Proceedings of the Standing Senate Committee on National Finance
Issue 1 - Evidence
OTTAWA, Thursday, October 23, 1997
The Standing Senate Committee on National Finance met this day at 11 a.m. to organize the activities of the committee.
[English]
Mr. Denis Robert, Clerk of the Committee: Honourable senators, I see a quorum. Pursuant to rule 88, the first order of business is that I preside over the election of the chairman. Are there any nominations for chairman of the committee?
Senator Bolduc: I move that Senator Stratton be chairman of the committee.
Mr. Robert: Are there any other nominations? If not, I call on Senator Stratton to take the Chair.
Senator Terry Stratton (Chairman) in the Chair.
The Chairman: The election of the deputy chairman is the next item of business. Do I have a nomination?
Senator Taylor: I nominate Senator Cools.
The Chairman: If there are no other nominations, the motion is carried.
Item No. 3 is a motion to this effect:
That the Subcommittee on Agenda and Procedure be composed of the Chairman, the Deputy Chairman and one other member of the committee to be designated after the usual consultation;
That the Subcommittee be empowered to make decisions on behalf of the Committee with respect to its agenda, to invite witnesses and schedule hearings; and
That the Subcommittee report its decisions to the committee.
Would someone care to move such a motion?
Senator Bolduc: I so move, Mr. Chairman.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: The motion is carried.
Next is a motion to print the committee's proceedings. Do I have a mover for such a motion?
Senator Sparrow: I so move.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: The motion is carried.
Item No. 5 on the agenda is a motion which states:
That, pursuant to rule 89, the Chairman be authorized to hold meetings, to receive and authorize the printing of the evidence when a quorum is not present, provided that a representative of each party is present.
Senator Sparrow: Mr. Chairman, I so move.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: The motion is carried.
Motion No. 6 reads:
That, pursuant to rule 104, the Chairman be authorized to report expenses incurred by the committee during the last session.
That report is here. Would someone care to move such a motion?
Senator Sparrow: I so move.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: The motion is carried. The next item deals with research staff and reads as follows:
That the committee ask the Library of Parliament to assign research officers to the committee;
That the Chairman be authorized to seek authority from the Senate to engage the services of such counsel and technical, clerical and other personnel as may be necessary for the purpose of the committee's examination and consideration of such bills, subject-matters of bills and estimates as are referred to it.
That the Subcommittee on Agenda and Procedure be authorized to retain the services of such experts as may be reqired by the work of the committee; and
That the Chairman, on behalf of the committee, direct the research staff in the preparation of studies, analyses, summaries and draft reports.
Would someone care to move the motion?
Senator Sparrow: I so move, Mr. Chairman.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: The motion is carried.
Item No. 8 deals with authority to commit funds and certify accounts. The motion reads:
That, pursuant to section 32 of the Financial Administration Act, authority to commit funds be conferred on the Chairman or in the Chairman's absence, the Deputy Chairman; and
That, pursuant to section 34 of the Financial Administration Act, and Guideline 3:05 of Appendix II of the Rules of the Senate, authority for certifying accounts payable by the Committee be conferred on the Chairman, the Deputy Chairman, and the Clerk of the Committee.
Senator Sparrow: I so move, Mr. Chairman.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: Motion No. 9 deals with travel and reads as follows:
That the committee empower the Chairman to designate, as required, one or more members of the Committee and/or such staff as may be necessary to travel on assignment on behalf of the committee.
Senator Sparrow: I so move, Mr. Chairman.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: The motion is carried.
The next item on the agenda concerns the travelling and living expenses of witnesses. The motion states:
That, pursuant to the Senate guidelines for witnesses expenses, the Committee may reimburse reasonable travelling and living expenses for no more than two witnesses from any one organization and payment will take place upon application.
Senator Sparrow: I so move, Mr. Chairman.
Senator Bolduc: I understand that this applies to when we ask witnesses to appear before us and not otherwise.
The Chairman: That is right.
Senator Taylor: Mr. Chairman, it may be too late in that you have passed already item number 10 on the agenda. However, I note that other committees have restricted the number of witnesses to one. This motion states "no more than two."
Senator Bolduc: We had the same thing at the Foreign Affairs Committee.
Senator Cools: We invite witnesses to appear.
The Chairman: For the most part, we would ask that only one witness attend. It is the committee's decision.
Senator Sparrow: May we revisit that motion, Mr. Chairman?
The Chairman: Yes.
Senator Sparrow: May I move that the number two be replaced by the number one?
We had the same discussion this morning in another committee. The committee can always decide if it wants to pay more money to witnesses.
Senator Bolduc: I agree with Senator Sparrow.
The Chairman: Is it the wish of the committee to reduce the number from two to one?
Hon. Senators: Agreed.
The Chairman: It is carried. The next item is with respect to meals. The motion states:
That the clerk be authorized, in consultation with the Chairman, to order food, et cetera, whenever a committee meeting is scheduled to extend into or over a meal period.
The reason for this motion is that we are meeting at 5:30 p.m. on Wednesdays. We feel that if the meeting is to go to 7 p.m. or 7:30 p.m. and it is to be a long evening that we should have something to keep you folks around the table.
Senator Moore: I so move, Mr. Chairman.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: The next motion is also a new motion. It states:
That the Chairman be authorized to seek authorization from the committee on Internal Economy, Budgets and Administration to incur expenses up to $10,000 on an emergency basis.
Is there a mover for the motion?
Senator Sparrow: Is such a motion used in other committees?
The Chairman: I think, perhaps, the clerk can explain it better than I can.
Mr. Robert: I do not know if it is used in any other committees. It is a practice I try to follow to give as much flexibility to the committee that I work with. It is being done with the special joint committee on the Constitution. It has been done in the past also. It is to bridge the time until we present a budget to the committee.
