President of the Treasury Board Appearance at the Standing Committee on Government Operations and Estimates: 2024–25 Main Estimates – May 2024

Issue

The 2024–25 Main Estimates present a total of $449.2 billion in budgetary spending, which reflects $191.6 billion to be voted and $257.7 billion in forecast statutory expenditures.

Response

The 2024–25 Main Estimates present detailed information on $449.2 billion in voted expenditures and $257.6 billion in statutory spending for 129 organizations to deliver programs and services to Canadians.

This includes $5.6 billion in spending for the Canada Mortgage and Housing Corporation, $8.4 billion for Health Canada, including the Canadian Dental Care Plan, as well as $28.8 billion for National Defence investments, including Ukraine, and training and equipment for the Canadian Armed Forces.

These Estimates also present information on the refocusing government spending initiative announced in Budget 2023.

As outlined in the Estimates, approximately $10.5 billion over the next three years from departmental budgets is being refocused towards top priorities for Canadians, like health care and housing.

This funding allows the government to provide a wide variety of programs and services and to support other levels of government, organizations and individuals through transfer payments.

The Estimates also include information on statutory spending amounts that support initiatives such as elderly benefits.

Background

The 2024–25 Main Estimates present a total of $449.2 billion in budgetary spending, which reflects $191.6 billion to be voted and $257.6 billion in forecast statutory expenditures.

The majority of expenditures in the 2024–25 Main Estimates are transfer payments – payments made to other levels of government, other organizations and individuals. Transfer payments make up approximately 63.0% of expenditures, or $283.0 billion. Operating and capital expenditures account for approximately 26.6% of expenditures, or $119.7 billion, while public debt charges are approximately 10.4% of expenditures or $46.5 billion.

The 2024–25 Main Estimates reflect updated forecasts published in the 2023 Fall Economic Statement. Significant changes in statutory budgetary spending from the 2023–24 Main Estimates include:

• an increase in public debt charges (from $37.8 billion to $46.5 billion)
• increases in major transfer payments, most notably elderly benefits (from $76.6 billion to $81.1 billion, the Canada Health Transfer (from $49.4 billion to $52.1 billion) and fiscal equalization (from $24.0 billion to $25.3 billion)
• an increase in the Canada Carbon Rebate (formerly called Climate Action Incentive Payments (from $9.0 billion to $11.4 billion)
• an increase in payments for the AgriInsurance program (from $243 million to $1.0 billion)

Net statutory expenditures of $1.0 billion are forecasted for loans, investments and advances, reflecting an increase in net loans disbursed under the Canada Student Financial Assistance Act.

Voted spending will be authorized through two appropriation bills. The first, Interim Supply, will be introduced in March and provide sufficient funding for the first three months of the fiscal year. The second, Full Supply, will be introduced in June for the balance of funding presented in the Main Estimates.

Due to the need to table Main Estimates on or by March 1, emerging priorities and Budget 2024 initiatives will be included in future Estimates documents.

Issue

Treasury Board of Canada Secretariat (TBS) priorities in its 2024–25 Departmental Plan

Response

As part of its 2024–25 priorities, TBS will continue to:

• advance digital government
• green government operations
• foster, build and support a diverse workforce
• modernize the federal regulatory system

For the 2024–25 Departmental Plan, TBS increased its target for the percentage of public servants who believe their workplace is psychologically healthy from “at least 61%” to “more than 68%.”

This reflects our goal of improving on the most recent result of 68% for this indicator, as measured by the 2022 Public Service Employee Survey

TBS removed its indicator on the degree to which Canadians complete high-volume tasks on Government of Canada websites.

This indicator was removed because responsibility for improving the usability of government websites was transferred from TBS to Service Canada (Employment and Social Development Canada) as part of the transfer of the Canadian Digital Service.

TBS will continue its work to refocus government spending as announced in Budget 2023.

As outlined in our Departmental Plan, TBS plans to remove from its departmental budget $9.5 million this year, $12 million next year and $15.5 million for 2026–27 and beyond.

We will achieve these targets by using in-house resources for work previously completed by contractors, applying efficiencies resulting from hybrid work, and emphasizing digital tools.

Examples include reducing office equipment like printers, using digital booking tools to maximize office space, and minimizing courier services.

By taking a leadership role in meeting the government-wide 50% footprint reduction target, TBS will also achieve operational savings through the consolidation of its office space.

Background

TBS’s 2024–25 Departmental Plan outlines $9.34 billion in total planned spending and sets out five priority areas for the department’s 2,096 total full-time equivalents.

Issue

The Parliamentary Budget Officer (PBO) releases regular reports on Main and Supplementary Estimates. The PBO report on Main Estimates examines the year-over-year growth in public debt charges and forecasts spending on public debt charges will reach $62.0 billion by 2028–29.

Response

The government welcomes the PBO’s reports on the Estimates.

