Government Operations Committee on March 18th, 2024

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Bachrach, it's over to you again, sir.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

Mr. Giroux, I dug into the tracking tables you provided, which are very helpful in connecting the supplementary estimates to the various budget commitments that the government has made.

If I'm reading this correctly, there's $10 million in the supplementary estimates (C) for 2023-24 for implementing the national action plan to end the tragedy of missing and murdered indigenous women and girls. This issue has a tremendous impact in the region that I represent. I'm curious about the number, if I'm reading that correctly, and whether it's supplemented by any other financial commitments by the government or whether in fact that represents the government's annual investment in that very important work.

[Yves Giroux]

We'll probably have to get back to you on that question, because although we have the supplementary estimates here, we don't have the overall government spending for the year 2023-24, and certainly not by that level of detail, program by program.

I would think there's more to it and that the amount you mention, the amount in the supplementary estimates (C), is only an addition to what the government plans on spending for this, because the fiscal year is drawing to an end. It would be very surprising if that were the only amount on that specific initiative.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Okay. Thank you.

Switching to a different topic, I was noticing in your report that on the student loan changes and the financial impacts of waiving the interest on student loans, you see the number of loan writeoffs declining over time, but I also noticed there's quite a spike in writeoffs between, I believe, 2021-22 and 2022-23.

I'm just wondering. This is in Figure 2-5. There's a graph there. Between 2021-22 and, it looks like, 2022-23, the number of writeoffs seems to have spiked fairly considerably. I'm just wondering if that's related to the pandemic. What effect are we seeing there?

[Yves Giroux]

I think the pandemic played a part, because the government made some policy decisions to suspend some repayments during the pandemic, but there's also an inherent volatility in decisions to write off, because it depends on recovery activity and repayment and how certain economic conditions can affect that. There's always some volatility in writeoffs and repayments because of the trigger that can be triggered or not, like the decision points, so there's always volatility in programs like that when it comes to writing off debt that is deemed unrecoverable.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Go ahead, Mr. Genuis, please.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you very much, Chair.

Thank you, Mr. Giroux, for your excellent work.

My colleagues asked some important questions about the government's arrive scam scandal and the costs associated with that. When talking about this scandal to people who are involved in government, one point of feedback I often get is that this is just the tip of the iceberg. People see the ballooning of contracting out and the number of firms involved in so-called staff augmentation and middlemen.

I wonder if you could help us get a sense of the magnitude of contracting out in general, and I'll ask some specific questions related to pieces of that.

How much are we spending in a given year on contracting out functions of public service delivery?

[Yves Giroux]

To give you an order of magnitude, we estimate that there is about $21 billion in contracting out. That includes, obviously, consultant fees and consultant services, but it also includes assistance or professional services that are not available in the public service. For example, if you are building warships, you don't necessarily expect all of the expertise to be available at the Department of National Defence.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Can I just jump in on that?

[Yves Giroux]

Sure.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

I was thinking about the instances of contracting out that maybe seem more plausible and legitimate than the ones that seem less plausible and legitimate.

I came up with a typology by putting it in three buckets. Let's say one bucket is specific “hard tasks”: The government says, “We just don't have people who know how to do that within government.” That's one bucket.

Another bucket might be management consulting. For example, this committee has done work on McKinsey, an organization brought in to offer general advice on direction and management consulting. The third would be pure middlemen, people who are hired to hire other people, like GC Strategies.

Within that $21 billion in contracting out, could you try to give us a sense of the magnitude of each bucket?.

[Yves Giroux]

In looking at what you've laid out in terms of categories, I'd say the vast majority are probably what one would describe as “hard tasks”—for example, the expertise the public service doesn't have, or services that are needed to contract out to provide health services to remote first nation communities.

Consulting services would probably be much, much lower, at a billion or two. I don't know the exact numbers, and the—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

I'll just jump in and we can go back and forth. A billion or two is smaller than the total of $21 billion, but a billion or two is still a lot of money.

Can you give us a sense, when you say a lower proportion, of what kind of numbers we would be talking about for those management consulting and middleman buckets?

[Yves Giroux]

The management consulting, or the consulting services.... We did a report that indicated the broad categories. I don't remember it off the top of my head, but what I remember is that it was about 10% of the overall total—maybe less.

For the pure middleman, there was no such category, because it could be embedded in all of these categories. For example, somebody who wins a contract could then turn around and subcontract it to somebody else. It's very difficult to figure out the proportion that would be the pure middleman, as you named that category.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Right. I guess this speaks to the lack of proper records. Is that right?

With the arrive scam issues specifically, the Auditor General's estimate is that we're looking at close to $20 million that went to GC Strategies. It didn't apply any hard skills. Close to $8 million went to Dalian. That's already half of the total, and those were areas where we know there were no hard skills applied.

Just to summarize what you said, this government is spending about $21 billion on contracting out, with $2.1 billion of that going to that management consulting category. The middleman category is a black box. We don't know. Is that...?

[Yves Giroux]

I wouldn't bet my salary on the $2.1 billion. That's from memory. The pure middleman is anybody's guess.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Well, in this government, you get a bonus regardless of how good of a job you do, so you don't have to worry about it.

I'm just joking.

Sir, the numbers here are, I think, quite striking, because we hear this narrative from the Liberals across who say that any reduction in spending is going to impact service delivery, but this clearly shows that there's waste within the government in contracting out for things that don't need to be contracted out.

I thank you for your testimony. If there's anything you want to follow up on, I'd appreciate it.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mrs. Atwin, please, go ahead.

[Jenica Atwin, Liberal, Fredericton, NB]

Thank you, Mr. Chair.

Thank you, Mr. Giroux, for joining us, as always.

I want to return to some of the questions that my colleague Mr. Bachrach asked around Indigenous Services Canada. I have a particularly vested interest in this piece.

First, I'd like to highlight for anyone at home or for anyone who is not familiar with Jordan's principle that it's certainly critical in ensuring that we're filling any of those jurisdictional gaps among provincial and federal governments for child and family services for indigenous peoples across the country. It's a very important investment. On behalf of the government, I'm very proud of this.

I'd like to ask you specifically, Mr. Giroux, if you have noticed an increase in spending for Indigenous Services Canada over the last couple of years.

[Yves Giroux]

Yes. In fact, there's been a very sharp increase over time in spending for Indigenous Services.

If memory serves me well—it's usually not a very good indicator—it went from about $18 billion in 2021-22 and reached $47.5 billion in the current fiscal year of 2023-24. It's a significant increase in spending for Indigenous Services.

[Jenica Atwin, Liberal, Fredericton, NB]

Excellent. Thank you.

In your analysis, you mentioned that a large amount of proposed spending relates to indigenous claims. Can you elaborate on that? Also, how does this compare to years past?

[Yves Giroux]

Indigenous claims are claims that are made by indigenous groups against the Crown for past wrongdoing.

The government has made it clear that it wants to settle as many of these claims as possible, so it's shown an openness to settling some of these claims. As a result, the government had to set aside money to settle the claims.

I don't have the exact amounts of money specifically set aside for settling claims, but it's something we can provide in writing at a later point.

[Jenica Atwin, Liberal, Fredericton, NB]

Great. Thank you very much.

Again, this is just a general comment from me in my role as parliamentary secretary to the Minister of Indigenous Services Canada on protecting service delivery, of course, for communities across the country.

I'd like to switch a bit now. A general question that I think most Canadians are really looking for the answer to is when you believe inflation will reach the target rate of 2%.