Proceedings of the Standing Senate Committee on
National Finance
Issue 27 - Evidence - February 15, 2011
OTTAWA, Tuesday, February 15, 2011
The Standing Senate Committee on National Finance met this day at 9:31 a.m. to examine the expenditures set out in Supplementary Estimates (C) for the fiscal year ending March 31, 2011.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: I call to order this meeting of the Standing Senate Committee on National Finance. Thank you for being here, honourable senators and witnesses.
This morning we begin our study of Supplementary Estimates (C). We anticipate having two sessions tomorrow on Supplementary Estimates (C) and, after the break week, two additional sessions on Tuesday, March 1, in the morning. Subject to what happens during those meetings, we do not anticipate holding many more meetings on Supplementary Estimates (C). We expect to receive the Main Estimates for the next fiscal year, which we will begin to examine on March 2 and continue with at the subsequent two meetings.
We need to finish our examination of Supplementary Estimates (C) and the Main Estimates before the end of March 2011. We will receive an interim supply bill and a final supply bill for Supplementary Estimates (C) to be dealt with as well before the end of March, and maybe a little before that.
At times, the House of Commons sends supply bills to us fairly late in time, which is why we like to deal with our examination and reports before receiving them in the manner expected of a Senate committee.
[Translation]
This morning, we will begin our study of the expenditures set out in Supplementary Estimates (C) for the 2010-2011 fiscal year, which have been referred to our committee.
[English]
I expect this will be the third and final set of supplementary estimates. Perhaps Mr. Enns will be able to help us with that. We have looked at the Main Estimates, Supplementary Estimates (A), and Supplementary Estimates (B).
As is our custom, we will begin our examination of these estimates by hearing from Treasury Board Secretariat, TBS, officials, We are pleased to welcome back to committee David Enns, Deputy Assistant Secretary, Expenditure Management Sector; Sally Thornton, Executive Director, Expenditure Operations and Estimates Division; and Marcia Santiago, Senior Director, Expenditure Management Sector, Expenditure Operations and Estimates Division.
Mr. Enns, I believe you have some introductory remarks.
[Translation]
David Enns, Deputy Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: It is a pleasure to be making my third appearance before the committee. Once the main estimates are tabled, I will have completed my first full supply cycle. I want to introduce my colleagues, Sally Thornton and Marcia Santiago, from the Expenditure Operations and Estimates Division of the Treasury Board of Canada Secretariat.
I would like to begin today with an overview of the supplementary estimates. We would then be happy to answer any questions you may have.
As the chair mentioned, Supplementary Estimates (C) are the third and final set of supplementary estimates for the 2010-2011 fiscal year. They were tabled in the House of Commons on February 8.
Through Supplementary Estimates (C), we are seeking parliamentary approval of an increase in voted appropriations for the current fiscal year. This increase will be allocated to budgetary items that were part of Budget 2010 expenditure plans and are now fully developed and approved to receive funding. Through these supplementary estimates, we are also seeking authorization for the transfer of existing spending authority between organizations, within an organization and between votes in order to accommodate the government.
In addition, it is important to note that the supplementary estimates provide an updated forecast of statutory spending, in other words, expenditures authorized under an act that is not an appropriation act, such as the main transfer payments to individuals and the provinces.
[English]
Slide 2 in the deck presentation that we have prepared for you outlines that we are seeking, through Supplementary Estimates (C), parliamentary approval of $920 million in voted budgetary appropriations. These estimates also provide information on a net increase of $886 million in statutory spending based on legislation previously approved by Parliament.
This is the third consecutive year in which we have had supply cycles with three supplementary estimates, (A), (B) and (C). Supplementary estimates presented near the end of the fiscal year tend to be relatively small, as is the case this year. By their nature, they deal largely with year-end pressures and final budget items that were not ready for earlier supplementary estimates. In terms of voted items, 2010 is the smallest Supplementary Estimates (C) of the last three years we have had the three supplementary estimates. By way of comparison, in Supplementary Estimates (C) this year, we are seeking approval for $920 million in voted items. In 2009-10, we sought $1.8 billion, and $1.5 billion in 2008-09.
Slide 3 shows a comparison expressed a bit differently with the Main Estimates, which were presented in the spring of 2010, and Supplementary Estimates (A), (B) and (C) total for the year. As shown in the chart, supplementary estimates to date, including Supplementary Estimates (C) before you, represent an 8.9-per-cent increase in voted funding over that in the Main Estimates for the year. The spending will be for items that were part of Budget 2010 expenditure plans that are now fully developed and ready to receive funding. If we include statutory changes, supplementary estimates to date represent a 2.2-per-cent increase from the Main Estimates. As compared to previous years, in 2009-10, supplementary estimates reflected a 13.1-per-cent increase in voted funding over the Main Estimates and a 17.8-per-cent increase overall. Total estimates for the year are about $267 billion.
Slide 4 lists six of the largest items. For your information, I will speak to them in a bit more detail in a moment because they are the large items and represent 90 per cent or $824 million of the total. This is why we would like to focus mainly on these in our presentation before we move to questions.
They are presented starting on slide 5 in order of largest to smallest. The first is the purchase of the Nortel campus in Ottawa. This initiative was announced in December. The Department of National Defence, DND, accommodates 17,000 employees in 48 buildings dispersed across the National Capital Region. The acquisition of this campus will result in the consolidation of up to 50 per cent of their staff into a single campus. This move and consolidation of staff will occur over the next five to seven years.
The second item is something that you are familiar with — Atomic Energy of Canada Limited, AECL. You have seen funding to support the operations of AECL in both Supplementary Estimates (A) and Supplementary Estimates (B) of this year. There is an additional request in Supplementary Estimates (C). As was the case previously, the funding requested through supplementary estimates for AECL is for isotope production; the shutdown of the dedicated isotope facility; addressing health, safety and security priorities at the Chalk River Laboratories; developing new technology for reactors; the refurbishing projects of existing commercial reactors; and managing operational pressures.
The third item is funding for Veterans Affairs. As you know, the New Veterans Charter provides for the payment of disability awards to recognize and compensate veterans for the non-economic impacts of a service-related disability, such as pain and suffering or reduced quality of life. Funding in these supplementary estimates will allow Veterans Affairs to cover award payments resulting from the reduction of the backlog of disability award applications and the new applications received.
On slide 6, continuing with the major voted budgetary items, the Government of Canada offers Canada Student Loans to full- and part-time post-secondary students who demonstrate financial need. Since the program was created in 1964, an estimated 4.3 million students have received Canada Student Loans. We are seeking approval to write off debts owed to the Crown for unrecoverable loans — 61,791 loans, representing less than 1 per cent of the total Canada Student Loan portfolio. The write-off reflects recommendations from the national write-off review committee covering the three-year period from December 2006 to September 2009.
The fifth item is the pay-direct card. This was introduced in November 2010 and allows for immediate claim processing of prescription drug purchases covered under the public service health care plan.
Finally, there is the harmonized sales tax. The Canada Revenue Agency, CRA, administers the harmonized sales tax on behalf of participating provinces, and is seeking resources to administer programs with Ontario, British Columbia and Nova Scotia.
On slide 7, you will see information on the statutory items. As you know, statutory spending has its authority in existing legislation, so it will not form part of the appropriation bill that Parliament will be asked to approve in support of these estimates. Statutory spending changes are provided as information items only.
We have highlighted five items in these supplementary estimates that are greater than $300 million.
There are increases to two non-budgetary items, and these are things such as loans, investments and advances. The first, for Canada Mortgage and Housing Corporation, CMHC, is an increase for low-cost loans through the municipal infrastructure lending program, which supports housing-related and community infrastructure projects such as sewers, waterlines and neighbourhood regeneration projects. This loan program of $2 billion over two years was announced in Budget 2009.
The second item, for Human Resources and Skills Development Canada, HRSDC, is for Canada Student Loans and reflects an increase in demand for loans.
Then there are three budgetary items. Natural Resources Canada, NRCan, shows an increase in payments to Newfoundland and Labrador to offset a reduction in equalization payments related to oil and gas income.
Agriculture and Agri-Food Canada is presenting an increase in the AgriStability Program, which provides income support to agricultural producers due to declining prices.
Finally, HRSDC shows a $567-million decrease in the forecast for old age security and guaranteed income supplement benefit payments. You will see the changes to these forecasts listed by individual program, a decrease of $356 million in old age security and a decrease of $211 million in the guaranteed income supplement. These numbers are updated regularly, based on population and average monthly rate forecasts.
