Proceedings of the Standing Senate Committee on
National Finance
Issue 2 - Evidence - Meeting of March 4, 2009
OTTAWA, Wednesday, March 4, 2009
The Standing Senate Committee on National Finance met this day at 6:30 p.m. to examine the Estimates laid before Parliament for the fiscal year ending March 31, 2010.
Senator Joseph A. Day (Chair) in the chair.
The Chair: I call this meeting to order.
[English]
Honourable senators, thank you for being here. This evening we begin our study of the Main Estimates for fiscal year 2009-10, which have been referred to this committee.
Everyone has seen the Main Estimates. It is not an insignificant document and that is why we need the help of Treasury Board of Canada Secretariat.
[Translation]
It is a pleasure to welcome here tonight Mr. Alister Smith, Assistant Secretary, Expenditure Management Sector, and Mr. Gregory Smith, Senior Director, Expenditure Operations and Estimates Division, Expenditure Management Sector.
[English]
I love your titles. However, I think what we will do, Mr. Smith, is thank you again for being here and ask you to give us some preliminary remarks to help us get started. We expect we will have the reference with respect to Main Estimates for the next fiscal year throughout the year. We may well bring you back at different times during the year, but certainly when we get supplementary estimates.
We understand there will be a supplement to this likely in April-May, which will be Supplementary Estimates (A), but on this stage, we are on the basic document, the Main Estimates for this year. The floor is yours.
Alister Smith, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: I am pleased to be here today, this time on the government's Main Estimates for 2009-10.
[Translation]
I am here with my colleague, Gregory Smith, who replaces Mr. Pagan. We have prepared a short presentation which has been circulated and which gives an outline of the Main Estimates. With your permission, I would like to review this presentation with you. Later on, we will be most willing to answer your questions.
[English]
I believe you have a deck from us. On page 2 of the deck, we lay out the purpose of the Main Estimates. They are to provide the requests for spending authority that must be approved by Parliament for each department, agency and appropriation-dependent Crown corporation.
Unlike the supplementary estimates that were referred to this committee in February, the Main Estimates present the yearly funding that is being sought at this point for each organization for 2009-10, rather than an itemized breakdown of requests for additional funding. We refer to Part II and Part I of the estimates. Let me start with Part II for the moment.
Part II of the Main Estimates provides results of many decisions taken over the past several years as they affect 2009-10 for departments. You will see departmental reference levels, which are not just the product of one year's decisions but, in fact, have evolved over time. We will come back to that point, I believe, later on.
Part I, however, the government's expense plan, does provide an explanation of the major items that account for the change in this year's Main Estimates as compared to last year. The explanations appear in Part I of the Blue Book, beginning at page 1-8 of the document.
The Main Estimates do provide a breakdown of the funding sought by program activity as well in departments — so for each major result area for the organizations. They provide a fair amount of information, at least a static picture of department requirements at that program activity level.
On page 3, you have seen variances of this before — the parliamentary financial cycle — and I will not spend much time on it. Just to note, as we mentioned in previous appearances here, this has been an unusual year from the supply perspective due to the election and prorogation. However, with this tabling of mains, we are back on the normal supply schedule. It is anticipated that the interim supply bill for Main Estimates will be tabled toward the end of March, the week of March 23. As Senator Day noted, we are planning another Supplementary Estimates (A) for budget items to be tabled in May and hopefully for supply in June.
On page 4 is the Main Estimates versus the budget plan. It is important to note that the close proximity of the budget and Main Estimates does not give us sufficient time for departments and agencies to come forward with all the approvals required to reflect the new spending in the budget in Main Estimates. A number of items have been overtaken by the budget. We will be playing catch-up, as I mentioned before, in Supplementary Estimates (A) and elsewhere through the year.
The proposed 2009 budget implementation act, if passed, will provide a certain amount of spending authority. The balance of program spending included in Budget 2009 would normally flow to departments and agencies upon passage of the supply bill for the 2009-10 supplementary estimates. For departments that can wait until June in order to implement budget initiatives, the government plans to table the Supplementary Estimates (A) in May, and it is anticipated that the related supply bill will be passed in June.
However, given the imperative to flow funds quickly where Budget 2009 initiatives are ready before June so that economic stimulus can be provided as soon as possible, the government has introduced a special $3 billion vote in 2009-10 Main Estimates — a one-time only budget implementation vote — that would permit the flow of funds as early as April 1.
Page 5 provides more detail on this new vote. Specific wording of the vote can be found in the 2009-10 Main Estimates on page 1-116 in the English version and on page 1-104 of the French version. The wording clearly indicates that allocations approved by Treasury Board ministers can only be made up to June 30 and must be for initiatives announced in Budget 2009. Supplementary Estimates (A) and Supplementary Estimates (B) will provide information on what allocations are made from the central vote.
On page 6 is the structure of the Main Estimates. I touched on this earlier in describing Part I and Part II. Part I of the government expense plan contains an overview of the amount sought in the Main Estimates. The departments and agencies are grouped by sector: social programs, transportation programs, justice and legal programs, et cetera. Year- over-year changes in Main Estimates are provided beginning on page 1-8 — page 1-9 in the French version — along with explanations for the major items that account for these changes. The department- and agency-specific presentations within each ministry begin on page 2-1.
Page 7 of the deck continues with the structure of Main Estimates. As I mentioned earlier, the structure is quite different from supplementary estimates. That is, supplementary estimates only seek in-year adjustments to spending for specific items while Main Estimates present the total spending for all programs of a department or agency for the coming year.
The total spending in 2009-10 for a department may reflect decisions taken several years before. That is important to note. Initiatives flowing from Budget 2007 could have multi-year effects, so the spending profile and approval for those initiatives in 2007-08 might affect the estimates in 2009-10. Sometimes you will see amounts in 2009-10 that are significantly higher or lower than the previous year. Often they reflect changes that have been determined two or three years before in the spending profile for that particular initiative.
The Reports on Plans and Priorities, RPPs, which are Part III of the estimates and which will be accompanying these for detailed committee study later, are to be tabled on March 26. They provide spending plans over a three-year horizon and provide a more complete picture of projected spending in a department. In the RPPs, we can see some of the evolution of spending patterns over time.
On page 8 is a portion of the 2009-10 spending that Parliament has been asked to approve through these Main Estimates. It represents a $6.6-billion increase over last year's Main Estimates. That amounts to a 7.7 per cent increase. In voted requirements from 2008-09 to 2009-10, the requirements are moving from $79.1 billion to $85.7 billion, an increase of $6.6 billion. Of that, $3 billion would be accounted for by the central vote that I mentioned earlier. Therefore, $3.6 billion would be the net increase.