The PBO observed that total spending sought through the Main Estimates has decreased in part due to the government’s work on the refocusing government spending initiative.

Through the Main Estimates and related documents, the government provides insight into how it proposes to allocate taxpayers’ money to help ensure spending is transparent and accountable to parliamentarians and Canadians.

Background

Issue

The government is taking continued steps to address issues related to harassment and systemic discrimination in its institutions.

Response

The Government of Canada is working to create a diverse and inclusive public service, free from racism, harassment and discrimination.

This is why we provided close to $50 million through Budgets 2022 and 2023 to create a mental health fund for Black public servants and establish dedicated career development programs, including those to prepare Black public service leaders for executive positions.

On February 21, 2024, I announced new initiatives as part of the government’s ongoing work to deliver an Action Plan for Black Public Servants. Specifically:

• Health Canada is introducing Black-centric enhancements to the Employee Assistance Program provided to over 90 federal departments and agencies. This includes recruitment of additional Black counsellors to provide culturally competent mental health supports to public servants and their immediate family members.
• Following a successful pilot, the Canada School of Public Service is launching an executive leadership program for Black leaders to create a sustainable pipeline of Black leaders and prepare them for senior executive roles.

Further, the Public Service Commission of Canada is supporting the career development of Black public servants by providing individualized assessment, counselling and coaching services. The Public Service Commission of Canada is building on its expertise and leveraging available research and feedback from Black employees to improve the delivery of its career development services.

In addition, Budget 2023 provided $6.9 million over two years, starting in 2023–24, to TBS to advance a restorative engagement program. This program will empower employees who have suffered harassment and discrimination and drive cultural change in the public service.

A panel of experts provided recommendations to the government on the design and creation of this new program this past winter that will inform decisions on next steps.

Background

The Attorney General of Canada is engaged in several employment-related discrimination and harassment class actions on behalf of a number of departments and agencies.

The broadest, largest and most high-profile of these cases is Thompson et al v. HMK. This proposed class action seeks damages on behalf of current and former Black public servants and any Black individuals who have applied for jobs in the federal public service dating back to 1970 but were not successful due to their race.

The plaintiff group in the proposed Thompson class action sent a letter to the United Nations’ Office of the High Commissioner for Human Rights setting out various allegations with respect to ongoing systemic anti-Black harassment and discrimination in the federal public service. Canada has not been advised of any advancements in this area.

Additionally, Amnesty International Canada filed a motion to intervene in the Thompson case in July 2023. In December, Canada responded that this motion should be denied as interventions at the certification stage are exceptional and the proceedings are not the type of exceptional proceedings where international law can provide any valuable guidance. We continue to await the Court’s decision on the intervenor motion.

The hearing date for the certification motion and the motions to strike and stay has now been set for October 28, 2024, for a duration of eight days in Toronto.

Issue

Status of the Phoenix damages agreements reached with unions in 2019 and 2020 and the new human resources and pay system

Response

We are committed to ensuring that federal public servants are paid properly for their important work, and we continue to take action on all fronts to resolve pay issues.

The Government of Canada and a number of public service unions have reached agreements to compensate current and former employees who were affected by the implementation of the Phoenix pay system in 2016.

The agreements cover general damages from April 1, 2016, to March 31, 2020.

All employees covered by the damages agreements have now received their general damages compensation. In addition, a claims process is in place to allow eligible current and former employees to file claims for severe damages.

The Government of Canada remains committed to resolving outstanding pay issues for public servants, while modernizing processes and systems to improve the overall human resources and pay experience for employees.

In support of this work, we will continue working with all partners, including bargaining agents, to simplify human resources and pay processes.

Background

To date, approximately $711 million has been paid in damages relating to the Phoenix pay system, including some $26 million in 2023.

$16.5 million from the 2024–25 Main Estimates is allocated to reimburse departments that pay claims for Phoenix damages.

Phoenix damages entitlements for employees (current and former) are provided by the following damage agreements with the bargaining agents:

Issue

What are the priorities and mandate commitments for the President of the Treasury Board and how are they being advanced?

Response

As President of the Treasury Board, I am focused on ensuring that government is well managed and effective so that Canadians are well served.

My top priorities driving toward this objective are to ensure that government is fiscally prudent, enforces and upholds the highest standards of procurement, shows strong climate leadership, and is supported by a diverse and high-performing workforce.

To this end, the 2024–25 Main Estimates and Departmental Plans, tabled February 29, report on how spending was refocused for each department and agency under the refocusing government spending initiative.

Altogether, we will achieve savings of $4.2 billion over four years, starting in 2025–26, and $1.3 billion ongoing.

I am also committed to addressing workplace harassment, discrimination and violence within the public service, with initiatives such as the action plan to support Black public servants.

The government has also taken action to enforce and uphold the highest standards of procurement to ensure sound stewardship of public funds.

As part of this work, the government has recently implemented additional robust standards to strengthen oversight and hold public servants to the highest of ethical standards.

