Proceedings of the Standing Senate Committee on
National Finance
Issue No. 76 - Evidence - October 16, 2018
OTTAWA, Tuesday, October 16, 2018
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to examine the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2019.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Good morning. My name is Percy Mockler. I am a senator from New Brunswick and chair of the committee. I wish to welcome all those who are with us in the room and viewers across the country who may be watching on television or online. As a reminder to those watching, the committee hearings are open to the public and also available online at sencanada.ca.
[Translation]
I will now ask the honourable senators to introduce themselves, starting on my left.
Senator Pratte: André Pratte from Quebec.
[English]
Senator C. Deacon: Colin Deacon, Nova Scotia.
Senator M. Deacon: Marty Deacon, Ontario.
[Translation]
Senator Poirier: Rose-May Poirier from New Brunswick. Welcome.
[English]
Senator Neufeld: Richard Neufeld, British Columbia.
The Chair: Thank you. I would also like to recognize the clerk of the committee, Ms. Gaëtane Lemay, and our two analysts, Alex Smith and Shaowei Pu, who team up to support the work of the Standing Senate Committee on National Finance.
[Translation]
Honourable senators and members of the public, the mandate of this committee is to examine matters relating to federal estimates generally and Canada’s public finances.
[English]
Today we continue our examination of the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2019, which were referred to this committee on April 18, 2018.
In the spring, the committee held seven meetings on the Main Estimates, where officials from 15 federal organizations across Canada appeared to answer questions. A first interim report was tabled in the Senate of Canada on June 18, 2018.
Today, honourable senators, we resume our study with other organizations that we have not heard from yet.
[Translation]
For the first hour, we have before us the representatives of two Crown corporations responsible for the management of major strategic infrastructure. The corporations carry out construction, rehabilitation and reinforcement projects on the infrastructure under their responsibility and oversee its operation and maintenance. We are pleased to welcome, from the Jacques Cartier and Champlain Bridges Incorporated, Claude Lachance, Senior Director, Administration, and Nathalie Lessard, Director, Communications.
[English]
From the Windsor-Detroit Bridge Authority, we have Mr. Bryce Phillips, Chief Executive Officer, accompanied by Mr. Kevin Wilkinson, Controller, Interim Chief Financial Officer.
To the witnesses, thank you for accepting our invitation.
[Translation]
The clerk is telling me that Mr. Lachance will go first with his presentation, followed by Mr. Phillips.
Mr. Lachance, please go ahead.
Claude Lachance, Senior Director, Administration, Jacques Cartier and Champlain Bridges Incorporated: Members of the committee, good morning. I am pleased to appear before you today to present the Jacques Cartier and Champlain Bridges Incorporated, JCCBI for short. Joining me is Nathalie Lessard, our Director of Communications.
Our corporation is a manager of federal infrastructure that includes bridges, highways and tunnels in the Greater Montreal region. Incorporated in 1978, JCCBI will celebrate its fortieth anniversary on November 3. During these four decades, the corporation has undergone many transformations, experienced significant growth and met many technical challenges, while carrying out major projects, which I will briefly review.
For 20 years, from 1978 to 1998, JCCBI was a subsidiary of the St. Lawrence Seaway Management Corporation. In 1998, it then became a wholly owned subsidiary of the Federal Bridge Corporation Limited. In February 2014, JCCBI became a parent Crown corporation.
While, initially, JCCBI was responsible only for the Jacques Cartier and Champlain bridges, our portfolio, as of 2018, includes three major bridges: the Jacques Cartier Bridge, the current Champlain Bridge and the federal section of the Honoré Mercier Bridge. JCCBI is also responsible for two shorter-span bridges, the Clément Bridge and the Nuns’ Island bypass bridge, as well as three related structures, the federal section of the Bonaventure Expressway, the Champlain Bridge Ice Control Structure and the Melocheville Tunnel.
As for the current Champlain Bridge, allow me to reassure you. Since 2014, JCCBI has deployed an ambitious program to reinforce and monitor the structure. Its 100 edge girders and 39 out of the 45 pier caps have been reinforced, and over 335 sensors have been installed to let us constantly monitor the bridge. We also conduct quarterly inspections that we diligently manage. The Champlain Bridge is therefore reinforced, monitored, stable and safe.
Our structures are crossed over by more than 110 million vehicles a year, which is why mobility is a core part of our mission and informs everything we do. JCCBI’s mission is to help users get where they need to go and ensure the safety and longevity of our infrastructure by applying systemic management based on a sustainable development approach.
Given that we are nearing our fortieth anniversary, I will give a brief overview of the major projects that have taken place on our structures.
Since 1990, we have conducted three ambitious deck replacement projects. For the Champlain Bridge, it was done in 1991-92, and for the Jacques Cartier Bridge, it took place in 2001-02. From 2008 to 2016, the deck replacement of the Honoré Mercier Bridge was one of the largest contracts ever carried out by Indigenous contractors and workers in Canada. In 2017, we spearheaded the exceptional illumination installation on the Jacques Cartier Bridge, a flagship project for the celebration of Canada’s one hundred and fiftieth anniversary and Montreal’s three hundred and seventy-fifth anniversary.
JCCBI must ensure the safety of its infrastructure at all times. The corporation has implemented inspection programs combined with detailed surveys, additional ad hoc investigations, along with load-bearing capacity studies. We ensure that we have the latest relevant data to make informed decisions about our maintenance repair programs for the short, medium and long term.
Work is scheduled from a more long-term perspective to ensure that our structures last as long as possible and to extend their service life based on the vision established for each one. Over the past five years, the corporation has focused on tailored approaches to reduce corrective work and increase preventive measures.
For example, since 2012, we have been working hard on the repair program for the Jacques Cartier Bridge, which was built in 1930. Our goal is to keep this bridge safe and operational until its one hundred and fiftieth anniversary.
The Chair: Mr. Lachance, would you mind slowing down for the interpreters, please? Thank you.
Mr. Lachance: In 2016, we started a 10-year repair program on the federal section of the Honoré Mercier Bridge. Our goal is to have this bridge, which was built in 1959, reach its one hundred and twenty-fifth anniversary.
In terms of finances, funding of $1.1 billion over five years was confirmed for JCCBI in April. With respect to the 2018-19 fiscal year, a total budget of $341 million was approved. Considering the substantial funding entrusted to the corporation, JCCBI maintains constant vigilance to ensure that public money is soundly used.
We also want to stress that JCCBI carries out its operations in a complex environment in which many external factors can impact our planning, particularly our partners’ many major projects that are ongoing or planned in the Greater Montreal region. To ensure that users of the traffic network can get around, we carry out short-, medium- and long-term planning of our priority work, while coordinating with Montreal’s other major projects.
Once again, thank you for inviting us to appear before you today. We will be happy to answer your questions.
The Chair: Thank you, Mr. Lachance.
[English]
Bryce Phillips, Chief Executive Officer, Windsor-Detroit Bridge Authority: Good morning. I appreciate the opportunity to appear in front of this committee to discuss the Gordie Howe International Bridge project and the Windsor-Detroit Bridge Authority.
This is my first appearance since I was appointed as CEO. As of July, I came to the Windsor-Detroit Bridge Authority. It’s a Crown corporation that’s responsible for the delivery of the Gordie Howe International Bridge project. I have joined at a very exciting time, and I look forward to briefing this committee on future occasions. I’m sure we will be back again in the six-year journey to design, build and construct this bridge. I will bring you the progress as we go along that journey to the point where we have a new crossing in place between Windsor and Detroit.
I would like to start my remarks with some details about the Windsor-Detroit Bridge Authority, or the WDBA.
The WDBA was created in October 2012, and we established operations in August 2014. Our mandate is twofold. The first is to oversee and manage the public-private partnership, or P3, procurement process for the design, build, finance, operation and maintenance of the Gordie Howe International Bridge. The second mandate was to manage the design, construction and operation of the new crossing.
Our first mandate was a major accomplishment by the organization at the WDBA and Infrastructure Canada. It was great teamwork to get to where we have achieved our financial goals. You may have seen that in the news on October 5 with some of the events that were occurring in Windsor. The official milestone was achieved on September 28.
Now, financial close is not just the final milestone of the procurement process. It’s a pivotal point in the story of the Gordie Howe International Bridge project. Now that we’ve reached that financial close, we are able to start construction of what is arguably the largest infrastructure project along the Canada-U.S. border; indeed, it’s one of the largest infrastructure projects anywhere in North America today.
We were proud to have the Prime Minister, the Minister of Infrastructure and Communities, the Governor of Michigan and other dignitaries on both sides of the border at that October 5 event to celebrate the official start of construction.
Our private-sector partner, Bridging North America, which is comprised of some of the most recognized leaders in the construction and infrastructure industries in Canada and the U.S., are now in place.
Together with Bridging North America, the WDBA is now concentrating on our second mandate, and that is the design, construction and operation of that new crossing.
The Gordie Howe International Bridge project is actually four projects in one. It’s the bridge, that’s obvious, but it’s also the ports of entry on the Canadian and American side along with the highway extension from the bridge on the American side out to their main highway, I-75. Each of these projects or components of the Gordie Howe International Bridge project is in itself a significant project. Together, they represent a massive and complicated infrastructure project.
