Committees (44th Parliament, 1st Session)

REPORT OF THE COMMITTEE

Thursday, June 6, 2002

The Standing Senate Committee on National Finance

has the honour to present its

SIXTEENTH REPORT

Your Committee, to which were referred the 2002-2003 Estimates, has in obedience to the Order of Reference of March 6, 2002, examined the said estimates and herewith presents its second interim report.

Respectfully submitted,

Chairman
Lowell Murray

SECOND INTERIM REPORT ON THE 2002-2003 ESTIMATES

INTRODUCTION

The 2002-2003 Main Estimates were introduced in the Senate on March 5, 2002 and referred to the National Finance Committee for examination. The Committee’s initial examination began on Wednesday evening, March 12, 2002, when Mr. Richard J. Neville, Deputy Comptroller General, and Mr. David Bickerton, Executive Director, Expenditure Operations and Estimates Directorate of the Comptrollership Branch of the Treasury Board outlined and explained the main features of the new estimates. They also answered several questions at that time and through written responses at a later date. The Committee submitted an interim report (its thirteenth) to the Senate on March 19, 2002. Since that date, the Committee has continued its examination of the Estimates.

On April 23, 2002, the Committee began a series of hearings on the use of the Treasury Board Vote 5 – Government Contingencies. The first witness was Sheila Fraser, the Auditor General of Canada, who explained the findings of her recent audit on the use of Vote 5. The Committee hearings continued on May 1, when Mr. Neville, and Mr. Bickerton, answered a number of technical questions on Vote 5. On May 8, Frank Claydon, Secretary of the Treasury Board and Comptroller General, and Mr. Neville explained to the Committee the Treasury Board’s policy on the use of Vote 5. The Committee’s findings and recommendations on the use of Treasury Board Vote 5 are contained in a separate report.

On May 29, 2002 the Committee heard from the Honourable Lucienne Robillard, President of the Treasury Board. The Minister was accompanied by several of her officials who provided additional information to the Committee. The meeting provided Senators with an opportunity to discuss both policy issues as well as technical aspects of government expenditures listed in the Estimates. Although much ground was covered in this meeting, the Committee intends to examine further certain items of the Estimates at a later date and to report on all of its work before the end of fiscal year 2002-2003.

THE HEARINGS, THE PRESIDENT OF THE TREASURY BOARD

In her opening remarks to the Committee, Minister. Robillard outlined some significant changes in the Estimates, and highlighted several initiatives of the government. She noted that the events of September 11, 2001 have had an effect on government spending. The December 2001 Budget announced a comprehensive package of security-related initiatives totalling $7.7 billion over six years, of which, $1.5 billion will be spent in the current fiscal year. The Main Estimates total $170.3 billion, which includes $168.3 billion in budgetary spending and $2 billion in non-budgetary expenditures. They are consistent with and reflect the bulk of the $172.9 billion expenditure planned for 2002-2003 as set out in the December 2001 Budget. She reminded the Committee that the balance of some $4.6 billion provides for further budgetary adjustments to statutory spending or for spending authorities that will be sought through Supplementary Estimates. This year’s Main Estimates show a total increase of $5.2 billion over last year. Of this amount, $5 billion, or 96 per cent of the increase, is for budgetary spending.

Senators were interested in a number of items contained in the Estimates. For instance, Senators asked the Minister to explain the effects of the recent labour difficulties at
Radio-Canada on that Crown Corporation’s appropriations. She explained that it is difficult to be precise at this time, but that the effects would be known when the Corporation returns for its annual appropriations. At that time, the Treasury Board and the Corporation would be able to take into consideration any reduction in wage costs that resulted from the strike, as well as any impact the action had on the Corporation’s revenues.

Last year, this Committee conducted an examination of Bill S-6: An Act to assist in the prevention of wrongdoing in the Public Service by establishing a framework for education on ethical practices in the workplace, for dealing with allegations of wrongdoing and for protecting whistleblowers. When Minister Robillard appeared before the Committee on May 30, 2001 she had discussed the Bill and the government’s intentions regarding the protection of whistleblowers. Senators were interested in developments since that meeting. The Minister explained that in November 2001 the Treasury Board issued a policy on this matter that they call internal disclosure and not whistleblowing. The Board has also hired Dr. Edward Keyserlingk who has vast experience on values and ethics as the Integrity Officer. He will receive and examine complaints. His Office has only been in operation since April 2002 and has received between 30 and 40 demands, therefore, it is too early to comment on his experience.

