Government Operations Committee on June 6th, 2012

[Pierre-Marc Mongeau]

We are talking about $61 million for the Wellington Building. The $90 million for the West Block is divided into two. Sixty million dollars is set aside for the West Block, and $30 million dollars is earmarked for the Sir John A. Macdonald Building. They are tied together in the request.

To answer your question, the building at 180 Wellington Street is the large building on the corner of O'Connor Street—

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

Sorry, we will start over. The total is $210 million, and you are requesting $240 million—so $30 million for the leases, $61 million for the East Block, $90 million for the West Block, including the Sir John A. Macdonald Building and the building at 180 Wellington Street.

[Pierre-Marc Mongeau]

That's correct. It's $90 million for the West Block program. So it's $90 million for the West Block and the Sir John A. Macdonald Building, $61 million for the recapitalization program, $61 million for the building at 180 Wellington Street, and $30 million for the leases.

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

It would have been nice to have the detailed figures. We may have been a bit less interested in the breakdown.

For each of those contracts, you say that you are ahead of or in line with the deadline and budget projections. There are no cost overruns.

[Pierre-Marc Mongeau]

For each of those contracts, we followed the normal procedure. We asked the Treasury Board for the authorization to spend—in other words, the authorization to conclude contracts. So far, we have not yet asked for amendments to the actual contract.

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

Very well.

Mr. Matthews, I have a $6-billion question. It's about the allocation, if you will, of the severance benefits. You talked about an overall amount of $6 billion over a certain number of years, for 400,000 government workers.

[Bill Matthews]

Thank you for the question, Mr. Chair.

The $6 billion was the amount that accumulated since the severance benefit was put in place. That is a period of time that varies, depending upon the collective agreements, but you're looking over roughly 30 years or so. It did get added into, as I mentioned, some 27 collective agreements, plus other groups as well.

That amount...it's not a fund, but it's a liability that's already booked in the government's financial statements. If you refer to the Public Accounts of Canada, volume I, under the liabilities for the Government of Canada, included in there last year was roughly $6 billion. That amount has already impacted the bottom line of the government. What we are dealing with now is the payout of that liability. Some employees will opt to receive payment now, some received it last year, and others will opt to defer the receipt of that payment until they voluntarily retire or leave the public service.

So that amount will be with us over a number of years. What we're dealing with now is that as the agreements are renegotiated, employees are given the option to get payout now, even though they remain as employees of the Government of Canada. But the liability itself will be with us for quite some time. It will be reduced as payments are made, but the liability itself will be there for quite some time.

[The Chair, NDP, Pat Martin]

Thank you, Alain. That concludes your five minutes.

Mr. Peter Braid.

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

Thank you, Mr. Chair.

Thank you to all of the departmental representatives for being here this afternoon.

I would start with a question or two for the Treasury Board Secretariat with respect to this issue of the payout of the voluntary severance, and kind of phasing that out.

It sounds to me like this is short-term pain for long-term gain, phasing this particular expense out as severance for people who either retire or leave the public service voluntarily. I'm curious to know whether you can provide any information with respect to what the savings of the phase-out of this particular payout will be over a period of time.

[Bill Matthews]

Thank you for the question.

Once we do finish the negotiations with all collective agreements, there will be annual savings of about $500 million a year, roughly speaking, with the elimination of this benefit. As I did mention, we will see payouts over a number of years.

To give you an example in terms of the benefit for the Canadian Forces, that has ceased, but it will likely be next fiscal year when Canadian Forces members receive the option to receive payout. So you will see payouts for a number of years, but once all is said and done, the annual savings will be roughly $500 million a year.

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

It's certainly not insignificant, then, in terms of benefit to the fiscal framework of the Government of Canada and the operating expenses of the government.

I'm curious to know why the $850 million was in the supplementary (A)s and not in the mains.

[Bill Matthews]

The mains are typically more for ongoing programs. With the supplementary estimates, we did want to have a good estimate of the cash we would require. It very much is dependent, as I said earlier, upon the pace of negotiations. We wanted the most current estimate we could get.

As I mentioned, last year we estimated $1.3 billion. It was really our first crack at it, because it was a new experience for us. We came in at $1.1 billion, so it did prove to be reasonably accurate. We had based that estimation on the experience of Canada Post, when they had eliminated a similar benefit.

