Proceedings of the Standing Senate Committee on
National Finance
Issue 11 - Evidence - Meeting of March 20, 2007
OTTAWA, Tuesday, March 20, 2007
The Senate Standing Committee on National Finance met this day at 8:30 a.m. to examine the Main Estimates tabled to Parliament for the fiscal year ending March 31, 2008.
Senator Joseph A. Day (Chairman) in the chair.
[Translation]
The Chairman: I would now like to call the 30th meeting of the Senate Standing Committee on National Finance to order. My name is Joseph A. Day. I am the Chair of the Committee and I represent the Province of New Brunswick in the Senate.
[English]
This committee's field of interest is government spending, either directly through the estimates or indirectly through bills that provide borrowing authority or bear upon the spending proposals identified in the estimates. Today we begin consideration of the government's Main Estimates, Parts I and II, laid before Parliament for the fiscal year ending March 31, 2008. The fiscal year begins April 1, 2007.
The 2007 Budget was presented only yesterday in the House of Commons and the tabling of the 2007-2008 Estimates new government-spending plans will not be reflected in these Main Estimates. Accordingly, these estimates seek Parliament's approval for government-spending plans as announced in the May 2006 Budget, as well as the November 2006 economic and fiscal update.
I would like to welcome the President of the Treasury Board, the Honourable Vic Toews, P.C., M.P. Mr. Toews was first elected to the House of Commons in the year 2000 and re-elected in 2004 and 2006. He has served as Minister of Justice and Attorney General of Canada. Before his career in federal politics, he was a member of the Legislative Assembly of the Province of Manitoba.
Mr. Toews is a lawyer by trade. He acted as legal counsel to the Premier of Manitoba at the Meech Lake Accord discussions in 1990. He was appointed Queen's Counsel in 1991.
Joining Mr. Toews are two individuals who are certainly no strangers to our committee. From the Treasury Board of Canada, Secretariat we have David Moloney, Senior Assistant Secretary, Expenditure Management Sector and Laura Danagher, Executive Director, Expenditure Management Sector.
I have recently learned that this will be Ms. Danagher's last meeting as a representative of Treasury Board. As a representative, she has come to this committee on many occasions and has been very helpful in her deliberations. She has received, within the civil service, a well-deserved appointment to another position and we would like to take this opportunity to thank you for your service to this committee through the Treasury Board and wish you well in your new appointment.
With those opening remarks, Mr. Toews, I would now welcome your presentation and then we will open it up to questions of honourable senators.
Hon. Vic Toews, P.C., M.P., President of the Treasury Board: I am pleased to make my second appearance before this committee. My first appearance was on February 27 to discuss the Supplementary Estimates (B), which is the government's final request for appropriations for the current fiscal year. Today I am pleased to have an opportunity to discuss the 2007-08 Main Estimates, the government's request for appropriations for next year.
As indicated by you, Mr. Chairman, I am accompanied here and ably assisted by Mr. David Moloney and Ms. Laura Danagher. I too want to express my appreciation for Ms. Danagher's work. I just came here and she is already leaving. I am assured that is coincidental. I certainly appreciated her input in the last committee meeting, which was the first one I attended with her; she proved to be a very able assistant. I want to wish her the very best as well. I also want to wish Mr. Moloney the very best as he continues, I trust, in his responsibilities with Treasury Board.
In my opening statement, I would like to set out the context for this year's Main Estimates in terms of the priorities of Canada's new government. After that, we will be pleased to answer any questions you may have. I am still into that steep learning curve and I think the assistants here with me today will be able to handle most of your questions. For a large part, this too is a learning experience for me, and it is pleasant to be able to rely on senior officials to guide us through these complex questions.
As you know, the government tables the Main Estimates to spell out its plans and seek the spending authority it needs to put those plans into action. Specifically, the Main Estimates identify the parliamentary spending authority sought by individual departments and agencies for the upcoming year along with a description of their activities and strategic outcomes. They also provide information to Parliament about amendments to statutory spending that has been previously authorized.
The estimates also contribute to accountability and transparency in government, which has been and continues to be a top priority of our government. They help keep parliamentarians and Canadians sufficiently informed of the government's expenditure resources and help to ensure that government is held to account for the allocation and management of public funds.
The 2007-08 Main Estimates demonstrate two key points about Canada's new government. The first point is that we are pressing ahead to implement the priorities first announced in last year's Budget 2006 and the November 2006 economic and fiscal update. These include increased funding for the environment, defence and security, and social programs. The second point is that the Main Estimates demonstrate this government's approach to effective and transparent management of taxpayers' hard-earned dollars, and our commitment to keep spending growth to a sustainable rate.
Let me take a moment now to elaborate on my first main point that Canada's new government is pressing ahead to implement its priorities. This is reflected in the 2007-08 Main Estimates. Here I need to go back a year to draw a distinction with the 2006-07 Main Estimates.
The 2006-07 Main Estimates reflected decisions taken by the previous government rather than our current government. These estimates did not reflect a number of this government's goals, including the Universal Child Care Benefit, strengthening the Canadian Forces, and support to agriculture and public security programs.
With the introduction of our own agenda last year, Canada's new government turned a new leaf. We set out our commitment to a future of hope, opportunity and positive growth for all Canadians; however, it was not until the Supplementary Estimates (A), tabled last fall, that we had our first opportunity to table estimates that reflected our own spending plans. Today, 14 months into our mandate, we are continuing to get things done for Canadian families and taxpayers.
As part of our overall plan for a stronger Canada, we are pursuing an active agenda built around four pillars: accountability, security, environmental protection and strong economic management. These 2007-08 Main Estimates propose funding in support of each pillar of this agenda. Our objectives in each of these areas are as follows: To increase accountability we are continuing to implement reforms to our political institutions and the political process to make them more accountable and more democratic. To improve security, we are continuing to better protect Canadians by toughening laws, putting more police officers on our streets and strengthening border security. To protect the environment, we are taking bold, practical measures to improve our air quality with a new clean air act, as well as stricter environmental standards and proper enforcement. To ensure prosperity for our citizens, we are working to strengthen Canada's economy for the long haul.
To achieve these goals, we need to be strong managers of Canada's money. Effective management, whether it is a company on behalf of shareholders or a government on behalf of citizens, means making tough choices. We have made tough choices. That is why fiscal responsibility has become a hallmark of this government.
We promised to make responsible spending a cornerstone of accountability in government, and by making government more accountable, we are changing the way business is done in Ottawa.
We also promised to review our programs to ensure that every dollar of taxpayers' money is well spent and that our programs deliver results, provide value for money and meet the priorities of Canadians. Over the summer, we did just that.
As a result, last September, my predecessor, the Honourable John Baird, announced that the government had secured $1 billion in savings from ineffective programs to invest in the new spending we announced in the 2006 Budget.
Responsible spending is the foundation of accountable government, not a one-time exercise and that is why we promised to review the Expenditure Management System and report in the fall on a new approach to making responsible government the norm. Our government is committed to vigorously and systematically examining the way we spend the public's money. We will approve only the funding that is needed to deliver real results for Canadians.
That brings me to the second main point I would like to make today. Canada's new government is effectively and transparently managing taxpayers' hard-earned dollars and keeping growth in spending to a sustainable rate. This is what the 2007-08 Main Estimates demonstrate and the facts are worth repeating.
The Main Estimates provide information on $210.3 billion in budgetary expenditures, including $74.9 billion in proposed voted spending, such as departmental operating and capital expenditures, and $135.4 billion in statutory spending previously approved by Parliament. They also provide information on voted and statutory non-budgetary expenditures for loans and investments equalling $1.4 billion.
Given that the previous Main Estimates for 2006-07 did not reflect this government's priorities, it is important to note that when compared to last year's total estimates, that is, last year's Main Estimates plus Supplementary Estimates (A) and (B), these Main Estimates show an increase in total government spending of only 1.1 per cent or $2.3 billion.
The Minister of Finance tabled the 2007 Budget yesterday and that budget set out additional spending plans for the next fiscal year. That budget delivered on the promises of Advantage Canada announced last fall and sets out our long- term plan for the Government of Canada. Again, the budget balanced surplus is $9.2 billion this year and $3 billion over the next two years. The rate of increase in government spending is trending downwards, 7 per cent this year, 5 per cent next year, and 3 per cent in 2009. We have continued to repay debt and have reduced the debt-to-GDP ratio of 29.7 per cent in 2008. We have included targeted tax cuts for families with a child tax deduction that will deliver $310 in savings for each child and we have harmonized the spousal exemption providing a further reduction of $209. We have helped small business owners by increasing the lifetime capital gains exemption to $750,000 and we helped seniors by increasing the age at which RRSPs must be rolled over into RRIFs from 69 years to 71 years of age.
