Proceedings of the Standing Senate Committee on
National Finance
Issue 10 - Evidence - June 17, 2010 - Morning meeting
OTTAWA, Thursday, June 17, 2010
The Standing Senate Committee on National Finance met this day at 9 a.m. to study Bill C-9, An Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures. (Topic: Parts 6, 9, 21, 22 and 24).
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Welcome to the Standing Senate Committee on National Finance. This is the fifth meeting on Bill C-9, An Act to Implement Certain Provisions of the Budget Tabled in Parliament on March 4, 2010 and Other Measures.
[English]
Over the course of our previous four meetings, departmental officials reviewed the provisions of 11 parts of the bill. Through this and our remaining meetings this week, we will review the remaining 13 parts of the bill, making 24 parts in total. This morning, we will be focusing on Parts 6, 9, 21, 22 and 24. These parts deal with the Federal-Provincial Fiscal Arrangements Act, Pensions Benefits Standards Act, the Canada Labour Code, payments to certain entities and Employment Insurance. As in our previous meetings, we will deal with one part until our questions and comments have been exhausted, and then proceed with the next part.
To speak to Part 6, which deals with the Federal-Provincial Fiscal Arrangements Act, and which appears at page 470 of the bill, we are pleased to welcome Mr. Alfred LeBlanc of the Department of Finance Canada. Mr. LeBlanc, could you begin by explaining clauses 1646 to 1648? We are focusing on the clauses that are in the bill, but there is not much in this bill on that particular matter, so it should be easy for us to focus. Following we will then proceed with discussion.
Alfred LeBlanc, Director, Federal-Provincial Relations Division, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: There are two matters in this bill that relate to the Federal-Provincial Fiscal Arrangements Act, one substantive and one housekeeping.
On the substantive side, amendments are necessary to implement protection against declines in total major transfers to provinces. For equalization-receiving provinces, that is being done through Part 1 of the legislation, and for provinces not receiving equalization, that has been done through separate payment under Part 5.1.
The other change is what we call housekeeping. We had to correct a cross-reference that relates to a measure introduced in Budget 2009 to ensure that Ontario, now that it is receiving equalization, receives the same amount of CHT cash per capita as other equalization-receiving provinces. The substance of that measure does not change. We discovered, after we had put the measure in place, that one of the references was out of date. There is no substantive change, and it has no impact on the amount, but it does address that minor error left uncaught when we first put the measure in place.
I am happy to take questions.
The Chair: Before I go to questions, can you tell us how these amounts were calculated?
Mr. LeBlanc: For each province, we added up the amounts for the three major transfers, so equalization for the provinces that receive equalization, CHT and CST. If a province would get less in 2010-11 than it received in 2009-10, a payment was calculated equal to the difference. That payment, as I say, in the case of a province that was equalization receiving, was paid in the form of an equalization payment, and for those provinces, Newfoundland and Saskatchewan, that were not equalization-receiving, it was a separate payment.
The difference is in their calculated amounts for CHT, CST and for equalization receiving provinces, the changes in the amounts between 2009-10 and 2010-11, from one year to another. Population affects the amount. Measured fiscal capacity relative to the measured fiscal capacity of other provinces within the context of the overall envelope for equalization affects the amount by province. That is how those amounts were calculated.
The Chair: Was the first year for the new formula for equalization 2009-10?
Mr. LeBlanc: That is right.
The Chair: This is the second year of that program?
Mr. LeBlanc: That is right.
The Chair: This is a one-time, one-off initiative that will not affect the new formula that has been in place for a year now.
Mr. LeBlanc: It is one-year protection, and it was presented as complementing the economic action plan.
Senator Marshall: Mr. LeBlanc, I am looking at the amounts. It is outlined in the legislation how much each province will receive. Some of the amounts are quite large. It is my understanding that that money cannot flow until Bill C-9 is passed. Is that correct?
Mr. LeBlanc: That is correct.
Senator Marshall: How soon after the legislation is passed can the various provinces expect to receive their funding? Could you give me an idea as to the payment schedule?
Mr. LeBlanc: We use different approaches for different kinds of analogous payments. In some cases, we have spread them over the remaining months of the year, and in some cases we made lump sum payments. We have not finalized that, but we are getting ready to make the payments. We make the payments every two weeks, so it would not take long. Unless we are a day from the payment, we would probably catch the next payment or the next wave.
Senator Marshall: Is there any restriction on what the provinces can use the money for, or does it go into general revenues?
Mr. LeBlanc: There are no restrictions.
The Chair: Even though it might be paid under Canada Health, there is still no restriction?
Mr. LeBlanc: Essentially, it comes in the form of an equalization payment for those provinces receiving equalization and a separate payment for those not receiving equalization. It is not strictly speaking a Canada Health Transfer payment. It may be, in part, driven by the CHT differential between 2009-10 and 2010-11, and that would be mostly driven by population changes, but it is not a CHT payment per se. It is an equalization payment or a separate payment and not tied to any particular transfer.
The Chair: It is treated like equalization.
Mr. LeBlanc: Yes, it is a no-strings-attached payment.
Senator Murray: With regard to the last point, these top-ups were announced, were they not, at the time of the presentation of the budget?
Mr. LeBlanc: Yes.
Senator Murray: Do you think it is conceivable that provinces have booked them already?
Mr. LeBlanc: I would think it is conceivable that they would have booked them already, yes.
Senator Murray: If not, then, to follow up on Senator Marshall's obvious concern about when the cheques will be cut, this would be a good argument for splitting the bill and passing this section right away so that they would have access to the money. I am not asking you to comment on that.
Mr. LeBlanc: Thank you.
Senator Murray: Speaking only for myself, I do not think we need to take too much time with this because we had a very good session with some of your colleagues on March 30 when we discussed this, in particular, Mr. Nipun Vats and Mr. Tom McGirr, both of them from the Department of Finance. Just to summarize equalization, the relative fiscal capacity of each province is measured in the context of a 10-province standard. Is that right?
Mr. LeBlanc: Yes.
Senator Murray: Included is 50 per cent of non-renewable resources. There are then two caps. One of the caps is on the overall pool of money for equalization.
Mr. LeBlanc: We call that a ceiling sometimes, to distinguish it.
Senator Murray: The ceiling is the three-year moving average of nominal GDP growth.
Mr. LeBlanc: Right.
Senator Murray: In respect of any one province's entitlement, the ceiling is that no province can, after equalization, have a higher fiscal capacity than the average fiscal capacity of the recipient provinces?
Mr. LeBlanc: That is correct.
Senator Murray: Am I missing anything?
Mr. LeBlanc: No, that is right.
Senator Murray: Turning to the equalization payments for 2010-11, what is the three-year moving average of GDP?
Mr. LeBlanc: The three would be 2008, 2009 and 2010.
Senator Murray: We are only in the middle of 2010.
Mr. LeBlanc: We use estimates. We have actual numbers for 2008, we have pretty good numbers for 2009, and we have projections for 2010.
Senator Murray: Just as a matter of curiosity, those would be the calendar years; right?
Mr. LeBlanc: Yes.
Senator Murray: Do you have it there?
Mr. LeBlanc: I will check while I am in between questions, but I do not think it is in my package. It is the private sector surveys, the same ones used for the budget that are used for the projection for 2010.
Senator Murray: When we come to next year, that is, 2011-12, you will be using the three-year moving average of nominal GDP for 2009, 2010 and 2011.
Mr. LeBlanc: Yes.
Senator Murray: Do you have an estimate now of what the nominal GDP will be?
Mr. LeBlanc: There was one in the budget, and there would be updates since then. That number is certainly stronger with more robust growth than what would show up in the average.
Senator Murray: Let us have a word about these top-ups. I asked some of these questions of your colleagues when they were here. The basis of the top-up is that you did not want any province to receive less from the total of the three transfers, Canada Health Transfer, Canada Social Transfer and equalization, in this year than they did last year; right? I asked someone what provinces had fallen below and why and where. The answer I received, and you can bring this up to date if you are in a position to do so, was that three of them actually would otherwise have received less money from Ottawa under the Canada Health Transfer. Is that the case, and is that the only case? I glanced at it last night, and my recollection is that none of them seem to be in a position where they will get less on the Canada Social Transfer, and I am not sure about equalization.
Mr. LeBlanc: The equalization numbers are driving the substantive amounts.
Senator Murray: You mean the short-fall?
Mr. LeBlanc: Yes. That is the main factor. The CHT envelope is growing 6 per cent a year.
Senator Murray: I understand that. However, your friend told us there were three provinces that, because of actual decline in population and — I forget what the other factor was —
Mr. LeBlanc: Newfoundland would be one of them, as would Saskatchewan.
Senator Murray: There is one other, but I cannot remember which one. Regardless, they were to get less of the CHT.
Mr. LeBlanc: The other factors that can affect the amount of CHT are that it is still a tax point and per capita calculation.
Senator Murray: So the tax points were worth less.
