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37th PARLIAMENT, 2nd SESSION

Standing Committee on Public Accounts

EVIDENCE

CONTENTS

Monday, March 24, 2003

1540

The Chair (Mr. John Williams (St. Albert, Canadian Alliance))

Mr. Shahid Minto (Assistant Auditor General, Office of the Auditor General of Canada)

The Chair

Ms. Carol Beal (Assistant Deputy Minister, Real Property Program Branch, Department of Public Works and Government Services)

1545

The Chair

Mr. Philip Mayfield (Cariboo—Chilcotin, Canadian Alliance)

The Chair

Ms. Carol Beal

The Chair

Mr. Philip Mayfield

Mr. Shahid Minto

Mr. Philip Mayfield

Mr. Shahid Minto

Mr. Philip Mayfield

1550

Mr. Rodney Monette (Assistant Deputy Minister, Operations Branch, Department of Public Works and Government Services)

Mr. Philip Mayfield

Mr. Rodney Monette

Mr. Philip Mayfield

Mr. Rodney Monette

Mr. Philip Mayfield

Ms. Carol Beal

Mr. Philip Mayfield

Ms. Carol Beal

Mr. Philip Mayfield

Mr. Rodney Monette

1555

Mr. Philip Mayfield

Mr. Rodney Monette

Mr. Philip Mayfield

The Chair

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ)

Ms. Carol Beal

Mr. Odina Desrochers

Ms. Carol Beal

Mr. Odina Desrochers

Ms. Carol Beal

Mr. Odina Desrochers

Ms. Carol Beal

Mr. Odina Desrochers

Ms. Carol Beal

Mr. Odina Desrochers

1600

Ms. Carol Beal

Mr. Odina Desrochers

Ms. Carol Beal

Mr. Odina Desrochers

The Chair

Mr. Odina Desrochers

Mr. Rodney Monette

Mr. Odina Desrochers

Ms. Carol Beal

The Chair

Ms. Beth Phinney (Hamilton Mountain, Lib.)

Ms. Carol Beal

Ms. Beth Phinney

Ms. Carol Beal

1605

Ms. Beth Phinney

Ms. Carol Beal

Ms. Beth Phinney

Ms. Carol Beal

Ms. Beth Phinney

Ms. Carol Beal

Ms. Beth Phinney

Ms. Carol Beal

Ms. Beth Phinney

Ms. Carol Beal

Ms. Beth Phinney

Mr. Rodney Monette

Ms. Beth Phinney

Mr. Rodney Monette

1610

Ms. Beth Phinney

The Chair

Mr. Gerald Keddy (South Shore, PC)

Mr. Rodney Monette

Mr. Gerald Keddy

Mr. Rodney Monette

Mr. Gerald Keddy

1615

Mr. Rodney Monette

Mr. Gerald Keddy

Mr. Rodney Monette

Mr. Gerald Keddy

Mr. Rodney Monette

Mr. Gerald Keddy

The Chair

Mr. Ken Epp (Elk Island, Canadian Alliance)

Mr. Rodney Monette

Mr. Ken Epp

Mr. Rodney Monette

Mr. Ken Epp

Ms. Carol Beal

1620

Mr. Ken Epp

Ms. Carol Beal

The Chair

Mr. Roger Gaudet (Berthier—Montcalm, BQ)

Ms. Carol Beal

Mr. Roger Gaudet

Ms. Carol Beal

Mr. Roger Gaudet

1625

Ms. Carol Beal

Mr. Roger Gaudet

Ms. Carol Beal

Mr. Roger Gaudet

Ms. Carol Beal

Mr. Rodney Monette

Mr. Roger Gaudet

Mr. Rodney Monette

The Chair

Mr. Shawn Murphy (Hillsborough, Lib.)

Ms. Carol Beal

Mr. Shawn Murphy

Ms. Carol Beal

Mr. Shawn Murphy

1630

Ms. Carol Beal

The Chair

Mr. Tony Tirabassi (Niagara Centre, Lib.)

The Chair

Mr. Gerald Keddy

Mr. Rodney Monette

1635

Mr. Gerald Keddy

Mr. Rodney Monette

Ms. Carol Beal

Mr. Gerald Keddy

The Chair

Mr. Shahid Minto

The Chair

Mr. Philip Mayfield

Mr. Shahid Minto

Mr. Philip Mayfield

1640

Mr. Shahid Minto

Mr. Philip Mayfield

Mr. Shahid Minto

Mr. Philip Mayfield

Mr. Shahid Minto

Mr. Philip Mayfield

Mr. Rodney Monette

Mr. Philip Mayfield

Ms. Carol Beal

The Chair

Mr. Philip Mayfield

Ms. Carol Beal

The Chair

Mr. Odina Desrochers

1645

Ms. Carol Beal

Mr. Odina Desrochers

Ms. Carol Beal

Mr. Odina Desrochers

Ms. Carol Beal

Mr. Odina Desrochers

Ms. Carol Beal

The Chair

Mr. Odina Desrochers

Ms. Carol Beal

Mr. Odina Desrochers

Ms. Carol Beal

Mr. Odina Desrochers

Le président

Mr. Mac Harb (Ottawa Centre, Lib.)

1650

The Chair

Mr. Ken Epp

The Chair

Mr. Ken Epp

Ms. Carol Beal

Mr. Ken Epp

Mr. Roger Gaudet

Ms. Carol Beal

Mr. Ken Epp

Ms. Carol Beal

Mr. Ken Epp

Ms. Carol Beal

1655

Mr. Ken Epp

Ms. Carol Beal

Mr. Ken Epp

The Chair

Mr. Roger Gaudet

Ms. Carol Beal

Mr. Roger Gaudet

The Chair

Mr. Roger Gaudet

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

1700

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

1705

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Mr. Shahid Minto

The Chair

Mr. Shahid Minto

The Chair

Mr. Ken Epp

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

1710

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Mr. Mac Harb

The Chair

Ms. Carol Beal

The Chair

Mr. Mac Harb

The Chair

Mr. Ken Epp

Ms. Carol Beal

Mr. Ken Epp

Ms. Carol Beal

Mr. Ken Epp

Ms. Carol Beal

Mr. Ken Epp

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Mr. Shahid Minto

The Chair

1715

Mr. Shahid Minto

The Chair

Mr. Shahid Minto

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

1720

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Mr. Roger Gaudet

Ms. Carol Beal

Mr. Mac Harb

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Ms. Carol Beal

The Chair

Mr. Shahid Minto

The Chair

Mr. Shahid Minto

The Chair

Mr. Shahid Minto

The Chair

Mr. Shahid Minto

1725

The Chair

Mr. Shahid Minto

The Chair

Mr. Mac Harb

The Chair

Mr. Mac Harb

The Chair

Mr. Mac Harb

The Chair

CANADA

Standing Committee on Public Accounts

NUMBER 021

2nd SESSION

37th PARLIAMENT

EVIDENCE

Monday, March 24, 2003

[Recorded by Electronic Apparatus]

¹ (1540)

[English]

The Chair (Mr. John Williams (St. Albert, Canadian Alliance)): Good afternoon, everybody.

Today, pursuant to Standing Order 108(3)(e), we are considering chapter 8, Public Works and Government Services Canada—Acquisition of Office Space, of the December 2002 Report of the Auditor General of Canada.

Our witnesses this afternoon from the Office of the Auditor General of Canada are, Mr. Shahid Minto,Assistant Auditor General, and Mr. Ronald Campbell, a principal with the office. From the Department of Public Works and Government Services, we have Carol Beal,Assistant Deputy Minister,Real Property Program Branch; and Rodney Monette, Assistant Deputy Minister, Operations Branch.

We will have the opening statements. So without further ado, Mr. Minto, please proceed.

Mr. Shahid Minto (Assistant Auditor General, Office of the Auditor General of Canada): Thank you, Mr. Chairman, for this opportunity to present the results of our audit on the acquisition of office space.

With me today is Ronald Campbell, the principal responsible for this audit.

Mr. Chairman, the Real Property Services Branch of Public Works and Government Services Canada provides office accommodation for over 100 departments and agencies. Because it shares roles and responsibilities with client departments, the department does not control all of the factors affecting the economy and efficiency of office space acquisition. Line departments can and do make decisions that limit the department's ability to choose the best option. However, the department does have an important role to play, and it needs to improve the way it manages several aspects of its own responsibilities.

Mr. Chairman, the audit examined the planning, acquisition, and management practices of the branch. This audit focused on the planning framework. Examination of individual transactions will be the focus of future audits.

To do its job well, the department needs to have good supply information, meaning information about the space available in individual markets and the space it already has in its inventory. We found that the regions do not routinely prepare a regional investment strategy. We also found that some community-based plans are not up to date. Without current supply information, it is difficult for the department to assess whether the proposed investments are consistent with its overall strategy.

In addition to good supply information, the department relies on client departments to give it accurate information on the requirements for office space far enough ahead so it can consider all possible solutions. Mr. Chairman, we found that the department had not yet developed long-term accommodation plans by department and agency. It needs to do this so that the department and its clients can plan ahead and optimize the cost-effectiveness of its office accommodation.

Mr. Chairman, the department also needs to improve the manner in which it analyzes the available accommodation options. Treasury Board policies require the department to base its decisions on the long-term costs of available options. However, we found that it did not consider long-term options in many cases, in part because it did not have enough time to consider all the information. We are concerned that the department's method of option analysis may lead to more costly solutions in the long term.

Mr. Chairman, we expected the department to have adequate financial and management information to manage its resources effectively and to meet the needs of its clients. We found that the department does not yet have good financial information about how much it costs to provide office accommodation to each client department. The department recognizes that weaknesses exist, and it has a pilot project underway aimed at improving its cost information.

There are some issues, Mr. Chairman, that the committee may wish to pursue. Let me start by saying that many of these issues are not new. Our office examined similar issues in 1991 and 1994 reports. However, we are pleased to note that Public Works and Government Services Canada has agreed with all of our recommendations. We are also encouraged that the department has developed an action plan to address our recommendations. While the plan appears to be comprehensive, it is important that the department follows through and ensures full implementation.

The committee may wish to ask the officials from PWGSC the following questions: What progress have you made in developing and reviewing community and regional strategies? What success have you had in working with client departments to develop long-term accommodation plans? What have you done to ensure that you allow enough lead time so that all investment options are considered? What success have you achieved through projects designed to ensure that your financial and operational information is complete and accurate? And finally, Mr. Chair, what timelines have been developed to guide officials in the full implementation of the action plan?