Senator Sparrow: Could you tell us what would be an emergency?
Mr. Robert: The committee may call a witness before we have a budget approved by the Internal Economy Committee. You do not have any money right now to pay for their transportation and living expenses.
Senator Sparrow: Would that money come out of the budget that is to be approved and will it reduce the amount of that budget?
Mr. Robert: Yes.
Senator Bolduc: Once our budget is approved, we will not need such a provision.
Senator Taylor: It does not say that.
Senator Moore: Further to Senator Sparrow's question, would that money be used to pay for the expenses of another witness if we wanted to hear one, or is this measure for something beyond that?
The Chairman: It is really an interim measure until we have our budget approved by the Internal Economy Committee. That is all this is for.
Senator Taylor: It does not say that.
Senator Bolduc: It is not very clear.
Senator Sparrow: Could you use the expression "advance on expenses" perhaps?
The Chairman: Yes, we can. Is there any further discussion?
[Translation]
Senator Ferretti Barth: You make no mention of the $10,000 in your initial report. Did you make a similar request during the previous session? Was your request for $10,000 approved or not?
[English]
The Chairman: This is the clerk's first meeting, as it is mine. The probability of this motion being used is remote. If something comes up prior to our budget being approved, then we need moneys to allow us to call witnesses and have them appear. That is all it is for. It is for no other purpose.
[Translation]
Senator Ferretti Barth: Other committees also have witnesses to hear from and they have not requested $10,000 to cover emergencies. Since the other committees have to hear testimony from witnesses, I do not see why our committee should have an emergency fund set aside.
[English]
Senator Bolduc: When do we expect to have our budget?
Senator Cools: It has to be prepared and the committee has to be functioning.
Senator Bolduc: Do you have any idea as to when that will be? If it is for a few weeks, then there is no problem with this motion. The first witness we usually have is the President of the Treasury Board and his officers.
The Chairman: It is up to you, senators. This is not a huge issue.
Senator Taylor: I support Senator Ferretti Barth. I do not see us needing it. When I go back to my little old Alberta newspapers and explain how a committee got $10,000 on an emergency basis with no explanation, it will look like hell. I do not see that it is worth going through the trouble.
The Chairman: If senators do not feel proper about it, then we will not do it. It is not an issue. If we have to call witnesses, though, we will have to do something.
Senator Taylor: We can do that then.
The Chairman: I have been informed that in the last session of Parliament Internal Economy approved this measure for all committees. However, not all committees adopted it.
If it is bothering members of the committee, then in my view it is more important not to have it than to have it. We will not carry it forward.
Item 13 deals with electronic media coverage of public meetings. It is a fairly standard motion, which states:
That the Chairman be authorized to seek permission from the Senate to permit coverage by electronic media of its public proceedings with the least possible disruption of its hearings; and.
That the Subcommittee on Agenda and Procedure be empowered to allow such coverage at its discretion.
Senator Sparrow: I so move, Mr. Chairman.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The Chairman: The time slot for committee meetings is 5:30 p.m. on Wednesdays and 11 a.m. on Thursdays. They will take place in this room.
In terms of other matters, when it comes to study, the committee always looks to the future as to what role it can play. We have the Supplementary Estimates coming to us this week.
I should now like to open the floor for discussion as to future studies.
Senator Bolduc: So that we may have a free discussion about the future work of the committee, I suggest that we proceed in camera, Mr. Chairman.
Senator Cools: I support that.
The committee continued in camera.
OTTAWA, Thursday, November 6, 1997
The Standing Senate Committee on National Finance met this day at 10:45 a.m. to examine the Supplementary Estimates (A) laid before Parliament for the fiscal year ending March 31, 1997.
Senator Terry Stratton (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, I would like to call the meeting to order. I know several people have a number of questions, and I would like to proceed.
Welcome, Mr. Lieff. I understand that you have an opening statement to make.
Mr. Andy Lieff, Assistant Director, Estimates Division, Treasury Board of Canada: Yes. Unfortunately, Mr. Miller has not arrived yet. If the committee wishes, I could proceed with the opening statement.
The Chairman: What is the wish of the committee?
Senator Forest: Do you know when he will arrive?
Mr. Lieff: I expect that he will be here momentarily.
The Chairman: We will wait for a few minutes.
I would like to suggest, if there is time at the end of the meeting, that we hold a short in camera meeting to discuss future long-term business.
Senator Cools: Mr. Chairman, Senator Milne has asked me to speak on her behalf. I believe that, in the last session, some officials from Health Canada appeared before this committee and they told us that, by August or September of this year, they should have the draft regulations on hemp cultivation. Senator Milne has shown some interest in this matter. She would like to know if the committee would consider asking those officials to appear before the committee again so that she may ask a few questions.
The Chairman: As I understand it, this involves her region which is the southern Niagara region.
Senator Cools: Yes.
The Chairman: They are getting out of tobacco growing and they must get into another crop. As I understand it, they are having difficulty finding another crop to grow with a reasonable rate of return. I understand hemp was a viable alternative for that region. When the officials appeared before us they told us that there had been a delay in developing the regulations, and they apologized for that but, to my knowledge, apparently nothing has taken place since that time. That is my recollection. However, I stand to be corrected if someone has some further information.
Senator Cools: Your recollection is excellent.
The Chairman: What would she wish to do?
Senator Cools: She is asking our indulgence to oblige her. If the committee agrees, perhaps I could move that we ask the officials to return, and Senator Milne could then ask the questions she wants to put to them.
In the alternative, other members of the committee could put her questions to them, but I think it would be preferable if she asked those questions herself. If committee members are agreeable to granting this particular indulgence to Senator Milne, I would so move.
The Chairman: Is there a seconder for that motion?
Senator Forest: I second the motion, Mr. Chairman.
