Government Operations Committee on May 17th, 2016

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

We're here to discuss the department's 2016-17 main estimates, supplementary estimates (A), and our reports on plans and priorities.

When I appeared before this committee on March 10 we discussed a range of important initiatives, including the rehabilitation work in the parliamentary precinct, successes in real property management, Canada Post, and the modernization of IT infrastructure.

As critical players in the day-to-day operations of the Government of Canada, Public Services and Procurement Canada and its portfolio are key to ensuring the government delivers on its ambitious agenda. Our work is under way but much more has to be done to achieve needed changes and improvements.

Today I'm happy to report to members on five key areas: greening government, service delivery, innovative practices, modernizing procurement, and budget investments.

I'll begin with our initiatives to support the greening of government. Greening initiatives received considerable support in budget 2016, which contained measures to strengthen the middle class and investments in infrastructure to boost the economy. Among the budget's many green investments, I draw your attention to the $2.1 billion to allow Public Services and Procurement Canada to repair its large portfolio of properties and to green government operations. Of this amount, $1.2 billion has been allocated to upgrade the outdated energy system that heats and cools over 100 buildings in the national capital region. Much of this energy infrastructure, which includes several plants, was built in the 1950s. This investment in modern technology will reduce greenhouse gas emissions by almost one-third and reduce annual operating costs by up to 20%. It will result in a safer and more reliable system.

When we talk about green initiatives, and in particular green buildings, most people think about construction that protects the health of the environment. To me such a building should also protect the health of its occupants. That is why Public Services and Procurement Canada has, as of April 1, prohibited the use of asbestos in its new construction and major renovation projects. In addition, beginning this summer, the department is posting an online inventory of the buildings it owns or leases that contain asbestos.

When it comes to service delivery, Canadians are at the heart of everything we do. We are continuously looking for ways to use evidence, facts, and research to better meet public needs. The Canada Post review, which I announced earlier this month, clearly illustrates this approach. We are undertaking this review to ensure that Canadians get quality postal service at a reasonable cost. All options including those related to home delivery are on the table. We want to hear from Canadians on the future of Canada Post.

We are taking a phased approach to examine this important issue. In the first phase, an independent task force is conducting research, analyzing data, and reviewing international best practices. Task force members were selected based on a range of factors, including their specific experience, expertise, and skill sets. They come from various geographic locations across the country and bring unique perspectives to this important work. By the end of the summer they will produce a comprehensive discussion paper on viable options for Canada Post. Engaging stakeholders and gathering their ideas and views are key to this process.

Mr. Chair, as I mentioned during my last appearance before this committee, the second phase will focus on providing Canadians the opportunity to tell us about their needs for postal services. Seniors and those with disabilities will be heard. Canadians will be consulted from coast to coast to coast. This committee will be asked to engage the public in an informed discussion on how Canada Post can deliver quality service at a reasonable price. In addition to this important committee work, I encourage all members of Parliament to find ways to bring their constituents into this national conversation. Our government is determined to build a new and respectful relationship with all parliamentarians to move this issue forward.

Organizations of all sizes and from all sectors are seized with the challenge of keeping pace with technology and embracing new, innovative ways of doing business. These challenges are particularly pronounced within governments where complex, outdated systems are common. Thankfully modernization efforts are under way on a number of fronts.

Until recently, the government was using a pay system developed over 40 years ago. It had become inefficient, incompatible with other systems, and provided limited functionality. In response, after extensive testing, the government launched a new system called Phoenix, which is now available in 101 departments and agencies. This system provides employees with a more automated, stable, and modern tool to process pay requests. The implementation of Phoenix is a major undertaking, and we are working directly with departments to identify and solve problems before paycheques are even issued. As well, we have brought new staff on board to help with the transition.

To further ensure that this project is heading in the right direction, we have engaged unions in a open relationship, held regular briefings for departments and media, and provided updates on issues and resolutions online. Since it was first implemented on February 24, 601 formal complaints were received out of nearly 1.2 million transactions. As of last week, 524 of these complaints have been resolved, and we are addressing the remaining 77. In addition, we are closely tracking feedback from Phoenix users. As we continue to use the system and better understand it, we will see opportunities for further improvements and efficiencies.

