Government Operations Committee on June 6th, 2012

[John McCallum, Liberal, Markham—Unionville, ON]

I thought it would be more official if the chair of the committee were to ask for it.

[The Chair, NDP, Pat Martin]

I see your point.

Mr. Matthews, would you like to comment?

[Bill Matthews]

We're actually doing a follow-up on a similar question to the Senate finance committee from yesterday. If you want, I can simply have the same letter written to both committees, which will provide some additional detail for AECL. Is that fair?

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you. I think that would work well.

[The Chair, NDP, Pat Martin]

Thank you.

Just before we close, let me ask one question. Years ago, when the old Reform Party used to be here, the one question they always put to groups presenting their estimates was, “What efforts have you made to reduce your spending on behalf of the taxpayer? What efforts have you made to tighten your belt so that you can ask for less money?” We would like to believe, especially in a time of cutbacks and fiscal restraint, that there would be evidence of the same, even though you're asking for additional spending.

Yesterday we had a press conference with a group called the Experimental Lakes Area, which had $2 million cut and 17 scientists laid off. It was a $2 million budget.

Could we not do without the skylight in West Block, save a couple of million dollars, and have fewer cutbacks elsewhere? I know it's not up to you, but has this come up within the parliamentary precinct renovations conversation? Could we not do without this problematic and very expensive crystal palace we're building and just put a roof on it? Could we not just put some asphalt shingles on it and save some money? Has that come up at all, Mr. Mongeau?

[Pierre-Marc Mongeau]

Thanks for the question, Mr. Martin. I know you're really interested in that issue.

I just want to say that the construction costs included in our estimates have been verified by the world-class architects we hired. We also hired a third party to review the construction costs. On top of that, we have our own service internally. What that means is that three separate parties are checking the construction costs.

We looked at comparable roofs in the U.S. that were built in a similar way. Using that benchmark, we found the costs to be more or less the same. We also worked with our consultants to examine the costs of arena-style roofing, which you would think was a cheaper option.

The roofing structure rests on steel columns that go all the way to the ground. As I mentioned, the total cost of the roof itself is around $40 million, but that includes the structure. If you compare that cost with the cost of a seemingly simpler roof, the difference is about 1.8% of the project cost, not very much.

Bear in mind as well that we cannot install a roof that does not comply with the National Capital Commission's Fibro requirements. We work with our consultants, our experts. We make sure our costs are as low as they can be and that the solutions we choose, while they might seem expensive, are consistent with the costs usually associated with the type of building in question.

[The Chair, NDP, Pat Martin]

Thank you.

I wasn't questioning whether the costing was done properly. If there's a 1.8% difference.... We learned later, though, that by putting a glass roof on it in a televised House of Commons is problematic. Now we have to build an extra screen to block the sun so that the television cameras can work within the chamber. Why not simply put a solid roof on it and avoid the problem of the sun ruining the television quality? I challenge whether there's only a 1% difference between a glass roof over that massive space and a solid roof.

I guess my question is, rather than rush to defend the design decision, are there rational discussions taking place that might change the design to a solid roof?

[Pierre-Marc Mongeau]

Thank you, Mr. Chair.

What we are doing currently is bringing the roofing components to optimal levels. As I said, the estimate for the roofing structure is $42 million. We are still trying to tighten up that estimate. I also want to point out that is only one part of the program. We are also doing a lot of masonry work, as well as technical innovation, as far as all the mechanics go.

We are constantly looking for ways to save money, and the best way to do that is, on the one hand, speeding up the work and, on the other hand, regularly reviewing the solutions we want to use, both now and in the future. I can assure you, Mr. Chair, that our practice of reviewing projects and programs is ongoing.

[The Chair, NDP, Pat Martin]

Mike.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair. You've inspired me to comment.

I appreciate everyone coming today.

In supplementary (A)s, you asked the question, should they not be looking for a reduction? Let's look at what we are considering today and be realistic.

The PCO was here. They had a surplus on a study they were doing, and all they're doing is restating the money in this year's budget—no new money, no change. On a $1.5 billion budget of money that's being transferred from other departments to a new department—and we're hoping that new department delivers, there's no doubt about it—we are actually doing internal money moving from one set of departments to one department to make that happen. Of the $1,500 million they're spending, they're asking for $10 million more for a specific project on cyber analysis, which they've been asked to do.

