Government Operations Committee on March 25th, 2014

[Bill Matthews]

Certainly, the P3 format is something the federal government has not done a lot of.

A great example would be the bridge to P.E.I. Many of our provinces are making extensive use of P3s. The advantage to the government is around actually getting payment or linking payment to actual production. The government is sort of protected from risk in terms of construction cost overruns, delays, and things like that. It's an easier way to hold the constructor to account in terms of tying the compensation to actual delivery. It's not just the building of the facility itself. These are ongoing operations, so there are service standards built into the ongoing operations of the building and they effectively transfer more of the risk to the private sector.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Could you please describe the features of the new building and provide us with a breakdown of costs?

[Bill Matthews]

One of the advantages is that it's self-contained. In terms of the facility itself, it's very modern. It's about 72,000 square metres. It does contain, if you look to modern buildings, lots of common space for meetings, facilitation, and things like that, so it's built to the new standard. From an environmental perspective, it is built to the LEED gold standard and that involves things like using recycled materials and things like that.

There are facilities in this, so it is self-contained. I know there is a fitness facility. Absolutely, the employees can stay put on campus, if I can use those words. I would assume the largest advantage is security. This building, obviously, because of the nature of the work, has to be highly secure, so it's a different standard you're building to than the normal government building.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Do you have the breakdown of the costs?

[Bill Matthews]

Not of the total cost, no. I have what the current year will cost, and I think we've already covered off those figures. As for the total cost itself, I can't answer that question, but maybe my colleagues have something to offer. No?

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

I would like—

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you, Mrs. Day. Your time is up.

Mr. Aspin has the floor for five minutes.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

My first question is for the minister, but in his absence maybe you can answer this question, Mr. Matthews.

On February 26 of this year in a speech to the Economic Club of Canada, the minister stated that beyond changes to the federal employees' contributions to their pension and disability plans, the federal government should be, “putting in place new measures to improve government spending decisions and strengthen the government's ability to contain costs."

Can you tell me what are these new cost containment measures to which the minister was referring?

[Bill Matthews]

Sure, and thank you for the question.

What was being referred to there is, if you think about the expenditure management system in government, that involves everything from the budgets, cabinet decision-making, right through to Treasury Board's approval of spending, and then actual spending. The expenditure management system does go through a review from time to time. The last one was about six years ago, and if I can give you a bit of history, out of that came the idea of strategic reviews.

Some of the longer serving members here would remember strategic reviews where each government department had to look at its programs every four years to look at effectiveness, so that was done. It talked about strengthening the evaluation function of the government, which has been done. There are evaluation functions in all departments. Those were kind of the major outcomes of the last time.

This time around our focus is going to be on improved costing. We effectively have two levels of costing. There's costing that goes into the memoranda to cabinet and then costing again on a more detailed level when it comes to Treasury Board submissions. These are improvements in the costing through greater guidance and material to CFOs who actually have to attest to their costs. That's one kind of improvement I would speak to.

The other is the notion of ongoing spending reviews of one sort or another, and that will vary by year. We'll look at a particular initiative or a particular area of spending to see if there are ways they can be improved and spending reduced. Those are the two highlights off the top of my head. I hope that answers the question.

[Jay Aspin, Conservative, Nipissing—Timiskaming, ON]

Thank you.

The Treasury Board 2014-15 report on plans and priorities cites five priorities. One of them is to strengthen government financial and expenditure management to support value-for-money ongoing cost containment and increased operational efficiency. One of the stated plans for meeting this priority is to establish a new costing centre of expertise within the secretariat to strengthen its capacity to challenge costs.

When this centre is established, what will be its budget and how many employees will be there? Is this centre something new? Were the costs of the Treasury Board submissions not analyzed before?

[Bill Matthews]

Thanks for that question. That links to the previous question as well quite nicely.

When I spoke about improved costing in departments, that requires two things. One is that it requires more guidance, benchmarks, things like that, from the centre to go to departments. That costing centre will handle that. The other thing is that Treasury Board Secretariat has always been responsible for challenging the costs that come in from departments on Treasury Board submissions. The recognition there is, to link it to a question from the first part of the meeting, if you're dealing with costing around AECL, that's pretty complicated stuff so there's a notion that depending on the nature of the project we may need some additional expertise at the centre to allow us to challenge costs. It's not just accountants. It could be engineers, depending on the nature of the work. That's the second part of that. Increased guidance to departments is number one. Number two is building up an expertise centre at Treasury Board Secretariat to deal with the really complex proposals to build on our existing challenge function.

