Proceedings of the Standing Senate Committee on
National Finance
Issue 12 - Evidence - Meeting of April 24, 2007
OTTAWA, Tuesday, April 24, 2007
The Standing Senate Committee on National Finance met this day at 9:02 a.m. to examine and report on issues relating to the vertical and horizontal fiscal balances among the various orders of government in Canada.
Senator Joseph A. Day (Chairman) in the chair.
[English]
The Chairman: Good morning, ladies and gentlemen. I would like to call this meeting to order.
[Translation]
I call to order this meeting of the Standing Senate Committee on National Finance. My name is Joseph Day and I represent the province of New Brunswick in the Senate. I am also the Chair of the committee.
[English]
On September 27, 2006, the Standing Senate Committee on National Finance was authorized to examine and report on issues relating to vertical and horizontal fiscal balances and to report back not later than June 30, 2007.
In the fall of 2006, committee members heard presentations by key officials from various provincial and territorial government departments, academics, and policy and market experts from across the country. The hearings took place over a six-week period.
On December 12, 2006, the committee issued an interim report, The Horizontal Fiscal Balance: Toward a Principled Approach, as part of its ongoing study of Canada's fiscal arrangements for provinces and territories.
In this next phase we are beginning, the committee will commence its study by reviewing the division of fiscal resources and spending responsibilities between various orders of government in Canada. This initial phase will include an in-depth review of the full range of mechanisms used to address the fiscal balance issue between the orders of government.
To this end, I am pleased to welcome our witnesses with us today, each of whom has appeared before this committee previously. It is my pleasure to welcome from the Department of Finance, Barbara Anderson, Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch. With Ms. Anderson today from the department is Mr. Vermaeten, General Director, Federal-Provincial Relations and Social Policy Branch. Mr. LeBlanc was not able to be here, but in his place we have Mr. Mark Haney. In addition to Mr. Haney, we have Mr. Glenn Campbell, Senior Chief, Federal-Provincial Relations and Social Policy Branch; and François Delorme, Director, Economic Development and Corporate Finance. Thank you all very much for being here.
Ms. Anderson, I understand you will be leading off with a few remarks and then we will proceed to questions and answers.
Barbara Anderson, Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: Thank you very much. We are happy to be here today. We have circulated a deck with some technical details about the fiscal balance measures. I will give some opening comments and then we will turn to questions. I do not intend to go through the deck slide by slide, but if there are questions arising from it, we would be glad to answer those.
In starting off, it is important to remember the context that led to the development of this approach to restoring fiscal balance. In Budget 2006, the government recognized that there were legitimate concerns over fiscal balance and it committed to respond to these concerns by developing a comprehensive solution to the issue. The government committed to do so guided by the following five principles, laid out in the budget document last year: accountability through clarity of roles and responsibilities; fiscal responsibility and budget transparency; predictable long-term fiscal arrangements; a competitive and efficient economic union; and effective collaborative management of the federation.
Last year's budget also took some initial steps on fiscal balance, including over $26 billion in tax cuts; committing to implement the 10-year plan to strengthen health care; providing additional funding of $3.3 billion to provinces and territories to help address immediate pressures on post-secondary education infrastructure, affordable housing and public transit; and focused spending on federal areas of responsibility, notably defence and security.
In addition, at that time, the government committed to bring forward specific proposals in 2007 regarding renewed and strengthened equalization and territorial formula financing programs; a new approach to long-term funding for post-secondary education, training and infrastructure; and a new approach to allocating unplanned surpluses.
[Translation]
In addition, the government committed to bring forward specific proposals in 2007 regarding renewed and strengthened equalization and territorial formula financing programs; a new approach to long-term funding for post- secondary education, training and infrastructure; and a new approach to allocating unplanned surpluses.
[English]
In this year's budget, the government delivered on those commitments by presenting measures to restore balance in a principled and fair way, first by providing more than $39 billion to provinces and territories over the next seven years to put all major transfers on a long-term, predictable, and principled footing, and then through significant new investments in support of shared priorities; by continuing to enhance government's accountability; and finally by delivering more tax cuts to Canadians.
The increases to major transfers are significant. Formula-driven equalization and territorial formula financing programs will provide significant benefits. Over the next seven years, the Canada Social Transfer is proposed to increase by more than $16 billion; funding for labour market training will increase by $3 billion; and the budget proposes more than $1.5 billion to support clean air and climate change. In addition, funding through infrastructure programs is set to increase by $16 billion.
[Translation]
I would now like to discuss in more detail these proposed measures.
[English]
Some of them are included in Bill-C52, the proposed budget implementation act that is currently before Parliament.
Let me start with equalization by first recalling the importance of this program. As stated in the Constitution, the purpose of the equalization program is to ensure that all Canadians have access to reasonably comparable services at reasonably comparable levels of taxation.
Over the recent past, changes were made to the equalization program that represented a significant departure from the long-standing operation of this program. Such changes raised concerns over the soundness and fairness of the program.
Building on the commitment made in last year's budget, Budget 2007 proposes a renewed and strengthened equalization program that provides, in 2007-08, $1.1 billion more than the old program would have provided and $1.5 billion more than payments in 2006-07.
The changes to the equalization program are very much in line with this committee's December 2006 recommendations, with the notable exception of the 50 per cent inclusion rate for resource revenues, in conjunction with a fiscal capacity cap. Let me touch briefly on the rationale for each of these changes.
First, the new program has a higher standard that takes into account the fiscal capacity of all ten provinces, as opposed to the ``middle five provinces'' of the previous system. Such a standard is more inclusive and reflects the fiscal capacity across all provinces.
With respect to the treatment of natural resources, the government agreed with the expert panel's assessment that provinces should be entitled to some net fiscal benefit from their ownership of resources. At the same time, there was also a need to recognize that resource revenues are a source of fiscal capacity and should be counted. In light of that, the government concluded that an inclusion rate of 50 per cent for natural resources was the fairest compromise among diverse and competing provincial interests.
The addition of a fiscal capacity cap was important in conjunction with a 50 per cent inclusion rate to uphold the important principle that equalization payments should not result in any receiving province having a higher overall fiscal capacity than that of the lowest non-receiving province.
Finally, with respect to the treatment of the existing offshore accords, Budget 2007 ensures that Newfoundland and Labrador and Nova Scotia retain the full benefit of their accords. In that respect, a choice between continuing under the status quo or the new system has been provided to those two provinces.
