Proceedings of the Standing Senate Committee on
National Finance
Issue 23 - Evidence - November 30, 2010
OTTAWA, Tuesday, November 30, 2010
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to examine the expenditures set out in the Supplementary Estimates (B) for the fiscal year ending March 31, 2011.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: I call this meeting of the Standing Senate Committee on National Finance to order.
[Translation]
Honourable senators, we continue this morning to examine the spending included in the Supplementary Estimates (B) for the fiscal year ending March 31, 2011, as referred to our committee.
[English]
We will divide this morning's meeting into two separate sessions. In the first, we will focus on Indian Affairs and Northern Development. It is also called Indian and Northern Affairs Canada. Perhaps Ms. Swords, in her opening remarks, can tell us which name is the legal one and which name the colloquial one.
In the second session, we will focus on the Department of National Defence.
Representing Indian and Northern Affairs Canada, we are pleased to welcome Colleen Swords, Associate Deputy Minister; and Susan MacGowan, Chief Financial Officer.
Colleagues, we have one hour for this session and I ask for your cooperation in ensuring we keep our questions succinct, so that all senators who wish to participate may do so.
Ms. Swords, the floor is yours.
Colleen Swords, Associate Deputy Minister, Indian and Northern Affairs Canada: Thank you. I am pleased to have this opportunity to appear before the committee to discuss the 2010-11 Supplementary Estimates (B) for Indian and Northern Affairs Canada.
I believe the legal name is the Department of Indian Affairs and Northern Department, but we use the short form, INAC, which is Indian and Northern Affairs Canada.
As you mentioned, I am accompanied by Ms. MacGowan, our Chief Financial Officer, and we have a number of other officials who are ready to assist in answering questions as needed.
[Translation]
These supplementary estimates will provide the department with the resources it needs to pursue our ideal, which is a future where Inuit, Métis, Northern and First Nations communities are healthy, secure, self-sufficient and thriving. These resources will allow our department to meet its obligations towards Aboriginal people through the settling of specific claims and to find a just and lasting settlement for the legacy of Indian residential schools. These resources will also allow the department to conclude agreements on land claims in Quebec; implement an enhanced prevention- focused approach for child and family services in Manitoba; and support the Aboriginals' deeper involvement in economic development.
[English]
The 2010-11 Main Estimates for the department were $7.3 billion. Together with already approved Supplementary Estimates (A), the Supplementary Estimates (B) before you today will raise the total estimates for the department to $8.3 billion. These supplementary estimates include a net increase to appropriations of $826 million.
The estimates contain both increases and decreases to departmental appropriations, and include amounts having an impact on a number of initiatives. For example, there are $311.7 million dollars in late reprofiling of funds from 2009- 11, of which $308 million is for the specific claims settlement funds; $295.1 million for the Independent Assessment Process, of which $294.6 million is incremental funding from the fiscal framework and $500,000 is part of a late reprofile from last year.
Other major items include $60 million for the Bigstone Cree Nation Treaty Land Entitlement claim, and the continued implementation of the Indian Residential Schools Settlement Agreement announced in Budget 2010.
This year, the department has continued to improve the pace of resolution of specific claims. These claims are grievances by First Nations related to Canada's obligations under historic treaties or the way the crown has managed First Nation funds or other assets. This fiscal year, the department has already paid $273.7 million towards the settlement of specific claims. This amount includes $126.1 million for the Peguis First Nation 1907 Land Surrender Specific Claim and $145 million towards the settlement of the Mississaugas of the New Credit, Brant Tract and Toronto Purchase specific claims.
A number of other claim settlements of high value are hoped for and expected later this fiscal year. The resolution of these and other specific claims address past grievances, and generate social and economic opportunities for First Nations and local communities.
The Indian Residential School Settlement Agreement settlement allotment has also been one of the priorities of the department. As you may recall, $960 million was set aside in 2006 to pay awards under the Alternative Dispute Resolution process and the Independent Assessment Process for serious physical and sexual abuse, as part of the Indian Residential School Settlement Agreement. This amount was distributed equally over the six years of the agreement, $160 million per fiscal year, with the understanding that adjustments might be needed to reflect the timing and the amount of the claims and awards to be processed.
Last year, you approved the reallocation of $120 million from 2012-2013, bringing the reference levels for the settlement allotment in 2009-10 to $321.7 million. After all the payments were made, there was an end-of-year balance of less than $1 million. The remaining settlement allotment amount was $360 million.
Both the amount of abuse-related claims and the size of payment awards continue to run above the original expectation. Looking forward, INAC anticipates there will be about 2,500 decisions resulting in compensation this fiscal year amounting to around $455 million.
Other allocations you will notice in the Supplementary Estimates (B) include: $27 million to address out-of-court settlements; $20.7 million to implement the Eeyou Marine Region Land Claims Agreement; $17.6 million to the First Nation Child and Family Services Program to implement a prevention-focused approach in Manitoba; and $16.3 million to support the implementation of the Strategic Partnership Initiative under Canada's new Federal Framework for Aboriginal Economic Development. There is also about $40 million for various activities, ranging from subsidies to the shipment of food to isolated northern communities and our continued support for the Youth Employment Strategy program.
Reductions to the appropriations of the department total $17.6 million, and the majority of these reductions are to provide funds to other government departments to support activities such as the new Arctic Research Infrastructure Fund and work related to the International Polar Year.
Within Supplementary Estimates (B), we are seeking a transfer from vote 1 to vote 10 of $18.8 million. This internal reallocation will allow us to make a transfer to the government of the Yukon for the assessment, management and remediation of federal contaminated sites in the territory.
These investments are in keeping with our ongoing priorities. Indeed, you will be aware that we have four bills before the house and Senate that seek to address some of the priorities we have mentioned. There is Bill S-11, the safe drinking water for First Nations act, where we are attempting to make tangible progress on improving the water conditions on reserve; Bill C-25, the Nunavut planning and project assessment act, which aims at providing clarity, consistency and legal certainty with respect to land use planning and the land assessment process in Nunavut; Bill S-4, the family homes on reserves and matrimonial interests or rights act designed to resolve a long-standing issue of on- reserve matrimonial real property; and, finally, Bill C-3, the gender equity in Indian registration act, which is needed to meet requirements of a court decision in British Columbia.
We are confident that the work the department is doing and the investments that are included in the supplementary estimates will lead to further progress for Aboriginal Canadians and Northerners.
We will be pleased to answer any questions the committee may have and hope you will indulge us. We will do our best to answer today, but if we cannot, we promise to return to you with answers in writing.
The Chair: Thank you, Ms. Swords, for that overview. We each have Supplementary Estimates (B) in front of us, and I have been trying to follow you on pages 160, 161 and following of the Supplementary Estimates.
Can you refer us to the reprofiling in the supplementary estimates? When you talk about reprofiling, especially when you go back more than one year, are we talking about statutory and you are giving us that information, or is reprofiling also in the estimates and voted portions of the act?
Ms. Swords: Generally speaking, reprofiling refers to funds approved both by cabinet and Treasury Board, but these funds are approved on an annual basis. If we are not able to expend the funds in that particular year, they lapse unless we receive authority and approval to reprofile them.
When we come forward with estimates each year, the estimates for specific amounts are only for that year. In a large department like INAC, of course there are things the department cannot fund necessarily all in that year. It is particularly an issue with something like specific claims, where they are negotiating with partners, with First Nations, and they cannot be certain when they will reach a conclusion to a negotiation. Indeed, even if they reach a conclusion, there are usually steps afterward for ratification by both the First Nation and Canada. They cannot always hit the year exactly in which the funds are approved for.
With respect to the total number of things we are seeking reprofiling for, I wonder if I can turn to my chief financial officer who will give you the list and summary of what we are asking reprofiling for.
The Chair: If you can make reference to the supplementary estimates, to the document we have as our background, that will be helpful, Ms. MacGowan.
Susan MacGowan, Chief Financial Officer, Indian and Northern Affairs Canada: Certainly. If we turn to page 163, the amount for the specific claims you will note there under vote 10 —
The Chair: What page are you on?
Ms. MacGowan: Page 163, ``Funding for the specific claims settlement.''
The Chair: Under ``Voted Appropriations''?
Ms. MacGowan: Under ``Vote 10,'' yes.
The Chair: Ms. Swords indicated the supplementary estimates contain increases and decreases, $311.7 million in late reprofiling, and it is that late reprofiling I want to have some explanation of, as to how you account for that and how you go back more than one fiscal year in doing so.
