Proceedings of the Standing Senate Committee on
National Finance
Issue 6 - Evidence
[Editor’s Note]
Correction
At page 6:25 of the
printed Issue, eighth paragraph, the text reads:
Yesterday, I raised this
question of the Canadian Lumber Trade Alliance, which will get nearly $15
billion out of Supplementary Estimates (B), although it turns out it was only
incorporated at end of January.
The text should read:
Yesterday, I raised this
question of the Canadian Lumber Trade Alliance, which will get nearly $15
million out of Supplementary Estimates (B), although it turns out it was only
incorporated at the end of January.
OTTAWA, Wednesday, March 19, 2003
The Standing Senate Committee on National Finance met this day at 6:31 p.m., to examine the Estimates for the fiscal year ending March 31, 2004.
Senator Lowell Murray (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we have a quorum. Colleagues, please note that this committee will meet in camera at 9:30 next Tuesday morning to discuss three draft reports that we must present to the Senate. These drafts will be circulated to you as soon as possible, and certainly in advance of Tuesday's meeting.
We are meeting tonight to begin our consideration of the Main Estimates for the fiscal year 2003-04, which begins on April 1. As you know, we maintain this order of reference for the entire fiscal year. We will do an interim report on the Main Estimates right away; but we keep the order of reference for 12 months to enable us to return to various issues, as we deem appropriate, under the umbrella of Main Estimates. Of course, we will be hearing from the minister, the President of the Treasury Board, probably in May or June.
Meanwhile we are pleased to have with us the Treasury Board team, David Bickerton and Laura Danagher.
Mr. David Bickerton, Executive Director, Expenditure Operations & Estimates Directorate, Comptrollership Branch, Treasury Board Secreriat: Mr. Chairman, honourable senators, it is a pleasure for me to be here this evening to discuss and respond to your questions concerning the government's Main Estimates for 2003-04. As you mentioned, appearing with me today is Ms. Laura Danagher, Senior Director of Expenditure Operations, and together we hope to be able to answer your questions.
[Translation]
We expect the interim supply bill for the 2003-2004 Main Estimates will be tabled in the House on or about March 25, followed by the full supply bill in June. I understand you will have the opportunity to review the full supply bill later in the spring.
I would now like to talk to the Federal Budget that the Government tabled on February 18th , 2003, its implications, and specifically how it related to the Main Estimates documents that we are here to discuss with you today.
[English]
As you are no doubt aware, the February 2003 budget introduced new spending priorities that will cost the government an additional $5 billion. It also announced the reallocation initiative aimed at redirecting $1 billion per year, beginning in 2003-04, from existing spending to fund higher government priorities. This reallocation will be permanent and is expected to fund close to 15 per cent of the costs of the new initiatives announced in the budget over the next two years.
The net impact of these announcements is included in the planned budgetary expenditures of $180.7 billion laid out by the Minister of Finance in his budget, and referred to in Part I of these Estimates. Of this, some $173.1 billion in budgetary spending for 2003-04, both voted and statutory, is reflected in these Main Estimates and represents close to 96 per cent of the expenditure plan.
[Translation]
The balance, some $7.6 billion, includes provisions for further adjustments in spending under statutory programs or for authorities that will be sought through Supplementary Estimates. With regards to the latter, this includes the new spending initiatives as well as the planned expenditure reallocations of $1 billion that were announced in the Budget. This adjustment between Main Estimates and the planned spending amount is significant compared to the previous years.
[English]
Given this, you may ask why these budget announcements were not reflected in the 2003-04 Main Estimates. As you can appreciate, many of the initiatives that are announced in the budget require legislation — often through the budget bill — that will be introduced likely later this spring. For further development before spending authority can be sought from Parliament. Given the confidentiality surrounding the development of the budget, much of its contents are not known by departments until the budget is tabled. The timing of the most recent federal budget — February 18 — in such close proximity to the tabling of the 2003-04 Estimates on February 26 precluded either from happening. As a consequence, these initiatives will be requested in subsequent Supplementary Estimates for 2003-04.
[Translation]
Furthermore, specific decisions relating to the $1 billion reallocation will not be announced until early May. Officials within the Treasury Board Secretariat are currently engaged with departments in determining the best way of implementing the reallocations.
[English]
As already noted, the 2003-04 Main Estimates present budgetary spending authorities totalling $173 billion. When one adds in the $2.9 billion required in non-budgetary spending, the 2003-04 Main Estimates total $175.9 billion, which is an increase of $5.6 billion, or 3.3 per cent, relative to the 2003-04 Main Estimates. This is attributable to a $4.8- billion increase in budgetary expenditures and a $0.8-billion increase in non-budgetary expenditures.
Both budgetary and non-budgetary expenditures may be authorized through appropriations or statutes. Along these lines, $175.9 billion can be split between appropriated or voted items for which spending authority is being sought through the Main Estimates. For 2003-04, these amount to approximately $58.9 billion or 33.5 per cent of the published Main Estimates and statutory items for which spending is authorized through previously approved legislation. This includes employment insurance benefits, elderly benefits, CHST and transfers to the provinces and territories. The statutory items in the Main Estimates total $117 billion, or 66.5 per cent of the Main Estimates.
Based on a threshold of $150 million, I would like to provide you with an overview of the major changes reflected in these Main Estimates relative to 2002-03.
The increase of $4.8 billion in budgetary Main Estimates is mainly attributable to the following: $1.3 billion due to the forecast increase in public debt, interest and servicing cost. The total forecast for these statutory costs is $37.6 billion, as provided for in the 2003-04 Main Estimates; $700 million for the Canada Health and Social Transfer, for a total forecast of $19.3 billion in the Main Estimates; $774 million for increases, including funds for the salaries of judges, RCMP members, members' and house officers' remuneration adjusted in accordance with Bill C-28, and related employee benefits;
[Translation]
An amount of $480 million to Transport Canada largely due to the creation of the new Canadian Air Transport Security Authority created as part of the public security and anti-terrorism initiatives announced in the December 2001 Budget; and increases related to highway improvement projects under the Strategic Highway Infrastructure Program.