The Chairman: A has been suggested to me that we write to the officials requesting an update on the status of the development of these regulations and, if the response to us is inappropriate or lacking in information, that we call them. Would you agree with that?
Senator Cools: Excellent.
The Chairman: That would be a first step, and then failing that satisfactory answer, then we would ask them to attend.
Senator Cools: I shall inform Senator Milne of the result.
The Chairman: Mr. Miller, perhaps you would like to proceed with your opening statement.
Mr. David Miller, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada: Mr. Chairman, honourable senators, I am appearing before you today to discuss the government's Supplementary Estimates (A) for the fiscal year 1997-98. These are of course the first supplementary estimates for this fiscal year.
Honourable senators, these estimates were introduced in Parliament on October 23, 1997, and seek new authority to spend approximately $2.6 billion. From a fiscal planning perspective, these amounts were provided for in the last budget of February 18, 1997; represent reallocations of funds within and among departments and agencies; and seek Parliament's authority to discharge liabilities that were provided for in the deficits of the previous fiscal years. This final point is one which represents a substantial portion of the supplementary estimates.
An additional purpose of supplementary estimates is to inform Parliament of the latest forecasts of spending under certain statutory authorities. These supplementary estimates identify a net increase of $858.2 million.
Some of the major items for which appropriations are requested include $504 million for 60 departments and agencies under the carry-forward provision to meet operational requirements originally provided for in 1996-97. This provision reflects a feature of the government's approach to operating budgets intended to reduce year-end spending and improve cash management. It allows managers to carry forward from one fiscal year to the next an amount of up to 5 per cent of the operating budget of the previous year. The operating budget includes salaries, operating expenses and minor capital expenditures.
The next three items are: $233.9 million for increased contributions by seven departments and agencies under the Canada Infrastructure Works Program which was announced in the 1997 budget; $78.1 million in contributions by 13 participating departments and agencies under the Federal Youth Employment Initiatives, a government wide strategy to create employment opportunity for Canada's youth; and $67.3 million for three departments and agencies for support to the provinces of Quebec and Manitoba in relation to the Saguenay and Red River floods.
I would also mention that $348 is a one-time grant from Transport Canada to the Province of Newfoundland for its agreement to assume all responsibility for the operation of the Newfoundland-Labrador Marine Freight and Ferry Passenger Service effective April 1997; and $162 million is for Agriculture and Agri-Food Canada to forgive uncollectable amounts owing the Crown in respect of advances made to the Crop Reinsurance Fund pursuant to the Farm Income Protection Act.
A further $97.6 million is for Transport Canada for an adjustment to their anticipated level of revenues due to amendments to the Greater Toronto Pearson Airport lease; $94.9 million to Health Canada for a variety of health initiatives such as enhanced blood safety and surveillance activities and the implementation of 1997 budget initiatives, including the Health Transition Fund to help provinces test ways to improve the health system and increase support for community-based children's programs. A further $87 million is for Foreign Affairs and International Trade to provide certain provinces with a share of revenues collected from the fees on softwood lumber exports.
Citizenship and Immigration Canada will receive $84.7 million for grants to the provinces of British Columbia, Ontario, Alberta and Nova Scotia to respond to the growing need to assist immigrants in integrating into Canada; $82 million will go to Indian Affairs and Northern Development for additional expenditures related to treaty obligations, settlement of claims and support for self-government initiatives; and $56.5 million is for Agriculture and Agri-Food Canada for increased grants and contributions to facilitate agricultural development and grain transportation reform, as well as for the potential requirement for additional payments related to the dairy subsidy.
The above major items represent $1.9 billion of the $2.6 billion for which approval from Parliament was sought. The $687 million balance is spread among a number of other departments, agencies and Crown corporations, the specific details of which are included in the supplementary estimates.
In terms of the update to Parliament on forecast statutory requirements, these reflect a net increase in expenditures of $858 million from the amount in the 1997-98 Main Estimates. These adjustments are consistent with information in the Minister of Finance's October 15, 1997, economic and fiscal update.
The major items are: A payment of $801 million by Industry Canada to the Canada Foundation for Innovation to honour a commitment made by the government in 1996-97 to establish the foundation and announced in the February 1997 budget; an increase of $142 million for Agriculture and Agri-Food Canada for payments to various provinces under the Agricultural Products Co-operative Marketing Act and the Farm Income Protection Act; an increase of $53 million in equalization payments to the provinces by Finance Canada, reflecting changes in forecasts upon which these payments are based, such as provincial tax levels, population data and tax revenues; and a decrease of $171.2 million for Finance Canada related to the cash component of the Canada Health and Social Transfer. This reflects a decrease of $28 million for 1996-97 due to an increase in the value of tax points transfers portion of this payment and population data, and a decrease of $143 million in the current fiscal year due to an increase in the value of the tax points transfers and revised population data.
The above major items represent $825 million of the $858-million increase to statutory expenditures.
Mr. Chairman, honourable senators, this concludes my opening remarks. I will be pleased to respond to any questions you may have concerning the supplementary estimates.
Senator Lynch-Staunton: I would like you to elaborate on the significance of the adjustment in the lease agreement between the Government of Canada and the Greater Toronto Airport Authority. What is the $97.6 million for? It says that it is an adjustment to their anticipated level of revenues due to amendments of a lease.
Mr. Miller: Perhaps the best way to start is to describe exactly how Transport operates in the sense of how their budget is approved by Parliament. Using fictitious numbers, if Transport has an operation which has requirements of $1 billion, and they estimate revenues of, say, $300 million, the authority provided by Parliament recognizes that $1-billion requirement and authorizes the department to use the revenues as they come in to help offset that expenditure. In actual fact, Parliament only appropriates the difference, or $700 million, to that department.
