Government Operations Committee on May 29th, 2023

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

Thank you very much, Mr. Chair.

Minister, during the process to replace its fleet of CP‑140 Aurora, a variant of the P‑3 Orion, the government formally asked the United States about the possibility of purchasing Boeing's P‑8A Poseidon. This issue was just raised. Keep in mind the context: Boeing announced that the production line would be shut down if there were no other buyers for that aircraft. However, by not putting out a request for proposals or conducting in‑depth analyses of options on the market, the government is shutting out Bombardier and all other manufacturers. Bombardier actually has a faster aircraft with longer range than the P‑8A Poseidon, and it goes without saying that parts for the aircraft will be available longer, since the production line won't shut down once the aircraft is built.

On the one hand, we're being told that a detailed analysis is being done, and on the other, no companies other than Boeing were approached. How do you explain that?

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Perhaps Simon Page can give us some details on that process.

As I've said, my information is that the P-8A is the only currently available aircraft that meets all of the operational requirements as specified by the Department of National Defence.

Perhaps, Simon, you can confirm that.

[Simon Page]

I'll clarify the situation.

The tendering process to replace the CP‑140 Aurora began with a very broad and completely transparent request for information. We received a number of responses.

Once those responses were analyzed, as the minister indicated, we came to a very clear conclusion: currently, Boeing's P‑8A Poseidon is the only aircraft that meets all the operational requirements of the Canadian Armed Forces, specifically the Royal Canadian Air Force, as they were explained to us. Those requirements included anti-submarine warfare, command, control—

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

Thank you. I apologize for interrupting you, but I want to very quickly mention something. I simply want to point out that, once the aircraft are built, the production line will be shut down. It's like buying a giant Gutenberg-style printing press, knowing that there will be few to no replacement parts available or that they won't be available for long. That's the part that worries me.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Mr. Johns, go ahead, please, for two and a half minutes.

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

Thank you, Mr. Chair.

Minister, I've raised this in the House of Commons. It's the increase in highly paid consultants, especially Deloitte. They're over $200 million now in the last fiscal year. PricewaterhouseCoopers is $100 million. There's $45 million to Accenture.

You talked about your plan to reduce spending on consulting and other professional services by roughly 15% in this fiscal year. Is that on the last fiscal year—because that's a 400% increase since your government took power in 2015—or is it on the 2015 amount?

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

As far as I know, it is related to spending in 2023-24, in relation to the previous year.

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

Minister, this is not a significant cut considering you have had such a massive increase in outsourcing. Fifteen per cent doesn't even take us back by a third of what your government has done in terms of increasing reliance on highly paid consultants.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

I think we need to go back to asking why we use consultants at all. We are carefully reviewing that, as you know. The President of the Treasury Board and I have been tasked to report back by the end of June. We have asked the procurement ombudsman to look at the practice as well, but what I can say in general is that we have used consultants when there has been a lack of in-house capacity.

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

I think I speak on behalf of all Canadians when I say we want to see this come down significantly.

We know that a lot of small rural communities are struggling to maintain their post offices because Canada Post's postmaster-provided model doesn't pay enough. The starting salary for these rural postmasters is less than $20 per hour. Moreover, these postmasters have to provide a space for the post office, for which Canada Post provides a stipend of only $250 a month. Postal service in rural Canada is a lifeline for many people. What concrete steps are you taking as a minister to support Canada Post's move towards a more sustainable financial model for rural post offices?

You have heard my colleague Mr. Bachrach from Skeena—Bulkley Valley, who was just in Atlin doing a town hall on this. Can you speak about what you're doing to do?

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Minister, I'm sorry. You have only about two seconds. Perhaps you and your officials could get back to the committee in writing on this issue, or perhaps we can follow up on it in the next round after the minister leaves and her officials stay.

Mrs. Kusie, it's over to you. Go ahead, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair.

Minister, I want to go back to the pay system. In the budget this year only $52 million has been put aside to continue work on the next generation. That amount is actually relatively small. For example, $63 million was put aside in 2019. This subsequent amount of $52 million is much less than what we have seen in previous years.

I just want to verify with you that you are committed to moving on to the next generation pay system, because the numbers don't indicate that and the number allocated in this year's budget doesn't indicate that.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

As we have said, we are looking very closely at the pilots and the testing process, and a final conclusion will be the result of what we see.

I would have thought perhaps that a decrease in the budget would be appealing to you, but perhaps I can ask the president again to explain why the numbers are lower.

[Sony Perron]

The funding we got in the budget this year allowed us to get to the recommendation stage this year. It carried the resources we have assigned to the project to pay the firm. You mentioned Ceridian earlier. It's our main partner in there. We have paid their fee until mid-year when the testing will be finishing.