The government has also taken substantial steps to support the knowledge economy and higher education. The budget includes additional funding for post-secondary education and child care totalling $16.3 billion over seven years. There is increased support of scientific research equalling $4.3 billion, commercialization of research and development of $3.6 billion, and advanced skills and training and science infrastructure for $1.3 billion.
This budget provides needed tax relief for working families, addresses the needs of today by restoring the fiscal balance, allowing the provinces to deliver needed programs and infrastructure, and of the future by investing in Canadians through knowledge development and research.
Senators can rest assured that such plans will only be implemented if Parliament approves the supplementary estimates request during the course of the year.
The budget also shows that even with these additional plans, spending is under solid control. This is what these Main Estimates demonstrate. They demonstrate our commitment to responsible spending by keeping growth in spending to a sustainable rate. They demonstrate our commitment to keeping our fiscal house in order. Taken together with the budget tabled yesterday, these Main Estimates demonstrate our commitment to achieving real results that make a difference to working Canadians and their families.
Mr. Chairman, honourable senators, before concluding my remarks, I would like to thank you for your continued scrutiny and guidance in allocating government resources to serve all Canadians better. I look forward to a long and mutually rewarding relationship with all members of the committee and thank you for your attention at this time. We would be happy to hear your comments and questions.
The Chairman: I would like to thank the minister for his comments to the budget released yesterday. As you indicated in your opening remarks, as did I, the purpose of this meeting today is to deal with the Main Estimates. These Main Estimates do not reflect the initiatives in yesterday's budget. I am sure we will have an opportunity to ask questions when we have budget implementation legislation or, as you point out, in the supplementary estimates. I would ask honourable senators to direct their questions towards the Main Estimates, which we have before us today and we will have a supply bill reflective of those Main Estimates, I would expect, next week in the Senate.
Senator Ringuette: I would like to look at page 14-8 under the heading of ``Human Resource and Skills Development Department.'' Under the item, ``Employment Insurance,'' there is nothing in regards to the Main Estimates for 2007-08. In the middle of the page, you have the ``Employment Insurance Program.'' There is nothing identified there.
Laura Danagher, Executive Director, Expenditure Management Sector, Treasury Board of Canada, Secretariat: You will see that they have realigned their program activity architecture in the current year. If you look under ``Employment Insurance'' for the 2006-07 estimates, things have been realigned against a new structure. The EI is still there, but it is probably under the ``Social Investment'' line. They have just realigned their spending. They are now tracking their activities differently than they did last year in the Main Estimates.
Senator Ringuette: Where can we find it?
Ms. Danagher: It will be under ``Social Investment.'' I can provide that to you in a follow-up question to show how they have explicitly realigned their expenditures. The money is still there.
Senator Murray: It is $15 billion, is it not?
Ms. Danagher: The $15 billion that you are talking about is under ``Consolidated Specified Purpose Accounts,'' which is at the front of the Main Estimates and does not fall under the departmental responsibility because it is a consolidated account for the Government of Canada. If you want to see the exact number, you have to turn to the front of the document.
Senator Ringuette: What is your estimate of revenue from the premiums and your estimate of the payment for the program?
Ms. Danagher: We will have to get back to you on that specific question.
Senator Ringuette: This is major, because 15 per cent of Canadian families and children are living in poverty. We have an Employment Insurance Program that, for the last six or seven years, has constantly reduced the EI premiums. While premiums have been reduced, the employees that pay into the program have received less service. Most of these employees are in the seasonal economy, which contributes 25 per cent to our GDP; this is a very important group of people.
Ms. Danagher: I will have to get back to you on the percentage; however, if you turn to page 1-57, you will see the EI to which I referred. The second last line is the ``Consolidated Specified Purpose Account.'' That is the EI, which is $16 billion. The table goes across pages 1-56 and1-57 and you will see a number, $16,058,500.
Senator Murray: On page 1-5, Table 4 you see ``Employment Insurance.''
Ms. Danagher: That is just the employment insurance portion of that account. The $60 million includes some of the administrative costs for that account.
Senator Murray: The $15 billion is employment insurance.
Ms. Danagher: Yes, that is the actual payments.
Senator Murray: I think Senator Ringuette wanted to know what revenue the premiums will bring in for 2007.
Ms. Danagher: I have to get back to you on that number.
Senator Murray: The present overall accumulated surplus in the fund is reaching $50 billion, is that correct?
Senator Ringuette: It is more than that.
Senator Murray: There is nothing new about that.
Senator Ringuette: I know, but something has to be done about it. It is a cash cow because the intent of the program, which is to help workers, has been diverted and skewed.
Mr. Toews: Why do you say that, for my clarification?
Senator Ringuette: The program is based on receiving premiums that go to the general revenues of government, and the program is intended to help employees. The premiums have been lowered in every budget for the last six or seven years, while there has been no real increase in benefits. Attention has been given to lowering premiums but the same amount of attention has not been given to the other part of the program, which is to help employees.
Mr. Toews: You are saying that the payments are not high enough; is that correct.
Senator Ringuette: There are a many items concerning this program. I am not necessarily saying that we need to increase the payments. There is an entire slate. There is the issue of the number of hours required to qualify, which is very high, especially for women working in the retail sector. These women pay into the system, but very few of them qualify when they need the insurance benefits.
I hope that in the near future, not only the premium side of the program will be reviewed on an annual basis. I hope the service side of the program, designed to provide for employees, will be reviewed annually.
Mr. Toews: I thank you for those comments senator. Are you suggesting that premiums should be based on the risk to the government that these individuals will go on unemployment insurance? You are saying that these women in the retail industry will not qualify or will not get those benefits, and therefore their premiums are too high. Then, for example, should individuals in less stable industries who more easily qualify for unemployment insurance be paying higher premiums?
Senator Ringuette: Mr. Minister, that has been the policy of your party for the last decade.
Mr. Toews: I am just asking.
Senator Ringuette: I will give you my answer from my perspective. You can say whatever you want in regard to the fact that this is an insurance program and should be quantified and qualified in risk areas.
Mr. Toews: I am not saying that. I am just asking your position on the subject.
Senator Ringuette: What I am saying is that for many years the premiums have been too high in comparison to what is paid out, you always have a surplus. If you only review the premium side, you have to admit that you should also review the other side. That means that the government is not providing enough services to the employees with those premiums.
Mr. Toews: You are saying we should either reduce premiums or increase benefits.
Senator Ringuette: No, the premiums do not seem to have balanced the program, because you still have a surplus. At the other end of the scale are the employees and the service that the program should be providing to them.
The Chairman: Ms. Danagher has undertaken to get us some further information. I would like to remind honourable senators that we started early because the minister can only be with us for an hour and we have used up 30 minutes of that time.
Mr. Toews: Excuse me, Mr. Chairman. I find the idea being brought forward interesting, and it is helpful. I do not want to look like I am delaying this in any way, but it is a helpful discussion.
The Chairman: Senator Ringuette, could I make a point for clarification for the record, before you go on to your next question?
Ms. Danagher, you indicated that ``Employment Insurance'' and ``Employment Programs'' have been lifted out as separate items. Are they both under ``Social Investment,'' at page 14-8? Is the term ``social investment'' the new-speak for employment insurance?
Ms. Danagher: No, when Senator Ringuette was asking about that specific line, it did not include the EI cost, which is under the ``Consolidated Specified Purpose Account.'' It is not part of the departmental spending.
I was saying that the line that used to be an activity that HRSDC identified has been realigned into different spending. I can tell you where that money has now been realigned. It was not the actual premiums that Senator Ringuette referred to.
The Chairman: For someone not familiar with the way government explains its expenditures, who has been accustomed to looking at page 14-8 under ``Employment Insurance'' to see what costs were involved, where does he or she go now?
Ms. Danagher: I will have to get back to you on exactly how that money has been realigned. The EI premiums have never been part of the departmental reference level. These are probably just the administrative costs associated with administering the program and they are now being shown somewhere else.