On page 9, to put that into the broader context of federal spending, the chart illustrates that direct program spending represents only slightly more than one third of total spending included in these Main Estimates and, in fact, reflected back in Budget 2008.
The direct program spending is $86 billion, which is about 37 per cent. Public debt is another $32 billion, which is 14 per cent. Major statutory programs account for a full 50 per cent — $118 billion — of the total budgetary expenditures of $236 billion.
The types of expenditures on page 10 of the deck note a few interesting points. Transfers to other levels of government and transfers to persons — Employment Insurance, Old Age Security, Universal Child Care Benefit, et cetera — are projected to increase in 2009-10. The forecast cost of interest on the public debt, however, is decreasing. Transfers and subsidies, which reflect other grants and contribution programs, also show a net increase of roughly $5 billion. Largely, this is due to increases for infrastructure — such as the Gas Tax Fund and the Building Canada Fund — the settlement funding at Citizenship and Immigration Canada, the Gateways and Border Crossing Fund administered by Transport Canada, grant increases by the Canadian International Development Agency, CIDA, and Indian and Northern Affairs Canada.
On page 11, the Main Estimates always reflect a number of important increases and decreases in departmental budgets. The most significant ones are shown here on and on the next page. These increases and decreases reflect decisions that affect 2009-10 in comparison to 2008-09. Sometimes the 2008-09 number might be the odd number, and the difference between the two may not give you the full picture that you would see in the three-year profiles from the Reports on Plans and Priorities. Those are the major increases there.
On page 12, you see the major decreases in the 2009-10 Main Estimates. I want to draw your attention to a couple of these for a moment, if I may, because they have been overtaken by events subsequent to Main Estimates. One is the expiry of the two-year Homelessness Partnering Strategy. Subsequent to the production of the Main Estimates was a $2 billion initiative on housing and homelessness, so it has overtaken that expiry. The Canadian Television Fund has been restored. Sometimes these budget decisions were taken too late to be reflected in the Main Estimates. Main Estimates need to be tabled by March 1. Therefore, we are always playing catch-up.
Finally, the last chart shows program spending by sector for your information.
That gives you a bird's eye view of this package of Main Estimates.
The Chair: Thank you. Mr. Smith, have you anything to add or are you content to answer questions if they are posed?
Gregory Smith, Senior Director, Expenditure Operations and Estimates Division, Expenditure Management Sector, Treasury Board of Canada Secretariat: I am content to answer questions.
The Chair: We are pleased to start the question and answer period.
Senator Callbeck: I want to ask about that $3 billion on page 5 of the deck. What procedure has to be followed access this money?
Mr. Alister Smith: It is very similar to the procedure for supplementary estimates, the internal procedure. It requires Treasury Board decisions on approvals of items which might otherwise be in Supplementary Estimates (A) or Supplementary Estimates (B) later in December. It is the same type of due diligence, the same type of procedure, as with supplementary estimates. The advantage of the central vote is that funds, if approved in interim supply at the end of March, would be available to flow as early as April for items that are budget items, have been approved by and meet all the requirements of Treasury Board, and for which there is a cash-flow need.
If you think about the situation of departments that are required to implement the budget, they start the year with limited funds — three twelfths, normally, of their overall money — and were being asked to plan for budget initiatives in the past without receiving new cash until the supplementary estimates in December. In this case, funds would be available for departments as early as April.
Senator Callbeck: What type of projects are we talking about?
Mr. Alister Smith: We are talking about projects such as infrastructure projects, which would be ready to go when the new construction season starts. If we think about the change we made last year, which was to table Supplementary Estimates (A) in June, that was an innovation because for 10 years we did not have spring supplementary estimates.
Let us assume we have it again this year. Money would not flow from supplementary estimates until June. If an initiative is ready, such as fixing a bridge or federal infrastructure or rail systems, for example, it could not really start until June — under the best circumstances — with supplementary estimates only available in June. This would allow initiatives to start in April.
Senator Callbeck: This is for projects that are already in there, is it?
Mr. Alister Smith: It is for both existing initiatives, which are being topped up in the budget, and for new initiatives. A number of new initiatives in that budget could get started early as well.
Senator Callbeck: Is there a formula as to how that $3 billion might be spent among the provinces?
Mr. Alister Smith: I believe that will depend on the programs and initiatives that receive approval and then the distribution of those across the provinces. In some cases, it could be targeted to one province or another just by the nature of the initiative. If it is First Nations or Inuit on-reserve health facilities, it might have one particular distribution; VIA Rail Canada might have another distribution; federal infrastructure and bridges might have yet another. It is not easy to generalize.
Senator Callbeck: Might it all go to five provinces then?
Mr. Alister Smith: I do not think it is possible to generalize at this point about the distribution until we see what Treasury Board ministers decide.
Senator Callbeck: I want to ask you about many things in this, but one is literacy. There was a secretariat, which I think was done away with in September 2006, and now we have the Office of Literacy and Essential Skills. When I look at this budget, they spent $24.865 million last year and $20 million this year. That is a reduction.
Mr. Alister Smith: What page are you referring to, senator?
Senator Callbeck: On page 14-7 of the Main Estimates, under Human Resources and Skills Development. It is the seventh figure from the top, grants to volunteer sector organizations. That has been a big issue in my province because four groups used to get funding, and last year it was only one. The other groups were refused because they did not meet criteria, but they cannot find out what criteria they did not meet. I am surprised to see this reduced, unless more money was spent in Supplementary Estimates (A), (B) and (C).
Mr. Alister Smith: We will have to check into this one. However, in some cases the 2008-09 number may be high for some reason or other, which makes the 2009-10 number appear much lower, when in fact 2009-10 could be a return to normal. We have to check that as well. Perhaps we could follow up on that for you.
Senator Callbeck: I would appreciate if you would follow that up; and also provide a breakdown by province, how much each province received of that amount.
The Chair: Will you provide that information to our clerk?
Mr. Alister Smith: We certainly will.
The Chair: That will be distributed to everyone.
Senator Callbeck: If we look at the programs listed under Human Resources and Skills Development, Canada Mortgage and Housing Corporation, page 14-13, under the housing repair and improvement programs, the third one down, we see a big decrease. When we read the paragraph that describes these programs, the Emergency Repair Program is there, and also the Residential Rehabilitation Assistance Program, RRAP. In my province, if you want emergency repair, you now have to wait two years. With a reduction in funding such as this, I would hate to think how many years you will have to wait, plus with the RRAP you are waiting six or seven years. Many programs are lumped in there, but I would like to know if that deduction applies to the Rural Residential Assistance Program and to the Emergency Repair Program.