Moving on to territorial formula financing, TFF, Budget 2007 also fulfills the government's commitment to renew and strengthen this important fiscal transfer. Building on the recommendations of the expert panel, the budget measures put TFF back on a principled and sound track, providing $115 million more in 2007-08 than in 2006-07.
I would like to highlight three features of this new program. First, TFF returns to a formula-driven approach providing three separate grants, one for each territory in recognition of their unique circumstances. Second, it improves the incentives for the territories to develop their own resources by excluding 30 per cent of their measured revenues from the formula. Third, as with equalization, the mechanics of the program are being simplified as they relate to measurement of territorial revenues and estimates and payments.
Finally, Budget 2007 also contains measures that go beyond TFF to address certain specific issues of the North, which were included in the committee's December 2006 report, namely devolution and resource revenue sharing with the Northwest Territories and providing an additional $23 million to strengthen Nunavut's financial management systems.
[Translation]
Turning to the Canada Social Transfer, Budget 2007 proposes to renew and strengthen it by providing long-term predictable support for post-secondary education and for other social priorities.
[English]
Bill C-52 proposes to implement a number of changes in that regard. It extends the transfer to the end of 2013-14 and proposes an equal per capita allocation of the cash component, an important element of the fiscal balance package.
I would like to touch briefly on this issue, since the committee considered it in its recent report. In last fall's Advantage Canada, the government committed to providing comparable treatment to all Canadians through major transfers other than equalization. With a stronger equalization program, Budget 2007 improves the fairness of support under the Canada Social Transfer, CST, and the Canada Health Transfer, CHT, by committing to move these transfers to an equal per capita cash basis upon their renewal.
As such, Budget 2007 introduces an equal per capita cash allocation for the CST effective in 2007-08 and provides $687 million to facilitate this move. All provinces and territories will receive the same per capita cash amount under the CST and certain provinces and territories will receive transitional protection payments to ensure this.
Budget 2007 also commits to move CHT allocation to a similar equal per capita cash basis upon renewal starting in 2014-15.
In addition, this budget proposes new annual investments of $800 million in support of post-secondary education and $250 million for the creation of child care spaces. The CST is also set to grow at a predictable and stable rate. Starting in 2009-10, a legislated 3 per cent escalator will apply to the overall CST funding.
With these measures, the CST is back on a long-term, predictable track and is at its highest level ever.
There are other measures in the budget that I would like to touch on. Budget 2007 provides significant additional support to provinces and territories for other shared national priorities. Along with new funding for labour market training and the environment, as I have mentioned, the government is also proposing significant investments in health. With respect to infrastructure, Budget 2007 delivers new funding of $16 billion over the next seven years, bringing the government's commitment under its long-term plan to $33 billion, the largest in history.
Budget 2007 announced new support to provinces and territories and municipalities through an $8.8 billion Building Canada Fund to be allocated on an equal per capita basis to support investments in highway systems, large-scale projects and smaller-scale municipal projects; an annual $25 billion per jurisdiction for investments in national priorities; and an extension of the Gas Tax Fund, transferring $2 billion per year to municipalities for use in municipal priorities such as roads, public transportation and water. This new funding is in addition to the support provided for other components of the government's long-term infrastructure plan dealing with gateways, border crossings and public-private partnerships.
[Translation]
To conclude, Budget 2007 measures to restore fiscal balance in Canada form a comprehensive, long-term approach that responds to the concerns of Canadians and of provinces and territories.
[English]
Moving forward, the government is committed to maintaining fiscal balance among orders of government by respecting the principles laid out; continuing to restore fiscal balance with taxpayers; and working together with other governments and stakeholders on the economic plan, including economic union issues such as labour mobility and internal trade. That concludes my remarks for today.
The Chairman: Thank you very much, Ms. Anderson. In all likelihood, this committee will be receiving Bill C-52 in due course, but we had started this study before the budget and before budget implementation. We are interested in knowing what programs are offered in the budget and how they will impact on existing programs in relation to the fiscal arrangement between the various orders of government. We have to get a clear understanding of existing programs and where the gaps were and are.
We are also interested in the treatment of those tax points that were transferred many years ago from the federal to the provincial government and how they keep coming back to haunt the provinces in various formulas for CST and HST.
Senator Eggleton: Thank you very much for your presentation. Much of what you talked about was the announcement that came out of the budget, particularly the revisions to the equalization program, which this committee previously looked at in the context of an examination of horizontal fiscal balance or imbalance. We are now on to vertical imbalance, which relates to the division of revenues amongst the different orders of government vis-à-vis their responsibilities for program delivery.
The citizens of Canada have many needs and those are provided for from the federal level, from the provincial level or from the local level of government. In the context of those citizens being taxpayers, each pays out money to all three orders of government. I think they expect that they will be able to get their services. Yet, we have a circumstance where certainly the provincial governments for some period of time have said that they are not getting what they think they should be getting to meet their demands, and the same with the municipal level of government and the education system.
Particularly in the mid-1990s, to get the deficit under control and eliminated, there was downloading. The federal government downloaded to the provincial governments and the provincial governments downloaded to the municipal governments, which did not have anywhere to go from that point on. The municipal level is still stuck with a number of things.
It can be argued that municipalities are the responsibility of the provinces under the Constitution, which is true enough. It has also been argued that provinces have the same taxing powers. They can tax if they want, although I have never known a party to get elected on the basis of saying we would like you to vote for us because we are going to increase your taxes.
One dilemma of all this is that when the federal government wants to cut taxes, they want to look good, so they want to make sure the citizens know they are cutting taxes. Provincial governments do not want to occupy the field and look like they are the spoiler, the bad person.
This business about, ``Oh well, they have the taxing authority,'' does not go over very well with the taxpayer. The taxpayers want the orders of government to work this out so that they can get the services they need and the flow of revenues will go appropriately to the level of government that will provide the services. The federal government has entered into a number of infrastructure programs that help out at the local level, but there is still a shortage of funds there.
Looking at the provincial and local levels, how can we move in the direction of trying to correct the vertical imbalance?
Ms. Anderson: Let me start off and then other experts no doubt will enter into the discussion.
One basis of the fiscal balance package presented in this budget was that the government had made progress, or was hoping to make progress with the budget, on addressing those exact issues. There is a clarification in discussions with provinces of what we call shared national priorities, health being the number one priority. This government committed to continuing the health accord from the previous government, which outlined shared objectives for moving forward and provided considerable federal resources for the provinces to meet those objectives.
