NDVA Committee Meeting

STANDING COMMITTEE ON NATIONAL DEFENCE AND VETERANS AFFAIRS

COMITÉ PERMANENT DE LA DÉFENSE NATIONALE ET DES ANCIENS COMBATTANTS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 24, 1998

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[English]

The Chairman (Mr. Robert Bertrand (Pontiac—Gatineau—Labelle, Lib.)): Ladies and gentlemen, I would like to call this meeting to order. This afternoon we have with us Colonel Pierre Lemay, director general for compensation and benefits for the Canadian Forces.

Colonel, you have between 10 and 15 minutes to make your presentation, and then we'll go to question period with the different parties. I believe notes have been sent out to all the committee members in both official languages.

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Colonel, the floor is yours.

Colonel Pierre Lemay (Director General, Compensation and Benefits, Canadian Forces): Merci.

Mr. Chair and members of the committee, I am very pleased to have this opportunity to appear before you today as the director general of compensation and benefits for the Canadian Forces. During this first of my two presentations on Canadian Forces compensation and benefits, I propose to outline the current state of pay, with a focus on recent accomplishments and fundamental challenges. My second brief in two days will cover the Canadian Forces allowances and the travel and relocation benefits.

Your recent visits across the country are of great importance to us in that Canadian Forces personnel have been very vocal and impassioned in clearly serving notice of their frustration and dissatisfaction in the current state of pay and allowances, particularly after five years of the pay freeze. Of course they are not the only Canadians who share this sense of frustration with the recent fiscal and economic realities; however, what distinguishes them from all other citizens is their commitment, their duty and the inherent liability in serving their country when and where required, often despite unfavourable and adverse conditions.

In our division we are certainly encouraged by the recent improvements, some of which I will describe shortly. Nevertheless, as evidenced by the testimony that you have heard over the course of the last few months, there still remains much to accomplish in fulfilling the terms of the expected social contract for Canadian Forces personnel.

For example, as you were told during your visits and as was widely reported in the media, the entry-level pay is inadequate for new enrollees with a family to support. Historically, new recruits were young single Canadians living in base singles' quarters. We will be seeking improvement to this problematic situation in the next few months. Rest assured that everyone is entirely committed to this undertaking. We will continue to actively pursue all required improvements to Canadian Forces pay.

[Translation]

The National Defence Act authorizes the ministers of the Treasury Board to make regulations prescribing the rates and conditions of pay and allowances for the Canadian Forces.

Since 1968, it has been government policy that the Canadian Forces compensation will be "comparable" to the one in the Public Service, with the flexibility to address unique military requirements.

To determine this comparability for pay purposes, between the Canadian Forces and the Public Service, pay comparability methodologies have been developed jointly, over the years, with the work of the Joint Treasury Board Secretariat/Department of National Defence Advisory Group on Canadian Forces Compensation.

The combination of Public Service benchmarking and Total Compensation comparability which serves to determine the pay increases for Canadian Forces personnel has undergone a comprehensive review over the course of the last five years. The aim of the joint Treasury Board/National Defence review was to calibrate and validate all the elements of compensation, with the view to establishing clearly the warranted pay increases required to achieve a full comparability between the Canadian forces and the Public Service.

As the Acting Chief of the Defence Staff, Vice Admiral Murray, informed the previous committee, this detailed review concluded that a 6.7 per cent pay adjustment was warranted to the non- commissioned members, while the officers of lieutenant-colonel and below required a 14.7 per cent increase to achieve full comparability.

[English]

As a result, following a 2.2% pay increase approved for non-commissioned members effective April 1, 1996, the President of the Treasury Board approved a multi-year expenditure schedule starting April 1, 1997, to restore full comparability for the Canadian Forces. Therefore, up to this point the non-commissioned members have received 2.2% in 1996, followed by an adjustment of 1.5% in April 1997 and 0.6% in October 1997. Added to this is an economic increase of 1.47% granted in November 1997 but retroactive to April 1997.

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For their part, the officers and pilots will have received 2.4% in April 1997 and 1.1% in October 1997 for the comparability program, with an additional economic increase of 1.15% granted also in November and retroactive to April 1, 1997.

In total, that means approximately 5.9% for the non-commissioned members during that period and 4.7% for the officers.

It should also be noted that in June 1996, incentive pay increments were reinstated for both the non-commissioned members and the officers and pilots, while performance pay was reinstated for generals, colonels and eligible specialist officers in March 1997. It is unfortunate that this performance pay program has been highly misunderstood in the public place.

The Canadian Forces' environmental allowances were also increased in 1997 by a total of 3.9%, with further increases anticipated in concert with the multi-year comparability program. For 1998 the wage comparability program will continue and a further economic increase should arise from expected public service settlements.

In support of the Canadian Forces' total force concept, and in response to the recommendations of the Special Commission on the Restructuring of the Reserves, the Treasury Board approved, in December 1997, a reserve force pay comparability program with the regular force retroactive to April 1, which increased the reserve force pay rates to 85% of the regular force corresponding rates based on job evaluation methodology that recognizes the inherent differences in training, skills, and job knowledge.

Other features of the program include the introduction of specialist pay for qualified non-commissioned members; the adoption of an incentive pay category structure similar to that of the regular force; and the introduction of a performance pay plan for those officers whose regular force counterparts in the same ranks are eligible for performance pay. In addition, a premium in lieu of annual leave and designated holidays will be afforded to those reservists who are engaged for periods of service of less than one month.

Finally, the program also allows the payment of accommodation assistance allowance to reservists serving for 180 days or more provided they have been relocated at public expense as a result of that service.

The Treasury Board also approved, effective April 1997, a severance pay-type benefit for primary reservists, known as the reserve force retirement gratuity. The purpose of this benefit is to encourage longer service through a tangible form of recognition. In addition, members leaving the regular force and other reserve force sub-components will be encouraged to transfer to the primary reserve.

[Translation]

Service in the Canadian Forces is unique relative to all other segments of Canadian society. In terms of their social engagement, military members assume unquestionably the ultimate liability— putting their life at risk. In your travels, you have no doubt heard many concerns expressed regarding the perceived lack of acknowledgment and recognition of the unique dimensions of military service.

Certainly, in terms of compensation, Canadian Forces members do not seek disproportionate consideration of the unique factors, but they wish to see these differences readily acknowledged and broadly supported in a tangible, fair and equitable manner. It is believed that more effort is required in validating the magnitude of these differences, and in expressing the manner and degree to which these differences should be recognized and fully compensated.

Within the context of the Total Compensation methodology, these unique conditions of Canadian Forces service are better known as the "Military Factor or the X-Factor". Set at a worth of four percent of salary in 1974, the X-factor was subdivided in 1981 into three distinct components that still exist today.

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[English]

The obligation to adhere to a military code of service discipline was set at 0.5% of salary. This adjustment compensates for the loss of freedom resulting from obligations such as the need for uniformity and compliance and the absolute requirement to follow orders. Other elements are the frequent separations from families, set at 1.5% of salary, and the family posting turbulence from relocations at 2% of salary. You should note that the posting allowance, a taxable allowance equivalent to one month's salary for Canadian Forces families, is a direct payment to the members at the time of a cost move, one that partially upsets this posting turbulence.

Of necessity, the value of these elements of compensation is highly subjective, primarily because it is virtually impossible to produce an empirically sound evaluation of these conditions. Instead, arbitrary percentages have been established.

Nevertheless, in terms of recognizing fully the unique aspects of military life, it is believed that the adequacy of these valuations should be reassessed in light of today's service conditions, the increased operational tempo, and the current Canadian societal norms. Your views on the values attributed to the X factor would be very useful.

The issue of Canadian Forces and public service hours of work and overtime should also be recast in the same light, owing to the subjective nature of the existing valuation. For the officers in the ranks of lieutenant-colonel and below, the valuation of overtime is at 4% of salary, and for non-commissioned members this valuation is at 6% of salary.

