Proceedings of the Standing Senate Committee on
National Finance
Issue 29 - Evidence - March 9, 2011
OTTAWA, Wednesday, March 9, 2011
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to examine the Estimates laid before Parliament for the fiscal year ending March 31, 2012.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Before we get under way with the guests we have with us this evening, I would like to make sure that everyone has received the report on Supplementary Estimates (C). If you could put that to the top of your piles and review it, we are planning on meeting tomorrow at one o'clock in room 256-S. Lunch will not be served. It is just before we go into the Senate Chamber, so hopefully we will have quorum. If there are any fundamental changes that you would like, could you let the clerk, Senator Gerstein or Senator Neufeld know beforehand?
The second request is that, if you have any stylistic changes, could you please hold onto them until the next time? We understand fundamental things. Stylistically, we are trying to get this report in. We have learned that the first Monday night after we are back, both supply bills will be coming to the Senate. The Senate will be sitting to receive those after they are passed in the House of Commons. Our time starts running on those, and we have to have our reports done and adopted by the Senate before we can adopt the supply bills. The supply is obviously very critical to the government, so we would like to cooperate by getting our reports in.
With respect to the report on these Main Estimates — that interim report — we will try to get that to the steering committee by sometime next week, and then the steering committee will move it along to everyone else. You will have it in your offices probably by Friday, which means some of you may want to read it on the plane on the way back. At our meeting on Tuesday morning, we should be in a position — and, if you want changes, let us know any time on Monday — hopefully to adopt that report. That is the plan.
Senator Ringuette: I understand your plan, but I thought that the meeting tomorrow was to review the report, make the necessary changes, if that was the case, and approve it. We can make the changes tomorrow?
The Chair: Make the changes in the morning. You have had it since this afternoon. If you have changes, please send them to Mr. Thompson, to me, or to any members of the steering committee before one o'clock.
Senator Ringuette: Okay.
The Chair: The Monday after we are back, you will do the same thing. However, you will have the whole day on that Monday because we will not deal with it until the interim report on the Main Estimates. We will then deal with that Tuesday morning, hopefully in the same manner.
[Translation]
We will continue the study on the estimates for the fiscal year 2011-2012 that was referred to our committee.
[English]
This will be the third and final meeting of the committee in this preliminary review of the Main Estimates. We will be making a report to the Senate prior to interim supply, which must be passed prior to the end of this fiscal year. However, our study of these estimates, as I have mentioned before, continues throughout the year. We have the mandate to continue, so if there are any groups, agencies or organizations that you would like to bring in on the Estimates throughout the year, please let the steering committee know and we will work that into our schedule.
This evening, we have two sessions of one hour each. The first is dealing with Agriculture and Agri-Food Canada and the second is dealing with Canadian Heritage.
For the first session, representing Agriculture and Agri-Food Canada, we are pleased to welcome Greg Meredith, Assistant Deputy Minister, Strategic Policy Branch; Rita Moritz, Assistant Deputy Minister, Farm Financial Programs Branch; and Bev Levere, Director General, Finance and Resource Management Services, Corporate Management Branch. Congratulations on your titles. I cannot resist saying that every time we read out all these titles. We have a one-hour session, so let us get under way. Mr. Meredith, you have the floor.
Greg Meredith, Assistant Deputy Minister, Strategic Policy Branch, Agriculture and Agri-Food Canada: We are pleased to be here. Not very often are agriculture and food issues above the fold. I was just talking with Senator Eaton about how topical issues around food and agriculture have become in recent days and weeks.
We are here to talk about our Main Estimates, which, for this year, are in the order of $2.57 billion. As compared to last year at $2.99 billion, it leaves a bit of a gap. I thought it might be worthwhile for me to spend a few moments talking about that gap, because I suspect that is of interest to the committee.
[Translation]
First, I should note that the main estimates are only one of the usually four estimates prepared each year. The main estimates are normally supplemented by three additional supplementary estimates. AAFC's main estimates are historically supplemented with additional funding through these supplementary estimates.
In 2010-2011, for example, AAFC received over $700 million in supplementary estimates, mainly to provide new funding for the Prairie Excess Moisture Initiative, as well as additional funding for Business Risk Management (BRM) Suite programming, including AgriStability and AgriInsurance.
