Thank you. I will do the introductions via my opening statement.
Mr. Chair and committee members, good afternoon.
I'm very pleased to be here today, and to have the opportunity to appear before you to discuss our supplementary estimates (B) as well as updates on some of our recent accomplishments.
It is a pleasure for me to speak for the first time in the newly renovated West Block. As Minister of Public Services and Procurement and Accessibility, I am proud of how much has been accomplished to restore and modernize the parliamentary precinct.
Joining me today are Public Services and Procurement Canada's new deputy minister, Bill Matthews; our chief financial officer, Marty Muldoon; our associate deputy ministers, Michael Vandergrift and Les Linklater; and our assistant deputy minister of defence and marine procurement, André Fillion.
From Shared Services Canada, we have Paul Glover, who was recently appointed president; Sarah Paquet, executive vice-president; and Denis Bombardier, chief financial officer.
Mr. Chair, these two organizations serve Canadians every single day by providing services and support to other departments and agencies. To support our operations, we are requesting $102.3 million in supplementary estimates (B). This amount is comprised of $75.5 million for PSPC and $26.8 million for SSC.
Allow me to begin with our request related to PSPC, starting with one of the most pressing issues the Government of Canada is facing today, which is stabilizing the Phoenix pay system. While we're making progress, we know there is still a lot of work to do to ensure Canada's public servants are paid accurately and on time, every time.
As I reported to this committee in December, we have significantly increased our capacity to address pay issues, and we have introduced measures to ensure that public servants receive more useful help and support when they call the client contact centre.
I will also inform this committee about the success we've had with our pay pods. You'll recall that this approach assigns compensation advisers to the employees of the specific organization. These dedicated advisers develop departmental expertise and relationships, and work to address all outstanding transactions in an employee's pay file, rather than addressing issues by transaction type. New pay pods were rolled out just last week, bringing us up to 34 departments that are being served using the pay pod model. This represents approximately 154,000 employees. We're also on track to have all 46 departments served by the pay centre using the pod model by May of this year.
Since January 2018, we've decreased the backlog by nearly 160,000 transactions and reduced the overall queue for pod and non-pod departments combined by an average of 25%. Pod departments alone have seen a 29% reduction in their queue, which demonstrates the success of this approach.
I should also add that we've processed more than $1.5 billion in retroactive payments for employees.
We are also supporting employees during tax season by working with Canada Revenue Agency and Revenu Québec to ensure that employees are provided with accurate tax slips. And we continue to offer flexible repayment options for employees who have received overpayments. We are committed to making this situation right for public servants and their families.
For supplementary estimates (B), we are requesting $25.1 million for continued efforts to stabilize the Phoenix pay system. Although we still have work to do, I can assure you that we'll continue working to ensure people get paid accurately and on time.
I now turn to our request for new funds in support of the Receiver General's operation. Every year, the Receiver General incurs costs for processing transactions on behalf of federal organizations. They include the card acceptance fees we pay so that Canadians can make payments to the government of Canada using debit and credit cards, and postage fees to mail cheques to Canadians. These fees have been growing above our normal baseline and they fluctuate every year. We are requesting $13.5 million to address these costs.
Our supplementary estimates (B) also include $2.8 million in new funds to support the integrity regime program, aimed at addressing corporate wrongdoing. This more robust approach to improper, unethical and illegal business practices will come into effect soon following public consultation. The funds we have requested will address the increased workload and operational costs associated with administering the new regime, ensuring that our government conducts business with ethical suppliers and ultimately holds those suppliers accountable.
I'd also note that there are $22.9 million from the sale of surplus real property that PSPC will reinvest to preserve and maintain our real property portfolio and provide tenants with healthy and safe accommodations. This will help PSPC meet the needs of federal organizations and provide sound stewardship of federal buildings on behalf of Canadians.
I'd now like to provide some updates on some of our key achievements.
We have made great progress on our promise to replace Canada's fighter fleet. We worked closely with the Australian government to procure 18 F-18 fighter aircraft, plus equipment to supplement the current CF-18 fleet. We received the first two fighter aircraft from Australia on February 17, ahead of schedule. In addition, just last week we concluded the second round of one-on-one engagement with suppliers for the future fighter program, to purchase 88 modern fighter jets.
