Public Accounts Committee on Oct. 2nd, 2025

[The Chair, Conservative, John Williamson]

I call this meeting to order.

Good morning, everyone.

Welcome to meeting number seven of the House of Commons Standing Committee on Public Accounts.

Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders.

I see that we have one member joining us online; the others are here in person.

I'd like to remind participants of the following points.

Please wait until I recognize you by name before speaking. All comments should be addressed through the chair.

Members, please raise your hand if you wish to speak, whether participating in person or via Zoom. I have the speaking order for questions.

Pursuant to Standing Order 108(3)(g), the committee is resuming consideration of report 3 of the Auditor General of Canada, entitled “Current and Future Use of Federal Office Space”, of the 2025 reports 1 to 4 of the Auditor General, referred to the committee on Tuesday, June 10.

I'll introduce our witnesses.

From the Department of Public Works and Government Services, we have Michael Mills, associate deputy minister. Also here is Nathalie Bertrand, associate assistant deputy minister.

From the Treasury Board Secretariat, we have Annie Boudreau, comptroller general of Canada. We also have Michèle Kingsley, senior assistant deputy minister, office of the chief human resources officer, and Samantha Tattersall, assistant comptroller general, investment management sector.

From the Office of the Auditor General we have Karen Hogan, Auditor General of Canada. We also have Nicolas Blouin, director, and Markirit Armutlu, principal.

It's nice to have you all here.

I'm going to begin with the Department of Public Works and Government Services.

You have five minutes for an opening statement.

[Michael Mills, Associate Deputy Minister, Department of Public Works and Government Services]

Thank you, Mr. Chair.

I'd like to acknowledge that we are meeting on the unceded territory of the Anishinabe Algonquin nation.

I'm pleased to be here to address the Auditor General's recent report on the current and future use of federal office space, and the findings and recommendations directed to Public Services and Procurement Canada.

I’m joined today by Nathalie Bertrand, associate assistant deputy minister of real property services.

Public Services and Procurement Canada, PSPC, manages the government's general purpose office space. This represents an office space portfolio of 5.9 million square metres. We estimate that before the pandemic, approximately half that space was underused on any given day.

We therefore initiated a process to optimize the office space footprint. Throughout this process we have worked with federal departments and agencies to ensure we provide sufficient office space in line with Treasury Board of Canada Secretariat’s directive on prescribed presence in the workplace. We’ve made important progress on optimizing the use of federal office space, but we recognize there is more to be done.

We thank the Auditor General and her office for their work, and we agree with the recommendations in the report.

The Auditor General's report highlighted delays encountered by PSPC in achieving the target of reducing the office space portfolio by half. As it stands, our efforts are projected currently to reduce approximately by 33% by 2034.

We recognize that the plan to reduce our portfolio by 50% is ambitious. Achieving it will require innovative portfolio strategies, cross-government collaboration and more effort. We have already identified ways to optimize our leased and owned spaces, including the co-location of federal departments and agencies, and accelerating the disposal of surplus assets. We will continue to work closely with federal departments and agencies to explore ways to bridge the gap between the 33% and the 50% reduction.

We agree with the recommendation that we must improve our public reporting on progress toward achieving the reduction of our office portfolio. As part of PSPC’s commitment to transparency, the department will publicly share information related to the management and use of space, and report on our progress toward achieving the 50% reduction of its office portfolio over the next 10 years.

I note that information on progress has been available online since March of this year, and will be updated annually.

In closing, PSPC will continue to work closely with the Treasury Board of Canada Secretariat; and Housing, Infrastructure and Communities Canada to implement the Auditor General's recommendations.

We have taken careful note of the Auditor General's findings with respect to delays and transparency, and we have already started to make progress on making information available publicly. We will continue to provide updates on our progress towards reducing the federal office footprint.

Thank you.

[The Chair, Conservative, John Williamson]

Thank you.

Mr. Mills, I have a quick question.

We've received your draft work plan or action plan. Could you let me know when the final version might come before the committee?

[Michael Mills]

I don't have a specific date, but we will endeavour within a week to provide the date for when it'll be finalized.

[The Chair, Conservative, John Williamson]

Okay, you'll provide a date within the next week about the final version. If that's an issue, we'll get back to you. We'll take that up if necessary, but a final version is something we look for. We don't want to get into the habit of departments sending us draft versions. Some allowance is allowed, but we look for a final version as soon as possible.

Thank you very much.

Ms. Boudreau, you have the floor for up to five minutes, please.

[Annie Boudreau, Comptroller General of Canada, Treasury Board Secretariat]

Thank you, Mr. Chair, for the opportunity to address the committee on the Auditor General’s Report on the Current and Future Use of Federal Office Space.