We are dealing with fiscal year 2010-11, and you are reprofiling funds from 2009-10. Can you explain how that reprofiling is shown here, and give us an explanation of that process, please?
Ms. Swords: I think some of it is connected with the process used for reprofiling. Sometimes one can ask for permission to reprofile, and if they do so before the end of the fiscal year that they received money for. If they receive approval from Treasury Board, it is acceptable. If they do not expend it in time for the end of the fiscal year for which they are making their request, they have to come forward with a late reprofile.
The Chair: Is this unexpended money carry forward the 5 per cent that Treasury Board allows for carry forward from one distributor to another?
Ms. Swords: It is additional to that amount, and it is money that we were unable to expend in 2009-10 and that was approved for 2009-10. We were unable to identify in 2009-10 that we would need it the next year. We were not certain which specific claims would reach conclusion and that we would be in need of paying out this year.
We have now reached a point where we have settled several and we are close to settling several others. We think we will need the funds this year, so we are seeking permission to reprofile, which means the funds we did not expend last year we are seeking to expend this year.
The Chair: That amount will not show as a new expenditure this year. It is an amount that was approved previously, so it will not show as part of the global amount of the budget for this year, other than as a comment regarding reprofiling?
Ms. Swords: The amount does add to the overall estimates for the department. When I said at the beginning of the year we had estimates approved at $7.3 billion with Supplementary Estimates (A) and Supplementary Estimates (B), the amount will go up to $8.3 billion for this fiscal year. Included in that $8.3 billion is an amount for late reprofiling, which is around $311 million, largely for specific claims. The amount does end up in this year's overall estimates for the department.
The Chair: That is shown as a savings for last year after we approved it, then unexpended, therefore —
Ms. MacGowan: That is right.
The Chair: We will find that amount in some other document, probably like public accounts. Is that right?
Ms. MacGowan: That is right.
Ms. Swords: It means the Canadian taxpayer has not spent it twice.
The Chair: We want to ensure the parliamentary committee charged with approving this amount does not approve it twice.
If we look at this figure of $311.7 million that you referred to, is that part of only a global figure that we find in the supplementary estimates, or is that $311.7 million figure actually there? Can you find that anywhere in these estimates for us?
Ms. Swords: I understand what you are asking, and I need my CFO to add it up for you. The total amount for late reprofiling is $311.7 million: $308 million for specific claims, and another $3 million that is identified on page 163. I believe some of it relates to the Indian Residential Schools Settlement where there was half a million dollars of late reprofiling last year. Ms. MacGowan, can you identify the other late reprofiles.
Ms. MacGowan: I am looking for them here. I apologize.
The Chair: Why not see if you can find that information and give it to us by the end of the session?
Ms. MacGowan: We will bring it back.
Senator Neufeld: Thank you for being here.
For clarification, at 5b on page 160 it states:
Capital expenditures, and (a) expenditures on buildings, works, land and equipment, the operation, control and ownership of which may be transferred to provincial governments on terms and conditions approved by the Governor in Council, or to Indian bands, groups of Indians or individual Indians . . .
Can you give me a sense of what that item would be? What would be transferred to ``individual Indians''?
Ms. Swords: Although I will have to confirm this information, there are times when, for example projects for Canada's Economic Action Plan, there is joint funding from the provinces and the federal government. The arrangements may be such that the money goes to the province, which then expends the monies to fund a particular capital project.
As another example, there are times when part of a road project goes onto First Nation land. Some of the project will be funded by INAC and some of it by the province, potentially. The funds may be transferred as a single vehicle for the contract.
I suspect that type of funds is what we are trying to capture in this particular capital item.
Senator Neufeld: I am interested in an example of funding to an ``individual Indian,'' as it states, so that I have a better sense of this item. I can understand what you are saying but it would surprise me to learn that the Government of Canada would give money to the province for the province to administer, although that could be the case. Perhaps you can come back with additional information of specific examples of that funding through the clerk of the committee. Time is short today.
When I first arrived in the Senate, I heard a great deal of talk about Canada Post providing air stage parcel service to the North in relation to fresh food, et cetera, and the related costs. I see at 15b on page 160 that there is an adjustment of $9.4 million to the appropriation from $47.6 million to $57 million for the Northern Air Stage Parcel Service. Have there been dramatic changes that require a 20-per-cent increase in those costs? Is the process working so well that people in the North accept it now, with this kind of increase? Can you give me examples of how that service works?
Ms. Swords: Senator, the amount that you see in Supplementary Estimates (B) relates to the current program. It does not relate to the new Nutrition North Canada Program, which comes into effect fully on April 1, 2011. This item relates to funding for the current system. There have been announcements well in advance for the new Nutrition North Canada Program, which comes into effect April 1, 2011, so that people have time to adjust.
The increase of $9.4 complements the funding in the Main Estimates. The Main Estimates have $47.6 million for the existing Food Mail Program. When we were calculating the amount of subsidy to Canada Post to fund food that goes to northern and isolated communities, we realized that we needed an additional $10 million for 2010-11. This amount is for the current system, not the new one in April 2011.
We hope that the Nutrition North Canada Program will increase access to affordable nutritious food. The main focus is ensuring that there is airlift and various means by which retailers can access airlift for the most nutritious and the most perishable foods. It puts an extra emphasis on making use of sea and land transportation methods, hence the need to have advance notice to retailers to make the transition.
My understanding is that although the program is not in effect, a number of the larger retailers took advantage in the summer of the opportunity for sea transport of items that are not perishable. A few smaller retailers have not done that. There could be a need for them to understand and appreciate the system better.
Minister Aglukkaq appeared before a parliamentary committee two weeks ago and explained it better than I ever could because she is a resident of the North. The new system focuses mainly on airlift for the most perishable and most nutritious products. Under the current system, a much larger set of products were subsidized through Canada Post for the transportation. The new system will be a subsidy provided to retailers. The subsidy will be more obvious on the receipts to consumer.
Senator Neufeld: You are saying that we need another 20 per cent to maintain a long-standing inefficient program for the remainder of this fiscal year. That amazes, if the program is as poor as I recall from the description. I assume that the new system will cost more than $57 million, as stated here. Am I correct in saying that the cost will be more but the service will be much better?
Ms. Swords: No: To the fullest extent possible, the new system is based on four or five years of consultations with all the stakeholders. It is designed to be cost effective and to ensure that the airlift part of the program focuses on nutritious and fresh food and that the government is not paying to airlift things that can be brought in equally well by sea or road in the summer.
Senator Neufeld: In response, you are saying that the program will be better service but will cost less than it currently costs. My first question was: Will it cost more? You did not tell me whether it will cost more, so I assume it will cost less. Is that correct?
Ms. Swords: The new program does not come into effect until April 2011. It has been designed to be as cost effective as possible. For the current fiscal year, we need the additional $10 million because the existing Food Mail Program is demand driven. When demand for the Food Mail Program increases, we have to pay. There is no cost-containment mechanism in the existing program.
The new program is designed to have greater cost containment because the retailers will receive the transportation subsidy and they do not want to have things sitting up there that they cannot sell. We are expecting and hoping that the new system will be more cost effective and that we will not have to come back to Parliament for additional amounts, as we do now because there is no cost- containment mechanism.
Senator Neufeld: My next question concerns $18 million to the Government of Yukon in respect of contaminated sites. I assume that those sites are on-reserve only, not off-reserve. Is that correct?
Ms. Swords: No: The department has responsibilities in the North for more than what is on-reserve. The contaminated sites we are talking about are in the North. I believe a large portion of the amount is for the Marwell tar pit site in Whitehorse, which dates back to World War II, before the Yukon government existed. The federal government agreed to try to coordinate and fund some of the remediation.
Senator Neufeld: I believe the amount is $18 million.
Ms. Swords: Which $18 million is that?
Senator Neufeld: You said earlier in response to a question that there was $18 million to the Yukon government for contaminated sites. That is what I am going by because I did not find $18 million anywhere.
Ms. Swords: No, the contaminated site at Marwell tar pit is not $18 million. Let me check.
Senator Neufeld: Maybe you can provide those sites and the appropriate amount rather than taking the time here. You can provide it to us through the chair.
