Proceedings of the Standing Senate Committee on
National Finance
Issue 1 - Evidence - Meeting of May 3, 2006
OTTAWA, Wednesday, May 3, 2006
The Standing Senate Committee on National Finance met this day at 6:19 p.m. to examine the Main Estimates laid before Parliament for the fiscal year ending March 31, 2007.
Senator Joseph A. Day (Chairman) in the chair.
[English]
The Chairman: Good evening, ladies and gentlemen. I would like to call this meeting of the Standing Senate Committee on National Finance to order. My name is Joseph Day and I represent the province of New Brunswick in the Senate. I am pleased to have been asked by my colleagues to chair the committee.
We are continuing today our study of the Main Estimates for 2006-07. We will shortly be joined by the Honourable John Baird, a member of Parliament for the Ottawa region and President of the Treasury Board. He is currently in the House of Commons because a vote is taking place.
In the meantime, we are fortunate to have with us officials from the Treasury Board Secretariat who appeared before us yesterday. This gives us an opportunity to pursue further questions in relation to which some research has been done. Present are Mr. David Moloney, assistant secretary of the expenditure management sector; and Laura Danagher, executive director of the expenditure management sector, expenditure operations and estimates division.
Permit me, first of all, to introduce the deputy chair. Senator Anne Cools is from the province of Ontario. During her many years of public service, she has been involved in a wide range of public issues and has been active as a member of various committees in the Senate and other public bodies on which she serves. In addition to this committee, she is currently a member of the Standing Senate Committee on Legal and Constitutional Affairs and the Standing Committee on Rules, Procedures and the Rights of Parliament. She is a busy senator.
Senator Lowell Murray, from the province of Ontario, is also, sometimes, from the island of Cape Breton. He has served in the Senate since 1979. During this time, he has served as Leader of the Government in the Senate, Minister of State for Federal-Provincial Relations, Minister Responsible for the Atlantic Canada Opportunities Agency and Acting Minister of Communications, all of that while serving as a senator. He has also served as chair of this particular committee; therefore, he is a valuable and important member of the committee.
Senator James Cowan represents Nova Scotia in the Senate. He has a legal background. He is a member of the Canadian Bar Association, the Nova Scotia Barristers' Society and the Canadian Council for Public-Private Partnerships. He is also active in many social causes in Nova Scotia.
Senator Art Eggleton is from the city of Toronto. He served, first of all, as a councillor in Toronto and was mayor of that city from 1980 to 1991. He was elected to the House of Commons in 1993 and served as a minister in various capacities, including President of the Treasury Board, prior to being summoned to the Senate.
Senator Mac Harb is from the province of Ontario and, in fact, from the Ottawa area. He is an engineer by training and has been an alderman and deputy mayor of the City of Ottawa. He was first elected to the House of Commons in 1988, where he represented Ottawa Centre until he was summoned to the Senate in 2003.
Next we have Senator Pierrette Ringuette. She is from New Brunswick and was the first francophone woman elected to the legislative assembly in that province. She was subsequently elected to the House of Commons, representing a riding in New Brunswick. Here in the Senate, she is also a member of the Standing Senate Committee on Legal and Constitutional Affairs.
Senator Nancy Ruth is from the province of Ontario. She has played an active role in various non-profit organizations in Canada, Britain and the United States. She has been the recipient of a number of distinguished awards. She has spoken extensively about the Canadian Charter of Rights and Freedoms and on issues concerning women's rights, poverty, politics and economics.
Senator Francis Fox is from the province of Quebec. Before coming to the Senate, he was a member of the House of Commons from 1972 to 1984, where he held several ministerial portfolios, including Solicitor General, secretary of state, Minister of Communications, and Minister for International Trade. He has a legal background and is involved in several of Montreal's cultural and sport activities and communities.
Next we have Senator Michael J. Forrestall. He is a journalist by background and a businessman. Before his appointment to the Senate, he had lengthy experience in the House of Commons representing the people of his beloved province of Nova Scotia, which he continues to do here.
Senator Bill Rompkey is from Newfoundland and Labrador — more specifically, from Labrador. He is a teacher by profession and has served as Superintendent of Education in Labrador East. He has represented Labrador in the federal Parliament, both in the House of Commons and now here in the Senate. He has served as minister in various portfolios, and has occupied different leadership roles in the Senate. He is now Chair of the Standing Senate Committee on Fisheries and Oceans.
That is your committee for this evening. I would now like to go to Mr. Moloney and Ms. Danagher. Thank you for being here again.
Senator Mitchell arrived late. Senator Grant Mitchell is one of the newer senators, but he is not new to politics. He has been involved in the political community and business affairs in the province of Alberta. He served in the Alberta legislative assembly and was Leader of the Opposition there. He has experience in the public sector and in business and was summoned to the Senate in 2005.
As I indicated, the President of the Treasury Board is currently tied up with a vote in the House of Commons. When he arrives, I will suspend our hearing for a short time to allow him to settle in between the two of you. In the meantime, perhaps you could provide us with some of the answers we have asked for.
David Moloney, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Senators asked a number of questions yesterday and my colleague and I undertook to return here with written responses to them. I am happy to take this opportunity to read into the record a summary of those. The one question that we have not been able to fully answer as of this evening is regarding the costs of internal audit functions across the government. That will require more intensive research, but we are working on that as well.
In potential order of import, senators asked yesterday about TB Vote 5, the government contingencies vote, specifically in response to my comment that we had adopted the recommendations of the committee in respect of the wording of that vote. The Main Estimates that are before the committee do have the reworded vote.
Senators also asked whether the recommendations of the committee with respect to the guidelines that will govern the use of TB Vote 5 have been adopted and, further, whether Treasury Board, as a ministerial body, had approved or would be approving the guidelines for that use.
We said that we would come back with a document, and indeed we will provide that to senators this evening. It summarizes for you on one page the current wording of the vote, the wording in the 2005-06 Main Estimates, and the framework for use by TBS, which has received the approval of the President of the Treasury Board. Further, we will be taking this forward to the Treasury Board. We hope to get the president's approval to do that before this summer.
We have also included what those guidelines are as well as, side-by-side, the previous, the current, and comments on which of those are responding to specific recommendations by this committee in sessions past.
I will also leave a copy of a document tabled with the committee in November of 2005 that provided an overview of the recommendations from this committee in the past as well as those from the Auditor General.
As you will see from this document, most of the specific recommendations that you have made have been adopted in respect not only of the wording, but of the guidelines themselves, which have been extremely helpful and important guidance for us.
We will be providing those documents to the clerk of the committee.
The Chairman: Do any senators have any follow-up questions from those answers?
Senator Ringuette: I want to ensure that I correctly understand the process. If a program has X amount of dollars and by March 20 there is no more money in that fund, what is the role of Treasury Board? The minister must go to cabinet to get approval for announcing funding. What is the role of the Treasury Board with regard to requiring additional funding? Do you decide to use the funds that are left and any further amount will have to come from the next budget?
Mr. Moloney: The document that will be provided to senators will explain in greater detail. In summary form, Treasury Board Vote 5 is to be used only — with one exception, which I will explain next — to provide a temporary advance to cover items that will be included in subsequent supplementary estimates brought before Parliament. Once those appropriations are brought to Parliament, when supply is received, Treasury Board Vote 5 is reimbursed.
The sole exception to that practice is that the government contingencies vote can be used to cover pay list shortfalls. As we come to the end of a fiscal year and get beyond that time, a department may find itself with certain wage and salary obligations that were not readily forecast, such as the cost of certain kinds of leave, be it parental leave, maternity leave, sick leave, early retirement or others. We have no other source for those.
