Evidence of meeting #56 for Public Safety and National Security in the 40th Parliament, 3rd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was costs.
A recording is available from Parliament.
February 17th, 2011 / 9:20 a.m.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
Thanks, Mr. Chair, and everybody attending here today.
In your modelling, what did your numbers uncover? What would be normalized replacement of building versus new building to the—
Parliamentary Budget Officer, Library of Parliament
Actually, sir, I'm going to ask either Sahir or Ash to talk a bit about our analysis of how the capital replacement is being dealt with in the present system.
Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
In annex 1 and annex 2 of Mr. Page's presentation we provided some metrics that may be helpful to committee members and that we can source through public sources, like the department itself. This could help you look at things like capital asset replacement and recapitalization. One of the things we note is the historical rate of these factors for CSC. But we also look at benchmark rates. When we did our study working with B.C. Housing, Partnerships B.C., and other institutions involved in capital asset management, we used benchmark rates. This is a normative view; that is, what ought to be the amount of money set aside to ensure that these institutions are usable to the end of their useful life and that there are sufficient resources to replace them afterwards.
Parliamentary Budget Officer, Library of Parliament
I think one of the issues over the past ten years is whether or not the Government of Canada, Correctional Services Canada, has been putting aside enough money each year to eventually replace these assets, and we think there seems to be a shortfall.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
So how many years did your research go back to look at the recapitalization? In your annex 2, it's 1% to 2%. Your suggestion would be in the range of 4%.
How many years does that go back, the 1% recapitalization setback?
Financial Advisor, Office of the Parliamentary Budget Officer, Library of Parliament
I must mention that the number that we have in this annex was actually sourced from the Correctional Services Canada website. We have not had the authority to go ourselves and do an investigation into these investments in correctional facilities.
Financial Advisor, Office of the Parliamentary Budget Officer, Library of Parliament
I believe this report was written in the year 2007, and they have done the analysis over the last couple of years, although I would have to refer to the report for accurate information.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
So part of this cost is that there is some catch-up to do, and that would be a normal cost of business.
In your modelling, were you able to identify the differences in cost savings of maintaining the existing older buildings versus the maintenance savings resulting from new builds or additions to a building? Were those identified?
Financial Advisor, Office of the Parliamentary Budget Officer, Library of Parliament
In terms of capital facility management, if the investments are not made in recapitalization and replacement, it is a deferred liability in the books of the government. It's easy to explain with an example. For example, if a window in your house is broken and you don't fix it in one year, you're going to have to spend a lot more money the next year.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
I think we'd all agree with that. But does your modelling identify the obvious savings that a new build would provide?
Financial Advisor, Office of the Parliamentary Budget Officer, Library of Parliament
The model would be pretty neutral in respect of how the money is spent in that sense. If there is less funding in one particular year, it will account for the lower FCI for that particular area, and the next year there would be increased expenditures.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
So one could argue that there could be significant savings found in a new build.
Did the model identify or take into consideration recidivism rates? We know that recidivism is a significant issue that CSC would deal with. There are associated costs to society or the taxpayer in the form of policing costs, fire department costs, and EMS costs. We hear from community leaders all the time that people are in and out of the system and there's a huge cost that the taxpayer doesn't see. Does that take into consideration any savings to be had by keeping individuals incarcerated to serve their true sentence versus the indirect cost? Does it take that into consideration?
Parliamentary Budget Officer, Library of Parliament
No, sir, we've not taken that into consideration, and to be fair, with respect to the assumptions that are laid out in our report, we've assumed status quo costing, constant occupancy ratios, and no changes in behaviour in terms of the system in order to produce these numbers.
So if a strong case could be made that you could significantly reduce recidivism and that there could be a cost saving at the same time, others might argue that if you moved to double-bunking or triple-bunking, that could have an offset. We basically held our assumptions as neutral going forward.
Conservative
Ben Lobb Conservative Huron—Bruce, ON
That's fine.
I do know that in a past study I was involved in with our human resources committee, we looked at poverty, and many community leaders from coast to coast identified these huge costs that aren't in bold letters when we look at crime.
On our team here we have a former police chief and a former OPP officer who could attest to some of the issues concerning recidivism.
Also in your modelling, you looked at Mr. Head's three price quotes: $200,000, $400,000, and $600,000. In your modelling, did you go out and look at a third party to have that analyzed or evaluated, and if so, who did you have analyse those costs?
Financial Advisor, Office of the Parliamentary Budget Officer, Library of Parliament
Sir, in terms of those costs, there are actually three sources you can use to verify. The first source would be the Deloitte and Touche study, which was the annex to the Sampson panel report that also identifies these costs. The second source we double-checked was the Don facility in Toronto, the new 1,600-bed centre that was built. So we do have publicly available data in terms of the value-for-money costing for that particular project. Third, we also looked at Corrections B.C.'s new projects in terms of project expansion for the Surrey facility, I believe it was. So we do have three different sources for verification of those numbers.
Conservative
Liberal
Alexandra Mendes Liberal Brossard—La Prairie, QC
Thank you, Mr. Chair.
Good morning, and thank you all for being here.
Mr. Page, you said three days ago that Parliament is at risk of losing control of its responsibility as gatekeeper of public spending because MPs are in the dark when they rubber-stamp government policies and plans. I would like to ask you if you could expand on that. Beyond simply criminal justice bills, in all the other aspects of legislation we're dealing with, how have we lost control of the spending that we're approving?
Parliamentary Budget Officer, Library of Parliament
According to my reading of the Constitution, the Financial Administration Act, and other documents produced by House of Commons officials, it is clear that when we collect money as a Parliament, it goes into a consolidated revenue fund. When we appropriate money or when we change taxes for Canadians, again, that's a decision, and the authorities are provided by all parliamentarians, not just the government.
We want to make sure that when parliamentarians are making these decisions, not only the government but in fact all parliamentarians have access to this information so they understand these costs. Specifically, with the comments we've related today, in terms of crime legislation, I think when you get down to various crime legislation like Bill C-25, again, we're talking about head counts, inmate costs, new construction costs, and the impacts on the system. You need that richness of discussion, and I think as well that information needs to be in the budget, so we need to know how the fiscal framework is being adjusted.
We've talked about crime legislation in my office, but we've also raised issues around operational restraint and some of the analysis that we think is fundamentally necessary to make sure we have a sustainable fiscal structure going forward. Again, all that type of analysis is provided in other countries. We want Canada to have the best system.
Liberal
Alexandra Mendes Liberal Brossard—La Prairie, QC
Thank you--and so do we.
To go to what Mr. Lobb was saying about recidivism and risks of recidivism, if I can quote the correctional investigator, he believes that double-bunking or triple-bunking or however much overcrowding we put into prisons actually increases the chances of recidivism. Have you taken that into account in analyzing possible extrapolated costs?
Parliamentary Budget Officer, Library of Parliament
No, as noted, in terms of most of these assumptions, which, again, are identified in pages of our reports--and that's a key one--we're holding things constant.
Liberal
Parliamentary Budget Officer, Library of Parliament
That's with no changes whatsoever in recidivism up or down, whether it's with double-bunking or whether if by keeping prisoners in longer they're not committing other crimes--
