Government Operations Committee on Feb. 15th, 2018

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you.

I have a quick question, and maybe somebody could get back to me in writing. I know there was a transfer from Citizenship and Immigration to the Department of Justice for legal aid money to help refugees. It was for the provinces of Ontario, British Columbia, and Manitoba. I'm wondering if someone could get back to me with the portion of funding that's allocated to Manitoba. It's not something we have to do right now, so if you could follow up in writing, I'd appreciate it.

I want to ask about the $250-million item for the Treasury Board Secretariat for paylist requirements, which seems to have a lot to do with accumulated severance pay benefits. I was doing a telephone town hall on Tuesday night with my riding, and there was a woman who called in. She is near the end of her career with the civil service, and a bunch of her colleagues and friends are as well. She was saying that there have been a lot of challenges with receiving their appropriate severance pay when they leave the civil service, and she attributed that to problems with Phoenix.

I'm wondering, first of all, is part of the problem that the government has not yet come to Parliament for the proper authorities in order to be able to dispense these severance monies, or is it really a problem with Phoenix or some combination thereof? Are we confident that this money that's going to be approved in supplementary estimates (C) is going to get disbursed to the people it ought to in a timely way?

[Marcia Santiago, Executive Director, Expenditure Management Sector, Treasury Board Secretariat]

Thank you for the question.

The $250 million in supplementary estimates (C) is specifically to deal with the last remaining agreement from two rounds ago now of negotiations. It's one specific group in the Canada Revenue Agency. To my understanding, they've already paid out at least that $250 million, and the item in supplementary estimates (C) is to reimburse them for what they've already paid to their employees.

The CRA, to my understanding, is not a pay centre or Phoenix department. I can't speak to—

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

This is CRA. It's not—

[Marcia Santiago]

This is CRA specifically, yes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much for that.

Coming back to the question around the SISIP that Mr. McCauley was asking about, it talks about halting charges, so I recognize that there may not be enough in the account. Does that mean we're paying penalties now? Is that a feature of the contract, then? How are those penalties assessed, and how long have we been paying those penalties?

[Renée LaFontaine]

Thanks for the question.

I don't have a lot of details, but I can give you a one-year example. In the contract, there are conditions whereby 40% of the premiums that are paid have to be kept on hand by Manulife to ensure it's financially sustainable. If they fall below that amount, Manulife uses its own money, so they give us a capital charge—they call it a “c charge”—and they charge us interest.

I have for you that we paid interest of $616,900 in 2016, and the longer that goes on, the more interest we pay.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

It's a penalty that's assessed, more like a loan.—

[Renée LaFontaine]

It's like a loan, right.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

It's not per claim.

[Renée LaFontaine]

It's to pay them for any of their capital costs that they use because they're using their own money.

Does that make sense?

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Yes, it does. Thank you very much.

My last question has to do with the money for paying the public sector unions the dues they haven't received. I'm wondering about the mechanics of that. I guess normally that would be employee money, which is why it wasn't initially budgeted. Is this extra money?

Do we know when to expect that this issue will be resolved? If so, is this expenditure going to be worked into next year's budget, if—

[The Vice-Chair, Liberal, Yasmin Ratansi]

Mr. Blaikie, you better cut your question short.

Mr. Pagan, give us a quick answer.

[Brian Pagan]

The way the process works is that when employees are paid, a portion of their pay is directed to union dues. Because of challenges with the Phoenix system, we have not been depositing all of the union dues owed the unions. In supplementary estimates (C), there is an item for PSPC. It's a non-budgetary vote. They will be advancing money to the union to make good on our obligation. It's a $14-million appropriation. When the challenges with the Phoenix system are resolved, that will be paid back to us.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Thank you.

Madame Mendès, you have seven minutes.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Thank you for being here and for trying to shed light on some of the details under supplementary estimates (C).

I was curious about the budget of $172.5 million for the stabilization of the Government of Canada's pay system. We're talking about Phoenix, I imagine. What would this imply? Is this just for the hiring of more pay experts and advisers? What does this mean?

[Brian Pagan]

The item you're referring to is presented as a horizontal item in the supplementary estimates, “Funding for the stabilization of the Government of Canada’s pay system”. This comprises funding for two departments.

For Public Works and Government Services Canada, it's $166.1 million. This is essentially threefold. In the first place, it is money to add capacity. They are hiring additional compensation advisers to address the backlog. Second, there are system fixes. They're going into the software of Phoenix and making changes to that system so that it functions properly. Finally, there are the changes to the underlying HR-to-pay process, looking at all of the rules, including the classification system, overtime costs, acting assignments, and promotions. All of this is being looked at to make sure it is streamlined and efficiently supports the system.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Doesn't that go with the IT part of it?

[Brian Pagan]

IT systems are intended to automate the underlying processes. What we found, through the Phoenix system, is that there were certain challenges to our underlying HR processes. We're looking at those business processes and making the changes necessary so that the system can function properly.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

These processes, then, were not found to be lacking in the old pay system, or were they being dealt with manually?

[Marcia Santiago]

Some of the processes that have been in place have been in place literally for decades. One of the things we found, for example, was that there are some relatively simple pay transactions that have to be approved and reapproved, say, three or four times before a cheque enters the pay record. What we should have done in updating the IT system was to update the business processes as well, so that they would be more efficient. I think that's what we're trying to do now. We're trying to address those things at the same time as we're addressing the backlog.

[Brian Pagan]

The second element of this horizontal item is funding to the Treasury Board Secretariat, which is $6.3 million, and this is multi-dimensional.

To support this business process review, we've stood up a new HR management transformation sector. We are working with PSPC and with the chiefs of HR in all the departments to understand the current processes and what can be streamlined. We have also established a claims office, so that those employees who have been negatively affected by Phoenix and are incurring fees for accounting services or interest on credit cards can be reimbursed for those charges.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Would that also include the excess taxes they're paying on their income because of badly calculated T4s at the end of last year?

[Renée LaFontaine]

No. CRA is looking at processes to ensure that if an employee has been overpaid and then they are overpaying their taxes, there is a process to get reimbursed for that. The claims office wouldn't deal with that. But if the employee has to go out and hire an accounting firm or an H&R Block or somebody to resubmit their taxes with updated T4 slips, we would certainly pay for that, because that shouldn't have happened.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Thank you.

In the international assistance priorities, I think we're adding this $202.5 million to what was voted in the 2017-18 budget. I'd like to understand why.

[Brian Pagan]

Just to be sure I understand the question, you're taking about funding for Foreign Affairs?