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REPORT OF THE COMMITTEE

Tuesday, June 12, 2001

The Standing Senate Committee on National Finance

has the honour to table its 

EIGHTH REPORT


Your Committee, to which were referred the 2001-2002 Estimates has, in obedience to the Order of Reference of March 1, 2001, examined the said estimates and herewith tables its second interim report.

 The 2001-2002 Estimates were tabled in the Senate on 1 March 2001 and referred for review to the National Finance Committee.  As is customary with this Committee, several meeting dates were set aside for the review of the Estimates.  The Committee’s initial examination began on Wednesday evening, 14 March 2001 when the officials of the Treasury Board outlined and explained the main features of the new estimates.  They also answered several questions at that time and through written responses at a later date.  The particulars of the Interim Supply Bill were made available for the Committee’s consideration before the end of March and an interim report (the Committee’s Third) was submitted to the Senate on 22 March 2001.  Since that date, the Committee has continued its examination of the Estimates. 

On the 24 April 2001, officials from the Transportation Safety Board assisted the Committee in its examination of the expenses of the government relating to the Swiss Air Flight 111 disaster. 

On May 29, the Committee examined the operations of the Public Service Commission of Canada.  Officials of the Commission were able to provide insight into the issues facing the public service at this time and were also able to offer advice on appropriate response to a number of matters of interest to Senators.

On May 30, the Committee heard from the honourable Lucienne Robillard, President of the Treasury Board.  The meeting provided Senators with an opportunity to discuss both policy issues as well as technical aspects of government expenditures listed in the estimates.  Although much ground was covered in this meeting, the Committee intends to examine further certain items of the Estimates at a later date and to report on all of its work before the end of fiscal 2001-2002.


THE HEARINGS 

   A.  The President of the Treasury Board

On Wednesday, 30 May 2001, the Honourable Lucienne Robillard, President of the Treasury Board appeared before the Committee and discussed numerous elements of the Estimates.  In her opening remarks, Ms. Robillard outlined some significant changes in government spending plans and highlighted several initiatives of the government.  She noted that the current estimates total $165.2 billion, which includes an increase of $9.1 billion over 2000-2001.

Senators were concerned about the 5.8% increase in spending in the current fiscal period.  Mrs. Robillard assured the Committee that this does not signal a departure from past practices of her government.  She observed that 75% of the year over year change in the Estimates relates to changes in the forecast for statutory spending.  For instance, most of the $1.9 billion allocated for non-budgetary expenditures will go towards direct loans to students disbursed under the new Canada Student Financial Assistance Act that replaces the previous program delivered by the banks.  Other statutory increases include $1.4 billion in direct transfers to individuals for Old Age Security, the Guaranteed Income Supplement and Allowance Payments for Employment Insurance.

A further $3.8 billion of this year’s increase in Estimates is a result of the government’s commitment of an additional $3.8 billion towards the Canada Health and Social Transfer Payments to the provinces.

Several questions dealing with the management and reform of the public service were put to the Minister.  However, questions concerning the introduction of measures to protect whistleblowers dominated the early part of the hearing.  Several Senators expressed a need for legislation that would provide protection for whistleblowers.  They suggested that such legislation might contain provisions similar to those contained in Bill S-6: The Public Service Whistleblowing Act, which this Committee reported on 28 March 2001.  The Minister does not believe that legislative measures are needed at this time to protect those public servants who reveal wrongdoing in the government.  However, she does believe that the current process needs reforms.  Therefore, the government is developing a clearer statement of ethics and values in the public service and of the process to follow in dealing with the discovery of wrongdoing in government agencies and departments. 

Ms. Robillard also reviewed other aspects of the economy’s performance and of government economic policy.  Her observations and statements elicited considerable discussion between the Members of the Committee and the Minister.  In particular the Senators questioned her at length about the significance of the Minister of Finance’s May Economic Statement and its relationship to his October Statement and how these are represented in the Main Estimates.  For instance, in the October update the Minister of Finance announced that the cost of servicing the public debt would be $41.7 billion.  In the May update he announced that there could be an $800 million reduction in the cost of that debt servicing, depending on the behaviour of various components of the economy.  The Senators interpreted his statement to mean that the $800 million was confirmed.  However, Treasury Board officials reminded the Committee that this amount is not final, it is merely a forecast based on current assumptions.  The final tally will be revealed in latter (supplementary) estimates to be tabled in the fall.  For the purpose of this report, and further discussions on the 2001-2002 Estimates, the debt service charge in the current spending period remains at $41.7 billion.   

Senators were curious about the process by which the Canada Foundation for Sustainable Development Technology was created.  Bill C-4, an Act to establish a foundation to fund sustainable development technology, was given first reading on 2 February 2001.  It succeeds Bill C-46 which was introduced on 4 October 2000 but which died on the Order Paper when the general election was called.  However, the Foundation was created and received $100 million in funding prior to the legislation being passed.  According to Mr. Lieff, Director, Expenditure Operations and Estimated Division of the Treasury Board Secretariat, when C-46 died on the order paper “the organization was created under the Canada Business Corporations Act, because the government felt that it was such an important initiative on which to get started that it would advance at least partial funds at the same time as seeking parliamentary approval to put it within a parliamentary accountability relationship with the rest of the government.”  Senators wondered if this was an appropiate way to create such agencies and crown corporations.  They questioned whether the government should have passed the bill before it advanced the funding. The members of the Committee condemn this process, which creates and funds a $100 million agency without prior Parliamentary approval. 

