Public Accounts Committee on Nov. 6th, 2024

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you, Mr. Chair.

Thank you very much to the witnesses for being with us today.

Our committee is coming to the end of its study on the ArriveCAN application, nearly a year after it was launched.

It's a good time to take stock, as a number of measures were announced when the Auditor General's report was tabled. Almost a year later, we should be seeing the first results. I will focus on that to begin with.

Before continuing, Ms. Reza, I would like to say that I found my colleague Ms. Yip's question about your background interesting.

Before you came to PSPC, you spent many years at CBSA. The issues raised by the Auditor General in her report couldn't have started in 2016. They likely go back to when the processes were in place—you were probably at CBSA. Is that your experience as well in terms of processes?

According to the Auditor General, the bookkeeping was among the worst she had seen in a number of years.

The problems probably didn't start in 2016. Did you notice the same problems when you were at the agency?

[Arianne Reza]

Thank you for the question.

I did not observe those issues when I was at CBSA.

In the end, when I was acting assistant deputy minister, I was responsible for managing expenses related to border processes for travellers. As part of my accountability mandate, I was also responsible for ensuring that budgets were properly prepared. So I haven't experienced that situation; I haven't seen the same thing.

I think it's very important to point out that the awarded contracts did not concern the ArriveCAN application file. The purpose of those contracts was to increase the number of consultants to help us manage the budget. I think that was among the points that were raised.

Currently, I am responsible for managing professional services contracts.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

I understand what you're saying, but the ArriveCAN application file is the tip of the iceberg in terms of processes and record keeping. These processes must exist elsewhere; they were not put in place for a single project.

We noted that this practice was quite widespread within CBSA. I'm surprised to hear you say that you had a diametrically different experience. Generally speaking, when there is a problem in an organization, it is not necessarily related to a single team. This was a problem with people at a fairly high level within CBSA. So I'm a bit surprised by your answer.

During our study, allegations were made that there was a toxic culture at CBSA. You were there while Luc Sabourin was working there.

Haven't you ever heard of Luc Sabourin? Are you aware of that case?

[Arianne Reza]

I did not hear about it when I was at the agency. I'm learning about it from your comments. I checked the period in question, and I think it was after I left the agency. It has been—

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

This happened between 2009 and 2016.

[Arianne Reza]

All right.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

That happened precisely during the years when you were at the agency. I'm obviously not saying there's a connection. So you have no knowledge of that.

Mr. Sabourin pointed out that there is a toxic culture within the agency. We've heard about a possible toxic culture in the human resources department. We've also heard about possible criminal activity. In fact, an RCMP investigation is under way. We learned that bookkeeping was deplorable.

Quite a few issues were raised about CBSA, and they are unlikely to have surfaced only after you left.

[Arianne Reza]

I would add that the results of the public service employee survey are still very weak when it comes to CBSA. The survey is conducted at all federal government departments and agencies.

That continues to be a concern for us. Let's not forget that many CBSA officers provide frontline services. Accordingly, when an agency achieves such results, there is always some concern about what should be improved. I agree with that.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Thank you very much.

With respect to PSPC, you've already mentioned a number of measures that were put in place, and I commend you for that. Those include specific processes and eliminating certain framework agreements with companies, which could be tantamount to a free pass. You suspended several departments' ability to award contracts without due process.

What is the current situation? Have you already achieved results?

Have any departments told you that they want to recover funds?

Can you provide statistics on that?

[Arianne Reza]

There are two parts to your question. First, you're asking what we've seen in terms of a culture change in the procurement process. Then you're asking if we've recovered any funds.

I will give the floor to Ms. Poulin and Mr. Laporte. They will be able to provide more details.

[Catherine Poulin]

Thank you very much.

We were able to recover some funds. That sum amounts to about $800,000, of which $400,000 has already been received and $380,000 is in the process of being finalized in the form of agreements. For that last amount, we're just waiting for payment.

These recovered funds are related to three fraudulent billing cases that were announced by the Minister in March 2024.

[Nathalie Sinclair-Desgagné, Bloc, Terrebonne, QC]

Can you tell me which company that was? Is that confidential information?

[Catherine Poulin]

It is indeed confidential information. You will understand that we want to avoid compromising ongoing negotiations on restitution agreements.

That said, we are very pleased to see that everyone has been contacted and that most of the people we call for reimbursement are collaborating. They understand the importance of maintaining a good relationship with the federal government. They also understand their contractual obligations.

They're not necessarily happy to talk to us about reimbursing the funds, but we're having success, and we're satisfied with the progress so far.

[Arianne Reza]

I would like to add that, in the past, it was usually up to each department to go and recover funds. However, it was not effective. We're going to have this new data analytics capability, and we've asked Treasury Board to give us that responsibility.

This is just the first wave, if I can put it that way. We're going to try to recover all the funds.

[Dominic Laporte]

I'm very proud of the work done by our procurement officers. There's a great deal more transparency than there has been in the past.

Some of the things we've done include, for example, requiring suppliers to disclose the names of their subcontractors and their profit margins. There's also much more rigour in terms of the requirements for task authorizations. For example, the job description needs to be more specific than it used to be. What we saw with the ArriveCAN app must not reoccur. The job description was so vague that we weren't sure we could link what was expected of this app to another IT project.

So I'm very happy to say that we have done a lot of outreach with our clients. The Treasury Board Secretariat has also helped us a great deal in raising awareness among managers, who are primarily responsible for defining needs when they request funds. So the Treasury Board Secretariat has issued guidance to managers. In short, many measures have been taken.