In terms of the numbers, the magnitude is outstanding. Together, the Canadian and U.S. ports of entry cover almost 300 acres. To put that in perspective of the namesake, Gordie Howe, that’s equivalent to more than 227 hockey rinks. It’s a large area. In fact, the Canadian port of entry will be the largest Canadian inspection plaza on the Canada-U.S. border. The bridge itself will be 2.5 kilometres and will have a clear span of 853 metres. The two pillars will be on land — they will not be in the Detroit River — and it will be the longest cable-stayed bridge in North America. The two piers I referred to will be 220 metres high. In perspective, that’s twice as high as the Peace Tower. Quite simply, the Gordie Howe International Bridge will change the skyline of Windsor and Detroit.
Next I would like to speak about the contract we have with Bridging North America. It’s a fixed-price contract. It’s valued at $5.7 billion. This includes the design/build phase along with the operation, maintenance and rehabilitation phases of the project. Bridging North America has presented and will be held to a 74-month construction schedule, and we will see the bridge open to traffic at the end of 2024.
This contract will be good value for Canadians. As a fixed-price contract, the private-sector partner assumes a risk related to the material cost and increases in cost fluctuations. A value-for-money analysis was conducted by an independent firm. That demonstrated that using the P3 model, the project resulted in the savings of approximately 10 per cent, so a little over half a billion dollars, as compared to the traditional methods of contracting and construction.
The Windsor-Detroit Gateway sees about 30 per cent of the total trade between Canada and the U.S., and that’s carried by trucks across that border. In dollar terms, that amounts to almost $200 billion a year.
An important benefit of this project is that it will provide capacity for the current and future long-term demands between the two countries. The bridge is meant to address the economy and the needs over the next 100 to 130 years.
As well, the completed project will provide highway-to-highway connection between Ontario and Michigan. In fact, you can get on the highway in Quebec and drive without a stoplight to Florida with this new bridge in place. For economies that are based on just-in-time delivery, it is a major step addressing some of the issues we need to do to advance our economies.
I will speak about our Main Estimates for 2018-19. We will need to continue preparing the sites on both the Canadian and U.S. ports of entry for the construction of the Gordie Howe International Bridge project and for the work to get started by our private partners. For the fiscal year of this year, ending in March of 2019, our request is for a total of $196 million. These funds are primarily there to assist with the final acquisition of U.S. properties and to do the relocation of utilities on both the Canadian and the U.S. sides and the completion of the early works on the Canadian side. These are all critical-path activities to set ourselves up so that the Bridging North America consortium can get on with the construction of the new Gordie Howe International Bridge project.
I would be pleased, along with my partner, the CFAO, Kevin Wilkinson, to address any questions you may have about the Gordie Howe International Bridge project. Thank you.
The Chair: Thank you, Mr. Phillips.
Before we turn to questions, I would ask Senator Forest and Senator Moncion to introduce themselves, please.
[Translation]
Senator Forest: Good morning and welcome. I am Senator Éric Forest from the Gulf region in Quebec.
Senator Moncion: Good morning. I am Senator Lucie Moncion from Ontario.
Senator Pratte: Good morning gentlemen. My questions are for the representatives of the Jacques Cartier and Champlain Bridges Incorporated. I’d like more detailed information on the numbers in the estimates. Some $340 million in funding was approved, if I understand correctly, for the 2018-19 fiscal year. In the estimates we received, we noted an $80-million decrease as a result of the Champlain Bridge maintenance program coming to an end. However, the total does not reflect that decrease. Are you, in fact, still spending money on maintaining the Champlain Bridge? Have those expenditures actually decreased?
Mr. Lachance: The corporation’s $341-million budget includes about $132 million for the Champlain Bridge in 2018-19. That amount is part of a reserve in case of any construction delays on the new bridge or in the event that we have to conduct adjustments after inspections during the instrumentation work and so forth. A large chunk of that funding is actually reserve. We expect to spend $50 million or so on the Champlain Bridge in 2018-19, which is a decrease from previous years.
Senator Pratte: How much were you spending in previous years?
Mr. Lachance: Last year, it was about $41 million, but in 2017, we oversaw major work on the edge girders and the reinforcement of pier caps, which cost roughly $100 million.
Senator Pratte: You work with Infrastructure Canada, which is in charge of building the new bridge. The construction of the new bridge is not part of your mandate, but you have to work closely with Infrastructure Canada. How does that relationship work?
Mr. Lachance: We have framework agreements that dictate which methods and content to use in the various jurisdictions, because we work in the same area, Nuns’ Island, Brossard and so on. We have agreements in place to manage the various projects and the maintenance of different parts of the existing and future structures. The projects are managed through agreements and coordination by both organizations.
Senator Pratte: Once the new bridge is built, it will fall under your responsibility.
Mr. Lachance: No, that’s not part of our current mandate.
Senator Pratte: I see. I didn’t know. Is the $400 million earmarked for the demolition of the existing bridge part of your budget or the budget for the new Champlain Bridge?
Mr. Lachance: That’s being discussed right now. The government has not yet decided how demolition of the old bridge will be handled. No announcement has been made, but a presentation was delivered to government officials on the management of demolition work.
Senator Pratte: The funding for that has not yet been allocated.
Mr. Lachance: No, but we were tasked with an environmental study analysis.
Senator Pratte: Where does the figure of $400 million come from?
Mr. Lachance: It’s from a pre-feasibility study that was done last year and released last September, I believe.
Senator Pratte: Even though nothing has been decided budget-wise, has anything been decided in terms of time frame? Do you know when demolition of the old bridge will start?
Mr. Lachance: No. Demolition of the old bridge will start once the new bridge is fully operational.
Senator Pratte: I see. Thank you.
[English]
Senator Neufeld: I want to go back to the start on the Champlain Bridge. The original budget was $4 billion; is that correct? I’m reading from the report of the Auditor General of Canada. On the Champlain Bridge project, the contract with a private partner for the bridge was $4 billion, including $2.3 billion for design and construction, $750 million for operation, maintenance and rehabilitation, and $950 million for financing. That’s correct?
[Translation]
Mr. Lachance: Overseeing construction of the new Champlain Bridge is not part of our mandate.
[English]
Senator Neufeld: In response to the previous senator’s questions, you said there was a close working relationship, so I guess you must talk about those costs also in that relationship, or maybe not.
[Translation]
Mr. Lachance: No. the relationship focuses on coordinating the work being carried out on the ground. We are not responsible for coordinating the construction work on the new Champlain Bridge.
[English]
Senator Neufeld: On keeping the old bridge in place and safe, have you met all the budgets that were predetermined to do that?
[Translation]
Mr. Lachance: Absolutely. The money that wasn’t used is now part of the reserve. Work to ensure the safety of the Champlain Bridge has been completed.
[English]
Senator Neufeld: So you’ve always been within the budget that was determined before the start of the construction of the new one? That’s all been met right on? I understand a fair amount of money has been transferred from the federal government to look after some issues that JCCBI was not aware of to start with. Is that correct?
[Translation]
Mr. Lachance: When the funds were transferred to us, in 2014, a super beam was cracked, so we had to intervene quickly. We received additional funding to repair the 100 edge girders. We recently completed work on 49 pier caps. All of that money was put towards ensuring the safety of the Champlain Bridge.
[English]
Senator Neufeld: In your close working relationship, the new bridge is supposed to be in place by December 21, 2018. The Auditor General says that’s probably not going to happen. What’s your opinion?
[Translation]
Mr. Lachance: I can’t give my opinion, since we aren’t responsible for construction of the new bridge. It’s not part of JCCBI’s mandate.
[English]
Senator Neufeld: If, in fact, that happens, as the Auditor General has pointed out and, at the end of the day, is usually right, what do you have in place to continue funding of the old bridge to keep it safe for traffic?
[Translation]
Mr. Lachance: As I mentioned before, $132 million was allocated in the 2018-19 budget for the current Champlain Bridge, and we anticipate spending about $50 million by June. Past that, $10 million in additional spending has been earmarked until December 2019. That means we have the budget to keep the existing Champlain Bridge safe.
[English]
Senator Neufeld: So there will be no more money requested from the federal government?
Mr. Lachance: At this stage, no.
Senator Neufeld: Is that contingent on the new bridge being open on December 21 of this year?
[Translation]
Mr. Lachance: No, absolutely not. If the opening of the new bridge is delayed, we have the funding to make sure the bridge is safe.
[English]
Senator Neufeld: Thank you.
[Translation]
Senator Forest: My question is for Mr. Lachance. I’d like you to clarify something, if you would. In the Main Estimates, JCCBI is requesting $250.1 million in appropriations, but there is $341 million in available appropriations. Where does the difference of $91 million come from?
Mr. Lachance: In our 2018-23 business plan, we requested additional funding for a fund to cover the risks associated the delays in construction of the new Champlain Bridge. We were allocated the money in the 2018 budget. We asked for reserve funding for the additional work to be done on the Champlain Bridge and the work to reinforce the steel structureof the Jacques Cartier Bridge.
Senator Forest: It’s an allocated reserve fund, then.