Senator Murray: Am I correct in my impression that Mr. Moloney has information on other subjects to place on the record?
Mr. Moloney: I do indeed.
Senator Murray: Would you mind, Senator Ringuette, if Mr. Moloney were allowed to do that and then, if there is time, we could proceed to questions?
Please put the rest of the material on the record and we will not interrupt with questions.
Senator Ringuette: I thought all the material had been tabled. Perhaps Mr. Moloney could just complete his answer before we move on.
Mr. Moloney: There are no possibilities, other than pay list shortfall, under which TB Vote 5 ends up being a permanent source of funding. Otherwise, it is a means of bridge funding for truly urgent purposes, where the government and Treasury Board approves, and for which it is not appropriate to wait for an opportunity to seek supplementary appropriations.
The Chairman: Thank you, Mr. Moloney.
Ladies and gentlemen, we are pleased to have with us, in his first appearance before the Standing Senate Committee on National Finance, the President of the Treasury Board, the Honourable John Baird. He represents, in the House of Commons, the riding of Ottawa West-Nepean, having been elected in the most recent election. Prior to that, he represented that area in the Ontario provincial legislature.
We are pleased that you are able to be here. In order to plan for interventions by senators, how long can you stay with us this evening?
Hon. John Baird, P.C., M.P., President of the Treasury Board: I am in your hands in that regard. I have an event to attend in my constituency this evening, but if you require my presence longer I will be pleased to stay, as I appreciate the important work that the committee does.
The Chairman: Will it be acceptable if we conclude at about eight o'clock?
Mr. Baird: If it can be sooner than that, I would be thrilled, but I am prepared to stay later than that if required.
The Chairman: Thank you very much.
Mr. Baird: I am pleased to make my first appearance before this committee to discuss the 2006-07 Main Estimates. I know of your good work, having had many discussions with the former chair about the important work that this committee has done over the years. I am looking forward to working with you, not only today but in the future.
Increased accountability is one of the government's five main priorities. This commitment is crucial in allocating taxpayers' dollars for the most effective use and for value for money. I know that yesterday and earlier today you heard from David Moloney and Laura Danagher.
In my opening statement, I would like to supplement their detailed presentations with a brief overview of the unique process for this year's Main Estimates. After that, I will be more than pleased to answer questions.
As you know, the Main Estimates identify the parliamentary spending authorities sought by individual departments and agencies for the coming year, along with a description of their activities and strategic outcomes. They also provide information to Parliament about adjustments to statutory spending that have previously been authorized. Because of a delay as a result of Parliament's dissolution for a general election, the Main Estimates were tabled on April 25 in order to secure interim supply. Full supply details are now scheduled for tabling in December. This will allow sufficient time for parliamentary committees to review the Main Estimates prior to granting full supply.
I do want to emphasize that the 2006-07 estimates reflect decisions taken by the previous rather than the current government. This government's new spending priorities were highlighted in yesterday's budget and will be fully reflected in the supplementary estimates that will be tabled later in the fall. With the introduction of the budget, we are turning a new leaf. We are firmly committed to a future of hope, opportunity and positive growth for all Canadians.
The budget did address the five key priorities that the Prime Minister set for this government. I have worked closely with the Minister of Finance to ensure sufficient resources are allocated to those key areas within the budget.
With those caveats in mind, let me turn to the timing of this year's Main Estimates and related supply bills and the reasons behind those changes.
Under the existing standing orders, Main Estimates for each new fiscal year are tabled in the House and referred to the standing committee on or before March 1 of the fiscal year. Interim supply is required before April 1 to permit the operations of government to continue until full supply is obtained, that is, until Parliament has had the opportunity to review in committee the Main Estimates. Full supply completes the process, and its timing should allow the committee time to report back on the Main Estimates.
This year, the process and timing are different because of the timing of the election and the return of Parliament. Therefore, the first order of business upon Parliament's return was to pass a special order dealing with the business of supply. This allowed the Main Estimates to be tabled on April 25 and interim supply to be introduced today.
As part of these special orders, it was further agreed that full supply would be delayed until the fall. Therefore, interim supply will be for nine months, not the normal three months. Consequently, committees will report back on the Main Estimates in November and full supply will be introduced in December. Given this timing, the departmental reports on plans and priorities will be tabled in late September. This delay allows sufficient time for departments to integrate the budget measures that were announced yesterday.
Supplementary estimates will still be tabled in the fall, following the tabling of the RPPs. That will provide the first opportunity for the government to implement spending plans that were outlined by Minister of Finance Jim Flaherty yesterday. The result will give parliamentarians a more complete and accurate picture of the government's plans and priorities.
Our priority now is to ensure that the government continues to operate. Given the compressed time we faced, the recasting of the current Main Estimates to reflect the priorities of the government was impractical. Furthermore, it would not have given Parliament sufficient time for a comprehensive review and scrutiny.
Under normal circumstances, the government tables estimates that spell out our plans and the spending authority that we need to put those plans into action. This year, however, in order to integrate new plans into the estimates, we would have had to delay tabling of the Main Estimates even later. That would not have given committees sufficient time to review these plans.
We are also further constrained by the fact that funding provided by special warrants runs out on May 15. I know the members of this committee are particularly interested in issues involved in special warrants. Mr. Moloney's presentation yesterday included some important details on this. However, it might be useful for me to provide a few additional details.
Some of you might ask why we would not just use special warrants to generate the extra time required this year. Special warrants are used under special circumstances and should not be used to circumvent the role of Parliament. For one thing, there are restrictions on the use of special warrants.
For example, they cannot be used once Parliament is sitting. Special warrants are normally issued for a period of 30 days; precedent allows an extension to 45 days during the special warrant period. While, legally, a final special warrant could be issued for a longer period, precedent does not support such a move. Even if special warrants could be extended further, this would impose severe restrictions on the time required for committee hearings to ensure comprehensive review.
Under normal circumstances, we would have had more time to compile the Main Estimates, giving committees, particularly the important work of this committee, a less pressing schedule for hearings.
Nevertheless, I believe the government has prepared a document that gets us off to a good start in fulfilling our commitments.
Mr. Chairman, honourable senators, before completing my opening remarks, I would like to thank you for your continued scrutiny and guidance in allocating government resources to serve Canadians better. I look forward to a productive relationship with this committee, and all senators, in the weeks, months and years ahead.
I did see Senator Eggleton earlier, a former President of the Treasury Board, and I asked him if he would provide assistance and counsel to me on an ongoing basis; he has agreed to do so. I have to confess I once came upon the now senator, then minister, on a rural road in my constituency, where his car had gone into the ditch, and as a young 25- year-old backbencher in Ontario, I was good enough to drive him to his event.
Senator Eggleton: Take me off the question list.
The Chairman: Senator Eggleton has not declared any special interest.
Thank you very much, Mr. Baird. We much appreciate your being here. We know how busy you are at this point in the cycle, with the Main Estimates and the supply bill. We look forward to receiving and dealing with those in the Senate tomorrow in our usual expeditious and thorough manner. Part of our ability to deal with that is to look at the Main Estimates and then report back before we deal with the supply bill, so that is why it was important to meet with you today.
I am assuming you are now prepared to receive some questions from honourable senators.
Senator Murray: Minister, if we ever find you in a ditch — there are plenty of them in Eastern Ontario, as you are aware — we will do our best to extricate you. I hope you find this experience more congenial than that.
