Proceedings of the Standing Senate Committee on
National Finance
Issue 1 - Evidence - Meeting of February 24, 2009
OTTAWA, Tuesday, February 24, 2009
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to examine the Supplementary Estimates (B), 2008-2009, laid before Parliament for the fiscal year ending March 31, 2009.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Colleagues, this is our second week of meetings dealing with Supplementary Estimates (B) for the fiscal year 2008-09.
This morning, we are pleased to have representatives of Transport Canada and Infrastructure Canada. Colleagues know that Infrastructure Canada is housed under Transport Canada. From Transport Canada, we have Louis Ranger, Deputy Minister of Transport and Deputy Head, Infrastructure Canada and André Morency, Assistant Deputy Minister, Corporate Management and Crown Corporation Governance. From Infrastructure Canada, we have John Forster, Assistant Deputy Minister, Policy and Communications Branch, and David Cluff, Assistant Deputy Minister, Corporate Services and Chief Financial Officer.
[Translation]
Mr. Ranger, we are aware that you have to leave around 10:30 a.m. So you have the floor.
[English]
Louis Ranger, Deputy Minister of Transport and Deputy Head, Infrastructure Canada, Transport Canada: Thank you for introducing my colleagues. I understand our meeting today is to discuss, among other things, some $326 million brought forward in the 2008-09 supplementary estimates for the Provincial-Territorial Infrastructure Base Funding Program and possibly some $56 million brought forward under our Border Infrastructure Fund.
[Translation]
While we meet today in quite exceptional economic circumstances, I would like to say that we are happy to answer your questions on the estimates.
I would first like to highlight some of the activities that Infrastructure Canada is undertaking in response to the changing economic climate.
[English]
In these challenging times, one thing is certain: We must move quickly and we must work together to achieve success. We must cooperate at all levels of government to make the investments needed to preserve and create jobs, foster growth and stimulate the economy. Our common goal is clear: We want to keep Canadians working today while sharpening our competitiveness for the future.
Others have referred to the current economic situation as the "perfect storm,'' but Canada provides a silver lining. Because of investments the Government of Canada made prior to this crisis, we believe we are better prepared than most to weather this downturn.
Many of the investments were made through our portfolio in each transportation mode and in the vital infrastructure of this country. In our portfolio, we have made significant investments in areas related to safety, security, the environment, trade and infrastructure.
All these investments have contributed to Canada's reputation of having a transportation system that is among the strongest, safest and most secure in the world.
Perhaps no initiative in this portfolio has been more significant than the $33-billion Building Canada plan. For this plan, the federal government is providing long-term, stable and predictable funding to help meet infrastructure needs across Canada.
It is recognized that modern infrastructure is vital to our economy, both in the short term as we try to provide economic stimulus and in the long term, by making strategic investments that will improve productivity of our economy. Investments in borders and trade corridors for example, improve the efficiency of our transportation system not only in Canada but also on a North American scale.
We have seen significant results. Building Canada framework agreements have been signed with all provinces and territories across Canada and numerous projects are currently under way. Ontario, Manitoba, B.C., Prince Edward Island and Alberta have also received fund for communities with populations under 100,000.
This funding will help communities meet their pressing infrastructure needs, stimulate the economy and support continued growth. In addition, over 25 per cent of the funding has been committed for major projects and another 50 per cent is under consideration.
While time does not permit us to go over all the programs and projects, let me give you a few examples of where money is being committed: The twinning of the Trans-Canada Highway in New Brunswick and British Columbia; cost sharing with Ontario of the access road to the new Windsor-Detroit bridge; building world renowned cultural infrastructure in Quebec, such as Place du Quartier des spectacles in Montreal; the Banff Centre in Alberta; the new state of the art convention centre in New Brunswick; a new congress centre in Ottawa; and last but not least, the Spadina subway extension in Toronto to address urban gridlock.
These are only a few examples of the Building Canada plan at work, but these projects are putting Canadians to work, creating jobs and getting the economy moving at a time when the economy needs it most.
Building Canada was designed as a long-term commitment to public infrastructure, but the dramatic and sudden change in the global economic situation requires us to accelerate our plan. To that end, Mr. Baird recently met with premiers and infrastructure ministers from each province and territory to discuss how to get more infrastructure projects moving.
During these meetings, the premiers and the provincial and territorial leaders endorsed a five-point action plan to help cut duplication, simplify the application process and streamline federal approvals. However, we do not manage projects ourselves. That is important to keep in mind. It is the responsibility of our provincial, territorial and municipal partners to take the necessary steps to get construction under way.
Last month, Budget 2009 saw an even greater commitment by the Government of Canada to infrastructure investments. Some $12 billion will be available to invest in a wide range of infrastructure and help stimulate our economy.
The specific budget programs and funding are better suited for a discussion on the 2009-10 Main Estimates; but for my part, I can assure this committee that the transport infrastructure communities portfolio will work hard to ensure Building Canada projects deliver results for Canadians, both now during these difficult times and in the future when infrastructure will give us a competitive edge.
Mr. Chair, while our focus is on the economy, we will also be working hard in other areas under our responsibility. We will continue to ensure the safety and security of the transportation system and we will continue to work to reduce the environmental impact of our transportation system.
While we do not underestimate the magnitude of the challenges ahead, we are encouraged by the concerted effort and spirit of cooperation across the government to get the job done.
We welcome comments from the committee.
Senator Callbeck: Thank you for coming this morning. In my province, a lot of frustration is being expressed about the infrastructure money not getting through. First, I want to clarify exactly what infrastructure programs we have.
You mentioned the provincial-territorial base funding program and the Building Canada Plan. Those are two. Is the Canada Strategic Infrastructure a fund?
Mr. Ranger: Yes, it is.
Senator Callbeck: Is that still ongoing?
Mr. Ranger: Yes.
Senator Callbeck: How much is in that program?
Mr. Ranger: We manage several programs. Some were from previous governments. There is still $4 billion to spend from previous programs — even prior to Building Canada Plan. The Building Canada Plan itself had several components. Now, with budget 2009, several other programs have been added.
In total, my portfolio manages 14 infrastructure funds. Those are coming from the past — those that we develop under the Building Canada Plan — and now there are the new series of funds that have been added, like the Infrastructure Stimulus Fund and the Green Infrastructure Fund. I can appreciate the frustration and we are doing everything we can to explain the structure.
I must say that those who are at the provincial level, for example, who are responsible for applying for those funds, know the programs quite well and we are available to explain how all this works. For the outsider watching this, I can appreciate that it looks complicated.
Senator Callbeck: You say you are responsible for 14 infrastructure funds. Is it possible to receive an outline of each of those funds?
Mr. Ranger: Yes.
Senator Callbeck: I would also like to see the funds that are available and the funds that have been spent so far.
There is $4 billion in the Canada Strategic Infrastructure Fund, $33 billion in the Building Canada plan, $326 million in provincial-territorial and the past budget was $12 million. Is that all new money or is some of that lumped in?
Mr. Ranger: The only thing that is not new in the Building Canada plan is the gas tax, which was a continuation of the previous programs.
John Forster, Assistant Deputy Minister, Policy and Communications Branch, Infrastructure Canada: Included in the Building Canada plan — the $33 billion — is the gas tax. However, the government added an extension of four years to 2014. The original commitment on the gas tax was only five years. The government prolonged it at $2 billion a year.
The $12 billion that was announced last month is new money on top of the Building Canada plan, with one exception. About $1 billion that was advanced for the provincial-base funding, which is the $25 million a year, the government has offered to spend that over two years if provinces can match it. It is money that was to be spent in 2012, 2013 and 2014 and the government has brought it forward if provinces can match it.
All the other funding in the budget is on top of the Building Canada plan.
Senator Callbeck: I have many questions but if I could see the list that outlines the process, how much money has been allocated, how much has been spent and what the ratio is, that would be helpful. In terms of the ratio, I know that some of them are divided into thirds. I would also like to know if there are strategic priorities for each of these funds.
The Chair: Please make that information available to Mr. Thompson, our clerk, who will circulate it in both official languages to all members of the committee. You will provide us with a list of the funds, how much is in each and a brief understanding of over what period of time the funds are intended to be used.
Mr. Ranger: Yes, I will do so.
The Chair: Also, it would be helpful to us to know whether they are leveraged-type funds or direct funds.
You may be aware that this committee conducted an investigation and published a report a year or so ago. What we will want to do is update that with a budget.
I remind honourable senators that we are dealing with Supplementary Estimates (B) at this time. We will have an opportunity, if you desire, to bring back Infrastructure Canada and Transport Canada to deal with a budget and those items when we look at Main Estimates and budget implementation.