The Chairman: To clarify your point with respect to page 1-56, please explain the ``Consolidated Specified Purpose Accounts.''
Ms. Danagher: That is the actual EI and that number includes the $15.1 billion that you see on page 1-5.
The Chairman: It includes other items as well.
Ms. Danagher: Approximately $1 billion sits in other small ``Consolidated Specified Purpose Accounts.'' I am able to obtain the specific information for the committee showing the breakdown because we report it in the Public Accounts of Canada each year.
The Chairman: Senator Ringuette's line of questioning pertains to the Main Estimates to determine the revenues and expenditures with respect to the Employment Insurance Fund and related programs. Perhaps you could advise the committee of those figures so that it can be determined whether too much money is being collected.
Mr. Toews: That is not a bad idea.
The Chairman: We look forward to receiving your information.
Senator Ringuette: I have one last comment. It is not a question of too much money being collected but rather a question of not enough money being directed to employees.
The Chairman: Once we have the figures, we can examine them and make a determination.
Senator Ringuette: That would be a good study for this committee.
Senator Murray: I did not know we would enter into a discussion on the Employment Insurance Fund, which is nominal. First, EI premiums started going into the general Consolidated Revenue Fund because an Auditor General instructed a previous government that it had to be done. Second, the accumulated surplus in the EI fund is approximately $50 billion or $60 billion. I do not have the exact figure but it would be interesting to know it. Third, the policy or the directive regarding the surplus is that the surplus is supposed to be sufficient to provide only a cushion against some future downturn in the economy resulting in a spike in unemployment. However, looking back as far as ten years or more, we can see that our friend Mr. Martin, the then Minister of Finance, balanced his budget year-over- year on the revenue side by the so-called employment insurance premiums and on the expenditure side, by cutting back on social transfers to the provinces. That is where we are at today.
I would approach this problem in another way. There is no excuse for such a sizable surplus, given the relevant policy and law. Unless a strong case can be made for huge increases in benefits, a stronger case can be made for quite substantial decreases in premiums.
I will put everything I have on the table, minister, and you can reply as you see fit. I appreciate what you have to say about fiscal responsibility and tough choices, et cetera, nevertheless we are looking at spending increases that outpace the increase in economic growth. I trust you will not object if a Red Tory reminds you that that kind of situation is not sustainable over the medium term much less the long term.
First, I would like you to agree and to assure us, because no Liberal would dare raise it, that the government's policy is to keep spending increases below the rate of economic growth.
Second, while I appreciate the admonition of our chairman to the effect that we are here to discuss the estimates, we heard the budget yesterday and I would like to know whether you or your officials could tell us, even in ballpark terms, what the increase in spending will be when we get to the supplementary estimates.
Third, I am always interested in staffing and I see the dollar figures here but they do not tell me much. I would like to know whether you are able to tell the committee what we might be looking at in the immediate future in terms of increased person years as a result of the estimates 2007-08 and yesterday's budget.
Mr. Toews: Thank you. I appreciate that you have expressed those concerns. I can tell you that I share the concern that spending remains sustainable, that we have to ensure that our program spending does not outstrip the revenues coming into the treasury, and that the revenues are at a sustainable level in the sense that we do not overtax Canadians.
I had a most interesting conversation with an individual involved in the treasury of a new developing democracy. He indicated to me that their corporate tax rate is about 30 per cent. Of course, no revenues were coming into the treasury until they reduced it to 10 per cent, and then money started coming in. A lower tax rate brought in much more money. It was not only lowering the tax rates but also putting in place tough anti-corruption measures to ensure that companies that did not pay the lower rate were effectively prosecuted. I found that an interesting way to increase revenues by actually decreasing the tax rate.
I indicated in my opening comments that a comparison with last year's Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B) shows that the Main Estimates show an increase in total government spending of only 1.1 per cent. I do not have the exact figure with me on the new spending. Do you have that, Mr. Moloney?
David Moloney, Senior Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada, Secretariat: Senators, the short answer is that we still have to assess the budget measures. The dollar versions of the figures that the minister is referring to would translate into the mains versus mains comparison of being just shy of $12 billion in the year-over-year increase. These mains, relative to total estimates last year, are looking at an increase of $2.3 billion of additional spending requests.
Yesterday's budget proposed $4.4 billion in new spending in 2007-08. However, as we have had occasion to discuss before the committee in recent appearances, that $4.4 billion is on the accrual accounting method. We understand that some of the budget initiatives, for example, funds for the Department of National Defence, for Corrections Canada and for some other departments, are for capital spending so the cash appropriations request in those cases is larger.
Some portions of the $4.4 billion, should the government bring that forward in time for supplementary estimates, would be larger because of the need to ask for cash appropriations. I cannot give the committee an estimate of what that ratio would be. Most of the spending would not be for capital items; therefore, for most of this additional proposed spending it will be a dollar-for-dollar comparison.
Senator Murray: What about staffing?
Mr. Moloney: I am sorry; we can provide you with the current levels; we do not have planned staffing details that underlie the actual proposed growth in spending. The government is not approving spending increases and proposals in terms of the staffing component. We have a wage and salary aspect of the costing but not the number of individuals who would be staffed. We could provide recent trends on staffing levels, if that is of interest.
Senator Murray: Are you telling me you do not have projections with respect to staffing levels?
Mr. Moloney: No, we do not.
Senator Mitchell: I am painfully constrained by your concern that we not ask too many questions about the current budget, so I will be careful.
I am very concerned about two issues in particular, although there are many others. I would like to touch on spending. I was concerned when I first looked at the estimates, and I am very concerned now that I hear Mr. Moloney confirm that there are no projections for staffing in the public service.
My concern is rooted in the fact that no matter what we call this current government, its roots are with the Mulroney government that ran up huge deficits. Its other roots, if I can say its finance minister's roots, are with the Harris government that ran up huge deficits. Now we see Mr. Toews suggesting — and I think this is a misdirection — that spending has only increased 1.1 per cent by saying that Main Estimates-to-Main Estimates last year plus supplementary estimates are up only 1.1 per cent. That is like saying they have increased spending in the middle of the year throughout the year so they can say they have not increased spending very much this year. However, at page 1-5, if you compare the base level spending budgeted last year of $205 billion in 2006-07 with the ultimate budgetary projection next year of $233 billion, it has not gone up 5 per cent, as some of the spin is suggesting; it has not gone up 7.5 per cent, as some of the other spin is suggesting; it has not gone up 12.5 per cent, as page 1-5 is suggesting. It has gone up 14 per cent. There has been a 14 per cent spending increase over 2007-08, and the government does not have any projections of the staffing levels.
It is almost incomprehensible that a government could do those things on the one hand, try to tell us that the increase is 1.1 per cent, and at the same time say that they are fiscally responsible.
I wonder if the minister could address that apparent inconsistency in the numbers and tell me how, when we have GDP growth of somewhere between 2 per cent and 3 per cent, we will ever sustain surplus budgets, particularly when you look at the budget document, which on page 32 suggests that the year after next there will be no surplus after they put a paltry $3 billion towards paying off the debt of this country, which will take 160 years to do at that rate.
We have a 14 per cent increase in expenditure, we have no grip on what staffing we have in the government, we have a finance minister who ran up huge deficits in the Harris government and a legacy of Mulroney debts and deficit spending that is endemic to many of the people who are in this government. Could you give us assurances that we are okay?
Mr. Toews: I do not want to go all the way back to the Mulroney years.
Senator Mitchell: You do not?
Mr. Toews: I had my differences with the Mulroney government. In fairness to the Mulroney government, they came through the worst depression since the 1930s. There is no question about that. When people were paying 18 per cent, 20 per cent and 22 per cent interest on mortgages and there was nothing from a Liberal government that assisted with those types of mortgages, I can tell that you many of us personally lived through that kind of a situation. When you actually look at the spending of the Mulroney government as it was winding down, it was in fact balancing its books if you took out the payment that they made on the interest.
Quite frankly, they survived a very difficult time. Again, I must say I had my differences with the Mulroney government, but what sustained the next government were two things: the GST, which the Liberals promised they would get rid of, and the free trade agreement. Those things fuelled the expansion in the economy of Canada. I do not think there is any dispute about that.
It was a difficult time. They addressed that through two measures, which were roundly criticized by the next government. They said they would get rid of free trade and the GST and then banked on those two initiatives in order to fuel the resources.