[English]
The first program I will dwell on a bit is one we call AgriRecovery. This program is designed to help producers get back on their feet when they have had to confront a severe weather disaster or a disaster due to pest or disease. There is normally a provision of about $120 million to $125 million annually for that program. That is not a ceiling because if the draw on the program is higher than that, the government dips into the Consolidated Revenue Fund and pays it out, as we did this year.
Unfortunately, due to timing for renewal, the AgriRecovery program is not listed in the Main Estimates. Therefore, it looks like this business risk management program, which is critical to producers, is not there for them this year. I assure the committee that it will be here this year, and we will be seeing it in our Supplementary Estimates (A). That is an important message for producers as well.
Another large component of the decrease we see in our budget this year of $418 million comes from a program we call the Advance Payments Program. This program is designed to help producers market their product in an orderly way. Generally, if there are cash flow problems for a producer, they would have to sell their product, whether the market was soft or really good. This program helps them delay having to sell by giving them some cash flow.
In the last two years, the livestock sectors, particularly cattle and hogs, have been hard hit, as you are probably aware. This program helped them considerably by putting out a large number of dollars to help producers get through that deep dip in their market cycle.
Recently, the minister decided that in order to help these producers more, he gave them extra time to repay those loans. Now, rather than having to pay them in the next crop cycle, cattle producers have until March 31, 2012 to repay their advance payment loans, and hog producers have until March 31, 2013, and that is a recognition of the relative difficulties the sectors have.
As a result of stretching out those loans, as you can imagine even in your personal finance area, the longer you have to pay, the less likelihood you will have trouble paying. Whenever we have a loan provision or a loan guarantee like this, we put a lot of money aside in the case of defaults. By stretching out the repayment period, we are making sure that producers will not default. Therefore, we need less money to provision for those loans that are defaulting. Basically, producers have a better chance of repaying; therefore, we have to provision less money. It looks like a drop, but it is actually a good-news story for producers.
Another component of our budget is comprised of programs that are put in place for a set period of time. We call them "sunsetters." You would see these in other departments as well. A number of sunsetters were started under Budget 2006 and naturally come to an end at the end of fiscal year 2010-11. The fact that they are sunsetters does not necessarily mean that they will not be restarted. It is up to the minister and cabinet and, subsequently, the Treasury Board to decide whether they want to continue with those programs.
We do have a number that sunset, and I want to go through them with you. There is one that we call the new opportunities for agriculture initiatives. There is another one called the agricultural bioproducts innovation program, one that helps orchards and vineyards transition to different product and different crop cycles, and the plum pox eradication program, which deals with a pest that hits tender fruit orchards. Those are naturally sunsetting at the end of 2011.
Another program that appears to contribute to the reduction in the Agriculture budget is one that we call the ecoAgriculture Biofuels Capital Initiative. If you like titles, Mr. Chair, how is that? We shorten it to ecoABC. That program was designed to help producers participate in an equity fashion — in other words, become equity participants, in biofuels projects, biodiesel and bioethanol. Unfortunately, the program was coming to an end at the end of this fiscal year. Because of the downturn, it was clear to us that a number of projects and a number of producers involved in those projects would not have the opportunity to access those funds. We took those funds that would have gone unused and would have lapsed, and we re-profiled them into next year and the following year and extended the program out for two years. This means that the projects that would not have been able to access those monies will now be able to do so. In accounting, it looks like a drop in the budget in the order of $47 million, but it is designed to ensure that producers — when I say "producers," I mean farmers and companies involved in the program — can actually access it.
The Chair: Just to explain that, you are taking the same amount of money and extending it over more years, so that $47.9 million will be available in future years?
Mr. Meredith: Exactly. The way the program was designed, you had to finish your plant and show that you were capable of producing a certain volume of ethanol by the end of this fiscal year. It just was not possible because of the slowdown of the economy. Now we have stretched it out two years, and it is more likely these projects can actually access those funds.
In Canada's Economic Action Plan, we had a one-time, two-year provision of about $25 million or $26 million to invest in our laboratory infrastructure. You may or may not be aware that Agriculture Canada is a large, research-based department. We do an enormous amount or large percentage of the agricultural research that goes on in Canada. As part of the action plan, we had approximately $25.5 million to upgrade our labs. That was for two years. We accomplished all that we were going to do under that budget provision, and that money obviously ceases and is not part of our ongoing budget.
Overall, the Main Estimates for 2011-12 reflect how we want to action the government priorities. I am more than happy to discuss the Main Estimates, the programs affected or any other aspect of our business.