Mr. Chairman, this concludes my opening statement. We'd be pleased to answer any questions you may have.

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

Now we'll turn to Ms. Beal for the opening statement from the Real Property Program Branch of Public Works and Government Services.

Ms. Beal.

Ms. Carol Beal (Assistant Deputy Minister, Real Property Program Branch, Department of Public Works and Government Services): Thank you for inviting us here this afternoon to discuss the December 2002 report of the Auditor General on the acquisition of office space.

As the report points out, the provision of office accommodation is a complex and challenging program responsibility. Public Works and Government Services Canada provides work environments for about 187,000 public servants in approximately 100 departments and agencies. We manage an inventory of 6 million square metres of office space in more than 2,500 locations throughout Canada. Mr. Chairman, this is a huge portfolio. In fact, it is the largest portfolio of office space in the country.

Public Works and Government Services Canada is a learning organization in that it is continually working to improve our service. So we welcome the report of the Auditor General. Indeed, as noted in the report, the department supports your recommendations. We have drawn up an action plan in response, and we've discussed it with the Office of the Auditor General. We've made copies available to this committee.

Let me briefly mention some of the elements of our response. We recognize the need for good supply information. Accordingly, we have undertaken to develop and update our community-based investment strategies. We will also review our regional investment plans and have these linked with our community-based investment strategies. This work we will complete by the end of this year.

In cooperation with other government departments, we will continue to develop master occupancy agreements to address the long-term accommodation requirements and to optimize our cost-effectiveness.

As noted in the AG's report, we have moved to a more proactive supply management approach. This has improved our ability to acquire the right property for the requirement at hand while providing us with adequate time to consider all of the options.

We are also putting in place a process in which expiring leases will be signalled well in advance, again maximizing the options available for consideration.

In addition, over the past three years we have spent considerable effort sensitizing clients to the need to incorporate accommodation requirements into their planning as an element of program design. We have taken a number of steps to improve our management of information, focusing in particular on data integrity. Over the past 18 months, we've made very significant progress.

Mr. Chairman, we recognize the importance of having an effective performance reporting framework. We've been working very hard in this area, and we've come a long way in the past two years. Our performance measures are now comparable with those of leading G-8 countries, notably Britain and the United States. In fact, PWGSC and the United States General Services Administration, with whom we collaborate closely, have adopted similar measures where appropriate.

Let me reiterate, Mr. Chairman, that effective performance reports are important to us. We want to ensure that parliamentarians are well informed of our results. We are looking forward to working with the AG to discuss ways that we can make further improvements. We also would be very happy to receive any suggestions this committee may make.

Mr. Chairman, Public Works is proud of its accomplishments in providing office accommodation. But as I said earlier, we are a learning organization and we want to continuously improve. We thank the Auditor General for providing us with some guidance in this regard, and we look forward to hearing from this committee today as well.

¹ (1545)

The Chair: Thank you very much.

Now the first round. We'll start with Mr. Mayfield, eight minutes, please.

Mr. Philip Mayfield (Cariboo—Chilcotin, Canadian Alliance): Thank you very much, Mr. Chairman.

Mr. Chairman, I note in the report Mr. Minto brought to the committee that he concluded with a number of questions. I believe there are five questions. Rather than my asking these questions and waiting for the answers, I'm wondering if I might ask Ms. Beal if the answers to those questions could be returned in writing to the committee.

The Chair: Is it yes or no?

Ms. Carol Beal: Yes, Mr. Chair.

The Chair: Thank you.

Mr. Philip Mayfield: As you begin reading the Auditor General's report on the real estate of the federal government, it was perhaps a dry read, to begin. Then you begin looking in the newspaper and see that it's an issue there too. The potential move of the Department of National Defence headquarters is what I'm referring to.

On page 10, paragraph 8.49, of the Report of the Auditor General, it mentions a potential client who didn't want to relocate within the national capital region because of employee transportation problems. I want to ask Mr. Minto directly whether the issue you referred to was the National Defence move to Nepean.

Mr. Shahid Minto: No, monsieur.

Mr. Philip Mayfield: It was not. Could you tell us what issue it was?

Mr. Shahid Minto: Could I just have a moment?

Mr. Chair, my understanding is it was HRDC, but I would want to go back and take another look and get back to you about that. It is my understanding that it was HRDC.

Mr. Philip Mayfield: Thank you, Mr. Minto. I'm not wanting to push into too much of an area of speculation, but it seems to me that perhaps the issue of DND is perhaps a bit of a case study for us to consider.

The news report cites complaints by the union that most of its member live in Orleans and Hull and therefore didn't want to commute to Nepean, so the decision-makers should give up on a very cost-effective investment of the old JDS Uniphase Corporation building.

As far as I know, the federal government's response to this should be the best office space deal for the taxpayers and not simply to accommodate the employees' transportation. This is not a relocation issue. I want to ask what impact an employee union has on the relocation of a department. If it has an impact, can you give some examples?

¹ (1550)

Mr. Rodney Monette (Assistant Deputy Minister, Operations Branch, Department of Public Works and Government Services): Thank you, Mr. Chair, Mr. Mayfield.

Normally I think in most of our relocations we find that people can work things out. If there are concerns the employees or the unions have, people can sit down and sort out transportation requirements. Sometimes we can talk with municipalities and others and arrange for additional bus routes--those sorts of things can be done.

I would say that for the most part those issues are taken into consideration. People can sit down and sort them through. I'm not aware of--and my colleagues may correct me--a move, for example, that hasn't happened because the union had significant concerns that stopped it from happening.

Mr. Philip Mayfield: How seriously would that issue be taken under consideration by your department, though, Mr. Monette? Is that a serious issue?

Mr. Rodney Monette: Well, I think for us any time we have a situation where there's not a unanimous consent with our client to move, then we'd have to be very sensitive to that and we would take it seriously.

However, for the most part, at the end of the day, we look to our client. If they have a union issue, they would deal with their union. We wouldn't, for example, deal with the union for a particular department. We would be sensitive to it and we would encourage them and would be helpful. We'd make suggestions, for example, if it was a transportation issue, as to how it might be resolved. But at the end of the day, Mr. Mayfield, we would look to the department to work with the union to resolve it.

Mr. Philip Mayfield: I think of my own experience when I hire staff. They're told where my office is and it's my staff's responsibility to show up on time for work every day. I was a little surprised to hear this was an issue that was carried forth in the paper.

Do you take into consideration the needs of the client, in this case DND, and the needs of the taxpayer for effective use and economy in making these allocations? I see you nodding. I presume that means yes.

Mr. Rodney Monette: Yes.

Mr. Philip Mayfield: Yes. I also want to ask about this. Apparently in the report Liberal MP David Pratt, who is also the chairman of the defence committee and the member for the riding where DND headquarters may go, has been noted for lobbying for the site with the cabinet and the cabinet members such as the Deputy Prime Minister, who will probably ultimately give the go-ahead or not on this.

If the unions have a say, what is the influence of the members of Parliament who are lobbying in the allocation of space? Is their lobbying documented and referred to, as decisions are made, in the same way as you've indicated your concern for the employees unions?

Ms. Carol Beal: Generally, Mr. Chair, when a specific member wishes to make representation about something within the member's riding, he addresses it to the minister, not usually to the officials of the department. That is a normal process. Every member has specific interests and knowledge about their own buildings and issues within the constituency that they may from time to time feel public servants have not considered, and they like to bring that information forward to the attention of the minister. That is passed along to the department.

I would answer the committee's question by saying, no, we do not document--as the member has referenced it--lobbying on the part of members of Parliament. Anything would be as a matter of record through the minister's office.

Mr. Philip Mayfield: So the documentation would be from the employees on their concerns, but not from those who represent the taxpayers. Is that what you're saying?

Ms. Carol Beal: Again, the documentation from the employees would be to their own department. They may feel at liberty to write to fellow public servants, but we take our direction from the department, not from the employees of the department or the union of a particular department.

Mr. Philip Mayfield: Then how do you intend to obtain the cooperation and commitment of all client departments in signing master occupancy agreements? Have you established action plans? Have you established implementation timetables?

Mr. Rodney Monette: That's a very important issue. If we aren't close to our clients and don't have a good relationship with them so we understand what their requirements are, it's much harder to serve them.

As the Auditor General pointed out in their report, we have community-based investment plans, and those plans allow us to understand the community. For example, we will know if a community is experiencing growth, we will know if our clients are experiencing growth, and we will also have some idea of the various market rates in that particular community. Those plans help us to plan and get close to our clients. So that's an important element.

Some of them are out of date, as the Auditor General has pointed out. We made a commitment in our action plan to have all of them up to date by next year, but that's a critical piece.

¹ (1555)

Mr. Philip Mayfield: What about the implementation timetable? Is that in the action plan too?

Mr. Rodney Monette: Yes, and it has specific dates.

Mr. Philip Mayfield: Thank you.

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

Monsieur Desrochers, s'il vous plaît; huit minutes.

[Translation]

Mr. Odina Desrochers (Lotbinière—L'Érable, BQ): Thank you very much, Mr. Chairman.

Mr. Minto, Mr. Campbell, Ms. Beal and Mr. Monette, good afternoon to you all. I have a few questions for Ms. Beal or Mr. Monette.

When Ms. Beal brings up her statistics, she says that she provides office space for some 100 departments and 187,000 public employees.

How many buildings belong to the Public Works and Government Services Canada and how many leases do you have with the private sector for private sector buildings? Do you have any idea?

Ms. Carol Beal: Mr. Chairman, we have some 2,200 leases and that represents about 40% of our inventory.

Mr. Odina Desrochers: So 40% of 6 million square metres represent buildings belonging to the private sector.

What process do you use to negotiate or renew your leases with private owners?

[English]

Ms. Carol Beal: That's a very interesting and complex question.

[Translation]

If you don't mind, I'll answer in English.

[English]

The process for a lease renewal must follow six principles that the department has established. They have been in effect for some period of time. They set out basically a code of conduct for us as public servants.

The first principle is that they must demonstrate a financial advantage to the Crown. So it is very clear we must support that. We support that by doing a market analysis of the environment of the existing lease.

The third principle is that the space meets or will meet, at no extra cost to the Crown, all of the new requirements for the lease. For example, if we've changed our standards since the lease was originally entered into, the stringency of the new standard must be met by the landlord at no extra cost to the Crown.

That there is a continuing program requirement for the space is also one of the principles. That the landlord has met all of the existing obligations under the current lease is also one of the principles.

