NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 4, 2000

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[English]

The Vice-Chair (Mr. Julian Reed (Halton, Lib.)): This committee is now in session. This morning we would like to welcome the Minister of Public Works and the quite illustrious group with him today. I'll turn the meeting over to the minister.

Minister, maybe you would introduce the people who are with you. You are, of course, familiar with the routine. You would be expected to make a presentation of ten minutes, along with any of your colleagues who would like to, and then we'll throw the questioning open to the committee. Thank you very much.

[Translation]

Hon. Alfonso Gagliano (Minister of Public Works and Government Services, Lib.): Thank you, Mr. Chairman. Colleagues, it is a pleasure for me to appear before your Committee once again—this time to discuss the government's Estimates for the current fiscal year.

But before I begin, I would like to introduce the officials accompanying me today: the President and Master of the Royal Canadian Mint, Ms. Danielle Wetherup; the Acting President of the Canada Mortgage and Housing Corporation, Mr. Claude Poirier-Defoy; André Ouellet, President and Chief Executive Officer of the Canada Post Corporation; the Deputy Minister of Public Works, Ranald Quail; Marc Lafrenière, Executive Director of the Canada Information Office; and Roman Winnicki, Acting President of the Canada Lands Company. This is the team accompanying me today.

To begin with, Mr. Chairman, I would like to provide an overview of the various initiatives now underway in my Department, and in the Crown corporations for which I am responsible.

At the dawn of a new millennium, it is with considerable enthusiasm that Public Works and Government Services Canada supports the government's goal of enhancing the quality of life for all Canadians.

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Our services play an essential role in supporting federal departments and agencies in doing what they do best—delivering services to Canadians.

[English]

My department's five corporate directions will focus their efforts over the next three years on ensuring that our services to the public good continue to add value to our great country.

Our contribution will be increasingly defined by advances in e-commerce and the Internet. We will be adapting this ever-changing environment so that we can effectively fulfil our expanding role of helping our clients—government and Canadians—adjust to the new realities.

As we enter the 21st century, I am confident that this department will continue to play an important part in helping the government provide a high level of service to all Canadians.

I have the same confidence in the crown corporations and government agencies that I am responsible for. Let me say a few words on each one of them.

[Translation]

Defence Construction Canada continues to support the management of National Defence facilities infrastructure, as it has done for almost 50 years.

DCC is in the third year of a ten-year, $320 million program to decommission 21 DEW Line stations in the Far North.

[English]

The corporation's flexible and responsive services have helped DND close and decommission facilities in a timely manner, as well as build new facilities required to accommodate the consolidation of Canadian Forces units, and to renew existing infrastructure.

The Canada Information Office has a special mandate to communicate from a corporate perspective representing the Government of Canada as a whole. I'm pleased to inform you that it has made progress on a number of fronts in helping the Government of Canada communicate more effectively with Canadians.

The CIO has also developed a variety of citizen-focused corporate communications products and initiatives. In 1999-2000, it successfully delivered a rural guide on Government of Canada programs and services to every rural household. In 2000-2001, CIO will be testing the same concept in urban areas.

[Translation]

To communicate better with Canadians, federal departments need to know what strategies and activities have worked best. In the coming year, the CIO will identify some of the best practices in government communications and share this information among federal departments and agencies.

Mr. Chairman, I am proud to inform you that the Canada Lands Company has just completed another very successful year, with several notable projects under way across the country.

One such example is Canada Lands' success in revitalizing the former St. Hubert Military Base on the South Shore of Montreal. This project has attracted many new businesses to the area and has created 800 direct jobs in sectors as diverse as cinema production and hi-tech, and has the potential to create up to 4,000 jobs. Sixty-six per cent of the property has either been sold, committed for sale or leased.

[English]

This company has just been reviewed on its performance by an interdepartmental steering committee with a view to renewing its mandate, and the recommendations of this committee, which I am told are most positive, will be received by my colleagues and I in the very near future.

Canada Mortgage and Housing Corporation is Canada's national housing agency. Since its creation more than 50 years ago, CMHC's mandate has evolved to address emerging issues and priorities in the national housing system, while meeting the changing housing needs of Canadians.

As part of the federal strategy to address homelessness that was announced in December 1999, CMHC will spend $311 million to bring low-income housing up to basic health and safety standards. This is in addition to the $200 million in funding that was announced in 1998.

In order to improve service to social housing clients and make better use of taxpayers' money, CMHC has transferred the administration of social housing stock to provinces and territories.

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[Translation]

Agreements have been signed with nine jurisdictions, and two more are likely this year. These new arrangements take nothing away from the Government of Canada's long-term financial commitment to social housing.

CMHC also funds research on housing needs and housing markets for use by consumers, private industry and community-based groups.

Last year, the Government of Canada and Canada Post finalized a Multi-Year Policy Framework for the Corporation.

Improving the speed and reliability of mail outside of core urban areas has been a major priority. Delivery standards in rural Canada are now the same as those in urban Canada.

[English]

Canada Post is also one of the largest employers in Canada. In order to be a successful company in the 21st century, Canada Post must build on the quality of its employees and allow them to play an active role in shaping the future of Canada Post. A major step in this direction is the recent signing of a three-year collective agreement between Canada Post and the Canadian Union of Postal Workers.

A significant part of the agreement is that the corporation and the union have agreed to work together to develop a new delivery model. This model positions the corporation to compete in the new markets that are developing as a result of the rapid growth of e-commerce. Canada Post will be a world leader in providing innovative physical and electronic delivery solutions, creating value for its customers, employees, and all Canadians.

I'm also pleased to report that in 1999, the Mint achieved the second greatest earnings in its 91-year history, with a profit before taxes of $21.7 million, an increase of almost 400% over the previous year.

[Translation]

As you know, last year Parliament approved amendments to the Royal Canadian Mint Act, giving the Mint more flexibility to react to market opportunities and to meet customer expectations.

In many ways, 1999 was the Mint's best year because its profits were driven by its successful efforts to create innovative products and marketing programs.

[English]

Last week, I had the honour of presiding over the official opening of the Mint's Winnipeg plating facility. I'm pleased to report that construction of the plating facility was completed ahead of schedule and $1 million under budget, another substantial achievement. The Mint is truly a world-class operation, well on the way to becoming the world leader in minting, and a crown corporation of which all Canadians can be proud.

[Translation]

Mr. Chairman, in my remarks today I have tried to provide you and members of your Committee with a sense of the many initiatives underway with the Department and organizations for which I am responsible.

In conclusion, I am certain that these organizations will continue to be valuable assets for Canadians.

Thank you for your kind attention. I would now be pleased to answer any questions you may have with the assistance of my officials.

Thank you very much.

[English]

Thank you very much.

[Translation]

The Chair: Thank you, Minister.

[English]

I'm sorry I couldn't have given my fullest attention from the distance at which I found myself at the earlier part of your presentation, but if it was as good as the latter part, then truly I missed a lot.

Mr. Schmidt, you're up first.

Mr. Werner Schmidt (Kelowna, Canadian Alliance): Thank you, Mr. Chairman, and welcome to the committee.

The Chair: You're not supposed to say I wasn't here at the beginning, but I'm glad you took note. It means I was missed.

Mr. Werner Schmidt: I just couldn't resist that. They missed you so much that they started to recognize—

The Chair: Mr. Reed, take note.

Mr. Werner Schmidt: Mr. Minister, I'd like to start my questioning with the most recent controversy that surrounded the Louis St. Laurent Building in Hull, a building owned by Mr. Bourque. I'd like to ask you if you could tell us what the current lease arrangements are on that building, the length of the lease, the rate, when it expires, and what the conditions of the lease are.

Mr. Alfonso Gagliano: Since that's a very detailed question, maybe one of the officials can give the conditions of the lease.

Mr. Ranald Quail (Deputy Minister, Department of Public Works and Government Services): Thank you very much, Mr. Chairman. Depending on the detail you want to go into, the lease is good until 2016.

Mr. Werner Schmidt: And when was that lease signed?

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Mr. Ranald Quail: It was renewed in 1991.

Mr. Werner Schmidt: So in 1991, that lease was renewed until 2016. The rate that was negotiated at that time was around $900,000 a month, if I understand correctly, plus the 5% inflation clause.