The Chair: We did have a figure of $18 million that you transferred from vote 1 to vote 10. We talked about the figure of $18 million earlier. I do not know if that figure has become mixed up here, but if you can help us with that, it would be appreciated.
Senator Callbeck: In your comments, you mentioned reductions to the appropriations of the department totalling $17.6 million, for which the majority is sent to various government departments.
On the information we have here, where would we find that $17.6 million? You say it has gone to various departments. I want to know where it came from. What programs were affected in the Department of Indian and Northern Affairs by losing that amount of money, and where did it go? I see transfers on page 164, but those are a far cry from $17.6 million.
Ms. Swords: From the information that I have, senator, $80,000 was transferred to the Department of Fisheries and Oceans, and that is for the English River fish counting fence in Labrador. A small amount is also going to finance the self-government fiscal agreement between Canada and Nunatsiavut, which ended an English River fish counting fence. That sort of thing is covered. That is about $80,000.
The largest amount is $12,075,000, transferred to Natural Resources Canada, of which $2,875 went to NRCan to operate the First Nations Forestry Program. An amount of $9 million was transferred to Natural Resources Canada to support activities related to the Arctic Research Infrastructure Fund, specifically for the upgrade to the Polar Continental Shelf Program; and $200,000 was transferred to NRCan to establish one of the nodes of the International Polar Year data assembly centre, and will be used for operating costs related to that set-up.
An amount of $765,000 was transferred to Health Canada to support activities related to the Arctic Research Infrastructure Fund and a radiological network project. Health Canada is providing a lot of the operations in connection with the network. It is the second year of funding. That network allows for separate monitoring sites in the North.
An amount of $763,344 is transferred to Parks Canada to support activities, again related to the Arctic Research Infrastructure Fund, and specifically for a national park. I am afraid I cannot pronounce it. It is for Quttinirpaaq National Park, and it is for field locations for the Churchill Northern Studies Centre. It allows renovations to northern research facilities.
An amount of $448,175 is transferred to Environment Canada, again related to the Arctic Research Infrastructure Fund. The funding is specifically for the migratory birds research network project. Again, it is the second year of funding for this particular project.
I am not sure if those amounts add up to $18 million. There are two more, someone is telling me, but they are not in my book.
Senator Callbeck: To go over those figures again, you said $80,000, $80,000, $12 million, $9 million, $200,000, $765,000, $763,000 and $488,000?
Ms. Swords: No: It is $80,000 to Fisheries and Oceans Canada. It is $12,075,000 to NRCan, but that is for three or four different sub-projects, one of which was $9 million; but to round it up, it is $12,075,000; $765,000 to Health Canada; $763,344 to Parks Canada; $448,175 to Environment Canada; $163,300 to Fisheries and Oceans Canada. Does that add up to $18 million? If it does not add up to $18 million, I will have to ask my chief financial officer to get a new calculator or to identify what specific transfers are missing.
Senator Callbeck: This money has been transferred out. What programs are affected by the transfer in the Department of Indian and Northern Affairs? Where did the money come from?
Ms. Swords: A large part of the programming that you see relates to the Arctic, so funds come from northern programs and relate to operations and economic development opportunities in the North. Some of the others are small amounts of money and the source would likely be the department's operating funds.
Senator Callbeck: Are you able to obtain a list of where that $17.6 million came from? In other words, what did the Department of Indian and Northern Affairs give up to give that money to other departments? Can you provide the committee with a list?
Ms. Swords: We can provide an answer, but if the transfers come from operating funds, they would not have to come from an individual or specific program. We will do our best to provide you with an answer, senator.
Senator Marshall: Can you give us information on the prevention-focused program for the First Nations Child and Family Services Program? Is that program something new? What is the prevention geared toward? Is it toward health or keeping First Nations children in school? Can you give us background information on that program, please?
Ms. Swords: Yes, senator. The funds that are in the supplementary estimates relate to a prevention-focused approach in Manitoba, but we have reached agreements with six provinces now for what we call the enhanced prevention-focused approach to child and family services. The provinces we have agreements with are Alberta, Quebec, Saskatchewan, Manitoba, P.E.I. and Nova Scotia. Child and family services for First Nations children are a provincial responsibility, but we fund it on-reserve.
In today's approach to child and family services, which is really about the protection of young children within their families, rather than quickly taking children out and putting them in another family or foster care, the approach is to try to put much more emphasis on prevention. The approach places much more emphasis on the parents and the family itself, and providing supports there, so it does not reach a point where a child has to be taken into protective care. It is an attempt as well, rather than to use foster care in families that are unknown to a child, to make as much use as possible of relatives, and care that is more connected and more culturally relevant to the child.
We started this approach in 2007, with Alberta. There have been positive evaluations in Alberta. It is a difficult area in which to say we have been successful, but the number of First Nations children who have gone into foster care, in my understanding, has gone down marginally as a result of the enhanced efforts we are making in what is called, the enhanced prevention model. The approach is still at early stages, but we are hopeful that with the injection of funds at an early stage and much more effort on prevention, that we will be able to reduce the number of times when it is necessary for a child protection service to intervene and take a child out of a family.
Senator Marshall: What are the ages of the children this program is directed at? Is it directed at children in preschool or all those children under 16 or 18? What age group is the program directed toward?
Ms. Swords: As I said, issues under child and family services fall under the province, so it may vary a little bit from province to province. However, it is my understanding that children can be affected right up to their age of majority or even age 18. I stand corrected if I am wrong. That said, a large part of the care and focus is on the time when the child is in the home full-time before the child goes off to school.
Children can be taken out of a home for abuse and so forth even after they are in school.
Senator Marshall: The age limit depends on what is stipulated by the provincial legislation, then.
Ms. Swords: Yes.
Senator Marshall: Correct me if I am wrong, but I understand from your explanation that the funding will be used for support services, whether for homemakers or child-care programs and things of that nature. Is my understanding correct?
Ms. Swords: A large part of the funding relates to providing services, not so much for foster families, but for training, learning and teaching within First Nations communities in families on how to be a better parent. There is also support for the larger families so they, too, can provide assistance to the children.
Senator Marshall: Do you know how many Aboriginal children this program covers; what is the total population of children that this program would apply to?
Ms. Swords: I do not know the exactly number. I can probably provide that information to you. I know that now, with agreements with six provinces, we cover 68 per cent of the Aboriginal population in the country. I am not sure if it is 68 per cent of the children or 68 per cent of the Aboriginal population.
Senator Marshall: You listed six provinces that have a program either identical or similar to this one. What happens in the remaining provinces?
Ms. Swords: Someone has given me a note. It says that 163,000 is the total number of all First Nations children across the country, and we are covering 68 per cent of the children.
Senator Marshall: Do you know the number in Manitoba?
Ms. Swords: No, but we can provide that number for you.
Senator Marshall: What happens in the other provinces?
Ms. Swords: We are in discussions with the other provinces about how best one can implement models that have a better record and a better chance of success. Discussions are at various stages. It is something we have to do with each province. We want to move forward with each one of them, because it seems to be a more successful and better model.
Senator Marshall: There is another program in the estimates that is geared towards Aboriginal youth: Funding for the development, implementation and maintenance of an education information system. Is that program new, and can you give us information on that program?
Ms. Swords: That is not a new program, per se. It is a database and a computer program, so that we can try to track data across the country that is relevant to evaluating success, or lack thereof, with respect to the education sector.
We are trying to do something so that we are able to track between reserves and provincial schools; sometimes, children move back and forth between them. We have information to be clear on with respect to grades, success rates and so forth. It is a data system.
Senator Marshall: That data system is geared toward individual children, is it?
Ms. Swords: No: It is a data system for all First Nations children in the education system that we fund across the country. The K to 12 funding that the department provides is quite different. This program is a computer data system or program used to track results.
It is in its formative stages. It has not been set up yet. It has proven to be complicated, particularly as each province has a slightly different system themselves.
Senator Marshall: Is that $6.3 million in addition to an amount that was approved previously, or is that the first amount?
Ms. Swords: There was a small amount to set up the initial design of the system and to come up with a charter. This amount is to advance the development of the system. Once the system is up and running, it will require funds to keep it operating and up to date.
Senator Marshall: Who is the subsidy for the subsidization of the shipment of food paid to? Is it paid to the retailers or to the companies that provide the transportation?
Ms. Swords: My understanding of the current system is that the subsidy goes to Canada Post and it is based on weight. In the new system that will start in April, 2011, the subsidy will go to retailers, or people can order for themselves, I believe. I am looking over at my colleague, and he is indicating that they can order for themselves and they will be able to obtain a subsidy for nutritious, perishable foods.
