Thank you, Mr. Chair. I'm delighted to be here today before your committee to discuss the supplementary estimates.
I have with me today from the Treasury Board Secretariat, Yaprak Baltacioglu, secretary of the Treasury Board Secretariat; Brian Pagan, assistant secretary, expenditure management sector; Marcia Santiago, executive director, expenditure management; and Grace Chennette, executive director, financial management directorate.
In supplementary estimates (C) 2016-17, the government is seeking Parliament's approval of funding to address matters of importance to Canadians.
These include funds for humanitarian assistance, border security, climate change, and veterans and their families. Specifically, the government is seeking parliamentary approval for $2.5 billion in additional investments in 47 organizations.
Included in this amount are 11 major items valued at more than $50 million.
There are also nine horizontal initiatives in which departments are seeking funding approval to work in partnership on shared outcomes, for instance, in addressing the crisis in Iraq and Syria.
Among these requests, I would note $545 million in Treasury Board vote 30 for the Treasury Board Secretariat to fund adjustments to the terms and conditions of employment to plan for the ratification of collective agreements with the Public Service; $350 million for Agriculture and Agri-Food Canada for the transfer of 19 federal dams to the Government of Saskatchewan, as announced in budget 2016; $178 million for Employment and Social Development Canada to write off unrecoverable Canada student loans; $174 million for Global Affairs Canada for humanitarian assistance and antimicrobial resistance initiatives; $133 million for Global Affairs Canada and Environment and Climate Change Canada to help developing countries address the impact of climate change; $132 million for Veterans Affairs Canada for programs and services to support veterans and their families; and a combined total of $118 million to Canada Border Services Agency to maintain the integrity of Canada's border operations.
These supplementary estimates represent an increase of 2.8% in voted appropriations over the the main estimates tabled in February 2016.
As you know, the estimates documents also include updated forecasts of statutory authorities authorized by Parliament through separate legislation. Supplementary estimates (C) include a $964-million net decrease in the statutory forecast, mainly related to reduced interest charges on public debt.
There is also a decrease of $431 million in loans to students and apprentices, because this financial assistance is now being offered as grants. This 50% increase in the Canada student grants program was announced in budget 2016, and it will benefit nearly 100,000 students from middle-income families every year.
While the government is asking for $2.5 billion to be voted in these estimates, the supplementary estimates (C) also include an online annex. This annex details close to $3 billion in frozen allotments that will no longer be available to departments for spending. During the fiscal year, the government can adjust the funds available to departments in accordance with evolving program developments and priorities. In this way, the Treasury Board authorizes that funding be frozen so it is not available to spend on anything else.
At the end of the fiscal year, these frozen allotments are included in the lapse shown in public accounts. Last year, we introduced this annex to provide greater transparency and accountability. This was actually noted by the PBO. Without this, the first time that frozen allotments would be shown would be in the public accounts, seven or eight months after the end of the fiscal year. Because of our change, parliamentarians and Canadians are now able to see this information much sooner.
Another measure we took to make the government more open and transparent and accountable was the new review process to ensure that advertising is non-partisan. Advertising Standards Canada, a national non-for-profit organization committed to ensuring the integrity of advertising, now conducts independent reviews of our ads. As a result, Canadians know that the information they receive from their government represents a legitimate public service announcement.
We have followed through on our budget 2016 commitment to reduce spending on government advertising, travel, and professional services. I'm pleased to say that we have fulfilled our commitment to reduce these expenditures by over $200 million.
Mr. Chair, before concluding I'll provide the committee with a brief overview of the requirements of the Treasury Board Secretariat presented in these supplementary estimates (C).
The department is seeking Parliament's approval to spend an additional $722.7 million. This includes a combined total of $716.8 million in the central votes managed by the secretariat on behalf of the government for Government of Canada obligations that exist across departments and agencies. Specifically these obligations relate to terms and conditions of employment, compensation adjustments with respect to collective bargaining, and even such things as parental leave, as an example of one of these. While these affect individual departments, ultimately Treasury Board is engaged in this.
As you know, our commitment to respecting the public service and bargaining in good faith with them has yielded agreements, as of now, with more than 80% of represented public servants. At the time we were elected, all of the collective bargaining agreements had expired, some of them for three or four years almost, and we committed to restoring a culture of respect for and within our public service. Part of that was negotiating in good faith, and we are making significant progress.