What is unusual about the hitches in the present supply cycle is that dissolution covered parts of two fiscal years. Therefore, what you call ``full supply'' that we will be voting at the end of the calendar year in December will be three- twelfths, and what your House just voted was nine-twelfths of full supply for the year.
These estimates, to all intents and purposes, reflect the spending plans and priorities of the previous government. The reason they are here is that we have to have estimates before us in order to grant supply.
To the extent that changes are made in these estimates as a result of yesterday's budget, or as a result of other policy decisions that may be made down the road, we will see those changes reflected in supplementary estimates; is that correct?
Mr. Baird: That is correct.
Senator Murray: When may we expect to see those supplementary estimates? Is that a December proposition, or will it be sooner?
Mr. Baird: They will be tabled in October.
Senator Murray: There is a reference in your opening statement to providing additional resources to such officers of Parliament as the Auditor General, the Ethics Commissioner and others. The accountability bill, which is in your name, is adding to that list of officers of Parliament whose job it is to monitor the executive on behalf of Parliament.
This committee has been interested for some time in the budgeting process for those officers. We feel that because their job is to monitor the executive, the executive should not be able to keep them on a short leash by controlling their budgets. Therefore, we have made some recommendations involving the participation of a committee of the Senate and the House of Commons in the funding and approval process, so that they are not completely at the mercy of the Treasury Board. Where do we stand with those proposals?
Mr. Baird: That is a valid concern. There is room for debate over the Treasury Board being the auditee and approving the budget of the auditor; in our case, the Auditor General. I understand a pilot project was established in the prior Parliament of a panel of MPs to examine the spending of officers of Parliament to ensure they had the resources required to do their job.
In our federal accountability act action plan, we indicate an intention to continue that pilot project. I believe only one or two, maybe three, officers went through it. We would like to continue it. In the House, for example, the former chair of the Public Accounts Committee would always ask the Auditor General on the record whether she had sufficient resources to fulfil her mandate, to which I understand she generally answered yes. She is not requesting additional resources this year, but it underlines the fact that once the bill passes and they have a greater comprehension of what it will entail, they may require additional resources next year.
Senator Murray: It is a question of process, minister. It is a question — and this is a bicameral system, as you know — of having senators and MPs involved in the approval process.
We recognize that these budgets have to go through the Treasury Board, the Crown and so forth, but we want Parliament to take part in the approval process for funding of those officers of Parliament. It is not just the Auditor General. I remember, 26 years ago, hearing the Commissioner of Official Languages speak to this very point.
Mr. Baird: The House leaders and Speakers of both Houses should discuss Senate members' participation in this issue. I am prepared to pass on the desires of this committee to our leaders in both Houses.
Senator Murray: You will be back in October, in any event, with the next set of estimates, and we will have an opportunity to review the matter with you then. A matter that we flagged yesterday when the officials were here concerns the 2010 Olympics. Ms. Copps, the then Minister of Canadian Heritage, was here in February 2003, and she reported that the total commitment of the government at that point was $310 million; most, if not all, of it through the Department of Canadian Heritage.
Yesterday, Mr. Moloney brought this figure up to just under $400 million; most of it again through Canadian Heritage. I do not know whether you can provide any more up-to-date information than what we received yesterday as to our present commitment to those games. The committee would want to know what process is in place to monitor, control and act as a clearing house for the various pressures that are or will be on the different departments and agencies of the government with regard to those games.
The media are full of reports about 50 per cent cost overruns, the tight labour market in the construction industry, and suggest that this will create pressure on the federal treasury. We do not want another Montreal 1976 on our hands. I am interested in learning how you are organizing yourselves to stay on top of this.
Mr. Baird: There has been a change of government, but no change in commitment with respect to the Government of Canada's support of the Olympics in British Columbia in 2010. A minister and a parliamentary secretary have been designated to take responsibility.
My understanding is the Government of British Columbia is responsible for covering any deficit that could occur. As a new minister and a new member of Parliament, I would be wise to take your concerns back to my colleagues, because there have been many cost overruns in previous ventures of this nature that have been felt for years to come. I could certainly do that.
Senator Murray: You are not aware, as we speak, of pressures?
Mr. Baird: I have nothing to add to that. I will take this concern back. It is wise counsel.
Senator Mitchell: Mr. Minister, welcome. The budget speech indicated that you have been charged, as President of the Treasury Board, with identifying at least $1 billion worth of savings in 2006-07 and another $1 billion in 2007-08. Could you provide an indication of where you intend to find those cuts and how many people you might be laying off in order to do it?
Mr. Baird: The budget came out yesterday afternoon. I will be working with my colleagues to develop an internal process. I feel strongly that I do not want to see anything grip this city as in some previous exercises, known as program reviews. I do not want to see major concerns and issues with our public servants. There is an issue of low morale. It is one of my priorities to address making a career in the public service rewarding.
I do not see why we should single out public servants for reductions as part of this exercise. That is not on my agenda. From the moment I was sworn in, I attempted to re-establish a good relationship, not just with public servants as an institution, but with them individually and the bargaining agents.
It is inevitable that there be changes here and there. Naturally, there are changes across government from year to year, let alone after a change in government with different priorities. Different times call for different priorities. For example, we are currently in the process of implementing the new Veterans Charter, passed unanimously by Parliament last year. There will inevitably be more public servants required to fulfil that mandate. There may be issues that, equally, will fall off the table as new ones come on. There is no identified process.
I will give you an example of a number of items I am proposing be addressed. The Prime Minister, on his first day in office, brought in a smaller cabinet. There are considerable savings to taxpayers as a result. They are in the millions. Rather than allowing that to sit in departments, we could put it to Canadians' use through some of the tax cuts or new spending initiatives. That would be wise.
Prior to the recent conclusion of an agreement with the United States on softwood lumber, we were spending a considerable amount of money on legal and court costs. Now that there has been a successful negotiation, there are some opportunities for savings. Those are two examples of areas that I would look into.
It is important to have a process to review these new spending priorities for Canadians in 2006 — certainly health care, crime and the environment. There are a number of issues that have probably risen higher on the public's wish list for government services and support.
Senator Mitchell: Perhaps, when you return, you will be more specific as to what you will be cutting. We know you are cutting $5 billion out of established environmental programs, and I am assuming that somehow, something has to give. Have you given any thought to how many people you will be laying off?
Mr. Baird: I do not accept that $5 billion figure, senator. What we did say during the election campaign is that the transit pass tax credit would be funded through some of the allocations made to deal with global warming.
Senator Mitchell: But you do not have to hire people to do that.
Mr. Baird: No.
Senator Mitchell: So that will not replace people you are cutting.
Mr. Baird: There will be a modest amount. One of the issues we are interested in is fewer studies and more action. We want to see measures that will actually reduce greenhouse gas emissions.
Senator Mitchell: If you are talking about fewer studies, more action, the one thing we are receiving from the environment department is the Minister of Environment's commitment to study the 100 programs she is cutting, and then figure out what she will do to replace them. There is certainly a study going on there, I would hope.
Mr. Baird: It was fortunate that a review of these programs was instigated by the previous government, and the minister has already taken quick action.
Both the Minister of the Environment and the Minister of Natural Resources have already made some of the decisions that have been widely reported with respect to studies that the previous government initiated, and which indicated a lack of success or a failure to meet objectives.
Senator Mitchell: Will we see the results of those studies to determine whether they actually were lacking in success? It would seem to me that no matter what degree of success they were achieving, it would be more than doing nothing at all, which is the situation that has existed for at least a year.
Which brings me to my next question: You have given some thought to the statement you made in your budget that you will put $2 billion into climate change programs.