There have also been a number of major developments in Canada's national shipbuilding strategy. On February 8 we announced that Lockheed Martin Canada had been selected for the design of 15 new Canadian surface combatants that will be built at Irving Shipbuilding's Halifax shipyard. This is the largest and most complex procurement ever undertaken by the Government of Canada, and it was done in an open and transparent manner. With this contract, design work is proceeding, which will be followed by construction in the early 2020s. In addition, we are advancing construction work on other large ships on both coasts, generating substantial economic benefits across the country and revitalizing a world-class marine industry that supports Canadian innovation.
As noted earlier, we have also worked hand in hand with our parliamentary partners towards a successful transition of the operations of Parliament to the West Block and the newly restored Senate of Canada building. This will allow major restoration work to begin on Centre Block so that it can continue to serve as the seat of our democracy and proudly welcome future generations of Canadians.
Mr. Chair, let me now turn to Shared Services Canada. SSC has made tremendous progress over the last few years. Now led by Paul Glover, and with the appointment of Luc Gagnon to the newly created position of Chief Technology Officer, SSC is entering the next phase of its evolution. This new office will help SSC deliver a more coherent vision of modern and secure digital government.
To that end, SSC has closed nearly 180 legacy data centres, replacing them with new state-of-the-art enterprise data centres. This is resulting in more efficient and less costly IT operations for the Government of Canada. SSC also continues to support its clients in the implementation of the government's “cloud first” policy. There are now over 40 active cloud computing accounts that are helping to provide modern and efficient IT services to Canadians.
SSC completed the first phase of an e-cabinet initiative that allows ministers to access their secure documents from their tablets anywhere, any time.
In 2017-18 alone, more than 1,200 employees joined the department. This provided vital additional capacity to meet the growing technology demands of federal organizations.
Today we are requesting $26.8 million in supplementary estimates (B) funding. This request includes $20.3 million for cyber and information technology security initiatives to respond to the most pressing gaps in government systems. This funding will continue to allow SSC to provide modern, reliable and secure information technology infrastructure and provide world-class digital services to Canadians.
Public Services and Procurement Canada and Shared Services Canada have diverse yet equally important mandates. We are thankful for the many devoted and skilled public servants who help fulfill these mandates.
With the additional funding we are requesting today, these organizations will be better able to meet the needs of their client federal departments and agencies, and ultimately, all Canadians.
Thank you. We look forward to your questions.
Thank you. I'll do my best.
Basically, the integrity regime is a suite of administrative tools to protect the integrity of procurement and real property agreements. It was put in place in July 2015 by the previous government. The purpose was to take action against improper, unethical and illegal business practices and at the same time hold companies accountable for their misconduct. Doing this, effectively addressing corporate wrong-doing, really protects the integrity of markets and addresses barriers to figuring out how to deal with these companies.
When I became minister of PSPC, the plans for the review of the integrity regime were very much under way from my department. That was, if you recall, in July 2017. That meant that we were consulting, and we were updating the integrity regime which had been introduced two years earlier.
We did a lot of industry engagement. As I understand, it was done by the previous government before the integrity regime was put into place. We kept that industry engagement ongoing. It's been this kind of iterative process. They had what was called an industy engagement group, and they met with the previous government twice before July 2015.
We continued to meet with this industry engagement group. We heard about a number of—I don't know if I would elevate them to concerns—challenges that they were facing, both in understanding the goals and what was happening within the regime, and also in terms of what was perceived by industry to be a rigidity in the policy itself.
Based on feedback from the industry, we decided to do a broader consultation on corporate wrongdoing, including the integrity regime. That included 70 submissions, and over 300 organizations and individuals who participated in the consultations. We really took a massive public approach to all of the amendments.
Do you want me to go into the amendments that are proposed?
Thank you very much, and thank you, Minister and all those with you here today.
Minister, you have a very busy portfolio, I have to say. You've been in this portfolio for, I think, about a year and a half now, and there is lots going on.
You did talk in your opening statement—and I wanted to go to that first—about the Phoenix pay backlog. It seemed to me that you have, I think you said, about $25 million as part of these estimates to work on this.