Mr. Lachance: Yes.
Senator Forest: It isn’t identified as a reserve in the budget.
Mr. Lachance: It is defined as a reserve in the budget of the Champlain Bridge.
Senator Forest: It’s a bit challenging for us to make the connection, because, with the construction-related budgeting and the Signature on the St. Lawrence Group, or SSL, we don’t know where it fits into the budget.
Mr. Lachance: There is no connection with the SSL Group, apart from ensuring the bridge’s safety in the event of a delay in the construction of the new bridge. There is no connection between our budget and that of the SSL Group for the new Champlain Bridge. It’s a matter of time frame. Our board took the necessary steps to make sure we had enough funding should construction of the new Champlain Bridge be delayed.
Senator Forest: It’s with a view to ensuring the safety of the old bridge.
Mr. Lachance: Absolutely.
Senator Forest: It’s through your reserve, and that’s how it’s described.
Mr. Lachance: Precisely.
Senator Forest: If the new bridge isn’t delayed, will that reserve funding be returned to the consolidated revenue fund?
Mr. Lachance: Yes. In the past, when funding was left over, it was reallocated to other government-approved projects that had been identified.
Senator Forest: As far as those other projects go, might the multi-use path on the Jacques Cartier Bridge be considered?
Nathalie Lessard, Director, Communications, Jacques Cartier and Champlain Bridges Incorporated: We actually did a pilot project last winter to identify potential snow clearing techniques and ice removal products. Right now, we aren’t at the stage of examining redoing the path. It’s quite narrow and poses a number of safety issues owing to the challenging geometric dimensions, especially as far as winter traffic is concerned. It is possible that we will examine that option, because, further to our pilot project, we hope to carry out studies to find solutions that would allow winter use. One of the options is to redo the path, but it would be premature, at this point, to say what the solution will be.
Senator Forest: At this time, don’t you want to find a compromise? Given that we want to reduce — we know about all the congestion issues in Montreal — the impact of automobile traffic in order to slow global warning, this desire would directly address the greenhouse gas reduction targets. It’s a possibility, but you’re not working tenaciously and persistently to achieve this goal.
Ms. Lessard: Actually, we carried out an ambitious pilot project. We wanted to find a solution, but a solution that would enable traffic to move safely. At this stage, too many issues come into play to maintain a safe traffic surface for all users. We can’t open the path to only experienced cyclists. Once we open the path, we must ensure that anyone can use it safely.
The issues are mainly related to the complex weather conditions on the Saint Lawrence River. The path is above a very wet, windy and highly changeable environment. The path can be cleared of snow and ice, but it’s very difficult to maintain a safe surface the entire day in such fluctuating and variable conditions.
The path is also a concrete slab suspended in the air and exposed on all four sides to weather conditions, as opposed to a path in the city on a roadbed, which insulates the surface. These conditions don’t exist on the bridge. “Black ice” is even more likely to form on the bridge. These are the issues.
There are also superstructures nearby, and issues with falling ice, for example. We’re looking at all the possibilities, such as the addition of a roof. However, this would involve very large investments.
This year, our goal was to find solutions to ensure that traffic could move safely on the current path. There are too many risks that we can’t mitigate at this point. That’s why we’re not moving forward. However, we’ve made it clear that we’ll be continuing our studies to try to find a solution.
Senator Forest: Do you have any statistics on how often the path is used in suitable conditions, such as in the spring, summer and fall?
Ms. Lessard: Yes. The weekday traffic is estimated at about 1,900 to 2,000 return trips a day, so approximately 1,000 cyclists a day.
Senator Forest: Are you sure that everyone returns?
Ms. Lessard: We hope so.
[English]
Senator Moncion: My first question will be about the Gordie Howe International Bridge. You have a P3 partnership. You said the bridge will be built on time and on budget. Who will be managing the whole project?
Mr. Phillips: Thank you for your question. It’s a very good question to ask at the start of a project like this.
Our P3 partner, Bridging North America, is accountable for the design, construction and operation of the bridge. The WDBA’s mandate is oversight, to ensure that that is delivered to that contract, so we are putting a lot of effort into our mandate right now to get ourselves ready and to do oversight on our private sector partner to make sure they deliver and meet all the milestones throughout that project.
Senator Moncion: After the bridge is completed, who will be managing the upkeep of the bridge?
Mr. Phillips: The contract we have signed with Bridging North America is a 30-year contract. Once the bridge is complete and open to the public at the end of 2024, then the Bridging North America private sector partner continues with its operation and maintenance, with the WDBA doing oversight and maintenance of their contract.
Senator Moncion: And it will be a toll bridge; right?
Mr. Phillips: That’s correct.
Senator Moncion: Have the revenues been calculated over the 30-year contract?
Mr. Phillips: As you mentioned, the Gordie Howe International Bridge will be a toll bridge. As it approaches operations in six years, we will set out to do the necessary studies to determine what the right toll needs to be. We’ll be competitive compared to other crossings between Canada and the U.S. Those tolls then all come back to Canada. None of the tolls go to the U.S., so 100 per cent of tolling comes back to the Government of Canada.
Senator Moncion: That is for the people who are leaving Canada and going to the States?
Mr. Phillips: And returning, both directions.
Senator Moncion: That is because Canada is financing the whole bridge?
Mr. Phillips: That is correct.
Senator Moncion: Thank you.
[Translation]
With regard to the Champlain Bridge, you mentioned that you’re not in charge of building the new bridge, but of managing the maintenance of the current structure, and that you’ll be playing the same role once construction of the new bridge has been completed. That’s what I understand.
Mr. Lachance: No. Once the Champlain Bridge has been completed, it will remain under the management of the SSL, so of the PPP. Until now, there has been no question of Jacques Cartier and Champlain Bridges Incorporated taking over the management of the bridge.
Senator Moncion: So the PPP must keep the bridge in good condition for 30 years.
Mr. Lachance: Exactly. The construction of the new bridge involves a PPP.
Senator Moncion: The comparison that can be drawn between the Windsor Bridge and the Champlain Bridge is that the Windsor Bridge is a toll bridge, whereas the Champlain Bridge will be toll-free.
Mr. Lachance: Exactly. The Liberal government announced that the Champlain Bridge will be toll-free.
Senator Moncion: In that case, how will the private sector benefit from the bridge? I understand how it will benefit from the Gordie Howe Bridge, but I have a harder time understanding how it will benefit from the Champlain Bridge.
Mr. Lachance: JCCBI is not responsible for the new Champlain Bridge or for anything related to the contract and decisions. JCCBI’s mandate does not involve managing all the issues surrounding the new Champlain Bridge. JCCBI’s mandate is to ensure the safety of the existing bridge. Our mandate does not involve answering questions about the new Champlain Bridge.
Senator Moncion: So you’re telling me that once the new Champlain Bridge has been built, you’ll no longer have any work.
Mr. Lachance: We have other contracts, including the Jacques Cartier Bridge, the Honoré Mercier Bridge, the federal section of the Bonaventure Expressway and the Melocheville Tunnel. We still have a great deal of work.
Senator Moncion: You’ve reassured me. Thank you.
[English]
The Chair: For the two Senator Deacons, I will, first of all, recognize the first question of a new participant appointed to the Finance Committee, Senator Deacon from Nova Scotia. Thank you for coming to the National Finance Committee of the Senate.
Senator C. Deacon: I would have recommended putting the more qualified Deacon up front, but we’ll do our best.
I’m new to the committee and I’m a new senator, so I have to look at things at a pretty basic level. I didn’t know about the Jacques-Cartier and Champlain Bridge Corporation until joining this committee. I was interested to read your mission: to ensure the mobility of users, the safety and longevity of infrastructure using a systematic management approach based on sustainable development. What does the sustainable development element include? How do you measure that you are achieving that?
[Translation]
Mr. Lachance: In the past two years, we’ve added internal resources to environmental protection and sustainable development. If you have the opportunity, I invite you to look at our latest annual report, where we describe the work accomplished on sustainable development and its incorporation into different indicators and measures taken. We want to include sustainable development in the management and implementation of our projects. We want to take into account technical, environmental, social and economic concepts in the assessment of our current and future projects.
[English]
Senator C. Deacon: I’m particularly interested in the economic sustainability element. I live in a city that has two bridges that are entirely financed by tolls. How do you measure your economic sustainability when there is so much federal funding required on an ongoing basis to manage these bridges?
[Translation]
Mr. Lachance: One of our current methods involves planning our projects according to the life cycle costs of the different parts of the structure and the infrastructure as a whole. As I mentioned earlier, we have an economic vision for each structure. We talked about 125 years for one bridge, and 150 years for another bridge. We want to determine whether it can last 150 years and measure other investment issues. We’re also trying to determine the appropriate time to consider replacing a bridge rather than continuing to maintain it over that period.
[English]
Senator C. Deacon: But there is no plan to make this an economically sustainable bridge system in Montreal as it is in my community of Halifax, where the users of the bridge are paying for the cost of the bridge?
[Translation]
Mr. Lachance: Decisions regarding bridge tolls are not JCCBI’s responsibility, but the government’s responsibility. Our mandate does not involve establishing this type of thing.