However, when I look at the actual figures, charts and tables, and the line-by-line items in this budget, I can see no place where that $2 billion is committed. It is stated that you will spend it, but there is no substance to that at all. The minister is still thinking about it.
Looking at NRCan and Environment, the figure of $2 billion is not in here. Essentially, you have cut $5 billion out of existing environmental programs that are doing something that needs to be done under Kyoto, and for the world and our place in the world, and at the same time you have said you will spend $2 billion, but that amount is not here.
Mr. Baird: Both ministers have said they are working on the issue and will be reporting back in short order.
Senator Mitchell: Will there be money here? Will you be spending more money than you have specified in your Main Estimates or your budget documents? You have said there is $2 billion but you have not put it in here.
Mr. Baird: We have defined both the Main Estimates and the budget document. The Main Estimates, as I said in my opening statement, represent the spending of the previous government. If there are new initiatives, obviously there will be supplementary estimates coming forward in October.
Senator Mitchell: Could you get back to me in writing and tell me where in any of these documents you can find the $2 billion you have said in the prose that you will spend?
Mr. Baird: I will be pleased to respond to your request.
Senator Eggleton: Little did I know when I was rescued from the ditch that the first person to give me a lift would later succeed me as President of the Treasury Board, but I congratulate you on doing the job. It was also my first ministry when I came to Parliament Hill and it is one I am sure you will find will give you a great, in-depth look at the government overall. You also get to look at my picture occasionally. I do not know if they use it as a dartboard or not.
Yesterday morning, when we met your officials, we had the light blue books in front of us, but today we also have dark blue books from the budget. As you say, this is previous government material, carrying on the business. We are more focused now on what will happen in the future. The supplementary estimates will start to reflect these things.
I want to pick up something Senator Mitchell mentioned, the $2 billion in cuts. It was $1 billion this year and $1 billion the following fiscal year.
Minister Flaherty talked about this in the budget speech. He said government programs must be consistent with federal responsibilities. On page 20 of one of the documents, ``Restoring Fiscal Balance in Canada,'' there is a list of current roles and responsibilities — federal roles, joint roles. Then there are the provincial responsibilities. They include primary and secondary education, health care, municipal institutions, social assistance, social services, natural resources and administration of justice. Some of these, such as health care, are subject to big transfer payments, but the province does administer them.
Mr. Flaherty also said — and this relates to what I wanted to ask you — that the existing gas tax funding commitment under the new deal for cities and communities and various other programs that come under that title will be maintained. Being from a big city, I was most happy to hear that.
However, I am concerned that the cuts will come from areas down here at the bottom of page 20, those that are not areas of federal responsibility. I see the words ``municipal institutions,'' and I am trying to figure out how that relates to carrying on with the new deal for cities.
Is the infrastructure, the new deal for cities, in jeopardy because it is not a direct federal responsibility?
Mr. Baird: No. It is part of the campaign commitment the Prime Minister made. The Minister of Finance underlined the government's support for that initiative, and it will stand.
I represent a riding in a large city in urban Ontario, as you do, and it is a concern. The health and vitality of our cities, particularly in our province, are important to me.
Senator Eggleton: I am glad to hear that. I might add that after the time I was rescued from the ditch, I developed a big interest in Eastern Ontario roads. I went back to the Treasury Board and found money to build Highway 416, which we did with the province.
The Chairman: That is how it happens, is it?
Mr. Baird: Highway 416 does not go to Packenham.
Senator Eggleton: I also want to ask you a specific question relevant to one of the climate change entities here.
On page 8-2 in the estimates, under the Ministry of the Environment, there is a vote 15 for the Canada emission reduction incentives agency. It is $48 million. What is the plan relevant to this agency? With the programs relevant to climate change under review, what will this agency do? Will it still carry on? What will it do for $48 million?
Mr. Baird: As I said at the outset of my remarks, because of unusual budgetary circumstances, the standing orders, the way we appropriate funds and the uniqueness of this year, these estimates reflect the priorities of the previous government. The Minister of the Environment will be reporting back in short order with respect to a made-in-Canada initiative to reduce greenhouse gas emissions. I will not steal her thunder on that issue.
Senator Eggleton: Will this agency be in limbo until that is all figured out?
Mr. Baird: I will let her speak to that.
Senator Eggleton: Yesterday I asked Mr. Moloney about a line item under Citizenship and Immigration. It is not one I would expect to be under that department in a program context. That is the Toronto waterfront. I understand it is there because it was the responsibility of the previous Minister of Citizenship and Immigration. I understand it is now your responsibility, so it will be transferred over to your budget.
I have a keen interest in this, as you can understand. How do you see this? I do not want to point fingers at anybody, but we have had a long period with different levels of government, different personalities and different political parties, and it has been difficult to get things moving on the Toronto waterfront. How do you see the effort on the Toronto waterfront proceeding from the federal perspective? Tell me it will proceed expeditiously and you will make sure it happens.
Mr. Baird: I agree with everything you have said. The supplementary estimates, I would imagine, would have those funds come over to Treasury Board. The Prime Minister has asked me to work on both the Toronto Waterfront Revitalization Corporation and that initiative, and the issue of the Harbourfront Centre. Those issues are important, particularly to people in Toronto and the GTA. Toronto being an important city in the country, this is a national issue.
I have had a number of productive meetings with officials at the corporation. I have tried to embark on a good working relationship with the Mayor of Toronto and the provincial government on this issue. There are individuals serving in those capacities who represent three political parties, but I believe they share a vision. I agree with you that there has been a fair amount of time spent studying this issue. The people of Toronto, the taxpayers in Ontario and across the country, want to see some action. That is my highest priority.
The wall of condominiums that began to creep up there in the last number of years is a concern. People want access to the waterfront. I want to signal a strong engagement by the federal government on this issue. It is important. The Prime Minister has recognized that.
Being at a central agency, this is the only direct program that I am working on, so it will have special significance. I was a member of the provincial cabinet that gave strong support to the initiative. I have tried to underline federal engagement on the file. Much work has gone on. At some point, we want fewer studies and more action on the ground. I was pleased to be at the West Donlands site, where there now is action on the ground, which is good news. We will be in Toronto in the coming weeks to launch another initiative with the other two levels of government. It is a great example. We have three different levels of government working together. It is a unique exercise. I would like to see more action and less talk, though.
The $1.5 billion is a large commitment from taxpayers at the local, provincial and federal level. It is really a drop in the bucket. The main desire is to see private sector involvement. If you can begin to re-gentrify part of the area, clean up part of the environment, the contaminated soil and whatnot, with remediation, it will attract more people there and more private sector investment will come to complement what we are seeing at the federal level.. That does not happen until the rubber hits the road.
It certainly will happen in the West Donlands in the coming years. There will be a strong commitment there on my behalf and that of the Prime Minister.
Senator Ringuette: I was just sitting here and saying, ``Boy, I wish he had taken my car out of the ditch, and if he could agree with my issues too, I would be okay.''
In your opening remarks you said, ``We are firmly committed to a future of hope, opportunity and positive growth for all Canadians.'' I remember seeing in the papers in February that you made a statement in regards to the Canadian Tourism Commission, that you did not support that particular organization. I do not know if it is being moved out of Ottawa.
Could you explain to me, as President of the Treasury Board and overlooking the allocation of funds, your position on the issue of decentralization?
Mr. Baird: If you look back at any public comments I made both before and after I became President of the Treasury Board, they would be pretty similar.
I represent a constituency here in the National Capital Region, where there is a real and deeply held concern that decisions will be made to move jobs out of the region for political rather than sound public administration reasons.
