Proceedings of the Standing Senate Committee on
National Finance
Issue 9 - Evidence - Meeting of June 3, 2009
OTTAWA, Wednesday, June 3, 2009
The Standing Senate Committee on National Finance met this day at 6:30 p.m. to examine and report upon the expenditures set out in the Supplementary Estimates (A) for the fiscal year ending March 31, 2010.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Thank you for coming to this meeting of the Standing Senate Committee on National Finance. On May 14 of this year, Supplementary Estimates (A) for the fiscal year 2009-10 were tabled in the Senate and referred to our committee for consideration.
[Translation]
Yesterday morning Treasury Board Secretariat provided us with a summary of its expenses and, this evening, we are continuing our study.
[English]
Our meeting will have two sessions this evening. In the first hour, we will meet with officials from the Department of National Defence. In the second hour, we will hear from officials at Human Resources and Skills Development Canada, Service Canada, and the Canada Mortgage and Housing Corporation. The Department of National Defence is special; they have the first hour to themselves.
I want to welcome Rear-Admiral Bryn Weadon. He is Assistant Deputy Minister - Finance and Corporate Services for the Department of National Defence. He is joined by David Jacobson, Chief of Staff, Assistant Deputy Minister - Materiel, and Colonel Richard Giguère of the Strategic Joint Staff. Welcome.
Honourable senators, as I indicated, we only have one hour. I have asked Admiral Weadon and I understand he will not have any introductory remarks, but rather work in the points he wants to make as he responds to our questions.
It will be helpful if you have before you the document, Supplementary Estimates (A). It lists all the various government departments with the additional money that they are seeking authority to spend, in addition to the Main Estimates. We are also studying the Main Estimates. As honourable senators know, we will handle a supply bill shortly on the Main Estimates to provide main supply for the period from July 1 to the end of the fiscal year, which is the end of March.
In addition to the funds that National Defence has asked for in the Main Estimates, we have the Supplementary Estimates (A). We want to focus on Supplementary Estimates (A) to the extent possible. However, honourable senators may have questions that need background, in which event we will let them stray somewhat from the estimates.
Before I go to Senator Callbeck as my first questioner, can you tell us the full amount that is sought in the Supplementary Estimates (A) by the Department of National Defence, Admiral Weadon? In general term, why is the department seeking these additional funds?
Rear-Admiral Bryn Weadon, Assistant Deputy Minister — Finance and Corporate Services, National Defence: Thank you senator. I did not expect you to ask for the total so I will verify the amount. We are seeking $1.329 billion through Supplementary Estimates (A). This total is split between three votes. The bulk of the money requested, a little over $1 billion, is in vote 1. That is our personnel, operations and maintenance vote for the Department of National Defence. Then we have requested a further $288 million in vote 5, which is the capital vote for the Department of National Defence.
The two largest items are related to the mission in Afghanistan at $822 million and the upcoming 2010 Winter Olympic and Paralympic Games at $205 million. Two larger vote 5 items are related to capital projects.
The Chair: On page 180 of Supplementary Estimates (A), I see a total of $1.342 billion. Is something subtracted from that total?
Rear-Admiral Weadon: We have amounts in Main Estimates. Treasury Board has frozen amounts in Supplementary Estimates (A). You will have that amount. We will free money through transfers to other departments or transfers back to Treasury Board. I have given you the net amount that we expect to receive.
The Chair: We will receive a supply bill for all the different departments, including your $1.342 billion that we will be asked to approve. This committee will receive a supply bill probably within the next two weeks that we will be required to deal with. The work that we are doing now, in effect, prepares for that supply bill when it comes.
We will not go home for summer break until we have passed that bill.
Rear-Admiral Weadon: The department appreciates that, senator.
The Chair: We assure you of that, but we want to be assured by you and others that what you seek is needed and the reasons why you need it.
Senator Callbeck: In the Supplementary Estimates (A) before us tonight, there is a major increase in capital equipment projects. What is the overall increase counting the Main Estimates plus the Supplementary Estimates (A)? What is the approximate percentage?
Rear-Admiral Weadon: We are expecting to spend, in vote 5, approximately $4.5 billion this year. This increase is about $290 million, or 5 per cent.
Senator Callbeck: Is that an increase of 5 per cent in capital spending?
Rear-Admiral Weadon: Yes, that is correct — over what we asked for in Main Estimates.
Senator Callbeck: I am asking for the increase taking into account the Main Estimates for 2009-10 plus the figure in Supplementary Estimates (A), compared to one year ago.
Rear-Admiral Weadon: From a capital perspective, it is comparable to 2008-09. I do not have the exact number here, I can get that for you.
Senator Callbeck: Roughly.
Rear-Admiral Weadon: We are spending, as a department, between capital and investment cash for major accrual projects, which are the post-2005 projects, in the range of $4 billion to $4.5 billion. That figure includes capital equipment as well as infrastructure projects.
Senator Callbeck: That is a lot of money.
Rear-Admiral Weadon: It is a lot of money.
Senator Callbeck: I am sure you are aware of comments that the Auditor General has made about spending in the capital area. In the spring report, the Auditor General notes that the national defence commitment to improve financial management remains unfulfilled.
What steps are you planning, or have you taken, to ensure that the major expansion of all this capital spending will be well managed?
Rear-Admiral Weadon: We have taken a number of steps. We had the lapse in 2007-08 of $300 million that was money we could not spend in the year and could not carry forward to 2008-09.
It was the first lapse in the department since 2000. We operate under a 1 per cent carry-forward limit. Many departments across government operate with 5 per cent, but the size of our budget makes it difficult to give us that flexibility.
That $300 million was all related to the personnel, operations and maintenance account — the vote 1 account. We did not lapse any money in vote 5 in 2007-08.
We will not lapse any money again in 2008-09. Public accounts are not out yet, but we are in the process of closing the books on the year. Our total carry forward will probably be around $70 million. Therefore, we are not even making full use of the $200 million. Vote 5 carry forward will probably have less than $10 million left.
We have two different types of vote 5 money, which I appreciate is not visible to senators. We have vote 5 money based on pre-budget 2005. This money supports projects previous to the implementation of accrual budgeting, which came to the department in 2005.
We draw annually about $2.5 billion in vote 5 that is for projects such as the Maritime Helicopter Project still being managed under the old processes as well as much of our infrastructure. Over the next few years, we will convert all of that old type of vote 5 money into the accrual budgeting realm.
We have about 2.5 billion recurring in our funding base. On top of that funding, we draw investment cash in the years that we need it in support of capital equipment. When we purchased the C-17 and took delivery of those aircraft, that money came to us through either Main Estimates or supplementary estimates. I believe the C-17 expenditure was mostly through supplementary estimates because of how quick it was between the time of approval and the time we were able to take delivery.
That money comes as investment cash. In the event there is a delay in the project, that money can be given back at the end of the year. It is not a lapse in the old, traditional sense, the way the $300 million was. However, we redraw that investment cash in the years that we need it for the specific projects.
Senator Callbeck: The question I asked was what steps have you taken to counter what the Auditor General indicated? She also told the Committee on National Security and Defence:
Back in 1998, in 2000 and again in 2004, we consistently found National Defence could not ensure that the right people with the right skills are available for major equipment projects.
The Auditor General has been critical of the department. I am trying to find out what steps you have taken to improve, because I am sure you have taken steps.
Rear-Admiral Weadon: We have taken a number of steps on the financial management front. Then I will ask Mr. Jacobson to talk specifically on the capital procurement front.
Since 2003-04, we have invested significant additional money in hiring financial personnel to manage our budget as the budget grows. We have implemented mandatory training for all people that are responsible for exercising the provisions of the Financial Administration Act — sections 32, 33 and 34. In fact, we were ahead of many other departments in town in that training.
We have a tight process around the management in year of money, which has enabled us, over the last five or six years — with the exception of 2007-08 — to be able to close the year within the $200 million carry-forward limit that we have.
On April 1, 2009, in accordance with the policy from Treasury Board around financial management, I have been formally appointed as the Chief Financial Officer of the department. We have instituted a defence finance committee, chaired by the deputy minister, where all major changes in program are brought forward for consideration, as well as the allocations and the quarterly summaries.
This committee formalizes a process that was happening on an informal basis.
David Jacobson, Chief of Staff, Assistant Deputy Minister — Materiel, National Defence: You are correct: It has been one of our challenges to have enough of the right people with the right sets of competencies to manage that scale of capital procurement. We have done a wide variety of things there.
We have focused on everything from recruiting to professional development. For example, on the recruiting side, in the area of engineers alone, we have hired over 200 new engineers over this past year, bringing in a variety of people — some in development programs — some fresh out of university, to work with us. That number also includes a number of people who have experience from industry and so on.
We have also focused on developing and understanding the competencies that are needed. As I am sure senators can appreciate, it takes 20 years to develop a 20-year sergeant. It takes 20 years to develop a 20-year procurement official or systems engineer. However, we have looked at those competencies, developed learning strategies, revamped some of our training and courses and looked at the development through associations.
I came today from a day-long seminar with our project managers to help share the lessons learned across the community. In that way, as we grow the number of people, as we deploy people within the organization and as we develop that workforce over the number of years, it will steadily increase our capacity to manage the scale of the capital program. We had over 600 appointments this past year alone. We have grown by 14 per cent over the last two years.
Senator Callbeck: You say you have grown overall by 14 per cent.
Mr. Jacobson: That is correct.
Senator Callbeck: In personnel: Is that the net increase?
Mr. Jacobson: That is correct.
Senator Callbeck: Are you satisfied that the proper steps have been taken to ensure the capital spending is done well?
Mr. Jacobson: To put that in a slightly different way, senator, I am satisfied that we are taking the proper steps, but the journey will take us some years.
Senator Callbeck: Is that three or four years?
Mr. Jacobson: I estimate it will be in the order of three or fours years. We have made and can already see the benefits of, the changes and the difference in capacity and capability over the last couple of years.
In three or four years, we will have hired to the levels that we need. Ongoing professional development and so on will occur, of course. However, we will be in much better shape.
Senator Mitchell: Thank you gentlemen. Admiral, it is good to see you again. Will this be the last time you appear before you retire?
Rear-Admiral Weadon: Unless you get me between now and Friday, yes.
Senator Mitchell: We will have to do that. Congratulations and thank you for a career of service to Canadians and Canada.
I am interested in the figure of $822 million for Afghanistan. It is likely that I am confused. However, on the Main Estimates, I think there was a $500-million allocation, if I am not mistaken.
Rear-Admiral Weadon: That is correct. The Main Estimates have approximately $550 million in it.
Senator Mitchell: Therefore, this amount is an additional $822 million, so Afghanistan is $1.3 billion?
Rear-Admiral Weadon: Our forecast is about $1.5 billion. We are asking for $822 million at this time. There is about $130 million which, at this point in time, we think we will manage internally, at this point in the year.
We have asked for $822 million at this point in time.
Senator Mitchell: Thank you.