Mr. Ranald Quail: The way I do it is we renegotiate the lease with the lenders every five years. The current lease is 7.75%. That's what we're paying on the mortgage. That could transfer.... I don't know whether we have the actual number. The thing we deal with is the rental rate. What's the interest rate? That's what we renegotiate every five years. The current rate we're paying is 7.75%.

Mr. Werner Schmidt: So what happened to the inflation clause? Is it there as well?

Mr. Ranald Quail: François.

Mr. Alfonso Gagliano: François Brazeau is the acting assistant deputy minister of real properties.

Mr. François Brazeau (Acting Assistant Deputy Minister, Real Property Services Branch, Department of Public Works and Government Services): The lease contract provides for a periodic readjustment of the rent, depending on the prevailing long-term interest rates. When the lease was renewed in 1991, the interest rate was at 10.78%. At the end of the five-year term in 1996, the interest was 7.75%. So the monthly rents were reduced from some $900,000 to $625,000.

Mr. Werner Schmidt: So it's directly related to the current prevailing mortgage interest rates. Well, that's very helpful. Somewhere in the literature I picked up a 5% inflation rate. Does that not exist at all in that lease agreement?

Mr. François Brazeau: No.

Mr. Werner Schmidt: Thank you very much for clarifying that. I really appreciate that.

The other question I have in this connection has to do with the lease to purchase. Does this lease agreement have a right to purchase or an option to purchase the building?

Mr. François Brazeau: The contract is a lease with an option to purchase. There is provision in the lease for the purchase at the end, in the year 2016. The option price at that time is $15 million.

Mr. Werner Schmidt: Thank you very much. So the prior lease was a renegotiated lease. It was a ten-year lease that was to run until 1995, and it was renegotiated in 1991.

Mr. Minister, I guess this question is to you. Is there an attempt to renew the lease or to renegotiate the lease now before it expires in 2016?

Mr. Alfonso Gagliano: You also have to know that this lease is before the courts right now, because there is litigation between the landlord and the mortgage company in terms of the rate of interest. Therefore, we will have to wait and see what the results will be, the court's decision.

Mr. Werner Schmidt: Did you say the lease is before the courts now?

Mr. Alfonso Gagliano: Yes.

Mr. Werner Schmidt: Was this before an offer was made to purchase the building?

Mr. Alfonso Gagliano: Yes. We made the offer of purchase because this has been a complicated lease.

Mr. Werner Schmidt: We know it's complicated. That's why it's an issue here.

Mr. Alfonso Gagliano: The court set a time. Then the judgment, which I'll let my official describe if you want, was necessarily clear. The mortgage insurance company is appealing this right now. We thought it was best for us to protect the crown interest and buy the building according to the conditions of the option to purchase established in the lease. The offer didn't go through, so we are back to square one. We'll have to await the court's decision on what kind of a lease we have, what kind of a rate we pay.

Mr. Werner Schmidt: The option to—

The Chair: We'll have to come back, Werner.

Mr. Werner Schmidt: We are done already?

The Chair: Yes. Isn't it great?

Mr. Werner Schmidt: No, it's not great at all.

The Chair: The chairman comes back and the time moves really quickly.

Mr. Julian Reed: Time flies when you're having fun.

The Chair: As the Latins used to say, tempus fugit.

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[Translation]

Mr. St-Julien.

Mr. Guy St-Julien (Abitibi—Baie-James—Nunavik, Lib.): I have a number of questions, given that my riding is a very large one. So, we'll get directly to the point. After your recent visit to Kuujjuaq, following representations from the mayors and people of Nunavik, who submitted petitions with respect to housing, I received a number of phone calls from municipalities, mayors and leaders such as Pita Aatami of the Makivik Corporation, Johnny Adams of the Kativik Regional Administration, and particularly from families in Salluit, Purtinik, Koartac and Kuujjuaq.

I therefore want to convey their thanks to both you and your team at the Canada Housing and Mortgage Corporation for Claude Poirier-Defoy's excellent work. We especially want to thank you for your leadership in bringing about the construction of new housing under a five-year, $50 million agreement. I would like you to say a word or two about that. This is an important initiative for all those families, and they very much wanted to convey their thanks. Perhaps you could give us some more information about it.

Mr. Alfonso Gagliano: Thank you, Mr. St-Julien. I believe there is an agreement in principle that will soon be finalized. The Government of Quebec and the Government of Canada will each be investing $10 million a year towards the construction of new housing for the Inuit in the North. I had the pleasure of visiting the area in person to make the announcement. This initiative will allow us to meet the pressing need for housing in that area. I would like to ask Claude Poirier-Defoy to provide additional details with respect to the agreement.

Mr. Claude Poirier-Defoy (President, Canada Mortgage and Housing Corporation): The agreement which is about to be finalized and should be signed by the Minister of Indian and Northern Affairs, the Minister of Public Works and Ms. Harel, the Quebec Minister responsible for Municipal Affairs, as well as the various Nunavik groups identified by Mr. St-Julien, stipulates that the Government of Canada will provide annual funding of $10 million over a five-year period. That $10 million should go directly to the Makivik Corporation, which is responsible for housing in Nunavik.

This funding should allow them to build approximately 1,000 houses a year. As for the Quebec Housing Corporation, it has undertaken to provide $10 million a year over the next five years to pay the operating and rent deficits. This is a remarkable agreement, in the sense that it was negotiated quickly. We hope to be able to deliver the first units as early as this year.

Mr. Guy St-Julien: Thank you very much.

My second question is addressed to Canada Post. With respect to omnibus air service to the North, the main goal of this program is to lower costs. But at the present time, we are experiencing problems, in light of what has happened with Air Canada and Canadian North. We know that the gateway to the north for routing non-perishable and perishable food is Val-d'Or, because of its 10,000 foot long runway.

Today I received a couple of phone calls. Having met with the people yesterday and the day before, I know that they are worried because Canadian North has not yet signed an agreement. I realize that these are confidential agreements, but I would like to meet with your officials to clarify the situation. The gateway has always been Val-d'Or and we would not like to see that gateway to the north located in another province. We want it to remain in Quebec. It represents between 46 and 100 jobs, and what is especially important here is that there are agreements with the Inuit in Nunavik and the Crees in James Bay.

Mr. Alfonso Gagliano: I'll ask the President of the Canada Post Corporation to provide you with those details. It is very important that we take a closer look at that.

Hon. André Ouellet (President and Chief Executive Officer, Canada Post Corporation): Mr. St-Julien, there is no doubt that we appreciate the service we are currently receiving. Having flights leave from Val-d'Or is a satisfactory arrangement, as far as we are concerned. Basically Canada Post is an intermediary for people sending goods to the area and using the mail as a distribution service.

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Of course, our contracts are renewed through calls for public tenders. Our primary interest is obviously good price-quality and price-service ratios. The service provided by people in Val-d'Or will certainly be considered, but in the final analysis, I'm sure you understand that we cannot pay a premium for this service. That is why I will be asking my people to meet with you and update you on the ongoing discussions, so that you are fully informed as the situation evolves.

Mr. Guy St-Julien: Thank you, Mr. Ouellet.

The Chair: Thank you, Mr. Ouellet.

Mr. Lebel.

Mr. Ghislain Lebel (Chambly, BQ): Mr. Gagliano, I would like to talk a little bit about CMHC—the Canada Mortgage and Housing Corporation. I have heard—and I would like you to tell me whether this is true or not—that CMHC's internal management has been contracted out to a firm—that there is a company managing CMHC's work force.

Mr. Alfonso Gagliano: I will ask the President to provide more details. To my knowledge, some of CMHC's services have been privatized, but not management of the Corporation as a whole. The Corporation has its own Board of Directors and its own Management Committee.

Mr. Ghislain Lebel: That's exactly what I want to know. I'd like you to explain...

Mr. Alfonso Gagliano: Some services have been privatized, and others are provided by Public Works. Perhaps Claude could answer that question.

Mr. Claude Poirier-Defoy: To my knowledge, there are still employees managing all the assets of the Corporation, both in Ottawa and Quebec. There is a Director General performing that function.

Perhaps you are referring to those units that have been taken back by CMHC.

Mr. Ghislain Lebel: Not at all. For example, I was told there is a firm, whose name escapes me, doing all of CMHC's printing work, as well as performing other functions on a contractual basis. I'm told that is no longer done internally.