The Canadian Forces family is certainly not immune to the financial pressures being experienced at present by all Canadian families at large. A case in point is the issue surrounding family earnings and spousal income. A major unresolved consideration within the scope of military-unique conditions of service is the loss or disruption of a second income caused by directed moves, and the cumulative effect of moves over a career vis-à-vis reduced earnings potential, all of these relocations representing mandatory conditions of employment.

Based on a previous analysis, a second income was a significant consideration for some 36,000 military families, in many instances increasing the average military family income by a minimum of 50%. Based on 1991 census data, it was determined that working civilian spouses of military members earned on the average $15,000 annually less than the working spouses of public servants.

Of equal concern to non-military spouses is the lack of pension vesting and portability that results from imposed geographic instability. The requirement for dual pension income at retirement is a growing concern. An innovative solution could take the form of government-subsidized investments into the affected spouses' registered retirement savings plans, or a spousal severance pay package.

Currently, many question or do not support the validity of the long-standing policy of the comparability to the public service for Canadian Forces compensation and benefits, and other options are possible. This comparability is currently evaluated by the analysis of a broad spectrum of military responsibilities and tasks compared to public service jobs at different levels. The policy agrees to pay military members, on average, the same salary and benefits as received by the public service, with the flexibility to recognize requirements unique to the military service, such as the X factor. After all, both groups work for the same employer.

Many options exist to establish Canadian Forces pay. Over time, the joint advisory group and the Canadian Forces have reviewed the alternative to link the Canadian Forces compensation to the private sector or to other military forces. The conclusions have been that the comparability with the public service should be retained, as other systems have presented challenges and complexities that would be difficult to resolve without a guarantee that a better system would be achieved. Nevertheless, it has been the joint advisory group policy to encourage reviews of compensation systems outside the public service. Such comparisons, however, have been for methodological purposes.

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[Translation]

Unlike the Public Service, the Canadian Forces is excluded from the collective bargaining process. We instead have a Joint Treasury Board Secretariat/Department of National Defence Advisory Group where military compensation matters are discussed before formal submission to the respective ministers, and then the ministers of the Treasury Board. The working relationship with the Treasury Board Secretariat has been excellent over the course of the last decade. The recent approval of a multi-year wage comparability program provides the most recent evidence of this positive relationship.

Nevertheless, over the course of almost 30 years now, there have indeed been instances where the employer has not always honoured the policy. Notwithstanding, the fact that the employer does not always grant the warranted increase due, or when due, does not necessarily mean that the mechanism itself is flawed or that the comparison to the Public Service is flawed. It simply means that, in the absence of an effective mechanism to resolve disagreement or dispute, the employer's imperatives have taken precedence, especially when engaged in collective bargaining with the Public Service unions. There have been different suggested ways on how to deal with this unenviable situation. An example would be the inclusion in the process of an Independent Review Board for validation and disagreement resolution purposes. Your views on this process would be very useful.

[English]

The inherent challenge therefore may not be one rooted in content but rather in developing a settlement mechanism that will be responsive in a timely manner to the Canadian Forces' comparability policy and its unique requirements and a mechanism that will provide more transparency and independence to Canadian Forces members.

The Canadian Forces have traditionally adopted an institutional or “team concept” approach to compensation, whereas the public and private sectors have tended to develop compensation for each job or occupation. Notwithstanding this dichotomy, the Canadian Forces develop their institutional rates of pay— that is, equal pay for equal rank —based on benchmarking to occupational driven comparison rates prevalent in the public service, such as for clerks, nurses, engineers, technicians, drivers, etc.

Hence, the determination of Canadian Forces non-commissioned members' pay, for example, has always required balance between paying all tradespersons at the same rank, level, experience, and seniority the same rate of pay while paying highly skilled personnel enough to retain them in the Canadian Forces. Essentially it's a struggle between the principles of internal and external equity. Likewise, with the exception of pilots and specialist officers, general service officer rates of pay are based on the team concept rather than their own occupation.

The team concept approach is predicated on the principle that anything that might detract from achievement of the operational mission, such as the unwanted distraction of differences in compensation, should be eliminated or at least minimized. The Canadian Forces will re-evaluate the primacy of the team concept and institutional pay, in that we are to conduct a review of the pay and allowance system to ensure fair compensation for skill and knowledge rather than tying it solely to rank. This review has begun in earnest and will be pursued with vigour, with the Canadian Forces personnel policy objectives serving as the guideposts.

[Translation]

Mr. Chairman, members of the committee, rest assured that the Canadian Forces is seized with the importance of these compensation challenges and the valid concerns of our members. While recent improvements have been most welcomed, there remains much to resolve in addressing those compensation issues associated with the timeliness, adequacy and effectiveness of pay and allowances, the unique and imposed conditions of military service and their effect on the member's family.

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We are looking forward to your committee's final report and your considered recommendations to help us continue to focus our collective efforts on issues that are most important to our Canadian Forces members.

Thank you for the opportunity to speak to you on this very important subject. I would now be pleased to answer any questions that you may have.

The Chairman: Thank you very much, Colonel. We will now go to questions, beginning with Mr. Goldring, who has 10 minutes.

[English]

Mr. Peter Goldring (Edmonton East, Ref.): Thank you, Mr. Chairman.

Thank you very much for your presentation, Colonel Lemay. I have a question on the performance pay. I'd like to know, on what criteria is it set up? Is there a performance bonus, and by the same means would there be a level for no bonus? Then, of course, what if there was a lack of performance? Is there a cut in pay, too? Could you answer to me, on what criteria is this bonus set up?

Col Pierre Lemay: Thank you. First of all, if we look somewhat at the structure of pay for senior officers and its evaluation, let's look at the colonels and generals. Their pay was established by an evaluation of the job they perform, using classification plans such as are used in the public service or in the industry. These evaluations demonstrated that these officers should be benchmarked at a certain level in the public service because of the work they do. So if we take a colonel, for example, the benchmark of a colonel is an EX-01 in the public service.

When performance pay was introduced in the public service, it was introduced also for the senior officers, the colonel, the general, because their compensation package is benchmarked to their counterparts in the public service. Unlike non-commissioned members and officers of lieutenant-colonel rank and below, these officers are paid on what we call the pay range. The pay range for a colonel is currently a minimum of $69,000 to a maximum of $84,000. Unlike the non-commissioned members and the officers, who also have a minimum and maximum, these people cannot move on the range without the administration of what is called the performance pay program.

For the non-commissioned members and officers, they have what we call lock-step incentive pay. So when someone is promoted to the rank of sergeant, they start at the basic sergeant pay rate, and every year they move one step towards the maximum of that rank. Senior officers don't have that. The only way they can move towards the range is through the administration of performance pay.

When a lieutenant-colonel is promoted to colonel, the entry pay at the colonel rank is what they earn as a lieutenant-colonel, plus 5% of the maximum of colonel, or the minimum of the range. Because we have so much compression between the lieutenant-colonel and colonel pay right now, when a lieutenant-colonel is promoted they always earn what they earned as a lieutenant-colonel, plus 5% of the maximum of the range. The maximum right now for lieutenant-colonel is in the order of $72,000 or $73,000, so if they get promoted they get that plus 5% of $84,000, which is about $4,200. Then that's their starting pay in that pay range.

Mr. Peter Goldring: So it has very little to do with performance, then. It's by time increments.

Col Pierre Lemay: That's how their salary is set for promotion. It's the same way when you go up to the general rank. It's what you make as a colonel plus, or the minimum of the range.

To move in that pay range, let's say I start as a colonel and I earn $74,000, the only way I can move towards the $84,000 is through the administration of performance pay. The way it's administered for the colonels and generals is exactly the same way it's administered in the public service. In fact, the Chief of the Defence Staff, who is responsible for administering performance pay for a senior officer when it's approved by the Treasury Board, uses exactly the same guidelines as those are used in the public service.

