National Finance

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THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE

EVIDENCE

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OTTAWA, Wednesday, April 15, 2026

The Standing Senate Committee on National Finance met this day at 6:50 p.m. [ET] to study the Main Estimates for the fiscal year ending March 31, 2027, with the exception of Library of Parliament vote 1.

Senator Claude Carignan (Chair) in the chair.

[Translation]

The Chair: I would like to welcome all the senators and all the Canadians tuning in on sencanada.ca.

My name is Claude Carignan. I’m a senator from Quebec and the chair of the Standing Senate Committee on National Finance.

I would now like to ask my colleagues to introduce themselves.

Senator Forest: Good evening and welcome. Éric Forest, independent senator from the Gulf division of Quebec.

Senator Gignac: Good evening. Clément Gignac from Quebec.

Senator Oudar: Good evening. Manuelle Oudar from Quebec. I’m replacing Senator Kingston this evening.

[English]

Senator Ince: Hello. Tony Ince, a senator from Nova Scotia.

[Translation]

Senator Dalphond: Good evening. Pierre Dalphond from the De Lorimier division of Quebec.

[English]

Senator Pupatello: Sandra Pupatello, an Ontario senator.

Senator MacAdam: Joan MacAdam, Prince Edward Island.

[Translation]

Senator Hébert: Martine Hébert from the Victoria division of Quebec.

The Chair: Honourable senators, today we’re continuing our study of the Main Estimates for the fiscal year ending March 31, 2027.

For our first panel, we’re pleased to welcome, from the Canada Revenue Agency, Hugo Pagé, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch; and Melanie Serjak, Assistant Commissioner, Assessment, Benefit and Service Branch.

From the Department of Finance, we’re also joined by Véronique Beaumier-Robert, Acting Chief Financial Officer, Financial Management Division; and Evelyn Dancey, Assistant Deputy Minister, Economic, Fiscal and Intergovernmental Policy.

Welcome and thank you for accepting our invitation to appear here today. You have almost always done so, and we appreciate your co-operation. You’re also regulars here.

We’ll now hear opening remarks from Mr. Pagé and Ms. Beaumier-Robert. They will each have approximately four minutes. We’ll then move on to a round of questions. Thank you.

Hugo Pagé, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency: Good evening and thank you for the opportunity to appear before the committee to present the Canada Revenue Agency’s Main Estimates for 2026-27 and to answer any questions that you may have on the associated funding.

As you’re aware, the agency is responsible for the administration of federal and certain provincial and territorial tax programs, as well as the delivery of a number of benefit payment programs.

Each year, the agency administers hundreds of billions of dollars of tax revenue for the governments of Canada and distributes timely and accurate benefit payments to millions of Canadians.

In order to fulfill its mandate in 2026-27, the agency is seeking a total of $6.3 billion through these Main Estimates.

Of this amount, just under $4.9 billion requires approval by Parliament, whereas the remaining $1.4 billion represents statutory forecasts that are already approved under separate legislation.

These 2026-27 Main Estimates represent a net decrease of $4.1 billion when compared with the 2025-26 Main Estimates. Of this amount, $4.2 billion is related to statutory forecasts for fuel charge proceeds returned primarily through the Canada carbon rebate, or CCR. This reflects the removal of the federal fuel charge effective April 1, 2025.

Excluding this item, the balance of some $60 million represents an increase of 1% from the 2025-26 Main Estimates.

[English]

A large component of this increase is due to the incremental funding for measures announced in the 2024 Fall Economic Statement and the Budget 2025. These include: $97 million to administer additional measures to combat tax evasion, $40 million to administer tax fairness measures for global corporations, $25 million to ensure the integrity and the timely delivery of the Clean Economy Investment Tax Credits.

Additional increases reflected in the CRA’s 2026-27 Main Estimates are: $51 million associated with the adjusted costs for the administration of the GST in the Province of Quebec, $50 million in the adjustments for contribution to employees’ benefit plans and $27 million to address collective bargaining adjustments. These increases are partially offset by decreases of $175 million due to a planned reduction or the sunsetting of funding to implement and administer various measures announced in previous years’ federal budgets and economic statements.

Additional decreases include $52 million associated with the ramping up of the refocusing government spending measures announced in the federal Budget 2023 and reductions associated with the Comprehensive Expenditure Review. And savings announced in the 2025 federal budget have also been reflected in the 2026-27 Main Estimates. However, the majority of these savings will be reinvested in the CRA to improve service, strengthen compliance and reduce the tax debt.

[Translation]

In closing, the Canada Revenue Agency is committed to contributing to the economic and social well-being of Canadians by providing a secure, intuitive and client-centric service experience. The resources being requested through these estimates will allow the agency to continue to deliver on its mandate. Ensuring a fair tax and benefit system that addresses non-compliance remains a top priority, as is making sure that Canadians have ready access to the information that they need about taxes or the benefits and credits that they qualify for.

Mr. Chair, we’ll be pleased to answer your questions. Thank you.

Véronique Beaumier-Robert, Acting Chief Financial Officer, Financial Management Directorate, Department of Finance Canada: Before I begin my opening remarks, I would like to provide some context. I just returned from 18 months of leave. I’ll strive to answer the committee members’ questions to the best of my knowledge.

[English]

Good evening, Mr. Chair, and members of the committee. Thank you for the opportunity to present the 2026-27 Main Estimates on behalf of the Department of Finance.

I would like to begin by acknowledging that I am speaking to you from the traditional, unceded territory of the Anishinaabe Algonquin peoples.

Joining me today are other departmental officials to assist in providing a more in-depth perspective on the rationale and policies supporting the numbers within the estimates.

[Translation]

Allow me to introduce Julie Trépanier, Director General, Global Affairs, Defence and Security; Evelyn Dancey, Assistant Deputy Minister, Economic, Fiscal and Intergovernmental Policy; Julie Turcotte, Associate Assistant Deputy Minister, Economic, Fiscal and Intergovernmental Policy; Galen Countryman, Director General, Federal-Provincial Relations; Jeremy Weil, Director General, Corporate Finance and Asset Management; Julien Brazeau, Assistant Deputy Minister, Financial Sector Policy Branch; and Trevor McGowan, Associate Assistant Deputy Minister (Legislation).

As you know, the department supports the Minister of Finance by developing policies and providing advice to the government with the goal of creating a healthy and resilient economy for all Canadians.

The 2026-27 Main Estimates outline a total budgetary requirement of $158.3 billion for the Department of Finance. Of this amount, 99% or $158.1 billion pertains to statutory items already approved by Parliament through enabling legislation.

There’s a net increase of $8.6 billion in budgetary statutory payments in 2026-27 compared to the 2025-26 Main Estimates. This increase is primarily attributable to the following items: a $4.7 billion increase in interest on unmatured debt, reflecting the revised projections as noted in Budget 2025; a $2.7 billion increase in the Canada health transfer, representing the 5% minimum growth rate guaranteed by the federal government in February 2023; a $990.6 million increase in fiscal equalization payments that reflects the 3.8% GDP-based escalator applied to the 2025-26 level. These payments evolve annually based on a three-year moving average of nominal GDP growth.

There’s also a $522.4 million increase in the Canada social transfer, aligning with the legislatively mandated 3% annual growth in funding, and a $354.8 million increase in territorial financing reflective of the integration of new and updated data for territorial expenditures requirements and revenue capacities into the program’s legislated formula.

There is a $182.9-million decrease in payments to the International Development Association, reflecting an updated payment schedule agreed to by donor countries upon signing the 21st replenishment in December 2025, and a $200-million decrease in payments to the International Bank for Reconstruction and Development Financial Intermediaries Fund for Ukraine. There was a one-time payment included in the 2025-26 Main Estimates that was ultimately reclassified to a non-budgetary loan in Supplementary Estimates (B).

There is a $226.1-million increase in recovery of alternative payments for standing programs as a result of the forecasted growth of national basic federal tax as calculated in October 2025.

Finally, the voted program expenditures of $147.8 million covers the day-to-day operation of the Department of Finance and includes salaries and goods and services.

The 2026-27 Main Estimates reflect a net decrease of $206.9 million in voted budgetary expenditures since the 2025‑26 Main Estimates. This is primarily attributable to a $193.8‑million non‑recurring transfer payment to Newfoundland and Labrador having been included in the 2025-26 Main Estimates.

Mr. Chair, this concludes my overview of the Main Estimates for the Department of Finance. My colleagues and I stand ready to answer any questions the committee members may have.

The Chair: Thank you very much.

Senator Forest: Thank you for being here this evening. My first question is for the Department of Finance, to get right to the heart of the matter.

Housing is truly a priority for the government, but above all for all Canadians from coast to coast to coast. What are the Department of Finance’s key initiatives for 2026-27 to support the government’s commitment to accelerating access to home ownership?

Ms. Beaumier-Robert: Thank you for the question. I will turn to one of my colleagues.

Senator Forest: You’re going to build us an answer.

