Government Operations Committee on Nov. 23rd, 2023

[The Chair, Conservative, Kelly McCauley]

Good afternoon, everyone. I call this meeting to order.

Welcome to meeting number 87 of the House of Commons Standing Committee on Government Operations and Estimates—or, as the PBO refers to it, the mighty OGGO.

Pursuant to Standing Order 81(5) and the order of reference adopted by the House of Commons on Thursday, November 9, 2023, the committee is meeting on the study of the supplementary estimates (B) 2023-24.

This is a reminder not to put earpieces next to the microphones, as this causes feedback and potential injury to our valued translators.

Today we have the PBO's office for two hours with an opening statement from Mr. Giroux. We are going to take a short suspension at 4:30, and we will welcome in Mr. Bill Robson from the C.D. Howe Institute.

As required, I'm letting everyone know all audio tests for Mr. Robson have been done and were found satisfactory.

Mr. Giroux, welcome back again. The floor is yours.

[Yves Giroux, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer]

Thank you, Mr. Chair, and members of the committee. Thank you for the invitation to appear before you today.

We are pleased to be here to discuss our report on the supplementary estimates (B) for the fiscal year 2023-24, published on November 16, 2023. Joining me are Jill Giswold and Kaitlyn Vanderwees, key analysts on this report.

The government's supplementary estimates (B) for 2023-24 outlined $24.6 billion in incremental spending. Parliament's approval is required for $20.7 billion. Statutory authorities, for which the government has Parliament's approval to spend via other legislation, are forecast to increase by a total of $3.9 billion.

Close to 50%, or $10 billion, of the proposed voted expenditures in these supplementary estimates relate to the indigenous portfolio, with a significant portion for the negotiation and resolution of indigenous claims.

As for the forecasted increase in statutory authorities, it is largely driven by a $2-billion Canada health transfer top-up payment to the provinces and territories to help reduce backlogs and respond to urgent pressures, as announced by the government in June.

Roughly 11% of the proposed spending in the supplementary estimates, $2.8 billion, is for 74 Budget 2023 measures. This brings the total proposed spending to date for Budget 2023 initiatives to around $10 billion for 2023‑24.

Including these supplementary estimates, the total proposed year-to-date budgetary authorities for 2023‑24 are $480.5 billion, which represents a $37.2 billion, or 8.4%, increase compared with the estimates for the preceding year.

To support parliamentarians in their scrutiny of Budget 2023 implementation, we have prepared tracking tables that list all budget initiatives, the planned spending amounts and the corresponding legislative funding authority. These tables, which are available on our website, will be updated over the course of the year as the government brings forward its legislative agenda.

With that, we would be happy to answer all of your questions about our analysis of the supplementary estimates or any other report my office has produced.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Giroux.

Before we start with Ms. Kusie, I need about five minutes at the very end of today to go over our budget and some of the document requests—a bit of information from Dalian.

We have Ms. Kusie for six minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Mr. Chair.

Thank you for being here today, Mr. Giroux. It's always good to see you. You've shared some very interesting testimony in the past.

Thank you for being here on the supplementary estimates. I'm always very interested to get your insight into things.

Obviously, what stands out is the total ask of another $24.6 billion in this time of economic crisis. The voted authorities are $20.7 billion of that $24.6 billion. It's a significant amount, but of course I'm mostly concerned about the $24.6 billion.

I know that you are no stranger to the fact that this committee has spent a significant amount of time looking at the amount this government has spent on external consultants. In fact, last spring we were seized with the McKinsey study because of the incredible amount of expenditures we saw on external consultants.

Unfortunately, your report indicates that the supplementary estimates provide an insight into the fact that this government continues to have a reliance on external consultants. In fact, you say in your report that the amount that they are planning to save is a paltry $500 million. This is just absolutely a drop in the bucket. Never mind the $15 billion that my counterpart, Anita Anand, the President of the Treasury Board promised to find by October 2, but couldn't.

You indicate in your report that the spending on the professional and special services continues to increase. You state that in 2023-24, it's “at a record $21.6 billion”. I'll repeat that number: $21.6 billion.