This is offset by a $50-million decrease relating to Jacques Cartier and Champlain Bridges Inc. as a result of major maintenance work and deck replacement being completed in 2002-2003. The 2003-2004 Main Estimates for Transport are $1.6 billion compared to $1.1 billion in 2002-2003 due in large part to this increase.
[English]
There is $450 million for direct transfers to individuals due to increases in old age security and Guaranteed Income Supplement payments. This is offset by a small forecasted decrease in allowances. Overall, the increases are due to an increase in the average rate of payments and in the forecasted number of beneficiaries.
These adjustments bring the forecasts of these statutory payments to $20.6 billion for old age security, $5.8 billion for Guaranteed Income Supplements and $395 million for allowances in 2003-04; $402 million for National Defence spending, including $204 million for pay and benefit adjustments approved for military and civilian personnel salary, funding of $148 million to partially compensate for the loss of purchasing power due to price increases and $50 million relating to the sustainability funding announced in the February 2000 budget. National Defence's Main Estimates for 2003-04 will be $12.3 billion compared to $11.8 billion in 2003-04.
[Translation]
An amount of $247 million to the Treasury Board Secretariat for employer contributions to insurance plans for public service employees largely due to an increase in health care and other insurance programs and in provincial health payroll taxes. Total contributions for 2003-2004 are expected to be $1.5 billion.
[English]
There is $204 million relating to the increased funding for the Canadian Institutes of Health Research, and to provide grants for research projects and cover an increase for the Canada chairs for the Research Excellence Program. The total funding for the institutes, as reflected in these Main Estimates, will be $669 million.
An additional $190 million is for payments to various international financial institutions relating to the commitments made by Canada under multilateral debt reduction agreements. The total commitments being forecast for 2003-04 are $390 million.
There is $187 million for the increase in Canada's commitment to the international assistance envelope. In the 2003- 04 Main Estimates, CIDA has listed $1.9 billion in grant and contribution payments relating to Canada's international assistance commitments.
An overall increase of $173 million to the Department of Indian Affairs and Northern Development is for its increased contribution in grant payments relating to the settlement of specific and comprehensive claims; adjustments per signed agreements; and to meet increased pressure from inflation and population growth in ongoing programs and services. Total Main Estimates for Indian Affairs and Northern Development will be $5.3 billion in the next fiscal year. There is $168 million to support various Health Canada programs such as First Nations and Inuit health, including early childhood development for First Nations and other Aboriginal children initiative, and the health infostructure and primary care transition funds initiatives as well. The total funding for Health Canada, as requested in the 2003-04 Main Estimates, will be $2.8 billion compared to $2.5 billion in 2002-03.
[Translation]
An amount of $164 million for disability pensions for veterans primarily due to annual price indexation adjustments, an increase in the volume of attendance allowance awards, and an increase in the level and number of disabilities as clients age. This will increase the total payments for disability pensions to $1.5 billion in 2003-2004.
[English]
There is $150 million for the increased payments to the Canada Mortgage and Housing Corporation relating to the affordable housing initiatives. This is offset by the following main budgetary decreases: a $542-million decrease due to the termination of the Canada Farm Income and Agricultural Risk Management programs;
[Translation]
An amount of $285 million in payments made by Human Resources Development Canada under the Canada Students Loan Program due to legislative changes and a decrease in the old loan portfolios. Total payments forecast for 2003- 2004 under the Canada Students Loan Program are $379 million.
[English]
There is a decrease of $229 million for the statutory adjustments for the reduced forecast for the net EI benefits, offset by increased costs of EI administration as reflected in the consolidated specified purpose account. The total forecast for the consolidated specified purposes account is $16.5 billion in 2003-04; a decrease of $175 million to the Department of Finance for alternative payments for standing programs under the Federal-provincial Fiscal Revisions Act, bringing the total forecast amount in 2003-04 to $2.7 billion.
[Translation]
An amount of $117 million for the National Homelessness initiative. While the funding to Human Resources Development Canada for this initiative was due to end in 2003-2004, the development of a new vision to help communities reduce homelessness is underway.
The February 2003 Budget provides for a three-year extension of the Supporting Communities Partnership Initiative at $135 million per year, in order to help communities sustain their efforts to address homelessness.
Similarly, these Main Estimates reflect a decrease of $100 million to Canadian Heritage related to the Canadian Television Fund as this initiative was due to sunset in 2003-2004.
The February 2003 Budget announced $150 million in new funding for this initiative over two years, starting in 2003-2004. The first year of funding will also be requested in the 2003-2004 Supplementary Estimates.
[English]
It should also be noted that there is $113 million in these Estimates for the Department of Justice for the continued implementation of the Canadian Firearms Program, including $95 million for the operating expenditures and $18 million for the grants and contributions. This represents an increase of $74 million relative to the 2002-03 Main Estimates for the Department of Justice. The April 1 planned transfer of responsibility for the firearms program to the Solicitor General's Department that was announced on February 21 will result in a transfer of funds between these two organizations in the Supplementary Estimates for 2003-04.
On the non-budgetary side, there is a net change of $800 million over 2002-03, with the increase being largely attributable to the $1.2-billion increase in anticipated loan disbursements and loan repayments under the Canada account agreements for EDC. This is offset by an expected decrease of $274 million relating to the loans disbursed under the Canada Student Financial Assistance Act and of $43 million to payments to various international financial institutions.
As I indicated earlier, we expect that the interim supply bill for the Main Estimates will be tabled in the other place on or about March 25. That bill will seek some $17.8 billion in interim funding out of a total of $58.9 billion in voted appropriations that are being requested in these Main Estimates. The remainder of supply, some $41.1 billion, will be sought from Parliament in June.
Mr. Chairman and honourable senators, that concludes my opening remarks. We would be pleased to answer any questions.
The Chairman: Thank you, Mr. Bickerton.
Senator Lynch-Staunton: I have two or three general questions. You answered one when you explained why all the items that were announced in the budget for the forthcoming fiscal year are not included in the Estimates. Along those lines, in the budget, there is about $6.5 billion in spending that will be allocated to the current fiscal year. Is that correct?
Mr. Bickerton: Yes.