Ms. Beaumier-Robert: We will take this question and consult internally. We will get back to you with —

Senator Forest: I have another question. On March 25, the Ford government announced a full one-year elimination of the harmonized tax on the purchase of new homes. The measure doesn’t necessarily apply to a first or second home — it doesn’t matter — which is really interesting. Ottawa reportedly agreed to waive the 5% tax to cover all transactions, not just those involving first-time buyers.

Can you confirm that this decision has indeed been made, and would it be reasonable to think that this measure, which I feel has a huge impact, could apply to the other provinces in the spirit of Canadian fairness?

Ms. Beaumier-Robert: Thank you for the question. One of my colleagues will answer it.

Evelyn Dancey, Assistant Deputy Minister, Economic, Fiscal and Intergovernmental Policy, Department of Finance Canada: I’ll start answering your question, and we also have a tax policy expert here with us.

First, the federal measure consists of payments. These are cash transfers to the provinces and territories. It’s really up to those governments to decide how they will support housing supply within their own jurisdiction.

Ontario has decided to reimburse that amount, but this does not constitute a change to federal tax policy.

Senator Forest: If I understand correctly, regarding the federal 5% tax, a transfer equivalent to what would be paid in taxes will actually be made, and it’s the province that will . . . . So there is no limit? There are transactions totalling $30 billion; so, with a 5% tax, that amounts to $100 million, and you’ll transfer the $100 million. Is that right?

Ms. Dancey: The federal government has already determined the amounts for each jurisdiction; the information has already been communicated to the provinces and territories regarding the amounts that will be reimbursed once the legislation is approved by Parliament.

Senator Forest: Can we know the amounts? Is this somewhat similar to the principle of the fuel excise tax refund, which was reimbursed at the time with lump sum payments by province and by community?

Ms. Dancey: I think that the specific amounts have not yet been made public. They were shared with the jurisdictions, so I think it’s up to the government to determine when this will become public. We have provided advice. Some amounts have already been disclosed.

Senator Forest: Just to be clear and to make sure I understand correctly, are lump sum payments actually allocated to each province or territory for the construction of new homes?

Ms. Dancey: Yes, that’s right. To increase supply, yes.

Senator Forest: Would it be possible to have something? It seems to me . . . . I can’t understand how —

The Chair: [Technical difficulties] Could you check to see if you can send us that information?

Ms. Dancey: Of course.

The Chair: From what we understand, the province can use these funds as it sees fit. In Ontario’s case, they said, “For us, it will be a provincial tax credit and the equivalent of the federal tax. That’s what we’re providing as a credit,” whereas another province could decide to provide it as a subsidy or in another form.

Ms. Dancey: Exactly.

The Chair: But only to create housing within the parameters. So would it be possible to have a list of provinces with the amounts allocated to them? If there are draft agreements or guidelines on how those funds should be used or on the program parameters, we’d like to have them, as well.

Ms. Dancey: We’ll take note of all that, of course.

Senator Forest: For example, the premier who has just been sworn in says she wants to eliminate transfer taxes.

The Chair: From this fund.

Senator Forest: By using this fund to finance that. Something really needs to be clarified. I think we would appreciate —

The Chair: We assume this information is public; otherwise we’ll ask the minister. We’ll have him testify.

Julie Turcotte, Associate Assistant Deputy Minister, Economic, Fiscal and Intergovernmental Policy, Department of Finance Canada: I know you’ve had a lot of discussion since then. Just to clarify, the amount has been published. The federal government is allocating $1.7 billion to the provinces and territories — this amount is subject to parliamentary approval, of course.

We’ve seen a significant slowdown in construction in some regions and sectors. This could pose risks to the housing supply in the longer term. It’s really a matter of giving the provinces and territories the freedom to decide how best to stimulate construction in their region.

The Chair: We would like to know the breakdown by province and the program conditions for each province.

Ms. Turcotte: Yes, we can provide them to you.

The Chair: Thank you.

Senator Gignac: I welcome all our witnesses. I will continue with Ms. Beaumier-Robert for my question. Welcome back. We’re glad to see you again.

I was looking at the 2026-27 Departmental Plan. I had some fun comparing it to plans from previous years, and I noticed that the Department of Finance has significantly modified its departmental result indicators compared with previous years. I’m thinking in particular — I’ll pick one, and this one has been removed, by the way — of the percentage of major international organizations and rating agencies that give Canada’s financial policy frameworks a favourable rating. So the reference to the credit rating has disappeared.

Is it because the government is afraid of losing its credit rating that it no longer includes it in its departmental results plans, or is it because, owing to your 18-month absence, someone dropped the ball and forgot to put it back?

Ms. Beaumier-Robert: Thank you for the question. Again, I will turn to one of my colleagues, Julien Brazeau.

Julien Brazeau, Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance Canada: Thank you for the question. Yes, some of the department’s success measures have been modified. We felt that the government had little control over certain measures. Some of them were hard to quantify. Our department undertook a broader review where the entire department examined its success measures.

Senator Gignac: I’m sorry to interrupt. I can understand why you’ve eliminated the greenhouse gas reduction target because of the government’s new vision, but you’ve been systematically including the credit rating for a number of years. The Minister of Finance rightly boasts that Canada has the best credit rating in the G7. It’s surprising that, all of a sudden, the Minister of Finance no longer includes maintaining a favourable rating in his departmental result indicators. I need a little more explanation. A written response would also satisfy me.

Mr. Brazeau: Yes, I can certainly get back to you with a written response. However, I would say that this is a measure we always take seriously. As you say, the Minister of Finance often talks about it. We work closely with credit rating agencies. This remains an important measure, but, as I said, the department was looking to modernize its approach. I will get back to you with a more detailed written response on this measure.

Senator Gignac: I was concerned to see that, all of a sudden, it had disappeared. I wondered if it was because of the new budget presentation, where the goal is only to balance the operating budget, not the overall budget. Would this have an impact on rating agencies? In any case, I would like some clarification.

Moreover, it is said that staff will be reduced by 15%. It is explained that this decrease is primarily due not only to the comprehensive review but also to the expiration of time-limited funding. Which of the department’s programs are expiring?

Ms. Beaumier-Robert: For example, there is the funding we received for the G7, which ended in 2025. Just give me a minute.

Senator Gignac: Otherwise, can you send us an answer in writing? I don’t want to catch you off guard with this.

Ms. Beaumier-Robert: Yes.

Senator Gignac: I was just surprised. When I think about finances, there are always equalization programs. There may be details, but I was a little surprised that this was among the reasons given to justify the 15%.

My next question is for the Canada Revenue Agency. I would call it a “tough question.” Thank you for joining us. A written answer would also be fine. The Auditor General published a somewhat critical report on the Canada Revenue Agency. She had conducted tests; calls were made to the Canada Revenue Agency in February and March of last year. For businesses, in 54% of the cases, the answer was accurate, but for individuals, the accuracy of the answers provided by Canada Revenue Agency staff and officials was only 17%. They were practically misleading people.

With the new estimates, will there be a special effort to train people who handle phone calls? Can you tell us more about that? Thank you.

Melanie Serjak, Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency: I can answer the question. Thank you very much. We appreciated the Auditor General’s report, even though it was difficult. There are always lessons to be learned. We are currently implementing her recommendations.

I would like to provide some clarifications on the published results. We have a very high volume of calls to our contact centres. That is very clear. They are divided into two categories. There are people who call us specifically for their own accounts. The Auditor General found that our methods for assessing the accuracy of answers — which is over 90% — were sound. As for the other category, about 20% of callers contact us regarding very general topics. I believe they made about 50 calls to our general line, resulting in an accuracy rate of 17%.

That’s unsatisfactory to anyone; that’s very clear. We continue to provide training and evaluate agents and the training to improve this result. We’re doing that right now. It was still a very small portion, covering very general questions, but we accept that and are making efforts to improve.

Senator Gignac: Thank you for the clarification; it’s appreciated.

The Chair: I would just like to clarify the issue of key performance indicators. What I understood from your answer is that you don’t have control over them, so you removed them. You have an objective third party that conducts an assessment and assigns a credit rating, and while you have control over the finances to determine whether you will achieve that result or not, a third party evaluates you and tells you whether you’re performing well or not. It seems to me that you can’t justify removing this key performance indicator because you don’t have control over it. I would just like some clarification. I must have misunderstood.

Mr. Brazeau: Thank you for the question. As part of the broader initiative, the department has revised all its key performance indicators, and there are a number of reasons why we made changes. Some were made because they were measures the department couldn’t control, no matter how hard we worked. These were subjective decisions. I’m not saying that was the case in this circumstance. I’ll get back to you on the justifications regarding credit rating agencies, but, in the overall exercise, we were looking to modernize our approach to key performance indicators. We felt that these were not necessarily measures of success. It was automatic that we would have —

The Chair: When it’s automatic, it doesn’t require a great deal of effort. I understand that this is not a performance criterion. Thank you. I just wanted to clarify to make sure I didn’t misinterpret anything.

[English]

Senator MacAdam: My first question is for the Canada Revenue Agency. According to the CRA’s 2026‑27 Departmental Plan, individual compliance activities brought $8.2 billion in fiscal impact, or $10.75 billion, including COVID‑19 individual benefits verifications. I’m just wondering if you could update us on the status of the recovery of COVID benefits?