[Translation]
We will be happy to answer your questions on our 2011-2012 main estimates.
[English]
The Chair: Thank you, Mr. Meredith. You referred at the end to $25 million, almost $26 million over two years, for the economic stimulus. Is that the only stimulus aspect to your budget? Some of the agents we have had in said it was a major portion of it.
Mr. Meredith: No, we actually do have some other programs, and my colleagues can go through them in detail. This one was different in that it was an investment in our lab infrastructure, whereas the other programs are investments in the sector. The fact that we were able to invest in those labs is a significant opportunity to improve our ability to do research on behalf of the sector.
The Chair: Thank you. I understand that. We have been trying to follow the economic stimulus package, and most of the programs are running out at the end of this month, at the end of this fiscal year. Do you have any that are continuing?
Rita Moritz, Assistant Deputy Minister, Farm Financial Programs Branch, Agriculture and Agri-Food Canada: Yes, we have programs that are continuing. In fact, we have had some influx of money that went into existing programs. As we speak about the programs, we can certainly go through that.
For example, one program that you will have seen mentioned in the Main Estimates is AgriFlexibility. That was a fund. We also have AgriProcessing. The reason some of those are continuing when the action plan was to end in two years is that there were not existing programs upfront, so it required establishing the programs, establishing the criteria. Some of them, for the same reason my colleague Mr. Meredith mentioned earlier, required investment by producers or by the industry and, economically, they were not able to move some of that. AgriProcessing would be an excellent example. That is really for end-of-cycle innovation programs where we are looking for innovative and new discoveries or new markets within the agri-food industries. Some of those are continuing into this year, and continue to be in the Main Estimates.
The Chair: Will it be just to the end of this year or do you anticipate going beyond the next fiscal year?
Ms. Moritz: Some actually go beyond the next fiscal year into 2012-13.
The Chair: Do they go beyond that?
Ms. Moritz: I do not believe we have any beyond that.
The Chair: That would be two more years.
Ms. Moritz: Exactly.
The Chair: Can you estimate for honourable senators how much in dollars that amounts to in total, just a rough figure?
Ms. Moritz: We have moved money, but it would vary. For AgriFlexibility, I will turn to our finance colleague.
The Chair: You can provide that information later on.
Ms. Moritz: We would be happy to do that.
The Chair: None of the other questions turn on it. I just wanted to have that in our minds.
Senator Eaton: Under your contributions, you were talking about transfer payments no longer being required for the Agricultural Bioproducts Innovation Program. Has the percentage of money the government is spending on agricultural research in general gone up or down?
Mr. Meredith: That is a good question and it depends from what base.
In 2006, this government invested considerably more money in a number of innovation programs, including the bioproducts innovation program.
Currently, under the federal-provincial-territorial framework that we call Growing Forward, which is an agreement among all provinces and ourselves about spending and policy alignment, we have a number of programs that represent a significant investment in research, more than doubling the amount of money previously allotted. I can go through some of those programs.
We have a program in that framework called Growing Canadian Agri-Innovations for $159 million over five years. There is a sustainable environment systems program for $32 million over five years. There is some additional research in animal and plant health for about $9 million, and some cost-shared money, which is money that we give to the provinces for innovation programming. That comes out to $336 million over five years, which is quite significant.
Fiscal year 2010-11 is not over yet so we cannot pin down a number, but our 2009-10 budget is in the area of $266 million in the 2009-10 fiscal year, versus about $190 million five years prior, so there is growth in terms of funds available for research.
Senator Eaton: Do you as a department give the money directly to universities?
Mr. Meredith: There are a variety of ways. Some of that money, of course, is for our scientists. As I mentioned, we have a very significant capacity for research in agricultural sciences. We have a program called Developing Innovative Agri-Products, which gives money to not-for-profits and for-profit organizations to partner with us to develop new products.
We have another program called the Canadian Agri-Science Clusters Initiative, which is designed to fund groups of people who come together to develop a critical mass of research capacity. It would be a combination of universities, not-for-profits, research organizations and even participation of our own scientists. There are a number of ways we provide money.
Ms. Moritz can talk to other programs that give money directly to companies to develop and commercialize new innovations where you have a significant difficult period from the laboratory bench to the market trying to close that gap — the valley of death.
There are a number of mechanisms by which we put money into research, and there are a variety of areas in the continuum from basic knowledge discovery right through to commercialization. We work throughout that continuum.