[Translation]
Honourable senators, through this overview of the most recent set of supplementary estimates, Supplementary Estimates (C) for 2010-2011, we have been able to cover the items that account for more than 90 per cent of the funds that Parliament will be asked to approve in the upcoming supply bill.
We also provided information on the main changes to forecast statutory expenditures. We would now be happy to answer your questions.
[English]
I would be happy to answer any questions you may have at this point.
The Chair: I have a number of senators who would like to participate.
In recent years, you always have this comment at the end of each of your presentations: In conclusion, the supplementary estimates are within the spending level specified in Budget 2010 for the fiscal year 2010-11.
Could you explain to the honourable senators just what you mean by that?
Mr. Enns: The budget presents a plan for expenditures for the government. Each initiative subsequently will seek cabinet and Treasury Board approval. Then, through the estimates process, we roll those up into the supplementary estimates and submit these to Parliament for approval.
The Chair: The figure of $267 billion was in the budget at the beginning and you are saying with these Supplementary Estimates (C), that brings us up to the figure of $267.3 billion that is being spent this year?
Mr. Enns: Yes.
The Chair: That was all predicted in the budget over a year ago?
Mr. Enns: In general, yes. There will be some changes and adjustments, but in principle, yes.
The Chair: Generally, that is what you are saying?
Mr. Enns: Yes.
The Chair: That compares to $254.6 billion the year previous?
Mr. Enns: I do not know whether I have that figure.
The Chair: If it turns out to be otherwise, those are the figures I have here, but I believe that to be the case. You gave a percentage and I gave an absolute figure. Your percentage is around a 2-per-cent increase.
Mr. Enns: Right.
Senator Finley: Thank you very much for your presentation. The process is extremely easy to follow. The questions I have are mainly context setting, because I know that we will be having representatives of the various departments in front of us.
I would like to start with almost the last item you talked about, which is Human Resources and Skills Development Canada, the decrease in old age security and guaranteed income supplement benefits.
My understanding is that the rates never change. This is just a reduction based on projections and statistics.
Mr. Enns: Exactly.
Senator Finley: We had a similar adjustment back in 2002, if I recall, of about $550 million as well. We are not actually in any way reducing the rates paid to the recipients of these two programs.
Mr. Enns: That is correct.
Senator Finley: It is just an adjustment.
My second question is on student loans. We had some representatives from the Office of the Superintendent of Bankruptcy about a week ago. They indicated that there was generally strong support to have the period by which student loans could enter bankruptcy proceedings reduced from ten years to six months.
Do you have any idea what impact this may have on the 61,000 that would increase the rate at which we would write off loans? The second part of that question is the following: is the 1 per cent relative to the number of loans outstanding or is it in terms of overall cash, money that is outstanding? You say it represents less than 1 per cent of the portfolio. Is it loans or is it money?
Mr. Enns: I believe that is a dollar value.
Senator Finley: Would you like to comment on the first part of my question?
Mr. Enns: That is a very good question that I am afraid I cannot answer at the moment.
Sally Thornton, Executive Director, Expenditure Operations and Estimates Division, Treasury Board of Canada Secretariat: If I may, senator, right now the government makes many efforts to collect student loans. Prior to write-off, they offer flexible repayment options. They also ensure that all reasonable collections efforts are taken. They will try a hold-back of any other benefits that would go to students. They have to be satisfied that legal proceedings will not work. It does usually take a considerable amount of time before they actually request a formal write-off of a student loan.
Enabling that to go into bankruptcy proceedings after a simple six-month period would definitely accelerate some of those. Whether or not those would be debts that ultimately, over the longer period, would have been uncollectable or not, I cannot speculate, but there would be an initial bump-up in numbers just because you would be accelerating a bunch of those other loans that are in the process. It is the Treasury Board Secretariat who actually writes the regulations about the question of student loans. HRSDC, I am sure, would be delighted to give you some sense of the impact of that. However, they are expected to exhaust every possible venue before writing it off.
Senator Finley: This is a three-year period. Has it escalated year by year or has it been fairly stable?
Ms. Thornton: It has been stable.
Senator Finley: My third question area is in regard to Elections Canada. If memory serves me right, and I am scrambling here to find my bits of paper among the paper tide, there were no Supplementary Estimates (C) in 2006-07 or 2007-08; is that correct?
Mr. Enns: Yes.
Senator Finley: That means that for five consecutive sets of supplementary estimates — (B) in 2007-08, (B) in 2006- 07, and (C) in each of the last three years, excluding 2008-09, which was an election year — Elections Canada has asked for $100 million in extra money. I am just picking those four out of five supplementary estimates. Probably in itself, $100 million is not very much money, but in relation to the annual monies budgeted by Elections Canada, the Supplementary Estimates (C) last year represented 20 per cent, and this year it represents 12.5 per cent. That seems to me to be an inordinate amount of money to ask for in terms of your annual budget. This year, they are asking for $15 million.
First, can you tell me why they want the money? Second, do you have any opinion on why it is that Elections Canada so consistently underestimates their annual budget requirements, especially in non-election years?
Mr. Enns: I will start by answering your first question on what they use the funding for. These are statutory appropriations, and they are statutory to remove any possible implication that there could be political partisanship at play in the operations of Elections Canada. The $15 million for this year is to prepare for a general election. They do have to be ready at any time. Also, they use the funding for conducting by-elections, and specifically this year there were three — in Manitoba, in Vaughn, Ontario, and in Winnipeg North. That is the purpose of the funding they requested through these supplementary estimates.
Senator Finley: If I recall, half the money they are asking for is for personnel.
Mr. Enns: Their personnel costs are paid not from the statutory appropriations but from their ongoing budget.
Senator Finley: This is what I am referring to.
Mr. Enns: The voted appropriation of the Main Estimates includes their regular salaries for their staff, and it is roughly 400 people.
Senator Finley: Let us talk about by-elections. There were three of them last year. There were several by-elections the year before. In fact, since I have been involved in politics, there have been by-elections pretty well every single year. I know my party budgets accordingly, because I did the budgeting, and I am pretty sure that my friends on the other side of the table also recognize that there will be by-elections in any given year, anywhere from one to four normally. Why does Elections Canada seem incapable of doing this?
Mr. Enns: That is a good question. Perhaps we can get back to you on that. I am not sure of the circumstances surrounding the request for the statutory funding that is being made available to them this year.
Senator Finley: I would appreciate it if you would do that. Thank you.
Mr. Chair, thank you. I may go on the second round.
The Chair: I have one question that flows from Senator Finley's question in relation to writing off student loans. Mr. Enns, during your presentation, you referred to the national write-off review committee. Who makes up that committee and what is their responsibility?
Ms. Thornton: The minister of each department must assure himself that all the regulations and appropriate processes have been followed, so they establish within their organization a write-off committee. In the instance of HRSDC, it is lead by a director general, and I do forget his title, but he is in the accounting/auditing area. He would be the chair of that committee. They review to ensure that all efforts have been made to recover, and that there is no possibility of recovering the loan in the near future and that it is not collectable pursuant to legal action.
The Chair: This is the procedure you explained earlier to Senator Finlay's question.
Ms. Thornton: Yes, and it is done through the committee.
The Chair: Is it all internal people, public servants, on that committee?
Ms. Thornton: The chair is. I am not sure about all the representatives.
The Chair: Could you determine who is on the committee and what their rules are? I think you indicated that the Treasury Board Secretariat wrote the rules for them. If you could provide those to us, that would be helpful in understanding the process.
Ms. Thornton: The regulations are an annex to the Financial Administration Act. We will provide that.
Senator Ringuette: I have three questions. I do not expect you will have the answers right now, but you could forward them to the clerk.
First, what is the cost incurred for the Task Force on Financial Literacy? Second, what is the cost to the federal government, its Crown corporation museums and parks, in regard to credit card acceptance fees, i.e. merchant fees? My third question is in regard to temporary staffing in the Department of Public Works and Government Services, PWGSC. I would like to know the cost to date of the temporary staffing through agencies and contracts with Public Works and why your guidelines, i.e. the Treasury Board guidelines, are not being followed by Public Works in assigning those contracts.
Mr. Enns: Okay.