Mr. LeBlanc: That is right; or they were worth more in other provinces. For example, Alberta's population continues to go up and its tax points remain strong. They will get less CHT money than other provinces as long as that arrangement is in place.
Newfoundland's population, at least over that period, I believe, was continuing to decline. It also got a jump-up in its CHT amount when it left equalization. Provinces that were in equalization get a certain amount of their CHT total through associated equalization. If they are not receiving equalization, the low value of their tax points is not brought up through equalization. Therefore, it is brought up outside of equalization.
Senator Murray: Your minister and the officials say this top-up is a one-off and that we should not expect it next year. Is that not right? I do not know how you will do that because the government has put itself in a position where, ignoring the fact that there has been an agreement on equalized tax points. They accepted Ontario's argument that the per capita transfers should be equal, did they not?
Mr. LeBlanc: The commitment on CHT was to move after 2013-14.
Senator Murray: Yes, but let us look at CST.
Mr. LeBlanc: CST would be moved right away. People do assume sometimes that Alberta and Ontario are a similar case; in other words, we accelerated Ontario, so does that not mean we should accelerate Alberta? There is a significant difference between the two provinces, and I think you can make the case that Ontario was very much an anomaly.
Ontario's overall fiscal capacity was below the average, so it was entitled to equalization. However, the tax points which determine how much CHT money it gets were still above the average. Those tax points counted against Ontario and they lowered its equalization payment, because you blend them all together.
The fact that its CHT tax points were above the average lowered its equalization payment and then lowered its CHT payment. There was a double whammy for Ontario. No other province is experiencing that double whammy.
Alberta got the ``single whammy.'' It has no equalization, so there is no reducing of Alberta's otherwise entitlement on equalization. However, the formula works as the formula was designed to work until it moves to equal to per capita cash. You calculate the value of Alberta's tax points and then you give it enough cash to bring its total amount up to the same as everyone else.
Senator Murray: As you know, the idea back when the transfers started in the 1970s was that 50 per cent of the transfer would be accounted for in equalized tax points. It was the only way the less-rich provinces could have accepted the transfer.
Years later, one or two governments, Ontario in particular, took the position that other provinces are getting more per capita and that is not fair. This was long before these other conditions arose.
My point is that it is costing a pile of money. Am I wrong in suggesting that the same problem that arose in 2010-11 will arise for 2011-12, and that the government will be faced with a decision whether to top up again?
Mr. LeBlanc: We anticipate there will be pressure of that sort, yes. The one thing that will be somewhat different is that there has been more notice. There was very little notice —
Senator Murray: Let us not discuss that. We raised that question at an earlier time. That was a matter of political debate.
Senator Callbeck: Regarding that total transfer protection payment, the commitment is only made for one year, is it not? The Canada Health Transfer is in effect right now.
Mr. LeBlanc: Yes.
Senator Callbeck: When does the social transfer go into effect?
Mr. LeBlanc: The social transfer is in effect, as well. In 2007, the government announced that those two transfers would move from being allocated on the basis of tax and cash allocation to equal per capita cash. CST was done immediately and the CHT was to be done after 2013-14. It was tied to some extent to the fact that the government had accepted the 10-year plan on health care and that the change would be made at the end of that 10-year health accord, when that transfer was to be renewed.
They are both in place, but they are allocated slightly differently at this point.
Senator Callbeck: You say they are allocated somewhat differently. Would you go over that again?
Mr. LeBlanc: Yes, about $11.2 billion of the CST is allocated. You take the total amount and divide it by the population of Canada. Prince Edward Island gets its exact same amount per capita as every other province.
Senator Callbeck: It does if you add the three together.
Mr. LeBlanc: In the protection, that is a different calculation.
Senator Callbeck: On the protection, yes, but that will disappear. Under the social transfer before the change in 2007-08, Prince Edward Island used to get the same amount per capita, if you add in the cash and the tax points. There was an associated equalization there, but we got the same as every other province.
Mr. LeBlanc: The total envelope for the CST for next year will go up by 3 per cent. The amount for Prince Edward Island and every other province will not necessarily go up by 3 per cent; it depends a bit on population. Prince Edward Island's population is probably not growing as fast as other provinces, so it will probably go up by slightly less than 3 per cent. However, the amount received by the Government of Prince Edward Island under the CST will go up 3 per cent per person.
The CHT is a little more complicated because it depends on the value of Alberta's tax points. Most provinces will see an increase of around 6 per cent per person in their CHT cash next year. Again, it will depend a little on Alberta. If Alberta is doing significantly better than the national average, it will get less cash per capita and that will leave a little more cash for others. If Alberta has weakened significantly relative to other provinces, it will get a bit more cash and that will mean a little less to distribute to other provinces.
Senator Callbeck: With that total protection payment gone and with the formula that we have, you are not taking into consideration regional economic disparities.
Mr. LeBlanc: We are, in the equalization formula.
Senator Callbeck: I am talking about the social transfer.
Mr. LeBlanc: The spirit of the fiscal balance package was that the equalization will be put on a 10-province standard and enriched, and that the other transfers would no longer have an equalizing component to them.
Equalization is done through equalization, and support is provided to provinces for these other areas on an equal per capita basis. If you let equalization do its proper job you do not equalize through these other transfers.
Equalization is a formula, and provincial amounts will go up or down depending on how those individual provinces are doing relative to other provinces.
Senator Callbeck: Do you have projections for my province for the next three years, for example?
Mr. LeBlanc: No. I do not have those projections.
The Chair: The province is probably doing those projections in anticipation.
Mr. LeBlanc: It probably will.
The Chair: On a point of clarification, when you were discussing equalization with Senator Murray, you talked about the ceiling or cap as part of the equalization formula. With this one-off top-up, if we include those dollars as equalization, I assume that that cap is no longer there.
Mr. LeBlanc: They are separate from the equalization amount, so yes, they are separate payments. The total envelope for equalization will grow from $14.37 billion by whatever the three-year average of nominal GDP is, 2 per cent or whatever it works out to.
Senator Murray: I heard you say, Mr. LeBlanc, that the spirit of the fiscal balance is that equalization would do its work and you would not pay equalization on the other programs. However, the equalized tax points are there and you are still paying what you called associated equalization to the recipient provinces. The only difference now is that you are also paying it, because of the equal per capita cash, to non-recipient provinces.
Mr. LeBlanc: We always were paying it to non-recipient provinces.
Senator Murray: You were not paying associated equalization to those provinces.
Mr. LeBlanc: No.
Senator Murray: You are now, effectively, whatever the spirit may be.
Mr. LeBlanc: For the CST?
Senator Murray: The CST is still composed of tax points, is it not?
Mr. LeBlanc: No.
Senator Murray: The CHT, then.
Mr. LeBlanc: There is still an associated equalization component to the CHT until it goes to equal per capita cash after 2013-14.
Senator Murray: We will wait to see that.
The Chair: To get rid of all those tax points.
Senator Murray: You can't get rid of them; they're there.
Mr. LeBlanc: It will certainly simplify understanding how it all works; that is for sure.
The Chair: Is it purposely made complicated so that mere mortals cannot follow this at all?
Mr. LeBlanc: We take a representative tax approach to equalization, and equalization has elements that have been part of the other transfers. It is inherently complicated because in that approach we are trying to reflect what provinces actually do. We are trying to comprehensively reflect the average practice by provinces in terms of raising revenue across the country. That is complicated because most provinces have a whole suite of revenue raising instruments. That keeps our people employed because that suite changes and evolves all the time.
If the system is going to continue to be a representative tax system approach, we have to keep it up to date with those practices. It is complicated because we have to reflect, as accurately as possible, the average practice and the representative tax base in each province for each revenue-raising instrument. There is a lot of detail and a lot of data to gather.
The Chair: Two or three years ago, our committee did an extensive review of equalization.
Mr. LeBlanc: I read that.
The Chair: We were pleased that a number of our recommendations were followed. It used to be done with announcements that tended to be more political and based on the revenues of the federal government at a particular time. We are glad that the formula-based approach is being followed. Even though it is a complicated approach, it is much more predictable for the provinces.
Mr. LeBlanc: It is a blend now, given the measures that have been taken.
The Chair: With this top-up.
Mr. LeBlanc: And with the ceiling.
Senator Murray: It is formula-based, but little ``pluses'' come in.
The Chair: It is formula-plus.
Mr. LeBlanc: Formulas on top of formulas.
Senator Murray: The last person who came in here without any assistance, as a kind of gunslinger, was the President of the CBC, and he was lucky to have escaped with his skin, so you are doing very well.
The Chair: We have Mr. Hodgson and Mr. Botham here to help us understand Part 22, which is found at page 714.
Gentlemen, we are interested in knowing about these foundations and why there are transfers to them at this time.