Mr. Alister Smith: This is one of the areas where the budget has brought a whole raft of new initiatives and spending. Retrofit of housing on-reserve, off-reserve, social housing, and I believe also RRAP — I will have to check that — are all programs expected to get significant new funds as part of this overall stimulus package. There may well be a very different pattern.
We have literally a couple of billion dollars more going into housing: renovation and retrofit of social housing, housing for low-income seniors, persons with disabilities, First Nations housing, northern housing and direct lending to municipalities for housing-related infrastructure projects. A huge increase in spending will happen if the proposed budget implementation act and the rest of the economic action plan are passed. A huge amount of spending is going into housing.
Senator Callbeck: That does not address the two programs I am talking about, which are really beneficial to low- income Canadians. I would like to know whether that deduction affects those two programs.
Mr. Alister Smith: Okay.
Senator Gerstein: Mr. Smith, I will begin by focusing on the issue of accountability, in particular the $3-billion special fund. Canadians have a right to expect us to be accountable for the manner in which funds are spent. Could you give a clear indication of the requirements of Treasury Board and how they will monitor these expenditures? I would appreciate some detail.
Mr. Alister Smith: Certainly, I would be happy to do that. As with all initiatives that come before the board, including those that normally would be in Supplementary Estimates (A), there is considerable scrutiny by the Treasury Board Secretariat and by the Comptroller General, as part of the Treasury Board portfolio, of compliance with Treasury Board policies, the Financial Administration Act and all other requirements for audit and evaluation. None of those requirements is waived here, but they are still in full force. We have our internal audit and the Office of the Auditor General of Canada will audit the process throughout. Quarterly reports will go to Parliament on the implementation of the budget measures as outlined in the economic action plan.
There will be considerable scrutiny and reporting on these initiatives and due diligence by the Treasury Board. Nothing has changed.
Senator Gerstein: Do I understand that the process you will follow is at the level, if not increased from what it was in the past in terms of the reporting that will be done quarterly?
Mr. Alister Smith: Definitely. Normally, we would not report quarterly on budget implementation, so the quarterly reporting is new. The first of these reports on budget implementation will be issued in March. That will be followed by subsequent reports in September and December.
In addition, there is heightened scrutiny by both internal auditors and auditors of the Office of the Auditor General. Treasury Board will be tracking spending and results. I would say that in many respects, the due diligence is higher rather than lower.
Senator Gerstein: Mr. Smith, could I conclude from the comments that you have just made that, although some have indicated that they view this $3-billion special fund as a slush fund, it is anything but that in your opinion?
Mr. Alister Smith: I would reject that characterization.
Senator Gerstein: Thank you.
Senator Banks: It is nice to see you again, gentlemen. On page 10 of the deck, I presume that the figures on the left- hand side are from last year and the figures on the right-hand side are for the coming year. Do I have that right? It does not say specify on my deck.
Mr. Alister Smith: Yes. On page 10, 2008-09 is on the left-hand side, and 2009-10 is on the right-hand side.
Senator Banks: Good. The interest under public debt is a reflection of lower interest rates.
Mr. Alister Smith: That is correct.
Senator Banks: On page 12, you said that the $100 million to the Canadian Television Fund had been restored, so this is no longer an operative statement.
Mr. Alister Smith: It reflects decisions made. We can only implement the decisions of Treasury Board ministers in this document. Subsequently, we had the budget, which is large, with many issues that are not yet included.
Senator Banks: They are not included in the $100 million.
Mr. Alister Smith: That is correct.
Senator Banks: I need not ask why that money has gone away because, in practice, it has not gone away.
Mr. Alister Smith: That is correct.
Senator Banks: With regard to the Public Service Labour Relations Board, PSLRB, which, in the past, could be seen to have low-balled its Main Estimates amount and then come back again and again for supplementary estimates, last year, they had the effect of almost doubling that budget. They spent some $12 million, and this year they are asking for $6 million. Will we likely see such requests from the PSLRB in the supplementary estimates for an additional $6 million?
Mr. Alister Smith: I cannot speculate on that at this stage. However, we were discussing, perhaps at the last meeting, the need to solidify the base funding for some of the smaller organizations. In part, this is a bit of a hang-over from the past. When some of these smaller agencies are given an expanded mandate, it takes some time to catch the funding up to their mandate. This is a case of catching up to the expanded mandate given to the PSLRB.
Senator Banks: Is that why it is saying this year that it needs half as much money as it needed last year? I want to know whether this is a reasonably accurate projection by the agency of how much money it will need to operate in view of the fact that the amount is about half of what it required last year. I admire efficiency, but that would be remarkable efficiency.
Mr. Alister Smith: Right. Perhaps my colleague has additional information on that.
Senator Banks: I am looking at page 5-30 of the Main Estimates.
Mr. Alister Smith: Your question is a good one, and I am not entirely sure that this amount would be sufficient, so we will have to double check with the agency.
Senator Banks: I am not concerned with the process of supplementary estimates because they are necessary for the reasons that you have explained. Rather, I wonder about the accuracy and efficacy of the budgeting process for that agency and whether it is being realistic or whether it is the agency's practice to low-ball in the Main Estimates, assuming that it will be fixed up later.
Mr. Alister Smith: I do not think it is their practice. This was one of the HR agencies that went through a strategic review. Some funding was transferred from the Public Service Commission, PSC, to the PSLRB for the appeals process. There has been some attempt to stabilize that budget, but I am not sure that it is sufficient. I will have to check that and come back to the committee.
Senator Irving Gerstein (Deputy Chair) in the chair.
The Deputy Chair: It is a great honour and pleasure to be sitting in this chair. It is a pleasure for me to call on Senator Nancy Ruth.
Senator Nancy Ruth: The circle graph in the deck interests me. You said that our public debt charges would be 13.5 per cent of the budget and that they would be reduced. I assume that is because of interest rates.
Mr. Alister Smith: Yes.
Senator Nancy Ruth: Can I assume that it might rise given the fact that we have increased the debt substantially? How does this pie chart change?
Mr. Alister Smith: Senator, you are referring to future years with debt rising, which we do not take into account here. We have given you a snapshot for the current fiscal year.
Senator Nancy Ruth: This is all about interest rates dropping.
Mr. Alister Smith: That is correct.
Senator Nancy Ruth: When looking at one of the supplementary estimates, I noted a cost of either $335 million or $385 million to transfer Status of Women Canada out of Canadian Heritage.
Mr. Alister Smith: There was a transfer.
Senator Nancy Ruth: There was a transfer of funds.
Mr. Alister Smith: That is correct.
Senator Nancy Ruth: Can you tell us what that money is being used for, and where was it taken from?