How can you be so far off in the Main Estimates with $500 million? That amount is a third of what you need for the year for Afghanistan. I understand Afghanistan is a special case, but surely we can be closer than $500 million in the Main Estimates. How do does that estimate work?
Rear-Admiral Weadon: In one of the tables that Treasury Board added this year in Part I of the Main Estimates, there is a reconciliation that shows the amount in the Main Estimates and a forecast for the year.
When the Main Estimates were tabled at the end of February, in that document, we forecasted $1,511 million as the total expenditure for 2009-10. The challenge the department has is that, to get money into Main Estimates, we need both policy approval by the appropriate cabinet committee, or a vote in Parliament, et cetera, plus we need approval from Treasury Board with respect to the allocation of funds.
That approval needs to be obtained by the first of October. Therefore, there are about six or five months between when we are cut off from adding to Main Estimates and when Main Estimates are tabled in the house.
As we worked after the vote in the house on the extension of the mission — and Colonel Giguère can give more details on the planning process — effectively, when we reached the October 1 point, we knew some amounts. Certainly, we knew some around some of the Manley initiatives et cetera, so we were able to obtain the necessary approvals to include the $550 million piece into Main Estimates.
However, we did not have the necessary Treasury Board approval for the $822 million by the beginning of October. It was not until later in the fall that we received that approval and consequently, that spending was bumped it into the supplementary estimates for 2009-10. When we went forward, we sought approval for amounts for the following fiscal years 2010-11 and 2011-12.
I am hopeful, subject to a change in the mission between now and the spring of 2010, that the bulk of the funding — if not all the funding — for 2010-11 will appear in the Main Estimates for 2010-11.
Senator Mitchell: Why was more funding not carried over from the Main Estimates the year before last? You would have spent more than $550 million the year before, and I thought that amount would have become the new base?
Rear-Admiral Weadon: We have a funding base for our main operations of the department. The commitment of the government is that all operations, missions abroad, will be funded through incremental funding. Therefore, while we can carry over the base and certain fixed factors such as the 1.5 per cent inflation adjustment that will become 2 per cent in 2011-12, and some of the budget announcements from prior budgets, we can take those amounts as granted and put them into Main Estimates. When it comes to missions, we have to wait until we have the appropriate Treasury Board approval, because those funds are incremental to the core base of the department.
When we were back in the 1990s with a stable number of missions, we were able to submit a recurring amount, but since Afghanistan started in 2001, it has not been possible to estimate that cost, nor was it desirable, really. The missions have changed as we have had additional capabilities in theatre. We had periods where we did not have as much capability in theatre through the 2002-03-04 time frame. Had we been fixed in an amount in 2001, we would appropriate funds which, at the end of the year, we would have to freeze and give back.
Senator Mitchell: That debate would be interesting, because it is not incremental in the sense of something we entered into for a six-month mission. We know we will be there pretty much until 2011.
Rear-Admiral Weadon: That is why we will be able most likely, for 2010-11, to include the full amount in Main Estimates for that time.
Senator Mitchell: What did the Afghanistan mission cost in the previous fiscal year, which just ended?
Rear-Admiral Weadon: That number is not totally finalized. We are still adding up the sums, but I expect it to be in the range of about $1.3 billion.
Senator Mitchell: We are up $200 million.
Rear-Admiral Weadon: There is more expense this year.
Senator Mitchell: What is that expense related to?
Rear-Admiral Weadon: It is related to the fact that last year we did not have all the air assets included for the full year; those deployed to theatre through the course of 2008-09. Many of the Manley initiatives, in fact, were brought in later in the year.
The Chair: For clarification, nothing changed in the mission between last year and this year. You knew you would have pretty much the same expenditure demands. I do not understand how Treasury Board was controlling a decision the government had made in terms of the mission, and DND was following through with it. There is no significant change, yet you say that Treasury Board controlled what money you could have?
Rear-Admiral Weadon: Yes; for any policy decision of the government or the house, for a department to access the money made available by the Department of Finance, a department is required to put in a Treasury Board submission.
We had policy approval for a mission until February 2009, and we had all the necessary Treasury Board approvals in place. Periodically, as the mission changed, we came forward, sought approval and were approved by Treasury Board. Then through supplementary estimates — such as last year where an extra $330 million was given to us through Supplementary Estimates (B) last year — those estimates reflect additional costs.
We had policy approval in 2008-09 to extend the mission beyond February 2009. However, because there was some change to the focus of the mission with February 2009, we needed to complete the necessary planning so when we go to Treasury Board we can say, this is exactly the equipment that will remain in theatre; these are the assets that will be there; these are the people who will be there; and this is what the role will be. We had to build that Treasury Board submission and obtain Treasury Board approval. We were not in a position to complete that work as a department until the fall time frame.
The Chair: That point is interesting. I would love to follow through with it, but we have a limited amount of time.
Senator Ringuette: I have two different questions, and I guess I should start with the first one that is kind of a follow-up.
Correct me if I am wrong, but you have to go to Treasury Board for planning and budgeting?
Rear-Admiral Weadon: We go to Treasury Board for funds. The department goes to cabinet for policy approval.
Senator Ringuette: Budgeting must go through Treasury Board.
In regards to the tender process, do you have to go to the Treasury Board like every other department?
Mr. Jacobson: It depends on what authorities we have. There are many cases where we go to Treasury Board for expenditure authority, and then, on many of the goods contracts, our colleagues in Public Works and Government Services Canada approach, and submit to, the board for contract authorization.
When we go for tender, which can be in various forms, there are times when we are able, if the procurement is relatively minor, to go forward in advance. In other cases, we may need specific policy approval. If the procurement would indicate a clear decision by government to go forward on a capability area, we may need to have the policy covered.
Senator Ringuette: Depending on the policy approval you receive at cabinet, you choose what kind of tendering to go forward with?
Mr. Jacobson: That policy approval will affect the timing of the tendering and then the type — that is, in what way we approach industry or solicit bids from industry.
Senator Ringuette: That process is different from any other department in regards to tendering.
I am looking here at the Main Estimates 2008-09, last year. For total department operation, capital grants, et cetera, you were at roughly $18 billion. For this year's Main Estimates, you are at roughly $19 billion; $1 billion more. That is your base funding, because it is in Main Estimates. Your base funding has increased by $1 billion.
Rear-Admiral Weadon: It has increased by $1 billion, but that funding includes projects that we anticipate we will spend money on in 2009-10 but may not have spent money on in 2008-09, as well as some Afghanistan money.
Senator Ringuette: In regards to Afghanistan money, you are looking at $1.34 billion, you said. How much of those funds are for contracted services, and what is the tendering process for these contracted services?
There seems to be some concern that there is only one major player in contracting those services by the name of SNC-Lavalin. What is the amount of their contract in the Main Estimates 2008-09, 2009-10, and in Supplementary Estimates (A) for the additional money that you require?
I understand that if you are retiring on Friday you may not be able to provide the information.
Rear-Admiral Weadon: Even if I was not retiring on Friday I would still not be able to give you the specific numbers today. We can obtain that information for you.
There are two main types of contracting. One is contracting for the support that is provided in Afghanistan. Within that $1.3 million, which will probably be about $1.5 billion for 2009-10, there is an element that is the direct support in theatre. Some of that contracting is contracted through the North Atlantic Treaty Organisation, NATO. Because this mission is now a NATO mission, many of the nations — and Canada is one of them — use the NATO supply agency as the means to contract. Instead of using Public Works, effectively NATO becomes the contracting agency for nations that need services on the ground.
Senator Ringuette: Like what, for instance?
Rear-Admiral Weadon: We are talking about potentially some of the accommodation, meals, infrastructure, support services and things like that.
Senator Ringuette: You pay NATO?
Rear-Admiral Weadon: We either pay NATO or, potentially NATO will arrange a contract and we will deal directly with the contractor. They will contract one contractor to support all NATO nations. Canadian firms have been successful in winning some of those contracts that NATO has tendered.
Senator Ringuette: Are the other NATO partners tendering services in the same way?
Rear-Admiral Weadon: I do not know if all of them are, but a number are making use of the NATO arrangement.
Senator Ringuette: What are the benefits?
Rear-Admiral Weadon: The benefits, from my perspective, are that they have one supplier and they have an economy of scale. The challenge is of providing that support in an operational theatre such as Kandahar. The fact that they are able to have effectively one supplier delivering to a number of nations, to a larger footprint, brings down the cost per person supported. It has proven beneficial for Canadian firms to win those contracts to support not only Canadian Forces but also other NATO forces.
Senator Ringuette: I understand the NATO situation, although I find it bizarre that only one or two countries tender services in that way. I would like to see the benefits.
Can you provide us with information on the services that you receive through NATO, who the service providers are and how much it costs to go through NATO?
Rear-Admiral Weadon: That information should be available for you.
Senator Nancy Ruth: Thank you for appearing. I want to go back to the $822 million that you are asking for, as it relates to the extension of the Afghan mission. It says on the bottom line of that little paragraph: For close-out expenses at mission end.
I have made an assumption that to cost the mission end, there is a plan for this end. First, will you table the mission and the end plan for closing out Canada in Afghanistan and its full costs with this committee, please?
Rear-Admiral Weadon: I am afraid that is not something I can do. When we came up with our cost estimate to mission close in 2011, we estimated that to be $9 billion from 2001 to mission close in 2011.
Senator Nancy Ruth: That is for the whole package?
Rear-Admiral Weadon: That is for the whole package, from the original deployment of the ships in 2001 through to what we expect, based on government policy and the vote in the house, will be the end of the mission in 2011, the return of all personnel and equipment to Canada as well as an estimate of what it will take to refurbish that equipment when it comes back to Canada because we treat that cost as an incremental cost as well.
We have prepared a forecast based on what we think the cost will be. That amount has been earmarked in our plan to date. When we come forward with our estimate of $9 billion, it is based on a forecasted amount. That amount will need to be refined as we come closer to knowing what our detailed plan will be.
Senator Nancy Ruth: What is today's estimate of that amount?
Rear-Admiral Weadon: We probably booked around $800 million for the return of all personnel and equipment to Canada and for refurbishing. Some equipment refurbishing is happening now. As we rotate equipment out of theatre and replace it with new equipment, we are conducting repair and overhaul and putting it back into service.
Senator Nancy Ruth: Will we selling any to the Afghans, given that they will have a stable government?
Rear-Admiral Weadon: I am not aware of any plans at this point.
Senator Nancy Ruth: One of my favourite things with the military is to talk about the United Nations Security Council Resolution 1325 on Women, Peace and Security. As you prepare for mission end in Afghanistan and the whole change in whatever Canada's role will be there, what are you doing to ensure the implementation of that resolution with local and international women's groups? How are you using relevant gender considerations in your close-out design?
Colonel Richard Giguère, Strategic Joint Staff, National Defence: We already have a good portion of our contingent in Afghanistan, which is composed of women. With respect to that particular Security Council resolution, it does not have a direct impact on what we do because of what we do every day in the Canadian Forces and what we do as a whole of government in Afghanistan — this is a whole of government mission, not only a CF mission — the role of women is a factor that is considered.