[English]
Senator C. Deacon: Your vision has you stating that you want to become a leader in major infrastructure management, an expert and a mobility leader and a social and urban contributor. How do you measure your leadership on a global scale? How do you report on how effective you are in achieving that vision in terms of your management of the infrastructure in a globally competitive manner?
[Translation]
Mr. Lachance: The corporation has started doing some benchmarking with various organizations to determine where it stands as a mobility leader. In terms of mobility, we’re choosing to ensure that we reduce the number of hindrances when making repairs. This includes a great deal of coordination with various partners in Greater Montreal. There are still a number of major projects in Montreal, including the new Champlain Bridge; the Réseau express métropolitain, or REM; the Turcot Interchange; and the project to rebuild the Louis-Hippolyte-La Fontaine Tunnel.
We must take into account all the different work taking place on the island of Montreal. We must also take into account all these issues when assessing our mobility. We want to ensure that we can invest, and we’re currently investing in an intelligent transportation system so that people can move more easily around the various potential hindrances in the system during the major construction period.
[English]
Senator C. Deacon: This organization has been around for about 40 years?
Mr. Lachance: Exactly.
Senator C. Deacon: But you don’t yet have a way of benchmarking. You are just starting the benchmarking to see the extent to which you live up to being a leader?
[Translation]
Mr. Lachance: The corporation has undergone major transformations. In 2009, the corporation had 40 employees and the operating budget for bridge repair and maintenance was about $60 million. Three years later, as of 2012, the corporation had almost tripled its repair and maintenance budget and operating budget. This helps us understand what we need to do. At this time, we want to take a more proactive approach in our operations. That’s where the issue of benchmarking comes into play in our approach to management.
[English]
Senator C. Deacon: I’m sorry to keep pushing on this. For me, when you are spending that sort of money, I’m surprised you don’t look at benchmarking upfront, when you begin, versus once you have already spent the numbers we are seeing here. I’d like to know, when I’m about to spend money, that I’m going to be doing it effectively and cost efficiently. The only way to know that is to have relative benchmarks. Is that reporting going to be something that is urgently put in place in your organization so you can demonstrate that you are living up to your vision, especially when it requires so much public money being invested and is not self-sustaining like our bridges in Halifax are, for example?
[Translation]
Mr. Lachance: This is part of our ongoing goals for 2018-19 and the coming years and our future business plan. We want to be able to establish these benchmarks, as you said, and ensure that the money spent on the structures is invested in a sustainable manner.
[English]
Senator M. Deacon: Thank you for being here today.
We have two significant projects — I’m going to come back to benchmarks, carrying on from my colleague Senator Deacon — where there has to be some pretty significant learning happening amongst I’ll call the more easterly and westerly project. For the Gordie Howe International project, I’m thinking about benchmarking, moving forward and the kinds of things that perhaps, from learning from previous projects, you are starting to look at and saying that we really need to track this from day 1. In 2018, we have the opportunity to do that.
As part B, quite frankly, listening to this conversation, having been on the job about ten minutes, how are you going about the benchmarking? Truly we are talking about some numbers, and I will have some questions about numbers in a moment, but on that bigger picture of this project, that it is reaching the community piece, the environmental piece and the legacy piece, what is it you are putting into place?
Mr. Phillips: That’s a good question to ask at the start of our project. Benchmarking is a big element of what we are doing to get ourselves ready to do the oversight that I talked about a few minutes ago.
As a matter of fact, I had a team of 20 people that we benchmarked yesterday. We ran a major infrastructure project in Ontario that earlier this year had just gone through an external audit by some senior executives in the construction industry to determine how well they are doing in their infrastructure project. They are two years into it. We chose to benchmark that infrastructure project for two reasons. They got a finding around not being ready for operations, turning it over for construction, and they got a strength in project controls. That’s a big element of how you manage a construction project: how well do you control the various aspects of a project both from a schedule and a cost and a claims perspective? Again, there were 20 of our folks, and my CFAO was part of that benchmark trip. We were taking the lessons learned from that infrastructure project and incorporating it into how we do business at the WDBA.
Also timely, I have a meeting at noon today with Infrastructure Canada. One of the topics to talk to them about is benchmarking the bridge that we have been talking about this morning in Quebec. We want to learn from them what they have done that’s worked well, the challenges they have and how they have addressed it and get that into how we do business.
The third benchmark trip that we have planned is to an infrastructure project in Metro Toronto. They are well into that construction project. They have had things goes very well. They have had some significant challenges. We are arranging for a trip there to understand what went well with that project, what they have struggled with, and how we can learn from that and put that into how we conduct our business.
So we have three benchmarking trips planned. One has been executed. We’ll continue with that way of doing business as we go through the construction project. Just from my background, benchmarking is in my DNA. It’s how you do business. It’s a yearly trip that you make with different staff, and it’s the working level in the supervisors that need to do the benchmarking. It’s not just the executives. It’s the people that actually execute that need to do the benchmarking. That’s how I conduct business.
Senator M. Deacon: That is encouraging to hear. I will lose my next question. Benchmarking is in your DNA. You are learning from other organizations who are at some pretty critical points in their work. This is part of your core work, benchmarking, and then your outward-facing accountability. So we are benchmarking. That is really important. But that accountability is to whom? Thinking about the organizations you have described already, about the long-term oversight and the actual work, then, who will you be accountable to on the outward facing piece with the benchmarking that you do?
Mr. Phillips: If I understand what you are asking, we have a board of directors. Infrastructure Canada does oversight. We have stakeholders on both sides of the border. Part of what they will hold me accountable to is executing our mandate, which is the design, construction and operation of that bridge to the terms that we have agreed to. Part of what I will be doing with the benchmarking results is making changes to how we do business and making sure that stakeholders and the board understand that. They can then in turn say, “Okay Mr. Phillips, show us the results from what you learned from that benchmarking.” I think that’s what you are asking.
Senator M. Deacon: Yes. I may be one of the only senators who use that bridge frequently. Thank you very much.
Senator Pratte: For people who are very familiar with the Windsor-Detroit bridge project, all of this is clear, but I’m still having difficulty understanding how this P3 is working. Obviously, you will have oversight over the building of the bridge, and it is not only the bridge but also the ports of entry. They are also part of the P3. Is that correct?
Mr. Phillips: Correct.
Senator Pratte: In your presentation, you mentioned that the second part of your mandate is to manage the construction — and we have talked about that — and operation of the new crossing. So you will manage the operation of the crossing. Help me out with this. The P3 will operate the bridge and maintain the bridge for 30 years. What will be your role once the bridge is built?
Mr. Phillips: Thank you for the question.
I’ll clarify a couple of things that I said. One of the things I said was rehabilitation. Part of the contract that has been established is that at the 30-year mark,Bridging North America turns the bridge operation and maintenance back over to WDBA. We don’t want a bridge that’s used, old. So that’s what rehabilitation means. Part of their contract is that they will have to turn over a bridge that is in effectively new condition. Roads will be repaved. Buildings will be conditioned back to an expected standard state. We won’t be getting a bridge and ports of entry back that are in a poor state of repair. That’s part of what our mandate will be: oversight of how Bridging North America is maintaining the bridge and the ports of entry and the highways so that we can challenge them and make sure they are addressing the condition over those 30 years so that when it’s turned over, we are receiving ports of entry, highways and a bridge that are in a good state of repair.
Senator Pratte: Thank you. You talked earlier about tolls and the fact that the amount of the tolls will be determined a bit later while the bridge is being built. Who has authority to decide that? Is it the P3 partner, you, both of you together or the government?
Mr. Phillips: The WDBA has the authority to set the tolls for the Gordie Howe International Bridge. We’ll do the necessary studies to look at the operation and maintenance costs, but also what the competition will be like so that we can set competitive tolls to make sure that we recoup our costs but also to ensure that we are supportive of the industry that we want to help support and generate for that crossing so that we continue with the volume of traffic increase over the 100 years of the operation of that bridge.
Senator Pratte: In the contract, there is a profit margin for the P3 partner, so that takes into account a level that the tolls have to reach. You have to ensure that your partner is making a bit of money.
Mr. Phillips: The contractor we signed with has built in their profits. They are a private company. Part of the financing of the project is that we make payments to them when they meet certain milestones over that 30-year period. The benefit or the insight to a P3 contract is that it’s to their advantage to design and construct on schedule or ahead of schedule because they get payments sooner, which reduces their financing and enhances their profits. Tolls are not related to their profits or not. It’s related totally on whether they delivered per their contract and whether they get the payments that are part of that contract.
Senator Pratte: So the tolls are related to the money that you will receive to pay them, right?
Mr. Phillips: The tolls are what goes back to the Government of Canada.
Senator Pratte: Okay.
Mr. Phillips: Through the WDBA.
Senator Pratte: Could the government intervene and decide, for whatever reason, that the tolls are too high? We saw this happen elsewhere where people think the tolls are too high. Does the government have the authority to intervene and say the tolls are too high or too low, or can the government do what they did with the new Champlain Bridge and decide there would be no tolls?
Mr. Phillips: I’m the chief executive officer of a federal Crown corporation. I have a boss that happens to be in the Government of Canada. I have to do what my boss says, so that’s a possibility.