Mr. Claude Poirier-Defoy: Yes, there is a company looking after that for us. A company by the name of SERCO now produces all the Corporation's documentation.

Mr. Ghislain Lebel: What functions does SERCO perform exactly? Does it only produce documentation?

Mr. Claude Poirier-Defoy: Yes, the company is involved only in the production of any documentation we need to deliver our programs.

Mr. Ghislain Lebel: And what kind of agreement have you signed with SERCO?

Mr. Claude Poirier-Defoy: If you would like additional details, I could ask the Vice-President responsible for that area to give you more information.

[English]

Bill, do you want to provide some additional information?

Mr. Bill Mulvihill (Vice-President, Corporate Services, and Chief Financial Officer, Canada Mortgage and Housing Corporation): On the role of SERCO?

Mr. Claude Poirier-Defoy: Yes.

The Chair: Let us know exactly who you are for the record.

Mr. Bill Mulvihill: My name is Bill Mulvihill and I'm vice-president of corporate services for Canada Mortgage and Housing Corporation.

The Chair: Thank you very much, sir. Please have a seat.

Mr. Bill Mulvihill: Thank you very much.

SERCO is involved almost exclusively with the production of documentation. For the company this would include, for example, printing that would be done for computer purposes. It could include brochures and pamphlets that would be produced for the company.

The reason this outsourcing took place was because private sector companies are better able to do this kind of work than we are, and it's more efficient to have it done by SERCO. It's a very small organization inside of our company and would account for a few staff working on mostly machines of printing type.

[Translation]

Mr. Ghislain Lebel: Does SERCO have a fixed contract or does it work on a freelance basis?

[English]

Mr. Bill Mulvihill: I believe the contract is for a period of five years, although I would have to verify that. Offhand, I don't know, and I don't have a copy of the contract with me, I'm sorry. I could provide that information.

The Chair: Could you make this available to the clerk for distribution to all committee members? Thank you.

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[Translation]

Mr. Lebel.

Mr. Ghislain Lebel: I was asking what kind of an agreement you had with the firm, but you have already answered my question.

The Chair: Do you have a supplementary?

Mr. Ghislain Lebel: Yes, I do. Has CMHC saved money by using the services of SERCO? Can that be proven? Is it beneficial for the government? If so, do you have a comparative analysis?

[English]

Mr. Bill Mulvihill: The contract was publicly tendered and was bid for. Our pro forma at the time showed there were substantial savings to be had through outsourcing of these activities, and we continue to work with SERCO to achieve full value under the contract. The amount of the savings was in the order of millions of dollars, but again, I don't have the details of a singular contract with me. If you wish, I could present further details.

The Chair: Monsieur Gagliano.

[Translation]

An hon. member: Good.

Mr. Alfonso Gagliano: We could provide you with both the contracts and reports indicating the current situation and what savings have been achieved to date. I think that would give you a complete overview.

The Chair: Thank you, Mr. Gagliano and Mr. Lebel.

Mr. Reed.

[English]

Mr. Julian Reed: This is in connection with Canada Post, and I think it's a problem that has been solved. Some reports were coming to me from rural mail carriers that when rural contracts were let there were cases where multi-contracts were awarded to one individual, who then sublet them, if you like, to other carriers, which was a major break in the traditional way of handling those letter carrier contracts. Could you please explain to us what has taken place and how the situation has been corrected?

Mr. Alfonso Gagliano: Over the years, naturally, it happened through the tendering process that one individual ended up having several contracts, several routes, and we realized that this definitely was not the original objective of the policy. So there was a policy change that has been implemented, and naturally, while the contracts are being renewed, that policy will take place. I believe there are still a few left, but the president of Canada Post can perhaps give the committee the details on where we are up to now.

Mr. André Ouellet: You're quite right, Mr. Reed. You could say this has been corrected. There was a tendency to give contracts, rural route contracts, to a contractor who would in turn sublet to individuals. The government has given us directives, which we are following, to no longer merge rural route contracts, to take every contract through a bidding process, and to give it to whichever contractor is successful. As a company, we had to honour contracts that were given in the past. As the minister has explained, as these contracts expire, we go out and ask contractors to submit bids. We have a policy of not giving more than one contract per individual contractor in rural Canada.

There is a different system that exists for suburban routes. The distribution in surrounding large cities is a different process, which has been in place for a number of years. In the suburbs of a city like Ottawa, or in other cities, there are professional contractors who have a series of trucks and so on and who give services.

So for services between cities or for suburbs of cities, we still do business with entrepreneurs who hire the number of people to do the service. But in rural Canada the rule is to adhere to one contract per contractor.

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Mr. Julian Reed: Thank you very much for making that change, because rural carriers in my experience are mom and pop operations. They've been in a family for many years and so on. The idea of putting them into a large lump really received a negative response. So I thank you for doing that.

The Chair: Thank you, Mr. Reed.

Mr. Bernier.

Mr. Gilles Bernier (Tobique—Mactaquac, PC): Thank you, Mr. Chairman. I have three questions. I will try to be brief, and I would like the answers to be as brief as possible because I'm not going to be able to be part of the second round, and I know time is going quite fast.

The Chair: You're using it all up with your preamble.

Mr. Gilles Bernier: My first question, Mr. Minister, is about your appointment of Emmanuel Triassi, a close personal friend of yours, as chair of the Royal Canadian Mint. On a personal level, I have looked at Mr. Triassi's resumé and I can find nothing that would qualify him to be chair of the Mint. He has never sat on the board, he does not have a degree in finance, he did not study metallurgy, and as far as I know he doesn't even have a coin collection. My question is, why did you not permit the Mint to do a proper executive search so that they could find a qualified chair for the board?

Mr. Alfonso Gagliano: Let me disagree with you. Mr. Triassi is a very qualified person. He's an engineer. He has a successful professional practice. He's also chair, CEO, of a major real estate company. He has been sitting on the board. He is the president of the chamber of commerce. I don't know personally whether he has a coin collection. I know Mr. Triassi, but you make it out that he is my closest friend, so maybe you are closer than I am. But I can tell you he is very qualified and he is doing a very good job of chairing the Royal Canadian Mint.

Mr. Gilles Bernier: My second question is in regard to the fact that in any business today, when profits are flexible, some of the products are losing. At Canada Post the profits are less than half of what they were before the strike in the fall of 1997. The letter mail volume is shrinking, and yet you just gave the chairman at Canada Post a salary increase of 32%, plus a performance bonus of 25% of his salary. How can you possibly justify such a huge pay increase?

Mr. Alfonso Gagliano: Mr. Chairman, this is a case where sometimes we don't have to believe what is written in the media.

The Chair: That's sort of a general rule, isn't it?

Mr. Alfonso Gagliano: Sometimes. On the contrary, upon the appointment of Mr. Ouellet as president of Canada Post, the salary and benefits were quite substantially reduced. I myself saw the article of a couple of weeks ago where I think it said the Canada Post president was making over $300,000. Let me say that this is not the case. I had someone check into this. There is a bracket from $240,000 to $280,000. So we were paying more than that, I can tell you, for the previous president. Again, this is not the case.

The Chair: Thank you.

Your last question, Mr. Bernier.

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Mr. André Ouellet: On the benefits and the profit of Canada Post, I would like to correct the situation, if you will allow me. Canada Post, this year, will declare a profit 50% higher than last year.

You're quite right that we endured a very bad strike that took us way back, but in the course of the year and a half or two years that I've been in charge of Canada Post, we've made profits. We'll be declaring a profit for the fifth year in a row, and the profit this year will be, as I said, 50% higher than last year, just for the record.

I know some people are concerned about my salary. I just want to say that by business standards, I come very cheap for Canada Post. In fact, the taxpayers of Canada are saving money, because while I accept to serve at Canada Post, I'm not cashing the pension that I'm entitled to.

The Chair: You don't have to apologize for that, Mr. Ouellet.

Mr. Bernier.

Mr. Gilles Bernier: My last question is for Mr. Winnicki. You're with Canada Lands Company.

There are some requirements or criteria that I assume everybody has to follow. If you want to dispose of a piece of land that you don't want for one reason or another, if I remember correctly, the criteria are that you will offer it to government departments or agencies at the federal level, and if they don't want it, you'll go provincially to government departments or agencies. If they don't want it, you'll go to the municipalities or the village.

