Proceedings of the Standing Senate Committee on
National Finance
Issue 2 - Evidence
OTTAWA, Tuesday, March 13, 2001
The Standing Senate Committee on National Finance met this day at 9:32 a.m. to examine the expenditures set out in the Supplementary Estimates (A) for the fiscal year ending March 31, 2001.
Senator Lowell Murray (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we have before us the Supplementary Estimates (A) for the fiscal year 2000-2001, which will conclude in a very few days, and our witnesses are from the Treasury Board Secretariat.
Please proceed.
Mr. Keith Coulter, Assistant Secretary, Planning, Performance and Reporting Sector, Treasury Board Secretariat: Honourable senators, I appear before you today to discuss the government's Supplementary Estimates (A) for the fiscal year 2000-2001. They were introduced in Parliament on the March 1 of this year. I am pleased to have with me Mr. Andrew Lieff, who is the Senior Director of Expenditure Operations and Estimates.
The preparation of the Supplementary Estimates involves many people in the Treasury Board Secretariat, particularly in our three program sectors. The Expenditure Operations and Estimates division pulls all of the information together into the blue books that are tabled in Parliament, and that effort is led by Mr. Lieff.
The amounts reflected in the Supplementary Estimates (A) of 2000-2001 are consistent with the overall planned spending level as set out in the October 2000 Economic Statement and Budget Update. Specifically, the 2000-2001 Supplementary Estimates (A) seek parliament's approval to spend $2.6 billion on expenditures that were not sufficiently developed or known when the Main Estimates or Governor General Special Warrants were prepared. The special warrants were used to obtain immediate funds to support the government's ongoing operations when Parliament was dissolved during the election period.
It should be noted that, of the total $12.9 billion in spending identified in the Supplementary Estimates, $10.3 billion represents adjustments to projected statutory spending, adjustments that have been previously authorized by Parliament and are provided for information purposes only.
[Translation]
As I indicated earlier, the total amounts earmarked in the Main Estimates and these Supplementary Estimates do not exceed the spending levels allocated for 2000-01 announced by the Minister of Finance in his Economic Statement and Budget Update of October 2000.
[English]
With respect to the voted requirements, there are a number of items affecting more than one organization. I will specify the two major items.
[Translation]
An amount of $195.4 million to the Treasury Board of Canada Secretariat in order to distribute to departments and agencies compensatory amounts for the recent collective agreements and the related adjustments associated with conditions of employment. Collective bargaining resumed in early 1997, and these funds represent retroactive costs and additional salary costs for 2000-01.
One hundred and forty million, eight hundred thousand dollars to 25 departments and agencies under the carry-forward provision in order to meet various operational needs originally forecast for 1999-2000. 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 for the previous year. Operating budgets include salaries, operating expenses and minor capital expenditures.
[English]
In addition, there are a number of items that affect single organizations, such as $595.4 million in additional funding for the Department of National Defence in support of essential operating and capital requirements. These include compensation for economic increases to the salaries of uniformed personnel, energy and operational costs, equipment maintenance, upgrade and replacement, construction and major capital acquisition program activities.
There is $206.7 million for three claim settlements for which the Department of Indian and Northern Affairs has recently concluded negotiations: the Nisga'a Final Settlement, which settled a land claim in British Columbia; the Horse Lake Specific Claim in Alberta; and an out-of-court settlement with the Squamish First Nation in British Columbia.
The amount of $140 million for Industry Canada is for a payment to Genome Canada to support genome centres across the country in order to improve the coordination of genomics research.
Next is $116 million for the Canadian International Development Agency to provide much needed assistance to developing countries. Payments will be made to international organizations, under the umbrella of the United Nations, to demonstrate Canada's commitment to lead multilateral development assistance efforts to reduce poverty worldwide.
The $101 million for the Treasury Board of Canada Secretariat is to cover the increased costs of public service insurance.
There is $71.3 million for enhancements to the new Canadian Institutes of Health Research, in recognition of the need to develop a broader understanding of the underlying determinants of health, disease and the changing nature of health research.
The amount of $64.4 million for Health Canada is for priority health initiatives announced in the February 1999 and February 2000 budgets. This funding will support the following initiatives: implementation of the Canadian Diabetes Strategy and the International Drug Strategy; innovative information and communications technology applications in health service delivery; support for the Organization for the Advancement of Aboriginal People's Health, Aboriginal Health Institute; initiatives to address the needs of people infected with hepatitis C; injury prevention initiatives for seniors; partnerships with the voluntary sector; and operational support for the Canadian Science Centre for Human and Animal Health in Winnipeg.
[Translation]
The main items referred to above account for $1.6 billion of the $2.6 billion for which parliamentary authority is sought. The balance of $1 billion is divided among a number of departments and agencies. Specific details appear in the Supplementary Estimates.
[English]
With respect to changes in statutory spending, the major items with adjustments in the projected spending amounts are the following: $3 billion for statutory payments to the pay equity settlement reached with the Public Service Alliance of Canada, which payments are pursuant to section 30 of the Crown Liability and Proceedings Act; $4 billion for the Department of Finance for health care, including $2.5 billion in order to provide a one-time supplement to the Canada Health and Social Transfer, as announced in the February 2000 budget, $1.5 billion to assist the provinces and territories, as announced in the September accord with the provinces for health care renewal, in purchasing and installing of medical, diagnostic and treatment equipment, $1 billion, and for addressing health care requirements for information and communications technology, $500 million; a forecast increase of $1.15 billion in equalization payments to provinces by the Department of Finance. This increase reflects changes in the forecasts, including population, provincial revenues, provincial fiscal disparities, and commodity prices.
There is a forecast increase of $200 million in public debt charges; $170 million for the office of the Chief Electoral Office for costs associated with the November 2000 general election and by-elections held in 2000; $145.5 million for the Canadian International Development Agency for the encashment of promissory notes in order to meet Canada's commitments to the replenishment of the African Development Fund; a forecast increase of $79 million in payments by the Department of Human Resources Development for Old Age Security, the Guaranteed Income Supplement and the Allowance, reflecting minor changes in the average monthly benefits and expected number of eligible recipients.
There is a forecast decrease of $309 million for the Department of Human Resources Development for grants to the trustees of Registered Education Savings Plans. This decrease reflects an adjustment to the very high forecast growth rate and the demand for the Canada Education Savings Grant program from levels encountered when the program was first introduced.
There is a forecast decrease of $87 million in expenditures for the Canada Student Loans program of the Department of Human Resources Development, mainly reflecting the lower-than- expected take-up on assistance measures.
[Translation]
A forecast increase of $1.8 billion for loans granted under the Canada Student Loans Program by Human Resources Development Canada now that the Government of Canada has taken over the funding of student loans effective August 1, 2000.
The main statutory items referred to above represent an adjustment totalling $10.2 billion. The balance of $80.6 million divided among a number of departments and agencies is addressed in detail in the Supplementary Estimates.
Honourable Senators, please do not hesitate to contact me if you require any additional information on this subject.
[English]
As I said at the outset, this involves a lot of effort in the Treasury Board Secretariat. What we have with us today is as much information as we could collect to support our appearance here. It is my hope that we will be able to find information about all of your areas of interest. Beyond that, we will commit to getting you the relevant information if we do not have it with us here today.