Senator Pratte: Thank you very much.
Senator Moncion: You might find my question unusual. Highway 407 belonged to the Government of Ontario and was sold to a private interest. How likely would that be with the Gordie Howe International Bridge? The same situation could happen where they would sell the bridge to private ownership and then it is maintained by private owners forever?
Mr. Phillips: It’s a fair question given what has transpired in Ontario. The Government of Canada and multiple governments of Canada have all been supportive of the Gordie Howe International Bridge and have seen its value to the economy of Canada. All these governments have also publicly helped support and drive, getting to the point where we have reached financial close. I don’t see any thinking that they would want to get rid of ownership of that bridge. It’s too critical to the economy of Canada. I would expect that they would continue to want to have that ownership to help support and drive the economies of our country.
Senator Moncion: Thank you.
The Chair: Before we close, I’d like to bring two questions to the sets of witnesses.
Mr. Phillips, this is a follow up to previous information we received on the infrastructure. When officials from the Windsor-Detroit Bridge Authority appeared before the committee on November 11, 2016, on the supplementary estimates for 2016-17, they stated that all project costs, including costs incurred to date, are being recorded and will be repaid, including interest by tolls on those who cross the bridge. That was the statement that was given to us. Today, Mr. Phillips, you are here. Does the government still expect to recoup all the project costs through tolls?
Mr. Phillips: That is a good question. I am just quickly looking at my CFAO. He has confirmed my understanding. That is the expectation.
The Chair: That is the expectation. Thank you, sir.
[Translation]
My last question is for Mr. Lachance.
Since the announcement of the construction, senators have been asking questions to obtain information on the amount of money involved. However, we haven’t yet received this information. Can you provide details? Since the announcement of the construction of the new Champlain Bridge, how much money has been spent as of 2014?
Mr. Lachance: On the current Champlain Bridge?
The Chair: On the maintenance of the Champlain Bridge.
Mr. Lachance: Since April 1, 2014, $328 million has been spent on maintaining the current Champlain Bridge.
The Chair: Thank you.
Since there are no further questions, we want to thank you.
[English]
Thank you, witnesses, for appearing this morning. We will call you back if there is an inclination or need.
Honourable senators, continuing our study of the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2019, we now have before us three representatives from Privy Council Canada. Witnesses, thank you for accepting our invitation to be here this morning to share your comments and your views, which will be followed by questions from the senators.
First, I want to introduce Mr. Matthew Shea, Assistant Deputy Minister, Corporate Services and Chief Financial Officer; Marian Campbell Jarvis, Assistant Secretary to the Cabinet, Social Development Policy; and Matthew Mendelsohn, Deputy Secretary to the Cabinet, Office of the Deputy Secretary to the Cabinet, Results and Delivery.
Thank you again for coming. I have been informed that Mr. Shea will make a brief presentation, to be followed by questions.
Matthew Shea, Assistant Deputy Minister, Corporate Services and Chief Financial Officer, Privy Council Office: Good morning, chair, and members of the committee. Thank you for inviting the Privy Council Office to review our Main Estimates. You have already introduced us, so I will jump right in.
As you know, the mandate of PCO is to serve Canada and Canadians by providing professional, non-partisan advice and support to the Prime Minister and ministers within his portfolio and to support the effective operation of cabinet.
PCO has three roles: to provide non-partisan advice and support to the Prime Minister, portfolio ministers, cabinet and cabinet committees on matters of national and international importance, including policy, legislative and government administration issues faced by the government; to serve as secretariat to the cabinet and all of its committees with the exception of the Treasury Board committee, which is supported by the Treasury Board of Canada Secretariat; and to foster a high performing and accountable Public Service.
[Translation]
Like the Department of Finance and the Treasury Board Secretariat, the Privy Council Office of Canada is a central agency.
[English]
It exercises a leadership role across government departments and agencies to provide advice to the Prime Minister and cabinet, as well as to ensure the coherence and coordination of policy development and delivery.
I would like to begin with a brief overview of the 2018-19 Main Estimates. PCO sought $166.4 million overall for its core responsibility, which is to serve the Prime Minister and cabinet, and for its internal services. PCO continues to coordinate the government’s efforts to deliver on policies and initiatives by using a whole-of-government approach. This includes strengthening diversity and inclusion, including support to the special adviser to the Prime Minister on LGBTQ2 issues; renewing relationships with Canada’s Indigenous peoples; and aiding the working group of ministers review of laws and policies, as well as the National Inquiry into Missing and Murdered Indigenous Women and Girls as part of Canada’s continuing effort to advance reconciliation.
The Chair: Mr. Shea, we’re on the fast track. Could you reduce the speed of the presentation in order to permit translation?
Mr. Shea: I have provided a copy to members; you’re welcome to read it into the committee. I would simply say that it is a brief summary and we would welcome your questions.
The Chair: You can read it, but slow it down.
Mr. Shea: I will slow down. I no longer know where I was.
Other initiatives include bilaterally and multilaterally collaborating with provinces and territories on key priority areas in order to maintain and advance intergovernmental relations; ensuring Canada has an open and accountable government, in part through nonpartisan regular updates to the status of ministerial mandate tracker commitments posted on the mandate letter tracker website, and by supporting the government’s commitment to open, transparent and merit-based selection processes for the Senate and GIC appointments; coordinating and supporting international trade negotiations as well as supporting the Prime Minister’s international travel and participation in summit-level meetings; coordinating the development of legislation and policies with regard to national security and intelligence, and responding to global concerns and threats to exports, investments and the safety and security of Canadians; public service renewal and modernization, including the innovative Impact Canada Initiative and a commitment to the advancement of healthy workplaces that promote diversity and inclusion, are free from harassment and bullying and foster innovation; and, finally, improving, strengthening and protecting Canada’s democratic institutions by supporting initiatives related to the political party leader’s debate, the Elections Modernization Act and political fundraising.
We also continue to support the Prime Minister by coordinating development of a policy informed by engagement with youth and youth-serving organizations in partnership with the Prime Minister’s youth council.
This brief summary of the PCO’s 2018-19 Main Estimates touches on a few of the means by which the PCO continues to support the clerk as head of the public service of Canada, the Prime Minister and cabinet as part of a whole-of-government approach.
[Translation]
Members of the committee, thank you for the opportunity to provide you with the context in which the Privy Council Office operates.
We would now be pleased to answer your questions.
The Chair: Thank you, Mr. Shea.
We’ll start the question period with Senator Pratte, who will be followed by Senator Forest.
[English]
Senator Pratte: The Impact Canada Initiative is aiming to renew and modernize the public service. Can you elaborate a little more? I’ve seen some of the projects you are working on or that you are coordinating. Would you elaborate? How much money is there for the Impact Canada Initiative, and what are you trying to achieve exactly?
[Translation]
Matthew Mendelsohn, Deputy Secretary to the Cabinet, Office of the Deputy Secretary to the Cabinet, Results and Delivery, Privy Council Office: The initiative is truly unique and innovative. The Privy Council Office has only one centre of expertise, a small team with a budget of less than $1 million a year. The centre of expertise is made up of people who can use their expertise in social finance and outcome measures to reconsider funding initiatives based on outcomes, and not only based on inputs.
The small team has developed a process to support the departments that want to benefit from the Impact Canada Initiative. For example, we supported the Department of Infrastructure in the Smart Cities Challenge. We also supported the Department of Natural Resources with a group of five challenges related to women in the technology and bioenergy fields, with strategies to ensure that Indigenous communities use alternatives to diesel, and so on.
The Impact Canada Initiative supports the departments, but the departments must have their own budget authority. A great deal of money may be spent, but the funding doesn’t come from the Privy Council Office. The ministers remain responsible for the programs. We support them and give them advice, and we approve the challenges and the methodology used. However, the ministers and the departments have the budget authority and are ultimately responsible for the project’s success or failure.
Senator Pratte: Is there an overall objective when it comes to renewing or modernizing the public service? Do you base your approval of a project on a central objective?
Mr. Mendelsohn: Yes, we have criteria. However, since we’ve just started, we’re still gaining experience. All the ministers’ mandate letters include a commitment for the government to ensure that the ministers use more funding to experiment with new ways of establishing programs and contributions. The Impact Canada Initiative aims to help the departments adopt outcome-based approaches faster. We support the departments by giving them the flexibility to experiment with new approaches more easily. The goal is to improve outcomes for Canadians and research better ways of establishing programs, making contributions or structuring programs to obtain better outcomes. Our team includes people who can use their expertise in methodology to measure the outcomes of these new experiences and to compare the outcomes in order to see whether the new ways of doing things work better than the old methods.
Senator Pratte: If I understand correctly, when it comes to these new ways of doing things, you don’t necessarily come up with the ideas. Instead, the departments come up with their projects and they have ideas on how to do things differently. Is that how it works?
Mr. Mendelsohn: Yes.
Senator Pratte: You approve the projects, but you don’t have the budget authority, since it comes from the Treasury Board.
Mr. Mendelsohn: Exactly. We’ve received some money to support a small team.
Senator Pratte: Thank you.