In this budget, we have pushed that forward into the area of post-secondary education; the commitment was that we would put that on a long-term, sustainable path. The budget proposals do that. There would be significant investments in the post-secondary education area, both through the transfers to provinces to deliver the services in their post- secondary education and through significant investments in this budget in direct federal spending in that area and new spending for students, et cetera.
Those steps have been taken. The discussions about clarifying the responsibilities will continue over the next year as we work with the provinces to decide on objectives for the new spending, both in post-secondary education and in child care.
Senator Eggleton: What about the municipal and local level?
Ms. Anderson: Significant progress has been made in extending the financial support to municipalities. That was one of the major things that we heard from municipalities; they wanted some stability in the financing and that has been provided.
Senator Eggleton: For what period of time? What is stability and how long is it?
Ms. Anderson: All of these investments in this budget are in the same timeline for the fiscal balance package, 2013- 14.
François Delorme, Director, Economic Development and Corporate Finance, Department of Finance Canada: The long term for infrastructure follows exactly the principles that were outlined by Ms. Anderson and it is the same time span, until 2013-14. The infrastructure investment improves on the long-term predictability for provinces and municipalities as well.
Senator Eggleton: Two of the major concerns in municipalities, particularly the large ones at this time, are transit and housing. What about federal government investments in those fields? Are they being increased? The status quo is not doing the job.
Mark Haney, Chief, Transport and Corporate Finance, Department of Finance Canada: Budget 2007 extended the gas tax through 2013-14, which is an additional $8 billion that is available for transit investments. There is the new Building Canada Fund, which will also be available to municipalities for transit projects, both large and small.
The GST rebate has been retained. The funding for Budget 2007 includes $5.8 billion in the GST rebate, which will be available to municipalities. They can use those resources as they see fit, including for transit.
Senator Eggleton: Are there new programs? The local level of government is finding those very helpful, but they are not making a huge dent in the problem.
Mr. Haney: What is key is the extension of the time frame through 2013-14.
Senator Eggleton: That is helpful.
Ms. Anderson: On the housing side, you will remember that the last budget provided significant money to the provinces and territories for housing through trust funds. That will continue over the next several years, on top of the money that is provided through the normal housing support programs.
The Chairman: Ms. Anderson, would it be an impossible task to list all of the federal government programs where money is directly spent in the provinces or is transferred to another order of government for expenditure by that government? Has anyone ever made an estimate?
Ms. Anderson: Someone else said it was impossible. It would be quite a mammoth task, I think, to list all of the programs. The Department of Finance has direct responsibility for what we call major transfer programs and all those numbers are provided. Those are the major programs that provide money to provincial and territorial governments, which are the ones I have talked about today — equalization, TFF, the Canada Social Transfer, the Canada Health Transfer. We have a sense of the budget expenditures on other transfers, but I am not sure they are listed. There are lots of grant and contribution programs that go directly from federal departments to provinces, and to organizations and people in provinces. There is not, as far as I know, a comprehensive list of those.
The Chairman: Do you have any sort of a list that you could share with us that would help us understand the tremendous impact of the federal government on provinces and territories in terms of fiscal arrangements?
Ms. Anderson: We can certainly do that in terms of fiscal arrangements and give some detail on this category of other transfers.
The Chairman: In order for a new Minister of Finance to determine that there is a fiscal imbalance, he or she must have something to go on. Someone must take an objective look and concur on the responsibilities and the amount of money required to meet them. The minister must then put the programs in place so there is no longer a fiscal imbalance. There must be some objective background to those decisions and statements.
Ms. Anderson: There is. The fiscal balance has been looked at in a large sense in that we look at federal government revenues and expenditures and we examine the fiscal situation of the provinces. You will note that all the provinces are in surplus so their fiscal situations are stronger. That kind of analysis is done.
We are directly responsible for $50 billion in cash transfers to other levels of government. It swamps the rest but the smaller grants that go from the federal government to individuals or organizations and our provincial governments are, by definition, much smaller. Certainly, we always look at the fiscal balance in terms of these major transfers.
Frank Vermaeten, General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: The government's approach, from an analytical perspective, seems very strong, in that one large element of solving fiscal imbalance is ensuring clarity of the roles and responsibilities and of the contribution that each level of government makes. Likely there is no unique amount of money that each level of government should contribute or that the taxpayer should send to each level of government. That is the large element of the plan.
Budget 2006 and the diagnostic on how to solve fiscal balance was about providing clarity of the responsibilities and of the amount of money provided and its purpose. Looking at it through such a lens allows you to see that we have health care, post-secondary education and infrastructure on long-term funding where the growth will be predictable, and that contribution has been clarified. For example, specific amounts of the CST are earmarked for post-secondary education and social programs, and the growth rate is known, making the allocation very clear. Those are highly important elements in resolving the fiscal balance.
Senator Mitchell: Mr. Chairman, I am struck by this statement and wonder whether someone in the Prime Minister's Office wrote this speech for officials. They said that in this year's budget, the government delivered on its commitments by presenting additional measures to restore fiscal balance in a principled and fair way. That sounds very much like a political statement. Certainly, it would be taken as political by the Government of Saskatchewan, which does not believe that the budget was delivered in a particularly fair way.
The minister appeared before the committee last week and made a startling observation for us that some of the money considered by this government to be going to Saskatchewan by way of equalization payments — $878 million advertised as new funding for Saskatchewan — includes a contribution to an ethanol plant. Could one of the witnesses today clarify how that could be construed properly as an equalization payment? If you count that contribution, does it not follow that every single cent spent by the federal government in any province would be considered a part of equalization? If the government spends money on the RCMP, for example, would that be construed as equalization?
Ms. Anderson: Without having the statement in front of me, I can say that it was not a budget statement. Rather, I believe the statement said that the budget provided new spending for the Province of Saskatchewan. I do not think there was ever any insinuation that it was equalization spending. Equalization numbers are clearly laid out in the budget. In the back of the budget booklet, you will see the by-province impacts. It is very clear in the annex to this document what every province received. It was in the context of new spending in Saskatchewan that the ethanol plant was included and not as part of the equalization payments.
Senator Mitchell: Could you clarify how much Saskatchewan will drop from this year 2007-08 to 2008-09 in equalization? The province said it would be $400 million, which is one half of what they will receive, apparently, in 2007-08.
Ms. Anderson: Equalization payments for 2007-08 for Saskatchewan will be $226 million. That is the government's firm number that has been settled for this year. Government projections for 2008-09 indicate that Saskatchewan will be such a wealthy province it will no longer receive equalization payments.
