Public Accounts Committee on Dec. 14th, 2023

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you, Mr. Chair.

Thank you so much to our abundance of witnesses today. It's a cast of thousands. For those of you watching at home, we actually have 10 witnesses in the room and two on the screen. I think that speaks to the importance of the issues we're dealing with today.

These are two very important reports—modernizing information technology systems and benefits delivery modernization. As the Auditor General's report indicated, more than 10 million Canadians rely on these income-support programs: OAS, CPP and EI. Obviously, failure is not an option.

I have a couple of questions for Mr. Jones, first of all. Basically, I was wondering, given that failure is not an option, why was no action taken after the 2010 spring audit report from the Office of the Auditor General that indicated action needed to be taken. It seemed like not a lot happened after that, and it was clearly identified that something needed to happen. Do you have any insight as to why there was a bit of a non-response on that?

[Scott Jones]

Shared Services Canada actually didn't exist in 2010; we were created following those discussions, or we were in the process of being created. Upon the creation of Shared Services, we had insufficient funds to begin a full-scale modernization, so it was focused on three areas: one was an email transformation initiative; one was a networking transformation; and then the other one was to try to consolidate data centres, as was mentioned in the Auditor General's report. All of those did make progress, but slower than we would have liked due to lack of funding.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Do you think if they had acted sooner, there would have been a cost saving to the Canadian taxpayer?

[Scott Jones]

I do think the lack of infrastructure and the lack of infrastructure spending and proactive spending did slow departments down, and it made it more difficult for them to modernize. However, we did need to dig ourselves a bit out of the hole we were in in terms of an infrastructure deficit and to rebuild lots of pieces. There was significant progress made, particularly around networking, which is what the government cybersecurity relies on. The investments tended to go towards networking, cybersecurity, and the pieces that provided that kind of perimeter around the government to protect it, as the cyber-threat changed drastically from 2010 to today.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

You referred to “digital together” in your opening statement. I guess it's a prioritizing mechanism, because there are so many things, and we can't accomplish everything as quickly as we want to. Can you explain that to us, please?

[Scott Jones]

Absolutely.

“ Digital together” is SSC's next strategy, following what we used to call “SSC 3.0”. It is about how we now start to fill in those gaps and be more proactive.

Our priority is obviously ongoing operations of government systems and whatever we need to do to maintain those operations. However, really it is investing in the hosting services branch, which Ms. Archibald leads, and asking how we deliver a new way of delivering, not just inside of our data centres but also all the way out to public cloud, and providing those options to our core departments that we provide services to.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

You also alluded to the impact of cybersecurity. What's the potential impact of AI on these types of projects? Can AI actually assist in generating better cost estimates and forecasted timelines? How are we dealing with these increased risks from AI?

[Scott Jones]

I'll start, and then maybe I'll turn to my colleague from the Treasury Board Secretariat, if that's okay.

AI is a huge opportunity for us, and we've started to see it being applied. We apply it, for example, on our access to information program, so that we can find information quickly and respond quickly. I think 99.6% was our rate last year for on-time responses at Shared Services.

We apply that throughout our technology stack. We can apply it to operations, looking for trends, etc. There's a huge benefit there.

The risk with cybersecurity is that AI can also be turned into how you breach a system, and then conversely, how you put AI in your defences.

We look to see where we can leverage it in terms of making ourselves more efficient, pushing our technology to where the state of the art in industry is heading, and then, of course, working with our cyber-partners around government.

Perhaps I could turn to my colleague, if that's okay.

[Catherine Luelo]

I think Scott described that very well.

I'll add maybe three points.

First is that the Treasury Board Secretariat's CIO office has published guidance around using AI, and specifically generative AI, as that emerges. I think we have some really good leading policy work in that space.

Second, it's a wonderful opportunity for us to actually decrease costs and be more effective in terms of automating predictive problems.

Third, I would say that built on a foundation of poor systems, poor data, you don't optimize your AI. It goes right back to the Auditor General's conclusion that we have lots of work to do there.

[The Chair, Conservative, John Williamson]

Thank you.

Ms. Sinclair-Desgagné, the floor is yours for two and a half minutes.