When we went into the arrangements in December of 1996 we had an agreement with the Greater Toronto Airport Authority to transfer the management, operation and development of the Lester B. Pearson International Airport. In February of 1997 the Treasury Board approved amendments to the lease to fund part of the GTAA's, or Greater Toronto Airport Authority's, development program related to specific projects already underway by Transport Canada or planned to be underway shortly; such things as the completion of the north-south runway, the de-icing facility, fire fighting facilities and possible tunnel access to the infield area. There were a number of capital projects under way.
The total estimated cost of this amendment is $185 million over a ten-year period. It will be provided to the GTAA as rent credits, in other words, offset to the rent requirements, representing foregone revenue to the department. Specifically what has occurred here is that, over the next ten-year period, the requirements in terms of expenditures for the Department of Transport will be reduced because they will no longer undertake those projects directly.
In the current fiscal year, in order to recognize the change in lease which transfers responsibilities for these to the airport authority, we acknowledge that the revenues will not be realized. What we are asking Parliament to approve is not an increase in the expenditure plans of the Department of Transport. In fact, over the next 10 years, those requirements will be reduced, but for the current year there is recognition that there was this over $90 million worth of revenue that they would have received from the airport authority, that now the airport authority will retain in order to undertake these capital projects.
It is not changing the overall expenditure, it is changing the amount of revenue that the Department of Transport will receive in exchange for the airport authority undertaking these projects directly.
Senator Lynch-Staunton: The government agreed to contribute to a capital expansion project of $185 million over a ten-year period; is that correct?
Mr. Miller: That is correct.
Senator Lynch-Staunton: In the first year $98 million would already be written off against that 185 million?
Mr. Miller: That is also correct.
Senator Lynch-Staunton: Why a 10-year period when more than half of it is written off in one year? What is the significance of 10 years?
Mr. Miller: The significance is that all of these projects were to be undertaken by the Department of Transport over the next 10-year period. By providing this offset in the lease cost, then the airport authority itself can take its own timetable and perhaps do these projects much sooner than otherwise anticipated.
Senator Lynch-Staunton: Which is what is happening now?
Mr. Miller: Yes, that is correct.
Senator Lynch-Staunton: Are there similar forgiveness or contributions to capital programs in other airports?
Mr. Miller: To my knowledge, this is the only one that has been done in this way but I stand to be corrected on that. This is the only one where a significant amount of revenue was to come in but, because of a new lease arrangement, that will now be offset.
Senator Lynch-Staunton: I know these questions will be directed elsewhere, but I find it extraordinary or unusual to say the least that, after a lengthy period of negotiations, a lease is signed in December and two months later there is a major change to it, to the extent of $98 million in the second year. I do not understand how what was found out in February was not known in December and included in the original lease.
Mr. Miller: Unfortunately, I do not have the details of the original lease, but I would assume it was an arrangement rather than a formal lease, and that there were some matters after the December negotiations that had to be ironed out. It seems to me that certain elements, such as particular financial aspects, may have been left and only addressed in that February agreement. However, I am not sure of what was contained in the December arrangement as opposed to the February detailed lease.
Senator Lynch-Staunton: How long is it leased for, do you know?
Mr. Miller: I do not have that information available to me now. I am sure we can find that.
Senator Lynch-Staunton: I wanted to ask several questions on the lease, and I recognize that you will not have all of the information with you. Could you provide the committee members with a copy of the lease?
Mr. Miller: We will certainly make inquiries, senator. I am not sure whether that is public information or if there is some confidentiality associated with it under our judicial process.
Senator Lynch-Staunton: It is very difficult to appreciate the significance of the $98 million when we do not have the lease in front of us to see exactly where it applies, how it applies, and how it is authorized. You are asking us, on this item, to fly blind. It would have been preferable to have somebody here who could go through the clauses of the lease with us. All we have is the statement that there was an arrangement made respecting $185 million over 10 years.
Does that mean that other similar arrangements can be made and eventually the Government of Canada will find itself funding the major part of what is going on at the Pearson airport? We just saw in the paper today that they are going into an expansion program which will increase their debt to $5 billion over the next 8 or 10 years. If the government's policy was to divest itself of airports and leave it up to local authorities to manage, operate, and attend to capital improvements, can the airport authority come back to the government and tell them that government must be partners with them in this?
The whole concept of airport authorities will be destroyed if on the one hand management is transferred for all but the technical facilities, but the government is still on the hook for the funding, either through this kind of arrangement or another kind of arrangement. That would, in effect mean that tax dollars will continue to go into the airports. As I understand it, that was not the purpose of transferring these airports to the authority. At Dorval, the only airport with which I am familiar, I am not aware of forgiveness along these lines. I wonder where we are headed.
I do not think I am the only member of this committee who would appreciate seeing a copy of the lease.
Mr. Miller: Certainly.
The Chairman: Most other airports, as I understand it, completed their capital works projects before the transfer. Is that not true?
Mr. Miller: I am not sure we ever actually complete all of those that are necessary.
The Chairman: Not all of them, but the significant ones are completed. I know in Winnipeg, for example, the vast majority are complete and that, for the ongoing operation or maintenance of the facility, they are considering adding a cost to the traveller.
My question is if they were able to do that for the most part in most other airports, to your knowledge why was Pearson delayed? Was it as a result of the problems at Pearson?
Mr. Miller: Certainly, you are correct, when you think of even the Ottawa International Airport, that there have been significant capital improvements in the last few years that have now been completed and based, on my understanding, some very large projects are proposed to be undertaken at Pearson and there has been some controversy and much community involvement in proposals such as the cross runway and things like that. Much of the delay in the change has been due to ensuring adequate consultation and meeting the concerns of the communities, and that may have delayed the Department of Transport's original plans.
Certainly, as part of the overall process of transferring responsibility, the government recognized that it would be preferable to avoid the liability of the further improvements, and that was part of the intention of divesting them. It was to allow them to run on their own. Pearson is probably the most profitable airport in Canada, but as to the exact details on what constituted the lease and how the offsets were arrived at, I do not have that information available.