As for trickery in budgets, I have learned some things in Treasury Board and in the Department of Justice about how Paul Martin balanced the books. I do not want to get too much into this issue because it is a lawsuit before the courts, but if we look at how they dealt with the so-called pension surplus by simply moving it because they overstated the liabilities of the public service pension, they then simply took that liability — and I do not know what the technical word is — but they said they overstated it, so they moved it to the asset side and balanced the books. That is how it was done. There was not a dime of fiscal prudence there; it was simply an accounting mechanism.
As a provincial minister, I had to bear the brunt of the cuts to social programs. The federal government under Paul Martin and Jean Chrétien removed all funding for off-reserve Aboriginals and it devastated provinces such as Manitoba. We had to come up with that funding, and suddenly, we were into very difficult situations.
I can go into all kinds of details; I am not being an apologist here for the Mulroney government, I supported many of the things they did, and I was concerned about other things.
Your admonition in respect of sustainable spending I think is important. It is an admonition I take seriously because I do not want to get into a situation where we have overspent and then the fiscal climate changes.
Some of the steps that were announced yesterday included the expenditure management review. We want to take a look at all of the programs that we are spending money on, especially the A-based budget, to ensure that those programs are reviewed, I believe the budget announced on a four-year basis.
I was very concerned when I realized, coming into the Department of Justice and to the Treasury Board, that there was no mechanism left by the previous government by which one could look at the A-based budget and determine whether dollars being spent on existing programs were in fact being spent effectively. There was absolutely no mechanism in place.
As a minister on a line department in the Department of Justice, I was very concerned that officials would come to me and tell me my new priority will cost X dollars, yet there was no independent mechanism for me to be able to verify that cost. That is a hangover of the prior government and a serious issue.
The reason they did not develop that expenditure management review for that type of programming is that back in 1995 they had cut things right to the bone, especially in the area of transfers to the provinces. Therefore, there was no mechanism. It was always assumed that we cut it right to the bone and, therefore, all of this funding is justified.
We are finding, for example, that in six years our A-based budget went from $45 billion to $90 billion. That is an astounding figure. I am not here to blame past governments, those of Mulroney, Chrétien or others. I am concerned about having sustainable spending. Your admonition is a good one, and we will take it very seriously.
Senator Mitchell: If you were concerned about what the reduction in federal transfers did to Manitoba when you were there, you are surely concerned about what the $800-million reduction to Saskatchewan transfers will mean to Saskatchewan.
Second, I find it difficult to accept that there is no mechanism for evaluating programs. The fact is that you cut every green plan program that was brought in by the Liberal government that would have accounted for a huge reduction in CO2 emissions. You cut every one of them, despite the fact, which is substantiated in a document we obtained through an ATIP document, that the Treasury Board had done a review that concluded that those programs were exceedingly efficient. Even though you had clear efficiency assessments for those programs, you cut them. That brings me to the environment.
You are saying that in fact spending has gone up 14 per cent from last year's budget.
Mr. Toews: Those are your figures.
Senator Mitchell: They are your figures; they are right in these two documents. I did not prepare these documents; your government did. Spending has increased 14 per cent increase overall from last year to this year at the same point. However, under the ``Environment Department'' I see that the biodiversity program, which is labelled ``Biodiversity is conserved and protected,'' has dropped $15 million. It says that Canadians adopt approaches that ensure sustainable use and management of natural capital and working landscapes. That has dropped $42 million.
This is a good one: ``Risk to Canadians, their health and their environment posed by toxic and other harmful substances are reduced.'' That program is reduced by $56 million, from $236 million to $180 million. The program Net Emissions of Greenhouse Gases, is reduced by $18 million. These are critical programs under Environment Canada. The government is saying that the environment is a priority and overall spending has gone up 14 per cent, yet environment spending has gone up barely 5 per cent, and critical programs within Environment Canada have been cut dramatically.
How do you square the idea that you care about the environment while you have cut critical programs?
Mr. Toews: I find it amazing that you listed all the things we have cut and then said that our spending has gone up 5 per cent. How does that jibe? Frankly, it does not.
The clean transportation and clean energy programs that were recently announced are being funded from the $2 billion for the made-in-Canada climate change program that was referenced in Budget 2006. Of course, our government has had many concerns with the Kyoto Protocol, with which there was never any intention by the prior government to actually comply. There were some vague ideas about buying hot air credits from foreign governments that would continue to pollute, which would essentially buy a licence for Canada's government to continue to pollute but would not decrease greenhouse gases or other harmful chemicals in any substantive way. The funding approved for 2007-08 is in the Main Estimates. The future year funding will appear in the Main Estimates for 2008-09.
One thing you did not mention in the cuts that you say were made is the ecoTrust announcement that will be sourced from anticipated 2006-07 budgetary surpluses and will appear in the public accounts in 2006-07. These ecoTrust initiatives are the subject of financial arrangements with the provinces and territories. I am quite excited about this. For example, I believe that for Manitoba that amounts to $54 million. Other provinces have received substantive amounts of money for these ecoTrust initiatives.
While I indicated that there was no mechanism, ad hoc mechanisms were demonstrated in $1 billion in cuts made last year. That was an ad hoc initiative, not a systemic initiative that can be done annually. That is what needs to be done in terms of reviewing expenditures. That is why we announced the Expenditure Management Review Program that would review all A-based funding over a four-year period. That was not done by the prior government and we want to put that into place.
Senator Mitchell: Let us focus on the Expenditure Management System with respect to environmental spending. No matter how hard I look through these estimates, no matter how hard I scour the budgets, and no matter how hard I scour the rhetoric coming from government, I know that whatever you have implemented does not represent as big a commitment as existed when you took over. Second, I see no numbers, no objectives, for each of these environmental programs for the reduction of greenhouse gases or for the reduction of pollutants. There are no numbers, no objectives, and no relationship between whatever these programs might do and what our targets under Kyoto must be. Yet, you talk about an Expenditure Management System.
How can you manage expenditure in any properly functioning management system without having objectives against which to measure these programs? Under risk to Canadians, their health and their environment from air pollutants and greenhouse gas emissions, we see a reduction of $130 million, which does not seem like much given the nature of the problem. How much reduction in greenhouse gas, by megatons, is that $130 million anticipated to result in? Do you have a number? Have you set it up, or is this just more spin?
Mr. Toews: If you want to talk about spin, let us talk about the prior government entering into an agreement that they knew that they could not fulfill.
Senator Mitchell: That is absolutely not true.
Mr. Toews: That is what we heard in the last couple of weeks.
Senator Mitchell: That program and the one we just announced can achieve what needs to be achieved, and there were three years left after the 2005 announcement of that green plan to achieve those objectives. This is more spin.
Mr. Toews: It was not spin coming from our party; it was spin coming from the Liberal Party. Senior officials inside the Liberal Party said there was no commitment to meeting those targets.
Senator Mitchell: They are wrong, because it could have.
We are talking about your estimates and your objectives. At least we talked about numbers. What are the numbers? What will that $130 million do? How much will it reduce?
Mr. Toews: I suggest that you get the Minister of the Environment here to talk about those specific details. I know that we want to implement programs that actually reduce greenhouse gas. Buying hot air credits from Russia or China, allowing them to continue to pollute as well as allowing Canadian companies to pollute, is not acceptable. We are actually going to implement hard limits on pollutants by automobiles, which will in fact make a difference.
Senator Mitchell: It is not for me to call the environment minister to account, although that is something we do. You are the President of the Treasury Board. You are the one responsible for making these programs work and ensuring that they are efficient, and on one of the most important programs facing your government you are fobbing me off on to the environment minister. You should be calling the environment minister to account to tell you what this will achieve. That is what we would call expenditure management system effectiveness.
Mr. Toews: In fact, that is what we will be doing. The point is that if you want to know how the substantive part of these programs work, the responsible minister needs to be called in.
Senator Mitchell: I want to know what the number is and I think you should know it. Could you get that for us?
Mr. Toews: We can get that number for you.
Senator Mitchell: Let us know what each of these programs will reduce in terms of megatons of CO2 reductions — to use your words, actual, real reductions.
The Chairman: Mr. Minister, you indicated that you had one hour. Your time has concluded. We appreciate your coming here today. We may have some follow-up questions. I will ask the two members of Treasury Board Secretariat to stay, if that is satisfactory. If they have some points that they are not able to answer, perhaps they can take those questions back to you.