The Chair: You, of course, are not accepting the statement that the rules and guidelines are not being followed.
Senator Ringuette: It has been established by the commissioner of the Public Service Commission through the human resources audit that she did.
The Chair: That is the background.
Senator Ringuette: It is already a public report.
Mr. Enns: We will get that information for you.
Senator Ringuette: I am looking at page 129, Human Resources.
The Chair: Of the estimates?
Senator Ringuette: Yes. I suppose the $2.9 billion way down at the bottom has to do with the extension of the pilot projects.
Mr. Enns: This is funding that was provided in Supplementary Estimates (B), I understand.
Ms. Thornton: Senator, that page is a summary, and it shows the total estimates to date. That $2.9 billion did come with detail in Supplementary Estimates (B).
Marcia Santiago, Senior Director, Expenditure Management Sector, Expenditure Operations and Estimates Division, Treasury Board of Canada Secretariat: In supplementary estimates, we showed in the HRSDC presentation an increase of $2.9 billion of EI, employment insurance, payments. We also showed in the same supplementary estimates an offset in the standard object table of a reduction. It is an in and out to reflect a reporting change, reflecting an adjustment that was made further to Budget 2009. It took effect last summer.
Senator Ringuette: I appreciate your answer, but I was just getting to my question.
Ms. Santiago: Sorry.
Senator Ringuette: There has been an announcement of an extension of the pilot projects for EI, yet I do not see in these estimates any funding for it. I would like to know the extent of the money involved. I would like to have the specifics. Exactly which pilot project has been extended and for what period of time; and why is it not showing in these Supplementary Estimates (C)?
Mr. Enns: I would venture that they are not showing here in the Supplementary Estimates (C) as the department has not yet come forward with the request for funding. Perhaps we will see those in subsequent exercises.
Senator Ringuette: Are you saying that we might see Supplementary Estimates (D)?
Mr. Enns: No. We might see those figures in the Main Estimates or in Supplementary Estimates (A) in the following year.
Senator Ringuette: They have agreed to spend money that has not been requested from Parliament.
Mr. Enns: They will not have spent the money.
Senator Ringuette: They have announced the extension of these programs, in general.
Ms. Santiago: If I may, normally the spending for pilot projects is allowable within the existing statutory authorities on the benefits side, and within their existing authority to charge the EI account for administration. It is accommodated within the existing authorities that have been voted for already. That is a possibility. If they need more than that, as Mr. Enns said, we will see them as an adjustment in subsequent estimates.
Senator Ringuette: On page 128, the third item from the bottom is old age security, OAS, which shows a decrease of $356 million in expenditure. Could you explain that? Every statistic indicates that the number of seniors in Canada is increasing, which would generate an increase in the demand for this program. Yet, we see a decrease in these estimates.
When there is a cost-of-living adjustment, COLA, to the old age security program, there is an automatic reduction in the guaranteed income supplement, GIS. Why is that?
Mr. Enns: On your first question, I believe the figure reflects the most current forecast and information available. These figures are adjusted periodically based on the best demographic and other information at the time. As we have mentioned before, this in no way reflects a change in payments, per se; it provides better information about what the payments will cost in a given period.
Senator Ringuette: Will you supply us with the information on the reduction in the estimates for old age security? If it is simply an adjustment, that is fine — but I want to know why. I would like the same information for the guaranteed income supplement. What triggers a reduction in the estimates for those two programs? In the last two years, I have been given two different answers, and I would like only one answer. I am hopeful that Treasury Board will be able to provide that answer.
The Chair: Perhaps you could give them the last two answers you have received, or you can accept the third one as the final one.
Senator Ringuette: At the next meeting, we will debate all three answers.
Ms. Thornton: If I may, the decrease of $356 million in the old age security benefit is attributable to three factors: The first is the decrease in the estimated number of beneficiaries. Before these estimates, it was thought there would be 4,789,402 beneficiaries, but now the forecast is 4,783,374 beneficiaries. The forecasted number of beneficiaries has decreased. That's a decrease of $36 million.
Senator Ringuette: Is that the rationale for the decrease?
Ms. Thornton: One of three factors is the forecasted decrease in the number of recipients.
The second factor is that the average monthly rate forecasted is decreasing from $504 to $500, which is an average. It does not mean that individuals are receiving any less, but the forecasted average has decreased $235 million.
Senator Murray: Are these figures for OAS only?
Ms. Thornton: I will give the numbers for the GIS after, if I may.
There is also an increase of $85 million in anticipated old age security benefit repayments. There are two decreases and one increase that result in a net decrease in the forecast of $356 million.
On the guaranteed income supplement benefits, a projected decrease of $211 million is forecast. This is a combination of two factors: The first is the estimated beneficiaries forecast, which had been 1,684,943 and is revised to 1,632,480. That accounts for a decrease of $259 million. The second is an increase in the forecast average monthly rate from $408 to $410, which totals $48 million. Netted out, the overall decrease in the forecast is $211 million.
Senator Ringuette: I accept that. Further to my questions, I want to know the formula used when there is a cost-of- living adjustment to the old age security benefit. Why is there a greater reduction in the guaranteed income supplement, which has happened two years in a row?
Ms. Thornton: We will undertake to get that information from the department.
Senator Callbeck: I have a couple of questions on page 56. At the bottom of the page, we see $5 million for the Office of Infrastructure of Canada for emergency funding. It says that the office historically has been underfunded in their operating vote. Why has this not been corrected before if it has been underfunded for a while?
Mr. Enns: That is a good question. It is correct that the Office of Infrastructure of Canada has never had operating funding in an A-base. It has always been funded on a temporary basis from year to year in order to provide the programs. I suspect the reason for not providing an A-base permanently is the change in the nature of the suite of programs available. The arrangement has always been such that the money is transferred from the overall envelope provided to the Office of Infrastructure of Canada, to operating funding to allow them to deliver the programs in any given year. It is correct that this is the way funding always has been done for that department, although it is somewhat unusual, and they continue to be funded that way now. This figure reflects their operating needs for the current year.
Senator Callbeck: Is the amount of $5 million consistent?
Mr. Enns: That is not their whole operating funding. This amount is required in addition to the previous forecast for delivery of the infrastructure stimulus fund. Late last fall they became aware that they would not have enough operating funding to continue to provide the programming, and that is when we received the request.
Senator Callbeck: What is the total amount for the year?
Mr. Enns: I do not have that figure at hand but their operating funding has been in the neighbourhood of $45 million per year. Given the huge dollar value of the programs they are delivering, we at Treasury Board think that is a reasonable amount.
Senator Callbeck: On the same page at vote 5, you have the words "authorized" and "allocated." Why is it necessary to make such distinction with these government contingencies?
Ms. Santiago: We are in the final supplementary estimates of the year; many of the vote 5 requirements have to do with the timing of supply. We changed our presentation of TBS vote 5 allocations in these supplementary estimates to show that there were this many departments and initiatives that received authority to access the contingencies vote. However, as you can see from the allocated column, at this point in time, not all of them have started to act on those allocations.
The reason we show them separately is because this is our last opportunity in the year to present to Parliament the use of the Treasury Board contingencies vote.
These departments asked for these on the expectation that they might have a requirement to make payments, like in the case of Nortel, to close the deal; in the case of Veterans Affairs, to make benefit payments in advance of receiving Supplementary Estimates (C) supply. That is why we have to show them, and that is why they need the authority of the contingencies vote.
Mr. Enns: If I can make a correction, my colleague has pointed out that I mentioned the figure for the operating base for Infrastructure Canada or their operating funding. It is higher over the last two years because of the funding required for the economic action plan. The figure you will see in the blue books for the total to date is $66 million. I wanted to make that clear.
Senator Callbeck: It is generally around $45 million?
Mr. Enns: That is what it had been in the past.
Senator Callbeck: I want to turn to the student loans. The default rate is about 1 per cent and it has been pretty stable. You are asking for $311 million, you say for two reasons: increased new loan projections and decreased forecast repayments. In the first one, new loan projections, is that because we have more students going or, for example, there is a lack of summer jobs? Students last year had a tough time finding a summer job. What are the reasons for that?
Mr. Enns: The increase in the requirement for Canada Student Loans is based on the current year information they have for both disbursements and repayments, and a forecast of the remainder of the requirements. The uptake will be a key factor in the requirement.
Senator Callbeck: I would like to know why they are projecting that increase. What are the factors they are considering there? If you do not have that, you can get back to us.