I'll tell you what concerns me. It's an article I saw just a couple of days ago. It was reported on CBC that there was a document “prepared in August 2018 for a deputy minister in Employment and Social Development Canada (ESDC) ahead of a meeting with the Treasury Board official in charge of helping find a system to replace Phoenix.” It says, “As the federal government forges ahead to replace the Phoenix payroll system, internal documents obtained by CBC News through access to information suggest clearing the backlog could take another three to five years,” and then it goes on to say that it actually “could take 10 or more years for the system to achieve 'overall stability'.”
It's one thing to be waiting 10 years for the rehabilitation of one of our Parliament Buildings, but this Phoenix estimate seems way out of line. Don't you agree? I mean, three to five years.... Many of these employees have suffered enough, and I'm sure you've heard from them, just as I have. It has to be very discouraging to see that report. What are your thoughts on that?
We circulated a deck to all members in advance of the meeting, both I and the deputy minister from Shared Services Canada, just to situate the hearing on estimates.
You have three things in front of you: the plan for 2017-18, which seems like a long time ago—our results; the supplementary estimates for the current year; and interim estimates for the upcoming fiscal year. That's all bundled into one hearing.
If you have the deck in front of you, I'll take you very quickly to slide 3. This is a PSPC slide. I want to flag where we are. In authorities to date, plus supplementary estimates (B), in relation to the previous year, we're up about 2%. So PSPC, as a department, is basically seeking, or on track for, 2% more authorities than it had the previous fiscal year.
On slide 4, some of this has been touched on, but here are the highlights in terms of what we are seeking in supplementary estimates (B): new authorities related to card acceptance and postage fees; some space requirements for Government of Canada employees, $28 million; some adjustments to existing authorities, which relates to revenue from sales of real property, and we're happy to speak about what those properties are; and some authorities related to the pay system. Then there are some transfers back and forth between PSPC and other departments. The big one in there relates to a transfer from the National Research Council for contracting work around the build in Canada innovation program.
On slide 5, 2019-20, the upcoming fiscal year....
Certainly. As the minister mentioned, we have seen progress with the pod model since it was launched with a pilot in December 2017, in three departments. We've been working since then with the staff at the pay centre in Miramichi and in our regional offices to expand the model as quickly as we can, with the appropriate level of staff and support to provide the leadership, the training and the coaching to allow the transition to a pod.
Essentially, Mr. Chair, a pod is a group of about 25 compensation staff, which include experienced compensation advisers, support staff who literally are taking both theoretical training and training on the job. They start off with straightforward transactions in the pod and then grow their knowledge base over time, supplemented with training. The pod is also equipped with a team lead, a data analytics specialist to help direct workload to the right people, to make sure that what comes in can be dealt with within the right time frame, the current pay period, so nothing new becomes old.
What happens with the pod, with this organizational structure, is that linkages are made back to the departments that they are serving, so direct connections with HR and with the finance groups, to allow information to flow back and forth. It allows departments to identify which priority transactions they would like the pod to work on to respond to their own particular circumstances. Some departments choose to deal with the oldest cases. Some departments choose to deal with the most complex cases, regardless of age, but that's based on their own feedback and their interaction with their staff. We work with them to grow those relationships.
At this point we are into the third wave of pod rollout this week and next. We'll now be at about 70% of pay centre staff being served by a pod, and that number will reach 100% by the end of May. What we've seen in terms of results is that, on average, even with the staggered rollout, the pods have reduced the backlog or the queue for their departments by almost 30%, whereas generally the reduction has been 25% across the entire network over the last 12 months. We are seeing the benefits of this.
Once all departments are on the pod, we will continue to see benefits as the service ratio is quite a bit smaller than is a transaction-based ratio. Fewer people can serve more people because of the structure and the knowledge sharing that happens, the skills development that happens. At the same time, we see that departments are understanding more what they can do within their own HR or finance departments to streamline processes to improve the flow of information back and forth. Essentially, the pod is dealing with an individual's file so that, as they clean things up, once a person is made whole and nothing new becomes old, they stay whole and their files remain clean.