Senator Ringuette: I am reading the Main Estimates for this year. I compare them to the Main Estimates from last year. Right from the start you have 14 per cent less. If we add the supplementary estimates of last year, (A), (B) and (C), then you have 30 per cent less. How much will it reduce transfers to the provinces for joint producer programs?
Mr. Meredith: Under our federal-provincial-territorial agreement Growing Forward, nothing will be affected in terms of our cost-shared programming. That is a five-year commitment. There are a good two years left in it, so transfers to the provinces and, ultimately, to farmers and agri-food processors will not be affected by that. As I mentioned in my opening remarks, a significant proportion of that apparent drop really is not money that will not be going out. For example, $125 million under AgriRecovery will still be there for producers. There is no ceiling on that. In the past year, as a result of extreme flooding — it sounds somewhat contradictory — and drought in different areas of the western provinces, we far exceeded that amount of money. The AgriRecovery framework kicked in a significant amount of money that showed up in our 2010-11 Supplementary Estimates.
Senator Ringuette: That is an event-based scenario.
Mr. Meredith: Exactly.
Senator Ringuette: I am looking at your operating and general programming that you provide for farmers, research and so forth. Here it indicates a 14-per-cent reduction, while we know that a 2-per-cent operating reduction was asked of all the departments. From 2 per cent to 14 per cent is quite a jump. I would like you to qualify and tell us where these decreases will be occurring.
If we also compare your operating expenditures, then you have a decrease of 3 per cent, but capital expenditures are 44 per cent, so I guess that would be your research operation that you did through special funds, the economic fund, infrastructure funding?
Mr. Meredith: Yes.
Senator Ringuette: It would be that one.
Mr. Meredith: Yes.
Senator Ringuette: In regard to transfer payments, there is a reduction of 18 per cent. I want to know where these reductions will happen.
Mr. Meredith: There are two or three areas where there will be actual reductions in payments. One is the Agricultural Bioproducts Innovation Program, which I just mentioned, and that is in the area of $34 million or $33 million.
One sunsetting program is the new opportunities for agriculture program. That will be going down by $34.5 million in the next fiscal year.
There are some other smaller programs that will see some reductions.
The Canadian Agricultural Adaptation Program had a one-time increase of $5 million last year through the reprofiling of money. This year it will go back to its planned level. There is $6 million for genomics research, which I believe is in partnership with the National Research Council of Canada. There is a certain amount of reduction, but the 44 per cent reduction is accounting, in many respects. I can give another example.
AgriInvest is a proactive risk management program for farmers whereby farmers and the government contribute to a savings account, which is like a rainy-day account to deal with unforeseen problems. We are forecasting that program to go down $15 million. That is a function of trying to look at historical participation rates, and at what the sector is doing in terms of being in a healthy financial position. If the number of producers who want to participate in that program increases, then the amount of money we put into the program will increase. It is demand driven. For accounting purposes, we have a forecasted level, but it is a statutory program that will continue to pay out.
We have another program that protects the farmer from volatility in income called AgriStability which, likewise, is demand driven. We have to forecast a certain number of dollars for purposes of prudent planning. If the demand on that statutory program increases, the funds will flow to the farmers.
Ms. Moritz: Perhaps I could add that demand-driven programs are considered the Business Risk Management Suite, BRMS. We follow those payments carefully because they are cost shared with the provinces. We pay 60 per cent of those costs and the provinces pay 40 per cent. We keep track monthly of the actual payments as the year progresses. We table that information with the Library of Parliament and with the Standing Committee on Agriculture and Agri- food. There is a very careful watch on those expenditures. We make the BRMS highly visible as to where we are going throughout the year.
The Chair: Can you provide us with a list of all programs that are cost shared with the provinces?
Ms. Moritz: Absolutely.
The Chair: Give that to the clerk, and we will circulate it.
Senator Ringuette: It is my understanding from discussions with producers in my area that their usual financing source is the banks. Some have been doing business with the same bank for 25 years, but last year it did not want to provide the loan.
What measures do you have in place for such cases? I am sure they are not the only farmers in Canada to face such a banking situation. What do you have this year to provide some help to finance the upcoming growing season?
