Friday, October 05, 2007   
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Address to the Toronto Board of Trade

Wednesday, September 21, 2021
Toronto, ON

Thank you very much.

I'm delighted to be with you today. I always feel comfortable before a business audience. And I have a great respect for the kind of savvy, drive and discipline that every successful entrepreneur needs.

An affinity for business comes naturally in my rural Nova Scotian family. My grandfather was in the pulp business. My mother and father owned a general store for 23 years. In fact, our family lived in a house attached to the store. My dad just retired a month ago. But at 82, he's now starting his fourth career working with my brother's real estate development company.

As I mentioned before I've got a genetic predisposition to business-like thinking. As a kid I had a lawn-mowing business. I picked up old bottles from the side of the road for recycling money.
At the age of 19 I started a business renting mini-fridges to university students. We had two brochures - one for parents showing the fridges filled with yogurt, fruit and vegetables - another for the students showing the fridges overflowing with Keiths and Labatts.

So, from renting fridges to investment banking, my work in the private sector has shaped my thinking as a cabinet minister.

I don't think that you can run government like a business. But there's no reason why you can't use business discipline and approaches to get better results as a government and better value for taxpayers. Simply put, that was my goal as a new minister in July 2004.

The challenge when I became Public Works Minister was changing the culture of a department that rivaled the biggest firms on the TSE. Think about it: Public Works Inc. has 14,000 employees. That's bigger than the Ford Motor Company of Canada. It's got a 7-million-square-foot real estate portfolio. That means it operates the biggest office portfolio in the country. The $1.3-trillion it handles in its Receiver General's function is larger than the GDP of Spain.

Now, exactly a year ago today I spoke to the Canadian Club here in Toronto about our Way Forward plan. About how I intended to harness private sector efficiencies, values and principles to change the culture of government.

I have no delusions about the way many Canadians feel about governments and their promises.
Many Canadians, especially people in the business community are skeptical and cynical of all governments. And I'm sure some of you folks felt that way 12 months ago when I vowed that this department would always "demonstrate respect for hard earned taxpayers' dollars."

As I said before, I'm a third-generation entrepreneur who believes in running things in a business-like fashion. So, I'm here today to present a one-year update - let's call it our first annual report - to the taxpayers and citizens of Canada.

You as taxpayers and as Canadian citizens are in fact the shareholders in the government. And I want to tell you that the fundamental changes we are making in the Department of Public Works will improve shareholder value.

Change is never easy. And I can tell you that without the absolute support of Prime Minister Paul Martin we would never have been able to come as far as we have in the past 12 months. Our Prime Minister and government are committed to changing the culture of government to a culture of respect for Canadians and Canadian taxpayers.

We're determined to earn your respect by being a government that keeps its promises. Last year, Paul Martin campaigned on a promise to defend the health care system. This is one Prime Minister who keeps his word.

Within months, he'd signed a health accord to deliver $41 billion to the provinces over 10 years.
Paul Martin pledged to bring in a childcare and early learning program - and he delivered. He promised a community agenda including $5 billion in gas tax revenues for municipalities. Another promise kept.
We're working to earn your respect in another important way - by supporting the work of Justice Gomery.

We've already made huge strides towards making the government more open, transparent and accountable.

We've brought in a new Comptroller General, and whistleblower legislation. We've strengthened management practices and ethics regimes.

Now we're eagerly waiting for Justice Gomery to deliver his two reports and recommendations to ensure nothing like this ever happens again.

We realize the importance of openness and accountability. Among our options, we're looking at separating the consulting and auditing functions within Consulting and Audit Canada and strengthening our internal auditing capacities.

And I also called for a mandate review of C.A.C. last spring - I expect that review to be complete by the fall.

There's another way we're transforming this government's culture. By keeping our promise to demonstrate the ultimate respect for your hard-earned tax dollars while delivering better value to taxpayers.

After all, it was Paul Martin, as Finance Minister, who helped change the culture of deficits into a culture of surpluses. Canada now stands alone in the industrialized world with eight consecutive balanced budgets and counting.

We've got the lowest burden of debt and the highest standard of living and employment growth in the G-7.

Yet we're not content to stop there. We're sure we can do more. So, we spent the past year conducting a sweeping expenditure review process under one of your Toronto ministers, John McCallum. No one said it would be easy to find $11 billion in government spending to reallocate to important priorities like health care, child care and cities.

But if we're going to earn your respect and show respect for your tax dollars it had to be done.
In Ottawa, I've been asked why a government in a surplus would want to conduct a painful review process like this. My answer is that all governments should be doing this on an ongoing basis. Business people and families go through the same decision-making process everyday. It's the right thing to do.

And I'm proud to say that my department is going to contribute almost a third of the $11 billion that's being reallocated throughout the government over the next five years. In fact, in the 2005 budget, my colleague, Finance Minister Ralph Goodale, singled out this department for the exceptional contribution it made to making the expenditure review process such a success.

Here's what he said: "Allow me to single out the people in the Department of Public Works and Government Services for their ERC work. They rose to the challenge and made an exceptional contribution to the success of this exercise. I applaud their innovation and their professionalism."
Reducing and reallocating expenditures in any government can be tough. Frankly, a lot of politicians prefer spending money to saving it. I'm the kind of guy who likes to save money.

And it's hard to accept the status quo when it costs 20% more for the Government of Canada to manage its real estate portfolio than it does for the private sector.

A year ago, I promised to change that. Since then we've put out a Request for Proposals to seek private sector advice on the best way to manage the 300-or-so buildings that we own across Canada. And we're getting very strong interest. In a few months we'll have the facts we need to make a good decision and to take serious action to get better value for taxpayers.