[Translation]

Mr. Odina Desrochers: In the first principle, you mention the most economical solution. I'd like you to give us more specifics on the attribution process. Do you choose the lowest bidder or the median, or do you have other criteria?

[English]

Ms. Carol Beal: If we are going to renew a lease, we first take into account all of the costs associated with moving that department when we look at any alternatives. So it's not simply a matter of dealing with the lease in abstraction and making a decision to renew. If it meets the six principles we proceed with it, because one of the attributes, the financial advantage to the Crown, includes the cost to move and the cost to fit up the new space we would move them into. Very often the existing lease--

[Translation]

Mr. Odina Desrochers: But who makes the decision? Which tender do you take? The lowest, the median or another?

[English]

Ms. Carol Beal: On the market range we would look at, basically we would attempt to achieve the least cost for the Crown. So we would always try to go with the least-cost offer, but in the case of a negotiation it's not an offer per se; it's our ability to work with the landowner in the private sector to achieve the best cost for the Crown. It would call into play some of our negotiating skills.

[Translation]

Mr. Odina Desrochers: But do you actually select the most cost-effective solution? That's what I want to know.

[English]

Ms. Carol Beal: Yes, that is always our preferred option.

[Translation]

Mr. Odina Desrochers: I worked for quite awhile for the Société immobilière du Québec and sometimes, when you're dealing with private owners, other criteria may come into play in the attribution of space. That's why I want to know if Public Works and Government Services Canada is doing everything by the book. Can you tell me what percentage of office space was attributed to those private owners who had submitted the lowest tender, in other words the most cost-effective solution?

º (1600)

[English]

Ms. Carol Beal: To the best of my knowledge it's all of them. There would be very few exceptions to that. The exceptions would be based on our not having any other alternatives. They would be based on the operational requirements of our clients. But generally speaking, we strive our best to ensure the least cost to the Crown in those instances.

There are very few exceptions to that. I can't give you a percentage at this point. I'm sorry, I wish I could.

[Translation]

Mr. Odina Desrochers: If we were to ask you to do a bit of research, would you be able to tell us which are the exceptional cases?

[English]

Ms. Carol Beal: I would be very happy to check. If there were, we'd be happy to provide them to the committee. I'm just not confident I would easily find that information.

[Translation]

Mr. Odina Desrochers: Do I have any time left, Mr. Chairman?

The Chair: Yes, two minutes.

Mr. Odina Desrochers: Ms. Beal, Mr. Monette, you know that there was a lot of downsizing over the years in the public service. You told us there were 187,000 federal employees. Within the framework of lease renewal or negotiation, is all the space being leased actually occupied and if that's not the case how much space is unoccupied at the present time because of downsizing in the public service?

[English]

Mr. Rodney Monette: Mr. Chairman, Monsieur Desrochers, if you look at our leased space, just a little less than 1% is unoccupied at this time. With respect to crown-owned space, around 4% is unoccupied. So if you average that out over the two,

[Translation]

I think there's a rate of 2 per cent, generally speaking, for the total space.

Mr. Odina Desrochers: And how much does it cost Public Works and Government Services Canada to keep that 2 or 4% of unoccupied space?

[English]

Ms. Carol Beal: That really depends on the location of the space, whether it's in an urban area, a rural area, or whatever. If one were to look at an average rate across the portfolio, we could probably do the calculation and provide that information to the committee.

I also think one of the parts of the question we maybe could elaborate on a bit is whether we attempt to recover or recapture vacant space if there is a vacancy when we go to renew the space. The answer to that is yes. Our challenge has generally been the reverse; that as we go toward a lease renewal, our tenants try to find additional space, other than what they originally had in the lease.

The Chair: Thank you, Mr. Desrochers.

Ms. Phinney is next, please, for eight minutes.

Ms. Beth Phinney (Hamilton Mountain, Lib.): Thank you very much, Mr. Chairman.

Do you have any appraisers who are qualified under the Appraisal Institute of Canada working for the department?

Ms. Carol Beal: Yes. We have 12 across the country.

Ms. Beth Phinney: I'm concerned because on page 13 of the Auditor General's report it says the reports don't contain your files on each property you own, and they don't contain investment analysis or market analysis. Then it says it's because the employees don't have the tools to do this.

Just taking my city of Hamilton, I think we have thousands of real estate agents who are doing real estate every day and know the value of properties. We have probably 30 to 50 qualified appraisers. You have 12, so one of them must be for Ontario, or maybe a couple are for Ontario.

Why can't we find the value of a piece of property, or why would this kind of statement be made?

Ms. Carol Beal: In fact, we are able to find the value of a piece of property. I think the point in question the Auditor General is raising is whether or not we have done a proper job of completing all of the files. I do not believe it is a question that we did not know the value of the property, but rather that our documentation was perhaps not as good as it should have been.

We only have that few number of appraisers because we use private sector appraisers to perform most of the evaluations over a certain value. But in each of our files we should have a lease attestation report for properties less than $100,000 in value. Someone who may not be a qualified appraiser but uses market information to perform evaluation on the property, such as a leasing officer, actually sits down and writes out a lease attestation. There's often a market analysis report available for the file. It would set the market range for properties in a particular area. Then for--

º (1605)

Ms. Beth Phinney: Can I just interrupt? I only have a certain amount of time.

You have all these qualified people, and I know you're saying “should have” and “could have”, but I was in the real estate business for a short time and I had a file on every single house or property I had for sale--or rental unit, or whatever. Everything about that property was kept in the file.

So is your Ottawa office not keeping these files, or are your regional offices not keeping these files?

Ms. Carol Beal: Cases the Auditor General looked at were in both the national capital area and out in the regions. Not all files were incomplete; a certain number of files were incomplete. The Auditor General noted that. We have taken steps in our action plan to ensure that doesn't happen in the future.

There are a number of reasons why it may have happened, but there's no question the Auditor General pointed out that not all of our files were entirely complete.

Ms. Beth Phinney: Okay, so are you guaranteeing us they will be complete within a year on every property?

Ms. Carol Beal: Absolutely.

Ms. Beth Phinney: Okay. I'm glad to note that the Auditor General's report says you've agreed to follow all the recommendations.

How long have you been in the department in that area?

Ms. Carol Beal: I've been back in the real property area in the department for two years, but prior to that I was in the department for quite some period of time before leaving to go to the Department of Fisheries and Oceans.

Ms. Beth Phinney: Are there many people in the department who have been there for 10 years?

Ms. Carol Beal: There is an expression in Fisheries and Oceans that people are lifers, and I come back to Public Works with a full understanding of that meaning. I think there are many lifers in Public Works as well.

Ms. Beth Phinney: I wonder if you have just a very short answer on why, if the Auditor General made these same comments in 1991 and 1994, nothing was done. They're not very hard recommendations. You know, it just says to have a complete file.

Ms. Carol Beal: We understand that point. I think we have made a considerable amount of progress in addressing the points raised by the Auditor General in 1991 and 1994. Our environment has changed substantially since 1991 and 1994.

On what we have not done well--and we acknowledge this quite freely--we have not closed the loop adequately with the Auditor General's office to demonstrate what we have done in the department. We've undertaken to do that as well within the next year.

Ms. Beth Phinney: Okay.

I have a question about long-term planning. We have federal offices all over the city of Hamilton. They decided a couple of years ago to build a building to house all the federal offices in the Hamilton area. Halfway through it became public knowledge that it was nowhere nearly big enough.

So a brand-new building is being built, and all the people in Hamilton who work for the federal government are not going to be able to go into that building. What kind of long-term planning is that?

Mr. Rodney Monette: On that particular building, the requirements were set out in 2000. At that time, I wouldn't say our space was at an absolute low point, but we had just gone through a program review and we weren't anticipating significant growth in departments.

A couple of years after that we went back and realized that some of our departments, for example CCRA, had actually gone through a fair amount of growth and were still growing. So our original assumptions, just two years down the road, were no longer correct. So that's really what happened with that building.

Ms. Beth Phinney: So you wouldn't build a six-storey building and say, okay, this is going to fit exactly who we have now. Everything grows. They hired 30,000 federal employees last year. They have to sit somewhere.

Why wouldn't you build an extra two floors on it while you're building it? I don't know if you can. Has anybody foreseen how you could add to this building? I'd hate to think this was going on right across the country.

Mr. Rodney Monette: In many cases when we build we anticipate growth, but in this situation we didn't. We have an arrangement with CCRA, and they are quite comfortable with our leasing some additional space for them. But it has changed a lot since 2000. Over that two-year period the government went through a fair amount of change in terms of growth and so forth.

º (1610)

Ms. Beth Phinney: I think maybe part of your improvement will be to hire people better qualified to do that job.

Thank you, Mr. Chair.

The Chair: Thank you very much.

Mr. Keddy, do you have some questions?

Mr. Gerald Keddy (South Shore, PC): Yes, thank you, Mr. Chairman.

I apologize to our witnesses that I was late. I was speaking to the supply day motion on Iraq and could not get away. However, I did read the information and I have a couple of questions about the action plan.

When the action plan is completed--at least in your response to it--apparently you will have about 80 clients without master occupancy agreements, and that's about 26% of your inventory. Then you went on to say that the department's long-range objective is to execute master occupancy agreements with all of these 26%, which I hope will soon happen.

You went further to say that to achieve this new tools are needed. I'm sure you've enlightened us about what these new tools are, but I missed that. So I would like to know why you need these new tools and what they are.

Mr. Rodney Monette: The new tools we're looking at for those clients are ones that will be useful for smaller clients. Those 80 are very small clients, and if you have a big complicated agreement, parts of it are really only appropriate for a much larger client, like CCRA or HRDC. So the idea is to get these done quickly and have a more streamlined agreement for the smaller clients.

Mr. Gerald Keddy: Are your larger clients--you're talking about those you mentioned in one of the first responses to the Auditor General's questions--more than $20 million?

Mr. Rodney Monette: They are just large in terms of space; for example, CCRA, HRDC, and Indian Affairs. You don't have an actual space cut-off, but there's a big gap between the big ones and the small ones, if I can put it that way.

Mr. Gerald Keddy: I appreciate that, but I suspect that for most Canadians the small contracts are still pretty serious ones.

º (1615)

Mr. Rodney Monette: Yes.

Mr. Gerald Keddy: I guess I'm a little shocked that this process has continued for nearly 13 or 14 years after the original recommendations were made and still nothing has been about it. I'm not about to infer that's the fault of the civil service. The civil service has some responsibility, and I'm sure you recognize that, but politicians are obviously the people who decide what gets done at the end of the day. You guys make the recommendations quite often, but it seems there has been failure on the part of both groups to actually deal with some pretty critical issues.

