THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, April 16, 2024
The Standing Senate Committee on National Finance met with videoconference this day at 9 a.m. [ET] for the consideration of Supplementary Estimates (C) for the fiscal year ending on March 31, 2024.
Senator Claude Carignan (Chair) in the chair.
[Translation]
The Chair: I would like to welcome all the senators and all Canadians tuning in on sencanada.ca. My name is Claude Carignan. I’m a senator from Quebec and the new chair of the Standing Senate Committee on National Finance. I have big shoes to fill. It’s budget day, so a good day for shoes.
I would now like to ask my colleagues to introduce themselves, starting from my left.
Senator Forest: Welcome to this new assignment, Mr. Chair. Éric Forest from the Gulf Division in Quebec.
Senator Gignac: Welcome, Mr. Chair. Clément Gignac from Quebec.
Senator Dalphond: Pierre J. Dalphond, Senatorial Division of De Lorimier in Quebec. Here, the Quebec side begins, but that will soon change.
[English]
Senator Ross: Good morning. Krista Ross from New Brunswick.
Senator Pate: Kim Pate. I live here in the unceded, unsurrendered territory of the Algonquin Anishinaabeg. Welcome.
Senator MacAdam: Jane MacAdam, Prince Edward Island.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Smith: Larry Smith, Quebec.
[Translation]
The Chair: Honourable senators, we’ll be resuming our study on the expenditures set out in the Supplementary Estimates (C) for the fiscal year ending on March 31, 2024, which was referred to this committee by the Senate of Canada on February 26, 2024.
We’re pleased to be joined today by senior officials from the Windsor-Detroit Bridge Authority; Public Services and Procurement Canada; and Employment and Social Development Canada. I understand that one official from each department will make statements and that the others will help answer questions, if necessary.
We’re joined by, from the Windsor-Detroit Bridge Authority, Charl Van Niekerk, Chief Executive Officer; from Public Services and Procurement Canada, Wojciech (Wojo) Zielonka, Assistant Deputy Minister and Chief Financial Officer; and from Employment and Social Development Canada, Karen Robertson, Chief Financial Officer and Senior Assistant Deputy Minister.
Welcome and thank you for accepting our invitation to appear in front of the Standing Senate Committee on National Finance. I’ll now give the floor to Charl Van Niekerk.
[English]
Charl Van Niekerk, Chief Executive Officer, Windsor-Detroit Bridge Authority: Good morning and thank you for the opportunity to appear in front of this committee to discuss the Gordie Howe International Bridge project and the Windsor-Detroit Bridge Authority, or WDBA.
It is a privilege to be here in Ottawa, the unceded traditional territory of the Algonquin Anishinaabe people, to brief this committee on the new bridge and provide an update on the recent developments regarding our project, the cost and schedule.
The Windsor-Detroit Gateway is Canada’s busiest commercial land border crossing, facilitating the movement of people, goods and services between Canada, the United States and Mexico. More than 25% of the annual trade between Canada and the U.S. travels through this corridor, accounting for 30% of all commercial vehicle movements.
The goal of the North American Free Trade Agreement, or NAFTA, is to generate economic growth and raise the standard of living for the people in all three countries. The Gordie Howe International Bridge will play an essential role in this agreement.
The new bridge will shorten travel times, meet current and future volume demands and provide crossing choice, creating a more predictable and secure trade environment that will encourage new investment and strengthen the supply chain. Significant progress has been made over the last five years, and we expect construction to be completed no later than September 2025, with traffic crossing the bridge in the fall of 2025.
Progress is due to the continued hard work of our private-sector partner, Bridging North America, our colleagues at Infrastructure Canada, the Michigan Department of Transportation, on-site workers and — of course — our staff at WDBA.
The past five years have not been without challenges. The project — like all of us — experienced significant COVID-19-related disruption. For the project, this was in terms of productivity on the site and in supply chain impacts. Unlike other projects, this project spans the border, adding much greater complexity and disruption. This meant that just as construction activities were significantly increasing, the project team had to adjust to hundreds of executive orders and changes to health care guidance on both sides of the border.
These changes were often made daily with different rules applying to work taking place in Canada compared to work taking place in the United States. Bridging North America kept the project moving by keeping people working while also keeping them safe. They aligned with federal, provincial and state health and safety protocols and re-sequenced construction activities. Through these efforts, schedule impacts were limited to less than 10 months.
The project team also encountered unprecedented and unpredictable material cost escalation, higher than expected inflation and supply chain shortages. Like most fixed-price public-private partnership contracts, the contract between WDBA and Bridging North America defines a fixed price for only the scope and risk elements for which the contractor is fully accountable. Impacts of certain risk events are either shared with the contractor or fully retained by the owner. This includes certain impacts of the COVID-19 pandemic.
The contract requires WDBA to provide both a reasonable extension to the contractual dates and to compensate Bridging North America for additional costs related to these shared risks. As a result, we amended our P3 contract to extend the construction completion date from November 2024 to September 2025, added new measures to ensure this date is achieved and updated the overall contract value from $5.7 billion to $6.4 billion.
In the end, WDBA and Bridging North America has achieved a resolution that addresses — in whole — COVID-19 past and potential future impacts, as well as the resolution of other project issues. In our opinion, the extended time frame and revised contract value are both reasonable.
For the supplementary estimates, WDBA sought approximately $507.3 million in new funding to be used along with previously allocated funding to support these adjustments to the contract with our private-sector partner. This funding is important to ensure WDBA can fulfill its mandate and deliver the Gordie Howe International Bridge to strengthen North American trade.
I am joined by my colleague, Joël Hupé, our Chief Financial and Administrative Officer, and we look forward to answering questions you may have on this funding request and the Gordie Howe International Bridge project.
Thank you.
[Translation]
Wojciech (Wojo) Zielonka, Assistant Deputy Minister and Chief Financial Officer, Public Services and Procurement Canada: Honourable senators, let me begin by acknowledging receipt of the Honourable Senator Percy Mockler’s letter dated April 4 and addressed to my minister announcing his retirement. His contribution has been invaluable. We would like to thank him for his outstanding service to Canada and this committee in particular. His comments have been noted and Public Services and Procurement Canada, or PSPC, will provide the committee with an official response in writing shortly.
I appreciate the opportunity to appear before you to discuss Public Services and Procurement Canada’s Supplementary Estimates (C) for fiscal year 2023-24. I’m joined today by Alain Lagacé, Director General for Budget Planning and Financial Management within the Finance Branch.
Honourable senators, as this committee knows, PSPC has a wide-ranging mandate to steer government procurement, manage government buildings, administer pay and pensions for the public service and more.
[English]
In order to support these activities, Public Services and Procurement Canada, or PSPC, has requested $263.4 million in the Supplementary Estimates (C), which brings available authorities from $5.2 billion to $5.5 billion net of revenues. I’ll now outline some of the larger items in this request.
In order to continue delivery of critical infrastructure projects highlighted in Budget 2019, there is a request for $200 million. This amount covers a suite of projects that will provide services to Canadians.
In addition, the Real Property Services Revolving Fund sought statutory authority of $30.1 million. This is to fund ratified collective agreements as well as additional investments in the modernization of service delivery tools and office space.
We continue to advance the Long Term Vision and Plan, or LTVP, a multi-decade strategy to restore and modernize the historic parliamentary buildings. Fourteen-point-four million dollars are being sought for the continuation of preplanned work on multiple projects, including the 100 Sparks, 30 Metcalfe and Block 2 redevelopments.
PSPC also sought $11.6 million for office accommodation services for employees to administer a range of public service, military and police pension funds. This is the cost associated with the office space for employees, and it’s established at 13% of the approved salary resources, as per the Treasury Board of Canada Secretariat guidelines.
The Laboratories Canada strategy, an initiative to renew federal laboratories, requested $6 million to undertake preplanning, schematic design and site selection for the Regulatory and Security Science NCA Main Project. This project aims to protect Canada’s people, animals and plants, and advance innovation and economic growth.
Smaller amounts are being sought in Supplementary Estimates (C) for receiver general card acceptance and postage fees, a cybersecurity certification program for defence procurement, employee benefit plan contributions and transfers to other organizations.
PSPC has also been proactive in reducing organization spending on travel, consulting and other professional services as part of their refocusing government spending initiative announced in Budget 2023. PSPC’s reduction of $34.5 million during the fiscal year 2023-24 is the second-largest reduction among all government departments, and it represents 7% of the total government-wide reduction of $500 million.
[Translation]
PSPC has many other priorities. A number of these priorities were recently highlighted by the Minister of Public Services and Procurement Canada, Jean-Yves Duclos, when he addressed the Supplementary Estimates (C). These include modernizing procurement, which involves simplifying processes and improving access to public contracts for SMEs and suppliers from historically under-represented groups.
A further departmental priority is to resolve pay issues for public servants and move forward with the next generation of the human resources and pay system.
PSPC is supporting the government’s response to the housing crisis by speeding up the conversion of surplus federal properties into affordable and accessible housing.
A fourth priority set out by Minister Duclos is to continue working closely with key partners to implement the Canadian Dental Care Plan.
These are just some of the priorities that PSPC is working on. I look forward to your questions. Thank you.
The Chair: Thank you.