It's a new centre. The idea of Treasury Board Secretariat challenging costs is not new. That's always been its job, but some of these things are quite complex. It's too early for me to say how many people will be resourced in that centre. Work has started there, but I don't think it's quite up to full speed yet.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you, Mr. Aspin.

Now we'll move to Mr. Byrne for five minutes.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

I want to follow up on some of the things we were talking about earlier about the EI account. How big a position do you expect the EI surplus to participate in in the overall surplus position of the Government of Canada by 2015?

[Bill Matthews]

On an ongoing basis—and that's probably a better question for the Department of Finance or ESDC—I would expect it to be cost neutral. That's the intent of this. From year to year, yes, there will be the odd fluctuation, but on an ongoing, longer term nature, I would expect it to be cost neutral.

Since EI is getting a lot of attention this morning, if it's of interest to members, the Department of Finance produces the “Fiscal Monitor” on a monthly basis. That discloses, on a monthly basis, EI revenues and EI expenses so you can track it quite closely from month to month. If it is of interest, there are all sorts of reporting there. I would highlight that for members, but longer term, the objective is that it would be cost neutral, to answer your question.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

If you were to include the $57 billion, would that still be cost neutral or does that play a role or have an impact?

[Bill Matthews]

That surplus was built up under the previous regime, so it's difficult for me to factor that into the new regime. If there had been no change, you'd have to ask if the premiums had been adjusted to reflect that surplus. It's difficult for me to say what that would be. I'm going back many years here. I think Sheila Fraser first raised issues around the size of the EI surplus in one of her auditor general's reports many years ago. That was a long-standing issue of the past. As I said, they've hit the reset button with new legislation to zero out and start afresh, and it is a new regime.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

The reset button started in 2008 or 2009, I think, wasn't it?

[Bill Matthews]

I think that's a pretty good guess. I would take Marcia's word over mine.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Not to contradict what she said, but it's not totally part of the old regime. I think it's a blend or hybrid.

[Bill Matthews]

Absolutely, so I understand.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

In terms of forecasting, what I think we're all very interested in and paying close attention to are payments that are booked that are not expended. If we book certain payments, certain expenditures, anticipated expenditures and they're not spent in the particular fiscal year, then they go back to the consolidated revenue fund. I think one of the criticisms of the past regime was the $3 billion contingency fund, which of course if it didn't get spent went to surplus. I think the argument was that it created a false surplus.

There seems to be a fair bit of contingency built into these main estimates, into this budget cycle. There's a reasonable contingency. Have we questioned that or is it...?

[Bill Matthews]

There are two things. One, the contingency you're speaking of that was part of the budget is still there. There's still a $3 billion contingency fund built into the budget and that's just good financial planning. If you think about incidents like the Alberta floods or Lac-Mégantic, you're going to have things, and you don't know what they are, but they're going to drive expenses. That's the $3 billion and that is still there in the budget that was tabled for budget 2014.

From an estimates perspective, you don't actually build in contingency funds. You build in your best case scenario in terms of how much money you think you'll be able to spend. It's illegal to overspend, so it's important to plan for the best case or worst case scenario, depending on your perspective.

We've talked already this morning about infrastructure. The infrastructure agreements are complex and year after year they're never able to realize the extent of the agreements they forecast. You're seeing a more realistic look at what the infrastructure spending will look like.

You could make the same comment about National Defence spending. It's complex, capital in nature, and frequently, despite best intentions, spending doesn't come in as high as planned on those projects. There are delays.

We're trying to do a better job of forecasting actual spending, but it is a bit of a catch-22 because it is illegal to overspend. So if you're going to bump up against your limit—it is an up to amount—you do have to come back in and get parliamentary authority.

So we do have to find the right level.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

I thought that was the function of supplementary estimates, to provide a cushion.

[Bill Matthews]

That is absolutely the function of supplementary estimates, but again to get into supplementary estimates through Treasury Board it's not a three-day process. It's a long process, so you do have to get your ducks lined up, but you're quite right.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you, Mr. Byrne.

Mr. Hillyer now has the floor for five minutes.