In summary, those guidelines are that you are allowed 5% of payroll to administer performance pay. Then each senior officer's performance of the last year is evaluated and rated from category one to five. In the guidelines you can receive what is called performance pay based on the category in which you were evaluated.

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Mr. Peter Goldring: How does that correlate with rank advancement, then— stepping through the ranks? You also have that avenue of approach to increase your rank and your status in the military, which gives more pay.

Col Pierre Lemay: But it's two different systems. There are merit boards for performance related to merit listings, and there are pay boards, if you want, that look only at the performance of the last year to evaluate the candidate for performance pay.

We have to remember when those pay ranges were put together, if I say a colonel earns $69,000 to $84,000— I don't know if you're familiar with the term “job rate”, but a fully qualified colonel should be making $84,000 after three or four years of experience. The only way the colonel can move from $75,000 to $84,000 is through the administration of performance pay, through which the other ranks move automatically by the lock-step system.

Mr. Peter Goldring: They would move as they advance in their careers and as they advance from one level to another in their trades as well as their classifications.

Col Pierre Lemay: No. When a master corporal is promoted to sergeant he goes to the basic pay of a sergeant. As a sergeant, every year— I think there are four steps —his pay will go up, assuming he meets the requirements to get incentive pay.

Mr. Peter Goldring: So it's not tied to performance, it's tied to time.

Col Pierre Lemay: If we look with purity in the QR&Os, in the regulation it's tied to an adequate performance. But in reality it's basically automatic.

Mr. Peter Goldring: Are there any who don't get it?

Col Pierre Lemay: I am not aware of any officer of the rank of lieutenant-colonel and below, or NCM, who was refused an incentive pay.

Mr. Peter Goldring: So nobody was refused a performance pay.

Col Pierre Lemay: It's called incentive pay in their rank. It's not called performance pay, although you have to have met satisfactory performance during that year to move from one step to the next one.

Mr. Peter Goldring: In here, I believe, it's called performance. That's why I'm questioning.

Col Pierre Lemay: For senior officers it's called performance pay.

Mr. Peter Goldring: Yes. Has any senior officer not received a performance bonus?

Col Pierre Lemay: I don't administer performance pay. My knowledge is probably the same as was reported to you through the media. There were officers who did not get performance pay.

Mr. Peter Goldring: All right. Thank you.

[Translation]

The Chairman: Mrs. Pierrette Venne.

Mrs. Pierrette Venne (Saint-Bruno—Saint-Hubert, BQ): Good afternoon, Colonel.

Col Pierre Lemay: Good afternoon.

Mrs. Pierrette Venne: We have recently heard about an incentive program for Canadian forces pilots which Treasury Board should be approving shortly. Under the program, pilots would be eligible for a bonus of between $35,000 and $75,000 if they agree to extend their contract with the forces by five years.

I'd like to know if the Department of Defence has also recommended that Treasury Board approve a salary increase for other members of the military? If so, can you give us any details of this recommendation?

Col Pierre Lemay: As I indicated in my presentation, we hope that the program to achieve comparability with the Public Service will continue in 1998 for non-commissioned members as well as for officers at the rank of lieutenant-colonel or below. We also anticipate that an economic increase will be granted, which would be tied to any increase negotiated through the collective bargaining process in the Public Service.

At this stage, I cannot give you any details, unfortunately, but I can tell you that we are consulting extensively with the Treasury Board Secretariat. I fully expect some announcements in the near future.

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Mrs. Pierrette Venne: You also stated in your presentation that since 1968, it has been government policy that Canadian forces compensation be comparable to compensation in the Public Service. You constantly used the word "comparability".

I'm not totally clear on this issue of wage parity with the Public Service, and I'm sure many others aren't either. I read in a briefing booklet that was handed to us that the department continues to experience problems in terms of addressing the issue of compensation comparability between the Canadian forces and the Public Service.

I realize that it is easier to draw comparisons in the case of certain professions such as doctors, nurses, clerks, lawyers, engineers and so forth, but for certain building trades, or in the case of infantry soldiers, a comparison is virtually impossible.

Under the circumstances, isn't it a little pointless to talk about wage parity, considering that we are comparing two totally different universes?

Col Pierre Lemay: I will try to answer your question without getting too technical. You have put your finger squarely on certain problems that we have been trying to resolve for nearly 30 years now. Admittedly, we have made considerable progress in this area.

Generally speaking, however, we do face one major problem. Moreover, I spoke very philosophically about an institutional compensation scale, rather than about one based on occupation. What we must try to do is draw comparisons between individuals who are paid at the same rate for the same level or rank, rather than compare structures for which different compensation scales apply.

Consider officers, for example. Engineers, nurses and administrators holding the rank of captain are paid the same salary. However, the same cannot be said of engineers, nurses and administrators in the Public Service. Therefore, we need to come up with a way of comparing engineers, administrators or nurses in the military with those in the Public Service to try and find a way of adequately compensating these individuals.

For the time being, all we have done is compare salaries. We should also compare other benefits such as vacation benefits or retirement pensions since all of these factors must be taken into account.

Once we have done this, we will also take into account the other factors that I mentioned, notably the X-factor.

For many years, it was extremely difficult to analyze duties that were strictly military in nature, duties for which no equivalent existed in the Public Service or in the private sector.

In recent years, considerable effort has been made to overcome these problems, particularly with respect to officers. Today, we have the tools to evaluate the work of a battalion commander or a ship's captain and we employ the classification methods recognized in the Public Service or in the private sector.

We still don't have the tools to do a direct assessment of non-commissioned members of the infantry, but we have worked a great deal on this problem. We are awaiting the outcome of the new Public Service classification program. If it does not allow us to directly evaluate the work of a non-commissioned member of the infantry, then we will try to come up with another system.

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Mrs. Pierrette Venne: As you no doubt know, I've already asked a question here in committee concerning the comparability of military and public servant salaries. Mr. Wolfgang Koerner provided us with a study that we had requested on the subject. His study focused on salaries paid in the United States, the United Kingdom, Australia and New Zealand. None of these countries uses the comparability model, and that is why I would like to know why you continue to maintain that such a comparison is useful or necessary. We appear to be the only country to take this approach.

Col Pierre Lemay: This was how the advisory group decided to proceed. However, as I indicated, there are several other options available to us. We will find out at the end of the session whether or not we should continue with this course of action.

Initially, the group established a number of comparisons between the Public Service and the private sector. It subsequently decided to disregard the private sector because the Department of Defence and Treasury Board were unable to agree on how to go about doing this evaluation.

While it is possible to draw comparisons with other countries, it is important not to compare totally different compensation plans. Pay is only one component of a compensation plan; we need to look at the entire benefits system, at pension plans, at travel allowance provisions and so forth. Often, the compensation level in one country may be tied to culture and to the importance that that country assigns it to its armed forces; it may also have something to do with the fact that the country has difficulty keeping its forces members or with the cost of living or inflation. We could draw up a long list of elements that need to be taken into account in order to evaluate the quality of compensation in a particular country and to compare that compensation program with the one in effect in Canada.

When everything is all said and done, Canadian forces members are going to compare their compensation with that awarded to other Canadian citizens.

As I said, I do not favor one system more than another. For the past thirty years, we have been trying to improve the compensation scheme in place. Group members decided that other issues needed to be considered, despite the absence of assurances that the evaluation would be successful.

The Chairman: Thank you very much. Thank you very much, Mrs. Venne.

[English]

The Chairman: Mr. Proud.

Mr. George Proud (Hillsborough, Lib.): Thank you, Mr. Chairman.

Colonel, I welcome you here today. I suppose all of us here could take the rest of the day asking questions. I'm going to confine myself to two or three questions.