Karen Robertson, Chief Financial Officer and Senior Assistant Deputy Minister, Employment and Social Development Canada: Mr. Chair, committee members, I would like to acknowledge that the lands on which we’re gathered are part of the unceded traditional territory of the Algonquin Anishinabe people. It’s good to be back in front of this committee. I last spoke here on December 5, 2023.
I’m here today as Chief Financial Officer of Employment and Social Development Canada, or ESDC. I’m joined by a few of my colleagues who will help me answer your questions about our programs. On my left is Brian Leonard, Deputy Chief Financial Officer at ESDC.
ESDC delivers a range of programs and services that Canadians can use throughout their lives. Through the Labour Program, our mandate is to ensure that employers under federal jurisdiction maintain dynamic, productive, healthy and competitive workplaces. Service Canada delivers ESDC’s many programs to Canadians, along with other Government of Canada programs and services.
[English]
I would like to present an overview of Employment and Social Development Canada’s, or ESDC’s, portion of the 2023‑24 Supplementary Estimates (C), which received Royal Assent on March 22.
As part of its Supplementary Estimates (C), ESDC sought $275 million in voted appropriations for programs such as Benefits Delivery Modernization, temporary foreign workers and sustainable jobs training. This includes a net increase of $55 million under vote 1, operating expenditures; $4 million under vote 5, grants and contributions; and finally, $216 million under vote 10, deletion of debt. The latter is related to the write‑off of unrecoverable debts owed to the Crown for the Canada Student Financial Assistance Program and Canada Apprentice Loan program.
Given significant recent events in the Government of Canada, I would also like to touch on two other subjects, please: refocusing government spending and contracting for professional services. ESDC’s reduction for the refocusing government spending exercise announced in Budget 2023 is $119 million by 2026-27. This is ongoing. We managed a small reduction of $3 million in 2023-24, and the amount increases over the next three fiscal years.
With our strategy, ESDC strived not to impact any critical services to Canadians. Overall, we anticipate a reduction of approximately 200 full-time equivalents as a result of this exercise, and this is entirely manageable via attrition.
We are now preparing for additional rounds of refocusing government spending, including what was in the 2023 Fall Economic Statement, and possibly more to be announced later today.
[Translation]
With regard to professional services contracts, ESDC has used the services of GC Strategies, Coradix and Dalian for around 20 contracts over the past 10 years. We currently don’t have any active contracts with these companies. These contracts provided resources with specialized skills and expertise to support ESDC’s operational requirements and internal systems. ESDC complies with the policies, guidelines, legislation and trade agreements in place when awarding all its contracts. ESDC will continue to follow the advice of Public Services and Procurement Canada for all contracts awarded using PSPC’s procurement methods, while ensuring that ESDC’s procurement activities are carried out in a fair, open and transparent manner.
We fully co-operate with all audits related to professional services contracting, including with the Office of the Auditor General, the Office of the Procurement Ombud, the Office of the Comptroller General of Canada and our internal auditors. My team also continues to build relationships with clients, for example by providing new training opportunities to improve financial integrity, transparency and accountability at ESDC. Thank you for your attention. My colleagues and I look forward to answering your questions.
[English]
The Chair: Thank you very much for your statements. Now, we will proceed to questions.
Senators, you will have a maximum of five minutes each for the first round and a maximum of three minutes each for the second round. Therefore, please ask your questions directly. Witnesses, please respond concisely.
I will maintain the same tradition as Senator Mockler and start with Senator Marshall.
Senator Marshall: Thank you very much for that, Mr. Chair, and welcome as the new chair of the Senate National Finance Committee.
My first question is for Ms. Robertson. When you were here last, I think you explained the status of the Benefits Delivery Modernization program and the Old Age Security portion. Can we get an update as to the entire Benefits Delivery Modernization program? It includes not only Old Age Security but EI and CPP. The budget was $2.5 billion. My first question: Is the budget still $2.5 billion? I read something in the media that there was going to be a request for $8 billion. Can you just confirm that it’s still $2.5 billion?
Ms. Robertson: Yes, the budget hasn’t changed from the last time I was here. However, there may be an announcement later today that will increase the —
Senator Marshall: There may be an — yes.
Ms. Robertson: Yes, I don’t know that.
Senator Marshall: With regard to an increase. Okay.
Ms. Robertson: Yes.
Senator Marshall: We did talk about the OAS portion, and before Christmas we were advised that certain recipients had migrated to the new system. My understanding is that all of the OAS clients are going to be migrated by the end of December of this year. Can you tell us whether that is still on track?
Ms. Robertson: That is still the plan, to migrate in December 2024.
Senator Marshall: Thank you very much.
In child care, the recent announcements by the government, the $1 billion in low-cost loans and the grants of $60 million, when will the loans commence being granted? Can you give us an idea as to the timeline?
Ms. Robertson: I’m sorry. I can’t answer that question because, actually, that would be directed to CMHC. I apologize for that.
Senator Marshall: Oh, okay. So that’s not being administered —
Ms. Robertson: I think they’re administering.
Senator Marshall: — by your — what about the grants of $60 million?
Ms. Robertson: Mr. Chair and senator, I believe that decision was just announced, so we don’t have all of the details on that yet. Perhaps I should reply in writing following today’s more fulsome announcement.
Senator Marshall: If you can provide that information, that would be interesting.
For Public Services and Procurement Canada, the defence update that was released last week indicated that defence procurement takes too long and it needs to be faster, and apparently the government has launched a review that has multiple organizations participating. Can you give us an update on that?
Mr. Zielonka: Thank you for the question. That’s something that’s in process, and as an organization, we’re looking at the impact.
In general, we’re constantly reviewing our procurement processes, and we’ve been in the media lately quite a bit on procurement processes in general. On the defence procurement, that will be something we’ll have to get back to you with more precision on.
Senator Marshall: Yes, I’d like to know if it has started. It’s announced in the policy last week, but I would have expected it to have started.
Mr. Zielonka, again, what are the plans for Canada Post? That reports through your department, does it not?
Mr. Zielonka: Yes, Canada Post reports through our minister, so that is correct. Those plans are being looked at actively, and we’re working with our minister’s office on —
Senator Marshall: Canada Post has been incurring significant losses, but you did say — in your opening remarks, you were talking about the possibility of the government converting extra spaces or extra buildings into housing units. I did hear on the CBC this morning that Canada Post has more outlets than Tim Hortons. I was wondering if any of those buildings are going to be converted. Are there any plans?
Mr. Zielonka: I think there is lots of speculation in the media in terms of what will be announced this afternoon, so we’ll have to wait for the announcement to see what the government plans on doing.
What I can say, though, is on the space that PSPC manages, we’re very active. We’ve put properties up, announced what properties are surplus, and we are actively looking at the possibility of those and other spaces that would be suitable for conversion into housing units. That is something that’s a priority for our department. We have assembled a team that is dedicated to that, because, as you know, with the hybrid workplace and changes in how we work, we do have a surplus of property across the country, and some of those will definitely be suitable for housing.
Senator Marshall: Thank you.
[Translation]
Senator Forest: Thank you for your remarks. To hone in on the concerns shared by my colleague Senator Marshall, this issue is extremely significant. We can see that many federal fixed assets in a number of Canadian communities, such as Rimouski, are somewhat outdated or must be covered with netting to prevent the bricks from falling.
Does PSPC have a response plan in order to properly maintain the federal fixed assets? Given what we just heard about the scale of the housing crisis, does the plan cover more than the details announced in the budget? Has PSPC come up with a game plan to optimize the transformation of public buildings, with municipalities and territorial and provincial governments, as part of a major effort to ensure that Canadians have a suitable and affordable roof over their heads?
Mr. Zielonka: Thank you for the question. Absolutely. In our work, we have a planning program whereby all the buildings in our portfolio are analyzed to determine which ones show affordable housing potential.
[English]
As part of that entire process, we also look at the condition of buildings. As we get the budget, we prioritize investments in those buildings to ensure that we try and maintain or improve the overall condition of buildings. That is always a challenge, and as we look at the disposal process, there is a kind of a process that goes hand in hand between the disposal of properties that, for example, may no longer be part of our portfolio or not suitable for our future needs but may be more appropriate for other things. We do those two things in the process.
The significant reduction in the portfolio is something that’s only been in process for the last year or so, so that is fairly new. We’ve been working very hard on that and looking at our needs across the country. As this plan moves forward, we will be working with provincial and municipal partners to look at the future of those assets.
[Translation]
Senator Forest: You asked for $200 million for additional investments in the Supplementary Estimates (C). What will the $200 million be used for?
Mr. Zielonka: We have a specific work program included in this amount. Most projects are in the Wellington corridor. In particular, we’re talking about the Parliament building —
[English]
— West Memorial Building, Energy Services Acquisition Program, or ESAP — the heat plant and other buildings. The majority of that investment is for those projects, and it’s really a question of timing. As the renovations progress, that is something that is sometimes unpredictable. It depends on the season, the weather, et cetera, so some projects go faster or slower, and often we have to manage the need for cash as a result.
[Translation]
The $200 million reflects the progress of the project, which can be seen every day, especially here in Ottawa.
Senator Forest: On the Hill?
Mr. Zielonka: Yes.
Senator Gignac: Welcome and good luck with your new mandate, Mr. Chair. I don’t know whether we should wish you as much longevity as your predecessor.