Examples include updated procurement guidance for managers, government-wide audits to ensure the highest ethical standards, and a new risk and compliance process to ensure government-wide trends, risks and departmental performance meet the highest standards.

These are just a few examples of the important work I am leading as President of the Treasury Board.

Background

The Prime Minister’s letter of December 16, 2021, addressed to the previous President of the Treasury Board, contains over 30 commitments for which the President is responsible in whole or in part, spanning areas such as:

• equity, diversity, accessibility and inclusion in the federal public service
• digital government
• greening government
• government procurement
• strengthening and modernizing the public service for the 21st century
• regulatory modernization

The commitments include leading whole-of-government initiatives aimed at delivering improved services and results for Canadians, including:

• “Continuing leadership to update and replace outdated information technology (IT) systems and modernize the way government delivers benefits and services to Canadians;
• “Bringing forward a coherent and coordinated plan for the future of work within the Public Service, including developing flexible and equitable working arrangements;
• “Continuing leading our regulatory reform efforts in collaboration with your Cabinet colleagues to improve transparency, reduce administrative burden and lead our efforts to harmonize regulations that maintain high safety standards and improve the competitiveness of Canadian businesses;
• “Ensure government policy continues to be developed through an intersectional lens, is reflective of the needs and aspirations of Canadians and supports our path to net-zero through:
  • “Continuing to refine and strengthen the quality of life framework to ensure that we achieve long-term outcomes that benefit people, and that progress towards those aims is rigorously reported;
  • “Working with the Minister of Environment and Climate Change on the application of a climate lens to ensure climate adaptation and mitigation considerations are integrated throughout federal government decision-making; and
  • “Supporting the Minister for Women and Gender Equality and Youth in the evaluation process of GBA Plus with the goal of enhancing the framing and parameters of this analytical tool and with particular attention to the intersectional analysis of race, indigeneity, rurality, disability and sexual identity, among other characteristics.”

Budget 2024 included support to advance commitments in key areas of Treasury Board responsibility, such as:

• $135 million in 2024–25 for PSPC and TBS to improve public service human resources and pay systems, including continuing work on a potential next generation pay solution
• $84 million over five years for TBS and Library and Archives Canada to maintain the Access to Information and Privacy regime
• $26 million over five years, starting in 2024–25, to Canadian Heritage, TBS and the Office of the Commissioner of Official Languages to support the implementation of An Act for the Substantive Equality of Canada’s Official Languages
• $17 million over five years, less $1 million sourced from existing resources, for TBS and the Public Service Commission of Canada to support the Office of Public Service Accessibility and the Federal Internship Program for Canadians with Disabilities and improve recruitment and assessment processes for persons with disabilities
• $11.1 million over five years to TBS to implement a whole-of-government cyber security strategy

Budget 2024 also announced other priorities including:

• a proposal to amend the Red Tape Reduction Act to provide ministers with authority to enable regulatory sandboxes, which would include authority to grant temporary exemptions to legislation or regulations to allow for testing of products, services, processes or new regulatory approaches
• language committing the government to “Addressing internal trade barriers, including through regulatory harmonization, in collaboration with provinces and territories, to cut the red tape holding back trade between provinces and territories, to ensure Canada can reach its full economic potential”
• as previously disclosed in TBS’s 2024–25 Departmental Plan, the government has updated the value of the Low-carbon Fuel Procurement Program to $134.9 million over eight years, starting in 2024–25

Other policy actions in 2023–24 related to the President of the Treasury Board’s mandate commitments included:

• Effective April 1, 2023, the Standard on the Disclosure of Greenhouse Gas Emissions and the Setting of Reduction Targets outlines that federal procurements over $25 million should incent suppliers to disclose their greenhouse gas emissions and set reduction targets.
• Effective April 1, 2023, the Directive on the Management of Procurement was amended to reinforce expectations that federal procurement activities are conducted with ethically, socially and environmentally responsible companies and require that all suppliers and their subcontractors adhere to the Code of Conduct for Procurement. In addition, departments will be required to implement measures for identifying, mitigating and disclosing risks of human trafficking, forced or child labour, and other unethical business practices in their supply chains and including these considerations in their procurements.
• In July 2023, the government released its review and update of the Government of Canada’s Digital Ambition, which provides a clear, long-term strategic vision for the Government of Canada to advance digital service delivery, cyber security, talent recruitment and privacy.
• Effective July 11, 2023, the Directive on the Management of Materiel was amended to include new and modified requirements in support of the federal Greening Government Strategy and the commitment to electrify the entire federal fleet of light-duty vehicles by 2030.
• In September 2023, the government announced the second cohort of the Mosaic Leadership Development program. This program, which was co-developed with diverse employee networks, is aimed at developing equity-seeking public servants for senior leadership roles.
• In October 2023, the government published guidance about the use of contracted professional services, including management consulting. The Manager’s Guide: Key Considerations When Procuring Professional Services helps managers determine when to contract for professional services versus when to use internal resources.
  • The guide also lays out practical considerations for managers when structuring contracts so that they deliver best possible value, can be effectively managed, and fully align with requirements of the Directive on the Management of Procurement.
• In October 2023, the government announced a panel of experts who will make recommendations on the structure and design of a new Restorative Engagement Program for public servants. The goal of the program is to address past harms and promote healing for employees who have reported experiencing harassment, discrimination and violence in the workplace.
  • In January 2024, the panel submitted its report, Restorative Engagement Program: Recommendations on How to Achieve a Successful Program.
  • The Government of Canada is now assessing these recommendations and will conduct further meaningful consultation with key partners and communities of practice to ensure the program design meets the needs of public servants.
• In February 2024, the government announced the first initiatives of the Action Plan for Black Public Servants, including:
  • funding for Black-centric enhancements to the Employee Assistance Program provided to more than 90 federal departments and agencies
  • funding for an executive leadership program for Black executives in groups EX‑01, EX‑02 and EX‑03 to support their career advancement
  • funding to provide individualized assessment, counselling and coaching services to Black public servants
• On March 20, 2024, TBS announced a series of actions to enhance its oversight of departmental practices and processes and support effective management across government, including:
  • a new risk and compliance process that will assess government-wide trends, risks and individual departmental performance in key management areas and take immediate corrective actions where necessary; using this process, TBS will more actively oversee government-wide management practices and outcomes
  • a horizontal audit that the Comptroller General will undertake beginning in April 2024 across a number of large departments to assess governance, decision-making and controls associated with professional services contracts, including IT and audit results, expected by December 2024, will inform any additional measures that are necessary
  • an update to the Manager’s Guide: Key Considerations When Procuring Professional Services; these updates include additional guidance to help managers in making decisions that demonstrate a prudent use of tax dollars
  • measures to strengthen the accountability of managers when procuring professional services by embedding certain elements of the guide within mandatory procedures that fall under the Directive on the Management of Procurement
  • publishing additional information about contracts on the open data portal and ensure that it is presented clearly, accurately and in a more user-friendly way

The Chief Human Resources Officer will review the Directive on Conflict of Interest to ensure that the requirements are clear and effective, particularly as they relate to employees who engage in outside employment, including contracts with the Government of Canada.

Issue

Budget 2024 announced new funding for pay and human resources oversight activities, official languages, cyber security, ATIP Online and the Office of Public Service Accessibility. It also reiterated actions to strengthen procurement and conflict of interest regimes and funding for carbon removal procurement.

Response

As President of the Treasury Board, I am focused on ensuring that government is well managed and effective so that Canadians are well served.

To achieve these priorities, Budget 2024 announced new funding to:

• implement new provisions under the Official Languages Act
• strengthen the government’s cyber security capabilities
• improve the ATIP Online platform to increase transparency for Canadians
• make pay and human resources activities simpler and more efficient
• support accessibility within the public service

Budget 2024 also indicates renewed commitments to strengthen procurement and conflict of interest regimes, as well as provide additional flexibility in procurement to include carbon dioxide removal services to achieve our climate objectives.

Background

Issue

What is TBS doing to strengthen management and oversight of departmental practices and processes?

Response

Canadians expect their government to deliver its programs and services effectively and efficiently, carefully managing spending of public funds.

To ensure we are consistently meeting this expectation, I announced a number of new actions to enhance measures that will strengthen oversight and better verify compliance with rules and requirements across government:

• establishing a new risk and compliance process to strengthen a government-wide culture of accountability and management excellence, with real and clear consequences for non-compliance
• strengthening the manager’s guide to help managers in making decisions that demonstrate prudent use of tax dollars and embedding certain elements of the guide in mandatory procedures
• performing a horizontal audit across a number of departments to assess governance, decision-making and controls for professional services contracts, including IT
• improving and enhancing how we publish information about contracts on the Open Data platform, to ensure it is accurate and easy to understand
• reviewing the Directive on Conflict of Interest to ensure that requirements are clear and effective, particularly regarding outside employment

All of these measures are in development, and I look forward to keeping committee members apprised of our progress.

Background

On March 20, 2024, the Minister of Public Services and Procurement and the President of the Treasury Board announced new actions TBS is taking to enhance its oversight of departmental practices and processes and support effective management across government. These actions included:

• launching a new risk and compliance process in the coming months to enable TBS to more actively oversee government-wide management practices and outcomes and take immediate corrective actions where necessary
• undertaking a horizontal audit of procurement governance, decision-making and controls associated with professional services contracts, including IT
• updating procurement guidance for managers to help them make decisions that demonstrate a prudent use of tax dollars
• bringing forward measures to strengthen the accountability of managers when procuring professional services
• committing to publishing more detailed contracting information on the open data portal in a clear, accurate and more user-friendly manner
• ensuring conflict of interest requirements are clear and effective, particularly as they relate to employees who engage in outside employment, the adequacy of mandatory training for employees and managers, and any additional oversight as may be required

Budget 2024 reiterated the details of the announcement as part of its commitment to strengthen the integrity in the public service.