Senator Di Nino: Please include in the information any participation from other levels of government, particularly provincial and there may be some municipal, as well, so we can see the total picture. That would be useful.
Mr. Ranger: Absolutely.
The Chair: Thank you, Senator Di Nino. That would be helpful. That is what I meant by "leveraged.''
[Translation]
Senator De Bané: First of all, I would like to tell Mr. Ranger how pleased we are to see him today.
In the light of the government's last budget, what are we going to do to move forward quickly?
[English]
As you said in your paper, we must do that quickly. However, on the other hand, we have to keep in mind what the Auditor General said about the deficiencies of the sponsorship program, specifically where it said that, because we have to move on an urgent basis, all the rules were broken, et cetera.
How do you reconcile what you have said; namely that we must move quickly — that $40 billion has to be spent quickly? Your group, which is among the most important in Ottawa, oversees all the additional expenditures. How will we reconcile that with your regular way of oversight of the different programs? I have difficulty seeing the urgency reconciled with ensuring there will be no disasters, as we saw a few years ago.
[Translation]
Mr. Ranger: That is the question everyone is asking! There is a lot of anxiety and you will see from the figures we are going to provide that funds are not released quickly enough.
We really have to understand that the Building Canada plan covers a period of seven years. If you are a senior official with the mandate to design the architecture of a seven-year plan, it is worthwhile to take the time required to get the structure right. That is what we did.
Now we are in a serious crisis and people want to know why the funds have not been released. Any reasonable person looking at the situation must see that the funds have not been released very quickly, but we must not forget that seven-year time frame. We have to roll up our sleeves and put our shoulder to the wheel.
Let me give you some examples of things that we can do quickly without compromising the principles of accountability.
[English]
Let us look at base funding, for example. The government committed $25 million a year for the next seven years for each jurisdiction. That is a lot of money: $2.3 billion. There are a few strings attached to that, such as eligibility criteria and so on. That said, it is pretty straightforward.
We are saying we can telescope that from seven years to two years and most provinces are prepared to do that.
There is another component, which we call the community component, which is for municipalities of less than 100,000 people. They knew how much money they had for each province but they knew they had seven years. Therefore, they were laying this out over seven years with what they "intakes,'' which are calls for proposals every year. The applications come in and they are processed, et cetera.
Most provinces have completed their first intake. They have long lists of proposals but in most cases, they had planned for only that annual amount. We are saying that if there is a long list and they are bona fide projects, why not telescope the money from seven years to two years and address those first batches of projects.
The same accountability principles are there. The investment in designing those programs is still valid and we can build on them without compromising. These are two examples of things that we can do fairly quickly. They were put on the table at the first ministers meeting earlier this year.
It will be a challenge, but we believe there are ways of getting money out the door and with safe projects, advance payments are permitted by the current rules. That money will be out the door and we can show some real commitment to getting the job done.
[Translation]
Senator Ringuette: Good morning, Mr. Ranger. In your presentation, you described a list of projects that your programs have funded. I am asking a lot, but are the expansion and renewal projects for Winnipeg Airport part of the infrastructure program?
Mr. Ranger: The simple answer is no. I have been at Transport Canada for a very long time and we are very proud of the governance structure we have established for the 21 major airports. They have 60-year leases with the Government of Canada, they are independent and they have a lot of flexibility in setting the pricing needed to keep them independent financially. They have landing fees and also, of course, the famous tax paid by passengers. Because this funding is stable, they can make long-term investments and plan their infrastructure investments as a result.
So airports were not included in the list of eligible recipients, precisely because they have a model that, on balance, is working very well.
Senator Ringuette: So no airport in the country can take advantage of the infrastructure program.
Mr. Ranger: That is correct. But, on the other hand, the entire network of roads leading to an airport, for example, can be eligible and often is. But everything inside the airport perimeter is not.
Senator Ringuette: In recent weeks, there have been media reports that, since 2006, almost 75 per cent of the funds in 14 different infrastructure programs have been spent — perhaps I should say invested — in constituencies with Conservative Members of Parliament. This leads me to question the way in which the funds are allocated.
Could I ask you, if possible, to provide us with a list of the projects that received financial assistance from the 14 different programs and their specific locations? I am worried about those figures mentioned in the media, 75 per cent of the funds, that is, which could also lead us to question the approval process.
Where in this process do the various political players at federal level stand, the Members of Parliament, that is, and the minister responsible for approving the funds? We really have to ask about that. If we accept the fact, with the figure of 75 per cent, and looking at the amounts in supplementary estimates (B) and (C) to come and the amounts proposed in the new budget, that there is no transparency in the investments and that 75 per cent represents, shall I say, "preferential treatment,'' that is cause for alarm.
If possible, I would like you to provide this information so that the committee can see whether the reports are true.
Mr. Ranger: I am going to ask John Forster to answer your question from two perspectives: the incorrect facts and the importance of the process. I would like him to explain those two aspects of your question.
Senator Ringuette: Mr. Ranger, do you commit to providing us with a list of projects that have received assistance, as well as the specific locations for those investments?
Mr. Ranger: If that is what you are asking me to do, I will provide it to you. But it is going to be a very long list.
Senator Ringuette: That is fine, we like lots of projects.
Mr. Ranger: And the list gets longer every day. Last Friday alone, for example, 289 projects were announced in Ontario. The list is very long; I will see what we can send you.
Mr. Foster: Thank you; with your permission, I will answer your question in English.
[English]
There are two things. The communiqué that generated the media coverage looked at a select list of projects; it was not a complete list. A number of projects were not included in that analysis and we provided a more complete list to the critic. For example, the Spadina subway extension in northwest Toronto has a federal contribution of close to $700 million. It is probably the single largest project we have ever committed to. That project was not included in the analysis. That subway will go from part of the City of Toronto into the Regional Municipality of York. You have to look at the complete analysis.
Senator Ringuette: That is why I am asking for the list. You can break it down by province.
Mr. Forster: The list would be by province. I want to assure the committee that every project we fund and support is posted on our website. It is public; it is transparent; the information is there. We will continue to do that.
In terms of small community projects, as Mr. Ranger mentioned, the process is a joint process with the provincial government. Applications are submitted; both governments review the applications and there is joint approval.
For large projects under Building Canada, we work under a signed agreement with each provincial government. Since they are very large projects, we sit down and talk about priorities with the province. We identify projects that we hope to work on and do together. At the end of the day, the federal minister approves the project for the federal government and if the province commits to a similar investment, it is approved. That is the process we follow and we would be happy to send you a copy of that list.
In other elements of the Building Canada plan over one-half of this money, $20 billion of the $33 billion, are transfers to either cities or provinces. In these projects, the city or the provinces make the proposals. All of the gas tax money and the GST rebates go to municipal governments. That is $17 billion of the $33 billion.
Senator Ringuette: The transfer of gas tax has nothing to do with the investment in the infrastructure.
Mr. Forster: Yes, the gas tax is for infrastructure.
Senator Ringuette: It is for the 14 different programs.
Mr. Forster: Yes, it is managed under a signed agreement with the provinces or, in a few cases, with municipal governments, who choose the projects. We have no role in that process. They are allowed to spend it on environmental infrastructure and report back to us on how they use the money. We are not involved in the process for more than one- half of the $33 billion.
Senator Ringuette: This leads to my third and last question for the current round.
Given the various interveners in these programs at the federal, provincial and municipal levels, who prepares the audits of these projects?
David Cluff, Assistant Deputy Minister, Corporate Services and Chief Financial Officer, Infrastructure Canada: Generally speaking, the audits are done by either a provincial auditor or an independent, private sector auditor.
Senator Di Nino: To whom do the auditors report?
Mr. Cluff: The reports are tabled with the committee that oversees either the project, in the case of large projects, or the program, in the case of smaller projects. Copies of these audits are kept with our delivery partners and sent to us. In addition, internal audits are prepared within Transport Canada and the delivery partners such as Western Economic Diversification, ACOA and others — to ensure that the internal processes are appropriate.
Senator Ringuette: With regard to the federal funds for which you are requesting approval, does the Auditor General, Sheila Fraser, have the authority to audit the federal portion of these investments?
Mr. Cluff: Each year, the Auditor General audits the Public Accounts, including government infrastructure spending. As part of that review, Ms. Fraser prepares an audit of all spent money.
Mr. Ranger: There is no doubt that the Auditor General is heavily involved and, because of the magnitude of the funds, it is clear that she has a specific interest in the program. I speak to her regularly to seek her advice in a number of areas. There has been a great deal of concern about duplication. All the provinces are serious, sophisticated recipients of funding, do their own processes and the federal government follows up with a similar process. There are double audits on everything. We were asked how we could simplify that process and still have assurance that the books would be in order.