Mr. Meredith: That is a good question. Luckily, the agricultural sector is relatively stable even in an economic downturn. It is more vulnerable to weather and other disasters, so our farmers did relatively well. The mechanisms in place to supplement regular bank access include the AgriInvest Program, which gives money proactively to farmers. Our sister agency, the Farm Credit Corporation, does a significant amount of lending strictly in the farm sector. The Canadian Agricultural Loans Act provides guarantees to banks to lend to farmers. We increased the amount of money to $0.5 million for capital purchases on farms. We also improved the way that we treat young farmers. For example, a young or beginning farmer with no track record did not have access to the predecessor program; but now they have that access. There are a number of mechanisms in place. The Advance Payments Program provides a farmer up to $400,000 at the beginning of his or her crop cycle, $100,000 of which is interest free. It is given so they do not have to sell into a weak market, which helps them to deal with some of the cash-flow problems that farmers face at the outset of a crop cycle. A number of mechanisms are in place to deal with financing issues.
Ms. Moritz: Last year as well we had the Hog Industry Loan Loss Reserve Program, HILLRP, which allowed hog producers and those in the pork industry to turn some short-term debt into longer-term debt with more beneficial conditions attached to the loans. The HILLRP is finished, but it was geared to helping that industry weather the issues faced by producers.
Senator Murray: I do not know whether it is the current or recent edition of The Economist that had a special section on feeding the world and world agriculture. I wish I had read it so that I could come in here and pretend to know something.
However, as I turn the pages, I see that the main point they make is that there will be 9 billion of us on the planet in a very few years. If you take the number that are underfed today and the number of new mouths coming to the table in the next few years, you are talking about feeding an additional three Indias. They seem to be saying that world agriculture is capable of the production if the technology is used. There are other issues discussed, such as trade, which is not your responsibility but you know what I am talking about in terms of protectionism and distribution.
One area that I thought they were scathing about, at least as scathing as The Economist gets, is this whole business of biofuels, to which you alluded. There are unconscionable amounts of grain being diverted to the production of this stuff. I forget how many millions of mouths could be fed with the grains being diverted to this purpose. I wonder whether you and the Department of Agriculture do not have a guilty conscience for promoting this stuff.
Mr. Meredith: The issue that you are addressing is very serious. It goes to what has driven agriculture above the fold recently. We characterize it as food security. There is much more at work in being able to feed the world than biofuels, although there is no question that it is a factor.
We have a significant responsibility, senator, for trade policy as it touches agriculture. When dealing with the WTO, World Trade Organization, it may not be a surprise to you that agriculture issues are always at the fore. It is a critical part of the solution to the problem that you address.
There is a consensus that the world is not facing a food shortage. Instead, we have a social and poverty problem. The average citizen spends a significant proportion of their income on food — 40 per cent to 50 per cent in some cases or more. When there is a movement in prices, it hits family income and quickly begins to affect nutrition. The food is available; it is a matter of getting it to where it will go. During the last food price spike in 2008, we did a great deal of work to determine the cause. In many respects, policy overreaction caused the spike, not biofuels or speculation. Countries that would normally trade put export bans on their food, and it causes a significant reaction. People start to try to bid up global supplies.
There are issues of stocks with the Chinese trying to draw down their stocks at a time when global food supplies seem to be dwindling. The issue of food security and getting food to the people who need it is a complex issue.
One of the solutions is more research. In the area of biofuels that you are pointing to, we want to move towards cellulosic-based biofuel. That is using parts of the biomass that are not food — for example, scraps from straw, leftover husks from corn, or other crops grown in marginal lands where you cannot grow food crops but you can grow crops that can be used for biofuel creation. Therefore, more research in that field is critical.
Senator Murray: Do you know how much Canadian grain is going into the production of biofuels today?
Mr. Meredith: For context, the government is putting in two mandates. One is in place, and that is 5-per-cent biofuels and ethanol for transport.
Senator Murray: Many other countries, as that article pointed out, have similar objectives and goals.
Mr. Meredith: In biodiesel, in heating products, we are consulting about a 2-per-cent mandate right now. About 5 per cent of our acreage goes into fulfilling those amounts.
Senator Murray: Is there an incentive to divert the grains to that purpose over other more conventional and traditional purposes? Do the farmers make more money from it?
Mr. Meredith: The creation of the mandates creates a market for farmers.
Senator Murray: Is it more profitable to go there?
Mr. Meredith: I would not say more profitable. The government had in place two programs. One was our ecoABC program, a small one. The ecoENERGY program run out of NRCan, Natural Resources Canada, was designed to help Canadian companies develop the capacity to fulfill those mandates, so there are production incentives in place to do that.