Further details on each of the actions are set out below.

Issue

The Government of Canada’s approach to cyber threats that pose a risk to government infrastructure and services, and the Government of Canada’s response to notable cyber incidents this past year

Response

The Government of Canada, like every other government and private sector organization in the world, faces ongoing and persistent cyber threats.

We have systems and tools in place to monitor, detect and investigate potential threats and take active measures to address and neutralize them.

Cyber threat activities have been growing in scale and complexity as actors are continuously looking for opportunities to exploit IT vulnerabilities, cause disruptions, and steal sensitive data in the government’s increased digital presence, which include the personal information of those using our services.

In response, the government published its first enterprise-wide Cyber Security Strategy on May 22 to reduce cyber security risks, improve the cyber security of government operations and keep pace with the evolving cyber security risk landscape.

Together with our partners across the government, we will continue our work to prevent, detect and manage cyber incidents so that federal organizations can deliver reliable and secure digital services to Canadians.

Background

The government works continuously to enhance cyber security in its services by preventing attacks through implementation of protective security measures, identifying cyber threats and vulnerabilities, and by preparing for and responding to all kinds of cyber incidents to better protect Canada and Canadians.

Cyber security is a shared responsibility across government. Departments and agencies have a responsibility to ensure that cyber security is managed within their organization, including the cyber security of departmental programs and services. TBS, Shared Services Canada and the Canadian Security Establishment (CSE) are the primary stakeholders with responsibility for ensuring the government’s cyber security posture is effective and able to respond to evolving threats. CSE, in concert with Public Safety Canada, also provides support on cyber security from a national perspective. TBS:

• provides policy leadership, advice and guidance for all matters related to government security
• establishes and oversees a whole-of-government approach to security
• provides strategic oversight of government cyber security event management to ensure effective coordination of major security events and support governmentwide decision-making

The Chief Information Officer of Canada:

• sets IT security policy
• defines cyber security requirements
• executes decisions on the management of cyber security risks on behalf of the Government of Canada

TBS also maintains the Government of Canada Cyber Security Event Management Plan (GC CSEMP). The GC CSEMP is the whole-of-government incident response plan providing an operational framework that outlines the stakeholders and actions required to ensure that cyber security events are addressed in a consistent, coordinated and timely fashion across the government. The plan is applicable to all departments subject to the Policy on Government Security. To ensure that the GC CSEMP is up to date and effective, the plan is tested regularly, reviewed on an annual basis, and updated if changes are warranted, for example, in light of lessons learned from cyber events. The latest version of GC CSEMP was published in October 2023. The most recent cyber simulation took place in February 2023 as part of the government’s executive-level cyber simulation exercises designed to test how the Government of Canada responds to a significant cyber event impacting multiple government departments.

In January 2024, escalation under the GC CSEMP was required in response to a cyber incident impacting remote access services of Global Affairs Canada within Canada. While Global Affairs Canada critical services were not impacted, this resulted in a data breach that affected employees.

In February 2024, the Royal Canadian Mounted Police (RCMP) was affected by a cyber event that targeted its networks, forcing it to launch a criminal investigation into the breach. There was no impact on RCMP operations and no known threat to the safety and security of Canadians.

In March 2024, the Financial Transactions and Reports Analysis Centre of Canada experienced a cyber attack resulting in unauthorized access to data capture network. Following extensive forensic analysis performed by the Canadian Centre for Cyber Security, there was no evidence that information was lost or that data was exfiltrated during the incident. It is also worth noting that the Canadian Centre for Cyber Security did not assess this incident as a systemic risk to the Canadian financial sector.

Cyber incidents have also impacted services contracted out by the government. Compromises within the supply chain have an impact on the Government of Canada and introduce operational risks when third-party services are used. Managing cyber security risks in supply chains requires ensuring the integrity, security, quality and resilience of the supply chain and its products and services.

In October 2023, relocation support services provided by a third-party supplier (BGRS and SIRVA Canada) were affected by a cyber incident that impacted current and former affected employees of the Government of Canada, the Canadian Armed Forces and the Royal Canadian Mounted Police. In February 2024, a fourth-party supplier (MSH International) under Canada Life providing Public Service Health Care Plan travel and emergency assistance benefits was affected by a cyber incident. Both of these incidents had privacy implications and warranted a Government of Canada–wide response, including invocation of the GC CSEMP Communications Framework to ensure consistent and coordinated messaging from the Government of Canada. The Policy on Privacy Protection also requires that federal institutions have plans in place to respond to privacy breaches, including those resulting from a cybersecurity event or incident.