Senator Nancy Ruth: Can you tell us about how it is considered? Can you give me a story or two?
Col. Giguère: From a military perspective, when we train our contingent to go to Afghanistan, we use the people that we already have in the forces, in the different contingents. Every contingent is different, but a percentage of that contingent is composed of women. They go on operations with the rest of the soldiers.
There is also an aspect of education, women in politics and subjects such as those where we are not really subject matter experts.
Senator Nancy Ruth: You are training Afghan troops?
Col. Giguère: Yes.
Senator Nancy Ruth: Do you ever talk about this resolution?
Col. Giguère: I am sure that at the soldier level on the ground, they do not talk about that resolution when they train Afghan soldiers.
Senator Nancy Ruth: There is no training for them in that resolution here in Canada, either?
Col. Giguère: Of course, here in Canada, the way women are treated in the Canadian Forces is a success story. This issue is basically a non-issue for Canadian soldiers when they deploy.
Senator Nancy Ruth: I think we probably disagree, but we may have different understandings of what the resolution is about. It is an international covenant, which Canada has signed onto and has an obligation to implement. In my opinion, all soldiers that go through base training should know what this United Nations Security Council resolution is about. Essentially, it is that no peacekeeping and no decision-making will stick and be firm unless women are involved in it. Whether we send police over to train police forces or military personnel to train military, if they do not understand that women have to be part of the decision-making process, it will not happen. It is not about us training our women; it is about wherever Canada goes, it has an obligation to implement this resolution. We will leave that subject at this minute.
I want to move on to the Olympics and the role of the military in the Paralympics and the Olympics. I want to ask you to outline what role the Department of National Defence has in limiting the trafficking of women and children. What plans do you have? What are you working on? What can we expect? I understand this issue is huge among the military, the RCMP, local forces in British Columbia and so on.
Col. Giguère: As you know, we will be there to support the Royal Canadian Mounted Police. The RCMP is the lead organization for the Olympics. I do not have a specific answer to your question because, right now, we are supporting the RCMP. I did not see anything yet at this stage, though I am not saying it does not exist. However, at the strategic level where I work, I did not see anything specific to your question.
Senator Nancy Ruth: Can you please find out and send us the answer?
Col. Giguère: Yes, ma'am.
Senator Nancy Ruth: The bottom of page 180 of the Supplementary Estimates (B) refers to Chemical, Biological, Radiological and Nuclear Research Technology Initiative and it has a bracket around it. It says 1.408. What is that? It says transfers to the Public Health Agency of Canada, for public security initiatives related to Chemical, Biological, Radiological and Nuclear Research and Technology Initiative.
Rear-Admiral Weadon: A program for research and technology has been in place for a couple of years, which is being delivered by a number of departments. That $1.4 million is being transferred to the Public Health Agency of Canada, Health Canada, Natural Resources Canada and the Canadian Nuclear Safety Commission.
The purpose of this program is to enhance Canada's capability to prepare for, prevent, and respond to a chemical, biological radiological or nuclear threat through investments in collaborative research. As well, the program is mandated to create and support clusters of federal laboratories through the acquisition of technology to address gaps in their capability to meet the above-noted threats.
Senator Nancy Ruth: Does that mean you are all working together?
Rear-Admiral Weadon: This is horizontal coordination in the science and technology community to enhance research for the detection of and response to chemical, biological, radiological and nuclear threats.
Senator Nancy Ruth: Is the $1.4 million for coordinating?
Rear-Admiral Weadon: No, the $1.4 million will go to those departments either to conduct research, buy equipment or support work in the research. It is not administrative money. It is to conduct research and develop technologies.
Senator Nancy Ruth: Who oversees that program?
Rear-Admiral Weadon: The Assistant Deputy Minister (Science and Technology) for the Department of National Defence is also the head of defence research — the defence establishment — and is the scientific coordinator. Through the scientific councils that exist, the ADM will work with all these other organizations. We are the lead department to obtain the money and manage this program.
The supplementary estimates is the method we use to provide money to other government departments so they can undertake their piece of the program.
Senator Nancy Ruth: Do you supervise it, monitor it, evaluate it and do all those things?
Rear-Admiral Weadon: That is correct.
The Chair: As a point of clarification, this money that you are asking Parliament to transfer is money that you received when you asked in the Main Estimates. Is that right?
Rear-Admiral Weadon: That is correct. We hope to receive it in Main Estimates when Main Estimates pass. When that money arrives, we will then transfer some of it to other departments.
The Chair: Colleagues are aware that, for you to transfer out of the department, you need parliamentary approval for that, as well.
[Translation]
Senator Chaput: Thank you, Mr. Chair. I would like you to clarify the way in which you transfer these amounts. The summary for the National Defence portfolio indicates that you request the authorization to sign undertakings. As an example, you sign undertakings with the provinces, the municipalities and in this case, for the 2010 Olympic Games.
If I am not mistaken these undertakings involve expenses, and you will therefore need funding. But they should also bring in revenue. If you provide services to provinces or municipalities, or in this case for the Olympic Games, is the cost of the services you provide not a source of revenue? As an example, the 2010 games must certainly have a budget for security; will they be reimbursing you for these services, if they are needed? And where will the cost recovery be indicated, if at all? I do not see it here.
Rear-Admiral Weadon: The revenue for the 2010 Olympic Games will come from the Province of British Columbia or municipalities. This revenue will be returned to the government, it does not come back to the department. This means we will be spending $205 million out of the $212 million in the main estimates. These are our costs. Costs will also be borne by the RCMP and other departments.
Senator Chaput: But I am referring to National Defence.
Rear-Admiral Weadon: Our department will be spending the appropriation. And if revenue is generated for the government, it will go to Treasury Board, and not to our department.
Senator Chaput: If, as an example, we wanted to know the exact budget for the Olympic Games, what they cost Canada, we would see what you spent, but not what you received for your services.
Rear-Admiral Weadon: Not for our department because revenue is not returned to the Department of National Defence. Perhaps another department like Public Safety or the Treasury Board could give you this figure.
Senator Chaput: Would the same principle apply to the agreements you signed with the provinces and municipalities?
Rear-Admiral Weadon: Generally, the provinces and territories receive money for projects within our mandate, but they carry out the project.
Senator Chaput: It is a form of subcontracting?
Rear-Admiral Weadon: Yes, it is subcontracting but for roads, land, family housing for Canadian Forces families; they build the roads and maintain them, but it is up to us to provide the funding.
Senator Chaput: I read something about decontamination, am I mistaken?
Rear-Admiral Weadon: That is with Ontario.
Senator Chaput: It is with the province?
Rear-Admiral Weadon: Yes, we give them a certain amount, the Province of Ontario does the same, and they carry out the decontamination.
Senator Chaput: Funding comes out of your budget and you have obtained it through appropriations?
Rear-Admiral Weadon: Yes, senator.
Senator Chaput: Thank you very much.
[English]
Senator Di Nino: What is the total estimated cost of the whole department for this fiscal year?
Rear-Admiral Weadon: Right now, we expect the total to be approximately $20 billion.
Senator Di Nino: Of that, about $4 million or $5 billion, I believe, is for capital expenditures.
Rear-Admiral Weadon: Right now, it is about $4.5 billion.
Senator Di Nino: What do you classify as capital expenditure? Equipment is part of that category, I imagine.
Rear-Admiral Weadon: The two main categories are the purchase of equipment — anything ranging from a $5,000 item up to a multi-billion-dollar item — and infrastructure, which includes building new buildings or making major life extensions on existing buildings.
Senator Di Nino: Has this number grown extensively since Afghanistan?
Rear-Admiral Weadon: I would not make the link to Afghanistan. However, since Budget 2005, the amount of money that is spent on capital expenditures has increased significantly.
Senator Di Nino: Can you give us a rough idea of the total budget for the previous year and the year before that, both in total and in capital expenditures?
Rear-Admiral Weadon: I can give you last year's number, which is $19 billion. When you add up our Main Estimates for 2008-09, plus our supplementary estimates, the amount was approximately $19 billion. Our capital was probably in the $4-billion range. I do not have the exact number.
Senator Di Nino: Is $3 billion to $5 billion a year a normal figure that you spend?
Rear-Admiral Weadon: We expect to stay in that range. There is a possibility it will go higher. It depends on the pace of the capital projects and whether we are able to advance deliveries in some projects.
For example, the money that we have asked for in Supplementary Estimates (A) for trucks is a case where we have been able to advance delivery. Therefore, we need more funds in 2009-10 to pay for trucks because they will arrive faster than originally planned.
Senator Di Nino: How does the procurement system work? Are there limits where departments can spend without a competitive process, and are there different limits for different amounts?
Mr. Jacobson: You are right. There are certain limits that one is allowed. Procurement can take place without a competitive process if the amount is relatively minor. If that amount is exceeded, they need additional permissions and approvals when they are in a situation where it is in the public interest, they are in an emergency or urgent situation or there is only one supplier such as with intellectual property in which they have to go forward on a sole-source basis.
Senator Di Nino: Are they different levels of authorities within the structure of the military?
Mr. Jacobson: They are within the structure of the government. For example, we need to go to Treasury Board for anything over $2 million.
Senator Di Nino: Do you have an internal audit department?
Rear-Admiral Weadon: Yes, we do. The Chief of Review Services is the internal auditor for the Department of National Defence.
Senator Di Nino: Do they work with the Auditor General at the appropriate time?
Rear-Admiral Weadon: Yes, they work with the Auditor General to ensure they are not auditing the same thing the Auditor General is auditing. It is not my expertise, but I think that the Auditor General's first stop on the way in is probably to look at the internal audits that have been conducted in the department to develop a sense of what issues have been raised.
Senator Di Nino: Two or three weeks ago at a meeting of the Standing Senate Committee on National Security and Defence, there was a suggestion that procurement was too slow. The military was not moving fast enough to make purchases of some of the capital equipment that had been authorized.
This evening, you seem to indicate that you are moving forward quickly to purchase equipment. Can you explain the conflict there?
Rear-Admiral Weadon: As the chief financial officer, I want to ensure the money is ready if the procurement process is successful and we move forward. For example, we were able to take quick delivery of the C-17 aircraft. The timeline between concept and delivery was quick. Other equipment has also arrived quickly. We will have earlier delivery than planned for the trucks. Other projects are taking longer to arrive than we would like, through the process.
Senator Di Nino: Is it fair to say that you try to purchase the equipment as soon as you can?
Rear-Admiral Weadon: As the chief financial officer, it is my preference that the equipment arrives as quickly as possible.
Senator Di Nino: It is also for the benefit of the soldier in the field if we can have better equipment to them as soon as we can.
Mr. Jacobson: That is correct.
In general, we have made enormous strides in recent years reducing by the order of 70 per cent the time needed to make major procurements. There are a number of recent examples such as the C-17s, the tactical airlift capability tanks and artillery. A number of these procurements support our forces in Afghanistan as well.