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

Thank you, Mr. Chair.

Ms. Luelo, you said you had to focus on certain mandates in particular, to modernize certain systems, and not spread your efforts around to try to transform everything. I understand that.

Do you think that is what was done in the case of IBM and the Phoenix pay system?

[Catherine Luelo]

I don't think it's okay that our staff are not paid properly. I don't think there's any deputy sitting in the room, or anybody in government, who thinks that where we are with pay is okay.

From an IBM perspective, I think it would be very easy to point the finger, but it was a multisystem failure in terms of Phoenix. It was governance. It was technology. Most importantly, it was a lack of standardization of business processes. We're still only half done on Phoenix. As we look forward on the pay file, we need to learn that lesson.

In my brief opening comments, I talked about the fact that if we do not exercise discipline on standardization, we're going to be having the same conversation in 10 years.

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

Thank you.

What is the exact total cost of implementing the Phoenix pay system? As of April 2022, it was approximately $2.6 billion, but I think the total cost is higher than that.

Do you have more recent figures?

[Catherine Luelo]

I will pass that to my—

[Arianne Reza]

If I may, I can answer that.

The cost comes to approximately $3.6 billion to date.

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

That means that the government has injected $3.6 billion into that system. But just a few months ago, the CBC told us that there were still 200,000 unresolved cases this year. We are right back where we were two years ago when it comes to the transactions backlog. That is disastrous, given the $3.6 billion taken out of taxpayers' money. How do you explain that?

Who can answer that question?

[Arianne Reza]

Catherine, if you like, I can start it off and then turn to you.

[Catherine Luelo]

That would be perfect.

[Arianne Reza]

As you know, it's been seven long years of trying to find a way out of Phoenix. Obviously as we all know, paying public servants is key, and you noted that the backlog continues to be an area of risk. As Catherine noted, it is really about standardization. Phoenix started off as an IT technology change, but in reality it was a continuum from the business rules, the transformation rules and all the systems that fed into those. The HR systems that are individual in each department have stayed as is. We have to actually work across the continuum.

We do want to make sure that the measures and technological tools put in place by Treasury Board, in collaboration with the unions and departments, will enable employees to get paid. I would note that there are 108 departments and 46 different technological systems involved.

My colleague can tell you about Treasury Board strategy.

Catherine, I will turn it over to you.

[The Chair, Conservative, John Williamson]

I'm afraid I will have to come back to that. I already added a minute to the time.

Ms. Sinclair-Desgagné, you will have another turn to ask your questions.

Mr. Desjarlais, you have the floor for two and a half minutes as well.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Mr. Chair.

I want to continue on my question in regard to outsourcing and contracting in the public service. You just heard from the member from OCIO, Catherine, that we're not paying our staff enough, and I fully agree. That is leading to serious competition issues, such that it's much easier to work for IBM; it's much easier to work for McKinsey; it's much easier to work for these other companies that then hold the government hostage by saying it has to pay them because there's no one else to do this work because the government has failed to pay its employees properly or at least at a competitive rate.

I can't express how disappointed I am by that. It is a serious concern, and I hope that after today's meeting, you can supply us with written advice on how, maybe by the time you renew your strategy, you're actually going to implement wage increases or become more competitive. We're losing real taxpayer dollars to profit CEOs and boards. Those profits could be directly paying for the salaries and wages of technicians who could be doing this work.

I hope that's simple enough and could be understood enough so that you know how serious an issue this is, and I hope that members of the government will also be keen to address it. Of course it is not just the civil service that is dealing with these problems; it's likely a funding capacity issue due to long decades of non-spending on operations and maintenance, similar to what we've seen in many audits before.

How much profit are these seven contracts generating for those companies?

[Cliff Groen]

We indicated the value of the contracts that we cited earlier. On the BDM program, I would say the majority—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

I'm curious about the profit that is being generated by these companies within these contracts. Do you have that information—yes or no? If you do not have information, I'd be happy to receive that in writing.

[Cliff Groen]

The contract value we have. I'm not sure what you're seeking in terms of specific profit.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

How much did these companies make off the public service? I feel as though that's a simple question.