The Chairman: Thank you, Mr. Coulter
Senator Stratton: One of my old favourite topics is gun control. With respect to the Justice Department, on page 14 is a summary of the supplementary spending estimates for the department. If you then look at page 39, at the top of the page under "Department" there is an amount for the Firearms Control Program, that amount being $30 million. If you then go to page 114, there is a heading entitled "Explanation of Requirement," under which are two amounts, $35,568 million and $14,263, for a total of $49,861 million.
How do we marry the 30 on page 39 with the other requests on page 114?
Mr. Andrew M. Lieff, Senior Director, Expenditure Operations and Estimates, Treasury Board of Canada: At the bottom of the table on page 114 is a footnote. When we advance Treasury Board Vote 5, we identify it for parliamentarians. Out that roughly $49 million for the Firearms Control Program, $30 million was advanced before the tabling of these Supplementary Estimates, and then we come here to actually appropriate the funds.
Senator Stratton: How much have we have spent to date? If you do not have that information with you, would you get back to me with the information, please?
Mr. Lieff: Including these Supplementary Estimates, I believe that the number is $489 million. I will just double-check that.
Senator Stratton: No, Mr. Lieff, that is fine. Thank you.
The Chairman: That amount is greater than the entire operating expenditure of the whole department for one year. Of course, $489 million is over a period of several years.
Senator Stratton: It was originally estimated to be $65 million; the amount is now at $489 million. That is a pretty outrageous number. Do you have any projections in the next fiscal year as to what our spending will be?
The Chairman: We will be looking at the Main Estimates tomorrow, Senator Stratton.
Mr. Lieff: We are on notice.
Senator Stratton: For National Defence, on page 124, under the heading "Construction" for "Barrack Block 65 Renovation -- Winnipeg," the 2000-01 expenditure was $1,063 million.
For clarification, there is an ongoing debate as to whether we relocate the Princess Patricia Canadian Light Infantry from its base in Winnipeg at the Kapyong barracks to Shilo. I want to know whether these improvements are to Kapyong or to another base.
Mr. Lieff: Senator, could I ask you to point it out? You are looking on page 124?
Senator Stratton: Yes. You will see an italicized heading that reads "Air Forces" and under that you will see a heading entitled "Construction." The item I refer to is the first one under "Construction."
Mr. Coulter: It would not be listed if it were for the PPCLI. It would not be listed under "Air Forces." That will be for the Air Force part of that base.
Senator Stratton: Thank you.
The Chairman: On the same page, 124, under "Land Forces " is a line that reads "408 Squadron -- Edmonton." Would that not be under Air Forces?
Mr. Coulter: I am not sure exactly what that item is, but the squadron would be in support of army operations. It is a light helicopter squadron, I believe.
Senator Banks: Gentlemen, in my previous life, and one which I sometimes rejoin, I was a musician. I work a lot with symphony orchestras, so my radar zooms in when I see the words "symphony orchestra." I note that there is what, to my knowledge, is an unusual expenditure in the form of a $5 million grant to the endowment fund of the Montreal Symphony Orchestra, an unassailably good orchestra, one of the two best in the country.
Notwithstanding that, it is the Economic Development Agency of Canada that has made that grant, and that is an unusual source for such a grant. Can I now spread the news to orchestras that they can apply for endowment grants from the Economic Development Agency? They will be very glad to hear that. That is found at page 106.
Mr. Coulter: Let me respond by starting with the fact that Canadian Heritage supports the Montreal Symphony Orchestra, along with 35 other orchestras throughout the country, via the Arts Council of Canada. The Arts Council of Canada provides annually $1.3 million to the MSO and $1.4 million to the Toronto Symphony Orchestra.
Senator Banks: I was a member of the Canada Council for nine years, so I am familiar with that and the straits in which some but not all orchestras find themselves. This is a grant that is no doubt needed and justified, but it is coming from a strange place. I am wondering why that is so.
Mr. Coulter: It is consistent with CEDQ's -- Canada Economic Development for Quebec Regions -- mandate to promote economic development in the different regions of Quebec. In the context of CEDQ's action strategy for the greater Montreal area, the purpose of which is to make the city an international business and tourist destination, this was considered. It was weighed against CEDQ's mandate, and approval was given in the context of looking at the criteria and the mandate of that organization.
The short answer to your question is that any similar organization could come forward for consideration, if they met the criteria and the project was consistent with the mandate of a regional organization. It is unusual in the sense that that is not the normal way that these things are funded.
Senator Banks: It is very good news, and I will spread it. Thank you.
The Chairman: This is not just a grant, is it? As I understand it, it is some kind of an endowment that the regional agency in Quebec is --
Senator Banks: That is precisely my question.
The Chairman: -- either contributing to or funding entirely.
Senator Banks: It is not an operating grant. It is a grant to an endowment fund. Most major arts organizations in Canada have endowment funds. That is the way in which the ones that survive survive bad times. They are for different purposes. Theatres have them for when it comes time to fix the roof or replace the seats. They all have endowment funds. That is the difference. This is not an operating grant but a grant to an endowment fund, which is an unusual thing in itself for a government to do. I am delighted to hear that it is "doable." I will make it widely known.
The Chairman: There is nothing wrong with various worthy causes tapping a variety of governmental sources, not only at our level but at other levels of government. At our own level, one wonders about our ability to coordinate these or to look at them in some kind of coherent way. The question always is whether the left hand knows what the right hand is doing, I suppose.
There was at one time a cultural initiatives fund at the Department of Communications. Not to put too fine a point on it, it seemed to be under the control of the minister and the minister's office. It did not start with that government. Does that still exist?
Mr. Lieff: I am not sure.
The Chairman: I think it was called the Cultural Initiatives Program in the Department of Heritage.
Mr. Coulter: We will look here and see if we can find it.
Senator Bolduc: To continue with that question about the grant to the endowment fund for the MSO, did it come following the hard negotiations they had with the musicians?
Mr. Lieff: Senator, I am not familiar with that. It came out of an overall strategy for the Montreal region, and it was one of the items in that strategy, given the cultural and tourism potential.
Senator Bolduc: Do you have the criteria used by that Montreal strategy?
Mr. Lieff: I do not, senator.
Senator Bolduc: Do you think it would be possible to get that? Somehow an initiative can be within the bounds of that strategy, and that puzzles me a bit. That reminds me of the criteria we used at the development bank, and we finally ended up financing a go-go bar in Hull and some other places. I am a bit embarrassed by that.
Mr. Lieff: I would point out that the Montreal strategy itself was an overall plan that would have had to fit the criteria for that funding. I should mention, as Senator Banks pointed out, that this is an endowment. The $5 million will go into a trust fund where only the interest can be used. Funding from other sources is applied to that. There are criteria on that front in terms of how the money gets spent.
I should also point out that if the foundation were to terminate its operations the $5 million would come back to the government. It lasts so long as the foundation is operating and is generating the tourism and the cultural benefits that were envisaged.
Having said all that, I will do my best to get back to you with the criteria.
The Chairman: I presume that an announcement was made at the time by some minister or official, and perhaps you could send that to us so we can look at the rationale that was put forward.
Senator Bolduc: Am I in order, Mr. Chairman, if I go back to the Governor General Special Warrants?
The Chairman: Of course.
Senator Bolduc: Speaking of Canadian Heritage, I notice here that more than 10 per cent of the budget of the ministry, which is around $800 million, is within that special warrants for the year 2001. I can understand that there are some warrants.
For example, in agriculture, we have something like $170 million. We all know that the farmers in the West have difficulties. However, I am a bit puzzled that in the month and a half of the election period we needed 10 per cent of the budget.