Issue

Departments have been exploring artificial intelligence (AI) technologies to improve services to Canadians. The Government of Canada is committed to ensuring the responsible development and use of AI in the federal public service. Media and public interest in AI has grown significantly over the past year following the release of generative AI tools like ChatGPT to the public.

Response

The government is committed to ensuring the responsible use of AI, including the use of generative AI tools.

AI has been used in workplaces, including in the public service, for decades in some form or another, including as a tool to support analysis, assist with prediction, or to support decisions.

With the rise in use of AI tools, TBS continues to introduce direction, tools and guidance that enable departments to responsibly manage the use of AI.

Just this week, I led a roundtable with Canada’s top AI researchers and academia on the development of the government’s first AI strategy.

The strategy will ensure responsible AI adoption throughout the government to not only enhance productivity of public servants and increase the capacity for science and research, but to ultimately deliver simpler, digital services for people in Canada.

Notably, it will look at how AI can help deliver better digital services for Canadians.

The strategy is expected to be completed in spring 2025.

Background

Issue

The Government of Canada’s use of professional services.

Response

Contracted services are a regular part of government operations and complement the work of our professional public service.

We continue to review and enhance procurement rules and guidance to support the responsible use of these services.

Notably, TBS has recently taken a series of actions to strengthen management and oversight of government procurement with a specific focus on professional services.

The manager’s guide about the use of professional services has been updated to include additional guidance to reinforce managers’ responsibilities in making decisions that demonstrate a prudent use of tax dollars.

TBS has added new mandatory procedures that every manager will need to fulfill when procuring professional services. This includes managers certifying that:

• they do not have a conflict of interest
• they have not directed which resources should be working under the contract
• the contractor did not assist or have unfair access in the solicitation process

Finally, the Comptroller General is undertaking a horizontal audit to assess governance, decision-making and controls associated with professional services contracts, including IT. Audit results, expected by December 2024, will inform any additional measures that are necessary.

Background

Government spending on external professional services – a broad category that includes everything from nursing to engineering to research to management consulting – increased by $1,078 million (6%) in 2022–23 when compared to fiscal 2021–22. Although 64% of departments have increased their external professional services in fiscal 2022–23, the year-over-year variance (%) or “growth rate” of 6% for the Government of Canada is the lowest it’s been in the past three years. This is mainly related to four major types of professional services:

1. informatics services (computer services, IT and telecommunications consultants)
2. health and welfare services (hospital services, welfare services purchased from social and related agencies, physicians and surgeons, paramedical personnel, and dental services)
3. business services (accounting and audit services, banking services, collection agency fees and charges, real estate services and other business services)
4. engineering and architectural services (architectural design, control and plans, construction supervision of buildings, and architecture of naval vessels, services related to assessment, remediation, care, maintenance, and monitoring of contaminated sites and engineering consultants)

While absolute spending has increased, the proportion of spending on external professional services has remained relatively consistent when compared to overall expenditures. Specifically, total departmental external professional services in 2011 was 11.1% of gross external expenditures, excluding transfer payments and public debt charges as compared to 11.7% in 2022. Through those years, the range was from 10.6% (2013 and 2021) to 11.8% (2016 and 2017).

Since 2011, the ratio of external professional services as a percentage of personnel expenditures by fiscal year has been relatively consistent, ranging from a low of 19% (in 2013) to a high of 23% (in 2017). For fiscal year 2022, the ratio was 22%.

While contracting is a normal and acceptable delivery strategy, the Office of the Chief Information Officer of Canada is developing a Government of Canada Digital Talent Strategy to ensure that the federal public service has the in-house digital talent and leadership it needs to build, deliver and maintain simple, secure and efficient digital services and programs.

The strategy is designed to support the digital community in the federal public service. This includes people who have skills, knowledge and experience in a variety of digital disciplines, including development, cybersecurity, data and many more. It also includes leaders who guide and sponsor digital initiatives.

Along with PSPC, TBS published the results of its review of contracts with McKinsey & Company in June 2023. The independent audits conducted as part of the review found no evidence of political interference in the contracts awarded to McKinsey & Company. The review also found that certain administrative requirements and procedures were not consistently followed. In addition to departments taking action, TBS outlined a number of measures it has since implemented to address these findings. This includes amendments made in June 2023 to the Directive on the Management of Procurement and the Guide to the Proactive Publication of Contracts to:

• require risk-based system of internal control that are maintained, monitored and reviewed to provide reasonable assurance that procurement transactions are carried out in accordance with the framework and applicable laws, regulations and policies, as well as ensure the accuracy, completeness and timely publication of contracting information for proactive disclosure
• strengthen documentation requirements, particularly regarding the justification for the use of sole source
• require greater transparency in large professional services contracts above a dollar threshold by requiring additional details in contract descriptions

There have been serious questions raised regarding the integrity of the federal procurement system, including the practices of certain suppliers to the Government of Canada. Recent and ongoing audits (including by the Office of the Auditor General, Indigenous Services Canada and departmental internal auditors), practice reviews (by the Procurement Ombud), investigations (including by internal departmental investigators, the Privacy Commissioner and the RCMP) and studies by parliamentary committees concerning the use of professional services have consistently identified gaps in contracting practices and documentation.