On the restating of the money that has already been allocated for the budgets for the renovations, those were perfectly good questions, Mr. Chair—if you want to question them on what we're doing in terms of renovations, how far the planning is on that, and if there is an opportunity to re-evaluate whether we need whatever those changes are—but really, at the end of the day, all they're doing is moving forward already approved money into this budget to actually be spent. I'm not keen on how that works because it looks like it's new money, the way it's working, but it's not really the case.

The big piece from our friends at Treasury Board is the ending of a program that will save taxpayers money in the long run, which we've heard of, and has already been booked as a liability. We're just paying down that liability, basically, and the way our system shows, that's approximately how much we will be spending this year.

So to be fair to our colleagues at the end of the table, the groups that we're looking at, there isn't very much in their supplementary (A)s, really. There might be some larger numbers, but in terms of actually asking for new money or new programs, there is very, very little of that, other than the $10 million for the cyber piece.

I want to make sure everybody understands, including those who are tuned in—I'm not sure there are very many—what we're dealing with today. We had a lot of good questions. I've been at this for six years, and I really appreciate the questions, not just from our side but from the opposition side. The questions today were about the estimates. I've been to a lot of meetings on estimates when there were no questions on estimates, or people hadn't read them and so on. That is not the case today. I think the level of scrutiny and discussion has risen, and I appreciate that.

You were able to make a comment, so I just thought I'd follow up with ours. That might not be the case for other departments. The supplementary (A)s in total were $2 billion, which is very small, really. We'll see what the supplementary (B)s look like, and then we'll have something to discuss.

Thank you, Mr. Chair.

[The Chair, NDP, Pat Martin]

Thank you, Mike.

I did interrupt you, Jean-François. We have 15 to 20 minutes left. Was there a point that you were still waiting to make when I cut you off?

[Jean-François Larose, NDP, Repentigny, QC]

It was just about estimates. To continue the questioning, it's just on the security measures.

To continue along the same lines, I can't see how the security piece fits in, because we are talking about estimates. Did you not take the security component into account? I've worked in public safety many times, and I know that when you're dealing with computers, security is always an issue.

Now, you said you were asking for more money because you were trying to ensure security, but I can't see why that was not taken into account from the outset. We do work for the federal government after all. Security should always be a consideration, regardless of the scope. It has been clear since 2001 that the government is vulnerable. Why, then, did this not factor into the initial estimate? That is my question.

[Benoît Long]

One of the benefits that Shared Services Canada will provide is a noticeable improvement in how well our systems stand up to cyber attacks, and an increase in how reliable and secure existing systems are, not to mention our own services. Our plans already take that into account. The amounts discussed today come under a new strategy announced by the government. That strategy is intended to increase the number of measures in place, while enhancing our ability to detect problems, defend the government security perimeter and respond to incidents quickly and much more effectively.

This investment is geared towards noticeably improving our ability to develop and deliver our services. As for the consolidation of our services and infrastructure, that will take a few years, given that our organization only recently came into being. Every time we make changes or consolidation efforts, we will be able to improve the security of our systems.

[Jean-François Larose, NDP, Repentigny, QC]

Thank you for your answer.

We will eagerly be following and analyzing the work you do. Thank you.

[The Chair, NDP, Pat Martin]

Thank you, Jean-François.

We still have ten minutes or so left. I've been asked if Alain Giguère may ask one question. As long as we keep our remarks limited to the estimates, I think we should use the two hours that we had scheduled for this set of witnesses, if that's agreeable to the Conservative side. If there are any other questions on this side, please feel free to indicate that. We won't bother with order so much as we'll use our time that way.

Alain, you have up to five minutes, please.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you very much.

I have two questions. The first has to do with the $6 billion that is not capitalized. It was listed as a financial reserve for the payment of severance benefits. As I understand it, the severance benefits have to be removed from collective agreements before they can be paid out.

The problem with that is you are assuming everyone, all the unions, will agree to having their severance benefits taken away. The $500 million you're saving may be achieved through the expansion of their pension plan. Your $500 million in savings, like your $6-billion reserve, depends on negotiations that have yet to take place. The outcome is unknown.

[Bill Matthews]

It's a good question. I have a couple of points.

The $6 billion is the liability for the benefit that has been earned to date. This is the amount that employees have earned under previous collective agreements; it is their earned right to receive that, and no one is going to take it away.

Your question, I believe, is around the savings on a go-forward basis, which we're estimating—and “estimate” is the key word—at about $500 million once per year, once all is said and done. The reason I say “estimate” is you're quite right, it is a negotiation. There are almost 20 agreements that still need to be negotiated, and that will take time. I cannot commit to what the exact savings will be because, you're absolutely right, it is a negotiation and it's still to take place. That's why I have used the words “estimated $500 million” or roughly $500 million. But the negotiations will occur as agreements expire. That will happen over the next couple of years.