You mentioned the change in the reserve force pay comparability program with the regular force retroactive to April 1. That's fine. I think by and large most of the reserves are pretty happy with that. Of course they'd like to get some more. They're pretty happy, I believe, with the retirement gratuity. The problem they have is that they are still not getting paid.

This was made loud and clear to us yesterday and yesterday evening. I was really astounded because I was assured a long time ago that this was fixed, and these people went out the same as a lot of other people did into the ice storm and back home but had no pay. This just isn't that case, but it's a lot of cases. We heard last night about where people went on holidays, and when they got there the pay was supposed to be deposited into their bank account and wasn't.

That's my first thing. I wonder if you could fill me in on that. I'll ask my questions, and then you can answer them all, if you would, at the end.

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The other one is about the dual incomes for military families. Last evening we had a town hall meeting in North Bay and we heard a lot of spouses and their husbands or wives speaking on this issue of the difficulties involved in getting a job, first of all. They perceive there's a bias against hiring military people because of their availability; their longevity may not be what they would like.

You mentioned a possible solution that would address the issue of dual pensions, and I must admit it appears to be a different way. However, my question would be, if the department were to contribute to such a plan, how can that be possible when they can't really provide a sufficient salary to their own personnel now? Furthermore, if the contributions were to be solely from the personnel, they can't afford now— We heard a major say to us yesterday, through us to the military, “Please don't send a corporal to the town I'm in because he can't afford to pay the rent in this town”. I wonder if you could comment further on that.

In reference to Treasury Board Secretariat— Department of National Defence Joint Advisory Group on Canadian Forces Compensation, could you elaborate on the structure of the advisory group and tell us who sits on it?

Those are my three questions, thank you.

Col Pierre Lemay: Thank you, sir.

In terms of the first one, I know there's been a difficulty we've been encountering for a number of years regarding the reserve pay system, and we certainly recognize and appreciate the frustration. I will take note of your question, sir. In our department it's not our division that administers the pay, it's another one, so regrettably I cannot specifically address your question.

Mr. George Proud: I would like to find someone who could, because this question was put to us on several occasions yesterday. Why can't they be paid the same way as the regular forces are paid? I don't think we need a rocket scientist to figure out how to do this in this day and age. There has to be somebody in that whole structure who can figure out how to pay these poor people so they know that if they're going to the grocery store or they're going to the bank their money is in to pay their rent. I get pretty frustrated with this type of thing.

Col Pierre Lemay: I agree totally with you, sir. I know these people have been working very hard to resolve the problems.

What I can suggest— and the people behind me maybe can take the note —is that I'm coming back to talk to you Thursday morning, and maybe we can bring someone from the division who looks after the pay system to address that question to you.

Mr. George Proud: I would appreciate that.

Col Pierre Lemay: If you allow me, maybe I'll deal with the joint Treasury Board advisory group first. I'm not exactly sure when this board was created, but I would suggest to you it probably goes back to the late 1960s. It's a board appointed by the ministers of the Treasury Board that is currently co-chaired by an assistant secretary at the Treasury Board and myself for the Canadian Forces. The other members are the different directors in organization, pay development and social programs. This is where the discussions occur, and then they are staffed to our respective ministers before formal presentations are made to the ministers of the Treasury Board.

I'm sorry, I'm not sure if I understood the other question.

Mr. George Proud: You mentioned the idea that possibly the requirement for dual pension income at retirement is a growing concern. An innovative solution could take the form of government-subsidized investments into the affected spouse's registered retirement savings plan or a spousal severance pay package. My question is, if the military can't pay the spouses, husbands or wives, a living salary now, how are they going be able to do this? If it is to be a contributory one, these people can't afford this type of thing. First of all, they have to get a raise in pay before they can even look at something like this.

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Col Pierre Lemay: It was an alternative, sir, an option proposed, that the government would contribute and not the individual. The government would contribute directly into a registered retirement savings plan on behalf of the spouse. So when a spouse is required to move or is moving on a directed move with the member— and we have certain programs in place right now that need improvements.

We're working hard at it but we hope to improve the program through which we're going to assist spouses to find jobs in the new place. As I will mention on Thursday, Treasury Board recently approved a benefit so that we can reimburse up to $350 for a spouse who has a curriculum vitae written.

What I'm suggesting here is that when one is relocated, this would be an additional benefit, where the government would contribute to the RRSP of the spouse, not the spouse through employment.

Mr. George Proud: I know that, but I guess my problem with that, if you get my question— they're not paying the spouses now, husband or wife. They're the people who need a raise in pay, and they need other things to go with it. Several times last evening it was brought up that maybe there should be an employment placement officer in the military who goes ahead when these people get notice that they're going to be transferred and starts searching out their qualifications to see if there could be a job when they get there.

I think those are things you should look at bringing back. Apparently these types of things used to be there. If the government were to contribute to the RRSP, that's fine, but I think that prior to doing that we have to get all these other things fixed. We have to get the military people's pay to a sufficient level so they can live. And hopefully the spouse can find work, because it's quite a difference— if you're working as a nurse, let's say, here in Ottawa and you move someplace else where there isn't any job, that's a tough break.

As you and I know, there's a lot of frustration out there. You talk about these numbers and the pay raises that these people are getting, so I guess this will be my last question: when will all of this take place? When is all of this going to happen? I guess that's what they're looking for, and I'd like to know myself so I can tell them that. When will they receive these pay packages?

Col Pierre Lemay: As I mentioned earlier, sir, until now, or until October, the non-commissioned member received a total of about 5.9% and the officers about 4.7%. That doesn't include the increase in pay that they may have had because of moving towards the maximum for their rank. I was talking about lock-step incentive before. It doesn't include that aspect of it.

Also, until now there has been a 3.9% increase in environmental allowances, which are allowances for people who go to sea or are in field operations or air crew. I suggested that the comparability program which was approved in 1997, the 6.7% and 14.7%, was approved. The Treasury Board approved it to restore comparability on a multi-year program. I think it's been made public that this program would last in the order of three to four years, so the program will be around for 1998. Everyone expects that there will be a further comparability increase on April 1, 1998.

I also suggested that based on the expected settlement in the public service with regard to a pay increase or an economic increase, I was hoping that an announcement would be made soon about an economic increase as well, around April 1, 1998.

• 1620

The Chairman: David.

Mr. David Price (Compton—Stanstead, PC): Thank you, Mr. Chairman.

I'll follow up on Mr. Proud. This is probably more of a technical question. You can bring the answer back.

Today, in businesses right across from small business to large corporations, most pay systems are done through outside jobbers, usually the banks. I'm wondering why that couldn't be done within the military. It doesn't eliminate the setting up of the pay but it eliminates the problem of what we're hearing about, time. They get their pay on time and they get the proper pay and the paperwork to go with it.

I wonder if you could come back to us with that. Has that been looked at? Is it possible?

Col Pierre Lemay: Okay, sir.

Mr. David Price: The other thing I have is a couple of clarifications on what you presented. One is on the reserve force retirement gratuity. You said the purpose of this benefit is to encourage longer service through a tangible form of recognition. How is that set up right now? Has it increased in percentage as time has gone on?

Col Pierre Lemay: It's a benefit, sir, that is basically copied from the severance pay package for the regular force. It's based on your number of continuous years of service. You need to have served at least ten years to qualify for the benefit. At the end of your service, if it's for a voluntary release, for between ten and twenty years you get half the benefit. For over twenty years you get the full benefit. The benefit is basically one week of salary per year of service.

Mr. David Price: This came into effect on April 1. Does that mean somebody had to be serving on April 1, or does it go back?

Col Pierre Lemay: Correct, sir. You had to be serving on April 1.

Mr. David Price: Okay.

On the issue of the Canadian Forces and public service hours of work and overtime, could you explain a little more about that? I'm not really clear on what that means.