Senator Lynch-Staunton: Not all of those figures show up in the Supplementary Estimates that we looked at yesterday.
Under the rubric in the budget Investing in Canada's Health Care System, there is a total of $4.6 billion. The absence of these figures in the Supplementary Estimates (B) is explained in the budget by the fact that the funds will be paid to a third-party trust until legislation is passed, but the funds are booked in fiscal 2002-03.
Under what authority does the government act to set aside funds in any fiscal year, for that matter, but say in the current fiscal year, for a program that may or may not be passed by Parliament in the following fiscal year? Is this standard procedure? Is it new? I will admit I have not studied budgets that carefully, but this popped up the other day. It piqued my curiosity.
Mr. Bickerton: I am not sure I know the exact nature of the expenditures to which you are referring.
Senator Lynch-Staunton: They are in the budget. It is where the table is, showing the budget, on pages 22-4, 22-5, 22- 6 and 22-7. There are tables showing spending and revenue initiatives proposed in the 2003 budget. The first column is the initiatives for 2002-03, which is the current fiscal year ending this month, which totals $6.398 billion, of which $4.6 billion is for the health care system. None of these figures appeared in the Supplementary Estimates (B), and the budget says that the monies are being set aside from the current surplus and will be paid to a third-party trust until legislation is passed. I am a little confused as to exactly what the mechanics are of this exercise.
Mr. Bickerton: Again, I do not have the specific reference in front of me. The only thing I could respond is that it is quite possible that these items will be included in the budget bill that will be tabled in Parliament very shortly, presented in both Houses. I know for a fact that one or two items that are included in the budget — not the items to which the senator refers — are indeed in the Supplementary Estimates for 2002-03.
Senator Lynch-Staunton: That is right. There are a number of items that were announced in the budget that are neither in the Supplementary Estimates (B) nor in the Main Estimates. One is them is $500 million for the Canadian Foundation for Innovation, and the other one is for Genome Canada for $75 million. If they are in the Main Estimates, they are under another rubric, because in the index, when one looks up the two names, they do not come up. If they are not in the Supplementary Estimates, that is fine. However, if they are in the Main Estimates, where are those two items?
Mr. Bickerton: The Canadian Foundation for Innovation was created by separate legislation by Parliament, and that is the organization to which they will be making those additional payments. I have not seen the particulars of the budget bill, but my understanding is that it is very likely that these items will be included in that. With whatever wording is associated with it, I presume that they would direct that these expenditures be charged against 2002-03.
Senator Lynch-Staunton: When you say ``the budget bill,'' do you mean the Appropriations Act?
Mr. Bickerton: No, this would be the budget bill that the Minister of Finance will introduce to implement the measures included in his budget.
Senator Lynch-Staunton: We are going to get two supply bills before the end of the year, are we not? One to honour the Supplementary Estimates (B), and one for interim supply?
Mr. Bickerton: That is correct.
Senator Lynch-Staunton: Will we find, in either of those bills, the $500 million that the budget announced for the Canadian Foundation for Innovation?
Mr. Bickerton: My understanding is that the item for the Canadian Foundation for Innovation is not in Supplementary Estimates, nor is it in the Main Estimates. It will be included in the budget implementation bill that will be introduced by the Minister of Finance in all likelihood before the end of this month.
The Chairman: Correct me if I am wrong, but the supply bill is drawn up by the government after Supplementary Estimates or Main Estimates have been passed by the House of Commons. A supply bill reflects what was done in the Estimates; does it not?
Mr. Bickerton: Yes, it does.
The Chairman: I do not know whether the CFI is one of those, Senator Lynch-Staunton, but where are the cases where the budget says that money is being sent to a trust pending the passage of legislation?
Senator Lynch-Staunton: That is the health portion. That is in the budget.
The Chairman: Yet not in the Estimates.
Senator Lynch-Staunton: I was asking — and maybe I am out of order — under what authority the government can take money out of a budget and set it aside for a purpose for which Parliament has yet to give its approval.
Mr. Bickerton: I am afraid I cannot give you the legal basis for that.
Senator Lynch-Staunton: We can only go so far, and I do not want to take you into political terrain.
The other question is more in your field: Where is the $500 million for the Canada Foundation? It is not in the sups; we have been through that. Nor is it in the Main Estimates. If it is in neither, how did it appear in another piece of legislation? Will we have spending authorities being asked for both under a supply bill and a budget bill?
Mr. Bickerton: Last year, the increases related to the new Air Transport Security organization were included in the budget implementation bill of last year. It was included as a statutory authority for the first year of operation. It does happen where there can be statutory funding provided through the budget bill. In that particular case, it was for the first year only. The ongoing funding is, in fact, reflected in these Main Estimates under the Department of Transport, so they will be requesting those funds on an annual basis from here on in.
As I mentioned in my opening remarks, because of the proximity of the timing of the budget and the Main Estimates, we could not put all of the items in.
Senator Lynch-Staunton: I understand that.
Mr. Bickerton: This one, as far as I know, will be put through under the budget implementation bill. The actual cash will be put forward in Supplementary Estimates next year. If it is statutory in nature, it will be there for information.
The Chairman: The first set of sups in the fiscal year 2003-2004 will likely be brought in this September.
Mr. Bickerton: That is correct.
Senator Lynch-Staunton: How is it determined which items go into sups and which into Main Estimates and so forth? For instance, $113 million for the veterinary colleges is in the sups and $270 million for defence funding is in the sups. Then there is $125 million for contingency for defence, which is not in the Supplimentary Estimates.
How is it determined that the current budget will ignore something, the next Estimates will absorb something, and then other spending will be found somewhere else?
Mr. Bickerton: All spending is done within the totals authorized or issued by the Minister of Finance. In the introduction to Part I, there is a statement indicating that it is not always possible to include all of those items. Where there are significant policy items or, in fact, legislation is pending, it would not be appropriate to include them in the Main Estimates. It is on that basis that items with relatively minor policy implications may be included in the Supplementary Estimates — as is the case with the veterinary colleges or additional monies for National Defence. However, it is based on decisions taken by the Minister of Finance.