For example, if the Quebec Auditor General has performed an audit, Ms. Fraser is comfortable with that and it is good enough for us. However, an internal audit performed by a Quebec department only is not good enough. If the audit is prepared by the Auditor General of Quebec, we will accept it. When there is doubt, I consult the Auditor General to know whether she is comfortable with the process.
Senator Banks: Welcome, I will be brief because most of my questions have been asked. I would like to add a little emphasis, in particular to the alarm that was raised by Senator De Bané. I am not a regular member of this committee but I was many years ago and when we approved the expenditures under what came to be known as the sponsorship scandal. We approved those parliamentary appropriations for the expenditures mainly on the basis of an emergency situation that had to be dealt with quickly. Therefore, using your words, Mr. Ranger, we had to streamline the approval process. Those words strike fear into the hearts of some of us because Parliament is about nothing if it is not about money and approving government expenditures.
In response to Senator Callbeck's question, Mr. Cluff said the magic words: The Auditor General audits money that has been spent. Gentlemen, I have been asking the same question on this committee for many years. It is wonderful to make pronouncements and announcements in respect of all the wonderful things that we will do but it is quite another thing for the money to be spent on those well-intended things. It is the choke points with which we are concerned and so I would ask that, in response to Senator Callbeck's question, you be careful to include for our information how much of that money has actually been spent. For example, the Building Canada Fund will span many years but how much of that money announced has been spent to date. How much of it is in the ground and working? How much has jumped through the necessary hoops with respect to provincial and municipal cooperation and participation? It is the efficacy of the policy pronouncements and expenditure plans made with which we must sometimes be concerned.
Mr. Ranger: That is a very good question. Much of our money is committed in the form of contribution agreements signed and ready to go. Of course there has been an announcement but it is a contribution, not a grant. Therefore, we pay upon receipt of an invoice from the provinces. For example, if 20 per cent of the project is underway and the province has spent $22 million, they send an invoice and we will pay them back within 30 days. However, it takes quite a while to get a project started and the shovel into the ground. Perhaps we have not spent yet because the first bill has not come in.
From the numbers I will provide to the committee, you might conclude that money is not going out but that does not mean that projects are not underway. We will try to explain that.
Senator Banks: I understand but please understand that my request has nothing to do with money that is committed. Rather, it has to do with money that is spent, which is quite a different matter.
[Translation]
Senator Chaput: I have two very quick questions for you. My first question deals with projects in communities of fewer than 100,000 people. You have already accepted projects of that kind and I was wondering if there was a specific amount for small communities or whether it was just a function of the projects you receive.
How many projects do you have to date? And do the projects also need a 50 per cent contribution from the municipality or the province?
Mr. Ranger: In each province, we identified a minimum amount that had to be set aside for municipalities of fewer than 100,000 people. Some provinces, Quebec, for example, decided to set aside more than the minimum.
The reason we established a minimum for small communities is that we did not want all the money going to large cities.
Within that amount, municipalities submit their requests. There is a process to sift through everything and establish priorities. As a general rule, we require one third from the municipality, one third from the province and one third from the federal government.
Senator Chaput: You told us about the Building Canada plan. If memory serves, in 2008, our committee discussed the fact that a portion of the funds were set aside for something called PPP Canada, the Public-Private Partnership Fund. In Building Canada's total of $33 billion, are some funds still set aside for PPP Canada? If so, are the funds still administered by the PPP Canada office, or do you administer them?
Mr. Ranger: The Minister of Finance is responsible; it is a new crown corporation. The corporation has just recently been established with the appointment of a new president and a chairman of the board. To my knowledge, all the money is still there.
Senator Chaput: What percentage of the $33 billion?
Mr. Ranger: $1.25 billion.
Senator Chaput: That is now in what is called the PPP Canada fund?
Mr. Ranger: Yes.
[English]
Senator Nancy Ruth: My question is about equity and infrastructure. Are the parties to the contribution agreements, particularly the provinces and the federal government for infrastructure grants, covered by the Federal Contractors Program with respect to employment equity and if not, why not?
Mr. Ranger: I would have to seek advice on that question. I cannot answer your question entirely, but as I said in my opening remarks, the provinces or the municipalities deliver those projects. They are the OPI, the office of primary interest. They sign the contracts with contractors and they do the bidding processes and so on. It is, to my knowledge, governed by the provincial regulations.
Senator Nancy Ruth: Is it true that the Ontario Ministry of Labour and the federal government have obligations around the federal monies that are contracted? How do you ensure that those things are happening?
Mr. Ranger: Unless John can help answer that question, we would have to come back to you on that question.
Senator Nancy Ruth: Another way to put the question is why should we put out billions of dollars without employment equity being in effect? That is really the nub of the question. I am wondering how that is happening and I would be happy if you could get back to me if you cannot answer it now.
Mr. Ranger: We will.
Senator Nancy Ruth: My second question also has to do with equity and the building of these physical assets likes Banff, the cultural centres in Montreal or the Spadina subway. I am from Toronto so the subway is of particular interest to me.
The issue of mobility, especially for those who are disabled, blind or whatever, is a huge issue in large cities. How do these monies help guarantee standards that we have in our Charter and other places so that there can be equal access for all people?
Mr. Forster: When we look at projects under the Building Canada Fund — again, it is not so much with gas tax, which is a transfer to the municipal government — where we are involved in selecting the projects, one of our standard criterion for all the projects is that any building or transit system has to be accessible to disabled persons. The projects have to meet the national standard.
Senator Nancy Ruth: This also has to do with timing. This has more impact on subway systems because many people who have these equity issues need mobility and transit in off-peak hours. I know this is not your jurisdiction, but I am always looking at the way federal monies are spent, where there is no push to the other levels of government to force them to get their act together.
If I could add, before you go on, Mr. Forster, on the $17 billion through the GST and gas tax, there is no control over municipalities in how that is spent, right, even on these equity issues?
Mr. Forster: On your first question, we do not condition our funding for the capital construction of a project to how the city operates its transit service. It is not an area of federal jurisdiction. We attach some conditions to the construction of the project to ensure that it is accessible to disabled persons, but we do not involve ourselves in the running of the service. That would be up to the province or municipality.
The transfers to municipal governments occur in two ways. One is a rebate on the GST. There are no strings attached to that transfer; municipalities can spend it however they wish. On the gas tax, which is a large portion of Building Canada, it is done through an agreement with each province. There are conditions about which categories of investment are eligible. It is focused on green infrastructure, environmental infrastructure. The money flows to the municipal governments each year. They choose the projects and then report back to us on how they spent the money.
Senator Nancy Ruth: I am also concerned about jobs for women. I went into a law office in Toronto last week. It was a smaller law office without a receptionist. The sign on the receptionist's desk said "ring bell,'' and a law clerk came out to get me. I thought that is another missed job for a woman.
Women are quite able to administer in the construction business or work machines et cetera. These women need to be protected and there must be some employment equity kick-in built into these projects.
Mr. Ranger: A number of areas are triggered, which is actually the subject of ongoing discussions. For example, all the federal environmental requirements are by our own regulations. We will try to give a more complete answer in writing on those issues.
Senator Di Nino: I would like to discuss the website with which I am familiar. Senator Ringuette asked you for some information and I have been getting some information from my own sources. It is very bulky and extensive. I like the idea, to the degree that is possible, of a reference website so we can obtain the information that we need; otherwise, we would be cutting down forests on a daily basis.
Is the website user friendly?
Mr. Ranger: That is a loaded question, is it not?
Senator Di Nino: It is. If we are going to save forests, we want to ensure that this information is easily accessible to us.
Mr. Ranger: I believe what we have is the very latest architecture. Is it not?
Mr. Cluff: The key question is the user. The website, as mentioned, contains copies of all of the press releases, which are the indication of the announcements of projects. If you were looking for answers, for example, to the type of question we were asked about who does the audit or how much have you spent, et cetera, you will not find that on the website yet, so there are limitations to what you can get from that source.
Senator Di Nino: I would be most interested in what Senator Ringuette was asking for because it is useful to one of us who must respond to inquiries. We need to know an amount that has been committed, an amount that has been spent, an amount that is still outstanding and maybe some commentary if there is an issue that requires some commentary. I would imagine that it would be updated regularly and I would think that it would be a very useful for us to look at. We may want to print part of it or not.
I think that is the type of information that we are looking for. Is that type of information easily available on these websites?
Mr. Cluff: No, it is not available on the website.