Senator Lynch-Staunton: Do you know what revenues the government received before the so-called "privatization," and what it is getting now under the lease arrangement?
Mr. Miller: I do not have that information available either. I would assume that the revenues obtained before would be available in the public accounts up to the end of 1996-97. That was tabled last week. However, I do not know how they have been impacted by the leasing arrangement.
Senator Lynch-Staunton: Perhaps you could provide that information to us.
Mr. Miller: We will add that to our list.
Senator Lynch-Staunton: When the arrangement was made with the Greater Toronto Airport Authority it included only Terminals 1 and 2. It was then announced in May that Terminal 3 had been sold to the airport authority. Does Terminal 3 come under the same lease as Terminals 1 and 2? As you may recall, Terminal 3 was owned by private enterprise. I will not go into the long story which most of us still remember. It makes sense for the three terminals to be under the same authority. What is the status of Terminal 3 in terms of this lease? There were special arrangements between Terminal 3 and the government. Were those special arrangements fitted into the lease; or do they have the same conditions as apply to Terminals 1 and 2?
Mr. Miller: Unfortunately I must defer to a written reply on that.
Senator Bolduc: We have $233 million for increased contributions by seven departments and agencies under the Canada Infrastructure Program. I read in the newspaper that, included in this infrastructure are golf courses in many places in Canada. Is there any process of selection of the infrastructure programs to be undertaken by the federal government, or does the federal government just accept the proposition that come from the provinces?
I know that some municipalities have a huge problem with their basic infrastructure. I am referring to water works, sewage disposal and so on. Yet, some areas are, apparently, being financed to build golf courses. I would an explanation.
Mr. Miller: As you know, senator, individual projects involve all three levels of government. A selection review is carried out at both the federal and provincial levels in respect to those projects and it is then put forth at the municipal level. There is a very technical review of the projects as well as of the consequences of going ahead. That applies also to the alternatives or other projects that may be selected. This program, however, was run on a fairly tight geographic basis so that there were allocations to ensure fairness. There were allocations for each province, and there were allocations within each province to different areas.
The projects were required to meet certain criteria. I am not sure how much money went into community centres or community golf courses as opposed to infrastructures such as roads and sewers. Again, it was based on the municipal level putting forward proposals and the federal and the provincial levels ensuring that they met the criteria of the program and were, in fact, the best of the projects that were proposed.
Senator Bolduc: Are any of those projects in provincial capitals? I ask the question because in the provincial capitals you usually have many municipal civil servants, provincial civil servants and federal civil servants.
Mr. Miller: Certainly most of the allocation was based on population, so that a provincial capital like Toronto would obviously, because of its size, receive a large proportion of the funding for southwestern Ontario. The kinds of projects that were selected reflect whether the area it is an urban area and the needs of that particular community. The allocations were related to population base. That being so, many of the provincial capitals themselves would receive a significant number of projects.
Senator Bolduc: Do you know whether the golf courses are being built in capital cities or in other regions within a province?
Mr. Miller: My understanding, senator, is that a few golf courses were actually part of community centres or were part of a larger complex. Some were being revitalized because of tourism, the necessity of providing that type of facility. Most of those were obviously in rural areas and related to tourism.
Senator Bolduc: There is a grant for Newfoundland and Labrador of $350 million for the freight and ferry passenger services. How was it managed formerly?
Mr. Miller: The ferry service and what we call the coastal ferry service, which operates around the coast of Labrador and the northern part of Newfoundland, was operated by the federal government and through CN Marine and other ferry services. The divestiture of the entire process started a few years ago when Newfoundland took over the South Coast Ferry Service. What it means now is that the federal government will only operate one ferry service, and that to Argentia, Newfoundland. That particular link is required through legislation. The other services would be provided by the province.
Senator Bolduc: The federal government provides a grant for that. Is there any other situation like that in Canada, for example, in British Columbia?
Mr. Miller: My understanding is that the Department of Transport is trying to divest themselves of all of the non-statutory required functions in this area, and I believe that the transfer of the coastal ferry services is the last remaining element of that program. Certainly CN Marine receives a subsidy for their ongoing obligations to provide ferry services but, in this instance, by providing the grant to Newfoundland and Labrador we are able to extract ourselves from the operations and from the future capital requirements and the ongoing implications of running an operation like that.
Senator Bolduc: How many jobs do you expect to create with the approximately $80 million allocation to the Federal Youth Employment Initiatives?
Mr. Miller: The internship program and the other initiatives I believe affect about 11 different departments and agencies. To explain the nature of the program and how it would operate, most of these are in partnership with either a non-profit corporation or some community group. What we are trying to do is provide opportunities for youth in expanding summer employment so that they will be able to obtain some useful employment for a period of time. There are also what we call "internship" programs where the youth is employed by a certain group for a specified period of time so that he or she may acquire certain basic work skills. For example, getting up in the morning and making sure you arrive at the office on time. That experience would be included in the resume of that particular youth. However, there was no real opportunity for ongoing employment. There is a large variety of opportunities under existing programs.
Senator Bolduc: Will they be employed by government agencies and departments?
Mr. Miller: There are two elements to this; first of all, the initiative itself, which was announced at a total of $315 million, would deal with those elements where we, as the federal government, are in partnership with other non-profit organizations. For example, Indian Affairs has $24 million to go towards a whole series of different initiatives.
Senator Bolduc: Would it be possible to see the tables of the department's involvement showing the number of employees or potential employees, as well as a distribution by province?