Mr. Pagé: Maybe I’ll start with the individual benefits. Last time we were here, we shared with you that there was an outstanding balance of roughly $11 billion that needed to be reimbursed. Our estimate, from an accounting perspective, was $1.5 billion would get collected. In Budget 2025, the government decided to continue with the collections effort, so the Department of Employment and Social Development received funding, which they then transferred over to the agency to continue our collections effort.

So far this year, we have collected roughly around $600 million. The numbers will be validated at year end, so we’re in the process of closing our books, as you’re aware. March 31 is our year end. At the end of the summer, when we’re ready to issue audited financial statements, we’ll have more accurate figures.

Senator MacAdam: The Departmental Plan states the number of full-time equivalents is estimated to decrease by 8.9%, approximately. These decreases are partially offset by a reinvestment of a portion of the Comprehensive Expenditure Review savings to improve services, strengthen compliance and reduce tax debt. Can you clarify how that decrease in funding can lead to reinvestment and improved services?

Mr. Pagé: There are two parts of the Comprehensive Expenditure Review decision. The first part, as you pointed out, is the agency has committed to generating savings of roughly $235 million, and these savings will come from mainly two things; one is we are looking to improve our process efficiency, so leveraging technology, be looking at our processes, and streamlining so that will form part of the savings. Then the other part of the savings will come from reduced efforts related to various tax measures that the government has cancelled, so for instance, the fuel charge, the carbon rebate and, as announced in Budget 2025, the underused housing tax. These savings will then be kept at the agency.

They will be reinvested in areas that generate revenue, areas that collect taxes and also reinvested in technology. Through those investments, we are expecting that the agency will generate at maturity, so in three years it will be a fiscal impact of $1.1 billion.

Senator MacAdam: Thank you. My next question is for Finance Canada. Your 2026-27 departmental plan identifies a fair and competitive tax system as a key priority. Can you outline some specific short-, medium- and long-term measures the department intends to implement to strengthen Canada’s tax framework?

Ms. Beaumier-Robert: Thank you for the question. My colleague will be happy to answer your question.

Trevor McGowan, Associate Assistant Deputy Minister (Legislation), Department of Finance Canada: Thank you for the question. Apologies, I didn’t hear very well from the back of the room.

In terms of examples of how recent tax amendments could contribute to a fair and competitive tax system, one is recent announcements that were enacted as part of Bill C-15 related to transfer pricing rules. Those bring Canada’s transfer pricing rules and our income tax system more in line with international standards so that multinational companies play by one set of rules, and the Canadian tax system is up to date with international standards.

Transfer pricing rules apply to ensure that the prices charged between members of a multinational group reflect arms-length prices, so these kinds of arrangements cannot be used to artificially shift income outside of a country like Canada to a lower tax jurisdiction. This amendment both helps preserve the Canadian tax base, ensure that multinationals have the same reportable income in Canada as our domestic companies, and ensure that they can compete on a level playing field, and also help ensure that Canada’s rules are consistent with international standards. That’s one example of how we’re making those types of changes.

Senator MacAdam: Do you have any other examples?

Mr. McGowan: Regarding our domestic tax rules. The proposed amendments from the last budget would deal with passive income earned through private corporations and tax planning that had arisen whereby certain deferrable taxes under Part IV of the Income Tax Act could be deferred by a year, or by multiplying the planning, two years, three years, up to indefinitely so that certain taxpayers were able to provide either an extended deferral or an indefinite deferral of their passive tax liabilities. By having a tiered chain of corporations in their group, each with different taxation year ends, this kind of artificial planning provided an unfair and unlevel playing field between individuals or companies who were willing and had the resources to engage in this type of planning and those that simply earn their income directly, either as individuals or through a single corporation.

These proposals, which were announced in the last budget and have yet to be legislated, would help level the playing field and ensure that everybody earning this sort of passive income through a private corporation, would pay the same level of tax.

Senator MacAdam: Thank you.

[Translation]

Senator Oudar: My question is for Finance Canada. Thank you all for being here this evening. I was looking at the departmental plan; I also like to look at the results indicators, and consulting the GC InfoBase is always interesting. Getting back to the departmental plan, I see that one of the commitments is that the annual federal budget include an assessment of the impacts of new spending and income measures on various groups of people. I see that this is one of the targets that was not met, which you likely attribute to the timing of last year’s budget.

I would like you to tell us a bit about what is being examined to assess these impacts. There is a broader obligation to ensure prudent allocations, public funds and sustainable fiscal capacity, so this is one of the result indicators that I think is very relevant. Could you give us some examples of how you conduct those assessments and tell us what you measure?

I just want to tell you that, despite all the talk of transparency, when I try to access reports from previous years, I’m told that they’re archived and that citizens don’t have access to them. Neither do I, by the way. Yet we are told that the goal is for them to be accessible to all citizens. This is just a side note regarding previous years; there is probably an automatic archiving process in place, but I think it would be interesting to have access to reports from previous years. My question is about the current indicator, not previous years. My question is not about archiving, as you will have understood. I would like to know how you assess the impacts and for what type of group — we are talking about gender, diversity, quality of life.

Ms. Beaumier-Robert: Thank you for the question. Your comment is duly noted. I’ll turn the floor over to my colleague.

Ms. Dancey: Thank you very much for the question and the comment on the website. We’ll look into that right away.

We would be happy to discuss that analysis in detail. This is a massive undertaking within the department, but also across the public service, as every proposal considered by the Minister of Finance and by the government for inclusion in the budget is accompanied by such an analysis prepared by the department responsible for the policy. We have a form that contains a number of questions and guidelines, for example, which I would be very happy to share with the committee.

For example, here are a few elements: Which populations, individuals or regions are targeted by the measures, as well as those that are expected to experience positive or negative impacts? Populations are defined by age, for example, from the youngest to the oldest, by education level, whether they are workers, students, and so on. What are the impacts by region in Canada and the impacts on the climate and the environment? We have very specific questions and tools to help each department conduct high-quality analyses. All of this is included in an impact report that is prepared alongside the budget. Unfortunately, you weren’t able to access it, but, for example, for Budget 2025, we have an excellent appendix with all these details and measures.

Senator Oudar: Among the measures that have a negative impact, are any especially concerning for the three things I mentioned, gender, diversity and quality of life?

Ms. Dancey: That’s exactly it. We try to work with our colleagues and other public servants. In cases where impacts are less than optimal, we always try to figure out whether it’s possible to make improvements or to create the conditions for the measure to benefit more people.

We have a number of examples in those reports as well.

Senator Hébert: I gather that, as an organization, you have the same problem most businesses across the country face: recruiting and attracting workers, and retaining expertise. It’s not easy. Revenue Canada and tax laws are anything but simple. People go to university for years to be able to understand them.

Employees who don’t necessarily have the same qualifications as those experts are often called upon to answer questions.

We have a taxation system based on self-reporting. One of the tenets for maximizing tax compliance is trust in the tax collection agency. I want to talk more about that and find out what measures you’re taking.

The Auditor General looked at this issue, but I think the Canadian Federation of Independent Business also does a lot of research on it, including mystery calls. I believe its findings were similar to the Auditor General’s.

Do you have a program or specific funding for ongoing training?

What measures have you put in place to try to increase that trust and improve the accuracy of the responses you provide?

Ms. Serjak: It is paramount that Canadians trust the Canada Revenue Agency, and they can. That’s why I wanted to clarify my earlier answer. We have a quality assessment program where we review 100,000 calls annually, on average. That helps us to check the accuracy of agents’ responses and their professionalism, and identify training pathways when we detect a deficiency.

We also believe in being transparent with Canadians. That is why, since our 100-day service improvement plan, we publish updates on a website every two weeks. Results towards the targets we’ve set are available on the site, so that Canadians can track our progress on improving service and response accuracy.

Those indicators are there for everyone to see, including information on response accuracy, caller satisfaction, our ability to meet service standards and even our inventories.

As I mentioned, that is critically important in order for Canadians to trust us.

As for training, specifically, and the pathways you asked about, our call centre agents go through training that lasts between two and 13 weeks. It depends on their current learning level and the complexity of the calls they will handle.

They then have a mentor — a coach, if you will — and their performance is evaluated monthly and on a regular basis. At the end of the month, we use very specific criteria based on the calls we received to assess whether they make the grade — or not, in which case, we take further measures.

It’s something we take seriously. We are doing everything we can.

Senator Hébert: Do you have a target to spend a certain amount on training? Take Quebec, for example. Organizations there have to spend at least 1% of payroll on training.

Do you have a target requiring you to allocate a certain portion of your budget to agent training every year, given what an important role it plays?

Ms. Serjak: If possible, we can get back to you with the information on how much of the budget we have calculated and allocated for that purpose.

Senator Hébert: If you have a set annual target, yes, it would be helpful to get that information.

The Chair: Do you have a line specifically for professionals? If my accountant has a question, it’s going to be much more complex than the average citizen’s. Do you have a separate line for professionals, as opposed to regular citizens?