Senator Di Nino: Then I think Senator Ringuette is absolutely right: You will have to give us mountains of paper and I am sorry to hear that.
The area I wanted to pursue was the recognition, which is almost global recognition. It is "global'' not only from a national standpoint but from a worldwide standpoint. We need to get this money out as soon as possible if we are to stop the bleeding of jobs that will create some enormous problems for our country and, indeed, the world.
I want to have a general feel from you people as to how that is proceeding. Specifically, I want to ask about the Spadina subway line. Have we started; have the shovels gone in?
If not, I know announcements have been made and the symbolic shovels have gone down and created some activity. However, have the real shovels gone into the ground? Can you give us a bit of update on that?
Mr. Forster: Regarding the Spadina subway line, we made our initial instalment of $75 million the spring of 2007. That was done through the Public Transit Public Trust. Therefore, they received an advance, if you will, for Spadina through that trust fund.
We did our due diligence and our environmental assessment. We signed our contribution agreement; that was done last year. However, we do not manage projects. We do not build anything. I hate to say it as a part of an infrastructure department, but I do not actually build anything. I help other people build things.
The speed at which that project advances is not within my control. The City of York and the City of Toronto have the responsibility to build the project. Once we have signed an agreement and as they built it, we reimburse for costs incurred after the fact. They will send us a bill every month stating that they spent $20 million this month and the federal share is one third. Therefore, we owe them $7 million and that is how we pay.
Senator Di Nino: That is the concern that I have, Mr. Forster. Having regard to the comments made by two of our colleagues — namely Senator Callbeck and Senator Banks, with Senator De Bané starting it — the proper accountable expenditure of public funds must always be number one.
If we, as a Parliament, are to assist the government in its role to create stimulus in the economy, we must not be concerned with your response but what your response tells us. We have $700 million. It feels good. We will put $700 million into the Spadina subway line, which also is very important to relieve congestion in the City of Toronto where I live. You are saying, "Well, the other guys have to be responsible for this.'' Maybe we should play a bigger role in that. Is there anything that we can do to say to these people, "If you cannot spend it now, we will give it to someone else who can and come back to us when you are ready and we will see if we can help you then''?
Mr. Ranger: As you know, that is very much the spirit of the new funds — the Infrastructure Stimulus Fund and others. It is a "use it or lose it'' principle with the first two questions being is it shovel-ready and can you do that project in two years? If the answer is "no,'' there is no other question and we would move on to something else.
However, the budget also goes further and indicates that, if the money is not being used during the course of the two years, the government reserves the right to take that money and move it elsewhere, whether in that province or in another province.
Senator Di Nino: That is only for the additional money we have just put in but not for all the money in the Building Canada Fund.
Can you please give us an update on the expenditures that have been approved for the border infrastructure — particularly of the Windsor-Detroit Bridge?
Mr. Ranger: One of the funds is the Gateways and Border Crossings Fund, which is not distributed on a per capita basis but on merit. There is no doubt that if there is a priority in this country it is to this new bridge, including the access road in which the province is very much involved. The government has already committed $400 million to the access road; that money that has been set aside for that project.
As to the bridge itself, it is well known that we would like to pursue a public-private partnerships (PPP) model, working with Michigan. That, too, is very advanced and we are just coming to the end of a three-year environmental assessment process. There will be a selection of a final location for the bridge. This is at a very advanced stage and we are in the middle of discussions in acquiring land. The City of Windsor owns much of the land we need. That is proceeding very well. There is a lot happening in that area.
Senator Neufeld: Streamlining does not bother me. I come from a province with a government that actually put in place a deregulation ministry that had a target stating that 35 per cent of needless regulation had to be gone within a number of years. We actually hit 40 per cent and, as a minister, if I came in with a new program and needed some regulation to put it into place, I had to figure out where I could take some regulation somewhere else.
Although that can introduce some pitfalls, I agree with you when you say we have to work quickly and cooperatively with provinces and the federal government to get this money out, as Senator Di Nino said. We want to actually get the money on the ground before things start picking back up again. This is an idea to get jobs happening.
Duplication really bothers me. I have two questions. You said it is good enough for you if the Quebec provincial auditor audits the program. Does that apply to all provinces and territories?
Mr. Ranger: Yes.
Senator Neufeld: My second question concerns environmental duplication. I appreciate environmental work must be done. Is your department working with the Ontario Ministry of Natural Resources in actually accepting the environmental work that a province does so that when a province does the environmental work for a project, it is accepted by the federal government rather the government redoing it?
I will be frank with you: It happens and it is happening now. It is not acceptable to me. We live in the province, we actually have people that know the province and have a pretty good understanding of what they have to do. I do not think there is any need for the federal government to come in and redo some of those things.
A project in my community was held up for a whole year because of that. I am not saying the ministry does it needlessly, but we certainly are looking at how to eliminate some of those roadblocks. I want to get the money on the ground. I know people who are not working in British Columbia that need to be working and there are projects I believe are shovel-ready now if the provincial standards are accepted.
The Chair: Before you answer, could I ask Senator Eggleton to put his question on the record as well and maybe you can handle all the outstanding questions.
Senator Eggleton: My question is a supplementary to Senator Di Nino's with respect to the Spadina line in Toronto.
At least two prime ministers and several ministers have announced the federal support for it several times. What I am hearing this morning is that the federal money is assured and then you wait until the invoice comes in before any money goes out the door. Surely you must do something to track these things. This was a major announcement and commitment. I do not think it is good enough to say that you wait until the invoice comes in the door.
I am not looking to cast any blame on anyone at any level of government, but it has been kicking around for some time now through several announcements. Is the municipality unable to put the money together to proceed or is there a difficulty with the provinces in terms of an agreement? Where does it stand? What is your understanding of when it will get going?
Even if you do not have the responsibility to put the shovel in the ground, you are holding federal money that is a key part of this project and you should know when that will happen.
Mr. Ranger: The question of avoiding delays or duplication during environmental assessments was referred to in the budget. The lead is the Minister of the Environment who has clear powers to exempt or exclude classes of projects. We have the advantage of having been in this business for a number of years now. As we look back to all the projects and all the EAs we have done, we ask: Was it necessary to do all the EAs in each case?
We have some evidence to conclude that it was probably not. If your question is whether we are working on this, the answer is that we are. We are burning the midnight oil on that particular issue to see how we can avoid duplication without compromising the project.
Work has been done at the provincial level. For example, on the complex urban transit projects, the provinces leading those projects are sophisticated in their own evaluation. When you look back, in most cases, all our requirements are met through a provincial process. Therefore, why duplicate it? We are very aware and trying to deal with that directly.
With regard to the Spadina line, I do not want to put John Forster on the spot again. The question keeps coming up. Once a contribution agreement is signed, some detail design drawing is still to be done. Environmental assessments come into the picture. Yes, we are talking to the provinces.
Mr. Forster: In terms of the Spadina line, there are two things. As I mentioned, through the transit trust that was announced, $75 million went up front to the provincial government in 2007. They have had federal money on the table for some time.
In terms of the project itself, we can provide to you a written assessment. We have a management committee for every major project where we have a funding agreement. We have a joint committee to track the progress of the project. However, as I said, we are not the construction managers. I do not think the federal government should be building subways. It is not something we are necessarily good at doing. The City of Toronto, the Regional Municipality of York, the TTC and the province are the construction managers. They have issued a number of tenders; they are doing their test drilling for the tunnelling machine; they have issued RFPs for the tunnelling machine; they have issued tenders for contracts; and they are doing their detail design and engineering work for the project. We can provide you with a more detailed, accurate update on the exact status of construction.
Senator Eggleton: That is a better answer in terms of what you have provided, but also I would like the written report. I think we need to know what is happening since there has been a large federal commitment.
The Chair: I agree wholeheartedly. There have been statements in the media, as Mr. Forster pointed out earlier, where the institution is sometimes misrepresented and unfairly treated. As another institution that, from time to time, is misrepresented and unfairly treated, we are sympathetic to your situation.
Unfortunately, we have run out of time. I have four people on my list for the second round, but I would ask for an undertaking from Mr. Ranger and his team to come back. We are dealing with Supplementary Estimates (B) now. We have Supplementary Estimates (C), Main Estimates, interim supply and budget implementation all coming forward in the next while. Therefore, if we could ask you to come back for one or more of those items, it would be helpful.
Mr. Ranger: If I may make two points as a closing remark. In my portfolio, there are two departments: Infrastructure Canada and Transport Canada. I appreciate that you have four dark suits in front of you. At Infrastructure Canada, there are three assistant deputy ministers — two are men, one is a woman. At Transport Canada, there are six deputy ministers — two are men, four are women. I am proud of that. I feel on balance, we are doing okay.
