Public Accounts Committee on March 22nd, 2016

[Jaime Pitfield]

If I could add to that, Mr. Chair, in business planning this year, National Defence approved a budget ongoing for the agency of $25 million next year, in vote 5, which is capital funds, $45 million in the second year, and $45 million in the third year. The Auditor General's request that the department consider a more stable form of funding has been put in place.

[Chandra Arya, Liberal, Nepean, ON]

Mr. Chair, the Auditor General also found that the agency “proposed to undertake work estimated at $1.95 billion” to modernize the portfolio. However, according to the Auditor General, the agency officials told him “National Defence did not support this large investment because of competing priorities and, therefore, funding and the proposed plan were not approved”.

I would like to hear the comments on that.

[Jaime Pitfield]

If I could answer that as well, Mr. Chair, there are many priorities at National Defence. There are many on the military side and then many in terms of supporting the military.

These are big numbers. The $1.8 billion is the value of the portfolio. If we were to recapitalize everything, that's what the cost would be. That's not affordable at this point, so the approach that National Defence has taken is that we are stepping up what we invest from a capital point of view, and we've actually moved the condition of the portfolio. We've improved it by 3% over the last several years. That trend will continue, given the capital monies that are programmed.

[Chandra Arya, Liberal, Nepean, ON]

You mentioned, sir, that many of the housing units were built between 1948 and 1960. You've said that you improved the conditions by 3%. Is that what you mentioned?

[Jaime Pitfield]

Yes.

[Chandra Arya, Liberal, Nepean, ON]

Do you feel that is adequate?

[Jaime Pitfield]

Go ahead, Ms. Francoeur.

[Dominique Francoeur]

Mr. Chair, we have a way to assess the condition of every single asset. The way that we look at housing is based on industry standards. It's on a scale from one to five. Right now, 87% of the portfolio, of the 12,000 units, is considered to be average or above. Average is like new. That's an increase of 3%. It's a direct result of the last four or five years of investment that we put into the portfolio.

[Chandra Arya, Liberal, Nepean, ON]

But average is still not good.

[Dominique Francoeur]

No, average is good.

[Chandra Arya, Liberal, Nepean, ON]

Many of them must be below average too.

[Dominique Francoeur]

No, sorry. Average is good. “Average” means that the components of the houses are working in a satisfactory manner. Average is good. It could mean that the roof may need a life-cycle update, but it is still performing.

The rest, the 13%, are houses that are targeted for disposal or that may be vacant because they are due for major repairs.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

I'm going to use my prerogative to jump in here, Mr. Godin, for one moment.

I'm wondering if someone from the department could explain the part of our Auditor General's speech today in which he talked about receiving the $6 million late in the fiscal year. We've heard today that for improvements, for renovations, for fixer-uppers, you've spent $130 million in the last fiscal year. Is that correct?

[Dominique Francoeur]

That's a combination of capital investment and life cycle.

[The Chair, Conservative, Kevin Sorenson]

All right, but my question is this: The money flows through DND; the agency then makes application or has a budget with DND, and it comes with the money, $6 million, in January. How much had been spent on some of those improvements previously in that fiscal year?

[Dominique Francoeur]

That was 2014-15. The department gave me $43 million in capital, in addition to the money that I spent on life cycle, and the last $6 million was in January of that year.

[The Chair, Conservative, Kevin Sorenson]

I just want to get a clearer picture of this. Are you then going to the department and saying, “Listen, we need more resources”? Are you constantly saying to DND that you need more resources for housing, and you're being put off?

[Dominique Francoeur]

I can tell you that at the beginning of that year, I knew I was going to receive $18.5 million, and I received it at the beginning of April. Then that year I received another $18.5 million later in June, and then the $6 million in January, so that's based on—

[The Chair, Conservative, Kevin Sorenson]

Previous to that, did you know the $6 million was coming in January?

[Dominique Francoeur]

I suspected that it would come.

[The Chair, Conservative, Kevin Sorenson]

Were there small projects you could use that $6 million for?

[Dominique Francoeur]

Definitely. I said before, and I'll make it clearer, that in the fall for the upcoming fiscal year, we develop a full plan based on the money we will potentially receive. For the money we're sure to receive as of the first of April, we develop a plan based on the condition of the assets and based on a priority system. We draw a line, and we always have some projects that we will be able to do if the money comes through. That's why we are sometimes able to do projects that might not have been our first priority but that are nevertheless very important.

[The Chair, Conservative, Kevin Sorenson]

Is there ever a time when you lapse money?

[Dominique Francoeur]

Not anymore. I would say that prior to 2009, sometimes we would. The agency, as it matured, got a lot better at planning and at knowing what investment was required for each of the assets. But prior to developing the appropriate plan after the full creation of the agency, we developed a rationalization plan, a life-cycle, asset management plan, and so on. After that we were able to make sure that all the rent revenue was spent on the housing, to improve the condition of the assets, and after that also as we got better at planning and spending the money, we didn't lapse anymore, and then also the department was able to fund us with capital—

[The Chair, Conservative, Kevin Sorenson]

Are you happy with that process of different allocations throughout the year as you need them?