Mr. Alister Smith: This was in supplementary estimates as opposed to the Main Estimates, so I can come back with specific information on that.
Senator Nancy Ruth: It strikes me as peculiar when the total budget in the Main Estimates is only $20 million, and you are spending $335 million plus to transfer a department out. Is something out of order here? What do I not understand?
Mr. Alister Smith: What was the figure you used?
Senator Nancy Ruth: It was $300-something million. It blew my mind when I looked at it, so I may have looked at it with the wrong perspective.
Mr. Alister Smith: I would be happy to come with specific information.
Senator Nancy Ruth: I want to read something on the record because I love to do it every year. This is not a question, but, with your permission, Mr. Chair, I will do it because I am always interested that the Status of Women immediately follows the allocations to museums in Canada. The National Museum of Science and Technology receives $34 million; the Canadian Museum of Civilization, $62 million; the Canadian Museum of Nature, $32 million; Library and Archives of Canada receives $121 million; the National Arts Centre Corporation receives $35 million; National Battlefields Commission receives $9.3 million, the National Film Board of Canada receives small change; the National Gallery of Canada receives $49 million; and Status of Women receives $29 million.
If you were to sum up what all the museums in Canada receive and what women receive, it is not too much. However, this is not your problem, it is mine. Regardless, it is on the record. Thank you, Mr. Chair.
The Deputy Chair: Thank you, senator. I understand it is a tradition that you uphold each year, and I trust it will continue for many years to come.
Senator Banks: I have a supplementary question to Senator Nancy Ruth's first question. Women are working in some of those museums. Therefore, you have to parse that out.
Senator Nancy Ruth: With respect, senator, when I go to the National Gallery, not much turns me on about either women's art or art about women, period.
Senator Banks: Mr. Smith, Senator Nancy Ruth asked you about the public debt charge, which is shown here as $31.9 billion, and I asked you about that earlier. You said that it was a reflection of the lowering of interest rates. Senator Nancy Ruth asked you about whether that was realistic since these are the estimates for the coming fiscal year. Do I have that right?
Mr. Alister Smith: Yes.
Senator Banks: These are the Main Estimates for the year beginning April 1, 2009. I am asking Senator Nancy Ruth's question again. In light of the fact that we now know that this will not be the public debt charge in the fiscal year beginning April 1, 2009, how realistic is it to present it as that amount here?
We know it will be more than that. Even if interest rates were to continue to go down, the principal amount will go up.
Mr. Alister Smith: The Department of Finance Canada essentially provides an estimate, which is for your information, as are other statutory items to be included in the estimates. Indeed, you will see through the cycle of supplementary estimates that we are often updating those figures. That is due to either higher unemployment or higher or lower interest rates. Therefore, we do tend to chase those numbers through the year a little bit and make adjustments on the statutory side to reflect changes in interest rates, currency or in unemployment rates.
Senator Banks: Can we assume this is not likely a good estimate of what the public debt charges will be during the fiscal year 2009-10?
Mr. Alister Smith: It is a point-in-time estimate now.
Senator Banks: However, it is based on situations that no longer prevail.
Mr. Alister Smith: That is right.
Mr. Gregory Smith: Mr. Chair, I might have a follow-up on the Status of Women, if you wish or we could do it later.
The transfer in Supplementary Estimates (C) was a transfer into the Status of Women to fund the operating expenses associated with the Office of the Minister of State (Status of Women). That was a transfer in support of expenses for this fiscal year in Supplementary Estimates (C).
Senator Nancy Ruth: Can you tell me what that means? This is the first time in some years that a minister has been only responsible for the Status of Women. My understanding is that it was setting up its own shop and would be out of Canadian Heritage.
Mr. Gregory Smith: That is correct.
Senator Nancy Ruth: Yet it is in Canadian Heritage when I look in the Main Estimates.
Mr. Gregory Smith: It is in the portfolio of Canadian Heritage.
Senator Nancy Ruth: What is this money for, then?
Mr. Gregory Smith: Are you referring to the $332,000? The $332,000 was to transfer funds to cover the costs in fiscal 2008-09. They were included in Supplementary Estimates (C) for the 2008-09 fiscal year.
Senator Nancy Ruth: Are we talking about $332,000?
Mr. Gregory Smith: It is $332,000. I believe that was the number you had suggested.
When you go to Main Estimates — in fact, the Office of the Coordinator — the Main Estimates for 2009-10 are $29,648. This is on page 5-26. Last year, the Main Estimates were $24,761.
Senator De Bané: Mr. Smith, I admire how you remain calm and serene, and so on. Politicians have the killer's instinct, and we explode all the time. I wonder if you are serene like that all the time.
Just a very small detail about the deck: Page 13 of the deck is not in colour. Is yours in colour? Ours is in black and white, and we cannot read it. We can read social, which is very big. All the other sections of the chart are difficult to see. If possible, could we have the one or two pages that need colour in colour next year? Thank you very much for your courtesy.
Mr. Alister Smith: We would be happy to provide it in colour for you.
Senator De Bané: It is a small detail. It may also be the same for page 10, but it is particularly true for page 13. It was impossible to read what it refers to. I am very happy that my friend agrees.
I draw your attention to notes 4 and 6 on page 1-5 of the Main Estimates. I will read note number 4:
Fiscal Equalization refers to unconditional transfer payments to less prosperous provinces so that they can provide their residents with public services that are reasonably comparable to those in other provinces, at reasonably comparable levels of taxation.
I know that equalization is in the Constitution, and we had to put it in 1982 to have the approval of several provinces. I would like to suggest to you that the sentence is not correct as it is written. The calculation of the amount that is given to eligible provinces is, of course, to ensure that essential public services, health, et cetera, can be offered by the province at a comparable taxation level.
However, as you say at the beginning, it is unconditional transfers. If a province wants to have many more civil servants per 1,000 people in their province, if they want to open embassies abroad, if they want to do whatever they want, number 4 and number 6 are unconditional. They can do whatever they want with that money; and if the health services in a province are not as good as in other provinces, you have nothing to do with it.
We should say that it is calculated in such a way to attain this, but it is unconditional. I would like that to be emphasized at the end. The way it is written, it seems to say that we give them that unconditionally for that, but it is unconditional. It is not clear for the people.
You say that Genome Canada will be getting so much. I would appreciate very much, through you, Mr. Deputy Chair, to ask Mr. Smith if he can give us, for the last 10 years, what our R&D expenditures were as a percentage of the GDP. I would like to know how much it was in dollars and then as a percentage of GDP. This is very important.
The Deputy Chair: Mr. Smith, would you be able to provide the committee with that information?
