THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, May 7, 2024
The Standing Senate Committee on National Finance met this day at 9 a.m. [ET] to study the Main Estimates for the fiscal year ending March 31, 2025, with the exception of Library of Parliament Vote 1.
Senator Claude Carignan (Chair) in the chair.
[Translation]
The Chair: Before we begin, I would like to remind all senators and other meeting participants of the following important preventative measures:
To prevent disruptive — and potentially harmful — audio feedback incidents during our meeting that could cause injuries, we remind all in person participants to keep their earpieces away from all microphones at all times. As indicated in the communiqué from the Speaker to all senators on Monday, April 29, the following measures have been taken to help prevent audio feedback incidents:
All earpieces have been replaced by a model which greatly reduces the probability of audio feedback. The new earpieces are black, whereas the former earpieces were grey. Please only use a black approved earpiece. By default, all unused earpieces will be disconnected at the start of a meeting. When you are not using your earpiece, please place it face down, on the middle of the round sticker that you see in front of you on the table, as shown in the picture. Please consult the card on the table for guidelines to prevent audio feedback incidents. Please ensure that you are seated in a manner that increases the distance between microphones. Participants must only plug in their earpieces to the microphone console located directly in front of them.
These measures are in place so that we can conduct our business without interruption and to protect the health and safety of all participants, including the interpreters. Thank you all for your cooperation.
I wish to welcome all of the senators as well as the viewers across the country who are watching us on sencanada.ca. My name is Claude Carignan, senator from Quebec and chair of the Standing Senate Committee on National Finance. Now I would like to ask my colleagues to introduce themselves, starting on my left.
Senator Forest: Éric Forest from Quebec.
Senator Galvez: Rosa Galvez from Quebec.
Senator Loffreda: Tony Loffreda from Montréal, Quebec.
[English]
Senator Pate: Kim Pate. Good morning. I live here on the unceded, unsurrendered territory of the Algonquin Anishinaabeg.
Senator Ross: Krista Ross, New Brunswick.
Senator MacAdam: Jane MacAdam, Prince Edward Island.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Smith: Larry Smith, Hudson, Quebec.
[Translation]
The Chair: Thank you. Honourable senators and witnesses, today we will resume our study on the Main Estimates for the fiscal year ending March 31, 2025, which was referred to this committee on March 19, 2024, by the Senate of Canada. We are pleased to welcome today senior officials from Global Affairs Canada, the Canadian Commercial Corporation, the Department of National Defence and Veterans Affairs Canada.
I understand that one official from each department will make statements and the others will help answer questions as required. So it is my pleasure to introduce: Shirley Carruthers, Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Global Affairs Canada; Juliet Woodfield, Interim President and Chief Executive Officer, Canadian Commercial Corporation; Cheri Crosby, Chief Financial Officer, Department of National Defence; and Sara Lantz, Assistant Deputy Minister, Chief Financial and Corporate Services Officer Branch, Veterans Affairs Canada. Welcome, and thank you for accepting our invitation to appear before the committee. I would like to give the floor to Shirley Carruthers, followed by Juliet Woodfield, Cheri Crosby and Sara Lantz.
[English]
Shirley Carruthers, Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Global Affairs Canada: Good morning, and thank you for the invitation to appear before the committee. It is a great opportunity to be here to discuss Global Affairs Canada’s Main Estimates.
Before I begin, I would like to acknowledge that I am speaking from the traditional, unceded territory of the Algonquin Anishinaabe people. I’m deeply grateful for the privilege of being present on this territory.
[Translation]
I am joined today by Annie Boyer, Director General, Financial Management and Planning and Deputy Chief Financial Officer, by Cam Do, Director General, Innovative and Climate Finance Bureau, and Ann Flanagan Whalen, Director General, North Africa, Israel, West Bank/Gaza.
I would be pleased to answer your questions after my brief opening comments. Mr. Chair, I would like to start by recognizing the breadth of our mandate. Guided by the leadership of three ministers, Global Affairs Canada bears the responsibility of promoting Canada’s values and interests on the global stage. This encompasses diplomacy and foreign policy, international trade, international assistance, and consular support within an increasingly complex global environment.
[English]
Global Affairs Canada leverages its strength to amplify its influence and engagement in key areas of significance. With 182 diplomatic missions in 112 countries worldwide, including locations in some of the most challenging and high-risk environments, the department has begun an organizational transformation to make sure it has the right people in the right place to advance Canadian foreign policy priorities and serve Canadians abroad.
[Translation]
The funding requested in these Main Estimates will contribute to ensuring Canada tackles its commitments towards climate change and preserving international biodiversity. It will support the strengthening of international partnerships and ensure that Canada has the necessary personnel worldwide to effectively deliver on its international priorities. Additionally, this funding will enable Canada to demonstrate both to its citizens and the global community that its actions can significantly contribute to addressing pressing international crises.
[English]
Through the Main Estimates, Global Affairs Canada is seeking $8.8 billion, which represents a net increase of $1.2 billion over the 2023-24 Main Estimates of $7.6 billion. Much of the additional funding sought through these Main Estimates will support costs related to advancing the priorities of the government and Canadians. More specifically, it relates to the following activities: $466.3 million to support the $5.3 billion 5-year international climate finance commitment pledged at the 2021 G7 Summit for Climate Change; $222.4 million to implement Canada’s International Biodiversity Program, the first biodiversity-specific development assistance program established by Global Affairs Canada; $124.9 million to pursue implementation of the Indo-Pacific strategy, a whole-of-government commitment to renew the Government of Canada’s investment in the Indo-Pacific region; $110.1 million to support various activities under Canada’s Feminist International Assistance Policy; $82.1 million related to compensation for collective agreements; $65.9 million to support the third of the three-year update to Canada’s Middle East strategy; and $57 million for the Strategies Priorities Fund.
A notable funding decrease of $117.6 million was attributed to the adjustment for the Refocusing Government Spending.
[Translation]
The funding requested through these Main Estimates will support Canada’s enhanced political and economic cooperation, while also reinforcing Canadian leadership in international assistance, including coordinating Canada’s efforts to address security issues in Haiti.
[English]
Of note, in Budget 2024, Global Affairs Canada received additional funding to support its multi-year organizational transformation to make sure it stays fit for purpose and can advance Canadian foreign policy priorities and serve Canadians abroad. Budget 2024 therefore provides $159.1 million over five years, starting in 2024-25.
[Translation]
The department continues to measure performance and communicate results to Parliament and Canadians. We emphasize responsible financial management to deliver against our mandate and ensure the highest standards of service to Canadians, particularly those requiring consular assistance abroad.
[English]
Thank you, Mr. Chair. We would be pleased to address any questions that you or other committee members may have about these Main Estimates.
The Chair: Thank you.
Juliet Woodfield, Interim President and Chief Executive Officer, Canadian Commercial Corporation: Let me begin by acknowledging that we are grateful for meeting today on the traditional, unceded territories of the Anishinaabe Algonquin people.
I am very pleased to appear before the committee as Interim President and CEO of the Canadian Commercial Corporation and as the corporation’s Chief Financial Officer and Vice-President of Corporate Services. Today, I’m joined by Mr. Darren Boomer, Director of our Contract Management and Operations Office of our International Programs.
I thought I would start with a bit of background around the Canadian Commercial Corporation, otherwise known as CCC. CCC was formed as a Crown corporation in 1946 in the aftermath of World War II. It was created to purchase and deliver urgently needed Canadian resources used to help rebuild war-torn Europe and support millions of displaced people globally. Today, the corporation operates at the crossroads of commerce and international relations. It helps Canadian businesses succeed in complex and highly competitive foreign government procurement markets.
In the past fiscal year ending March 31, 2024, CCC signed new contracts for $3.2 billion. These represent new opportunities on behalf of Canadian exporters. On behalf of Canadian exporters, we also delivered $3.6 billion worth of goods and services to foreign governments on new and pre-existing contract commitments. For an organization of about 120 people, that equates to about $30 million worth of exports per employee. Moreover, $3.6 billion in exports translates to roughly 27,000 export-related jobs right here in Canada. Many of these are high-paying positions and advance manufacturing sectors of Canadian industry.
The corporation is a unique Government of Canada entity. We sign commercial contracts with governments around the world to purchase goods and services for export from Canada. At the same time, we sign contracts with Canadian companies to deliver on the terms and conditions of these government-to-government, or G2G, contracts. These projects tend to be large, complex and politically sensitive, and they require the expertise that exists within this small organization. Our contracts with foreign governments are backed by the Government of Canada and therefore provide a guarantee of meeting contract terms and conditions. This guarantee mitigates the foreign government’s risk and promotes procurement for Canada.
CCC carries out rigorous due diligence on its Canadian exporters to ensure they can deliver on the Canadian requirements. This includes integrity, technical, managerial and financial assessments. We also conduct risk-based assessments of the human rights records of both the exporters and the foreign government. In terms of foreign governments, we work only with trusted and allied nations. We work with ministries responsible for major public infrastructure, national security or defence, or state-owned enterprises and subnational government entities. Our international defence sales are aligned with Canada’s foreign policy and international trade strategies.