My first questions are for Public Services and Procurement Canada. I would like to know how national security considerations are integrated into your decision-making processes. Some major infrastructure projects are on the horizon, such as VIA Rail and telecommunications towers. I had the privilege of sponsoring a bill on foreign investment. It includes a whole national security component.
From Washington’s perspective, certain countries will be excluded from the consortiums when it comes time to issue calls for tenders. What is Public Services and Procurement Canada’s policy on taking into account the national security issue?
[English]
Mr. Zielonka: When it comes to national security, I think there are two different areas within our portfolio that I might mention. The first and foremost is in our real property portfolio. When we look at renovations, security is always a focus. Everything we do has a security element in there. Risk assessments and so on are part of the planning process. That’s one part of the answer.
In terms of procurement, we tend to work closely with ISED and the procuring departments to define their particular needs. Often, the nature of the security requirements are directly derived from the needs of those departments, and we work collaboratively with them to define those.
[Translation]
Senator Gignac: Regarding Senator Marshall’s question about national defence, the tens of billions of dollars spent on modernizing or purchasing military equipment will be substantial.
What is the policy with regard to our American ally, especially for NORAD? When I was in Colorado Springs, at NORAD headquarters, talking to officers, I was surprised to learn that there wasn’t any automatic alignment of the procurement service. Canada and the United States can buy different things, even though we’re the only countries with a military defence alliance.
When it comes to purchasing military equipment, is our national procurement policy different from the Americans’ policy? Why don’t we automatically buy the same types of aircraft or military equipment, especially since we’re in NORAD together? Do you hold any discussions with your American counterparts when the time comes to make purchases, or do you consider only the Canadian economic benefits?
Mr. Zielonka: Thank you for the question. We’re an independent country. We have our own procurement policy.
[English]
We are also subject to different trade agreements than our colleagues south of the border. Those would all be factors that would be key in the decisions around what procurements we make.
Of course, our colleagues at the Department of National Defence would often dictate their particular requirements. We’re a different country from the United States in terms of our requirements. We have the longest sea borders in the world, so that is going to create different needs.
Those with all be factors that would be taken, but it doesn’t automatically mean that we will follow the procurements of NATO or other countries. Obviously, though, we work very closely with our allies as we look to define procurement.
[Translation]
Senator Gignac: My last question is for Employment and Social Development Canada. It concerns the benefits delivery modernization project. You’re talking about an additional $38 million. That’s quite significant. We’re talking about Old Age Security and Employment Insurance. This affects millions of Canadians. Is the user affected? Will they need to do things differently, or is it more of an administrative matter? Will users need to change their habits?
Ms. Robertson: I would like to thank the senator for the question. I’ll ask my colleague, Susan Ingram, to join me at the table. She’s the Assistant Deputy Minister responsible for the program. She can describe the experience of Canadians.
Susan Ingram, Assistant Deputy Minister, Benefits Delivery Modernization, Program Strategy and Design, Employment and Social Development Canada: Thank you for the question. I’m Susan Ingram, Assistant Deputy Minister, Benefits Delivery Modernization. Over the course of the transformation, there will be changes for Canadians. However, we’ll be introducing these changes gradually. Our goal is to improve the digital experience in particular and also the experience across all avenues.
When people come in person, call or use the website, we want to make it an integrated experience. The first changes introduced for Old Age Security mainly involve support services. These constitute administrative changes in order to set up a modern system for processing Old Age Security claims. Over the next five or six years, we’ll see changes in the client experience.
Senator Gignac: Thank you.
Senator Smith: Thank you, Mr. Chair, and good luck in your new role.
[English]
I have a question for Ms. Robertson. These estimates include $5.5 million to create a new agriculture and fish processing stream within the Temporary Foreign Worker Program. Could you explain why it was decided to create this stream within the Temporary Foreign Worker Program now? Was it simply a matter of increased demand for workers in that sector?
Ms. Robertson: I would like to invite my colleague Michael MacPhee, who is sitting behind me, to the table. He is the assistant deputy minister responsible for the Temporary Foreign Worker Program. He was with me here in December and addressed many of your questions specific to that program.
Michael MacPhee, Assistant Deputy Minister, Temporary Foreign Worker Program, Employment and Social Development Canada: Good morning, and thank you for the question.
The introduction of a new program stream for agriculture, fish and seafood processing is essentially an effort on behalf of the program to harmonize the treatment of requests for this stream of workers. We’re taking what was previously the Seasonal Agricultural Worker Program, or SAWP, which was there primarily for the agriculture sector, and we’re building off of the best practices that exist there.
The purpose of it is to simplify the processing of these applications and, more importantly, to improve worker protections. The Seasonal Agricultural Worker Program includes far more active engagement on behalf of the source countries from where these workers come, and, as such, they play a much larger role throughout the entire process and facilitate a better worker experience.
Senator Smith: Have you set targets for how you want to modify the program and the impact it will have on the number of temporary foreign workers who will enter our country?
Mr. MacPhee: We have just launched consultations with stakeholders. The final design of this new stream is still in development. We intend to engage the source countries as well as employers, stakeholders and migrant worker support groups in order to make sure that the outcome has the positive effects that we intend to implement.
Senator Smith: The changes did include some exemptions, for example, in the agricultural and seasonal sectors, which will not reduce their employees. What sort of consultations did the government have with specific industries like agriculture and health care before they implemented the changes to the Temporary Foreign Worker Program? I’m not sure if that is your bailiwick.
Mr. MacPhee: I’m not sure if you’re speaking to the recent announcement about us stopping certain measures that were part of the Workforce Solutions Road Map that was announced in March.
When we introduced those measures in 2022, the labour market was in a very different situation. We had about a million job vacancies, record-low unemployment, and efforts were being made to facilitate the bringing in of additional workers to support key industries within Canada.
Over the last few cycles, we have seen that job vacancy rate dropped down to just over 600,000- 650,000. Most recently, we have seen the unemployment rate rise to 6.1%, and we made the decision to start pulling back on some of those more facilitative measures so that we could return to what the program parameters were prior to COVID.
In terms of consultations, we did not go out and directly consult on the timing for these. However, we do have a robust governance structure that allows us to reach out to stakeholders on a very regular basis and helps us inform the future direction of the program.
Senator Smith: In addressing timing, where do you see that going?
Mr. MacPhee: I’m sorry, I’m not sure I understand. Timing in terms of what?
Senator Smith: When will you roll it out in terms of changes you are going to make in the number of foreign workers coming in?
Mr. MacPhee: In that space, we have to remember that the program is actually a demand-driven program. It is up to the employers to determine whether or not they have a legitimate need.
As we work in collaboration with our partners at Immigration, Refugees and Citizenship Canada, or IRCC, we need to develop a larger overarching strategy for the number of non-permanent residents who are here in Canada, and we will align our work with IRCC in that space.
Senator Pate: My question is also for Employment and Social Development Canada. I think this question is for you, Ms. Robertson, although you may want someone else to answer.
In front of the Senate Standing Committee on Social Affairs, Science and Technology, or SOCI, last year, the government committed that the Canada Disability Benefit, or CDB, whose design was based on the Guaranteed Income Supplement, or GIS, would be delivered by the end of 2024. Many persons with disabilities and advocates will be tuning in today’s budget to discover whether long-anticipated funding for the benefit will be announced.
Could you please clarify how — in your work on the modernization of benefits delivery of Old Age Security, or OAS — you’re anticipating preparing for the Canada Disability Benefit. What steps are you taking in your work on OAS, for example, through the development of best practices or shared infrastructure to ensure that the CDB will be delivered by the end of 2024? Could you please also clarify how the $38 million identified in the supplementary estimates could be used to assist in that process, if at all?
Ms. Robertson: Thank you, senator. Mr. Chair, I would like to call my colleague, Elisha Ram, the assistant deputy minister responsible for that program, to the table. He has spoken here with me before and is far more knowledgeable about the elements of that question than I am.
Elisha Ram, Senior Assistant Deputy Minister, Income Security and Social Development, Employment and Social Development Canada: Thank you for the question. My name is Elisha Ram. I am the senior assistant deputy minister responsible for security and social development in ESDC. I will be responsible both for the Cyber Security Audit Program and, hopefully, the soon-to-be-launched CDB. Those two programs are separate. They’re not going to be delivered using the same delivery infrastructure although, obviously, we have to wait for any details that might be available later today. As noted, senator, no funding has been allocated for the CDB.
We have been working within the department to prepare for the introduction of the benefit. Of course, we will be in regular conversation with folks who are working on the delivery side of the organization, and we will be using all the lessons that we have learned over many years of delivering programs like OAS, but these two programs are separate and will have different funding streams and delivery infrastructure.
Senator Pate: We have heard many times at this committee about the need for improving infrastructure and delivery, particularly of some of the antiquated systems that are being used. Are we not using similar ideas in terms of the approaches that have been used up until now with some of the other benefits, particularly OAS and projecting how that may benefit the disability benefit rollout?
Mr. Ram: Absolutely. As I said, my folks who work on the policy side of the program are in regular contact with our colleagues who work in Service Canada on delivery, and once the details are made available regarding the funding and the timing for the CDB, we will obviously take what we have learned from the previous way that, for example, audit security was being delivered. Of course, it’s being transitioned to the new delivery infrastructure under the Benefits Delivery Modernization programme — but they said the programs will not be delivered using exactly the same infrastructure because of different programs, different client bases, different eligibility criteria and so on.