Richard Botham, General Director, Economic Development and Corporate Finance, Department of Finance Canada: There are four payments included in this section of the bill. One is a $10-million payment to the Canadian Youth Business Foundation to enable it to support Canada's young entrepreneurs through access to capital and mentoring. There is a payment of $75 million to Genome Canada, which supports genomics research across the country. There is a payment of $20 million to Pathways to Education Canada, which supports disadvantaged youth to complete high school and to continue to post-secondary education programs. The fourth payment is $13.5 million to the Rick Hansen Foundation to support its activities and operations, including research into spinal cord injuries and rehabilitation, and also to support events to mark the twenty-fifth anniversary of the Man In Motion tour.
The Chair: Mr. Hodgson, do you have anything to add, or are you here as backup and support?
Mark Hodgson, Senior Policy Analyst, Labour Markets/Employment/Learning, Social Policy, Department of Finance Canada: I am here to provide answers on Pathways to Education in particular.
The Chair: Each of these foundations has been in existence for a period of time. Could you tell us generally about the form of governance they have?
Mr. Botham: All four organizations are at arm's length from the government. They are incorporated as not-for- profit corporations. Genome Canada was incorporated in 2000. The Canadian Youth Business Foundation was incorporated in 1996 by two financial institutions and an existing organization.
I am not sure when the Rick Hansen Foundation was incorporated.
The Chair: However, not in the last year or so; it has been around for quite a while?
Mr. Botham: Yes.
The Chair: Are the members of the boards of the foundations handled in the same way, or does each one have its own terms of reference in terms of appointment of board members?
Mr. Botham: Each organization has its own board and it is governed by the bylaws of the corporation. They appoint their board members according to those bylaws, because they are incorporated separately as not-for-profit organizations.
The Chair: I suppose the terms of reference for each of these foundations would be available publicly at the website for each one?
Mr. Botham: That is correct; yes.
The Chair: Are each of these foundations subject to the Auditor General's review or are they audited by outside commercial, independent auditors?
Mr. Botham: They would have their own auditors. I am not sure in the case of Pathways to Education.
The Chair: What about Pathways to Education?
Mr. Hodgson: They would certainly have their own auditors.
The Chair: Does the Auditor General have the right to come in and audit from time to time?
Mr. Hodgson: These are arm's-length charitable organizations, so the Auditor General's purview would not extend to them.
Senator Ringuette: For all four of these foundations, it indicates that it is a maximum payment. Is there a reason why the maximum should not be paid? I suppose this would have been a commitment to them through the budget speech?
Mr. Botham: That is correct; these payments were included in the budget announcement. It is anticipated that the full amount that is listed here would be paid to the organizations.
Senator Ringuette: I also assume that, for each of these four foundations, these payments are not recurring on a yearly basis. These would be for a certain time frame. Am I correct?
Mr. Botham: That is correct.
Senator Ringuette: Could you indicate to us the disbursement time frame for each of the organizations?
Mr. Botham: Certainly. In the case of Genome Canada, it is a five-year time frame. It is anticipated that the funds would be disbursed through a competitive process, so they will support research projects that generally run in a three- to five-year time frame. However, because it is a competition, some flexibility will occur because it depends on what researchers identify as the length of the research project. In the case of the Canadian Youth Business Foundation, again, it is anticipated that it would be a five-year time frame.
The Rick Hansen Foundation is slightly different. It is supporting activities that occur at different time periods into the future. For example, the twenty-fifth anniversary of the Man In Motion tour events will occur over a three-year period. The research activities, which is one component of the support, is also a three-year activity.
Senator Ringuette: It would be three years overall?
Mr. Botham: Generally, yes.
Mr. Hodgson: Pathways to Education is expected to be disbursed over five years.
Senator Ringuette: Are you able to indicate to us the maximum payment for the previous time frame? For instance, the Canadian Youth Business Foundation has a $10 million payment for five years. What was the payment in the past five years?
Mr. Botham: There have been three other payments made to the Canadian Youth Business Foundation by the government.
Senator Ringuette: In the last five years, though.
Mr. Botham: Two of those occurred in the last five years. There was a $10 million payment included in Budget 2005, and in Budget 2009 there was also a $10 million payment.
Senator Ringuette: This entity's allocation is being reduced by 50 per cent, then?
Mr. Botham: Right; I understand. The Canadian Youth Business Foundation raises funds from governments as well as the private sector. Their total budget includes money from the federal government, but the federal payment is not the totality of their budget. Generally, Canadian Youth Business Foundation raises about 50 per cent of their funds from other sources.
Senator Ringuette: I want to compare apples with apples. I want to compare the current proposed $10 million transfer to this entity from the Consolidated Revenue Fund, and it is for the next five-year period. You indicated that, in the last five-year period, the amounts paid from the Consolidated Revenue Fund, by the Minister of Industry, had been in two different payments totalling $20 million.
The payments to the Canadian Youth Business Foundation have been reduced by 50 per cent from the Consolidated Revenue Fund through the Minister of Industry.
Mr. Botham: I am not sure how you get to the reduction of 50 per cent, because they started in a certain time period in the past. The first payment from Budget 2005, $10 million, supported the operations of the foundation and its lending to entrepreneurs over a period. That is then matched by other organizations to sustain operations. Loan payments come back to the foundation, which enable it to continue operations. The government decided subsequently to provide an additional amount of $10 million to, again, sustain its operations into the future. However, that total of $20 million was used over a period starting in 2006 and extending forward. Providing the organization with $10 million now is not 50 per cent less. It is 50 per cent of what has been provided in the past, but it is not a 50 per cent reduction in the amount available to the organization.
Senator Ringuette: Let me ask the question again. My question to you was: You said that, through the Minister of Industry, there had been two payments from the Consolidated Revenue Fund of $10 million in the past five-year period.
Mr. Botham: Yes.
Senator Ringuette: If, in the past five-year period, $10 million was given to this foundation on two occasions, and you are also saying that the $10 million in this budget bill is for the next five years, then there is a $10 million difference — that is, if you compare apples and apples, from the same account. I am not looking at the general revenue funds to this foundation; I am looking at this particular source of revenue.
Mr. Botham: I understand that the $10 million that is provided this year is 50 per cent of $20 million in total provided previously.
Senator Ringuette: Exactly.
Mr. Botham: However, it is not a 50 per cent reduction to the operations of that organization, because it is a rolling window. Money is provided in 2006; it is a contribution to an organization that needs to raise funds from other sources. Based on all that money they take in, they sustain a certain level of operations. They do worthwhile work. The government decided to provide another $10 million a year ago, and then the corporation went out and raised money to sustain a certain level of operations into the future. The government decided to provide them with another $10 million, which will be used as a basis of fundraising to carry them into the future. It will last them for a period of time, depending on the take-up of loans, the default rate of previous years and their fundraising ability. That will carry them through for a period of time into the future as well.
Senator Ringuette: Your response that these funds are for a five-year period is not necessarily so?
Mr. Botham: It is dependent on future government decisions about how much support the government deems it would want to give to this organization. It is not a final contribution, given the uncertainty of the future.
Senator Ringuette: Let us move on to Genome Canada. You indicated that the maximum of $75 million is for five years. Comparing apples with apples, what was the contribution to Genome Canada in the five previous years?
Mr. Botham: The situation with Genome Canada is similar in that it raises funds from other sources. Federal funding accounts for about 45 per cent of the support that the organization provides to researchers and research centres across the country. The organization has received funds in previous budgets. The last five years, $140 million was provided in Budget 2008; $100 million in Budget 2007; and $165 million in Budget 2005.
The question that I think you are trying to get at is: What is the steadiness of the state support? Does it represent an increase or a decrease? The difficulty in answering that question is that the organization changes its activities through time. As an independent, not-for-profit corporation, it may decide to allocate more funds to the infrastructure and the kind of testing and research centres that it maintains across Canada. In certain periods, it may increase or decrease its allocation. Since it was established in 2000, some centres have opened and expanded their activities, while some have reduced their activities.
Also, because it is supporting research, there are periods during which its support to researchers increases substantially and periods when it decreases. I would point to a third factor. Over the last five years at different times, the government has identified priorities for Genome Canada and the researchers it supports that provide a public good in Canada. An example would be a decision to have the organization do genomics research in agriculture related to mad cow disease. The government decided to provide additional funding for that specific project. It has been lumpy for different reasons.
Senator Ringuette: Basically, we cannot assume that this allocation is a definitive payment for the next five years?
Mr. Botham: No. A future government could decide to put an additional priority on genomics research or that the organization would fulfill a specific public policy role that would lead the government to provide additional funds.
Senator Ringuette: I will move on to Pathways to Education?
Mr. Hodgson: This is the first time funding has been provided by the federal government to Pathways to Education.
Senator Ringuette: Is the funding for a five-year period?
Mr. Hodgson: Yes. It is intended to be over a five-year period.
Senator Ringuette: Is it a fixed five-year period?
Mr. Hodgson: That is correct.
Senator Ringuette: Like Genome Canada and Canadian Youth Business Foundation, you have other forms of fundraising or you would not be in existence.
Mr. Hodgson: That is correct. They will seek funds from provincial governments, community organizations, corporate donors and the normal gamut of funding sources for a charitable organization.
Senator Ringuette: I am familiar with the Pathways to Education program. You are doing a very good job.
