Budgetary	Non-Budgetary	Total
Voted Appropriations	8,048.0	26.6	8,074.6
Statutory Authorities	5,518.3	----	5,518.3
Total	13,566.3	26.6	13,592.9

 

Source:  Supplementary Estimates (A), 2007-2008, p. 9.

 

OVERVIEW  

 A.  Planned Spending 

Treasury Board Secretariat officials began their testimony by providing Senators with an overview of the $13.6 billion in planned spending under the Supplementary Estimates (A) 2007-2008.   As Mr. Moloney informed the Committee,  this spending is consistent with the planned expenses as established in the March 2007 Budget and the October 2007 Economic and Fiscal Outlook.  In those documents, planned spending for the 2007-2008 fiscal year total some $233.4 billion. With the spending proposed in these Estimates and the $211.7 billion provided under the 2007-2008 Main Estimates, total Estimates to-date for this fiscal year are $225.3 billion. The $233.4 billion in planned expenditures can be compared to the previous fiscal year, 2006-2007, where the total expenses of the federal government were $222.2 billion, and $209.0 billion for the 2005-2006 fiscal year.

 

As Mr. Moloney reminded the Senators, the Main Estimates for 2007-2008 were tabled on February 27, 2007, three weeks before the 2007 Budget was presented on March 19, 2007. As a result, the Supplementary Estimates currently before the Committee are asking Parliament’s approval to spend funds on several strategic initiatives and key priorities announced in the 2007 Budget and related Cabinet decisions. As he explained, through these Estimates, the federal government is seeking Parliament’s approval to spend $8.1 billion in voted appropriations that were not known or sufficiently developed when the Main Estimates were tabled last February. Among the expenditures tabled for approval, he highlighted the following:  

• $875.2 million for National Defence for implementing the Canada First Defence Plan;

• $573.8 million in funding for the Canada Strategic Infrastructure Fund;

• $181.9 million to preserve and improve the quality of affordable housing for low-income Canadians, including seniors, persons with disabilities, victims of family violence, and Aboriginals;

• $120.9 million to fund additional RCMP positions and law enforcement priorities; and
• $105 million to create new Centres of Excellence to support research and commercialization activities in priority areas such as environmental science and technologies, natural resource and energy, and health and related life sciences.

 

Mr. Moloney noted that statutory expenditures are expected to increase by $5.5 billion, due mainly to the following items:  

• $1.5 billion to implement the Clean Air and Climate Change Trust Fund;
• $1.2 billion for fiscal Equalization;
• $794.6 million in support of the Canada Social Transfer;
• $614 million in transition payments for post-secondary education and training for Ontario, Manitoba and Saskatchewan;

• $612 million to implement the Patient Wait Times Guarantee;
• $401 million towards the Cost of Production Benefit for agricultural producers;
• $300 million to assist provinces and territories with the cost of the Human Papillomavirus Immunization ; and
• $250 million to support the creation of child care spaces.
  
   

B. Changes to Central Votes

Mr. Moloney informed the Committee that, as well as including requests for new spending authority for many of the Budget measures, these Supplementary Estimates also seek approval to create two new central Votes: the first, for the government-wide Operating Budget Carry Forward, and the second, for government-wide Paylist requirements. He stressed that the two new central Votes do not represent additional spending requirements in the Supplementary Estimates as these items have previously been funded from other sources.  Rather, they are intended to improve transparency. In addition, they will allow the Treasury Board Secretariat to reduce the size of future years' Supplementary Estimates. 

He explained further that the Treasury Board's Operating Budget Carry Forward policy is a long standing means of providing departments with the capability to transfer a portion of any unused funds into the next fiscal year, up to a maximum of 5 per cent.  As he noted, once approved by Parliament, the new approach will provide a mechanism by which these routine departmental requests for transfers can be consolidated into a single, more visible, central Vote, which will be displayed in the Treasury Board's votes. In addition, through this mechanism, the government will be able to allocate these funds to departments earlier in the fiscal year (i.e., once the Public Accounts are closed in September rather than waiting for Supplementary Estimates to be voted in December).  According to the Treasury Board Secretariat, this will support better planning, and improve program management and business continuity within departments.

Mr. Moloney noted other advantages to the new Vote structure. The new Operating Budget Carry Forward Vote reduces the number of line items in Supplementary Estimates and, in many cases, eliminates the requirement for Supplementary Estimates altogether for many smaller departments.  As an example, he told the Committee that this year, 33 more departments would have had pages printed in Supplementary Estimates (A), had the Treasury Board not proposed this Vote. Instead, in these Estimates, those items are detailed in one place, as part of the horizontal items (pages 74 to 86).  A total of 130 departments and agencies may request appropriations through the Estimates process.  

