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SUPPLEMENTARY ESTIMATES “A” 2002-2003

Standing Senate Committee on National Finance

SECOND REPORT

Chair: The Honourable Lowell Murray, P.C.
Deputy Chair: The Honourable Joseph A. Day

December 2002


INTRODUCTION  

Your Committee held a meeting on Tuesday, November 26, 2002 to review these supplementary estimates.  At this meeting, officials of the Treasury Board Secretariat appeared as witnesses and provided three explanatory tables, which form part of this report.  Together the tables summarise the major changes in the federal government’s financing requirements in the fiscal year 2002-2003.  Supplementary Estimates “A” are the first of a set of Supplementary Estimates that will be issued in this fiscal year. .

 

OVERVIEW 

Three tables provided by the Treasury Board Secretariat are reproduced below.  Together, they provide a quick summary of the changes proposed by these Supplementary Estimates.  Table 1, entitled “Summary of Expenditure Framework for 2002-2003,” indicates that of the $172.9 billion set out in the budget, $168.3 billion has been listed in the estimates to date.  

 

Table 1 

SUMMARY OF EXPENDITURE FRAMEWORK FOR 2002-2003

Expenditure Framework:

Budgetary Main Estimates

$168.3 billion*

Budgetary Estimates To Date

$168.3 billion

Projected Budgetary Expenditures

$172.9 billion

 

SOURCE:  Treasury Board of Canada.

*Budgetary Estimates will always differ from Projected Budgetary Expenditures due to adjustments not reflected in Estimates for such items as anticipated lapses, budgetary reductions and those expenditures already recognized in prior years.

 

In Table 2, “Estimates to Date for 2002-2003,” we observe that total planned spending will increase from the $170.4 billion reported in the Main Estimates to $176.4 billion.  The $6 billion increase is made up of $5.8 billion listed in these Supplementary Estimates.  The balance is made up of unexpended funds.

The bulk of the expenditures in the Main Estimates, $116.0 billion or 65.8%, are statutory expenditures that do not require a vote.  However, most of the Supplementary Estimates, $3.8 billion of the $6.0 billion require parliamentary approval.  The  $6.0 billion change in the total estimates proposed in the Supplementary Estimates represents a 3.5% increase in the original planned government expenditures for the fiscal year 2002-2003.

 

Table 2

ESTIMATES TO DATE FOR 2002-2003

 

TO BE VOTED

STATUTORY

TOTAL

(in thousands of dollars)

Main Estimates

 

 

 

* Budgetary

56,268,974

112,056,146

168,325,120

 

Non-Budgetary

80,223

1,961,602

2,041,825

 

 

$56,349,197

$114,017,748

$170,366,945

 

 

 

 

 

Supplementary Estimates (A)

 

 

 

Budgetary

3,759,074

830,392

4,589,466

 

Non-Budgetary

2,500

1,182,050

1,184,550

 

 

$3,761,574

$2,012,442

$5,774,016

 

 

 

 

 

** Unexpended Funds

 

Budgetary

223,266

223,266

 

Non-Budgetary

 

 

$223,266

$223,266

 

 

 

 

*** Total Estimates To Date

 

 

 

Budgetary

60,251,314

112,886,538

173,137,852

 

Non-Budgetary

82,723

3,143,652

3,226,375

 

 

$60,334,037

$116,030,190

$176,364,227

  SOURCE:  Treasury Board of Canada.

 

*       Budgetary Estimates will always differ from Projected Budgetary Expenditures due to adjustments not reflected in Estimates for such items as anticipated lapses, budgetary reductions and those expenditures already recognized in prior years.

 

**      This amount represents unexpended funds that were appropriated in 2001-2002 for CCRA and Parks Canada and which will be spent in 2002-2003.

 

***    Totals may differ from those shown in the Blue Book due to rounding.

Finally, Table 3 entitled “Supply to Date for 2002-2003” summarises the appropriations that have been approved to date.  Appropriation Act No 1 has approved $16.9 billion while Appropriation Act No 2 approved another $39.4 billion for a total appropriation of  $56.3 billion.  The current appropriation sought in the Supplementary Estimates (A) would add a further $3.8 billion, to increase the total appropriations to $60.1 billion.

 

Table 3 

SUPPLY TO DATE FOR 2002-2003 

Unexpended funds appropriated in 2001-2002 which will be
spent in 2002-2003

$223,266,374

Two Appropriation Acts have been approved in respect of the Estimates for 2002-2003

Appropriation Act No. 1, 2002-2003

Granted Interim Supply for the 2002-2003

Main Estimates equal to an initial

Allocation of 3/12ths for all votes and

49 votes received additional proportions

 

 

 

 

 

 

$16,908,361,503.73

Appropriation Act No. 2, 2002-2003

Granted Full Supply for the 2002-2003 Main Estimates

 

 

 

$39,440,835,295.27

Total Approved to Date

$56,349,196,799.00

 

Supply Awaiting Approval:

 

For the whole of Supplementary Estimates (A), 2002-2003

 

 

 

 

$3,761,573,812.00

Supply to date for 2002-2003

$60,110,770,611.00

 

SOURCE:  Treasury Board of Canada.