[Translation]
I am sorry, I mixed up Senators Ringuette and Chaput because of the position of the cards.
[English]
The Chair: We look forward to receiving the information you have agreed to provide for us.
This second panel is intended by your steering committee to be the last hearing that we will have on Supplementary Estimates (B). We have the Treasury Board Secretariat with us here again to help in that regard. They will be back tomorrow evening to assist us in our examination of Supplementary Estimates (C). As well, we hope to look at the report of committee tomorrow evening. We expect to have that report completed in draft form this evening and circulated to committee members' tomorrow morning as soon as we can get the translation done. Mr. Beaumier has done a great job in putting together the early part of the draft report. Your steering committee has seen it and today's hearings will be incorporated into it. I would hope that we adopt the report at tomorrow's 6:30 p.m. meeting. The plan is to table it in the Senate, debate it on Thursday and, hopefully, adopt it then.
All members are aware that before we can do the appropriation bill that flows from Supplementary Estimates (B), we must have our report completed, so we are under a bit of a time constraint.
My other preliminary comment is that during the earlier session we had on an overview of the supply process, one comment was made in the other place that the budget implementation document would be done by the end of March but that is not necessarily what might happen in the Senate. As you know, we are masters of our own institution and we will handle budget implementation when we receive it.
This is not in any way intended as an adverse reflection on Mr. Pagan and his presentation as he came on very short notice to provide us with this background, but this document is somewhat House of Commons-centric, if I may.
We do not vote on the budget in the Senate and we do not vote on supplementary estimates. Rather, we vote on the bills, which are not referred automatically to the Senate. There is a process to be followed after which we vote to send them to this committee.
Another point is that we do not deem acceptance of the estimates in the Senate if we do not report back by a certain time. Until this committee is ready to report back, they remain with this committee.
There are differences between the House of Commons and the Senate that I picked up during the briefing, and there may well be others. I ask that you bear in mind that this is a distinct supply process that is dealt with differently in the Senate than it is dealt with in the House of Commons.
Are there comments?
Senator Banks: You are exactly right.
Senator Di Nino: We always work as diligently as possible to ensure that we report these matters in an efficient time to facilitate the objectives of the proposed legislation.
The Chair: Absolutely, and we do it in a bipartisan manner.
Senator Di Nino: Yes.
The Chair: We understand the importance of supply to the entire government process.
Senator Di Nino: Exactly.
The Chair: Mr. Smith, do you have additional introductory comments? We heard from you at last week's meeting and you will be here tomorrow as well.
Alister Smith, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: We have replied to the Treasury Board questions from the last time we were here and we have asked other departments to reply in respect of other questions. I have seen one or two of them but I am not sure if they are all in yet, although I am hopeful.
The Chair: I am told by the clerk of the committee that certain questions and answers were received in both official languages and were distributed yesterday to the offices of members. Senators here today as substitutes for regular members might not have received them, for which I apologize.
Senator Ringuette: Perhaps I did not receive one of the documents because they do not include responses to the questions that I put forth in respect of buying back of insured mortgages.
The Chair: Was this intended as a fulsome, complete document?
Mr. Smith: I believe that the Department of Finance was asked for a response to that question. They should respond directly to the committee.
The Chair: It was to the Department of Finance.
Senator Ringuette: We did not ask the Department of Finance the questions.
Mr. Smith: We referred the questions that are under the mandates of various departments to the respective departments, such that Public Works responded directly and the Department of Finance was asked to respond directly.
The Chair: Could we ask Treasury Board to use its good offices to follow up on that for the committee?
Mr. Smith: We will do that.
Senator Ringuette: It has been 10 days. This involves an enormous amount of money, possibly the biggest spending item.
Senator Di Nino: It is not a spending item but an investment, if you wish.
Senator Ringuette: This committee needs more information about this priority item before our report is tabled in the Senate. I think that given the amount of money under consideration, the Department of Finance would not take more than 10 days to make the information readily available. Instead, it should have been available to us within 48 hours, at the most. Otherwise, it begs many more questions.
Mr. Smith: We will double-check on those replies as soon as we get back to the office.
The Chair: Understanding the importance of supply in the cycle, it would be helpful if you could expedite that reply. Senator Ringuette makes a good point.
Mr. Pagan, do you wish to take issue with my comments about your presentation?
Brian Pagan, Executive Director, Expenditure Operations and Estimates Division, Treasury Board of Canada Secretariat: Not at all, senator. I recognize the distinct nature of the House of Commons and the Senate such that each has its rules and procedures. The presentation was very much an overview of the parliamentary process, writ large. I concentrated on the supply periods that are determined by the Standing Orders of the House of Commons.
Slide 8 in that overview of the parliamentary process made it clear that upon tabling, Main Estimates and supplementary estimates are referred to the various standing committees of the House of Commons and to the Standing Senate Committee on National Finance, which looks at the estimates in their entirety. I made that point in my speaking points.
The Chair: In fact, at least two votes are referred to another committee. Not all of the estimates come to us each time. It is not all, but virtually all of the estimates.
I believe that the Official Languages Committee and the Joint Committee on the Library of Parliament look at the estimates for those issues.
Senator Callbeck: I understand that we are able to ask questions on this overview.
The Chair: Absolutely.
Senator Callbeck: I am a new member of this committee, and I want to clarify something: When you say the committee may approve, reduce or not approve a budgetary item, we cannot increase it, but we can decrease it. If we decrease it in this committee and it goes to the Senate and it is passed, it has to go to the House of Commons to be passed before the budget can be approved; is that correct?
Mr. Smith: Are you referring to the budget or a supplementary estimate?
Senator Callbeck: I am referring to either.
Mr. Smith: That is a good question. I believe that would be the procedure but perhaps Senator Day would have a better answer for that question than we would have.
The Chair: This committee makes recommendations to the Senate as a whole, and it is the Senate as a whole that makes a decision on the recommendations of this committee.
Senator Nancy Ruth: If we object to something.
The Chair: We put it in our report.
Senator Nancy Ruth: And if it is accepted by the Senate, then what happens? Does it go back to the House of Commons?
The Chair: Absolutely. That is the process.
Mr. Pagan: By convention, the Senate does not normally change money bills coming from the House of Commons.
The Chair: By convention.
Mr. Pagan: You can, but by convention, money bills are not normally changed by the house. This is something that the Privy Council and the House leader's office would be more comfortable with in terms of the legislation.
Senator Nancy Ruth: It could cause a general election. That is why we are asking.
The Chair: On a point of order, Senator Di Nino.
Senator Di Nino: I think the confusion is one that you identified at the beginning. If we are to use a document, which I think is a useful document that was prepared by our witnesses, I think it should be amended to clarify the role of the Senate, because others will see this and it will create confusion. The document, as useful and informative as it was, needs to be changed to reflect the authorities and the role of the Senate in this process.
The Chair: We have already gone on record as indicating that this is more a House of Commons-oriented document and it is helpful to us.
Senator Di Nino: If you are going to have it, either that or scrap it. I do not want it sitting around somewhere.
Mr. Pagan: I will try to dispel any confusion. The presentation this morning was intended to be an introduction to the estimates and supply process, which is quite a complicated and arcane procedure that involves distinct procedures of both the House of Commons and the Senate. It was not intended as a briefing on how the Senate should review the estimates or what your committee should or should not look at. Those instructions and directions would come from your researchers.
It is a general overview to situate the estimates in the context of parliamentary procedures for approval of spending. We would be happy to work with you to clarify particular roles of the Senate, but that lead would, I think, not come from the Treasury Board Secretariat.
Senator Callbeck: The other question I have regarding your paper concerns departmental performance reports. I assume that compares the budget with the actual, for every department. That comes in December, so is that for the end of March 31?
Mr. Smith: Correct, the previous fiscal year that ended March 31. It compares planned spending, which is in the reports on priorities and planning — the RPPs — with actuals in the DPRs. It looks at performance in general for all the programs in the departmental program activity architecture.
Senator Callbeck: In the Supplementary Estimates (B), on page 100, there is more money for the Food Inspection Agency. Is any of that money to cover information and technology equipment that the Auditor General spoke about in the report that was produced in December?
Mr. Smith: We will see if we can extract that information from our Supplementary Estimates (B) binder.
Mr. Pagan: I am not familiar with the report you refer to in December, but you will see on page 100 —
Senator Callbeck: It is in this report on page 16. It says that the information management and technology programs are not adequately supported. It goes on to say that this was brought up before, as far back as 1996.
Mr. Smith: The question is whether this is now reflected in Supplementary Estimates (B). We will double-check that. If we cannot find an answer now, we will come back to you with an answer.