Mr. Miller: Yes. In fact I do have a table for each program. Unfortunately, what I do not have is a distribution of that by province, but there are literally several pages of initiatives being undertaken under existing programs. Just to give you an example, under Canadian heritage there is: Young Canada Works in Heritage Institutions; Young Canada Works in Both Official Languages, Young Canada Works for Aboriginal Urban Youth; and Young Canada Works in National Parks and Heritage Sites. All of these are in cooperation with non-profit organizations.
The other element we have, which is also included in the supplementary estimates of the Treasury Board Secretariat itself, is for the federal government to undertake an internship program similar to that. We are working with the YMCA and a non-profit organization called Career Edge to provide opportunities for limited duration employment in federal departments themselves over the next three years. Included in these supplementary estimates is $6 million as a contribution to those organizations in order to organize, make use of technology to show job availability, and that kind of thing. However, I do not have a provincial distribution on that now.
Senator Bolduc: Could that information be tabled, Mr. Chairman?
Mr. Miller: Certainly, I would be happy to table the information we have in support of this. As I mentioned, I do not have the provincial distribution at this point.
Senator Forest: My questions have to do with agriculture. I note a $98-million increase, which is double the amount originally budgeted in this program. What programs is that money allocated to and for what purpose?
Are the costs related to the reinstatement of food inspectors included in this or is that found in the Health Canada budget or elsewhere?
Mr. Miller: On the first item, it is important to note that the Department of Agriculture and Agri-Food Canada has three types of support programs that are available to help producers deal with uncertainty. The first of these, which is their major program, is the Net Income Stabilization Program which, for ease of understanding, you can think of as an RRSP for farmers and producers. It operates by depositing money in a bank account, collecting interest on that, and having matching money. There are set limits of overall income that producers can deposit in that way. The program is geared towards a rainy day so that, if prices or net income fall below a certain level, farmers or producers can take advantage of the money they have deposited.
This second element is crop insurance itself, which is the principal mechanism the government uses as an insurance against crop failure or other problems. As an insurance program, it is separate from ensuring an adequate level of income to producers.
Senator Forest: Is that paid for equally by the government and the producer?
Mr. Miller: The crop insurance is shared between the provincial level and the federal level.
The third element, is the Provincial Specific Companion Programs. A few years ago, in order to get the right mix of programs, we decided to look at those first two and decide what the financial requirements were for the NISA Program, for crop insurance, and then, from a planning perspective, the Department of Agriculture and Agri-Food could rely on a residual amount up to $600 million. In other words, the first two would use the bulk of the money, but whatever was left in this envelope could then be used to consider specific initiatives, either to help particular provinces or to help specific parts of the industry.
These companion programs, require much negotiation and many agreements to be signed and verified between the federal government, the provinces, who have a very active role in agriculture, and producer associations or other groups. Therefore, we knew ahead of time that it was unlikely we would be able to get all this information into the main estimates. In fact the plan has always been that the $98 million would be spent on these companion programs but they were not in place at the time the estimates were tabled last February in Parliament. This just recognizes that we are now in a position, the agreements are in place, and these particular programs are under way.
For this particular period, these companion programs will include, for example, beef and hog development programs in Alberta, a risk management pilot project, a sugar beet project, a wildlife crop damage program, contributions to Quebec's ASRA program, which is a similar stabilization program, and several others. They are designed to meet specific requirements, perhaps provincial, or perhaps an element of the agricultural industry itself.
Senator Forest: The funding for that comes from the federal government, the provincial government and the producers; is that correct?
Mr. Miller: In many of these cases it could. I do not want to categorize these as all being the same. Many would require participation and funding from all three. In some cases the federal and provincial governments would enter into an arrangement to provide assistance, or in others perhaps it would be just federal money. It is really to give them the flexibility to adjust their programming to meet the requirements of the following 12 months and, therefore, not have a whole series of initiatives in place that may not be required, but to be able to react in a fairly short term to alleviate particular concerns.
Senator Forest: Do you have any comment on the food inspection program?
Mr. Miller: Yes. The Canadian Food Inspection Agency has been created by legislation. It was announced in the 1996 budget as one of three agencies. It is the only one of those three which has gone through the legislative process and has been established. Prior to the creation of this agency at least four departments were responsible for food inspections: Agriculture and Agri-Food Canada; the Department of Health, the Department of Industry, and Fisheries and Oceans.
I happened to work in Agriculture and Agri-Food for three years and I do not think I would be telling tales out of school to suggest that they did not cooperate on all occasions. It was very awkward and difficult. The creation of the agency has allowed all of those resources to be pooled together. The new food inspection agency has brought all these functions and services together. It represents about 4,500 employees who carry out the inspection of virtually all aspects of the food industry.
By bringing everything together there was the expectation that we would save resources, eliminate duplication, and provide better services by ensuring that the industry would not be subjected to dealing an inspector from the Department of Agriculture one week and an inspector from the Department of Fisheries and Oceans the next.
It was also important to bring everything together to ensure there were no gaps which might result from one department thinking that another department was covering a particular aspect. Administratively, we are in early stages of this, but we are hopeful that it will be much more efficient and effective in terms of ensuring a safe food supply.
Senator Cools: I notice that at page 84 of Supplementary Estimates (A) there is a significant increase in expenditures in the Department of Justice, approximately 13 per cent. Can you explain why that increase is necessary? Can you also tell me why there are increased costs in the categories of Personnel and Professional and Special Services, as well as in Transportation and Communications?
Mr. Miller: Perhaps I could start by identifying some of the specific elements that are included in the request for supplementary estimates. Within the $33.8-million increase, the first element is our standard operating budget carry forward, the ability, as I mentioned in my opening remarks, for departments to bring forward up to 5 per cent of their operating budget in order to provide for better management and to avoid year-end spending. We ask Parliament to re-approve up to 5 per cent each year.