Col Pierre Lemay: I suggested earlier the tool we use is basically three separate entities. The first one is to find a way to compare pay. Then we compare other benefits, such as leave. The third step is the X factor. In the X factor overtime is one. Many years ago— and my understanding is that the determination was quite subjective —they decided that in the pay of every officer of lieutenant-colonel and below there should be an additional 4%, and there should be an additional 6% for NCM.

Mr. David Price: But is that tacked as a separate item onto their pay or is that included?

Col Pierre Lemay: It is tacked on.

Mr. David Price: Okay. It's not subject to your actually working overtime, for example. It's an automatic.

Col Pierre Lemay: Correct, sir.

Mr. David Price: In your suggestions for resolving problems, you speak of an independent review board for validation and disagreement resolution purposes. How is that handled now? That's not clear. The military has always had a set-up there. It was a yes or no, and there's a chain of command and—

Col Pierre Lemay: We have a policy, approved by Treasury Board and the government, of comparability with the public service, with the flexibility to recognize unique military requirements. There have been times when the consultative process through the joint advisory group has worked well and there have been other times when it hasn't worked as well. When it hasn't worked as well, generally we were the ones who ended up not obtaining what we were seeking, we thought fairly, to get.

One of the options in the proposal made there— and I think you would find you would observe a similar type of system, although it doesn't compare with the public service, in the U.K. —would be to have an independent board. When the department and Treasury Board don't see eye to eye on a proposal, it could be referred to the board for recommendation to the government. Also, I guess one could suggest that a board of such a nature could conduct an overall examination of compensation or other benefits in the military every three years or five years and report to the Treasury Board about how they see the compensation status.

• 1625

Mr. David Price: But right now who has the final say, the Treasury Board?

Col Pierre Lemay: The Treasury Board.

Mr. David Price: It goes right to there.

Col Pierre Lemay: As I said, for the past decade our relations have been excellent, but over the last 30 years there have been times when they weren't as good. Not only for validating or a resolution of disagreement, but also a board of this nature— From the perspective of the Canadian Forces members, if someone from an independent board would validate their compensation plan, they may see more independence and transparency from it.

Mr. David Price: Okay, thank you.

The Chairman: Thank you.

We now go to the five-minute round. Mr. Goldring, please.

Mr. Peter Goldring: Thank you, Mr. Chairman.

Colonel, this committee has seen first-hand the declining state of the housing, the lowering of the standards of living, and the subsequent lowering of the morale of the lower ranks of the forces. Has serious consideration been given to selling off some of the older buildings on the Canadian Forces base and leasing new properties, or providing subsidies to Canadian Forces members living outside the bases, or equalizing housing payments so that somebody living in Goose Bay would be paying comparable to somebody living in my town of Edmonton?

Have considerations been given to different methods of equalizing the housing to make it better and to upgrade the level of housing that our Canadian Forces members have?

Col Pierre Lemay: I'd be pleased to answer your question. I was going to talk about it Thursday, so if I answer the question, you'll forgive me Thursday if I mention it.

The first thing I would like to say is that I think Mr. Michael Nelson addressed you last week, and he's in the Treasury Board directorate, looking after the housing aspect in terms of the conditions of the premises and buying land or not buying land.

On our side, we have an allowance right now in the Canadian Forces that is designed to attempt to assist people who have to live in high-cost areas. It's called the accommodation assistance allowance. That allowance, in those areas that qualify, is paid to those who rent on the economy, and in certain areas to those who live in the PMQs.

This is an allowance that was created in 1981 because of the real estate difficulties in Calgary. We had extreme difficulty in Calgary. So it's 1981 vintage as to how it was put together and the rules to apply it. Basically a location can qualify if the assessed value of real estate in that region or PMQ is 12.5% higher than the national average of where Canadian Forces people are employed. Then from there a number of small adjustments are made.

From our perspective, the major difficulty with that benefit is the fact that it is taxable. If you come to someone with a benefit that is supposed to equalize differences, when you're in a high-cost area, if you tax it by 50%, obviously you've defeated the purpose by 50%.

As I said, I will speak more on Thursday about this allowance. One does exist, but the taxation of it is defeating the purpose of the allowance.

The Chairman: Thank you.

Bob Wood.

Mr. Bob Wood (Nipissing, Lib.): Thank you, Mr. Chair.

I was just going over your notes, Colonel, and I just need something a little bit better explained. This ties in with what I see as endless studies that produce volumes of reports that end up justifying doing nothing. Really, in your discussion of the comparability of public service and military pay, you point out the difficulties that exist in comparing the military service, where pay is based on rank, to the civilian system, where pay is based on the job qualifications.

• 1630

In the notes that you have presented this afternoon, you state that:

—the Canadian Forces will re-evaluate the primacy of the team concept and institutional pay, in that we are to conduct a review of the pay and allowance system to ensure fair compensation for skill and knowledge rather than tying it solely to rank. This review has begun in earnest and will be pursued with vigour.

It seems to me that the comparability of pay systems has been analysed to death over the last fifteen years. Studying it again will only show that many military personnel are underpaid, and that's something that we, the committee, already know. What it will do, in my mind, is delay any pay increase for a couple a years.

I guess I'm very frustrated, and I would like to know why we can't do more right now— right now! —to address these problems rather than hiding them in fancy words and endless studies.

Col Pierre Lemay: I understand your question. I don't know, but I think the studies have done fairly well to identify a shortfalls of 6.7% and 14.7%. To me, studies that identify those kinds of results were successful not only in identifying the shortfalls but in demonstrating what was owed to Canadian Forces members. I thought 6.7% and 14.7% were fairly successful, and that the Treasury Board has agreed to restore this comparability on a multi-year program is, I think, reasonably successful.

Mr. Bob Wood: When is it going to happen? We have people going on welfare. We have people who are going to food banks. Come on, let's just give these people a fair deal. We expect things from them, so they should obviously expect us to come back. They expect us, as the Government of Canada, to pay them a fair wage, but they have lost in the battle.

Col Pierre Lemay: Well, sir, as I suggested to you, this study demonstrated a shortfall of a fairly large magnitude. Certainly from our perspective, there's nothing more that would have made us happier than the government giving us these comparability shortfalls on April 1, 1997. They were demonstrated. They were agreed upon.

We would have been most pleased to get those numbers to our members on April 1, 1997. In the situation that the government was in given the economic reality, however, it was not possible to achieve that. To obtain the best for our members, we therefore agreed on a multi-year program that recognized the situation in Canada, and that program is being delivered.

As I said to you, 5.9% has been delivered to the NCMs in eighteen months, and 4.7% to the officers. I couldn't agree more with you that we would have liked to get it in one whole lump sum on April 1, 1997, but that was not deliverable. But if we compare it to many other Canadians, the 5.9% and the 4.7% were not too bad. As I said, I expect that there will soon be an announcement for more on April 1, 1998.

So I understand that our people are frustrated, but I think the Canadian Forces are doing their best to increase their pay. There has been success, but I agree that it's not as fast as we would have liked.

Mr. Bob Wood: To your knowledge, has there been any comparison of any of our Canadian Forces salaries to those of our NATO allies or the other G-7 countries? If there has been, where do we stand with our NATO allies as far as pay and benefits are concerned?

Col Pierre Lemay: We have a fair amount of information. I think we provided the researcher with the information we had at the office some time ago. A formal study was commissioned to do that work; however, I'm not sure exactly where they are with that work.

• 1635

As for where we compare, I think a lot of people agree that certainly six years ago we compared very well. But after going through a five-year freeze, when the other countries received increases of 2%, 3%, or 4% per year— after a period like that, we don't compare as well today.

Mr. Bob Wood: When was the last time this study was done? You talked about 4% or 5%.

Col Pierre Lemay: There is a study being done right now, I thought, for the committee.

Mr. Bob Wood: I don't know. I haven't seen it. You know, we get a lot of stuff. I just wondered where we are on that scale. Can you remember?