Innovation is a key driver at Shared Services Canada. The Government of Canada's IT infrastructure is the backbone of the effective delivery of services to Canadians, such as employment insurance, social benefits, and national security, including border security and policing services. Modernizing and transforming this IT infrastructure is a key priority of Shared Services Canada.

The budget allocates $384 million over the next two years to support a multi-year, whole-of-government IT transformation, with a focus on upgrading mission-critical infrastructure. Another $77.4 million was provided over five years to strengthen cybersecurity and ensure robust protection for networks and systems that support not only the delivery of employment insurance and other benefit programs, but also digital communications and open data initiatives.

These budget commitments will also enable Shared Services Canada to continue to improve the security of Government of Canada systems and networks, contributing to the government-wide response to the horizontal and internal audit on IT security recently completed by the Office of the Comptroller General.

Shared Services Canada is also engaging its partners, stakeholders, and IT industry experts to help validate its plans for modernization and transformation of the government's email, data centre, and network services. This initiative has also drawn the attention of this committee, and I appreciate it that you took the time to study this complex file.

Government does not have a monopoly on good ideas, and we cannot do everything we need to do alone. We must work with partners and stakeholders. Engagement and collaboration are critical. We are strengthening relationships at all levels, from my ministerial colleagues to partner and client departments, suppliers, unions, and aboriginal and indigenous groups, as well as green and youth stakeholders. For instance, many of these individuals and groups have told us that the federal procurement system is still too complex and cumbersome. We are committed to modernizing procurement, simplifying government purchasing, and cutting red tape for both clients and suppliers.

As well, working with Environment and Climate Change Canada, Shared Services Canada will help revitalize weather services and develop new solutions for better coverage of the north to improve shipping safety in the Arctic.

Meaningful engagement requires us to bring greater transparency to what we do. The national shipbuilding strategy is a case in point. We should and can be much better at sharing with Canadians both the good news and the challenges that come with the strategy. We have to be straightforward with Canadians about the progress of individual projects, shipyard investments, contract awards, and other pertinent data. I am committed to publishing an annual report to Parliament starting this fall, as well as providing quarterly updates.

Turning now to the 2016-17 main estimates, Public Services and Procurement Canada's total spending is expected to remain stable at $2.87 billion. The department is also seeking $351.6 million in additional funding through supplementary estimates (A) for the recapitalization of engineering assets and maintenance and repairs of federal buildings, as well as the maintenance and upgrade of federal infrastructure.

Total spending by Shared Services Canada for this fiscal year is expected to be $1.55 billion, an increase of $105.8 million, or 7.3%, over last year. This includes expenditures of $53.6 million to help retrofit the Carling campus for National Defence and $26.4 million for cybersecurity, along with investments to support our partners across government on key initiatives, such as strengthening digital infrastructure for Canada's research, education, and innovation communities.

Shared Services Canada is also seeking $272.1 million in additional funding through supplementary estimates (A) to implement budget 2016's commitments to cybersecurity and upgrading mission-critical infrastructure for high-performance computers in support of Environment and Climate Change Canada's weather services, as well as for Shared Services Canada's contribution to the resettlement of Syrian refugees.

Mr. Chair, both organizations have been allocated significant funds to deliver programs and services to the benefit of Canadians. There is much to do, but I know we are up to the challenge.

I've met hundred of employees throughout these organizations. They are energized, committed, and eager to deliver. As I have discussed, they are pursuing a greener future. They are embracing innovation and a commitment to service, and they are working not only for but with Canadians and other key stakeholders. I am proud to have the opportunity to keep this committee informed of the results of their efforts.

Thank you. I am pleased to be able to take the committee's questions.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Madam Minister.

Before we begin, it is my understanding, Minister, that you will be with us until 4:30?

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

I will.

[The Chair, Conservative, Tom Lukiwski]

We should be able to get in one complete round of seven-minute questions before your departure.

Following that, colleagues, the rest of the officials will be with us until we adjourn to go into committee business.

We'll start now with seven-minute rounds.

First up on the government side is Mr. Whalen.