The majority of the funding related to collective agreements in supplementary estimates (C) had been set aside by departments during previous years in which the previous government had been unable to reach agreements. It is now being made available as agreements become ratified.
In addition to these central funds, we are seeking $5.9 million in TBS vote 1, program expenditures, for items such as improving access to information, funding the back office transformation initiative, advancing the service agenda, and transferring the office of greening government operations to Treasury Board Secretariat, which is something we are very excited about.
I want to also commend the parliamentary secretary to Treasury Board, Joyce Murray, who is with us today. She has demonstrated tremendous leadership in establishing our office of greening government in Treasury Board. This is going to make a real difference. We're targeting a reduction by 40% of greenhouse gas emissions for the Government of Canada.
This is a significant commitment, but it's going to make a big difference in terms of our leadership as a government with respect to climate change. Last November, when we set the target of reducing emissions by 40% by 2030, we were serious about it, and that's why we're establishing metrics and measuring results, so that Canadians can actually hold us to account. Putting this centre within the Treasury Board Secretariat is really helpful to driving this across departments and agencies.
Mr. Chair, this concludes my presentation on the main points in supplementary estimates (C).
Finally, Mr. Chair, I look forward to continuing our discussions on how to improve the estimates process. We've had discussions in good faith among all parties, and we share the view that the current system is confusing, frustrating, illogical, dysfunctional, and opaque. I remain committed, and I look forward to working with you and parliamentarians as we move forward, to improving the system in order to provide better, more timely, more useful information to parliamentarians and better accountability for our government and future governments to Parliament and to Canadians.
At this point my officials and I would be pleased to take your questions.
Thank you, Mr. Chair.
Mr. Chair, and honourable committee members, I'm pleased to be here to discuss Public Services and Procurement Canada's departmental performance report for the fiscal year ending March 31, 2016, and the 2016-17 supplementary estimates (C).
Given the committee's interest, I would also like to take the opportunity to update the members on the progress that we're making on stabilizing the pay system—if that is okay with you—and to address employee pay problems.
Sitting beside me are Marty Muldoon, our chief financial officer; Lisa Campbell, who is the assistant deputy minister for marine and defence procurement; and Kevin Radford, the ADM for real property.
Public Service and Procurement Canada has a broad mandate to provide key services that support other departments and agencies, parliamentarians, and Canadians.
As the government's real property manager, purchasing expert, linguistic authority and pay and pension administrator, PSPC supports and facilitates the operations of departments and agencies. This is in keeping with the overarching goal set out in the minister's mandate letter: to ensure that the services provided in her portfolio are delivered efficiently and in a way that makes citizens feel respected and valued.
While many think of PSPC in terms of procurement or pay, the department's role in government operations reaches far beyond that.
For instance, through the Receiver General function, it manages over $2.2 trillion in cash flow of federal money in and out of the Consolidated Revenue Fund.
It provides pension services to more than 850,000 members of Canada's military, RCMP and public service.
It issues more than 339 million payments per year, including old age security, Canada pension plan, child benefit payments, and EI payments. It manages about $18 billion's worth of procurement on behalf of departments, of which over one-third goes to small and medium businesses. It manages the crown-owned real estate portfolio, with an estimated value of $7 billion. It also produces the Public Accounts of Canada, including the audited financial statement of the Government of Canada.
With regard to the Departmental Performance Report in 2015-16, the department made progress in numerous areas. For example, we significantly advanced the modernization of the Parliamentary Precinct. The Wellington Building rehabilitation was completed and work advanced on the West Block, the Government Conference Centre and the new Visitor Welcome Centre. These projects were and continue to be on time, on scope and on budget.
The department continued to invest through the Build in Canada Innovation Program, which matches businesses with innovative products and services with the needs of federal departments. Since last April, contracts valued at over $20 million have been awarded to 42 companies. Approximately 80% of companies in the program commercialize their innovations within one year of their contracts ending.
Through the national shipbuilding strategy and the defence procurement strategy investments were made to equip the Canadian Armed Forces and Canadian Coast Guard, while creating jobs and economic benefits for Canada.