Senators expressed an interest in the workings of the National Capital Commission (NCC), specifically with the process of property disposal. The Minister explained that there exists a procedure that must be followed by any government organization involved in the disposal of surplus assets. In the case of the NCC, this involves a lengthy process by which it identifies surplus properties and informs the government of its intent to dispose of the property. Other government organizations are given an opportunity to express their interest in retaining the property in the government portfolio of properties. If no interest is expressed, the NCC is given permission to dispose of the property at market rates. Proceeds of the sale must be reinvested in other properties that the NCC deems important to its mandate as a property manager in the National Capital Region. The Committee continues to be interested in the operations of the National Capital Commission and will be hearing the NCC in June.

Another concern of Senators is the large number of contracts that are administered by the Department of Public Works and Government Services. It is estimated that the Department administers as many as 60,000 contracts on an annual basis. Mr. Neville, himself a former employee of Public Works explained that that Department is well equipped to handle such a volume of contracts. He also reminded the Committee that the Auditor General was, on the whole satisfied with the performance of the Department. In respect to the current troubles with the Groupaction, the Minister reported that the Auditor General found no fault with current government policies and regulations. The problem was that they were not followed. The Minister recognised that this lack of adherence to policies and regulations is unacceptable and has instituted a review to determine what further action could be taken to avoid a recurrence of such a problem. Mr. Neville noted that the Department’s internal audits committee has one of the best reputations in the government. He also explained that internal audits could miss individual problems because they rely on a sampling of files.

Recruitment and retention issues in the Public Service continue to be of interest to Senators. The Minister highlighted the efforts of the Treasury Board to improve the government’s ability to hire high quality recruits and to retain its best employees. She is very concerned about ensuring that the Public Service offers both challenging and rewarding career opportunities. However, Senators expressed a concern that the current reforms will bring undesirable changes to the Public Service. They are concerned with the growing practice of moving government employees into new public organizations where the Public Service Commission has no jurisdiction. The Committee has expressed interest in this issue in the past, notably in its study of Bill C-43, An Act to establish the Canada Customs and Revenue Agency, in February and March of 1999 and in its study of Bill S-23, An Act to amend the Customs Act, in May of 2001, and also in a hearing with the President of the Public Service Commission in May of 2001. They are concerned that the authority of the Public Service Commission and its relationship to Parliament will continue to be eroded. Therefore, they asked the Minister to consider introducing a White Paper rather than new legislation, which is usually not as amenable to amendment. The Minister felt that sufficient study and discussion had already taken place and reiterated her intention to present legislation in the fall..

The volunteer sector of society is a major contributor to the well being of many Canadians. Senators are interested in government efforts to assist and encourage the development of the sector. The Minister agreed that the sector is important and she noted that the government has several initiatives designed to assist in its development in a joint effort with the Public Service and the volunteer sector.

The issue of the creation of arm’s length foundations or alternative service delivery mechanisms continues to concern Senators. Their creation, the funding agreements, and the general accountability to Parliament were discussed. The Minister explained that the use of these alternative service delivery mechanisms represents a conscious policy decision on the part of the government. The government considered various alternative means of delivering these initiatives at the time of the creation of each organization. She acknowledged that while there were many differences in the particulars of each organization, there has been an attempt recently to bring about more consistency in their structure and to address recurring concerns of the Auditor General and the Committee. Specifically, changes have been introduced that will allow for a greater degree of accountability to Parliament while respecting the third party arrangements. Changes in the funding agreements will also contain wind-up provisions that will return unused funds to the Consolidated Revenue Fund. (CRF).

CONCLUDING COMMENT

As is customary, your Committee intends to continue its examination in greater detail of these and other aspects of the government’s spending plans, as contained in the Main Estimates.