In their reports, the Auditor General of Canada and the Procurement Ombud confirmed there are clear rules in place to ensure sound procurement management practices across government, but more can be done. In response, TBS and PSPC announced a series of new measures on March 20 to strengthen management and oversight of government procurement.

Main Estimates overview

$449.2 billion in budgetary spending:

• $191.6 billion to be voted (down $6.6 billion, or 3.3%, from 2023–24 Main Estimates)
• $257.6 billion in forecast statutory expenditures (up $23 billion, or 9.8%, from 2023–24 Main Estimates)

The amount is made up of:

• transfer payments 63% of expenditures, or $283.0 billion
• operating and capital expenditures account for 26.6% of expenditures, or $119.7 billion
• public debt charges are 10.4% of expenditures, or $46.5 billion

TBS spending and Treasury Board central votes

TBS total authorities of $9.3 billion for 2024–25 represent a net increase of $413.4 million when compared to last year’s Main Estimates of $8.9 billion.

Major changes to TBS departmental votes include:

• Vote 1 – Program expenditures: an increase of $35.4 million, primarily related to:
  • funding from signed collective agreements
  • new funding such as the Action Plan for Black Public Servants and funding to advance clean fuels markets and carbon capture, utilization and storage technologies in Canada
• Vote 20 – Public service insurance: an increase of $431.5 million, primarily related to additional funding for the Public Service Insurance Plan and Programs

TBS is seeking $5.1 billion in central votes to distribute to departments, primarily for:

• Treasury Board Vote 5 – Government Contingencies: $750 million
• Treasury Board Votes 25 and 35 carry-forward for operating ($3 billion) and capital ($750 million)
• pay list expenditures ($600 million)

In addition, there is $18.5 million (a decrease from $71.1 million in the 2023–24 Main Estimates) in Treasury Board Vote 10 – Government-wide Initiatives for Phoenix claims ($16.5 million) and the Regulators Capacity Fund ($2 million).

Voted expenditures: largest departments

The organizations seeking the most voted funding (comparisons to 2023–24 Main Estimates):

• National Defence: $28.8 billion (up from $24.8 billion)
• Indigenous Services Canada: $20.9 billion (down from $39.5 billion)
• Employment and Social Development Canada: $11.5 billion (up from $11.2 billion)
• Crown-Indigenous Relations and Northern Affairs Canada: $10.9 billion (up from $9.1 billion)
• TBS: $9.3 billion (up from $8.9 billion)

Departmental Plans provide more information on the spending plans of organizations and planned results.

Refocusing government spending

Overall, the government is refocusing $15.8 billion in spending by 2027–28 and $4.8 billion per year thereafter through the Estimates.

• Budget 2023 announced spending reductions of $14.1 billion over five years and $4.1 billion annually thereafter.
• The 2023 Fall Economic Statement announced further reductions of $345.6 million in 2025–26 and $691 million ongoing.
• Main Estimates reflect $2.3 billion refocused in 2024–25.
• Departmental Plans and the Refocusing Government Spending to Deliver for Canadians webpage provide details on 2024–25 and future year reallocations undertaken to date.

Dental and Pharmacare

Health Canada’s Main Estimates have increased by roughly $4.5 billion from 2023–24 to 2024–25. This is due primarily to the Canadian Dental Care Plan, which is being rolled out in a phased approach.

Main Estimates does not include funding for the Pharmacare program proposed in Bill C‑64. Once Bill C‑64 receives Royal Assent, forecast statutory expenditures will be included in Estimates for information purposes.

Professional services

The 2024–25 Main Estimates include $19.1 billion in planned spending on professional and special services. This is a decrease of approximately $395 million from the 2023–24 Main Estimates. Four organizations show year-over-year growth of $200 million or more in planned professional services spending:

• National Defence: $673.6 million increase, largely related to increases in funding for international operations, in-service support and major capital equipment projects. The largest component of the increase is for engineering and architectural services.
• Health: $109.9 million increase, related to the expansion of the Canada Dental Care Plan. Planned expenditures include a contract with a third-party administrator to provide dental care claims processing and adjudication services, as well as an agreement with Employment and Social Development Canada to support the delivery of the plan.
• Fisheries and Oceans Canada: $334.4 million increase, largely for engineering services relating to shipbuilding projects under the National Shipbuilding Strategy.
• Crown-Indigenous Relations and Northern Affairs Canada: $204.2 million, primarily for maintenance and remediation of contaminated sites under the Northern Abandoned Mine Reclamation Program.

