the question.

I don't want to be too long on this, because it can get technical, but in our asset facility management plan, we have a process whereby we establish priorities. You're not going to be surprised that our top priorities are health and safety, and then we go down the list. So these are our so-called A projects, B projects, C projects.

As you may imagine, the top of the apex is wide, but it's fairly narrow when you compare that to the rest of the investments one would have to make to bring the assets to the absolute level where they should be. It has been mentioned in the past, not recently, that the quantity of resources we get per annum--about $450 million, or half a billion per annum--compared to the capitalization deficit overall in our building, is a fraction. One can be measured in billions; the other one is measured in half a billion a year.

It doesn't mean that we have substantial issues. Just like your house, you go to the--

[The Chair, Liberal, Yasmin Ratansi]

Mr. Guimont, you'll have to....

[François Guimont]

Sorry.

[The Chair, Liberal, Yasmin Ratansi]

He'll get the next round anyway.

I have to go to the next person who is asking the question, and that's Mr. Martin for eight minutes.

You know, feel free to cut the witnesses off if you think they're giving you answers that are too long-winded. You can interject. Don't ask the chair to do it for you.

[Pat Martin, NDP, Winnipeg Centre, MB]

Okay. Thank you, Madam Chair.

It is a shame that we only have one hour to deal with Public Works and Government Services, the same amount of time we had to deal with the PCO, with a budget one-thousandth the size.

There are so many things we've dealt with as a committee that having you here is very useful, Mr. Guimont.

I'd like to focus mainly on the real property portfolio. First of all, in most comparable Commonwealth countries, the parliament buildings and the parliamentary precinct are under the jurisdiction of the speaker or some joint committee. I think most people agree that the delegation of that authority to Public Works has been problematic, at best, and maybe really expensive. Obviously you have so much on your plate now that it seems the renovation, restoration, and even maintenance of buildings here hasn't been very well done.

Would you agree--very briefly, if you could--with the Auditor General's report that it would be a good idea to set up some kind of other management administrative structure for the parliamentary buildings?

[François Guimont]

Thank you for the question.

I'll be brief. I know you want me to be brief, but I just want to say a few things before, if you don't mind, and I'll answer the question very clearly.

Members, Madam Chair, when we're given a mandate on the precinct, we do pretty well. With a clear mandate, plus the money, and we're just left to operate....

I can give you examples. The kitchen that used to be in the West Block, which has now been relocated, was under budget 10% and before schedule. We have done the same thing with the museum of photography. Now we're going to be able to have committee rooms there. On the other side of Wellington, the La Promenade Building was done, if I remember, below budget as well.

The point I want to make... I know it's not perfect, but when we have our hands on the project, generally speaking, setting aside surprises--with the Library of Parliament, there were a few surprises there, but most people now say it was well done--we can do a good job. I think it's important for my folks and me, since we spend hundreds of hours on this, to be able to say that.

On your point about governance--

[Pat Martin, NDP, Winnipeg Centre, MB]

I'm running out of time.

[François Guimont]

--I acknowledge that there is a challenge there. I think Madam Fraser has put her finger on something that needs to be looked at. We committed to look into this, to work with the players. It needs to be addressed.

Frankly--I will say briefly--I was in the U.K., and I sat down with the Sergeant-at-Arms. Obviously they have a different model, there's no question.

To the questions...do you deal with issues, how do you create consensus, there's one single point of accountability; it's obviously probably easier.

I would also say that despite that issue on governance, the relationship with the players is good. It's just the reality; it's like hands on the steering wheel.

[Pat Martin, NDP, Winnipeg Centre, MB]

It's staggeringly expensive.

[François Guimont]

It is. You're right.

[Pat Martin, NDP, Winnipeg Centre, MB]

I come from a construction background. We would have a new office building there if the price didn't keep doubling, tripling, and quadrupling, to where we're talking hundreds and hundreds of millions of dollars for a simple office building. There's nothing more simple in the world than building an office building, but it was going to be three times the price of a hospital, which has operating rooms, MRIs, and equipment. It's just insane. So building in Ottawa is three times what it costs anywhere else in the country. Building on Parliament Hill is ten times more expensive. It's out of control.