I do not want to exaggerate, but we have no impact from our small mandates on global food availability. We are a relatively small player when it comes to biofuels.
The Americans and the Europeans have very significant investments in the creation of ethanol and biodiesel, especially as compared to Canada.
The Chair: Did you say 5 per cent of our grain production is going into the production of ethanol?
Mr. Meredith: It is 5 per cent of our acreage.
The Chair: Does that include corn?
Mr. Meredith: It would include our arable land, about 5 per cent.
Senator Marshall: Can you speak about the item under the Main Estimates for 2011-12 called the "Spending of Revenues"? I know that, under your legislation, there is a section that allows you to spend money or revenues that you have received. I am talking about section 30 of the Canadian Food Inspection Agency Act and $52 million is budgeted; it is on page 45. What would that be?
Mr. Meredith: I am afraid we cannot speak to the Canadian Food Inspection Agency, CFIA. I would not be able to give you a solid answer.
Senator Marshall: What is the best route to get that information?
Mr. Meredith: CFIA officials would be happy to come in. Both Agriculture and Agri-Food Canada and the CFIA have vote-netted revenue, which is the capacity to take in monies and spend them. In some cases, it might be fees. In our case, it would be intellectual property rights for patents that we have developed and commercialized. I would not want to speculate.
Senator Marshall: The way the legislation is worded, it looks as though something has been sold, so it is a significant amount of money.
Would we be able to get that information?
The Chair: Can you use your best offices to get that for us?
Mr. Meredith: They are a good bunch. We will get that information for you.
Senator Marshall: I would expect the same for the Canadian Grain Commission, CGC. You would not be able to answer questions on that.
Mr. Meredith: CGC is a portfolio partner and I would want them to speak directly to you. They have a fee collection system for some of the services they offer, and I suspect that would show up as vote-netted revenue.
Senator Marshall: We will speak about the loan guarantees that you referenced earlier, and the budget for this year is $13 million.
How do you go about estimating that? With guarantees, you do not know until you get partway through the year whether you will be called upon to honour them.
Mr. Meredith: Are you referring to the Advance Payments Program?
Senator Marshall: It is called "Loan Guarantees" under the Canadian Agricultural Loans Act.
Ms. Moritz: That has increased from what was $4 million last year, and my colleague referenced earlier some changes we made to that legislation to make it easier for young farmers to access credit for farms to be passed on to the next generation. There is also an increase in the ceiling of the loan from $250,000 to $500,000.
Because of those changes to the legislation, and to what would be the possibility of loan defaults, we have actually increased, and this is not expenditure necessarily but potential liabilities. Therefore, we try to estimate every year what that might be if we had defaults on those loans, does the government take a little added risk, and we try to reflect that added risk in the estimate.
Of the $4 million that we have had in past years, we have never hit anywhere near that. Generally, people pay those loans and we do very well, but we do want to signal that, by the government guaranteeing those loans, there is a risk.
Senator Marshall: The program has been improved from what you are saying.
Ms. Moritz: Absolutely.
Senator Marshall: That is a statutory program, or that is what is indicated here in the estimates. There was $4 million that was included in the Main Estimates for last year. Would you have exceeded that in Supplementary Estimates (A), (B) or (C)?
Ms. Moritz: No, we did not.
Senator Marshall: There is another statutory program called "Contributions in support of the Assistance to the Pork Industry Initiative," and I know there was some reference in your opening remarks, Mr. Meredith, about the hog industry. Could you speak about that? That is a statutory program also, and the budget has gone from $39 million down to $405,000. Are you expecting supplementary estimates to pick up additional amounts?
Ms. Moritz: That initiative would have comprised two particular programs which were beneath that. One was the Hog Farm Transition Program, which was put into place to respond to the Canadian Pork Council's strategy on how to rebalance the hog industry.
That transition program was actually an auction. It was an interesting formula that allowed producers to submit to us the amount of money they would take to leave the hog industry for a period of three years — in other words, to empty barns of hogs and breeding animals for that period. There was a payment for that. It was a reverse auction in the sense that it was those producers who took the least amount of money, and then we went through would-be participants in this program. That program is now over. It was managed by the Canadian Pork Council, and I think we spent the full amount of that program.
The second one was the Hog Industry Loan Loss Reserve Program, which I mentioned earlier. It allowed producers to move from short-term debt into longer-term debt, and become eligible for the Advance Payments Program that my colleague spoke about.