While we have made those tremendous strides, still you probably will not find anyone who is satisfied. We all want the process to move faster. We reviewed a number of the Manley initiatives today at our project management seminar that I mentioned earlier. We had the pleasure of having four project managers talking about how they brought in over $1 billion worth of new capabilities in less than a year working together.
Some of our allies commented part way through the process that, you people in Canada are crazy; you will never get there. However, in fact, we did. That was with the unquestioned support of our colleagues in other departments, central agencies and many people burning a lot of midnight oil.
The Chair: I have a couple of points of clarification. You indicated in answer to Senator Di Nino that you anticipated total expenditures this year at around $20 billion. However, I have $19 billion in the Main Estimates and $1.3 billion in Supplementary Estimates (A). We are over $20 billion and there are two more supplementary estimates to come.
Rear-Admiral Weadon: I hope those estimates will not be as large as this one. I know of a couple of items that could come forward, but we will be in the range of $20.5 billion.
The Chair: You are at $20.5 billion now. Therefore, you will be above that amount unless you give some back.
Rear-Admiral Weadon: That is a possibility as we progress through the year, especially around the investment cash for capital projects.
The Chair: You also indicated to Senator Di Nino that there was approximately $4 billion last year in capital projects. Can you provide us with a percentage of projects that went through the process of competitive bids and those that were sole sourced?
Mr. Jacobson: I do not have that figure off the top of my head. Typically, the vast majority are competitively bid.
The Chair: Can you look at two or three years for us and provide us with the breakdown of those figures?
The information will be helpful to round out Senator Di Nino's questions.
Senator Neufeld: I want to thank you for what you do, and through you, to the men and women out there doing things for Canada that we sometimes take for granted here at home. Please pass that thanks on to them.
I want to touch on two things. First were initial questions about the auditor. You said that after the audit, you had to hire many people including engineers, and that you think it will take about four years to ramp up to where the report says you should be.
I have not read the report. Was there a significant change in the way you were instructed to manage the money or was it poorly managed before that report required you to ramp up to manage it differently? I do not understand the massive nature of what you say will take four years to get up to speed and how you manage the budget, unless I misunderstood you. Those resources can come relatively quickly. Can you clarify that situation?
Mr. Jacobson: It may be helpful to provide a little history. The materiel group within the Department of National Defence responsible for the procurement of our equipment and our services was of the order of 13,000 people at the beginning of the 1990s.
Like other government departments, we went through a number of programs to reduce the size of that group and to find smarter ways to procure the same amount of material but with fewer people. For instance, that might include bundling a number of activities and determining that we do not need to manage this activity — industry can do a perfectly good job managing on our behalf; we can have 30 people overseeing that activity as opposed to 300 people. We made a number of changes there.
The challenge that we faced in the last approximately five years has been the relatively dramatic increase in our overall procurement. If we look back, say, about four years ago, we were procuring perhaps in the order of $1 billion of capital equipment per year and supporting to the tune of about $1.5 billion a year with the maintenance, repair and overhaul of the equipment we already had. As Admiral Weadon has indicated, we are now managing the expenditure of between $4 billion and $5 billion of capital, and in the order of $2.5 billion of maintenance, repair and overhaul.
The scale of activity has risen dramatically. As a result, we have needed more procurement officials, more engineers, additional managers and so on to cope with that scale.
We also have made other changes and we have gone further in terms of where we can use established capabilities that are out there in industry, and further reduce the overhead we need to make those procurements in a responsible way.
Senator Neufeld: I believe you also said that the Afghan mission is not consuming all that extra money. You are building up maybe what you were starved of before. You are nodding that you agree with me. That says to me that over the last three to four years, the government has responded favourably to modernizing, bringing in new equipment and equipping the troops better to perform their jobs around the world on our behalf, and that is good news for everyone.
Mr. Jacobson: That is correct.
Senator Neufeld: With respect to the Olympics, because I am from British Columbia and I was in that province's government prior to coming here, I know that the security costs of the Olympics have risen dramatically from conception, when Canada won the bid. The bid is not British Columbia's; it is actually Canada's. It is only carried out in British Columbia.
Security costs increased dramatically for the province, as well as for the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games, VANOC, through federal government funding.
Can you tell me what kind of things your department will do with respect to security at the Olympics? We know what the RCMP will do, but maybe many people do not know what the Canadian Forces will do there. Is it related only to security, or is there something else? Will you be there along the coast with some of your ships? Are those the kinds of things you will be responsible for because of the higher threat of terrorism, et cetera?
Mr. Jacobson: I will ask Col. Giguère to provide you with a high-level summary of his activities.
Col. Giguère: To give you an idea of what can be expected from the Canadian Forces in support, like I mentioned earlier, of the RCMP on the security side at the Olympics, we are talking about land patrols, surveillance, air defence and maritime surveillance. We could have logistics support, explosive disposal and other types of technical expertise. This information is broad but the kind of support that we can provide because we have the training and the equipment to do so that other security organizations do not have.
Senator Neufeld: That information makes good sense of what you are doing. To go a little further, was this type of surveillance provided from the Department of National Defence during the Calgary Olympics?
Rear-Admiral Weadon: There was support from the Canadian Forces for the Calgary Olympics. I do not have with me on what level. Of course, given 1976 to now and the impact of inflation, to compare the costs would be difficult. There was military support to the Calgary Olympics, as there was at the Montreal Olympics as well.
Senator Neufeld: Thank you.
Senator Di Nino: In 1983, the Scouts had an International Scout Jamboree in Kananaskis, and the military was heavily involved, particularly around the perimeter. I think these kinds of events are natural for them.
The Chair: Kananaskis is a good one because the G8 summit there had a huge military presence.
Honourable senators, we have had a good session on the Supplementary Estimates (A) from the Department of National Defence's point of view. On behalf of the Standing Senate Committee on National Finance and, in particular, those of us here and all senators, we wish Admiral Weadon — I have forgotten the navy term — fair winds and following seas. I have heard that phrase so many times, I should have remembered it. We wish you well on your retirement.
Rear-Admiral Weadon: Thank you. I look forward to going back to Nova Scotia.
The Chair: Thank you very much for your service to Canada over the last many years.
[Translation]
Colonel Giguère, thank you very for attending our meeting this evening.
Mr. Jacobson, thank you as well.
[English]
We now have a new panel of witnesses, and we welcome you all. We continue our study of the Supplementary Estimates (A). We anticipate a supply bill coming in due course that reflects these Supplementary Estimates (A).
At this time, we have Service Canada, Human Resources and Skills Development Canada, and Canada Mortgage and Housing Corporation.
We are pleased to welcome, from Canada Mortgage and Housing Corporation, Michel Tremblay, Chief Financial Officer; and Sharon Matthews, Vice-President, Assisted Housing.
We also welcome from Human Resources and Skills Development Canada, Karen Jackson, Senior Assistant Deputy Minister, Income Security and Social Development Branch; Paul Thompson, Associate Assistant Deputy Minister, Skills and Employment Branch; and Su Dazé, Comptroller.
From Service Canada we have Liliane Binette, Assistant Deputy Minister, Operations Branch.
Do any of you wish to make a brief introductory remark?
[Translation]
Karen Jackson, Senior Assistant Deputy Minister, Income Security and Social Development Branch, Human Resources and Skills Development Canada: Thank you, Mr. Chair and members of the committee.
[English]
I am pleased to be here this evening to discuss the supplementary estimates for the Department of Human Resources and Skills Development for 2009-10.
We have supplementary estimates that are necessary as we seek authority for the revised spending levels that Parliament has been asked to approve. These supplementary estimates build on the Main Estimates of May 4, which came shortly after the budget, the Government of Canada's Economic Action Plan. That is the reason, therefore, that those Main Estimates did not reflect the announcements made in the January budget.
[Translation]
Spending initiatives which appeared in the Government of Canada's Economic Action Plan will be the subject of our discussions today.
[English]
The supplementary estimates show that HRSDC requests a further $455.1 million to continue delivering programs and services that directly benefit Canadians every day. Almost $321.5 million of this amount is in the form of grants and contributions to organizations that partner with us to deliver results and programming in communities.
Among these programs, we are asking for funds for the Canada Skills and Transition Strategy — which was a part of Canada's Economic Action Plan — to help Canadians obtain financial assistance and skills development and training needed to acquire and retain jobs.
The additional funds include $128.5 million for the continuation of the Homelessness Partnering Strategy, to promote strategic partnerships, housing solutions and assist homeless people to move towards self-sufficiency.
I will outline briefly some of the measures that were included in the Canada Skills and Transition Strategy and that are here in the supplementary estimates.
HRSDC is requesting $40 million in spending for the apprenticeship completion grant. With this funding, a taxable grant of $2,000 will be provided to about 2,000 apprentices each year. The grant will go to those who complete their apprenticeship training and obtain their certification in any of the designated Red Seal trades.
This new grant complements an existing incentive grant designed to attract young people to undertake careers in the skilled trades, and both are indeed intended to increase access to the skilled trades. Registered apprentices in any of the designated Red Seal trades will now be eligible to receive up to $4,000 over the period of their apprenticeship training.
Moving on, the supplementary estimates also include funding of $26 million for the Wage Earner Protection Program. Through this program, in instances where employers have declared bankruptcy or are subject to receivership under the Bankruptcy and Insolvency Act, the eligible wages including salaries, commissions, vacation pay, termination and severance pay owing to workers will be restored.
HRSDC also requests funding to encourage greater Aboriginal Canadian participation in the labour market, specifically $25 million for the Aboriginal Human Resources Development Strategy. We are also asking for $24.7 million for the Aboriginal Skills and Training Strategic Investment Fund. This fund is to support projects to assist Aboriginal people with barriers to employment find and keep employment.
A further $20.9 million is requested for a separate program, the Aboriginal Skills and Employment Partnership Program. This program aims to develop the skills of Aboriginal Canadians through partnerships with employers. It will help them gain sustainable employment on major economic projects that provide, in turn, lasting benefits to themselves, their families and their communities.
Moving on, there is also, in the supplementary estimates, a request for $17.2 million for the Foreign Credential Recognition program, another measure of the Economic Action Plan. This funding will provide for the timely assessment and recognition of foreign qualifications through the development of a pan-Canadian framework on foreign recognition. In turn, we see this goal speeding up the integration of skilled immigrants into Canada's labour force.
Mr. Chair, a further $49.9 million is requested for the Targeted Initiative for Older Workers. This existing program supports older workers in communities affected by downsizing, closures or high unemployment. The goal here is to help them reintegrate into jobs and employment. The supplementary estimates bring the total budget for that initiative in 2009-10 to $56.6 million. The funding for the extension in the enhancements of that initiative will support not only unemployed older workers in communities affected by downsizing or closures, but will be extended as well to smaller cities.
Moving on, the department also requests $6.1 million for Canada Summer Jobs. It is an existing program that funds work experience for students who deliver community services to children, families, people with disabilities, seniors and others through summer employment.
The total program budget for Canada Summer Jobs in 2009, as a result, will be $107.5 million allocated across the 308 federal constituencies.