This has been the position of the bargaining agents who represent the employees working here. I feel strongly that we should not use public servants as pawns in electoral politics. I suspect that both parties that have governed the country have done that from time to time. It is not a practice with which I agree.
If decisions are made to move jobs from one part of the country to another, such as that the government recently made to move jobs to Gander from Halifax, they should be based on public policy considerations. During the recent election campaign, some candidates even stated decisions had been made which had not been announced that would move jobs to their riding. That is regrettable.
A scientist or someone who works in the food inspection agency or tourism industry should never feel decisions are being made for political reasons. They should be based on sound public policy and administration.
There was a real concern in the capital when the Eastern Ontario tax processing centre was moved to Shawinigan, Quebec. Many felt that it was done for political reasons and not reasons of public administration. That is certainly my view.
Senator Ringuette: Do you think that it would be logical that the Department of Fisheries would be located where the industry is operating?
Mr. Baird: I guess it would depend. Obviously, when a decision is made to put them in Halifax or Vancouver or Ottawa, you have to look at every situation as you find it.
Senator Ringuette: Is that the position of your government in regards to decentralization?
Mr. Baird: If there is a public administration or public policy rationale, then that case would have to be made. I just do not think it is appropriate for a candidate running for political office to say, ``I got the government to agree to move 25 jobs from this town to this town.''
Senator Ringuette: Just like there is a difference between saying something when you are a member of Parliament wearing one hat, and saying another thing when you are a minister of the Crown and having to wear two hats.
Mr. Baird: My view has not changed and it is my view in both hats.
Senator Ringuette: In regards to your view, I have a bill in the Senate right now to remove the geographic barriers to hiring Canadians from across the country for the public service of Canada. All the public service jobs throughout the country would be open to all Canadians, wherever they reside and wherever the job is.
What is your policy on such fairness?
Mr. Baird: I looked at your bill briefly. I have not read it cover to cover. The issue was raised with me. I know Bill Casey in the lower house is interested in this issue. I would want to look at it. In principle, it is not an issue with which I have a concern. If there is a job opening up here in Ottawa and there is an outstanding Canadian from Edmonston who wants to apply, that person should be able to.
I understand the Public Service Commission, which is independent of government, and Maria Barrados are looking at this issue. The timeline for implementation does seem long.
Senator Ringuette: You have to understand the commission has guidelines. As we saw in the past, looking at this issue when we studied Bill C-25, the modernization bill, only 23 per cent of government departments had a human resource plan. Human resource planning is also a guideline.
The purpose of the bill is to have a firm commitment so that there is no fuzziness about this issue. It is a piece of proposed legislation that would have to be enforced by all government departments.
One thing I would like to flag for you is the differences between Bill Casey's bill and my bill. There are two. First, Bill Casey's bill would allow Canadians living outside of Ottawa to apply for jobs in Ottawa. My bill says that any Canadian, wherever the individual resides, can apply for any federal job in any part of the country. I do not believe that people living in the Ottawa region should be banned from applying for a job in Halifax or Vancouver. This is a question of fairness and equity, and also of mobility rights under the charter. Members of this committee know how I feel. I have been working on this issue for a long time.
Mr. Baird: I know of a woman from New Brunswick who applied for a public sector job here in Ottawa and she got it. It was my stepmother, so I agree with you.
Senator Ringuette: Good. The other issue I would like to raise with you is in regards to your upcoming $2-billion program review. We asked the President of the Treasury Board in the previous government to supply us with the criteria they would be using to do a review of program spending. They complied, and I am wondering if you would do the same.
Mr. Baird: I would be happy to. It is in the budget. There are several criteria laid out to guide us.
Senator Harb: Let me congratulate you, minister, on your appointment. I wish you well. I have three short questions.
First, in the past, the committee and Senator Murray have made a number of recommendations. There was an undertaking by the previous minister to review those recommendations and to take action on at least some of them.
Will you give the same undertaking, to look at those recommendations at some point and come back here to tell us whether or not you will be taking action on them? Those recommendations mainly deal with the estimates and the way they are tabled, including the way we fund officers of Parliament, budgets, programs and other issues.
Mr. Baird: I am prepared to take the issue with respect to the officers of Parliament to my house leader in the House and the Government House Leader in the Senate. As someone who has been a government leader, opposition leader and a chief government whip, I was impressed with the principle behind the pilot project. It is not just the obvious issue between the Treasury Board and the Auditor General, but if they are officers of Parliament, it is a natural extension to ensure that they are properly funded to fulfill their mandate.
Senator Harb: My second question deals with the budget impact. In fairness to you, as you said at the outset, you are here on estimates that affected the previous government. Therefore, it is not fair of me to ask you questions about the past. Is there any decision that came as a result of the budget that might impact those estimates? In particular, there was a commitment of about $4.5 billion from the Liberal Party at the time and the NDP. This was Bill C-48.
I want to find out what happened to that and how we will handle it. In conjunction with this, I understand there was a series of trust accounts set up, with money moving from the government coffers into those accounts for the purpose of introducing or delivering certain programs. I want to find out at what point the government will come to Parliament for approval of those trusts. Could you tell us about any impact that the government budget or the latest announcement by the government would have on these estimates?
Mr. Baird: I was not a member of the previous Parliament, but I believe authority was given by the Minister of Finance in Bill C-48 to make such payments, as long as there was a surplus. I do not know whether it will take until August for that to reach a certain standard, but there is a pretty high degree of confidence that there will be a sufficient surplus of a minimum of $2 billion to be able to accommodate those.
Senator Murray: Bill C-48 was a terrible precedent in terms of accountability to Parliament and explaining to Parliament where this money was going and what for. There were general subject matters — for example, so much for Indians and so much for something else, but it is a bad precedent. Some of us criticized it vigorously. I hope we will be treated to somewhat more detail.
I do not disagree with the principle of taking money at the end of the fiscal year and using it for proper purposes — but just a notional idea.
Mr. Baird: I am new to this process; new to this house. However, I will share the concern that you have raised. There were statutory authorities in Bill C-48, and when the public accounts are presented in Parliament, there will have to be an accounting for that.
Senator Cools: We do not have in this Senate a public accounts system. We have an estimates committee, which is this one, but we are not the House of Commons. There is no Public Accounts Committee.
Mr. Baird: Thank goodness we have the Finance Committee.
Senator Cools: It does something different from this.
Senator Eggleton: There were a couple of references to trusts yesterday: one for public transit; the other for housing. Both of those have the appearance of being related to Bill C-48. Can you comment on whether they are and whether any other trusts are being set up?
Mr. Baird: The short answer is yes, there is a relationship to Bill C-48. The total amount, for those of you looking at the budget plan 2006 document, on page 160 under Bill C-48, is $3.6 billion.
Senator Rompkey: I want to welcome the minister. As he said, my Ottawa residence is in his riding and has been for some time. I have been most impressed with him as a representative. He remembers my name every time he sees me.
Senator Forrestall mentioned Goose Bay before I did — he knows me so well. Senator Eggleton asked about the Toronto waterfront. I want to ask about the waterfront of Nunavut, because the department is anticipating a net decrease in spending. I wanted to bring to the minister's attention that the polar bear has now been put on the endangered species list and may become extinct in Canada within the next 10 years. I lay that out as a dramatic instance of what is happening and the need for resources to combat it.
The Premier of Nunavut brought to our attention some years ago what was happening with the Arctic ice cap, the continuous and accelerating decrease in the ice cap, and what that was doing not only to the environment of the Arctic, but also to the environment of the East Coast of Canada, affecting all of us in terms of climate change. It is affecting people making a living in the Arctic. People still shoot polar bears and they use bears, seals, ducks and fish. They harvest from that habitat, and that habitat is disappearing.