Senator Marshall: The $405,000 is like the wind down.
Ms. Moritz: Yes, it is.
Senator Marshall: To go back to the question about the revenues for the Canadian Food Inspection Agency, would your department have any provision in your legislation? Do you have a similar provision that any revenues you collect you can spend?
Mr. Meredith: Yes, we do. I mentioned what we call vote-netted revenue, which is a bit of an esoteric term. We do bring in monies through intellectual property rights for patents. That goes to our research branch and they can spend it.
Ms. Levere, are there any other sources of vote-netted revenue to which we can point?
Bev Levere, Director General, Finance and Resource Management Services, Corporate Management Branch, Agriculture and Agri-Food Canada: Yes, the Canadian Pari-Mutuel Agency Revolving Fund brings in some money with their 0.8 per cent levy on each of the wagers placed. We also have significant revenues from our Community Pasture Program, where producers can summer their cattle and take advantage of breeding services available there as well.
Senator Marshall: What would be the range of those revenues? Are we talking about thousands, hundreds of thousands, or millions?
Ms. Levere: In total, we are talking about $60.5 million in revenue overall. You can find that at the bottom of page 46.
Senator Murray: What is the federal government doing in community pastures? I would have thought that was a provincial responsibility. Am I wrong? Sorry, Senator Marshall.
The Chair: Is this a supplementary, Senator Murray?
Senator Murray: Sort of.
The Chair: I will take it as a supplementary.
Mr. Meredith: I think I heard someone say PFRA. It does go back to the Prairie Farm Rehabilitation Administration, PFRA, which is now part of our environment branch. It is a service to provide forage and pasturing for cattle for a fee.
One of the arguments that I think still applies today is that the Community Pasture Program helps manage that land carefully. Some of it is environmentally sensitive. By having it under management, we can control the environmental impacts of a broad range of foraging.
Senator Murray: Where is this? Is it all on the Prairies?
Mr. Meredith: Yes, it is all on the Prairies, and it is quite an extensive program. I can follow up with a number later. In agriculture, it is a shared jurisdiction. That has led us to have collaborative relationships with provinces. It has never been a federal-provincial issue.
The Chair: Senator Marshall, you had the floor. Do you have any other questions?
Senator Marshall: I have another short question. Is the $60 million for 2011-12 in the vicinity of what it usually is? Is that comparable?
Ms. Levere: Yes, it is.
Senator Marshall: That does not fluctuate a lot, then. It is something you depend on?
Ms. Levere: That is right.
Senator Peterson: Thank you for your presentation.
There is every indication that there will be disaster flooding in Southeastern Saskatchewan and Southwestern Manitoba. Is this something your department will have to deal with? Where will you source the funds?
Mr. Meredith: You are quite right; there is some concern about the snow pack and significant moisture problems with runoff, right from Manitoba through to Saskatchewan and Alberta. We do not invest directly in a lot of the mitigation strategies like the waterway management, and so on, which belong to the municipality or province. However, we are looking at the situation. We have a fairly significant investment in our environment branch, which does a lot of geomatic examination of water levels and moisture levels, so we can get a forecast of what is coming.
Our main response in a disaster would be through our AgriRecovery program, which can move fairly quickly to help mitigate some of the impacts on income and producers' viability getting restarted after a flood. The other risk management programs help with that as well. There is production insurance — AgriInsurance — for crops that deal with acres that remain unseeded because it is too wet, or acres that cannot be harvested because it is too wet or they just do not get a crop off them. There is an insurance program that we cost share with provinces which can take care of that. Last, our AgriStability program will come in at a macro, whole-farm level and will look at the impact of the year on a farmer's income, compared to his or her historical income, and will help to smooth out that volatility.
These programs work in concert. They worked this year. There are programs for flooding, forage damage and drought in the Western provinces. We would foresee that support happening again if farmers faced a similar kind of deluge.
Senator Peterson: You are saying the money is there?
Mr. Meredith: Yes. That was probably a faster answer. I will learn next time.
Senator Peterson: On the agri program, is that like an RRSP, registered retirement savings plan? Can a farmer unilaterally decide whether he wants to withdraw money or to put in money?
Mr. Meredith: Yes, there is a calculation for sales of eligible farm commodities. We chip in 1.5 per cent of that and the farmer can chip in 1.5 per cent of that to match. That money can be used for proactive risk management — that is, investing in the farm — or it can be withdrawn at any time to supplement income in more difficult years.