I may be wrong, but in my mind a special warrant is there for when you need immediate funds. If we look at the summary of appropriations for those warrants, they are all over the place. It has become habitual.
I am talking about the special warrants at the beginning of the book. They are there for all executive agencies of the government. I have difficulty with that. I was quite alive in the 1950s, and when we used a Governor General's warrant it was for a specific reason, such as a disaster or a sudden economic crisis. It has now become a regular procedure. There are probably 200 of them, or something like that.
Look, for example, at Foreign Affairs, to take one case. You will see that the explanation that you give in the budget covers just about any division of the ministry. They are all over the place.
Look at, for example, page 51 in English. When you have time, read that.
The Chairman: Yes, it is incredible.
Senator Bolduc: The policy has lost its sense. After all, the election period is only month and a half. Mind you, I am talking with you about this but normally I would talk to the minister. I think we are going overboard. Of course, I am not in the House of Commons, and we do not have the same role in the Senate with parliamentary oversight, but somehow I think that it has become a matter where we do not need approval by Parliament but just spend the money and report after that, and this is the report. I have difficulties accepting that as a formula. I think it is bad to do that.
For example, in Canadian Heritage, and I am not against this ministry in particular, there are more than 12 warrants, and those are only the total for each agency. There is something wrong with that. It is hard to believe that people cannot wait for 40 days, the period of an election, before spending money, that is, to wait until Parliament says "yes."
What is your explanation of that? I do not want to blame you, but it passes through your hands.
Mr. Coulter: It did pass through our hands.
Senator Bolduc: I suppose the minister was campaigning during those days. Does this mean that when the minister is not there it is easier to get money from Treasury Board?
Mr. Coulter: No, it does not mean that. Let me respond in a couple of ways.
Mr. Lieff and I learned a great deal about the warrants regime over the last several months. Neither of us had gone through an election period when warrants were required. We learned all about this regime very quickly and what it does and does not do.
The starting point is that we have to continue providing services to Canadians when Parliament is not sitting. This is a function of timing in the supply process. The reality we faced with this election when the writs were dropped was that we were very close to tabling a Supplementary Estimates document in Parliament. That would have happened, I believe, on November 3, if the normal calendar had played out. Thus, we in the Treasury Board Secretariat had to look at the situation with a very objective lens and ask, "What are the are real cash flow requirements here, department by department?" It is a huge undertaking.
I can tell the committee that running the special warrants regime in preparing for these Supplementary Estimates and the Main Estimates at the same time stretched an organization that is thin and not geared up for this convergence of different exercises at the same time.
We went through it case by case, department by department, and the process is that the FAA was approved by Parliament. It allows special warrants and they have to meet certain criteria. In the Treasury Board Secretariat, this is a purely bureaucratic exercise. However, in the end, the process requires the minister, who in some cases was out on the campaign trail, to attest to the bureaucratic recommendation that these funds were required.
We then went through the three different issuances of warrants and we ended up with this figure, which we think is the right one.
Senator Bolduc: But you have $3.5 billion. It is a lot of money. A huge part of that amount is for the heating fuel rebate, which was a new program announced during the election. It is obvious that the minister was in a conflict of interest. On the one hand, he said, "We will give you money," while on the other hand he asks the civil servants to prepare these warrants. My God, we are going very far these days. The Auditor General is not very happy about it.
I will give you another example. In the Department of Fisheries, over $200 million was allotted during that period. The Auditor General is the same man who says that the Department of Fisheries has a huge problem of managing grants in particular, and those are grants.
That is just a reflection. Perhaps I am getting old.
Mr. Lieff: Senator, I would like to try to explain a little bit of the context in terms of the timing. When an election is called, as Mr. Coulter mentioned, all business stops and we move into a different mode of trying to manage the operations of government. In fact, none of the warrants was issued during the election period. The election was over by the time the first warrant was issued. The warrant does not just cover the period of the election. In fact, it has to cover the period from the time the writs are dropped until we can obtain supply through these Supplementary Estimates. The authority in special warrants are required to manage all of the expenditures of government until Parliament passes Supplementary Estimates, supposing that they do.
Senator Bolduc: The government decides when we come back. It could have decided to come back in December, which would have solved that problem.
The Chairman: You understand that it cannot come back right away.
Senator Cools: Mr. Chairman, first, I want to underscore Senator Bolduc's concerns about the Governor General Special Warrants. I appreciate the position you gentlemen find yourselves in. The fact is, honourable senators, that last fall I cancelled trips so as to be ready to deal with that supply bill. That is because the natural expectation of Parliament would have been that such a supply bill would have come forward and that it would have been duly processed and voted on before an election was called. After all, it seems to me that one can make the assumption pretty clearly that government has a duty to ensure supply before calling an election. It seems to me that it is less than an adequate use of the Financial Administration Act to go into an election anticipating the use of special warrants.
Perhaps you gentlemen are not the appropriate people to ask this question of, however, I am wondering how and where the decision was taken not to bring forward a supply bill and to proceed into an election without adequate supply.
Mr. Lieff: The Financial Administration Act expressly provides for the use of special warrants during an election period. In fact, that is the only time, following the so-called Milliken amendment in 1997 or 1998, that warrants can be used. In years gone by, the government was able to use special warrants during a period of adjournment. In fact, the governments of the time had been accused of prolonging adjournments by use of special warrants.
The FAA expressly foresees and provides for the use of special warrants to maintain essential government operations during an election period.
The Chairman: The last time we had a major debate on this matter was, I think, in 1989. The occasion was that there had been an election in November of 1988. We brought Parliament back as soon as we could in December to pass the Canada-U.S. Free Trade Agreement.
That having been done just before the New Year, we packed it in until, I think, mid-April. We did not start another session until mid-April. Technically, we were in an adjournment period and Governor General Special Warrants were used. We had a large debate on it in the Senate afterward. I remember going back to amendments made to the FAA under the Diefenbaker government, I think it was, and so on.
There is a lot there as to what the criteria are. However, I do not see the difference between what was done in 1988-89 and what was done this year when you passed special warrants to tide you over the entire period. The only difference is the technical one that there was an adjournment between December 1988 and April 1989. We were still in a period of dissolution, if I can put it that way, between November 2000 and January 2001.
Perhaps the point is not important, but you said a few minutes ago that you considered it important enough to point out that the government is only permitted to pass Governor General's warrants during an election period, and that they cannot use them during an adjournment.
Mr. Lieff: That is correct. In addition, to address the issue that you mentioned that arose in 1988-89, the amendment to the Financial Administration Act expressly provided that warrants could only be used when Parliament was dissolved for an election. An express time limit within which to use special warrants was put in the act, up to 60 days following the return of the writs. Sixty days following the return of the writs would have taken us further into February. Under the technical rules of what would have been permitted, the government, theoretically, could have recalled Parliament on that criterion alone -- later than it did -- under the specific time frames set out in the act.
The Chairman: Neither Senator Bolduc nor I is making the argument as to the principles.
Senator Cools: My understanding, as well, is that these special warrants are not supposed to be used as routine business. My understanding is that the criterion that you have outlined, where you talk about a state of dissolution -- I believe one of those criteria speaks to questions of urgency. It would take a long stretch of the imagination to ever believe that the Financial Administration Act was ever intended to look after routine affairs, or to substitute or supplant Parliament. The essence of Parliament, after all, is to provide supply. There are many sets of criteria that must be met to be able to use these particular warrants.
