Proceedings of the Standing Senate Committee on National Finance
Issue 2 - Second Report of the Committee
TUESDAY, November 25, 1997
The Standing Senate Committee on National Finance has the honour to present its
SECOND REPORT
Your committee, to which were referred Supplementary Estimates (A), 1997-98, has, in obedience to the Order of Reference of Wednesday, October 29, 1997, examined the said estimates and herewith presents its report.
Your committee held meetings on Thursday, November 6, and Wednesday, November 19, 1997 to review the 1997-1998 Supplementary Estimates "A." At these meetings, officials of the Treasury Board Secretariat appeared as witnesses and provided two explanatory tables, which form part of this report. Together the tables summarise the major changes in the federal government's financing requirements in fiscal 1997-98. The first table, entitled: Summary of Expenditure Framework and Estimates for 1997-98 displays the various totals as they appeared in the Main Estimates, 1997-98. The second table entitled: Supply to Date for 1997-98, shows the Appropriation Act passed in fiscal 1997-98, and the amounts approved by Parliament to date. It also shows the amount sought in the present Supplementary Estimates (A).
Supplementary Estimates (A) is the first of a set of supplementary estimates that will be issued in the 1997-98 fiscal year that ends on March 31, 1998. These supplementary estimates call for a total increase of $3.48 billion which will bring the estimate of federal expenditures for 1997-98 to about $153.03 billion. This represents a 2.3 per cent increase over the original estimate of $149.56 billion. Of this total increase, 75.3 per cent or $2.62 billion is subject to a vote. The balance ($858.2 million) is composed of statutory budgetary expenditures.
Supplementary Estimates (A) 1997-98 provide estimates of the spending requirements for departments or agencies of the federal government. Both the general spending plans and specific items in these new estimates were of interest to Members of the committee.
Mr. David Miller, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada outlined some significant changes in the Estimates and responded to questions from the Members of the committee. He noted that items included in these Supplementary Estimates serve two purposes. They seek Parliament's authority to spend money which, while provided for in the fiscal plan set out in the 1997 budget, was not included in the 1997-98 Main Estimates. This amounts to $2.62 billion in these Supplementary Estimates. 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. Such statutory adjustments found in the Supplementary Estimates (A) account for a $858.2 million increase from the amounts in the Main Estimates.
In its review of the estimates, the committee was interested in the supplementary estimates of Transport Canada. This department is seeking to almost double its budget for operating expenditures from $111.3 million in the Main Estimates to a new level of $218.6 million in the supplementary estimates. The largest portion of the new appropriation is earmarked to cover revenue adjustments associated with amendments to the new lease at the Greater Toronto Airport. The committee wanted some clarification on the changes in the lease that would result in such a reduction in government revenues. It was also concerned about the short time that elapsed between the announcement of the deal (January 1997) and the signing of the amended lease (April 1997). Although Mr. Miller was able to explain the reasons for amending the lease, he was not able to explain why this matter was not addressed in the original lease. Nor could he satisfactorily explain why government revenues should be reduced to the degree specified in the amending lease. Your committee remains concerned about several aspects of these transactions. Consequently, the committee has decided to pursue the matter through further discussions with officials at the Treasury Board and at Transport Canada.
Another significant new appropriation is requested under Vote 10a, which deals with grants and contributions. The vote would increase the original estimate of $410 million by an amount of $363.8 million or 88.8 per cent. By far the largest portion of the increase is accounted for by the $348.0 million increase in the grant to the Province of Newfoundland in respect of marine freight and passenger services. Treasury Board officials explained that this involved the coastal ferry service, which operates around the coast of Labrador and the northern part of Newfoundland. The federal government began divesting itself of this service several years ago. This current grant will mean that the federal government will only operate the one ferry service to Argentia as required by law. The provincial government would provide any other service. In this way the federal government is extracting itself from the operations and from the future capital requirements and the ongoing implications of running a ferry service.
The committee noticed that several departments (e.g., Agriculture and Agri-Food, Environment, Foreign Affairs and International Trade, etc.) have requested new appropriations for the Youth Employment Initiative. The committee asked for some clarifications on this initiative. Mr Miller informed the Members that the initiative involves about 11 different departments and agencies. In most cases the federal government enters into a partnership agreement with a non-profit private sector group to provide an employment opportunity for youth. This is also an opportunity for the youth to obtain experience and to acquire new work skills. Mr. Miller promised to provide to the committee additional data on this program.
The committee observed that the Agriculture and Agri-Food Department's original 1997-98 estimates came in at $1,169.1 million. However, in these supplementary estimates the department seeks an additional $442.7 million of which $300.4 million is subject to a vote and $142.3 million is statutory. The largest single component of the increase in the statutory items is a $98.6 million increase in payments in connection with the Farm Income Protection Act, more than double the amount originally budgeted for this program.
Mr. Miller explained that this item refers to the Provincial Specific Companion programs, which is one of three federal government farm-income-support initiatives. As details of the program involved negotiations with the provinces and producer groups, the government could not include specifics on the expenditure at the time of the preparations of the Main Estimates. Mr. Miller went on to provide some specific examples of companion programs that were developed with the provinces.
The new appropriations required under Vote 1a of the Department of Agriculture and Agri-Food represent a 13.3 per cent increase in funding. A significant amount is represented by the $31.6 million required for the realignment of resources to establish the Canadian Food Inspection Agency. According to the officials, this Agency was created by legislation announced in the 1996 budget. It brings together the resources of the four departments (Agriculture, Industry, Health, and Fisheries and Oceans) that were previously responsible for food inspections. The creation of the Agency is expected to yield benefits in terms of pooling resources, eliminating duplication, and by ensuring complete coverage of the food industries.
The Department of Justice also attracted the attention of the committee. The Department is requesting a 21.2 per cent increase in its operating budget. Most of the $33.8 million increase will be divided between personnel expenditures ($13.9 million) and professional services ($9.8 million). Mr. Miller explained that these increases were associated with programs that had sunset clauses and which were recently approved after obtaining favourable program reviews. Examples of such programs include the Canada Drug Strategy, the Anti-smuggling Initiatives, and the Child Support Initiatives. As these programs are renewed and in some cases extended, new personnel are being hired.
The committee continued to ask for details on the way the government budgets for large lawsuits that it is facing. In particular, the committee has been interested in following the way that the Department was planning to handle the various expenses relating to the Airbus suit. Although Treasury Board officials have made an effort to answer these queries, the committee remains unsatisfied with the responses.
Another issue of interest to the committee is the source and control of funds set aside for supporting certain international travel by Canadian judges. This seems to involve the Canadian International Development Agency (CIDA) and the Canadian Judicial Council. Although the committee has expressed interest in this matter on repeated occasions, it has yet to receive a satisfactory answer. Mr. Miller recalled certain aspects of this issue were raised at earlier estimate hearings but was unfamiliar with the involvement of CIDA. He assured the committee that Treasury Board would try to clear up this issue.
Rerspectfully submitted
TERRANCE R. STRATTON
Chairman