There is no means for us to pass funding for future years because the decision has not been made about where this is going, so a recommendation is critical. That's why we are pressing the process to get the final conclusion regarding what we have learned from the pilots and to move toward an assessment of whether moving forward with this product might be a possibility in the future.

We have funding for one year, which will bring us to March 31, 2024.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

I would say that a decrease in the budget certainly isn't much use if our people aren't getting paid. I certainly hope you'll continue to make that a priority.

Minister, according to the 2023-24 departmental plan, PSPC is considering strengthening its integrity regime. I hope this will include reviewing the ineligibility and suspension policy. I'm sure you're aware that we've recently been studying McKinsey. You were here on this. Given the moral and ethical breaches of this organization, it's astounding to me, actually, that McKinsey passed the integrity regime.

I reviewed the regime quite extensively. To me, “Application”—section 4— seems to have far too many exemptions. I'm particularly shocked that McKinsey passed section 6, part (b)(v), where the supplier has been convicted of an offence. I recognize that, in the States, McKinsey was not convicted of an offence, but I certainly think a $600-million payout over 49 jurisdictions is something that should make the Canadian government look twice. In addition, part (b)(vi) is “Trafficking in substance”. I would say this definitely should have given the Canadian government pause and re-evaluate McKinsey.

What the current integrity regime does exclude is human rights, the rule of law and reckless disregard for the health and well-being of Canadians. I'm sure you're aware of the notice of motion I've given. I'll read it here today, although I'm not moving it, Mr. Chair:

That the committee report to the House that, in light of the government's announcement that it will join the class action lawsuit against McKinsey & Company for their role in the opioid crisis—

I'll add that your government voted against both of our motions in the House today.

—the committee calls on the government to reform the integrity regime associated with procurement in order to exclude companies that have shown reckless disregard for the health and well-being of Canadians, and for human rights and the rule of law.

Throughout testimony in this committee, we have seen McKinsey & Company consistently and repetitively do this.

What are your thoughts on this motion I have on notice, Minister?

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you very much, Mrs. Kusie.

First of all, I want to point out that we are actively reviewing the integrity regime, which was brought in by the previous Conservative government. We're looking at areas where perhaps it's too stringent and areas where it's too lax. You feel strongly that, in this particular case, it is potentially too lax.

We are clearly abiding by the current integrity regime. The questions you're asking and the discussion at this committee are all input we value. I can assure you that we are looking at the integrity regime very carefully. In fact, it was one of the things the deputy mentioned to me when I was moved into this particular portfolio.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

We also brought in the Federal Accountability Act, but that didn't make the government do anything in regard to the report from OGGO in 2017. That's why we have Bill C-290.

Thank you, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Thanks, Mrs. Kusie.

Mr. Bains, you have five minutes to finish things off.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair.

Thank you to the minister for joining us today, along with the department officials.

I am going to pick up my colleague's question regarding the historic investment in the national shipbuilding strategy and expanding on the economic benefits the NSS has created across the country. As you know, this investment is very important to us here in British Columbia and to our marine sector.

Could you talk a little about the economic benefits and generational jobs this will create?

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you, Mr. Bains.

It was certainly a pleasure to make the announcement on the east coast. I know Minister Murray did the same out in B.C.

We have some numbers in terms of the economic benefit. The national shipbuilding strategy contracts awarded between 2012 and 2023 are estimated to have contributed more than $25 billion, or $2.1 billion annually, to Canada's gross domestic product and to have created or maintained more than 18,800 jobs annually between those same years. The record to date has been very successful. I think, with our announcement related to small and medium-sized vessels, you can see we're continuing to pursue this economic development, potentially for smaller communities—those on the Great Lakes, as MP Kusmierczyk alluded to, as well. This is of benefit across Canada.

It is very heartening to see, I must say, having been at the announcement at Chantier Davie. The current mayor of Lévis had his 100-year-old father at that announcement. Of course, that family has been involved in the shipbuilding industry now for generations. They look forward to that continuing, obviously, for several more generations.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you.

Could you tell us a bit about direct or indirect jobs through the supply chain and how many jobs may be created as a result of this in other areas?

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

We have a magnificent chart here the deputy is showing me.

Would you perhaps like to respond in some depth to the question?

[Paul Thompson]

I would be happy to speak to it.

A lot of the benefit from the national shipbuilding strategy flows to small and medium-sized enterprises. About $1.2 billion in small business contracts has been awarded.

They have a distribution across the country: one company in Alberta; a number of companies in British Columbia, totalling $265 million; and $228 million in Newfoundland and Labrador. The distribution of the national shipbuilding strategy across the country is an important aspect of the strategy, in addition to the contracts directly with the large shipyards.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you.

I'm going to shift a bit. I know the government is doing a lot of work in greening our government, which is important as we continue to see climate change and the earth's temperature on the rise. I'm wondering what the federal government is doing to green its own infrastructure, Minister. Could you add to that?