Mr. Alfonso Gagliano: It's Treasury Board policy.

Mr. Gilles Bernier: Yes.

I expect those criteria would have to be followed. Was there any time at all in which those criteria were not followed, and if they were not, why?

Mr. Roman Winnicki (President, Canada Lands Company): Mr. Chairman, if I could answer—

The Chair: Mr. Winnicki, the answer to that is...? Tell me it's more than one syllable.

Mr. Alfonso Gagliano: Before Mr. Winnicki gives the answer, Canada Lands was created in 1995 to dispose of surplus properties of the Government of Canada. So when the Government of Canada transfers properties to Canada Lands, that policy of Treasury Board that you alluded to is done. In other words, we want to put it on the private market, and Canada Lands' role is to dispose of those properties and get the best value for Canadian taxpayers.

In a couple of weeks—I don't recall the date—we're going to have a shareholders' meeting here on the Hill, probably in this building, so that members of Parliament can participate. Every year on that occasion, Canada Lands has been paying a quite substantial dividend.

But now, if we have any occasions on which we have been giving property from the stock received from the Government of Canada....

Mr. Roman Winnicki: Thank you, Minister.

The process by which the property is first considered for other uses, government uses, and so on, is a process that is followed before the property is transferred to Canada Lands, so that exercise has been gone through.

Once it has been put into Canada Lands' hands and Canada Lands has acquired it, it has been deemed not to have been needed or required for any of those purposes, or in the order the member has asked. So we then deal with it on a commercial basis.

The Chair: Thank you very much.

Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): Thank you.

I'm interested in Central Mortgage and Housing. I don't have all the facts in front of me, but I'm interested in the area of mortgage insurance, how that is being undertaken. Do you carry an account as a surplus or a deficit? I'm looking at claims, claims made against the program and premiums collected. Is that in a surplus or a deficit position right now?

Mr. Claude Poirier-Defoy: The fund has been in a surplus position for many years, and we've been getting better and better results year after year.

Mr. Alex Shepherd: So should your rates be reduced?

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Mr. Claude Poirier-Defoy: At the same time, since the NHA was changed last year, since we've been given a sole commercial mandate, we've been asked to capitalize our reserve.

So when you see what we have in our corporate plan summary or the annual report that will be tabled very soon, you'll see that we have a very high level of insurance in force. We have a surplus in net incomes. We have an appropriated surplus that deals with a number of matters, like contaminated lands, policy reserves, and capitalization. So we come closer to being at a level playing field with our competitors. And we have, of course, an unappropriated surplus.

Mr. Alex Shepherd: I was referring to the aspect of residential housing, and presumably you're saying you have a surplus, and a surplus that is increasing. So the issue obviously for a lot of homeowners or future homebuyers in this country would be, are the rates that CMHC is charging for mortgage insurance too high?

Mr. Alfonso Gagliano: If I could add, before Claude adds more to this, a few years ago we had a policy where for first home purchases we were insuring 95% of the mortgage, which was very high risk. We extended that 95% mortgage insurance rule to all purchases, not only the first one. So I suppose such a policy, which encourages Canadians, especially young Canadian families, to purchase their home, in terms of liability, I believe, has a higher impact on the reserve.

Claude, do you want to add anything?

Mr. Claude Poirier-Defoy: You have to understand that we do insure everywhere in the country at the same price. So we don't pick and choose in large cities. We cross-subsidize certain areas that need to be cross-subsidized. We're taking all kinds of risks on reserve. We're taking risk in the one-industry town. So we have to get, in some instances, higher levels of return for the part we cross-subsidize.

Mr. Alex Shepherd: I'm only looking at the aspect of a young family buying a house. Sometimes that is as high as $2,000 or $3,000, depending on the price of the house. Sometimes it's prohibitive to buy.

Mr. Claude Poirier-Defoy: I'm not sure that's the case, because, as the minister was saying, the 95% product has been so popular that now it does represent almost 70% of our insurance in force.

You have to understand that the premium is paid, it's amortized, through the terms of the loan. So I don't think it's an impediment to purchase.

Mr. Alex Shepherd: Okay.

I have one final short question. I just noticed in the main estimates that the actual department has increased its cost of operations by 10% year over year. I wonder if you could explain that. I'm looking at the 1998-99 estimates. At one point, it's $1.519 million as opposed to $1.66 million.

Mr. Alfonso Gagliano: That's CMHC or the department?

Mr. Alex Shepherd: Canada Mortgage and Housing total agency cost on the 1999-2000 estimates is $1.666 million compared to $1.519 million for 1998-99.

Mr. Bill Mulvihill: That is a technical issue. In fact, the budgetary expenditures of the company have remained relatively flat at about $1.9 billion, which is the number you hear from time to time when we talk about our commitment to social housing. There are some very modest changes to that amount, a few millions of dollars here and there for some programmatic changes.

However, since the government only forwards us the cash we need, it would net out loan prepayments that we have. So it's a cash amount of difference and is strictly a result of variability and some receipts of mortgages, which are assets that we have on our book and are not part of budgetary expenditures of the government.

So in fact our budgetary expenditures—that is, the support provided to CMHC—are very flat.

The Chair: Thank you very much.

We'll go to Mr. Forseth.

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Canadian Alliance): Thank you very much. I want to talk about the leaky condo disaster in British Columbia from the perspective of regional disaster relief and the government agency involvement of CMHC.

• 1155

In a letter dated October 7, 1999, Mr. Minister, your special assistant, Pierre Brodeur, wrote to Mrs. Marie Toth of Surrey, British Columbia, and said:

In the context of the report

—of course referring to the Barrett Commission—

Minister Gagliano has used all the resources that were available to him to help ease the financial burden of impacted condominium owners.

Mr. Minister, the commission did mention bridge financing at bank rates. However, your assistant writes that you did everything to help ease the burden. I'm wondering how loan underwriting at bank rates helped condo owners at all to ease their burden. You had the resources to offer bridge financing even at 0%, but you failed to do that.

I know that many in my community seriously wondered if something similar had happened in Quebec or Ontario, whether the Liberals would have bent over backwards to provide assistance. To put it another way, it can be reasoned that the disasters of the Quebec ice storm and the Manitoba flood were seen as a significant federal financial responsibility through partnerships, yet the B.C. disaster is analogous in size, social disruption, financial impact, and the combination of human inaction and lack of preparedness for the consequences of the weather. So in your view, what is the federal role, and what are you prepared to do?

Mr. Alfonso Gagliano: Let me just say, first of all, in terms of disaster assistance, there is a program, and it is the province that has to decide if they are in a disaster position and then make the application. I don't know if the leaky condo situation in Vancouver would qualify. But if it would qualify, believe me, I would be the happiest person in the world. About two days ago I had a telephone conversation with the minister responsible from the Government of British Columbia, and she and I agreed that we should have our officials talk and see what kind of a solution we can find.

For the time being, I'm responsible for CMHC programs, and all those programs have been put at the service of people in need in terms of financing and refinancing mortgages to make sure the work can be done. We participated in a lot of research. I even extended the RRAP program in B.C. so that some can qualify through that program.

In terms of bridge financing, we offered the $75 million to the British Columbia government, as Mr. Barrett recommended, at a bank rate. The British Columbia government would like to have that $75 million, but interest free. So far we have not agreed on that.

Now there is a new minister. We will again open up the talks, and we'll see what will happen. For any programs, I will go back to cabinet and my colleagues, and we'll see what we can do.

Mr. Paul Forseth: Mr. Minister, I show you this article where it says “MP Sekora promises cash for condos”. I refer to this article that appeared on April 30, 2000, in the Tri-City News, which is a local paper in my riding as well as Mr. Sekora's. Shawn Hall, the reporter, wrote:

Lou Sekora says leaky condo owners will get more federal money soon, but that he can't yet make the details public.

Mr. Sekora said he met with the minister in charge, Jan Pullinger—that's on the provincial side—“three weeks ago and they are close to an agreement on some more joint funding.” A quote from Sekora: “It's something I'm moving along and I don't want to say any more about it.”