Senator Forest: My first question is about appointments because there are some important positions vacant right now, such as at the National Research Council, Export Development Canada, VIA Rail, Canada Post, and Jacques Cartier and Champlain Bridges Incorporated, as we heard just before you.
So there are many positions to be filled in the current process. These are people who will head up key organizations for Canada. What is the reason for the delays in filling these positions? Succession is a challenge for you, and that is quite evident in the current situation, but how do explain these long delays in filling such strategic positions for Canada?
[English]
Mr. Shea: PCO supports the GIC appointments process for 2,000 GIC positions on behalf of the Prime Minister and his office. The PM announced in February 2016 a commitment to open, transparent and merit-based processes. In the last couple of years, we’ve staffed 940 appointments following open, transparent and merit-based selection processes out of a total of 2,000 that exist in various organizations.
While I can’t comment on specific processes, I can say that progress is being made to ensure that they’re open and transparent but also that we ensure diversity. I can comment that of that group of 940 appointments we’ve made, 53 per cent were women, 12 per cent were visible minorities and almost 9 per cent were members of Indigenous groups, as well as 3.5 per cent who are members of groups with persons with disabilities. All that is to say that we have made significant progress, and progress continues to be made as we speak on filling the very vacancies that you speak of.
[Translation]
Senator Forest: Yes, those results are most welcome and significant. On the other hand, do you not think that a balance must be maintained between effective appointments to these positions and the objectives of transparency and equity in achieving higher representation of certain target groups?
[English]
Mr. Shea: PCO, in its leadership role, does try to encourage efficiency of these processes, and part of that is having a central team that supports departments rather than leaving departments on their own. I should make clear that this is a shared responsibility. For most GIC appointments, it’s a shared responsibility between the Privy Council Office, the Prime Minister’s Office, the department responsible for that particular position and the minister’s office of that area. All of those groups work together to try to ensure that these are staffed in as efficient a manner as possible, while also ensuring that transparency and diversity that I spoke of earlier.
[Translation]
Senator Forest: So, it seems you are satisfied with the pace at which positions are being filled.
[English]
Mr. Shea: I would neither comment on the satisfaction nor the efficiency but simply say that we do it as efficiently as possible. We ensure there are adequate resources. Part of my role as CFO is to ensure there are adequate resources for the team responsible for this, and we have ensured internally, from a budget perspective, that we make those resources available for that team to support departments and to support this important process.
[Translation]
Senator Forest: May I ask a question on another topic?
The Chair: Of course.
Senator Forest: It is about the Impact Canada Initiative. I am no longer new to the Senate, having been here for two years now. I am looking at the current federal government’s main economic development strategy, the infrastructure program. It entails $180 billion over 12 years, with a lot budgeted for partnerships, whether with cities or other partners, including smart cities, which seems most relevant to me.
Right now, we are having trouble measuring the impact of this very bold economic strategy. For example, it provides $28.7 billion for the public transit sector, green infrastructure, social infrastructure, and funding for project work by partners, including territories, provinces and cities.
As to the public mission of the Impact Canada Initiative, do you have any thoughts on how to measure the leveraging effect and the real impact of this very ambitious strategy? At PCO, you are responsible for evaluating the commitments in mandate letters. Is it possible for the Impact Canada Initiative to measure not only the money spent or committed by the Government of Canada, but also the outcomes, in light of the partnerships that are being developed with the territories, provinces and municipalities?
Mr. Mendelsohn: That is a very interesting question, but, of course, it is not part of the mandate of the Impact Canada Initiative to do that. What we are doing at the Privy Council Office, however, and the clerk has given clear instructions about this, is improving our capacity throughout the federal system, and also through partnerships. We have to measure the impact of our investments not only in the short term, but also in the long term. All kinds of broad discussions are ongoing to try to measure the impact of an expenditure, not just the next day, as I said, but also the long-term return on investment.
We also have to look at the social benefits. All kinds of methodological questions are being asked right now, and departments can measure the impact in terms of job creation. A few years ago, in 2009-10, the Department of Finance estimated the impact of all these expenditures after the recession and the global economic crisis. Our methodologies are not perfect, so one thing we are doing in terms of public service renewal is working system-wide to improve our ability to measure results and return on investments in the medium and long term.
Le sénateur Forest: I think that is essential in terms of results, that is the first strategy for economic development. There is an impact on job creation and on investment in communities, which has a leveraging effect because there was often participation on a third-third-third basis. There is also the impact on society and the environment, and so forth. I think measuring all this is a major challenge because this government has made a commitment and there are very large public investments.
Mr. Mendelsohn: Exactly. As you know, there are many objectives: green objectives and public transit objectives, as well as job creation and social inclusion. There are all kinds of objectives. As to infrastructure, we have a broad agreement with the provinces and territories, and then we negotiated bilateral agreements with the provinces.
The provinces have their own priorities. Like the federal government—I will not speak for the infrastructure minister, who is responsible for this—, the federal government has its priorities, but a province may have other priorities. So we have to negotiate. To my mind, it is always a good idea to have a good measurement structure so we can measure the real impact on public transit, social inclusion, job creation and greenhouse gas emissions. All governments, not just in Canada but around the world, are working to improve their ability to measure these impacts, and we are working with the departments to help them improve their ability in this regard.
Senator Forest: Thank you. I will hold off on my other questions.
[English]
Senator Andreychuk: I have always been interested in PCO and just what goes on over there, that bridge between the bureaucracy and the cabinet.
As I understand it, your budget is for about $166 million requested; is that correct?
Mr. Shea: That’s correct.
Senator Andreychuk: And $16 million of that would be for contributions to employee benefits. How much of the $150 million-plus is on staffing, and what else would be included in the figure? To the limited extent that I can find it, I see where you’re supporting the government and where you’re supporting the National Inquiry into Missing and Murdered Indigenous Women and Girls, and you’re establishing secretariats. Is this basically for staffing?
Mr. Shea: The PCO is largely a staffing-based department, but not entirely. There is a document available online that is a companion document to the estimates, and it’s called Budgetary Expenditures by Standard Object. That breaks down that $166 million that you mentioned by each of the areas. I can tell you that based on that, $119.5 million of our budget is salary. Then, as you mentioned, the statutory is the corresponding employee benefits. So you can see that there is still a $30 million amount that is other amounts.
The PCO’s budget has fluctuated in recent years. Part of that is because in Budget 2016, we were given some money for infrastructure investments, upgrading our IT and physical security and upgrading the kinds of tools that we have within the PCO to support the ministers that we support and having outward facing IT. For example, we now have youth-related and RDU-related websites that we post on, so there’s a cost that goes with that.
All that is to say it’s not all salary, but we are largely salary based. It is different branches, as you mentioned, ranging from supporting the cabinet committees to the national security and intelligence adviser that has a branch that supports her, and then we have internal services, which is a large part of our department.
Because we’re a unique department, we have things like executive correspondence for the Prime Minister. There are 250,000 emails, letters and telephone calls for the Prime Minister each year that have to be opened and responded to. We have a team that does that — my branch, in fact. We have a group that travels with the Prime Minister whenever he goes around the world, whether for official business or when he’s on vacation, because we need to ensure that there is secure communication connectivity wherever he goes for obvious reasons with continuity of government.
So we have a number of unique features that other departments that don’t have that are salary based largely. I hope that answers the question partially.
Senator Andreychuk: It’s starting to. Transparency has to be the issue all the time. How do we as parliamentarians know exactly what you do, and to what extent do we have access to any of the materials or advice? Is it all kept confidential?
Mr. Shea: You’re no longer talking from a budgetary perspective. You’re talking about the actual documents advice to the Prime Minister and the clerk, which we do not generally share. We have access to information group that will go and figure what can be and cannot be shared in many cases, and we go line by line and look for opportunities to release as much as possible in keeping with this idea of being open and transparent. By default, however, as you can appreciate, historically and based on legislation, we cannot share cabinet confidences through ATIP releases. However, I can tell you that because the ATIP releases come through me in many cases, we do release an awful lot of information, not just for ATIP but for parliamentary questions we get. For example, your question regarding budget, if that were to be submitted by a member of Parliament asking for more information, you would get that information from us.
Senator Andreychuk: In the documents, you seem to be supporting the missing and murdered Indigenous women and girls. One of the difficulties that we have heard coming back from the commission itself was that they were not able to meet their mandate because they felt there was just — I’m going to put it delicately — roadblocks from the government and too much involvement. Would that be the PCO, because you have a role of supporting? What is your role with the Indigenous women and girls?
Mr. Shea: I’m aware of some of the references you make. Many of those are from quite some time ago. I will say that since I joined the PCO about a year ago, I’ve enjoyed an excellent relationship with members of the commission, the executive director and the chief commissioner, and I’ve had no such complaints from the commission.
We do provide all internal service support to the commission. They’re arm’s length, so we don’t interfere with who they hire or how they hire, but we help them hire. If they identify they want to hire someone, for example, we’ll do the paperwork to do the letter of offer. We have service standards. Generally, within 72 hours, if they submit something, we’ll give them the letter they can give out. We help them with getting accommodation space. As you can appreciate, they’re not located in one location but are across the country, so we have had to negotiate a lot of short-term leases to support them. We process all of their bills. Again, we’re not there to challenge what they spend, but we do have to process it as per the act. It does say that the PCO has to play that role and satisfy the Financial Administration Act, while respecting the fact that they have independence.