The Auditor General pointed out that of the 80 files she studied, 29% did not contain investment analysis reports, and 34% lacked market analysis reports. I'm not going to ask you to admit these are key documents, because you know they're key documents; we all know they're key documents. But this lack of documentation seems to be the norm and shouldn't be the norm.

We saw this in the sponsorship program. We've seen this in a lot of other programs. By not having this type of documentation it allows, quite blatantly, for political interference. Leases can be given to friends, supporters, sisters, brothers, you know, the local fire chief. I had no idea. This is almost unbelievable.

So I guess there are three points here. Why are these files incomplete? You've partially explained that in answer to Ms. Phinney's question. What's been done to update them, and will you be able live up to your promise a year from today?

I guess the other thing is--as much as we may want to avoid it--what disciplinary action was taken against individuals who were supposed to be looking after these files and failed to act in the best interests of the taxpayers?

Mr. Rodney Monette: Mr. Chairman, Mr. Keddy, we can take some very specific measures to improve the files and have done that in the action plan. What's really important in ensuring that these files are handled well is also our relationship with the clients. We've taken a number of steps over the last six months in the department to change how we provide service to our clients so that we're closer to them and we understand them. A good example would be CCRA where the director general at CCRA who's responsible for the real property portfolio is actually one of our staff who sits in their offices. Those things allow us to get close to the client and to understand what their requirements are.

With respect to staff and folks who aren't doing the right things with respect to file documentation, we recognize those things in how we assess their performance. If there's a staff individual who has not been diligent and has consistently not been doing the right work with respect to file documentation, we would recognize that in the performance assessments and treat it accordingly at that place.

Mr. Gerald Keddy: The whole issue for all governments and for the civil service, of course, is one of due diligence. Certainly I can tell you for a fact that it's not our policy in the Progressive Conservative Party to try to find civil servants to be the scapegoats. We've always felt that the political masters of the civil service are the people responsible.

At the same time, you raise the issue that there are disciplinary procedures in place, so my next question is whether disciplinary action has ever been taken. It's one thing to put something on somebody's file, but has that ever generated another complaint, or a secondary or third complaint, that actually had someone transferred out of a department? Has it ever occurred?

Mr. Rodney Monette: Mr. Chairman, Mr. Keddy, I have seen cases where performance issues have resulted in disciplinary action--not on these particular files, but in the department with respect to due diligence. I have seen that, yes, sir.

Mr. Gerald Keddy: I'm not trying to put you on the spot when I ask that and I appreciate the answer. I'm glad to hear that this has happened, because we don't see it on the other side. You see ministers of the Crown signing blank pieces of paper worth a half a million dollars and there are no repercussions for that. I'm not going to ask you to comment on it. I'm just making the statement. That would be more than unfair.

Those are my questions for now, thank you.

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

That brings to an end the first round, so now we're going to go to the second round, and it's Mr. Epp for four minutes, please.

Mr. Ken Epp (Elk Island, Canadian Alliance): Thank you, Mr. Chair.

I would appreciate your making your responses as quickly as possible, because I have limited time.

My first question is this. In your report you said that you provide the housing for 187,000 government employees. It's my impression that there are considerably more government employees than that. Where do the others get their space?

Mr. Rodney Monette: Mr. Chairman, Mr. Epp, there are a number of departments, such as DND and RCMP, that look after their own space requirements.

Mr. Ken Epp: Okay, so there isn't a turf war going on here. That's what I was wondering.

Mr. Rodney Monette: No, in fact, interestingly some of those departments want to do more work with us, and some of them are looking at transferring some of their space management responsibilities back, or over, to us.

Mr. Ken Epp: Okay. My next question has to do with rental versus ownership. I would like to know whether you have done a study of roughly what proportion of the space provided to government agencies that you provide is rented and what proportion is actually owned by the government. Have you done a study on what is the most cost-effective in general? Is there an answer to that, or is it true that in some cases it's cheaper to rent and in others it's cheaper to build?

Ms. Carol Beal: Mr. Chair, it's not simply a matter of price, although price is a very real consideration. We take into account things like the long-term requirement for the space. If it's five years or less, then we clearly would not own that space, we would rent it. We take into account the operational requirement of the client. For example, a client may understand that it has a program that has a sunset clause of seven years, or something like that. Again, those would be very clear instances where supplementing our crown-owned inventory by lease would make sense.

The other part of the answer is--and I will try to be brief--it is very much location specific. If there are markets in which the price to obtain lease space because of the market condition is of such an economic advantage to the Crown that it outweighs the cost of crown construct, we would certainly take that option as the least-cost option.

As to leasing the portfolio, and I think the Auditor General references this in their report, we should have a core of crown-owned inventory and we should be supplementing that core in a balanced way to achieve cost-effectiveness and flexibility for the Crown. We don't want to be in a position, should government priorities or program requirements change, that we find ourselves with a lot of costly inventory to hold in the Crown's hands without the ability to dispose of that inventory in a cost-effective way. Leasing does provide us with that balance.

º (1620)

Mr. Ken Epp: I have a whole bunch of questions about the disposal of the space you are talking about, but I can't go into them because I want to ask one more question before I'm out of time.

My last question is the most difficult. Specifically in Public Works and Government Services, we had had instances where it is strongly suspected, but not yet necessarily proven, that there was political interference in the letting of contracts—but not in the letting of lease agreements. We're talking about the advertising contracts, of course.

Now, the question I'm wondering about is this. You said that the departments make the final decision. They are your clients and you offer them space, but in your report you say that they have the right to decline it. Is the final decision with the minister, and if so, how do you prevent political interference in your decisions?

If a minister were to say, “I want to rent this building in this town from So-and-so because it's available, he's talked to me about it, and it's good for me politically”, do you have a mechanism to deal with this? If not, would you like to have one? My party, I think, would propose setting civil servants free from this kind of interference.

Ms. Carol Beal: Mr. Chairman, I would have to say that in my personal experience the circumstance described by the committee member has not occurred. I would also say that I would think it rare or very odd that it would occur.

I think any discussion between a minister and officials on where a program should be located may be held internally in a department, but it certainly wouldn't be held between a minister and officials of the Department of Public Works and Government Services.

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

[Translation]

Mr. Gaudet, you have four minutes.

Mr. Roger Gaudet (Berthier—Montcalm, BQ): Thank you, Mr. Chairman.

What's the total cost of the leases for 6 million square metres?

[English]

Ms. Carol Beal: The annual budget for the lease program, Mr. Chairman, is in the order of $685 million.

[Translation]

Mr. Roger Gaudet: That means you're paying $10 per square metre, doesn't it? That's not expensive. Is that only for the space you've rented out or does that include the space belonging to Public Works and Government Services Canada?

[English]

Ms. Carol Beal: No, $685 million is the actual cost of the lease agreements or program that we have. Our costs are based on a gross lease, so we would include things like the operating and maintenance cost of the building, and the tax payments that the owner of the building would have to make as well. So it's all inclusive of the gross cost. Our total gross costs on an annual basis for our entire lease portfolio is $685 million.

Can one work it out on a square-foot basis? I think you could do the math, but you'd have to be clear on what was included in that price.

[Translation]

Mr. Roger Gaudet: I don't find $10 a square metre expensive. Space is more expensive down home, right out in the country. That works out to $3 a square foot. That's not expensive. We'll rent some from you.

Are you maximizing the use of space in your own buildings before renting something elsewhere?

º (1625)

[English]

Ms. Carol Beal: We always look first to see if there's sufficient space in the crown-owned inventory to meet the clients' operational requirements. That is always the first step. If the space is not available, then we go to a lease.

Generally speaking, other than in large urban areas within crown-owned space, we seldom have enough space to satisfy demand without going to lease.

[Translation]

Mr. Roger Gaudet: How much did it cost to get rid of Revenue Canada and set up the Canada Customs and Revenue Agency? You might not have the answer yet, but you can send it to me in writing.

[English]

Ms. Carol Beal: I certainly don't have that information in my head, Mr. Chairman. To provide that information, we'd have to talk with our colleagues in the CCRA.

[Translation]

Mr. Roger Gaudet: Are they going to use the same space as Revenue Canada or others?

[English]

Ms. Carol Beal: Perhaps my colleague might like to answer that.

Mr. Rodney Monette: Yes, Mr. Chairman.

Monsieur Gaudet, I can answer that in part because I worked with Revenue Canada at one point in my career. When Revenue Canada became the Canada Customs and Revenue Agency, for the most part it didn't cause them to change space. They stayed in the same buildings they were in previously—though they may have changed some buildings since then.

[Translation]

The changes were not due to the fact that they became an agency.

[English]

It wasn't because they became an agency.

[Translation]

Mr. Roger Gaudet: Are the people who used to work for Revenue Canada now working for the Canada Customs and Revenue Agency or are the people working at the agency all new people? They are the same ones?

[English]

Mr. Rodney Monette: Yes, Mr. Williams, and Monsieur Gaudet, for the most part it's the same people who were with Revenue Canada. When it became an agency, basically the same people moved over.

[Translation]

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

[English]

Mr. Murphy, for four minutes.

Mr. Shawn Murphy (Hillsborough, Lib.): Thank you, Mr. Chairman. I just want to pursue an issue with Madame Beal and Mr. Monette.

You indicated that in a lease taken by necessity, the least cost to the Crown is a primary factor. From the point of view public accountability, that's certainly admirable. I just want to explore the concerns of the community, especially whether or not to lease or to construct your own building on behalf of the Government of Canada.

My second area of questioning is about the downtown core, which is under stress in a lot of the cities right across this country. I've seen situations where the Crown is leasing property, perhaps not in the downtown core but near the core. It will move out two or three miles to some place that has low costs and has lots of parking. The staff may love it, but certainly it significantly harms the downtowns of a lot of cities and town right across this country.

I just want to ask you if any consideration has been given in your deliberations to community concerns?

Ms. Carol Beal: Absolutely, Mr. Chairman. In fact, in the department at the moment we are developing a policy called the good neighbour policy. It encourages us to look at three things: the first is the operational requirements of the client; the second is the least cost to the Crown; and the third is the planning aspirations of the local municipalities. We take into consideration things like how the location of public servants can help enable or facilitate local planning objectives, and things like transportation and the demand that the location would be placing on the transportation infrastructure of municipalities. These are things that we will be taking into account very seriously in our good neighbour policy, currently under development, in making decisions with our client departments as to where their locations should be.

