Government Operations Committee on April 19th, 2016

[The Chair, Conservative, Tom Lukiwski]

Ladies and gentlemen, I think we'll start. We have quorum. We'll start the continuation of our discussion on the main estimates.

Mr. Pagan, thank you once again for being here with your colleagues. I understand that you would like a moment or two to address the committee on a couple of issues that came forward this morning. If so, please go ahead.

[Brian Pagan, Assistant Secretary, Expenditure Management, Treasury Board Secretariat]

Thank you, Mr. Chair. It's good to be back.

My job as the assistant secretary of expenditure management at Treasury Board is to aggregate all of the different spending requests of the government and present them to the committee in the estimates documents. As the minister made clear today, we are presenting in the 2016-17 main estimates requirements totalling $250.1 billion, and this is broken out by our voted amounts of $89.85 billion and statutory requirements of $160.29 billion.

To help me explain these estimates requirements today, I'm joined at the table by Renée LaFontaine, our chief financial officer at Treasury Board. Renée will address any questions related to TBS-specific requirements. Also, there is my executive director of expenditure strategies and estimates division, Madam Marcia Santiago. Between Marcia and I, we will do our very best to address any questions you have about the rest of spending across the public service.

[The Chair, Conservative, Tom Lukiwski]

Thank you, Mr. Pagan.

There is one thing I will mention before we commence. For the last ten minutes or so of the meeting, I'll excuse the witnesses, and we'll go in camera for some committee business. I have a few items that I'd like to discuss with committee members, if that's all right with everyone.

Now I think we'll get right into it. Leading off on our seven-minute round of questions will be Monsieur Drouin.

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

Thank you, Mr. Chair.

Thank you for being here for the second time today.

There has been some talk about the importance of cybersecurity. I know that Mr. Fadden was in the news saying that cybersecurity is going to be the major threat, probably bigger than terrorism.

As it relates to the strategic direction that the TBS gives to Shared Services, how has the IT strategic plan for the Government of Canada been completed and approved as it relates to cybersecurity? What are the steps that you're taking as Treasury Board to ensure that all government departments are properly secured from cyber threats?

[Brian Pagan]

As I think everyone understands, the security of our information holdings is a top priority of the government. Since 2010, coordinated efforts by the government have contributed to significant improvements to the Government of Canada's cybersecurity posture. These initiatives have included coordinated approaches to collecting and analyzing cyber-threat intelligence, reducing the overall attack surface by consolidating Internet access points, and standardizing the planning and implementation of network security across the government.

In budget 2016, the government continues this commitment by making commitments totalling $77.4 million in additional funding over the budget horizon. This funding will be used to support or to implement a vulnerability management and compliance regime across the Government of Canada enterprise. It will reduce the number of privileged user accounts across the government in order to minimize vulnerability to data breaches, and we will be implementing an application whitelisting in order to reduce Government of Canada vulnerability to zero-day malware.

I have to be honest with you that, if you want to know what an application whitelisting is, I think you'll have to speak to our chief information officer branch or perhaps Mr. Fadden, but those are the purposes of the money set out in budget 2016.

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

Is it the responsibility of Treasury Board to perform those vulnerability audits or do you mandate Shared Services to do that?

[Brian Pagan]

It's a shared governance.

Within the Treasury Board Secretariat we have a branch, the chief information officer branch, that sets overall policy and security posture for government. They work with Shared Services Canada basically as the face of IT investment and management across the government and also with the Communications Security Establishment and other security agencies to look at threats both internal and external, so there's quite a coordinated approach across government to manage this.

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

We know that your department put what is called a department action plan on IT for Shared Services in response to the findings and recommendations contained in report 4 of the Auditor General's fall report. There have been some shortfalls with some of the initiatives that Shared Services undertook. What role does Treasury Board play to ensure that we don't see any more shortfalls in terms of IT implementation plans? One example is the email, as everybody knows.

[Brian Pagan]

It's a challenging question in the sense that the initiative to create Shared Services Canada is really quite novel. It had not been done to this scale, to our knowledge, anywhere else in the world, in fact, so when Shared Services Canada was created in 2011, there was a concept to bring this together to both improve service and improve the security posture of government.

A challenge for the agency was the fact that the world continued to evolve. The business needs of departments needed to evolve, but the budget of the department quite simply did not keep pace with that. Shared Services, like other departments, had to implement some efficiency and cost-containment strategies, and so they went forward with their business plan while at the same time working to achieve savings of almost $390 million over that three- or four-year period.

They have been successful in the sense that they have consolidated 485 data centres down to seven, 50 networks down to one, and we are in the process of moving from 63 different email systems to one email system.

In that sense, there has been some very good progress, but at the same time there have been some challenges in terms of that service availability. Budget 2016 recognizes that in order to move forward to provide the service and enhance the security the government will need to make investments at Shared Services to be able to realize the original intent of the initiative, and so budget 2016 does identify new funding for Shared Services for that purpose.

