Good afternoon, members of the committee. Thank you for inviting us to speak today.
I'm accompanied by Karen Cahill, executive director, finance, planning and administration directorate, and deputy chief financial officer at the Privy Council Office.
It is a pleasure to be here today, and I look forward to answering your questions with regard to the PCO 2016-17 supplementary estimates (A).
In the supplementary estimates, PCO is seeking $23.9 million for the following items:
First, PCO is seeking $18.9 million to support our information technology modernization project. A substantial portion of the new funding is required to make much-needed investments in our information technology environment, including overdue life-cycle updates to PCO's IT systems. PCO has embarked on a transformation initiative to modernize and expand the organization's capacity with a view to improving the sharing of information with Canadians, as well as federal, provincial, and territorial government organizations.
PCO is increasing its investments in its IT infrastructure. Our current aging infrastructure has an impact on how we work and, in order to better serve Canadians, cabinet ministers and the , investments are needed. We need to be able to respond in a nimble and agile way with Canadians who want to use technology to connect with their government in an ever changing digital landscape.
The transformation initiative will touch on all areas of the department and can be summarized in the following activities:
First, there is the replacement of aging IT infrastructure that supports PCO business solutions and systems to better align with government technology and security standards. As an example, we are planning to replace existing desktop computer systems with mobile technology to enable PCO employees to work anywhere, any time, on our protected network. Flexible and dynamic workplaces are now the expectation, and as such, help to increase our impact, productivity, and efficiency.
Second, we propose to introduce new technologies such as business intelligence and collaboration and information management tools to improve PCO's ability to analyze business information and enable PCO employees to work collaboratively, and simultaneously share or exchange business information.
Third, we will modernize web tools that support new, open and transparent processes for government appointments, including for the appointment of senators.
Fourth, there is the implementation of e-cabinet which will introduce 21st century tools to facilitate automated management and communication of cabinet documents in a secure digital and controlled environment. An additional $0.5 million will be invested to support identification of business requirements and a new process and delivery model for the management of cabinet meetings using this technology.
Second, PCO is seeking additional funding of approximately $3.5 million to support Government of Canada communications priorities. This includes: support to conduct public opinion research to better inform our policies, programs and services to Canadians; support to first ministers' meetings and associated federal, provincial and territorial activities; and support for engagement activities, including a digital-by-default approach to how we communicate and interact with citizens.
Across government, we are transforming how we communicate with Canadians to remain relevant in the current environment in which we operate.
Increasingly, Canadians are connecting by using digital communications. We are investing resources in our digital presence to deliver increasingly complex methods of communication, including live streaming and rich digital content.
These investments will facilitate the coordination, production, and distribution of richer, more dynamic content for posting on our websites, including the official of Canada social media accounts. This will include videos, photo-shareable social media, graphics, and interactive story lines pertaining to events in Canada and events abroad.
Part of the budget 2016 investments will fund the staff required to create this rich interactive content. This funding includes specialists in videography, video editing, and production. Of course, it goes without saying that we will need the capacity to publish rapidly at any time, pertaining to issues occurring in Canada or globally, to support the Prime Minister both domestically and internationally.
It's important to note that building and maintaining a website in the federal government environment is more complex and resource intensive since there is a number of statutory and regulatory obligations that must be respected, including those pertaining to official languages, accessibility, and interoperability across a wide range of devices, browsers, and platforms. Additionally, the PM website is not simply a static website. It's a living database and repository of all official products and communications that must be updated and maintained daily.
In terms of research, the Communications and Consultations Secretariat will undertake an expanded research program to ensure the Government of Canada has a better understanding of the views and concerns of Canadians when making decisions on policy development, programs and services. This will involve ongoing public opinion research data collection to allow the Government of Canada to listen to Canadians on various issues and priorities that affect them.
We will also ensure that all public opinion research contracted by PCO will be made public in a timely matter.
The program will also provide an ability to work across departments, in particular on more urgent requests, and enable partnering and elimination of duplication in this area of research.
Finally, PCO is seeking $1.5 million to continue supporting the process for creating a non-partisan, merit-based Senate appointment process, announced by the on December 2015. Under the new process, an independent advisory board for Senate appointments was established on January 19, 2016 to provide advice to the Prime Minister on proposed candidates.
The second phase that PCO is supporting will implement a permanent process to fill the remaining and future vacancies, and will include an application process open to all Canadians. We are seeking funding to support the operations of the independent advisory board in its work to provide advice and recommendations for the 's consideration.
Mr. Chair and members of the committee, I'd like to thank you for the opportunity to explain the initiatives related to the Privy Council Office's 2016-17 supplementary estimates (A). We'll be pleased to answer your questions.
Mr. Chair, more generally, as noted in the question, the role of the Privy Council Office is really threefold: one, to support the Prime Minister; two, to support cabinet in its decision-making; and three, to provide support for the public service through the Clerk's role as head of the public service. That includes support for appointment processes, both for Governor in Council appointments where decisions are taken by the Governor in Council but we provide and enable support in that process, and as announced and put into practice by the government, the new process for Senate nominations.