Mr. Shawn Murphy: Is the policy in effect now?

Ms. Carol Beal: I believe our minister has yet to formally announce the policy, Mr. Chair.

Mr. Shawn Murphy: This leads me to the area of heritage buildings, which we have a lot of right across the country. I've seen situations where a landlord of a heritage building has a beautiful building in the downtown core, but he or she can't lease it. These building have to be wheelchair accessible and to have proper washrooms and basic standards, but they don't meet the national building code, perhaps because the windows may be too small. Of course, they're prohibited by city bylaws from changing the windows, so they're in a catch-22 situation; they can't put on big windows, but then can't lease to the government because the windows aren't big enough.

This is an important issue to our heritage building community, which is very important to our tourist industry, our downtown, and our economy. Is there any movement to try to lessen the regulations, so that some of these heritage buildings will be eligible to lease some of their space to the federal government?

º (1630)

Ms. Carol Beal: The issue is not really one of lessening the requirements, but of our ability to work with the landlord in the community to figure out how to resolve some of the challenges raised by those requirements. I'd be reluctant to say that we would lessen them because it was a heritage building, but we clearly are interested in preserving heritage places. In part, it makes us a good neighbour. It also helps us to achieve some of the broader government objectives sponsored by our colleague, the Department of Canadian Heritage, and its heritage places initiative.

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

Now Mr. Tirabassi, for four minutes.

Mr. Tony Tirabassi (Niagara Centre, Lib.): Thank you, Mr. Chair.

Mr. Murphy covered my question identically. I was going to ask about heritage, simply because I am a former member of the LACAC committee in my local community, so I would just hope that the department would continue to look to that aspect. I know that municipalities are under pressure to build new city halls and to keep these government functions in the downtown, preferably looking to heritage buildings for this.

So I don't have a question, but just offer this support. Thank you.

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

Mr. Keddy is next for four minutes, please.

Mr. Gerald Keddy: Thank you, Mr. Chairman.

I guess my question is for the assistant deputy minister.

From listening to the meeting--at least the part I've been able to participate in--and reading over the information you gave us, it's pretty obvious that the whole question of long-term planning of office space is one of the more difficult issues you have to deal with. It seems the best value for the taxpayer can be obtained when you have sufficient lead time to actually deal with those questions. It's important to have a coordinated effort between you and other government departments that are the lessees.

Is there someone in your department who's specifically tasked to work with the other government departments to make projections on what's going to be required? For instance, we all know the size of CCRA--and that's a whole other discussion on whether it's really needed or not. It's a huge and obviously growing department. They're going to need additional space in the future.

Do you have someone working with CCRA, the Department of National Defence, Natural Resources--whoever the players may be? The question is how often does this person meet with senior officials in other departments? As deputy minister, how often do you meet with other deputy ministers or assistant deputy ministers and ask for projections?

Mr. Rodney Monette: Thank you, Mr. Chairman and Mr. Keddy.

It's very important that we be close to our clients. We went through an adjustment in the department about six months ago to create client service teams to work with our client departments on a day-to-day basis. In fact, in many of these cases the client service team actually resides or co-locates with the department. In the case of CCRA, for example, the director general responsible for accommodation for CCRA is actually one of our employees who sits there and works as one of them in their offices. So that day-to-day contact is very important, and at the client service team level the contact is daily for most of our clients.

Our deputy minister has meetings at the deputy minister level to talk about plans as well. You're absolutely right that the earlier we're in to plan with them, the better we can be of service to them, and the better planning we can do.

º (1635)

Mr. Gerald Keddy: I guess I have one more question, if I have time. What options do you have? Let's say you go to CCRA and the minister or the deputy minister has put in a request for office space. You have office space, but the minister decides they don't want it. What recourse do you have to go back and say, I'm sorry, we have space available and you have to take it? What recourse do you have when the minister says they're not taking it, that they want different space? Have you ever seen that happen?

Mr. Rodney Monette: It has happened that departments have said, gee, we're not sure we want to move into this space. My own personal experience is that if I call a colleague at the assistant deputy minister level, usually in the vast majority of times you can sort through that and work it out.

Although I am reasonably new to this portfolio, I haven't had any experiences where I haven't been able to sort it through and find a solution.

Ms. Carol Beal: I had similar responsibilities before Mr. Monette. The actual fact is that at the most senior levels in the public service we share joint obligations to meet the broader government objectives. We always start the discussion from that point and arrive at acceptable solutions.

Mr. Gerald Keddy: Thank you.

The Chair: Mr. Minto has a comment.

Mr. Shahid Minto: If I could just clarify one thing, we certainly agree with the objectives of the department. It's not a problem with their objectives or policies; the problem has been on the implementation side in many of the issues we've talked about today.

Mr. Keddy raised the issue of getting information from the clients. I would just draw your attention to paragraphs 64 and 65 of chapter 8 for a second and simply point out that there is a policy there. There is a client accommodation service adviser. From what we saw and what we were told, these people may be overworked. There are a whole lot of positions that have stayed open. While the concept is good and the objective is very good, the implementation is not completely there.

I didn't want to leave you with the impression that the problem had been resolved. Certainly people are working on it. It has been recognized, and people are doing something about it, let's be fair. But it's not a done deal.

Thank you.

The Chair: Okay, thank you very much, Mr. Keddy.

Mr. Mayfield, four minutes, please.

Mr. Philip Mayfield: Thank you, Mr. Chairman.

I want to look at the same issue from perhaps a little different point in the report. What I'm looking at is right at the beginning of the report--the background and other observations, paragraphs 6, 7, and 8--and the departmental response.

If you go back to 1991 and 1994, “we reported that improvements were needed” on client requirements. In paragraph 7, “The Branch has begun to take a more proactive approach by looking at a portfolio of owned and leased buildings in a given area and forecasting the needs of all clients, rather than meeting needs client by client.”

What were you intending to say there, Mr. Minto? Would you be repeating what you just said in answer to the previous question?

Mr. Shahid Minto: Partially, but also I think when they started having envelopes for clients and decided--

Mr. Philip Mayfield: Would you say that again? I'm sorry.

º (1640)

Mr. Shahid Minto: The department had space envelopes designed for clients and said, this is your envelope--I think that was back in 1995--and any addition to that you have to justify and you have to deal with that. I think they have been proactive by in some cases going out into the market and getting buildings that they think there is a reasonably good chance of using in the short term.

Initially what we were getting away from was simply a response to a client request. Instead of just being that, I think now you can see indications that they are actually anticipating requests and going out to starting to talk to clients earlier.

Mr. Philip Mayfield: I heard Mr. Monette say, I believe, that in one instance there was even a director general sitting right on the premises, which would seem like lots of face-to-face contact. But it seems to me you're saying there's a system whereby they develop a profile on the projected needs of a client and that perhaps more face-to-face is still required.

Is that what you're saying, Mr. Minto?

Mr. Shahid Minto: I think Mr. Monette was talking about CCRA, and CCRA is such a huge client that you would expect somebody to be there. It's 20% or 25% of the business, and for a client of that size you would expect people to be there anyway.

For the other people, there are contacts being made. There are advisers in place.

Mr. Philip Mayfield: Some of the smaller clients are not getting the same service that the larger clients are. Is that what you're suggesting?

Mr. Shahid Minto: What I'm saying is that perhaps some of the smaller clients don't need the same service as the large clients. It's a risk analysis type of decision as to who needs more immediate attention.

If I can just take one minute here, the real issue is that in order to deliver service to the clients you need information on the client's needs, what is in your inventory, what is the market, what is it going to cost you to do this, and finally the most cost-effective solution. In each one of these areas, from what we've seen, they have good objectives. There are good policies. There are things happening, but implementation has been slow. Implementation has been happening, but it is not fully there.

Mr. Philip Mayfield: Before my time is completely gone, I have to get back to the department and say improvements have been made and the department says there are still lots of challenges. I want to press you really hard. How are these challenges being met in a specific way that the committee can build them into its report and recommendations? Could you do that for us, please?

Mr. Rodney Monette: Yes, Mr. Chairman and Mr. Mayfield, there are some very specific actions that we have agreed to with dates. For example, our community-based investment strategies will be complete this next fiscal year. On the regional strategies, which are very important, as the Auditor General has identified, we have committed to having those completed as well. We have committed by the end of next fiscal year to having formal memoranda of agreement with about 75% of our clients, representing about 75% of the space that we're involved with, and there are a number on the planning side as well that my colleague would speak to. There are some very specific things that we agree need to be done, and we'll undertake to have them done.

Mr. Philip Mayfield: Thank you very much.

Ms. Beal, did you have something to add?

Ms. Carol Beal: One of the other points the Auditor General has consistently made with us is with respect to the quality of data in our information, in our systems. We have launched, a year and a half ago now, a specific exercise around data integrity.

The exercise has been linked to the performance accords of what we call the executive population in the public service. They're the population who actually get financial remuneration in relation to their performance. We have linked the data integrity exercise to those performance accords. We're taking some very strong steps in order to ensure performance there.

We have put in place a number of new tools that are going to be helpful. I think Mr. Minto was trying to also explain that instead of responding by transaction basis, we have been doing some advance thinking and trying to bring inventory online before we have the detailed specifics of the client finally worked out. That is in order for us to be able to better respond to our client populations.

One of the examples is for a group of small client departments. If we were to welt one off for each of these, we'd be looking at space between maybe 2,000 and 5,000 square metres. We're looking at space around 15,000 to 20,000 square metres in which we will place a number of those smaller clients. It is steps like this that we've been trying to do to improve our planning and the responsiveness of our program.

The Chair: Thank you very much.

Mr. Philip Mayfield: Thank you. I want to ask if the information you just provided--and I thank you--will be in your forthcoming performance report.

Ms. Carol Beal: That's a very good question. I know that in our forthcoming performance report we have given some very concrete examples around performance indicators. The narrative I just provided was more of a qualitative nature. We've tried to be more quantitative in our performance report this year pursuant to observations made by the Auditor General. I would have to say that it might be there in a general narrative way.

The Chair: Let's hope that it is there in more than a general narrative way. As you know, the Auditor General is going to start auditing some performance reports--it might be yours--therefore you want to make sure you get a good report from the Auditor General.

[Translation]

Mr. Desrochers, four minutes, if you please.

Mr. Odina Desrochers: Thank you, Mr. Chairman.

Ms. Beal, you said that managing the building inventory costs $685 million. What part of that amount goes to repairing and maintaining the inside of those buildings? Or would that amount be calculated on top of those $685 million?