The department completed the land acquisition for the new St. Lawrence corridor bridge project and entered into a contractual project agreement.
The promised review, as you will know, of Canada Post was completed last year. The government is currently preparing its response to the report prepared by this committee, “The Way Forward for Canada Post”.
Let me take a moment on Phoenix. Since was here last year before this committee on November 29, our priority has been to move toward prompt processing and short waiting times to get us to a steady state.
To do this, we executed a three-part plan to increase capacity, efficiency and transparency.
Steady state means that 95% of transactions are processed within 20 working days, which is our established service standard for most transactions. We see that there has been progress in moving toward that objective.
First, to increase capacity, we have reassigned most of the compensation advisors working on the backlog to the queue. We are prioritizing specific areas to allow us to reach steady state one transaction category at a time.
Working with the unions, we identified parental leave and disability leave as the first two priority areas. And we set targets to reach steady state for parental leave by the end of March, and for disability leave by the end of April.
We are on track to meet these targets. In fact, new requests for maternity or parental leave will be processed within 20 days of receipt at the Pay Centre, 95% of the time.
The vast majority of parental leave transactions in the Pay Centre that are outside of our service standard have been addressed, and employees will start receiving their top-up payments on March 22.
Once we have reached a steady state in these two categories, we will shift our focus to other categories. We're starting to process more transactions than we receive. This is a key milestone. It means that both waiting times and overall numbers of the pay requests awaiting processing will start to decrease.
The second element of our plan is efficiency. We're implementing technical enhancements to decrease processing times. For example, we recently introduced a new enhancement to automate calculations for past actings. Requests for acting pay that are entered into the system by departments at the start time of the acting period have been automated since the implementation of Phoenix, but now we have automated the past acting, which required very lengthy manual calculations.
This new enhancement will decrease the time needed to process these transactions. Right now there are close to 100,000 of those transactions awaiting pay processing at the pay centre, and they represent about 30% of our current workload.
To ensure we effectively manage this large volume of work, they will be processed in a controlled and focused manner between now and June. The plan is for employees to start receiving payments on March 22.
The third part of our plan is increased transparency. To ensure that employees have useful information, we are now posting monthly dashboards, which spell out how we are doing against our service standards and the estimated wait times for various transactions.
The wait is interminable for employees whose pay has been affected, and we are well aware of that. I would like to be able to tell them that everything will be settled tomorrow, but it is still going to take several months, even though we are making progress.
As summer approaches, we are paying special attention to student pay to make sure last year's issues are not repeated. We want to be able to provide timely and accurate pay to students joining the public service when the required documents are sent by their department to the Pay Centre at least 10 days before their start date.
Lastly, let me touch on tax implications. In February, we issued over 440,000 tax slips for 2016 for the 300,000 employees. We recognize that tax preparation can be confusing, especially given the pay issues. That's why we've equipped our call centre to make sure that we could have additional help to guide employees who have questions. They can contact the call centre, and we can connect them with specialized support or directly with Canada Revenue Agency.
As we have said on several occasions, all employees deserve to be paid. I know this is difficult and has sometimes created intolerable situations. We constantly remind employees that they are entitled to an emergency salary advance and to priority payments if they are in a precarious situation. There is no reason for them not to be paid.
In conclusion, under the main estimates, $2.9 billion was sought. Under the supplementary estimates (C), the department is requesting additional funding of $105.6 million, primarily for federal real property management. Taking transfers from other departments into account, the net amount we are seeking is $99.9 million.
The major items are $27.9 million to continue remediation work at the federal contaminated sites such as the Alaska Highway in northern British Columbia and the former Sambault garbage dump in Quebec, $19.3 million to reduce risks associated with the rehabilitation of the Esquimalt Graving Dock, $18.7 million to account for the fluctuation in expenses related to real property management, and finally, $18.2 million to modernize the heating infrastructure of federal buildings in the national capital.
Mr. Chair, we have more than 12,000 employees located in every part of Canada who all share the collective goal of demonstrating integrity, efficiency, and transparency, and care deeply about delivering high quality services to our client departments and Canadians.
Thank you for your attention, Mr. Chair and members of the committee. My colleagues and I will be pleased to answer your questions.