CCC has three lines of business. The first line of business is the Defence Production Sharing Agreement, known as the DPSA. It is funded through an annual $13 million parliamentary appropriation. The DPSA was established in 1956. This unique G2G contracting relationship for military acquisitions includes Canada and the procurement legislation of the U.S. Department of Defense, or DOD, as part of the U.S. domestic supply base. Essentially, the DPSA allows Canadian companies to compete for business from the U.S. DOD on equal footing with their U.S. counterparts. It establishes CCC as the contract management agency and prime contractor for defence contracts with the U.S. DOD for contracts above $250,000. In 2023-24, this business line signed contracts with a value surpassing $1 billion for Canadian exporters. Canada’s federal Budget 2021 reinstated this annual appropriation of $13 million to CCC to administer the DPSA, beginning in 2022-23 and ongoing.
Our second business line is the Sourcing business line. It supports the Government of Canada’s delivery of in-kind assistance to other countries. It is funded through a fee-for-service relationship established through a memorandum of understanding with the respective Government of Canada department or agency, such as the Department of National Defence or Global Affairs. This financial model recovers CCC’s full costs in providing these services.
CCC is an executing agency for the Government of Canada’s humanitarian and military in-kind foreign aid delivery agency. The corporation leverages its international contracting expertise to support Government of Canada departments and agencies on a range of initiatives, such as delivering on Canada’s military aid contribution to Ukraine, providing urgent disaster relief support from Canada and facilitating international endeavours like scientific and medical collaboration programs.
CCC works very closely with Global Affairs Canada and the Department of National Defence to provide military equipment and other goods to the Ukrainian government. We like to say that our goods include the range from long underwear to Light Armoured Vehicles, or LAVs. On February 24, which was the two-year anniversary of the conflict, the Prime Minister announced an additional $3 billion security package to support Ukraine. The full requirement of this aid package has not yet been finalized, but CCC is forecasting an annual contracting requirement from DND for approximately $250 million to $350 million. This new funding is in addition to the $650 million of support for Ukraine that was announced by the Prime Minister in September 2023.
Our third business line is our International Prime Contractor business line, known as IPC. It encourages foreign government buyers in a collaborative process with the Government of Canada. This process is also supported by Canadian private-sector expertise to scope made-in-Canada solutions to satisfy foreign government buyer requirements. The corporation charges a fee for the IPC service that is generally calculated as a percentage of the contract value. Fees are negotiated with Canadian exporters on a contract-by-contract basis and are generally reflective of the project’s risk profile and competitive market conditions.
To wrap things up, we do have access to $40 million that supports our operations, and we are very pleased to be able to continue to support Canadian exporters and the growth that they generate for the Canadian economy. Thank you very much.
The Chair: Thank you. You will have the opportunity to complete your presentation with the different questions.
[Translation]
Cheri Crosby, Chief Financial Officer, Department of National Defence: Mr. Chair and members of the committee, thank you for inviting me to present the main estimates for fiscal year 2024–2025 on behalf of the Department of National Defence.
[English]
I would also like to begin by acknowledging that the land on which we are gathered is the traditional, unceded territory of the Algonquin Anishinaabe people.
Today, I am joined by the Vice Chief of the Defence Staff, Lieutenant-General Frances Allen.
The Department of National Defence’s Main Estimates reflects a determined and comprehensive effort to direct and allocate defence dollars responsibly and appropriately in support of defined corporate priorities during the fiscal year.
[Translation]
This includes ensuring that our military members have the tools and equipment they need to perform the vital tasks we ask of them.
[English]
In these Main Estimates, the Department of National Defence is requesting $30.6 billion. This represents an increase of $4.1 billion, or 15.46%, from the Main Estimates approved for fiscal year 2023-24. This change reflects increases across the departmental vote structure as follows:
First, operating expenditures will increase by $2.3 billion year over year to $20.2 billion. This is mainly attributed to compensation for increases in military pay and public service collective agreement amendments, as well as incremental funding for various international operations. These operations include Operation REASSURANCE, which supports NATO’s assurance and deterrence measures in Central and Eastern Europe; Operation HORIZON, which implements elements of Canada’s Indo-Pacific strategy; Operation UNIFIER, Canada’s military training mission to Ukraine; Operation ARTEMIS, the Canadian Armed Forces participation in counterterrorism and maritime security operations across the Middle East; and Operation IMPACT, the Canadian Armed Forces involvement in the Middle East stabilization force. Funding will also go toward operating and sustaining assets, advancing capital acquisition, acquiring short-range and long-range missiles, replenishing ammunition and explosives donated to Ukraine and strengthening and enhancing the technical foundation and digital backbone of our Canadian Armed Forces.
Second, the capital expenditures will increase by $1.1 billion year over year to $7.2 billion. This increase is mainly attributed to investments in major capital equipment projects such as the Canadian Multi-Mission Aircraft, Strategic Tanker Transport Capability, Future Fighter Capability and the Canadian Surface Combatants, in addition to incremental funding for various international operations.
[Translation]
Third, government grants and contributions will increase by $573.7 million to a total of $893.5 million, primarily allocated to the Military Training and Cooperation Program to support Ukraine with additional military assistance and NATO contribution programs.
Fourth, funding for long-term disability and life insurance plan payments for Canadian Forces members will remain at $446.7 million.
[English]
Lastly, the statutory allocation will increase by $58.6 million, to $1.8 billion, which is mainly attributed to employee benefit plans.
[Translation]
As part of the Government Expenditure Realignment Initiative announced in Budget 2023, the department implemented approved reductions of $613 million in these Main Estimates, reducing its spending authority by the same amount.
[English]
The guiding principle with the reductions has been to minimize the impact on military readiness and to direct our spending towards top defence and government priorities, including operations, modernizing military capabilities and supporting our people and their families.
The significant net increase in funding requested in these Main Estimates will support National Defence and the Canadian Armed Forces in carrying out its essential operations, programs and initiatives, and those of the Government of Canada, in addition to starting to implement the vision outlined in our new defence policy, Our North, Strong and Free.
[Translation]
In conclusion, the Department of National Defence and the Canadian Armed Forces continue to deliver on our core national mandate while ensuring financial accountability and effective resource management.
[English]
My colleague and I will be very pleased to answer your questions.
Sara Lantz, Assistant Deputy Minister, Chief Financial Officer and Corporate Services Branch, Veterans Affairs Canada: Good morning, Mr. Chair, Deputy Chair and committee members. It is a pleasure to be here today with you.
I look forward to discussing and taking questions on the 2024-25 Main Estimates for Veterans Affairs Canada, or VAC. My name is Sara Lantz. I’m the Assistant Deputy Minister, Chief Financial Officer and Corporate Services Branch for the department. Joining me is the Director General for Research and Policy, Mitch Freeman.
Honourable senators, as you know, the department is responsible for providing benefits and programs to veterans, Canadian Armed Forces personnel and their families in recognition of their service to Canada, as well as ensuring their achievements and sacrifices are honoured and remembered through commemorative activities.
Mr. Chair, committee members, the department is extremely proud of its mandate, just as it is proud to continue to do everything in its power to ensure its programs and services are always meeting the needs of Canadian veterans and their families. Over the past several years, significant investments and numerous changes at Veterans Affairs Canada have resulted in a noticeable improvement in service delivery. Since 2016, more than $11 billion has been invested to ensure that veterans receive the services and benefits to which they are entitled and deserve. This includes recent investments to address the backlog of disability benefit applications and ensuring timely provision of critical health services through new programs such as the mental health program and telemedicine services.
Veterans Affairs Canada’s Main Estimates reflect the continued commitment to veterans to ensure critical access to services and improve the long-term financial security and independence of ill and injured veterans and their families. The 2024-25 Main Estimates will provide Veterans Affairs Canada with $6.2 billion in funding, which represents a net increase of approximately $230 million, or 4% when compared to last year’s Main Estimates. This year’s increase in Main Estimates is mainly due to a forecasted increase in demand and expenditures for three of our veteran programs: Income Replacement Benefit, Additional Pain and Suffering Compensation, and housekeeping and grounds maintenance.
It’s important to understand that over 90% of VAC’s overall budget is quasi-statutory, reflecting the non-discretionary and demand-driven nature of veterans programs. Demand for case management services is increasing, and this is primarily associated with Afghanistan veterans releasing. For the 40,000 veterans and members who served in Afghanistan, we are seeing increased complexity in their levels of need. Since 2015, demand for our case management services has grown by over 6,000 veterans. This demonstrates that veterans are coming forward and seeking help and support, as they should.
VAC forecasts annual budget requirements for each veteran program based on historical spending, any new programs or services, changes to existing programs or services or our operating environment. This ensures that all veterans who come forward during a fiscal year receive the benefits and services to which they are entitled.
In closing, Mr. Chair, these Main Estimates reflect the continued steps we have taken to ensure Canadian veterans and their families are provided access to the benefits and services they so rightly deserve. With the help of the funding in the 2024-25 Main Estimates, we will continue to put the well-being of veterans and their families at the heart of everything we do. We will remain focused on improving the delivery of services to veterans and their families, and we will recognize veterans’ service and sacrifices.