Mr. Alister Smith: We will probably work with the Industry Canada to come up with those figures for you.
Senator De Bané: Thank you very much.
I see, on page 1-5, that transfers to other governments are $50 billion. Other transfer payments and subsidies to provinces are $34 billion, for a grand total of $84 billion. Is that really the only thing that we know how to do properly, to send cheques to the governments of the provinces? Can we not also devise policies that will help each province to diminish the bottlenecks for their development, to attain their maximum development and remove the obstacles and all the bottlenecks?
I find that this way of spending $84 billion out of a budget of $240 billion is a very easy way to say that we have done what we can for such a province; we send them a cheque. If we show the people of that province that we are sensitive to their aspirations and that we will tailor our policies so that the people of Alberta and the people of P.E.I. — they do not have the same challenges and bottleneck — can each attain their maximum with our help, that would be much better.
In my own province of Quebec, I have seen the polls asking people questions about who is doing more for economic development of this province and who is assisting industry more, et cetera. You should see the numbers. It is depressing because people do not realize everything the national government of this country is doing for them.
I know it is a question of policy, but to see such a big number, $84 billion, going to that. If we add the statutory payments, there is not much left that we do with our own signature on it.
That is something that causes me problems.
My last question, Mr. Smith, concerns page 11 of the deck. Would you please remind me about the introduction of a new drug card? It says, ``Funding for increases in the cost of Public Service Insurance, including $75 million for the introduction of a new drug card (Treasury Board Secretariat) — $210 million.'' Do you see that on page 11?
Mr. Alister Smith: I do see that. I believe the bulk of that cost does not refer to the introduction of the new drug card, but just additional costs under public service insurance, vote 20, for a variety of reasons. Perhaps we can provide you with some further information on what are driving those costs — the disability costs, aging and so on.
Senator De Bané: Perfect, so whenever you can send them, that would be fine.
Senator Banks: However, it does say $75 million for the introduction of the new drug card.
Mr. Gregory Smith: That is correct. The cost of benefits is constantly on the rise for employers. In order to manage that, it will cost $75 million to do that; but hopefully it will derive efficiencies within the plan in years to come.
Senator De Bané: To both Mr. Smiths, Gregory and Alister, thank you very much.
[Translation]
Senator Chaput: My questions deal mainly with culture and linguistic duality. Would you please look at page 1-16, in the French document.
[English]
Senator Chaput: In English, it would be page 1-14.
[Translation]
Concerning cultural programs, we see at the bottom of the table a decrease by 6.2 per cent between 2008-09 and 2009-10. It says that the most notable departmental decreases are Canadian Heritage and Canadian Broadcasting Corporation.
With respect to the Canadian Broadcasting Corporation, the decrease amounts to $62.8 million, and you say it is due to an adjustment in the corporation's spending program from the previous year and to a reduction in revenue generation. What does that mean?
[English]
Mr. Alister Smith: Maybe I could start with the overall Canadian Heritage numbers and then move on to Radio Canada and CBC.
[Translation]
Senator Chaput: I have another question about Canadian Heritage.
[English]
Mr. Alister Smith: CBC has a decrease in their Main Estimates this year of $62.8 million, and $60 million of that is due to the Beijing Games. The amount of $60 million was included in their 2008-09 reference level for the operating expenses of the Beijing Games.
When the games finish, we move on to the next year, and a decline shows from one year to the other. This is really the type of problem I was referring to earlier: the time-limited funding provided in one year. It shows up in the 2008-09 number, and when we look at the 2009-10 number, there is a decline. However, it is not really a decline; it is just the special funding for the Beijing Games, and now we have moved on. That is the bulk of it, but there is offsetting increases for collective bargaining as well.
A reduction in revenue has affected CBC due to the slippage from Beijing. Revenue was boosted then, and it is lower now than it was during the Olympics.
[Translation]
Senator Chaput: That is not a reduction in the funding they receive for programming; the difference comes from the games, is that it?
Mr. Alister Smith: Exactly.
Senator Chaput: Thank you, your answer was very clear.
I want to go back to Canadian Heritage. I am a little worried when we talk about culture and heritage because that includes linguistic duality. When I look at programs, under Canadian Heritage, and I see a decrease in funding in support of the implementation of the Official Languages Act, I am worried.
I do not understand how this funding can be decreased while there is so much to be done yet. I have been unable to find the Roadmap on linguistic duality, but I may have missed it. You may remember that, at previous meetings, once we had found this roadmap, we had noticed that only 7 partners out of 14 had identified some funding in the budget for the implementation of the roadmap. Now the government has come up with a Roadmap on linguistic duality. All departments are included, with their allocated funding, but I am unable to find it here. What do you mean by a decrease in general funding and no funding for the Roadmap on linguistic duality?
[English]
Mr. Alister Smith: I will try to address two of your questions. I may need to find more information. On the first question, funding provided under the Official Languages Act was decreased. I understand this is due to the ``sunsetting'' of some funding that had been provided in Budget 2007. It has now expired and that funding drops off. It is the sort of time-limited funding issue, again, that was provided in support of the Official Languages Act, but it was for a particular period of time and that is now completed.
Senator Chaput: Do you have an example of the type of funding that it was?
[Translation]
Senator Chaput: Which vote is it? Is there an agreement, a plan? Could somebody tell us?
Mr. Alister Smith: I do not know exactly.
Senator Chaput: Could you provide us with some information about that?
Mr. Alister Smith: Yes.
Senator Chaput: Thank you.
[English]
Mr. Alister Smith: With respect to the other issue, we discussed, in previous supplementary estimates, the road map and additional funding that had been provided to departments. Those funds would be in those departments' budgets. They may not show up at this level of aggregation for the departments. However, it does not mean that the effort is any less than it was. If Supplementary Estimates (C) are approved, then I believe that funding goes forward.
[Translation]
Senator Chaput: Yes, but in (C), there were 7 departments, while there should be 14 of them. I am still looking for the other seven.
[English]
Mr. Alister Smith: I will try to find out more about the other departments that should be in that list as well.
The Deputy Chair: I have only one senator left in round one. I am sorry, I did not see Senator Ringuette.
Senator Ringuette: No, I only wanted to ensure I have an opportunity.
Senator Neufeld: We were surprised that you were so quiet when you put your hand up. We expected a little more exuberance.
Senator Ringuette: There is an issue that we have to identify here in regard to us women being passionate and exuberant and you men being calm and cool. Please, can you refrain from making such comments? I would appreciate it.
The Deputy Chair: I must apologize. Having taken the chair, I had been handed a list of questioners. Your name was not on it. I only know what I was given. I am trying to cast my eye around to catch anyone who raises a hand to ask questions. Senator Neufeld followed by Senator Ringuette.