I’ll give you a couple of examples of what we’re doing to make sure there are no barriers. That was something identified early on. We actually put together a working group, made up not only of PCO officials, but Shared Services Canada, Treasury Board of Canada Secretariat, CIRNA — the departments that were impacted and that could support in the work that they do — to come up with solutions. When they came up against something where they said the authority prevented them from doing something they felt was important, our answer was, “Well, this is how you can get that authority,” and we would work on their behalf to do it.
After-Care is an excellent example. Initially, they did not have the authority to do that, but they felt it was important to their mandate, so we went back and sought the appropriate authorities from Treasury Board to allow them to do the important work they’re doing.
I would summarize simply by saying I think we enjoy an excellent relationship. We meet regularly with them, and any time there’s an issue, we work quickly to resolve it, working hand in hand with them. We’ll support them where they are. From an IT perspective, we have actually flown people across the country to support them when they do their various meetings. We’ll help them set up contracts — anything it takes to help them be successful, while still respecting the fact they’re independent.
Senator M. Deacon: At the beginning, you touched the budgetary increases and supporting five areas. One of the areas was supporting PCO’s information tech modernization project, and one was establishing the LGBTQ2 Secretariat. In those two areas of interest, there’s money that’s been allocated over the three years to put the secretariat together, and there’s work happening in the technology area. I’m trying to get a better, more specific sense of what the annual costs or budget for those two areas are and what we see moving forward as some of the specific activities and goals of those particular areas that have benefited from an increase in funding.
Mr. Shea: I’ll allow my colleague, Ms. Campbell Jarvis, to respond to the LGBTQ2 question first, and then I’ll follow up on the IT, if that’s okay.
Senator M. Deacon: Thank you.
Marian Campbell Jarvis, Assistant Secretary to the Cabinet, Social Development Policy, Privy Council Office: Good morning.
On the question regarding the LGBTQ2 Secretariat, it was initially set up to support the Prime Minister’s special adviser. That involved organizing meetings with stakeholders, consultations, some special advisers and international engagement.
With respect to the other pieces of what the secretariat has been involved with, one of the very significant historical milestones was the apology last December to the LGBTQ2 Canadian community. The secretariat was instrumental in pulling together the stakeholders and hearing what would be helpful in that apology and in preparing the apology with the Prime Minister. Corresponding with that, there was a settlement to the Ross, Roy, Satalic class action that the LGBTQ2 Secretariat was quite involved with, whole-of-government, led by the Canadian Armed Forces. What we saw from that settlement were not only payments to the survivors, if one can put it that way, but also some of the commemoration pieces that were really important to put forward. So the secretariat has been very involved in that.
The secretariat is also looking at some of the intersectional pieces of social policy. What I mean by intersectionality, when we look at social policy and at some of the youth homelessness, what is quite noticeable when you look at the data is that a large proportion of homeless youth is in the LGBTQ2 communities. It’s surfacing some of the gender identity and trying to understand issues in a different kind of way. A project of the secretariat is looking at the third gender marker. For passport applications, for example, instead of a Mr., Ms., Miss — that may not be needed; it can simply be a person by their name. Those are some of the projects that the LGBTQ2 Secretariat has been responsible for and is looking at.
Mr. Shea: With respect to IT, I mentioned that Budget 2016 gave us funding. It gave us $88 million over five years for both IT and accommodation upgrades. The majority was last year in 2017-18. This year, our total amount for that project is $13.6 million, including $4.1 million for accommodation, and the remainder is for IT. That is, generally, what we are investing in, and it’s for things ranging from tools for our employees — we’ve given people tablets, iPhones — the ability to use modern technology, and some of that outward-facing work I mentioned earlier. It’s also for things like accommodation, making sure the accommodations are modern and allowing for the type of work that we do. Some of the areas in our department have not been upgraded for several years, so it’s a key part of what we are trying to do, slowly but surely.
It’s also e-cabinet, if you’ve heard of that. That is something that started a few years ago and that we’re finalizing right now and will be evergreen and continually improved, reducing the amount of paper and making it so that we can use modern technology, with the goal of secure communication so that there is an ability to load these up in different places within the country and ensure the information is protected from a security perspective.
Senator M. Deacon: Part of me was thinking about e-cabinet and whether it was continuing in a robust way and able to do that while you are improving accommodations. That is good to hear. Thank you.
Senator Neufeld: Thank you very much for being here. I have just a quick question, Mr. Mendelsohn. You mentioned something about the discontinuation of diesel. I was wondering what reference you made for that, or did I misunderstand you? I think it had something to do with northern development.
Mr. Mendelsohn: The government is interested in reducing the use of diesel in remote communities and Indigenous communities. One of the things that Impact Canada may pursue is launching a challenge to identify innovative ways to get Northern or remote communities off diesel and to be able to use alternative energy sources.
Senator Neufeld: So that would be work that’s already being done by the department that is responsible for that? I see two prongs going out there trying to get at an answer. Does that make good sense?
Mr. Mendelsohn: We wouldn’t do that without Natural Resources Canada’s support. If the department has a traditional grant and contribution program or a traditional research program, they may want to explore a different way of doing it, such as perhaps launch a challenge or a prize for someone who can solve a particularly challenging issue. They may have no expertise in designing a challenge or prize, building up the capacity to understand how you articulate a challenge statement or how you assess applications, and often you have stage gating in these processes to identify a group of finalists, so rather than them building expertise from scratch and other departments doing that, what we have done is created a group with expertise that helps departments. However, if a department doesn’t want to pursue an alternative method, they wouldn’t. It would only be if they have their traditional program but they want to try a different way, to see if they can harvest or identify better ideas from the research community, from the private sector, from communities, from municipalities that may have ideas where they are not finding a way to experiment or explore with them. The department could say we are going to do a challenge, and we’d help them do that.
Senator Neufeld: Also you talked to Senator Forest in response to his questions about the impact of the expenditure, both short-term and long-term. Was there an impact assessment done on the Kinder-Morgan purchase and an impact assessment made by the PCO on Energy East?
Mr. Mendelsohn: I think that would be better directed toward the relevant department.
Senator Neufeld: So what was your role? Was there any role for the PCO? Did you give any advice of any kind to the Prime Minister’s Office about Energy East or the Kinder-Morgan project?
Mr. Shea: The PCO’s role in the purchase was the same as it would be on other policy files in the government, which consisted of activities to ensure consistency and coordination of government communications policies, programs and initiatives. The Department of Finance is leading the file with respect to the purchase, and questions around that are best posed there. Natural Resources Canada is leading the response to the recent Federal Court of Appeal’s decision, and questions related to that are best posed to that department.
Senator Neufeld: So you are saying the PCO had no involvement in either of those projects, either Kinder-Morgan or Energy East; is that correct?
Mr. Shea: As with any file, any advice that would go to the Prime Minister would be whole of government. We bring information together and give advice to the Prime Minister, which we would not share with the committee for the reasons I explained earlier.
Senator Neufeld: I understand the confidentiality. I’m not asking for what advice you gave; I’m asking whether you gave advice or you didn’t give advice.
Mr. Shea: I can’t speak to what advice would have been given as it wasn’t myself who would have been involved. I apologize that I can’t say any more than that. On this file, like any file, any advice PCO provided to the Prime Minister would have been that whole-of-government approach, and it would not be something that we would publicly discuss.
Senator Neufeld: You talk about promoting diversity and inclusion, the public service being free from harassment and bullying and fostering innovation. How are you doing? How are things going? Have you accomplished a lot in those areas? Have you promoted diversity? Is that going well? Inclusion? Free from harassment? Or maybe you can’t tell me that either, and if you can’t, fine, we’ll move on because I have one more question.
Mr. Shea: I’d be happy to talk about harassment in particular. Those are broad questions. I do think the clerk, in his role as the head of the public service, is certainly trying to promote all of those. If you read his most recent report on the public service, he talks about the importance of tackling those issues.
There has been progress. I apologize that I don’t have statistics with me on diversity. I did mention earlier that for the GIC appointments, I think there is clear progress towards more diversity amongst GIC appointees, so I think that’s something we can point to.
On harassment — this is something all departments are seized with, and every deputy across town is reviewing their internal policies to make sure they are up to date. The clerk asked deputies to do that. The clerk recently released a report on harassment that had five recommendations for departments, and departments were asked to look at those. Those range from supporting our employees to showing leadership, improving the capacity we have, best practices, and actually using data, making sure we are tracking these instances so we can better report on the questions that you’re asking right now. The clerk put together a working group of deputy ministers to look into this issue, headed by a deputy at PCO. Again, they are looking at this from three pillars. It’s preventing, responding and supporting. I do think a lot of work is being done on harassment. It’s a topic of great concern to people in the public service.
Diversity, I think there has been progress on certain files. I apologize I don’t have more information on that. I think if you look at the public service survey, there have been some positive results in certain areas. We talked about innovation. There are questions around, Do you feel supported? If you had a new idea, would your supervisor support it? And the numbers are up. We do see progress in some of these files. There is still work to do. We want to be a more agile, risk-tolerant public service that promotes innovation and diversity and is free from harassment and bullying.