I wanted to bring that to your attention, get your support for doing something to counteract it and ask you what measures you think might be brought in soon to do that.
Mr. Baird: I think that should be a huge concern for all Canadians. It is not just in Nunavut. We have a polar bear population in Northern Ontario and tagging operations that occur, even my home province, to watch the movements. We should all be concerned.
The issue of global warming has not been taken as seriously as required in the last 10 or 20 years by different political parties. It is not a partisan issue. I would like to see initiatives that produce a twin benefit, not only in global warming but also dealing with reducing smog.
When I was a member of the provincial legislature, it was possible, on the thirty-first story of a building, to actually see the smog over the city in the morning. From that level you get a real sense of what it is like every day.
A made-in-Canada policy could have the twin benefit of not only reducing global warming, but also improving air quality for people with respiratory problems, especially young children and seniors. I share your concern about global warming, as we all do. It is how we will begin to deal with it effectively.
Senator Rompkey: My second question is related to the same issue and involves the Department of National Defence, where there has been an increase in spending. However, I ask Minister Baird, because he is President of the Treasury Board and all of these issues will come before him eventually, my question about the particular items that will involve spending. A number of suggestions have been put forward, such as heavy-lift and long-range aircraft. I recall that during the election, the now Prime Minister focused on three naval icebreakers for the Arctic, to be stationed, I believe, at Iqaluit. I was hoping that he would put one at Goose Bay; and perhaps he will do so.
The point is that it is part of the same issue. This is the one hundredth anniversary of the traverse of the Northwest Passage, which is opening up. There is more traffic coming through it all the time. The northern part of Canada will experience more sea traffic, more air traffic and more traffic of every kind, and yet we have no presence there, although we have underwater sensors and rangers on the ground. This is not a partisan issue, but it is a Canadian issue and we have not established an adequate presence there. We say that we own it and have jurisdiction there, but we have not exercised that authority. It is a question of ``use it or lose it.'' I was happy to hear the words of the Prime Minister, but I want some assurances that the government will follow through on the promises made and that those icebreakers will be built and put in place, because it is long overdue. It is not only for protection and surveillance, but also for mapping. Those coasts have not been mapped since Captain Cook was there in 1770. There is a great deal of work to be done in the Arctic and we need those ships.
Mr. Baird: I will take that back to my cabinet colleagues. There is a huge appreciation for Arctic sovereignty. My first job as a student was working at the House of Commons for the then Minister of National Defence. I had an opportunity to travel to various parts of the country, and so I have an appreciation for the role that the men and women in uniform play. At the time, the minister was pushing a rather aggressive plan on nuclear-propelled submarines that did not receive the endorsement of the Parliament of the day. Through that I learned that it is not simply that we have to make a case for Arctic sovereignty, but also for a physical presence in, and an engagement with, the Arctic. In Budget 2006, on page 135, you can read the details of an increase to the budget of National Defence over five years. It lists the various initiatives that would be undertaken.
We need a more expedited policy with respect to defence procurement to allow the Armed Forces to identify needs and then have them met. Sometimes, procurement issues can hold up otherwise wise public investment in that area. I know that one senator, who has been at Treasury Board and National Defence, would know that.
Senator Forrestall: I would like to talk about wasted money or purchasing for an hour.
Senator Nancy Ruth: It is my understanding that in 1976 there was a cabinet decision requiring departments such as yours to do gender-based analysis — the consideration of a gender-responsive budgeting process. Could you tell me about how this process was used in the building of the estimates?
Mr. Baird: In 1976 I was in grade 1, and these estimates do reflect the plans of the previous government.
Senator Nancy Ruth: Would you ask your department to table their gender-based analysis on these estimates with us?
Mr. Baird: I will take that request back to the most senior officials.
Senator Cowan: In the budget speech yesterday there was a good deal of discussion about the Pacific Gateway, which is an important initiative. However, I did not hear anything about an Atlantic gateway, which was begun under the previous government, although it was very much in its infancy when Parliament was dissolved. Could you tell us anything about the plans of this government with respect to promoting an Atlantic gateway?
Mr. Baird: I am more familiar with the Pacific Gateway initiative, but I will talk to my officials about the Atlantic. There is a specific reference to it in the budget papers, but I would be happy to take the question to the department and report back to you.
Senator Cowan: In the budget document, on page 43, dealing with restoring fiscal balance in Canada, one section is headed ``Concerns over funding arrangements targeted to address specific regional needs.''
Mr. Baird: I have the full budget papers but not that document.
The Chairman: You should have made one red so it would be easier for us to find.
Senator Cowan: All these blue documents look alike.
I will read parts of the section, which states: The confidence of Canadians in the overall fairness of federal programs has been undermined in recent years as a result of federal actions that were seen to be departing from the principle of comparable treatment of all Canadians and their provincial and territorial governments.
It refers to the offshore accords reached by the previous government last year with Nova Scotia, Newfoundland and Labrador, and the labour market development agreement reached with Ontario. It says that these were seen as a departure from the norm. Are those your views? Do you share those views on those kinds of programs?
Mr. Baird: It is difficult to separate the three agreements cited in the fiscal balance paper. The general view of the government is that dealing with one-off agreements as an answer to fiscal federalism and making it work is problematic. My party supported all three of the agreements cited. The labour market agreement in Ontario was long overdue, and I supported it. One-off agreements are a general concern if we are to have more effective equalization and a more effective and stronger relationship. This is the kind of dialogue that provincial premiers began in Montreal a few weeks ago. Is this the O'Brien report?
Senator Murray: That is the one on equalization. That is the federal government's panel.
Mr. Baird: There is that report. I suspect there will be a dialogue with the provinces on those issues and a debate in Parliament, both informally and on the record, in the months and years ahead on that issue. Most everyone's province is coloured by the location of their home base. Obviously, Atlantic Canadians, Ontarians, Quebecers and Westerners will have strong views in favour of their respective provinces. There are no easy answers.
The Minister of Finance and the government, in their response, would say it would be ideal to have a better central program. It is a difficulty that even the provinces cannot agree and had some pretty significant challenges when they met in Montreal a few short weeks ago. Tabling the document with the budget is the beginning of that process. The provinces, through the Council of the Federation, are discussing it. The O'Brien report, from some eminent Canadians, will come up. We will see what they have to say.
Senator Cools: I would like to thank you, Mr. Baird, and to welcome you to our committee. I know this is your very first appearance before this particular committee, but I believe it is your first appearance before any Senate committee.
Mr. Baird: Or House committee.
Senator Cools: We are ahead of the House, how about that. We are the upper house, you know.
I want to welcome you here. I am sure you are aware of the circumstances in this committee, that, for example, we have three Conservative members, and how many Liberals?
The Chairman: Eight.
Senator Cools: And one independent.
The Chairman: One Progressive Conservative.
Mr. Baird: All friends and colleagues.
Senator Cools: I am sure you understand what that means in terms of political realities.
Senator Rompkey: What does it mean?
Senator Cools: It means that Mr. Baird has to perform very well.
Mr. Baird: How am I doing, senator?
Senator Forrestall: I think you are doing extraordinarily well.
Senator Eggleton: This is a kind and gentle place.
Senator Cools: Today this is gentle stuff.
I want you to know, Liberal colleagues, I thank you very much. I really do.
I would like to hear you talk a lot, minister, about accountability. I hear you beating the drums of the federal accountability act, and maybe one day you will tell us how much it will cost, but that is not the purpose of my intervention today.