Last but not least, you indicated that the Rick Hansen Foundation funding is for the next three years for all events and research. How does that compare to the last three years?
Mr. Botham: The most recent payment to the Rick Hansen Foundation was announced in Budget 2007, so within the last five years, that was the only other payment. It was $30 million for five years and was for one specific component of the Rick Hansen Foundation's operations: the Spinal Cord Injury Translational Research Network. Again, this organization has activities that ramp up in certain periods and then drop off. The Man In Motion Tour would be an example of that.
Senator Ringuette: I assume that more than half of the $13 million will go to the twenty-fifth anniversary events for the next three years.
Mr. Botham: It is slightly less than half.
Senator Callbeck: You mentioned that two financial institutions are involved in the Canadian Youth Business Foundation
Mr. Botham: Right.
Senator Callbeck: What are those institutions?
Mr. Botham: The Canadian Imperial Bank of Commerce was one of the original founders and the other is the Royal Bank Of Canada, along with the Canadian Youth Foundation — those three organizations.
Senator Callbeck: Is it all in the form of loans to young entrepreneurs or are there any grants?
Mr. Botham: There are two components. There is the loan component of up to $15,000, and the other is mentoring to youth entrepreneurs. There are no grants.
Senator Callbeck: What ages are involved?
Mr. Botham: They are 18 to 34 years of age.
Senator Callbeck: What is the default rate?
Mr. Botham: I am not certain that I have the default rate in my notes, but I will look for it.
Senator Callbeck: How do young people know about this program?
Mr. Botham: It would be publicized through the Internet, certainly. The CYF makes itself known. I am not sure of the range of promotional activities the foundation undertakes.
Senator Callbeck: Do you have a listing of how this funding would be divided by province, or specifically how much would be given out in the province of Prince Edward Island?
Mr. Botham: No. It would be influenced by the applications that come in. I would think that it varies over time, rather than being a constant distribution among the provinces and territories.
Senator Callbeck: Where are the applications approved?
Mr. Botham: I am sorry, but I do not know the approval process for loans.
Senator Callbeck: For this $10 million, does the Canadian Youth Business Foundation present a plan to the government for acceptance?
Mr. Botham: Yes.
Senator Callbeck: Do you follow up to ensure the money is spent accordingly?
Mr. Botham: There is monitoring. A funding agreement with the organization stipulates the uses of the funds and the requirement to generate matching funding, so those terms and conditions are monitored, yes.
Senator Callbeck: I would be interested in knowing, just in the last two years, the breakdown of how much went to each province. Could you get that for the committee and give it to the clerk, please?
Mr. Botham: I will look for it in my notes. If I am unable to find it, I will ensure it is provided to the committee.
[Translation]
Senator Losier-Cool: I share the same interest as Senator Callbeck. When you do the research on the provinces, could you also provide us with an answer about minority communities, especially in terms of young entrepreneurs' projects?
Mr. Botham: All right.
Senator Chaput: I want to make sure I understand. There are four organizations here. All four are incorporated, not-for-profit and not connected to the government. So they have their own board, they have policies and accountability mechanisms in place, they choose their auditor, and they have an action plan in place, which, from what I understand, is discussed with the relevant department, and then they have to follow that plan. Is that it?
Mr. Botham: Absolutely.
Senator Chaput: When the agreement is reached with the department in question — for example, the Minister of Industry asked for the Canadian Youth Business Foundation — is there one percentage amount for administration and another for activities? Is there some sort of formula or can each organization decide what to spend on administration and on activities?
Mr. Botham: I think it is different for each organization. I believe Genome Canada has a set amount for administration.
Senator Chaput: Of how much?
Mr. Botham: It is a percentage amount. I do not think there is one for the other three organizations.
Senator Chaput: When you talk about a set rate or a percentage amount for Genome Canada, is there a maximum they cannot exceed?
Mr. Botham: I did not get the exact amount, but it is less than 10 per cent.
Senator Chaput: In the other cases, what happens with administration expenses and the amounts that go to the program?
Mr. Botham: As I said, the government did not set an amount for administration for the Rick Hansen Foundation. And I am not sure about the Canadian Youth Business Foundation.
Senator Chaput: And for Pathways to Education Canada, is there a set amount for administration?
Mr. Hodgson: Not yet. We still have to draw up an agreement.
[English]
I understand that the negotiations are continuing and the agreement is being drafted, but I am not certain of the details at this point.
Senator Chaput: It could be different, depending on the foundation itself. What is acceptable for administration could be different in regard to the kind of work they do. Is it discussed and agreed with by the government?
Mr. Hodgson: Yes, it depends on the function.
Senator Chaput: Yes.
Mr. Botham: Each organization would have a different kind of activity attributed to administration and different levels of expenditure that they attribute to that.
[Translation]
Senator Chaput: At the end of the year, does each organization prepare an annual activity report or an annual financial report? If so, is it submitted to the corresponding department?
Mr. Botham: Yes.
[English]
Since they are independent, not-for-profit organizations, each organization would publish an annual report.
Senator Chaput: Do they have to?
Mr. Botham: They would make it available. Do they have to? I am assuming that they do, as a condition of their own bylaws. However, because they are independent, they are governed by those bylaws. In the case of Genome Canada, there certainly is an annual report. There are also forward-looking reports, planned activities into the future. For the Rick Hansen Foundation, I am not as certain as to what they publish.
[Translation]
Senator Chaput: I understand they are independent organizations, but do you not think that, since they receive federal funding, they still have an obligation to account for the amounts spent? And do you not think that the department in question is also responsible for making sure the money goes where it is supposed to go?
[English]
Mr. Botham: Absolutely. In the case of Canadian Youth Business Foundation and Genome Canada, as I mentioned, since they have a funding agreement with the government that stipulates terms and conditions, that is something that would be monitored by the Industry Department. They would ensure that those terms and conditions are being met.
[Translation]
Senator Chaput: To follow up on Senator Losier-Cool's question about official language minority communities, could you tell me if the Official Languages Act gave responsibilities to any of those organizations, and what was provided to the official language minority communities?
[English]
Mr. Botham: There will not be a set amount, as far as I understand. It is attributed to young entrepreneurs from different communities. I will undertake to find out if they gather data that way, but they may not.
Senator Chaput: I understand.
Mr. Botham: To the extent they do, I will ensure it is provided.
[Translation]
Senator Chaput: Could you also check if there is a connection with the roadmap the federal government developed? The roadmap is based on the needs of francophones and Acadians in minority communities. Could you tell me if one of those foundations is connected to the roadmap?
[English]
If they get money from this, it means that money must be spent towards the betterment of those communities. Could you check that out, please?
Mr. Botham: I will.
[Translation]
Senator Losier-Cool: Pathways to Education Canada should be linked to the roadmap.
[English]
Senator Murray: Do you know, in respect of each of these organizations, what portion of their budgets is accounted for from the federal treasury and what portion by provinces, where provinces are involved, and what portion from the private sector?
As well, I am curious to know with regard to the provincial government involvement in one or more of these organizations, how that is done. Do they just pass the hat periodically, or is there some tithing arrangement where it is understood that different provinces will pick up a particular percentage of the budget? How is it done?
You are here from the Department of Finance. I would like to know to what federal department each of these organizations relates. I hate the word ``interface,'' but you know what I mean. For the Canadian Youth Business Foundation is it your department or some other department of government?
It says here that for Genome Canada the money comes out of the CRF upon the requisition of the Minister of Industry. Is that the department to which Genome Canada relates; is that the department that has a continuing overview, if you like, of what is going on there? For Pathways to Education the money is coming upon the requisition of the Minister of Human Resources and Skills Development, and the Rick Hansen Foundation funding will be delivered by Western Economic Diversification. That does not seem to be the ministry that would be best qualified to keep an overview of the Rick Hansen Foundation's activities around research on spinal cord injuries and so forth.
Do you have that information with you?
Mr. Botham: I have some of it. Beginning with funding sources, in the case of Genome Canada, federal funding accounts for about 45 per cent of total funding. They raise funding from other sources for their activities, including the provinces and the private sector. Provinces account for about 23 per cent of funding. Other institutions such as research hospitals and universities account for about 8 per cent. The private sector provides 11 per cent of the funds. Foreign funders, such as the National Institutes of Health in the United States where there would be collaborative projects or European funders, account for about 8 per cent. Other federal organizations, apart from Industry Canada, account for about 6 per cent. That is likely Canadian Institutes of Health Research or federal departments that also do research in the area such as Agriculture and Fisheries. That amount will vary.
In terms of how that organization goes about raising money, Genome Canada would raise money for individual research projects. Where collaboration is involved internationally, they would go to another funding agency in another country and indicate that they are interested in undertaking, for example, a major genomics research project. They would indicate that they can allocate a certain amount of money, and they would seek funds from the other organization that may have an interest in pursuing the same research outcome.