I understand and am sensitive to the position that you and the government are in. There was a time in our history when ministers used to have a fear of God, or a fear of going to prison, if they ever approached the use of these particular warrants. At the end of today's debate, what is crystal clear to us is that it is time for this committee or some other committee to study this particular phenomenon, as we did in 1989.
In today's community, the average member of the House of Commons and most ministers may never have heard the words "Governor General Special Warrants." It is time to bring on a renewal of some of that knowledge. I thank you for your forthrightness and for your honesty.
Mr. Coulter: Certainly in terms of the custom, practice and the history of all of this, we looked at everything carefully. We are able to say that we feel we applied the warrant regime against the criteria correctly for each and every one of the items for which we have asked for warrants. The wisdom of the regime, the calling of elections and the recalling of Parliament are a little bit out of our bureaucratic zone.
Senator Cools: I realize that.
Mr. Coulter: If honourable senators look at that, you obviously have a perspective on it that needs to be brought to bear. However, from our point of view, as people trying to sort through and cash-manage during this fairly lengthy period, we think that our use of warrants was proper.
Senator Cools: I am aware of that and am sensitive to that. I am saying that, in principle, it is not right or acceptable for a government to say that they do not have to bring a supply bill because, after all, we can go into an election and we can rely on the FAA. That is the principle with which I have taken issue. That is not an issue to be addressed by you; that is for your political masters.
Senator Bolduc: I would like to mention two other examples of what we are talking about. For firearms controls, for example, a figure of $96 million is specified for special warrants. In public expenditure, we have the acquisition of Canada Place in Edmonton for $98 million, and the acquisition of Ottawa City Hall for $36 million. Why that occurred in this period, I do not know. Maybe it was a process that you had to do, I do not know. It is very curious.
The Chairman: Have those transactions been completed?
Mr. Lieff: Yes, they have.
The Chairman: Perhaps someday we will look at all the criteria, including the question of urgency, and whether the expenditure could be described as unforeseen. I remember that word coming up.
Senator Cools: It seems that it is urgency and being unforeseen that is required during dissolution.
Mr. Coulter: Urgency required for the public good is one criterion.
Mr. Lieff: When we were researching the 1989 debates, we determined, in fact, that the government of the time used special warrants to provide for maintaining the ongoing operations of government -- for example, to pay public servants or to continue to provide Canadians their CPP pensions or their unemployment cheques, that kind of thing. All of these ongoing operations were considered, at the time, to meet the criterion of "urgently required for the public good." The debates and in the legal opinions that were offered at the time, including an opinion offered by the then Dean of Osgoode Hall Law School, indicated that this criterion could be reasonably interpreted to provide for maintaining the ongoing operations of government.
In terms of the urgently required element and the way warrants are issued, you will notice that there were three separate warrants. Each minister must attest that those are the expenditures required. For the first two warrants, the period is 30 days, as per parliamentary convention, and then the last warrant has a longer period to allow time for the House of Commons and the Senate to consider supply.
That is where the urgently required element arises. Each minister must attest to that, as they are required to do by the Financial Administration Act.
Mr. Coulter: There are three conditions in the Financial Administration Act. These must be satisfied before a special warrant can be issued. The first aspect is that Parliament is dissolved following an election call, and that goes from the date of dissolution, until 60 days following the date fixed for the return of the election writ. The second point is that the payment must be urgently required for the public good. The third factor is that no other appropriation from which the payment can be made exists. So one of the things that we do is to exhaust Treasury Board Vote 5 before we move into a warrant regime. That is what the FAA gives us. And then we looked at all previous cases and applied it the best way we could.
Senator Doody: Do you ever reject departmental requests for warrants?
Mr. Coulter: Yes. It is a matter of talking it through, more than getting a series of requests to the Treasury Board Secretariat. There was a huge dialogue between departments, with senior financial officers and others in the secretariat. The list that was developed was one that we were comfortable with at the secretariat.
Senator Doody: Do I take it from what you said that the criteria do not include the words "urgent" or "emergent"?
Mr. Coulter: The payment must be urgently required for the public good. That is one of the key criteria in the FAA. However, as Mr. Lieff pointed out, we have used jurisprudence, parliamentary convention and tradition here as well, almost like a common-law approach.
The Chairman: Let us agree to put it down as something that we might look into as a committee. If senators feel that there are too many loopholes, or that the interpretation is too broad, then it will be up to us to suggest some corrections.
Mr. Lieff: Senator, I would like to point out that there are some things that the government will not do under special warrants and does not believe it has the authority to do under the Financial Administration Act. There is authority to supplement existing appropriations. We would not, however, create a new vote. We would not amend vote wording to provide authority of a legislative character, for example, to delete debts or to increase ceilings on loan guarantees. We would also not use warrants to make grants.
Senator Cools: My question is on the Department of Justice, page 115, Supplementary Estimates (A). I notice on that page that there is, at the top of the page under "Grants," a grant of $140,000 to the National Judicial Institute. Are you with me?
Mr. Coulter: Yes.
Senator Cools: It seems to me that that amount of money represents a substantial increase for the National Judicial Institute. What is the National Judicial Institute? Who is in charge of it. And what is the purpose of that amount? Why is it such a significant proportion of their budget?
The Chairman: It is under the department, but if you look at page 14 there is not a spot for it. It is included in the overall grant and so forth.
Senator Cools: I believe that the executive director of the National Judicial Institute is the former Deputy Minister of Justice.
Mr. Coulter: We do have some information on that item that we can share with you. This item is to allow the Department of Justice to increase the annual grant to the National Judicial Institute by $140,000 for the fiscal year from within existing reference levels.
The National Judicial Institute is the leading national organization for the continuing education of both federally and provincially appointed Canadian judges. Since its establishment in 1988, the Canadian institute has been a major factor in the substantial progress made in judicial education. The NJI's budget is fully funded through an agreement between the federal, provincial and territorial governments. Of the total funds required, the federal government contributes half, with the provinces and territories splitting the other half pro rata on the basis of the total number of judges per jurisdiction. The total budget of the NJI for 2000-2001 is $537,000, bringing the federal commitment to $268,000. However, the federal grant stands at $128,000, necessitating an increase of $140,000 to meet the federal commitment.
The Department of Justice is currently working with Treasury Board officials to develop a long-term funding arrangement for the NJI.
Senator Cools: It seems to me to be a pretty hefty number. Who is the head of that now?
Mr. Coulter: We will get that for you.
Senator Doody: Mr. Chairman, I am curious about the pay equity settlement. We discussed it at some length when the Main Estimates were before us some time ago. I notice there is $3 billion in here for that purpose. Is that the total of the pay equity settlement? If it is not, what is the total? There was an amount buried in the salary vote in the Main Estimates; it did not specify that it was for the pay equity. The explanation to us was that this was necessary for negotiating purposes and so on. However, we never could determine the exact amount because it was not known at that time how much would be needed, and that is quite reasonable. Do you know now? Is this $3 billion in addition to whatever that amount was -- and I do not know how much that amount was -- and, if so, what is the total?
Mr. Lieff: The government has announced that the total retroactive portion of the pay equity settlement will be $3.6 billion. We expect it to be within this total. The little over $3 billion identified in these Supplementary Estimates represents the actual payments that have been made to individuals to date and forecast for this current fiscal year.