Mr. Toews: Thank you, Mr. Chairman. It is always a pleasure to be here and to hear the comments and concerns of members of this committee.
The Chairman: I would like a point of clarification on the last answer in relation to ecoTrusts. As Mr. Moloney and Ms. Danagher know, we are keen to know about expenditures and the approval for those expenditures before they take place, either through legislation or the Main Estimates and an appropriation bill. The minister just indicated that ecoTrusts would be funded and that we would learn all about it through the public accounts, which is after the fact.
Can we be assured that there will be legislation with respect to the ecoTrusts, which I understand will be funded out of this year's surplus, which will explain to us the corporate structure and how this money will be managed?
Mr. Moloney: Certainly no monies can be spent without parliamentary approval ahead of time. For any amounts to be charged to the Consolidated Revenue Fund for 2006-07, the only remaining instrument that the government would have would be to include such proposals in the Budget Implementation Act, which will be coming to Parliament shortly.
The Chairman: Thank you. That answers that question.
Senator Eggleton: My question was to the minister.
The Chairman: You can ask them to the secretariat and they will pass them along to the minister.
Senator Eggleton: I am interested, as a former Treasury Board President, in the reform of the expenditure management system that you are entering into. I can remember, when I was in the position of President of the Treasury Board, saying that I felt there was an obsession with rules and that we needed to be a little more focused on results. We still need rules, but we need to be more focused on results and value for money. I am concerned when I hear lately that the rules have again made it difficult for many people who are getting grants and contributions to be able to manoeuvre. Some of these organizations look upon themselves as being partners with the federal government in helping to deliver services, such as, for example, organizations involved in literacy. A number of coordinating agencies and provinces help to ensure that the money coming from the federal government gets down to the level of the service provider in an efficient and effective way. The federal government cannot be down there on the ground in terms of the detailed delivery of the programs, so it is important to have the kind of organizations that do that. Yet, they are being treated like they are charity cases as opposed to partners in helping to deliver these federal programs. I am hoping that part of what you are doing will help resolve some of that. It is a risk management question. We want to make sure that the public funds, the tax dollars, are protected, but we do not want to strangle these programs with so much red tape that we cannot get the results out of them that the program is intended to achieve. I wonder if your expenditure management system reforms will help deal with that kind of problem.
Mr. Moloney: I can perhaps respond to two areas that were referred to in the budget yesterday.
On the second and specific aspect about grants and contributions and what some have referred to as a web of rules, the budget did have a brief summary of the report of the blue ribbon panel that the President of the Treasury Board had commissioned in June of last year. That panel looked explicitly at making grants and contribution programs more efficient, in line with strong accountability, while reducing the burden on those recipients. That panel has recently reported. There is a short summary in the budget, but in fact that very detailed report by this blue ribbon panel is available.
The other aspect that I would point to is the description of the focus on the new expenditure management system, putting a focus on results. Briefly, it refers to an enhanced requirement for proposals coming to cabinet to clearly define objectives and expected results and an enhanced requirement for departments to manage very rigorously those results and, in fact, to devote much greater effort to evaluating the effectiveness against those results, and then to report to Parliament. As the President has already mentioned, the Treasury Board, on a four-year basis, then reviews the performance of departments and every non-statutory-spending program against those results that were pre- specified. That focus is, in fact, intended to be the way forward.
Senator Eggleton: That sounds encouraging, but those kinds of words have been around a long time. I did not bring the budget document with me. You said, Mr. Chairman, you did not want us to ask questions about yesterday's budget. Maybe you could just give me one or two highlights from the blue ribbon panel that you think would be substantive alterations to the way things have been done and that would give greater comfort to our partners in delivering social programs out there, some feeling that this web, as you called it, will change.
Mr. Moloney: Senator, it might be most efficient if we were to provide to the committee the action plan that the government has released. There is a detailed action plan of specific steps that the government is proposing to take over the course of the year and going forward.
Senator Eggleton: I would appreciate a copy of that plan.
Let me ask you about the Auditor General's criticism — I may have asked you this last time — about the lack of progress in getting to full accrual accounting. How is that coming along?
Mr. Moloney: The government, under some standing orders in the other chamber, has until April 6 to respond to a committee report from one of the House committees, in fact, two House committees, calling on the government to present a timetable for moving to accrual appropriations and accrual budgeting inside departments. The government expects to meet that timeline of coming back to Parliament in that time frame, which is imminent.
Senator Eggleton: Did our committee have some recommendations in that regard as well?
The Chairman: We will be dealing with a bill that calls for quarterly reports based on an accrual basis, and it is still before committee.
Senator Eggleton: Finally, let me ask you about the decrease in the Main Estimates for Canada Mortgage and Housing Corporation at a time where we still have many people of low or modest income who cannot find affordable housing and when rehabilitation programs seem to be part of this reduction. Can you tell me where we are headed on that issue?
Mr. Moloney: As the senator points out, the Main Estimates do ask for less in the way of funding for CMHC spending.
There are two areas in which there are reductions: One is related to a lack of further funding being proposed in the Main Estimates for renovation programs and the other relates to affordable housing initiative and a renovation rehabilitation assistance program. These latter two programs are under review.
The renovation programs were to terminate on March 31. Since the Main Estimates were finalized, and I believe since they were tabled, the government has recently announced a two-year extension of the federal renovation programs at the same funding level of $128.1 million. So the CMHC plans to bring forward this funding request in the 2007-2008 supplementary estimates program. That will provide funding for residential rehabilitation assistance program, the emergency repair program, home adaptations for seniors' independence and the shelter enhancement program.
Senator Eggleton: Out of this $280 million decrease, about $128 million is going back as a result of the announcement that you mentioned. What does the rest of it represent? Is this putting back a program just with less money? Is this another one of those examples?
Mr. Moloney: This actually represents a continuation of one program and no further funds at this point for a different program.
Senator Eggleton: Which program is effectively cut?
Mr. Moloney: The affordable housing initiative.
Senator Eggleton: What did that involve?
Mr. Moloney: That initiative was delivered and administered by provinces and territories, which had a cost- matching element.
Senator Eggleton: That is cut? This is housing for low-income, handicapped people.
Mr. Moloney: That is right.
The Chairman: The answer was yes?
Senator Eggleton: They have cut housing for low-income, poor people, for disabled people, seniors.
The Chairman: I just wanted to make sure that we had the answer from the witnesses and that they agreed with you.
Senator Rompkey: I feel something like Senator Eggleton, in that my questions are policy questions and should be asked to the minister. I do not think it is fair to ask the officials to comment on some things, because they may recommend policy, but they do not make it.
I wanted to focus on regional development and literacy. I notice that all three regional development agencies have had their funds cut in the estimates, showing a net decrease of $64.6 million in funding. That is found on page 116.
I wonder if the officials might like to comment on that. Again, they do not want to comment on policy, I suppose, but I find it strange that we are cutting that particular issue. I think it is fair to say that all of the Atlantic provinces have depended on federal help to improve their situation for many years. I know we have in Newfoundland and Labrador.
In terms of my own province, we have not improved relative to the rest of Canada since 1949. We have improved, yes, but that gap is still there, and if we are to catch up in a number of areas, we need federal help. All of us are infrastructure-weak. We are getting better, but unless we have that basic infrastructure — and the provinces cannot do it on their own — we are never going to catch up. That is a whole economic issue.
I am thinking of the Trans Labrador Highway, which both governments, Liberal and Conservative, have put money into. In my own province, 80 per cent of the cost of the roads has come from federal money. It is comes through ACOA. We have changed ACOA over the years and perhaps there are other programs the officials can point me to. There used to be an infrastructure program. I do not know if that still exists.
I am concerned that at a time when we need to improve our infrastructure in order to compete, those funds are being reduced, and the same thing evidently is true for the Western Economic Diversification Fund and for Quebec. That is one question.
My second question is regarding literacy. I do not know if the officials can point to where in the estimates this is dealt with, but we were told that the literacy program that had been in place was demolished. Senator Eggleton will remember a day-long round table that we had with stakeholders from all across the country, which was a sad day, because they feel that they have no hope; they are completely demolished; they have nowhere to go; they have plans.
This is extremely important. If we are to help people, particularly Aboriginals, we have to deal with that question of education and we have to start with literacy. If you consider the dropout rate in areas, particularly among Aboriginals, it is crucial, and it is crucial to productivity. There were comments made that the budget yesterday did not address that particular problem. What will we do for students, but more importantly, what will we do for those at the bottom of the chain?