Senator Runciman: I have a few questions about land claims. You may recall the confrontation that occurred in Ipperwash in 1995. Part of the concern there was the military base built on land that had been subject to a land claim for a significant period of time. Can you tell us the status of that land claim? Has that claim ever been settled and has ownership of that land transferred?
Ms. Swords: I will correct myself after if I am not correct. Negotiations are still under way and there has been considerable progress. One issue relates to removing unexploded ordinance on part of the territory.
When we are working on trying to transfer land back, it is important that the land be sound and safe environmentally before it is transferred. Otherwise, there are ongoing liabilities that are unclear.
That claim is still in discussion and under negotiation, but there are good discussions happening and we are hopeful of reaching an agreement.
Senator Runciman: There is another Ontario issue, and that is Caledonia. The occupation has been ongoing for years now, involving continuing efforts by the Ontario Provincial Police. It is unsettling for the community surrounding it.
Was there a specific land claim prior to the occupation? I have heard mixed stories about that situation. Is there a land claim currently, and what is its status, if there is one?
Ms. Swords: My understanding is that there is a claim. When we say ``land claim,'' people sometimes mix up whether it is related to a historic treaty where there is a sense it has not been fulfilled properly, and they can end up with a specific claim; or whether it is something that a particular thing was not part of a treaty but there is a sense that there should be a treaty.
There are discussions that continue with Caledonia. It is not something that we have let drop. I will provide you with an answer, senator, regarding the exact status because I am not familiar with it.
Senator Runciman: I would appreciate knowing when there was an actual indication that there was a claim to that property.
In looking at the materials provided to us, Supplementary Estimates (B) contains specific claims arising from alleged breaches in the administration of lands and monies of First Nations. That amount is $367 million. Are alleged breaches in the administration of lands and monies historic, as well? How far back do these kinds of claims go? What is the total of outstanding claims, and how big is the backlog?
It seems to me that, as of 2009-10, if we still have these claims of breaches in administration, and are continuing to allocate significant taxpayer monies to these breaches, I wonder what this is all about.
Ms. Swords: They do relate to historic claims. I have seen some claims go back to the 1800s. I do not know if any go back to the 1700s. The claims are difficult and time consuming because of their historic nature. They often relate to a difference of understanding of a treaty. Sometimes the old treaties are written such that, ``You have land as far as you can throw a stone.'' What does that mean?
In some cases, unfortunately, we have found that historically, some Government of Canada representatives who were responsible for funding under the claim 150 years ago were not fulfilling the obligations under the treaty. These cases are all historic.
I understand that all the specific claims are booked as a contingent liability of around $5 billion for the Canadian government. That amount does not mean that is what we actually owe, but that is the magnitude. It is significant.
With the Justice At Last proposal of the government, we are trying to bring these claims to a close and come up with timelines to deal with them. We have been successful in reducing the inventory of claims so far. Inventory has been reduced by more than half, with the active inventory currently at 557. We had over a thousand, and the concluded claims stand at about 848 claims. We put up on the department's website once a quarter where we are.
Senator Runciman: There is a light at the end of the tunnel.
Ms. Swords: There is light, and the claims are not all huge. Some of them are $75,000.
Senator Runciman: A few years ago, I had an opportunity to tour Northern Ontario. I do not know Northwestern Ontario, and I am not sure this situation is typical. However, going into Sioux Lookout and Red Lake, I saw people unconscious on the lawns all over the area at 10 a.m. It is devastating to see what is happening in some of these communities.
If we look at the disproportionate number of people in child and family services and in corrections, we wonder, talking about light at the end of the tunnel, what are we doing to address this ongoing tragic situation?
Ms. Swords: I am not sure there is enough time left to address that question, but rest assured that the government is doing everything it can.
There is no single magic bullet that will resolve things. The Prime Minister's apology made a big difference in terms of emotional healing for many First Nations. We have to do so much. We have to try to provide economic development opportunities; we have to foster increased sense of pride; we have to settle land claims; and we have to ensure the education system is equal to the education other Canadian children receive. It is a huge undertaking with many historic roots, and we will not be able, and have not been able, to change things overnight, but we are working at it.
Senator Murray: I will observe simply in connection with what Senator Runciman was talking about that there is a problem of equal severity, I think, with off-reserve Aboriginals. You know that. You will find them in the morning in Regina, Saskatoon, Edmonton and such places. However, that is not what I want to talk about.
I am intrigued by the subject that was raised by Senator Callbeck earlier about this business of transferring money from your department to other departments. What seems to be happening here is that there are programs in various departments of government in respect of which, obviously, they have come to Parliament and obtained funding. Then, if there is some colour of relevance to the Department of Indian and Northern Affairs, they obtain supplementary funding from you. I am not being critical, at least not yet. I want to know more about this subject.
Are you becoming a bank of last resort or a central agency? I find it a bit peculiar. It is striking, and I wonder whether those other departments, for example, be it Environment Canada, Natural Resources Canada or whomever, are deliberately lowballing their estimates when they come to Treasury Board and indeed to Parliament, knowing there is a rich uncle or aunt at the Department of Indian and Northern Affairs who will provide them with supplementary funding. How does all this transferring work?
For example, some of the regional development agencies, Atlantic Canada Opportunities Agency is the one I know best, have authority to top up programs of other departments to create or improve the regional aspect of those programs. What can you tell us about that practice? Is it a general practice across the government? If you are funding programs in other departments, have you had anything to say about the design of those programs in the first instance? What is going on here?
Ms. Swords: First, bear in mind it is $18 million out of a total $8.3 billion, so the amount is not huge. In some cases, they can be undertaking a project with another department, and it works better to be funded through one source.
In some cases, what happens is that they need a service delivered that they cannot deliver themselves but another department has the authority to do so. I will give you an example from the department I used to work at, which was the Department of Foreign Affairs and International Trade. We provided transfers of funds to the RCMP for them to deliver police training in foreign countries. In effect, we were almost contracting out to another department.
This $18 million relates to a number of projects that are Arctic Research Infrastructure Fund projects, where we had additional funds to fund research facilities in the North, and NRCan and Health Canada had proposals to establish various research or monitoring centres. In some cases, they are working together with a university or one of the territories. We had funding to support those research proposals. Those are other examples.
I do not think it is an attempt to come to the big bank of INAC because I think if you spoke with First Nations, they would say that with the 2 per cent cap, INAC does not have enough funds. The funding relates to specific projects where, to accomplish them, we need to provide funds to another department, either for ease of a single contract or because the department has the expertise to deliver on something.
Senator Murray: At what point in the process, when the other department is developing its program, is it understood that they will come to you, or you go to them, with money to do something on your behalf?
Ms. Swords: Usually, it is fairly early on because they are developing a project and a design, and it is obvious that the funding will have to flow. Usually these projects have some sort of an exchange of letters or a memorandum of understanding explaining it. Of course, we come before Parliament and identify the projects to you and we seek approval.
Senator Murray: That transfer shows up in your estimates. Will that transfer show up in the estimates of the various departments?
Ms. MacGowan: Yes.
Senator Murray: Under those specific programs. Thank you. I will not be critical, then, for now.
Senator Ringuette: On this same issue, you stated that you were transferring $19 million to Natural Resources Canada to provide support for economic development in the forestry industry of native communities. If I go to the supplementary estimates for Natural Resources Canada, it confirms exactly what Senator Murray was saying. Out of the $19 million transferred, there is $685,000-plus devoted to Queen's Privy Council of Canada, who is a minister without portfolio; then there is $10,440,000 for capital expenditure of Natural Resources Canada; and then there is $5,800,000 for grants and estimates for Natural Resources Canada. I am at page 187 of Natural Resources Canada, referring to the transfer of $19 million from your department. On page 189, it states that $2.8 million will go to the operations of the First Nations Forestry Program and to facilitate their access to forest-based economic opportunities, out of the $19 million you mentioned. The balance will go to all other different programs under Natural Resources Canada.
Ms. Swords: I will go back over the amounts under NRCan, where there are many sub-parts. The total amount of $12.75 million will be transferred from INAC to Natural Resources Canada. Under that total, $2.875 million is to support the operations of the First Nations Forestry Program and to facilitate access to forest-based economic opportunities; $9 million is for the Arctic Research Infrastructure Fund for a specific program to upgrade the Polar Continental Shelf Program; and $200,000 is for Natural Resources Canada for the nodes of an International Polar Year data assembly network. There are several parts under the total of $12.75 million. The amount for the forestry program is $2,875,000.