Senator Lynch-Staunton: I am sure others have many questions, but I would like a second round.
The Chairman: The chair usually alternates between opposition and government.
Senator Cools: In your introductory remarks, you say that there is an additional $113 million to the Department of Justice. When I look in the Department of Justice page, I see no mention of the Canadian Firearms Program.
Mr. Bickerton: If I could offer a point of clarification. In my opening remarks, I said there was a total of $113.1 million in the Department of Justice. It represents a net increase of $74 million from the monies included in Main Estimates last year.
Senator Cools: I recognized and noted that. That is not my question.
My question is that it is not clear on the face of it that the amounts under Justice, on page 15-2, under Votes 1 and 5, it is not clear that that money is for Canadian Firearms Program. You have just explained that it is, but without your explanation, that would not have been clear.
I am wondering why you have done it like this, bearing in mind that we have just had a situation where most members have become painfully aware that the recording and the reporting in the Estimates are not clear. I am wondering if the recording and the reporting as they happened in the blue book, Parts I and II, were how you planned to do it and then the breakdown, as in your introductory comments, is the afterthought.
The reason I say that, honourable senators, is that Mr. Bickerton's comments — and we have copies of it at page 10 — state the following, I will read:
It shall also be noted there is $113 million in these Estimates for the Department of Justice for the continued implementation of the Canadian Firearms Program, including $95 million for the operating expenditures and $18 million for the grants and contributions.
Then it explains:
This represents an increase of $74 million over 2002-03.
This happened last year, if you will recall. Last year, if we were to look at the Main Estimates, there is no mention whatsoever of the firearms program, but Mr. Neville told us yesterday that that amount — which I think was operating expenditures — included $35 million. Therefore, it would have been my expectation, based on all of the fuss of the last couple of weeks, that this particular page would have shown very clearly, under Justice, an amount of $113 million for the Canadian Firearms Program.
Mr. Bickerton: The Main Estimates documents that we are discussing today, Parts I and II are just part of a set of documents that are presented to Parliament annually in presenting its expenditure plans.
You are quite correct that, in Part I or Part II that you were looking at, the particular reference is there to support the supply bill that will be introduced shortly.
Senator Cools: I understand that, but this was a point of concern with the Auditor General. For example, yesterday, you and Mr. Neville were before us on Supplementary Estimates (B) for year ending 2003.
Here, under Justice again, in Votes 1 and 5, it is very clear. It says ``Canadian Firearms Program,'' and that is found at page 82, Supplementary Estimates (B), 2002-03. It is crystal clear. The Canadian Firearms Program, Vote 1, $50,589,000; Vote 5, $8,858,000, for a total of $59,447,000.
I am aware of this because several days ago, when the news started to be released or revealed that the minister was coming back yet again for more money, I immediately ran to the Estimates to look up the amounts. Many people phoned me, and I found the $59 million in the Supplimentary Estimates, but when I looked at the Main Estimates, it was not evident. As a matter of fact, I think Senator Comeau was asking me the same thing a few days ago.
I am wondering why that is. This issue, Mr. Bickerton, is a pain for many people. In this particular committee, we have asked consistently — probingly — to try to get the amounts of money. At last, other people have finally caught on that the information has not been as clear or sufficient as it should be. I am wondering why this is happening this way. Perhaps it could be that these had already gone to press.
Mr. Bickerton: The presentation that is included in the Main Estimates presents information by business line. When the plans and priorities document comes out next week, you will see that the firearms program is identified as a separate program within the policy and law business line. The resource levels being requested for this year and for the subsequent two spending years will be evident.
Senator Cools: I know that. However, we will vote next week on a bill reflecting this amount. One of the great tragedies of today's community is that the majority of the senators will vote on those numbers — never mind not even seeing what they are, not even knowing what they are.
I have paid a fair amount of attention to this program. When I went to the Main Estimates I should have been able to find that number for colleagues who were calling me because they wanted the true number from the Estimates — rather than rely on a number reported in the newspaper. I certainly should be able to find this without calling you to ask for the amount.
Mr. Bickerton: The presentation of the Main Estimates changed about seven or eight years ago. There was a time when the Part IIIs were tabled on or about the same time as the Main Estimates. The government made a change to split the planning documents from the reporting side of the document, so that the planning documents are tabled in March, approximately a month after the Main Estimates. Part of the rationale for that is to try to put as much information as possible in those reports on plans and priorities.
The presentation of Justice has been the same for a number of years. As you know, senator, the book is fairly weighty tome as it is. It was not possible to include all of the details. The president, in her press release, made it very clear that there were monies in there for firearms, specifically to try to ensure that that information was not being withheld. The information that will be coming out in the report on plans and priorities to be tabled in the House on March 27 will give the information for which you are looking.
Senator Cools: I agree, except that we do not vote on the RPP. We just vote on this. This is what we will be voting on.
Mr. Bickerton: You are absolutely correct, senator.
Senator Cools: Over the past many years those categories and numbers have included multiple dollars for the firearms program. It is not that clear. It is reported as operating expenditures, grants and contributions, but it is a situation where you have hundreds of millions adding up over the years. It is not really accurate to just describe it as operating expenditures.
Even yesterday, someone here asked Mr. Neville and yourself to recite the annual amounts, year-by-year, since 1995. One should be able to, I think, glean this information with a bit more ease.
I would submit, colleagues, that it is very difficult for many members of Parliament even to pick up these documents and to discern this information. I am not castigating you in any way, because you know what I think.
Mr. Bickerton: I am aware and I know Mr. Neville is aware of the committee's interest and diligence in following this over the past several years. The Justice Department has made a change to its planning documents to present and separate out the information related to firearms. It did so starting with 2002-03 and is continuing to do so. The Minister of Justice further committed to try to make a full accounting of the costs, historical, current and prospective, and present it in a departmental performance report tabled in the fall.
Senator Cools: I am very curious. These sums are included in Justice, but in point of fact are they really now for the Solicitor General?
Mr. Bickerton: There was a press release or press conference held saying that the responsibility was being transferred. I think they are still working out the details of that. When the final decisions are taken as to which pieces go where, the formal transfer will be reflected in the Supplementary Estimates that will be tabled in September.