Ms. Serjak: Coming back to our service delivery indicators, I can say that we’ve had problems, to the point that we sometimes weren’t able to answer the calls of citizens who were trying to get through to an agent.

We’ve been working on that since September. Currently, we respond to about 74% of one-time callers weekly. That’s a significant improvement over last year’s tax season. Things have gotten much better.

In addition, we’ve launched a unique pilot project: professionals can now submit a request for a callback from a level 2 agent as soon as one is available to answer their questions. We have different levels of agents.

We make about 200 callbacks a week. As soon as an agent is available, we call back the professional who reached out to us for assistance by filling out a form online.

By assisting a professional more quickly, we know that we are indirectly helping many people further down in the queue. The project is moving along nicely, and we’re waiting until it’s over to draw our final conclusions.

About 60,000 professionals are registered with the agency. We reached out to that network to spread the word.

The Chair: Thank you.

Senator Dalphond: You mentioned earlier the transfer to Quebec for the administration of the GST and QST. As I understand it, the Department of Finance deals with that.

How are this year’s costs being adjusted? Do they take into account the obligation on the public service to cut its operating budget by 15%?

Ms. Beaumier-Robert: The 15% spending reduction target does not apply to transfer payments to the provinces. Our review did not include statutory appropriations, only voted appropriations.

The first line in the Main Estimates shows operational spending for this year as $147 million, versus $354 million last year. The 15% reduction applied to that funding.

Everything having to do with provincial transfers, whether for health or equalization, is outside the scope of those cuts.

Senator Dalphond: The transfer for the administration of the GST is for a service. Does your agency provide that service to Quebec as well?

Mr. Pagé: We pay Revenu Québec to administer the GST in Quebec.

Last year, we gave them $207 million. The payments are reviewed annually. The cost we pay is based on our savings.

Senator Dalphond: Based on what?

Mr. Pagé: On our savings. That means we reimburse them for doing what we would’ve had to do otherwise.

Senator Dalphond: Are you cutting 15% of your staff this year, in line with the government’s targets?

Mr. Pagé: No. As I explained earlier, part of the reduction represents about 5%. That amount is reinvested within the agency, mainly in compliance activities, which are partly performed by Revenu Québec. For Revenu Québec, then, the budget cuts won’t affect the total amount.

Senator Dalphond: You are cutting staff by 5%, though?

Mr. Pagé: On one hand, certain activities are being cut such as the carbon rebate work.

Senator Dalphond: That was eliminated last year.

Mr. Pagé: It was eliminated.

Senator Dalphond: I had asked you what happened to the people who did that work.

Mr. Pagé: That’s right. Now, there are positions that were cut in line with the changes that were made. That money is being allocated to other activities, ones that generate revenue and support collections, as well as to IT investments.

Senator Dalphond: Technically speaking, then, you administer the GST outside Quebec, in the rest of Canada, and you didn’t make any staffing cuts on that end. Is that right?

Mr. Pagé: The agents who do that work are Revenu Québec agents, so they work for the Government of Quebec. The amount we give Quebec is based on our expenditures, but that part of our spending wasn’t significantly impacted.

Senator Dalphond: All right.

On the collections front, how’s the progress going on the recovery of COVID-19 benefits that were paid out but shouldn’t have been? It was in the billions of dollars. I can’t remember whether it was $12 billion or $14 billion.

Mr. Pagé: It was $11 billion.

Senator Dalphond: Where are you on collecting that money? You were at $3 billion, $4 billion or $5 billion a while ago. Are you making progress or have you hit a wall?

Mr. Pagé: We’re making progress. I mentioned earlier that the last time we were here, in the fall, I believe we indicated that $11 billion was still owing. We estimated that about $1.5 billion was recoverable, because we know that a large portion of that debt is owed by people in vulnerable populations.

Senator Dalphond: Of that $11.5 billion, how much was considered to be recoverable?

Mr. Pagé: It was $11 billion, and we estimated that we could recover $1.5 billion.

Senator Dalphond: About 10%, then?

Mr. Pagé: About, yes.

The Chair: That you estimated you could collect?

Mr. Pagé: About.

We continued our collections work this year. In Budget 2025, Employment and Social Development Canada received money to be transferred to the agency to carry on that work. We estimate that we’ve collected about $600 million, but the final figures will be ready in the next few months; we’re finalizing our financial statements.

Senator Dalphond: You collected $600 million, but you were aiming to recover roughly $1.5 billion. Is that right?

Mr. Pagé: As of now, but we’ll continue working on it for another two years.

Senator Dalphond: That was out of the $11.5 billion that was outstanding?

Mr. Pagé: The $11 billion.

Senator Dalphond: Basically, then, $10 billion will not be recovered?

Mr. Pagé: It’s an accounting estimate. Errors can occur. However, what we did was take a close look at the population that owed the money, and a big chunk of that population are people who can’t afford to pay.

Senator Dalphond: Do you have a special team that deals with that part of collections?

Mr. Pagé: Yes.

Senator Dalphond: What I gather is that you’ve recovered $600 million, which is about a third of your $1.5-billion target.

How much does it cost to run the team and do the collections work?

Mr. Pagé: All costs included, we received about $50 million.

Senator Dalphond: It’s about $50 million annually.

Mr. Pagé: About, yes.

Senator Dalphond: It’s worth continuing the effort, to try and possibly collect another $600 million. Is that right?

Mr. Pagé: If the trend continues, yes.

[English]

Senator Pupatello: First, I wanted to start with a comment to the CRA. I know there is a lot of negativity out there, but I have to tell you that my own experience, which is only anecdotal, has always been great with these people when I call. I really like the feature of giving them my number and letting them call me back, but I’m also aware that my own accountant has to keep a line open just on hold for the CRA. It’s the same experience where they just can’t get through. They have so many files that need to be finished and put through, but they can’t. My own experience is anecdotal and always positive.

Bob Hamilton sends me too many letters. I have never met this guy. I would like to meet him. We’ve turned him into a verb in my household. Depending on what his letter says, I say, “I’ve been Hamiltoned,” which means I owe money. I haven’t met him yet. Does he just send me mail or everybody? So it’s not a personal thing. I’m teasing, obviously.

Anyway, I did have a question overall. Whose job is it? When we saw the budget come out, and now, as it’s rolling out through these estimates, you looked at unused housing tax, you saw the cost of producing that type of initiative. Not worth it, let’s get rid of it, and everything happened.

Whose job is it to do that review and to say that something is not worth it? It’s going back to the questions from Senator Oudar around targets. You do it because you will hit this benefit, goal, money, activity, whatever it is, and it really isn’t panning out, so you know you need to take it away.

Government has long been accused of starting a lot of new programs but never eliminating the old ones across all ministries. In the central agencies, whether it be Treasury or Finance, it’s somebody’s job to say, “We need to review that” and then actually decide to get rid of it. The shortage of people means you will likely keep people but have them doing something different. So they shouldn’t be afraid of that kind of exercise. I’m just not aware that happens.

Mr. McGowan: That is something we do at the Department of Finance in the Tax Policy Branch, working closely and in collaboration with our counterparts at the Canada Revenue Agency on a continuous basis. We are often, after any new measure, like the underused housing tax, which has been introduced, we will follow up and stay on top of it. Once we have experience working with the Canada Revenue Agency, we meet with external stakeholders as well, taxpayer groups, groups of professionals and things like that.

We are kind of always keeping up with how these measures are being rolled out, whether they are worth it or they are delivering what has been promised, whether there are unexpected frustrations with the rules, unduly high compliance burdens or things that could be simplified and things like that. That is ongoing.

Senator Pupatello: Is it under some kind of tax policy that you would do that, or would that extend into other types of programming?

Mr. McGowan: Certainly, I work in the Tax Policy Branch, so that is our focus. I’m sure elsewhere they do it as well.

I should say as well that there are periodic reviews of tax expenditures and things like that, which is a larger project in addition to our ongoing work as well.

Senator Pupatello: I have a quick question on Buy Canada. The way we’re talking about what you need to do internally to automate AI generation that’s going to do whatever it’s going to do in the future — do we have local content in those buys? Is that a question for procurement coming up in the next panel? How are you managing that?

Mr. Pagé: I can speak a little bit about it, but I think Shared Services Canada and PSPC, who are coming up next, are probably best positioned to answer that.

As far as the agency is concerned, we are very aware of ensuring that data sovereignty is respected. When we put forward contracts — which are typically issued through Shared Services Canada, or SSC — we make sure that these requirements are in place.

The Chair: Thank you.

[Translation]

That concludes this half of the meeting. Thank you. Coming back wasn’t too tough, Ms. Beaumier-Robert?

We’ll wait for the additional information.

Honourable senators, we are now moving on to our second panel. From Public Services and Procurement Canada, we are pleased to have with us today Michael Hammond, Chief Financial Officer, Finance Branch; Mark Quinlan, Senior Assistant Deputy Minister; and Dominic Laporte, Senior Assistant Deputy Minister, Procurement Branch.