There will be some payments of this retroactive portion in the next fiscal year as well, as we are trying to find people who have left the public service. We are adjusting payments as a result of some arithmetic errors that were made on some cheques, so it is still a dynamic situation. However, this represents the overwhelming majority of the payments.
There is also another $47 million in the Public Service Insurance Vote 20, which is in these Supplementary Estimates, representing the payroll taxes levied by certain of the provinces on public service salaries.
Senator Doody: The $3.6 billion, plus this payroll taxes and so on.
Mr. Lieff: That is included in the $3.6 billion.
Senator Doody: This is the overall figure then?
Mr. Lieff: That is right.
Senator Doody: Included in this amount is the amount that was in the previous Main Estimates or the Supplementary Estimates (A), or whatever?
Mr. Lieff: The amount in the previous Main Estimates, and will be in this, is the ongoing costs of adjusting salaries for current public servants, the impact of that decision on their ongoing salaries as opposed to what they are owed from the past as a result of a settlement.
Senator Doody: This is not the total settlement then?
Mr. Lieff: These Supplementary Estimates reflect the total settlement in terms of the retroactive pay owing to public servants. The adjustments in the ongoing salary base are in the order of $100 million to $200 million per year.
Senator Doody: They are included in the salary estimate numbers.
Mr. Lieff: That is correct.
Senator Doody: The amount that we discussed previously is in this $3.6 billion.
Mr. Lieff: No, the $3.6 billion in these Supplementary Estimates is solely related to the retroactive portion. The ongoing portion is now in the salary base of departments.
Senator Doody: Do you understand that?
The Chairman: The $3.6 billion, is that the total retroactive?
Mr. Lieff: That is correct.
Senator Doody: When we had that major discussion about the amount of money that had been allocated for a settlement but had not been identified as such because it was buried in there we were quite upset because Parliament did not have an opportunity to know what they were voting for when they voted in this salary adjustment. What were we so upset about if the $3.6 billion is coming out of these Supplementary Estimates?
Mr. Lieff: I must say, I do not remember that discussion.
The Chairman: It was quite a spirited discussion. I am advised that it was before Mr. Coulter's time but Mr. Lieff was there.
Mr. Lieff: It must have been a while ago. At the time was, if I can refresh my memory, the issue was either before the tribunal or the settlement had just been reached.
Senator Doody: That is right.
Mr. Lieff: At that time we knew, roughly overall, that the cost was likely to be in the range of $3 billion. We did not know how that would be allocated and reflected in pay, and we were certainly far away from making the actual payments.
We only put the forecast amounts in the Estimates when we are able to let you know what the payments have been under the statutory authority. They were not in the Estimates at all back then, except for the portion that was ongoing, and that was included in the departmental reference levels.
The Chairman: I think we had better review the discussion.
Senator Doody: We were incensed at the principle of Parliament voting all this money without knowing that the money was in there.
Mr. Lieff: I remember that, Senator Doody. Senators had commented that because this was a statutory payment, Parliament was not voting on the money. The authority to make the payments had already been provided under the act, the Crown Liability and Proceedings Act, which allows the Minister of Finance to make payments to settle court judgments. That was the discussion at the time, as I remember.
The Chairman: The announcement was made that the settlement had been made, and the question was raised at this committee: Where is the money coming from?
Senator Doody: That is correct. The first cheques were scheduled to go out at the end of that month. We asked where the money was coming from and were told that it was in the salary vote, but Parliament did not know that it was in the salary vote because it was not identified as such.
The Chairman: Wherever it was, we were told it was already buried somewhere in the Estimates, that prudence had dictated that they make provision for this. There was a provision buried somewhere. We had a long discussion about it.
Mr. Lieff: It was not in the Estimates. I now remember the discussion with Mr. Neville. The discussion was that we had provided for the settlement in the Accounts of Canada, not the Estimates, and the amounts had been discussed with the Auditor General. When we knew over the years that a court action was coming, amounts were set aside in the Accounts of Canada at that time -- over a number of years, in fact -- to provide for the payment of that settlement. So that is in the government's executive accounting.
In fact, while it was not explicitly identified, there was room in the financial statements of Canada that are tabled after the end of the year with the public accounts to provide for that sum of money. Of course, we did not want to disclose what that amount was at the time because we were providing for a settlement that had not then been reached. To provide for the settlement in this way, however, was only prudent.
The Chairman: We will review the discussion. When had Parliament approved it? Parliament had approved it in the course of the previous Estimates and it was set aside somewhere in a vote, although not identified as such.
Senator Doody: Precisely. The first batch of cheques went out, and they must have gone out from somewhere. It was not from the minister's personal account.
Mr. Lieff: Senator Doody, the provisions that were made in the Accounts of Canada were on the books of Canada but were not submitted for Parliament's approval in the Estimates. They were, however, tabled in Parliament with the public accounts.
The authority to make the payment stems from section 30 of the Crown Liability and Proceedings Act. We are now identifying those payments to you for information.
If I recall, the discussion at the time was related to how Parliament can allow the government to make such large payments without coming to it for a vote.
Senator Bolduc: Your answer is that this is a statutory expenditure?
Mr. Lieff: Exactly. We are now identifying the amount of the expenditure under that statutory authority. At the time, we estimated that it would be in the realm of $3.6 billion. We are still estimating that it will be that. We are now identifying amounts against the statutory appropriation, but it was not provided for in a vote. The portion provided for in a vote are not the retroactive portions of the settlement that are covered under the Crown Liability and Proceedings Act. It is the ongoing cost for public servants that are currently working where the salary budgets have been adjusted as a result of the agreement.
Senator Doody: Are you telling me the $3.6 billion that is in here has already been spent, that cheques have already gone out?
Mr. Lieff: Three billion dollars of it has.
Senator Doody: Three billion dollars has already gone out?
Mr. Lieff: That is correct.
Senator Doody: You are asking for $3 billion to replace that?
Mr. Lieff: We are identifying $3 billion to let you know it has gone out. We are not asking for anything.
Mr. Coulter: To be clear, no appropriation is being requested here. This item is information to Parliament.
Senator Bolduc: I still have a problem. The judicial decision that you have implemented is based on the principle of equal pay for equal work. Equal pay is very easy to understand. It is a quantity; you can fix it. The other part of the equation is equal work. The Auditor General has told us that the classification plan of the government is a whole mess, that it does not work and that nobody understands it.
The Chairman: The phrase is "work of equal value."
Senator Bolduc: It is a quoted as "equal work." We used to say "equal work." Now we say "work of equal value."
The Chairman: There is a big difference.
Senator Bolduc: I understand that the classification plan decides that. The Auditor General is very critical of the government in that area.
How do you manage to go through that mess?
Mr. Coulter: I will not give my own characterizations, but basically we are implementing a court decision. It is simple on the retroactive part.
With respect to the classification system, as you probably know, we are doing major work in trying to find a formula with respect to the classification system that we can implement and afford.
Senator Bolduc: You have been working on that for 10 years now.
Mr. Coulter: We are working harder on it now.
Senator Doody: I understand the principle involved in this. I understand the statutory section of it. I understand as well that you are now presenting a request for the money. Where I am stuck is how you paid all these people if you did not have the funds. If you did have the funds, where did they come from? Is that question too simple?
Senator Bolduc: He was Minister of Finance in his own province.
Mr. Lieff: Senator, we are not asking for the funds now.
Senator Doody: Where did they come from then?
Mr. Lieff: The funds come from the statutory authority.