Mr. Enns: It is an actuarial projection, but we will check that for you.
Senator Callbeck: In the second part, you say it is because of decreased forecast repayments. What do you mean there? Do you mean fewer students will pay it back? Do you mean lower payments or less consistent payments?
Mr. Enns: That is what I understand, that the original forecast for repayments had to be modified and, therefore, there is an increase in the requirement.
Senator Callbeck: I would like to know why, the same as the number one reason you gave.
I have a question on a different subject, Canada Mortgage and Housing, Corporation. You are asking for $793 million for low-cost loans for municipalities. How are those loans going to be distributed across the provinces?
Mr. Enns: I am not certain of that. We will verify how those are distributed to the provinces.
Senator Runciman: In the AECL request, it talks about refurbishment. I am curious if you have a breakdown. Does that relate solely to Point Lepreau? How much are we talking about? Do you have specifics on that?
Mr. Enns: Yes, if you will give me a moment. There are four specific refurbishment projects. Point Lepreau is a significant one. There is also a project at Bruce in Ontario. There is the South Korea Wolsong reactor and Gentilly in Quebec.
Senator Runciman: Bruce and Point Lepreau are both very much above the original estimates but the others, we were advised, were pretty much on budget. Are you saying that is not the case?
Mr. Enns: This is the next chunk of funding that is being provided to AECL.
Senator Runciman: We know Point Lepreau is well over.
Mr. Enns: These are the same requirements you saw previously in the year through Supplementary Estimates (A) and (B) for the same ongoing work that is required.
Senator Runciman: On the Nortel campus, when that presentation was made to the Treasury Board, investments such as that, was there also an indicated estimate of payback? I know you are talking about consolidation of offices. Does the ministry give you an indication of what the long-term returns will be on that kind of investment?
Mr. Enns: We do not have information necessarily on a payback, but we do have some information on what the acquisition represents in terms of a good deal for the government. The replacement cost of providing locations for DND employees was estimated at $800 million, and the cost of the acquisition of the Nortel campus is $208 million. It is the lowest cost per square metre of any recent Crown acquisition in the national capital area. This is why you are seeing this coming forward. It represents an opportunity for DND to consolidate in one location. A large part of that is the fact that this will be away from the downtown area where costs are less expensive. It also has enhanced security, not being in a downtown location. Given the circumstances around the acquisition, it represented good value for money for the government.
Senator Runciman: Talking about payback again, on the pay-direct card, with reduced paperwork, is there a return on investment there as well that was projected?
Mr. Enns: There are administrative savings associated with introducing the card.
Senator Runciman: Do they quantify that?
Mr. Enns: It is very difficult to be precise about that, but the savings are the result of lower administration costs through electronic processing. Technology obviously introduces cost-containment possibilities. Part of the advantage is that the substitution of generic drugs for brand name drugs becomes automatic, if you will, when it is processed that way and there are savings associated with that.
Senator Runciman: Jumping back to AECL, one of the other justifications for this was managing operational pressures. Is there a dollar value attached to that? Could you give us any specifics on what that means?
Mr. Enns: Yes. We do have some information that I hope will help.
I can provide some rough figures for the categories of work that are being done.
Senator Runciman: It was managing operational pressures that I was curious about, just what that meant.
Mr. Enns: That is estimated at $21.4 million, and includes ongoing operational costs, expenses relating to the restructuring, workforce adjustments, those kinds of things.
Senator Runciman: I am sure there is a better explanation of that at Treasury Board. Can we get something with more detail attached to it?
Mr. Enns: We can try to get more comprehensive information for you, yes. It might be something you need to talk to AECL about, but we will see what we can do.
Senator Runciman: Is there a possibility this week of getting a breakdown as well on the additional $22 million that the Canada Border Services Agency, CBSA, is looking for related to the Sun Sea human smuggling operation? They are coming Wednesday night, I think. If it is possible, I think it would help us in preparation for that meeting as well if we had a breakdown of what is involved with that, and the additional costs to process the smuggled individuals. I know there are other costs associated with the RCMP and the Immigration and Refugee Board, but the big one is CBSA.
Mr. Enns: Briefly, the $22 million that you are referring to is associated with incremental costs for pre-arrival, arrival and post-arrival activities associated with those migrants. The incremental costs include legal services, the actual detention costs for the 492 migrants, accommodation, health services and things that have to be provided. These are minimal health services, but they must be provided. It also includes investigations and examination and some vessel maintenance costs as well. That is what the $22 million refers to.
Senator Runciman: The legal services are provided to the migrants, I assume.
Mr. Enns: That is a good question. It is likely. Certainly, there will be costs to the government as well.
Senator Murray: I would just make a brief comment on one or two issues that have been raised already. On the matter of old age security and the guaranteed income supplement and, in particular, the lower-than-projected numbers of recipients, our friend, Senator Downe, has been hot on the trail of this issue or a related issue for some time now. The number of people who do not realize that they are eligible and are not applying is surprising. I saw it referred to quite recently in another government report somewhere. You may or may not want to comment on what the government is doing to inform people that they are missing out on something.
With regard to student loans, somewhere in the briefing notes we received from our advisers it was suggested that, with interest rates as low as they are, whether the government considered — and I recognize that we are talking about less than 1 per cent of the total portfolio here — instead of writing some of them off, restructuring or renegotiating the loans, or do you just think it is not worth the trouble?
Ms. Thornton: Renegotiating and extending the payment period is the first option, and there is a program available to do that. That is what they go out with to the students.
Senator Murray: It has already been done in the case of the ones we are writing off and it has not worked?
Ms. Thornton: Yes. First, you try a different payment structure period, and then you try alternative ways of recovering it. It could be, if they are getting money from another federal organization, withholding. Then you see if you have the legal basis to pursue it. If not, you write off.
Senator Murray: That sounds good.
With regard to the purchase of the Nortel campus, $216 million to acquire it and pay the property taxes, this is just the beginning — is it not? Somewhere there is a projection as to what it will cost to renovate and make those quarters dignified and worthy of all those generals and colonels and their civilian counterparts who will be occupying them.
Mr. Enns: Yes. The total cost projections for PWGSC and DND, including acquisition, fit up and move —
Senator Murray: Sorry, acquisition what?
Mr. Enns: Acquisition, fit up of the facilities, renovation and the move — and for DND, the fit up, security and IT, information technology, the total is $998 million.
Senator Murray: Over what period of time?
Mr. Enns: I believe that the move will be completed by 2016-17.
Senator Murray: I will ask you to refresh my memory on some matters. Was the assistance to the automobile industry, specifically GM and Chrysler, all under non-budgetary or was some of it under budgetary?
Ms. Santiago: I believe they were almost entirely budgetary, in the form of repayable contributions.
Senator Murray: We lent them money, did we not, in both cases, and we purchased equity. Normally, would that not be under non-budgetary?
Ms. Santiago: As I said, the ones I remember are the repayable contributions, and those would have been budgetary. We will look up if there were any non-budgetary ones.
Senator Murray: That would be what we call the loan. What about the equity position we took? That should be non- budgetary.
Mr. Enns: That would be an investment.
Senator Murray: Thank you. What was the total amount again? Do you have that?
Mr. Enns: I do not know.
Senator Murray: That is the past; you are just interested in present-day stuff. Someone has to refresh my memory on the amount and what fiscal year this took place in. Surely you remember that. Was it before your time?
Mr. Enns: It was before my time.
Senator Murray: I will get it. Someone will tell me. I just cannot recall. I wanted to take advantage of your presence here to ask you that.
I have a note here from the Library of Parliament telling us that a March 2010 CBC news item quoted AECL officials as stating that the reactor at Point Lepreau will not return to service until April 2011. I think that has long since been overtaken by events. There is no way it will be ready in April 2011.
Another matter here concerned me, and it has to do with the use by AECL of the Treasury Board vote 5, urgent and unforeseen expenditures and all that stuff. I am looking at table 2 on page 4. In Supplementary Estimates (C) that are now before us, the table I have indicates that you are looking for $175.4 million for AECL. Now, I have another table that indicates that under vote 5, AECL came to the well in the present fiscal year for $275.4 million. When you take money from vote 5, you are supposed to have it covered in the next set of supplementary estimates, and I do not know where that $275.4 million that they have received under vote 5 is found in the 2010-11 supplementary estimates. I see $300 million in Supplementary Estimates (A), $294 million in Supplementary Estimates (B) and $175 million in Supplementary Estimates (C). Can you help me on that?