º (1645)

[English]

Ms. Carol Beal: The $685 million, Mr. Chair, refers to the cost of the lease portfolio, which includes the cost of operating the lease portfolio. Perhaps I could just clarify for the committee the fact that our lease inventory is 2.5 million square metres, so when we do the math of the $685 million, it should be against the 2.5 million square metres.

[Translation]

Mr. Odina Desrochers: Thank you, Ms. Beal.

You say that 40% of your space allocation is rented from private owners. What is the duration of the leases? Is it 5 years, 10 years, 15 years? What criteria do you use to set the duration, either 5, 10 or 15 years?

[English]

Ms. Carol Beal: Mr. Chairman, we have a number of leases that are less than one year in duration. We have some that are five years. We find that five-year leases satisfy small requirements very nicely and requirements where the long-term certainty of the program is unclear.

Lately we have been going for larger leases that are of a term of around 15 years for the total term of the lease. We find this about the right break-even time before the building starts to need a lot of repairs, and it provides us with the maximum amount of flexibility.

We would take a number of things into consideration when looking at the term of the lease--operating requirements of the client, the length of the program certainty, the other uses we may have for the space within a geographical location, and so on. It's not a fixed rule.

[Translation]

Mr. Odina Desrochers: Approximately when did you sign 15-year leases? Was it in 2000, 2001 or 2002?

[English]

Ms. Carol Beal: The termination dates would vary depending on the lease, Mr. Chairman. I believe the question is being asked whether they all co-terminate in roughly the same time, and the answer is no. They terminate at different points in time depending on when they were first brought into the inventory.

[Translation]

Mr. Odina Desrochers: In the context of the total Canadian building inventory you rent or operate, what is the percentage of buildings in Quebec? What is the percentage rented and what proportion of the property belongs to the federal government?

[English]

Ms. Carol Beal: If you could just give me a minute, Mr. Chairman, I think we can find the answer to that.

The Chair: Mr. Desrochers, in the meantime, do you have any more questions?

[Translation]

Mr. Odina Desrochers: If the questions are sometimes too technical, I can wait to get more specific answers in a letter, Mr. Chairman.

[English]

Ms. Carol Beal: We can identify the square metres of leases that we have in Quebec. Right now, there are approximately 200,000 square metres of lease space in Quebec. The crown-owned office inventory is approximately 385,000 square metres.

[Translation]

Mr. Odina Desrochers: So what kind of percentage does that give?

Ms. Carol Beal: I'm sorry, I haven't done the calculation yet. My colleague says it's about 60%.

Mr. Odina Desrochers: Thank you.

Le président: Thank you very much, Mr. Desrochers.

[English]

Mr. Harb, four minutes, please.

Mr. Mac Harb (Ottawa Centre, Lib.): I don't know about you, Mr. Chair, but I'm extremely impressed by the level of commitment and accuracy that the officials have come to this committee with. I was even more impressed by the action plan that was distributed to our offices in response to the Auditor General's recommendation.

Mr. Chair, I thought that some of my colleagues on the opposition side might have taken the opportunity to congratulate both the Auditor General and the department for a job well done. I wanted to do this on behalf of the committee. I don't want our witnesses to leave here with the understanding that we are not taking note of the excellent work that has been done in trying to respond to the Auditor General's recommendation.

I suspect that while there will be challenges ahead, as Mr. Minto has clearly stated, and a lot of hard work, the system does work. As someone from the national capital region, I consistently hear from my constituents about the efficiency that Public Works has introduced into the system, and the transparency and quality service they are providing to my constituents and to colleagues in the national capital region.

I have no question but will just say keep up the good work. I know that some of my colleagues on the opposition side can't go to bed at night because they are worried that somebody might still be up and having a good time. The system works; there are efficiencies in it. I want to thank both the Auditor General and the witnesses from Public Works--one or both of them my constituents, I presume--for a job well done.

º (1650)

The Chair: Very good, Mr. Harb. We know that you look after your constituents here in Ottawa Centre. It's a good comment.

A voice: Oh, oh!

The Chair: Mr. Epp, for four minutes.

Mr. Ken Epp: Mr. Chair, I'd like to inform my honourable colleague that I don't lay awake at night because I think someone's having a good time, but because I'm travelling back from the west.

A voice: Oh, oh!

The Chair: I thought you were going to say that because everybody else is having a good time, you can't get to sleep.

Mr. Ken Epp: No, no. We're all having a good time.

I'd also like to commend the people here. Notwithstanding what Mr. Harb has just said, I'm impressed with your knowledge today and with your forthright answering of the questions. I thank you for that.

I just want to be sure that I have one number right. During the questioning by Mr. Desrochers or by his colleague, you indicated that the average cost was something like $10 per square metre. Is that accurate? It seems very low.

Ms. Carol Beal: I believe it was Mr. Desrochers who did the math and arrived at $10 per square metre.

Mr. Ken Epp: That's low.

[Translation]

Mr. Roger Gaudet: No, no, it's me. It's $11.50.

Ms. Carol Beal: I'm sorry, Mr. Gaudet.

[English]

My very competent support behind me has told me that the average cost of leased accommodation is $263 per square metre, or on average $24 gross per square foot.

Mr. Ken Epp: Okay, that's much more accurate, because I was just going to ask where I could get that deal.

Some hon. members: Oh, oh!

Mr. Ken Epp: In my next question, I want to go back briefly to this issue I raised with respect to decision-making on contracts. You said that you haven't encountered political interference, but we know that it's a possibility. So I would like to know if your department has taken measures to inoculate your officials down the line from political interference. In other words, do they have explicit instructions on how to handle it, if it occurs?

Ms. Carol Beal: There are two things I would say. First, every member of the Department of Public Works and Government Services has been exposed or is scheduled to be exposed to a course on ethics and conduct within the public service. So it's very much part of our learning culture as a department.

Second, we are very sensitive around the issue of political contact, so if there is direct contact from a member of Parliament, for example, this is always raised to a senior level of management within the department. At the most senior levels, should we feel we are receiving something that does not allow us to go to bed comfortably at night, we have a mechanism within the public service to raise those issues.

My colleague has just pointed out also that we have formal processes in place in the department with respect to an index of authorities, and only authority to a certain level is delegated throughout the department. Certain authorities are held at the regional director general level or the assistant deputy minister level, and certain authorities rest at the minister level.

So it's first a matter of what kind of an environment we create in terms of the department and very much in terms of ethics, behaviour, and conduct. We're very sensitive to those issues.

Real estate is a business that is subject to a number of questions being raised from time to time, not just within the public domain but also within the private sector. So we are exceptionally cautious about our prudence and our probity as we go through these transactions. We have an environment that allows our employees to raise any level of discomfort up the management line. Particularly in the real property area, we're very sensitive to that.

Mr. Ken Epp: Are there repercussions if they go beyond the authority line?

Ms. Carol Beal: We have a very good comptroller within the department, and we are monitored regularly on what our authority levels and our signatures are. We do internal audits against that, and the Auditor General, from time to time, has the occasion to come in and look to see if we are compliant with our index of authority. So that process is in place.

We are all subject, of course, to the Financial Administration Act, which makes us very conscious of our responsibilities in that regard.

º (1655)

Mr. Ken Epp: I have one last question that I think is silly, but I have to ask it. On page 5 of the auditor's report, in chapter 8, there is a little table that talks about all these accommodations for the government--crown-owned buildings, leased office accommodations, etc. Then at the bottom it says “bridges and highways”. Surely we do not have government employees who act like the trolls that lived under the bridges in the fairy tales we read when we were kids. What is this part about bridges and highways? How does that fit into this? I thought this was specifically about office space. How did that get stuck in there?

Ms. Carol Beal: I won't speak for the Auditor General, but I'm sure she was trying to paint a comprehensive picture of the budget for the real property program within Public Works and Government Services Canada.

As part of the real property program, I have accountability for certain engineering works. We have accountability for the Alaska Highway in British Columbia, for example. There is the St. Andrews locks and dam, with which you might be slightly more familiar. There is the Burlington lift bridge. There are a number of things like that. There are five bridges in the national capital area, for example, that we are still the custodian of within the Department of Public Works and Government Services Canada. So some of our money, not much, is allocated to the operation and maintenance of these pieces of infrastructure.

Mr. Ken Epp: That's a curiosity satisfied. I was going to say satiated, but satisfied is a better word.

Thank you.

[Translation]

The Chair: Mr. Gaudet, you have four minutes.

Mr. Roger Gaudet: I'd like to try to understand. Excuse me if I misled you before.

Coming back to my calculations, there are 6 million square metres rented out for $685 million. If I understand these things correctly, that averages out to $115 a square metre. Am I wrong? Because before, you told my learnered colleague that it cost $235 a square metre. Did I misunderstand the answer?

Ms. Carol Beal: Perhaps you'll allow me to clarify a few points.

[English]

The total of our lease inventory is 2.5 million square metres. The total inventory, including crown-owned, is 6 million square metres. So only 2.5 million is for the leases and only $685 million goes against that 2.5 million square metres.

[Translation]

Mr. Roger Gaudet: Thank you. You've answered my question.

The Chair: Everything fine?

Mr. Roger Gaudet: That's fine. I just wanted to understand.

[English]

The Chair: Unlike some other members, I have some concerns about the department's performance. When I listen to your opening statement and to the statement of the Auditor General, I can only say I'm glad the Auditor General decided to pay you a visit, because that seemed to be the motivation for getting the job going. I understand you have lots of performance goals and plans, ideas, and objectives you're now going to be meeting, but why did you have to wait until the Auditor General came along before you said, oops, we're not up to snuff here; we'd better fix things and improve things?

Ms. Beal.

Ms. Carol Beal: Well, Mr. Chairman, I don't think either the Auditor General or I would agree that we waited until the Auditor General came--

The Chair: It seems that way.

Ms. Carol Beal: --to visit the department. I think the Auditor General, in the usual diligent fashion of the Auditor General in visiting departments, has pointed out areas where we can improve what we're doing. But I think you'll find in the report they have also acknowledged areas where we have made substantive change, where we have put some things in place, and the Auditor General is just cautioning us that there's still more to be done.

We agree with that readily. I myself signed the response to the Auditor General acknowledging that there is still more to be done. So we have continuously been responding to some of these points.

The Chair: Well, when I look at your opening statement on the second last page, you talk about recognizing the importance of having an effective performance reporting framework. And you know, this is fairly fundamental and basic stuff. This isn't some esoteric idea that the Auditor General has. This is fundamental stuff.