Senator Pate: When you talk about the $38 million for the modernization of benefits delivery, what is that $38 million being used for?
Ms. Robertson: Thank you for that portion of the question. That relates specifically to OAS on the BDM platform; that is not related to CDB. Susan could come back, but I think I’m knowledgeable enough to speak to that.
For the new platform that’s being developed, we’re only positioned to put OAS on at this time. The next after that will be Employment Insurance and then the Canadian Pension Plan. Maybe down the road, we would be using it for CDB, but not even in the medium term.
Senator Pate: Okay. How will it be linked it the Revenue Canada stream that we knew during the pandemic was the only system fit for purpose to roll out the benefits that were needed then on an emergency basis?
Ms. Robertson: Senator, I’m not able to answer that question. Ms. Robertson, are you able to answer that question about the linkage with CRA’s systems for OAS or should we get back on that? I apologize. We will get back to you on that.
Senator Pate: Thank you very much.
Senator MacAdam: Welcome to your new role as chair. My question is for Employment and Social Development Canada. I’m wondering what the reason is for this significant $473 million drop in Old Age Security payments that was identified in the Supplementary Estimates (C).
Ms. Robertson: Thank you very much for that question. My colleague Brian Leonard is an expert on that, so I’m going to ask him to answer.
Brian Leonard, Director General and Deputy Chief Financial Officer, Employment and Social Development Canada: Thank you for the question, senator. These are adjustments made to our forecasted spending within the OAS program. A drop of $437 million is against $56 billion that we have already allocated forecasted to spend this year. The Department of Finance has provided to us the amount to make an adjustment based on uptake or amounts given to Canadians for this program. This is just a technical adjustment based on updated forecasting, and that was also stated in the 2023 Fall Economic Statement.
Senator MacAdam: Thank you. I have another question. You had mentioned in your statement earlier that you no longer have contracts with GC Strategies and two other contractors, mainly as a result of the audit by the Auditor General of Canada on the ArriveCAN app. What was the value of the contracts that you did have with those contractors, and how do you plan to replace those services in your department? How do you plan to manage that?
Ms. Robertson: Thank you so much for the question, Mr. Chair. As I mentioned earlier, we had three active contracts when this came to light. The first one with GC Strategies was valued at $980,000. The second one with Coradix was valued at $2.6 million. Then we had a third contract that was a joint venture between DALIAN and Coradix, and that was valued at $8 million.
Definitely, it’s created a gap in the department. I will use GC Strategies as an example because the contract for GC Strategies was in my own group, so I can speak to that one in greater detail.
GC Strategies was supporting us over several years to maintain and develop our project management information systems. So ESDC has a very large amount of capital projects, including the Benefits Delivery Modernization, and we track all of those projects at the different stages through this project management information system. We ended this contractual arrangement right away.
We are also putting out a new request for proposals. We work with our colleagues at PSPC, and so we’re looking for new contractors to support us. We’re also looking as to whether we can hire employees to do that work. We had been previously unsuccessful in hiring employees to do this technical work because it is a specialized area, but we’re hopeful now, and we’re going to try again to replace those resources with employees.
I could go on with the other contracts, but does that help? Would you like me to continue?
Senator MacAdam: Yes, it does help. I’m wondering to what extent that is going to cause delays in terms of the projects you are working on.
Ms. Robertson: We didn’t stop all the contracts in their tracks. We made sure that we had an arrangement in order to continue the work. In my case, the development work definitely stopped, and we’ll have to readjust our expectations accordingly. But some of these contractors were helping us run call centres. We made sure that there was no disruption in service for Canadians in our transition strategy. Once again, similar strategies were used — sometimes some of the contractors were willing to come over as employees, but in other cases, we turned to our colleagues at PSPC and we leveraged some of their tools to hire new resources to ensure there wasn’t a lack of continuity in the service that we provide.
This was work that was done over several months, so it wasn’t easy. I don’t want to leave anyone with the impression that this was easy, because it wasn’t.
[Translation]
Senator Dalphond: Thank you for joining us to help us finish this last part of the year.
My first question concerns the delivery of Windsor’s Gordie Howe International Bridge. I asked a question about this last time.
An additional budget of half a billion dollars is being requested today. Are you saying that the reason is the 2020 pandemic? Given that it has been three years, what are the other reasons for this increase?
How does the project work? Is it a public-private partnership? Is it a high-risk contract for the contractors, or are the risks managed by the Windsor-Detroit Bridge Authority? It seems that the budget increase is quite significant.
[English]
Mr. Van Niekerk: Mr. Chair, senator, thank you. So this is a public-private partnership. It is a typical P3, where the bulk of the risk and scope is transferred to the contractors at a fixed‑price rate. Of course, with all P3 projects, there is shared risk and retained risk that the owner has accountability for.
The bulk of the payment, the $500 million we are asking for in this round, is part of the adjustment to the contract value directly associated with the COVID-19 impacts to the project. Of course, this is a very complex and difficult claim to review. It took many years to review the claim. At the end of last year, we achieved the settlement of that claim. This money is purely to pay part of that claim.
It is primarily for the COVID-19 impacts. There were also other disputes included over the life of the contract that we resolved. As part of the settlement, we resolve absolutely all claims and disputes up to December 2022. We resolve all COVID-19 impacts up to final completion, both as identified during those periods and future impacts, the same with any Russian sanctions. Then we also negotiated new measures into our contract to ensure the new timelines are met and that future disputes are much easier to resolve in any dispute process.
Senator Dalphond: I understand it’s a PPP. Normally that — the pandemic was kind of a force majeure case, which is not the responsibility of the owner but of the risk taker, which is the PPP. Nevertheless, you had agreed to have additional compensations for the loss of productivity and these types of consequences?
Mr. Van Niekerk: In this case, pandemics are typically a retained risk. We did a lot of work to identify entitlement under the contract to ensure that we only pay for those risk events or those events for which the owner has retained accountability through this contract, of which the pandemic in this case was part of it.
Senator Dalphond: Okay. So I understand that it was through long settlement discussions that you came to cut the apple in such a way that everybody is taking part of the consequences of the pandemic.
Mr. Van Niekerk: Absolutely. Senators, the contractor themselves also absorbed a lot of the impacts. The ultimate settlement was around 30% of their overall claim. The contract itself — this is a shared risk. When you look at the entitlement and the quantification of the various events that occurred during the COVID-19 period, the contractor themselves absorbed a lot of those costs and impacts. They did a lot of work to mitigate the impacts, which is why we have less than a 10-month delay on the work itself. Then, of course, as an owner, we compensate them for part of the increased cost.
Senator Dalphond: Kind of acceleration of the project with additional costs over time and additional things to be put in place.
I understand that all these claims related to the pandemic are now settled and that the project should be, more or less, within the budget for the remainder of the work.
Mr. Van Niekerk: That is correct, senator. Currently, based on current knowledge, we don’t foresee any other issues. The project is running well. We are confident that we can achieve the September 2025 date.
Senator Dalphond: What will be the total price for the —
Mr. Van Niekerk: The total revised contract value is $6.42 billion.
[Translation]
Senator Kingston: Senator Carignan, welcome as chair of the committee.
[English]
My question is for ESDC, and it is regarding the Action Plan for Official Languages. Employment and Social Development Canada is requesting $9.7 million for employment assistance services under the Enabling Fund for Official Language Minority Communities and $2.6 million for the Action Plan for Official Languages 2023-28. The communities are expected to increase from $20 million in 2023-24 to $49 million in 2024-25, and then $67 million in 2025-26. So my question is, how will the funding be distributed among the provinces and territories? Keep in mind I’m from New Brunswick and Acadie.
Mr. Leonard: Thank you for the question. You are right; there were two items in the Supplementary Estimates (C) for the Enabling Fund for Official Language Minority Communities. One piece, the amount was $900,000 in grants and contributions as part of the existing program. That is just to top up the existing program due to inflation.
There was also an amount of, as you quoted, $9.2 million to create a new employee assistance stream for services to employee assistance services. That funding is being added to the existing program. It’s a second stream within the program. They are going to launch a call for proposal on how to distribute that funding and which organizations to choose on how to distribute that new funding for the new EAS second stream.
Senator Kingston: Will you look at who’s going to serve what population in terms of your contracts? They go to the provinces, so if you’re looking at a call for proposal, somebody could be heavy on another part of Canada as opposed to Atlantic Canada, for instance.
Mr. Leonard: Right. They’re launching an open call to focus on employment counselling job placements — things like that — through these organizations that receive the funding, but I cannot answer more of your question, but we can get back to you in writing.
Senator Kingston: Okay, if you could.
What are the objectives of the additional funding being requested? How will results be measured?
Mr. Leonard: It is the same answer as before: We will get back to you in writing on that one.
Senator Kingston: Okay.
Another question is regarding the action plan for official languages itself. What would the $2.6 million being requested to implement be used for?
Mr. Leonard: The majority of that funding for the Enabling Fund for Official Language Minority Communities Program, EF‑OLMC. That’s what I mentioned at the very beginning. That’s for the existing program to increase existing contribution funding due to inflation. That’s the majority of that funding through the action plan.