Supplementary Estimates “A” 2002-2003 provide estimates of the spending requirements for departments or agencies of the federal government, and as usual, Senators showed interest in both the general spending plans and specific items in these new estimates.

Mr. Rick Neville, Deputy Comptroller General, and Mr. David Bickerton, Executive Director, Expenditure Operations and Estimates Directorate, from the Comptrollership Branch of the Treasury Board Secretariat, outlined some of the significant changes in the Estimates and responded to questions from the Members of the Committee.  They noted that items included in these Supplementary Estimates serve two purposes.  First, they seek Parliament’s authority to spend $3.8 billion on expenditures for 2002-2003. These are expenditures that were not provided for in the 2002-2003 Main Estimates because they were not sufficiently developed or known.  However, they were provided for in the Minister of Finance’s October 2002 Economic Statement and Fiscal Update.

The second purpose of these estimates is to provide Parliament with information about changes in projections of statutory spending it has already approved in legislation.  These changes amounting to $2.0 billion are included in these estimates.

Among the larger voted items are: 

·        $631.6 million to the Treasury Board Secretariat to supplement other appropriations on behalf of other departments and agencies regarding compensation for collective bargaining; 

·        $584.4 million to 71 departments and agencies under the carry forward provision in order to meet various operational needs originally forecast for 2001-2002.  The purpose of this measure is to reduce year-end spending and to improve cash management.  It enables managers to carry forward from one year to another up to 5 per cent of their operating budget from the previous year; 

·        $202.7 million to 18 departments and agencies for public security and anti-terrorism (PSAT) initiatives; 

·        $195.7 million to the Canadian International Development Agency (CIDA) to meet additional grant requirements for international development assistance; 

·        $190 million to 14 departments and agencies to discharge their responsibilities in organizing events related to International Summits in Canada, specifically chairing the G8 process in 2002, including the Leaders’ Summit in Kananaskis and hosting over 40 preparatory meetings of Ministers and Senior Officials; 

·        $183.6 million to the Canadian Institutes of Health Research to continue to build on their capacity to create and translate new knowledge for improving health; 

·        $162.5 million to Human Resources Development Canada for operating costs to administer the new “direct financing” arrangement for the Canada Student Loans Program and to increase loan recovery activities ($70.6 million) and to help alleviate and prevent homelessness ($91.9 million); 

·        $147.3 million to 15 departments and agencies to fund projects related to the Government On-Line strategy, the government’s initiative to provide Canadians with information and services on the Internet by 2005; 

·        $135.8 million to National Defence for pay comparability for Canadian Forces and pay adjustments and environmental allowances for officers and non-commissioned members; 

·        $92.6 million to Veterans Affairs to cover increased disability pension costs for veterans and their dependants;

·        $85 million to the Canada Mortgage and Housing Corporation to help stimulate the production of affordable housing in urban centres and remote communities; 

·        $75 million to Health Canada for sustainability of the Non-Insured Health Benefits program for First Nations and Inuit in 2002-2003; 

·       ·        $72 million to the Department of Justice for the continued implementation of the Canadian Firearms Program;  

·        $55.9 million to the Department of Justice and the Federal Court of Canada for additional costs related to unique legal cases; and 

·        $52.4 million to the Canada Customs and Revenue Agency to implement six initiatives including the Reporting of Federal Construction contracts, Tax Measures Affecting Individuals, Deferral of Corporation Tax Instalments for Small Businesses, Air Travellers Security Charge, First Nations Taxation, and Tax on Income.

In his opening remarks, Mr. Neville thanked the Committee for its analysis and recommendations on the use of Treasury Board Vote 5.  He informed the Committee that Treasury Board Officials are preparing a response to the Committee Report.  He also stated that a proposed new policy statement and refined guidelines on the use of Vote 5 will be considered by the Treasury Board Ministers early in the New Year and any changes would be reflected in the Main Estimates documents to be tabled in Parliament in March 2003.

In its review of the estimates, the Committee expressed an interest in a number of spending items.  For instance, Senators were interested in the process by which the government determines the level of support that it will provide for international events that are held on Canadian soil.  Specifically, they wanted to know if cost limits were established at the time that the government agreed to fund part or all of events such as the “Catholic World Youth Day” or the Queen’s recent visit to Canada.  It should be noted that the Senators did not question the merit of supporting such events; only whether guidelines in the form of spending limits for such government support existed.  Senators are interested in knowing if budget limits on spending for such occasions exist.  While, Mr. Neville assured the Committee that all expenses are thoroughly vetted by the Secretariat before the government accepts them, the Senators believe that the process should establish, beforehand, limits on the level of government support that would be available for any event, and that these amounts should be reported in the Main Estimates.

The Committee noted that a large part ($72 million) of the $179 million in new appropriation sought by the Department of Justice is for the Canadian Firearms Program.  Senators continue to be concerned about the spiralling costs in the implementation of this program.  A year ago (National Finance, Issue 30, November 21, 2002) the Committee was told that total expenditure on the Canadian Firearms Program had reached $689.8 million, already well in excess of the original forecasted implementation costs of approximately $80 million as announced in 1995, when the program was being considered in Parliament.

