National Defence Committee on April 13th, 2010

[Claude Bachand, Bloc, Saint-Jean, QC]

Major-General, thus far, we have spent a great deal of time discussing the legitimacy of all this, which some believe to be dubious.

Now I would like to look at this from a legal standpoint. I have found comments by other soldiers that raised doubts in my own mind about how legal this is. I would like to discuss these with you. This is what one soldier said:

Providing opportunities for continued service in the public service to retain knowledge and expertise? Fine. It's a different organization. But playing a game where folks stay in the CF and draw a CF pension while continuing full-time service is, in a nutshell, breaking the law--the NDA defines regular force and reserve force, and by playing these games we're violating the spirit and letter of the law. Either change the law, or change the way we do business.

Another said this:

The "earned the pension" is a logical fallacy. CF members pay about 1/3 for their pension costs. No other employer would bring back full-time workers and pay them a pension to boot. The cost to government of those double-dippers is a significant drain.

Besides, from a legal perspective, the reserve force is those employed for other than continuing full-time service. These folks jump from full-time in the regular force to full-time in the reserve force--in my books, that's continuing full-time service--and therefore still regular force. An independent Office of the Auditor General review of the scam...would be illuminating.

[MGen Walter Semianiw]

Monsieur le président, I will just answer different parts of the question.

First, it comes back to the definition of the words “continuing full-time service”, because if you look at continuing full-time service, I come back to

my explanations regarding people who occupy permanent positions in the reserve force.

That's permanent, full-time positions. One-, two-, three-year contract is not on continuing full-time service. This is what it comes back to. I can tell you this categorically, because I've asked this question.

What goes on now doesn't violate the law. If that's the case, then the law has been broken for the last 30 or 40 years. It comes back to an interpretation of the individual, who at least, I would submit, accepts some of it, and it comes back to one issue, which the individual fails to mention: hiring the person with the best knowledge and the most expertise. It's not mentioned there. What is mentioned is that they're just hiring someone. It comes back to this view that friends are hiring friends and people are hiring people. At the end of the day, that's not what it's about. It's about hiring someone

who basically has the knowledge, who

the skills to be able to do the job on a short-term basis to fill the need.

This is the issue that I would throw out to the committee. Be very careful when you take a look at all the anecdotal evidence, and yes, I understand that once you get enough anecdotes you can call it research. I understand that, but at the end of the day, you have to ask the question: who is the question being posed by? Is it being posed by...

—and this is very important—

somebody in the reserves who has been on a continuing three-year engagement, a three-year contract for the last 20 years? There are many; they exist. Are those the people who are unhappy? I don't know if that's who this individual is. Or is this a person who is on class A? I don't know.

There is a danger if we don't understand where the question comes from, because I have had people come and raise the issue to me: “I've been working in the regular force for 15 years”. “What have you been doing?”, I ask. “Class B, full-time reserve, three-year contract after three-year contract after three-year contract.” Remember, that's one of the reasons we put in the new reserve force pension plan, which reservists who are serving full-time can now pay into.

So if it's coming from that angle, I would only say this in a very open and positive way. There is no guarantee that your three-year contract is going to be renewed year after year. There was a view, except for the last three or four years, when things were going well, when the contracts were always being renewed. That's not the case right now. So there are a number of individuals—I've talked to them—who are unhappy, because their contracts are not being renewed because the numbers are coming down. Or they are saying, the flip side, that other people go into these jobs that are being created.

[Claude Bachand, Bloc, Saint-Jean, QC]

Is my time up?

[The Chair, Conservative, Maxime Bernier]

Yes. Thank you, Mr. Bachand.

Mr. Harris, please.

You have the floor for five minutes.

[Jack Harris, NDP, St. John's East, NL]

Thank you.

According to the Treasury Board policy that has been made available to us, the TBS policy on contracting for the service of “former public servants in receipt of a pension or a lump sum payment” specifies measures to ensure such contracts “bear the closest public scrutiny and reflect fairness in the spending of public funds”, including “obtaining the lowest cost-effective rate, using electronic bidding procedures and evaluating the contract's performance at the end of their contract”.

First of all, within the military, are you subject to those Treasury Board policies?

[MGen Walter Semianiw]

All those Treasury Board policies.

[Jack Harris, NDP, St. John's East, NL]

Okay.

I guess the reserve class B would be contract work or a senior military or public servant who retires and comes back as a consultant, or, as was suggested, in the job one day as a full-time public servant and the next day or the week after retirement is doing the same job. What it says as well is that “If the contract work is substantially like that performed by the pensioner before retirement, contracting authorities should ensure that they can justify why the work is not being done by a successor.”

I just want to ask you, has that happened at the senior ranks, within both the civilian and military side of DND, and if it does, what measures are in place to ensure that this justification is there?

[MGen Walter Semianiw]

There's a potential danger in calling class Bs “contracts” and taking the Treasury Board contracting policy and applying it. It doesn't fit. But in speaking to that, I think all the principles still are very sound, and at the end of it all, we are expected to ensure that we're open and transparent in all of this, to ensure as a first thing that if I have someone in my organization who leaves early and there is no one to fill that position.... What do I do? Option one is that I promote somebody from the merit list. That's always the first option.