Col Pierre Lemay: Where we are with the study, or on the scale?

Mr. Bob Wood: No, no, no. I don't want any more studies. I want some action. I want to know where we are as compared to our NATO allies or the G-7 countries, however it works— it doesn't matter. Where are we on the comparability scale? Are we the worst-paid army in our NATO allies? Are we the best? Are we in the middle? Where are we?

Col Pierre Lemay: I would want to wait for the results of the study that's going on before making conclusions like that.

People use pay for comparison purposes, but as I suggested earlier, you have to look at the other structure, the compensation, the allowances, the pension plans. People make the comparison with the Americans, but you have to look at their conditions of service. You have to look at whether a corporal in the U.K. is really the same as a corporal in Canada.

All I would want to answer here is that in comparison, our pay has fallen 10% to 15% behind what it was five or six years ago.

The Chairman: Thanks, Bob.

David Pratt, please.

Mr. David Pratt (Nepean—Carleton, Lib.): Thank you, Mr. Chair. My question relates to the X factor. Before I understand where it may be going, I want to understand where it's been.

In your explanation, you said it was set at 4% of salary in 1974— this is at the bottom of page 3. At the top of page 4, you mention that the issue of being subject to a disciplinary code was worth 0.5% of salary. Some of the other elements were separation at 1.5%, and relocation at 2% of salary, for presumably a total of 4%. What I don't understand is, is that total X factor then 8% for the officers, when you include the overtime?

Col Pierre Lemay: Basically, sir, in a nutshell.

Mr. David Pratt: So 8%, and then 10% for the non-commissioned officers, presumably.

Col Pierre Lemay: Correct. Now, there are other benefits that diminish that 8% or 10%. The posting allowance is an example. Although everyone at their pay gets 2% for posting turbulence, once you are actually posted, you get a benefit called posting allowance, which is a month's salary. So if you were to compare all the pluses and minuses in the comparability process, that posting allowance benefit diminishes the 2% that you get, because you're getting another benefit.

Mr. David Pratt: I see.

Based on the 1974 determination of the X factor, there hasn't really been much in the way of significant changes to it since then?

Col Pierre Lemay: That's correct, sir.

There was a fundamental examination of total compensation between 1992 and 1994, which led to the 6.7% and the 14.7% that I was talking about earlier. I wasn't there when the study was done, but the people who conducted this examination at that time decided not to change this X factor.

All I was expressing to the committee is that you may wish to, in your deliberation, ask yourself if in the new millennium giving people 0.5% of salary for the demands that are made on them and the loss of freedom compared to other Canadians is still a reasonable differential to give people in uniform for their unique conditions of service. I think your review and your views on these particular points would be very useful to us.

Mr. David Pratt: That's definitely what I'm picking up from you— that in terms of the economic increases, the catch-up increases, and the comparability increases with the federal public service, there still remains this other category, the X factor, where there is an opportunity to make some further adjustments.

• 1640

Col Pierre Lemay: Correct, sir. So what I'm suggesting is that if, at the end of the day, Treasury Board were to approve that the loss-of-freedom factor, instead of being 0.5%, should be 4%, then everything else being equal, this would generate a 3.5% increase to all Canadian Forces members.

Mr. David Pratt: There's another issue that comes to mind in all of this. Over time, of course, with percentage increases in salaries, the people at the top end tend to benefit more than the people at the bottom. There seems to be a widening gap between a private's salary and a general's salary. What are you doing to address that issue as far as that disparity is concerned?

Col Pierre Lemay: As I mentioned in our paper, we have to remember that the Public Sector Compensation Act froze compensation plans in the federal public sector for many years. It was difficult to address shortcomings in our compensation structure during that timeframe because there was no opportunity to do so.

We are very concerned about the entry level pay for a number of reasons. Historically, young recruits were single young Canadians who lived in base quarters. A salary of $20,000 or $22,000 for a young Canadian coming out of high school living in single base quarters would probably be seen by a fair amount of people as being reasonable.

However, we now have enrollees, because of all sorts of changes in legislation and in society, who come in with a spouse and maybe some children, so it's not the same perspective.

So we will examine the entry-level pay. We want to see what we can do about improving that. However, some people probably would discuss with you that while you do this, you have to keep taking into consideration new laws about discrimination, marital status, etc.

I should note that two episodes occurred during that timeframe that were primarily based toward young recruits. They might not be as well-known today as they were two, three, or four years ago.

The government introduced the freeze legislation on increments. There was a two-year freeze on increment pay, such as moving from one step to another within the same rank.

That law affected privates the most. In fact, as for all privates since that day, when they enrol, they enrol at the IPC1 level. So if you look at the pay scale for privates, there's the basic private and private recruit, and then levels 1, 2, and 3. Every enrollee since that date, which was at some time in 1994, enrols at the number 1 level.

So the minimum salary right now for a recruit is not $17,000 or $18,000, which is what you will see for private recruits in the books, but in fact it's about $20,000 and something. I'm not suggesting to you that it's enough, I'm just saying that this correction was made to help them.

The second one is that the 2.2% I talked about in 1996 was a special clause in the 1996 budget. In fact, it was in the legislation of that budget so that it could amend the Public Sector Compensation Act to give 2.2% to the non-commissioned members. Again, the person it was made for was the new recruit.

So we have lots of work to do. We are giving it our attention and we're trying to do better. There's room between the private's pay and the corporal's pay, and we hope we can achieve improvements there.

Talking about the comparison between privates and generals, I had some numbers made. No, it's corporal versus colonel.

Mr. David Pratt: Do you have figures, let's say, going back a number of years in terms of what percentage of a general's pay a private's pay would be?

• 1645

Col Pierre Lemay: Yes. The one I have is between a colonel and a corporal. Corporal is the working rank. Every private becomes a corporal after three or four years at the maximum— some earlier. In 1950 the maximum corporal pay as a percentage of a maximum colonel pay was 18.5%; in 1970 it was 31.6%; in 1997 it was 43.6%.

Mr. David Pratt: Can I ask a question, Mr. Chair?

The Chairman: You can ask a very short one.

Mr. David Pratt: When we went across the country we became aware of the issue of the standard of living. It's clear the forces have a number of what I would call band-aid programs that attempt to address the issue of standard of living but clearly aren't working.

It seems to me that as a general principle people who are doing work for their country and are posted from one part of the country to another should not be in a situation where they have to sustain a serious loss of income, or loss of standard of living and all that goes along with that, in terms of family problems. What are you doing on a wider scale to address that issue?

Col Pierre Lemay: I mentioned previously the accommodation assistance allowance and—

Mr. David Pratt: Which has been roundly criticized.

Col Pierre Lemay: Because of the need and the demand— and I know Mr. Wood is not going to like the fact I'm going to say we're doing another study—

Mr. George Proud: But you're going to do it anyway.

Col Pierre Lemay: —we are almost ready to go outside. We are conducting a study on the cost of living across the country where people are living. We want to look at the feasibility of having a system in Canada that would be similar to the system we have oversees. You compare the price index of goods and commodities from one place to another and come up with an adjustment factor that varies depending on your pay range, because people with lower incomes tend to spend more money and people with larger families tend to spend more money.

We are going full blast with that and I hope we will have the results of the study some time this summer. We will look at it from a cost of living perspective both without accommodation and with it and see what the better way to look at it would be. So that's a deliverable we're working on.

I don't whether it will result in people receiving a lot more money tomorrow. I can't prejudge. Obviously, as a Canadian Forces member I want to compare it to myself. I don't want to discredit any region of this beautiful country, but if I'm in Victoria or Toronto I wouldn't want the basis to be Oromocto. What will the average be? We're working on it. We appreciate the frustration out there and we're trying to do the best we can.

The Chairman: Thank you, David.

Mr. Goldring.

Mr. Peter Goldring: Thank you, Mr. Chairman.