Again, it is an estimate. It's entirely possible that we would come back in supplementary estimates (B) or (C) and say that the negotiations moved faster than we thought, or that the rate of payment was greater than we thought, and we need additional funds. But it's our best estimate. And by waiting for supplementary estimates (A), we were able to have some additional time to make that estimate.

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

I might observe as well that the supplementary estimates (A) from the Treasury Board Secretariat are very clean. There are a lot of “non-entries” here, other than the $850 million, so you.... You done good.

Moving to a different topic, to this issue of the cyber-security initiative, why are there asks from both the Treasury Board Secretariat and Shared Services Canada with respect to this initiative?

[Christine Walker]

There are two parts to this. The SSC is responsible for the infrastructure, the e-mail, the networks, and the data centres. The Treasury Board is responsible for the overall guidance on the IT security and the policies and the standards and the directives.

What will happen is that once the Treasury Board formulates its policies, its directives, and its standards, it will be up to the SSC to implement that in the infrastructure they now currently manage. That is the reason we have both as part of that cyber-security.

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

Did you want to add to that?

[Gina Rallis]

If I may expand, the cyber-security strategy is a horizontal initiative. Four departments are involved in the delivery of this strategy for the Government of Canada. It is led by Public Safety. Of course, Communications Security Establishment Canada is also involved, as well as Treasury Board Secretariat and SSC, from a shared services perspective. This strategy and the funding we're seeking is with respect to ensuring we're able to combat cyber-crime and reduce the number of threats on our IT infrastructure for the Government of Canada.

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

Is there an ask in the supplementary estimates (A) because the costs of this program have increased?

[Christine Walker]

The reason it's in the supplementary estimates (A) is that the Treasury Board decision was taken after the fact, the close-out date for the main estimates. It's a timing issue.

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

It's a timing issue. Okay.

Thank you.

[The Chair, NDP, Pat Martin]

I'm afraid your time has expired.

John McCallum for the Liberals.

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

Thank you.

Thank you all for being here.

Mr. Matthews, AECL got money from the central vote 5, the contingency fund, in the amount of $25 million. It's to be used for “urgent health, safety, security and environmental priorities at Chalk River Laboratories”. I wonder if you could explain to us what this money is used for, needed for.

[Bill Matthews]

Sure. Thank you for the question.

I'll speak to the funding for AECL in two pieces. As the member mentioned, funding was provided through government contingencies. When the deal to divest the division of CANDU reactors from the Government of Canada to SNC-Lavalin was struck, the funding structure for AECL changed. You have statutory funding ongoing to AECL for the nuclear reactor life extension projects that the government entered into before that deal with SNC-Lavalin. The government is still financially responsible for those.

The balance of the AECL operating requirements is around a couple of things. The first piece is around isotope production and ongoing issues there. The second piece is related to Chalk River labs and some ongoing maintenance and health and safety spending.

That's about the extent of what I can say on AECL. If you want a further follow-up, I'd suggest the department itself might be in a better position to answer.

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

Thank you.

Next, can you explain why Treasury Board decided to remove the table of allocations for Treasury Board central votes from the supplementary estimates?

[Bill Matthews]

Thank you for the question, Mr. Chair.

We've made a couple of changes. I'll use this opportunity to highlight the changes we've made to the supplementary estimates (A). The member has just mentioned one of them. We've put those online. They're not removed from the document itself, but we are trying to keep printing costs down, so we've put a number of things online. They are no longer in the printed version itself, but they are available online.

The other things we have done to attempt to improve the document itself this time round is we have included what's basically a top 10 list early on in the document to highlight the major changes, both in terms of dollar amount and percentage in terms of the supplementary estimates (A). That may not look particularly useful to you now because the supplementary estimates (A) are fairly small. Those top 10 items, I think, get you 85% of the spending. I think it will be useful in subsequent supplementary estimates where greater amounts of dollars are included. It might be useful in highlighting the changes.

The other thing we have done...we used to only include organizations that were receiving funding in supplementary estimates (A). We are now including all the organizations so you can see what has happened to each organization. Even if they are getting no funding at all, they are listed there, so that's highlighted for you.

That's the run-through of the changes we made.

I think there is one other one. It's not a substantial change, but there is a section on horizontal items, which tends to get some attention. We have moved that forward in the document. It's not a new section, but it is closer to the front of the document so it's easier to find.

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

Thank you.

Mr. Lakroni, in your report on plans and priorities, you say you're going to manage your real property portfolio more strategically, including increased use of private sector capacity. I wonder where and when and why that private sector capacity comes in.