The $6 billion liability is what employees have earned to date, roughly, for provisions under existing collective agreements, and that's not being touched.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

My second question has to do with the level of computerization and the $1.5-million estimate. The Auditor General has, in previous years, indicated that many departments had fallen very behind in terms of modernizing and upgrading their computer systems. The problem is that you are inheriting not just the budgets of those departments, but also all their weaknesses, stemming from their lack of past investment.

Under the current budget transfers, how will you not only deliver the services needed, but also ensure those services are sound and secure. And how will you do that while reducing budgets to achieve the necessary savings and making up for the lack of investment and resulting system weaknesses? How will you do all four of those things within a fixed budget?

[Benoît Long]

Obviously, this isn't an easy problem to fix, but a number of states and provinces have undertaken a similar exercise. A business-case approach must be adopted when setting up new systems and infrastructure. Our mandate is of course limited to infrastructure, meaning what already exists as far as data centres and networking go.

A natural replacement occurs within those data centres, as far as servers and storage capability are concerned. Under that natural transition, servers are expected to last four to five years before they need to be replaced. Instead of each department replacing those servers one at a time—with all the duplication that would entail in terms of the processes, resources and foundations needed to maintain those systems—we are going to establish horizontal systems and business-based approaches across government. We will provide a new type of service, one that is even more reliable and much more secure, while allowing for savings throughout the replacement process.

A number of years down the road, what we will end up with is digital infrastructure that has been modernized and renewed replacing what currently exists. It is under way.

[The Chair, NDP, Pat Martin]

Thank you, Mr. Long.

Building on Alain's last question, some of our systems were compromised in a very serious way a couple of years ago at Treasury Board. I remember when Stockwell Day was the President of the Treasury Board. Obviously we can't know the depth of it for national security reasons.

But my question would be, with the concentration of servers now, are we more vulnerable to an attack? If somebody does get in, they have access to more stuff, now that we're concentrated. Are these attacks still happening, and are we fending them off? Are they getting more sophisticated and harder to detect? Is it part of your new mandate with Shared Services Canada to augment and enhance the security provisions we have so that we don't suffer these attacks?

[Benoît Long]

Thank you, Mr. Chairman.

Absolutely, it's part of Shared Services Canada's mandate, along with Treasury Board, Public Safety, as well as CSEC, to actually enhance our ability to manage, if you wish, and continue to defend ourselves against progressively increasing threats against our perimeter, our systems on the outside.

Some of those dollars that you're seeing today are the investments the government has announced to really enhance our ability to do a few things, including the defence and monitoring, as well as prevention, and increasing our capability to respond to incidents when they do take place. It is an ongoing challenge for every government and every institution in the world to fend off those increasing and progressively global threats. But the measures that we are putting in place, as well as the consolidation of that infrastructure, will actually allow us to reduce the number of points that exist today where the government systems could be vulnerable, as well as to improve our ability, with the reduced number of points, to increase our defence at those very points of entry.

Similar to windows and doors on a house, the fewer you have, the more you can actually protect those that are left, and presumably you can increase the security to allow anybody to come in or not come in. We now have a more sophisticated system, as well as increased funding, to allow us to increase our detection of anybody who does try to come into our systems.

[The Chair, NDP, Pat Martin]

I don't think you'll find anybody arguing that's not money well spent, to make sure we're up to speed and current with that defence.

John, go ahead.

[John McCallum, Liberal, Markham—Unionville, ON]

I have one question for Mr. Matthews.

If I understand correctly, the severance amounts that we've been talking about today are for voluntary departures or retirements. What about all the money and severance for the involuntary departures for people who are laid off as a result of the cuts? Where do those appear?

[Bill Matthews]

The liability for that was laid out in the budget. Going from memory, it's just under $1 billion, I think $900 million, so the liability has been booked.

That is pursuant to the workforce adjustment directive, and that's separate from the voluntary severance. If you did have a person, for example, who was impacted by the reductions, the workforce adjustment directive would kick in, and their severance package would also be there as well. If they had already been paid out earlier, that would influence things there, but the workforce adjustment directive is still in effect for those folks who are impacted by the reductions.

There is a separate liability for that, and it was outlined in the budget, and I'm going from memory here, but I think it was just under $1 billion.

[John McCallum, Liberal, Markham—Unionville, ON]

But since the supplementary estimates do not contain the results of the cuts, does that mean the severance payments are not included in the estimates to date?