When I was in the Royal Canadian Air Force a long time ago, those who joined the services and went through training were glad to have the job, but it was certainly recognized that because we were young we would be single. You could hardly pay for a family on $88 a month. Nobody expected us to have somebody pay for our families if we joined the armed forces. In other words, you were discouraged from it.

Is this a point of trying to shoehorn in employment equity by suggesting that because we have to be fair and equitable to everybody, if I apply for a job as a recruit and have a wife and children, the armed forces should have to pay for them through the basic training period too? Are we trying to shoehorn employment equity into our basic training process as well? Is that why we're looking at pay for extended families for new recruits?

Col Pierre Lemay: I'm not sure whether I understand the meaning of “shoehorn”.

• 1650

Mr. Peter Goldring: When we're looking at hiring somebody who is single, right from high school or from the workplace or whatever— he gets hired by the Canadian Forces and he joins —it's expected he's going to be going through a year of training or a year and a half or two years of training. Why should the Canadian Forces pay for that person's spouse and children as benefits and as extra things? Why should the Canadian Forces be expected to pay? You touched on the fact that in the interests of equality married people should have the same opportunity as a single person, but you're implying somehow we should be paying more for that.

Col Pierre Lemay: When we look at entry-level pay, that's the challenge we're going to have to look at. Obviously every Canadian has to have the same opportunity to join the Canadian Forces. We need to fill our ranks with new enrollees. If our entry pay levels are so low that people can't join because they have a family— Although I appreciate the angle you're coming from, asking whether it's going to be fair to pay more to someone with a spouse and kids than someone without, every Canadian has to have the same opportunity to serve in the Canadian Forces.

The challenge of looking at entry-level pay is going to be exactly to address the concern you have raised. Are we going to be able to say we're going to give you more money because you're married? Well, there's a contradiction here with other laws. That's the challenge facing us. We have to make sure every Canadian has the opportunity to serve and at the same time, if they decide to serve with us, they can have a decent life with their family.

Mr. Peter Goldring: For basic training, that was the way it used to be, but that has somehow changed. Now we have a situation where you say compared with civil servants' rates we're lagging some 4.5% or 4.7% behind comparable civil servants. Is that my understanding of it?

My question is why is the Canadian military lagging behind? Is this not a failure of the government in setting unrealistic levels of pay and benefits for the Canadian Forces for the past several years? Has it been unrealistic? Have our attempts to economize in our figures, to work to show the numbers on the books at the end of the year, been at the cost of our military and the cost of our Canadian Forces members? Has that been what the case has been for the last three to four years?

Col Pierre Lemay: I guess if you look at the numbers and the studies one could be led to believe that. But to the contrary, those studies that were conducted from 1992 to 1994 were to calibrate the tool. In doing this calibration of the methods that are used to determine what comparability is, those shortfalls were discovered. Before those studies no one was out there making a point of hiding something or not giving the military what they should have. It's just that during the pay freeze we had the time to do these fundamental examinations of the tool, and those studies revealed those shortfalls.

Mr. Peter Goldring: So the public service was obviously better positioned to put forward their demands for equitable increases than the military was.

Col Pierre Lemay: It's simply that the tool we had before was not as good for finding out how much a military person in a particular trade should be paid.

As I said, I think it was a technical work. Nobody was hiding anything, and the results of the studies are being dealt with.

The Chairman: Mr. Price.

Mr. David Price: On the comparisons you did, were they net or gross?

Col Pierre Lemay: That would be gross.

Mr. David Price: So if we look ahead, it would be even closer to that.

Col Pierre Lemay: It would be larger, yes.

Mr. David Price: Okay.

The Chairman: That was the shortest question today.

Colonel, I have a few questions for you. How often does the Treasury Board Secretariat and Department of National Defence advisory group meet?

Col Pierre Lemay: We try to meet on a monthly basis.

The Chairman: So you are on this?

Col Pierre Lemay: Correct.

• 1655

The Chairman: And you're the one who tells Treasury Board, for instance, that the posting allowance should be x amount of dollars, that's what Canadian Forces personnel should receive.

Col Pierre Lemay: Yes. We work together on a continuous basis, on a daily basis, basically, on proposals and studies. It's at that committee level that the final decisions are made to bring the matters to our respective ministers through our chain of command. Then hopefully it will go to the ministers of Treasury Board for the benefit. The members of the committee— or their staff —are working on a daily basis on any compensation issue.

The Chairman: The allowance that you propose, the task force— do you take into consideration that it's a taxable amount? For instance, if we send somebody to Esquimalt and because of the costs out there he needs $600 a month, let's say, do you recommend $600 a month to Treasury Board or do you recommend $900 a month because you know that amount is going to be taxable?

Col Pierre Lemay: If we're talking about the accommodation assistance allowance—

The Chairman: Yes.

Col Pierre Lemay: We're going back to 1981. I'm not sure what was discussed at the time. I think the people understood that it would be taxable. There were fundamental examinations made later, like in 1987, and I'm sure they looked at it again.

I have a couple of points here. First, from the Treasury Board perspective— and at some point you may wish to discuss this with them or Revenue Canada —if they bring up an allowance like one that might exist for other Canadians in the private sector— because people relocate in the private sector or the public service too —to make an exemption for military personnel and not make it for the rest of Canadians is a dilemma.

From the public service perspective or the Treasury Board perspective, if we go there saying we want an exemption or we want them to gross up the amount so we defeat the taxation purposes, I'm not sure in what kind of position it puts them vis-à-vis all their other employees or all other Canadians. These are the dilemmas that we have to deal with.

Again, on this particular allowance, we are quite prepared and we want to go back again to Revenue Canada, trying to demonstrate— can you push the explanation to say that it is an employers' demand expense type?

So as part of the committee work, yes, from our perspective we want to gross it up or get it exempted, but there are also other realities out there that make it difficult for the Treasury Board to say yes, sure, we'll do it for you, but—

The Chairman: So how long have you been sitting on this joint task force?

Col Pierre Lemay: Three years.

The Chairman: In your day-to-day bargaining with Treasury Board or with Revenue Canada, is it hard to push something through? Is it something that's done over one meeting, for instance, or does it take three or four months?

Col Pierre Lemay: It depends on the—

The Chairman: The nature?

Col Pierre Lemay: —proposal or the nature of the proposal. As I said, since my time in the last three years, I can go back to the early 1990s, I think, and say that the consultative process and the cooperation between the two departments has been excellent. That doesn't mean that you sit at the table, ask for something and get it the next day, but as I said, the cooperation has been excellent.

There are some files that are taking more time than others. On Thursday morning, I'll address one file that we've been consulting on for not months but years. Others sometimes go fairly quickly.

• 1700

The Chairman: In terms of a recommendation from our committee regarding the non-taxability of these allowances, do you think that would help you in dealing with Treasury Board or with Revenue Canada? Would a very firm commitment from our committee do that?

Col Pierre Lemay: Yes, sir, I would think so. If your committee, which represents Canadians, is prepared to say that it's satisfied that the military has a unique situation and should be exempted in these particular circumstances because of that unique situation as compared to that of other Canadians, I would think it would help us a lot in terms of obtaining success with it, sir. It will, coming from you as a committee, and also as the voice of Canadians.

The Chairman: In my mind, Colonel, it's very clear that Canadian Forces personnel are very different from Canadian civil servants. We don't ask a clerk at Revenue Canada in Victoria to lay his life on the line. In my opinion, I think that is an excellent way of putting our case across that maybe some of these allowances should be non-taxable.

Col Pierre Lemay: I think it would be very helpful, sir.

Although our consultation has been excellent, what sometimes is difficult for us to articulate or be totally convincing about is our unique conditions. Again, other people will look at this in terms of how it is that we are so different. If they haven't made the visits that you have made and haven't met the people, seen the locations, seen what the people are doing, their first reaction will be that we are really not that different from them.