The purpose has to do with the fact that you keep raising the word ``accountability'' and this is the drum that you are beating. I have been a member of the Senate for a while. We are often in a difficult position here, as we are on the particular supply bill that will be introduced in the Senate tomorrow. These bills arrive and we have two or three days to manage them and to get them through the house, which it is not a simple task.
In all your concern for accountability, I want to know if you are planning any initiatives on the issue of strengthening the means of MPs and senators in respect of reviewing legislation. I say this, minister, because you are a little new to this process, but the bureaucracy here is large and pretty expensive, and ministers are not easy to deal with if a member has an issue, or even raises questions. It does not matter on which side of the chamber we sit; I see money being poured daily into everything except developing the capacity of MPs and senators to hold governments accountable.
You have your staff teams. Mr. Rock, when he was minister a long time ago, would come before us and tell us he had 2,700 lawyers or something. Senators have two measly staff, and MPs do not have much. In the scheme of accountability, minister, real accountability is not about the Auditor General or any of those officers of Parliament. Real accountability is about the ability of individual members in both Houses to hold governments accountable.
I was just wondering, as you were so devotedly using that word ``accountability,'' if, in your scheme of accountability, you have any intentions or any proposals for strengthening individual MPs and senators? It is hard work. It is brutal work. It sometimes takes the viscera of a titan to plough through reams of information. I am a little more laborious than most so I do it a lot, but members need resources, because you fellows have your staff, and millions of them and millions of dollars, and highly paid individuals. I want to know, what about MPs and senators?
Mr. Baird: I thank you for your question, senator. With respect to accountability, and the budget for that, we have identified it on page 52 of the budget plan. I know you will be excited to see that.
Senator Cools: You have to know. I hate to tell you this, Mr. Minister, but we are a little short of Conservative senators. There was a problem yesterday, where many of us had to sit in the chamber to maintain quorum and could not follow what was happening on the budget. This is how serious the problem is. Therefore, yes, it is music to my ears.
Senator Murray: Appoint more senators.
Senator Cools: Can you read the statement into the record, because all it will say is the page number.
Mr. Baird: I was recently invited to meet with the Senate government caucus and I said I much enjoyed my time there and regretted it was only as a visitor.
Page 52, table 3.1, on accountability, identifies for the current fiscal year the federal accountability action plan, $57 million, and then internal audit in the amount of $16 million.
Senator Cools: I was speaking more in general, of strengthening resources for MPs and their budgets. You must admit, minister, their budgets are awfully small. You talk about the Auditor General. The Auditor General's budget is larger than the Senate's, is it not? The total Senate?
Mr. Baird: It is about $87 million.
Senator Cools: Yes, much larger than the Senate's. This is a position, minister, that was a civil servant not too long ago. This is a position that has its origins in the Deputy Minister of Finance. It is interesting, but I am not taking issue with that.
Mr. Baird: If Canadians knew that a Senate committee was sitting at quarter to eight and the House is sitting across the road, then they would know the value they get for their dollar. I agree that we have to strengthen the capacity of members of Parliament, both in the upper and the lower House. One of the initiatives in our federal accountability action plan — I think it is quite meaningful — is establishing a parliamentary budget authority that can provide support to the Finance Committee in both the House and the Senate, to be able to equip senators and members of the House of Commons with the capacity to hold the government to account; whether it is the accuracy of financial projections, whether it is costing out public policy proposals, whether it is doing research. This will go a long way. It not something that I would envisage as being as big as the Congressional Budget Office down in the United States, but I think if we could equip senators with the power of information to be able to hold the government to account, I believe that would be a welcome addition.
Senator Cools: When do you think you can get that moving?
Mr. Baird: The minute we get Bill C-2 passed, I would commit to making that a priority, senator. If you can talk to your colleagues about the importance of accountability, one of the key parts of that is the parliamentary budget authority. We would not want to set up a new bureaucracy; our proposal would be to put it under the Library of Parliament, which serves both Houses and would be genuinely independent. That is obviously a necessary requirement.
Senator Cools: The other item is a small one. You did not talk much about the use of the Governor General special warrants, but that has been a fairly significant issue with this committee for many years. Perhaps, before you complete your remarks, you could give us something a little more comprehensive on that.
The essential point I am trying to make, minister, is that this has been truly an unusual time in the supply cycle, and all manner of normal processes have been abridged, altered, corrected and changed — and so on.
I want to register that I hope that this does not set precedents and that this kind of thing will not be happening again. I think you will find that Liberals here are being cooperative on this matter, and more than cooperative — supportive.
I happen to have in front of me the motion that was put forward on April 4, 2006, about the disposition of all matters in respect of supply by today, I believe. It was voted on. That was the vote in the House of Commons.
These kinds of situations are so significant, so unusual. I hope that you will find your way to bringing in these bills in a timely way so that we can have the time to give them the study that they deserve. Quite often the House of Commons adjourns and goes home in June, and senators sit on for weeks and weeks. At the end of the day, the government controls the agenda. Please give serious thought to the timing on these appropriation acts and supply bills so we can give them what they really deserve. The public would be scandalized if they understood that significant amounts of money, millions and billions of dollars, are being voted on in the blink of an eye. You look around and it is gone. I take this process seriously. I would be happy and pleased if you as a minister would take back to your colleagues the message that it is important that we move these bills in a more timely way. It is not right to do this to us again and again. I hope I made the point. You are new to this process, which means you can bring new eyes and a new vision, but it is important that you understand that most of us do not like it.
Mr. Baird: That is wise counsel. Our decision to delay our RPPs until the fall was designed to allow more time for Parliament to review the details of those, and hopefully they will be more reflective of the priorities of the new government, rather than, like these estimates, of the old government. That was one example of something I felt strongly about.
Senator Cools: As I said, you are vigorous, and I appreciate that, but I can tell you governments today dip into those special warrants with great ease. I know well of eras where ministers went near those in fear and trembling because the consequences of the mishandling of something like that were enormous in those days. Now we are in the era where I do not think too many MPs know what a Governor General special warrant is.
Mr. Baird: I have certainly become more familiar with them.
Senator Cools: It is important that we understand what we are dealing with here. We are dealing with the expenditure not of $5 million or $10 million, but rather billions — $15 billion.
Mr. Baird: It is $26 billion dollars.
Senator Cools: I was thinking of the amount of the warrant. I would ask you to take this message back.
Mr. Baird: I will.
Senator Cools: That it is an important message.
Senator Forrestall: Thank you, minister, and welcome. I do not know whether this is off track or not, but like many other Canadians, I have noted with awe and amazement the rebounding of our loonie. I am also engaged in substantial financial interactions that have cost me perhaps more money than I earned in the first 10 years of my life because of the growing value. I am curious as to whether this will have any impact. I am thinking of our reserves, monies we have in reserves and accounts. I am thinking of the value of gold and where we stand with these matters. Where do we stand with our credit? The simple fact that the dollar is going up in value does not necessarily mean it is a good thing. Does it create any problem for your area of activity and work, or is that left to the departments themselves to cope with, where and when the situation arises?
Mr. Baird: The Bank of Canada takes a huge interest in that, and we let them work independently in that regard.
It is a concern with respect to the manufacturing sector. With respect to competitiveness, Canadian industry, in large measure, did lean on a low Canadian dollar for many years, and the value of the dollar is a huge concern in that sense. Our hockey players from the United States are paid in American dollars, so it becomes a little easier for the Ottawa Senators.
Senator Forrestall: We have heard more about that in the last 48 hours than the general impact across the board.