Senator Mitchell: Is the amount of $800 million being transferred for post-secondary targeted in any way? Can you be certain that it will be spent on post-secondary education or are the funds unlinked, if I may use that term?
Ms. Anderson: In our terminology, senator, we would say that yes, they are part of an unconditional transfer. Certainly, the objective is that the Minister of Human Resources and Social Development will undertake discussions with his provincial counterparts over the next year to work toward a framework that will accompany that investment. It is hoped that the framework would discuss objectives and benchmarks.
Senator Mitchell: How would the $250 million to child care spaces be handled?
Ms. Anderson: In a similar way to the post-secondary education amounts.
Senator Mitchell: It would also be unconditional.
Ms. Anderson: Currently, we have money in the Canada Social Transfer for children, one for early childhood development and one for child care more broadly. Both of those investments were accompanied by framework agreements, which have to be renewed as the whole investment was renewed. The same process will occur in that the minister will discuss with his provincial counterparts to develop a new framework agreement.
Senator Nancy Ruth: Like other senators here, I am always interested in the impact of numbers. What are the results of these predictable, long-term changes in the budget? How will they impact the economic and social quality of life of people? How do you measure that? Who is affected in terms of region, class, gender, race and age, and to what degree? How do you figure that out?
Some senators have asked the same questions in another way. It absolutely boggles my mind when I see the discrepancy between the sums in post-secondary education and child care. I know that this is a political question and not in the realm of departmental officials, but how do you measure the impact of what will happen?
Ms. Anderson: Let me come at that in a general sense, and then Mr. Campbell may want to add something. Certainly in the transfers, we mathematically can assure the Parliament of Canada that we transfer the amount designated and that the provinces receive that amount. In both cases, if I could use health and post-secondary education, it is a relatively small amount in comparison to what provinces and territories spend on those priorities.
Can we assure you that each dollar is spent on post-secondary education? No, but we can assure you that provinces and territories spend a lot more than we transfer. That money is going into the investment. Do we track the incremental investment amounts? In some general sense, we do that, to assess, but there is no process that does that.
Remember that provinces are responsible to their citizens for how this money is spent. As has happened in the health field, where they have worked together on benchmarks for how they report, hopefully there will be a more comprehensive approach in post-secondary education and in the spending on children through transfers. In health, those reports are becoming more user-friendly so that citizens can see how the money is being spent. There are framework agreements attached to the transfer money for children already, and they have produced very worthwhile reports to which the provinces have contributed. That is how you get accountability.
Can we tell you, then, who is affected and exactly how they are affected? Well, yes, in tracking national statistics and provincial statistics on health outcomes and on post-secondary education outcomes, it is possible to track the benefit of increased spending.
Glenn Campbell, Senior Chief, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: If I may supplement what Ms. Anderson said, it is important to keep in mind that major transfers support programs where provinces and territories are principally responsible, for example in the health care field and in the social spending field. I will also draw your attention to the former Canada assistance program, for example, which supports social assistance or welfare. All of these programs are in provincial jurisdiction. They each deal, on their own merits, with their stakeholders and various citizens about what the program requirements are and what impact they are having both economically and socially. Across health care, post-secondary education, programs for children and the other suite of social programs for which the provinces are responsible, each one of those is debated with their stakeholders and citizens on their own merits. Included in those are lenses about impact on gender, region, and social equality. We know that just from watching how provinces manage their own social programs.
The federal government is providing support to the provinces in those endeavours. Also, by what Mr. Vermaeten said, the federal government's effort to increase funding, as requested by both stakeholders and provinces in these areas, suggests there are demands in these areas. The efforts to make federal funding more transparent in each of these areas will help stakeholders, in their work with provinces, identify where the funding eventually flows.
Senator Nancy Ruth: Do you have any kind of stick to use if provinces and territories do not meet the frameworks within which you would like them to use the money?
Ms. Anderson: The stick is the moral suasion of citizens. We have some conditionality respecting the principals of the Canada Health Act. There is a provision that the federal government can withhold funds. That kind of conditionality does not exist in the other transfer. The Canada Social Transfer has one condition with respect to mobility, but that is it. For the last 10 years, governments working together have worked in a very different way. They have not been interested in that kind of conditionality of withholding amounts for transgressions. They have been much more interested in conditionality through proper reporting and accountability to citizens, which the new structure is trying to encourage.
Senator Nancy Ruth: It is awfully difficult to sit here knowing that the budgets are a set of values that have huge social impacts and there is no measurement. No one wants a whipping girl or boy, but it is tough to sit in this place and wonder how you track this stuff down to the ordinary person living in the city. It is difficult.
Mr. Vermaeten: As you said, there is a natural tension. On the one hand, providing money unconditionally gives the provinces flexibility, but then from a federal government perspective, to some degree you are losing control. On the other hand, you could move to a series of very small, specific-purpose transfers or grants and contributions for a few hundred thousand dollars, which are quite easy to track, but probably such a structure would not work very well.
We have both kinds of transfers within the federation. With the large transfers, we track a lot of progress, just not the kind of tracking about where does this dollar go and exactly what does it do. We look at equalization and we see what it generates. We know, for example, that for Prince Edward Island, equalization provides about 25 per cent of their source of revenues. We know that that allows Prince Edward Island to provide services that are comparable to those in the rest of Canada. We also know that the funding for post-secondary education has helped produced a very strong post-secondary education system there.
We do not track each dollar every day, but we do track progress. Where we think more progress is needed, adjustments are made. Take for example the federal investment in labour market training. There is concern that more is needed to be done for non-Employment Insurance clientele. The government does studies on that and says, ``Let us direct money there.'' It is not a one-for-one tracking like a small grant or contribution, but there is certainly ongoing analysis to ask whether we are moving in the right direction and can we work with provinces to improve things.
Senator Nancy Ruth: The message I get is that the taxpayer pays and the taxpayer had better hold governments accountable, full stop.
Ms. Anderson: I would like to touch quickly on your last issue on child care and post-secondary education spending. In this budget document, we try to outline the incremental spending in comparison to the total spending in those areas. We have provided information on the incremental spending from this budget decision. In these text boxes, we have also tried to give a clear idea of the federal government's support for child care, which is substantial and substantial in comparison to the last investment. That is just part of the story. We have done that for all of the social areas to try to give a better understanding.
Senator Ringuette: How many people work in your department?