I will spend another moment on the Homelessness Partnering Strategy, for which HRSDC requests $128.5 million in this year's supplementary estimates. In September 2008, the government committed $1.9 billion over the next five years for affordable housing for low-income Canadians, and to help homeless people. Ms. Matthews will elaborate on that strategy in a few minutes.
The department must request the funding for the Homelessness Partnering Strategy through these supplementary estimates because the Main Estimates had already been completed in the fall, prior to all necessary approvals being secured.
There are a couple of re-profiling requests. There is a $500 million annual budget for labour market agreements with the provinces and territories to deliver skills training to individuals who are not eligible for Employment Insurance. At the request of some of the provinces and territories we, in turn, are requesting a re-profiling of $22.2 million from the previous year, 2008-09, to 2009-10 in recognition of the time and challenges it took to put formal agreements in place with all the provinces and territories. It will also allow the provinces and territories the time to plan and deliver the new programming, according to the particular circumstances of their regions of the country.
As well, HRSDC requests a re-profile of $8.7 million for the Enabling Accessibility Fund. That money funds both major and minor capital projects to construct or renovate buildings, to modify vehicles or to make information and communication technology more accessible to persons with disabilities.
Finally, I will try to explain one other aspect: The need for $59.7 million in operating funds to compensate for a reduction in administrative costs charged to the Employment Insurance account. Many administrative activities in our department are in support of both EI- and non-EI-eligible clients.
A recent review of the formula used to apportion the cost resulted in a requirement to realign our funding authorities. As a result, we seek an increase of $59.7 million in appropriated funds with a decline of the same amount in the funding that is drawn from the EI account. The next time this formula is scheduled for review is two years from now.
Thank you, members of the committee, for your interest in our department and for having us here. In times like this, Canadians' expectations of our department are great, and I hope we have been able to explain how we intend to meet those expectations and provide help to Canadian families and workers.
The Chair: Thank you, Ms. Jackson. Before we go to you, Mr. Tremblay, I will ask for clarification. I am not sure that I understood your $59.7 million related to EI. Maybe you can give some documentation that will help me understand and I will circulate it to all members of the committee. You said that formula will not be up for review for another two or three years.
Most of your points, Ms. Jackson, appear in our supplementary estimates document at page 155, colleagues. We were following that list; virtually all are there.
However, you made mention of a $25 million Wage Earner Protection Program. That item is statutory. We have already approved that item under Bill C-10. However, we appreciate the statutory items that are here because they help bring it all together. We will not vote on that item, however. It is there only for our knowledge and information.
I did not understand your comment with respect to two or three items. You said they are ``re-profiling.'' What do you mean by ``re-profiling?'' That word does not appear on the items themselves here.
Ms. Jackson: Mr. Chair, re-profiling means that these monies were indeed in budgets for the department in a previous year. There comes a point in that year where we can see that we will not be able to spend those monies fully. It is a formal request, then, that they reappear in these supplementary estimates so that, indeed, they are there to be spent for the purposes of the programs and services.
The Chair: Thank you. That helps clarify the item. Honourable senators might have other questions, but we will ask Mr. Tremblay to give his remarks first.
Michel Tremblay, Chief Financial Officer, Canada Mortgage and Housing Corporation: Thank you. On behalf of CMHC, we are pleased to have this opportunity to update the Standing Senate Committee on National Finance on CMHC's 2009-10 Supplementary Estimates (A).
[Translation]
I would also like to provide a brief update on the progress in implementing housing-related measures contained in Canada's Economic Action Plan.
[English]
As senators know, CMHC President, Karen Kinsley, and I appeared before this committee on March 24. Since then, on May 14, CMHC has tabled the Supplementary Estimates (A). We are seeking parliamentary approval for items that were not part of our 2009-10 Main Estimates.
In September 2008, the government committed more than $1.9 billion over the next five years to improve and build new affordable housing and to help the homeless. Canada's Economic Action Plan built on this with further investment of more than $2 billion over two years to build on and repair social housing units across the country.
[Translation]
Supplementary Estimates (A) seek funding approval to allow CMHC to act on the extension of CMHC's suite of renovation programs and the Affordable Housing Initiative, as well as portions of Canada's Economic Action Plan.
[English]
In addition to the $812 billion provided under the Budget Implementation Act for Canada's Economic Action Plan, we are requesting $75 million in 2009-10 for renovation of existing federally supported social housing, which CMHC administers. As you know, much of this housing is aging and in need of essential repairs. The money will be used also for energy retrofits.
Also included is $1.3 million requested to improve housing in First Nations. First Nations communities face several housing challenges, including overcrowding and high cost of construction in remote areas. This funding will support the creation of new affordable housing units.
As I indicated earlier, these estimates also provide for the extension of our Affordable Housing Initiative and Homeowner Residential Rehabilitation Assistance Programs.
There is $49.7 million for the Affordable Housing Initiative, which supports the creation of new, quality, affordable homes.
[Translation]
Funding for the Residential Rehabilitation Assistance Program will be increased by $86.9 million. This program provides financial assistance to bring dwellings up to a minimum standard of health and safety. It also helps with repairs that allow the elderly and disabled to stay in their homes.
[English]
The budget commitments contained in Canada's Economic Action Plan go a long way to shaping our activities at CMHC. I want to update the committee briefly on CMHC's progress in implementing Canada's Economic Action Plan.
In total, you will recall CMHC is responsible for delivering more than $4 billion of the federal economic stimulus funding. These investments will benefit hundreds of thousands of Canadians, create thousands of jobs in the housing sector, and help hundreds of Canadian companies that make or supply housing material.
[Translation]
CMHC is working closely with partners such as provincial and territorial governments, and stakeholders to ensure that stimulus funding is distributed in a timely and effective manner. We have signed agreements with most provinces and territories and funding is now available for those governments.
[English]
Of the $1 billion in social housing renovation funding, $150 million is being delivered directly by CMHC. We are already accepting applications for these funds. As of April 27, First Nations can now apply for funding to renovate existing housing or to build new housing through CMHC and Indian and Northern Affairs Canada. CMHC is also accepting loan applications through the Municipal Infrastructure Lending Program for housing-related infrastructure projects.
Details and applications for various initiatives are also available on our website.
[Translation]
CMHC looks forward to working with our partners to help stimulate the economy and create jobs, to improve housing options for Canadians and to continue building the best housing system in the world.
[English]
Thank you once again for this opportunity to tell you about our work. We will be pleased to answer your questions. The supplementary estimates for CMHC are on page 157.
The Chair: I was trying to follow your comments by reviewing this page as you went through it. It is page 157 in the Supplementary Estimates (A) document.
[Translation]
Did anyone else care to make a presentation? If not, we will now begin to hear senators' questions. The first question will go to Senator Mitchell from Alberta.
[English]
Senator Mitchell: To begin, my questions will be directed to Mr. Tremblay. When you and the president were here, a couple of things came out that I want to pursue.
I think it was stated that CMHC has bought $53 billion worth of bank paper. Is that still the case or have they bought any more?
Mr. Tremblay: I think our figure is now up to $56 billion and it is in pooled mortgages; it is not necessarily bank paper. It is in pooled mortgages that are already insured either by CMHC or competitors.
Senator Mitchell: What is the quality of those mortgages? Have you assessed the risk?
Mr. Tremblay: There is no additional risk to the Government of Canada. These are high-quality mortgages the banks were holding. They are already insured either by CMHC or competitors with strict underwriting criteria and also backed by the government guarantee.
Senator Mitchell: The banks, therefore, sold these mortgages to you for liquidity, but they sold good mortgages to you. That seems counterintuitive to me.
Mr. Tremblay: Once they do that, they gain additional funding to be able to make more loans to Canadians. Other sources of funding were dried up in the market.
Senator Mitchell: If it was $53 billion and you added $6 billion more, why is there $50 billion here on page 154 of Supplementary Estimates (A), 2009-10?
Mr. Tremblay: It was allocated through tranches. In October of 2008, there was $25 billion. There was an additional $50 billion again, still in 2008, and then a subsequent $50 billion, which is part of Bill C-10, Budget 2009.
Senator Mitchell: If you spent only $56 billion and your first two tranches were $75 billion, why do you need another one?
Mr. Tremblay: The take-up has been slower in the last couple of auctions we have held, so the financial institutions have not done a full take-up.
Let us say we offered to purchase $4 billion. In some cases, the auction came back and only $2 billion were offered, which can be seen as a positive thing. The banks are indicating that currently they have sufficient funding, or the Insured Mortgage Purchase Program has worked in providing them with the necessary funding. That is a point in time. It is not to say that situation will or will not continue.
Senator Mitchell: The reason you have this money here, in a sense, is contingency; in the event that banks need it, you will have it. That is the only reason.
Mr. Tremblay: Correct; the program is available up to September 30, 2009.
Senator Mitchell: You could go to $125 billion in the next four months, but it is not likely.
Mr. Tremblay: Based on the recent take-up, it is unlikely.
Senator Mitchell: I want to pursue one other line of questioning. I think the president also said you have about $334 billion worth of insured mortgage — that is your portfolio — but that only one third of 1 per cent were questionable or were in some sense vulnerable. That amount is $11 billion. It seems odd to me that, given the credit difficulties we are experiencing and the recession we are experiencing, only one third of 1 per cent of the people who hold mortgages insured by CMHC would be ultimately in jeopardy of being unable to pay.
Mr. Tremblay: I believe the one third of 1 per cent figure is the rate of arrears, which is published by the Canadian Bankers Association on their website. That rate is when a borrower has gone three months or more without making a payment on their mortgage, and that rate is probably around 0.39 per cent right now. It is almost 0.40 and it has been creeping up.
Senator Mitchell: It has gone up from about a third of a per cent to 0.4?
Mr. Tremblay: It is well below historical highs. In the 1980s and 1990s, it was at half a per cent for the longest time. I think the most we ever paid in claims at the CMHC is $600 million in a given year.
Sharon Matthews, Vice-President, Assisted Housing, Canada Mortgage and Housing Corporation: To put that figure more into context, in 2006, the claims that CMHC would have paid would have been in the order of $209 million. At the end of 2008, CMHC paid about $372 million, so the increase is not insignificant. However, in the context of over $334 billion in outstanding insurance in force, it is still a fairly small number. It is because we have stringent underwriting.
Senator Ringuette: That is for a portion of the market.
Ms. Matthews: True.
Senator Mitchell: You have taken on a particular quality of mortgages.
Ms. Matthews: I suggest we probably take some of the poorer quality mortgages relative to some of our competitors. Remember, we are in the marketplace to ensure we serve across the country. We serve rural and remote areas. We are into rental insurance, which our competitors are not, and that area can be more volatile. One would not assume we are taking the better versus the poorer quality.
Senator Mitchell: What explanation is there that relatively, so few mortgages are in trouble? If that is the case, why was it ever necessary — well, there are other reasons why you have to provide cash to the banks.
Ms. Matthews: It is important to appreciate that the Canadian housing marketplace is not the American housing marketplace. That is what most Canadians hear on the news night after night. Subprime, for example, was a major component of what happened in the States. In Canada, not only CMHC, but none of the insurers were in the business of subprime. We have high-quality and prudent underwriting. We look at our loans.