Senator Kingston: I have a question for another group. I’m going back to Employment and Social Development. You were talking about the modernization of benefits for Old Age Security.
Why is the $38 million being requested at this time?
Ms. Robertson: Thank you very much, senator, for the question. This was approved in Supplementary Estimates (C), so that was the balance of the funding we needed the last fiscal year for the operating costs for the program.
Senator Kingston: Okay, thank you.
Senator Ross: Welcome to you as our new chair, Senator Carignan.
Good morning, witnesses. My question is for Mr. Zielonka.
I’m interested in the Laboratories Canada strategy that shows $6 million earmarked for three projects. One of them is in Moncton, which is in my province. Can you give me a sense of the overall cost for these three projects? Also, how much of that is for the New Brunswick project?
Mr. Zielonka: I don’t have those figures offhand, but we had a budget announcement that goes back to 2018 if recall correctly. There was about $2.8 billion at that point. As a department, we’ve been making steady progress on the labs that were included in that initial budget announcement. We have recently been making two large projects for approximately a billion each. They’re in progress right now, and we expect to have a shovel in the ground in the next year or so. There has been some significant progress on that.
Maybe I’ll turn to my colleague, Mr. Lagacé. He can maybe add something on that.
Alain Lagacé, Director General, Budget Planning and Financial Management, Public Services and Procurement Canada: I don’t have the exact number for the Atlantic Science Enterprise Centre, or ASEC, facility in Moncton, but my understanding that one is well advanced. Construction should start very soon. Don’t quote me on the figures, but I think it’s a $300-million facility. We’ll come back to this committee with the exact figures. That one is well advanced.
To Mr. Zielonka’s comments, yes, the initial envelope for Laboratories Canada was $2.8 billion. We’re advancing on major projects. The amount that we’re accessing through Supplementary Estimates (C) is only for preplanning for other facilities that are in the queue to advance. ASEC is not getting that money; that project is already funded. It is well advanced.
Senator Ross: I think they had a ceremonial groundbreaking last summer.
What is the timeline on the Moncton project?
Mr. Zielonka: We might have to get back to you. I’m just trying to see if I have anything on that.
I do have some information. Site preparations are ongoing, and in March, the excavation is showing as having started. I think that major construction activity is going to be this summer, actually; it will be going full swing. Essentially, the design and development have been completed, so they have the full design, and it’s going through approval processes right now.
One of the things we normally do, as much as possible, we try to parallel. As we develop design, it’s almost an iterative process. I know some of the work packages — while we’re waiting for the design to be finalized and everything, some of the early work packages typically kick off. I expect that will probably be happening this summer.
Senator Ross: Thank you.
The Chair: Before we go to the second round, I have a question for Mr. Zielonka.
[Translation]
You spoke about funding for a cybersecurity certification program for defence contractors. I would like to know the following. Is the Canadian Centre for Cyber Security involved in this certification? If so, in what capacity? We have significant in‑house expertise in cybersecurity. Will this certification or certification program for defence contractors extend to departments other than National Defence, given the significant strategic issues not necessarily related to defence, but to the entire government?
Mr. Lagacé: Thank you for your question. We’ll have to get back to you on whether the organization you mentioned is participating in the program. I can tell you that we aren’t the only department involved. Six departments and one organization are working on the program. We all know how important cybersecurity is. It affects our supply chains, and it’s always possible that malicious actors may try to access Government of Canada information through suppliers the government does business with.
It’s a certification program, and what we do is work with entities that do business with the Government of Canada — so small and medium-sized businesses with defence contracts, normally for munitions — in order to certify their IT systems. We make sure that their IT systems are certified, so that when they deal with the Government of Canada, their systems are secure and Government of Canada information is protected. PSPC will work on developing the certification program.
The U.S. government is another reason why we are doing this. It has done the same thing on its end, with its suppliers. If Canadian small businesses are to pursue and land U.S. defence contracts, this kind of program is absolutely necessary. Otherwise, Canadian businesses will no longer be able to compete for U.S. government contracts.
The Chair: All right.
I’m also on the Defence Committee, and we met with officials from the Canadian Centre for Cyber Security yesterday. I asked them about this. They didn’t seem to have any certification program. Today, on this committee, I’m seeing that there is a certification program being developed. It’s important to make sure that, internally, the communication is flowing.
You said that Canadian businesses needed certification in order to win U.S. contracts. In order for Canadian businesses to land U.S. defence contracts, don’t they usually have to go through the Canadian Commercial Corporation, or CCC? No? You seem to be saying no. There is a parallel. I was asking about military procurement, and I was concerned about how quickly weapons were being supplied to Ukraine. I was told that the process wasn’t the same. The contract doesn’t go through PSPC; it goes through CCC because it’s quicker. When do contracts go through CCC, and when do they go through PSPC? How is that decided?
[English]
Mr. Zielonka: This is a certification program in the procurement world. It’s under development; we’re looking for funding to fully develop the program. As my colleague, Mr. Lagacé, mentioned, it’s to make sure that these companies have the minimum security standards. What is being looked at is how we will do the certification program. The idea is an independent third-party certification. When you mentioned CCC, I think you mean the Canadian Centre for Cybersecurity. That may be one of the options, I think, or —
[Translation]
The Chair: No, I’m talking about Canada’s government-to-government procurement agency. It advises Canadian businesses on selling their products and services to other countries, for instance, the U.S. Department of Defense. Through the agency, a faster system for accessing contracts was put in place.
[English]
Mr. Zielonka: We’ll probably have to get back to you, but what typically happens is that the United States is also developing a certification program. It requires that companies that sell into the U.S. defence program are cybersecurity certified. We are doing something parallel for our companies. The idea would be that it would have a dual use: It would work for both our procurement as well as when Canadian small- and medium-sized enterprises want to sell to the United States. They will be able to use that certification to show they’re meeting the cybersecurity standards in the United States as well.
Both countries are, in parallel, developing respective programs. I’m not sure if that fully answers your question, Mr. Chair.
[Translation]
The Chair: The second part had to do with CCC, the Canadian Commercial Corporation. Are you familiar with that agency?
Mr. Zielonka: Yes.
[English]
I can’t comment on the Canadian Commercial Corporation. I do know they facilitate a lot of sales. As to how this will play into that, I would imagine that this certification — whether it goes through a middle party, within the procurement requirements, there is usually a requirement of meeting a certification. This is probably going to be needed no matter what. This is something that will really facilitate companies, but it’s also to make sure we have, as my colleague, Mr. Lagacé, mentioned, protection of information. Often in procurement, you provide a lot of very sensitive information that they will often have on their IT systems, and you want to make sure that’s protected.
The Chair: Thank you.
Senator Marshall: I want to follow up on the questions that Senator Dalphond was asking the Windsor-Detroit Bridge Authority.
The $6.5 billion that you mentioned for the budget for the project — is the private partner’s contribution included in that $6.5 billion?
Mr. Van Niekerk: That’s correct, yes. Their equity contribution is included in the value.
Senator Marshall: How much is their contribution? Could you tell us something about that relationship? What’s their return going to be? Is it fixed, or is it a certain percentage of something?
Could you just talk about the private partner for a moment?
Mr. Van Niekerk: Senators, when we talk about contributions, we need to look at the construction costs. Of course, our overall construction cost that we partially pay back during the design-build phase, up to substantial completion. We only pay part of it. Fifteen per cent of the value of the construction is repaid over a 30-year period.
When we talk about the private sector partner’s equity in the project, or their skin in the game in the project, we mean that 15% of the overall value of the construction that we only repay in a 30-year period. We do that so that if there are technical issues on the bridge during the design-build phase, we still hold onto some money to ensure that if they do not fix those elements, we still have some skin in the game on the project.
That 15% over the 30-year period is a combination of equity from the partners and a long-term bond that is also repaid over a 30-year period.
Senator Marshall: Okay. So is there some sort of equation or percentage that the private partner has to earn? Is there a minimum?
Mr. Van Niekerk: No. That was part of their bid. We won’t know their profit margin or their share. They bid a fixed price for the construction and for the earning period. Some of that is variable, but we won’t know those values.
Senator Marshall: I had understood that this is going to save the government money. I think the amount we were told initially was $500 million. Is there an ongoing valuation of that, or is that $500 million still the target?
Mr. Van Niekerk: I think the question you’re asking is around the value of the P3, or partnering with the private sector. I think that’s the value of the fixed price component and the rest you transfer. From my view, if you look at the impacts of COVID-19, we have already gotten a return on the fixed-price contract where the contractor has absorbed a lot of the impacts on the contract. We only pay our portion of the rest. The contractors, of course, have to absorb the rest of those impacts.
Senator Marshall: Do I have time for another question?
The Chair: A minute.
Senator Marshall: Just tell me how the project is set up. You have a board. Is there a subcommittee of the board responsible for the construction? Just tell us a little bit about how it’s set up.
Mr. Van Niekerk: Absolutely. We have a board of directors that oversee WDBA. Within our board, we have various subcommittees. One is primarily focused on the management and administration of our contract with Bridging North America. The board is very closely involved in the review of the impacts with COVID-19 and other disputes. It is, of course, involved in reviewing the settlement.
Senator Marshall: Is the agreement between the government and the private partner publicly available?