We were told that even though the previous program was demolished, $80 million had been set aside for literacy. What, then, is the take on that program? How many people have applied? How much of it has been spent? Do we have a breakdown, for example, in various parts of the country? Those are my two questions, one on regional development and one on literacy.
Mr. Moloney: I can provide some pertinent information that would clarify the situation in regard to the regional agencies. The reduction that the senator refers to in the regional agencies' budget on a combined basis reflects, to a significant degree, the fact that over the past couple of years the government's various infrastructure programs have evolved and one has replaced another.
What is important here is that the regional agencies were for some years essentially the delivery agents for what was called the Infrastructure Canada program. That program no longer exists. It has been replaced by two related programs: the Municipal Rural Infrastructure Fund, the MRIF, and the Canada Strategic Infrastructure Fund, CSIF. These two latter programs are now being delivered and thus one would find them in the estimates for Infrastructure Canada. It is not the case that the ultimate recipients of the funding are facing smaller amounts, indeed, there have been infrastructure investments, however, the regional agencies just do not play the same role as they did before.
It is also the case, as we look at the individual regional agencies, that some significant one-time or one- or two-year initiatives that had been in place in 2005-06, or 2006-07, have run their due course. For example, in the case of the Western Economic Diversification, there was a major initiative, major investment in the Prince Rupert Port Authority, and monies for the Alberta and Saskatchewan centenary celebrations that have run their course are not being proposed.
In the case of the Economic Development Agency of Canada for the Regions of Quebec, there were some significant one-time investments around the commemoration of the four hundredth anniversary of Quebec City in 2008. As we look at the collected impacts of these various changes, we see that in a number of cases, the agency budgets are reduced.
With respect to the detailed questions on literacy programming, I am sorry; we do not have the details with us. We could come back to you and point to which of the program activities that contain literacy funding.
Senator Rompkey: The answers we received in the Senate from the Leader of the Government over and over was that there was 80 million, as I recall the amount, for literacy, and that you could apply for that.
Senator Eggleton: They reduced the 80 million by 17 million over two years.
Senator Rompkey: The problem that I understood was that in the various regions there are literacy groups, literacy organizations, and literacy structures. There is a team approach to literacy and they help each other. They get together and they decide what they want to do and they support each other and they help with applications. Now that is gone, I am wondering what applications have come in, what are they for, what is the uptake? These are the questions I would like to have answered. Out of that 80 million reduced by 17 million, what is the uptake and where has it come from?
Mr. Moloney: We will see if that information is available on a current basis.
The Chairman: I refer you to page 1-5 of the Main Estimates. If you look at the table here are comparative figures in the first two columns. If you go down almost to the bottom, you will see ``Total Budgetary Main Estimates.'' The total is $210 billion for this year compared to $198 billion for the Main Estimates last year. There is an adjustment for the economic update, which I understand are other new initiatives.
The next one I do not understand, and that is the ``Net adjustment, from net to gross basis of Budget Presentation.'' You have a little footnote, and I read that and I still do not understand it. It is a matter of $15 billion, so I think it would be helpful for this group to understand that.
Mr. Moloney: I will try to be clearer than the footnote. It is a matter of an accounting shift as of the May 2006 Budget, which puts the budget on a different basis, not only on accrual versus cash that basis we have been talking about, but a net versus gross basis for accounting.
I should note that the Auditor General had been recommending that the government shift its budget, its overall public accounts, for a number of years. The Auditor General had been recommending that it would be more transparent for the government to move to what we are referring to here as a gross basis. That means that the government should be reporting the total revenues that come in and the total spending that goes out.
Many departments receive monies directly. For example, the fee that one pays to enter a national park or the amount that one pays to the government to purchase a government publication. Many votes are worded such that departments have the authority from Parliament to re-spend those revenues. Those amounts are detailed in the back pages, department by department, when we will see revenue credited to vote.
What Parliament is actually voting then is access to the Consolidated Revenue Fund to spend additional amounts. Parliament is not literally voting all of the spending. It is voting the spending coming out of the government's general revenues, consolidated revenues.
As the auditors have pointed out, it is important for Canadians and for Parliament to know how much the government is spending overall when you are adding it all up. Hence the budget has made the shift. Since the estimates are looking for individual voted authority separate from this re-spending authority, the estimates are on this net basis.
I should point out that those distinctions are important, but there are two other areas. One is that consolidated Crown corporations also have certain revenues, and that is not exactly the same as re-spending departmental revenue.
The single largest difference, though, is that the Canada Child Tax Benefit is not voted spending, again for the purposes of the estimates, and yet that is treated as spending in the government's accounts. It is a tax benefit. It is netted against tax that individuals owe. Yet, for the purposes of the public accounts, it is shown in the government's books as spending. We are not coming and asking for annual voted amounts.
As the senator points out, we are talking about just shy of $15 billion now. We believe it is important to balance the fact that while it may be confusing to show to Parliament that these two ways of accounting for spending, they do add up to the same bottom line. We will endeavour to clarify the footnote.
The Chairman: I would like to thank you for your explanation and suggest that you might want to clarify item 21 in the footnotes.
Senator Eggleton: Is 14, 893.1 many little items or are there one or two big ones that you can give to us as an example? How is it broken down, roughly?
Mr. Moloney: The revenues netted against expenses in individual votes, as the senator would describe it, many little items. It adds up to $3.7 billion worth of little items, but if you flip through the Main Estimates and look at many of the votes, they will have revenue credited against vote column. Some of them are small and some of them are quite large. The biggest single item is $9.3 billion for the Child Tax Benefit, which is simply the way it is booked. We have $1.8 billion of revenues of the consolidated Crown corporations, which again is a series of smaller amounts.
The Chairman: Did you say $9.8 billion?
Mr. Moloney: I said $9.3 billion.
The Chairman: Is that an annual amount.
Mr. Moloney: Yes, it is the annual amount for the Child Tax Credit.
The Chairman: Last year that came in July, so we only had six months to look at the Child Tax Credit.
Mr. Moloney: This is the pre-existing measure. This is a measure that has been in place for several years now.
The Chairman: I was thinking of the new program that came in July, the Child Tax Credit.
The other question I wanted to ask you was with respect to a comment made by the minister where he indicated that the government has secured the $1 billion savings through program review or expenditure review. We understood that was a two-year program, but he is now indicating that it has been fully secured in the first year. We have had accounting here I think for only about $225 million and we are looking for how and where the other $775 million has been secured. Has someone performed an analysis so we could learn which programs have been cancelled?
Mr. Moloney: I should clarify that President's statement that the government has secured, should be interpreted, as the government knows that we will have the billion dollars in savings over the two years. It was not intended to say that the billion dollars of savings that were committed are already in place in the 2006-07 fiscal year. It is over the two years.
The second point is about the difficulties regarding demonstrating the two-year amount in detail. The document that the government released in late September of 2006 detailed where a large number of initiatives were being curtailed or cancelled and those were spread over the two years.
There were quite a number of additional amounts where the government set aside money in the fiscal frameworks. In previous budgets, cabinet set aside funds for spending programs that had not gone forward and, in fact, had not come forward to Parliament. It contained the amounts where Parliament had voted something and that was what we reported. For example, in the supplementary estimates last fall, that was the $223 million, I believe. The other amounts are essentially cabinet decisions that had been made in secrecy and had not been made public in terms of coming before Parliament.
The overall fiscal framework has been marked down by a total of $1 billion over the two years.
The Chairman: I understand, but surely if a minister can say that he has secured $1 billion, we as parliamentarians have a right to know where that money has been found.
Mr. Moloney: We will take that back to the minister.
The Chairman: He cannot hide behind a cloak of cabinet secrecy concerning $775 million.
Mr. Moloney: The September press release and backgrounder specified approximately $1 billion over two years. We will inform the president of the committee's interest in the further amounts.
The Chairman: Thank you. We appreciate hearing you from you on that subject. My final question is with respect to horizontal accounting through various departments. We hoped we might see something in the Main Estimates that would help with the expenditures in various departments.
You had been providing us with a summary in the supplementary estimates on a horizontal basis, but we were looking for everything horizontally in the Main Estimates in order to track it. How are you coming along with that undertaking?