Senator Ringuette: Why did you say it was $19 million?
Ms. Swords: The total amount in transfers from INAC to a number of departments is approximately $18 million, including the Department of Fisheries and Oceans and Environment Canada. For Natural Resource Canada, the total is $12.75 million, of which $2.875 is for the forestry project.
Senator Ringuette: We need more details about the money initially approved by Parliament in the Main Estimates for specific dealings with INAC. For example, we need to know where the money has been cut, from which programs, and where it goes when transferred to other departments.
Specifically, what is your authority to ensure that these investments, approved by Parliament in the Main Estimates for INAC, will be allocated toward the purposes that Parliament approved, and not transferred as we have heard? You told us that $19 million was for forestry issues, but it is only $2.8 million for the entire country.
The Chair: Would you like to respond to that? It is not necessary.
Ms. Swords: I understand the interest and the preoccupation of the committee. We will do our best to answer this question about transfers. The amount of $18 million is transferred to many different departments, to clarify that point.
In no case do we transfer money for anything outside the mandate of Indian and Northern Affairs Canada. The forestry program is for forestry on reserve. Given the historic nature of the department and other departments in terms of certain responsibilities, such as Natural Resources Canada for forestry, to implement what needs to be done on reserve, we need to make use of those other departments. We may be a little different from other departments because of the nature of our mandate. We will obtain an answer for the committee that I hope will help.
Senator Peterson: On page 161 is an amount for ``Payments to comprehensive claim beneficiaries in compensation for resource royalties'' of $1.472 million. Is that reserve land only? Do you negotiate as an agent for the bands? Is this money held in a trust fund?
Ms. Swords: Which line is that at page 161?
Senator Peterson: It is almost one third of the way down the page.
Ms. Swords: I am sorry but I cannot answer that question today. We previously had approval for that item under the original estimates. We are not seeking to add or subtract from it today. I will provide the committee with an answer.
Senator Peterson: Further down the same page, there is an amount for ``Grants to Aboriginal organizations designated to receive claim settlement payments pursuant to Comprehensive Land Claim Settlement Acts.'' If they are entitled to the money, is it so they can hire lawyers to ensure that you pay them?
Ms. Swords: It is a significant amount, $6.4 million. I am asking my CFO to check. I want to find the answer today so we do not have to come back with it.
Senator Peterson: I do not understand why there is a grant to receive money they are entitled to receive.
Ms. Swords: Comprehensive Land Claim Settlements are agreements reached with First Nations. It is not a specific claim so it is not an existing treaty but a future treaty. Therefore, in many cases we have to provide funds.
I am told that the amount of $6 million relates to grant payments for the Grand Council of the Crees for the implementation and land acquisition costs for settlements already made.
The Chair: It is not a payment of the settlement but rather a grant or contribution.
Ms. Swords: It is a part of a settlement.
The Chair: The grant is part of the settlement.
Ms. Swords: The overall settlement would be larger than that.
The Chair: Your word for ``settlements'' is ``grants.''
Ms. Swords: No: The word ``settlement'' is used vis-à-vis the negotiated settlement. Grants and contributions are the federal government's terminology for how the funds are transferred.
A contribution requires that you account for the funding and explain how it is used. A grant is given for a specific purpose, and we do not have to account for it. I believe anything we do as a settlement under an agreement would go out of the estimates as a grant simply because First Nations do not have to come back and say: ``Yes, we reached a settlement. You owe us this amount for this; and here is how we spent it.''
It is a statutory grant. It is not a contribution, which they continue to report on.
The Chair: Do you have anything to add to that reason for calling this item a grant?
Ms. Swords: It is a grant because it is not a contribution; but it is pursuant to a settlement agreement.
The Chair: It is not a payment pursuant to a settlement agreement; it is a grant. Grants and contributions are different from expenditures based on settlements.
Ms. Swords: I am not sure that I follow.
The Chair: You know the question. If you can find an answer for the committee, we would appreciate it.
Ms. Swords: I am not sure that I understand the question. Maybe we can have a quick word after the meeting.
Senator Peterson: They are entitled to receive a payment; so is this an advance payment? Why do you call it a grant?
Ms. Swords: The way the federal government transfers money, it is always either a grant or a contribution. The issue is a terminology one. That is what it is called in the legislation for how they transfer money.
The Chair: The government does not want to feel it has an obligation to pay it so it calls it a grant, as opposed to an obligation to pay under a settlement.
Senator Ringuette: There is another terminology in appropriation called funding.
Ms. Swords: That issue may require changes to the way the legislation describes how money goes out of departments.
The Chair: If you have anything further to add, that would be great. We have many other questions we would like to put to you but we have run out of time. We thank you, Ms. Swords and Ms. MacGowan, for being here today. It is nice to have someone here with Scottish ancestry on St. Andrew's Day, Ms. MacGowan.
We have been dealing with Supplementary Estimates (B). We are pleased that the Department of National Defence personnel have agreed to be here to help us with the portion of the supplementary estimates relating to the Department of National Defence.
I am pleased to welcome Kevin Lindsey, Assistant Deputy Minister, Finance and Corporate Services. He is accompanied by Colonel Sean Friday, Deputy Chief of Staff, Plans and Strategy, Canada Command; and Major- General Robert Bertrand, Director General, Financial Management.
Honourable senators, we have less than an hour to deal with this particular matter, so I ask you to keep your questions succinct.
Mr. Lindsey, do you have a few opening remarks?
Kevin Lindsey, Assistant Deputy Minister, Finance and Corporate Services, National Defence: I do. Thank you, chair. I should apologize. I have been fighting a head and chest cold for about a week, so I may be difficult to understand. I will try not to share.
[Translation]
Honourable members of the committee, today I have the pleasure of representing the Department of National Defence in my dual role as Assistant Deputy Minister, Finance and Corporate Services, and Chief Financial Officer of the department.
[English]
As you have noted, I have with me today Major-General Robert Bertrand, Director General, Financial Management, and Colonel Sean Friday, from Canada Command.
I am here to present honourable senators with details regarding Supplementary Estimates (B) for the fiscal year ending March 31, 2011. Included in these estimates are initiatives and continuing commitments in both domestic and international security, major capital projects, and technical advancements under the Canada First Defence Strategy.
I am prepared to address those estimates raised in earlier questions by the committee on the support and service rendered to our mission in Afghanistan and those relating to our participation in the Winter Olympics security effort. As well, I understand there were questions concerning the department's carry-forward amount, for which I will be happy to address and provide background.
[Translation]
These estimates all share a concerted effort of diligent planning that has had to remain flexible enough to meet the ever-changing operational environment our fighting men and women find themselves in today. To that end, I am happy to answer your questions.
[English]
The Chair: I see the Department of National Defence in the supplementary estimates appears at page 183 and following. If you have a copy of the supplementary estimates before you, that is probably where honourable senators may wish to direct their attention.
You indicated there are two or three points you might want to deal with if questions are posed. Do you want to talk about the carry-forward amount now and explain that a little bit, and any further information you might want to give us with respect to security during the Olympics? If there are any specific points that you want to make, that will be helpful to us.
Mr. Lindsey: Certainly. I understand, chair, that in the context of the appearance of Treasury Board officials before the committee on November 23, a question arose about carry forwards. Although the DND's carry-forward amount from 2009-10 to 2010-11 is not included in these estimates, I will be happy to talk to it.
The amount that we carried forward from 2009-10 to 2010-11 is $410 million, representing approximately 2.5 per cent of DND's Main Estimates for 2009-10. That amount is lower than most other government carry forwards, and our ceiling is 2.5 per cent of our combined operating and capital vote appropriations. Other departments typically have a 5 per cent carry forward.
The Chair: I am sorry, operating and capital or only operating?
Mr. Lindsey: Our carry forward is based on our vote 1 and vote 5 appropriations.
The Chair: It is operating and capital; 5 per cent of both?
Mr. Lindsey: It is two and a half per cent of both. It is a function mostly of the size of the DND appropriation and the difficulty from a finance perspective in handling the fiscal impact of a DND carry forward that, if it approximated other departments, would be in the order of $750 million to $1 billion, depending on the fiscal year. It is a large amount, and DND has been successful in managing within that lower limit.