The banks in Canada are also prudent and conservative in what they are doing. The benefit of the new program, the Insured Mortgage Purchase Program, IMPP, was really to insure the liquidity in the marketplace at a point where globally there was a crisis going on and there was not the access. This program facilitated that liquidity that provided that extra stability to our financial system and allowed those banks to continue to do business as usual.
As Mr. Tremblay noted, the fact that the take-up has not been up more recently, in the last couple auctions, is a good sign in terms of what is happening in the Canadian marketplace.
The Chair: I would like clarification on a point that Senator Mitchell was making. In relation to the $50 billion for the Insured Mortgage Purchase Program, you talked about $75 billion in an earlier tranche. Where did that $75 billion appear? Where will we find that approval? Is this funding statutory or are you coming here to ask us to approve $50 billion now?
Mr. Tremblay: The $50 billion is statutory.
The Chair: It is here for information, but the way it is presented at page 154 looks like it is part of the actual request under these Supplementary Estimates (A).
Mr. Tremblay: What happened, if you look in the vote area way at the left-hand side where it says ``vote,'' anything that has an ``S'' is statutory. It is there only for information purposes.
The Chair: The earlier $75 billion is likewise statutory?
Mr. Tremblay: Yes.
The Chair: We might not have seen that. I do not recall, but it might have been tucked away in one of these documents.
Mr. Tremblay: I am not sure. Because of the timing of it in October of 2008, I am not sure when or how you would have seen it.
The Chair: On another point of clarification, at page 157, there is $75 million of funding ``to stimulate housing construction by addressing,'' et cetera, and it says Budget 2009.
My recollection is we have already approved a significant amount of money in Bill C-10 for precisely the same thing. Why are you asking for more money here on that?
Mr. Tremblay: The way this item was divvied up, the Treasury Board took through the Budget Implementation Act anything that was not directly delivered by CMHC. It was delivered by our partners, either the provinces or the territories. Every item in vote 15 will be delivered directly by CMHC. That is how the delineation was made.
You are correct. If you look at the budget, the $75 million is part of a total $1 billion, of which $150 million will be delivered by CMHC. Over the life of the two-and-a-half year program, $850 million will be delivered by the provinces and territories.
The Chair: This is $75 million of the CMHC portion?
Mr. Tremblay: That is correct.
The Chair: That clarifies the matter for me. Thank you.
Senator Ringuette: I have one question for Mr. Tremblay. You lost quite a percentage with the two players in the mortgage insurance market. I know that the federal government also bought mortgages from the famous American insurer that has been in Canada for only three years. However, it was not billions of dollars. From the amounts we identified as statutory, does that include a mortgage insurance bailout for your two mortgage insurance competitors, such as AIG?
Mr. Tremblay: In terms of the pooling of mortgages being offered by the financial institutions to CMHC for purchase, they include mortgages insured by CMHC, Genworth and AIG. However, AIG and Genworth in Canada are still fully capitalized and strong if you look at their Canadian balance sheet. They are already in the Canadian market, and the Government of Canada was already guaranteeing those mortgages implicitly through the Canada Bank Act.
That the mortgages have been purchased by CMHC does not add additional risk to the Government of Canada.
Senator Ringuette: It is a benefit for an American company that has been operating in Canada for only three years to have all these mortgages bought out, providing liquidity, as you say.
CMHC has been doing an excellent job from my perspective to help Canadians buy their first home and so forth. I am — I am trying to find the exact word — not a pleased Canadian citizen knowing what has been happening in the U.S. mortgage insurance market. We have an American company, AIG, that has been here for only three years. They took away a substantial amount of your market by going into the derivative market where they offered mortgages for no cash down, borrowers could include landscaping and furniture and they paid only on the interest for 10 years. They offered the same system they operated in the U.S.
Meanwhile, CMHC has been providing good services and you are treated the same way by our federal government. I do not see that situation as being fair. That is a comment and I do not expect you to venture into that subject.
The Chair: You may be entering policy issues here.
Senator Ringuette: I needed to make that comment.
Ms. Jackson, you indicate on page 3 of your presentation that you are requesting $40 million on an apprenticeship completion program at $2,000 for 20,000 apprentices. I would like further explanation on this program.
Most of the trades have a five-year apprenticeship before reaching Red Seal certification. You are saying that the $2,000 plus is overall $4,000 for those apprentices. How does it work?
Mr. Jacobson: I will have Mr. Thompson answer that question.
Paul Thompson, Associate Assistant Deputy Minister, Skills and Employment Branch, Human Resources and Skills Development Canada: We have two programs that work in a complementary fashion. The pre-existing apprenticeship incentive grant provided $1,000 per apprentice upon completion of the first year or stage of the apprenticeship program. The second program, which was the newer one launched at part of Budget 2009, was the apprenticeship completion grant that provides an additional $2,000 taxable grant, which Ms. Jackson outlined in her remarks. That grant is paid upon completion of the apprenticeship program. If it is in a designated Red Seal program, they are eligible for that $2,000 bringing the total to $4,000, once they complete the program. That total is two $1,000 grants and a completion grant of $2,000. Our current estimate for the completion grant is that approximately 20,000 apprentices will qualify for this grant.
Senator Ringuette: Do you have an estimate of the number per province that you anticipate for those 20,000 apprentices?
Mr. Thompson: It is based on information gathered by Statistics Canada on the trends in apprenticeship registrations. I do not have figures in front of me on a provincial basis. The apprenticeship program is administered provincially so we do have estimates.
Senator Ringuette: Is it part of the federal-provincial agreement on training? If not, why not?
Mr. Thompson: As part of the labour market grants?
Senator Ringuette: Yes.
Mr. Thompson: This is a stand-alone program. It is an added incentive to participants in apprenticeship programs to complete the program to meet the overall shortage of skilled tradespeople. It is an additional measure on top of the apprenticeship programs administered by individual provinces.
Senator Ringuette: On page 4, you talk about foreign credential recognition to develop a pan-Canadian framework on foreign recognition. How will that program work?
Mr. Thompson: We have launched another project in collaboration with provinces and territories. The bodies that regulate professions are provincial in most cases. In this case, we are working with provincial and territorial counterparts to develop a framework of standards and principles to guide the way in which foreign credentials are recognized. This framework is with a view to making that recognition timelier and trying to provide more information to people before their arrival in Canada on the process they will go through to recognize those credentials. This item is part of a project that first ministers asked to be brought to them by September. We are on a track to achieve that date.
Senator Ringuette: Will this project replace the unaccountable recognition that your department gives to provide temporary work visas in Canada, where only the employer can determine if the applicant is qualified?
Mr. Thompson: This project is a distinct initiative from the Temporary Foreign Worker Program. The project is aimed at recognition of credentials of immigrants to Canada who are permanent entrants to the labour force and who received their credentials elsewhere. There will be linkages into the labour force priorities in identifying those occupations in the highest demand and where we need to put the biggest focus to recognize those credentials.
Senator Ringuette: The last statistics available were that 221,000 temporary foreign worker visas were issued in 2007- 08 by your department. The only means of accountability in regards to credentials was that the employer said this person has the skills. An even bigger problem in our system is that our immigration people in our foreign embassies are recognizing, on the spot, that a person has the same skills and training as a Canadian to occupy a certain position and to obtain a visa to work in Canada on a temporary basis.
Ms. Jackson: I will make two points in response.
First, we have immigrants who have recently arrived in Canada whose credentials have not been recognized, whether as an engineer, a medical professional or whatever. That situation could contribute to the number of requests that come forward from employers to hire, and allow the entry of, temporary foreign workers. To the extent we can recognize credentials more quickly for those who are here, we should see less of a need over time to bring people to work temporarily in Canada.
Second, it is necessary for temporary foreign workers to meet the standards of the provinces in the regulated trades and professions.
Senator Ringuette: It is not only your department that requests that of the employer, and I have that in writing from the department, thank you very much.
With regard to the $59.7 million for EI, administrative costs in switching from one account to the other, six weeks ago your minister announced publicly that because there was a three-month delay in providing EI and processing requests — a huge delay — that she will add $60 million to human resources for processing purposes. Is this $59.7 million the same amount of money we are talking about?
Maybe I should clarify the question. The way I read this document is that you are taking $59.7 million from the administration funds of EI, and you are transferring those funds to non-EI operations.
Is that what you are saying here?
Ms. Jackson: No, it is not. There are two things we can do to answer that question. I will ask Ms. Dazé to explain the $59.7 million again and see if we can make ourselves understood better. Then I will ask Ms. Binette to address the question about EI processing and recent steps taken there.
Su Dazé, Comptroller, Human Resources and Skills Development Canada: The $59.7 million represents a review of our costing methodology. Human Resources and Skills Development Canada is funded in three ways: We have money from Consolidated Revenue Fund, CRF; money to deliver Canada Pension Plan programming; and we have money to deliver EI programming.
On a cyclical basis we review the formula. When we review the EI formula, we conduct an extensive review of each and every expense we make in the department, each organization to identify whether they are delivering EI directly, indirectly or not at all so we can establish a costing formula, and the proper amount to charge to the EI account.
It had been a few years since we performed the last review, so we reviewed and found that we were charging the EI account $59.7 million too much.
This money is not additional money to HRSDC. We have one pot of money and it is a matter of allocation, so it is a zero-sum gain.
Senator Ringuette: I understand.
Liliane Binette, Assistant Deputy Minister, Operations Branch, Service Canada: The approved resources were targeted on processing the EI applications as quickly as possible. As I believe you are already aware, there is a long- standing standard of processing 80 per cent of the file so that people receive their payments within 28 days. The resources from the $60 million were invested towards hiring a number of new resources. To date, we have hired 1,200 people to process EI applications. We have recalled recent retirees.
Senator Ringuette: I do not see the request of $60 million for that purpose in Supplementary Estimates (A). Where is that $60 million figure?
Ms. Dazé: It will be charged to the EI account, and the EI account is not there.
Senator Ringuette: You took away $59.7 million from the EI account, and now you are returning $60 million to the EI account.
In reality, because of your prior explanation, the net addition for human resources to enhance EI processing of applications is $0.3 million.
The Chair: We must move on, but can you us in writing with this question? We have asked this question twice and we have not gotten an answer that we understand.
Part of the problem with the $59.7 million is you are asking for funding to compensate for reduction. That wording, ``funding to compensate for the reduction,'' is difficult to understand.
I will go now to Senator Nancy Ruth.
Senator Nancy Ruth: First let me say, when I listen to all these numbers, figures and things, I am overwhelmed at the amount of work it must have taken to bring all this information together. It is impressive.
I was interested in the Auditor General's comments on gender-based analysis, so my questions are about this subject.
When all these programs were designed, how was the gender-based analysis performed, both in CMHC and in Human Resources and Skills Development Canada?