 

In previous testimony before the Committee on the Canadian Firearms Program, Mr. Neville suggested that the original cost estimates were valid, but that numerous changes in the program, as it was being implemented, are at the root of the cost increases.  However,
Mr. Neville stated that:

From the Treasury Board Secretariat perspective, we are very concerned about this file.  I do believe that if we were to discuss this in a few months, we probably would have additional information to provide.  I will say that we are extremely concerned about this file.

 

With the present supplementary estimates, the cumulative total since 1995 will reach  $810.8 million.  He informed the Committee that the Office of the Auditor General is examining the program and that the Department of Justice is also conducting an internal review.  Reports on these examinations and evaluations are expected shortly.

Some Senators suggested that in light of the alarming growth in the level of cost associated with the implementation of the Canadian Firearms Program, that the Committee conduct its own enquiry into the administration of the program.  They suggested that the Committee consider inviting the Minister of Justice and his officials to explain the growing costs of this program.

Questions on the effectiveness of the registration process of the Canadian Firearms Program led to questions on the process by which government programs are evaluated for their efficiency and effectiveness.  Mr. Neville explained that the individual departments are currently responsible for conducting internal reviews and evaluations of their programs.  The Treasury Board Secretariat has a government wide responsibility for monitoring this activity and verifying that proper procedures are used to conduct reviews and evaluations.  The Secretariat does not itself conduct any evaluation of programs.

Some Senators noted that there remain problems with the way that departments report their activities to Parliament.  In particular, they find discrepancies between the stated objectives listed in the Report on Plans and Priorities and the assessment of outcomes found in the Departmental Performance Reports.  Specifically, they are disappointed that there still seems to be reluctance in departments to acknowledge any shortcomings in achieving their stated objectives.  Furthermore, Senators noted that it is difficult for them to assess the success or failure of departments because there are too many differences in the format of the two types of documents.  These differences make it difficult to compare the reported outcomes against the stated objectives.

Under Vote 25a, the Canadian Transportation Accident Investigation and Safety Board is seeking an additional $2.94 million, an increase of 13.5% in program expenditures, to cover further costs associated with the Swissair Flight 111 investigation.  This Committee has already heard evidence from officials of the Board on the investigation and the provisions of the Chicago Convention of the International Civil Aviation Organisation, which sets out the cost liabilities associated with flight disaster investigations.  Specifically, the Committee is well aware that this agreement stipulates that Canada will bear the entire cost of the investigation.  However, the Committee’s Second Report, dated December 2, 1999, stated:

 

In the longer term the Committee would suggest that the government seek to change the relevant sections of the Chicago Convention, such that international carriers assume some liabilities for the investigation and clean-up of air disasters.

 

The Senators expressed a wish to pursue this matter at a later date with the responsible government ministers or officials..  Mr. Neville also informed the Committee that the total cost of the investigation (including these Supplementary Estimates) has reached $62.6 million.

The Committee observed that the Department of Human Resources Development has a budget of $29.1 billion and is seeking new appropriations of $192.9 million.  Under Vote 5a, the Department’s contributions for human resource investments, it is seeking an 11.5% increase ($106.0 million) over the original amount of $925.6 million set aside for this Vote.  Of this amount it will earmark $91.9 million of new funding to help alleviate and prevent homelessness under the National Homelessness Initiative (NHI), a program which originally was intended to provide $753 million over three years to ensure community access to programs, services and support for reducing and alleviating homelessness in urban and rural regions across all the provinces and territories.  The National Homelessness Initiative works through partnerships with community organizations, the private sector and all levels of government.  Some Senators inquired whether this $91.9 million was completely new funding for the housing initiative.  Mr Neville assured the Committee that this was part of the original $753 million set aside for this program.

At $65.0 billion, the Department of Finance has the largest planned spending for 2002-2003.  The Committee notes that in the Supplementary Estimates, the Department requests an additional appropriation of $249.8 million.  Most of the new money ($230.1 million) represents a transfer payment to the “International Development Association.”  This is a 114.6% increase over the $200.8 million originally requested in the Main Estimates in March of this year.  Some Senators sought additional information on the nature and functions of the Association.  They also wanted further information on the operations of the agency and on the events that triggered the current transfer payment.  Although the officials of the Treasury Board Secretariat could not elaborate further at this time, they did commit themselves to provide the requested information at a later date.

Finally, some Senators enquired about the Treasury Board’s response to two recommendations contained in the Committee’s 19th Report, entitled Report on The National Capital Commission dated June 2002.   

The specific recommendations were:

Recommendation 2 

We recommend that the Treasury Board rescind its 1991 Real Asset Management Funding Strategy as it relates to the National Capital Commission and that monies received by the Commission for the sale of surplus assets be directed to the Consolidated Revenue Fund as these were assets held for all Canadians.

And 

Recommendation 3 

We recommend that the National Capital Commission approach Parliament through the Treasury Board for the necessary resources should the Commission require such monies to effectively operate and manage its real estate assets.

Mr. Neville felt that he could not respond at this time, but promised to provide the Committee with an answer in the near future.


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