Senator Neufeld: I want to go back to questions about page 9. It says that the total budgetary expenditures for this year are $236 billion. My understanding is that the public debt charges relate to the public debt at the ending of fiscal 2008-09. That does not incorporate any new debt that would be incurred in the 2009-10 estimates, is that correct?
Mr. Alister Smith: That is my understanding, yes.
Senator Neufeld: I do not know this and I suspect no one knows it, which is why they do not estimate it. However, if those debt charges go down, obviously there will be more spending in direct programming. If it goes up, which portions of that pie reduce to account for that?
Mr. Alister Smith: We would not be reducing direct program spending. Having set these budgets for departments, if interest rates were to go up, we would see total budgetary expenditure rising, and, therefore, the deficit would rise as a result.
Senator Neufeld: Okay.
Mr. Alister Smith: I think that is the answer. This is sort of nondiscretionary for us to keep paying the public debt charges, whatever they are.
Senator Neufeld: On page 11, the major increases for 2009-10 and Main Estimates, the first one is $3 billion; I understand that one; and the Gas Tax Fund. However, on funding for major capital projects — including airlift capability and tank replacement, et cetera — of $936 million, is that over and above what the increase was for the military in Supplementary Estimates (C) or is that inclusive of some of those dollars not yet spent?
Mr. Alister Smith: This increase is looking back at the 2008-09 figures for Main Estimates and comparing those 2008-09 figures to those for 2009-10. If you look back at the 2008-09 year as a whole, you could do another comparison, which is in this Blue Book, of the total estimates for the year 2008-09. This would be Main Estimates plus Supplementary Estimates (A), (B) and (C). You could compare that number, which includes your supplementary estimates, to this one. That would give you a slightly different picture because it would include all those other expenses.
Senator Neufeld: Last on the page is funding to development private-public partnerships for related infrastructure projects totalling $83 million. Is that $83 million to develop the process, or is that for some of the capital, and is this for Canada-funded projects only?
British Columbia has been using private-public partnerships, P3 for a number of years. It has done a relatively good job of that. I know developing it costs money; there is no doubt about that. Sometimes, there is no need to recreate the wheel. Is this money targeted at how we figure out how to do this or is it some capital funding? What is that $83 million?
Mr. Alister Smith: As my colleague points out to me here, for the $83 million, if you look at page 9-3 in the Main Estimates, $10 million of that is for operations and program delivery and $72.8 million is for the P3 Fund investments. It is a mixture of the two items.
This fund, I believe, is still being set up. Further work is still to be done.
Senator Neufeld: As I understand it then, to deliver the approximately $73 million in projects would cost $10 million.
Mr. Alister Smith: These are set-up costs as well for the organization, so I do not think that would be a true reflection of the operating costs on an ongoing basis. The operating costs reduce as a share of the total on an ongoing basis once it is set up.
Senator Neufeld: To be fair, the $73 million would be the federal government's portion if you are doing it three ways.
Mr. Alister Smith: Exactly. The leverage would be much higher.
Senator Neufeld: That answers my question.
Senator, I am happy to hear you talking about trying to remove roadblocks. I could not agree with you more. There are far too many roadblocks that do not allow provinces to reach their maximum. It does not matter what part of Canada you are in. I look forward to the discussion we will have about removing some of those roadblocks as we go into consideration of the budget implementation act. It will be great.
Senator Meighen: Have any disbursements been made so far from the P3 Fund, and do you anticipate that the PPP will play a role in the government stimulus package? Will it be a part of it?
Mr. Alister Smith: My colleague may know better than me. I do not think any disbursements have been made yet, and I believe it will be part of the overall stimulus package over the next two years.
Mr. Gregory Smith: The Minister of Finance announced the permanent chair on January 19, and the new permanent CEO was announced January 19. It is just getting up and running. No investments have been made at this time, but a paragraph in the budget talked about PPP and how it can help in the whole financing of infrastructure in the plan going forward.
Senator Meighen: Are you aware of any expressions of interest from the provinces and, if so, what would be the rough geographic distribution of those expressions of interest?
Mr. Gregory Smith: I cannot speak to that. I know that the CEO is travelling the country and meeting all of the provincial PPP partners and discussing opportunities.
Senator Meighen: Is there a cap or a limit to disbursements that may be made out of the fund, or is it governed by the income generated by the capital in any fiscal year?
Mr. Gregory Smith: When PPP was created, the announcement was a $1.2-billion fund over five years. I suppose that is the plan at this point in time.
Senator Meighen: Please explain for my edification. You mean you divide $1.2 billion by 5 and that is the amount you can spend each year, or is it the interest on the $1.2 billion?
Mr. Gregory Smith: No, that would be the appropriated amounts to be invested. Returns would be on top of that.
Senator Meighen: What is eligible to be spent then?
Mr. Gregory Smith: In fiscal 2009-10, investment is $72.8 million.
Senator Meighen: For investment in PPP projects?
Mr. Gregory Smith: Yes. When you see the RPP for the Department of Finance, you will see that three-year window that they plan to spend.
Senator Ringuette: My first question is in regard to this supposed $25-million program for foreign artists. I have looked through the budget book, but it is not there. I have looked through this book, and it is not there. Where can I find this $25 million for foreign artist recognition?
Mr. Alister Smith: I do not know either, senator. I do not believe it is in the Main Estimates.
Senator Ringuette: It is nowhere. Where is it hiding?
Mr. Alister Smith: I believe that is a question that Minister Moore or the department might be able to provide more information on, but it is not in the Main Estimates.
Senator Ringuette: It is nowhere to be found and is hiding from being recognized by the Canadian taxpayer.
Under the Human Resources and Skills Development Department, operating expenditures, on page 14-2 of Main Estimates, I see a reduction of $19 million. I would like to know why because that department is responsible to deliver Employment Insurance benefits, and there is a huge delay. They need to provide more staffing to decrease that delay in paying benefits to EI recipients, and yet this budget shows a $19-million reduction. How can we explain that?
Mr. Alister Smith: Senator, a long list of increases and decreases to their budget results in that net effect. I would also say that that might be changed quite considerably by the economic action plan. For instance, if I look at the reductions in their budget, just on that side, some reductions are related to the Canada Student Financial Assistance Act.
Senator Ringuette: Yes, quite a lot; $2 billion.
Mr. Alister Smith: There is a decrease due to the expiration of the two-year Homelessness Partnering Strategy, yet that has been overtaken by a much larger initiative. That will offset those reductions.
Senator Ringuette: With the student grants, loans, et cetera, there is a reduction of $2 billion on page 14-3.