Thank you, Mr. Chair. My colleague and I would be pleased to address any questions that you or other committee members may have.
The Chair: Thank you very much for your statements.
We will proceed to questions. I would like to remind senators that we will have around five minutes each for the first round and three or four minutes, depending on the time, for the second round. Please ask your question directly, and to the witnesses, please respond concisely. Thank you.
Senator Marshall: Thank you to the witnesses for being here.
My first question is for Ms. Crosby. We have the new defence policy now, and you mentioned that there’s $7.2 billion there for capital expenditures. Can you tell us what the big items are in that? I’m focused on some of the aircraft and some of the ships.
Ms. Crosby: Thank you very much for your question, and specifically asking a question about our new defence policy update, which is late, breaking news in the last month. We’re very excited to explain further, although it is early days so we are just starting our planning.
In terms of big capital assets, specifically what you were interested in, Our North, Strong and Free policy supports two things: One is our foundation, and the other tends to be capital.
Senator Marshall: Okay. I am just going to stop you there. I just need the dollar amounts for some of the big projects, like the F-35s, if there’s any money in there for that.
Ms. Crosby: Yes. The biggest ticket items include $18 billion over 20 years for tactical helicopters, for example. Another example would be airborne early warning aircraft, $307 million over 20 years.
Senator Marshall: You are giving me numbers now for over 20 years. I’d just like to know what is in the $7.2 billion.
Ms. Crosby: In total — the 7.2?
Senator Marshall: The $7.2 billion that is being requested for capital expenditures, and I’d like to know what the big numbers are in that big number.
Ms. Crosby: Yes. Sorry. I got thrown off because these Main Estimates do not include any funding related to Our North, Strong and Free.
Senator Marshall: No, I know. Is there any money in there for the F-35s in that $7.2 billion?
Ms. Crosby: Yes. For the Future Fighter Capability project, there is $250 million requested in Main Estimates.
Senator Marshall: Okay. 250.
Ms. Crosby: Another example in Main Estimates would be the Canadian Surface Combatants, and we are asking $1.3 billion.
Senator Marshall: How much? $1.3 billion?
Ms. Crosby: Yes.
Senator Marshall: Okay. Can you give me some of the other larger numbers?
Ms. Crosby: Sure. Joint Support Ship, asking for $553 million; Arctic and Offshore Patrol Ship, $240 million; and maybe another example might be the Hornet Extension Project, which is 293 —
Senator Marshall: Is the Canadian Surface Combatants the largest one?
Ms. Crosby: Yes, it is.
Senator Marshall: I notice in the defence policy, the new one, that money has been pushed further into the future, and we know from the old defence policy that not only was money pushed into the future but, even when you got the money, in order to revise the amount of money, you weren’t able to spend it.
The concern I have is whether the department have the personnel and the framework for receipt of the new aircraft and for building the new ships? I’m looking at the new policy and I’m thinking that I don’t know if you’re going to be able to implement the new policy. Can you explain how you’re going to do this? Could you also address the issue of information technology? In Budget 2021, you were given some additional funding over several years to upgrade your systems so you can monitor these capital projects. Can you just give us some idea as to how the department is going to implement the new policy?
Ms. Crosby: Thank you for the questions. There is a lot to unpack there.
First, one thing we have learned from Strong, Secure, Engaged, our policy announced in 2017, is that it does take people to deliver. You may have noted that in both the NORAD modernization announcement that was made two years ago and the more recent announcement on Our North, Strong and Free, a portion of the funding will go to support the hiring or the paying of folks to deliver those projects. For every project, we include the cost of the project management office that is run by them.
Senator Marshall: Could you send to the clerk a listing of what is in that $7.2 billion? I’ve been tracking capital projects now for seven or eight years.
I’m going to move to Ms. Woodfield now. You talked about military acquisition. Can you elaborate on that? Would you be involved, for example, in the acquisition of the F-35 fighter jets? What’s your role in capital acquisitions?
Ms. Woodfield: Our role in supporting the Department of National Defence relates to Government of Canada contributions abroad. We were not involved in the F-35 acquisition or any acquisitions for internal into Canada. Our space is supporting Canadian exporters in procurements that involve other foreign governments or Canada’s delivery of aid in other nations.
Senator Marshall: Thank you for clarifying that.
Please put me on second round, Mr. Chair. I have questions for Veterans Affairs Canada and Global Affairs Canada.
[Translation]
Senator Forest: Thank you for being here this morning, which is very important. My first question is for Ms. Crosby.
We know that major military procurement projects are a major challenge for National Defence. In many of these projects, we have seen significant cost overruns and delays in terms of timelines. Are there any new initiatives in this budget to better identify the department’s needs and improve project control? Drawing up specifications is an important part of the procurement policy.
[English]
Ms. Crosby: Thank you very much for your question. I’m not sure I entirely understood. When you mentioned issues of supply, are you referring, senator, to industry supply challenges that we have been experiencing in the last few years?
[Translation]
Senator Forest: The Parliamentary Budget Officer’s recent report revealed that you spent $12 billion less than planned in 2017 on military procurement. The Parliamentary Budget Officer expressed concern that Canada had not proceeded with these acquisitions. He said that delaying acquisitions and thus not following the procurement timelines could have a significant impact because of inflation; for the same amount of money, we risk having fewer acquisitions. This was one of his concerns.
Has the process at the Department of National Defence been modified to better develop specifications and tap into what may have been previously unused expertise in terms of procurement policy?
Ms. Crosby: Thanks for the question. I would like to make a comment first.
[English]
We found that the procurement strategies associated with some of the major capital projects are complex. We certainly have had some challenges, whether they were externally driven challenges due to market supply or internal challenges due to bureaucratic steps that we need to take.
Over the last six or seven years, while we’ve been implementing Strong, Secure, Engaged and NORAD modernization, we have been making an effort to review our processes internally at National Defence to streamline where we can. We are currently participating in the procurement review led by Public Service and Procurement Canada, and we are looking forward to some of the outcomes that will result from that review. Internally at National Defence, we are also looking at creative and different ways to procure major projects, including phasing them in differently and also conducting our methods to replace technology in a more agile fashion. The quick answer is yes, we are looking at our procurement processes. We are very much interested in streamlining them.
Again, where we can, we’ve taken steps to shorten the processes as much as possible. In support of Operation REASSURANCE, for example, three urgent operational requirements arose. We were able to identify some shortcuts, if you will, or fewer steps to take in order to secure those particular assets. We do have urgent requirements that can be addressed fairly swiftly, and we’re using those processes as examples that we may be able to learn from with respect to some of our bigger projects.
[Translation]
Senator Forest: Ms. Woodfield, you seem to have a fairly specialized and effective expertise in the procurement process. Could your organization guide or support departments such as National Defence? The challenge is enormous, both in the maritime and aviation sectors. Could your organization accompany or support the Department of National Defence in the major procurement challenge it faces in acquiring military equipment?
[English]
Ms. Woodfield: Thank you very much for your question.
Our mandate stems from our legislation under the Canada Corporations Act. That act establishes our organization as an international procurement organization. Our mandate exists around contracts with foreign governments, exporting Canadian goods and services to those foreign governments or supporting the Government of Canada in foreign aid. Our mandate is restricted by that piece of legislation.
We absolutely support the Department of National Defence as it exercises the Government of Canada contributions to foreign overseas countries as required, but our mandate is restricted by that particular piece of legislation.
[Translation]
Senator Forest: Your mandate is therefore limited. Do you think there would be an added value if your mandate was expanded to help our departments with their acquisition programs?
[English]
Ms. Woodfield: Thank you again for the question.
If there were any revision to our mandate, we would absolutely be pleased to support the Government of Canada in the way that we would be asked to do so. We certainly possess in-house expertise around procurement, particularly around potentially complex, sensitive procurement, and we have a number of risk assessments and procedures in place, but we very much exist under the mandate to support Canadian exporters at this point in time.
Senator Smith: Ms. Crosby, it’s great to see you again. I have a couple of questions for you.
In your departmental plan of 2024-25, it is noted that National Defence is planning to reduce spending by more than $800 million. The bulk of these reductions come from reducing operating expenses, as well as a $200 million reduction in spending on the use of professional services. From our past exchanges here, you’ve made it known that the use of professional services is critical to DND due to the technical nature or short-term scope of some of the work required. Could you provide a breakdown in the areas in which you are reducing the use of professional services, and how are you working to fill those needs with internal staff?
Ms. Crosby: Thank you for those questions. We’ve spoken about this in previous meetings.
We have developed our plan at this point. You will see in these Main Estimates that we are forecasting expenditures of $5.6 billion in contracting or professional services. We are required to reduce that by $200 million on an annual basis. As I’ve mentioned in previous committee meetings, about half of that $5 billion is spent on things like engineering services or technical services that we contract with to support our fleets, our fleet maintenance, renewals and so forth, our infrastructure. The remaining half of that investment goes to many other things, including translation services and general management consulting. Information technology is another big-ticket item. We have been reviewing all of those expenditures to identify those activities that we feel have the least impact on operational readiness.