Ms. Anderson: In our branch, which is federal-provincial relations, primarily the transfer world but with a social policy section, I believe we are now about 65 people. There are slightly more on the federal-provincial side.
The transfer programs are one of only two programs that are delivered in the Department of Finance, so we have those program delivery responsibilities as well as policy development.
Senator Ringuette: As a follow-up to Senator Nancy Ruth's question on accountability, what are your responsibilities under the Canada Health Transfer and the Canada Health Act? Is that the responsibility of your department or of Health Canada, or is it a shared responsibility?
Ms. Anderson: The Minister of Health primarily assesses an infringement of the principles in the Canada Health Act. There is then a process for a cabinet decision. Once a decision has been made, we do the withholding on the administrative side.
That part of the program is very rarely used and has not been implemented for many years. More progress is possible through discussions than through withholding, but there is a process in place.
Senator Ringuette: Do you monitor that at all, or do you only rely on Health Canada?
Ms. Anderson: We work in collaboration with the Department of Health. They are the first round as they are closer to health systems than we are.
Senator Ringuette: I will read you an excerpt from an article that appeared in the Charlottetown Guardian of March 31.
Budget 2007 scraps this formula that has existed for 30 years. The net result is that Prince Edward Island will receive an additional $7 per capita in CST funding in 2007-08; Ontario an additional $40 per capita and Alberta an additional $102 per capita. The net result is that next year, Alberta will receive an additional $333 million in additional CST funding; Ontario will receive an additional $445 million, and all other eight provinces will share a total increase of $14 million.
Are the numbers I just stated, which appeared in this article, correct?
Ms. Anderson: We would have to check to the penny, but the direction is certainly correct.
Senator Ringuette: The direction is certainly correct.
Ms. Anderson: You must remember that, on a per capita basis, Alberta and Ontario were receiving considerably less than other provinces. With the decision to move to equal per capita cash, the first year — the proposal being to get everyone to the same level in the first year — the expenditures went to the provinces that were way under to bring them up, and then the new investments will bring everyone up.
Senator Ringuette: You will need to adjust all of that into the equalization program, because if you distribute all the other funding programs on a cash per capita basis, you are skewing the revenue levels for the provinces. If you go on a per capita basis, five years from now three provinces will have funding at 100 per cent and all the less populated provinces will be at the far end of the scale. That is the situation I foresee. The announcement in this budget of changing the entire redistribution formula to a per capita basis is exactly what is happening.
I cannot believe that Alberta, which has no debt and has major surpluses yearly, needs an additional $102 per capita under the Canada Social Transfer. How can we rationalize that for achieving what is supposed to be achieved by these programs, that is, providing fairly comparable services for a fair amount of taxation? This is skewing the entire process.
Ms. Anderson: With respect, the proposal is that equalization is supposed to provide the resources for provinces to provide equally comparable services at comparable levels of taxation, and the equalization program does that. It measures the capacity of each province to raise revenues, and it brings them up to a standard. That is the simple concept of the program.
The rationale is that once we have done that — and the government argues that it has strengthened that because it is a more generous equalization program — then the support for other priorities such as health, post-secondary education and social programs should treat all Canadians equally. Therefore, those transfers will move to equal per capita cash support for every Canadian regardless of where they live. That is the rationale.
Senator Ringuette: The rationale is not rational. It may be rational for Toronto, Senator Eggleton.
The Constitution of Canada provides that the federal government must provide funding to the provinces in a way that treats Canadians fairly and gives them access to fair services for fair taxation. I reiterate that Alberta is in much better financial shape to provide services than are New Brunswick, Prince Edward Island, Saskatchewan and Manitoba. The government has made a move from one end with regard to equalization, but with all the other programs, be they child care, infrastructure or health transfers, it is giving more to the provinces that have more.
Ms. Anderson: The proposal does not give more to the provinces that have more. The proposal is to bring everyone to the same level, so the initial investment goes to the provinces that were receiving less on an equal per capita basis.
You are quite right that under the Constitution the objective of the equalization program is to bring all provinces to the same level. There is then the question of federal support for other shared priorities, whether they equalize again or whether they provide an equal amount for every citizen in Canada, and the government has decided that, with a strengthened equalization program, support beyond equalization would be on an equal per capita basis.
Senator Ringuette: Budget 2007 clearly indicates that P.E.I. will receive an additional $7 per capita and Alberta, $102.
Mr. Campbell: The figures you are referring to speak to a one-time adjustment, basically in 2007-08. The government has put forward a long-term plan for support in these areas.
Senator Ringuette: On a per capita basis.
Mr. Campbell: On a per capita basis. Part A of the program is an enhancement to equalization, so there will be enrichment to the program that supports provinces, which currently does not benefit Alberta or Ontario. These provinces have made a case that they were being underfunded on a per capita basis in cash terms, which was accurate. There was an inclusion of tax points in the formula of the Canada Social Transfer, and the tax points will continue to support those programs. The government has made a decision to sever the calculation because those tax points are being equalized in the equalization program. This one-time adjustment is bringing the other provinces up to the same level.
Going forward, when you look at the Canada social program, starting next year, after these adjustments take place, all provinces will receive the same amount per capita, so all Canadians, no matter where they live, are supported equally and that will continue going forward over the next few years. All the enhancements for post-secondary education and child care will also be going equal per capita to all the provinces.
Senator Ringuette: You have just reaffirmed that this per capita redistribution is equalization on a large scale. In addition to that, it is changing the formula that was there for the last 30 years, moving from collective responsibility to individual responsibility. I fully understand that the policy is agreed upon or rejected by the government. However, this new policy of complete transfer based on per capita will be very detrimental to many Canadians and many provinces.
Ms. Anderson: I reiterate that every province will receive increased support, that equalization is how the differences between the capacities of provinces is compensated, that the support through the social transfers is not trying to compensate for the differences in fiscal capacity because the assumption is that if an equalization program is working, that has already happened. There is no interaction between equalization and the social transfers except in this transition period. If you look at just one year, you see strange things, but that is because of the transition of bringing provinces up and ensuring that the provinces do not lose. There is a lot happening. If you look at the future, the objective is to provide the same cash support everywhere, which is where the transfer systems have evolved since 1977. We have moved closer and closer to equal per capita support, and now this is the last step.
Senator Ringuette: I understand that the number of voters matters. However, we need to have a clear picture, and not only for this committee. Every Canadian and cabinet and Parliament should have the real picture of all transfers being done.