A number of other elements relates to initiatives that had, in fact, almost reached the end of their first period of review. We call these "sunset" programs. Departments were expected to do evaluations and decide whether to continue on in any particular vein. The Department of Justice had several of these program reviews underway but the evaluations had not been completed and the money was not originally included in their main estimates. They have now completed the requirements. The government has made a decision, for example, to continue initiatives in this area and, therefore, we are now asking Parliament to authorize the funds.
Some of these initiatives will be familiar to you; for example, the Integrated Proceeds of Crime Initiative at $6.7 million, the Canada Drug Strategy at about $500,000, Anti-smuggling Initiatives at $3.5 million, and the Child Support Initiative at $9.2 million. All of these elements have been the subject of extensive discussions. It is a question of the department being able to further proceed on these particular initiatives at this point.
There are a few other items, such as the Aboriginal Justice Strategy and the B.C. Treaty Process which, again, are a continuation of processes that have been in place. The Department of Justice has required additional people to deal with the number of cases and the number of judicial processes underway.
Senator Cools: Are you saying that the department has been hiring people?
Mr. Miller: Yes.
Senator Cools: How many new people have been hired and how many of those hired are lawyers?
Mr. Miller: That is a good question. I know that, the composition of the Department of Justice is a little over 50 per cent lawyers. I do not have the breakdown for specific initiatives but my understanding is that, for example, the Aboriginal Justice Strategy and the B.C. Treaty Process would involve 21 people; the Integrated Proceeds of Crime, Anti-smuggling and Canada Drug Strategy would involve 91 people; and the Child Support Initiative would involve 28 people.
Senator Cools: However, all of those items are listed quite differently from what you have described here as Personnel and, secondly, Professional and Special Services. Why have they increased, those two? Supplementary Estimates (A) list the Child Support Initiative and the aboriginal program quite separately.
I ask because some months ago the Deputy Minister of Justice, George Thomson, appeared before us -- I forget whether it was on the Airbus payments or the Pearson inquiry -- and it was my understanding that he told us that, over the next few years, the number of lawyers would be declining. From my reading of it, it seems that we are headed in the opposite direction, not declining but increasing.
Mr. Miller: I am not certain of the exact breakdown of these additional people who will be required for these initiatives, that is, how many are lawyers and how many are support staff. Certainly, if you look at the distribution of costs that is included in the supplementary estimates you will see that the bulk of this is for personnel.
Senator Cools: Will they be people like Claude-Armand Sheppard, the lawyer who represented the department against Mr. Mulroney in the Airbus case?
Mr. Miller: They could be functional experts in a particular area who would be hired to review or deal with a case, or perhaps do some background work. Rather than being full-time employees these people would be engaged because of their specific area of expertise.
Senator Cools: For example, would the lawyers who were retained to represent the department on the Airbus case, Mr. Sheppard and Mr. Code, fall into these categories? Would their fees be included here?
Mr. Miller: I am not familiar with the details of that particular case, but the Department of Justice has two methods. They either use their own lawyers or they use Crown agents. These Crown agents work for law firms throughout Canada and are employed, because of their area of expertise. The largest component of justice lawyers is the legal service units, which are those that support the activities of departments. They physically work in different departments and the largest number, which comes as no surprise, works for Revenue Canada. They are, technically, employees of the Department of Justice but, again, they develop expertise in areas related to departmental activities.
There are of course other areas. On the litigation and policy development side, it depends on the kinds of activities being undertaken as to whether or not they would hire outside professional services or whether internal people could deal with the matter.
Senator Cools: Where in the supplementary estimates would I find the amount of money paid to Mr. Mulroney, Michael Code for legal opinions, and Claude-Armand Sheppard for conducting the department's case?
Mr. Miller: That level of detail would not be included in either the main or supplementary estimates. There are, however, several chapters in the public accounts that deal with that.
Senator Cools: I cannot discern a major category where I should look for that detail.
Mr. Miller: In the public accounts, for 1996-1997 that were tabled last week, there are chapters devoted to professional and special services which list the major contracts by every department and agency. There are cut-off amounts in terms of what it means, but technically every contract the federal government enters into under professional and special services is listed in that document, or summarized. There is obviously much repetition and it is difficult to relate individual payments to, say, a law firm that was retained to do specific work. It would show the payments to that firm overall. It would not relate to one case or to one initiative.
There is another level of detail in the public accounts which is published after the expenditures have been made, but it is most unusual for us to publish the details ahead of time through supplementary estimates unless it is a specific payment, a grant, or a contribution payment.
Mr. Lieff: In this particular case the funds would have come out of departmental funds that were provided at the time of the main estimates. It would come out of their normal budget, so there would not be funds for that in these supplementary estimates as well, but it still does not address the question.
Senator Cools: These mysteries baffle me.
The Chairman: To take the Mulroney case as the example, if you are running a good house and being responsible to the public I would assume that you would keep a very close track of costs, both within the department and on contracts awarded to lawyers. A professional firm or any good company would keep track of expenditures. That information should be available.
Mr. Miller: I would hate to comment on the Department of Justice's ability to keep records. This has been an ongoing concern, and I will not speak to the particular case, but from a departmental perspective, on any major initiative, it was always a great concern to a department to understand the costs that justice was incurring on their behalf and the costs that in fact the Department of Justice was able to transfer. Because the Department of Justice deals with points of law, precedents and all kinds of other considerations that go well beyond, in many cases, the implication of a particular case, they have always argued that they could not do the sort of reporting that you would expect to see in a normal professional firm such as lawyers or accountants. They are changing that in order to respond to their clients, and they are trying to keep track but, historically, it has been very difficult for even their direct clients in the departments to get that kind of detail.
The Chairman: If the Department of Justice works for the Department of Agriculture, is there a charge back to the Department of Agriculture for that service?