Mr. Moloney: There is a difficulty we face as we look at that. In the following form, we do have a possible way forward that would take us out of the Main Estimates.
The difficulty we have is that, as we come forward with the Main Estimates, we are not describing each of the initiatives that the government will be funding or is moving ahead on. A few years ago, we developed the innovation of the ``Program Activities,'' which is a means of describing for Parliament what the money is intended for at a high level, going beyond the traditional grants, contributions, capital, operating — that sort of detail.
Those ``Program Activity Architectures'' are still at a pretty high level. You do not see an individual program named that might be the subject of an announcement, for example. Were we to list all the programs, we would have a much larger, unwieldy document.
We bring forward this explicit tying together in the supplementary estimates because they are smaller. The supplementary estimates contain specific initiatives that are moving forward since a budget and since a Main Estimates framework has been proposed. The supplementary estimates are of an initiative program-by-program nature as opposed to this higher level of what we call ``Program Activities.'' Therefore, although it does contribute to the thickness of the supplementary estimates, we are still able to bring forward and say that this program has bits and pieces in three or four departments, without us making it unusable.
At this point, the nature of the documents being different, we believe that the Main Estimates are not conducive to a horizontal approach. If I may point to an approach we are trying to take forward, it would build not on the Main Estimates per se — the Part IIs — but what used to be called the Part IIIs, the Reports on Plans and Priorities, which the president will be tabling in Parliament before the end of the year. Each of those reports is intended to show greater detail of what lies under the program activities which are in here.
As senators may know, each year, we bring forward the departmental performance reports, which report on a retrospective basis. For about six years now, the government has had an overview that is called ``Canada's Performance.'' That overview has embedded within it a whole-of-government reporting framework, which takes all of the activities of the government and shows where there are linkages, one to the other and where they pursue common objectives.
The online version of that allows one to go from 13 government-wide outcomes down to a level of 400 or so outcomes, and there are explicit links, one to the other, through this architecture.
We are examining, and hope to be able to bring forward, such an overview for the Reports on Plans and Priorities, so that parliamentarians, the public and other interested parties will be able to take these department-by-department activities and objectives and see which ones link together across governments.
It is easier to view the document online and we think that will go some way toward giving Parliament a view of how the various items link together.
The Chairman: For the Reports on Plans and Priorities, the problem is that not every department will list the activity in the same manner. If we look at various departments, some activity might be hidden away. That has been part of our problem in the past.
One example is trying to understand the total cost of the evacuation in Lebanon. We have been working on that since it happened trying to figure out the total costs incurred by the various departments. Some of departments have listed the costs in their ``Operations.'' In order to get all of the information we would have to have each departmental representative before us. That is why we found your work and the horizontal statement to be very helpful. Maybe you could let the minister know our interest in expanding that role as it would help us immeasurably.
Senator Mitchell: I have a series of specific questions. I will list them and perhaps you can get back to us on them if you do not have specific answers at this time.
First, where in the Supplementary Estimates (B), and for that matter, in the Main Estimates for 2007-08, would we find the allocation for the new ministry of seniors?
Second, there has been an announced infrastructure funding in this budget. While this is not specifically the focus of this committee today, is there a list of determined infrastructure projects? If there is such a list, I would like to know the allocation to the Edmonton-Fort McMurray highway upgrade.
Third, the government announced some time ago that they would increase funding for Afghanistan reconstruction by $200 million. I would like to know where that is, and whether that is $200 million net new or $200 million reallocated from within the same budget in some other region of the world or from another budget in the government.
The next question concerns the accelerated capital cost allowance, which is an advantage for oil sands development in Alberta. Would it be possible to find out the level of tax savings afforded oil sands companies in the last five years compared to their profits?
Finally, Mr. Moloney, you mentioned in response to a question by Senator Eggleton that either there is a process or there will be a process whereby departments will present the objectives for each program. Which of those is correct?
The Chairman: Mr. Moloney, are you able to answer any of those questions today?
Mr. Moloney: I can point to answers to several of those questions. The budget details that portions of the Afghanistan announcement are from new funds, which are detailed in the budget. With respect to tax, that is not in our remit so we would have to redirect that question. I do not believe that we have funds in the Main Estimates 2007-08 for a ministry for seniors. There is an ``Infrastructure Canada'' chapter in the Main Estimates under ``Transport Canada'' but I do not have the information on the specific projects. The Report on Plans and Priorities might not be that detailed either so we would have to seek the answer to that question.
On the final question, perhaps I can clarify the activities. Is that in respect of the Main Estimates or the supplementary estimates?
Senator Mitchell: I am looking under ``Transport'' in the Main Estimates.
Mr. Moloney: For each department, there will be a ``Programs Activity Description.''
Senator Mitchell: I just happened to open at page 24-10 under ``Program Activity Descriptions,'' ``Securing critical elements of the Canadian air transportation system.''
Mr. Moloney: That is in respect of the Canadian Air Transport Security Authority. This provides the strategic outcome that these funds in support of critical elements of the air transportation system as assigned by the government are secured. Under ``Program Activity Description'' is the activity undertaken by the government in support of that outcome. The Reports on Plans and Priorities will be tabled for each of these organizations before Parliament next week, I believe. For each of the program activities set out in the Main Estimates, the respective ministers are accountable to bring forward the results that they are specifically aiming to achieve and how they will judge success and how Parliament should judge success against this activity against this strategic outcome. As the chair said, this approach has been adopted for some years but it is still relatively new. Treasury Board is working with departments to have them take an increasingly rigorous, common horizontal approach to these so that Parliament can look at one strategic outcome and activity and how it will be judged; look at the Report on Plans and Priorities; and then look in the performance report 18 months later to see an honest reporting back that is evidence-based.
That is part of what underlies the expenditure management system renewal statement that departments are increasingly being required to manage not only what they are spending on but also how this activity will be judged and how the performance will be assessed. Balancing the amount of information, the Part IIIs go into further detail in respect of the results.
Senator Mitchell: Mr. Moloney, you said that there is nothing in the Main Estimates for a seniors program. Presumably, then, any allocation will be strictly in the budget.
Mr. Moloney: The costs for a new ministry for seniors, per se, are not sought in the Main Estimates but would be sought in the supplementary estimates.
Senator Mitchell: They existed because Senator LeBreton was appointed Secretary of State for Seniors two months ago. Has there not been any expenditure in 2006-07 for that ministry?
Mr. Moloney: We would have to confirm that but in terms of setting it up nothing has been proposed in the Main Estimates 2007-08.
Senator Mitchell: I would like to know what was spent for the last quarter of the fiscal year or will be spent, and where it can be found in these Main Estimates. Surely it must be here somewhere or the government is spending money that it should not have been spending.
Mr. Moloney: I can confirm that any announcements of portfolio changes have been absorbed within existing budgets in the current year. Whether the government comes forward and asks for additional funds next year will be for the government to decide.
Senator Mitchell: There should a strategic outcome program to assure us that they simply did not make it up.
Mr. Moloney: Certainly, seniors programming exists and I was trying to clarify that the specific cost of having a minister with that specific responsibility as opposed to the existing programming.
Senator Ringuette: I would like to come back to an issue brought forward by Senator Murray on staffing. You have to admit that the Government of Canada, like any government, is in the service industry. Last year, Ms. Maria Barrados from the Public Service Commission indicated to the committee that only 20 per cent of government departments had human resource plans in place. It is an awful situation for the federal government to be in because human resources are a key element in a service industry. Treasury Board Secretariat is the director for all departments in respect of program delivery. I would like to know which departments have human resource plans in place and which ones do not have such plans. What attrition rate is anticipated for this year and for the next five years for each department? How will departments attain the required staffing? Only one month ago, the Comptroller General of Canada appeared before the committee and spoke to a major lack of accounting professionals, not only for that area but also for the additional requirements of the Federal Accountability Act.
What will Treasury Board do to help? How many person years will be required to meet the service delivery standards and the various legislative requirements placed on departments? We put a great deal of emphasis on program spending but do we have the human resources to do it properly? If we do not, then how can we ensure planning to execute appropriate human resource staffing?
While I do not expect you to answer these questions this morning, I hope in the not-too-distant future you will be able to provide this committee with the numbers that will answer the questions I have just put forth.