Mr. Pagan: I am referring to the Supplementary Estimates (B) document that was tabled January 29. In my presentation earlier today, I explained that estimates are essentially in three parts. There is an introduction, there are summary tables at the beginning, and then there are details by ministry and department. The Food Inspection Agency is a very good example to look at because it is brief.
You will see four elements of that detail by department. Beginning on page 97, you have a ministry summary, so everything in the Agriculture portfolio is presented by vote and amount.
When we turn to page 100, we will see three distinct sections: an explanation of requirements, of which there are two line items here; funding related to advertising programs, which is a horizontal initiative of the government; and funding to provide greater support for Crown agents across Canada. Then you have a section on funds available within the vote — there is an explanation of that at the bottom of the page — and then finally, transfers. Transfers can be internal to the department between votes or external to another department if it is deemed more efficient to collaborate with another department. That structure exists for every department.
In answer to your question regarding information technology referred to by the Auditor General, no, there is not a Supplementary Estimates (B) requirement identified by the Food Inspection Agency to address that issue.
Senator Callbeck: I have a question on page 102, regarding ACOA. There is another $11 million to the business development program. Is it possible to get a list of what makes up that $11 million?
Mr. Pagan: Yes, absolutely.
Mr. Smith: We can ask for that list from ACOA.
The Chair: I have two other people on questions, and we have not started with the main purpose, which is an explanation of vote 5. We want to go through that because it is important for us to understand that.
Senator Banks: Chair, can we go to the question of Treasury Board vote 5 before we do anything else?
The Chair: There is a handout, I understand, with respect to Treasury Board vote 5, which came up at our last hearing. We thought we should have a clearer explanation of Treasury Board vote 5 for our committee, and how the application of the rules of Treasury Board vote 5 apply with respect to Supplementary Estimates (B). If you could take us through that, that would be helpful.
Mr. Smith: Certainly. I apologize for the delayed circulation of the French version. Our computers were down this morning and late last night.
I will be happy to take you through this brief presentation. If you turn to page 2 of the deck, I will wait for everyone to get a copy.
The Chair: My colleague from the Library of Parliament points out that I should be using the term Treasury Board Secretariat vote 5.
Mr. Smith: No, I do not think so. It is TB vote 5.
The Chair: It is always good to sort these issues out. As we are having the documents circulated around, I believe colleagues will also have received a document that is a bit dated. It is from June 6, 2002. It is a report of this committee when we first looked into this issue and when Senator Murray was chair of this committee. Many of those recommendations were accepted and implemented by Treasury Board.
Mr. Smith: Indeed they were.
On page 2 of the deck is the outline. I would like to set out the history that you started on, Senator Day, on the nature and use of Treasury Board vote 5, the actions we have taken to date, the status and approach to Treasury Board vote 5 that we have implemented and some of the implications surrounding the use of the vote.
Turning to the next slide which is the history and context, as you know, no expenditure can be made without Parliament's authority. Parliament has approved two exceptions to this fundamental principle. One is Governor General special warrants, which we use during periods of dissolution, and Treasury Board vote 5, which is government contingencies.
The Chair: Senators will recall that during at least one of the elections, perhaps between the end of Mr. Martin's regime and the beginning of Mr. Harper's, that this Governor General Special Warrants was used. I do not want to say it was used "extensively,'' but it was used.
Mr. Smith: That is correct.
Senator Di Nino: It was used correctly.
The Chair: Absolutely. Did I imply otherwise?
Senator Di Nino: We are on the public record. It was important to note.
Mr. Smith: On slide 4, we continue with the history. There has been a government contingencies vote since 1876. The vote is intended to provide temporary funding to departments for urgent and unforeseen events between supply periods.
Mr. Pagan went through those. A variation of the current vote wording has been in existence since 1964. The use of TB vote 5 is intended as a temporary allocation that is repaid upon approval of their supplementary estimates by the department asking for the funds. That is important. It is like a line of credit, in other words.
You will recall that this temporary allocation can be required — given what Mr. Pagan was talking about earlier with the three supply periods — when we are caught in between these periods.
Page 5 lays out that Treasury Board vote 5 is recognized as an extraordinary instrument for expenditure approval and its use has been regularly reviewed by the Auditor General. The AG's comments have included concerns in the past that the Treasury Board vote 5 was being used to make payments before receiving Parliament's approval; the overly-broad wording of the vote was susceptible to wide interpretation; and there was a need for Treasury Board ministers to formally approval guidelines on the use of Treasury Board vote 5.
Slide 6 lays out the action we have taken to date. We have had extensive consultations with the Office of the Auditor General, OAG, with departments, with TBS management and parliamentary committees. We introduced revised vote wording in fiscal year 2006-07.
We also separated two elements from the old TB vote 5: one was the carry-forward, the so-called OBCF, the Operating Budget Carry Forward, and the pay list requirements, which had been lumped in with other contingencies in TB vote 5 and arguably made it less transparent. Therefore, we have actually extracted those other elements and made them separate central votes. Additionally, we have approved new guidelines for access to Treasury Board vote 5.
We believe we have responded to the concerns of the OAG and the Standing Senate Committee on National Finance with regard to the use of TB vote 5 by introducing the revised wording, creating those two new central votes and having TB ministers formally approve guidelines on the use of TB vote 5.
The revised vote wording now serves as the governing conditions of vote 5 use. It includes the conditions ". . . to supplement other appropriations to provide the government with sufficient flexibility to meet urgent and unforeseen expenditures where a valid cash requirement exists . . . .''
You will see this language in every supplementary estimates document that we bring forward.
The new guidelines approved by Treasury Board ministers require that a valid and compelling reason exists, particularly as it relates to the payment of grants, as to why payment needs to be made before the next supply period. If not, the payment should be deferred and access to Treasury Board vote 5 denied.
Therefore, these new guidelines, which again are reproduced in our supplementary estimates documents, respond to this committee's recommendation that Treasury Board adopt a formal policy or guideline governing the use of TB vote 5 for grants. I think we have quite comprehensively responded to the committee's recommendations.
The status on the following slide is that we have protected the integrity and transparency of TB vote 5 by limiting it to government contingencies and moving out the other two elements — the carry forward and pay list — and we have improved the governance of this through the formal adoption of guidelines by Treasury Board ministers. Therefore those represent the remaining commitments that we had to the OAG, the AG and to this committee.
Finally, just to reiterate, we believe we responded to the concerns through the introduction of the revised wording, the creation of the two new central votes and the formal approval of guidelines for TB vote 5.
The Chair: We may well have some questions, but do you intend to go over page 70 of Supplementary Estimates (B), the various applications of that TB vote 5?
Mr. Smith: We can do that if you would like.
The Chair: Please explain how they fit into the "meet urgent and unforeseen expenditure'' test.
Mr. Pagan: Before going through a list, I will point out to the committee the four different places in the Supplementary Estimates (B) document where you can find information about TB vote 5. One is on page 56. I mentioned the proposed schedule to the appropriation bill. Any time there is a change in vote wording or a change in the amount of a vote, you would see this reflected in the appropriation bill. It is not in the appropriation act because there has been no change to the vote wording of TB vote 5 and no change to the amount; it would be in the appropriation act or the schedule for the appropriation act for the Main Estimates. That is for future reference so you know where to find the vote wording. It is in the proposed schedule.
The Chair: In the Main Estimates?
Mr. Pagan: Yes.
The Chair: Unless there has been a change?
Mr. Pagan: Correct.
You mentioned page 70, which is one of the summary tables on the allocation of central votes. On page 21, there are also the explicit four criteria that Mr. Smith referred to. Finally, there is vote wording on page 200. You would see under Treasury Board Secretariat that it is a central vote under Treasury Board Secretariat, TB vote 5, government contingencies, your vote wording and your amount of $750 million. There is no change in the appropriation and therefore it remains constant from the Main Estimates.
On page 70, which is the summary table of allocations from this central vote in these Supplementary Estimates (B), there were, in fact, two allocations made by ministers in the supply period. The first deals with payment to Nova Scotia in respect to the Crown Share issue. We spoke to that item in our last appearance. You will see a brief explanation as to why Treasury Board ministers considered it important to advance money on July 13, 2008.
The signing of an agreement between Canada and Nova Scotia concluded negotiations with the province that had been ongoing for many years. The Department of Finance required the authority to pay the province at that time in order to alleviate the risk surrounding ongoing and delicate negotiations related to that file.
The Chair: Was your test "urgent and unforeseen'' to protect the delicacy of ongoing negotiations in the file? Is that what you said?