Ms. Santiago: Other than the $175 million that you see printed in the supplementary estimates, the $275 million would have been authorized in prior supplementary estimates, as you said. The way the contingencies vote works is that the organization comes to the well and they get an allocation that covers them until supply, so that $275 million would have been repaid at supply of Supplementary Estimates (B).
Senator Murray: I see. It was repaid in what sense?
Ms. Santiago: It was repaid in the sense that they would not receive the appropriation as well as the allocation from vote 5.
Senator Murray: The total number of total spending authorities for AECL in the fiscal year now drawing to a close was $871.9 million between the Main Estimates and the three sets of supplementary estimates, including the one before us. Is that correct? That is the figure I have from the Library of Parliament.
The Chair: Did we have that confirmed?
Ms. Santiago: Yes.
Senator Murray: I will move on to the Parliamentary Budget Officer, PBO, who said on January 20 this year that there is limited evidence that current plans will meet the President of the Treasury Board's public service attrition target, which is 11,000 full-time positions per annum. Can you help us with that? Do you have more evidence?
Mr. Enns: That is not a target but rather a figure based on historic attrition rates in the Government of Canada, which have been roughly 11,000 per year over the past four years. That figure was used to anticipate a similar reduction of people leaving the public service in the current year. It is not a target that we want to reach; it is a figure based on past trends.
Senator Murray: What is the target?
Mr. Enns: There is no target, per se. The cost-containment measures do not specify a reduction in full-time employees across government. They simply freeze operating budgets at 2010-11 levels. That means each department will work within its appropriated funding to absorb the costs of wage increases as opposed to having them funded.
Senator Murray: I understand that, of course.
Mr. Enns: The attrition provides some flexibility to departments in terms of how they might deal with that.
Senator Murray: The Parliamentary Budget Officer had asked various departments and agencies with regard to staffing reductions to identify how each of them would achieve the savings, and whether service standards or operating risks would be affected. He said, as of January 20, that eight organizations had responded to the PBO request and two organizations, Correctional Services Canada, CSC, and the RCMP, had not responded, although that may have changed since. He pointed out that the forecast decreases in most organizations were offset by a substantial forecast increase in Correctional Services Canada. Do you have anything to say about that?
Mr. Enns: As there is no hiring freeze, departments will continue to take on new employees as required to deliver programs. CSC is a good example of that. For those departments without ongoing pressures or initiatives to implement established attrition rates in which we have confidence, it provides a measure of flexibility to deal with it. It is within the accountability of deputy ministers to deliver what they need to deliver within the envelope provided to them.
Senator Murray: A freeze in operating budgets and the government's insistence that departments swallow any wage settlements suggests that the President of the Treasury Board has been quite open about this and that they will have to decrease the staffing expense through attrition; it will be a fairly tall order, I would think.
I will close on this. The Parliamentary Budget Officer said that parliamentarians may wish to consider inviting the deputy ministers to appear before standing committees to explain the specific staffing impacts of the operating budget freeze on their organizations, as well as the strategies they intend to use to maintain service, quality and business line risks. I do not know what is being done in the House of Commons because I am not following. I would not like to duplicate anything they are doing, but perhaps we should find out whether they plan to hear from certain deputy ministers and we should consider hearing from others.
He also pointed out, apropos Correctional Services Canada and their planned increase by more than 4,000, that the RCMP propose to decrease by over 1,000 at the same time, although there are suggestions that they need many more people in their organization.
The Chair: That is a good suggestion.
Senator Neufeld: I will ask for additional information on student loans. Usually a provincial portion is attached to those loans, I believe. What kind of information is transferred between the federal government and the provincial governments with regard to student loans? Do you inform the provinces that a student has been forgiven their federal portion of the loan? Can that information be passed to the provinces? I might be wrong in assuming this, but I believe there are two portions to a loan.
Ms. Thornton: We will have to get back to the committee with that information. I am not sure whether the Canada Student Loan portion is linked to provincial loans or whether information is shared. We will undertake to talk to HRSDC to find that information.
Senator Neufeld: I believe that the only way they are linked is through the student, who receives a portion from the federal government and a portion from the provincial government. That might be the only link. I understand each has the right to do whatever but I wonder what information is shared between the two levels of government. Do the provinces continue to try to collect some of those loan repayments? If they do so, are they successful? It would be interesting to be able to make the comparison between the two levels of government.
The Chair: That might vary from province to province. Perhaps you could give us an analysis across the country, which would be most helpful.
Senator Neufeld: My second question is about AECL, which Senator Runciman asked about. It went to vote 5 because of extenuating circumstances. In Supplementary Estimates (C), the figure is for refurbishment program shortfalls. That tells me that someone misestimated the last time around when they came here. There are some significant shortfalls of $175 million, which is a lot of money. Today we are at $872 million rounded for AECL.
Since I have been here, not one supplementary estimate has come before us that has not asked for another $100 million or $200 million or $300 million for AECL. It is a substantial amount of money. I would like to know more about where those shortfalls are. You listed refits at four facilities, including Point Lepreau, Bruce Power and in South Korea and Quebec. I was in Quebec recently and talked to Hydro-Québec. Nothing is happening there so they are off the list. We have been told by AECL that South Korea is flowing beautifully and is on time and on budget, so I can cross that one off the list.
I was at Bruce Power a while ago where they said that everything was on time and on budget. That leaves only Point Lepreau. I would like to have a little more information about where the $175.4 million is going in terms of the shortfalls. If some of the money is going to Bruce Power, I would like to know how much. I assume that most of it is for the national research universal, NRU, reactor and the isotope production, but I am not positive of that. It leaves me wanting more information. I agree with Senator Runciman. I have been to Treasury Board, so I know that you have to go with more information than "I am sorry; we miscalculated" or they will show you the door quickly, at least where I come from.
I would like to know the dollar amount, what this $175.4 million is going to.
Mr. Enns: I will take a stab at it now and, if you would like more information, we will endeavour to get it for you.
Of the total amount you are seeing in these supplementary estimates, $16 million is for isotope production. That is the upgrades and repairs required to re-licence the NRU for isotope production until 2016. That is $16 million.
The shutdown of the dedicated isotope facilities, including the MAPLE reactors, which were terminated in May 2008, is $7 million. That includes putting them into a safe shutdown state and returning the inventories of the enriched uranium to the United States, as well as to pay for legal costs associated with the action brought against the corporation by MDS Nordion.
There is $16 million for operational infrastructure upgrades related to health, safety and security at Chalk River — fire safety, sewage facilities, technical equipment, that kind of thing.
There is $18 million that will be going for new reactor technology development. This is to support future potential sales of CANDU reactors.
Where you started with the life extension or the refurbishment projects, that is $97 million of the total. The most challenging, as you have noted, is Point Lepreau. The Ontario and South Korea projects, as you have noted, are further advanced and are expected to be completed in 2011. Again, Hydro-Québec has announced that it will be postponing the active phase of life extension at Gentilly. We have the same information.
Finally, there is what I mentioned earlier on the operational pressures at $21.4 million.
That is the breakdown that we have been provided by AECL in terms of the requirements for the $175 million.
Senator Marshall: Most of my questions are about Human Resources and Skills Development, but I do have a follow-up question on Atomic Energy of Canada.
When we were doing Supplementary Estimates (B), we had officials from the corporation in to speak to us about their funding requests. We asked the question about where they were going for the rest of the fiscal year we are in now, trying to get a handle on what was going to be in Supplementary Estimates (C).
What kind of information does treasury board get? The official here from Atomic Energy of Canada could not give us any information as to where they were going until the end of the fiscal year, but Treasury Board must require that information. Do you just take each request as it comes in each quarter and deal with that, or are you focusing on future projections?
Mr. Enns: Given the nature of the problem that we have, there has been active monitoring, by NRCan primarily, which then sponsors the submissions we will see at the Treasury Board for AECL. There is ongoing progress reporting and monitoring. The reason why you see it so often is that the funding is flowing piece by piece. That is purposeful.
I would say that there is a team of people at NRCan that is responsible for the department's role in AECL. We then work with them as they provide information to treasury board on which it can make its decisions.
