Government Operations Committee on March 10th, 2016

[George Da Pont]

I would hope not, but we certainly recognize that there are some issues in that area. There is also the issue of us having real estate and occupying buildings that are not completely full, while in the same communities we're leasing other space. One of our priorities, which touches very much on the point you raised, is to really try to maximize the use of our space. If we have half-empty buildings or buildings that are one-third empty and we're leasing elsewhere, we want to move people into those buildings, and maximize their use to reduce the costs. Similarly, if we're using space in a fashion that's not productive—and you gave us one example—then we're looking to phase that out. Space optimization is really a key priority of the real property area.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Mr. Da Pont.

We'll turn to Monsieur Blaney.

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

Thank you very much, Mr. Chair.

Madam Minister, welcome to the committee. It is a pleasure to have you here. I would also like to acknowledge the officials you have with you. You can count on robust and constructive opposition from our side, I hope, in the greater interest of Canadians. That is why we are all here for, after all.

Madam Minister, in your presentation, I liked your commitment to the shipbuilding strategy which, as you have recognized, is a major engine of job creation here, especially in Vancouver, Halifax and Lévis. I am also delighted that you intend to provide us with regular updates about the evolving costs and the progress of the projects. Canadians expect us to be sure that the contracts awarded by the Canadian government are completed on time because we are dealing with taxpayers' money and, of course, because we are in a competitive environment. We have been entrusted with a great responsibility.

My first question is about the shipbuilding strategy issue specifically.

After the election, I printed this passage from your election platform, your plan. You say that you want to strengthen the navy while complying with the requirements of the National Shipbuilding Procurement Strategy. Of course, those are investments that will allow the navy to be operational, but that will also create jobs. Clearly, we want to create jobs in Canada.

I had the opportunity to tell you about an article about the tugboats, as they are called. It raised the possibility of having them built somewhere else. So, can you confirm this afternoon that the jobs will be created in Canada, as part of the shipbuilding strategy, as you committed to do?

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

Thank you for the question.

Like you, I recognize the importance of the shipbuilding industry. We have not had a shipbuilding industry in this country for over 25 years, and we need to have one. We need to have a robust shipbuilding industry in our country. We need to respond to the needs of the navy and the Canadian Coast Guard. In having that robust shipbuilding industry, we need to involve companies throughout the country and in doing so create jobs. That's what this is about.

No decision has been made yet by the Department of National Defence with respect to the tugboats. We're very early in the planning stages for that. There was a competitive process that enabled the government of the day to come up with two centres of excellence, one in Halifax and one in Vancouver, which you already referred to. That doesn't preclude other shipyards from availing themselves of the opportunities, because there will be opportunities for smaller ships. While Halifax will be building combat ships, and Seaspan will be building non-combat ships, there will be other opportunities for companies throughout the country to avail themselves of and employ Canadians from coast to coast to coast.

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

Yes, and there are certainly many smaller shipyards throughout the country that have the capability to build those tugboats. My colleague, Mr. MacAulay, and I visited the designer of tugboats in Vancouver. I would argue this person is the best designer in the world. He's in Canada. We have the expertise.

Madam Minister, I was a little surprised that when it came time to hire an expert, you couldn't find any Canadians and went to hire a independent British consultant. Is there any reason why you chose not to rely on Canadian expertise in shipyards to advise you on moving forward with the strategy?

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

Allow me to repeat that we have not had a shipbuilding industry in this country for 20 to 25 years. We did look for a Canadian. There were Canadians who were working abroad, but in the interviews that were held, it became obvious from those who were doing the interview process that Mr. Brunton was highly qualified and came with shipbuilding experience. He's a rear admiral who is used to naval acquisitions. We wanted to get the best possible person and we did that. It was determined through all of the interviews that were held that he was the individual we should hire.

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

In the mandate you have provided to this consultant, have you clearly specified that in his recommendations the ships would have to be built in Canada?

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

We will be looking to Mr. Brunton for advice, but clearly he knows that our goal is to build the shipbuilding industry in this country. We want to make sure that we get 100% Canadian profits for all ships that are built. He is well aware of that, just as we've indicated before. We're working closely with him, but our priority will always be to have ships built in the country.

We also have to bear in mind that we're talking about Canadian taxpayer dollars here. We want them to be spent effectively and efficiently. A number of factors come into play, but first and foremost are jobs for Canadians.

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

Absolutely. Regarding the taxpayer, you mentioned you would be willing to provide an update on the procurement process. When do you expect you will be able to provide this committee with the current status of the shipyard strategy either for the combat or the non-combat ships, the estimated costs, and the schedule for those ships?