In terms of the provinces, there has been varying degrees of support. Some provincial governments are more active in this field of scientific research than others. British Columbia and Quebec are active. Those provinces support research as well as research centres. These are co-funded by provinces as well as Genome Canada. There would be a Genome centre at UBC, and therefore B.C. would be interested in providing for some of the costs of it. The same is true in Quebec.
As to the Rick Hansen Foundation, for the year ending March 31, 2009, the foundation indicates that they got 67 percent of their funding from federal and provincial governments. I do not have a breakdown of the amounts. Interest income is a minor portion. They get 31 per cent from individuals, because they are a charitable organization.
I have not yet found in my notes the fundraising for the Canadian Youth Business Foundation. As Mr. Hodgson speaks to Pathways, I will look through my documents.
Mr. Hodgson: Pathways would be reporting to HRSD. Pathways only exists at this point in Ontario and Quebec, and their funding comes almost entirely from provincial government sources and private sector donations. I am afraid I do not have the breakdown for those two sources of revenue.
Going forward, it is impossible to say now what share the federal funding will represent of future budgets. The intention for the funding is to expand this to a national program, so the extent that they can raise additional funds from provincial/municipal governments and private sector donations will determine the final proportion that federal funding will represent.
Senator Murray: It appears to be nine years old, but it is still only in Ontario and Quebec?
Mr. Hodgson: It is in eight locations; seven in Ontario and one in Quebec. They are planning to expand to Kingston, Winnipeg and Halifax. After that, they intend to expand to Alberta, B.C. and other provinces.
Senator Murray: Thank you. That is interesting.
Mr. Botham: I do not have the information with regard to the Canadian Youth Business Foundation.
You also asked about the relationship of these foundations with the federal organizations. For Genome Canada the relationship is with Industry Canada and the industry minister. Canadian Youth Business Foundation is the same. The Rick Hansen Foundation is, as you indicated, with Western Economic Development. The reason for that is geographic more than anything else. It is a West Coast-based organization. However, because they do research, they would also have relationships with the Canadian Institutes for Health Research, for example.
Senator Murray: Our former colleague Senator Keon was extremely knowledgeable about and interested in Genome Canada and the CIHR.
Senator Gerstein: Am I correct in assuming that the four organizations listed in Part 22 are considered not-for-profit organizations?
Mr. Botham: Yes, that is correct.
Senator Gerstein: Are they also charitable foundations?
Mr. Hodgson: Pathways to Education is a charitable organization.
Mr. Botham: I suspect that the Rick Hansen Foundation is. I am not certain of the other two, although I suspect that Genome Canada is not.
Senator Gerstein: Is the Canadian Youth Business Foundation a charitable foundation?
Mr. Botham: I would have to look at their articles of incorporation, but in their public materials they refer to themselves as a national charity, so I assume that is the case.
Senator Cowan: Pathways to Education has now launched in Halifax as well. There was a launching event within the last month. They are underway there and have been very well received.
Senator Dickson: How long do you expect it will be before Halifax will be operational?
Mr. Hodgson: Given that I was not aware that they had announced Halifax, I am afraid I could not guess how long it will take for them to be fully operational. I presume that if the announcement has been made, they would be targeting the coming school year to enrol people in their programming.
Senator Dickson: I noted from evidence given before committees in the house that the Boston Consulting Group had done studies on the success of the Pathways to Education Program. I was wondering whether outside studies have been done on the other programs, as well.
Mr. Botham: In the case of Genome Canada, there have been periodic program evaluations where third parties are contracted to evaluate the outcomes and determine the success of the funding the government has provided.
I am not sure that the same approach has been followed for the Rick Hansen Foundation. Funding has been more periodic and a smaller proportion of the organization's activities.
I would have to look to see if a study has been done on the Canadian Youth Business Foundation. I am not certain it has.
Senator Dickson: To the extent that studies have been done, could you give our committee, through the clerk, copies of the studies?
Mr. Botham: I will undertake to do that, yes.
The Chair: With respect to each of these sums of money, is there a funding agreement signed between the department or the government and the entity before the funds are disbursed to them?
Mr. Botham: Yes.
Mr. Hodgson: Yes.
The Chair: Therefore, we would be able to see in the Rick Hansen Foundation, for example, how much of the $13.5 million is going to the promotion of this anniversary date, would we not?
Mr. Botham: In the case of Genome Canada, the $75 million would be part of the funding agreement.
With regard to the Rick Hansen Foundation, I think it might not be a funding agreement — a global agreement —the same as what the government puts in place for Genome Canada. It might be more a specific contribution agreement as approved by the Treasury Board for particular parts of the expenditures, since there are likely two or three components.
I suspect that is something that might not be available, because it is a Treasury Board decision. However, there would certainly be an announcement associated with that which would specify each component of the funding, when it will take place and what it would be used for.
The Chair: I think the public would be interested in knowing how much of the funds are actually going to spinal cord research and how much are going to celebrate an anniversary year. If you are able to help us out with that, that would be great.
You indicated earlier it is probably a charitable foundation, but any of the funds raised through the issuance of charitable tax receipts — also public money — would not be able to be used for celebrating an anniversary, in my understanding. The federal money allocated in Bill C-9 would be going for the celebration, not other funds it has raised from other sources.
Mr. Botham: I am not sure of the variety of sources the foundation will use to support its celebrations. I will find out whether specific allocations have been made yet for each of the different activities. If they are available, I will provide them.
The Chair: Mr. Botham and Mr. Hodgson, the committee very much appreciates you coming to help us out with this particular part of Bill C-9
We will proceed now to Part 21: Labour Code, page 711. Ms. Lenore Duff from Human Resources and Skills Development Canada is here to help us. Part 21 contains amendments to the Canada Labour Code, appointment of appeal officers. Can you explain to us the purpose for these amendments and their effects?
Lenore Duff, Senior Director, Strategic Policy and Legislative Reform, Human Resources and Skills Development Canada: The amendments to the Labour Code provisions affect the appointment of appeals officers and the hearing process. The Budget Implementation Bill contains provisions that amend the code to facilitate the use of outside, contract adjudicators to hear occupational health and safety appeals.
Appeals officers currently work in a part of the labour program known as the Occupational Health and Safety Tribunal. This was established to create a type of firewall between health and safety officers and appeals officers. Appeals officers are currently designated by the minister. Some are employees of the labour program. In recent years, contractors have also been engaged to do this work.
The Occupational Health and Safety Tribunal Canada handles their cases effectively. However, there have been concerns in terms of the efficiency in managing caseloads and rendering decisions in a timely manner. The proposed changes to the code in the Budget Implementation Bill seek to address this.
Part III of the Canada Labour Code would be amended to provide that the Minister of Labour would appoint rather than designate appeals officers. The use of appointment reinforces the intention to ensure the independence of decision makers from the government. This amendment would bring Part II of the Canada Labour Code, which is the health and safety portion of the code, in line with Part III of the code, which covers labour standards. Currently, under Part III, unjust dismissal adjudicators and wage recovery referees are similarly appointed by the Minister of Labour to resolve disputes. We made Part II have the same process as Part III currently does.
These decisions makers on these appeals are recognized as neutral and independent of the government.
The amendments would also address the issues of timeliness and efficiency. They provide that written decisions must be rendered within 90 days of the completion of the inquiry. This time period is similar to that provided in other parts of the Canada Labour Code. For example, Canada Industrial Relations Board decisions are rendered within 90 days. They provide the Governor-in-Council with the powers to make regulations governing the appeals officer's conduct of proceeding, again aimed at making the process more efficient.
In summary, the amendments make no substantive changes to health and safety requirements in the Canada Labour Code. However, they make changes to the process by which the appeals of health and safety officers are heard and, essentially, how decisions are administered to make the process more efficient.
The Chair: Please tell us how you are doing at making things more efficient by referring to the proposed sections of the bill itself, for example, take clause 2174.
Ms. Duff: Clause 2174 provides that the minister shall appoint an appeals officer upon receipt of notice of appeal. Currently, the appeal will go to the minister. She will appoint an appeals officer, who will be a contractor, as in Part III, to hear that appeal. They will not be in place before or after the appeal. They will be appointed at the time required.
The Chair: Only for that particular appeal?
Ms. Duff: That is correct.
The Chair: Are there other clauses that you want to draw to our attention? It is important for people to understand the distinction.
Ms. Duff: The other clauses are relatively technical. Clause 2172 only changes the definitions of ``appeals officer'' to appointed from designated. Clauses 2173 and 2175 similarly provide that an appeals officer will be ad hoc appointees and the appeal will start upon written notice to the minister.
Clause 2176 starts to define the conduct of the inquiry — how the process unfolds. The first portion is a more technical matter that deletes the phrase ``and the reasons for it'' to focus on circumstances of the decision, such that they are consistent with the de novo nature of the inquiry, which reflects developing jurisprudence in the area. The second part of clause 2176 provides the 90-day time limit for completion of the hearing in an effort to have decisions rendered more quickly.
Clauses 2177, 2178 and 2179 pertain to regulations and transitional measures to ensure that there is no gap for what is being heard at the time the legislation comes into force. Clause 2179 is about coming into force. It also allows for provisions to come into force on different days. For example, procedural versus appointments can come into force at different times.
