Evidence of meeting #8 for Public Accounts in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was space.
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
A decision should be rendered within the next few days. Is the decision based on certain conditions?
Deputy Minister, Department of Public Works and Government Services
You mean the decision--
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
The letter of intent, the decision that's being made.
Deputy Minister, Department of Public Works and Government Services
Yes, the letter of intent clearly states that we must receive approval from ministers of the Treasury Board, and other conditions of that kind.
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
So if there's an approval in the next few days, what's the next step?
So there's a letter of intent, and the deadline is on June 15, as you've indicated. What's the next step? If they approve it, where does it go from there?
Deputy Minister, Department of Public Works and Government Services
If they approve it, what we have proposed to the minister is our recommended position on various costs in terms of maintenance and other aspects of fit-up, and so forth. We believe we can reach those kinds of levels with the vendor. We're hoping to improve on what we have discussed with the vendor. We will then make that final negotiation to see if we can get as good a deal as possible before it's--
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
Are you able to disclose the amount, or roughly the amount, that we're dealing with here?
Deputy Minister, Department of Public Works and Government Services
I very much regret that I cannot.
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
That's fine. That's fair. I just wanted to make it....
The second question I had was with respect to the expenditure review process, and I need some assistance in understanding the role of Public Works in this process. In the past, when Minister McCallum was responsible for expenditure review, he indicated savings would be coming out of the department when Mr. Bryden was the minister, and I know another commitment was made by the current Minister for Treasury Board. As well, the Public Works minister has made some commitment to savings associated with the expenditure review process.
What is that amount, first of all? I'm confused about the amounts. There are various amounts. I feel lost, so I need some assistance on that.
Deputy Minister, Department of Public Works and Government Services
Well, Mr. Chairman, we have worked on the opportunities available to improve our costs. With the expenditure review committee, we've put forward various proposals we felt were advantageous. And in real property, over a five-year period that would end in 2009-10, we believed we could achieve savings of $925 million after investments such as to buy new systems. We are working toward that. We've already achieved the first year's savings, which are scheduled at $150 million. We're working on this year's savings. That is the trajectory.
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
So that's the commitment, the commitment for Public Works and Government Services, $925 million, up until 2010?
Deputy Minister, Department of Public Works and Government Services
Correct.
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
You've indicated certain targets. Is there a detailed plan?
Deputy Minister, Department of Public Works and Government Services
There is very much a detailed plan. We touched on it when we discussed the issue that part of the achievement is by reducing the amount of square metres we assign to each department. Part is the fit-up reduction. We're reducing the package of expense there. Part of it is lease negotiations, that we are intending to extend leases longer and therefore get better pricing. A part of it is reducing our own overhead. We've taken out 300 people by attrition. We haven't let anyone go; we've simply not hired as many people. So we have a program, yes.
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
Could you give me the cost of that, on an annual basis, and how you plan to hit the $925 million--from this point, or including any savings in the past, and on an ongoing basis to 2010, please?
Deputy Minister, Department of Public Works and Government Services
Yes, we can certainly table that with the committee, or I can discuss it in detail now.
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
If you could just table it, because I don't want to—
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
It would be easier. Just a very simple, straightforward one page to illustrate the amounts and the major drivers for the savings associated with it. Nothing too complex, just to give us an indication that there's a plan in place, and the plan entails certain action items that will contribute to those cost savings on an ongoing basis.
Deputy Minister, Department of Public Works and Government Services
Yes, we would be very pleased to do that.
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
Okay.
Speaking to the question raised by my NDP colleague with respect to assurances, I know when you read some of the issues identified in the Auditor General's report.... The major concern I have is with respect to management information, that it needs fundamental upgrades. I believe there are legacy systems and other issues with respect to management information that are really hurting the department and are driving the unsatisfactory progress.
My question is, you have these savings associated with the expenditure review, which you've indicated, and you've illustrated the action items for it, but there seems to be a clear indication that there needs to be major capital investment or a major investment in management information systems as well, to upgrade, to bring about these efficiencies.
First of all, will this investment take place in line with some of the assurances you've provided? Second, will it impact the savings you have estimated in any shape or form?
Deputy Minister, Department of Public Works and Government Services
Yes, Mr. Chair. We have been very conscious of the need to upgrade our systems in this kind of program going forward, and the actual savings we've achieved so far and are working on amount to $1.25 billion. We have earmarked $100 million for changes over five years—new systems, new capabilities, and so forth—which then would yield a net of $925 million. That has been taken into account, because it needs to be done.
Liberal
Navdeep Bains Liberal Mississauga—Brampton South, ON
With respect to risk management, I know that issue was raised as well. They're saying there was no consistent risk-management process. In one of the areas I noticed there was a mix, I think it was 41% that was leased versus—what percentage was it? Forty-one percent is leased and the rest is owned by the Crown. Will that fundamentally shift on a going-forward basis as well, in light of (a) risk management and (b) the savings you've just discussed?
Deputy Minister, Department of Public Works and Government Services
We are certainly examining very carefully the economics of owning, because as you look at a business case on paper, when you want a long-term occupancy, it would often point to the advisability of owning.
On the other hand, as you get into the 25-year journey and you don't make the investments to upgrade your building, you end up at the end of 25 years with a building you really have to tear down. So the original case, if you like, hasn't proven out in practice. We have many buildings of that kind in our inventory. Part of the reason for it is that we get annual funding, and there are other anomalies that occur on the journey. So as we look at it, we are re-examining what really in practice does happen, how we can fix it, what options we have, and so forth.
In other words, we haven't said we're going to shift the balance in order to save money. The steps we are taking are independent of that and can be executed and achieved whether or not we change the mix. But we are looking at it.