I will give you an example. Atlantic Canadians are constantly being targeted as receiving economic development money through a co-op. However, I would like to know, with the budget of Industry Canada, how much is going to Ontario, Quebec and Alberta. Through analyzing all these programs we will have a clear picture of what is happening financially in this country.
I know that you have 65 people in your department. Could you, for a short period of time, assign a few people? I think it would be beneficial to all of Parliament and the provinces. It is an analysis that needs to be done.
Mr. Vermaeten: This speaks in part to the request for an analysis. It is important to look at the impact of the budget in its totality, to look at all the measures, and not to look only in terms of millions of dollars but also to look at the per capita impact in total and what was the starting point and what is the end point. The analysis is complex, and certainly you can have different perspectives.
For example, take Prince Edward Island. They are benefitting tremendously from strengthened equalization, a ten- province standard, which is an historical request of many provinces. Since the early 1980s they have been asking for that, and it is an important element. Regarding moving to equal per capital funding for the Canada Social Transfer, provinces currently receiving more than their equal per capita share would no doubt prefer the old formula.
For the infrastructure funding, there is a per jurisdiction allocation to recognize that small jurisdictions may require more funding. There is a new per capita jurisdiction funding of $25 million per jurisdiction. When you look at that on a per capita basis, Prince Edward Island with 100,000 people receiving $25 million is seeing a tremendous increase in funding for that purpose.
It is important to look at the balance of measures. One can argue that this is not the way this should be funded, but look at the package of funding: Does it provide good balance? I think the government would argue that there is a lot of support here. Some support will be provided on a per capita basis, particularly in principal areas, general-purpose transfers, but then there are specific-purpose transfers that are not provided on a per capita basis, and then the overall, overarching equalization program, which provides a tremendous level of support for the less wealthy provinces.
Senator Ringuette: I agree that we need to look at the entire package and that is why I am reiterating the request for your branch to provide this committee and anyone interested with all the different funding going to the different provinces from the different departments. That is a must. If we have to look at the package again, I want to see the entire package, not a portion of the package.
Ms. Anderson: There is a lot of information that we would not have on that. Put that aside for a moment. There is one province that has done this in extreme detail. In a general sense, there is a number in public accounts for how much the federal government raises in each province in terms of taxation and how much it spends in each province in terms of overall expenditures.
As analysts, we have a problem with that approach, in that there is so much in Canada that is not about measuring exact expenditures. When the Department of Defence makes a major expenditure, who does that benefit? Does it benefit the only people who live where that expenditure is made or does it benefit Canadians everywhere? Who benefits from expenditures in Foreign Affairs? When a lab in Ottawa produces a new strain of wheat, the expenditure under that system comes under expenditures in Ontario. That benefits farmers in Saskatchewan. That is what we call a checker book approach to federalism. It does not answer all of the questions.
To do the analysis of what this budget provided and not what the base funding provides would also give a distorted picture. We have certainly tried to be transparent about the impact on provinces and to explain that in this transition period some of those numbers in 2007-08 are moving in different ways. If there was a magic list of every expenditure made by the federal government and which region and province it was in, we would be glad to provide that, but there is no such thing.
The Chairman: You have told us you will provide us with what information you can.
Ms. Anderson: Yes.
The Chairman: We can figure out the gaps and go elsewhere with those.
Senator Stratton: I have the same problem as Senator Ringuette. I think we all do. If we want to get to the bottom of this, we have to do it. We cannot rely on any one, single department. Good luck to any who tries to take this on.
To go back to the fiscal imbalances, horizontal and vertical, we realize that this is a recovery period from the cuts that took place in the 1990s in health care, education, infrastructure, housing, child care, and the list goes on. The cuts were quite severe, some say too severe. We are trying to now accomplish a recovery in this area. You can see the poor road conditions when you drive in your cities and on your rural highways.
We are in that process. I think there will be winners and losers in some areas, then, depending on the situation, there will be winners and losers in another area.
If we start looking into one area to try to find out where all the money goes, we can get lost in the detail, which is a concern. Instead, we should be looking at how to make the have-not provinces, such as my province of Manitoba, more independent and self-sustaining. That really should be the end objective of what we are trying to get at, instead of simply asking for more money.
In Manitoba, the total number of dollars given to the province by the federal government was around 31 per cent of the total budget in 2000. It is now up to 36 per cent to 40 per cent of the provincial budget. There is a concern that the province becomes welfare dependent on the federal government and that there is no incentive for the province to create wealth on its own because the money is flowing from Ottawa. We need to address that as a policy concern.
I would ask the officials whether, when they look at the growth taking place, they have any way of measuring whether or not the have-not provinces are really endeavouring to achieve greater self-sustaining approaches or creating wealth on their own? Do you have some way to measure that, or do you just accept the fact and give them money? That is a tough question because it is treading on policy, but there must be some measurement on the other side. Is that done?
Ms. Anderson: We would argue that in equalization, we measure the fiscal capacity of the provinces. We can track whether their fiscal capacity is increasing or decreasing. We also track whether the disparity between the highest and the lowest is changing.
Mr. Vermaeten: The issue of whether equalization creates a disincentive has been discussed for many years and there is a lot of concern about that.
Ms. Anderson already discussed program design. First, the program is designed so that there are not these disincentives, because we measure the fiscal capacity. Second, the changes proposed before Parliament would create an incentive for developing natural resources and would be helpful in encouraging economic development.
We in the equalization world monitor constantly the issue of transfer dependency and whether or not provinces attempt to develop their economies. Our evidence suggests that provinces are working hard to improve their economies. It is not a major concern from our perspective.
Senator Stratton: My concern is that in Manitoba the federal equalization or transfer payments to the provinces increased from 31 per cent to 36 per cent to 40 per cent of the provincial budget over the last few years. It becomes apparent, just from the statistics, that the province is becoming more and more dependent upon federal money.
What incentives could we look at? I know you cannot answer that; it is a policy issue.
Ms. Anderson: The equalization side is a big amount of that. As an example, if we guaranteed $6,500 per capita to any province through equalization, there would then be an incentive for them not to raise any taxes or do any development. The federal government, in theory, could provide 100 per cent.
However, that is not how the program works. We do not know what you actually raise; we measure what you could raise if you applied a national average tax rate on the tax base that you have. Therefore, the incentive to gain that is not there, because it is not what you actually raise. Hopefully that structure in the system moves us away from problems of incentives.
Senator Stratton: You would think we would try to work more towards independence. In Manitoba, it appears there is a greater dependency, and that becomes a real concern.