I am joined today by Michèle Kingsley, senior assistant deputy minister, strategic directions, office of the chief human resources officer; and Samantha Tattersall, assistant comptroller general, investment management sector.

I will outline the role the Treasury Board of Canada Secretariat, or TBS, has in this area, then address the relevant audit findings.

TBS sets the administrative framework for how departments should manage their real property.

There are 28 organizations that own and manage real property. These are referred to as custodian departments. These organizations are accountable for ensuring that their real property supports their operational needs and is managed effectively. This includes determining which assets are required, how they are maintained, and when and how they are disposed of when no longer needed.

In addition to our role in real property management, TBS also introduced the direction on prescribed presence in the workplace in December 2022, requiring eligible employees to work onsite two to three days per week by March 2023. Revisions to the Direction were announced in May 2024 to increase the minimum onsite presence, requiring eligible employees to work onsite three days a week and executives to work on site four days a week as of September 2024.

The goal of the audit was to determine whether the government's general purpose real estate portfolio was managed in a manner that provided sufficient office space for the public service while minimizing costs to Canadians. Four organizations were included in this audit.

The audit focused on the role of TBS in directing real property management across government, and in particular on the Centre for Expertise on Real Property. This centre was created as part of the 2021 budget with $5 million in funding over three years to coordinate the implementation of recommendations from the horizontal review of capital assets and to help departments and agencies adapt to changes in office space use resulting from the pandemic. This funding was temporary and ended in March 2024.

The Auditor General found that the centre had played an important leadership and oversight role in implementing the recommendations arising from the review. The audit also found that, following the dissolution of the centre, Treasury Board Secretariat's capacity to provide the leadership and coordination necessary to implement the recommendations had diminished.

Treasury Board Secretariat agrees with the Auditor General's conclusion that the centre has made significant progress in implementing improvements to the management of real property within the federal government.

As agreed in the management response, TBS has begun reviewing the outstanding Horizontal Fixed Asset Review recommendations to prioritize work that could be undertaken, taking into consideration feedback from the real property community. We will then consider options to address the identified priorities, including exploring funding strategies and identifying what can be delivered with existing resources.

In conclusion, through the Office of the Comptroller General, TBS continues to support the improvement of federal real property management as part of its core responsibilities. We continue to improve our policies, provide advice to the community, and support the professional development of real property practitioners.

I look forward to answering your questions. Thank you.

[The Chair, Conservative, John Williamson]

Thank you, Ms. Boudreau.

Ms. Hogan, you are the next speaker on the list and you have some things to tell us.

[Karen Hogan, Auditor General of Canada, Office of the Auditor General]

Mr. Chair, thank you for this opportunity to discuss our report on the current and future use of federal office space.

I would like to acknowledge that we are gathered on the traditional unceded territory of the Algonquin Anishinabe people.

Since I already appeared before this committee last week, I won't make an opening statement today. I understand that my written statement has been redistributed to committee members.

We're pleased to answer questions from committee members. In order to best support the work of this committee, I cede the remainder of my five minutes' speaking time. Thank you.

[The Chair, Conservative, John Williamson]

Thank you very much, Ms. Hogan.

I'll begin our first round, which consists of three members with six minutes each.

Ms. Kusie, you have the floor to kick us off, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Chair.

Thank you to all of our witnesses for being here today.

Mr. Mills, the Auditor General's report made it clear that your department is not on track to deliver the 50% reduction in federal office space over the 10-year period. I find it hard to believe that PSPC will even reach the new 33% planned reduction, given that, since 2019, the government has only reduced federal office space by 1.6%. What gives you the belief that you can reach this target?

[Michael Mills]

I have a number of points I'd like to raise today in terms of the progress.

We acknowledge that we have not made a lot of progress, in part because, between 2019 and 2024, we didn't have an approved policy to hit the 50% reduction supported by an approved funding source. That came in the 2024 budget. Also, between the prework that was done in 2019 and 2024, we had a severe disruption to the portfolio and to our work program because of the pandemic. The last piece I would mention is that part of what we were doing in that interim was running procurements and initiating large capital projects that will result in and enable reductions in other years.

I can appreciate at the moment that the progress has been relatively modest but, as we look around the city and we look across the river at Place du Portage III or Les Terrasses de la Chaudière, we have hundreds of thousands of square metres of office space being modernized today, which will enable reductions two to three years down the road.

We have made some progress over the last year. As we go further along and complete our capital projects, which can take three to five years each, we will start to see an acceleration in the number of reductions.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you for that response.

The Canadian Press reported last week that the updated “In-office rules for public servants [is] thwarting”—that's their word, not mine—“plan[s] to sell off [office] space”. Do you agree with this statement?