Senator Cools: When the supply bill comes, in the next few days, will this quantum be under Justice or will it be under Solicitor General?
Mr. Bickerton: The monies included there, the total of $113 million, will be included in the provisions requested for the Department of Justice.
Senator Cools: Will it be Votes 1 and 5?
Mr. Bickerton: That is correct.
Senator Cools: I think I have that straight. For those who will hang on to this book for the next many years, we should perhaps write on the top, as I have been doing, ``This includes a quantum of `X' millions of dollars for the Canadian Firearms Program.''
Senator Comeau: Thank you for appearing before us this evening, Mr. Bickerton. I will follow up Senator Cools' comments. I do not want to belabour the point and I know it is not your decision to make, but I did in fact try to find those numbers for the Firearms Act. It was quite frustrating for me. I did finally find, when I looked in the index, that there was an item under ``firearms programs.'' It was not even under the Canadian Firearms Program.
I just want to stress the point that if you are going to make presentations, at least try to be consistent. It is known as the ``Canadian Firearms Program'' rather than the ``firearms program.''
The Chairman: It is listed as such in the detailed side; it is Canadian Firearms Program. However, in the index one has to go under `F'.
Senator Comeau: That is right. I could not find the Canadian Firearms Program so I had to go in the index and through many items.
I just bring this up again, to help us as parliamentarians. We probably do not have as much staff as we would like to have. We try to do the best we can with what we have.
Mr. Bickerton: As do we, senator.
Senator Comeau: As do you. I do not want to belabour the point that much.
Mr. Bickerton: I will take note of that. We do try to strive for consistency. We have tried to use the same terminology in the Supplementary Estimates year after year so that it is easy to find and it is not called different things in different years. Certainly we will take note of this for next year.
Senator Comeau: We are all trying to serve the same master anyway at the end of the day. I noted that you place in your notes that there will be $113 million for the Canadian Firearms Program, which will then be transferred over to the Solicitor General. Has any estimate gone in here regarding the cost of the transfer? We all know transferring a service of this magnitude from one department to the next entails a huge amount of cost.
Mr. Bickerton: Those numbers reflect the gross numbers that are identified in here for the Canadian Firearms Program. The announcement of the transfer of responsibility took place between the tabling of the budget and the tabling of the Estimates. We had even less time to determine what the nature of the change was. I know discussions are underway now within the two departments as to the nature of the transfer, the timing and all of the other modalities. I believe that will be reflected in the transfer that will take place and be reflected in the Supplementary Estimates.
Senator Comeau: We will look forward to another line item.
Mr. Bickerton: There will likely be another line item for the Canadian Firearms Program.
Senator Comeau: I looked over at the fisheries department, which is under 8-5. I noted there were a number of reductions in budgets and I would like to focus on them. I noted especially that habitat management and environmental science is being reduced from $96 million to $85 million. Are there any explanations included about why we would see such a major reduction at a time when, in fact, we should be increasing spending? Do you just record the numbers?
Mr. Bickerton: There are explanations about the cash flow changes. I am not sure I have the details of the particular one that you are asking about. I could certainly try to find that information for you.
Senator Comeau: That would be extremely important to us. We are seeing an unprecedented closure of the cod fishery off Newfoundland and Labrador. At a time when we should be spending money to find out why we are closing the cod fishery and to examine fish habitat and other environmental sciences, we are actually reducing the number of dollars being spent on those issues. If I saw the figure correctly, even in the category of fisheries and ocean sciences we are only increasing by $6 million. Again, those are the two major items in which we should be investing rather large sums. Yet we are not touching them. Could you give us the notes that accompany this item?
Along the same line, the Fleet Management is decreasing from $142 million to $80 million. That is a huge reduction — again at a time when we should have made some decisions some time ago on replacing our icebreakers for the north. The announcements on replacements are overdue. We are reducing the numbers at a time when we should be showing our sovereignty in the north. We are also faced with issues of climate change and pollutants that are affecting the northern areas. With these reductions, we will reduce our capacity to deal with these problems in the North.
Mr. Bickerton: If you do not mind, Mr. Chairman, I will take those requests for information back to the department and we will provide it to you through the minister.
Senator Comeau: Thank you.
Senator Wiebe: Mr. Bickerton, I am certain that you have a terrific answer for this but you will have to pardon me for not being able to understand. I refer you to page 2 and the section on grants and contributions under the Department of Agriculture and Agri-food. This is Vote 10. In the Main Estimates 2002-03, $779.9 million was allocated to grants and contributions; in 2003-04 there is a 65 per cent decline in grants and contributions of $273.8 million. On page 2-5 I see it included again.
I have a couple of other questions after this one that relate to it but could you explain why there shows a reduction on page 2-2?
Mr. Bickerton: Mr. Chairman, the matter of timing plays a role in the particular instance of Agriculture and Agri- food. Two programs were being phased out and those reductions are reflected in these Estimates. The Canadian Farm Income Program, CFIP, and certain other contributions relating to Agricultural Risk Management are being phased out and replaced by new programming under the Agricultural Policy Framework. The reductions are shown in these Estimates. That contributes a large part of the actual reduction, something in the order of about $400 million of that reduction.
The funding for the new framework on the other transition measures will be reflected in the Supplementary Estimates. It was really just a case of timing. Negotiations are ongoing with the department and the partners, and it was not possible to include those monies in the Main Estimates. That represents the single biggest decrease.
Senator Wiebe: That is logical. However, it is interesting that the minister and the Prime Minister announced the new program last June. There should be some kind of ballpark figure that could be includes in this year's Estimates to indicate what the rough figure would be for the 2003-04 year.
Mr. Bickerton: There was an announcement made last year that they would provide funding in the order of $5 billion over a number of years. The Supplementary Estimates (A) of this year, we had about $550 million for some transition measures. There is also about $50 million for Quebec in the Supplementary Estimates (B), which are before this committee, that would bring it to about $600 million for the year. Those were transition measures and I understand that they are looking to redesign the program. Those negotiations are ongoing. At the first opportunity, the government will be presenting that information in Supplementary Estimates.