Our plan, not surprising to you, perhaps, will focus on things like management consulting, training that’s not mandatory training or translation services that we can do now with the support of technology, for example. We are working on finalizing that plan, but those basically are the areas that we’re looking at. And, yes, we are also looking internally to see what we can do differently ourselves. We have been contracting out temporary help, for example, and we’re looking at those activities to see if we can’t bring them in-house. Basically, those are the key areas.
Senator Smith: Do you feel you are equipped with enough capabilities within your internal staff to be able to manage these issues?
Ms. Crosby: It’s been challenging. As you know, we don’t have as many CAF members as we would like, and on the civilian side, we are already committed to delivering what we deliver. It’s been challenging to find different ways. We’re looking at some practical solutions like fewer printers or, again, translation tools that we can use that don’t require necessarily more people. We’ve reduced shuttles between buildings and so on. We’re trying to focus on things where we don’t have to pick the service up or just stopping it completely. Those are the deliberations we’ve been going through.
Senator Smith: If you’re dealing with one of your superiors right now and that person asked you for your top three reductions, what would they be?
Ms. Crosby: I’d say our top three that we have zeroed in on are what we’ve called management consulting, so bringing in expertise from the outside to give us leadership advice, that kind of thing. We are looking internally to try and find solutions for that. We are also reducing some of our IT, so telephone services, for example, re-looking at our plan to support what equipment staff need in the office. That’s the second area. Again, translation services is a third one where we think we can do it differently.
Senator Smith: According to your departmental plan, planned spending on procurement capabilities will more than double in the next fiscal year, up from $6.2 billion this year to $14 billion in 2025-26. Could you provide an explanation for this massive increase in planned procurement in 2025-26? What are the reasons for this, please?
Ms. Crosby: The National Defence budget has been on a steady growth pattern since 2017. In fact, our budget overall will double between 2017 and 2027. We are on a growth trajectory.
Prior to the recent announcement, the growth was primarily in capital. We have, through Strong, Secure, Engaged, or SSE, and NORAD modernization, a fairly steady growth peaking in about 2026-27. Now we’ve added Our North, Strong and Free on top of that, so our capital budget will grow a little bit more quickly.
Our operating budget is also going to grow more quickly because there was an announcement for things like funding to support the sustainment of the Halifax class, infrastructure renewal and sustainment. These are operating dollars that will now move our operating budget upwards.
All together — you’re absolutely right — we’re starting from last year — this year, even, of a budget of about $30 billion and moving up to $44 billion to $45 billion by 2027-28. It is a combination of accelerated capital. We are six or seven years into Strong, Secure, Engaged. We are now reaching the key implementation stage on some of our key capital assets, so the capital is growing significantly over the next little while, and then we’re layering on new programs that have been announced. It’s a combination of all that.
Senator Smith: Last quick question: Recruiting. It appears we’re a little short on staff. Maybe we’ll save that for the next round.
Senator Pate: Thank you to all of our witnesses.
My question is for you, Ms. Lantz. Veterans Affairs’ departmental plan indicates that nearly one in five veterans have household income below the low-income measure, and that’s close, as you know, to twice the general rate of those below the poverty line in Canada. I note that the target and date for achieving a reduction in poverty have been left blank in the departmental plan. How did your plan for tackling poverty change when your change in survey methodology revealed that poverty rates were much higher than previously estimated, closer to 17% of veterans rather than 6%? When can we expect your targets to be published? Could you please explain what concrete steps you’re taking to ensure that veterans are not left behind in poverty?
Ms. Lantz: Thank you for the question.
I may defer to my colleague, Director General Mitch Freeman, on this one. What I can say is these are new findings with some of the information that we’re gathering from research, stats, et cetera. At this stage, I think it would be within the policy area. There might be some work being done in this area. Mitch?
Mitch Freeman, Director General, Policy and Research, Veterans Affairs Canada: Thank you so much, Mr. Chair, for the question.
I draw the committee’s attention to the transition from our survey methodologies and the inclusion of the veteran identifier in the Census 2021. Prior to the Census 2021 information, we were using a system called Life After Service Survey, or LASS, which was a survey methodology for releasing members. It had some limitations. That is why we worked very closely with our Stats Canada colleagues to implement the veteran identifier in Census 2021. That, senator, has allowed us to have a much richer, fulsome look at the Canadian population and then the veteran population in comparison. That is why that information is not populated at the moment, because we are still working on bringing those two data points together. Once that is done, we will then have the opportunity and the knowledge around the comparator to implement the concrete actions that you mentioned.
Senator Pate: Can you provide in writing any of the concrete actions you are considering or that you are looking at prior to having this information? Presumably, it’s not new information. It’s been confirmed by research now.
Mr. Freeman: Certainly, Mr. Chair. Thanks for the question.
We’d be happy to provide the committee and the clerk with information on this particular topic.
Senator Pate: I also want to explore some of the barriers that the Auditor General’s 2022 performance audit identified. It talked about the barriers to processing disability benefits for veterans and found that Veterans Affairs had failed to reduce wait times for eligible veterans. You’ve announced an intention to reduce the backlog, as you’ve already discussed, reduce the number of those awaiting for disability applications to some 4,000 folks. Has the target of reducing to 4,000 by January 2023 been met? What impact has it had, in your estimation, on poverty rates for veterans? Could you please identify what the barriers are that veterans still face in obtaining access to income supports, including those provided by the department?
Ms. Lantz: I’m not quite sure I understand the 4,000 target, but if you’re addressing the barriers to the disability backlog, we’ve been successful, since 2021, in reducing the average completion time from 49 weeks down to 20 weeks this past year, at the same time as the number of applications has been increasing. We’ve, overall, reduced the backlog by 77%. We will continue to work on that for the next couple of years with the funding we received most recently in the fall of this year, the additional $164 million.
Senator Pate: In terms of the data that you’re taking in and the time lapses, are you looking at the potential impact of this, having to make back payments where you’ve determined people who are eligible weren’t provided with the resources? Are you assessing what the health impacts are on veterans of those delays?
Ms. Lantz: One of the new programs that we put in place just two years ago was the Mental Health Benefits. The majority of our disability applications come in for mental health conditions. This is a great program that allows people to access mental health benefits while waiting for their disability decision. That has helped mitigate a lot of the retroactivity or the impacts of waiting in a backlog of decision. We will always retroactively make sure that veterans are receiving the financial benefits they deserve and assessing the impacts of the disability on their mental health conditions. That’s why we had the mental health program introduced two years ago.
Senator Pate: Thank you very much.
Senator Galvez: Thank you for being here this morning.
My question is to Ms. Crosby. Referring to your 2024-25 departmental plan, we see that there is an increase. The web page of the Canadian Armed Forces states:
Climate change is affecting the frequency, duration, and intensity of Canadian Armed Forces operations, both at home and abroad, placing unprecedented demands on our resources.
You have requests for assistance, RFAs, that have increased dramatically. You send our forces to deal with instability, disaster and defence, but this is increasing with time and it’s aggravating the personnel shortfalls. I heard in another meeting that the cost for using our soldiers for this disaster mitigation is very expensive. Can you please elaborate on how these resources are allocated and how they are planned?
Ms. Crosby: Thank you very much for your question.
The Canadian Armed Forces, of course, are ready and able to assist in any request for assistance domestically. We are pleased to do that, but it comes at a cost. It does cost money. It’s wear and tear on the equipment. There are transportation costs and so on. We carefully track these costs and can see trends. You can imagine that during particularly difficult seasons, last year, for example, with the wildfires, for that particular operation, we spent almost $8 million addressing these sorts of things. You also have floods. During COVID, we had other opportunities to help. It does place increased demand domestically, coupled with increased demand internationally — whether in Latvia, Haiti and so on. At the same time, we are in a reconstitution/recruitment mode so we don’t necessarily have all the CAF that we need.
Specifically for finances, I do see trends. Our spending varies between $10 million and $20 million annually, which we use our internal funds to do. We will be tracking it again very closely this coming season, of course.
Senator Galvez: Your other initiative concerns the Montreal NATO Climate Change and Security Centre of Excellence. Can you tell me where we are with this?
Ms. Crosby: Thank you very much for the question.
As you know, a decision was taken to put the NATO climate centre in Montreal. In fact, I was here during Supplementary Estimates (C) requesting some funding, and again in the Main Estimates we’re requesting additional funding to support the opening of that centre of excellence in Montreal. We are in the process of getting it up and running. Overall, that particular centre will receive $40 million over five years. In this Main Estimates, we are asking for a number of things related to NATO. Most of the funding we’re asking for relates to our contribution to the Main Estimates, but there is some funding in there for that Centre of Excellence that is just getting going in Montreal, as well as the Centre of Excellence in Halifax, which is a centre for innovation, both NATO centres.
Senator Galvez: The last initiative is the creation of a new bachelor degree in geopolitics and climate science. Is this program operating now? Is it directed to social science or to engineering?
Ms. Crosby: Thank you for that question. I do not have that answer. I’m looking over my shoulder to see whether or not the general does. She is moving up, so it looks like she does.
Lieutenant-General Frances Allen, Vice Chief of the Defence Staff, Department of National Defence: Thank you for the question.