But I have to move on to other issues here.

Our whole reason here is to try to get best value for tax dollars. Another thing that bugs me about the real property is the federal building initiative. I remember when this was created, because I was doing energy retrofitting in my own career at the time. The government owns about 50,000 buildings, many of which are absolutely sick buildings, energy hogs, because they were built in a time when nobody cared about that.

The federal building initiative was supposed to reduce the operating costs and create a healthier work environment and better indoor ambient air quality by energy retrofitting all these buildings. Yet, out of 50,000 buildings, maybe 500 or 600 buildings have been done. We'd have to do 5,000 a year to get the federal building initiative to actually energy retrofit. The retrofitting they do is things like changing the light bulbs. They never do the building envelope. They do the low-hanging fruit.

Could you briefly give me the status of the federal building initiative, how much priority it's getting, and how much attention it's getting within Public Works?

[François Guimont]

Thank you for the question.

To your point about 50,000 buildings, again, for members, about 350-odd buildings are in the Public Works portfolio; if I remember, it's 315 buildings. This is what we own. They're office buildings.

But you're right, there are a lot of federal buildings above and beyond what we call office buildings. There are laboratories and warehouses. So I agree with you, absolutely; there are a lot of DND buildings, a lot of buildings--

[Pat Martin, NDP, Winnipeg Centre, MB]

There are thousands.

[François Guimont]

There are a lot of them. I agree with you.

The things I'm directly responsible for are the office buildings. Having said that, I'm not aware of the status of that program. That program, if I remember, was put in place by NRCan.

The other point I would say that goes to your point is this. When we proceed with renovations, retrofits, we go with the LEED standard. We try to go with, as much as we can, classifications--

[Pat Martin, NDP, Winnipeg Centre, MB]

How do you explain Place du Portage where people essentially turn green if they work there too long? Some of these are sick buildings where you lose public servants' productivity, and they're ridiculously expensive. They're just bad buildings. They need comprehensive retrofits or a wrecker's ball.

[François Guimont]

We do have projects like Place du Portage. I'm not necessarily aware of the timing for that building. I'm thinking of the C.D. Howe Building and Place de Ville. We are going to be making investments in these buildings.

[Pat Martin, NDP, Winnipeg Centre, MB]

Can I ask you about Larco? Has there been a cost-benefit analysis on whether it was smart to sell those buildings and lease them back? It seems every time the federal government wants to sell off buildings, they don't sell the dogs, they sell the crown jewels, or the jewels in the crown, because nobody wants to buy their dogs. This seems like bargain basement to me.

Where we used to deal directly with contractors, now we go to SNC-Lavalin and let them deal with the contractors--cost plus. Instead of hiring that contractor, we hire the contractor and pay SNC-Lavalin 14% to have the same work done.

Where is the business case for that?

[François Guimont]

On Larco, or the sale-leaseback of the seven buildings, when those buildings were sold, we had very good timing, and we see that now. That is the first point I will make.

We did indeed sell buildings that had good value, otherwise there would have been no pickup. That's the second point I would make, and I don't question that.

Third, was it a fair deal? Deutsche Bank, which we hired on purpose to advise us on whether or not this would be a fair deal for Canadians, opined formally that this was a fair transaction. Right now, the relationship with Larco through this building, because we are now in a 25-year leaseback, is functioning well. No issues came to my attention in that relationship.

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

We now go to the second round of questions, for five minutes.

Ms. Siobhan Coady.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Thank you very much. I'll be sharing my time with Martha Hall Findlay.

I want to go back to my original question. In your response I think you basically said that you don't get a whole lot of calls from the minister's office asking for that. I know you get 70,000 a year, but not a whole lot from....

I wonder if you could address the question I put to you earlier about the André Morin e-mail that said:

The DM is concerned about this type of request and by the fact it can contravene and disrupt our daily operational or program requirements....

Could you address that for me? Then Martha Hall Findlay has some questions for you.

[Martha Hall Findlay, Liberal, Willowdale, ON]

If you could do it fairly quickly, that would be much appreciated.