Mr. Van Niekerk: Yes. The agreement between WDBA and Bridging North America is public. It is on our website.
Senator Marshall: Is that on your website?
Mr. Van Niekerk: Yes, it is.
Senator Marshall: Great, thank you.
[Translation]
Senator Forest: My first question pertains to the student loan writeoffs. It’s quite something to see how much is written off every year. This year, it’s $216 million, which is more than previous years but represents fewer writeoffs — the idea being to prompt young borrowers to take responsibility and repay their debts, as all Canadians have to do.
What percentage of the student loan portfolio are you writing off? Is it 50% of the portfolio or 2%? The climate is such that perception matters more than reality, and the actual number makes it seem as though young people aren’t taking responsibility and repaying their debts. What percentage of the student and apprentice loan portfolio does the $216 million being written off this year represent?
Ms. Robertson: Thank you for your question, senator. I’m going to ask my colleague Jonathan Wallace to answer. Currently, the total amount is $24 billion, so it’s a very small percentage. Mr. Wallace can give you more information.
[English]
Jonathan Wallace, Director General, Canada Student Financial Assistance Program, Employment and Social Development Canada: Thank you for your question.
Ms. Robertson is correct, the current value of the Canada student loans portfolio is just over $24 billion. The write-off amount for this year represents 0.9% of that portfolio, and that’s consistent with prior-year write-offs. In the last few years, the write-off of unrecoverable student debt has been less than 1% of the value of the student loans portfolio.
[Translation]
Senator Forest: It might be a good idea to provide some context to paint a more accurate picture.
My other question is about the Laboratories Canada strategy. Would I ask Mr. Zielonka about Laboratories Canada?
PSPC is requesting $5.9 million for the strategy. The government launched the first phase of the strategy in Budget 2018, investing $2.8 billion over five years to support federal scientists and build new and modern lab facilities. It’s 2024, so where do things stand with that work? You’re asking for $5.9 million.
Mr. Lagacé: Thank you for your question. We are making progress on some major projects, including the one in Moncton. The TerraCanada facility in Hamilton is complete, and the TerraCanada facility in Mississauga is coming along well. Two major projects in the National Capital Region were approved. It’s the TerraCanada hub here, in Ottawa. The Regulatory and Security Science group looks after that as well. Those two significant pieces will take a big chunk out of the $2.8 billion, but they are only in the planning stages. You’re right that things are a bit behind schedule. The program was launched in 2018, but progress is being made on most of the laboratories when it comes to spending the budgeted funding.
Bear in mind that the funding being requested in Supplementary Estimates (C) is for preplanning work on the next projects being brought forward.
Senator Forest: I thought I saw that you were planning to upgrade the lab at the Maurice Lamontagne Institute. Is that true?
Mr. Lagacé: Unfortunately, I don’t know the answer to that.
Senator Forest: I’d appreciate it if you could ask one of your experts to look into it.
Mr. Lagacé: It’s certainly possible, but I’m not aware of all the details.
[English]
Senator Smith: I have a question for Mr. Zielonka in relationship to procurement practices.
In March, the procurement ombudsman released findings on contracts awarded to the McKinsey and Company consulting firm from April 2011 to March 2023. The report found that McKinsey was awarded $117 million in federal contracts over that period, the biggest increases in contracts began in 2018 and continued through to 2022, with the majority being solely sourced, highlighting the non-competitive process by which contracts were awarded. The ombudsman concluded that his observations create a strong perception of favouritism towards McKinsey. Could you address the concerns related to the awarding of the contracts by PSPC? In what ways is your department working to make sure that awarding contracts is more transparent?
Mr. Zielonka: Thank you for the question. Yes, we are now reviewing the procurement ombudsman’s report on McKinsey. We are also preparing responses to that, as well as the previous report related to ArriveCAN. There are a number of practices that we can absolutely improve, and we have already made several rounds of improvements around practices. Some of that relates to documentation, and some of that relates to more transparency in the process. We are in the process of looking at that.
One of the things that we are also doing is making sure that the procurement instruments that are being used and the justification for those procurement instruments, in certain cases, that permitted for exceptions or were used for exceptional circumstances, that those are used appropriately. We’re tightening the requirements around those to make sure that there is a higher standard to meet those requirements going forward.
Senator Smith: What type of time frame do you think this will take?
Mr. Zielonka: We already announced changes back in November, and I know that there are some other changes that are being looked at. We’re working very closely with our colleagues at the Treasury Board Secretariat on that as well. Minister Anand also announced some changes fairly recently, including the guideline for managers and documentation. A lot of those things have already been put in place. I would say the bulk of things have already happened, but we are looking at additional measures as required.
Senator Smith: What is the largest issue that you’ve learned from this experience?
Mr. Zielonka: The question around documentation, because I think that’s been a bit of a struggle throughout the whole process. Often, when we look back, the documentation doesn’t exist in terms of trying to explain why certain decisions were made. It’s a little bit difficult to second-guess. That whole issue around better documentation is a key item that is important. Making sure that there is a high degree of — “pushback” is maybe not the right word, but skepticism or that back-and-forth that needs to happen and the documenting. We have evidence where that has happened, but we don’t necessarily have the evidence of all of the back and forth that happened that finally justified things one way or the other. That’s a challenge. We need better documentation. Sometimes, looking back, it’s hard to know why. To the extent that we are finding things that are definitely not right, we’re definitely looking to fix those.
Senator Smith: Thank you so much.
[Translation]
The Chair: Thank you to the witness.
Senator Dalphond: I’m going to follow up on something Senator Forest talked about. I, too, noticed what a large amount your department was requesting for the student debt writeoff. It’s actually the largest item, because it accounts for 80% of the additional funding you’re seeking.
You said the amount written off annually is more or less 1% or 0.9% of the student loan portfolio, so why wasn’t it included in the annual estimates? Why is the funding being requested in the supplementary estimates, not the Main Estimates?
The Chair: It doesn’t have to do with Mr. Biden’s announcement?
Ms. Robertson: No. Thank you, senator.
[English]
That is a very good question. I have never thought about it. It’s something we do every year. We wait until the end of the fiscal year. Mr. Leonard might be able to add more. But the amount, as Mr. Wallace said, is very consistent.
This is my third our fourth time appearing for Supplementary Estimates (C) for this department. It’s always around $200 million and we wait for Supplementary Estimates (C) to declare the amount. It might be because we wait to see the value that needs to be written off.
Mr. Leonard, I’ll ask you. Do you know of any other reason why? It’s an expense and it seems like an appropriate time to do it at the end of the fiscal year.
Mr. Leonard: I have nothing else to add in terms of why we do this, but one extra step is we do a Treasury Board submission. TB ministers need to approve this item before it goes into supplementary estimates.
[Translation]
Senator Dalphond: Can you explain to us how the debt writeoff process works? The Bankruptcy and Insolvency Act was amended so that students wouldn’t be able to get out of repaying their student loans, even if they declared personal bankruptcy. A number of students were declaring personal bankruptcy when they finished school, before they started working. The amendments prevented that. Are you able to tell me whether the total amount of the debt is repaid when repayment arrangements are made with students, or conversely, are there arrangements where part of the debt is repaid and part is written off? How much accounts for total writeoffs, and how much accounts for partial writeoffs?
Ms. Robertson: That’s a very good question. I’m going to have to ask my colleague Mr. Wallace to come to the table. He’s the one who oversees the program, so he can answer that.
[English]
Mr. Wallace: Thank you for the question. A number of steps are taken to prevent students from having their debts go into default and be written off. First and foremost, the government has introduced an expanded non-repayable Canada Student Grant. The reason for that was to reduce the amount of loans they would owe once they get into repayment.
A second major step was the elimination of interest accruals on student loans, which was put into place April 1, 2023, after a two-year interest waiver. The goal with that is, over time, students will have less money to pay back on their loans.
A third major program benefit is called the Repayment Assistance Plan, or RAP. It’s designed to help those borrowers who need assistance in repayment. There are three kinds of repayment assistance. The first is known as stage 1, which really helps students when they first finish their studies. Say they need support because they can’t make their monthly payments for a period of six months. In most cases, we will not require them to make a payment. When we used to have interest accrue, we also used to pay the interest but now that’s not part of the equation.
Stage two is offered to borrowers who have persistent financial difficulty. It is offered after 10 years of a student being on the Repayment Assistance Plan stage 1. By that point, if a student still has persistent financial need, the government will start to pay down the balance owing on the loans.
The third form of repayment assistance is known as RAP for students with a disability. It recognizes that students with disabilities have unique challenges. It supports them by paying down the loans right away.
Senator Dalphond: It’s a long process before getting off the hook.
This does not include Quebec, I understand, because Quebec is managing its own system. Does the federal government compensate Quebec for that? Does it give a similar amount to Quebec that amounts to a similar kind of write-off?
Mr. Wallace: That’s correct. Quebec, Northwest Territories and Nunavut do not participate in the Canada Student Financial Assistance Program. Under the Canada Student Financial Assistance Act, each of those jurisdictions receive an alternative payment so they can offer comparable programs and services. A payment is made to Quebec in January of each year for the preceding academic year. The payment made to Quebec in January 2024 was just over $1.1 billion, and it covered the academic year 2022-23. That’s so Quebec can offer programs of a similar nature.