When I take a look at the Auditor General's report on page 2, paragraph 8.8, it talks about previous audits and says that although the branch has made some improvements in planning and management, it faces some long-standing challenges. And when I look further on, at paragraph 8.29, the heading says that many of these issues are not new.

I don't think there are many kudos to be handed out here. I think you've been kind of lax and you've been pulled up short, and now you're trying to get things approved.

So what's the problem?

» (1700)

Ms. Carol Beal: When the Auditor General made the comment with respect to performance measures, the Auditor General's office was looking at the departmental report on plans and priorities dated 2000. In that report we had given some information with respect to performance indicators, but we had not given very good information. We collect some 53 performance indicators within the department, yet in the report we had only provided parliamentarians with information around seven or eight of them. We have taken steps in our subsequent reports to improve that.

With respect to the data integrity, which is another ongoing comment in the Auditor General's report--

The Chair: Yes, but it's more than just sharing of information.

When I take a look at the heading on paragraph 8.27, it says that key components of the long-term planning framework are not developed or implemented consistently, and paragraph 8.38 says that sharing of information is not timely. This is a fairly significant criticism we have here of your department.

Now, can we be assured that from here on in you're going to adopt a professional approach of management to ensure that you run....? As you pointed out, you're the largest real estate manager in the country. You own property, you lease property--all kinds of property, including bridges. That is your responsibility, to manage it effectively on behalf of the taxpayer.

I'm finding that you just seem to be going through the motions day after day, and there's no real thought to the serious management of this kind of money and property. This is the thing that concerns me. You have negotiations with tenants, or proposed tenants. You have only about 20...no, I guess you have 50 or 60 clients, if you take all the departments and agencies, maybe 75. In the private world they have many more clients and they deal with them satisfactorily, otherwise the clients don't come back.

You have only 75 clients. You go out and find a space, and then you find out they don't want that anymore; they've changed their minds. Can't you lock them down to an agreement and say, this is what you want; we'll go out there and get it for you; here it is?

Ms. Carol Beal: Well, Mr. Chairman, I'm sure our life would be much simpler if we could do exactly as you're saying--

The Chair: So why don't you do it that way?

Ms. Carol Beal: I think you would have to understand the context within which we operate.

First, I'd like to address your question as to whether or not we are fiscally responsible in what we do. I think there are a number of processes and procedures, things we have in place in the department that we haven't had an opportunity to speak to today and that the Auditor General has found to be in place. And without putting words in the Auditor General's mouth--because trust me, that is not a good thing to do--they have been found to be in place, adequate, and very much being followed. The problem is that sometimes, with overworked staff and tight deadlines, we don't always complete the documentation, and this is something we will work on.

With respect to whether or not we can manage our clients, we have a number of challenges with our clients, just as they have a number of challenges coming to grips with their long-term planning requirements. We are actively--

The Chair: In the private sector, we have a thing called a contract. If a client comes to you and says, Public Works, we want a new building in downtown Toronto, we want 100,000 square feet, we want it to be first-class space, and we want to pay no more than x number of dollars per square foot, you enter into a contract. You say, okay, we will go and find that for you, and when we deliver it to you, you will take it provided it meets all the criteria that you have asked for. But here they can turn around and say, I don't want that anymore; I've changed my mind.

Ms. Carol Beal: It's not quite “I've changed my mind”. It is generally because the operating requirements they had have been adjusted, either for programs--

» (1705)

The Chair: So they've changed their mind.

Ms. Carol BealMrs. Carol Beal: That's one way of expressing it, Mr. Chairman, but quite often it is very much a considered response to a program demand that has been made on their department. They don't do this in a casual way.

The Chair: I didn't suggest that. But I'm saying, can't you just tie them down and enter into a simple commercial relationship with your clients?

Ms. Carol Beal: Yes.

The Chair: When I talk about that, I'm taking a look at paragraph 8.16: “While most departments do not pay for the Branch's office accommodation services, it does have reimbursing clients....” I can't imagine that you are going out and finding space--now that we're into accrual accounting too, by the way, and that's very, very important--and Public Works is not the custodian owner of all the property, especially the buildings that you own, and you charge the occupying departments a negotiated relevant amount for lease. You just give it to them? Then how can they be held accountable for their costs if they're occupying free space?

Ms. Carol Beal: Neither our department nor the client department views it as a free good. We receive--

The Chair: Well, who is paying?

Ms. Carol Beal: We receive in our appropriation the money to pay for that on behalf of the client departments, but they operate within an envelope of space against which they have to be accountable. They report in their report on planning and priorities their space utilization against that envelope. We provide them with cost information, which also goes into that report.

The Chair: Let me ask Mr. Minto this. Now that we're into accrual accounting, wouldn't it be advisable that Public Works own and maintain ownership of all the buildings that the Crown owns and charge a negotiated lease to the department so that we can see what it costs to run the programs and the amount of space that departments are occupying?

Mr. Shahid Minto: Mr. Chairman, the debate about revenue dependency, as this used to be called, has been going on for some time. I have been auditing the department for 25 years. In my first audit of the department, the debate was on then about revenue dependency, whether they should charge or not, and positions have moved on all sides.

I really couldn't give you an answer just off the top. It's not something we've studied or looked at in detail lately. It's a policy issue, and really, the Treasury Board has to look at it and see what to do.

Right now, they have three kinds of clients. One is the clients for whom they provide services and accommodation free of charge; then there's HRDC, whom they charge, this reimbursing client; and then there are other people who have their own accommodation but can come to the department.

Our concern was really, before we get to revenue dependency, which is what you're suggesting, sir, the department should get a very good handle on the cost and this cost accounting.

The Chair: The best way to do that, Mr. Minto, is for them to have to pay somebody for the space they occupy. If it's crown-owned property they're occupying, it's far better that Public Works would become a revenue-earning department by charging the departments for the space they occupy. This way, it's going to show up in their own financial statement, so that they have to justify and see what kind of costs there are. We know if they can sit on “free space”, because it doesn't show up on any financial statement, they'll tend to forget about it, and it's never being used to its optimal efficiency.

Mr. Shahid Minto: Mr. Chairman, I was not debating whether it should show up in the statements or not. I was just saying whether they should actually physically pay and there should be a transfer of funds. That's a policy issue in which the government has to say, in whose appropriation should the funds reside, and what do we do with that?

Because it is a policy issue, I just can't....

The Chair: I appreciate that, Mr. Minto. I just thought you might want to offer an opinion on that.

What do you think, Ms. Beal? Why should departments be sitting on “free space” because they don't have to pay anybody for it? Of course, there are no taxes. In a case where they have free space, who's paying the insurance and the other expenses?

Mr. Ken Epp: They have payments in lieu of.

Ms. Carol Beal: The government self-insures, Mr. Chairman, so there is no issue around insurance in terms of the crown-owned space.

The Chair: What about utilities?

Ms. Carol Beal: Those are part of the operating costs. Those costs are appropriated to our department to pay on behalf of the clients who receive their space from the Department of Public Works, unless they are reimbursing clients.

The Chair: You pay the utilities as well. So it is truly free space. There's no cost to them whatsoever.

» (1710)

Ms. Carol Beal: As I said earlier, Mr. Chairman, they report these costs to Parliament in their report on plans and priorities. So--

The Chair: Who reports the revenue if they're reporting the costs?

Ms. Carol Beal: They report the information with regard to the costs. They do not record them in their financial statement. It is a piece that is entered into what used to be called their blue book, which is now called the report on plans and priorities.

The Chair: Now that we're into accrual accounting, I think we should be changing that. Don't you all agree? Yes, it's a good idea.

Mr. Mac Harb: Speak for yourself.

The Chair: I think we should have these costs fully and adequately reported in the financial statement of each department. If a department has space and they're not a reimbursing client, then they are occupying space that does not show up on their financial statement. There's no cost to them as far as rent and payments in lieu of taxes are concerned, as Mr. Epp pointed out. Even the utilities are not their expense. Does Public Works pay for that?

Ms. Carol Beal: That is because they're expensed through the Department of Public Works and Government Services.

The Chair: It's time we changed that.

Mr. Mac Harb: That's taking it from one pocket and putting it in the other one. It's the same thing.

The Chair: No. When it comes to proper management responsibilities, these things just have to show up in the financial statement.

Remember also that the Minister of Finance introduced in the budget program evaluation for all non-statutory programs. This is a significant piece of information, which should be included in the costs of non-statutory spending. We'll be talking about that later on, I'm sure.

Mr. Epp, do you have some questions?

Mr. Ken Epp: I have one question that just arose in the last few milliseconds. It was incredibly fast. You indicated that the government self-insures, which I knew, and it makes sense. I'm familiar, for example, with Canada Place in Edmonton. It's the big federal building there. Are you suggesting that a building like that is also self-insured?

Ms. Carol Beal: All crown-owned inventory would be self-insured. I believe that when we first acquired Canada Place, it was under a lease/purchase arrangement. In the real property world the landlord is responsible for the insurance. If the landlord is private sector, he must follow all of the appropriate private sector requirements, and it is part of our lease tender document to ensure that those are in place. If it is crown-owned, we do not have a provision set aside for insurance because the Crown self-insures.

Mr. Ken Epp: Actually, I don't even know what the situation is now with regard to Canada Place.

Ms. Carol Beal: I believe we've since acquired it into the inventory, so now we would be self-insuring it.

Mr. Ken Epp: Obviously, you've made that decision based on actuarial work on this. It's more economical to do that than to give a whole bunch of money to some private insurance company.

Ms. Carol Beal: This would not be a decision taken by our department. This would be a decision taken by the Treasury Board minister in terms of the policy of the government.

Mr. Ken Epp: So it was probably a wise decision.

Thank you, Mr. Chair.

The Chair: Thank you very much.

We covered off these free buildings, which you supply at no cost to certain tenants. When clients ask you to go out and find space, I take it that the services you provide are also free to them.

Ms. Carol Beal: We have two things that we deal with here, Mr. Chairman. The first is if the client has followed the advice given by our department and included the cost of accommodation for any new program that is being approved, there is a percentage set aside of the salary dollars to go to the cost of acquiring the space. That's held by the Treasury Board and accessed by our department when and as we need it. We generally refer to it as an expansion requirement. All other requirements of the client that are not expansion would be as a result of a decision made by us with regard to the inventory. We would be looking after that as part of our inventory management accountabilities.

The Chair: That was a long answer, but I think you said there's no cost there. Is that correct?

Ms. Carol Beal: You keep going back to that point, Mr. Chair. Yes.