I ask you, Mr. Minister, is the member for Port Moody—Coquitlam—Port Coquitlam, who has, I would say, really no authority to negotiate agreements on behalf of the government, in charge of the leaky condo file? Secondly, is there something actually in the works that will help condo owners, and will it be instituted retroactively? What is Mr. Sekora's role, and what is he talking about with regard to new developments that are different from what has already been offered?

Mr. Alfonso Gagliano: As I said before, two days ago I had a conversation on the telephone with the new minister from British Columbia responsible for the file, and the only agreement we have is that her officials and my officials at CMHC will see if we can find some solution to help the situation. That's all there is for the time being. I offered the RRAP program to help with some of the files. CMHC is ready to help with any financing and insuring of the mortgage if people have to refinance to repair or solve this problem on their properties. But that's all there is so far.

• 1200

Mr. Paul Forseth: I understand that the provisions of the RRAP program are so minuscule that it hasn't hardly helped anybody in the leaky condo sector. Are you prepared to say you're going to put a significant amount of money at least into that program so that it would begin to really address that aspect of our problem in British Columbia?

Mr. Alfonso Gagliano: I don't think in the RRAP program it is the amount of money that creates the problem. It's a national program to help people on the low-income scale to repair their property. We increased the value of the property in the national program because of the B.C. situation, with the high property evaluations, so that that wouldn't be an impediment. We said we'll look at it case by case.

We invite those people who have problems to go to CMHC. We'll look at it case by case, and we'll do the best we can. We understand the situation. We'll be working within our program and within our capacity to help, but we cannot go beyond that. I hope that now that the discussions are open again, maybe we can find a solution. If there is a solution, we'll be at the table.

The Chair: Thank you very much.

[Translation]

Mr. St-Julien.

Mr. Guy St-Julien: I have a question for Mr. Gagliano, Mr. Ouellet and Ms. Danielle Wetherup.

Mr. Gagliano, you referred in your opening remarks to the recent signing of a collective agreement between the Canada Post Corporation and the Canadian Union of Postal Workers. I recognize the importance of the services provided by employees of Canada Post, particularly in the rural regions. I would like some additional information with respect to this three-year agreement.

Mr. Alfonso Gagliano: Before I turn it over to him, I would just like to congratulate Mr. Ouellet for successfully negotiating this agreement. As you know, in the previous round of collective bargaining, labour relations were difficult, and our employees went on strike for eleven days. That break in service cost both Canadians and the Canada Post Corporation dearly. Following that strike, we agreed to make every possible effort to improve labour relations within the Corporation. Mr. Ouellet took this commitment seriously, and I am pleased that we were able to sign a three-year collective agreement. The term of the agreement is an important element. Since it was Mr. Ouellet who negotiated the agreement, I will turn it over to him to provide some additional details.

Mr. André Ouellet: Minister, thank you for your kind words. Indeed, competition with the private sector has brought a certain amount of stability to labour relations at Canada Post. If our clients are not satisfied, they will deal with our competitors. That is a message that the leadership of the main union has understood. We have been able to sit down with them and negotiate a long-term collective agreement that offers job security to our employees and gives us the flexibility we need to better serve our customers. The thrust of this agreement is job security and flexibility.

The clauses in this collective agreement are in keeping with the usual standards, as it provides for increases of 1.9 per cent in the first year, 2.5 per cent in the second year, and 3 per cent in the third year. This is also an attractive contract because it marks the first time the union has agreed to change a collective agreement before it expires. Previously, once a collective agreement had been signed, it was untouchable until its expiry date. This time, however, the union collaborated with us in developing a new method of mail distribution. This agreement gives us the flexibility we were looking for to better serve our customers.

Mr. Guy St-Julien: Thank you for your work and for your leadership. I also want to thank both the employer's and the union's bargaining teams. We very much appreciate the work you have accomplished together.

• 1205

My second question is addressed to Ms. Danielle Wetherup and has to do with the survival of the five dollar bill and the penny. It is important that we know what is planned. Have you considered a program to eliminate them?

Mr. Alfonso Gagliano: Mr. St-Julien, the government has no intention of producing a five dollar coin or abolishing the one cent coin. The role of the Royal Canadian Mint is to advise the government on coins that are needed and to conduct the occasional market study. I will allow Ms. Wetherup to give you more information on that. I believe the Royal Canadian Mint surveys Canadians every three or five years for their opinion on these matters. However, I want you to know the government is not intending either to introduce a five dollar coin or eliminate the one cent coin.

Ms. Wetherup.

[English]

The Chair: Madame Wetherup, you can use up the rest of the time.

[Translation]

Ms. Danielle Wetherup (President and Master of the Mint, Royal Canadian Mint): Mr. St-Julien, as the Minister has already indicated, our analyses are not linked to a specific decision. We simply try to determine, in the case of a sharp rise in inflation, what effect the introduction of a five dollar coin or the elimination of the one cent coin might have. I must tell you that we see no need to do either for the time being.

Mr. Guy St-Julien: So, we get to keep our one cent coin.

Ms. Danielle Wetherup: You can either keep them or spend them. We would be very happy to see you use them.

Mr. Guy St-Julien: Thank you.

The Chair: Mr. Cardin.

Mr. Serge Cardin (Sherbrooke, BQ): Ladies and gentlemen, welcome. I have a couple of quick questions, and then a somewhat more complex one.

Minister and Mr. Ouellet, you referred to a substantial increase in profits—an increase of about 50 per cent. There was also an indirect reference to the President's salary increase, which leads me to believe the two may be connected.

I am wondering why you didn't decide instead to share those profits with the rural route carriers who, as you know, are demanding the right to form an association and become unionized. Having looked at the issue, we know that their working conditions are quite difficult. Also, you are demanding that they submit bids every year, with the result that contractors end up tearing each other apart. At the end of the year, some realize that the contract was not profitable and that they had to pay out more money than they actually earned. Do you intend to share those increased profits with rural route carriers?

Mr. Alfonso Gagliano: First of all, I would like to point out that even we are talking about increased profits, I would remind you that the Corporation is currently facing a whole series of technological changes and has to invest some money in order to remain competitive. That's why I prefer not to just say that the Corporation's profits increased by 50 per cent. I will ask Mr. Ouellet to provide you with more information in a moment with respect to rural route delivery.

When we asked the court to clarify the scope of the provisions of the Canada Post Corporation Act, it confirmed that these contractors provide a special service that is different from the one provided in urban areas. Mr. Ouellet and I have been working together for the last year and a half with the leadership of their association and we will also be meeting with them this month. We submitted proposals to them which they rejected, at which point we asked them to make a counter proposal so that we can improve these clauses in their contracts, including the ones that relate to profits.

Mr. Serge Cardin: I understand why you want to improve their working conditions, since it is simply unacceptable in the year 2000 for people to be forced to work in such conditions.

Mr. Alfonso Gagliano: We set a date for an upcoming meeting where we hope to be able to agree on certain points and accomplish something concrete. We have made progress, but we still have a long way to go.

Mr. Serge Cardin: You say you want to improve their circumstances, but are you prepared to go so far as to allow them to form a union?

• 1210

Mr. Alfonso Gagliano: I've always said that since no one has yet proved to me that the Canada Post Corporation Act needs to be changed, I am not prepared to amend it. I think we should sit down with the contractors who deliver mail in the rural areas and talk about these contract clauses, as well as the way of awarding contracts. Mr. Ouellet and I have said on a number of occasions that we are currently negotiating with them, that meetings have taken place, and that other meetings are planned. I hope we will be able to find an acceptable solution for both parties in the very near future. But, if you are asking me to amend the Act, my answer would be no. A Private Member's Bill was tabled to that end, and the House voted on it.

Mr. Serge Cardin: We will raise it again in the House at some point.

Mr. Alfonso Gagliano: Yes, certainly.

Mr. Serge Cardin: I have another short question. I hope your answer will be just as short, since I have many questions and I am afraid I will not be recognized in the third round.

You talked about the way you award contracts. Perhaps we could briefly discuss the grants the Department of Public Works provides to certain organizations. Do you consider criteria such an organization's economic potential when you hand out grants? I won't name the organizations today, because you are well aware of them.

I read in a report that Canada Economic Development had rejected a grant request because it believed the project had no economic potential, whereas the Department of Public Works had approved it. Does the Department of Public Works consider the profitability factor?