Senator Neufeld: You say coordinating and supporting international trade negotiations, as well as supporting the Prime Minister’s international travel and participation in summit-level meetings, and you say there’s always someone from the PCO along with the Prime Minister. Would the PCO have planned the India trip for the Prime Minister? How many people from the PCO would have gone along on the India trip to actually watch and see how well it was doing?
Mr. Shea: Thank you for your question. As I mentioned, we are on every trip. It varies whether it’s official business or vacation. If it was vacations, it would be RCMP for security —
Senator Neufeld: India wasn’t a vacation.
Mr. Shea: I’m just making that contextual difference.
Leading up to the trip, PCO played several important support roles to the Prime Minister, especially with regard to communication, policy advice and on-the-ground support and logistics. We work closely with PMO and the office of protocol at Global Affairs Canada as well as our Canadian missions abroad to support the PM’s international engagements. Absolutely, we were there on the ground and would have provided support to the PM as needed. Global Affairs Canada plays an important leadership role on trade missions, so was very much involved as well. Absolutely, we would have been on the ground for multiple facets, from a communications facet, from a technology/secure communication/administration facet, but also we would have had foreign policy experts who travel with the Prime Minister on these types of trips.
Senator Neufeld: Would pre-planning for the trip be part of that?
Mr. Shea: It would have been a shared approach among all of the different departments involved and the Prime Minister’s office.
Senator C. Deacon: Thank you for your presentation. I have a real fondness for the PCO because I got a phone call from the PCO in June, just prior to my appointment. There will always be a warm place in my heart for the Privy Council Office.
I’m interested in the third point of your roles, fostering a high performing and accountable public service. I would think that leadership role is crucial to the functioning of the Government of Canada, and I would also think that demonstrating productivity improvements in that leadership role would be crucial.
I come from a small business world where your budget doesn’t increase unless you are going to do something pretty amazing, you have someone to invest or you’ve increased sales that justify it. The budget of PCO is up 38 per cent in three years. If you take the tech part out just for this year, it’s up 27 per cent in three years. That’s a pretty big increase when you consider that leadership role.
I fully agree with the important social objectives you have outlined in so many of the priorities. Sometimes social objectives are put at risk when you don’t demonstrate effective and cost-efficient efforts to pursue them. My concern would be that these important social goals could be put at risk if we’re not demonstrating there is great value for money in the investments being made, especially when you consider your important leadership role in the Public Service of Canada.
I’m really interested in the interface between PCO and the line departments and how you make sure there isn’t overlap. There have been many questions on that, but I’m still not getting clarity around how you make sure you’re benchmarking your productivity and demonstrating that you’re delivering really good value for money out of these dramatic increases in your budget that you don’t want every department mimicking. So it’s that interface — how you work with the line departments.
In my world, I had to take priorities off the table — some that were important — because something of greater importance went ahead of it. You couldn’t just spend more money. How do you manage that? Could you provide a little more clarity on how you manage that risk factor? To me, it’s an important risk factor. If you don’t demonstrate that, you do put important social objectives at risk.
Mr. Shea: For the second part of your question, I’ll allow my colleagues to jump in as they feel appropriate because they work closer with line departments than I do, but I’d like to tackle the portion around the budget in order to add context.
Our budget has increased, but most of those increases have been short term for specific projects. If you look at our departmental plan that we released this year and at the outer years, it actually goes back down to levels below 16-17. Most of the funding increase this year relates to the projects I mentioned, as well as the missing and murdered indigenous women and girls inquiry.
Senator C. Deacon: Which is temporary.
Mr. Shea: Which is temporary, but $14 million of our budget this year relate to the missing and murdered indigenous women and girls inquiry. If you actually take that out, you are pretty much on par with where you were a couple of years ago, even with some of those IT investments. Until that inquiry wraps up, we expect that will be the same. The IT investments were heaviest last year, and so they are starting to finish off, and so, again, when you look at the outer years, we are not much bigger. That’s not to say the other part of your question is not important, but I do want to make clear there is not this massive growth that perhaps it appears. I believe it’s important to look at the different pieces.
The main areas we have had specific growth other than that, for this year compared to last year, would be the Impact Canada Initiative that Mr. Mendelsohn has been talking about. We have $1.3 million for that. The work on LGBTQ2 was $1.1 million of that. Laws and policies for Indigenous people, that review was about $1 million. That really accounts for what our increases are. They are not largely those core people. In fact, those areas have not grown dramatically over the last couple of years. I do want to put that context into place.
Mr. Mendelsohn: The question you ask is of fundamental importance. It’s, as you would know, highly complex as well. I’d say at the core of your question is part of the reason that the results and delivery unit was created. The Privy Council Office historically, as Matt was explaining, has a number of key roles. But what we have added is a real interest not just in supporting the Prime Minister and the cabinet to make good decisions but also digging in a little bit on implementation issues and results, so once a cabinet decision is made, are things rolling appropriately? That is obviously part of the role for the Treasury Board Secretariat. It’s also the department’s role. But we have added a focus on key priorities to ensure that they are rolling along well and that obstacles, wherever they may occur, are being cleared.
We have also worked with departments to improve their ability to assess the impact and results of their work. There are now more discussions across the board — cabinet discussions — in the Treasury Board phase on outcomes — the short, medium and long-term outcomes you are targeting — and what is your strategy for assessing whether you’re achieving those or recalibrating and adjusting as you move along.
Obviously, governments have always been interested in results. TBS has always been interested in results. People have always been interested in implementation. However, we are trying to add a more focused look from Privy Council Office to ensure that the implementation and the results piece are going, because your point is exactly right. If we are just measuring inputs, we have spent a lot of money without assessing outcomes, or if we’re just focusing on a process, we’ve spent a lot of money, we’ve set up a process, a lot of people have gone through a program, but unless we’re looking at outcomes, there is the risk that you highlighted, senator. And that’s a culture change. It’s a big change for the system. It’s not going to be perfect and we’re not going to get there overnight, but part of our role and elsewhere in PCO is to put more rigorous focus on outcomes and measurement.
Ms. Campbell Jarvis: As my colleague has outlined on the results and delivery side of things, it’s after some of the decision-making. My role and that of colleagues is to work with various departments in formulating what they’re going to do. In that effort, we provide a friendly challenge function role and ask questions about what and why and what will this achieve. Those kinds of questions and frame develop a bit of that framework that is then taken up by the results and delivery unit and, of course, Treasury Board Secretariat.
Really, your question about efficiency and productivity and value for money for Canadians is front-loaded in the initial conceptualization of an idea, a policy or a program as it’s developed. That’s the role of Privy Council Office vis-à-vis line departments in developing their proposals.
Senator C. Deacon: I’m intrigued by the extent to which that framework would be applied to all government expenditures and programs, not just new ideas. Being very clear, because if you’re not clear on what problem you’re solving, sometimes you’re just spending money. I would encourage that to expand because of your leadership role.
Senator Andreychuk: I’ll drop all the questions I wanted to ask but one. When you are given something to get involved in, whatever topic or subject matter, is it already well developed or are we just getting a policy statement saying that we are going to do something with, for example, the LGBTQ community or some technology modernization project? Are you just getting a principle and then no administration is done, or are you getting the final product where it’s already had built into it the objectives, the principles, the time frames and the cost and then you assess it? What I see is some of the programs that have been coming through are objectives and then there’s a scrambling to try to make it productive. What is your role in making sure that we actually have constructive programs in the administration of those projects and not just an objective?
Ms. Campbell Jarvis: Mr. Chair, I can start the answer to that question. Unfortunately, I think the answer is yes, yes and yes to all of the above. What I mean by that is in the policy and program development implementation of government, when one reads the Speech from the Throne or a budget document, that’s really the opportunity for the government to set out its agenda and its priorities. Sometimes those priorities are very specific and very concrete, and then it’s up to the public service to loyally implement that. Sometimes it may be an idea that government knows it wants to do something in a certain area and then it is asked of the public service to develop options, engaging with stakeholders and others across the country on how something might be undertaken.
It depends on the particular circumstance or the situation, but at the end of the day, all of those ideas and programs start with an intent of the government to do something. It is then put through a very rigorous engagement policy development process, a cabinet decision-making process, scrutiny by the Treasury Board Secretariat, and a policy is translated into a program with funding and grants and contributions and scrutinized by Parliament. I think someone once likened it to the sausage-making process. It can at times can be a bit messy, but there is a lot of rigour, scrutiny and thought put behind the idea through to the implementation and measurement of those results. I hope that helps.
Senator Andreychuk: I’m thinking of the legalization of marijuana. How much went into actual implementation? Before we’re in a position to be implementing it fully in a day or two, I would like to know what the prior process was. I guess I’ll have to pursue that at a later date. Thank you.
The Chair: In this case, since it was brought to the table, can you, Mr. Shea, provide additional information to the clerk on this particular matter?
Mr. Shea: Absolutely.
The Chair: With that, to the officials of PCO, thank you very much for sharing the vision and your professionalism again.
(The committee adjourned.)