Ms. Matthews: On the stimulus programs that came out in the budget, when we design the programs, appreciate that we understand core housing need in the country; we understand what percentage that need is of women living alone, X per cent of seniors. When the dollars came forward for this housing need in the programs, that money will serve, for example, the $1 billion on renovation and retrofit of existing social housing. It will serve those seniors and women living alone in those units. It will serve the clientele within those existing units.
When we look at the new construction, for example, for seniors and persons with disabilities, those programs will be delivered directly by the provinces. The provinces will design and develop the specific programs within some high-level federal parameters in terms of how the money is spent and accountability. We have given, for ease of speed and to allow for more local flexibility, a one-window approach to allow the provinces and territories to design and deliver that programing.
CMHC will not design the programming for the seniors and persons with disabilities. In the existing social housing, it is the people already in those units today who will benefit from that money.
Does that help?
Senator Nancy Ruth: Of the new housing, what percentage will go to women — whether they are disabled, elderly or in whatever categories you have — and what percentage goes to men?
Ms. Matthews: There is not a parameter within the program design that says to a province or territory, thou shalt make sure X per cent —
Senator Nancy Ruth: I understand that.
Ms. Matthews: Therefore, I am not able to give you a number for new construction. I suspect the number will be similar to the number in the past, when you look at existing social housing. I do not have numbers for you today, but we can give you an overview of the profile of what we know in terms of who is living in social housing today.
Senator Nancy Ruth: It would be interesting to have. Is there any plan in CMHC to perform this analysis after you have built these houses and housed people, on how many are homeless and disabled? Who are they? Are they families, men and women, individuals?
Ms. Matthews: In a province or territory, say they make an arrangement with a particular sponsor in town X to build a certain amount of units. When that commitment is made, they come to CMHC and give us a record of commitment. That is when we will cash-flow the federal share of the money to the province. In that record of commitment, there is a descriptor that says this number is families, this number is new immigrants and this number is seniors. We will have an overall profile at the end of this commitment, a high-level aggregate, but a picture of who ultimately was served.
Senator Nancy Ruth: There is not a gender question, per se, for those it serves?
Ms. Matthews: I do not believe so. It is seniors, persons with disabilities, families and, I think, single parents, which typically are more gender-based. Off the top, I do not think we say women versus men.
Senator Nancy Ruth: Would your organization consider adding a gender component? For instance, you are including families in the profile. How many are single-mother families, or single-father families?
Ms. Matthews: It would be difficult to collect the information. In delivering these programs, we have signed agreements with all the various provinces and territories. Within those agreements, we work hard to limit the requirements we place on them so they have the flexibility they need locally to design the housing they think they need to serve the community. We try to keep it as streamlined as possible so it is as efficient as possible. Whether a province or territory will voluntarily agree at this point to provide additional information, I suspect they are not in a position to collect it either, in most cases.
For example, we sign an agreement with Ontario, but the province will then work with service managers in all sorts of different communities across Ontario. Gathering that information will depend on what is available and what the arrangements are in the communities.
Senator Nancy Ruth: I am confused now. When you answered the question before this one, you said people, when they came to CMHC for money provided an outline of a report: How many new immigrant families will be served, et cetera.
Ms. Matthews: I am saying that to add to that information would have to be voluntary. We have that basic level.
Senator Nancy Ruth: Why is that? If the other questions are mandatory, why must this question be voluntary?
Ms. Matthews: In getting those agreements out quickly, we have already negotiated those agreements, by and large. They are already in place. I have received my first claim through the door. We are moving quickly. We think it is important, given what is happening, that this money goes out there fast.
I do not think I am in a position to change that process now. The information would have to be given voluntarily by the provinces.
Senator Nancy Ruth: If you wanted to change it for the next round —
Ms. Matthews: It would be part of the negotiations and discussions with provinces and territories. We would have to understand what it would take for them to gather the information themselves. It all adds to the bureaucracy.
Senator Nancy Ruth: Canada has made this commitment in the Beijing 1995 agreement to implement UN Resolution 1325, and if good women like you cannot implement it, what can anyone expect? I encourage you to do so.
Ms. Jackson: I will make a general point, and Mr. Thompson might be able to provide additional information.
The funding that we seek here, these programs we are using in response to the downturn and the money flowing in Canada's Economic Action Plan, are pre-existing programs for the most part. The gender-based analysis would have been done at the time of the design of the programs as opposed to in the last few months, or as we were working on formulating proposals for additional funding.
That said, Mr. Thompson may be able to comment further on Aboriginal women versus men.
Mr. Thompson: At a more strategic level, we have an active capability to perform analysis of the labour market outcomes for women and men across the labour market. The analysis is gender analysis. It points out the areas where we are making significant advances and where we are performing well relative to other countries, as well as those other areas where we still have some challenge.
That kind of analysis is active and ongoing, and that information feeds into our processes for all sorts of different programs.
Then, in each individual program, we pre-actively monitor the participation and take up in these programs with a gender lens. One example is our Aboriginal Human Resource Development Strategy. Recent information I saw showed that the client base was pretty much 50-50 in terms of men and women. They were being served equally, and there is an active child care component in that program, which is an important part that responded to earlier gender analysis in terms of overcoming barriers to entering the labour market.
Other programming, such as the Apprenticeship Completion Grants, still shows relatively low participation of women. However, the department has a number of projects to bolster the participation of women in the trades, whether working with our sector council groups to boost that participation or otherwise. We actively monitor the gender balance on those kinds of programs, as well.
Senator Nancy Ruth: When you monitor these programs, and at the end of a program or after a number of years — whatever the unit is that you are measuring — how do you use that data to influence the next development of policy?
Mr. Thompson: That information is part of the core analysis of the program, whether through the program evaluation in terms of effectiveness or if gender gaps emerged relative to the original objectives of the program. Those gaps are flagged and they feed into our redesign. Strategies are developed to try to address the shortcomings in that regard.
Senator Nancy Ruth: Would you say the government's commitment to encouraging women via retraining, employment or whatever is an active component of your policy planning then?
Mr. Thompson: It is an active part of our overall labour market monitoring and program monitoring. It does indeed inform the development of new programs in a significant way.
Senator Greene: I have a human resources question. About a year ago, one of the biggest issues in the country that everyone was talking about was the lack of skills in the country — the lack of tradespeople, et cetera.
That issue has gone away a little bit with the economic recession. As you recall, there were not enough people for the Vancouver Olympics and for P3 projects from coast to coast. Now, many of those projects are having trouble with financing.
However, I think that issue will come back, and it will be as important as it was, whether it is next year or the year after. I think the problem is an enduring one that we have to deal with.
My attitude is that, if a company wants to hire you, no matter where you are from in the world, they should have the right to do that.
Having said that, there are places and groups in Canada where more can be done in terms of their skills. For example, one source could be people retiring from the military. They have a lot of skills. They are welders, pipe-fitters, et cetera, and they have to be good at what they do because what they do can save a life. Are there programs, when people retire from the military, whereby they can achieve their Red Seal more quickly? That is one part of the question.
Another part is the auto industry. Lots of auto workers are without employment. We do not know exactly how many will be unemployed. Of course, these people are all factory workers; they are assemblers more than a specific trade, but they understand machinery, et cetera. Are there special programs to bring them into the workforce in another type of position?
Mr. Thompson: We are of the same view that, despite the economic downturn, we will see in the long run the re- emergence of significant skills shortages, particularly in skilled trades areas.
The economic downturn is a bit of a pause in terms of the intensity of that shortage but also an opportunity to use some of the investments that we are making in training to deal with some of that demand that we will see in the future, in a forward-looking approach. That approach may to work with some of the industry sector councils that try to think about national standards, both the quality and the quantity of workers that they will need in the future, or it might be working with provinces in how they invest the significant funds that are being transferred, whether through the Employment Insurance account, through the labour market development agreements, or through the labour market agreements which are open to non-EI-eligible trainees, as well.
These significant funds are flowing and we have active dialogue with the provinces on some of the labour market needs and trends. We have regular dialogue on how we can best orient those federal and provincial investments towards some of these future needs.
On some of the specific points, we are in the final stages of what was known as the Trades and Apprenticeship Strategy, which is multi-year strategy to deliver a number of projects in the trades area. One of the projects in that strategy is, indeed, what you are referring to: mapping trades within the military to the existing Red Seal structure; how the competencies map, where the gaps are and what is needed to facilitate a smooth transfer out of military into civilian trades. They are progressively making their way through all the different trades in the military to have comprehensive coverage. That project is still underway. They have made a lot of headway, though.
Senator Greene: What is happening with the auto industry in Ontario?
Mr. Thompson: The auto industry is a huge challenge from a labour market perspective; it is significant and targeted in particular regions as well. The Province of Ontario primarily is looking actively at transition strategies. On our side, we have a number of measures through the 2009 budget that are aimed at facilitating this industry. One in particular I would highlight is called Career Transition Assistance. It provides up to two years of Employment Insurance benefits for what we refer to as long-tenured workers.
Many of the people you refer to are such workers where they have paid into EI for a long time and suddenly face a layoff and a significant change in careers. Through this program, we provide income support while they undergo significant retraining, often towards a trade as you refer to, and the province supports the core training costs. Investments from the federal and provincial governments would be complementary.
[Translation]
Senator Chaput: Ms. Jackson, under Canada's Economic Action Plan you have a strategy for providing training to aboriginal people to learn trades and undergo training.
You referred to the possibility of targeting older workers to help reintegrate them into employment. You also referred to foreign credential recognition to speed up the integration of skilled immigrants. In hearing you mention all of these programs, a question arose in my mind.
Has your department ever conducted an analysis of jobs lost in Canada to date? Has it analyzed the skills required to hold these positions? Have you analyzed existing jobs where there is a labour shortage?
Can you tell us how many jobs are available in Canada and what kind of skills are required to hold these positions? Are you in a position to state that your programs could serve to train a certain number of people in these skills and match up people and jobs?
Were you able to connect your programs to the necessary skills? That would perhaps prevent us from bringing in qualified immigrants from abroad to then find out that they cannot work in the field they are qualified to work in. My question is rather broad, but I would like you to answer it.
Mr. Thompson: I will attempt to answer your questions.
[English]
The question is a challenging one. The domain of forecasting employment in general is challenging. Forecasting specific occupational demand in the future is difficult to do with any degree of precision.
That being said, there are several broad conclusions around sectors where we expect to continue to face significant demand in the future. We mentioned the trades. Generally, we put the demographics that we face in these occupations together with anticipated labour market demand. We can safely say we will continue to have some shortages in that area in the future.
Health care is another area where labour continues to be in short supply. Again, I can safely say that health care is another area of focus.
The broader engineering and regulated trades beyond health care tend to be in demand also. Through our work with the employers generally, we know there are general categories where there will be ongoing needs to meet in the future.
Ms. Jackson: The research branch in our department has something called the Career Occupational Projection System. The branch will make forecasts, on a regular basis at the national level, as Mr. Thompson mentioned, around what we can see as occupations in demand into the future.
Then there is a publication called Job Futures, which we publish on a regular basis, which again provides information at a national level. It is aggregate information and it will be used by those advising students about prospects in certain careers and professions.