Mr. Pagan: That is right. The ministers determined that —
The Chair: There may be some questions on that issue. I simply want you to apply the test of "urgent and unforeseen'' if you would.
Mr. Pagan: With respect to the second allocation from this vote, the Public Service Labour Relations Board, since 2003, and the introduction of new legislation has had an increase in responsibilities and resources required. They have been funded on an annual basis through the budget. As we discussed earlier today, there can be a disconnect between the timing of the budget and the Main Estimates. That particular agency found itself with an approved increase in responsibilities but beginning the year without the resources to match that level of responsibility. Since 2003, the agency received that funding in supplementary estimates. With the delay to the Supplementary Estimates (B) timeline this year, due to the election, there was a requirement for the department to supplement its existing appropriations in order to carry out responsibilities assigned by ministers.
Senator De Bané: However, in relation to your observation about "unforeseen'' items, he said this has been going on since 2003 and therefore, there is nothing unforeseen.
The Chair: You make a very good point and I think there will be a number of questions that will flow from this presentation. However, we asked the witnesses to make a presentation based on how they use vote 5 according to the rules. Therefore, they will give their presentation and then we can ask questions. Mr. Pagan or Mr. Smith, have you finished your analysis?
Mr. Smith: I will draw the attention of members to the criteria to elaborate a little more.
The criteria are on page 22. "All advances from the Government Contingencies Vote should be considered temporary advances to be covered by items included in subsequent supplementary estimates . . . .'' "An organization's existing appropriation must be insufficient to cover both existing requirements in the new initiative until the next supply period.'' "A valid and compelling reason exists, particularly as it relates to the payment of grants . . .'' "For grants, the transfer payment policy must be consulted and followed . . . .''
Those are the specific criteria that Treasury Board ministers look at when they are approving access.
The Chair: Could you tell us whether those specific criteria are the wording of the use of vote 5 or rather Treasury Board's interpretation of the actual wording of vote 5?
Mr. Smith: Those are the specific criteria that would be applied here consistent with the wording on voting.
The Chair: The vote wording is what has been approved by Parliament.
Mr. Smith: Yes.
The Chair: This specific criterion that you referred to on page 21 is Treasury Board's interpretation of what Parliament has passed.
Mr. Smith: It supplements it. For any particular approval, Treasury Board ministers would look at these criteria in addition.
The Chair: I do not see the words "urgent and unforeseen.''
Mr. Smith: No, but these would be beyond that. For example, an existing appropriation must be insufficient.
The Chair: Therefore, "urgent and unforeseen'' still apply in addition to these.
Mr. Pagan: The vote wording sets out the legal parameters, that is, what you can and cannot do with the vote.
The Chair: Which is on page 70.
Mr. Pagan: Correct. The criteria that Mr. Smith is referring to at page 21 are the formal guidelines adopted by Treasury Board ministers. They are not our own interpretation; they are four check lists, if you will, that departments must respond to when they make a request to Treasury Board for access to vote 5.
These have been formally communicated to departments. They are posted on our website. If a department anticipates a requirement, it fills out a checklist and responds to us explaining why this is a temporary advance, why existing appropriations are insufficient and provides a cash flow analysis. The department articulates the valid and compelling reason why the payment cannot wait until the supply period. We spoke about the restrictions of the supply period in the presentation this morning. The department also articulates how the payment will be in accordance with the transfer payment policy.
Each request that comes forward is assessed against those criteria. Some, quite simply, do not pass the test and they do not find their way into supplementary estimates. We tell departments to defer the activity and wait for supplementary estimates. Where it is deemed that they do meet the criteria, those are brought forward to ministers for their approval.
Senator Nancy Ruth: Can you give us stories? Tell us what has been approved and what has not been approved.
The Chair: Are you referring to Senator De Bané's question?
Mr. Pagan: Yes, correct. Senator De Bané suggested that the Public Service Labour Relation's Board requirement was not unforeseen because this has occurred since 2003. It is a fair point.
The distinction or subtlety here is that they had received their funding through an announcement in the budget. As we explained this morning, because of the proximity to the budget and Main Estimates, it is not always possible to include the budget initiatives in the Main Estimates. The department started the year with less funding than the government has actually provided in the budget.
They have previously been able to access that funding through supplementary estimates without incident. Therefore, there has been no call or requirement for a call on the vote. This year, because of the circumstances around the general election, the supply for Supplementary Estimates (B) was expected to be delayed. The department provided a cash flow that satisfied us they would run out of their authorities from Main Estimates before they would get supply from Supplementary Estimates (B). That is the reason ministers agreed to top up their appropriation in the amount indicated.
That is an example. Of course, there are 132 appropriation-dependent entities. Each has their own particular mandate, story and circumstances, so each case is different. However, the criteria are the same. Those four guidelines, approved by ministers in May 2007 were conveyed to the Senate, the Public Accounts Committee and the Auditor General to ensure that everyone is aware of the guidelines we are using. Those are regularly reproduced in estimates documents so that everyone understands the applied guidelines.
Senator De Bané: We were talking about unforeseen events and we were saying that this has been going on since 2003. Your question, Mr. Chairman, inspired me to ask where we would find the "unforeseen'' if it has been going on for five years.
The Chair: We have been assured by Treasury Board that the Treasury Board minister's four criteria are based on the overall test that Parliament has passed, which requires flexibility to meet "urgent and unforeseen'' expenditures. That is the overriding point that is always there. We have been assured that is followed and these criteria are simply a manner of applying that.
Senator De Bané: This is a tribunal with a new mandate since 2003 and we see vote 5 is still in use five years later.
Mr. Smith: "Unforeseen'' in this case applies to the interruption in the supply process this year and the situation it left this tribunal in. I do not think they could have planned that.
Senator Ringuette: Should not the base budget for that unit be adjusted and reflected in the Main Estimates instead of using the vote year after year? It is a matter of good management skills to recognize that a department needs more money to operate after they have repeatedly asked for more money. Why is their base funding not adjusted accordingly?
Mr. Smith: Senator Ringuette, you have raised an excellent point. In this case, the mandate had expanded. The existing funding was suitable for the old mandate but not for the new mandate. Therefore, it was addressed in the budget. New funding was to be provided but we got caught up in the supply cycle and they have been running out of cash. They did not have enough to cover their new requirements under the Public Service Labour Relations Board.
Senator Ringuette: It is simply a shuffle of the various responsibilities of other units and being reorganized under this one.
Mr. Smith: Your point is well taken, which is that these organizations need predictable long-term funding so that we do not get into this situation. However, often when an act is passed, mandates change and it takes a while for the system to respond to that new mandate and provide the appropriate funding. Frankly, there is a challenge function because we will challenge them to ensure that the requested funding is appropriate and not excessive. In this case, we were caught with unforeseen circumstances.
Senator De Bané: My comment is to Mr. Smith pursuant to Senator Ringuette's comments. I quote from page 70 in respect of the Public Service Labour Relations Board:
. . . PSLRB's mandate was expanded by the Public Service Labour Relations Act and since 2002-03, it has received incremental funding announced in successive federal Budgets.
Mr. Smith said that incremental amounts occur over five years in order to ascertain the proper funding of an expanded mandate. Five years is a long time to assess the requirements of an extended mandate.
Senator Ringuette: It has changed.
Mr. Smith: Senator, your point is valid. This should have been dealt with before now. I agree that it should have had a proper A base for its expanded mandate. Incremental one-year fixes are not sufficient and that is why problems arise when these things are not sorted out.
The Chair: Honourable senators concerns are being expressed, and I appreciate that.
Senator Banks: I sound like a curmudgeon but I want colleagues to know that these questions have been asked and these concerns have been expressed by this committee over a very long period of time. I will attempt to consolidate my questions.
It is not too fine a point to observe that parliamentary requirements in respect of vote 5 are such that they must be urgent and compelling, not urgent or compelling.
Mr. Smith: They must be unforeseen.
Senator Banks: There is a significant difference between the use of "and,'' not "or.''
Mr. Smith: If I may, Senator Banks, I am looking at the wording on page 21 where it says, ". . . urgent, miscellaneous, minor or unforeseen expenditures.''
Senator Banks: We need to change that because there is a significant difference. My recollection of many years ago is that we said, "and.''
Page 70 discusses expenditures of $126 million and page 200 says that Treasury Board vote 5 is about $750 million. Where is the other $524 million?
Mr. Smith: I can explain. The allocation that we request every year is for $750 million, as a matter of course, for that central vote. It is drawn down as required and the balance here is the remainder.
Senator Banks: The automatic request of $750 million for Treasury Board vote 5 is, in effect, a flat-out contingency that will be drawn down from time to time in the supplementary estimates.