The Chair: Mr. Minto.

Mr. Shahid Minto: Let me just clarify one issue, sir. I'm not disagreeing with your position as to whether or not they should be in the financial statement. It probably would make sense at some later stage to do that. For the appropriation that the department gets, it establishes standards of quantity and quality for its clients. If a client comes back and says they need something of higher quality or more in terms of square footage, then the client pays for that.

The Chair: What do you mean, pays for it? They reimburse--

» (1715)

Mr. Shahid Minto: For the excess, for the additional cost.

The Chair: What's the benefit to that? So they have an extra expenditure on their statements saying that instead of paying $18 per square foot, we're paying $22 per square foot, so they have a $4 cost.

Mr. Shahid Minto: I was just clarifying that everything is not free, but in case the need exceeds the minimum standards, then they have to pay for that excess.

The Chair: That makes the issue more confused from the point of view of someone trying to analyze the financial data of a department than if it wasn't there at all. That really finds....

I know Mr. Gaudet has a question, but I want to follow this through at the same point in time.

You have a responsibility to maximize the benefits for the Government of Canada. So sometimes you may actually go out and acquire space that's not immediately required by a department, so you're expecting that there's going to be an infill need. You're anticipating that; therefore you say it's better to keep it all on one bill rather than spreading it around. So you make some corporate decisions, which is good.

But I'm looking at paragraph 8.36. where it says “The Branch has not yet developed long-term accommodation plans by department and agency; and it needs to do this”. You're more than just a realtor where a department phones you up and asks for another 100,000 square feet or can you renew their lease; you have an obligation to look at the global picture and resolve that. I am disappointed that you haven't been doing that.

Ms. Carol Beal: We have in fact attempted to do that, Mr. Chair; for example, in the Gatineau area. We have had meetings with the six or seven largest clients in Gatineau with a view to starting the process of getting a long-term accommodation strategy established for them. It's not always easy to do, for two reasons. One is that the clients don't always have the surety around their programs, and secondly--

The Chair: Yes, but in the private sector, clients don't have surety and guarantees and everything is fine.

Ms. Carol Beal: That is correct. We're not looking for long-term surety, but very often the programs are in a state of flux, and it is very difficult for departments, if I could put it this way, to sign on the dotted line that this is going to be their demand strategy. However, they have agreed in the last 18 months to start working with us in Gatineau with a view to arriving at a strategy for the Gatineau area.

The second reason that it's not always easy--and I was a former client of this department at one stage, Mr. Chair--is that sometimes within the client department the accountabilities for accommodation are dispersed.

The Chair: So?

Ms. Carol Beal: They are dispersed between program ADMs. They are not always centralized in one place. It makes it very difficult for a department when accommodation is not their priority, it is not their program.

In Fisheries and Oceans, for example, they were more concerned and interested in talking about fish and fish stocks, or science, or the coast guard than they were in sitting down and talking about what constitutes a reasonable space standard and how we could move forward the agenda for planning for spare accommodation for that department.

The Chair: I appreciate that. I think this has been part of the problem over the years, that people in the senior categories haven't been looking at their departmental responsibilities in a business environment, where we have to make some intelligent, and perhaps risky, prospective projection decisions about our space needs just as we do in the private sector. But for them to go ahead and say, if I'm in Fisheries and Oceans, I focus on fish and I don't focus on property, but I would like to have a roof over my head when I'm doing my work, means that they're abdicating their responsibility.

Accrual accounting was designed to change the whole regime so that we could use financial statements per program, per department, for the government. We have what is called the cascading concept, where we have one financial statement for the Government of Canada, which is an amalgam of all the financial statements of all the departments, which is an amalgam of all the financial statements for all the programs that they run. We want to know these costs, what's the costing for each program.

Therefore, I would hope that you, as an assistant deputy minister up there in the higher echelons of the Department of Public Works, are saying that in order for the government to run this program in a businesslike fashion, you have to be charging for the services you deliver to the departments when they ask you to go out and lease space, buy buildings, or whatever. You should be charging out rent to everybody in a situation. They should be paying their own utilities. They should be charged out for the payments in lieu of taxes, as everybody else is. I can't imagine in this modern day that it's not there.

» (1720)

Ms. Carol Beal: Mr. Chairman, we do provide the information on costs, which the various departments do report to Parliament, but they do not run those costs through their financial statements and I think that's the difference.

The Chair: But there are two things. One, when the information is fragmented all over the place--I have a financial statement here, I have a report to Parliament there, I have the report to Treasury Board somewhere else--somebody who wants to make sense out of it has to amalgamate it. So just amalgamate it.

Two, it is not for Parliament to do. We are an institution of accountability; we're not the institution of management. Therefore, the managers, I would have thought, would have had this information.

Ms. Carol Beal: Mr. Chairman, I can see you have strong views on this.

The Chair: I do.

Ms. Carol Beal: Perhaps it would be helpful to have a discussion with the Treasury Board Secretariat in this regard.

The Chair: I just may do that.

[Translation]

Mr. Gaudet, you have a question?

Mr. Roger Gaudet: Yes, I have a brief question.

Ms. Beal, you said before that 60 per cent of the space you rent in Quebec belongs to private owners and 40 per cent of it belongs to the department. Would it be possible to obtain, in writing, the same information for all provinces? I don't need the answer immediately because you probably don't have it. Just write us.

[English]

Ms. Carol Beal: We do have it, Mr. Chairman, but in the interests of time, we'd be happy to provide it in writing.

Mr. Mac Harb: Normally 25%.

Ms. Carol Beal: On average, the ratio for lease to crown-owned is about 40%.

The Chair: To wrap up, your department really should be run like a business. You're in the real estate business. You buy property, you lease property, you have clients, you have to pay taxes in lieu, you have utilities to pay, you have insurance policies to see in place where it's privately owned. You are not that different from a real estate agent, except that you have the global responsibilities as well to ensure that the Crown, as an institution, is served with the space at once, in the way that it should be served, and in the calibre...and so on. So it requires you to maybe buy in your own inventory, hold it, and then lease out as they require it.

So you have a very responsible department and you go through a lot of taxpayers' money--$1.75 billion. That's a good chunk of change. Therefore, you have a lot of responsibilities.

You know my feelings. Now that we're moving into this new culture of cost accounting and accrual accounting, I want to see you go down that way. I want to see in your performance reports how you are calling upon Parliament to give you the necessary legislation, so it's not just HRDC that is--what do you call them, what kind of a client?

Ms. Carol Beal: A reimbursing client.

The Chair: A reimbursing client. I want all of your clients to be reimbursing. I want to see that in your performance reports. Don't you think it would be a good idea to go down that line?

Ms. Carol Beal: I'll be checking what we have already tabled in our draft performance report, Mr. Chairman. I'd like to check the status of where it is for this year.

The other question is one that I have to, again, acknowledge comes from the Treasury Board Secretariat. I will certainly give them a heads-up of your interest in this area.

The Chair: But don't you agree it's a good idea to go down this way?

Ms. Carol Beal: I think there are pros and there are cons, Mr. Chairman. I'd be happy to discuss those with you at some point.

The Chair: Sounds like you're going to sit on the fence there.

Ms. Carol Beal: No, that's seldom what I do, but I think there are pros and there are cons.

The Chair: Do you have any comment, Mr. Minto?

Mr. Shahid Minto: Mr. Chairman, the Office of the Auditor General had taken a public position on revenue dependency many years ago. He was supportive of it at that time. It was not accepted by the government. As a matter of fact, we even did some pro forma statements of what these numbers may look like and how they could be disclosed, but that was some years ago.

The Chair: Yes, that was before accrual accounting.

Mr. Shahid Minto: Much before accrual accounting.

The Chair: And accrual accounting practically dictates it would go down that way, doesn't it?

Mr. Shahid Minto: I would hope that costs will be shown on the statements. We have not--and this is the honest answer--revisited the issue to look at it in detail, and as to whether the appropriation should be changed also to where the money is. But I'm sure if something is of interest to the committee, we would look at it and we would talk to the people. Really, the policy, of course, has to be developed by Treasury Board and Finance.

There have been some good issues today, Mr. Chairman. I thought, if I can just take a minute--

The Chair: Yes, I'll just ask you to wrap up now.

Mr. Shahid Minto: There have been some very good issues today. I was struck by Mr. Monette's comments in relation to Hamilton, where he said the planning assumptions have changed. Really, that is what we were trying to say: the planning assumptions do change, the market conditions do change, so have up-to-date plans and have up-to-date information on what's available and what your client's needs are. I think that's part of what we were talking about.

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The Chair: In other words, run it in a businesslike environment.

Mr. Shahid Minto: Yes, run it in a more businesslike environment, if I can use the expression.

I also have to say we spent a fair bit of time looking at the department's action plan. It is encouraging. There are some specifics in it, and some dates. I caution again that while that is true, the problem in the past--and it's what I think has been there for many years--has been on the implementation side. It is vital these things get done within the timeframe.

We will do some monitoring for you, and I am sure the department will report back to you themselves on this.

The Chair: Thank you very much, Mr. Minto. I appreciate the department coming forward. I appreciate their being candid this afternoon.

While accrual accounting is not in the report we've been talking about this afternoon, it's certainly an issue that is near and dear to the philosophy that I think the government should be adopting, now that we're there with accrual accounting.

Accrual accounting is only a start. It gives you the figures and the information for managers to start managing, and that's what accrual accounting is all about. But it's only the start. It's only the framework, the shell upon which managers start to manage their business, and here, of course, we're talking about managing the business of government.

I really would like to see a serious appreciation that there's a new opportunity out there for all departments. You have the capacity at the Department of Public Works to really take a lead in this, so I would like to see you calling to Parliament's attention that we should have all departments reimbursing departments, that you should be charging for your time when you go out and find that space--for the lawyers and everything else. That should be charged out to departments.

That's what accrual accounting and management information in financial statements is all about. We want to go down that road.

I think I've been on this issue long enough. If there are no further questions--

Mr. Mac Harb: It's inspirational.

The Chair: I'm glad to hear that, Mr. Harb. From you, I take that as a compliment.

Mr. Mac Harb: It's a bit out of whack.

The Chair: I know you've been complimenting the department, so I appreciate the compliment.

Mr. Mac Harb: They're doing a great job, Mr. Chair.

The Chair: Our researcher is just pointing out that in April 2003, which is next month, the Auditor General's report, chapter 2, will be on managing the quality of financial information. So there we have it; we'll be talking about this again.

On that basis, there being nothing further, the meeting is adjourned.