Also joining us, from Shared Services Canada, are Scott Davis, Chief Financial Officer, Chief Financial Officer and Procurement Branch; and Patrick Comtois, Director General for Enterprise IT Procurement Enablers and Cloud, Chief Financial Officer and Procurement Branch. You must have quite the business cards.

Thank you for accepting our invitation. We will now hear opening remarks from Mr. Hammond and then from Mr. Davis. Afterwards, we will proceed to questions.

Michael Hammond, Chief Financial Officer, Finance Branch, Public Services and Procurement Canada: Good evening, Mr. Chair. Thank you for inviting me to speak to the Main Estimates for Public Services and Procurement Canada, PSPC, for fiscal year 2026-27. Let me begin by acknowledging that we are gathered on the unceded territory of the Algonquin Anishinaabeg Peoples. Joining me this evening are my colleagues Dominic Laporte, Senior Assistant Deputy Minister, Procurement Branch; and Mark Quinlan, Senior Assistant Deputy Minister, Real Property Services Branch.

PSPC is tabling a total opening net budget of approximately $5.9 billion in the 2026-27 Main Estimates. This represents a net decrease of $1.3 billion from the previous fiscal year. Note that if approvals are granted, funding for PSPC may also be adjusted during the year through the supplementary estimates.

Amid a rapidly evolving global economic and security environment, PSPC is supporting the Government of Canada’s focus on reducing spending in order to enable greater investment. PSPC continues to be committed to the responsible management of resources as it supports the government’s key priorities. The department is supporting the comprehensive expenditure review through efficiencies and a focus on the core elements of the government’s agenda.

The department continues to work on a number of important projects including establishing the new Defence Investment Agency as well as applying the Buy Canadian Policy.

[English]

At the same time, PSPC continues to provide central procurement, translation, real property management and other common services to the Government of Canada.

While carrying out this work, PSPC has been able to reduce its overall request for funding in these Main Estimates.

The largest decrease in PSPC’s Main Estimates, when it comes to year-over-year variances, is for the long-term capital investment plan and pre-planning for capital, with a total decrease of $1.2 billion.

This decrease is largely due to the completion of contractual milestone payments related to major infrastructure initiatives such as the Energy Services Modernization Project.

PSPC can attribute a decrease of $97.5 million in operating funding related specifically to the Government’s Comprehensive Expenditure Review.

As part of the expenditure review, PSPC will be reducing the administrative burden for internal processes at the department, alongside making sure our workforce has the right mix of skills and roles.

PSPC is also projecting decreased actual expenditures on professional services and travel from 2024-25 to 2025-26.

Mr. Chair, in its role as pay administrator for the Government of Canada, PSPC, delivers pay to over 430,000 current or former public servants from over 100 departments and agencies.

The Main Estimates contain a year-over-year decrease of $57.3 million related to the current pay administration program.

Alongside this reduction, PSPC is seeking an increase of $67.6 million to support continued rigorous testing and building of the next generation pay and HR system.

Mr. Chair, additional variances in PSPC’s Main Estimates include, among others, a decrease of $27.7 million following Canada’s hosting of the G7 Summit in 2025 and for which funding is no longer required.

Finally, the department’s Main Estimates also include an increase of $20.7 million in funding for non-discretionary expenses associated with Crown-owned buildings and leased spaces. This increase provides protection for accommodation costs beyond PSPC’s control, and any unspent funds at year end are returned.

Thank you for the invitation to appear today. I’m happy to take your questions.

[Translation]

Scott Davis, Chief Financial Officer, Chief Financial Officer and Procurement Branch, Shared Services Canada: Thank you, Mr. Chair, for the opportunity to discuss Shared Services Canada’s 2026-27 Main Estimates. Before I begin, I would like to acknowledge that we are gathered on the unceded and traditional territory of the Algonquin Anishinaabe Nation.

I am accompanied by Patrick Comtois, Director General for Enterprise Information Technology Procurement Enablers and Cloud, Chief Financial Officer and Procurement Branch. Shared Services Canada, or SSC, modernizes and operates the Government of Canada’s core IT infrastructure. This includes the connectivity services, cybersecurity services, digital services and hosting services that enable departments to deliver on their mandates.

This technology underpins programs and benefits, public safety and national defence. It supports everything from benefits delivery and border security to emergency response. In short, without this IT infrastructure, many services to Canadians would be disrupted or could not be delivered at all.

In addition, as a common IT service provider, SSC helps reduce costs through scale, standardization and government-wide buying power, while improving reliability, security and interoperability across government systems.

[English]

Mr. Chair, in the 2026-27 Main Estimates, SSC is seeking $2.36 billion. This is a net decrease of $128.6 million compared to 2025-26. This overall reduction is due to the Comprehensive Expenditure Review and adjustments to multiyear funding profiles, including the sunsetting of time-limited funding approved in previous years.

The Main Estimates request of $101.4 million in new funding includes support for core IT services across departments, such as networks, workplace technology devices and digital services that departments rely on every day to serve Canadians and support public servants; and a project to automate and accelerate large parts of the security monitoring process, allowing us to better predict, detect and respond to cyber threats. Shared Services Canada is also seeking an increase to its vote-netted revenue authority. The associated revenue will fully offset costs, resulting in no net impact on funding, while providing greater flexibility to respond to client demand.

Shared Services Canada plays a central role in delivering the government’s agenda for digital transformation, efficiency and the responsible deployment of artificial intelligence tools and automation. This includes ensuring digitally sovereign solutions amid increasing geopolitical uncertainty.

Shared Services Canada is working closely with departments and agencies to apply emerging technologies, such as AI, chatbots, automation and predictive analytics, to modernize operations, reduce costs and improve service delivery for Canadians. This work includes SSC’s in-house generative AI tool, CANChat, a secure platform for public servants that supports productivity while ensuring that data remains in Canada and is hosted on government-accredited infrastructure. We are preparing for broader deployment across government beginning this spring.

These and other initiatives require sustained investment but are essential to building a more resilient, secure and innovative digital government while maintaining uninterrupted delivery of existing services.

Over the years, SSC has absorbed inflationary pressures and rising demand by leveraging efficiencies and economies of scale. However, the growing volume and complexity of IT requirements, particularly related to cybersecurity and AI, mean additional resources are needed to manage operational risk and sustain effective service delivery. Shared Services Canada is also reviewing all aspects of its IT procurement through benchmarking, prioritizing Canadian vendors and ensuring the best value for Canada, with a focus on life-cycle costs, performance and resilience.

We have also implemented the “buy Canadian policy” to strengthen domestic innovation and digital capacity by prioritizing Canadian suppliers, materials and content whenever feasible, while remaining compliant with trade obligations.

In conclusion, SSC will continue to deliver and strengthen essential digital services that Canadians depend on every day while advancing secure, efficient and innovative government operations.

[Translation]

Thank you, Mr. Chair.

[English]

I welcome your questions.

[Translation]

The Chair: Thank you, Mr. Davis.

Senator Forest: Welcome to the committee this evening. My first question is for the PSPC officials. It’s about the Defence Investment Agency. I’d like you to explain the government’s management philosophy to me. On one hand, it’s asking you to streamline, make cuts and maximize budget efficiencies. On the other hand, it’s creating new agencies. Build Canada Homes is one. The Canada Mortgage and Housing Corporation had all the necessary expertise and could have delivered the same service, but the government created a separate agency, Build Canada Homes.

When I look at the Defence Investment Agency, I look at the expertise PSPC has, and you’re doing that job. There’s a great deal of skepticism. I think that a lot of the people who end up working at the Defence Investment Agency will come from PSPC. I can’t wrap my head around the management rationale. You’re being asked to streamline, but then the government is creating more agencies. The question is for Mr. Hammond.

[English]

Mr. Hammond: Thank you very much for the question, senator.

I’m probably not the best person to comment on the Defence Investment Agency. I can tell you that the agency is being designed and set up to look at streamlining the procurement in the defence space. Obviously, PSPC is supporting the agency, as it’s stood up as a stand-alone entity, and we will provide support from personnel and corporate services perspectives in order to make sure they are efficient.

[Translation]

Senator Forest: They’re building the plane in flight. The connection between PSPC’s responsibilities and the agency’s isn’t clear, then? Will it be worked out in the coming months?

[English]

Mr. Hammond: Thank you, senator, for the question.

The actual specifics in terms of how the agency will be established and the role that it plays versus PSPC are still being worked out at this point in time.

[Translation]

Senator Forest: We’ll see. Stay tuned.

In recent years, the government has often been criticized when making big purchases, particularly for defence procurement. The surveillance aircraft come to mind. In that case, Bombardier wasn’t given an opportunity to bid on the contract. Another case that comes to mind is the process that led to Davie being excluded from the shipbuilding procurement policy. Given the size of the defence investments the government has announced, can you tell us about the efforts under way, especially at PSPC, to ensure that military procurement processes take full advantage of Canadian businesses?

[English]

Mr. Hammond: Thank you for the question.

I might turn to my colleague, who might be able to speak from a procurement perspective. While defence procurement is not his area of expertise, there are certain elements that are similar between the two.