The Chair: Thank you for going through those sections. You mentioned the deletion in clause 2176 of ``and the reasons for.'' Did I understand you to say that the appeals officer will not give reasons?
Ms. Duff: It really is only a technical amendment. It deletes the phrase ``and the reasons for'' so that inquiries will now focus on the circumstances of the decision or direction of the health and safety officers, rather than what decisions the health and safety officer made at that time. It is simply to reflect jurisprudence.
Appeals of these kinds of decisions are not supposed to focus on determining why the health and safety officer made a decision. They are intended to start over, look at the whole process and investigate the actual incident rather than focusing on what the health and safety officer decided at the time. It is being done as the result of a court case.
The Chair: Thus the deletion of ``and the reasons for.''
Ms. Duff: Yes, these hearings should be de novo, in other words, commenced anew and review of the whole matter.
The Chair: We anticipate the appeals officer will give reasons for his or her decision.
Ms. Duff: That is correct.
The Chair: Although that is not in the clause, you anticipate that?
Ms. Duff: That is correct. It will still take place, but the focus is put on the fact that it is a new hearing.
The Chair: Clause 2176 on page 712 indicates the appeals officer will act expeditiously in a summary way. Is that a defined judicial process?
Ms. Duff: Only in that it is the appeal officer's duty to provide a written decision within a 90-day time frame. Under clause 2177, regulations can be put into place to govern the conduct of the proceeding. There is flexibility to address other issues with respect to the proceedings and time limits on those, should that be necessary.
The Chair: Do you anticipate that regulations defining the process will come later?
Ms. Duff: I do not anticipate it, but the measure is here to ensure that the actions taken or how the proceedings unfold are efficient.
The Chair: We have seen many sections that say these directions will not be considered statutory instruments. These regulations, if generated, will be considered statutory instruments that are reviewable?
Ms. Duff: I believe they will be reviewable as regulations. As I said, this legislation under clause 2177 will function without any regulations. They will be created if they are required.
The Chair: That is helpful.
[Translation]
Senator Chaput: Thank you, Mr. Chair. Based on the proposed amendment, from now on, an appeals officer will first be appointed by the minister rather than designated by the minister. How did things work when the appeals officer was designated? Did the minister also designate the appeals officer?
[English]
Ms. Duff: Yes, the minister also designates.
[Translation]
Senator Chaput: And now, the minister will appoint the appeals officer. What is the difference?
[English]
Ms. Duff: The minister can designate or appoint. The difference is somewhat subtle. Typically designating is used for internal employees and appointing is used for external individuals. That is not exclusive; they can both be designated or appointed. In this instance, it is to reflect the intention to appoint external people to hear these appeals. In the past, more people involved in this process have been designated and have actually been employees of the labour program.
[Translation]
Senator Chaput: In the amendments you are proposing, will the decision-making authority of the appeals officer, the one now appointed by the minister, be broader than before?
[English]
Ms. Duff: No. Decision making powers will be the same. What can be appealed and how the process works is defined in the Canada Labour Code. None of that has changed.
Senator Chaput: It is the same thing.
Ms. Duff: That is correct.
[Translation]
Senator Chaput: You are now suggesting that the officer's powers be established by regulation rather than by statute. I understand that it is more efficient to do it by regulation since, if I am not mistaken, the Governor-in-Council can change the regulations, whereas, if it were an act, it would have to be passed by Parliament. In other words, it would be more efficient to establish the powers through regulations because it would be quicker, but does that give more power to the Governor-in-Council to be able to change the regulations faster without having to consult Parliament as a whole?
[English]
Ms. Duff: All of these changes are legislative. There is an addition in clause 2177 to provide the Governor-in- Council with a fairly limited power to make regulations governing the nature of the proceedings. It will not affect the requirements of the legislation.
Whether the process is quicker to move through regulations — it probably is quicker — is not the reason why it is included. The changes are legislative, and the regulation-making power is there to ensure that whatever proceedings changes have been made are sufficient to ensure the efficiency of the process, so that it operates more efficiently and quickly and we get results more quickly.
[Translation]
Senator Chaput: Implementation will be more efficient. Thank you, Ms. Duff.
[English]
Senator Ringuette: My first question is with regard to Part 21 and the clauses therein. Has there been any consultation process with the unions and the employers that are subject to these clauses?
Ms. Duff: There has not been consultation with the unions that are subject to these clauses yet. As they go forward, there are plans to have consultations with the unions.
Senator Ringuette: Before legislation that affects employees and employers and their rights and abilities is brought forth to Parliament, there is usually a consulting process with the affected groups and their comments are taken into consideration. Now you are saying it will be done afterwards?
Ms. Duff: These provisions are in the budget bill, and there are no discussions on the legislation before the legislation is brought forward. Certainly discussions will be held with the unions and involved individuals before any actions are taken that affect their employment.
Senator Ringuette: Why is this in the budget bill?
Ms. Duff: It is actually a measure that came out of the Strategic Review Process that the Labour Program underwent and was reported on in this budget.
Senator Ringuette: You indicated in your comments that these clauses would provide neutrality and independence of government. How so?
Ms. Duff: Currently, the health and safety officers who make the decisions — go to a workplace and say something is unsafe — and the appeals officers who hear the decisions are essentially employees of the government. Having someone from outside government hearing the appeal is perceived to be more neutral, at arm's length. That process is used in other parts of the code. The decision makers who make decisions on government employees will be seen as neutral because they are not part of that process.
Senator Ringuette: Are the health officer and the appeals officer under the same roof, the same building? Would they be colleagues?
Ms. Duff: They are not located in the same building, but they are all employees of the Labour Program. It is a relatively small organization. The possibility that they would be colleagues or may know one another is there.
Senator Ringuette: You indicated that you will be contracting out, essentially, the service of appeal.
Ms. Duff: That is right.
Senator Ringuette: Can you indicate to us how many public servants will be losing their employment by this contracting-out process?
Ms. Duff: There are currently seven positions in the organization in the Occupational Health and Safety Tribunal Canada. I believe that one or two of the positions are not currently filled. There is a secretariat function for that organization as well as appeals.
We expect there will be somewhere between three and five people who will no longer be employed as appeals officers. We expect those people will be absorbed into the organization in other positions. We do not expect anyone to lose their job.
If I could go back to my comment in response to the question about whether the appeals officers will be likely to know one another, they are likely to know one another. I am not making any comment to suggest that they hear things unfairly or are influenced by one another. Generally speaking, the Labour Program operates now with outside appeals officers.
Senator Ringuette: What is the anticipated cost savings of these measures?
Ms. Duff: The anticipated cost savings are in the neighbourhood of $240,000.
Senator Ringuette: How will that be achieved?
Ms. Duff: Essentially, in terms of the efficiency of the operation, the appeals officers will only be used when required. Efforts will be made to have appeals heard where they happen, in regions — rather than pay for travel expenses — and to use existing buildings and facilities to hear the appeals, and the time limit for rendering the decisions is reduced such that the per diem payment for these people will be limited to the time they are actually working on the appeals.
Senator Ringuette: Do you have a list of these contractors?
Ms. Duff: There is no list of contractors at this point.
Senator Ringuette: Who will have the responsibility of compiling a list of contractors to be designated by the minister as appeal officers?
Ms. Duff: They will be appointed by the minister. My understanding is that there will not be an actual list, that they will be appointed on a per-case basis.
Senator Ringuette: How will they be identified? Who will identify them and what will be the standard with regard to the per diem and so on in their contracts?
Ms. Duff: I do not know the actual per diem. As I said, this system is used for Part III, the health and safety part of the labour standards of the Canada Labour Code. It is a very similar process. Outside appeals officers are appointed. They are paid a per diem rate of, I believe, $300 a day. The appointees they sought out are people who have experience or expertise in those areas.
As I mentioned at the outset, some of these outside individuals have already been designated by the minister as appeals officers. Some contract workers are doing that work now. There is certainly the capacity to identify those who have expertise in the health and safety area to hear the appeals.
Senator Ringuette: You have a list, then?
Ms. Duff: There is not an established list, but there is general knowledge of who has done this in the past and who has expertise in the area. However, there is no actual list I could produce to say these are the people that the minister will choose from. It will be at her discretion.
Senator Ringuette: In a normal year, what would be the number of appeals that would be heard?
Ms. Duff: Approximately 40.
Senator Ringuette: Do these measures mirror provincial legislation with regard to the process in health and safety?
Ms. Duff: There is quite a variety across provinces in terms of how appeals are heard and whether there is an established list or whether they are within the government or external to the government. This process is similar to the processes in Nova Scotia and Saskatchewan, but there is a lot of variation and there are different elements in different jurisdictions. It is most similar to the Nova Scotia system.
Senator Cowan: Following up on some of the questions Senator Ringuette asked, you spoke earlier about moving from a designation system to a system of appointment because there is a perception of independence with an appointment that does not exist with a designation?