[Translation]
Senator Chaput: You do not have a system that clearly indicates what the needs are and what the reality is.
[English]
Mr. Thompson: Services are available to individuals. We have an initiative at the job bank through which employers can post jobs where they are looking for employees, and where laid-off workers can look for jobs. The initiative matches demand and supply of labour, so that is one other tool we have. I also note that the forum of labour market ministers has seized on this issue as important, and they have launched a panel on labour market information that will report soon. It will look at how well integrated our labour market information is, and whether it is adequate and satisfactory going into the future. Recommendations may come out of that exercise that are pertinent to your question.
[Translation]
Senator Chaput: Do you think there is a danger that people trained through your programs could end up unemployed? Could this conceivably happen?
[English]
Mr. Thompson: At a local level, connections are generally made. There is better understanding of local labour markets than at the national level to understand a comprehensive picture of demand and supply. Those connections are often made through partnerships on the ground and those kinds of connections, but many of those decisions are made at the provincial level, the training funds that are transferred, so the responsiveness to labour demand varies from province to province.
Senator Neufeld: I have two main questions. One concerns the $17.2 million for the foreign credential recognition. I am happy so see that item there. I know in my province we always hear that highly trained people from other countries are driving taxis and we are short of people. Even with the recession going on now, although there are more people to work, we will face a problem coming out of it. Regardless of what we do, we will still face a problem. Hundreds of millions of dollars worth of work did not happen because there were no trained professionals.
Are you working cooperatively with the provinces on this foreign credential recognition? Also, can you give me a sense of your time frame of when we will see things happen on the ground initially? I know you cannot do it between Monday and Friday, and I am not asking for that because the answer is difficult. There are some countries we accept and some we do not, but there ought to be some relatively quick hits that can be accomplished.
Second, on the homeless partnering strategy, in British Columbia we have taken innovative initiatives in housing for the homeless. It is a problem, no doubt. In fact, I think almost every province and territory has a problem with housing for the homeless. I am happy to see that program expanded. Can you explain to us how it works so that the federal government and the province do not provide initiatives that overlap?
Mr. Thompson: I will start on foreign credentials recognition. As I said earlier, a work plan has been launched that works closely with the provinces and territories. A lead from each jurisdiction has been appointed to work with us towards the delivery of a framework, which first ministers asked for.
This framework was tasked to the federal and provincial officials to develop. It will have a number of components. One is a set of priority occupations to identify what you refer to, the quick hits where we can put concerted effort into achieving the biggest bang for the buck in terms of the effort on foreign credentials. The framework will also indentify common principles that will guide the work both at the provincial and federal level, and approach things in a consistent fashion, as well as a common sense of timelines so that projects do not drift on. The time lines will bring more rigour to the process of recognition of those credentials.
I also alluded to the need to have more information available to immigrants prior to their arrival, as to the exact process they will go through to have their credentials recognized, and not have that process happen after they arrive.
Senator Neufeld: When do you think the rubber will hit the road, if you have that information?
Mr. Thompson: September is that commitment to first ministers to report on this set of priority occupations and the proposed framework.
Senator Neufeld: It will be after September of 2009 before we see anyone leaving some labour force and entering a trained job?
Mr. Thompson: Much ongoing effort is continuing, working with all the regulatory bodies for professions, so that work is progressing. In parallel with this effort is this idea of a national framework to bring more consistency and a set of priorities, and to put more focus on the right areas. We have not stopped the work while that framework is developed.
Ms. Jackson: I will make comments about the homelessness partnering strategy. The program has several different components and streams. In some instances, we are helping construct and renovate facilities so that they can be used as temporary shelter, then moving on and supporting a little bit up the housing stream into assistive housing, et cetera. In all cases, there is a principle of partnership here. In some cases, these partnerships are at the community level. In other instances, we have a couple of agreements in place with provinces where there is collective effort at articulating priorities around the spending of this money.
We are not spending only on construction and renovation. We are also spending on services, programming and supports to try to help move people out of the state of homelessness into housing and also into jobs and better ways of life. In the last couple of years, we have been pushing hard on horizontal collaboration, even across the Government of Canada. We have a project now with Corrections Canada, for instance. We work with ex-offenders as they leave penitentiary in Kingston, for instance, to try to prevent a situation of homelessness by helping right off the mark to obtain Social Insurance Number, SIN, cards, if that is what they need, and help them with ways to find jobs or placements with employers, et cetera.
Another stream of funding is targeted at the Aboriginal situation off reserve. We are working with Aboriginal partners, in particular in large urban areas, and that initiative likely goes back to trying to move people off the streets and into shelters, and then trying to figure out how to move them up the housing continuum.
Senator Callbeck: I will be brief in view of the time.
Ms. Jackson, you spoke about the Canada Summer Jobs program. I feel that program is a good one. It gives students experience, as well as money. Can you tell me how those jobs are allocated across the country?
Mr. Thompson: Additional funding was provided in Budget 2009, an additional $10 million, as Ms. Jackson noted, to bring the total funding to $107 million. The increment was allocated using up-to-date information from the 2006 Census, as well as from the most recent labour force survey on summer unemployment for students from the last summer period. Those data sources were used in the allocation of the incremental funds for the summer jobs program.
Senator Callbeck: On Prince Edward Island, for example, how do you decide how many jobs will go to each of the districts there as compared to Ontario or British Columbia? How do you allocate those jobs?
Mr. Thompson: In terms of the application process?
Ms. Jackson: Are you asking about how we look at the applications and decide which applications are worthy of funding?
Senator Callbeck: No, in the district. I come from the Malpeque district in Prince Edward Island. How do you decide how many positions will be in Malpeque?
Ms. Jackson: What has been described is how we allocate budgets to the provincial level, and now the question is, how do we move from the provincial level to a budget amount within provinces for a sub-region?
Senator Callbeck: There are 308 federal constituencies. How do you determine how much the district of Malpeque, Prince Edward Island, will receive?
Ms. Jackson: We will have to answer you in writing on that question. We will go back to our program experts.
Senator Callbeck: I would appreciate that information.
Mr. Tremblay, I do not see in these supplementary estimates any additional money for the Rural Residential Assistance Program, RRAP, or the emergency repair.
Mr. Tremblay: That item is on page 157. It is part of the $86 million under the first line. That item includes the Emergency Repair Program and the renovation programs that you speak of.
Senator Callbeck: How much money will go to emergency repair?
Ms. Matthews: I cannot give you the split off the top. We can give you an overall split off-line.
Senator Callbeck: I want to know how much is going to the emergency repair and to the rural housing residential program, and how that funding is divided among the provinces.
Ms. Matthews: We can give you that information.
Senator Callbeck: In my province, people wait for years and years for a new roof.
Ms. Matthews: In the extension that was recently announced and that is part of the Supplementary Estimates (A), I believe P.E.I. will receive close to $1 million a year for the renovation programs. The vast majority of the dollars under the renovation program are probably homeowner Residential Rehabilitation Assistance Program, RRAP. There is also emergency repair. The adaptions for seniors program is also a small component. There is rental assistance as well. We will give you the split on how that funding has been distributed historically, but we do not necessarily decide at the beginning of the year that this much goes to each program. Distribution depends on the need and what applications come in. We prepare a plan at the beginning of the year of what we think it will be, based on what we have seen historically and what we know. Then, we will see what the applications are. That is where we direct-deliver. We direct- deliver in P.E.I., but in many provinces and territories, we have a partnership with the provinces where they perform the direct delivery.
Senator Callbeck: I know that. My understanding is that an agreement was made within the past year to extend the rural housing assistance program. However, no extra money was put into the budget. There are six or seven years waiting.
Ms. Matthews: The extension of the program was announced in September last year. It was not announced in time for us to put it into the Main Estimates, and that is why, in the Main Estimates, you see the decline in the program because it was scheduled to end at the end of the fiscal year.
The Supplementary Estimates (A) includes the new dollars for the renovation program. In the extension, the federal government put in another $128 million per year, consistent with the historic levels. They continued that funding, and the same with the affordable housing initiative, for the next two years.
What you are seeing in the Supplementary Estimates (A) is that, in the first year, we will commit $128 million. Appreciate that, on the renovation programs in any given year, we will cash-flow the dollars as the work is completed. While I may make a commitment in one fiscal year, it may not be flowed until a subsequent year because the work must be completed.
Senator Callbeck: Was there any increase in that commitment?
Ms. Matthews: No, there was not. In September 2008, the programs prior to announcement in September were scheduled to end, and the federal government extended those programs. The $1.9 billion commitment for funding was over the next five years, and the supplementary estimates are representative of the first year.
Senator Callbeck: It will not do the job. The situation is terrible.
Ms. Jackson: Chair, as our colleagues answered the question, we think we found the answer to Senator Callbeck's question about how we allocate from the provinces to the constituencies.
Mr. Thompson: It is an extension of the story I was telling about how the funds are allocated to provinces and territories. We allocate based on census and Labour Force Survey information, which shows the extent of unemployment amongst the student population. That is how the provincial allocations are made. Then the money is allocated at the constituency level, continuing to use the census information. We have that level of precision around census information that does not exist on the Labour Force Survey. We use the updated census information down to the constituency level.
Senator Mitchell: Is there no particular bias towards — just asking — Conservative constituencies? Can you please give us a list, riding by riding, of the number of positions that were allocated?
Ms. Jackson: We can. The budget and jobs created by constituency for last year is posted on the department website, and as soon as that data is available for Canada Summer Jobs 2009, it will be posted again on our website.
The Chair: Are we talking about the Canada Summer Jobs program?
Ms. Jackson: Yes, we are.
The Chair: At page 155 — you touched on this item as you gave your presentation — — an additional $6 million under that Canada Summer Jobs Program says Budget 2009. Does that entry mean that, as a result of the budget, the program was increased significantly, by the $6 million? Is that what that entry means?
Ms. Jackson: Budget 2008 increased the budget of Canada Summer Jobs by $10 million in each of two years.
There is $6 million that you will see in these Supplementary Estimates, and I believe that you had Treasury Board Secretariat officials explain to you, vote 35. You will find in vote 35 the other $4 million that was money to be spent under Canada Summer Jobs, so $4 million plus $6 million gives you the $10 million.
The Chair: The vote 35 is the special funds that were made available through the Main Estimates for the period April until June 30.
Ms. Jackson: That is correct.
The Chair: We will obtain a complete accounting of that money in due course. It will not all be used, as we learned last evening, because you could not get the funds flowing. That is an additional $10 million per year in Budget 2009.
Ms. Jackson: Yes, that is for two years.
The Chair: Do any questions that flow from that item? If not, then it remains for me, on behalf of the Standing Senate Committee on National Finance, to thank each of you for being here.
[Translation]
Thank you very much, Ms. Binette, Mr. Tremblay and Ms. Mathews.
[English]
The three of you, Ms. Jackson, Mr. Thompson and Ms. Dazé, have a lot on your plate. HRSDC is a huge department. You have a lot of matters, but we appreciate the work you are doing. We have a professional public service, and you are reflective of that. Thank you very much.
(The committee adjourned.)