[Translation]

Dominic Laporte, Senior Assistant Deputy Minister, Procurement Branch, Public Services and Procurement Canada: Thank you for your question. The Buy Canadian Policy applies to defence procurement and all federal procurement in strategic economic sectors, such as defence and, of course, security, which is a strategic sector. What’s the goal? The goal is to prioritize Canadian content in future purchases. Currently, the threshold is $20 million.

Points will be awarded for Canadian content as part of any competitive procurement process in a strategic sector. Say I’m a supplier. The more Canadian content I can include in my bid, the more likely I am to be awarded the contract or the better my chances of being awarded the contract.

When it comes to defence infrastructure projects, we are talking about the construction of buildings and military bases, and we have a policy to prioritize the use of Canadian materials. Going forward, any steel, aluminum or wood products will have to be Canadian-made or Canadian materials. That requirement applies not only to the prime contractor, but also to the entire supply chain. That’s an example of the Buy Canadian Policy in action.

A number of other defence procurement measures are being taken, in coordination with our colleagues at Innovation, Science and Economic Development Canada. I’m not as well versed in those, but I do want to emphasize the Buy Canadian program in the defence sector.

Senator Forest: A type of positive discrimination is being applied to the assessment process. In naval procurement, we’ve often seen that the two authorized shipyards couldn’t get an opportunity as a supplier or even a contractor of work in Korea. Do we have contacts across the industry to say, “Listen, the orders are coming”? Is a relationship being built with the industry, so that our companies can adapt and take better advantage of your requests for proposals?

Mr. Laporte: I think the experts in defence procurement would be in a better position to answer that specific question, about the relationship with the naval industry. I can tell you, though, that in working on the Buy Canadian Policy, we work with steel producers. For instance, we make sure that we have the capacity in Canada to manufacture what’s needed for the different types of steel. We make sure that we encourage manufacturers to have that capacity. In construction, on our end, on PSPC’s end, that relationship with the industry is very much there.

We worked closely with them to build the policy. I know that my defence procurement colleagues are no doubt in close contact with the defence industry as well, but I wouldn’t want to speak for them.

Senator Gignac: Welcome to our witnesses. My question is for the Shared Services Canada representatives.

Let us talk about digital sovereignty. For the benefit of the thousands of Canadians who are watching us live, when we talk about digital sovereignty, we’re talking about the ability to exercise autonomy over digital infrastructure, data, intellectual property and critical technologies to protect Canada’s interests.

There are billions of federal government data records that are currently hosted outside of Canada. Do you have a percentage of the data that’s hosted abroad? Do you have a target of 80% or 100% within three years? Will all the data have to be hosted in Canada? If there isn’t a percentage, on a scale of 0 to 10, how vulnerable are we right now because our data is held abroad?

Mr. Davis: Thank you for the question. I don’t necessarily have the percentage. Today, in the hosting centres that consolidate the federal government’s own data centres, 90% of the data is still with us. There’s a certain percentage of data in the cloud; a number of departments use the cloud, either in our contracts or in contracts issued by PSPC. In those contracts, to answer your question specifically, I would say that the percentage of data hosted abroad is minimal. Even for many of the well-known American companies — we’re talking about Amazon, Microsoft and other companies that are in other countries — their data centres are largely based in Canada. The data is protected, and the country’s sovereignty is respected.

Senator Gignac: That’s encouraging. We’ll change the subject: I’m going to turn to PSPC. In your 2026‑27 Departmental Plan, you talk about increasing Canadian purchasing. When I was minister of economic development in Quebec City, I was always told that we had to honour our international commitments. I was told that we couldn’t do this, that we couldn’t do that, or that the United States would sue us if we specified that it had to be Canadian. Are those international obligations no longer there? Under NAFTA, can we no longer be sued? Can we now say that we will buy 100% Canadian?

Can you give us an overview and reassure us that we won’t be sued by Washington because we suddenly buy more from Canada?

Mr. Laporte: That’s a great question. What we want to do in the context of our international agreements and through the “Buy Canadian” policy is to maximize the possible flexibility in our trade agreements. That’s something we’re working on. “Buy Canadian” enables us to do that.

Whether that’s consistent with our trade agreements is a question that should be asked of our colleagues at Global Affairs Canada. Our mandate is to implement the policy and ensure that there’s no discrimination in supplier ownership.

For example, as long as suppliers are on Canadian soil and are incorporated in Canada, regardless of where their headquarters are located or who owns the shares, what’s really taken into account is the presence in Canada. What do we want to do? We aren’t saying that we won’t buy from companies with American interests, for example. We’re really looking at whether investments are being made and whether jobs are being created in Canada. That’s the lens that’s used.

The goal isn’t to discriminate against the United States or European countries, quite the contrary; it’s to promote buying Canadian.

Senator Gignac: It seems to me that in the past, the lowest-cost supplier was the determining factor. Now, the priority is to be based in Canada. It’s not necessarily the lowest cost, because there could be an American or Chinese manufacturer that could cost 10% or 15% less. Now, the first condition is to be based in Canada?

Mr. Laporte: On the contrary, I would say that the criteria aren’t mutually exclusive. Cost will always be a very important variable in evaluating a call for tenders. What we’re going to do is still allocate points that may have been allocated to other criteria in the past, to assign a certain percentage — 25%, for example — to the presence of Canadian content.

Senator Gignac: Is all of this transparent when there are calls for tenders? People know this, so they don’t work for nothing?

Mr. Laporte: It’s completely transparent. We also have requests for information. We consult with the industry to develop these provisions on Canadian content. Yes, the policy is indeed very transparent.

The Chair: It isn’t guaranteed, but there’s a competitive advantage in terms of points in the calls for tenders?

Mr. Laporte: Exactly. The more Canadian materials and services you provide, the more likely you are to get the maximum allocated points.

The Chair: The example you’re giving, the 25 points, is that the standard?

Mr. Laporte: Yes, 25 points is the standard set out in the policy.

The Chair: Thank you.

Senator Oudar: I don’t know if you heard our discussion here yesterday, but there was a question about Phoenix, and your kind colleagues from Treasury Board referred us to you today. I’m glad to be able to ask you this question about Phoenix. Specifically, I had a careful read of the Auditor General’s report from last month. This is a new audit, her fourth report, as you know, on this multi-billion-dollar financial hole that has led to significant consequences for our staff, financial stress, delays, underpayments and sometimes no pay at all.

I’ll digress a moment in my former capacity as president and CEO of CNESST. When I saw this happening in Quebec, I still found it unbelievable that people working for the Government of Canada weren’t getting paid for the work they were doing. What’s concerning is that the auditor’s report says that, 10 years later, there are still errors in public servants’ pay.

Public Services and Procurement Canada stated, based on preliminary estimates, that Dayforce, the new human resources system, would cost more than $4.2 billion, but that those estimates didn’t include the anticipated costs to make the transition in the various departments and agencies.

I’m getting to my question. No one wants history to repeat itself. Could you tell us how many of the numerous recommendations in the Auditor General’s various reports have been implemented before the government launches the new Dayforce program?

[English]

Mr. Hammond: Thank you for the question, senator. I don’t have the specifics in terms of the number of recommendations that have been applied. What I can share with you today is that there is strong governance around the project at this point and time in terms of the dollar amount. The amounts that are quoted in the Auditor General’s report are a very rough order of magnitude costs. They are being refined as we go through the project and as the project is defined more clearly. There are checking points on a regular basis throughout the entire project to ensure it remains on track and is providing valuable services to the Canadian public.

[Translation]

Senator Oudar: Without knowing the exact number, do you know if any recommendations from the four Auditor General reports have been implemented? Reassure us, as well as the millions of Canadians listening to us this evening, and tell us that they have been followed, these reports, since the fourth one. Can you tell us whether those recommendations have been followed before Dayforce launches at $4.2 billion?

[English]

Mr. Hammond: You can rest assured that PSPC takes the recommendations very seriously and works to implement them. I do not have the numbers on the specific recommendations. I would be happy to come back to the committee if that is something of interest.

[Translation]

Senator Oudar: I learned that there had been a compensation agreement with the workers. Thank you, because I think that was essential. This is an agreement that was reached a number of years ago, before even more errors were found in public servants’ pay. Is the government open to entering into a new agreement with public servants?

Mr. Laporte: That’s really a question that should be put to the Treasury Board Secretariat, which is the employer for the government. That doesn’t fall within the purview of PSPC. I’m sorry.

Senator Oudar: That’s too bad, because our colleagues at the Treasury Board Secretariat refer us to you, but . . . .

Senator Gignac: We’ll invite them back.

Senator Oudar: We’ll invite our colleagues back. We like doing that.

The Chair: We’ll surely get the chance to see them again.

Senator Hébert: I’m glad to know that our ratings are better than “Antigang”!

Thank you very much for being here this evening.

We talked about the “Buy Canadian” policy, and you talked about strategic sectors. Is a list of those sectors available?

Mr. Laporte: Yes, certainly; we’d be happy to provide it to you.

We were talking about defence and construction; there’s also everything to do with infrastructure, pharmaceuticals, medicine and consumer goods. There’s another one as well.