The Minister of Finance from Saskatchewan talked about tax points and how some provinces are penalized by them. Could you explain to us what tax points mean to a province and why the Minister of Finance from Saskatchewan would be complaining about that?
Ms. Anderson: By way of a quick bit of history — because I am probably the only one on this side of the table who has any hope of remembering this — in 1977, the federal government provided transfers to the provinces. For incentive and all sorts of other reasons, they split the amount. Fifty per cent was provided in cash and the other 50 per cent was provided through a tax point transfer. At one moment in time, the federal government reduced its tax rates at exactly the same time the provinces upped theirs, so there was no impact on the taxpayer. It was just a switch.
Those tax points have been part of the support that the federal government has given to the provinces over the years, but they have become complicated and difficult in the transfer world.
The tax points are still there. After this proposal, they will no longer be used in the Canada Social Transfer to determine how much goes to each province. That is the only difference. We will still mention that 50 per cent of our support will be through these tax points, the value of which grows each and every year, but it will no longer be used as a determining factor in the allocation. That is the short and sweet answer.
Senator Murray: However, the associated equalization that went with those tax points is no longer there.
Ms. Anderson: No, that is not true. Those tax points have always been equalized and will continue to be equalized. It was using them as an allocation in the other program. The money that equalizes those tax points will still be provided to provinces.
Senator Murray: The associated equalization?
Ms. Anderson: Yes. It will no longer have to be called associated equalization. That is the difference. The payment will still go to the provinces.
Senator Murray: Under both the CHT and the CST?
Ms. Anderson: No, under equalization. The payments were always made under equalization and were included in the CST.
Mr. Vermaeten: In fact, associated equalization increases occurred before there was an associated equalization that initially went to the five-province standard and then to the implicit standard of the fixed framework. Currently, the associated equalization is going up to the 10-province standard. In that respect, it has been strengthened.
Second, this is tremendously complicated and non-transparent. That is precisely why one of the recommendations in the O'Brien report was that you should not have this. There is what he referred to as an implicit backdoor equalization. He argued that you have an equalization program. Make that strong, and then you do not have to measure fiscal capacity within a transfer.
He says you can look at needs and transfers and maybe do equal per capita. With other transfers, base it on another measure of need, but do not look at the fiscal capacity within a specific transfer. Implicitly, that is what the CST did. It created a lot of confusion by looking at the value of the tax points.
Third, why would Saskatchewan not be a particularly big fan of that? There is a good diagram on page 360 in the budget plan that shows the value of tax points and the value of cash. It is interesting because an anomaly in the way the old system worked resulted in a situation where Saskatchewan, for example, would become a have province. Overall, their fiscal capacity was very strong, yet because of the interactions in the system, they would actually receive more per capita cash than any other province for the CST.
Mr. Campbell is pointing out that this appears on page 15 of your handout. You have a situation where Saskatchewan would be a province that would have a fiscal capacity higher than other equalization-receiving provinces but receive the most amount of cash. That was an anomaly in the system that Mr. O'Brien pointed out and precisely the reason he said to sever the tax points in determining the CST allocation because, first, there is unfairness there and, second, there is non-transparency.
That is an important reason why the government did what it did in this budget.
The Chairman: Thank you for that short and sweet explanation as modified. It is complicated.
My understanding is that tax points are still considered in the Canada Health Transfer until 2013-14, but they will be gone from the Canada Social Transfer once we presumably approve the budget implementation that is floating through Parliament now.
Ms. Anderson: They will be gone as a means of determining allocation. The tax points will still be there. No one is touching them.
Senator Murray: I will not argue with Senator Ringuette about the principle of equal per capita. We will have that argument another day.
The tax points, of course, are still there. They were transferred in 1977, and they are imposed by the provincial governments.
You tell us that the associated equalization will continue to be paid. Is that to be found explicitly in the new equalization formula? I presume you will be making a different calculation every year as to the value of the tax points across the provinces.
Bill C-52 is now before the House of Commons. I think it contains the new equalization formula, does it not? Is the associated equalization provided for explicitly in Bill C-52? Do you know?
Mr. Campbell: With respect to the Canada Health Transfer, there are provisions in Bill C-52 that show changes to the associated equalization for the purposes of the CHT, which basically mimic the enhancement on equalization. Effectively, the standard for equalization is going up. Therefore, the standard for associated equalization for the Canada Health Transfer is also going up.
Senator Murray: What about the social transfer?
Mr. Campbell: The value of those tax points formerly attributed to the Canada Social Transfer are found in the personal income tax base and the corporate income tax base. There were 13.5 personal income tax points formerly transferred and one point of corporate income tax. They are blended into that base.
Senator Murray: I understand that. With respect to the payment of the associated equalization, will that explicitly be provided for with regard to the Canada Social Transfer in the equalization formula, or where is it explicitly provided for?
Mr. Vermaeten: Let me see whether this answers your question. All personal income tax and corporate income tax revenues were equalized into the old system, which included the tax transfer.
Provinces do not distinguish between which corporate dollar came from their own tax points and which corporate dollar of revenue came from the tax point transfer. They collect all these corporate income tax revenues and personal income tax revenues. All those are equalized and equalization is paid on the whole amount.
It is provided for in the sense that there is equalization, and all tax points are equalized. They were all equalized before except they were equalized to a lower standard. Now all of them are equalized, including the tax transfer, the corporate income tax points and the personal income tax points, except they are equalized to the 10-province standard. Yes, they are explicitly provided. There has always been only one check for equalization. The fact that part of it is associated with those tax transfers is an analytical construct.
Senator Murray: When we talked about the value of how much we were transferring under the old Canadian Health and Social Transfer, we always included the value of the associated equalization which was paid out through the general equalization program. When we talked about the general equalization program we included it again. We paid it once and counted it twice.
Ms. Anderson: We paid it once and counted it twice, which is why we never added the two programs together. It is as simple as that.
Senator Murray: I have a couple of fairly short questions. Do you happen to know whether Bill C-52 covers all the initiatives in the budget that will require legislation, or will we be looking at another smaller budget implementation bill?
Ms. Anderson: I will answer that very generally. It covers all of our issues. I suspect that it does not cover all of the tax issues.
Senator Murray: Sure.
Ms. Anderson: There are usually two tax bills. There is also some spending through Main Estimates. Not everything needs a legislative —
Senator Murray: I understand that.
Ms. Anderson: Certainly all of the transfer changes, the fiscal balance changes, are there.