[Nick Whalen, Liberal, St. John's East, NL]

Thanks, Mr. Chair.

I'll be sharing two minutes of my time with Mr. Drouin. If you could give me a heads-up at the five-minute mark, that would be great.

Thank you all for attending today.

I'll jump right in with a couple of questions for Minister Foote in respect of the modernizing, procurement, and greening government initiatives she spoke of in her opening comments.

Something that has come before the committee a couple of times now is what seems to be a slight disconnect on the procurement side between the responsibility of Public Services and Procurement Canada and that of Shared Services Canada with respect to IT procurement.

Can the minister inform the committee whether there are other areas in which PSPC is still doing IT procurement and why most of the IT procurement has been outsourced, it seems, to SSC?

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

Gavin Liddy will respond.

[Gavin Liddy, Associate Deputy Minister, Public Services and Procurement Canada]

Mr. Whalen, the issue is that when Shared Services Canada was started up, we had all the procurement tools in our inventory. Those have since been moved over to Shared Services Canada. We still have a few regulatory and a couple of other issues to clean up. By and large, we've tried to divide the landscape in a very even process so it's absolutely clear to suppliers and to government departments doing business which department does which. John Glowacki and I have been meeting on that on a monthly basis for about a year, and I think we have it all buttoned up now.

[Nick Whalen, Liberal, St. John's East, NL]

My follow-up question is for the minister.

Is this an efficient division of labour or should the procurement of IT hardware and other services be brought back in under the Public Services and Procurement Canada umbrella?

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

I'm really interested in the work that the committee has been doing in terms of looking at Shared Services. I'll be looking forward to a report coming out of this committee, which we will then take into account regarding whether we go down the road of bringing it all under PSPC or not. The work that you're doing will be very helpful to the department.

[Nick Whalen, Liberal, St. John's East, NL]

Okay. Thank you.

With respect to the greening government initiative, what specific things is your department doing to ensure that government buildings are energy efficient?

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

We think we should lead by example. As I said in my remarks, we've allocated $1.2 billion to upgrade the heating and cooling systems of over 100 buildings in the national capital region through the energy services acquisition project. It will reduce greenhouse gas emissions by one third. It will reduce annual operating costs by 20%. It will reinforce the government's commitment to achieving climate change targets.

We're very focused on making sure that we have the resources to do what we need to do in keeping with what this government has said. That is, that we must give reducing greenhouse emissions priority.

[Nick Whalen, Liberal, St. John's East, NL]

I have a final question before I hand it over to Mr. Drouin.

In respect of these initiatives and the projected benefits we talked about from this one initiative—20% cost reduction and one-third energy-use reductions over time—what metrics are in place within PSPC to make sure that the projects that are funded by government and are expected to be environmentally beneficial are tracked going forward in the budgeting process, to ensure that the money is tracked to see whether or not those projects are on budget? In respect of environmental benefits, are we tracking those in a similar fashion to ensure that Canadians are getting the environmental benefits they expect?

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

Absolutely. That's part of our overall plan.

As a government, we're looking at delivering on the initiatives that we have announced. To do that, of course, we have to have data. We have to be able to put measurements in place, and we're doing that. That's part of our overall process to make sure that we achieve what we set out to achieve given the resources we've been given to do that.

[The Chair, Conservative, Tom Lukiwski]

Mr. Drouin, you have slightly less than three minutes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I have one question with regard to Canada upgrading its payment system. It hadn't been done for the last forty years. I believe we're talking about Phoenix. There have been some media reports about some employees not getting paid. I know there are always glitches in new systems, but what measures are your department taking to ensure that employees are getting paid? What are we doing to fix the glitches as well?

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

Let me say at the outset that it's really important that all employees receive their pay and receive it on time. This is a new system and, as I have said earlier and as you reiterate, we're coming off a 40-year-old-system. Even though we're seeing examples of some people who are not being being paid, the testing that was done previously was substantial to make sure that there would not be any glitches in the system. It's hard to cover off everything. We're finding that if there is an issue with overtime, for instance, if the human resources manager hasn't entered the overtime for a particular individual, that can result in a delay in a person being paid.