Senator Hébert: Okay.

Mr. Laporte: We could provide you with that, along with the “Buy Canadian” policy.

Senator Hébert: In “consumer goods,” for example, could you tell us . . . .

I recently had the opportunity to meet with a number of producers in the agri-food sector, and they told me that there wasn’t necessarily a policy for their sector, particularly for public institutions that deal with food. For example, they mentioned Canadian prisons, institutions that are under the Government of Canada’s jurisdiction and that provide food and order consumer goods to deliver their services. Do you know if this sector is being considered? If not, it would be good to look into the possibility.

Mr. Laporte: I would have to check exactly what the situation is for that particular sector.

When PSPC awards contracts, 90% of our suppliers are Canadian. For that reason, I’m convinced that most of the suppliers in that sector are Canadian. I can get back to you with more details.

Senator Hébert: It would be interesting to know that. These are sectors that are often less politically attractive or economically attractive, in terms of zeros at the end of the numbers, than the steel sector, for example, but I think they’re just as important to the Canadian economy.

I have a second question. I want to go back to the question about the Defence Investment Agency. Do we have the total budget?

I would like to know how this budget and the staff who will be assigned compare — in terms of the total investment envelope that this agency will administer — to other government institutions that have investment funds or that are involved. My colleagues have mentioned the CMHC, but I could mention the BDC, for example. What was the process for comparing the agency’s funding to the amounts invested in it? Was a benchmark established? If so, how?

[English]

Mr. Hammond: Thank you for the question, senator. I can tell you from a budgetary perspective, I do have numbers on the budget operationally for the agency. At the current point and time, they have approved funding of approximately $2.8 million related to the joint transition office, which was related to streamlining procurement. It was provided to PSPC. That has been transferred to the DIA. There was also approved funding as part of Budget 2025, $7.7 million per year for operations for that organization. That was when it was created as a special operating agency within Public Service and Procurement Canada. Obviously, as it is transitioning to a stand-alone entity, there will be some adjustments to that because they may require office support in order to provide their services. I would expect an adjustment up from that.

In terms of the actual investment in funding, the resources that are provided to purchase defence procurement are generally from the Department of National Defence. It’s their budget envelope that pays for the investments. I don’t have specifics in terms of the amount related to defence procurement that would be coming from DND specific to the agency. That’s kind of it, in a nutshell, from an operational perspective.

[Translation]

Senator Hébert: Are there any performance indicators that have been established and linked to the funding of that agency? Was this agency created to make investments more efficient?

[English]

Mr. Hammond: Thank you for the question. I think at this point they are still developing the indicators associated with procurement. The agency is relatively new. It’s still going through the process of being stood up.

Senator Ince: Thank you all for being here. My first question is for Shared Services Canada regarding artificial intelligence. The department is building AI infrastructure, plotting automation use cases, developing Canadian-centric AI tools and establishing governance frameworks to ensure privacy, security and innovation.

Does Shared Services Canada oversee the acquisition of the use of AI within the Government of Canada, or does each department make its own decision?

Mr. Davis: The Treasury Board Secretariat has an overarching policy that all departments need to adhere to. For the most part, many departments rely on our centre of expertise and leverage our knowledge at Shared Services Canada to enable some of the capabilities within AI.

Senator Ince: Thank you. My second question would be for PSPC. You had talked about “Buy Canada.” Does prioritizing Canadian suppliers and materials risk raising the cost of government procurement? If so, by how much, and if not, why?

Mr. Laporte: Thank you for the question. It’s possible that it may have an impact on the cost of the project, but when we look at the entire economic benefit of buying Canadian, the impact is huge so we can create new industries. We can stimulate the demand for some products. I think it needs to be looked at in the overall context.

We have also put under the Buy Canadian Policy some safeguards to ensure that at a certain threshold — for example, if it is more than 25% of the cost — that there is a possibility to not apply the Buy Canadian Policy. So some safeguards have been put in place where the costs would become excessive. This is something that we’re very mindful of. Yes, it may have an impact on the costs, but at the same time, it may create thousands of jobs.

Senator Ince: Thank you.

[Translation]

Senator Dalphond: My question is for Shared Services Canada.

[English]

You are responsible to provide all the information technology for the government. It is a huge network you have to sustain. The capital expenditures are very low. Where are the costs of the system?

Mr. Davis: For the most part, yes, our capital expenditures have been tailing off. It is a mixed issue. It depends on where our investments are. I will give you, if you permit me, a little bit of background to the data centre. We last invested in one six or seven years ago. It was a major capital investment. It would depreciate over time, as you know.

Most of the other acquisitions that we acquire are either through operating expenditures due to the nature in which we acquire it. It would be an asset that we would acquire that would be either a lease in some cases.

A lot of the gear we acquire will not meet our capital asset threshold, which is $10,000. So they are automatically expensed, and we holistically manage them that way.

Major capital investments have been tailing off for various other reasons as well. Industry has moved from a model in which they sell software licensing, in which historically we would have generally acquired and maybe built up the asset over time and built an asset under construction. And they have moved more to a subscription-based contracting, so it has moved more to an O&M-style expenditure.

Senator Dalphond: Expenses to provide people who are knowledgeable to maintain the systems and to provide services to the departments?

Mr. Davis: Yes. And when you look at our overall expenditures for a year, we generate $1 billion from other departments.

Senator Dalphond: Yes. I was going to ask you that question. So do they pay you a service fee?

Mr. Davis: Yes. We have services that we offer either mandatorily to departments, and there were 43 that were named in the Shared Services Canada Act when it was created, and there are optional clients that are available that can use SSC services, but they are not mandatory to use them.

We offer about 30-plus services depending upon what they are. I can give you an example, like the mobile telephones. We manage all the mobile telephones across the Government of Canada. The 43 departments get them for free, air quotes; the other non-mandatory departments, we charge them for the utilization of that capability. And it is a cost-recovery model. Generally, they pay costs plus the incremental costs, all developed in policy, on how we charge them. That equates to about $1 billion of our $3 billion spent annually.

Of the remaining portion, approximately — I know the number precisely, but I will say “approximately” — $1 billion is in salary, so for full-time equivalents, which are about 9,300 employees we have. The remaining portion is split between operating and capital expenditures.

Senator Dalphond: And how many employees are affected with the billing to these non-mandatory departments and agencies?

Mr. Davis: I don’t have the precise number. But we continue to automate a lot of those services. We are using AI. We are throwing technology capabilities at it.

We are also streamlining the way in which we work. If you look back in Budget 2022, we appropriated a series of additional funds — about $170-$181 million from departments — to get out of the administrative burden of doing this on a cost-recovery basis and having people do the related, mundane tasks of charging inside of government.

We have continued to review all of our services and look to get into agreements of longstanding, get out of cost recovery with departments and just offer the service like electricity and have it run every day.

Senator Dalphond: What happens to the non-mandatory departments? Are they departments of the government?

Mr. Davis: They are departments or agencies of the government that sit outside.

Senator Dalphond: The formal department structures, agencies and commissions.

Mr. Davis: Different scheduled departments, exactly.

The Chair: Okay.

Mr. Davis: Yes.

Senator Dalphond: Interesting.

Mr. Davis: For the most part, if I may, from a cybersecurity perspective, they generally all want to and are enabled and secured by the infrastructure that we provide.

Senator Dalphond: Thank you.

Senator MacAdam: My first question is for Shared Services Canada. It is on that topic of cybersecurity.

In 2025, there was a report of the Auditor General. There were many recommendations. One of them recommended that Shared Services Canada establish a clear action plan with defined criteria and a timeline to develop a security information and event management application and ensure it has an up-to-date central inventory of networks and systems across federal organizations which it services.

Could you give us an update on the status of the implementation of the recommendations?

Mr. Davis: I might be off by a few days, but earlier this year — I believe late February — we awarded the contract and started to deploy, we called it the SIM, across government departments.

I don’t have the exact percentage. But we’re making progress across the board on the recommendations that came from the Auditor General and we continue to implement.

Senator MacAdam: They are not all fully implemented yet?

Mr. Davis: No. It will take a series of years to implement some of them, even the roll-out of this capability. The event management structure and where they go, where these sensors go, it is —

Senator MacAdam: What is the target? What are the target dates? Have you established the target dates?

Mr. Davis: I don’t have the exact date. But we have established target dates. We’re targeting toward them. Tonight, I can tell you that I wouldn’t flag any that are of concern at this time.

Senator MacAdam: And have you been to the Standing Committee on Public Accounts with regard to this report?

Mr. Davis: Yes. We went late last year. The deputy attended the meeting, yes, with the Treasury Board.

Senator MacAdam: Would you have filed an action report and management plan with PACP?

Mr. Davis: Yes. They did receive it, yes.

Senator MacAdam: Okay, thank you.

Yesterday, we heard from Mike MacDonald, the acting Chief Information Officer of Canada, the Treasury Board Secretariat. His role, as I understand it, is to provide leadership regarding the government’s overall approach to serving Canadians through digital, digital platforms, technology, et cetera. He referenced AI as an example where he can provide a leadership role in terms of the use of AI within government.