Within the $410 million we have carried forward from 2009-10 to 2010-11, it breaks down to about $70 million in capital with the balance of $340 million coming out of vote 1.
Senator Murray: Sometime when we have Treasury Board or the Department of Finance here we probably should go into the question of why it would be difficult to manage a carry forward of 5 per cent for DND, as all other departments have. I understand your explanation, but I think we need to know a more. Treasury Board and the Department of Finance would be the people to tell us.
The Chair: Thank you. That is a good suggestion that we will keep on our list of carry-forward questions.
It has been my understanding that it was 5 per cent of vote 1 operating budget, operating vote only. However, is that your understanding for other departments; namely that it is 5 per cent of operating?
Mr. Lindsey: It is, absolutely. Having worked in a number of other departments in the same capacity, other departments have a 5-per-cent carry forward calculated on their operating vote only.
The Chair: In DND's case, you have two and a half per cent operating and two and a half per cent capital. Do those carry forwards stay in the separate votes as you carry them forward, or do you move them from one vote to another as part of a lump sum?
Mr. Lindsey: In the subsequent year — in the year in which we receive the money — the money goes into the vote from which they were lapsed. If we then want to move the money around, we need to move it through supplementary estimates, and this committee would see that request to move that money.
The Chair: Thank you. That is helpful and helps us understand. Mr. Lindsey, we interrupted you to clarify a point. Please continue.
Mr. Lindsey: I hope that satisfies the curiosity around our carry forward. If not, I am happy to answer questions.
I also understand there is curiosity about the $13.5 million in our Supplementary Estimates (B) related to what we characterize as ``off podium,'' things like DND's Olympic security effort or DND's contribution to the broader security effort. That $13.5 million will be spent to restore to their original state the sites that DND occupied during the operation. Although the Olympics ended in March, DND remained on station as it were, through the Paralympics, as well. Therefore, we were not able to begin site remediation efforts until the 2010-11 fiscal year.
This $13.5 million in the estimates draws down money from our original Olympic allocation that was not spent in 2009-10 and brings it into our appropriation in 2010-11 so that we can complete that site restoration work.
The Chair: Thank you. That is helpful. There may be more questions honourable senators may wish to pose in relation to that or other matters.
Senator Ringuette: Regarding your comments about restoring sites at the Olympics at the cost of $13.5 million, do you recall what your total cost for that event was?
Mr. Lindsey: Colonel Friday may be able to supplement my answer, but my recollection is that, until March 31, 2010, which is through the 2009-10 fiscal year, we spent something like $190 million. This supplemental appropriation would bring our total cost to just over $200 million.
Colonel Sean Friday, Deputy Chief of Staff, Plans and Strategy, Canada Command, National Defence: The initial allocation for the multi-year budget for the Olympics for DND was $212 million. There was a further request and receipt of $19 million, although that money will not have been used and will have returned to the system. The initial allocation was $212 million.
Senator Ringuette: That was —
Mr. Lindsey: In aggregate, DND will have spent less than it was allocated in total for its Olympic security efforts, even considering this $13.5 million for site cleanup.
The Chair: What are you allocating? Are salaries of the personnel there? Presumably, it is not the cost of the equipment, but the equipment you have? Are any supplementary costs included in that figure?
Mr. Lindsey: The cleanup will be done by Canadian Forces members as well as by staff from Defence Construction Canada. The $13.5 million will go to salaries for the people involved, a provision of temporary accommodation while they are on site and the costs associated with the work.
Senator Ringuette: None of these costs includes the security costs for the RCMP, the local municipal police or provincial police?
Mr. Lindsey: No, senator.
Senator Ringuette: This amount is only in regards to DND, is it?
Mr. Lindsey: It is only in regards to the Department of National Defence and only in regards to restoring sites, of which there were about 50.
Senator Ringuette: What is the cost of data and technology research in regard to purchasing the F-35?
Mr. Lindsey: I do not have that information, senator, and I emphasize that no money is being requested in these supplementary estimates related to the F-35.
Senator Ringuette: I am asking if you can provide us with the cost of analysis, research, and so forth, in regard to the untendered purchase of the F-35 for $17 billion. I want to compare that cost to the U.S. and the cost of that analysis.
I want to refer to page 183. Under vote 1b, you request almost $600 million, for a total of $15.6 billion. The details are generic: operating expenditures, Treasury Board votes, the payment of each member of the Queen's Privy Council for Canada, ministers with or without portfolio, and so forth.
This generic information is for a total amount of $15.6 billion. Is it possible for you to provide us, if not today then shortly, with the breakdown of that $15.6 billion?
Mr. Lindsey: Are you asking for the breakdown of the full $15.6 billion in vote 1, or the full supplementary estimate item?
Senator Ringuette: We might as well go for the full amount, because the original amount was $15 million. I cannot remember if there was any additional request in Supplementary Estimates (A) for your department, but I suspect there was.
Mr. Lindsey: There was. We were here on June 8 to talk about that.
Senator Ringuette: It would be great if we could have the details of the $15.6 billion in spending as soon as possible. We will also include in that request, vote 5b, which is for an additional total estimate to date of $5.3 billion. We are looking at over $20 billion of taxpayers' money.
I anticipate we might have Supplementary Estimates (C), so in the next few months, we might be looking at additional billions of dollars for your department. I would like more details about these amounts.
Mr. Lindsey: We will undertake to provide you with additional detail.
Senator Marshall: There is a reference in the supplementary estimates for the major capital projects for $112 million. Can you give us a list of those projects and speak to the half dozen that cost the most? I would think the $112 million would involve numerous projects. I do not need you to go through them all, but can you give us a flavour for what the six highest costing ones are?
Mr. Lindsey: Certainly: I will give you a sense of the kinds of projects and then if you require further information, perhaps the general can provide more commentary.
Examples of the $112 million are a renovation of the kitchen in St. Jean, Quebec, which is the main intake centre for recruits. That renovation is a large project.
Senator Marshall: How much would that project be?
Mr. Lindsey: General, do you have details on that one?
Major-General Robert Bertrand, Director General, Financial Management, National Defence: I do not have those details.
Mr. Lindsey: Perhaps I can list them and the general can provide the expenditure detail.
Another example is that we are consolidating the School of Electrical and Mechanical Engineering at CFB Borden. We are building a new headquarters for Land Force Western Area, which is currently housed in a former elementary school. We are consolidating the Military Police Academy at CFB Borden.
The Chair: When you say ``consolidating,'' do you mean there are several buildings and you are bringing them into one?
Mr. Lindsey: That is exactly right.
We are expanding the health services facilities at CFB Valcartier and we are modernizing facilities for Defence Research and Development Canada, also at Valcartier.
Those are a half dozen examples of the big-ticket items in that $112 million. Of course, some of them are multi-year projects; they will not all be completed this year. This amount is to seek the funds required for the current year expenditures.
Senator Marshall: Can you give me dollar figures on those projects?
Maj.-Gen. Bertrand: For the six construction projects listed, I do not have the dollar figures. I have other major capital projects that formed a large part of the $112 million.
I will preface my comments by saying that most of this money is due to slippage in the projects. That is where we are moving the money from fiscal year to fiscal year.
Senator Marshall: They are not on schedule.
Maj.-Gen. Bertrand: That is right. There has been a variety of delays. We had our C-17 project, where we had to move money again to the 2010-2011, 2011-2012 year. It is actually good news. It is a decrease in spending due to total exchange rates on that project. Our tank replacement project slipped, the Arctic offshore patrol project slipped, and the joint task force relocation project has slipped as well.
Senator Marshall: What are the dollar amounts for those projects? We are talking about $112 million; would the top six projects be $90 million? I am trying to have some idea as to the size of the projects.
Maj.-Gen. Bertrand: The largest slip or reprofile was the C-130 Hercules project replacement, and that was $116 million. There are a variety of debits and credits. Some projects increased, some decreased and the money was moved.
Senator Marshall: My next question relates to the reinvestment of revenues from the sale or transfer of real property. I have the impression from that explanation that if you sell property, you are allowed to spend that money. Is that correct?
Mr. Lindsey: We are. That is true not only of the Department of National Defence; it is true of all government departments. It is meant, in part, to provide an incentive for departments to divest of infrastructure no longer required.