As I mentioned, 450 procurement files were audited, and the compliance rate on those files was high. When we realize that certain things need to be improved, such as if we notice that a document was missing, we take a very constructive approach to our procurement officers. We've also created checklists to make sure that all the pieces of information that need to be in the procurement file are there.

I'm very impressed with the culture change we're seeing. All of this is being done in parallel with training activities. We have about 1,000 procurement officers who have completed our training on file management quality. All these things are moving us in the right direction.

[The Chair, Conservative, John Williamson]

Thank you very much.

Next, we have Ms. Zarrillo, joining us online.

Welcome to the committee, Ms. Zarrillo, and you have the floor, for six minutes, please.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Thank you, Mr. Chair. My questions today will be for witness Hogan.

There are so many additional important issues that the Auditor General's office needs to audit to serve Canadians with better transparency and oversight. One of those that I and my NDP colleagues are seized with is the financialization of housing and how the federal pension plans are contributing to the displacement of renters through the Public Sector Pension Investment Board, the PSPIB, as they contract out landlords to manage their multi-family real estate assets.

I want to refer to the PSPIB special examination report out of witness Hogan's office in 2021. We know that the PSPIB is a Crown corporation. The report stated, “During our audit, the secretariat communicated the government’s funding risk tolerance and long-term real rate-of-return objective for the pension assets that the corporation managed.” They were told what those risk tolerances and rate-of-return objectives were. The report also said, “the government’s real rate-of-return objective was 3.6% for the following 10 years and 4.0% thereafter.”

That was in 2021. Today, just recently, the PSPIB annual report shows that their 10-year net annualized return is 8.3%, more than double those objectives. Those returns are partially coming off the backs of displaced renters. In fact, ACORN Canada protests that the Public Sector Pension Investment Board's stake in exploitative financialized housing is causing harm.

If we think about the PSP investment board being one of the largest billion-dollar corporate financialized landlords, it certainly requires oversight, as this is happening under the government's watch. Who is overseeing renters and protecting people from private investment and tactics like the ones the PSP Investment Board is engaging in?

I would say they're engaging in it because we know, according to documents released in response to a recent access to information request, that the PSP Investment Board owns around half of Starlight Toronto's portfolio. Starlight is actually Starlight Investments, one of the largest landlords in Canada, a privately held real estate investment and asset manager that manages over 65,000 units. Prior to founding Starlight, their CEO ran TransGlobe, which earned a reputation for ignoring tenants' requests for maintenance and faced hundreds of charges for failing to do repairs and for violations of the fire code. Starlight has also applied for more above-guideline rent increases than any other landlord in Toronto. It was one of the top evictors during the pandemic and has targeted tenant organizers with evictions.

Witness Hogan, this is the government's partner in the pension funds. Are you aware of this reality?

[Karen Hogan]

Mr. Chair, I pride myself on coming prepared to answer just about any question a committee member may have, but I have to admit that I did not anticipate this.

I would offer up that I will happily consult with my audit team on the PSPIB special examination, including the joint auditor. This is an audit that we do jointly with the private sector.

Could I provide a written response back to you, Mr. Chair, that you could share with the committee member?

[The Chair, Conservative, John Williamson]

I think that would be fine.

Ms. Zarrillo, you have the floor again.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Thank you.

The very pensioners that this fund is supposed to protect are asking for oversight, so I'm happy to hear this from witness Hogan. I'll be looking forward to that.

This comes from The Hill Times. The headline reads:

Union urges public sector pension fund not to pursue rent increases, mass evictions at Toronto apartment buildings

It goes on:

A union representing federal public servants says the pension fund that manages its members' retirement savings has joined with one of Canada's largest real estate firms to evict tenants who are resisting proposed rent increases at three rental...buildings in Toronto.

Union representatives and tenant organizers have criticized the Public Sector Pension Investment Board (PSPIB) and its operational arm...for its role in the joint venture with Starlight Investments, a global asset management company that is one of the largest privately held real estate firms in Canada.

I want to share this, witness Hogan, and I want to ask this question. I've tried to reach out to the newly appointed board chair. I have been refused a number of times any access to the PSP Investment Board chair. They've pushed me off to some other operational pieces. Obviously, there is no accountability for Canadians.

I just want to understand why a parliamentarian is not allowed access to the board of this Crown corporation, when this is exactly who they report to. They report to parliamentarians.

[Karen Hogan]

Mr. Chair, I echo the fact that boards of directors oversee the operations of Crown corporations. A Crown corporation is at arm's length from the government, but ultimately it accounts back to the government.

What I can offer up and encourage is this: If this or another parliamentary committee would like to study our special examination and invite witnesses from the Crown corporation, our office and among the joint auditors, I'm sure we would all be prepared to support the committee in studying important matters linked to PSPIB.

[The Chair, Conservative, John Williamson]

Thank you very much.

That is the time for this exchange.

Beginning our second round, Mr. McCauley has the floor for five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks, Chair.

Witnesses, welcome.

Ms. Reza, during one of your previous appearances, you noted that GC Strategies had been given a suspension for 180 days.

The 180 days are up. Are they still suspended?

[Arianne Reza]

They are no longer eligible to do business with the Government of Canada. I think they're permanently removed.

[Kelly McCauley, Conservative, Edmonton West, AB]

They've been permanently removed.