Government Operations Committee on March 20th, 2023

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

I have a brief question for which which you could just give a yes or no answer.

Am I to understand that potential cost increases owing to inflation and other factors were not taken into account when the amount of the envelope was established?

[Yves Giroux]

That's quite possible.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you.

We have Mr. Johns for five minutes.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you for all the important work that you do and for being here again.

Mr. Giroux, we talked earlier about the $800 million in new cash for professional and special services, and that includes spending on external consultants. What concerns do you have, if any, about the level of spending on consulting services in Canada, looking at our OECD partners and where their levels of spending are on external consultants? Have you looked at that? Do you have any comparables that you can give us?

To add to that, the President of the Treasury Board was here saying, “Compared to spending on the public service, the use of professional services has also remained relatively consistent since 2011.” However, in the numbers that we have for the public service it has grown by 11.8%, I would say, since 2020, but IT outsourcing has grown 45.8% in that period. It contradicts what the President of the Treasury Board says.

Maybe you could speak to both.

[Yves Giroux]

Sure. I haven't looked at what other countries do. I've been very busy looking at what Canada does, so unfortunately I don't have international comparisons.

The fact that consultant services and the recourse to those services has increased is concerning when compared or when put together with the increase in the size of the public service. The reason I'm saying that is that, when you have a growing public service, you'd expect that growth to happen in areas of need. The fact that this is happening, but the use of consultants is also increasing.... Services are not always keeping pace with expectations. That is the part of the equation that is concerning to me.

For example, if the use of consultants for health care services is increasing, it's obviously to meet needs. When it's for IT services, it's also to meet needs. Each and every one of them may well be justified, but then, why are we outsourcing many of these services at the same time as we have a public service that is growing? Are we hiring the wrong types of public servants, or should we be hiring even more public servants, which we can't, because obviously we need to use consultants? It leads to all kinds of questions for which the answers are not obvious, at least not to me.

[Gord Johns, NDP, Courtenay—Alberni, BC]

In addition to the transparency and accountability issues that we've been raising here at committee, the government's increasing reliance on outsourcing raises concerns around equity issues that warrant conversations, discussion and research.

In 2018 actually, the UN special rapporteur on extreme poverty and human rights discussed privatization as a cause of poverty even while privatization costs governments more. We've seen it here—the subbing out of contracts. As one example, we looked to GC Strategies during the ArriveCAN app study, which was charging between 15% and 30%, which I guess is the industry standard. They don't know anything about tech. They just know whom to contract to. You have these big, highly paid consultant companies, six of which are over $100 million, that are doing business with Canada—the big six. A lot of their work is subbing out.

Have you looked at how much money is going just to the commissions for subbing out, because that seems to be a huge economic leakage right now in our country, money that could otherwise provide services from pharmacare to expanding dental care and making sure that everybody's got a safe, secure place to live in our country. It seems absolutely ludicrous the skyrocketing highly paid consultants trend that we're seeing and these commissions that are going out in the range of 15% to 30%. I imagine they're all near 30%, because every time I ask if it's 15% or 30%, they answer, “It's the industry standard.” They would tell us it's 15% if it were 15%, so it's more than likely that it's 30% in most cases.

[Yves Giroux]

I haven't looked at the commissions or the breakdowns of the fees that consultants charge the government. That would require going through thousands of contracts. We looked at the overall numbers and, unfortunately, I don't have an answer for you.

[Gord Johns, NDP, Courtenay—Alberni, BC]

That's something that's there. Again, I appreciate it.

There's money here—$227 million for unrecoverable debts around student loans. In your view, why has the value of unrecoverable debts increased by $57 million since last year? Is that the norm? How do you project the elimination of student loan interest effective this April will affect Canada's ability to deal with student loan debt? Obviously, we're very happy to see that happen as New Democrats. It's something we've been looking for.

[The Chair, Conservative, Kelly McCauley]

I'm afraid, Mr. Giroux, that we're going to have to ask you to get back to the committee in writing or, actually, to Mr. Johns in his next round of questions.