Senator Doody: You have a fund with $3 billion sloshing around, waiting for an opportunity to send it out, and then you come to Parliament and report that you have spent $3 billion.
Mr. Lieff: A number of the larger items that we have come to inform you about in terms of the statutory spending have actually been charged to the budgets of prior years. This is one of them. The government, over the years, in strict accordance with accounting principles and in discussions with the Auditor General, provides for expenditures when obligations are incurred. It was determined over a number of years, prior to this agreement, that it was a responsible thing to do to provide in the frameworks of those years for this settlement, when it was deemed that the obligations were incurred. Therefore, in fact, none of the $3 billion identified in these Supplementary Estimates actually impacts on the spending plans of this year. They are charged to prior years' surpluses and deficits.
The Chairman: However, they went through on a vote somewhere, Mr. Lieff. Even if they were not identified, they were included in some vote that Parliament approved at some point in the distant past.
Mr. Lieff: They were approved under the statutory authority of section 30.1 of the Crown Liability and Proceedings Act. They were not voted.
Senator Doody: They were not only approved, they were spent. Where it came from, God knows.
Mr. Lieff: It came from those provisions.
Senator Bolduc: I know where it came from; it came from tax revenues. Money is coming in by the shovel full every day. Open the doors, in comes the money, and we spend it.
Senator Banks: I have a supplementary question, just to clarify this for my own understanding. You said that, over the years leading up to this settlement, in recognition of the fact that it was coming, the government prudently arranged for some money to be put aside in order for the rainy day when the court said, or might have said, "You have to pay." Is that correct?
Mr. Lieff: That is correct.
Senator Banks: Was that money that was set aside prudently by successive governments in successive years not voted upon by Parliament?
Mr. Lieff: No, it was not.
Senator Banks: It cannot have materialized out of thin air. I thought that the government could not expend moneys that have not, in some way, at some point, either been asked for in terms of approval or pre-approved by Parliament. It seems to me that you are saying that the government has spent money that has never been approved by Parliament, and I am having a hard time understanding that.
Mr. Coulter: The approval that is used for this is not the appropriations approval process. It is statutory. It is a law.
Senator Banks: I understand.
Mr. Coulter: It gives us the coverage. The reason that Mr. Lieff and I are struggling to come up with an answer to this is that it is more a public accounts question, and that is not our part of the ship. We are the appropriations people. We talk to voted items. Part of our process informs parliamentarians on the adjustments to statutory programs. When you talk in terms of what year things were booked in and how this money was thought about in public accounts terms, that actually is another part of our organization.
Mr. Lieff: As Mr. Coulter was saying, there are two ways in which funds are appropriated from Parliament. One is on the basis of annual appropriations, for which there is about $55 billion or $56 billion a year out of the $160 billion in total expenditures of the government each year. As well, a number of items have been approved on an ongoing basis by means of separate legislation that has been put before Parliament and voted on separately, but we inform Parliament about them in the Estimates. For example, the largest items include the public debt. There are income security programs such as Old Age Security. There are equalization payments to provinces, the CHST, the Canada Health and Social Transfer. There are the Employment Insurance payments. Separate legislation previously approved by Parliament gives an ongoing authority for these expenditures.
One of these statutory authorities, in the Crown Liability and Proceedings Act, provides that if there is a judgment against the Crown the Minister of Finance must pay that. That is where this payment stems from.
Senator Banks: So the expenditures have, at some point and in some way, been approved by Parliament.
Mr. Lieff: Under a blanket authority, yes.
Senator Cools: But not for that purpose.
The Chairman: I do not think we can get much farther with this issue today. I will ask our researcher from the Library of Parliament to see that the previous testimony is reviewed, as well as today's, and then senators can consider whether there are further questions we want to put. We will either have you back here or will mail them to you, and you can send us your answers. Thank you for that.
Senator Mahovlich: I am asking a question on behalf of Senator Ferretti Barth, who is unable to be here. She asked me to bring to your attention an item on page 134. It relates to Swissair, Flight 111. Her question is this: Did Canada look after all the expenses of that accident and the investigation?
Mr. Coulter: The short answer to that is yes. By international convention and practice the country that conducts the investigation pays. The accident was offshore but within our territorial waters.
Senator Mahovlich: What was the outcome of the investigation? Was it pilot error?
Mr. Coulter: It has still not concluded. We expect it to go for another year.
Senator Mahovlich: It is ongoing.
Mr. Coulter: Yes. A number of things were implemented by the National Transportation Safety Board and the Federal Aviation Administration in the United States falling out of this accident, including some rewiring of aircraft, inspections and things like that. The investigation is a very complicated process. As they move through it, step by step, certain actions are taken that arise from the preliminary findings and investigation. We expect this to go on for quite some time. Approximately 90 per cent of the aircraft has been brought up off the ocean floor. We know that there was a fire in the cockpit area and immediately behind it. Every once in a while, the Transportation Safety Board gives an update on where they are with this investigation. I can tell you, as a former aviator myself, that this is a very complicated business. Most of the expense related to recovery of the thing off the ocean floor. That recovery required capabilities that we do not have, capabilities that we had to get hold of.
The whole responsibility is on the country of jurisdiction to conduct an investigation, although other countries are contributing.
Senator Mahovlich: They are?
Mr. Coulter: Boeing is also there.
Senator Mahovlich: There is a beautiful marble monument that has been erected at the site. Who put that up?
Mr. Coulter: I believe there are several things out there. There is the monument that you referred to, and there is something at Peggy's Cove. You are talking about St. Margaret's Bay, I think.
Senator Mahovlich: Yes.
Mr. Coulter: I can get back to you on that, but I think it was a combination of Swissair, the City of Halifax and the local community.
I was out there during the accident, in the very early days, and I have never seen a community pull together as well as Halifax and the local areas did. It is heartwarming as a Canadian to see that kind of reaction.
The bottom line of your question is that we pay.
The Chairman: What did you mean by saying that others are contributing?
Mr. Coulter: There is an interest on the part of the Federal Aviation Administration, the Boeing Aircraft Corporation, which lost an airplane, and Swissair. Delta Airlines was a partner with Swissair in this. They all, in various ways, have contributed effort into this. Canada was responsible for the recovery operation and the investigation, among other things. Certainly there is a big price tag to that kind of an effort.
The Chairman: This matter arose when we were discussing the Main Estimates. There was a discussion about cost-sharing among countries on matters of this kind. The point that was made is that Canada is particularly vulnerable because of our national space. A relatively larger number of flights travel over our land and water, making us particularly vulnerable financially. I thought we were told that efforts were being made by the government to pursue this matter with other countries.
Mr. Coulter: It may be true that there have been some soft soundings and discussions; however, in reality, our legal advice from the Department of Justice is that if the accident takes place in Canadian territory it is our responsibility to respond.
Senator Bolduc: This is the present convention, but as to future I think it would be appropriate to have Foreign Affairs look at this. It is unfair that Switzerland pay only in Switzerland and we pay for the whole thing. All the planes from New York and Chicago go over Canada. We have 100 times more possibility of a crash here than they have in the Republic of Andorra.
Mr. Coulter: The Swissair crash was one of the most complicated crashes because it went down in fairly shallow water, an area from which you can recover the wreckage. It is, however, one of the most expensive things you could have. If an airplane goes down on land, the process is normally a lot easier. If an airplane goes down in the deep ocean, you have lost it. They do not bring them up like some of the old ships.