Senator Wiebe: My next question deals with one of the programs that will be terminating this year — the Canadian Farm Income Program, CFIP. There is an excess of $542 million from last year's budget that is now being turned back over to the Treasury Board because it was not spent. Could you tell me what the original budgeted amount was for that program so that I know the difference between what has been spent and what is being returned? I do not know the original budget figures.
Mr. Bickerton: When you say, ``turned back,'' do you mean the reduction from the 2002-03 amount to the 2003-04 amount in the Estimates?
Senator Wiebe: That is right.
Mr. Bickerton: It is related largely to the termination or windup of the Canadian Farm Income Program. In the Main Estimates of last year, it shows that the contributions to Agricultural Risk Management under the CFIP totalled $413 million. In a related program, the contributions to Agricultural Risk Management were $107 million. Those will continue under the new Agricultural Policy Framework. If you add those two, you could argue that the original budget for last year was $520 million. However, there was a total of $550 million in Supplementary Estimates (A) and $50 million in Supplementary Estimates (B). It was meant to be a transition to the new program.
Senator Wiebe: I do not know whether my request is allowable under the committee structure. There were two programs, CFIP and AIDA, which I am sure you are aware of, that started four years ago. Could you provide the committee with the figures for both programs? What was budgeted each year? What amount was expended for each of those programs per year for the last five years? CFIP replaced the AIDA program.
Mr. Bickerton: I would have to obtain that information and respond to the committee at another time.
Senator Wiebe: That would be fine.
The Chairman: Mr. Bickerton or Senator Wiebe, could you provide us with the full names of those two programs, CFIP and AIDA?
Senator Wiebe: CFIP is the Canadian Farm Income Protection Program. AIDA is the Agriculture Income Disaster Assistance program.
Senator Day: I have two or three questions, Mr. Bickerton, with which I hope you will be able to help me. It will help me get a flavour for how to interpret these documents better.
At page 4 of your presentation, there is a $1.3-billion increase for public debt interest and servicing costs. We understand that the overall public debt is being reduced. Can I assume that that increase is for an anticipated increase in interest rates and that is all it is?
Mr. Bickerton: As is usually the case, it is not quite as simple as that.
Senator Day: I suspected that.
Mr. Bickerton: The increase and the identification of the amount for the public debt servicing costs are received from the Department of Finance. The information that we received said that this net increase in the public debt charges is partly due to the implementation of accrual accounting and also to increased costs related to short-term interest rates and interest accrued on retirement and post-employment liabilities. They are partial offsets related to the decline in the federal debt and also declines related to the interest on public sector pensions.
There are a variety of reasons why the change took place.
Senator Day: Thank you for that. I suspected it was a little more complicated. I will read your comments when they are transcribed. I will try to go through. I will not ask that again now.
With regard to page 11 of your presentation, you are expecting a decrease of $274 million related to loans disbursed under the Canada Student Financial Assistance Act. I want to focus on the Canada student loans. I think there are two or three different categories. The two major programs are the Canada Student Financial Assistance Act, and the Canada Student Loans Act.
I am reading from the Main Estimates 12-2 where I can see the reduction between the Main Estimates from last year and this year. You have commented on that as a decrease.
In this age when students are crying out for more financial aid, this sort of jumped out at me. Why would the federal government be forecasting paying out less money in student aid? Am I seeing a policy change here or has something else that has happened?
Mr. Bickerton: Mr. Chairman, I do not think it is a policy change. The particular reference that you are citing is a non-budgetary adjustment for loans disbursed under the Canada Students Financial Assistance Act. It is a result of a change in forecasting methods. The $274-million decrease is from improvements to the accuracy of the forecasting model used to estimate the growth in the student loans portfolio and also the inclusion of repayments.
In the past, HRDC has based its forecasts on a particular percentage increase in disbursements every year. They found that when they were able to improve their forecasting methods, they actually previously overestimated the student loans being disbursed and that brought about a decrease in the 2003-04 ME of about $200 million.
It does not change the amounts available to students. It simply is that they are better able to forecast the requirements. In this particular case, it resulted in a reduction.
Senator Day: I should be able to go back through documents and see where HRDC asked for a certain amount for student loans in a previous year and did not disburse because they over-forecasted demand. Is that it?
Mr. Bickerton: You should be able to go back to the public accounts and trace that through. That is where we do a comparison between the actual expenditures against the authorities.
Senator Day: I will try to move this along so everybody will have a chance. I refer to page 6 of your comments. There is $402 million in increased budget forecast budget expenditure for National Defence. Of that $402 million, $204 million is for pay and benefit adjustments to the military and civilian personnel.
That leaves about one-half of that for an increase to the military. We have heard the military crying out for funding. Am I correct in assuming that there is a maximum of approximately $200 million more to the military? Or, will there be another category somewhere elsewhere funds will be going to National Defence?
Mr. Bickerton: You are correct in your determination that of the increase of $402 million, about one-half went for the pay. The balance went to compensate the department for loss of purchasing power.
If you look at the material in the budget, you will find that the government has made a commitment to provide additional spending to the military. That should be reflected in the Supplementary Estimates in the upcoming year.
Senator Day: I am starting to understand. As the Main Estimates were done so close in time to the budget, the increases that were announced in the budget are not reflected in these Main Estimates, but will arrive in sups later in the year.
Mr. Bickerton: I can assure you that they are factored into the Minister of Finance's total planned spending. He will not be spending over and above that which he presented in his budget of February 18.
Senator Day: My final question is in relation to Marine Atlantic, an organization that we know quite well in the Maritimes. My recollection is that in the final Supplementary Estimates (B) for the year ending, the Department of Transport asked for an additional $7.5 million for operating and capital expenditure for Marine Atlantic.
In these Main Estimates, at page 22-2, Vote 20, ``Payments to Marine Atlantic'' are forecast under the Main Estimates to be approximately the same amount less. In the Supplementary Estimates for the end of this year they want $7.5 million more for Marine Atlantic, and for the Estimates for next year, it is $7 million less. Is there a story that I should be able to take from this?