The process the government decided to undertake is one whereby there is an independent advisory board, as I noted, that provides recommendations to the Prime Minister. That advisory board has different configurations of membership on a province-by-province basis, with three federal members, chaired by Madame Huguette Labelle, and two members recommended by the province, or nominated by the Government of Canada if the province chooses not to recommend anyone.
In the case of the process that's being completed, they undertake a review of the nominations provided to them. Then, on that basis, they make recommendations to the Prime Minister of five names per vacancy.
The PCO's role, again, is to provide secretariat support for that process, anticipating the permanent phase of a web portal enabling Canadians to indicate their interest in applying.
Mr. Chair, members of the committee, good afternoon.
My name is André Bourbonnais and I am the president and chief executive officer of PSP Investment Board. My colleague Daniel Garant, executive vice president and chief investment officer, and I are pleased to appear before the committee today to discuss PSP Investment Board's mandate and operations and to provide you with an overview of our activities.
I joined the organization just over a year ago and it's a real honour for me to have an opportunity to contribute to its long-term success and to the long-term sustainability of the pension plans whose assets we invest.
PSP Investment Board is an arm's-length crown corporation that was established in 2000 to invest the amounts transferred by the Government of Canada for the funding of the post-2000 obligations of the pension plans of the Public Service of Canada, the Canadian Forces, the RCMP, and since March 2007, the reserve force pension plan. Our statutory mandate is to manage the funds in the best interest of the contributors and beneficiaries and to maximize investment returns without undue risk of loss, having regard to the funding, policies, and requirements of the plans and their ability to meet their financial obligations. Our goal is to ensure that, given the current level of contributions, and in the absence of other factors that may affect the funding status of the plans, we earn sufficient returns so that there will be enough assets to cover promised pension benefits, or in other words, that we have fully funded plans.
Currently, the chief actuary has determined that this requires achieving a 4.1% real rate of return over the long term. One can appreciate that achieving such a rate of return is not risk-free. Indeed, there are no investment opportunities that can generate such a return without taking risks, accepting, therefore, a certain level of volatility. Accordingly, one should expect returns to be higher than the objective some years and lower in other years. What matters is that our investment strategy is carefully calibrated to maximize returns and the likelihood of achieving the return objective, while limiting the amount of risk the board and the management of PSP deemed the minimum necessary to achieve this objective. To that end, we have adopted a portfolio diversification strategy that goes beyond public assets like stocks and bonds to include less-liquid private asset classes, such as real estate, infrastructure, natural resources, private equity, and private debt.
My first priority when I joined PSP was to lead the strategic review process that will guide our evolution over the next five years. One of our key challenges going forward will be to manage growth. Our assets under management are expected to reach $165 billion by 2021. This means we will need to find a significant number of new investment opportunities, and we will have to do it in an investment market that is increasingly competitive, not to mention, in the context of the current global economy, one that is generally expected to yield low returns and low growth over the next few years.
To succeed, it will be important to implement investment strategies that are scalable. For instance, in PSP's world, a scalable investment strategy is the development of investment platforms. Those are best explained by way of an example. A few years ago we purchased a participation in five airports from a German company. Also included in the investment was an operating team of highly skilled professionals who specialize in the management of airport investments. In addition to managing our participation in those airports, this team now helps us identify potential investments in others. The fact that we can rely on such a competent management team helps us submit stronger bids and attract other investors. This is just one of the many platforms we own.
Selecting the best investment partners is also very important to our success. Our expertise lies in selecting the best investment opportunities, not in managing the day-to-day operation of our investee companies that operate in a wide range of countries and industries. For that we rely on our investment partners. Since those partners have a very direct impact on the success of our investments, we need to ensure that we work with the very best and that our interests are totally aligned with theirs.
In order to attract the right partners, we rely on networks that are often local, and thus we must be present in the world's main financial centres. A local presence in key markets will also help us unlock new investment opportunities. A significant pillar of our strategy is therefore to expand our global footprint. We recently opened an office in New York, which is a key market for our new private debt asset class. We're also building a European hub in London, and eventually we would like to open an office in Asia.
Another important aspect of our strategy going forward will be to improve collaboration within our organization. We have already started to shift our focus from an asset class perspective to a total fund perspective. This, I expect, will have a profound impact on the way we conduct business, how we make decisions and how we manage risks.
For example, we've created a dedicated chief investment officer group, led by my colleague Daniel Garant. Under his leadership, we will form research groups composed of individuals across our asset classes that will develop thematic research that will translate into investment ideas and inform investment strategies.
The chief investment officer will also be responsible for designing and implementing a strategy to enhance our flexibility to make investments that are beneficial to PSP as a whole, even when they don't fit within our usual asset class approach.
Finally, our most important asset is our employees, so identifying, attracting, retaining and developing talent is one of my key priorities. Already, I'm proud to say we've made tremendous progress in promoting diversity in our ranks over the last year. We plan to continue those efforts.
In conclusion, we have our work cut out for us, but my colleagues and I could not be more excited and energized to tackle such a tremendously stimulating challenge. We are particularly proud to do it in the interests of the sponsors of the plan, the Government of Canada, and the plan's contributor and beneficiary.
Mr. Chair, this concludes my remarks. Mr. Garant and I look forward to any questions members of the committee may have.