I appreciate what you said. Part of the problem is the overvaluation of the American dollar. We have had to live with that. We are not solely responsible for suppressing our dollar for the purpose of gain. It happened because of growth in the value of their dollar, to the point where I think for some time now it has been somewhat overvalued. I appreciate that I cannot pursue that any further.
I do not want to get into dialogue about pegging the dollar, as we have been through that before in my years here, but are there contingency plans to deal with possibly serious consequences in the manufacturing and resource sectors?
Mr. Baird: The competitiveness of the manufacturing sector is important to all Canadians, to all of us in both the House and the Senate, and certainly the government. Perhaps it would be best to let the Minister of Finance and the Minister of Industry speak to the broader issue. Obviously the budget, and the significant discussion about competitiveness, particularly with our taxation policy, is something that we have a little more control over than many of the other factors that affect the situation.
The Chairman: I have one question for clarification. In the budget announcement yesterday, there was reference to additional funding over the next five years for the Armed Forces of $5.3 billion. In other areas of the budget documentation, when it was the government's intention to confirm an earlier announcement of the previous government, that was specifically stated. I cannot find any statement in the budget documentation that the previous government's announcement of a five-year plan for the Armed Forces and the amount of funding was confirmed and that this $5.3 billion is in addition to that, as opposed to a substitute for that previous announcement. Can you help me with that?
Mr. Baird: We made some substantial commitments. I cited the very page in the budget papers that spoke to capital and the operational increases with which this government and the new minister are going forward. I will get them.
The Chairman: I have your figures. It is $5.3 billion over five years, and for the next year it is $400 million. Let me tell you that the previous government had committed an amount of $12.8 billion over the next five years. Is the $5.3 billion a substitution for the $12.8 billion, or is it in addition to the $12.8 billion?
Mr. Baird: If it was $12.8 billion by the previous government, $5.3 billion would be a cut, not an increase. Obviously, our intention would be to increase the budget of the Department of National Defence. There are significant recruitment and procurement issues, so we are not able to move as quickly as I think many of us would like to on these initiatives.
Obviously, some things can be done more easily than others. I mentioned issues with respect to procurement and what we can do to have it done more effectively, particularly looking at the timeliness of it. Obviously, I know that the communications campaign for recruitment for the Armed Forces is in high gear as we speak. What it says on page 136 about the budgetary basis of the increase, you cannot do it as quickly as you would like. Senator Rompkey talked about Arctic icebreakers. Those are considerable procurement challenges.
The Chairman: I understand. I think that is why it is a five-year layout for the Armed Forces as opposed to the adopted two-year layout for other departments.
Mr. Baird: Correct.
The Chairman: I want to make sure that I understand your answer. You are saying that this government is announcing a further $5.3 billion, in addition to the $12.8 billion that the previous government had announced for the next five years.
Mr. Baird: I would want to confirm whether or not the previous government was making any clawbacks in any other areas of the Defence budget. I would want to check that, and I would be pleased to do so.
The Chairman: If you could. I do not mean to catch you off guard, but it is not entirely clear here.
Senator Eggleton: The same documentation refers to additional forces: 13,000 in the regular forces and 10,000 in the reserves. I cannot remember the increased numbers put forward by the previous government, but is this in addition to those or does this incorporate them? Is this an expanded level of personnel?
Mr. Baird: If you look at page 135, it specifically speaks to accelerating the recruitment of 13,000 additional regular forces.
Senator Eggleton: ``Accelerating'' means that these are the same numbers as the previous government, but to be accomplished faster?
Mr. Baird: For that one line on page 135. I think the previous government minister, Minister Graham, was committed to certain expansions, both in troops and in the budget and that should be acknowledged. I will say that, of the previous cabinet, he was one of the more effective ministers at Foreign Affairs, but he was, surprisingly, very effective at Defence, which had not been his forte.
There were a number of increases. I would want to confirm, though, if there were any internal clawbacks with respect to the McCallum review. I would want to look at that and report back to you on that, senator.
Senator Eggleton: I was just concerned about the numbers here, whether in fact that was an increase or acceleration.
Mr. Baird: That is the only place I noticed in the entire line that reads ``accelerate'' rather than ``increase.''
Senator Mitchell: Coming from Alberta, as I do, where we have no debt, I am interested in debt repayment. I notice, Mr. Minister, that your government has made a commitment to $3 billion a year in debt repayment. With $480 billion in debt, it will take 160 years to pay it off.
Mr. Baird: I think it is $499 billion.
Senator Mitchell: Is it? I was looking at these figures. Anyway, give or take $19 billion, it is significant, and 160 years or more would be a long time. The other irony is that you are basing some of your projections here on an increase in interest rates, from 4 per cent to 4.6 per cent. That is about $3 billion right there in excess interest. Is $3 billion enough? Do you have a plan that goes beyond two years?
The Chairman: Mr. Minister, we are running out of your time. You have been very generous with your time. If you would like to undertake to answer in writing, you may.
Mr. Baird: I will answer it now, if you like, senator. Alberta had a good Albertan running the province and now we have a good Albertan running the country, so that will be a key ingredient to our fiscal success. The commitment that we made was to plan to pay down $3 billion in debt per year. I think that will extend beyond the two-year planning cycle in the budget, if you look at our campaign document. Already, within 100 days, we have paid down $8 billion on that debt, so we are almost three years ahead of schedule.
Senator Mitchell: That is why I am so concerned, because it was $8 billion when we did it and now it will be $3 billion.
Mr. Baird: That is Canadian taxpayers' money.
Senator Mitchell: We managed to do it, though.
Senator Cowan: It will still be Canadian taxpayers' money.
Senator Mitchell: Yes. It will just be less of it going to that.
Mr. Baird: As well, one of the initiatives in the budget was a goal to reduce our accumulated debt to 25 per cent of GDP, and we were able to move that up by one year. We would be able to meet that target a year earlier, by 2013 or 2014. As the economy grows and as that number goes down — it is relative — the size is impacted. By virtue of the $8 billion that is being repaid with the surplus of this year, we will save $400 million next year.
Senator Mitchell: If interest rates do not go up.
Mr. Baird: It would be more than 400 if interest rates go up, so that is an advantage for us. There is a value to debt repayment. Some people see it as a higher priority than others. I certainly believe that it is a priority.
Senator Ringuette: I hope that Mr. Baird will come back. This is not a question but a quote from an article, and it is in response to the issue of decentralization and your issue of sound public administration. The person quoted here:
...suggests ``governments look at a cohesive national strategy aimed at decentralizing services to rural areas of the country to anchor rural communities and provide much-needed employment opportunities.''
That is from your colleague, for whom I have much respect, Senator Segal, and it is dated February 21, 2006. Those are wise words.
Mr. Baird: His hometown is Kingston, which has a larger public sector than Ottawa, by the way.
The Chairman: Typically, we would ask you whether you have any concluding remarks.
Mr. Baird: I would like to thank all senators. I have enjoyed this. I am looking forward to a productive relationship during these committee hearings. If anyone has questions or wise counsel, I am certainly always open to that. I have already had the occasion to speak informally to a number of senators. There is a tremendous value that the years of experience of members of the Senate bring. This is one of the most important committees in the Senate. I look forward to a productive and long relationship.
The Chairman: Thank you very much. We would like to thank Mr. Moloney and Ms. Danagher. They have some other responses from yesterday that they will provide in writing and we will circulate them to the members of the committee. On behalf of my deputy chair, Senator Cools, and the other members of this committee, I would like to thank you for a productive evening.
The committee adjourned.