Mr. Miller: It is quite confusing. If full-time justice lawyers are applied to the Department of Agriculture, and they spend the entire year working on Department of Agriculture issues, historically their salaries have been paid by the Department of Justice and included in the Department of Justice estimates. If the Department of Justice advises another department that the expertise exists in the private sector, the department may, in fact, employ one of the Crown agents. The Department of Agriculture has no choice on this and, in the case of Crown agents, the Department of Agriculture actually pays the fees of the Crown agents.
Because life is not straightforward, we have other situations where in fact money is provided to the Department of Justice to augment the services to Agriculture and we simply, over a year -- and part of our job in Treasury Board is to keep track of these things -- move the money from Agriculture to Justice if they require what everyone understands to be an augmentation of the full-time resources that are being devoted. From one case to the other, for one type of department to another, there are a variety of situations.
Senator Cools: On page 85 of Supplementary Estimates (A), Department of Justice, under law and policy you have National Judicial Institute, $140,000. What is that for? What is the National Judicial Institute and who runs it?
Mr. Miller: It is an independent body that coordinates judicial education in Canada and sensitizes judges to current and emerging issues. In keeping with the joint commitment of the federal, provincial and territorial governments to provide an annual joint funding of $610,000 to the institute, the federal government must increase its 1997-98 grant to the institute by $140,000, for a total grant of $273,000. This compares to $280,000 in 1996-97, and similar amounts in the previous two years. It is a national non-profit corporation which was founded in 1987 with a mandate of providing a wide range of educational programs and services to all Canada's judges, whether federally, provincially or territorially appointed.
Senator Cools: Is there a board of directors? Who is in charge of it? Do you have their names?
Mr. Miller: I do not have any specifics on their governance or on the individuals who are engaged in that but, as a non-profit operation, I would assume that they are represented at the federal, provincial and the other levels by judges themselves, but that is just my assumption based on how these things normally operate.
Senator Cools: Why is it under transfer payments?
Mr. Miller: As a grant in this case.
Senator Cools: I would have thought it was a grant and not a transfer payment.
Mr. Miller: We classify grants and contributions as transfer payments. The grants are outright gifts. I should qualify that. There are all kinds of pre-conditions required in order to get a grant, but once that organization or individual has received the money, we do not expect anything direct in return. In other words, we have an arrangement in this case with the National Judicial Institute that recognizes we will pay them that $280,000 in total, but we do not expect to get anything in return.
The difference between a grant and a contribution is that normally a contribution arrangement, which is the bulk of the arrangements the federal government enters into, specifies that, in return the government will be furnished with a series of reports as to the progress of a particular issue. It is more like a contract that, in exchange for the funds, the organization will produce certain things or do certain things with the funding. Each grant requires specific authorization by Parliament because of its nature. Since contributions are more contractual in nature, Parliament simply approves a total amount, and there is some ability to move funds. However, to adjust one dollar as a grant requires parliamentary authorization.
Senator Cools: I have gone through the pages devoted to Foreign Affairs and International Trade quite thoroughly. Where will I find the dollar amounts being paid to the judges of Canada through the Commission of Judicial Affairs toenable, in the exact words of Chief Justice Lamer, "20, 30, 40 judges of Canada...go around the world?" Where will I find such this item for international judicial work?
Mr. Miller: If the payments are made through federal Judicial Affairs, they have their own set of separate estimates as a separate organization. I do not believe they are included in the supplementary estimates.
Senator Cools: My understanding is that the dollars are being paid by CIDA and administered by the Commission of Judicial Affairs. It is very complicated. I would like to find out how much money is being put into the hands of these judges and for what purposes. On the one hand you have the Canadian Judicial Council, which is under statute. On the other hand, we are frequently told, in interviews made here and there by Chief Justice Lamer, that CIDA pays these judges. In addition, a few moments ago you told me that the Judicial Institute pays out money as well. You did not know the names of the people in charge, but I believe it is the same people again. This information seems to be very difficult to get.
Where will I find, in one place, the total amount of money that is being put into the hands of these judges and the purposes for which they are being given it by this government?
I keep asking this question but no one seems able to answer it. Obviously, the committee may have to have the Commissioner of Judicial Affairs or Chief Justice Lamer appear before the committee to tell us what is happening with these expenditures. Witness after witness appears before the committee, and I ask the same questions. People give very sombre responses, but I get no real information. At some point you must inform me as to how I can get this information.
I was referring to a particular statement made by Chief Justice Lamer on December 9, 1996 on television, that Parliament denied judges the opportunity to travel internationally. However, they had found a way to do it through CIDA with the approval of Madame Huguette Labelle, the President of CIDA. However, I can find absolutely nothing in these pages aboutthese expenditures. That particular issue is of some concern to me because it was my understanding that, last year, in Bill C-42, the Parliament of Canada said very clearly that judges were not to do that sort of thing.
Mr. Miller: Yes, I remember the senator made those comments at our appearance on the final supplementary estimates for last year and I understood that it was in relation to international travel. I thought we had addressed the issue at that point, but certainly we may not have, in fact, reviewed the angle of CIDA, which of course encourages Canadians, not only as federal government representatives or elements of the judiciary but businesses as well, to travel internationally, both from an educational and an international marketing viewpoint. They have an enormous array of programs to assist Canadians in actually getting into international markets or vice versa, using expertise that is here to help developing or emerging nations.
Quite honestly I do not have the details of how that relates to the judiciary but we will endeavour to find out.
Mr. Lieff: It is unfortunate, but we did prepare a response to the committee's questions last time, and we neglected to bring that with us.
Senator Cools: The neglect is continuous.
Mr. Miller: We will ensure that details of any direct payments by CIDA will be included in the response.
The Chairman: Thank you, for your assistance, Mr. Miller. Our time today has run out, but we would invite you to return to the committee to deal with our second round of questions at our next meeting.
Mr. Miller: I will be glad to be of further assistance to the committee.
The committee adjourned.