Colleagues, in the second round, because we're out of time, we're going to do turns of four and four minutes, and then two and a half and two and a half minutes.

We have Mrs. Kusie for four minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair.

Thank you for being here today, Mr. Giroux.

This will be the first year that the overall budgetary spending detailed in the main estimates has risen above the $400-billion threshold. The government crossed the $300-billion threshold in the 2020-21 fiscal year.

Monsieur Giroux, your predecessor Mr. Page said that the current government has been “rightly criticized for running relatively loose fiscal policy” while resisting calls to implement stricter fiscal anchors. That's just a quote I will use relative to the budget next week.

You are quoted in one of my favourite publications, The Hill Times, as stating, “It makes sense from that perspective, but it's clearly an indication that the government is not shy about spending”. The Hill Times said your office released an analysis of the supplementary estimates on February 23, and you stated, “It's not every year that there are three supplementary estimates: A, B, and C.”

Do you want to expand on your comments in The Hill Times, Mr. Giroux?

[Yves Giroux]

I can expand on the fact that three supplementary estimates do not happen every year. That's true. Usually—well, not usually, because it depends on the year—having supplementary estimates (A) and (B) in a year used to be quite normal, years and years ago. Having three supplementary estimates doesn't specifically indicate a deeper inclination to spend. It's the amounts that matter.

The quotes you just read are my words, and I stand by them. I don't have anything else to add. I can't deny that I said that. The Hill Times is a reputable publication. They did not misquote me.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I agree.

The only edit I might make is that whereas as you said “A, B, and C,” I would say the government would be “A, B, and S”, as in “Always be spending”.

[Some hon. members]

Oh, oh!

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I'll move now to the significant increase in statutory authorities. Can you elaborate on the role that you believe inflation has played in these increases in statutory authorities, please?

[Yves Giroux]

Inflation is playing an important role in the increases in statutory authorities because the main items in statutory authorities or statutory spending are old age security, which is indexed to inflation and also is driven by the population growth of those aged 65 and above, and transfers to provinces, which are indexed to inflation or have a minimum level of increase. Inflation plays an important role in statutory expenditures.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Would you say that the massive amount of government spending has played a role in the increase in statutory authorities?

[Yves Giroux]

Very indirectly. To the extent that someone would say that government intervention has contributed to inflation, then there could be a feedback loop. Due to the inflation, statutory authorities need to increase, so yes, it's a possibility.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Finally, do you think the cost of living crisis has played a role in the increased spending on statutory authorities?

[Yves Giroux]

Not directly. I think it's driven by inflation and population growth.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much.

Thank you, Chair.

[The Chair, Conservative, Kelly McCauley]

Thank you.

We have Ms. Thompson for four minutes, please.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

Welcome back to the committee.

During Minister Fortier's appearance, it was indicated that the frozen allotments are due to the need to hold funds over for settlements and projects that require funding but are impacted by climate and weather issues. We've certainly seen indications of that across the country in the past year. Are these types of frozen allotments important to ensuring good government operations?

[Yves Giroux]

In fact, they usually are done for very solid, very good management reasons, in my experience at least. I can't speak specifically to each and every one of them included in the supplementaries.

They're done because conditions for the release of funds have not yet been met. It's to ensure that funding is released to departments only when the specific conditions have been met. For example, certain triggers have been met, the department is ready or it has fulfilled its obligations as stated in the Treasury Board submission, for example, or in a memorandum to cabinet. It is usually a good financial management practice to have frozen allotments to ensure the funding is released only when it's appropriate to do so.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

I'll switch now to executive performance pay for public servants. Some have remarked on the use of this executive performance pay for public servants and have criticized its use despite not hitting departmental targets. However, executive performance pay is part of executive compensation packages and has no link to organizational goals outlined in departmental targets.

Do you believe it's important to use such market-based incentives to motivate leadership to achieve results?