Government Operations Committee on Dec. 1st, 2011

[Richard Dicerni]

The program was closed down, terminated, in 2006, and was in some ways replaced by the SADI program, strategic aerospace and defence initiative, which is uniquely focused on the aerospace sector. That program has not started any repayments because there's usually a five-year to seven-year R and D phase before they finish the development and start selling the product in the marketplace.

The two other programs, the two legacy programs, the DIPP and the TPC, are finished, but they're in the repayment stage. And we'll get back to you--

[The Chair, NDP, Pat Martin]

Perhaps you could get back to us with that. I won't take any more time for now.

The next round of questioning is for the NDP, Mathieu Ravignat, or as you see fit.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

We're going to share.

[The Chair, NDP, Pat Martin]

You're going to share.

Ève Péclet.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

On page 89, the first point is entitled "Reinvestment of receipts from repayable contributions to support operating requirements". This refers to vote 1. You are asking for $23.1 million. I would like to know how this amount will be broken down. What kind of expenses are these?

[Richard Dicerni]

These contributions are allocated to the department for its operations. They are not intended for any specific activity; they are simply part of our budgetary base. To run Industry Canada, we need approximately $400 million a year, and 80% or 85% of this amount originates from the consolidated fund. Therefore, we obtain a transfer from Treasury Board. The rest comes from contributions and receipts originating from this program. This $23 million is integrated into the department's operating base. It is not allocated to any specific activity.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

On page 90, the second point is entitled "Internal reallocation of resources - To support investments in various capital projects". This in fact refers to votes 1 and 5.

Once again, I would like to know how this amount would be broken down. In other words, what will this $8 million will be used for?

[Kelly Gillis]

Approximately $4 million out of the $8.6 million will be spent on new spectrum management software. This is a very important software allowing us to manage our licenses. Another amount of approximately $3.5 million is allocated to the infrastructure and small projects of the Communication Research Centre of the Shirleys Bay campus. The other amounts will be devoted to very small projects, such as the purchase of software, a server or other such things.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

I see.

[Mathieu Ravignat, NDP, Pontiac, QC]

I have a more general question.

Reviewing the estimates of the other departments, I realized that the costs of outsourcing were increasing. I would like to know if this is also the case for you and where in the estimates we can find details regarding your use of outsourcing?

[Richard Dicerni]

Could you specify more clearly what you mean by outsourcing?

[Mathieu Ravignat, NDP, Pontiac, QC]

I am referring to services you use and which are not offered by the department, but by the private sector, for example.

[Richard Dicerni]

I can respond that generally we reduce our outsourcing costs. This is one of the areas I targeted in order to reduce our operating costs. Generally I can tell you that now, we use outsourcing less as compared with yesterday or the day before yesterday.

[Mathieu Ravignat, NDP, Pontiac, QC]

That is interesting. You are perhaps the only ones.

I would like to know why you targeted reductions in the area of outsourcing and in what sector they apply.

[Richard Dicerni]

There is more than one reason, and one of them is experience. I have a certain number of years of experience in management. In particular I remember one moment in my career. When I was president of the Canadian Newspaper Association, I had an opportunity to meet many owners. I also met a man by the name of David Radler who was the president under Mr. Black. He was responsible for all the newspapers of Southam Newspapers and Hollinger Inc. During our meeting, he told me about his management strategy. He told me he rarely spent a cent to hire consultants. If any of the newspapers had an editorial problem, he knew that another newspaper had an expert in that field and he could ask that person to explain to the less competent editor how to do the job. If there was a distribution problem, he did the same. He told me that in order to improve the performance of others, there were always people within his team who were equipped better than any consultant he might use and who would cost him an arm and a leg.

That comment struck me at the time and always remained a point of reference for me. I think that we have a good team at Industry Canada. In my opinion, internal help we provide to each other mutually is more effective than recourse to consultants.

[The Chair, NDP, Pat Martin]

Thank you. Your time is up.

For the Conservatives, Peter Braid. Peter, welcome.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Mr. Chair.

I'll start with an observation.

Mr. Dicerni, you and your officials and I must be feeling a sense of déjà vu. Yesterday you were before the industry committee speaking to the supplementary estimates (B).

In this era of government's interest in government efficiency, avoiding duplication, and finding enhancements to how government operates, I wonder out loud how much sense it makes to have the same officials come to two different committees. You'd perhaps prefer to be back at your office helping to run your department, or perhaps even be at the dentist, rather than being here. In any event, now that you are here....

Yes?

[Richard Dicerni]

We are proud of our department and we are proud of the stewardship we have over these expenditures. We seek every platform possible to share that pride.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

I should have known that you wouldn't have missed that opportunity, Mr. Dicerni.

I have a couple of questions. One relates to an item in your introductory remarks, and then the second is a specific line item.

In your remarks you mentioned that on page 94 there are requests for $23.1 million in repaid contributions from the defence industry productivity program. I was curious to know a bit more about what the DIPP is. So could you explain a little about that program, and how it results in repaid contributions back to the industry department, please?

[Richard Dicerni]

The Government of Canada has had a long history of partnership with the.... I'll focus on the aerospace industry. I think this goes back to WWII, when we were the manufacturing production house for the Allies.

The Government of Canada's commitment partnership has been sustained through a variety of programs over the decades. The DIPP program was one such partnership program between the Government of Canada and the aerospace industry. It ceased to exist in 1995. The government of the day abolished the program and one or two years later a bit of a successor program, called Technology Partnership Canada, was created, which ran from about 1996 or 1997 to 2006. That program, TPC, also came to an end, the successor program being the strategic aerospace and defence initiative.

The DIPP program was similar in some ways to TPC and SADI as a technology-enhancing partnership between the government and different companies. The repayments flow from contribution agreements that were entered into in the 1980s and 1990s prior to the program's termination. The previous year, I believe the Government of Canada received about $60 million to $65 million in repayments. This year it's down to perhaps about $40 million to $45 million, because these are old legacy initiatives that have been on the market for 15 to 20 years. So in some ways they have been lapped by other new projects, new elements.

The department's funding base comes from the consolidated revenue fund and partially from DIPP repayments. So this money that you have in the estimates contributes to the operating base of the department, and represents maybe 15% of the operating expenditures of the department. So that's DIPP.

[The Chair, NDP, Pat Martin]

Thank you.

A very brief question, Peter.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Will that 15% carry on into the future for a period of time, or at some point will it...?

[Richard Dicerni]

Well, at some point these repayments will continue to trickle down, because they are old. Take for example a Pratt and Whitney engine that was supported by this program. They have new engines on the market that are much more fuel-efficient, and therefore they're having a hard time selling the old engine, because we have supported them in the development of a new engine.

So in some ways we are cannibalizing the old programs in terms of their ability to be sold in the market.

[The Chair, NDP, Pat Martin]

I'm afraid your time is up. Thank you.

We now have Denis Blanchette.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you Mr. Chair.

Earlier we briefly spoke about the labour needs in Canada and in all western countries in the field of information technology. You have the money and you want to invest in this area. I am curious to know why this area would fall within the competence of Industry Canada and not the Department of Human Resources and Skills Development.