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

We're expecting to have our first report ready in the fall, and after that we'll be doing quarterly reports. Bear in mind that we are going down a different path in the shipbuilding strategy. We want to make sure that we get it right. We're doing consultations on an ongoing basis with industry. We will not preclude anything in how we're going to roll out the strategy, bearing in mind that we know that we already have the two centres of excellence. We know what we have committed to them to do. They're our partners in this process. We're looking at the fall for a complete report of where we are, and then we'll do quarterly reports.

[The Chair, Conservative, Tom Lukiwski]

Thank you, Minister.

Mr. Weir, you have seven minutes for questions and answers with the minister.

[Erin Weir, NDP, Regina—Lewvan, SK]

Thank you.

As the NDP critic for Public Services and Procurement Canada, it's great to have you here, Minister. I'd like to pick up on a point raised across the table about real property. A practice of the last Conservative government, and indeed the preceding Liberal government, was to sell off government buildings and then lease them back at much higher costs. I wonder whether the new government will continue that practice? Specifically, of the $32.8 million requested for increases in non-discretionary expenses associated with crown-owned buildings and leased space, how much of that is crown-owned buildings as opposed to leased space?

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

I'm going to ask the deputy to speak to those details.

[George Da Pont]

In terms of the approach on buildings I think what you're referring to are situations when we are in buildings that are close to the end of their life and need very significant refurbishment. That's the bulk of what the real property folks deal with.

When buildings get to that situation, there's a cost-benefit analysis done, where we look at all the options: would it be better to sell the building, would it be better to invest and refurbish the entire building, would it be better to look at some public-private partnership to see if one could build a new building?

I think the approach is to look carefully at all the available options, look at which one has the best value for the taxpayer and still meets the needs of the public service, the people who will be working in those buildings.

The answer is different depending on that analysis.

[Erin Weir, NDP, Regina—Lewvan, SK]

Perhaps that should be the approach. I'm still wondering if there's a breakdown of that figure between crown-owned and leased buildings. The more general question is about the oft-taken approach of selling these assets for upfront cash, which might make the public finances look better, but cost taxpayers more in the long run.

Can we get some kind of commitment from the minister that this won't be the approach of this government?

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

Certainly it's not all about getting cash for the buildings. It's about looking at how the property will be used.

We're very conscious sometimes of the need to take a different approach and we have not ruled that out on a number of fronts within the department. We're reviewing all of the...whether it's real property, Canada lands, different entities within the department, and looking at different approaches to delivering on our mandate. Real property, of course, is one of them.

[Erin Weir, NDP, Regina—Lewvan, SK]

Another item in the estimates that relates to procurement is $61.8 million for a new bridge to replace the Champlain Bridge. The new government has indicated that it will remove the requirement from federal funding that infrastructure projects be conducted as public-private partnerships.

I'm wondering if you could update us on whether that has been done and whether it makes sense to push ahead with the new Champlain Bridge as a P3.

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

We are cognizant of a need to spend taxpayers' dollars as efficiently and as effectively as we possibly can. In looking at any new builds, we're bearing that in mind, so that as we go down the path of new builds we're looking at what the actual cost will be, what the best route to take is, and the signed contract for that particular bridge is a P3.

[Erin Weir, NDP, Regina—Lewvan, SK]

That's part of the reason I raised the topic.

Whether or not it's a P3, the bridge will require a large amount of steel. The Canadian steel industry is currently depressed, and I'm wondering if the new bridge will be built with Canadian-made steel, and also what type of fair wages policy if any will be applied for the workers engaged in that project?

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

We're looking at optimizing the benefits for Canadians and for Canadian companies with everything we're doing. That is something we're undertaking to do as a department.

[Erin Weir, NDP, Regina—Lewvan, SK]

But on this specific construction project, which is a huge one, can you give any indication of whether it will be built with Canadian-made steel?

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

Have we funded the P3?

[George Da Pont]

As the minister said, significant Canadian companies are part of the consortium that won the contract, so there will be very significant Canadian content. I would have to look into the question you raise about whether they intend to use Canadian steel because, off the top of my head, I don't have the answer to that. We'll undertake to send that afterwards.

[Erin Weir, NDP, Regina—Lewvan, SK]

I appreciate that.

I know your mandate letter speaks to a modernized fair wages policy, and I'm not sure exactly what that means. Will it be in effect for all the workers employed in building this new bridge?

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

That is the intention.