Mr. Alfonso Gagliano: My first point would be that we do not provide grants; we simply sign service contracts. I believe you are referring to a specific instance where the Government of Canada and other stakeholders, including other levels of government, provided support. In this specific case, we considered not only the economic spin-offs, but also all the benefits associated with our participation. It was a question of government visibility and publicity.

Mr. Serge Cardin: You just mentioned a very important word: “visibility”. In your speaking notes, you referred to the Canada Information Office and talked quite a bit about communication. I would like to hear your definition of communication. Does it involve informing Canadians about the services the Government of Canada is providing in order to enhance the living conditions of Canadians and Quebeckers? Or does it involve conveying—you can see I am being nice, since I didn't use the word “propaganda”—a certain image of the Government of Canada? Some of my constituents ask me what services the Government of Canada provides. This is information they are not receiving. I have fun asking them how many times they saw the word “Canada” or the Canadian flag that day. They tell me they saw it at least once or twice.

You have broken off your association with Communication-Québec and have set up the 1-800-Canada number. I know that internal polls show that 1-800-Canada has been a flop in terms of information, but a success in terms of conveying an image. Your perception of communication seems to have more to do with conveying an image than informing the public.

Some malicious individuals often say that we Quebeckers claim to never receive our fair share under various government programs. But it would seem that as far as communications with us are concerned, we get more than our fair share; our share is quite a bit more significant than that of the other regions of Canada.

Are you able to tell us the amounts your Department invested in advertising, either for your own Department or other government departments and agencies in 1998-1999 and 1999-2000? Could you also give us an idea of the regional distribution of that advertising?

I'm sure you realize, Minister, that I would willingly accept a more elaborate, written response to that question.

[English]

The Chair: I thought there was going to be a question in there sooner or later, Serge. I'm glad you got to it.

Mr. Minister, I don't know whether you want to answer. I let the question go on. I thought we were getting to a point and I thought it was in order. I'm glad the member has indicated that perhaps a response to that question might be better submitted in writing. Should you choose that option, I'd appreciate it. Otherwise I'm going to have to ask you to be very brief.

• 1215

Mr. Alfonso Gagliano: It was a detailed question. The latter part of the question I will try to answer in writing because I don't have all the figures with me.

[Translation]

I would first like to set the record straight with respect to a couple of your assertions. First of all, as its name indicates, the Canada Information Office is tasked with informing Canadians. We are not talking about propaganda. So, its role is to inform Canadians. I mentioned in my opening statement that last year, we prepared a guide that was distributed to every rural household in Canada last summer. This brochure lists all the programs and provides information on where to go to take advantage of various programs and services.

As regards the 1-800-Canada number, Canadians appreciate this service, because it is easy to use. When they want information about a specific Government of Canada program, they don't have to look in the telephone book. All they have to remember is Canada and 1-800. There they have access, not to a machine, but to an actual human voice that answers their queries and tells the caller to contact such and such a department if his questions are extremely detailed or require special expertise.

I can assure you that we are not in the business of distributing propaganda. We are truly fulfilling our role, which is to inform Canadians about the programs and services they may obtain and which are there for them. The government has a responsibility to implement programs that will benefit Canadians. The 1-800-Canada number, which can be dialled from anywhere in Canada is meeting a real need. There is also the Internet site, which has been improved—again, in order to meet that need. We want to ensure that Canadians can obtain information about what their government is doing with their tax dollars.

The Chair: Thank you, Mr. Gagliano.

Mr. Serge Cardin: Did you really give me five minutes, Mr. Chairman?

[English]

The Chair: We don't multiply by three every time we talk about minutes, Serge.

I'm going to go to Mr. Schmidt.

Mr. Werner Schmidt: Thank you very much, Mr. Chairman.

I want to pursue the issue of the Louis St. Laurent Building just one step further. I'd like to ask you, Mr. Minister, whether it is your intention to submit another offer to purchase to the owner since the last offer to purchase was rejected.

Mr. Alfonso Gagliano: No. We haven't been authorized by Treasury Board to make that offer.

Mr. Werner Schmidt: Thank you very much.

Mr. Minister, would you be prepared to table the lease agreement?

Mr. Alfonso Gagliano: The lease is a public document. It's registered in the registry office in Hull, I believe. We can provide you with a copy.

Mr. Werner Schmidt: Could you give that to the clerk?

Mr. Alfonso Gagliano: Sure.

Mr. Werner Schmidt: Thank you very much, Mr. Minister.

I have two questions, one for the Royal Canadian Mint and the other one for CMHC. The first is for CMHC.

The amendments to the National Housing Act, and the CMHC as a consequence, allow CMHC to now pay dividends to its shareholder, which is the Government of Canada. What is the amount of the surplus that CMHC has that will be paid to the Government of Canada?

Mr. Claude Poirier-Defoy: We paid $23 million to the Government of Canada last year. According to the latest figures, which you'll see eventually in the annual report, we should pay probably $35 million this year to the Government of Canada.

Mr. Werner Schmidt: The same question to the Royal Canadian Mint.

Ms. Danielle Wetherup: So far we have paid about $189 million in dividends. This year we are not going to pay dividends because we have major capital expenditures in both the Winnipeg plant and the Ottawa plant, and we are also basically overhauling all of our electronic means of doing business. So there is a very strong capital expenditure that has to be done to position the Mint to do business in the new mode of business that is being engaged internationally.

• 1220

Mr. Werner Schmidt: The Royal Mint also has the authorization to borrow money both from the general treasury and from private sources like financial institutions. The Winnipeg plating plant was financed by borrowed money to a large degree, and that's the capital expenditure part you're talking about. To whom is the money owed for the loans you have outstanding now, both for that and other purposes?

Ms. Danielle Wetherup: First of all, the loan we have for the capital expenditure of the plant is not going to be repaid. The loan was negotiated to be repaid in a number of years.

Mr. Werner Schmidt: To whom?

Ms. Danielle Wetherup: To the Bank of Nova Scotia.

Mr. Werner Schmidt: Thank you.

The other question has to do with Canada Post. What will your payment be to the Government of Canada?

Mr. André Ouellet: We are asked to pay a dividend of 25% of our profit.

Mr. Werner Schmidt: Does the board of directors declare that profit or does the minister declare that profit?

Mr. André Ouellet: It's the board of directors that first of all receives our year-end result. It has to be approved by the audit committee. Obviously it has to be signed by our external auditors. Then this report is presented to the minister for tabling in Parliament. In due course, the board has to pass a resolution to authorize the payment of the dividend to the government. We are expected to pay 25%.

Mr. Alfonso Gagliano: In our corporate plan, we ask that Canada Post pay 25% as a dividend.

Mr. Werner Schmidt: The question really applies to Canada Mortgage and Housing as well. You have a major surplus in the insurance fund, and I appreciate that there has to be a reserve there. When you compute your net profit for Canada Mortgage and Housing, do you compute that on the basis of the reserve that's there? How do you actually arrive at the situation? Is this dictated by the minister, or do you as a corporation decide this?

Mr. Claude Poirier-Defoy: This is dictated by the actuaries of the corporation. The minister is not involved at all.

Mr. Werner Schmidt: Who determines the profit you pay to the Government of Canada?

Mr. Claude Poirier-Defoy: This is a complex formula between the net income versus the amount that has to be capitalized, the amount that has to be kept for additional policy reserve. Once the total net has been achieved, 3% of what's left goes back as dividend to the government.

Mr. Werner Schmidt: Okay. You received some $198 million or something like that for operating Canada Mortgage and Housing. What does that money cover? Is your salary part of that? Is the whole administrative structure of CMHC paid for by the operating fund? Just what happens to that money?

Mr. Claude Poirier-Defoy: I think you are referring to the $187 million of the operating budget.

Mr. Werner Schmidt: It's something like that.

Mr. Claude Poirier-Defoy: Yes. It deals with the administration of our buildings, our staff, and all the overhead expense that has to be incurred. You have to keep in mind that at CMHC we are responsible for the Mortgage Insurance Fund, the corporate fund, and also the minister's account.

Mr. Werner Schmidt: I understand that. Well, the minister's account is separate. I don't want to deal with that right now. I want to deal with CMHC as a crown corporation that acts. When you do a cost analysis, the $190 million or thereabouts that comes from the Canadian government is not a cost to Canada Mortgage and Housing in its operation. That's a grant that you get from the government.