These are new degree programs that are being implemented at the Royal Military College in Saint-Jean, Quebec.
Senator Galvez: Is it one or two?
LGen. Allen: It is a degree. There are two recent degrees that are being put in place. They are not engineering degrees per se; they’re more social science degrees.
Senator Galvez: Has it started? Do you have students?
LGen. Allen: There are students at the college right now. Whether or not the entire program is finalized at this point, I couldn’t tell you. I couldn’t tell you whether or not we’ve had any graduates yet, but we can certainly get that information and provide it back to you.
Senator Galvez: Thank you.
Senator Loffreda: Thank you for being here this morning.
My question is for Veterans Affairs Canada, Ms. Lantz. Good morning. One of your department’s objectives is to ensure veterans have a sense of purpose. Purpose is so important for all of us, including our veterans. The department is committed to helping veterans make a smooth transition to the civilian job market, which is why the education and training benefit is so important.
As I understand it, this taxable benefit helps veterans get a certification, degree, diploma or additional training to integrate into the workforce. I noted in the Main Estimates that approximately $36 million is earmarked for this benefit, a $5.5 million increase from two years ago. Can you provide us with additional details on this benefit and elaborate on it? What are the eligibility criteria? How many individuals have applied for the benefit? What is the application success rate? Beyond the actual financial support, how does the department support veterans in their transition to new careers outside the forces? Are there career guidance counsellors available to help individuals choose the right career path?
You mentioned that veterans are coming forward. My concern, last but not least, is the ones not coming forward. I’ve had a lot of connections with veterans through the many activities and personal initiatives that I’ve undertaken. Do they come forward? Is there a follow-up made to veterans who do not come forward? For example, a veteran retires from the force and has been retired for four or five years. Does someone call them up to say, “Hey, you’re still around. We know you’re there. How’s it going?” I am not talking about the ones that reach out to you. Do we have those important resources?
Ms. Lantz: Thank you for the question. I will invite my colleague Director General Mitch Freeman to join me.
Absolutely, we work very closely with the Canadian Armed Forces and with the members that are releasing. We do have a transition strategy. Through some of our audit and evaluations, we have started to identify possible links between programs where we might have to do further outreach to let veterans know what benefits they may be eligible for that they’re not aware of. We’ve heard a lot from veterans that it’s too complex and too broad to understand everything that they may be eligible for, so we’re starting to do some analysis there on where we can make the links and do the outreach.
We have had some education training benefit programs. We’ve had greater uptake of those programs in the last few years. We have been working on a veterans’ employment strategy, and that is part of that. I think there is more awareness again. When it was first launched, there was a lot of awareness around it, but I think more awareness is going out around it.
I will hand it over to Mitch Freeman to speak about the transition and maybe some of the education, if he has that.
Mr. Freeman: Thank you, Mr. Chair, for the question, and thank you, senator, for this important topic. As you identified, purpose is something that is very important to all of us, veterans included. I will highlight a couple of items.
First, in the transition process, there has been a lot of advancement over the last number of years to ensure that members transitioning from the forces have a sit-down interview with members, both from a Canadian Armed Forces point of view and Veterans Affairs Canada point of view. Strides have been made to enhance that process quite dramatically over the last number of years, and some significant changes have just been implemented across the country in that regard.
Also, a very important part of that transition process is to include family members. As we know, from a purpose point of view, family plays a key and important role in that, so it’s certainly not mandatory but highly suggested to the member that their family is included in the discussions around transition.
There are also checklists provided, both from an analog and digital point of view, to aid in that process going forward, and if there are any particular issues identified, then Veterans Affairs has programming available. One of those things is around employment.
Certainly, through a transition process, as we know, there’s opportunity from a public service employment point of view, and then there is also, depending on the member’s situation, movement into the rehabilitation program. That rehabilitation program will offer medical and psychosocial supports as well as an income replacement benefit during the time the member is going through rehabilitation, and that provides 90% of their pre-release salary throughout that process so they can concentrate on making themselves well in order to then move into some type of second career civilian employment. At the tail end of rehabilitation, when the member is ready, there is also a vocational rehabilitation component to launch that member into a second career. Subsequently, if that member is not able to progress into a vocational rehabilitation process, then that can be used by the spouse in order to aid that family unit with purpose.
In parallel to that, Mr. Chair, and to the senator, if the member is releasing without a need for rehabilitation, then the education and training benefit comes into play. I will try to highlight some of the eligibility criteria for that program, but I’m happy to share the official eligibility with the clerk for the committee.
I would just highlight that there is opportunity there for formal education and otherwise, and I’d be happy to discuss further.
Senator Loffreda: Thank you.
Senator MacAdam: This question is for Veterans Affairs Canada. Last year Veterans Affairs Canada announced a new two-year funding envelope for Veterans Affairs Canada employees in Charlottetown and across the country aimed at retaining existing employees and to provide more effective and timely service. To date, federal investments have supported the hiring of additional case managers and support staff to lower the caseload of service delivery employees and reduce the volume of disability applications currently in the queue. As you’re well aware, timely processing of disability applications is integral to the department, but I’m wondering, what are some of the challenges you face with temporary funding as opposed to permanent funding, and do you expect a permanent funding strategy in the near future?
Ms. Lantz: Thank you, Mr. Chair, for the question, and thank you, senator.
Yes, it’s five or six years, so probably since 2018-19 and 2019-20, that we’ve made a concerted effort to seek funding for resources to tackle the backlog, and I would say that there’s approximately $800 million sought over the last five years. We’ve had an effort each year to seek funding. Some of our initial funding sought was for five years and maybe some permanent funding to sustain the backlog, but, unfortunately, we have been getting two years of funding at a time. The effort it takes each year to look to see where the gaps are and what we need to continue so we do not roll back some of the progress we have made is difficult. I will also say that when you hire terms for two years at a time, there’s a lot of attrition with that, so there is rehiring and finding qualified employees, especially in the case manager world. Nurses are very hard to find and retain these days, so that’s been a struggle.
In analyzing the salary of our Veterans Affairs workforce over the last five years, our permanent salary has probably gone up about $85 million to $90 million, and 75% of that is due to new programs that we’ve introduced, such as the Veteran and Family Well-Being Fund, Veteran Family Telemedicine Service, Mental Health Benefits and the whole Pension for Life, or PFL, suite that manages old and new programs that transition. There’s been a real reason for the uptick in salaries and permanent employees to manage those programs. The rest of the increase has been for collective bargaining. We’ve transferred money from operating side to cover our salaries, which leaves us much less discretionary money in our operating side, our non-salary side.
I’m very proud of the department and its employees for delivering all the benefits and services to our clients and for doing it in a very efficient manner, but we could get better at the efficiency of funding these needs and services.
Thank you.
Senator MacAdam: On top of that, the department is expected to contribute $6.4 million in 2024-25 to the announced efforts to reduce $14.1 billion in government spending over five years. I’m wondering, how does the department plan to reduce expenditures by $6.4 million in 2024-25?
Ms. Lantz: Thank you for the question.
This, of course, is the refocusing of government strategy for the Government of Canada, and our reduction is just over $6 million for this fiscal year. There is a travel component to that, a professional service component to that and a general operating component.
For our travel budget, there is a 15% cut across most government departments. Again, we have a lot of travel related to commemorative events and for case managers to visit clients, so, effectively, that’s about a 30% cut on our discretionary travel budget for a department with headquarters in Prince Edward Island. We are managing, and there’s a lot more virtual technology, but it is a struggle to cut some of that travel back and be fair and transparent across the board to our employees.
Professional services, similar to the DND, we’re looking at less in business consulting. For IT consulting, we’ve deferred or stopped some of the smaller, less beneficial projects across the department.
Operationally, it’s been around the edges. Some people that will be retiring may not be replaced in certain positions, and we are cutting back or finding more efficient ways to do things in order to manage the workload against our staff.
Senator MacAdam: It sounds like there are a lot of challenges. What do you think are the biggest challenges? You’ve talked about staffing, and then you have to reduce further. I’m just wondering about two or three of the biggest challenges that you’re facing right now in the department.
Ms. Lantz: I would definitely go back to sustaining the backlog. We’re making great progress on reducing the backlog, but now we need the tools and the resources. That’s human resources but also equipment and tools and systems to maintain that. That is the biggest issue we’re facing right now.
Since the pandemic and a lot of the changes, the other risk is to our employees. Creating that sense of belonging and purpose in the office and ensuring that we take care of them and that we can provide them the professional development that they need and that we are not overwhelming them with the workload, I would say, is our second biggest risk.
Senator MacAdam: Thank you.
Senator Kingston: Thank you everyone for being here.
My questions are for Ms. Lantz and perhaps Mr. Freeman as well. I’d like to start with the fact that the department is seeking authorities for $354 million for additional pain and suffering compensation, an increase of 29% over the previous Main Estimates. I’m wondering what explains this increase. How is the additional compensation determined?
Ms. Lantz: Thank you, Mr. Chair, for the question.
As I indicated earlier, the number of applications is up. Some of our more modern-day veterans, as we refer to them — like the veterans from the Afghanistan war — have more complex conditions than in the past. Therefore, we’re seeing many more applications from fewer clients with the additional pain and suffering that is for a more grievous or permanent injury.