Mr. Moloney: I will make several points. First, with respect to the earlier discussion about staffing levels and staffing projections, the federal government has not since the early 1990s had staffing level controls and thus went away from the business of forecasting staffing levels. Since the early 1990s, the focus has been on overall budgets with respect to the cost of delivering service. Individual ministers and deputies as managers of departments must of course take account of what they believe will be the wage and salary costs of delivering programs and services. Treasury Board obviously looks at that, as does cabinet. We perform the due diligence on the oversight and control. It is up to the individual deputy head to determine the number of individual staffers and the mix between permanent and temporary workers needed to deliver the services going forward.
The Public Service Commission is not part of the Treasury Board portfolio, but the Public Service Human Resources Management Agency of Canada is and it reports to the president. That agency is charged, among other things, with dealing with the broader issues that the senator is bringing forward in terms of HR planning and the need for the government to deal with staffing challenges.
The current Clerk of the Privy Council has identified public service renewal, including staffing both the numbers and the kinds of competencies that the government needs today and will need over the coming years, as a key priority for the public service and for departments. The PSHRMAC, Public Service Human Resources Management Agency of Canada, is taking a lead in developing the necessary policy frameworks in that regard.
We will approach our colleagues in PSHRMAC to inquire as to what degree they have statistics that go beyond what the PSC provided in terms of what departments have human resource plans. Perhaps they could provide the committee with their intentions in terms of dealing with the staffing challenges, the attrition and turnover.
Senator Ringuette: Will that be broken down by region? It seems that every time there is a reduction in person years, it occurs in regions and not in the centre. Every time there is an increase in staffing, it happens in the centre and not in the regions.
I think this is of great interest. Maybe this committee will see the need to look further into this issue because I do not know of any other Senate committee that has a mandate to do so.
The Chairman: Thank you, Senator Ringuette. That brings me to the end of my list of questions and to the end of our time. We have gone over our time, but we appreciate Mr. Moloney and Ms. Danagher being here and helping us with questions that were clearly beyond the scope of your briefing book.
We certainly look forward to getting that information back because it will help form the basis for us in determining where we go with other business in this committee as we continue studying the Main Estimates throughout the year. We have a mandate to study throughout the year, and it is not concluded with this one meeting.
Let me again thank Ms. Danagher for her fine work in helping us over many years. You are the knowledge of the secretariat with respect to the work in this committee. We have appreciated working with you over the years, and we wish you well in your new challenges.
Ms. Danagher: Thank you very much.
The Chairman: The next item of business is consideration of draft budgets for the fiscal year ending March 31, 2008. There are in fact two draft budgets before you. We have been mandated to consider the special study on fiscal balance. We have completed the first half but not the second half. The mandate will expire at the end of June unless extended by the chamber.
Based on the current mandate, we are asking for $12,200. That total amount consists of other services of $11,200 if needed, and we have working breakfasts and lunches, et cetera, and then a miscellaneous expense of $1,000. That is a bare bones budget, and we may not have as many lunches and dinners.
Senator Stratton: We have two documents, right?
The Chairman: Yes, we are dealing with the one on application for the fiscal balance of $12,200. Can I have a motion to accept that particular budget?
Senator Stratton: I have a question.
The Chairman: Is it a question on the budget of $12,200.
Senator Stratton: For everyone's sake, and particularly mine, when I look at the $12,200, it is for fiscal year ending March 31, 2008. Then we get $62,800 for the fiscal year ending March 31, 2008.
The Chairman: Yes.
Senator Stratton: Why do they both have lunches and dinners in them?
The Chairman: We like to eat a lot.
Cathy Piccinin, Clerk of the Committee: If I can help, each budget has incorporated the possibility of working meals, but it is not certain what the committee will do on Tuesday or Wednesday of each week; therefore, there is the possibility of either study taking place.
Senator Stratton: Are we approving both budgets?
The Chairman: This is usual as one is our normal mandate under the rules, which is the legislation, et cetera, and the other is a special study given to us by the chamber. The special study given by the chamber is one-half complete, and our mandate goes to the end of June, unless extended. We are asking for a budget of $12,200 to finish the vertical portion of the fiscal balance.
Senator Stratton: It should be clear, because the other people on the committee know who they are. I would be asking how you get approval for two sets of lunches and dinners.
Senator Rompkey: It is notional.
Senator Stratton: I realize that.
Senator Eggleton: They are different meetings.
Where do we want to go on the fiscal balance study? Why do we not defer this until we deal with it?
The Chairman: We could defer the budget, but tomorrow we are dealing with future business. Let us get the budgets behind us. We already have the mandate.
Senator Eggleton: That is putting the cart before the horse.
The Chairman: No, it is not, because specifically where we want to go within the mandate does not have to do with the meals we will eat during the time we study that, and this is basically about going to the end of June and having meetings.
Senator Eggleton: Could we have a summary report on the announcements in the budget of yesterday as they affect the question of fiscal imbalance? Could we have some attempt to analyze the situation on equalization whereby every province writes its own ticket on equalization, so that we can get some understanding about where the government policy is and how a further examination of fiscal balance would go if we are to continue in that line?
I have previously expressed an interest in the fiscal imbalance involving the local levels of government. Since more than 80 per cent of the people live in cities and one-half of our economy comes from the 10 biggest cities of the country, there are some important issues in terms of fiscal balance there. In the committee that I chair, the Standing Senate Committee on Social Affairs, Science and Technology, I have a mandate from the Senate to deal with cities, and we have an ongoing study that includes the question of the fiscal capacity of cities. We also have to consider the possibility that there would be some duplication of work there and how that might flow.
I am not sure I can be here tomorrow night, so I thought I would make those statements now.
The Chairman: I appreciate your doing that. They are two important issues. I do not want to overload the Library of Parliament. Their primary objective between now and tomorrow evening is to develop a report on the meeting we have just had so that we can file our first interim report on the Main Estimates. Once that is complete, it would be helpful if you could help us with a summary of the impact of the budget and where we might want to go in our discussion on the vertical fiscal balance.
It has been moved by Senator Stratton that the budget of $12,200 for the balance of our mandate for the study of fiscal balance be approved and that I have authority to submit it to the budget committee.
Is that agreed?
Hon. Senators: Agreed.
The Chairman: Thank you.
The second budget is larger; it is for the full year. This budget is for $62,800 and is for all the work that we normally do under the rules, including reviewing Main Estimates and supplementary estimates, budget implementation, et cetera. In this budget we have provided for $46,800 for expert advisers, if needed. At this stage, I do not know of any need, but we will learn throughout the year whether we will need the assistance of an expert adviser.
Senator Rompkey: I am told that only six people in Ottawa know how to explain this, and they are all in mental institutions.
The Chairman: We have Senator Murray.
Senator Rompkey: Yes, Senator Murray is our saving grace.
Senator Stratton: With respect to the $62,800, the record going back to 2001-02 shows that the requests for funding were considerably lower, with the exception for 2005-06, when there was a trip to London and Dublin. Why are we suddenly jumping up to $62,800? Is that specifically for the vertical study?
The Chairman: No, the vertical study has a separate budget. This is for legislation. The difference is the $46,800 that we included for expert advisers, if deemed necessary.
Senator Stratton: As we have not done that in the past, why are we doing it now?
The Chairman: I do not want to tell you this, but we applied to have that amount allocated last year and the Standing Committee on Internal Economy, Budgets and Administration refused us. We are coming back at it.
Senator Stratton: I kind of thought that.
The Chairman: Maybe we will get one-half of what we ask for.
Honourable senators, what is your pleasure?
Senator Eggleton: If you do not know what you are going to spend it on, why put it in?
The Chairman: We put it in so that the steering committee can make a decision when and if needed, as opposed to having to go through this process again, which is a major process. This committee has to meet, we have to develop a budget, we have to file it, and we have to line up at the internal committee.
Senator Ringuette: Actually, it is $30,000.
The Chairman: Yes, it is $30,000 for the adviser and the rest is for meals. You are quite right.
Senator Ringuette: I suppose you have not taken into account the possibility that a federal election may be called.
The Chairman: If we took that into account, why would we do these budgets at all? We do these budgets on the basis that this is an ongoing matter.
It has been moved by Senator Rompkey that this committee accept for submission a budget of $62,800 for the coming fiscal year for our normal mandate on legislation.
Is that agreed?
Some Hon. Senators: Agreed.
Senator Stratton: On division, based on history.
The Chairman: It is agreed, on division.
Honourable senators, we should go in camera to deal with two reports that have been circulated to you.
The committee continued in camera.