Government Operations Committee on Nov. 25th, 2010

[Pat Martin, NDP, Winnipeg Centre, MB]

I don't know why I found that in my Privy Council document, but it's great if I could ask you.

That severance pay existed as a liability before. But in our mind, it was a controlled liability, in that people would slowly or incrementally claim their severance pay as they retired. Now that you have eliminated it, upon ratification, everybody who is owed any severance pay will want it paid out immediately.

What is that going to cost us?

[Carl Trottier]

Well, I'd begin by clarifying that only some portions of the severance pay have been eliminated, the portions on resignation and retirement. So all of the other portions—for example, termination, death benefits, and so on—remain and continue as before.

[Pat Martin, NDP, Winnipeg Centre, MB]

Yes, I understand that.

[Carl Trottier]

They are—

[Pat Martin, NDP, Winnipeg Centre, MB]

Aren't you asking for this whole liability to hit you at once now, at a time when we're going to have to borrow money to pay it out? Do I understand correctly that upon ratification of this arrangement, if I have 12 years of service, I can now say, “Okay, I'm still going to keep working for you, but I want my 12 weeks' severance pay now, I want to be paid out now”?

[Carl Trottier]

That's correct.

[Pat Martin, NDP, Winnipeg Centre, MB]

Well, there are about 100,000 people who are going to say that all at once, are they not?

[Carl Trottier]

Well, it will depend on the scenario of each individual. There are three options the employees can take: they can either take it now; they can take it upon separation from the employer; or they can take a mix of a small portion now and a small portion later. So various options are going to be chosen by the employees.

[Pat Martin, NDP, Winnipeg Centre, MB]

Okay, well, what's the plan? How much are you contemplating this is going to cost upon ratification?

[Carl Trottier]

I don't have those figures here with me. We have definitely contemplated there being some pick-up in terms of people taking it immediately, but there is also going to be some significant desire on the part of others to wait and not touch it until separation.

[Pat Martin, NDP, Winnipeg Centre, MB]

Why? For tax purposes?

[Carl Trottier]

Correct.

[Pat Martin, NDP, Winnipeg Centre, MB]

My other question along the same lines is about the public service renewal strategy. It says that the annual retirement rate has been rising regularly.

What are the long-term plans for the size of the public service? Is it the intention of the Treasury Board Secretariat to fill vacancies as they arise? Is there an attrition strategy to reduce the overall size of the public service? What forecasting are you doing to accommodate the rise in the annual retirement rate? I think it's 3.3% now.

[Carl Trottier]

Unfortunately, I didn't come here with that information today.

[Christine Walker]

How it's going to be managed, I think, is a question in terms of the cost containment measures. With the cost containment measures the hope is that with the attrition rate there will be retirements, but those retirements will not be filled as the cost containment measures take effect.

[Pat Martin, NDP, Winnipeg Centre, MB]

That's what I'm getting at. It seems that part of the strategy for getting us out of our deficit—again, I know you're only the messenger here—is to reduce the retirement benefits of the public service and to shrink the public service. This is our worst fears realized, frankly. We incur this massive deficit and the first place people look to try to trim the budget is to cutting and hacking and slashing jobs and benefits for our public service. That's the only conclusion I can come to from seeing both of these things clustered together in this particular study.

Thank you for your answers.

[The Chair, Liberal, John McKay]

Thank you, Mr. Martin.

Mr. Warkentin, five minutes, please.

[Chris Warkentin, Conservative, Peace River, AB]

Ms. Walker, I'm going to move to the questions that we actually asked you to come to this committee to testify to. It's important for colleagues to get some information with regard to vote 1b, and vote 15b as well.

These votes are with regard to collective agreements and paying out benefits for those. Is that correct?

[Christine Walker]

Vote 15 is the vote about the compensation adjustments, which is the $137 million I talked about.

The benefits that are the employee benefits--public service health care plan, dental plan--that's vote 20.

[Chris Warkentin, Conservative, Peace River, AB]

Pardon me, I didn't—

[Christine Walker]

That's vote 20. It's a different vote. So the benefits we pay—for instance, the dental plan, the public health care plan, the pension benefits—actually come out of vote 20.

[Chris Warkentin, Conservative, Peace River, AB]

I think committee members are often curious as to why certain funds or certain allocations come under supplementary (B), as opposed to the main estimates. I suspect that benefit payments would come out of a later vote because they are incurred during the year and these are absolute amounts. Is that correct? Are these in addition to what the estimates may have included?

[Christine Walker]

Many times they don't get asked for until the collective agreements have been signed and ratified. I believe some of these collective agreements were actually signed after the main estimates had been prepared. Hence, we come back and get it at the first chance we get.

[Chris Warkentin, Conservative, Peace River, AB]

For committee members, what I find interesting, of course, is the responsibility within Treasury Board to undertake the challenge function for pretty well every department when it comes to asking for money and additional funds. Are you involved in the oversight or challenge function for departments?

[Christine Walker]

No, I am not. That is done by our program sector. And as I said earlier, I'm sure the secretary or the associate secretary would be happy to come and speak to you about that.