As I mentioned before, I think that through the audit and evaluation, we’re trying to identify and ensure that those who come through the door as clients are identified for those services as well — that they’re not having to figure that out on their own.
I think you’re seeing the increase because of the uptick in clients and applications and because we’re hoping to identify those that don’t fall through the cracks.
Mitch, could you speak to some of the eligibility? I’m not familiar with that. We could pass on those details if you don’t have those handy.
Mr. Freeman: Thank you, Mr. Chair, and thank you, senator, for the question.
As Ms. Lantz articulated, there’s been a 61% increase in applications through the program. As we know, the pain and suffering compensation is demand driven, so those who apply will be adjudicated and then paid. Therefore, this is to ensure there’s sufficient funding based on that estimated demand and uptick coming into the system.
Senator Kingston: Thank you for that.
As a follow-up, you were speaking earlier about rehabilitation programs. I’m going to turn to homelessness among veterans. I’m just thinking about what you speak of in your plan. This is the housing plan for Canada in terms of wraparound services for veterans. I would think the rehabilitation program is part of that. I believe that many of the veterans who become homeless do have complex needs and would have increased pain and suffering, so I’m asking you to explain what the wraparound services are that are referred to here in terms of housing, because housing without supports for people who have very complex needs — I’m thinking about people who are seriously affected by PTSD and so on. The supports are absolutely necessary for them to maintain their housing. How does that all fit into the rehabilitation program and the outreach that might be needed in order to identify some people who actually qualify but haven’t got the internal resources to manage to find those resources?
Mr. Freeman: Thank you so much, Mr. Chair.
It’s a very complex yet important question because, as you articulate, one leads to the other.
The rehabilitation program is for services above and beyond what is provided in the Veteran Homelessness Program. Part of that is the outreach to identify veterans who are in or could find themselves in a homeless situation so that we can then offer the services available through Veterans Affairs, whether that is the pain and suffering compensation — assisting those veterans in applying and getting approved — or whether that is to enroll into the rehabilitation program for assessment and further medical or psychosocial needs.
One of the things I would highlight is that the benefits at Veterans Affairs are really needs based. Therefore, a veteran who comes forward — and part of the homelessness program is to identify and bring to the door those veterans who may not have the wherewithal to do that on their own — can be assessed and then the appropriate treatments, programs and sense of purpose can be applied appropriately.
Senator Kingston: Everyone talks in the budget about providing funding to public, private and academic organizations to advance research projects and innovative approaches to deliver services to veterans and their families. I’m wondering if, in terms of, for instance, new treatments for PTSD — I’m thinking of psychedelics, as an example — your department is involved in supporting academic institutions’ research in this area. How accessible are these new treatments to veterans who have been struggling and have not received the appropriate treatment yet?
Mr. Freeman: Thank you so much, Mr. Chair, and thank you, senator for the question.
Emerging treatments is a very important topic. One of the goals of Veterans Affairs, of course — as part of Ms. Lantz’s introductory remarks — is to ensure veterans have the benefits and services they need to deal with the issues they face, so we’re always supportive of emerging treatments that the health domain and health system are pursuing.
With respect to psychedelic support, certainly we’re monitoring this very closely with our colleagues at Health Canada and the Canadian Institutes of Health Research, along with our colleagues from a Five Eyes point of view, to determine the efficacy and safe application of such services.
I’d also like to bring forward another item you highlighted, which is the Veteran and Family Well-Being Fund. It is a program at Veterans Affairs with the goal of supporting the country and the industry — be it with veterans health services or with other types of social supports — to ensure that there is funding available for those innovative ideas. The Veteran and Family Well-Being Fund has been very well positioned to do that over the last number of years. In fact, Budget 2024 sees an increase of $6 million over three years in order to support more of this. We’re quite excited about putting that fund to good use in all areas to support veterans and their families.
Senator Ross: My question is for Ms. Woodfield. In New Brunswick, we have a growing cyber sector, aerospace and defence sector, as well as a strong and growing tech and export sector. Of course, our proximity to CDSB Gagetown feeds us. I’m interested in what types of services you provide to help Canadian businesses get those procurement contracts from foreign governments. Also, specifically, are you working with various provincial economic development or export organizations and agencies to ensure some of those smaller, newer companies can participate in these opportunities?
Ms. Woodfield: Thank you, senator.
We work very closely with local and provincial export agencies. We have a customer acquisition team that travels across the country to meet with small Canadian businesses to let them know about the services we provide and to let them know we’re here to support and work with them to secure international contracts with foreign governments. So we have an outreach strategy. We meet regularly with local chambers of commerce, and we also have a program on our website called the Global Bid Opportunity Finder, GBOF, that anyone can access. It will identify international opportunities that are available for all Canadian exporters. We can serve to help all businesses, actually, navigate the system and be successful in some of those international contracts. We do have a direct outreach strategy where we aim to reach all sectors all across the country.
Senator Ross: From the perspective of criteria, is there any type of vetting that happens that would ensure they have security clearance or other types of criteria?
Ms. Woodfield: Yes, we conduct a pretty thorough analysis of the Canadian exporters. In particular with contracts, we look at their technical capability to deliver on what the foreign opportunity may be. We also look at their financial backing, managerial backing and capabilities. We actually conduct a very thorough risk analysis. We also identify for those companies where they need to perhaps beef up or improve their capabilities so we can help them be successful. There are a number of criteria, but we work very closely with the Canadian exporters to identify what those are and what they would need to be successful on a foreign opportunity.
Senator Ross: Thank you very much.
[Translation]
The Chair: I would like to add to that. In fact, you are a victim of your own success. What I hear from military suppliers in particular is that you are so good that it is easier to sell to a foreign government than to the Government of Canada. I do not want you to get in trouble, but is this something you hear in the field?
[English]
Ms. Woodfield: As a small, very targeted, focused Crown corporation, we have developed an internal capability around international procurement in very complex projects and complex industries. We are absolutely able to work with Canadian exporters to help them identify those foreign opportunities and help them to be successful on those contracts.
I will say, though, we put those Canadian exporters through a pretty rigorous process before we are able to back them and provide the Government of Canada guarantee to the foreign exporter. We have been successful, but we do have a very robust due diligence system and vetting process to help Canadian exporters be successful on their contracts internationally.
[Translation]
The Chair: Are the results of your due diligence audits used by Procurement Canada, or do they redo the accreditation or audit process for companies? Is there any duplication?
[English]
Ms. Woodfield: I’m sorry, senator, but I don’t understand the last part of your question. Could you provide some clarification, please?
[Translation]
The Chair: When you do an audit and accreditation exercise to ensure the quality of our companies when it comes to exporting and to make sure they can do business with other countries, when Canada buys from these same companies, does it go through the accreditation and certification process again, or does it use your own?
[English]
Ms. Woodfield: I can’t speak to the Government of Canada’s acquisition process. That is typically done through the Department of PSPC. I can say that I’m sure there’s an overlap in terms of the due diligence and the work that we do to ensure a Canadian exporter has the capabilities to deliver on the item that we’re entering into a contract with, but I can’t speak on behalf of the Government of Canada’s procedures. Thank you.
The Chair: Thank you.
Senator Marshall: I want to read into the record what I’m looking for from the Department of National Defence.
For the $7.2 billion in capital funding, could the department send to the clerk a list of each project included in the $7.2 billion and the amount allocated to each of those projects? That’s what I’m looking for.
For the Department of Veterans Affairs, Mr. Harris has testified the last several years, and he had indicated that your service standard was 16 weeks. When he was here last year, he told us that I think the backlog was 23,000 in 2020, but last year, it had been reduced to 6,800. Are you able to give us the number as to what your backlog is this year? Is it getting smaller or larger?
Ms. Lantz: It is currently around 5,300. It has risen a little bit over the last month or two. We did have it below 5,000, but we’re still proud to have it around the 5,000 mark, which we were targeting.
Senator Marshall: Thank you for that.
Are you able to tell us the number of veterans in Canada and also the number who are receiving benefits from the Department of Veterans Affairs?
Ms. Lantz: I can tell you there are around 190,000 clients for Veterans Affairs. They’re all receiving different benefits. I don’t have the unique number for each program.
Senator Marshall: I think this goes back to your colleague who was indicating Statistics Canada is gathering information?
Ms. Lantz: Yes, and I will invite Mitch to the table again.
Senator Marshall: Or you can just send it to the clerk. I have two other questions that I’m trying to squeeze in.
Ms. Lantz: 461,000.
Senator Marshall: That’s great. Thank you.
The Persian Gulf War vets have been vocal with regard to their designation. They’re designated as special duty veterans as opposed to wartime veterans. Is there anything happening within the department to assess the classification to move them over to the wartime vet classification?
Ms. Lantz: Thank you for the question.
Unfortunately, that is not a decision or mandate for Veterans Affairs Canada. It is a decision for DND and the Canadian Armed Forces.
Ms. Crosby: I would like to invite Lieutenant-General Allen to the table to respond to that.
Senator Marshall: If I can just get a quick response to that.