Senator Dalphond: Thank you.
Senator Kingston: My question this time is for PSPC, and it is regarding the Centre Block rehabilitation.
Are the initial estimate costs and timelines for Centre Block rehabilitation on track?
Mr. Lagacé: Thank you for the question. Yes, we are tracking 2030-31 for the end of the construction. The budget is still between $4.5 to $5 billion, so we’re still on scope, on budget and on time.
Senator Kingston: Funding of $14.4 million is requested for the Long Term Vision and Plan for the Parliamentary Precinct. The Centre Block Rehabilitation Program was approved in 2016, and the estimated cost of construction was between $4.5 billion and $5 billion including contingency fund and reserve. Why is the department requesting $14.4 million now?
Mr. Lagacé: That $14.4 million is not directly related to Centre Block, it’s related to LTVP, the program as a whole. Multiple projects are going on at the same time and other projects will be coming in for approval too. It’s preplanning dollars. That is, money that’s already been approved by the budget. It’s money that’s sitting in the fiscal framework that we, as a department, will be accessing to continue the preplanning activities. It’s mostly related 100 Sparks, 30 Metcalfe and the block 2 redevelopment. It’s preplanning dollars. It’s not related to the Centre Block.
Senator Kingston: Thank you.
Senator Ross: This question is for Ms. Robertson. It seems that there is a contradiction in the lowering of the overall TFW Program. I’m asking specifically about New Brunswick and the launch of a new program aligning specifically to the needs of agriculture and fish processing. The new program makes sense but there is a big concern in New Brunswick relating to the decrease that might happen in other sectors such as truck driving, hospitality, food service, sawmills and a variety of other sectors. I understand there might be some exceptions in health but economists in New Brunswick are suggesting that our province know our needs best, and our premier has stated that he wasn’t consulted on the changes to the TFWs. I’m interested in your comments on this.
Ms. Robertson: Thank you for your question. I’ll ask my colleague Michael MacPhee, who manages the program, to answer that level of detail. Thank you.
Mr. MacPhee: Thank you very much for the question. In terms of the changes that are being proposed, we are realigning existing workers from the low-wage stream into the new program reform stream that I discussed previously. That’s the plan in that space. I explained why that was done.
As it relates to the adjustments, the adjustments that were announced in March were specific to returning to a lower cap in terms of the percentage of temporary foreign workers that would constitute the workforce for a specific employer. When we introduced the Workforce Solutions Road Map, we had identified a 30% cap for seven specific sectors and 20% for the other sectors. There are four of those seven sectors. We excluded construction and health care sectors that are returning to that 20% cap.
As I previously stated, we have to remember that the Temporary Foreign Worker Program is designed to support employers who are unable to find workers domestically. When we look at it even further, as a portion of the entire labour force, the Temporary Foreign Worker Program represents about 1%. The entire labour force is about 21 million. We are talking about 200,000 workers on an annual basis.
The reductions that we have seen in terms of the job vacancy rates across the country leads us to believe that we need to transition away from this higher dependency on the Temporary Foreign Worker Program for workers when there is, potentially, a domestic labour force is available to perform those functions.
Senator Ross: According to both the economists and the premier of our province, we don’t have that labour force availability in the province and that we need to continue to have the amount of TFWs and not just in specific sectors.
The premier said he wasn’t consulted. Have there been consultations with the departments within the provinces?
Mr. MacPhee: Thank you for the question. As I said previously, we did not consult directly with the provinces on the reduction to the 20% cap. We took a larger economic view of what was going on in the labour market. I made the determination that because of those significant reductions in the job vacancies, as well as the increase in the unemployment rate, the correct course of action was to return to pre-COVID levels in terms of program parameters. In fact, the cap of 20% is still above what it was prior to COVID.
Senator Ross: If it’s found this isn’t the case or there is more need, how nimble can we be in adjusting it?
Mr. MacPhee: While we didn’t consult specifically on the drawing back for closing off some of those temporary measures associated with workforce solutions, we have a robust governance where we engage with stakeholders from industry, from provinces and from foreign governments in order to get a proper handle on how we need to adjust the program to ensure that it is meeting the needs of employers. We also have to remember that first and foremost, we need to ensure that by bringing in temporary foreign workers to the program, we are not having a negative impact on the local labour market conditions or preventing Canadians or domestic workers from accessing work.
Senator Ross: Thank you very much.
Senator Pate: My question again is for you, Ms. Robertson. One of the objectives of the Benefits Delivery Modernization program is stated to be improving the user experience of diverse groups, including seniors, people in remote locations, Indigenous peoples and refugees. Could you please clarify how, one, the Benefits Delivery Modernization program and, two, the $38 million requested will be used to support this goal and in particular how they will help those seniors who are most marginalized, including those who may not have a fixed address or easy access to the internet or bank accounts, to access OAS and GIS?
Ms. Robertson: Thank you so much for the question, senator. I will ask Ms. Ingram to come back up, please. We received a very similar question like that in December. I don’t know if it came from you, and Ms. Ingram did speak to the integration of the channels earlier to meet these needs, but she will answer much better than me.
Ms. Ingram: Thank you, senator. That’s a really great question, and our focus in the program is to ensure we are reaching all Canadians, and part of that is about designing a system that is able to respond and receive those transactions and applications.
Part of the work that we’re doing within OAS on BDM and the EI on BDM is doing client research and working with community organizations to understand how we reach their populations and how we ensure that we understand the needs of those marginalized communities. We actually have an advisory board that we consult with, with members from Indigenous communities, from remote communities, as well as other community organizations where we seek their advice and guidance around how to reach their membership best. Part of that is how we’re actually adjusting the systems and the applications to be more responsive and to be available to them.
I also talked a little bit about looking at our outreach programs and our in-person services and how all of those pieces come together so that there is a unified client experience. So if someone gets hung up on the web, they will have the ability to call and have that continuum of service.
These are changes that are going to be introduced over a number of years, throughout all of those transformations, so that we can ensure that we are providing the best client experience.
Senator Pate: The Auditor General recommended that you work with the Treasury Board Secretariat to ensure that any future changes, including, of course, cost estimates and timelines, do not result in the transformation component being curtailed or eliminated, and according to the audit, the last estimated project cost in November 2022 was $2.4 billion to $3.4 billion, with an expected completion date of 2023. We’re past that, obviously. What is the latest assessment of the total cost and the timeline for the Benefits Delivery Modernization?
Ms. Ingram: Currently, we’re still sitting at $2.2 billion for the estimate, but as Ms. Robertson said, we may hear something in the budget announcement this afternoon.
The projected end date for Old Age Security on BDM was adjusted in the fall 2022 to December 2024, and we are on track to deliver that on time.
Senator Pate: Does the project still include a component to transfer the way the programs are accessed?
Ms. Ingram: Yes.
Senator Pate: Okay. How will you be ensuring that future changes to cost estimates or timelines, don’t affect the goals of the program in terms of improving user experience for diverse groups and in particular equality of access to benefits for those who are most marginalized?
Ms. Ingram: Absolutely. Part of our program includes the client experience focus. In our department we have a client experience officer, and his primary mandate is to support the projects in the design of the solutions. Recently, he’s been working in supporting the Canada Dental Benefit implementation. He’s working with the Benefit Delivery Modernization program to ensure that the applications and systems that we put out on the web, the telephone interactive voice response, are responsive to Canadians’ needs, and we’ve seen some really great improvements as a result of the research that he helps us do.
Senator Pate: Thank you.
[Translation]
The Chair: I have a few questions, but I’ll wait until the end.
[English]
Senator Marshall: I do have a third question. Back to the Windsor-Detroit Bridge Authority. The point I was trying to get at in my previous question is that the government thought that was going to save them money, and at this point in time, are they — government saving money. Government is not really good at saving money, so I’m a bit skeptical. Is it still forecasted to save money, and if so, or if not, are you doing any sort of evaluation on an ongoing basis to track who is paying what and who is getting the biggest benefit from this?
Mr. Van Niekerk: Thank you, senator. Perhaps I should ask for clarification about where the statement came from. I assume it was from the business case when the decision was made to proceed on a P3 project, where the statement on half a billion dollars was made.
Senator Marshall: But I read somewhere that the government was expecting to save $50 million. I don’t know where I got that number, but they were going to save money as a result of this private-public partnership. My question is, well, the government is not really good at saving money. Does that theory still hold, and if so, is there some sort of evaluation being done on an ongoing basis, or will be done at the end of the project, to see that the government did, in fact, save $50 million?
Mr. Van Niekerk: Absolutely. I’m a very strong supporter of the P3 model. I think if it had not been for COVID-19, this project would have been completed on time. The contractor is doing very well, and they are the experts in delivering these very complex projects. To your point, sometimes government might struggle with the expertise to deliver this kind of project, which is why we do the public-private partnerships. So, yes, I think we are still seeing those benefits in partnering with the private-sector partner. To your second question, we always, on an ongoing basis, see where we can optimize, bring down costs. That way, we can work more closely with our private-sector partners to deliver more benefits to the public.
Senator Marshall: By the end of the project, is there going to be some sort of evaluation publicly released that would indicate — that would demonstrate that this was actually a benefit to government as opposed to the private-sector partner?
