Public Accounts Committee on Oct. 2nd, 2025

[Annie Boudreau]

As I said earlier, the objective of the current review is really to increase efficiency and cut spending on programs that are not achieving the results they should for Canadians.

Once the review is complete and the decisions are made, I imagine the results will be shared with you.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

The government pledged to raise the level of military spending and spending by the Department of National Defence, or DND, to 5% of GDP. Again, we have very serious reservations from a policy standpoint regarding the goal the government has set, a government that hasn't been very generous to DND over the past nine years.

Again, this isn't a question about policy; rather, it's a question about the facts. Do you think the major increase in DND spending the government has planned could directly affect the rents you pay?

[Annie Boudreau]

Unfortunately, I don't have the information to give you an adequate answer.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

Your honesty is very much to your credit. Thank you.

[The Chair, Conservative, John Williamson]

Thank you, Mr. Deltell.

Mr. Housefather, you have the floor for up to five minutes, please.

[Anthony Housefather, Liberal, Mount Royal, QC]

Thank you so much, Mr. Chair.

I know that you and the committee members will join me in extending our sympathies to the Jewish community in Manchester after this horrible attack on a synagogue, on the most holy day of the Jewish calendar. I hope we can all pray for a day when Jewish communities feel as secure as they did two years ago.

Mr. Mills, it's good to see you again. I don't believe we received the full management action plan from PSPC. When can the committee expect to receive that?

[Michael Mills]

Mr. Chair, we did submit—as was discussed at the beginning—a draft action plan. We sent it for comments. As soon as we have those comments reflected, we will present it to this committee. I endeavour, within a week, to get you a firm date as to when we will submit it to the committee.

[Anthony Housefather, Liberal, Mount Royal, QC]

Okay, so basically within the next week we'll know what date you'll submit it.

[Michael Mills]

That's right, but we're going to work as urgently as possible to incorporate the comments that we get back to finalize this.

We appreciate the need to get a timely final action plan to the committee.

[Anthony Housefather, Liberal, Mount Royal, QC]

I understand.

Let me move to a different question, Mr. Mills, which is related to the Auditor General's report.

I want to read section 3.33 of the Auditor General's report, then I'm going to ask some questions:

Some federal tenants reimburse (or pay rent to) Public Services and Procurement Canada for the office space they occupy, while others follow a different model where the amount of space they occupy has no impact on their budget. Of the 15 tenants cited above who did not agree to the reduction of the space they occupy, 13 (or 87%) had no financial incentives to reduce the space. In total, 93 federal tenants (89%) do not reimburse the department for the space they occupy.

I want to pivot to that because, as we both know, you also have the added problem that where there is no cost imputed to the budget for the space they occupy, there would be costs imputed to the budget if a tenant were required to move, buy new furniture and set up a new office space.

It seems we've created a situation where there's going to be a great deterrence for many of the federal tenants to actually ever want to reduce office space, because, as you said, it would require them to perhaps move temporarily and it would require them to incur additional costs.

What can be done to change the process so that the existing rent is actually in some way imputed to the tenants, giving them an incentive to downsize?

[Michael Mills]

As noted in the report, some clients are reimbursing. We do have some reimbursement models. The Canada Revenue Agency, for instance, is reimbursing, as well as Employment and Social Development Canada. Those are models that we can look at potentially expanding to other federal tenants.

One of the challenges we have with a decentralized rent model is it doesn't align easily with a centralized mandatory service provision. Part of the challenge we have is how we create incentive mechanisms that can align with central management of the office portfolio.

I appreciate that we will need to review other models. We do have some that we think create incentives and that work well. Maybe there are opportunities to look at expanding those models to others.

[Anthony Housefather, Liberal, Mount Royal, QC]

I understand that, Mr. Mills. I respect you. We had a chance to work together, and I know you know this subject very well.

The CRA does have a different model. It wouldn't necessarily need to be a model where cash is actually paid; it could be a reduction in budget.

Would it be a decision of Treasury Board or PSPC to have a standard model across government related to how we would impute costs of different departments occupying different office space?

[Michael Mills]

I'll turn to my OCG colleagues to talk about the policy requirements for something like that.

[Samantha Tattersall, Assistant Comptroller General, Investment Management Sector, Treasury Board Secretariat]

First of all, a decision about having a central general manager for accommodation is a policy decision, not a Treasury Board decision. That decision actually came out of the Nielsen report. It was, to what Mr. Mills was saying, about centralizing accountability so you can set standards across government.

In terms of how the funding works, I'll defer to PSPC, but each department does get allocated office space and they have to stay within it. Anything above that, they have to pay for. There are readjustments on an annual basis.

[Anthony Housefather, Liberal, Mount Royal, QC]

What you're saying, though, is that for the space they have been allocated now, they're paying. Is that correct, or are you simply saying that if they occupy more space than they've been allocated now, they would be paying?

Of course, the issue is the refusal to downsize, not the demand for additional space.

[Samantha Tattersall]

It's your space.

[Michael Mills]

Mr. Chair, that's correct. They would pay if they went above their space allocation.

Reducing the space allocation, as you mentioned, is a very difficult choice and potentially a grey area that we need to look at in terms of who has the discretion to actually reduce in line with their head count.

[Anthony Housefather, Liberal, Mount Royal, QC]

I understand, but we do agree that this is a problem. Is that correct? When I was the general counsel at a company, I managed office space and I ran facilities. The biggest incentive for us in a budget to downsize space or to move to another location was the savings that it would generate.

If a department sees no budget decrease for occupying the same amount of space and refusing to comply with downsizing guidelines, we have a problem. We all recognize that there's an issue here and it has to be resolved.

[Michael Mills]

I tend to agree that the more visibility departments have on all their cost drivers, the better enabled they are to make efficient decisions on the use of public resources and strive to increase productivity and efficiency over time. Not having the true visibility of that cost does prevent them from thinking about how they, on their part, in their operations, can have a real property footprint that enables them to deliver great services for Canadians and do it in a very cost-effective manner.

[The Chair, Conservative, John Williamson]

Thank you.

That is your time, Mr. Housefather. I'm sure we'll come back to you.

We now go to Mr. Lemire for about two and a half minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Ms. Boudreau, my question is for you, but Mr. Mills can respond too if he likes.

I understand that telework is an important policy for the government in order to cut costs. Telework as a working arrangement came about because of the pandemic and the necessity to work from home. A few years later, though, the government came to the realization that it was more efficient for workers to be in the office, and that is now being promoted.

That approach, though, means higher costs. Rents have gone up massively, for both offices and residential dwellings, as have maintenance costs. Increasing people's presence in the office is going to cost more.

Given that the Prime Minister has instructed you to quickly cut operating costs by some 15%, how do you balance the need to increase the number of workspaces? Shouldn't we expect another report from the Auditor General pretty soon?

[Annie Boudreau]

I'll use my department as an example.

A year ago, in 2023-24, we made the decision to bring all our employees together under the same roof, and in doing so, we saved a lot on security, maintenance and IT service costs, as I mentioned earlier.

Then the rules changed. Now executives spend at least four days a week in the office, and employees, three days a week. We've done a lot of analysis, and what we are seeing, week to week, is an office utilization rate of about 75% or 80% right now.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

That rate isn't the same every day, is it?

[Annie Boudreau]

We try to establish set days when each team has to come in, so that all the employees come in to the office on the same day. Again, the idea is to make it easier for employees to co-operate and have discussions. Currently, it's not at all a problem for our department.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Fine, but the utilization rate must be 100% on Wednesdays, but about 50%, if not 25%, on Mondays and Fridays. Is that not right?