The second proposed central Vote is the Paylist Requirements Vote.  As Mr. Moloney explained, under this Vote the Treasury Board will reimburse departments for paylist shortfalls related to certain costs for employee benefits, such as severance pay and parental benefits.  Currently, these requirements are met later in the year through permanent allocations from Treasury Board Vote 5 – Government Contingencies (TB Vote 5). The creation of a separate vote for these requirements means that there will be greater transparency and accounting of personnel costs and a clear identification of the funding source for these costs.  It also helps address the concerns of the Auditor General, who has been critical of the use of TB Vote 5 for routine paylist costs that are the legal obligation of the employer. Mr. Pagan also directed the Senators` attention to the new Vote wording for TB Vote 5 on page 23, in particular the new criteria itemised in that Vote that must be met in order to approve departments` access to TB Vote 5 funding. The Vote wording has changed as a result of the introduction of the two new central Votes.  

The manner in which contingency funds have been used under the TB Vote 5 has been an abiding concern for the Committee. The changes to the central Vote structure should address many of these concerns, which have focused on clarifying how the Vote was used, the government's accountability to Parliament on its use, the overly broad wording previously used in the Vote itself, and in assuring that the Vote is used strictly for urgent requirements. Thus, Senators were generally very supportive of these new initiatives.

They were also pleased to learn that, overall, the creation of these Votes and their inclusion in the Main Estimates will serve to reduce the dollar value of a typical Supplementary Estimates amount in future years by an estimated $1.5 billion to $1.75 billion. The increased reliance on Supplementary Estimates by departments and agencies as government finances improve has also been a long standing concern of this Senate Committee. 

 

EXAMINATION OF THE SUPPLEMENTARY ESTIMATES (A), 2007-2008 

            During the Committee’s hearing on the Supplementary Estimates (A), 2007-2008, Senators raised a variety of issues related to the planned spending as outlined above, in addition to the operation of the new central Votes.  Some of these are discussed below. 

 

A.    Multi-year Appropriations

Some senators noted that, as was the case in prior years, in these Estimates three agencies – Canada Revenue Agency, Parks Canada Agency, and Canada Border Services Agency – are requesting multi-year appropriations, pursuant to each organization’s respective enabling legislation[2].  Mr. Moloney explained that as such, Parliament would be voting on the appropriation of funds once, and, as a result, these three organizations have the authority to spend in either this fiscal year or the following fiscal year. 

 Senators were interested to learn that the Treasury Board Secretariat has been examining, in consultation with the Department of Finance, whether or not a similar multi-year appropriations approach could be extended to a broader range of departments, specifically those involved in a larger number of, or multi‑year plans for, asset purchases. Mr Moloney indicated that the Treasury Board Secretariat is currently running a pilot project under which three specific departments are being allowed to mimic multi-year appropriations through administrative means. The Secretariat will be evaluating the pilot in order to determine whether or not it improves management and provides value for money, but also in terms of information, control, and oversight ability. Further multi-year appropriations will not be proposed before the completion of the evaluation. Mr. Moloney agreed to share the results of the pilot with this Committee and with Parliament. 

 

B.     Fiscal Equalization

Senators were interested in the $1.25 billion provided in these Estimates for Fiscal Equalization (page 151).  As Mr. Moloney explained, this funding reflects an update to forecasts as well as a specific change in provincial entitlements. Specifically, it relates to the provinces' ability to choose alternative arrangements going forward as detailed in Budget 2007. In that Budget, the government announced a new formula for Equalization which modified the 2004 New Framework for Equalization and Territorial Formula Financing. It also provided an option to Nova Scotia and Newfoundland and Labrador to remain under the old Equalization system or opt for the new formula. Nova Scotia opted for the new formula; hence, there was an additional cost for Equalization of $1.25 billion this fiscal year. This represents an increase of $200 million over the $1.1 billion first anticipated in Budget 2007 for this fiscal year.

 

C.    Child Care Agreements

Senators were interested in the allocation of the $250 million in funding towards the creation of child care spaces in the fiscal year 2007-2008, which was made pursuant to a commitment in the 2006 Budget.   Mr. Moloney explained that the funds were distributed to provinces and territories in June of this year.  He added that provinces and territories are guided in the allocation of their funding for child care by arrangements in the Canada Social Transfer in 2000 and 2003 which comprised of federal/provincial/territorial frameworks on early childhood development, early learning, and child care. Further, the responsible minister has recently sent a letter to the provinces and territories setting out federal expectations. Senators were also interested in the proposal developed in the Budget Plan 2007 to provide an investment tax credit to businesses that create new child care spaces in the workplace. Treasury Board Secretariat officials indicated that they were not in a position to explain how the provinces have used the $250 million to date, nor could they speak to the latter proposal, but would undertake to provide the Committee with that information.