The process is that departments turn properties over to the Canada Lands Company. As and when Canada Lands Company is able to sell, or otherwise derive a revenue stream from, the property, the department that relinquished the property to Canada Lands Company shares in the revenue.
In our case, we take that revenue and reinvest it in the infrastructure that we are keeping. The effect, in part, is to reduce the amount of incremental money we need to ask for through appropriations, because we are funding it with this revenue.
Senator Marshall: Is the $8.7 million the total amount for the year or was there some amount previously?
Mr. Lindsey: It is the total amount for the year to date. There may be additional revenue that we receive between now and the end of the fiscal year. If it materializes, we will include it in Supplementary Estimates (C).
Senator Marshall: The ``Public Security and Anti-Terrorism initiatives to improve national public security'' at $5.6 million, what would that amount be for?
Mr. Lindsey: Excuse me while I get my notes so I can give you specifics on that item. This item is a horizontal government initiative, involving the departments of Public Works, Government Services, Justice and DND. For DND's part of the initiative, we will spend money on four elements.
One is with respect to infrastructure at the communication security establishment. Another is to invest in additional kit and response capability for the Disaster Assistance Response Team, DART, at DND. Another is for infrastructure; they are building a research facility around technical issues for terrorism response. Lastly, there are requirements for the acquisition of certain information technology hardware. That is where that money will go this year.
Senator Marshall: Your share is $5.6 million. What is the total cost of the project?
Mr. Lindsey: Unfortunately, I cannot give you that information, senator. This initiative is a horizontal government- wide initiative and I only have line of sight to DND's component.
Senator Marshall: Chair, can we have the clerk obtain the total cost of that initiative for us?
The Chair: We can make an inquiry on that item. We will do that.
Have in mind that this is a supplementary estimate. Before we take our break for Christmas, we have to vote on the supply bill that comes with it. Any information you can provide us, if you can provide it as quickly as possible, will be helpful to us in performing the function we have to perform in Parliament.
Mr. Lindsey: I understand.
The Chair: Thank you.
Senator Callbeck: My first question deals with the voted appropriations — the implementation of investment plans in support of the defence strategy.
In response to Senator Ringuette, you said you will bring in details about the operation figures that are given to us in one lump sum. I hope that when you provide those details, you will explain the $649 million. As I understand it, that strategy covers four different things: the expanded regular force; the reserve force; improving the infrastructure of the Canadian Forces; and improving the readiness of the Canadian Forces and beginning the replacement of main combat fleets.
Rather than giving an explanation on this defence strategy, the $649 million, I hope that when you submit the information to the committee, you will outline expenditures in detail, because otherwise we do not know which area that money is going to.
Mr. Lindsey: We will absolutely include that information in our response, but I can give you a sense of how that number breaks down today, senator, if you want.
Senator Callbeck: Yes.
Mr. Lindsey: Indeed, the $649 million gross breaks down into two large chunks. The first is approximately $302 million, and as you have pointed out, it aligns with the four pillars of the Canada First Defence Strategy.
With respect to the readiness pillar, about $23.8 million of that amount will go to operating expenditures and consumables in support of training and infrastructure maintenance of new infrastructure. About $52 million will go to force expansion such as recruitment, training and all those costs associated with attaining the military personnel targets outlined in CFDS.
A further approximately $160 million will go to what we call national procurement, the acquisition of materiel in support of the implementation of CFDS such as spare parts, improving the readiness of a wide range of land equipment and maritime fleets and sustaining fleets. We are improving the readiness of the decontamination equipment.
Last, about $67 million is going to force generation, including the call-up and training of reservists who will backfill for regular force members who are deployed to Afghanistan; funding the moves associated with backfilling those positions and so forth. Those are examples of the kinds of things that money will be spent on.
Senator Callbeck: That information is helpful. You say $52 million to expand the regular and reserve forces. This program was brought in, I believe, in 2008.
Mr. Lindsey: It was.
Senator Callbeck: Do you have figures as to how much the forces have increased?
Mr. Lindsey: I cannot tell you how much they have increased since 2008. Rather than mislead you with a figure that I would be relying too heavily on my memory to provide, why do we not undertake to provide you with the numbers.
The regular force, though, is under 70,000, which was the CFDS target. We have not attained that limit yet. We will return to you with the exact number and with the reserve force numbers as well.
Senator Callbeck: I appreciate that. One other item I ask for more explanation on is where you have funds available, spending authorities available, within vote 1 of $80,249,901. However, you do not tell us where those savings come from.
I would like a list of what programs have been affected by that saving. Obviously that money has come out of certain programs, and it will be helpful to the committee if we know what programs those dollars came from.
Mr. Lindsey: With respect to the funds available in vote 1, they are attributable to two initiatives, and they are both Budget 2010 initiatives. Budget 2010, as you may recall, implemented a number of expenditure restraint measures, including restraint on operating budgets in general and a freeze on reimbursing departments for increased salary costs. Budget 2010 also implemented measures to restrain spending in ministers' office budgets.
In the case of DND Supplementary Estimates (B), about $79.9 million of that internally sourced funding is from a frozen allotment we created to respond to the Budget 2010 expenditure restraint and a further $365,000 is money that we froze related to the restraint measures on ministers' office budgets.
To put it another way, in our Main Estimates a certain amount was allocated to us for spending in our minister's office. Budget 2010 had the effect of reducing that ceiling by $365,000. As a result, that money is available to fund something else, and we are using it in these supplementary estimates to reduce our gross ask.
The Chair: As a supplementary question, with respect to your explanation of the funding to continue the implementation of the investment plan to support the defence strategy, is there a concern that some of the expenditure you include in operations for a specific piece of equipment you are buying does not reflect the full cost of that piece of equipment. Tanks, for example; if you include $100,000, $1 million or whatever, in operation to implement the strategy of tanks, that is not included then as part of the capital cost of the tanks. How do you account for that? Is that a concern?
Mr. Lindsey: When we seek approval to proceed with these large capital projects, when we go to Treasury Board, for example, for approval, we seek approval for the total cost of the project. It is not only the initial capital cost of acquiring the piece of equipment; it includes associated changes to the equipment that we need to make, and we also estimate operating costs for that equipment over its life.
The Chair: Do you include in that figure this funding to continue the implementation of the strategic plan, the portion of it that might relate to that particular piece of equipment, or is this money that is lost in operating expenses?
Mr. Lindsey: It does not get lost; it is money that we have forecast to be a requirement for the sustainment of these fleets once they are acquired.
The Chair: After the fact?
Mr. Lindsey: We make the forecast before we make the acquisition. Sometimes we do not have the forecast right, but these costs that you see here for sustainment are not unanticipated.
The Chair: I am looking for the cost of acquisition, the front-end costs to implement the defence strategy. You have an item here under ``Vote 1'' that is a significant amount of money. Senator Callbeck was trying to obtain a breakdown of how you use that money. A portion might be to acquire capital equipment.
Mr. Lindsey: I see the point. There may be a misapprehension that all the money for the Canada First Defence Strategy was capital in nature and would be spent in vote 5. That is not the case. In fact, one things that the Canada First Defence Strategy contemplated, as Senator Callbeck pointed out, was an expansion of the regular and reserve forces. The biggest cost driver in that expansion is the salaries associated with the new personnel, which is an operating cost.
When we buy new fleets pursuant to the Canada First Defence Strategy, once we buy them, there are then the ongoing maintenance and sustainment costs associated with those fleets. The Canada First Defence Strategy contemplated those costs as well, so what we see here in this ask in the operating vote are operating costs associated with implementing the Canada First Defence Strategy.
Your question, I think, goes to where we see the initial acquisition cost of some of these new fleets. As it happens, in this supplementary estimate, we do not see any money being requested for the acquisition of new equipment under CFDS. We have in previous estimates, and we see it in Main Estimates. We do not happen to see one of those items in this estimate.
The Chair: I have one other supplementary question before I go back to the list, because this information is helpful. For example, let us deal with the tanks, because there was an announcement on tanks recently.
Does the Department of National Defence go on a cash basis? Do you have to transfer the full amount of the acquisition cost of the tanks in one year, or are you on an accrual basis where you transfer an amount for one year over a number of years to the party for whom you are buying this equipment?