There are many possibilities. My feeling is that if you ask Canadians if they want the federal government to invest their money in commercial real estate, the answer might be yes. But if you ask them whether they want Ottawa to manage their investment in commercial real estate, they might just say no.

Now I don't intend to prejudge the outcome of our deliberations. We could retain ownership or lease buildings while maintaining ownership of the land. We could spin the buildings off into real estate investment trusts.

The possibilities are exciting. There's a lot of institutional money seeking to invest in Canadian commercial real estate. For example, public sector funds like OMERS, Teachers, or CPP could invest in a Government of Canada office building REIT.

I want you to think about this for a moment. With this kind of approach, it's possible that the people of Canada could continue to benefit from the upside potential of owning this real estate at the same time as the investment would benefit from private sector discipline and private sector value creation.
Whatever we decide down the line will be in the best interests of taxpayers.

In the meantime, we're already saving them money. We're scaling down the amount of workspace per employee to more closely mirror private sector practices. That in itself could save $500 million over the next five years.

We're becoming tougher negotiators when it comes to new leases. In fact, Colliers International, the global real estate consultants, recently reported that the more aggressive stance by Public Works is helping to push down rental rates.

As far as I'm concerned, any time we can harness private sector efficiencies and ingenuity to deliver services better and at a reduced cost, we have the responsibility to do so.

We'd better. We have plans to shave about $1 billion off our real estate spending over the next five years. So far this year Public Works has already found about $150-million of that. That's $150 million the government can now use for debt reduction and other priorities.

There's another way we can provide better value for taxpayers. Smarter buying. The Government of Canada buys approximately $13 billion in goods and services a year. In the past, they were bought in a fragmented way by the 100 or so different agencies and departments of government. This resulted in too many one-off purchases. A system that's unwieldy, costly, bureaucratic and unfocused.
No corporation would ever act that way.

In the 2005 budget, Public Works was given the mandate to be the principal procurement arm of government for goods and services. And we're moving toward a more disciplined, and business-like approach.

For a start, we're harnessing the massive buying power of the Government of Canada to negotiate better deals with our suppliers.

But we're also doing other things too: making a number of standing offers mandatory to bring down costs. We've removed the fees to use MERX, the government electronic tendering system. And we've brought in a plain language initiative to simplify the contracting process.
As well, the new Government of Canada Marketplace - an on-line purchasing tool we're developing with IBM - will cut the time it takes to complete a transaction in half.
Every little bit helps when you're a government that spends $13 billion a year on goods and services. And we're already chalking up success stories.

For example, we've reduced our airline travel costs by tens of millions of dollars.
Let's face it - taxpayers expect us to be disciplined buyers with an eye to the bottom line.
To do this, we want to partner with Canada's small business community. I am confident that we can harness the power of smaller companies to help get better value for taxpayers.
Right now small and medium size businesses make up almost half of Canada's G.D.P. Yet they actually get about 75% of government contracts.

And I'm committed to making it easier - not harder - for small businesses to work with the federal government as partners in progress to provide increased value for taxpayers.
Those aren't just more empty political promises. Earlier this week I officially announced our new Office of Small and Medium Size Enterprises to help streamline and simplify the procurement process for small businesses.

There's a new 1-800 number and a new dedicated website to help small companies do business with the government.

And starting this Friday, we're holding workshops to consult with small and medium-sized businesses across the country. I'll be in Halifax for the first session on Friday. I'm also hoping to be here on September 30 for the Toronto session. And there will also be workshops in the Ottawa area, Montreal, Edmonton and Vancouver.
I know some small businesses are unhappy about our new mandatory standing offer policy. The new office will be clarifying our exceptions policy to make sure it's implemented fairly and uniformly across the country.

And we're seriously looking at letting more firms qualify for standing offers and also considering re-competing a number of standing offers earlier than scheduled.
Public Works is also setting up commodity councils so private sector people can advise us how to ensure there's fair and equal access to contract opportunities for all small businesses.
I've done all this because small businesses are the engine of growth for the Canadian economy. They matter.

Good environmental policy matters too. And not just because it's the right thing to do. Our department is challenging the old assumption that going green hurts the bottom line. The way I see it good environmental policy can also be good economic policy.
Back to my mantra - giving increased value to taxpayers. By 2006 we plan to deliver a new Green Procurement policy to govern all government purchases.
That will make the Martin government a global leader in environmental policy.
The process is already underway. We already have more than 100 standing offers with Canadian companies to provide green goods and services.

About 40% of my department's large fleet of automobiles are hybrids or use alternative fuels. And I'm proud to say that my departmental car in Ottawa is now a Honda Hybrid.
My goal is to ensure that the Government of Canada uses its purchasing power to stimulate industry and build bigger industrial capacity for cleaner and greener technology.
For example, we want to buy 20% of our power from emerging renewable energy sources like wind power. That means we're helping to create that market.

I already told you about the Office of Small Business. Well, this year we also set up the Office of Greening Government Operations as well.

And remember our huge real estate portfolio? We're making it more energy efficient by updating central heating and cooling systems and turning off our lights and air conditioners sooner. New federal office buildings now also have to meet strict standards for environmental efficiency.
Public Works, by the way, is also in the forefront of the remediation of contaminated sites whether it's cleaning up the Sydney Tar Ponds or the toxic waste stored underground at the Giant Gold Mine in Yellowknife. It's another way that we're showing respect for our environment.

Let me sum up. We are changing the culture of government to a culture of respect by keeping our promises. We are demonstrating respect for Canadian citizens.

By paying attention to every tax dollar we receive, we are demonstrating respect for Canadian taxpayers.

And by greening government operations, we are demonstrating respect for the environment.
I believe that is only through building a culture of respect that we can earn the respect of Canadians.
Because Canadians deserve nothing less.

Thank you.

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