Senator Murray: Okay. The government does not seem to be hurrying along that legislation in the House of Commons, which leads me to believe that even without the help of the Senate they are giving some aspects of it sober second thought. You do not have to comment on that, although if you would like to, go ahead.
Ms. Anderson: Later, senator.
The Chairman: It has not gone to committee yet.
Senator Murray: In the budget document on fiscal balance, the government mentions that you will go to a market- value base for residential property taxes, as recommended by the O'Brien panel. Will you implement the stratified approach that he recommends?
You are going to exclude user fee revenues. Am I right in saying that in the previous formula 50 per cent of user fees were included? The O'Brien panel recommended that only user fees that generated a profit should be included, and they talked about lotteries and booze and that sort of thing, would be included. I presume you are implementing the whole.
Can you bring us up to date as to how the equalization formula treats or will treat revenues from Ontario Hydro, Quebec Hydro, Manitoba Hydro and New Brunswick Power?
Ms. Anderson: In a general sense, under the new equalization system we have combined all the natural resources into one base, from the previous 16, and the fiscal capacity will be determined on actual revenues. Those are two huge changes in terms of simplification.
Senator Murray: That is a big change in terms of hydro revenue. Is that right?
Mr. Vermaeten: The answer is yes. Hydro revenues, the profits, will be put on the same footing as other resource revenues. Fifty per cent of those profits will be included in the base, as Ms. Anderson mentioned.
Senator Murray: Previously, was a corporate tax rate applied to it?
Mr. Vermaeten: It was treated as if it were corporate income.
Senator Murray: I misspoke myself at another committee last week regarding child care. I thought that the government had abandoned the tax credit for businesses that would offer child care services to the children of their employees. The tax credit is still there. It is just not being taken up very aggressively by the private sector, I understand.
Ms. Anderson: It has just been proposed, senator. It is not in tax law.
Senator Murray: I see. I thought it was in there.
Senator Murray: You are putting $250 million to create child care spaces. It says here, $250 million in each of 2007- 08 and 2008-09, and the payment in 2007-08 will be outside the CST. Why is that?
Ms. Anderson: For both the investment in post-secondary education and the investment in child care spaces, it was to provide a year for the federal government to discuss with the provinces the framework agreement about objectives. The commitment had been made by the government that they would provide the $250 million for child care spaces starting this year. The first year is being provided outside the program. Work will continue on the development of a framework, and then starting April 1, 2008, it will be delivered through the CST.
Senator Murray: I am aware that the present government cancelled the agreements that had been negotiated by the previous government with the provinces, but prior to those specific agreements there had been some kind of general protocol or multilateral agreement on child care. Has that gone by the boards?
Ms. Anderson: That has been extended with the extension of the Canada Social Transfer. Those framework agreements mirrored the legislation. They were put in place until the end of 2007. Part of the ministers' discussions will be getting a framework agreement that covers the three investments in children through the CST.
Senator Murray: The present government gave 12 months notice to cancel them.
Ms. Anderson: There were two investments within the CST and then the previous government had a major investment in child care outside of the CST. The investment outside of the CST was cancelled.
Senator Murray: What agreements were you referring to earlier when you replied to Senator Nancy Ruth about provinces reporting back on child care?
Ms. Anderson: Those were framework agreements on early childhood development and a framework agreement on child care that was delivered through the CST.
Senator Murray: Are they the programs that are being cancelled?
Ms. Anderson: It was not the $5-billion program that was cancelled.
Senator Murray: One other matter I noticed is that the government again in this document says that they ``reconfirm.'' I do not know what reconfirm means. I suppose that means confirm for the second time, does it? According to Budget Plan 2007, this budget reconfirms the government's commitment to limit the use of the federal spending power to ensure that new cost-shared programs in areas of provincial responsibility have the consent of the majority of provinces to proceed and that provinces and territories will have the right to opt out of cost-shared federal programs, with compensation, if they offer similar programs with comparable accountability structures.
Is that much different or different at all from the Social Union Framework Agreement that the previous government, the Chrétien government signed?
Ms. Anderson: It is basically the same.
Senator Murray: Did we legislate the Social Union Framework Agreement?
Ms. Anderson: No.
Senator Murray: Is it the intention of the government to give this the force of legislation? Do you know?
Ms. Anderson: I do not know.
Senator Murray: How are you going about this? Are there negotiations underway? Do you expect to negotiate this with the provinces?
Ms. Anderson: It was certainly part of the consultations that the government undertook following the last budget. The Minister of Intergovernmental Affairs had discussions with his provincial counterparts on the spending power.
Senator Murray: We will have to ask the Minister of Finance whether they plan to legislate this and how they intend to negotiate it.
The Chairman: Senator Murray, we are getting close to the end of our time. Could you finish up your questioning with one more question — as big a one as you want? If there are any undertakings or information that they do not have, the witnesses could provide us with it afterwards.
Senator Murray: Ms. Anderson has been very clear that the money earmarked for post-secondary education and child care — anything that goes to the CST — is, as we speak, unconditional and that the government hopes to negotiate some kind of protocol with the provinces respecting those earmarked funds.
I do not know whether this is a question I can properly put to you. If you do not want to take it on, fine. Is there any practical possibility of separating out the post-secondary education component, as we did with the Canada Health Transfer?
Ms. Anderson: Part of this budget was that those funds were earmarked within the Canada Social Transfer. We showed very clearly an allocation of the total amount — how much support for post-secondary education and support for other social programs.
Senator Murray: That was based on the present spending patterns of the provinces, was it not?
Ms. Anderson: It was exactly as we did with the health transfer; we used the same methodology when we split those two transfers.
The support for children had already been earmarked within the Canada Social Transfer. It was an amount that each and every province knew, so we have just done that.
Senator Murray: However, it is notional, is it not?
Ms. Anderson: It is notional, yes.
The Chairman: Regretfully, we have run out of time. I had some other people on my list for the second round of questioning. You see how exciting this subject matter is for this committee, Ms. Anderson.
Ms. Anderson: I regret that we have to run, but we have an appearance at another committee. We should not keep them waiting.
The Chairman: We appreciate all of you having been here, as well as any information you can get for us. You understand now where we are going and what we are trying to get our arms around. It may result in further questions having to be posed to you. We know now where there is a good source of information, so we thank you and we look forward to hearing from you. Honourable senators will join me in thanking our guests and we look forward for the opportunity to meet with you again. This has been a pleasure.
The committee adjourned.