Auditor General Finds Ottawa Slow to Reduce Underused Federal Office Space

Canada’s auditor general, Karen Hogan, and the commissioner of the environment and sustainable development, Jerry V. DeMarco, hold a press conference at the National Press Theatre in Ottawa on June 10, 2025, after jointly delivering eight performance audit reports to the House of Commons. The Canadian Press/Sean Kilpatrick

The federal government is falling short in its efforts to repurpose underused office space for housing and reduce unnecessary costs, according to the auditor general, who found Ottawa has managed to reduce the space by less than 2 percent.

Auditor General Karen Hogan examined the period from 2019 to 2024 and released her findings in a report tabled in the House of Commons on June 10. The report was one of eight performance audit reports delivered the same day.

“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,” said a statement from the Office of the Auditor General. “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.”

Public Services and Procurement Canada (PSPC) estimated that half of government office space was either vacant or not being used to full capacity in 2017.

The department’s efforts to reduce federal office space and decrease the associated operating costs were mainly slowed by a “lack of funding” since 2019, the report says.

PSPC developed an updated plan in response to the funding shortfall in order to maintain its commitment to reducing office space by 50 percent. The 2024 federal budget included $1.1 billion to help PSPC reach its target over 10 years, however, according to the report, the department still projects that office space will only be reduced by 33 percent over that time.

The audit report notes that “well-managed” office space cuts down on costs for taxpayers and can help make use of the benefits a hybrid work environment brings, adding that the disposal of underused federal properties can save money and help to increase the housing supply.

The current Liberal party platform pledges to increase Canada’s housing supply faster, in part by facilitating the transformation of existing structures into affordable housing units, build affordable homes at scale including on public lands, reintroduce a tax incentive for building multi-unit rental buildings, and speed up building approval processes.

In 2018, the Canada Mortgage and Housing Corporation (CMHC) was allocated $200 million over 10 years to make use of surplus federal properties to develop affordable housing through the Federal Lands Initiative.

The audit found that CMHC was on track to meet the initiative’s initial target to “secure commitments” to build 4,000 new housing units by 2027-28, but predicted 1,951 units will actually be built by that deadline. The report also said that CMHC’s reporting of housing units already built “lacked clarity” and “did not maximize access to affordable housing for those with the greatest need.”

Hogan has recommended PSPC collect information each year on its office space management and publicly report the information, including the department’s progress in achieving its 50 percent target.

The audit also recommends that PSPC works with other departments in its effort to reduce office space and ensure that its plan includes the enhanced costs to maintain and operate surplus office buildings that are deemed “less suitable” for housing and therefore not a priority for repurposing.

Response

Public Services and Procurement Minister Joël Lightbound welcomed the findings of the audit report in a June 10 statement, saying that the federal department accepts all recommendations set out by the auditor general.

“In particular, I welcome the recommendation that PSPC improve its public reporting on progress toward achieving the 50% reduction of its office portfolio by 2034,” Lightbound said, adding that his department recently shared an online update and will provide annual updates moving forward. Lightbound also stated that he is committed to working closely with other departments to implement the auditor general’s recommendations.

Opposition leader Pierre Poilievre criticized the Liberals’ progress on meeting its office space portfolio targets during a June 10 media scrum.

“In the middle of the worst housing crisis in the world, the government has failed to live up to its promise to sell off federal land and buildings for housing,” Poilievre said.

“The fact that they’ve missed these targets means that there are countless young people who can’t afford homes, single mothers who pay higher rent, seniors choosing between eating and heating because the cost of housing is out of control.”