But in many cases—not to make this issue more complex—many of the positions we're talking about are positions outside of the established Canadian Forces. This is the crux of the issue. For example, I'm not entitled to and don't have a driver, but let's say hypothetically that I need a driver. I could establish a class B contract for a driver, put out that call letter for a contract of one, two, or three years, if I had the funds available to do it. If I didn't, I couldn't do it. But in the end I'd have to proceed as I explained before: it's not a contract, but at the same time I'd have to follow all those regulations.

But that position isn't in the regular force establishment, because someone has said to me that they don't think I'm entitled to this. Therein lies the challenge, as mentioned in the other question: ensuring that there is—and there is—effective oversight over the hiring of class B folks, and more importantly, establishing or sending out job offers on class B across the Canadian Forces. And that's what we need to do.

[Jack Harris, NDP, St. John's East, NL]

I understand that class B is a different category because of the nature of the budgets and the capacity to create positions. I suppose you could create a position, as in Mr. Bachand's first example, and leave the position of the colonel vacant. Could you do that?

[MGen Walter Semianiw]

Yes, you could leave the position vacant. That's the first thing you could do. The second thing—

[Jack Harris, NDP, St. John's East, NL]

You could hire the class B and leave the position of the colonel vacant?

[MGen Walter Semianiw]

Technically, you could.

The other thing you could do is take somebody who is actually in the area and make them take the position and be the “acting director”, or whatever it would be. But you could hire somebody, send out a three-year.... In essence, it's hiring people for work—I'm saying this in a positive way—for one or two or three years to fill that void, for all the reasons that you don't think there is somebody who has the qualifications for that position. Perhaps the person who is on the merit list.... It's a good point to note. The next person promoted might be out in Vancouver, and we need the person right now in that position. So you might have a short-term gap. They're not all for one, two, or three years; it could be for six or seven months, to fill the gap.

But yes, you can do that.

[Jack Harris, NDP, St. John's East, NL]

Maybe this is outside of the military ranks in DND, but you hear—and this is anecdotal, I don't challenge that—of people going into retirement and then being, possibly, a consultant on the choice of military aircraft or something; it could be anything. Maybe it's necessary; maybe it's totally justifiable. I'm not suggesting otherwise. But do we have a system whereby individuals can be entitled to retire and do so, whether early or late, and then all of a sudden—usually it's noticed when the people are at senior remuneration levels, above $100,000 or something like that—they're back at their same desk or in the same office or in the same building, working a month after retiring?

Do we have many instances of that at the senior level? How many of these per year have we had in the last five years? And is there a system that, as a TBS report says or as guidelines say, ensures that there is justification explaining why this work is not being done by a successor to the person who has retired?

[MGen Walter Semianiw]

First, the short answer is that I don't know of anybody at senior ranks, any general officer or flag officer, kept in their job while hired on as class B. That doesn't—

[Jack Harris, NDP, St. John's East, NL]

So it's outside the class B system.

[MGen Walter Semianiw]

Right on. Outside of that system, I don't know; we'll get back to you with the data.

But the answer to the question that was raised here is important; I think this is fundamental. The question was posed by a member of the committee who said “I don't think any employer would hire anybody back who's drawing a pension”. I disagree. I think any civilian employer would hire anybody back drawing a great pension, if they knew that was the best person for the job. If you talk to anybody who runs a company, they would say they would hire that person because that person is the best person for the job.

That's what the discussion comes back to. How do we ensure and maintain that they are the best people for the job and that it's open and transparent?

[The Chair, Conservative, Maxime Bernier]

Thank you very much.

Now we will give the floor to Mr. Payne for five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Mr. Chairman.

That's a great example you're talking about, General. In fact, I know in private industry, because that's where I come from, people who have actually retired from their organization, are getting a full pension, and then go back to work for the same company as a contractor. The prime example I have of that is myself. I worked for a petrochemical company. I was drawing a pension. They hired me back as a contractor, and I was entitled to double-dip, so to speak, if that's what you want to call it. At the same point in time, however, if I were hired back as a full-time employee without a contract and was expected to in fact contribute to the pension plan, then I would have stopped getting my annuity from the company and started paying back in and adding more credit to my time. So that's a really good example of that. I was actually going to get you to comment on it, but you've done some of that already.

I just wanted to bring that point out. It does happen in private industry.

[MGen Walter Semianiw]

I believe the phenomenon, if you want to call it that, happens across and in any sector to ensure you have the best people for the job that's available.

[The Chair, Conservative, Maxime Bernier]

Will you share your time? You still have three minutes.

Mr. Braid.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Mr. Chair.

Thank you, General, for being here this morning.

As a somewhat recently elected member of Parliament, I'll say it's inspiring to be surrounded by so many double-dippers.

[Voices]

Oh, oh!

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

You indicated that currently one in four full-time reservists are in fact annuitants. I'm just curious to know how that compares with the numbers at other points in time five, ten, or fifteen years ago. Has that been stable? Has it increased?

[MGen Walter Semianiw]

We'll get the data to the committee, but I'm just kind of hypothesizing here. My sense is the number right now is higher than it was in the past, given that we've never had such a demand for class B folks. This is the challenge: operational tempo, the baby boomers kind of moving ahead, and retention issues, all of which have led to a higher number of class B personnel on one-, two-, or three-year contracts. There are probably more than there have been in the past. We'll get you the data to confirm that intuition.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Is it your sense that the one in four, then, is probably close to its peak, and that will start to...?