Mr. Lindsey: We are on an accrual basis. Just as you see in a private corporation, the full cash disbursement associated with buying a piece of equipment is reflected in the public accounts for any given year. However, when you look at the department's accrual financial statements for that year, you do not see the full acquisition cost but only that part of the equipment whose use is amortized to that fiscal year. The acquisition cost, for accrual purposes, as manifest in the department's accrual-based financial statements, is spread over the life of the asset.
The Chair: Yet these documents we are looking at today are based on a cash basis?
Mr. Lindsey: They are, indeed.
The Chair: Part of the adjustment we have to make over time is going from a cash basis for budgeting and determining how much money to vote, as parliamentarians, to the accrual basis accounting that various departments use.
Mr. Lindsey: It is an issue, Mr. chair, absolutely. To emphasize, as you put it, these estimates request only the cash that is required for a given item in the year, not the cost necessarily of something.
The Chair: Understood.
Senator Neufeld: That is standard practice that has taken place over a long period of time, is that correct? This practice is not different than the one you would have experienced at the Department of National Defence five or ten years ago? You do it more or less the same way; is that correct?
Mr. Lindsey: Ultimately, I will defer to the general on this question. I will hazard to say it is a different practice than the Department of National Defence would have used a decade ago. The accrual framework was implemented in conjunction with the Department of Finance and Treasury Board, I believe, in 2005, thereabouts.
Maj.-Gen. Bertrand: I would have to confirm that.
Mr. Lindsey: I believe it is mid-decade, senator. I say with some certainty that this was not the practice a decade ago.
Senator Murray: I think I have a better understanding of some of these matters as a result of some of your earlier exchanges with other members of the committee. However, for the record, we know that the government has to tighten its belt and that money will be tight next year and for subsequent years.
In general, what have they told you will be your contribution to this process? Are you exempted from any part of it?
Mr. Lindsey: No, senator, we are not. Budget 2010 articulated specific ways in which the Department of National Defence will be affected. The department is also affected by some of the broader, government-wide initiatives. DND's budget will be reduced by $500 million beginning in 2013.
Senator Murray: That is a reduction?
Mr. Lindsey: That is a reduction.
Senator Murray: Over 2011-12.
Mr. Lindsey: The first reduction of $500 million, which will be ongoing, will occur in 2012-13.
Senator Murray: That reduction is over the previous year?
Mr. Lindsey: Yes: That reduction of $500 million rises to a $1 billion reduction in 2013-14. To try to be clearer, the Department of National Defence is taking a $1 billion reduction, ultimately, on an ongoing basis to its status quo budget beginning in 2013-14.
Senator Murray: What are we expecting in 2011-12, which is the fiscal year coming up?
Mr. Lindsey: There is not a DND-targeted reduction in 2011-12. There is, however, the need for DND to absorb some of the broader, government-wide measures that were implemented. For example, DND will not be reimbursed for the costs of salary and wage settlements. They have to be absorbed.
Senator Murray: The department has to swallow those costs. There probably will be an increase next year over this year, 2011-12 over 2010-11?
Mr. Lindsey: In the case of the salary and wage —
Senator Murray: In general.
Mr. Lindsey: In general, I believe the expectation is that our 2011-12 Main Estimates will be higher than the 2010-11 Main Estimates, yes.
Senator Murray: We will see them when they come.
With regard to swallowing the 1.5 per cent wage bill for public servants, does this include our friends in the Armed Forces?
Mr. Lindsey: It does.
Senator Murray: What is the size of the wage increase they will receive? Is it 1.5 per cent also?
Maj.-Gen. Bertrand: Generally, it mirrors the public service.
Senator Murray: I see. Do you know, even ballpark, what the net saving, if any, is likely to be from the change in our mission in Afghanistan? I know it is not a matter for the supplementary estimates, but I am sure you have been thinking about that issue.
Mr. Lindsey: We have, since the announcement was made, senator. I think it is reasonable to expect that the new mission will be less costly overall than the existing one. However, mission requirements have not yet been fully defined, and so they have not been fully costed. I cannot answer your specific question, which, I believe, was: How much less will it cost? We do not have an answer to that question yet.
Senator Murray: I presume a substantial expenditure is involved in removing the facilities you have there already and so forth. Is that correct?
Mr. Lindsey: Yes.
Senator Murray: When will that removal begin?
Mr. Lindsey: The withdrawal in earnest is to begin, I believe, in the summer of 2011, with a view to be out, per the government's commitment, by December 2011.
Senator Murray: That is the next fiscal year.
Mr. Lindsey: Yes: It is the upcoming fiscal year.
Senator Murray: The next fiscal year is 2011-12. We will know more when we see the Main Estimates, I presume, when we can have more information, and have witnesses here for that. Thank you.
The Chair: I think the question might also have been: Can we anticipate additional requests in Supplementary Estimates (C) because of the change in mission in the next fiscal year?
Mr. Lindsey: I think, Mr. chair, I would be speculating on that. In part, I would be speculating because I do not know what the mission definition is.
The Chair: Are you aware whether the Canadian Forces or the Department of National Defence will have any requests in Supplementary Estimates (C)?
Mr. Lindsey: We are in the process of putting together our Supplementary Estimates (C) package now. I can say with certainty that we will have a Supplementary Estimates (C) request. I cannot say with certainty, chair, what will be in it.
Senator Murray: It is a wish list, is it? It still has to go to Treasury Board, or does it?
Mr. Lindsey: Most, if not all, of the items in that package will have been considered and approved already.
Senator Ringuette: Looking back at these precise supplementary estimates, I cannot help but ask, of all the operational and capital funds that you are requesting, and the fact that we are hearing almost on a weekly basis that there are soldiers in dire need of medical attention, why do we not have further requests for funds to meet the medical requests of our soldiers coming back from Afghanistan? If they are not here, why not?
Mr. Lindsey: I will respond in two ways. One of the capital items included in these estimates is for health infrastructure at CFB Valcartier. That item is included in the $112 million in vote 5. It is one of the infrastructure projects in vote 5.
Senator Ringuette: Yes, but it is a capital project; it is not per se a medical treatment fund. It is a capital investment. That is what I am saying. We are looking at a lot of capital investment and operational investment, but there is nothing specific in regard to the requests that we are hearing from soldiers coming back from their mission in Afghanistan requiring medical attention.
Where are the funds that are required to meet that need?
Mr. Lindsey: One thing we will do when we respond to your first request to follow up on a breakdown of the $15 billion in our operating vote is to be sure to include a specific breakdown with respect to care for the ill and injured.
I emphasize that the DND is spending significant amounts of money to care for the wounded and the afflicted coming home. That money comes out of our existing operating budget, that $15 billion to which you alluded earlier, so we will take care to underscore for you our spending on that issue when we respond to your first request.
Senator Ringuette: Can you at the same time respond to the question of whether the allotted amount of money is meeting the needs, or is it an envelope of money that you have to work within? Is the allotted money meeting the needs? That is the most important question.
Senator Runciman: My question does not relate to the estimates but it is a quick question that you can respond to if you want. If not, I understand.
It is about the training of Afghan soldiers. There was a news story yesterday or today about six U.S. soldiers being killed by an Afghan trainee. I am wondering how you view that training exercise, how the ministry views it, and how DND itself views it.
There was a comment by a Canadian public official last week about the futility of training Afghans to provide their own security.
I am wondering if you might respond to those concerns that many Canadians have.
The Chair: You were asked to be here to deal with financial matters. If you wish to comment on it, you are welcome to. If you wish to leave that to someone else, we understand.
Mr. Lindsey: In my official capacity, I do not have a view as CFO. I do not have a window on these issues. Obviously, as a citizen, you are concerned any time you hear a story like that, and as an employee of the public service I am concerned, but in my official capacity I cannot comment on that issue because I have no line of sight to it.
The Chair: I want to thank the Department of National Defence and the Canadian Forces for being here to help with Supplementary Estimates (B). We may well call on you with Supplementary Estimates (C) in due course. That is typically something we deal with in February or early March. In the meantime, you have helped us have a clearer understanding of these documents and for that we thank you. Mr. Lindsey, Major-General Bertrand and Colonel Friday, thank you very much for being here.
Honourable senators, tomorrow evening we have Atomic Energy of Canada Limited, AECL, and the Canada Account with respect to the loan to General Motors and Chrysler, and that will involve a panel of Export Development Canada along with Finance Canada, and Foreign Affairs and International Trade Canada.
That meeting will be the end of Supplementary Estimates (B). We remain charged with them throughout the year if we want to follow up on anything.
(The committee adjourned.)