  

B. Transportation Safety Board (TSB)

David Kinsman, Executive Director, and William Tucker, Director General of Investigation Operations were very helpful in answering questions concerning the costs of rescue and recovery operations whenever an aircraft crashes in Canadian territory.  Specifically, the Committee was concerned that Canada might be obliged to bear an unfair share of the costs of rescue and recovery operations involving international flights.  Given the country’s size and the preponderance of over flights, it seems reasonable that Canada faces a risk of increasing costs relating to such disasters.  Under the current international agreements, the country in which the disaster occurs is responsible for all costs relating to the rescue and investigation of the accident.  For instance, in the case of Swiss Air Flight 111, neither the company – Swiss Air, nor the governments of Switzerland or the United States can be legally compelled to contribute toward the cost of recovery and investigation.  This practice is in accordance with an international protocol established by the International Civil Aviation Organization, or ICAO.  The ICAO is an agency of the United Nations headquartered in Montreal.  While none of these parties were required by law to assist in the investigation and recovery efforts associated with the crash of Swiss Air Flight, the Committee recognizes that each made significant contributions of time and equipment that assisted the TSB in its investigation. 

The specific protocol regarding accident and incident investigation is contained in Annex 13 to the 1944 Chicago Convention on International Civil Aviation. Pursuant to section 26 of the convention, Annex 13 prescribes the responsibility of the state of occurrence, that is, where the accident happened, to undertake an investigation for safety purposes and to be responsible for its conduct.  It also contains international standards and recommended practices for the conduct of the investigation.  According to Mr. Kinsman, since its original adoption in 1951, Annex 13 has had periodic reviews and updates as a result of international meetings and working groups that were formed specifically for those purposes.  One such meeting was the accident investigation prevention group meeting held in Montreal in September of 1999.  One of the agenda items for that meeting addressed responsibilities for mounting an investigation and provisions for the allocation of resources for accident investigations, both of those being of direct

relevance to the questions raised by this committee.  While discussions have taken place, no consensus exists on how to change the responsibility for the cost of accident investigations.

 

C.  Public Service Commission of Canada (PSC)

Mr. Scott Serson, President of the Public Service Commission, along with Commissioners Michelle Chartrand and Nurjehan Mawani, answered questions and explained various aspects of the functioning of the PSC and the cost associated with its operations.  They also discussed several aspects of managing a modern public service and the reforms that might be necessary at this time.

Although the government is reviewing the possibility for reform in the public service, Mr. Serson acknowledged that much could still be accomplished under the current legislation.  In his opening remarks he reviewed some of the Commission’s own initiatives that deal with problems of recruitment and retention at all levels of the public service.  He also explained how the Commission collaborates with Departments in order to ensure that its goals are met. 

Senators expressed concern about the practice of limiting competition for federal jobs to only select areas of the country.  Mr. Serson explained that the practice came about as an attempt to limit the cost of recruitment.  In particular, instances exist where the criteria are relatively easily met and the number of applicants is consequently very high.  As the government is bound to examine and rank each applicant, the recruitment cost would be out of line with the position being filled.  He assured the Committee that this practice was used only in those instances where very large numbers of qualified applicants could be assured.  He also noted that the practice is now under review.

The Committee discussed the Commission’s mandate and role with respect to official languages and employment equity.  The Commissioners assured the Committee that efforts are made in the government to ensure that employees of both language groups are well represented at all levels of the public service.  Furthermore, the PSC is involved in setting the language standards in the public service and in providing language training.  With respect to employment equity, the PSC is responsible for sensitising senior management to the needs of visible minorities in the recruitment process.  It is also involved in monitoring the career development programs for visible minorities. 

Senators were concerned about the potential abandonment of the merit principal in the selection and promotion of public servants.  In particular, they are alarmed that the creation of new federal agencies such as Parks Canada, the Canada Food Inspection Agency and the Canada Custom and Revenue Agency (CCRA) is reducing the ability of the Commission to monitor the appointment of public servants.  These federal agencies have separate legislation and do not have to meet the requirements of the Public Service Act.  In none of these separate acts is there a reference to the adoption of the merit principle in the management of human resources.  Mr. Serson acknowledged that there are large segments of the federal labour force that no longer fall under the traditional public service legislation.  However, he noted that when the Canada Custom and Revenue Agency was created, the PSC was able to obtain language in the legislation that permits it to review the personnel operations of the Agency.  This language was added to the Act establishing the CCRA to ensure that in practice the Agency’s recruitment and promotion policies would lead to similar results as to what would occur if the merit principal were explicitly applied.  Although they have begun examining the practices of the Agency, Mr. Serson feels that insufficient time has elapse to judge the effects of the CCRA’s practices on recruitment and promotion.

 

CONCLUDING COMMENT

As is customary, your Committee expects, at a later date, to examine in greater detail these and other aspects of the government’s spending plans.

Respectfully submitted, 

 

Lowell Murray
Chairman


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