Mr. Bickerton: Mr. Chairman, at this point, I do not have an explanation of the rationale for the change. Again, I would have to undertake to find that and then respond to the committee.
Ms. Laura Danagher, Senior Director, Expenditure Operations, Comptrollership Branch, Treasury Board Secretariat: They provide a corporate plan. The monies that you are seeing in the Main Estimates are consistent with that which the organization is putting forward in its corporate plan. This is based on what they are identifying as their cash flow and spending.
The Chairman: It is a Crown corporation?
Ms. Danagher: Yes.
Senator Day: The figure was common, and we had just looked at the Supplementary Estimates for the end of this year. I see now a reduction in the same amount. Perhaps it is a prepayment or something like that. Perhaps not much turns on it, but it seemed peculiar to me.
Ms. Danagher: We can find out why there has been a change.
Senator Milne: Senator Wiebe basically asked my question. However, I will go on with the agricultural part of it any way.
On page 2-5 of the estimates, looking down through the transfer payments for agriculture, you see the sums for 2002-03 and 2003-04 are fairly close, if not identical, under most categories. When you get to contributions to facilitate adaptation and rural development within the agricultural and agri-food sector, it is twice as much as it was last year. The contributions toward the implementation of the Climate Change Action Plan 2000 have gone up this year drastically. Is this because of things that are coming up under the Kyoto Protocol? Why is that drastic increase there?
Mr. Bickerton: In developing their plans for spending, departments develop the programs, make an estimate as to what the costs will be over time, and make requests based on certain cash flows. The first contribution that you have pointed out is just a change in the nature of the program and the projects being undertaken.
In respect of your question, relating to the action plan, I believe is a response to the government's commitment to implement the Kyoto accord. This is the agricultural component that is reflected in the Main Estimates this year.
Senator Milne: Thank you.
Senator Lynch-Staunton: Since our first exchange, I have been given a copy of the budget implementation bill. In it are found certain grants, so that answers that question.
I thought colleagues should know the wording is interesting, possibly under the assumption that by approving these grants, it is mandatory for the minister to ensure that they are honoured. In fact, it is the case for each of the number of grants here. I will read the one for the Canada Foundation for Innovation, $500 million: ``from out of the Consolidated Revenue Fund, there may, on the requisition of the minister or ministry, be paid.''
``There may.'' We give them discretion to do so, but if he or she may, it means he or she may not. Is that correct?
Mr. Bickerton: Senator, I have not seen the budget implementation bill. You are a step ahead of me.
Senator Lynch-Staunton: I would not bring it out unless it was tabled. It was tabled in the House of Commons today.
I know this is a finance thing; however, it is troubling and the discussion would be worthwhile. From the current budget, an amount of $4.6 billion has been set aside for the health care system. Any budgetary surplus usually goes to the reduction of the debt. The more you take out of the surplus, the less the debt is reduced. That is fine, as far as I am concerned, as long as it is done for programs that are in existence and have been authorized by Parliament. In this case, however, $4.6 billion will be taken out of the current budget. I have given Ms. Danagher the reference and I can now read it clearly. It is on page 224 of the budget plan. After you see the items totalling $4.6 billion, footnote one reads, ``These transfers will be paid to a third-party trust and accounted for by the federal government in 2002-03, pending passage of legislation.''
The Chairman: In 2003-04.
Senator Lynch-Staunton: Or 2004-05. Under what authority can Parliament, on the advice of the government, set aside funds from one fiscal year for a program, which may or may not be approved in legislation passed at an indefinite date?
Mr. Bickerton: Mr. Chairman, I am afraid I do not have any more answers than I did earlier.
Senator Lynch-Staunton: I know I am straying away. This is Finance, not Treasury Board. I wanted to bring it out at least for honourable senators to know about this element I have not seen before. I do not know if you are familiar with this kind of reserve. What is a third-party trust?
Mr. Bickerton: I do not know what the exact reference is here. If you go to another one you mentioned, the Canada Foundation for Innovation, it was set up as a foundation.
Senator Lynch-Staunton: That is totally different.
Mr. Bickerton: That would be, in my mind, an example of a third-party trust. Whether it is the exact reference referred to here, I do not have that answer.
The Chairman: It is not dissimilar to the matters that attracted the attention, to put it that way, of the Auditor General in the past with regard to these foundations. Toward the end of a fiscal year, the government would advance money. Perhaps the foundation had been established under the Canada Corporations Act or something of the kind, but the minister found himself flush toward the end of the fiscal year. He decided, rather than to apply all of that money to paying down the debt, to put it to various worthy causes. The Auditor General objects to that on the basis of sound accounting practice. I suppose parliamentarians object to it, to some extent, on the basis of the conventions of parliamentary government.
Senator Lynch-Staunton: At least in the first case, it went to a private corporation, which had been incorporated and was in actual existence. Therefore, we knew about it.
Yesterday, I raised this question of the Canadian Lumber Trade Alliance, which will get nearly $15 million out of Supplementary Estimates (B), although it turns out it was only incorporated at the end of January. It has no track record, but at least there is a piece of paper there. In the budget, there is $4.6 billion going to an unknown third-party trust.
The Chairman: There is nothing in the new budget for the lumber people. They have cut them off already.
[Translation]
Senator Biron: Could you explain to us the difference between budgetary and non-budgetary expenditures?
[English]
Mr. Bickerton: Will this be a test of my accounting lessons?
The budgetary expenditures that are reflected in the government's spending are those that will have an impact on the deficit or surplus at the end of the year. They are really meant for ongoing operations and programs that the government runs.
The non-budgetary expenses are those things that do not affect the surplus or deficit position. They are meant for loans and other types of guarantees, where the government is making an investment of certain types. These are accounted for in a different way when the government keeps its books. In the actual financial statements, some of the loans and investments you would actually find if you were looking at a private sector or government financial statement would show up on the balance sheet for those types of expenditures.
Senator Cools: For the sake of the witnesses and for the sake of the record, Mr. Bickerton, we rely on what you tell us. Mr. Neville, Ms. Danagher and you enjoy a high degree of respect from this committee. However, since I have not said it yet, I thought I should not let the meeting and the record pass without recording my absolute dismay that the government has come back yet again in the Main Estimates for yet another quantum of money, in this instance, $113 million.