[Michael Mills]

The current footprint we have is sufficient to accommodate the number of employees at the current requirements of prescribed presence in the office. We have additional capacity to have more presence in the office. We continue to work on our plans to see our reduction, but, again, the 34% reduction was based on the current program we have with prescribed presence in the office and based on the work counts we have today.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you for that.

As I mentioned previously, the Auditor General's report shows that the government has only reduced space from six million square metres to 5.9 million square metres, again, just 1.6%. Her report outlines that full-scale implementation began only in 2024, five years after the program was announced.

Can you understand why Canadians might be skeptical that this program is more than a project for the government to display that they have the capacity to oversee a housing crisis where costs have doubled, young Canadians have been priced out of their homes and mortgages have doubled?

[Michael Mills]

Again, I can appreciate that, at the early stages of a large, complicated capital program such as this, relatively modest initial reductions would challenge people's confidence. This is why it's important that we take very much to heart the recommendation by the Auditor General to have much more transparency on what we predict as the reductions and much more clear and timely reporting on how we're doing against that so we can build the confidence of Canadians.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

Ms. Hogan, thank you for your detailed report on this program. As always, your work is deeply appreciated by Canadians.

Last week, the committee heard that both CMHC and Housing, Infrastructure and Communities Canada don't currently have enough office space to accommodate the three-day per week return-to-office mandate.

Do you believe that this is common across departments?

[Karen Hogan]

Unfortunately, I'm unable to answer that question. As we highlighted in the audit, gathering information across the federal public service about usage of office space is inconsistent.

I did hear that testimony. I can tell you that my office has enough space. You would have to ask others about their thoughts and views on space usage.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

If departments at this committee are coming forward and saying they don't have enough space, do you feel confident that this program will ever accomplish its goals?

[Karen Hogan]

Again, I believe that they commented on not having enough space with the current way their offices are laid out. One of our findings in our audit was about the need to modernize workspaces to move away from the traditional, where everyone has a large office or cubicle, to something that allows for hotelling and more activity-based work.

Progress has been slow on that. Until that happens, I think many will likely report that they don't have enough space under the current set-up of their offices.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much.

[The Chair, Conservative, John Williamson]

Up next is Mr. Osborne.

You have the floor for up to six minutes, please.

[Tom Osborne, Liberal, Cape Spear, NL]

Mr. Mills, in terms of the modernization of workspace, when we look at the prescribed presence in the workplace and how that has changed over the last couple of years.... I mean, who knows? It may change again in the future. We don't know that.

How realistic is the modernization and sharing of workspaces now that we have a difference in the prescribed return to work?

[Michael Mills]

At present, around 30% of the public service is already operating in modernized spaces. We are confident that for those who are operating in modernized spaces, it is serving their needs and they are able to accommodate flexible, hybrid work arrangements.

Another key part of this is actually the technology. We need to have both the modernization and more presence of what we're calling GC-WIFI. It's having Wi-Fi-enabled space. With the presence of GC-WIFI and modernized space, we can accommodate much more flexible work arrangements. We can accommodate departments into the future.

[Tom Osborne, Liberal, Cape Spear, NL]

Mr. Mills, as a landlord, I can't imagine having to negotiate with my tenants on when they move or if I need that space back. The Auditor General found that there was no financial incentive, that budgets were not reflected by the space that was utilized and that tenants were not co-operative with PSPC in terms of the desire to move or were showing a lack of desire to move.

That obviously creates constraints for you. We can have recommendations or policy provided by elected officials, but if departments are not responding to you as the landlord, how do you get around that?

[Michael Mills]

By way of incentives, I think it's important to start off and acknowledge that when we move to a new space, PSPC pays part of the cost, which we call the base building. It's actually fitting up the hard surfaces—walls, carpeting, ceilings and whatnot. Departments incur costs to purchase new furniture, security systems and technology.

I don't want to characterize it as departments always being resistant. We have to try to align departmental budget decisions with PSPC budget decisions. They don't always align that easily.

The other part I would say around moving forward is that it is really disruptive to actually move a department from one location to another location. Sometimes what we have to do is actually move a department out of its building. We call that swinging them out. We move them to a temporary location—temporary could be three to five years—and then move them back in. That is a very disruptive process for a department.

I don't want to characterize it as departments are holding on or resisting. There are valid reasons why it's challenging for certain departments to be able to actually align and modernize space.

In working with our people who are responsible for real property in the different departments, we are trying to make sure that as we go forward and talk about modernized space, they understand that all departments are going to have to modernize their spaces. All departments are going to have to move toward an alignment.

It's a question of how we work with them on a plan over the next 10 years to ensure that all public servants are in modern spaces where they have access to modern technology such as GC-WIFI and ensure a footprint.... It will be challenging for some departments to determine a timeline that aligns between what we want to do from the hard, real property piece and what they can resource and change-manage in terms of their side of the equation.