Mr. Alister Smith: What I have here is a reduction in the loans negotiated and repayments under the Canada Student Financial Assistance Act. With the new Canada Student Grant Program, which is coming into effect, we have essentially a new program here where the loans dispersed will be expected to decrease, and voluntary repayments are forecast to be higher than originally expected.
A complex set of changes on the student assistance side result in part of that reduction in the non-budgetary side.
Senator Ringuette: There is a $2-billion reduction. We still do not know why the operating expenditures, such as the EI claims and disbursements are under this operating expenditure item.
Mr. Alister Smith: I should have clarified this at the beginning. The $2-billion change you are referring to is a statutory item. That will not affect the operating expense issue, the first question that you asked.
Senator Ringuette: It is clearly stated here that there is a difference of $19 million in regards to the operating expenditure for HRSDC.
Mr. Alister Smith: Correct. Therefore, there is that decline in the operating expenditures, absolutely. I may have misled you by talking about the student assistance part.
Senator Ringuette: We are talking about apples and oranges here.
Mr. Alister Smith: That is statutory. That does not affect the operating expenses. I took you down that path. However, I was looking at a list of increases and decreases to operating expenditures, and one of them was student related. Another was the Homelessness Partnering Strategy.
Senator Ringuette: That has been sent to another area.
Mr. Alister Smith: The Targeted Initiative for Older Workers program has also been reversed in the budget. Likely, we need to incorporate all of these budget numbers to have a true picture. Of course, we cannot do that when we table these Main Estimates in February and the budget comes out in February. That is part of the problem that we face.
Senator Ringuette: With regard to departmental planning to deliver the services, we have known since the end of September or early October that there would be a major increase in claimants and, therefore, a major increase in staffing capability. Some people have been waiting for two months. It is difficult to feed a family if you have to wait two months for money. Still, we have a department cutting its operations by $2 million.
Mr. Alister Smith: I believe the budget and the economic action plan contain a great deal of money for which HRSDC would be responsible that will also cover operating costs.
Senator Ringuette: Do you mean operating costs to deliver EI?
Mr. Alister Smith: Well, yes, additional training —
Senator Ringuette: One minute, if you will. At page 14-8 and 14-9, we find all the training components with respect to the labour market, the sector councils, the older workers program, human resource planning, the Labour- Management Partnership Program and Labour Market Agreements for Persons With Disabilities. All these programs have been cut at the specific time when we need to invest more in training. This is not rocket science. I am sorry, but these cuts are from $37 million to $7 million; from $77 million to $49 million; from $528 million to $505 million. All of these cuts come down to providing training for Canadians. If all of these programs have been cut, and you are prepared to tell me that they will all appear in the government's economic plan, then I will say to you that the government's economic plan is just a storefront. They made these cuts so that their economic action plan can show money for retraining. Is that what you are going to say?
Mr. Alister Smith: I was going to say something somewhat different and refer to page 1-21 of the budget, where you can see an enormous amount of funding set aside, or hopefully will be.
Senator Ringuette: Set aside from where? They have been cut here so that they can be shown as an increase there.
Mr. Alister Smith: No. We have of course the budget implementation bill; we have the central vote, which will be used for some of these items, and we have Supplementary Estimates (A) coming forward. In this area, there are quite a few initiatives on training; for example, an EI training program, a Strategic Training and Transition Fund, additional funding for the Canada Summer Jobs program for students, and the federal public service student employment program.
Senator Ringuette: These programs all exist now. These are not additional initiatives. Maybe I should have used that wording, additional initiatives, earlier.
Mr. Alister Smith: However, in 2009-10, just those additional training programs alone are worth $940 million.
Senator Ringuette: The programs are not additional because they have been cut here.
Mr. Alister Smith: You are looking at statutory contributions.
Senator Ringuette: Drastic cuts have still been made with respect to training possibilities, whether through the provinces or non-profit groups or post-secondary institutions for older workers, for disabled persons and for the labour market partnership program. These have all been cut quite drastically.
I will wait until we have Bill C-10 before us, but looking at this boggles the mind. At such a time in our economic history, we are screaming that we want Canadians to acquire more skills, yet we are drastically cutting the existing programs for them to acquire those skills. I have extreme reservations.
Mr. Alister Smith: If I may, to give you an idea of the scale of what you see at page 1-21, it is an additional $2 billion over two years for training. If you look at freezing EI rates and incorporate all these changes, it is quite significant. In 2009-10, the increase is $4 billion, and $3.5 billion in 2010-11. In total, it is some $8.3-billion increase in direct program spending over two years.
Senator Ringuette: The $4.1 billion is for getting the program for an additional five weeks. It has nothing do with training. Right here, you have the $2 billion cut. They cut it here so that they could do a spin in that budget book. That is what I am telling you. This is spin that does not reflect the reality of the situation with respect to providing training programs for Canadians.
Senator Ringuette: This committee has known for a few years that we have major attrition happening in the federal public service. We will need to increase the level of hiring to try to compensate for the more than 20 per cent of people who will retire. The agency responsible for the hiring is the Public Service Commission. Currently, the Public Service Commission should be on high alert to hire, yet the Main Estimates at page 5-29, shows that they have $5 million less to work with. It is exasperating when, year after year, we try to raise these issues to sensitize government, the public service and Treasury Board. Some issues you cannot run away from, and human resources is one of them. We are a service-based sector, and the number one requirement is human resources. The numbers do not fail on that. However, their operating budget has been cut by $5 million.
Mr. Alister Smith: Senator, the $5 million cut is due to a reduction in the interim recruitment solution and the longer-term Public Service Staffing Modernization Project, so in time-limited funding, which is now sunsetting. I would also mention that the public service, I believe, has been growing significantly over the last few years. Therefore, recruitment has been relatively successful.
I agree with you — and I think everyone in the public service does — that there are demographics just as4 everywhere in the rest of the country that make it imperative that we do recruit to fill the gaps. I believe we are doing that, and, in everything we do, we are putting a lot of emphasis on public service renewal. Therefore, I do not think this is a reduction, as such, in the effort to recruit.
Senator Ringuette: I am not saying that it is a reduction in the effort to recruit. I am saying that the Public Service Commission — and Madam Barrados — will have $5 million less to work with in order to meet the hiring requirements of the federal public service. That is sad because we are at a time where the requirements are probably at their peak right now, if you look at the attrition situation.
Regardless, I have had my say.
Senator Callbeck: In the Main Estimates on page 3-4, under Atlantic Canada Opportunities Agency Department, I see that enterprise development and community development programs have both been cut, one by $16 million and the other by $13 million. It runs about 10 per cent. Do you have any explanation for that?