Mr. Claude Poirier-Defoy: No, this is not a grant that we get from the government.

Mr. Werner Schmidt: Where does it come from?

Mr. Claude Poirier-Defoy: It comes from what is allocated to the different accounts. We have a mandate to eventually administer the social housing programs on behalf of the government, for which we charge a fee. We also administer the Mortgage Insurance Fund, for which we charge a fee, and the same thing for the corporate accounts.

Mr. Werner Schmidt: That's a very interesting answer.

Thank you very much, Mr. Chairman. I'll rest for now.

• 1225

The Chair: Are you resting for keeps?

Mr. Werner Schmidt: Oh, no. I want to give my partner a chance. I have a couple of other questions on some other areas. Were you going to give me open time?

The Chair: Mr. Schmidt, I'm the most generous guy when it comes to giving you an opportunity to speak, and I want to maintain that reputation, especially since I missed the first couple of minutes, as you so dutifully reminded everybody who is reading the record.

Mr. Werner Schmidt: I apologize if I embarrassed you.

The Chair: During those couple of minutes, apparently the minister, without asking the chair, said he would make himself available for a longer time than might normally be the case. I don't know whether we want to jump on that generosity, Mr. Minister; I have another commitment in about 15 minutes. As a coincidence, the bell is coming. We'll check to see what they're doing.

Mr. Alfonso Gagliano: I'm in your hands.

The Chair: We'll impose...I guess it's not an imposition; it's a duty of Parliament. We'll exercise our duties, and we're glad that you'll do the same for another very brief round.

I have Mr. St-Julien.

Mr. Werner Schmidt: May I just express appreciation both to you, Mr. Chairman, and to the minister and his officials for making themselves available in this way? They've been very generous with their time, and they've also been very competent in the answers they've given. Thank you very much.

The Chair: You don't need to thank me, but I guess it's appreciated by the minister and his staff.

Mr. St-Julien.

[Translation]

Mr. Guy St-Julien: Mr. Chairman, I thought I had only one question, but I actually have two.

Mr. Gagliano, some people talk about advertising the 1-800-Canada number, but we now also have access to something called Service Canada. In the regions, it is a well-known fact that right before the Canada-Quebec Agreement on Communications was terminated, Quebec had already made major changes to Communication- Québec; there was a plan to centralize the rural areas in Montreal. However, they changed their minds when the agreement came to an end.

With the CFDC, with Canada Economic Development, and with Service Canada, we know that this is a pilot project for this year. In my area, there are seven. We have never seen a government create jobs in remote rural regions. We have never seen something like Service Canada in Matagami before. Yet two jobs have been created there.

Could you elaborate on the benefits provided to the rural areas by Service Canada and the 1-800-Canada number?

Mr. Alfonso Gagliano: I am pleased to have a chance to say a little more about these specific services, even though they are only a pilot project for the time being and are actually the responsibility of my colleague, the President of the Treasury Board. We want to create a single window at the federal level so that people can access programs and services through the 1-800 number, the Internet site and something called Service Canada.

To the greatest extent possible, we are using available facilities for this purpose. For example, there are some at Canada Post, and I would like to thank the Corporation for its cooperation. Some are housed in other federal services. This is a pilot project that thus far, seems to be benefitting every area of the country.

The government's objective is to create a vehicle via the 1-800 number, the Internet site and Service Canada whereby Canadians, wherever they happen to be in the country, can access Government of Canada programs and services and remain informed. So, this is really a program that focusses on providing access to programs and services in Canada. And by relying on computers, the telephone system and all the new technology now available, I believe we are going to succeed.

Mr. Guy St-Julien: Thank you, Mr. Gagliano.

My second question is addressed to Mr. Ouellet. From top to bottom, my riding covers 2,000 kilometers. However, I don't have to cover that distance on foot. I want to talk about Canada Post. We really appreciate what you are doing in the southern part of the Abitibi—Baie-James—Nunavik riding in terms of installing community mail boxes. This is working very well and we are receiving very good service. Things have changed, and people think it's really fantastic that we have been able to make this kind of gain in the rural areas.

I want to talk about Kuujjuaq again. As you know, there is a post office there. Having visited it, I'd say it's more like a matchbox. It is a small post office. Because it's been there for a number of years, and with the high winds in that area, it is damaged and is not easily accessible. Remember, we're talking about an area that has snow ten months of the year.

Would it not be appropriate to make changes to the Kuujjuaq service point, in light of the representations made by both the Inuit and myself?

Mr. André Ouellet: We obviously cannot ignore the Hon. Member's representations. Canada Post does have a facility maintenance program. However, we have received a very clear directive from the government imposing a moratorium on our post offices. We do not have the right to close post offices.

• 1230

Mr. Guy St-Julien: That's quite a change from what the Conservative Party was doing.

Mr. André Ouellet: So, it's clear that as long as we keep those post offices open, we will have to invest whatever resources are required to ensure that the buildings don't fall apart. So, we will be making those investments, and the post office you have referred to is one of those we will be looking at.

Having said that, it is important to realize that maintaining a presence for Canada Post in rural areas costs us more than it brings in and for that reason, our ability to improve these small post offices is limited. We obviously encourage partnerships with others. The Service Canada Program is a program whereby other departments can come to our facilities and help us, if not to make a small rural post office profitable, at least to improve the revenues it is generating.

In the long run, our preference, if the government forces us to keep them open, would be that these small rural post offices become places people go to not just to pick up their mail, but to obtain federal, provincial or other government services.

Mr. Guy St-Julien: Thank you very much.

The Chair: Thank you.

[English]

Mr. Forseth.

Mr. Paul Forseth: Thank you very much.

I'd like some comments from the representative from CMHC to tell us what they're doing for their B.C. clients who are caught in the leaky condo disaster. What programs or special attention are they focusing on this very serious problem?

For instance, what about foreclosures and the consequent costs versus being proactive to help their victims with special measures to prevent social harm and allow amelioration, repair, and stabilization of the market, rather than behaving as the cold banker who acts with no social responsibility for the human element of their clients? Of course, there is the fiduciary responsibility on one side, but as an agency of the taxpayer, there is a national social responsibility for the other side.

So I'm asking, in summary, what is being done and what could be done, from your perspective, to help your victim clients.

Mr. Alfonso Gagliano: Before I ask Mr. Defoy to give you the details on your question, let me say that we are not responding to this crisis as cold bankers. We have been there from the first day. We asked to help them to get financial assistance so they can repair their houses and so on.

Mr. Chairman, I would like to make sure that we clarify that statement. We have been very cooperative and very sensitive in such a crisis.

Mr. Defoy.

Mr. Claude Poirier-Defoy: We have been providing the services of mortgage insurance to the citizens of B.C. We have expanded all the eligibility criteria from day one. We are providing second mortgages for those who are faced with a special assessment.

We have worked out an arrangement with the B.C. Homeowner Protection Office to provide mortgage insurance whenever they were asking us to do it. I must say that up until now, the take-up has been quite good, and I think the services that have been offered have been well received by the citizens of B.C.

On top of what the minister has mentioned in terms of the RRAP initiative, I should mention that we are providing unilateral moneys in B.C. because the provincial government is not cost-sharing the $4.5 million we're offering. We have changed the eligibility criteria of that program to make it possible to implement in B.C. We have spent more than $1 million in research with the different agencies and with the different organizations to try to find solutions to the problems. I think we've been very active.

Mr. Paul Forseth: Mr. Minister, will you be prepared to come to British Columbia for the purpose of learning first-hand about the regional disaster? Then, as a result of that experience, maybe you would be prepared to go to cabinet to get some movement on the questions that have been put forward to you previously on the record about GST, RRSP, tax credits, victim grants, and perhaps a more comprehensive—what I would characterize as caring—role from CMHC, not to foreclose, but to ameliorate.

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Mr. Alfonso Gagliano: Mr. Chairman, let me put on the record that I've been to B.C. twice. I'm very concerned about this issue, and the latest participation on my part is that I opened discussions with the official, the minister responsible in the B.C. government for this file, so that we can find a solution.

I know. I've met some of the owners, the people involved. I know the file; I've looked very closely at the file. I read. I watch. I listen. And we're coping with it as best we can.

The Chair: Monsieur Cardin, you have a very brief question.

[Translation]

Mr. Serge Cardin: Thank you. I have a brief comment and a long question.