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

I remember in 2012, when Shared Services was created, the CIOs weren't sure which responsibilities they had. Do they, and CIOs in other departments, now understand that Shared Services does infrastructure? Is that clear in terms of who does what within each department from an IT perspective?

[Brian Pagan]

To my knowledge, I think that's clear.

Renée, as our CFO, would have some first-hand experience with that.

[Renée LaFontaine, Assistant Secretary, Corporate Services and Chief Financial Officer, Treasury Board Secretariat]

The CIO of TBS proper reports to me; and, yes, over the last three years it has gotten clearer.

What we're still working out is this cyber side of things because, as you know, Shared Services Canada looks after all the servers and that hardware, but the breaches can come from anywhere, so we have to really work well together. That's something we're working out to make it much more understood between both of us.

[The Chair, Conservative, Tom Lukiwski]

Monsieur Blaney, seven minutes, please.

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

Thank you very much, Mr. Chair.

My first questions will be about VIA Rail. After that, I have some questions about Infrastructure Canada. Finally, I will be talking about public-private partnerships.

So, my first question is about VIA Rail.

We are aware about the Quebec City-Montreal-Windsor corridor project. In the estimates, they are asking for additional funds in the amount of $382.3 million, including $240 million in order to cover the deficit.

Are you able to describe the nature of VIA Rail's operating deficit? Which infrastructure projects is VIA Rail planning? Finally, coming back to the deficit, which lines are profitable? Which parts of the VIA Rail network are profitable?

By the way, welcome to the committee.

[Brian Pagan]

Thank you, Mr. Blaney.

First of all, I have some information about VIA Rail Canada but, for more detailed information, I feel that you might need to ask VIA Rail Canada directly.

The estimates amount presented in the 2016-17 main estimates total, as you noted, is $382.8 million. This does include an amount of $239.5 million for an operating deficit at VIA Rail.

It's my understanding that passenger rail traffic in Canada, the passenger rail business, continues to be challenging from a cost-recovery perspective for VIA. The only corridors that come close to recovering costs, let alone generating revenue, are the Ottawa-Toronto and the Toronto-Montreal corridors. VIA loses money on every other rider across the country.

It is in that context of weak revenue and fixed costs that VIA Rail is incurring an operational deficit.

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

To your knowledge, could a part of the deficit have anything to do with the pension fund? Could I ask VIA Rail that question directly?

[Brian Pagan]

It is a question that VIA Rail can answer.

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

Fine.

If I go to the infrastructure, there's an important amount of $3.9 billion forecasted in 2016-17. Part of it was initially scheduled in the 2013 federal budget. You are asking for an increased investment of $575 million.

Can you tell us when those funds will be used? Do you have any indication of the advancement of the infrastructure program and dealings with the provinces?

[Brian Pagan]

As I mentioned, in budget 2013, the government announced—

It is the new building Canada fund.

That is a 10-year project, with investments

that were profiled over each of those 10 years. What we see in these main estimates, the increase of $574.8 million that you referred to, is the forecast from Infrastructure Canada for those projects in the new building Canada fund, which will see cash disbursements this fiscal year.

They have a portfolio of infrastructure projects that span out into the next 10 years, and that totals billions of dollars. The increase in the requirements this year are related to those projects for which there will be payments to provinces and firms within this fiscal year.

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

We will probably see those amounts invested all over the country, and particularly in Quebec.

My third and final question deals with public-private partnerships.

It is indicated that an additional amount of $267 million is requested for 2016. It says it is an increase of 22%. I understand the P3 is willing to go in the region and in jurisdictions where they are inexperienced with P-3 procurement.

Can you tell us where the P3 projects have been implemented, or not implemented, and when those investments will be made?

[Brian Pagan]

Mr. Blaney, I do not have details of specific P3 investments, but that is something we can research and answer for the committee.

As the minister made clear this morning, public-private partnerships can be an effective way of delivering complex and expensive infrastructure projects. This government has removed the mandatory screen for P3s, but they continue to be a tool that the government will consider as a way of moving forward. As the minister said this morning, these projects have generated cost savings of about $800 million. We will get you a list of the investments.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

We'll go to Mr. Weir.

[Erin Weir, NDP, Regina—Lewvan, SK]

I'm also interested in this topic. I appreciate that the government has removed the P3 screen, but is it correct to assume that all the money allocated to P3 Canada will find projects that are P3s? In other words, would it be a funding requirement for a prospective project to be organized as a public-private partnership?

[Brian Pagan]

That's right. In this instance the funds forecast for this fiscal year are in support of previously approved programs, or programs for which they are already doing a screening to determine the viability of P3 as an investment tool. So these funds are in a sense committed, because they're tied to specific activities and projects of P3 Canada.

[Erin Weir, NDP, Regina—Lewvan, SK]

When those projects are completed and the government is looking at things case by case, will the P3 Canada fund be wound down? Will infrastructure funding be provided only through the building Canada fund or other mechanisms not subject to a P3 requirement?