LGen. Allen: I’ll get to your question quickly, senator. We do a designation based upon the nature of the conflict and the nature of the activity. I could not tell you today why each conflict has been given a specific designation, being a special duty operation or being in a special duty area, but we can certainly get that information and provide it back.
Senator Marshall: Is there any activity with regard to looking at the classification?
LGen. Allen: To my knowledge, we’re not reviewing it at this point in time, but I can certainly inquire with those who do.
Senator Marshall: I think my time is up. Thank you.
[Translation]
Senator Forest: My question is for Ms. Crosby. Boeing has been awarded a non-competitive contract to replace the CP-140s. How much was allocated in the budget for this purchase, estimated at nearly $8 billion?
[English]
Ms. Crosby: Thank you, senator, for that question.
You’re talking about the CP-140 replacement? The Canadian Multi-Mission Aircraft, or CMMA, project is a $10 billion project, and in these Main Estimates, we’re asking for $600 million.
[Translation]
Senator Forest: I do not know who could answer that question and reassure us. After all, this is a major purchase that the government is making without a call for tenders. What motivated the decision not to tender, particularly when there was a Canadian company that could have bid, even if it had not necessarily won the contract? We hear that Boeing’s P-8 Poseidon aircraft may be at the end of its life. Once it has been in service for twenty years or so, there may be maintenance problems.
[English]
Ms. Crosby: Thank you for your question. I would again ask the general if she may wish to elaborate.
Again, we discussed this at a previous committee as well. The Canadian Multi-Mission Aircraft purchase of the P-8 was based on the requirements that were met by this particular fleet, The Canadian Air Force had specific requirements that could only be met by this particular vendor. Of course, as the project progresses, we will have processes put in place to ensure that we get what we are paying for and that we get the results that we expect. But again, this project is early days and we are just at the beginning of the process.
[Translation]
Senator Forest: My question is for Ms. Carruthers and pertains to Global Affairs Canada.
The situation in Haiti is of particular concern. In the past, Canada has done a great deal for that country. I see that the $28.6 million funding for crisis resolution support expired on March 31, 2024. What plans does Canada have to support Haitians now that the $28.6 million funding has come to an end?
[English]
Ms. Carruthers: Thank you very much for the question.
In terms of Haiti, in these particular Main Estimates, we do have new funding of about $12.2 million. This funding was to facilitate training, if necessary, for infrastructure and rehabilitation of the Haitian National Police.
In addition, I would say that since April 1, 2020, we have committed close to $380 million in international assistance for Haiti. We have disbursed up to $140 million in international assistance, as well as another $13.7 million in international humanitarian assistance.
[Translation]
Senator Forest: Thank you.
[English]
Senator Smith: I’ll head back to Ms. Crosby. The Minister of Defence was recently quoted as saying that the failure of the Canadian Armed Forces to recruit new members could be leading to a death spiral, which is kind of strongly put. The minister also noted there is a shortfall of about 16,500 members in our Forces. I’m not sure if Senator Marshall asked the exact question, but could you provide us with a breakdown across the Armed Forces of the gaps in terms of people? Hopefully it isn’t as bad as the minister quoted, but it could be worse when you factor in the military requirements needed to carry out our new modern defence policy. How is your department working to ensure that current members are being adequately trained for all new equipment that has been ordered in the future? Do your recruitment processes reflect the new, modern defence policy, ensuring you’re hiring people with the right skills and experience to be successful?
Ms. Crosby: Thank you for your question. I will again invite Lieutenant-General Allen to speak more to the tremendous efforts we are putting into reconstituting and rebuilding the CAF.
From a financial point of view, in these Main Estimates, we are requesting $6.8 billion that will be the salary required for 64.4 thousand CAF members, which is the target for this year. That’s the financial story. I know you’re more interested in the efforts we are taking to bring the right people in and where our gaps are.
LGen. Allen: Thank you, chair, and thank you, senator.
You’re absolutely right that people are at the heart of the capabilities that the Canadian Armed Forces delivers to Canada and Canadians at home and around the world. Focusing on recruitment and retaining our people is critical to all of the lines of business that we do. It’s critical to us to be able to equip and crew the new capabilities that are coming, both as part of SSE, NORAD modernization and on Our North, Strong and Free, so very much focusing on it as the most critical line of activity is something we have to do to enable us to be where we want to be in the future.
The breakdown of the numbers varies by occupations. Our occupations are at different strengths. Every year, we identify what we call our strategic intake plan which identifies the people that we need in different types of occupation. Overall, that needs an uptake of applicants and an uptake of people coming into the Canadian Armed Forces and moving them into the types of occupations that we need for today, but also for the capabilities that we need in the future.
Senator Smith: How do you evaluate the morale of the Forces now with some of the challenges that they face from a people perspective?
LGen. Allen: I do think it is challenging. That’s why we try to balance how much we can do while we focus on this growth piece.
We’ve made it very clear in both internal and external communications that putting a priority on CAF reconstitution is the key and the heart to us being successful. That’s why we are staffing up the units that are delivering on the bringing of people into the Canadian Armed Forces and that first initial training so that hose units have the capacity they need and the bases that support those units have the capacity they need to be able to pull people through.
It’s also very oriented on improving and changing our recruiting process that we’ve had in place for decades. We have not been meeting our strategic intake plan for a number of years now. This year, we had a net increase of 222 people within the Canadian Armed Forces, so that’s balancing between people leaving and people arriving. The majority of that number is due to more people staying.
Senator Smith: Can you make a quick comment on your equipment needs and the actual money you’re going to be spending with all the profiling that took place over the years of pushing money forward? What’s your sense about getting the right equipment we need to not only be modernized but to support people such as Ukraine and other needs throughout the world?
LGen. Allen: The geopolitical environment is changing so drastically and technology is changing so drastically. We must have access to new equipment, new sensors and new systems so we’re able to —
Senator Smith: If you have anything you can put in writing on one page, that would be helpful, just so we can complete that thought.
LGen. Allen: Certainly, I will do that.
Senator Smith: Thank you.
Senator Galvez: I have two questions for Global Affairs.
Under grants, you will be including grants to the International Energy Agency, the International Renewable Energy Agency and the Convention on Biologic Diversity. Can you give me the amounts for these? You can send it in later.
I see on your website that you have 21 full proposals to help and assist African countries on issues related to environment and climate change. I was wondering how you are evaluating the success of these projects. Are you using KPIs?
Ms. Carruthers: I can ask my colleague, Cam Do, to come up, and she can provide you an assessment of how they’re evaluated.
Senator Galvez: Okay. That would be good.
While she comes up, can you answer about Export Development Canada? Export Development Canada assists Canadian companies looking for critical minerals in developing countries. Do they follow the laws that apply in Canada in developing countries?
Ms. Carruthers: I’m will have to get back to you on that specifically.
Senator Galvez: Can you provide that?
Ms. Carruthers: Yes.
Cam Do, Director General, Innovative and Climate Finance Bureau, Global Affairs Canada: Thank you for the question.
I think this is in regard to the partnering for climate under the climate change initiative. We have very clear criteria, five key principles that we need to follow. The first is it has to demonstrate climate change objectives, whether it’s adaptation or mitigation. It also has to fall under our ODAA Act, so the eligibility in terms of country. It also has to integrate gender equality, so that is a very important aspect. Then we have a very robust results framework that we have to follow, and at least two indicators have to fall under that.
Senator Galvez: I want to complete the answer from my colleague on Haiti. Most of the countries are in Africa. Is Haiti or the Caribbean among the countries that are eligible for this assistance?
Ms. Do: If they fall under the ODAA Act, yes.
Senator Galvez: Under the what?
Ms. Do: Official Development Assistance Accountability Act.
Senator Galvez: Thank you.
Senator Loffreda: My question is for Lieutenant-General Allen.
In the 2024-25 Main Estimates, the Department of National Defence is requesting $28.8 billion in voted appropriations, an increase of 16.3% from previous years, and forecasting statutory expenditures of $1.8 billion, an increase 3.4% over the previous year’s Main Estimates. Those requests are important.
Lieutenant-General Allen, thank you, first of all, for your service and the services of the Canadian Armed Forces. I would like to turn your attention to table 3.2 on page 36 of your departmental plan. We mentioned success, and success of our Armed Forces is essential. It’s key going forward because of geopolitical concerns. It’s always about people, engagement and morale. This table looks at health, well-being and overall support of the defence team, and three of the four performance indicators caught my attention for the wrong reasons.
These indicators are, first, the percentage of military personnel who feel the Canadian Armed Forces provides a reasonable quality of life for service members and their families. The target is 85%, and the result is 43%. Is that a normal result in this environment, or is the trend decreasing? What can we do to increase those results?
The second is the percentage of the Canadian Armed Forces members who feel positive about their job. The result is 60.9% and the target is at least 90%.
The third is the percentage of public service employees in the defence team who describe their workplace as psychologically healthy. The result is 65%, and the target is at least 80%.
In all three cases, we are falling far way short of our targets. What is in progress to reduce those gaps? Our military personnel provide an incredible service. We don’t expect it to be 100%, but I’m wondering how the targets are set. Are they too ambitious or unrealistic? Do the results need substantial improvement, and quickly?