What we've done as a department is to work with other departments to make sure that they know exactly what is expected of them and that they can enter the information that's required. When you consider that there have been 1.2 million transactions and that right now there are only 77 outstanding complaints, the employees who have taken responsibility for this initiative are to be commended. They have been working very hard. We've put additional resources in place. We've made sure that the pay centre has the individuals it needs to work with the permanent staff there to make sure that people don't go without their pay.

As much as we would like to be able to ensure that it will never happen, we're working hard to make sure it doesn't, but I expect that until each department understands the process and what has to be entered into the system for everyone to get paid, we'll continue to have minor glitches in the system. The priority for us, as a department, and for all departments involved is to make sure that employees get paid on time and get the right amount of money.

We also work with departments to make sure they are making available emergency pay in cases where people aren't getting paid, so those people don't go without a paycheque.

[The Chair, Conservative, Tom Lukiwski]

Monsieur Blaney, for seven minutes, please.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Thank you very much, Mr. Chair.

Welcome back, Madam Minister. We are always happy to have you and the representatives of your two main departments. Thank you, as well, for informing us in advance of the Canada Post review. It was very much appreciated.

As I already mentioned, as an engineer, I am very proud to see that a deputy minister and member of the Ordre des ingénieurs du Québec is in charge of public works in the country. It is particularly gratifying and a source of pride for the profession.

Madam Minister, we have already started hearing from the Canada Post representatives. They had a five-point strategy to lower costs by $800 million. However, when they appeared before the committee, they informed us that they had stopped implementing this strategy to generate savings.

Who made this decision?

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

I would have done that as minister responsible for Canada Post, the idea being that the outcry from the public at large as a result of the five-point plan, but in particular the installation of roadside mailboxes, became an issue. How do we best deal with that issue? How do we reach out and hear from Canadians? The reality is that there were aspects of the five-point plan that, for us to continue with it, would have prevented us from doing what we needed to do in having an independent, comprehensive review of Canada Post, looking at what quality services could be delivered at a reasonable cost.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

I can assure you that the committee will work with you on the Canada Post review.

We have learned that the anticipated losses resulting from the interruption of this review amounted to half a billion dollars. In terms of Canada Post's financial situation, we noted that the corporation was barely staying afloat. Regarding their bottom line, I would say that they are maintaining a balance, or, as we sometimes say, they are breaking even. They are in a precarious financial situation, and we are taking away their ability to become profitable by preventing them from implementing their plan. The $6-billion pension fund is also a sword of Damocles.

What do you think about the fact that their ability to become profitable is being taken away? Ultimately, taxpayers will pay for this decision.

Where do you stand on that?

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

The aspect in terms of the installation of roadside mailboxes would be where putting a moratorium on that would have been where Canada Post would now probably have the savings they had anticipated receiving. They would not, as a result of putting a moratorium on the installation of roadside mailboxes, because home delivery would be continuing in the areas where those weren't installed.

Canada Post is going to be part and parcel of this comprehensive review. They are a major stakeholder, just as are the unions and Canadians from coast to coast to coast. The idea is that they know that they will continue to get a lot of revenue from parcel delivery, because that's where mail is focused these days. The letter volume is down, so they were not getting the revenue they expected from letter mail, but they will continue to get revenue generated through parcel post.

We're confident that in working with Canada Post, we can deal with the issues, but Canada Post has to remain self-sustaining, and the one element of that within the five-point plan was the installation of roadside mailboxes. It was the one aspect of it, where we put the moratorium, that would that have affected their savings.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Since time is running out, I will keep this short.

I would simply like to reiterate that three out of four Canadians do not have mail delivered to their home. The interruption of the action plan will result in a deficit at Canada Post when the volume of mail is decreasing and the number of packages mailed is insufficient. In the end, we are asking Canada Post to square the circle and their ability to be profitable is being taken away. It is quite a problem situation.

I would like to share my time. How much time is left, Mr. Chair?

[The Chair, Conservative, Tom Lukiwski]

Are you good with two minutes?

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

I will share my time with my colleague, Mr. McCauley.

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

If I could just speak to the point that you made—