How does your department work? How does Shared Services work with the Chief Information Officer in terms of AI, implementing AI throughout government?

Mr. Davis: I will probably have a few answers for you.

We work hand in glove to put it simply. Over the last year, we have put in place a generative AI tool which five prequalified vendors — three of them are Canadian — are available to all departments of leverage. We have worked with the Treasury Board Secretariat on where we’re going from. This is generative AI capabilities.

As I mentioned in my opening remarks, we have also created a CANChat, which is a large language model inside of the Government of Canada. It is secured in data centres in Canada by government employees that allows for up to protected B data to be leveraged inside. I describe it this way — me, personally — that basically it cannot be influenced by foreign interference or any pollutants, my terminology, which affects the actual decision tree.

That is helping advance how the public service, with the partnership of the Treasury Board Secretariat and all the departments, is advancing AI and its capabilities in a controlled roll-out that respects the AI policies that the Treasury Board of Canada Secretariat has developed.

Senator MacAdam: This is a question about procurement: I want to follow up on a discussion we had earlier about the Buy Canadian Policy. Do you have documented criteria to decide if the bidder is, in fact, Canadian? There would be compliance with the Buy Canadian Policy.

Mr. Laporte: Yes, we do. The Buy Canadian Policy has a very clear definition of Canadian suppliers. We want to ensure, for example, there is a permanent establishment in Canada that they are paying and filing taxes in Canada, that jobs are created, that they provide value-added and they are not simply a reseller of goods. We could exclude, for example, the company if their only operation in Canada was to import and resell to the Canadian government, then we would have the discretion to exclude that company.

Senator MacAdam: What about share ownership? Do you have percentages, 50% or —

Mr. Laporte: Yes, we do have a rule for shared ownership. I would have to get back to you on that. But it is basically the same principle in terms of — but, again, we don’t drill down in terms of the ownership of the company itself, but really looking at where operations are taking place and what is the Canadian value-added provided.

Senator MacAdam: What if it was operating in Canada but there were no Canadian shareholders?

Mr. Laporte: The main criterion of the Buy Canadian Policy is to drive Canadian content. I have to say for us, from a procurement standpoint, there are a lot of asks, streamline procurement. If we were to do an analysis of where the shareholders and the HQ are located, that would make procurement complex.

We have to be mindful that we have a lot of Canadian companies that are doing good business with other foreign jurisdictions. We need to be mindful of that. Some consequences if we were to really look at that ownership and take a strong position on ownership.

Senator MacAdam: Thank you.

Senator Pupatello: The shared services, maybe by default, created these big buying groups in a number of areas. We experienced the same in Ontario back in 2006. We started with hospital and school board buys.

The unfortunate consequence was many of the little guys got knocked out because they could not then scale to fund and serve four hospitals; they could only do two. My concern is that we’re focused — Mr. Davis used careful words saying — “when feasible” and “where possible,” and that was very good of you to be precise in that way because it tells me that there will be many instances where you will not. It is likely because your buying procedures are going to allow only a certain level of company that can comply. Have any of you actually gone on the Buy Canadian website, opened it up and said that I am going to be someone who can now answer a procurement bid. You go in and say, I’m a tech company, I will offer these administrative services, and you go through that list and tick all the boxes of the things that you can do. Have you done that? Have you gone on the site?

When you keep going, I want to know that there is nothing on those lists that will prevent them from supplying, like the thing is too big so that perhaps it could be broken down or you have to have been a government provider in the past, because you get caught up in those little things. The little guys who think that they now have an opportunity with the Buy Canadian policy in place in our new world, where 15 months ago we were more concerned about trade agreements, and now we’re not, right, considering the geopolitics of the season.

I’m really concerned that someone has been through this process to say we’re not knocking out the little guys and that your big buys have not had the unintended consequence that — unfortunately, we know that has happened. Someone has to unwind policy on one side in order for this to work so that we see the targets we were talking about earlier. Prove to us more companies have benefited when this has been in place for a year. You will come back and say we had 7,500 companies who used to provide to us, and now it is 10,000, and these extra 2,500 are Canadian small guys. Who is doing that in there?

Mr. Laporte: This spring we’re going to be launching a small business procurement program under the Buy Canadian policy. What we want to do is to create streams for those innovative, small businesses to ensure that they get a fair share of government opportunities. Oftentimes, you are right, we see a lot of large contracts awarded to large suppliers. We want to make sure we provide that opportunity, and we aim for suppliers’ diversity.

This is something that we are working closely with ISED on and to design the parameters of the program. So breaking down and looking at —

Senator Pupatello: You are including the private sector in these conversations, like the Canadian Federation of Independent Business?

Mr. Laporte: We have a supplier advisory committee that is made up of those kinds of key players, and they are —

Senator Pupatello: Are they the big ones that are left now, or are they going to be the small ones? Because a few years ago we lost a lot of the small guys.

Mr. Laporte: The goal is to ensure that, in the future, we have a procurement vehicle that will provide an edge to small- and medium-sized businesses. In terms of the program design, we are looking at this right now, but how can we ensure that we have a stream dedicated for those kinds of small businesses and that will be available only to them? This is something that we have provisions under various trade agreements that we can leverage and we are currently exploring.

Senator Pupatello: Are you also coming up with these goals and identified targets for the number of suppliers today — here is how many we have today and their size and location — so that, in a year when you come back to visit us, we will say, okay, how many more did we add? Are you putting that number down somewhere?

Mr. Laporte: For each pillar of the Buy Canadian Policy, we are developing key performance indicators right now, as we speak, for example —

Senator Pupatello: And so you have a count today that we will be able to —

Mr. Laporte: In terms of exactly how it will be calculated, I won’t venture there. I know, for example, for steel we will be looking at the volume of Canadian steel. We will be using the same approach with respect to SMEs.

Senator Pupatello: I will tell you now that I will ask that question shortly — which is: What was the number in 2026? — so you will have that number so we can make those comparisons. I really don’t want to be too cute about it, but it is really serious that the large buying groups that we’ve created on purpose — because we had to save money — have had this consequence of knocking out the little guy that we’re now purporting to try to help. We have to figure out how your policies get unwound to accommodate these things because that is the reality of what is left out. If you have gone on your website lately to be procured by the government, you will see that are you are making it easy for these guys.

Mr. Laporte: It’s also part of the Buy Canadian pillars for SMEs is to make procurement much more accessible. We are working on various initiatives; harmonized procurement regulation is one of them. How can we take procurement and streamline that and have contracts that are much more standard for SMEs because procurement is complex? Right now, you are right, it may discourage some bidders, and we also want healthy competition from SMEs. The worst outcome for us is having only one bidder when we have a tender out.

Senator Pupatello: There are a number of people here who would love to come and help you right here in this room.

[Translation]

The Chair: We’ll conclude on the issue of AI. The government signed an agreement with Cohere in November. I wanted to know if there’s any information on the status of the work, the projects, the assessment, the plan, because I imagine Cohere has started working under the plan, the memorandum of understanding that was signed in November 2025. Can you give us an update on the situation? You can just give us a summary for now and send us, in writing, the full action plan, the work plan, the steps, the assessment that has been made, something more detailed.

Mr. Davis: Absolutely; I think that would be ideal. We’re still making progress on the letter of agreement we signed with them. Yes, I will get back to you on that.

The Chair: Okay. They have started to work and advise the government on ways to incorporate artificial intelligence into services, then?

Mr. Davis: Yes.

The Chair: Okay.

My second question is about Claude Mythos from Anthropic. You talked about cybersecurity. Are you involved in discussions with Anthropic to ensure that the government has access to Anthropic’s Project Glasswing, so that we can test our systems with Mythos?

Mr. Davis: Thank you for the question. We haven’t made progress on—

Patrick Comtois, Director General for Enterprise IT Procurement Enablers and Cloud, Chief Financial Officer and Procurement Branch, Shared Services Canada: No, we haven’t started discussions with Anthropic on the matter.

The Chair: What are your plans? This is a major cybersecurity issue. Have you sounded the alarm to say that this is urgent? What steps have you taken?

Mr. Comtois: In the work we do with the Treasury Board, particularly with the central information adviser, we’re working with various elements, and we’re consulting the industry. We’re in the process of developing an action plan to address the issue.

The Chair: To take Mythos into account, or at least the flaws that will be identified?

Mr. Comtois: Not necessarily or not specifically that supplier or organization, but, in general, we’re studying what’s going on internationally.

The Chair: We have cybersecurity systems, but who are the suppliers? Is it CrowdStrike or Palo Alto? Who are the suppliers that the Government of Canada uses specifically in cybersecurity?

Mr. Davis: We work with Palo Alto, notably; that’s a good example of a vendor I work with.

The Chair: Are there others?

Mr. Comtois: Yes.

The Chair: Which ones?

Mr. Davis: There are a number of them; we can get back to you with the list.

The Chair: You can send us the list. They’re working on Mythos and are part of Project Glasswing; that’s why I want to be sure we’re protected on that.

Thank you. We’ll pick it up next week.

(The committee adjourned.)