Mr. Alister Smith: I do not personally.
Mr. Gregory Smith: Are you looking at the program by activities chart?
Senator Callbeck: Yes.
Mr. Gregory Smith: That is for information for the types of areas in which that organization works. When you look at page 3-2, their appropriation actually goes up in total to $332 million from $328 million. The activity table just reflects into what areas they are putting their resources.
Senator Callbeck: It is showing it there that it goes up, but, with the supplementary estimates added in, I believe it was somewhere in the region of $350 million. Therefore, it really has not gone up; it is gone down.
On page 3-5, you can see where the Innovative Communities Fund is down $12 million; the International Business Development Program goes on from $1.7 million to $700,000. I would like to know why these programs have been decreased.
Mr. Alister Smith: We will try to get answers from Atlantic Canada Opportunities Agency, ACOA, for you.
Senator Callbeck: All right. On page 5-19, under Canadian Heritage, National Arts Centre Corporation, it says, ``Strong and dynamic performing arts in the National Capital Region and across Canada.'' I am just wondering how much of that money is spent outside of Ottawa.
Mr. Alister Smith: We will ask the National Arts Centre.
Senator Callbeck: On page 5-19, the column that says, ``Less: Revenues credited to the vote,'' where would those revenues come from?
Mr. Alister Smith: Presumably, that would be ticket sales from the National Arts Centre.
Senator Callbeck: Okay; they would get the ticket sales.
Mr. Alister Smith: Yes, so the revenue is credited to the vote, and it is re-spendable.
Senator Callbeck: All right. However, in the column for 2008-09 Main Estimates, the $24 million is net, correct? Is that without any revenue credited?
Mr. Alister Smith: No, that is probably a total number, so there is probably a reduction there, as well.
Senator Ringuette: In other words, we are reducing Canadian arts, yet funding foreign artists $25 million.
Senator Callbeck: That is what we are doing.
I would like to have a breakdown as to how that money is spent across Canada.
Mr. Alister Smith: Okay. We will ask.
Senator Banks: My first question is a supplementary to Senator Ringuette's question about the $25-million Canada prize.
I remember when I was on this committee years ago, we were told — and you told us again last week — that supplementary estimates are not new money; they are moving money around, money that was already contained in the budget.
Would you undertake to find out and let us know through the clerk where the $25 million is in the budget, where it shows up; if it is in there someplace?
Mr. Alister Smith: We will undertake to do that.
Senator Banks: I have five quick questions, and, deputy chair, I would ask that if any of these are not answered, they be responded to through the clerk.
Senator Neufeld raised a question earlier about the overlapping of environmental assessments as between the various orders of government — all three orders of government in some cases. He is right in that there is such a thing. However, I notice that the Canadian Environmental Assessment Agency's net plan to spending decreases about $2.4 million and that is attributable, in part, to one-time funding for the regulatory system for major national resource projects and for the Aboriginal consultations for environmental assessment processes.
Mr. Alister Smith: That is correct.
Senator Banks: Were those two programs assessed as to their efficacy? Did they work? Is there a report from them? I know you should not be answering that question directly but could you find out for us if they have been assessed?
Mr. Alister Smith: Certainly, if there is some evaluation of the programs, we will follow up on that, yes.
Senator Banks: On page 9 of the deck, the total spending is shown as $235.8 billion and on page 1-14 of the estimates it is shown as $248.3 billion. The difference is $12.5 billion. Where is that difference?
Mr. Alister Smith: Are you referring to a reconciliation between the budget and the Main Estimates?
Senator Banks: It is between the Main Estimates and the deck. The deck, on page 9, shows $235.8 billion as the Main Estimates, I think, is it not?
Mr. Alister Smith: Yes.
Senator Banks: In the Main Estimates themselves, on page 1-14, in the total at the bottom of the left-hand bold column is $248.3 billion. The difference is about $12.5 billion. Which of these is wrong? They cannot both be right.
Mr. Gregory Smith: You might be referring to page 1-5 not 1-14.
Senator Banks: Yes, 1-5. You are right; I am sorry.
Mr. Gregory Smith: If you look at 1-5, just above the $248 billion, you will see the $235,784.6 billion total budgetary Main Estimates. Underneath that are two minor adjustments.
Senator Banks: A net adjustment from net to gross basis. What does that mean?
Mr. Alister Smith: When the Department of Finance issues its economic and fiscal update, which was most recent document to which we were aligning, or the budget, they provide their estimates on a gross basis. Therefore, they do not net out requirements, as we do. When we come to ask you for money, we ask you for a net requirement. If we have anything we can credit against that requirement, we will net it out. Therefore, our request to you is on a net basis. They provide the numbers for other purposes on a gross basis, and there is also an accrual adjustment because they provide numbers on an accrual basis, and we appropriate on a cash expenditure basis.
Senator Banks: You are now speaking Greek to me, but I am sure that is the right answer.
The Deputy Chair: We are quickly running out of time. I know you have additional questions. Perhaps you might ask them. Both Mr. Smiths might get back to us or we can ask them to come back and appear before the committee.
Senator Banks: Your choice, deputy chair. I will eliminate all my other questions but one, the reduction to the Library of Parliament, which I think is $36 million. This is a particular concern to us, not just because of the library and the archives themselves, which are very important to us, but also because senators to a great deal rely on the Library of Parliament analysts for research since we have no substantial other means.
The parliamentary librarian, Mr. Young, has explained to me, when I have asked him about this, that he is between a rock and hard place. He cannot keep people; he cannot get people; he cannot pay enough money; and he does not have enough analysts to do the jobs required by us. I am paraphrasing him, but not unfairly.
Since, as a percentage of the total administrative operating costs of Parliament, the Library of Parliament's budgetary expenses have gone down by about 3 per cent over the past two years rather than up — which everyone else has done — why do we have a decrease for this essential service?
Supplementary to that, I understand that those budget amounts are set by the Speakers of the Senate and the House of Commons, and that this is a number based on their recommendations. Therefore, I presume if we want to change that, we need to go to the Speakers. However, has anyone given you a rational explanation for why the Library of Parliament budget would be decreased?
The Deputy Chair: Could I ask you to get back to us in writing on that matter?
Mr. Alister Smith: Certainly.
Senator Chaput: With respect to the fiscal equalization, the major transfers, I was wondering which formula the government used to calculate the amount that is here.
Mr. Alister Smith: I believe this would be the formula before the recent changes in the budget in 2009.
Senator Chaput: Would it be the O'Brien formula?
Mr. Alister Smith: I believe so, yes.
The Deputy Chair: Are there any further questions?
There being no further questions, the committee is adjourned.
(The committee adjourned.)