Senator Stratton: At page 72, with regard to the Department of Finance there is a figure of $200 million? It reads, "Statutory -- Interest and Other Costs." Is that simply due to interest rates?
Mr. Coulter: I cannot say that it was simply due to interest rates. However, interest rates have gone up, so these numbers certainly did not surprise us. The Department of Finance holds the pen on these numbers and they provide them to us. They manage the public debt. I am 99.9 per cent certain that this is almost totally related to an increase in interest rates. They are on their way back down, as you know. Thus, this moves around a bit.
Senator Stratton: On page 76, the second line on the page reads, "Financial Transactions and Reports Analysis Centre of Canada." That new centre cost $17 million. Mr. Lieff, perhaps you can give us an explanation as to what this new centre does.
Mr. Lieff: It is a responsibility that was being carried out on a smaller scale in a division within the Department of Finance and in some areas of Revenue Canada. Its essential purpose is to combat money laundering. When the idea first came about to devote more resources to this initiative, it was part of a multi-country G8 initiative to combat money laundering worldwide. In fact, the overall strategy was approved by the government in its national initiatives to combat money laundering, of which this organization is a focal point. When the money laundering legislation was passed, this agency was established.
Senator Stratton: With respect to the Department of Finance on page 70, we see that the department spends $64.9 billion. There are additional requests for $89.9 million. More than half, or $48.2 million, goes to payments or grants to foreign financial institutions, including $15 million to the World Bank's Heavily Indebted Poor Countries Debt Initiative, and $33.2 million to the International Monetary Fund's Poverty Reduction and Growth Facility. Can you tell us a bit about those two accounts?
Mr. Lieff: These are two facilities that have been established, respectively, by the World Bank and the International Monetary Fund to help the most indebted countries in the world address their debt problems.
Concerning the World Bank's Heavily Indebted Poor Countries Debt Initiative, about 30 of the world's poorest countries are eligible for concessional financing and reduction relief under this facility. Those countries are mostly in Africa. Canada played a leading role in calling for the creation of this special initiative at the 1995 Halifax summit, and there was an enhancement at the 1999 Cologne summit.
The idea is to mobilize donor resources to support relief efforts of the multilateral creditors, in particular those of the African Development Bank.
Overall, we are expecting the initiative to provide about $45 billion in debt relief. This is a contribution toward this international effort.
In terms of the International Monetary Fund's Poverty Reduction and Growth Facility, a number of the countries can apply for both, but the same principles apply. There is a slightly larger list of countries, if the committee is interested in looking at it. The purpose of this facility is to help support a balance of payments for low-income and developing countries. We have agreed to provide about $400 million in grants to this organization. This is part of that international effort.
Senator Stratton: Is that part of the $45 billion or is this a separate item?
Mr. Lieff: One was to the World Bank for its Heavily Indebted Poor Countries Trust Fund, which, when combined with all other international contributors, amounts to $45 billion. Canada's share is $400 million. I do not think I have an overall total for what this will provide.
Senator Stratton: That is all right. You can get it for me later.
Senator Banks: Are those moneys that you were just talking about part of the forgiveness of debt that we heard about, or is the forgiveness accounted for by a line item in the budget?
Mr. Coulter: It is debt relief that covers debt forgiveness and other areas that would help countries get through it.
Senator Banks: I have two questions. One is specific and the other requires a bit of rumination. On page 144, there is a line item for the Canada Information Office. In the Main Estimates, the allocation was about $20 million. In the Supplementary Estimates, the request is for an additional $30 million. This latter request is more than 150 per cent of the original estimate. I am wondering what remarkable thing happened that we need to get three fifths of the annual expenditures in the Supplementary Estimates.
Second, could you talk to us for a minute about a thing that the Auditor General has expressed a great deal of concern about, that is, the overall facts of life about the overseeing of, reporting on and responsibility for grants, generally speaking? Does the Treasury Board have an ongoing active interest with respect to the monitoring of grants, to ensure that they are used for the purposes for which they were intended and that no misuse is made of those funds, et cetera?
Mr. Lieff: With respect to the Canada Information Office, the primary reason for the large increase is that the budget of February 2000 included $30 million per year for three years in additional spending for this agency. The reason it was not in the Main Estimates -- and this is a perennial challenge for us -- is that the budget is usually tabled a few days, or a week, before the Main Estimates. Given budget secrecy and that sort of thing, a number of the items are unknown to us and are not sufficiently developed to include in the Main Estimates. We come through in Supplementary Estimates to deal with these items.
In this case, the $30 million supplementary amount is large in relation to the existing base, but it was announced in the budget and I have explained why it was not in the Main Estimates.
The funds were for three initiatives. There was a citizen information initiative, which is $19 million a year for those three years, which include 2000-01 and which will run out at the end of 2002-03; the fairs and exhibits initiative of $4.6 million; and a regional communications initiative of $5.4 million. That accounts for the $30 million.
Mr. Coulter: With respect to the second question, the Treasury Board is very focused on this area. We have done a number of things. When the HRDC situation became public over a year ago, we had two basic reactions to that, as a central agency. The first initiative was to help HRDC through the situation, and we did a number of things, including a daily dialogue to help them to develop action plans. We also sent a person to them, to help with some of the work and generally to help them through that period, to get that particular situation as quickly as possible into a better zone.
Second, we took a critical look at government-wide aspects of the situation. We reviewed every department and agency and looked at where we were with grants. We looked at the entire regime. We developed some concerns. We had already started to work on a new transfer payments policy. That work was accelerated and we delivered a new transfer payment policy, which covered grants and contributions, last spring.
Since then, we have delivered a new audit and evaluation policy, which was publicly announced in the last month or so. Thus, we have a new mechanism and we are building a new capability in the areas of audit and evaluation.
With our transfer payment policy, one of the provisions we wrote in was a five-year evaluation requirement on all grant programs. We are working our way through that, program-by-program, getting the frameworks in place. There is a significant amount of technical work involved to ensure that that happens. With the new evaluation policy, we are taking our evaluation capability to another level and creating a centre of excellence in the secretariat to look at that work and to lead and support the evaluation function across government.
The other area, and the President of the Treasury Board has spoken about this publicly, is the operating philosophy that we have called "active monitoring." In the recent Auditor General's report, which includes an overview of the last 10 years and his thoughts for the future, the Auditor General mentioned this area as something that the Treasury Board Secretariat needed to do more in. We are developing an implementation plan at present.
We have become more active in our engagement of departments and agencies. It is partly a mindset in terms of watching for trouble. We know we need better radar at the centre and we are committed to building it.
Senator Bolduc: For the budget 2000-01, there is a variation of $16 billion. I understand that a major percentage of it, 65 or 70 per cent, is a statutory item, but there is still a difference of 10 per cent between what you forecasted and the figure we see less than a year later. Is this discrepancy because we had two budget speeches this year, one in February and another one in October? Or is it because the statutory system in Canada gives a large amount of discretion to the government to decide, for instance, that health administration needs a few more dollars?
The Chairman: A third option is that they low-balled their revenue forecasts.
Senator Bolduc: I expect that the money was coming in so fast that they decided that they must do something with it, spend it. The budget is a secret process about which processes even you do not know. It is embarrassing. The public does not know what the minister thinks about the future.
I think that the Canadian system is in very bad shape. It is not because of you. I know you are very competent people and your predecessors were also competent. All here would agree that the senior officers who have come before us in the past were very good, and they continue to be so.