Senator Marshall: The committee here is seeing it piece by piece as well. Is there anyone looking out into the future? When we did Supplementary Estimates (B), I was only looking at the next quarter so I was not looking way down the road. We could not even get any information on what was coming down in the next quarter, and we were already into the next quarter. Does Treasury Board not have that information? I would expect that you would be getting that information. Would you not know where you are going until the end of the fiscal year?
Mr. Enns: As a Crown corporation, the organization submits forward-looking plans. We do see those as well. The government has publicly stated its intention to find a new owner for its commercial arm. They are engaged in a process there. Negotiations are ongoing and I could not comment on them.
The restructuring process is complex. We cannot really comment on what is going on with those portions of the issue. We do our due diligence when we see things coming forward from the corporation as they make these requests for additional funding in the context of the process.
Senator Marshall: My main questions are on Human Resources and Skills Development Canada. I want to talk about some of the programs that additional funding is being provided for. Under the Canada education savings program, there was $60 million extra. I understand that was for an increased uptake in the program. However, there was an adjustment to appropriations of $36 million for allowance payments. What would that be? It is on page 129.
I can understand the increased uptake. It is an extra 10 per cent. Authorities to date would be main supply plus the supplementary estimates, would it not?
Mr. Enns: Yes. You were asking first about the Canada education savings grants.
Senator Marshall: Yes, and the extra $60 million; I understand that is an additional uptake and it is about 10 per cent.
Mr. Enns: Yes, that is correct.
Senator Marshall: What would the $36 million be on page 129? There is an adjustment, a reduction. It is less than 10 per cent. What allowance program is that?
Mr. Enns: The $36 million is a decrease in allowance benefit payments for the elderly. This is the allowance for the survivor. This provides payments to low-income surviving spouses or common-law partners age 60 to 64. The decrease is due to, again, updated population and monthly rate forecasts. They would have a model and they would be monitoring the statistics and then adjusting their forecasts accordingly. At this point, this results in a decrease of $36 million.
Senator Marshall: Under the Canada disability savings program, if you go further down the page, there were some changes made to that program in the last budget. Just to make sure I am interpreting the information correctly, the authorities to date include both main supply and supplementary estimates, but the adjustment to the appropriations for both the grants portion and bonds portion of the disability savings program is significant when you look at the authorities to date. For the grants, it was originally thought to be $10 million and the adjustment to the appropriations is $67 million.
Is that as a result of the changes that were made during the last budget process? It is on page 129, about halfway down the page.
Mr. Enns: The increase in Canada disability savings grants is due, as you have noted, to the revised growth rate estimate. Through this grant, there are matching grants of up to 300 per cent, depending on the amount contributed and the beneficiaries' family income. The increase is a result of higher-than-estimated take-up by Canadians than forecast when the program was established in 2008.
Then there is a related item, funding for the disability savings program. That is a Budget 2010 initiative to allow a deceased individual's RRSP, registered retirement savings plans, or RRIF, registered retirement income fund, proceeds to be transferred to the disability savings plan.
Senator Marshall: Yes, I remember that. This would include the changes in the last budget.
Would those increases have been projected when the changes were contemplated? Would you have expected that the increase would have been that significant?
Ms. Thornton: At the time, there would have been forecasts provided, and this reflects a change based on similar experience. They have modified the forecast.
Senator Marshall: In the front of the document, the major items are mentioned. On page 12, it talks about the Canada Revenue Agency and the $279 million that looks like a reduction. When you read the explanation, it says that the Canada Revenue Agency is collecting and then reimbursing. It sounds like money in and out. Why would there be a figure of $279 million? Am I interpreting that program properly? On page 12, it is headed "Modification to original estimate of disbursements to provinces under the Softwood Lumber Products Export Charge Act . . ."
Mr. Enns: Through that act, CRA does, in fact, collect and administer charges levied on exports of softwood lumber products to the U.S. and then makes disbursements to provinces of these amounts, and there is some netting of administrative deductions.
In the 2010-11 Main Estimates, there was a statutory softwood lumber export charge estimate of $479 million. This is being reduced now to $200 million to account for changing prices and volumes in the lumber market. That is why you see the item there. It is a reduction of the original estimate that appeared in the Main Estimates.
Senator Marshall: Why would there be any difference at all if it was just in and out? It sounds like CRA is collecting and then disbursing. If it is in and out, why would there be a $200-million expenditure item?
Mr. Enns: I am not sure of that.
Ms. Thornton: It is the forecast of what would be in, and there have been much slower exports to the States with the reduced housing builds. The original estimate was $400 million.
Senator Marshall: Will there be an expenditure at the end of the year?
Mr. Enns: Of the $200 million.
Senator Marshall: It is not just in and out. There is a residual amount.
Senator Murray: Supplementary on the softwood lumber item — within the past little while, Mr. Peter Van Loan, the Minister of International Trade, put out a statement commenting on an adverse decision that Canada had suffered in the international tribunal. They were going to have to put a higher tax on the products going into the States, and they were going to turn that revenue over to the provinces. Is that contained in your supplementary estimates there?
Mr. Enns: My understanding is no; that would not be part of the supplementary estimates. That would be reflected later.
Senator Murray: Do you know how much?
Mr. Enns: I do not know.
Senator Murray: We will see it in another supplementary estimate or in the Main Estimates.
Senator Peterson: I do not want to be picking on the students, but what are the major reasons for non-payment? Is it that they do not complete their education or is it because of health? What are the major reasons?
Mr. Enns: I am not sure what the reasons would be. We could request the department to provide information on that.
Senator Peterson: In terms of the bankruptcy changes, it talks about 10 years. Is that too much or too short? What would be a realistic time frame?
Ms. Thornton: My apologies if I indicated I thought a shortening of time was too short. The question was simply would it have an impact on the write-off, and it would simply accelerate some of the time, or could potentially. I have no comment on whether the time frame is appropriate.
Senator Peterson: I will rephrase the question. What do you think would be a realistic time frame to change to, in your experience? Would it be two years or three years?
Ms. Thornton: My experience is that it is not actually the time frame, but at what point you can realistically say it is no longer viable to pursue this debt, or it is costing more to pursue the debt than to carry it on the books.
Senator Peterson: Your experience would indicate that is how long?
Ms. Thornton: Whatever it takes.
Senator Finley: My understanding is that the student loans and the default for the last three years are at least seven years old, all of them. There are none less than seven years.
Ms. Thornton: We would have to confirm that time period. I do not know that the time period is a fixed criteria, although it seems reasonable. They have gone through all the processes possible for recovery and realize they just cannot. If it is no longer legally enforceable and there is indeed a statute of limitations on that, they will write it off. That is worth passing on to HRSDC.
The Chair: I will remind honourable senators we are confusing government writing off a debt and the student going through a personal bankruptcy. If you write it off, presumably you do not have the cost of the bankruptcy being incurred as well.
Senator Peterson: On Atomic Energy of Canada, ensuring isotope production, the $175.4 million, is that net of any revenue they get?
Senator Ringuette: No. The revenues are never registered.
Senator Peterson: Where do they go? Could we find it somewhere? They have the market cornered on that. They are the only ones who have made it.
Mr. Enns: The isotope production is not the total $175 million.
Senator Peterson: I know that. I am asking about the revenue. Where would I find that?
Mr. Enns: The revenues would be expressed in the public accounts or in their corporate plans. We can find that for you.
The Chair: Public accounts are after the year is over.
Senator Peterson: It would be nice to see that.
The Chair: You make a good point. It would be nice to balance it. Presumably AECL has some revenue from these projects, even though they are overrun. You are not netting this; you are just showing the costs or expenses.
Mr. Enns: Exactly.
Senator Gerstein: Thank you, witnesses, for appearing before us. I would like to draw your attention to page 9 and to the paragraph on student loans. It seems it is of great interest to a number of people around the table. In particular, I would draw your attention to the third line in the paragraph, which says:
This covers a three-year period and represents less than 1 per cent of the total Canada Student Loan portfolio.
I know what it says, but I must tell you that I have not the slightest idea of what it means. I am assuming that there have to be criteria for write-off. The vast majority of write-off would be done by formula, and the formula would probably be based on the recency of the last payment. Clearly, that is the basis on which you write off. If you have not paid in 90 days or 120 days, whatever it is, there is a formula. There may be some exceptions. There may be those who are deceased and you write it off, and there is no estate.