Mr. Smith: That is correct. The amounts are repaid by departments at the next supplementary estimates so they are replenished. By the end of the year, you have not used any additional funding because the advanced funding has been repaid.
The Chair: I have a point for clarification. Senator Banks raises the issue of the use of "and'' versus the use of "or.'' On the fourth line down under government contingencies vote 5 at page 21, the term is "and.'' It says, "urgent, miscellaneous, minor and unforeseen expenditures.'' At page 70, it says, "to meet urgent or unforeseen expenditures.'' Which one of these was approved by Parliament?
Mr. Pagan: Page 21 and page 70 provide descriptions. The only thing that has been approved by Parliament is the vote wording in the Main Estimates.
The Chair: Is that at page 70?
Mr. Pagan: It is page 101 of the Main Estimates, which I appreciate members would not have before them. If it helps, I will read it into the record.
The Chair: Perhaps you would read that portion.
Mr. Pagan: Under TB vote 5, government contingencies, it states:
—Subject to the approval of the Treasury Board, to supplement other appropriations and to provide for miscellaneous, urgent or unforeseen expenditures not otherwise provided for, including grants and contributions not listed in the Estimates and the increase of the amount of grants listed in these, where those expenditures are within the legal mandate of a government organization, and authority to re-use any sums allotted and repaid to this appropriation from other appropriations . . .
That is what Parliament approves and that does not change. The last time that changed was in 2006-07 when there was specific introduction of "miscellaneous and urgent'' rather than "valid and compelling'' as well as a specific reference to "the ability to make grants.'' In 2007-08, with the creation of the new central votes, the reference to "pay list'' was removed from the vote wording because we now have a separate Vote for that purpose.
The Chair: On page 200 of Supplementary Estimates (B), is that wording not the same as what you have read to us. It is under Treasury Board Ministry Summary Treasury Board vote 5. You would not be putting in wording that is different again, would you?
Mr. Pagan: We should not be doing that.
The Chair: I would not think so.
Mr. Pagan: Anything in the estimates is for information. The legal text is in the appropriation act.
Senator Banks: You might want to address that subject by way of a recommendation, Mr. Chair.
At page 151, under vote 10, the Department of Indian Affairs and Northern Development requested $20 million for certain undertakings with respect to Aboriginal child care in Nova Scotia and in Saskatchewan. Why were those two provinces singled out?
I suggest that in the interests of timing you could respond to that in writing later through the clerk.
The Chair: It would be helpful.
Senator Di Nino: I am trying to put some sense into the discussion we have been having, which is very valid and much needed. If I understand vote 5 correctly, in a perfect world, we would not need it; is that correct?
Mr. Pagan: Correct.
Senator Di Nino: With vote 5, you seem to be saying that it is a tool which is needed from time to time where situations arise where the effective and proper functioning of government may be impacted if the department or agency does not have sufficient funds to continue, for whatever reason, even if it is deemed to be a mistake — someone made an error somewhere — whether it is foreseen or otherwise.
To ensure that the government continues to function properly and effectively, sometimes we find that the department does not have enough money, so we have to provide some funds. There has to be a certain discretion within the rules that have been established so that the Treasury Board, which consists of a number of ministers, is able to assess whether that is a real emergency or otherwise. If they cannot pay the bills or the staff, that is an emergency. Is that what this is?
Mr. Smith: You are absolutely right. We have needed a vote like this for a long time. We have had one since 1876. Despite the best planning, there will be circumstances under which you would need this flexibility. If you tighten up the wording too much, you will not be able to use it for that flexibility and will have to find another way of dealing with an emergency, such as forest fires or floods or all kinds of other things, for which this vote could be used.
One must balance the need for transparency and accountability with flexibility. Indeed, we have struck a good balance with this vote. We do report on all uses of it and subject those uses to your examination.
Senator Di Nino: This enforces the point that this discussion is needed and valid.
Mr. Smith: It is important to have a contingency vote. I am not aware of any other system that does not have one; it is a matter of how one uses it.
Senator Di Nino: One final point that I think is worth repeating is that this must be approved by Treasury Board.
Mr. Smith: Yes.
Senator Di Nino: There is a supervisory component to this. It is not just done by a department head. There is accountability, in effect.
Mr. Smith: Absolutely. We have a procedure, which Mr. Pagan outlined, for requesting information and attestation from the department that they need the money for valid reasons, including cash flow reasons. A recommendation is then made to Treasury Board, which can accept or reject the recommendations. It is a decision by ministers on how this money is to be used.
The Chair: I suppose, Senator Di Nino, just to finish your line of argument, Parliament always has the ultimate authority to refuse to allow that when it comes to them in the form of supplementary estimates. Parliament is now being asked to approve the action of Treasury Board. All we are doing with these questions is testing the application of the very strict rules for this extraordinary power that has been delegated by Parliament.
Mr. Smith: Absolutely.
The Chair: I have one point, since we are dealing with supplementary estimates, and this is the last time we will be seeing you on this. I know we will be seeing you on other things and we will have an opportunity to follow up on a lot of other issues.
Bill C-12 is a supply bill or appropriation bill that flows from Supplementary Estimates (B). We will not have this bill come to this committee; it does not go to any committee, as it is based on the study that we do and the report that we file. If you look at Schedule 1 at page 34 under National Defence Department, each time I speak on the bill I look at the schedule page 50 of Supplementary Estimates (B). I look at the figure that is $452 million for the Department of National Defence, and the last three digits are 359. Typically, the schedule is exactly the same and that is how we avoid bringing this bill to a committee. I stand up in our chamber and say that the schedule is precisely the same. Senator Banks has heard me say that, as has my seatmate many times.
When I go through this, I find that the figures are not exactly the same, and I need an explanation before I stand up and misspeak. Albeit, it is almost de minimis, a small amount, but the numbers are not exactly the same. Can you tell us why? It is not a rounding off; it is clearly not that.
Mr. Pagan: I do not have Bill C-12 in front of me.
The Chair: You will have it shortly.
Senator Di Nino: Is it only that one figure?
The Chair: Yes. It is only one figure in the whole schedule.
Mr. Pagan: You are quite right. As I made clear in the introduction, the estimates exist for information purposes, to support this appropriation act. What Parliament votes on, of course, is the act. We provide a proposed schedule to the appropriation bill in each estimates document. For Supplementary Estimates (B), the draft schedule, or the proposed appropriation bill, is found at page 36. That was the proposed bill, as it existed at the time of the original tabling of Supplementary Estimates (B), which was November 24, 2008. In the bill now before the house, the difference is some $500. We will have to go back and confirm why that change has been made.
The Chair: It changes my understanding of the process. The amount is not as important as the fact that the two are not precisely the same. If they are not the same, then we have to rethink our process. If this is a typographical error, I would feel better than if you said you cannot rely on Supplementary Estimates (B); you have to look at the bill and the schedule. Then we will have to start studying the bill every time.
Mr. Pagan: You might feel better if it is a typographical error; I would feel worse because there should not be a discrepancy. If there is, I can only imagine it is because there has been an accounting or reconciliation to ensure that the figures do add up. To be fair, I will have to go back and find this difference of $500.
The Chair: If you are aware of a discrepancy between the schedule that appears and the supplementary estimates — the schedule that is attached to the supply bill that flows from this — would you bring that to our attention?
Mr. Pagan: Absolutely.
The Chair: So you were not aware of this one.
Mr. Pagan: No, although, this would not be the first time where there is a discrepancy between what was proposed in the estimates and the actual.
The Chair: We could have passed that based on my assurance that they are exactly the same when they were not.
Mr. Pagan: In both the House of Commons and the Senate, the president would stand and normally attest to the fact that the bill before you is the same in form and content as what has been reviewed in committee. However, there have been instances where there were changes to the proposed schedule and the actual schedule. Sometimes it is a typographical error; sometimes it is a correction to vote wording; very rarely is it a change to an amount, but we will find out why this is.
The Chair: You will investigate this for us.
Mr. Smith: We will.
The Chair: And you will undertake to let this committee know if there are discrepancies in the future that you are aware of, that you will let us know about them.
Mr. Smith: Most definitely.
Senator Banks: I think you are about to adjourn. I would like to say that notwithstanding the valid comments that you and Senator Di Nino made, I am appreciative of the presentation Mr. Pagan made today because it was extremely useful. I have been here a long time, and that helped a lot. Thank you very much.
The Chair: Senator Banks is reflecting the feeling of all of us. We had a number of senator staff members here as well who are anxious to hear and I think learned a lot from the presentation. As usual, we are relying heavily on you and we thank you very much for your continued good work.
The committee adjourned.