Ms. Duff: That is right.
Senator Cowan: What is the evidence of that? Has there been a complaint about the designation process? How did you come to this conclusion?
Ms. Duff: I do not know of a specific complaint about designation, particularly with regard to the Occupational Health and Safety Tribunal, but typically that is how legislation defines an appeals function. As I said, the appeals officers are external for Part III of the Canada Labour Code. These amendments bring the tribunal into line with Part III of the code so that there is a consistent process across the code with respect to how appeals are heard.
Generally speaking, as it stands now, the effort to separate the function was to set up a group that existed in a different locale, but they were still public servants. These changes simply formalize the new process, take the next step if you will.
Senator Cowan: I understood you to say that the move would be towards outside officers rather than existing public servants.
Ms. Duff: That is correct.
Senator Cowan: And that has been the trend in other similar situations?
Ms. Duff: That is correct.
Senator Cowan: The government has found that this creates a perception of independence that did not exist before?
Ms. Duff: It would become the standard method, which is followed already under Part III of the Canada Labour Code. It will bring Part II into line with Part III.
It is difficult to define or measure the perception, but generally speaking there is an interest in having arm's-length decisions, and a way to formalize that arm's-length decision process is to have people appointed who are not public servants and who have no relationship with the original complaint or administration.
Senator Cowan: I accept that. That seems sensible to me. However, I wonder whether this is as a result of a particular concern that had been expressed in this particular program or whether it was to bring it in line with a standard across governments, and you mentioned provincial governments as well.
Ms. Duff: Right. It does not arise at all from a particular complaint. The other elements of the legislation that would make the process more efficient and set timelines are in response to concerns about the process taking too long. There have been no specific complaints about those current designated appeals officers.
Senator Cowan: This is moving from designation to appointment, but you alluded to the possibility that some of those persons appointed could be public servants, that they would not necessarily all be contractors?
Ms. Duff: There is nothing that prevents the minister from appointing public servants, but I think the emphasis here is to go to appointments outside of the public service.
Senator Cowan: You mentioned that there were, on average, 40 such appeals?
Ms. Duff: That is right.
Senator Cowan: By moving this from public servants to people who work on a case-by-case basis, the savings are anticipated to be $240,000 a year?
Ms. Duff: That is the savings for the whole process, so moving it to contractors and also eliminating some of the travel costs and using government facilities to hold hearings. Yes, the intention is a savings of $240,000.
Senator Cowan: Yet no one will lose their job as a result of this. These persons who are now being designated will continue to be employees of the Government of Canada?
Ms. Duff: Our expectation is that they will be absorbed into the organization. There will not be a duplication of the job, but they will be absorbed into the organization in other positions.
Senator Cowan: You are talking about a savings that would result after some time has elapsed, obviously, because it will take some time to absorb these people into the system, surely.
Ms. Duff: That is right. As I mentioned, there will be discussions, and the same process that goes on with the elimination of any position will take place. However, it will take some time to do that. In terms of absorbing people, there are typically positions open or available at any given time for which individuals may be a good fit. I cannot comment on that.
Senator Cowan: How did you come to the figure of $240,000?
Ms. Duff: It was calculated on the basis of the average cost of the organization, how it runs now, and what the expectation would be for contractors.
Senator Cowan: After there is a complete transition?
Ms. Duff: That is correct.
Senator Cowan: And without accounting for the transitional costs?
Ms. Duff: I think that is fair to say, without accounting for the transitional costs. However, we will not be creating new positions for people. They will be filling existing positions.
Senator Cowan: Why would there not have been consultations with the people affected by these changes before the legislation is brought forward?
Ms. Duff: It is not really possible to discuss the legislation before it is brought forward, given budget secrecy.
Senator Murray: We are talking about the Canada Labour Code, for goodness' sake.
Senator Cowan: This is not an area that I know anything about, really, but it would seem to me sensible, if you are moving from having public servants doing this type of work — I do not know whether ``contracting out'' is the right term — to a system where you are hiring outside people on a per diem basis to do the work. Then you will hopefully move these public servants to positions, perhaps not involving similar skills, but involving similar remuneration. You will not put them in positions that pay three quarters of their compensation. You will have to find a spot that suits their skills, that would provide them with the same compensation, and that would hopefully not require them to uproot their families and move.
There may not be a large number of people involved here, but it would seem to me that the people who are involved will be significantly affected by what you are proposing here. I do not know what budget secrecy has to do with this and why it would not be possible to discuss this with the people who are affected by it.
Ms. Duff: The strategic review process is part of the government's expenditure review. That is why it is carried in the budget. I understand these are changes to the Canada Labour Code, but typically before they would go forward and be approved, there would not be discussions about legislative changes that were carried in that vehicle.
However, in terms of what our expectations are for the changes for these people, certainly, as I said, for three to five people, we expect that over the three years we will have to implement this, and some of that change will come by attrition, given the knowledge of the people in those positions, and we fully expect that they will be easily absorbed into the organization.
I appreciate that normally with changes to the Canada Labour Code or any changes that would affect large numbers of people, there would be prior discussions, but in this instance that was not the case.
Senator Cowan: In response to Senator Ringuette's questions about how this ties in and why we are dealing with it here, you said that this was reported on in the budget. What did you mean by that?
Ms. Duff: This was part of the strategic review process that was reported in the budget.
Senator Cowan: If I went back and read Minister Flaherty's speech again and I was one of the persons affected by this proposal, is there something there that would lead me to realize that this would affect me?
Ms. Duff: The short answer to that is, no. It indicates in the budget that Labour Canada was one of the organizations subject to a strategic review. People understand generally that the requirements of the strategic review are to reduce expenditures. They are reported in the budget in a global sense. Looking in the budget, you will see under the section on strategic review that it indicates how much money a labour program is eliminating from its budget over the three-year period as per the requirement.
Senator Cowan: Is that the $240,000?
Ms. Duff: No, it is considerably more than that. The $240,000 is only one of the elements of the strategic review.
Senator Cowan: We will get to the others at some point, will we, Mr. Chair?
The Chair: They are not in Bill C-9. Only this part of the strategic review savings appears in Bill C-9 from the point of view of the Department of Labour.
Ms. Duff: For the Labour Program, this is the only element that appears in Bill C-9 related to the strategic review. That is correct.
Senator Cowan: If I may, we wonder why we are dealing with this now. Senator Ringuette asked about the savings or the costs. One would think that when dealing with a budget, you would be dealing with two parts: the additional monies required to implement certain programs on one side and the savings to be achieved by making some changes on the other side. We are talking about a savings of $240,000. What is the total amount for labour that I would find if I were to read Minister Flaherty's speech again?
Ms. Duff: I am afraid I do not have that figure before me.
Senator Cowan: I assume it would be some millions of dollars .
Ms. Duff: That is right.
Senator Cowan: How is it you chose a $240,000 item to be included in the Budget Implementation Bill and the balance not included? Why this and not that?
Ms. Duff: I am not sure that I can speak to the entire rationale. This change required legislation.
Senator Cowan: None of the others required legislation to effect the savings?
Ms. Duff: I believe that none of the other specific changes to the labour programs required legislation to effect savings.
Senator Cowan: All of the other savings identified in the strategic plan referred to in the budget speech will be achieved without the necessity of legislative change.
Ms. Duff: For the Labour Program?
Senator Cowan: For the Labour Program.
Ms. Duff: I believe that is correct.
Senator Cowan: Can you check on that?
Ms. Duff: I will check on that.
Senator Cowan: Are any additional offsetting costs required in order to implement these changes? Is the $240,000 a net figure or is it the gross savings? There will be costs for training, et cetera?
Ms. Duff: The $240,000 represents the net savings, as I understand it, but it is not net of anything; it should be $240,000.
Senator Cowan: That is $240,000 net.
Ms. Duff: That is right.
Senator Murray: Mr. Chair, let me observe that the exchange between Ms. Duff and Senator Cowan has given me another reason that I had never dreamt of to oppose omnibus bills of this kind. Surely it is obvious to honourable senators what is happening here: What appear to be relatively routine amendments to the law are given the same secret status as a major tax measure would have. Think about that.
I do not know whether there are any objections to this part. We are told that because of the budget secrecy, the stakeholders, or representatives of labour and management, had not been consulted on this matter. I have no idea whether any objection will be taken. If objection is taken, the only chance they will have to make representations will be before this committee. If there are objections, we will hear from them.
The Chair: We have the minister this afternoon at five o'clock. It will be interesting to pose the question to him as to whether these changes to the Labour Code are part of the pre-budget consultation.
Senator Murray: Maybe so. If there is objection, we might want to hear from the Minister of Labour.
The Canada Labour Code was one of the first pieces of legislation passed under the Pearson government in 1963. Our old colleague, Senator MacEachen, was the Minister of Labour at the time. It enjoyed broad Parliamentary support because it had such a broad consultation during the drafting stage with labour and management and the public generally.