What is disturbing to me is the phrase "represents less than 1 per cent of the total Canada Student Loan portfolio." I do not know if "total portfolio" means current portfolio. My concern is that a less than 1-per-cent write-off is an extremely low number. I cannot think of a retail company that would have bad debts less than 1 per cent.
Having it less than 1 per cent suggests to me that perhaps whoever grants loans is turning too many loans down, because if you start on the premise that you do not want to have a write-off, you do not grant any credit in the first place.
If the criteria are too tight and too many applicants are being turned down, that is what I might be taking out of this. We are, in effect, causing a problem for the future of this country. I would ask the question, we can live with a number that is higher than less than 1 per cent. No one will get the gold medal because they take it from whatever it is and can reduce by 0.10, or whatever the number is. That is why I say, as I read the line, I have absolutely no idea what it means, over what period this has been written off, what is the portfolio. If you read 1 per cent, is the portfolio $1.5 billion? Is that the portfolio of the student loans presently? I cannot tell from this.
I would be very interested to hear you try to expand on any of the things I am raising because, frankly, it is concerning to me that the number is so low.
Mr. Enns: Perhaps we will need to get back to the department on that and get an answer for you from them on the criteria, how they are applied and what it represents in terms of the total or current portfolio. We will get that for you.
Senator Gerstein: I would have liked to have seen the number higher, to be frank.
The Chair: You have quite a bit of research to do for us on student loans and we look forward to receiving it.
Senator Dickson: The areas I would like to address are atomic energy and questions relating to Veterans Affairs. Our veterans are doing a tremendous job in Afghanistan. Many have come home with disabilities and they are pushing for money to flow out under the New Veterans Charter.
Coming to Point Lepreau first, what was the amount and what were the terms and conditions of the original contract for the refurbishing of Point Lepreau?
Mr. Enns: I do not have that information here. We will have to get that from AECL.
Senator Dickson: I have notes from the Library of Parliament. The original contract was for $1.4 billion. Does that sound familiar? You cannot answer?
Mr. Enns: No, I cannot.
Senator Dickson: You said in reply to a senator asking a question that, of the $175 million, a further $97 million is going to refurbish Point Lepreau. Is that correct?
Mr. Enns: There are refurbishments projects, one of which is Point Lepreau.
Senator Dickson: How much of the $97 million is for Point Lepreau?
Mr. Enns: I do not have the breakdown here, but we can ask the department for that.
Senator Dickson: How much over budget is Point Lepreau? Do you know or can you find out?
Mr. Enns: We will check on that.
Senator Dickson: As I understand it, the Government of New Brunswick is making claim against the Government of Canada or against Point Lepreau for the cost of electricity. Their sales into the United States have been lost because the project is behind schedule. Does anyone have any idea? Have lawyers been engaged to determine whether that claim is valid or invalid, and what the estimated cost will be to the Government of Canada?
Mr. Enns: I can only say that the Government of Canada has stated that it will meet its legal and contractual obligations. We are not in a position to comment on that.
Senator Murray: That does not include replacement power.
Senator Dickson: Seeing is believing when you get the legal opinion.
Do you have any concept or ideas as to why there were such significant delays and cost overruns at Point Lepreau?
Mr. Enns: I understand that the work was more complex than they expected. They are still working on it. We were told that the removal of the calandria tubes has now been completed and they are being polished prior to being reinstalled. I obviously do not understand the technology, but they expect the project to be completed in 2012.
Senator Dickson: Did they give any date in 2012? Was it any time in that year?
Mr. Enns: All I have is 2012.
Senator Dickson: That gives them some scope.
I have some questions relating to Veterans Affairs Canada and the New Veterans Charter. When do you think the benefit payment backlog will be fully paid to the veterans?
Mr. Enns: We do have to talk to Veterans Affairs about the backlog. It fluctuates, but I do not have information on what the current expectation is when that would be met.
Senator Dickson: What caused the backlog? Is it because of insufficient staff or incompetency on the part of the staff they do have? They do not understand.
Mr. Enns: Part of the funding is being provided for administrative costs to deal with the backlog. I would assume that part of the problem was an insufficient number of people to do that. That is the purpose of part of the funding.
Senator Dickson: It would not relate to poor management of the people they do have?
Mr. Enns: I do not believe so.
Senator Dickson: That is interesting. Could you explain to us the procedures a veteran must go through to obtain a disability allowance? How much paperwork, how many interviews are required before he gets his cheque? I understand it is extremely cumbersome. You need about three lawyers to get through the first phase.
Ms. Thornton: Those may be excellent questions to pose to Veterans Affairs. I do know they have just launched a red tape reduction program. They are streamlining their processes. They would be better positioned to talk to you, not just about what historically has been required but also what is now being changed.
The Chair: Honourable senators, we have invited Veterans Affairs for next Tuesday's meeting.
Senator Dickson: Thank you. I will save these questions for Veterans Affairs.
The Chair: I do not think it does any harm to get them on the record because they may be unable to attend in the time limit in which we have asked them to come. It is good to get them on the record.
Senator Dickson: Thank you.
Ms. Thornton: On the question about student loans and the statute of limitations, the cut-off date is six years after the last activity, whether that is an acknowledgment from the student there is a loan outstanding or the last legal activity.
The Chair: Honourable senators, and this would be helpful for the Treasury Board Secretariat to know, we have invited HRSDC to come. There are many questions and much research. If you can liaise with them and let them know many of the questions, maybe they could help, so you will not have to give written answers if they are able to give us those answers.
Mr. Enns: We will do that.
The Chair: That would save us all some time, Veterans Affairs and Human Resources and Skills Development Canada.
Honourable senators, we are now down to round two. We have about 20 minutes left. The Treasury Board Secretariat has provoked much good discussion and this is very helpful.
Senator Marshall: Could you give us some general information on the reduction in the interest costs? In each of the supplementaries, I believe, there was a reduction and I notice there is one this year for $125 million. I think in Supplementary Estimates (B) it was around $2 billion; it was quite a significant amount of money.
Could you give us a general explanation on that adjustment?
Mr. Enns: We simply provide for information purposes in the main estimates the latest information we receive from Finance based on their forecasting. This will be reflecting what they did in the context of the fall fiscal update. We just take that information. I believe what they are forecasting is for lower, obviously, interest rate charges and that is reflected in the statutory appropriation.
Senator Marshall: You would not have the total reduction there, would you, from all the supplementaries? I do have (C) and (B), but I do not have the figure from Supplementary Estimates (A). I was trying on work backwards to see what the percentage decrease was.
Ms. Thornton: Which page are you on?
Senator Marshall: I am on page 107. The $125 million for these supplementary estimates are there, but I would think that the $28.4 billion would be net of reductions in Supplementary Estimates (A) and Supplementary Estimates (B).
Mr. Enns: It is the total estimates to date, yes.
Senator Marshall: You would not have the number there for Supplementary Estimates (A), would you?
Mr. Enns: I do not. I know that, in Supplementary Estimates (B), the projection was for $28.4 billion.
Senator Marshall: It looks like about a 10-per-cent decrease generally.
Mr. Enns: It is from $28.432 to $28.307 in these supplementary estimates.
Senator Marshall: If Supplementary Estimates (B) were $2.9 billion, would that be netted into that $28.4 billion? It is, I assume. That is good. I would say it is around 10 per cent.
Senator Callbeck: On page 168, under the Canada Border Service Agency, there are $9.8 million spending authorities available within the vote and of that, the footnote says $578,098 was money for Canada's response to the earthquake in Haiti. It has not been spent, and I am wondering why.
Mr. Enns: We do not have information on why that money was not spent. They are simply funds available from within the vote.
Senator Callbeck: Could you get an explanation for that, please?
Mr. Enns: We could ask CBSA.
The Chair: They are here as witnesses tomorrow.
Senator Callbeck: On page 133, regarding transfer payments, I am interested in two amounts: $551,000 and $53,000. In the explanation, this money is payable to government, municipalities, communities, employers and so on. I would like to see a breakdown of those two figures as to exactly where that money is going.
Mr. Enns: I do not believe we have information with us here that breaks that down.
Senator Callbeck: Would you get that information, please, for the committee?
Mr. Enns: Yes, I will.
Senator Callbeck: On page 170, the RCMP requires $9.4 million for long-term vision and plan of major capital projects and security measures at West Block and the Library of Parliament.