On behalf of Canadians, you have been out there looking at what these people have been doing, and you will pay more visits. There's no doubt in my mind that if you are convinced that we should have some special exemptions, it would assist us tremendously in trying to obtain success in those fields.

The Chairman: I just have a couple of last points, Colonel. What is an environmental allowance?

Col Pierre Lemay: That's our designation for aircrew allowances or sea duty allowances. They are those allowances that are there to recognize the hardship or the risk related to a particular condition. They're normally only paid when you are in the environment.

[Translation]

The Chairman: One last comment, Colonel, regarding reservists pay. If the pay system that applies to reservists also applied to senior officers and generals, perhaps changes would be quick in coming. I'm an MP and I've been a member of this committee since 1993. Each year, we are told that the pay system in place for reservists doesn't work. I know that substantial sums of money have been invested in the computer system in an effort to rectify the situation, but once again, we are hearing that problems persist. Therefore, I would recommend that we use the same pay system for senior officers as we do for reservists. Maybe then, things would change.

Col Pierre Lemay: I can assure you that neither we nor senior officers are proud of the fact that we have failed to correct the shortcomings in the reserve system. As I mentioned earlier, I hope to have with us on Thursday morning someone who can provide you with more detailed information. I can assure you that those responsible are also discouraged and not proud about the results. Unfortunately, this is not my area of expertise and I can't explain to you the technical reasons for our lack of success in this area.

[English]

The Chairman: Mr. Pratt.

Mr. David Pratt: Can you talk about the status of the guaranteed home sale program right now? Members seem to be under the impression that it is in fact a bit of a test program, that it's not permanent at this stage. What have you seen? What sort of feedback are you getting on that program right now?

• 1705

The other question I have for you relates to the mileage that is paid to members of the Canadian Forces. I understand there's a different mileage allowance paid to members versus public servants.

Col Pierre Lemay: On the first question, the guaranteed home sale plan was first approved for a two-year pilot project, approved by the Treasury Board for all departments. Those two years would have ended in seven days, on March 31, 1998. The program, the pilot project, has been extended for another year. It's in place now until March 31, 1999. So the next six months are going to be important to see if the program will become permanent or not.

I think I will mention to you on Thursday that up until now we have had in the neighbourhood of 2,600 successful guaranteed home sales. So in general, the program is well received. It's an excellent service for Canadian Forces' members. At the end of the day, one might make the point, is it cost-effective in the sense that the system is paying for itself or not? From strictly a service perspective, when you're directed to move and you want to move with your family, it's an excellent service that we hope will stay in place for a long period of time.

On the mileage issue, I'm not clear, sir, what exactly you're referring to.

Mr. David Pratt: This may or may not be correct, but I understand that for members of the Canadian Forces, and I don't know whether this is for reserves or for regular members, it's 9¢ per kilometre.

Col Pierre Lemay: It may be someone referring to the fact that when you go on travel, there is what we call the high rate and the low rate.

Mr. David Pratt: I presume that's the low rate. Hopefully that's not the high rate.

Col Pierre Lemay: The way it has been administered, we have paid historically the high rate when we ask you to take your vehicle and the low rate when you ask to use your vehicle at your convenience. Maybe someone was comparing that way of doing business to what they may have seen or heard being done in the public service, and maybe it wasn't applied the same way.

Mr. David Pratt: Getting back to the home sale program, you mentioned that it was a program designed for the entire public service.

Col Pierre Lemay: Correct, sir.

Mr. David Pratt: But it would seem to me that the disproportionate use would be by members of the Canadian Forces.

Col Pierre Lemay: That's correct.

Mr. David Pratt: So why wouldn't you design a program for the Canadian Forces rather than one for the entire public service?

Col Pierre Lemay: I would suggest to you that before 1996 we had been seeking a program for us for a long time. We were quite pleased when the government approved a program for the full public service. Again, this is one of those things. Are people in authority prepared to approve a program strictly for the Canadian Forces and not for the other employees of the federal public service? Certainly from our perspective it's a very successful program, and we hope it continues.

Mr. David Pratt: But within that program, you still have people who, presumably, can either opt into the program or not.

Col Pierre Lemay: Correct.

There are some little flaws with it that we would like to see corrected, but we're advised that during the trial there is no flexibility to do that, because there are contract arrangements with the real estate people. But generally, I think it has been well received by the members as an improvement to the services available when they have to relocate.

Mr. David Pratt: But it doesn't get around the fact that you still have members based on housing conditions in particular areas that are losing thousands and thousands of dollars because of equity.

Col Pierre Lemay: We have an equity protection program in place. It has some flaws, and we will look into improving it. Only we and the RCMP have this equity program protection. Basically, the way it is right now, you are reimbursed 90% of your equity loss on the home you're selling, or have sold, if the similar homes in that area have decreased in value by more than 10% for that period.

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What occurs with this is you have people who have larger homes, or homes in high-priced areas, and if they don't qualify for the 10% decline in equity they may lose a lot of money. On the other end, you may have people in other areas with a 10% decrease in the market and they qualify for lesser reimbursement. We were told if we want to change this program we will have to look at cost-neutral proposals, so we're trying to see how we could make the program more equitable to everyone.

But we do have an equity protection program. In fact, I think on Thursday morning in the presentation I'll ask the committee for their views on whether Canadian Forces members should incur any loss of equity at all when they must relocate.

Mr. David Pratt: Apart from relocation allowance, there is a situation many of the members we spoke to over the last couple of months have been in— it came up particularly in relation to the ice storm —where they have had to go on short notice, and there were costs associated with that, whether it was spoiled food in the fridge or arrangements they had to make for child care right on the spur of the moment or other costs. Has any consideration been given to that sort of situation, where on a quick deployment, let's say within six or eight hours, when people have to pack up and move, etc., they would be—

Col Pierre Lemay: Yes. It would generally not be the norm for someone to have to relocate on an operation like the ice storm, for an operation that is not scheduled to be of the nature of six months or more. Certainly all the travels will be reimbursed.

The child care issue is one I'll be addressing with you on Thursday morning. It's certainly an important one, one that particularly our single parents raise all the time.

Food in the freezer is something that could be addressed. I don't know if people should claim that through their insurance or through a special benefit. This is not something I can say has come to us very often, that there was a problem area there.

Mr. David Pratt: Perhaps the examples I used weren't as good as they might be. You would have to speak to the people who were involved in the situation to get a better appreciation of that.

I have a final question. In your discussions with the people in Treasury Board, when you have to go to them, do you think they have any appreciation of the morale issues that are tied to the compensation package for the members of the Canadian Forces?

Col Pierre Lemay: I think they do, sir. We're always inviting them to come and visit. In fact, the person who looks after the benefits for service overseas was visiting Bosnia with our director just last month for a few days so they could have a better understanding of exactly what goes on out there. I think they do.

Mr. David Pratt: This is someone from Treasury Board, and they went to Bosnia?

Col Pierre Lemay: Yes, the person who looks after the staff benefits for service outside Canada for our department, the RCMP, and all other departments, such as DFAIT.

But we also have to be sensitive that they have to deal with the whole of the federal public sector, not only us. We have a responsibility to make our case a good one and make our unique case as best we can. I think this is where sometimes the more difficult areas occur, in trying to demonstrate our unique requirements.

Mr. David Pratt: On that point, do you think it would be a good idea for Treasury Board perhaps to send a representative along for the tail-end of our meetings on the east coast and Petawawa, just so they get an appreciation of what is happening at those hearings?

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Col Pierre Lemay: Yes, it could be useful, sir. I think they're speaking to you next Tuesday, as a matter of fact.

Mr. David Pratt: Okay. I go day by day.

Thank you, Mr. Chair.

The Chairman: Colleagues, if there are no other questions, I'd like to thank Colonel Lemay. We shall see you again on Thursday morning.

The meeting is adjourned.