Why is this government incapable of letting go of its use of external consulting services? Why is there a need for them to spend these exorbitant amounts on external consultants, as you indicated in your report, with $21.6 billion?

[Yves Giroux]

I don't think it's for me to explain exactly why the government needs that money.

I can say, though, that these professional services are used for a variety of purposes. For example, it can be on IT services that the government cannot do internally. It can also be for expertise that it doesn't have and it would not provide value for money to develop in-house. It can also be to provide some services to remote communities—for example, health services to communities.

If you have a specific question as to why the government keeps increasing its recourse to services, I would suggest that Minister Anand would probably be a better person to provide a justification. I would point out though, that the $500 million in freezing voting appropriations—the $500 million that was announced as part of the subsidy—is a small fraction of the lapse that took place last year for professional and special services. The government had booked $21.4 billion last year and lapsed $2.8 billion, or 12.9%. Freezing $500 million this year does not sound like a very binding exercise.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

I'll use this as another example here.

It was recently reported that the Liberal government spent $669,500 on a KPMG contract to help reduce consulting in the Department of Natural Resources. Again, we're seeing this obsession with external consultants in this government. They even have to rely on consultants to determine how to eliminate external consultants.

Were there any significant reductions in consulting from Natural Resources? Can you see any positive impact from using consultants to help determine how to reduce consultants?

[Yves Giroux]

Probably the only benefit I would see in using consultants to look at ways to reduce consultants is maybe to get a second opinion in addition to the one that would be provided by senior public servants, who would advise ministers and cabinet on the best ways to reduce the use of consultants.

It would seem a bit risky to rely solely on the expertise of consultants in that perspective. I would see that as the only reasonable approach that would justify asking consultants for ways to reduce fees for consultants. It would be to confirm the advice that public servants would have already provided.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Finally, do these frozen funds have any impact on the government's debt-servicing costs, or is there nothing to stop the government from putting more fuel on this inflationary fire?

[Yves Giroux]

It will have an impact on debt-servicing costs to the extent that the money would otherwise have been spent. This may not be the case, given the previous year's lapses in spending on professional and special services. The amount authorized to be spent, but which was not spent, was about $500 million.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Giroux.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much.

[The Chair, Conservative, Kelly McCauley]

Go ahead, Mr. Jowhari, please.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Giroux and team. Welcome to OGGO once again.

I'll go back to the fact that you highlighted how the cost dedicated to professional and special services is to the tune of $21.6 billion.

Does “professional and special services” exclusively mean external consulting services, such as services from Deloitte, McKinsey and all those others we've heard about?

[Yves Giroux]

No, it's a broad category that includes several types of services. Consultancies, as you mentioned, are a component of it. However, they are not by any means the vast majority of this.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

Can you give me the top five areas or services that are considered under “professional and special services”? What is the largest part of that?

[Kaitlyn Vanderwees, Analyst, Office of the Parliamentary Budget Officer]

The top five areas are engineering, architecture, business, health and welfare services. Of the top two, there's been approximately $7 billion, historically. Management and consulting contribute to around 5% of historical spending on professional and special services.

[Majid Jowhari, Liberal, Richmond Hill, ON]

I'm sorry. Are management and consulting around $5 billion?

[Kaitlyn Vanderwees]

It's 5% of the total.

[Majid Jowhari, Liberal, Richmond Hill, ON]

It's 5% of the total, so 5% of $20 billion would be about $1.1 billion. Okay.

I'm specifically interested in investment in health services.

Can you expand on that one? How much is it, and where is it going? What purpose is it going towards?

[Yves Giroux]

Are you referring to consultancies or the $2 billion to Canada health...?

[Majid Jowhari, Liberal, Richmond Hill, ON]

No, it's professional and special services. There's a category under health services.

How much is that? Where is that going?

[Yves Giroux]

Do you know how much?

[Kaitlyn Vanderwees]

For this year, in your estimates, we don't have the breakdown by area yet. That only comes with the public accounts. We wouldn't know until next fall.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay. How much of the $21.6 billion is on health?

[Yves Giroux]

We'll know this only after the fiscal year has ended, when we get a breakdown from departments.