The Chair: A comment?

Mr. Serge Cardin: Yes, it's addressed to Mr. Ouellet, who said a few minutes ago that he was swayed by Mr. St-Julien's argument. Well, I would rather he be swayed by what the rural route couriers are saying. That was just a comment.

I want to come back to the Minister. Once again, I am going to let him take note of my question and send a written answer to the Committee.

Could the Minister tell us how many opinion polls his Department conducted, either for his Department or for other departments, in 1998-1999 and 1999-2000, as well as who these contracts were awarded to and which federal agencies and departments ordered them?

On this particular point, Minister, I am quite understanding and I am going to give you and your departmental officials a chance to provide an answer in writing. However, I do want to address one point before we conclude.

We received a list of contracts awarded by the Canada Information Office between April 1997 and December 1999. There are firms on that list receiving millions of dollars to organize Ministers' visits to Quebec. For example, Communication Stratégie received more than $1.7 million, and Tremblay Guittet, $1 million, to perform that kind of work.

I have three short questions. How is it that the Canada Information Office has to spend millions of dollars paying firms to organize visits that should be planned and organized by the Department's own communication services?

Secondly, could the Minister explain why these visits were only to Quebec? And is it not true that these monies were expended in Quebec because of complaints from highly placed party officials that the Liberal Party of Canada's message is not getting through in Quebec, and that they had to get them out there on the ground for the usual polite photo ops with local weeklies?

The Chair: I would say those are rhetorical questions that call for rhetorical answers. But I would ask you to keep your rhetoric brief and to the point, if you don't mind.

Mr. Serge Cardin: From a purely rhetorical point of view, Mr. Chairman, this Minister is also the Liberal Minister responsible for Quebec.

Mr. Guy St-Julien: I guess we'll have Quebec appear at the same time.

The Chair: He is a liberal in all he does and all he says.

Please proceed, Minister.

Mr. Alfonso Gagliano: Thank you, Mr. Chairman.

First of all, we will send you all the information we have with respect to opinion polls. I want you to know that contracts for polling, advertising or communication are always awarded through a public tendering process. All the firms used for these purposes were selected in this way. Since my answer is a general one, it applies to both of your questions on that point.

The government asked the Canada Information Office to organize a Ministers' visit to Quebec. Since you asked rhetorical questions, I am going to give you rhetorical answers, in the sense that we are required on a daily basis to get out there in Quebec and set the record straight with respect to statements made by the Government of Quebec or your own party.

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So, we decided to accomplish this by having a well organized Ministers' tour. Everything is public. The contracts were awarded on the basis of a call for tenders and the monies expended appear in the Public Accounts. This is not propaganda. The idea is simply to make Quebeckers aware of what the Government of Canada is doing and set the record straight publicly. We leave it up to Quebeckers to interpret the facts as they see them, once all the facts are out there.

That is the purpose of the Quebec visit. And I can tell you we will continue to arrange such visits, whether some people like it or not.

The Chair: You have any comments, Mr. Ouellet?

Mr. André Ouellet: With the Minister's permission, I would just like to say to Mr. Cardin that I am obviously very open to hearing the views of rural route carrier representatives, as the Minister has already said. Indeed, a number of Members of Parliament have already made representations to me on that very issue. Mr. Schmidt met with me to discuss it. We have made progress. We have improved certain aspects of our relationship with the rural route carriers.

However, Mr. Chairman, I cannot accept Mr. Cardin's comment that we are exploiting or mistreating the people who work as rural route carriers. The fact is the people who get this work are independent contractors. If they were that poorly treated, there would not be as many people wanting to do this job. When we put out a call for bids, a lot of contractors bid on the rural routes available.

So I think we have to keep that in perspective. Of course, it is important that the people performing this work do so in appropriate conditions and be appropriately paid. But I don't think it is accurate to say that Canada Post is trying to exploit these people.

The Chair: Thank you, Mr. Ouellet.

Mr. Schmidt, I will allow you one last question.

[English]

Mr. Werner Schmidt: I am very happy you're still here, Mr. Chairman, because when I thanked the minister and yourself earlier, that was because you had deigned to stay for a while. You were going to let it go on and I thought that was great. So I should have left my thanks until now. But that's okay; I have a couple of questions.

The Chair: Do you want to take it back, Werner?

Mr. Werner Schmidt: No, no. I spent some time before that I should have spent now. I'm happy to be here and I'm glad you're here.

There are three areas I'd like to look at briefly. One of them has to do with the Mint's projection of its receipts from customers, the cashflow statement that comes in your summary of the corporate plan and the proposed reduction of cash receipts from customers, which is reduced dramatically from the forecast of 1999. The 1998 actual is $501 million, the forecast for 1999 is $563 million, and then it drops to $420 million. I was wondering what the explanation for that would be.

Ms. Danielle Wetherup: As you know, for two years we have had an extremely popular program with the millennium coins. This program has been successful beyond any of our aspirations. There is no doubt that the product appeal over the change of the millennium is going to be by far stronger than to celebrate the venue of an explorer or the activities of a Canadian. There is no doubt that we have to account in our forecast for what we believe is going to be the interest of the purchaser of the memento coins. This is one of the reasons we are forecasting less revenue in 2001.

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The other reason is tied to the interest in bullion. Bullion is a very large component of our activities. At this particular time, the interest of investors with regard to bullion as a revenue investment is not picking up. The report of the precious metal industries coincides with our analysis of the market. We don't see any major trend.

On the other hand, we are working very diligently to try to create new products for gift-givers. We are promoting our products through different marketing media. We do hope we will have the same success in interesting people in our new products as we have had, in a relative fashion, with the millennium program.

Mr. Werner Schmidt: My final question, Mr. Gagliano, has to do with the secure channel. You know about the secure channel. What is the progress on it now? I know the electronic industry is very concerned about the issue and the development here. I wonder if you could tell us what your plans are within the next year.

Mr. Alfonso Gagliano: This is a very important commitment from the Government of Canada. We had it in the throne speech. It was in the budget. Definitely the Government of Canada connects with all Canadians, and therefore we're working to achieve that commitment.

Actually, it's a very complex file. It's also a very important file in terms of the technology, in terms of funds. I wanted to make sure, as the minister responsible for that procurement.... I'm only responsible for part of such a sensitive and expensive procurement. I want to make sure that everything is okay. We're proceeding very well. I cannot predict the future, but I believe that in the next weeks we should be able to tender a process.

The Chair: That was going to be my question. When will the request for proposals go out and the tendering process actually begin?

Mr. Alfonso Gagliano: As soon as possible.

The Chair: Yes, I know, but what's the date?

Mr. Alfonso Gagliano: I have no date, unfortunately. We're working on the file and we still have to cross some dots and make sure everything.... As I said, it's a very sensitive and important file. When we go out there we want to make sure it's done the right way.

The Chair: A point of order, Mr. St-Julien.

[Translation]

Mr. Guy St-Julien: Mr. Chairman, when Mr. Cardin was speaking the last time, I made a comment, as members of other political parties often do during meetings of standing committees. However, when I made that comment, the Assistant to Mr. Cardin and the Bloc Québécois took it upon himself to respond directly to my comment.

As I see it, M.P.s' assistants do not have the right to speak here. If they want to have the right to speak, they can follow the same process we did, and put their name on a ballot. I have no problem with their providing documents directly to M.P.s, but as for taking part in the debate directly and cutting us off... If they want to speak, they should do what we did. They have to get out there on the hustings and put their name on a ballot.

[English]

The Chair: I accept the observation. I didn't hear it, and I'm sure we can check the record and see how that has taken place.

Mr. Cardin.

[Translation]

Mr. Serge Cardin: Mr. Chairman, Mr. St-Julien is absolutely right. When someone has a legitimate complaint, it's important to say so. I therefore apologize on behalf of my assistant.

[English]

The Chair: Thank you very much, Mr. Cardin.

Minister Gagliano, I want to thank you and obviously all of your officials as well. You've been here longer than I had anticipated, and I'm pleased that you made yourselves available. Part of our obligation is to Parliament and I'm glad you recognize the same duty.

Mr. Alfonso Gagliano: Whenever the committee feels that I should appear, just let me know.

The Chair: Thank you very much, one and all.

The meeting is adjourned to the call of the chair.