Statutory expenditures included in Estimates for information

The 2024–25 Main Estimates also presents for information purposes:

• $257.6 billion in statutory^{Footnote 1} budgetary spending
• $1.0 billion in statutory non-budgetary^{Footnote 2} spending

Statutory budgetary amounts include:

• $81.1 billion in elderly benefits
• $52.1 billion for the Canada Health Transfer
• $46.5 billion in public debt charges
• $25.3 billion for fiscal equalization
• $16.9 billion for the Canada Social Transfer
• $11.4 billion for the Canada Carbon Rebate

Statutory non-budgetary amounts reflect an increase in net loans disbursed under the Canada Student Financial Assistance Act.

New measures to strengthen procurement

On March 20, the government announced a series of measures to strengthen management and oversight of government procurement:

• Develop a risk and compliance process to assess trends, risks and individual departmental performance in key management areas and take immediate corrective actions where necessary.
• Conduct a horizontal audit across a number of departments to assess governance, decision-making and controls associated with professional service contracts, including IT.
• Launch an updated manager’s guide and commit to create new mandatory procedures when procuring professional services to strengthen the accountability of business owners and managers.
• Review the Directive of Conflict of Interest and what additional TBS oversight may be required.
• Provide additional contract information on open data. In addition, the Comptroller General requested that departments review the completeness and accuracy of their institutions’ proactive publication of contracts by June 7, 2024.

Federal procurement and professional services

• In 2022–23, as reported in the Public Accounts, the government spent $14.3 billion on external professional services. This includes a broad range of services, including construction, health care and engineering.
• Less than 6% of this amount ($838.3 million) was spent on management consulting.
• A new manager’s guide helps determine when to contract professional services versus when to use internal resources. As well, the recently launched Directive on Digital Talent prompts hiring managers to assess internal capacity before looking at outside resources.
• We are continuously strengthening procurement approaches. The Directive on the Management of Procurement is being amended to add new mandatory procedures for business owners when procuring professional services.

Contracting values

McKinsey & Company

The government accepts the recommendations from the Office of the Procurement Ombud report.

TBS continuously seeks opportunities to improve guidance to organizations to help them effectively manage their procurement activities.

In June 2023, following TBS’s review on contracts with McKinsey & Company, the following actions were taken to strengthen procurement policy, guidance and training for procurement practitioners, including:

• amended procurement policies to establish risk-based internal controls and improve accuracy and completeness of records and their disclosure
• the manager’s guide to help make informed decisions on whether to procure professional services to meet operational needs and to meet their responsibilities under Treasury Board policy

TBS continues to work with PSPC to maintain the integrity of the procurement process.

PSPC has taken steps to improve fraud prevention and detection by strengthening controls for the administration of professional services contracts.

Strengthening the role of managers in procurement

The reviews of procurement have shown that we need to better equip our managers when they procure professional services.

In March, we updated our guide to support managers in making prudent procurement decisions.

Key elements of this guide are now embedded in policy, and managers will need to:

• demonstrate and document that contracting for professional services is the right approach
• sign off before the contract is awarded that there was no unfair advantage, that they haven’t directed who will perform the work, and that they are not in a conflict of interest

In addition, we will be requiring that departmental officials report to their deputy heads twice a year on the number of professional services consultants working in their organizations.

ArriveCAN

The ArriveCAN app was built on an emergency basis under exceptional circumstances; however, the details that have come to light in recent months are concerning.

TBS did not have any involvement in the development of the ArriveCAN app.

Deputy heads are responsible, as accounting officers, for the contracting activities in their department.

The Auditor General found that TBS has appropriate contracting rules in place but that the rules weren’t followed.

On recovery of payments, the government is reviewing the contracts to determine if restitution is warranted. The Canada Border Services Agency will work closely with PSPC on this.

Public service issues

As of March 31, 2024, the size of the federal public service was 367,772 employees.

Personnel costs as a proportion of total expenditures have generally stayed the same.

By September 9, 2024, federal public servants will be required to work on site a minimum of three days per week and four for executives.

This is an administrative decision taken by TBS, working with deputy ministers from across government.

These changes will maximize the benefits that consistent in-person interactions offer and will bring greater consistency and fairness.

The employer has the exclusive management right to designate the location of work and to require employees to report to their designated worksite.

We will continue to monitor how hybrid is working and ensure that it continues to provide fairness, flexibility and focus on a high-performing service delivering for Canadians.

Collective bargaining (Border Services (FB) Group)

We are committed to reaching an agreement that is fair for employees and reasonable for taxpayers.

Negotiations yield the best results, and we fully support the collective bargaining process.

The government has already reached agreements with 80% of the public service, and there is no reason we can’t do the same with the Border Services group.

We are participating in Public Interest Commission hearings and look forward to the Commission’s report at the end of May. We believe the Commission’s recommendations will help pave a path to an agreement.

Should there be a strike, 90% of front-line border service officers in this group have been designated as essential and are required to provide uninterrupted border services to Canadians.