Can you elaborate on this long-term vision? If there are any public documents related to it, how are they accessible?
Mr. Enns: I can tell you that this funding is for pressures and equipment costs to enhance security measures and response times on the Hill. In the current year, 25 FTEs, full-time equivalents, have been deployed for security coverage on the Hill, and this is in response to the security breach by Greenpeace activists in 2009. It is also for the purchase of additional surveillance equipment to provide a higher capacity in the surveillance of construction vehicles and strategic perimeter surveillance.
That is the information we have about what the funding is being used for.
Senator Callbeck: Do you know whether any public documents related to this are available?
Mr. Enns: I am not aware of any, but we can check for you.
Senator Callbeck: I would appreciate that, as well as information on how to access them.
The Chair: Is West Block the correct location there? We know that it is closed.
Mr. Enns: They are West Block and the Library of Parliament.
The Chair: My point is whether West Block is properly listed here since West Block is closed.
Mr. Enns: I believe it is correct.
The Chair: Maybe the House of Commons and Senate security do not do any work with West Block now that it is closed, and therefore the RCMP has to get involved. Could that be the explanation?
Mr. Enns: I am not certain, but we will verify that within the context of Senator Callbeck's request.
The Chair: That would be good.
Senator Callbeck: On page 151, the offices of the information and privacy commissioners of Canada are asking for $355,000 for complex cases. What do you mean by "complex cases"? What are we talking about here?
Mr. Enns: I do not have any information with me in the material I have. I would assume that it has to do with extensive requests for information and any kind of proceedings or investigations that the Office of the Information Commissioner conducts.
Senator Callbeck: Could you ask the office, please, and get an answer for the committee?
Mr. Enns: Yes.
Senator Ringuette: Before asking my question, I want to ensure that I understood you correctly about the Nortel building. You said that DND estimated that their new facility requirements would cost them about $800 million.
Mr. Enns: That is a combined estimate from PWGSC and DND. That is for the entire costs of fit-up and the move.
Senator Ringuette: Based on that estimate, they bought the Nortel building for $280 million.
Mr. Enns: Yes.
Senator Ringuette: Did I understand you correctly that, in order to refurbish, move, do the IT and the security, the total cost of that facility would be $998 million — estimates?
Mr. Enns: That is the total that I referred to.
Senator Ringuette: Where are the savings? From estimates to estimates, from building a brand new building estimated by DND at $800 million, we have now bought this Nortel building. With the refurbishing costs, the move, the IT, the security, et cetera, et cetera, the estimate is almost $1 billion. Where are the savings in all of this? How can we justify this? Does Treasury Board or Public Works have a firm policy regarding government offices?
Mr. Enns: Yes, they do, and as I mentioned, this represents the lowest cost of any Crown acquisition recently. There are forecasting annual savings as well that have to be factored when you are calculating what this represents in terms of value for money. This funding was provided simply for the cost of the acquisition, and there would be ongoing accommodation costs that DND would have incurred elsewhere to house those individuals. That is why the math is that not simple.
Senator Ringuette: The math is very simple; I beg to differ. I would like to see what the policy is on offices. I would like to know what changes occurred in the policy three years ago when then-Minister Bernier told the public that we needed to sell a government-owned office building to the private sector to run. Suddenly, we have the reverse situation, whereby the government is buying a private facility in which we plan to invest close to $600 million in addition to the acquisition cost to create a public asset. There is no consistency and I see no cost savings. Perhaps if I knew government policy on this issue and had a copy of the study on this building, I would be able to understand the reasoning. However, I know you do not have that at hand.
Mr. Enns: I am able to give you a bit of the information. The department manages the accommodation requirements and real property holdings as a portfolio. It attempts to determine locations that represent the best value for money for the government to house federal public servants. This case represented for them a unique opportunity to acquire that facility, which is well suited to the needs of DND, which have to be considered as well. They have needed to move the bulk of their staff out of the downtown area for some time. The consolidation serves their operational purposes much better than being scattered across 48 locations. With those factors in play, DND and PWGSC determined that this facility represented the best solution and would provide good value for the government. That is their motivation.
Senator Ringuette: I would like to see the study that truly supports what you have said because the current number does not do so.
Moving on, my second question is about the Vancouver Olympics where security costs were $850 million. The estimated cost was done initially in 2003 at $175 million. The actual cost rose to $850 million, of which the federal government absorbed 72 per cent.
Mr. Enns: I am not sure what you are referring to.
Senator Ringuette: I am looking at December 14, 2010 and the Vancouver Olympic Games. It says that the original estimated cost for security was $175 million but it rose all the way up to $854 million. I guess that increase does not differ much from that of other estimates of major projects where we have a return on the investment. Some government expenditures for the Vancouver Olympics were an investment and some were not.
The Chair: Are you following those figures? You are looking lost.
Mr. Enns: I can tell you what the Department of Finance provided.
Senator Ringuette: These amounts were confirmed by Minister Toews.
Mr. Enns: I could tell you a little more about the supplementary estimates vis-à-vis the Olympic and Paralympic Games. We are seeking approval of an expenditure of $8 million for winding down and closing the integrated security unit planning office and their operational support centre. As well, there were final payments for dismantling the perimeter intrusion detection system for the RCMP. Those elements are included in these supplementary estimates for the Olympic and Paralympic Games.
Senator Finley: Going back to DND and the Nortel campus, you mentioned in passing that DND has 48 locations. Do you know, or could you supply us with the information, whether the government owns or leases these 48 facilities and in what proportion? What is the net value of any owned buildings in today's market? Does the government have plans to sell or otherwise dispose of the buildings? Obviously, in any such real estate transaction, you will look at which assets you can dispose of as well as which ones you will acquire. I would appreciate having that information.
My main question is related directly to the Treasury Board and the Red Tape Reduction Commission, RTRC, for which you have allocated $1.7 million. I think it is a wonderful idea. I would like you to confirm, at least en passant, that Canadian businesses are in for $30.5 billion per year in administration only with the various levels of government; that it takes about 30 million hours per year for these businesses to transact business with the three levels of government; that between 1975 and 1999, which is the latest for which statistics are available, 117,000 federal and provincial regulations were implemented at a rate of almost 13 per day; and that governments published 505,000 pages of regulations during that time.
What do you expect from the Red Tape Reduction Commission? Can you tell me how it will operate? What sort of tranches of accountability and targets are set for it? To what degree will MPs, senators and the general public have a say in it? We have only a few minutes left.
Mr. Enns: I will try to be quick. As you noted, the figure of the cost to businesses was estimated by the Canadian Federation of Independent Business at $30.5 billion. The Red Tape Reduction Commission will be led by two federal ministers, five parliamentarians and five private sector leaders. TBS will be considered home for the work of the supporting secretariat. It will hold a series of regional consultations and round tables at the national level, and it will do online consultations with business. We will support the logistics of the work, including arranging the consultations and doing analytical work. There will be a report at the end. The goal is to provide specific actions and measures to reduce the regulatory compliance burden. It is anticipated that these measures will form part of Budget 2012. That is the overall picture of the Red Tape Reduction Commission.
Senator Finley: Is there a target goal over a period of time for this reduction? Are we talking about $10 billion per year or $20 billion per year? Could this possibly lead to a substantial number of revocations of existing regulations? I do not know whether that would have parliamentary impact. Could you give us an idea of the anticipated numbers?
Mr. Enns: We do not have enough information at this time to establish a target.
With respect to regulatory action or the rescinding of regulations, the goal of the RTRC is to reduce the regulatory compliance burden. Likely we will see such measures proposed. It will be up to the commission, supported by Treasury Board Secretariat, to develop an action plan and a way forward. Whether that involves specific targets remains to be seen.
Senator Finley: I have many more questions.
The Chair: Many of us have more questions. Some members of the committee have left. Our meeting time is up. Could you respond in writing to the committee? Honourable senators have other meetings to attend so I always try to keep our meeting within the allotted time.
On behalf of the Standing Senate Committee on National Finance, I thank Ms. Santiago, Ms. Thornton and Mr. Enns. Probably we will see you in a couple of weeks on the Main Estimates. We would like to do our report on the supplementary estimates in the next couple of weeks so we would appreciate these undertakings as quickly as possible.
Mr. Enns: We will endeavour to find the answers to your questions as soon as possible.
The Chair: That would be much appreciated.
This meeting is now concluded.
(The committee adjourned.)