Yesterday, in Supplementary Estimates they were asking for $59 million. Today, on the Main Estimates they are asking for $113 million. I will not ask you to respond, because I do not think you can. This is political terrain. However, this record should show that these new quantums were not supported in point of fact by any visit before us by a Minister of Justice or any minister.
This is not the time to go into this, but at some point, I will return to this particular point. On this particular issue and front, we must remember that the Minister of Justice was under what I describe as a censuring, disapproving motion to reduce Estimates in December 2002. I would have thought that before we would move ahead to make another grant, we should have heard from the Minister of Justice on these quantums.
I did not want today to pass. Once our discussion today moves on, it has moved. I must tell you that I have found the entire situation and the actions of the Minister of Justice extremely disturbing. I am not asking for any comment, Mr. Bickerton. I understand the position that you people are in.
The Chairman: We need not have a comment from anyone else, either, please.
Senator Cools: The minister has made it clear, he is giving us no answers: Vote, or be put out of your caucus. We will see about that.
I thought what Senator Lynch-Staunton was saying on the floor of the chamber today was profound. This committee is in a position to lead in respect of laying out some of the principles and standards that historically had to do with control of the purse, long forgotten by many.
In regard to the National Judicial Institute, I have not been able to find that under the Department of Justice and perhaps there is not an item here today. I had read some weeks ago that the judges were being trained in theatre and acting. I found that interesting. That has something to do with teaching them how to look authoritative and to look as if they are paying attention. I am perfectly serious. I do not have the newspaper article with me.
The Chairman: Why can the rest of us not get in on this?
Senator Cools: Look at me; I have had no training, anyway.
I am curious. Where would these numbers be listed under the Department of Justice? The National Judicial Institute is under Justice, is it not?
Mr. Bickerton: There is an item under Justice called the Commissioner for Federal Judicial Affairs. That is on page 15-8.
Senator Cools: Would these be training seminars? I find it interesting that someone must take a course to look interesting and to be able to convince the public that they are interested. Do you have any idea how much that would cost? It must be a phenomenal cost to fill a room with judges for training and to hire whomever they hire to do it. How often a year does that happen. Do you have any idea of the quantum?
Mr. Bickerton: Mr. Chairman, I have no indication as to what the breakdown of the costs is.
The Chairman: There is a quite a large increase in the National Judicial Institute, whatever that is.
Senator Cools: That is the item.
The Chairman: That is found on page 15-5. Do you have a note, Mr. Bickerton, as to how that is explained? If you look at 2002-03, that is a hefty increase.
Senator Cools: I would love to know about these courses, especially as to what they cost per session and how many judges take them.
The Chairman: You do not have a note on that one, do you?
Mr. Bickerton: We will provide you with a response.
Senator Cools: In addition to courses on acting, I am interested in knowing how much they spend on their courses on gender sensitivity training. There is a body of case law and challenges now developing which is showing in point of fact that judges are being prejudiced and brainwashed in so-called ``sensitivity training'' to behave, act and judge in a certain way. That is just an aside.
Mr. Bickerton, at the next Supplimentary Estimates, I will reopen my examination of the judges so we can return to that.
The other question that I want to ask concerns the National Capital Commission. This item is found on page 4-19 under Heritage Canada. I think it was perhaps this time last year that I had inquired. I looked at the National Capital Commission, Canadian Heritage reference on page 4-19. I looked at those four categories. We fastened on to real asset management and development. I am not too sure about that now; I would have to look it up.
I am interested in is the cost to the government and to taxpayers, of the National Capital Commission, when it engages the public and city government in respect of the development of lands. Last year, I think I asked if there was any way I could find out the amount of money that the NCC spends on legal fees and legal costs. For example, in a case such as the Moffat Farm where, in essence, they are attempting to get the Ontario Municipal Board to overturn a decision of city council, in respect of the development of a piece of parkland.
Perhaps you have not followed the record that carefully, Mr. Bickerton. It strikes me as odd that a body corporate of commissioners can keep in their possession for 50 to 60 years in the files of public trust a piece of land disowned as parkland, valued at $400,000 and suddenly wants city hall to rezone it so that they can sell it at $10 million or $12 million. I have a problem with that, because I view it as a distortion not only of land prices, but also a distortion of the public accounts.
Could you tell me how much are we paying for these kinds of legal costs? Of concern to Parliament at some point in time is the amount of money that government is actually absorbing in court costs and so on — however, that is another issue. I wonder if you have any idea how that breaks out.
Mr. Bickerton: Mr. Chairman, I certainly remember the senator's interests in the NCC. Senator Cools has, once again, asked us questions for which we do not have an answer. Levels of information to that level of detail are not available to us. We will have to make the inquiries with Heritage Canada to get that information. We will include that in the responses to the questions that have been left with us.
Senator Cools: You will note it is not only that property, but that the NCC has been engaging for quite some time and has been building up quite a track record of going to the Ontario Municipal Board and so on. What does that cost? What are they paying those lawyers? I know most lawyers do not like to have their legal fees released but we can still find out.
I have one final question relating firearms that I just noticed. Mr. Bickerton answered in respect of the transfer from departments. How is the money transferred?
In your remarks, you basically said that the announcement would result in a transfer of funds between the two organizations. You said ``organizations'' but I think that means the departments of Justice and the Solicitor General.
Mr. Bickerton: Yes.
Senator Cools: How does that transfer happen?
Mr. Bickerton: The actual mechanism that we use to effect the transfer will be Supplementary Estimates that will be presented in September. Negotiations ongoing now will be finalized and the government will make a decision as to the nature of the transfer. Those will be reflected in the Supplementary Estimates in due course.
Senator Cools: Those will not be in the Main Estimates, not in the bill in June. I would be very interested, for my own learning, in knowing the mechanics of how that is done. You can teach me that information any time.
The Chairman: I wish to thank you, Ms. Danagher and Mr. Bickerton. We have left some loose ends but we will expect to hear from you as usual with full information on the matters that are still open.
The committee adjourned.