 

D.    Gender-based Analysis of the government Programs

            Many Senators questioned how gender-based considerations are taken into account in the Expenditure Management System Renewal, and whether or not gender‑based analysis was being incorporated into cabinet review of federal programs.

            According to Mr. Moloney, departments are required to be quite clear as to the objectives they are aiming to achieve, and to be able to assess their performance through a formal program evaluation; within this context, programs may have gender‑specific outcomes.  When examining specific program proposals and initiatives, Treasury Board Secretariat program analysts are required to ensure that there is an appropriate assessment of gender outcomes, whether it related to a specific and explicit objective related to gender or other gender‑based impacts. All Secretariat program analysts have received formal training in order to do so.  

It was unclear to the Committee, however, how gender-based analysis was being carried out within departments. One Senator cited several examples where gender-based considerations were perhaps not being incorporated into a program’s initial analysis. For example, a recent assessment of the Wait Times Guarantee initiative found that those women were being treated differently to men within the health care system.  As explained by Mr. Moloney, the funds related to this initiative were placed in a trust and, as such, the specific program parameters did not flow through the Treasury Board process. On a positive note, he informed the Committee that new formal guidance and requirements relating to the Treasury Board Submission process came into effect on September 1, 2007. Under it, all departments and agencies are required to bring forward a gender-based analysis to the Treasury Board, both when seeking approval for new programs and expenditures, and when seeking to change the terms and conditions surrounding an existing one.  Some Senators expressed their interest in further study of this issue. 

 

E.     Accountability for Joint Federal/Provincial/Territorial Programs

Some senators inquired about the process by which joint programs are being evaluated and/or audited, and by whom (the federal or provincial/territorial governments or both), citing the Clean Air and Climate Change Trust Fund as an example.  Mr. Moloney responded by saying that the authority to evaluate and audit programs is specific to each program and that, in many cases, it is the provincial auditors general who will review those expenditures from the point of view of financial controls and probity. In the specific case of the Clean Air and Climate Change Trust Fund, it is the provinces and territories who are responsible for ensuring that the programs are being carried out in accordance with the established terms and conditions, and for reporting publicly on their activities and the results achieved.

 

F.     Federal Benefits for Seniors

One Senator noted that that were there no additional funds under these Supplementary Estimates for Guaranteed Income Supplement (GIS) payments (page 176).  Senators were interested in determining how many senior citizens are currently receiving the GIS; how many should receive the GIS; and what the current outreach programs of the department are to reach those seniors not receiving the GIS for which they are eligible. 

While the Treasury Board Secretariat officials could not provide the Senators with some of this information at that time, they did outline the actions that Human Resources and Social Development Canada are taking in order to improve eligibility for the Canada Pension Plan, Old Age Security, and the GIS. As Mr. Moloney explained, through Service Canada, the department is being more proactive in reaching out directly to communities.  For example, they are partnering with an Aboriginal group, the First Nations Social Development Society, to hold workshops for Aboriginal seniors and elders on reserves.  In addition, they are working with Citizenship and Immigration Canada and with immigrant‑serving agencies to ensure that immigrants to Canada are aware of their eligibility; there is an also an effort in the City of Ottawa to reach homeless and near‑homeless seniors. They are also trying to determine the needs of disabled groups and improve their awareness of these programs.

 

G. Millennium Scholarship Fund

Some Senators voiced their concerns with respect to the Millennium Scholarship Fund, noting that the last academic year to which the fund applies is 2008. Senators questioned whether or not the fund would be renewed or replaced, and what issues were under consideration as the government reflected on the program.  Treasury Board Secretariat officials committed to bringing those issues to the attention of Human Resources and Social Development Canada and to the Department of Finance, both of whom would be involved in any such decision.  

 

CONCLUSION

During its meeting on the Supplementary Estimates (A), 2007-2008, the Committee deliberated on these and other matters. Treasury Board Secretariat officials committed to following up on a number of issues.  The Committee intends to more fully examine the government’s spending plans for the 2007-2008 fiscal year, and will present further interim reports as it continues its work.    

The Standing Senate Committee on National Finance respectfully presents its report on the Supplementary Estimates (A), 2007-2008.