Mr. Van Niekerk: That is definitely something we can do. I think the benefits are twofold. First, the economic benefits. We can track to see, based on the construction of the bridge, the economic benefits in the region. We can also look at the benefits already realized in the communities. Just to mention a few, over 11,000 workers have been orientated to work on this project. We have roughly 2,000 workers per day on the site, 42% of which are just from the local region around the bridge. The rest, of course, from the rest of Canada.
Over 275 local businesses have already benefited directly from the bridge. We have had over 690 apprentices trained on this project, and pre-apprentices, over 350 co-op students. The list goes on of benefits already realized.
Senator Marshall: Thank you.
Senator Smith: Ms. Robertson, I just wanted to follow up. In 2021, the Auditor General published her report, Health and Safety of Agricultural Temporary Foreign Workers in Canada During the COVID-19 Pandemic. The report found that ESDC didn’t necessarily address long-standing issues related to worker accommodations and the department did little to improve working conditions for the workers. Could you give us an update on progress with respect to housing for temporary foreign workers not only in the agricultural sector but across the country? Has any additional funding been allocated in this regard?
Ms. Robertson: Thank you so much for that question. I was in my position then; so I remember that report as well. I would ask Mike MacPhee to come back, please.
Mr. MacPhee: Thank you very much for the question. In the context of the housing, following the Auditor General’s report, the department undertook a series of consultations to establish a baseline set of requirements. Housing is a bit of a tricky situation because of the multi-jurisdictional nature of it. The primary regulations fall under provincial or, in some cases, municipal jurisdiction. But what we have been doing is working with our provincial counterparts in order to establish a set of 12 redline items that would be a requirement for a minimum set of deliverables for all housing provided for temporary foreign workers.
Senator Smith: Could you give us some examples?
Mr. MacPhee: It would be in terms of water quality, square footage for space and things like that.
Senator Smith: Is there any additional feedback to quantify or qualify exactly what has been delivered to improve temporary housing for temporary workers? You outlined some ideas, but what type of results have you seen?
Mr. MacPhee: I think the key for us is the fact that for all the applications that come in on an annual basis, there is a requirement for a housing inspection report to be provided by the employer. The establishment of a clearer set of baseline criteria that everybody can look at allows the employer to understand what their obligations are in that space.
We are actually still in the process of finalizing the work in that area, but — as I said — we’ve got that set of 12 criteria now, and we are looking to roll that out shortly.
Senator Smith: I will be interested to see the results of that. Thank you, sir.
[Translation]
Senator Dalphond: My question is for the PSPC officials. It’s about Parliament Hill and the Wellington corridor.
As I understand it, the $15 million being requested in vote 1c — $14.446 million, to be precise — is for planning costs. Is that for consultants or extra teams the department is hiring?
Mr. Zielonka: Exactly.
[English]
Senator Dalphond: So, it’s both?
[Translation]
Mr. Zielonka: Yes, it’s both.
[English]
Senator Dalphond: What is the planning cost forecasted by the government? In additional costs, I guess.
Mr. Zielonka: Typically, what happens is that we have to do preplanning to actually develop the detailed plan. The detailed plans are going to come out of this effort, and at that point in time we will be able to give more precise estimates. But the plans are still evolving.
Senator Dalphond: I’m on the Senate Subcommittee on Long Term Vision and Plan, so I’m familiar with all these evolving plans, but what I’m noticing is that it’s $14 million additional now for that. It is difficult to predict how far we’ll go, but how much have we spent in planning so far?
Mr. Zielonka: We’ll have to get back to you on that. We don’t have the number. What I can say is that typically as a rule of thumb, you will spend about 10% of the overall cost, plus or minus — it depends on the complexity — but planning would often be 10% of an overall project cost, maybe even a little bit more. It really depends on the complexity, but the more you invest in the early stages of the project, the more likely you’re going to be on time, on budget and on scope.
Senator Dalphond: Yes, I understand that. But what is the amount, 10% of what?
[Translation]
Mr. Lagacé: I can partially answer that. A total of $4.9 billion has been spent on the Parliamentary Precinct project to date.
[English]
Senator Dalphond: That’s not the budget. $4.9 billion is the real cost.
[Translation]
Mr. Lagacé: To date, $4.9 billion has been spent.
The Chair: To date, that wasn’t the total amount budgeted.
Mr. Lagacé: I don’t have the total amount budgeted. I’ll have to get back to the committee with that information, but it’s definitely higher than that amount. We are halfway through the planning process.
[English]
Senator Dalphond: So, do we have more or less than $10 billion?
[Translation]
Mr. Lagacé: I don’t have the exact numbers.
[English]
Senator Dalphond: That would include the new Senate building and the offices building on the other side of the street?
[Translation]
Mr. Lagacé: The Senate building is accounted for in the $4.9 billion because it’s finished. It covers the costs of the Senate building along with the West Block.
[English]
Senator Dalphond: No, I mean the new building that is going to be built on the other side of Wellington Street — the B Block — the Senate offices. Is it part of the $10 billion?
[Translation]
Mr. Lagacé: Yes.
[English]
Senator Kingston: My question is for ESDC. I would like to go back to what I was talking about before. A follow-up type of question. We were talking about the Enabling Fund for Official Language Minority Communities Program, and you talked about the fact that you were going to be putting out a request for proposals. Do you have any examples of organizations that have been successful in the past? Also, what are they actually doing in terms of employment assistance services through those contracts?
Ms. Robertson: Thank you, senator. I wish I had brought my colleague responsible for that program. I don’t have that level of detail, but we will absolutely get back to you with examples. I apologize that I don’t know that.
Senator Kingston: In writing?
Ms. Robertson: Absolutely, in writing.
Senator Pate: In terms of student loan forgiveness, is there any data you can share about the effects or projected effects of the government’s decision to permanently waive interest on student loans in terms of the numbers of marginalized people, particularly people with low incomes who are anticipated to participate in post-secondary education as a result of the measure?
Ms. Robertson: Thank you very much for the question. Mr. Wallace, would you join me again, please.
Mr. Wallace: Thank you for the question, senator. The Canada Student Financial Assistance Program targets students from low and middle income households, so by definition, it is already targeted to those who need support the most.
Our expectation is that the elimination of interest will support further those students in being able to repay their loans once they complete their studies. It could also act as an incentive to pursue studies. We do know that certain populations in Canada are debt‑averse and are less likely to access the program because it is loan based. One of the things we did in 2021, the government changed the name of the program from Canada Student Loans Program to Student Financial Assistance. That was in recognition of the increasing non‑repayable grant support being offered to students. This is another way in which we’re trying to better target those populations so that they take advantage of the supports available to them.
Senator Pate: As someone who had an 18% interest on my student loan when I finished university a long time ago, I certainly see the benefit of that. I’m curious as to whether there has been any cost analysis of what it would be to waive tuition versus this kind of loan program, and, if there has been, if that could be provided. If not, just let us know that.
Mr. Wallace: No. We haven’t done that type of analysis. Part of the reason is that tuition is determined at the provincial level and sometimes at the institutional level. The federal government doesn’t have any control over setting tuition. But we do know based on average tuition across Canada that current supports offered by the Government of Canada exceed the cost of tuition.
For example, for a low-income student who would be eligible for the maximum grant for students attending full-time studies, which is currently $4,200 a year, that’s on par with the average college tuition, for example. There are supports available, but we haven’t done the analysis in the manner you asked. Thank you.
[Translation]
The Chair: I have one last question, but you can get back to us in writing with the details.
My question is about credit card acceptance costs. What percentage do companies bill the Government of Canada for with respect to credit cards? How much in total are we paying for credit card fees? What services are we receiving the payments for?
You can’t pay your taxes with a credit card. I already figured that out — not that there aren’t others who have tried. I’d like to know that detail. Also, is the funding for postage fees for Canada Post or other entities?
Mr. Lagacé: Thank you for your questions. It is the percentage of credit card fees, so for MasterCard and Visa.
The Chair: As a business owner, as a merchant, basically?
Mr. Lagacé: Exactly. When Canadians pay for services provided by the Government of Canada, such as immigration fees, passport fees and national park admission, they use their credit cards. The rate can vary depending on the credit card, between 1% and 3%.
The Chair: Can you give us the specific information for each and the total amount of fees that we receive or that we pay as a merchant?
Mr. Lagacé: The total amount fluctuates from year to year. It depends on the Government of Canada’s revenues. For the year that just ended, the total for credit and debit card fees was between $50 million and $55 million.
The Chair: Are you able to give us more detail than that? I’m trying to see the extent to which the Government of Canada can relate to business owners who pay credit card fees. Thank you.
Mr. Lagacé: You were right when you asked your last question. They are postage fees. Some 20 million cheques are mailed out every year, so the cost of the stamps has to be covered.
The Chair: All right. Thank you.
That concludes today’s meeting. Thank you to all the officials who appeared before the committee.
Witnesses, please keep in mind that you have until end of day on April 30, 2024 to get back to us in writing with the specific information the senators asked for.
Our next meeting will take place on April 17, at 6:45 p.m., when we will be starting our study on the Main Estimates 2024-25.
Before we wrap up, I’d like to thank our support staff, the clerk, the advisers, the Library of Parliament, the systems people and the pages. Thank you all for your work. What you do is essential.
(The committee adjourned.)