The system needs a great shake-up in my opinion. I would like you to say to the minister, and this message comes from an ex-civil servant, that an error of 10 per cent is a huge amount in one year. Your minister is making a forecast for five years. Can you imagine? It is unbelievable.
Mr. Coulter: Let me try to respond. Our discipline is around the planned spending level of the government. The Treasury Board Secretariat focuses on ensuring that we arrive at planned spending levels, that we approve everything, and we keep within that regime.
The way that that planned spending level develops is an issue more for the Department of Finance. However, in terms of the numbers you have presented and the 10 per cent figure, we ought to give Mr. Lieff a chance to explain. The planned spending level announced in the October update statement is what we can very firmly reconcile these documents and the appropriations with.
Mr. Lieff: As Mr. Coulter said, our framework that we take as given and unalterable, as the Treasury Board and as the rest of the government, is the planned spending that is laid down in budgets by the Minister of Finance for the year.
In the February 2000 budget, the Minister of Finance laid down a budgetary planned spending level of $158 billion. The Main Estimates, as I explained before, do not actually allocate all of this amount to departments, for various reasons.
For example, if there are funds that are allocated in the budget that still require legislative approval, we do not put them in the Estimates. A number of items, like the Canada Health Care Act, were just about to be introduced to Parliament for review.
A significant amount of planned spending identified in the budget was not reflected in the Main Estimates. In fact, the budgetary spending in the Main Estimates was $155.7 billion at the time and we had a planned spending level of $158 billion. You are quite right that, in the October economic statement and budget update, the Minister of Finance and the government added another $3.9 billion to total spending in the current year, so the planned spending number became $161.9 billion. That is for budgetary expenditures.
There is another component in your numbers that is non-budgetary. It has not been our tradition to include that in the planned spending numbers because it is for loans and investments that are performing. We therefore focus more on budgetary spending. In fact, $1.8 billion of the increase that you have pointed out is non-budgetary and reflects the fact that the loans that the government is now issuing and bearing on Canada's books used to be borne by financial institutions for the Canada Student Loans program. That is a significant amount but it does not have an impact on the planned spending level set out in the budget update.
In terms of the budgetary spending, we have a level of $161.9 billion for the current year, which we are within. Part of that increase goes to the rather complicated issue -- and I hesitate to get into it -- of the idea of money being provided for in previous years. Those rather large amounts, for example, for the pay equity payment of $3 billion, were charged to the deficit and to the surplus in prior years, although the payments are flowing this year and are identified as such in these Supplementary Estimates. However, in terms of when we reconcile with the Public Accounts and the financial statements for the Government of Canada these expenditures are not counted to this year. There is also another rather large payment of this type, of $2.5 billion, which Parliament approved through the Canada Health Act. That was committed to in a prior year and is being spent this year. That is the $2.5-billion top-up to the CHST.
Those two items do not impact on the planned spending this year, even though the money is flowing out the door this year. They impact on the deficits and surpluses of the years when those funds were committed. In the case of the top-up to the CHST, there has been full parliamentary scrutiny of the changes during Parliament's consideration of the Canada Health Act.
In addition, there are a number of rather large items that explain most of the increase. There was the $3 billion that I just mentioned for the pay equity settlement and the $2.5 billion for the top-up to the Canada Health and Social Transfer, which was announced in the 2000 budget and was charged to a prior year. We also have the $1.5 billion that flowed from the September health care accord with the provinces, including $1 billion for the medical trust fund that was established and $500 million for a payment to a corporation to provide medical information standards and sharing. There was also a revision of the forecast of equalization payments based on economic variables and that kind of thing. That added about another $1.2 billion. Having gone through those items, without getting into anything else, we are at $10 billion. That is where the large share is. The rest of the expenditures are within the realm of normal increases sought in Supplementary Estimates.
The $3.9 billion increase that was in the budget update reflected primarily two items: the $1.5 billion for the home fuel rebate and another $1.5 billion for the CHST top-up flowing from the September accord with the provinces. That represents $3 billion of the $3.9 billion. The overall Estimates for 2000-01, therefore, including these Supplementary Estimates are consistent with the planned spending that was adjusted in the budget for this year. We stick by that. We would not go beyond what the Minister of Finance has stipulated in the budget.
Senator Bolduc: And the Student Loan Program and all those things do not interfere with that?
Mr. Lieff: The Student Loans Program does not interfere with that because they are performing loans right now. They are new loans being issued. If we have to come back and write them down or reserve against them, then we will be coming forward and advising Parliament of that.
Senator Bolduc: And the innovation also.
Mr. Lieff: The innovation fund is not in the Supplementary Estimates.
The Chairman: Mr. Coulter and Mr. Lieff will be here tomorrow at 5:45 p.m. when we consider the Main Estimates for 2001-02. You will be invited to raise your sights from the misdeeds of previous years and look forward.
Senator Stratton: I want to find out how you will handle diminishing income coming in for the government in the next fiscal year.
The Chairman: That might be a policy question. Thank you, Mr. Lieff and Mr. Coulter.
I need you to stay for five minutes, senators. I believe you have before you a copy of a calendar of meetings. It was our plan, a week from today, to resume consideration of Bill S-6, the Public Service Whistle-Blowing Act. Our colleagues on the steering committee, who are the deputy chairman, Senator Finnerty and Senator Banks, came to me this morning with a proposal to make a change here. They are concerned that, in our consideration of draft reports, we are bumping up perilously close to the deadline for getting supply legislation through. They are hopeful that we might be able to put the draft reports on both the Supplementary Estimates and the Main Estimates to bed on Wednesday, March 21. Perhaps we can do that, perhaps not. In any case, they would like to move Bill S-6 down to Tuesday, March 27, in the hope and expectation that the tentative consideration of draft reports could be moved up to Tuesday, March 20 and, if necessary, Wednesday, March 21.
I very much regret that Senator Kinsella, who is the sponsor of Bill S-6, is not here. I would have liked to have consulted him as a courtesy on this. On that day, our only witness is Mr. Audcent, our legal counsel, and we have asked Treasury Board people to stand by. If you wish to accommodate our Liberal colleagues in this matter, now is your opportunity to say yea or nay, as the case may be.
Hearing no objections, we will try to arrange it in that way.
I will add the caveat here that if there are many changes that the committee wishes to make to the draft report we will have to bring it back on March 27 and we will bump up against the supply, but those are the hazards of life around here.
Senator Finnerty: Bill S-6 will not take that long.
The Chairman: We always say that.
Senator Bolduc: In the letter that I sent to you on February 22, I made a grammatical mistake in the first paragraph. I said that we have a long tradition of inquiry concerning these public policies.
The Chairman: I am glad you brought that up. We must have a meeting before the end of this month, in camera, to discuss future business. In particular, Senators Banks, Bolduc, Stratton, Moore and Cools have some ideas for areas to which we should pay special attention in the coming months, and some other areas may have been suggested in the course of today's testimony. I think that I should make arrangements at some point -- and you should also address this -- to find out exactly what these areas are. We will meet at some point before the end of March to come up with a schedule upon which we can rely.
Senator Bolduc: If we want to make a real contribution to the parliamentary institution, then this is a committee that has that role.
Our committee has a role to play in the good functioning of parliamentary institutions, with our legislative role and budgetary oversight. We should have a fairly long-term program. It should not only be for one month, but for longer than that. We should decide, for example, that for the next few years we will undertake to make a real inquiry into certain items. We have some major items that we could look at seriously. That would be a good contribution to Parliament.
The committee adjourned.