LGen. Allen: I don’t think the targets are unrealistic. There are challenges, conditions and circumstances we find ourselves in in the work we need to do to be able to create the environment.
We spoke earlier about the challenges we have in terms of the number of people we need to do the work. That often implies a burden of additional work in trying to account for the lack of personnel. This can be difficult and can reduce the level of job satisfaction as a defence team member — either a CAF member or a public servant working within the department. The demands we put on CAF members are significant in relation to the jobs we ask them to do — in terms of training, separation from families and frequent moves across the country and abroad. We know that these things can be challenging for members and their families. That is why, as we do CAF reconstitution, it’s critical that we focus not only on recruiting and attraction, but also on retention, in order to try to compensate for the challenging environment we put people in.
We’ve had some successes in these areas as we look at the progress we’ve been making on putting in place a housing differential payment that recognizes both your salary and where you’re going, as opposed to just the location that you’re in. From a housing perspective as well, we’re looking at ensuring that no one should have to pay more than 25% of their gross family income to live in a residential housing unit within the Canadian Armed Forces. It’s important that we’re capping those issues and ensuring that new folks coming into the Canadian Armed Forces, while in that transition period, aren’t paying for housing, rations and quarters. That’s just one aspect of housing.
Then there is the issue of finding career opportunities for spouses. How do we support families to find career opportunities in light of the fact that we ask families to move around? The supports we can provide through the Military Family Resource Centres or Military Family Services are another important aspect.
We’re also trying to reduce the number of times that we ask people to move. Not that far in the past, it was like, “Okay, three years; time for you to move,” when potentially you didn’t have to.
There are a number of issues we need to focus on to increase the level of satisfaction in what can be quite a challenging role.
Senator Loffreda: Thank you. Good luck.
LGen. Allen: Thank you.
Senator MacAdam: My question is for Global Affairs. It was reported last week that the federal government has taken the exceptional step to impose financial sanctions on Canada Life after months of outcry from public servants, retirees and their families who were left fighting for medical claims to be covered. It is particularly felt by Canada’s Foreign Service who are posted abroad and are facing lengthy delays in claims processing and questionable coverage of their claims. Could you give us an update on the sanctions being imposed, the hardships faced by Canada’s Foreign Service in making their medical claims and an appreciation of when this situation will be corrected?
Ms. Carruthers: Thank you for the question.
I don’t have specific details, but I can tell you that the department is working closely with Treasury Board Secretariat, as well as Canada Life, to try to resolve the situation. It’s very stressful for folks who are abroad and having to deal with this. Where possible, the department is allocating funding from our Foreign Service directorates and other means in order to provide advances to families so they can get the medical attention they require.
Senator MacAdam: Thank you.
Senator Kingston: My question is for Ms. Lantz. The budget speaks about the expansion of the Veteran Family Telemedicine Service pilot for another three years. My concern is that telemedicine services have been increasing across the country in different places and jurisdictions. There are concerns around integration with the provincial system in terms of follow-up, lab tests, consults to specialists and so on. How are you working with the different provincial jurisdictions in order to provide fulsome service in terms of telemedicine? What concerns have you had so far, and how do you plan to address those concerns in terms of telemedicine being valuable to veterans and their families?
Ms. Lantz: Thank you for the question.
Yes, the budget is allowing for an expansion and extension of a pilot of the telemedicine services program. Where previously it was for medically releasing, it will be expanded to include non-medically releasing.
Concerns have been raised about full comprehensive medical treatment and not just one-time telemedicine services. This was put in place due to the unique nature of CAF members and veterans and where they end up living post-service, transitioning from the medical services they have while they’re a member and then post-service. It’s helping with the transition as an interim measure and because there is a lack of family doctors in different across the country. In the beginning, the program was there to serve that need during the pandemic. We saw a benefit in terms of other factors in the current medical environment. With the pilot program, we continue to monitor how this will continue to work and whether it will be needed long-term.
It is a provincial jurisdiction to provide care for all Canadian citizens. Hopefully, we’ll see improvement in that area where the services will be integrated within the province and become part of the whole of medical services that we’re providing to the veteran and not a separate program that Veterans Affairs is running. We are monitoring and trying to improve, thus the expansion this year to the non-medically releasing.
Senator Kingston: But not necessarily collaborating with the individual provinces at this time?
Ms. Lantz: If my colleague Mitch Freeman has any information on that, I’d invite him to the table, but at this time I do not. We can provide that to you later as well, if we have it.
Senator Kingston: Maybe in writing?
Ms. Lantz: Yes.
Senator Kingston: Thank you.
Senator Ross: My question is for you as well, Ms. Lantz. Veterans are not a homogenous group, so we can’t lump their needs together. For example, we know that women are one of the fastest-growing segments of military veterans in Canada and we know that women veterans have unique health needs. What gender-specific programs and research are being undertaken to study these supports?
Also, other programs acknowledge that some needs are more complex, both physical and mental. How are we recognizing these complex needs holistically?
Ms. Lantz: Thank you for the question. I will invite my colleague Mitch Freeman to the table with me.
We are doing a lot of work in this area, using research and consultations in the last few years to address the different presentation of symptoms of women versus men for some medical conditions. The table of disabilities is being amended to address some of those issues.
Mr. Freeman can speak to the research that’s currently being undertaken.
Mr. Freeman: Thank you, senator, for the question.
The concept of uniqueness within the veteran community is very important. As we’ve heard over the last number of years, implementing a gender-based analysis process in terms of how we deliver and create programs is very important. Over the last number of years, there has been a significant amount of effort put into the adjudicative process around our eligibility entitlement guidelines in our Table of Disabilities to actually highlight that distinction between a female veteran versus a male veteran and their unique needs. They are very much unique and present differently, both from a timing point of view and a complexity point of view. Significant work has been undertaken at the department in order to understand that and to make change. As a result, you see now decisions for women veterans on par with male veterans, or very close to it. I would say to the committee that at any point in time, if you were to pull the data, you’d see a variation. Several years ago, that disparity was large in time, and now it is not large.
Also from an English-French point of view, the complexity in analyzing and finding medical professionals who can work with complex medical conditions in French has been increased over the last number of years to also ensure that that comes closer to par.
Then, of course, the minister and the department held a forum in early March both from a veteran summit point of view and a women’s forum point of view, and we heard loud and clear from the veteran community, both from the veteran summit holistically and very specifically from women veterans’ point of view, that the needs are different and more research needs to be done in that regard. At this point, from my portfolio around research, it’s about taking that feedback coming from those communities and the creation that the minister announced recently — in fact, at the women’s forum — of the creation of a women’s advisory council in order to spearhead and steer the research in the right direction.
Senator Ross: Thank you.
The Chair: I have a question for National Defence.
[Translation]
There is a housing shortage in the military right now. In a recent report, we spoke of a total shortage of 6,000 housing units on several bases, but particularly here in the Ottawa region, notably in Petawawa.
What measures are included in the budget to address this military housing crisis, and more specifically, what projects have been identified, where are they to take place, and how many units will be built in the coming year? Since we are recruiting more people, we will need even more housing, and that will also have an impact on the crisis.
We have heard the government announce that it wants to dispose of federal land or buildings for housing purposes. In your department in particular, are there any areas or surplus lands that are part of the disposal initiative?
If you do not have the answer now, can you send it to us in writing?
[English]
Ms. Crosby: Thank you very much for the question. We will supply something in writing, but I’ll give you some tidbits, if you allow me a moment.
You’re absolutely right. Housing is absolutely critical. Our CAF members need meaningful work, they need access to good tools and they need to be able to live comfortably and suitably and to accommodate multiple moves. Housing has been a focus for the department for a number of years. In fact, we already had a plan to invest an additional $475 million over the coming years to continue to upgrade and renovate about 12,000 units.
On top of that, Our North, Strong and Free recently announced an additional $1.4 billion for CAF housing, which, over the next five years, will enable us to put in place 650 new units. We are on the road to either repairing, upgrading or developing new housing with this additional funding, which is excellent. Our North, Strong and Free also announced another $17 billion over 20 years to do additional renovating, and we are currently working on a plan to do that.
[Translation]
The Chair: You will be able to identify exactly what is planned for the coming year?
[English]
Ms. Crosby: Absolutely. For example, we have 10 sites in mind for these 650 units, including Borden, Edmonton, Esquimalt, Trenton, Kingston and so on.
Just quickly on your question of divestment, in fact, Budget 2025 identified a number of sites that we will divest of. We do have land that is surplus to our needs that we don’t need. So we would be happy to —
[Translation]
The Chair: So you are going to tell us where?
Ms. Crosby: Yes, absolutely.
The Chair: Perfect, thank you.
This concludes our meeting. Many thanks to the witnesses for appearing before us. Please send your responses to the clerk by the end of the day on May 21, 2024.
I would like to remind senators that our next meeting will be tomorrow evening, May 8, at 6:45 p.m., to resume our study of the Main Estimates.
Before closing the meeting, I would like to thank the committee’s support team for its essential work done behind the scenes. Thank you all.
(The committee adjourned.)