I was going to ask you about consultation but the question is no longer apt. I will ask about the following: The government has given us some notes on clause 2177 of the bill — the regulation-making authority. The note states that this section provides that the Governor in Council may make regulations governing the appeals officer's conduct of proceedings. The focus is on timeliness and the efficient and effective operation of the proceedings. The powers of appeals officers under subsection (1) may be limited by these regulations.
Can you explain what that means? I do not know how ``they may be limited.'' What is subsection (1) and how may the powers be limited?
Ms. Duff: I will consult the Canada Labour Code at section 146.2, which states:
For the purposes of a proceeding under subsection 146.1 (1), an appeals officer may
(a) summon and enforce the attendance of witnesses and compel them to give oral or written evidence under oath and to produce any documents and things that the officer considers necessary to decide the matter;
(b) administer oaths and solemn affirmations;
(c) receive and accept any evidence and information on oath, affidavit or otherwise that the officer sees fit, whether or not admissible in a court of law;
(d) examine records and make inquiries as the officer considers necessary;
One might envision having a limit on the amount of time that the proceedings take place when you hear the evidence and, in terms of the examination of records, how long they would have to produce records or examine records. It has to do with the proceedings only.
Senator Murray: There will be a limit on how long the appeals officers would have to do that.
Ms. Duff: That is right.
Senator Murray: That is fine. Looking at the Canada Labour Code from 1963 forward, you will find that amendments were never made to the Canada Labour Code without wide-spread consultation before they were brought in.
Ms. Duff: Consultations will be held with the employees and the employee representatives before any changes are made. That will still take place. This bill does not preclude or eliminate that process. However, the legislation potentially will be in place before those discussions take place but potentially not brought into force at that point either.
Senator Murray: I see.
The Chair: Are you able to give us an undertaking that these changes will not be brought into force before consultation has taken place?
Ms. Duff: I can come back to the committee on that. I cannot speak to that today.
The Chair: It would be helpful to have a note from the minister to indicate that.
Senator Runciman: I am not sure if you are aware of it but you have put up with some pretty extensive grilling. You have been caught in a Liberal opposition filibuster for the good work you are doing to save the taxpayers of this country $0.25 million. It is a good thing you are not saving them $1 million or you might be here all day.
Senator Cowan: That is a helpful comment.
Senator Runciman: There are a number of things here that I think you have already mentioned, which perhaps we should reinforce. What this initiative does is save taxpayers roughly $0.25 million. It is improving turnarounds with respect to these hearings, and it is standardizing what is already a normal approach in other parts of the code — one that is quite common practice throughout the country, really, and certainly in Ontario. It may be more applicable with respect to Nova Scotia, but even in Ontario, it is quite common to bring in experts, whether they are arbitration hearings or whatever might be the case.
This is really pretty straightforward stuff, and we should not have put you through what is now three quarters of an hour of grilling for political purposes.
The Chair: Are you able to comment on that?
Senator Cowan: The foregoing was a paid political announcement on behalf of the Conservative Party of Canada.
The Chair: Ms. Duff, you have the choice on whether you wish to comment on anything Senator Runciman has said.
Ms. Duff: I would say it is a standard process in terms of bringing external contractors to hear appeals. As I said, it is done fairly typically across the country and it is bringing it in line with Part II of the code. That is my only comment.
Senator Murray: With regard to Senator Runciman's comment, I must observe that our colleague, Senator Gerstein, is — I think it is fair to say — the co-author of a motion that has passed the Senate that has given us until July 31 to report on this bill. On June 17, I think it is a bit premature to talk about filibuster, especially given the progress we have made over the past few days by very hard work. We have examined government witnesses on quite a number of parts of this bill. I think we are doing very well.
Furthermore, Senator Gerstein, in his speech at second reading, admonished us severely to take the time that is necessary and to examine this bill in the greatest of detail, which we are doing, and, finally, reminded us of what an agreeable place the nation's capital is in July.
The Chair: I recall those words.
Senator Murray: Senator Runciman, who comes from this general area, should be the first to agree with that.
The Chair: Thank you for that.
Senator Neufeld: You said a number of times — and Senator Runciman also referenced it — that Part III of the Canada Labour Code has employed this kind of appointment in contracting out, and now we are bringing Part II in line with Part 3. It is a simple process and a good step.
Can you tell me how long this process has been used and has been in force in Part III? Has it been in the last two years? Has it been in the last ten years, under other administrations that have accepted the appointment of arbitrators? Is that normal? Has it has been done in government for a long time?
We have heard things here that say this is absolutely terrible that we would do it. I want you to clarify that for me. Has it been done for a number of years?
Ms. Duff: I do not have the year that it started, but it has been done for more than two years; and it has been done for many years under Part III, that is correct.
Senator Neufeld: What is done under Part III and what we doing under Part II to bring it into line is not a sea change of anything that would require all kinds of questions around it. It is tried, obviously true and has been tried in other provinces. Would you agree with me?
Ms. Duff: Yes, I would agree with that. The evidence we have from the Part III process is that it is an efficient, effective way to operate appeals.
Senator Neufeld: I am glad to hear that we are doing this, and that other administrations accepted previously this practice of appointing outside people to come in and review these kinds of matters.
The Chair: Could you refresh our memories so we can clarify that testimony? Part II of the Labour Code is what we have been talking about.
Ms. Duff: That is right.
The Chair: That is occupational health and safety. Part III is what, again?
Ms. Duff: Labour standards.
The Chair: If there are appeals in relation to labour standards, that is the process that Senator Neufeld has indicated has the outside experts in existence now.
Ms. Duff: That is right. There is the same sort of process. Labour standards officers make decisions. Decisions on unjust dismissal or unpaid wages can be appealed. That appeal process functions with external appeals hearing officers and the decisions that are made; those are contractors.
The Chair: I wanted to clarify the record for that important point that he made.
Senator Dickson: I wanted to make reference to the time period for making decisions. I was reading from the house minutes that, previously, it was somewhere in the vicinity of 195 days on average to get a decision from an appeals officer.
Ms. Duff: That is right.
Senator Dickson: Now we are going down to 90 days.
Ms. Duff: That is right.
Senator Dickson: That will be a benefit, I assume, for the employer and employee. They will know where they fit.
Ms. Duff: It should be a benefit for everyone involved, yes.
Senator Dickson: Now I flip over to Part III. Is there a time cut in Part III insofar as decisions are concerned? Does someone have to make a decision within 90 days, is it 120 days or is it ad infinitum?
Ms. Duff: I do not believe this is a specific time limit. I would have to get that information, but those appeals have been heard more quickly than those on the health and safety side in the past.
Senator Dickson: It would be interesting to find out what the average has been there. Next year, we may, in our omnibus bill, have to include another section. I wanted to make sure that we proceed along in the same manner.
The Chair: Thank you for that warning.
Senator Dickson: Well, if you like July, you might as well be here.
Senator Ringuette: You mentioned earlier that you are currently contracting out in regard to Part II.
Ms. Duff: That is right.
Senator Ringuette: You have also said that, on average, you have 40 appeals a year. How many outside contractors would be used for how many appeals?
Ms. Duff: I do not have the answer to that question. It varies considerably, but I do not know how many have been contracted out in the last year.
Senator Ringuette: Can you also inform us as to how many of the current contractors under Part III are also contracted under Part II?
Ms. Duff: I am sorry; I do not understand the question.
Senator Ringuette: Are the contractors under Part III the same contractors who are currently doing contracting work under Part II?
Ms. Duff: I do not know the specific answer to that question. I would have to check and see who has been employed as a contractor, but I will say that typically that would not be the case. Those who hear industrial relations matters under Part I are not the same people who hear labour standards matters under Part III. I would expect those hearing health and safety issues would be health and safety experts. They typically would not be the same individuals because it is based on the expertise of the individuals to hear these matters.
Senator Ringuette: I was questioning that because earlier you indicated that there were some people who are being contracted out under Part III that were currently being used under Part II.
Ms. Duff: Not individuals. I said that under Part III, all the appeals are heard by external contractors; there are no public servants hearing appeals.
Under Part II, there is now a combination of both. There are some public servants hearing appeals and there are also external contractors. However, I did not make any comment about whether they were the same people. I expect they are not the same people, because we typically pick people who would have expertise in specific areas. However, I would have to look at the list and identify them. I just do not know the answer to that question.
The Chair: Seeing no other senators who wish to intervene, it remains for me to thank you, Ms. Duff, for being here as part of HRSDC.
We had on the list that Mr. Beauséjour might have been in attendance with you. I have just been told he will speak to the EI, the next item.
Ms. Duff: He is here.
The Chair: Honourable senators, we have only six minutes left in this designated time slot and Part 9, pensions, is a fairly heavy item. I would propose that we put off parts 9 and 24 — pensions and EI — until a time that can be arranged by our clerk and the witnesses.
We do have a program for this afternoon already, which is parts 4, 5, 15 and 23 — softwood lumber, customs tariff, Canada Post and telecommunications — and then the minister at five o'clock for one hour.
This meeting is now adjourned until this afternoon at three o'clock.
(The committee adjourned.)