By Catherine Morrison in Ottawa

A new report by Canada's auditor general says the federal government has been slow in its effort to reduce its office space.

The report finds that Public Services and Procurement Canada has had plans to downsize its office space footprint since 2019 but there has only been a two per cent reduction because full-scale implementation only began in 2024.

The report says the delay in progress is mainly due to a lack of funding.

“The federal government has been slow to reduce office space and cut costs to support hybrid work, and to convert surplus properties into affordable housing,” auditor general Karen Hogan said in a news release. 

“Public Services and Procurement Canada and federal tenants need to accelerate their efforts to reduce the office space they occupy and contribute to increasing stock for housing that is sustainable, accessible, and affordable.”

The report also said that the government has been slow to modernize its offices to be open spaces without assigned seating. While the target was to modernize at least four per cent of office space per year, it has so far only modernized an average of 2.4 per cent of office space per year since 2021.

“The shortfall between the target and the actual results is due to resistance to change from some federal tenants, aging infrastructure, condition of buildings, portfolio size, reallocation of funding, and an increase in costs driven by inflation,” the report said.

The former Liberal government announced a $1.1 billion plan in the 2024 budget to cut its office portfolio in half over the next decade.

The plan is to find billions in savings and unlock properties that can be used for housing. 

While the target is still 50 per cent, the report says Public Services and Procurement Canada currently projects that office space reductions will reach 33 per cent.

While the report was optimistic about the plan, it highlighted some risks and stressed the need for Public Services and Procurement Canada to work with government departments and federal tenants about how to reduce the office space they occupy.

It said just under half of tenants had not signed office space reduction agreements and that negotiations were still ongoing at the time of the audit, which could delay the implementation of the plan. 

The report also expressed concerns around flexibility of the plan, which has decreased post-COVID as public servants have been called back to the office on a more regular basis.

It also noted that delaying the disposal of properties not suitable for housing could lead to the increase of maintenance and operating costs, and said those costs should be included in the plan. 

An official from the auditor general's office who spoke about the report on background said the government’s plan to reduce its office portfolio seems solid and well-made but that it won’t be possible to determine whether it can reach its goal until the 10 years has passed.

The report said that, between 2021 and 2024 the Treasury Board of Canada Secretariat made “good progress” on improvements to how real property is managed within the government. However, it said its ability to lead and support organizations decreased with the dissolution of the Centre of Expertise for Real Property.

It also said that Public Services and Procurement Canada failed to report publicly on some important information about its management of office space and that it lacked up-to-date, standardized and reliable information from federal tenants on the daily use of office space, which would better allow it to “maximize opportunities for further reductions.”

Minister of Government Transformation, Public Works and Procurement Joël Lightbound said in a statement that he welcomed the findings of the auditor general’s report and that the government accepts all of the recommendations.

Lightbound said his department plans to share annual updates on its progress and that it remains committed to working with federal departments and agencies to improve data collection.

The report also looked at how the Canada Mortgage and Housing Corporation managed the Federal Lands Initiative, a fund designed to manage surplus federal lands and buildings.

It said that while the organization is on track to meet its target of securing commitments to build thousands of new housing units, many of the projects supported by the initiative won’t serve Canadians in locations where needs are greatest.

(C) The Canadian Press