Senator Peterson: The farmer makes the choice?
Mr. Meredith: Yes.
Senator Runciman: A quick comment concerning Senator Murray's question about food supplies and cost. In my own area, there has not been necessarily a better price for providing fuel to an ethanol producer, but Casco, which produces corn syrup and other corn-based products, has talked to me. The price has gone up because you have this competition. Most of the cash-crop producers in my area have moved into corn because the values continue to rise and there is this competition for the product. It has an impact in places like Egypt, where 85 per cent of their average income is food costs.
I was watching a show the other night that was talking about the use of antibiotics on animals in Canada and the concern, because of the significant use of antibiotics, that we can lose our immunity and the impact in terms of fighting off various illnesses. A comment was made that we are one of the few jurisdictions that does not have any control with respect to caps or limits on the use of antibiotics on animals. Do you have any comment or response to that?
Mr. Meredith: I apologize; I do not like to not have an answer for you, but that is an issue that would probably be best posed to the CFIA. They deal with the regulations and the Health of Animals Act, so I would have to defer to them.
Senator Runciman: You do not know the answer?
Mr. Meredith: I do not.
Senator Runciman: It is not necessarily relevant to the estimates, but it would be interesting to know.
Page 48 refers to the "Contributions for the implementation of the Community Development Fund program to assist rural municipalities in the tobacco-growing regions of Ontario." You continue to have an amount in the estimates for that comparable to last fiscal year. How long will that program continue? Is it working? Is this helping farmers to transition from tobacco to other products? What is it used for?
Ms. Moritz: This program was a complementary program to the Tobacco Transition Program, which removed quotas and brought in a licensing system. That was delivered by the Province of Ontario. The corollary program was to help the Sand Plains community, a number of areas in that community in Southern Ontario. The counties covered were Oxford, Brant, Middlesex and Norfolk. It was to help those communities deal with the transition out of tobacco production in some instances. It is still on. It was announced in August 2008; it was launched in September 2009. In the first two years of operation, so far it has distributed $7 million to 39 projects. It is project based.
Senator Runciman: It is based on projects, not simply transfers to municipalities?
Ms. Moritz: No. It is project based and it is administered by the Community Futures Development Corporations in Ontario. I go back to Senator Day's question on titles. It is administered locally and the projects go to this association and then they are funded from there.
Senator Runciman: What is the relationship between the ministry and marketing boards? Is there any control exercise, any cash one way or the other? Is there any role there? Are they completely self-governing and self-financing?
Mr. Meredith: Marketing boards are generally at the provincial level. We have oversight mechanisms in the portfolio, and they report directly to the minister.
Senator Runciman: With respect to the inspection of slaughterhouses, do they fall under the Canadian Food Inspection Agency, places like Maple Leaf?
Mr. Meredith: Yes.
Senator Runciman: Most of my questions would then be for the Canadian Food Inspection Agency.
Senator Dickson: Two quick questions. When was the last time the Auditor General did a value-for-money audit on the vast basket of programs that you people create and administer? Has one ever been done?
Ms. Moritz: We and the Auditor General are good friends. They are in very often.
Senator Dickson: That is good.
Ms. Moritz: In fact, currently, as we speak, they are doing what they are calling a "payments to producers" audit, which covers the AgriInvest program we spoke about earlier, AgriStability, as well as the Tobacco Transition Program.
The Auditor General knows us very well. They come in as the programs are being developed and delivered and then regularly at the end. We do a lot of internal audits as well, so we try to cover our programming regularly from an evaluation and audit perspective.
Senator Dickson: Has she made any recommendations? If so, what was the scope of those recommendations? I am curious. You do an excellent job, by the way; I am just curious. There seem to be a lot of programs.
Ms. Moritz: There are many programs and I would say there are recommendations every time, to be honest. Not in my time have I ever seen the Auditor General come in and not have a recommendation. We work on those.
The recommendations could be anywhere from documenting the way a program is set up or perhaps delays in setting it up, to doing an audit of our research branch and the research done in the department, which would be quite different observations.
There are a variety of things on the programs, on perhaps what the Auditor General has heard from our clients in the industry and how we could better communicate. Many different types of observations come out.
Senator Dickson: Perhaps, Mr. Chair, the officials could follow up with something in writing to give us some idea quantitatively as to the particular programs and what recommendations were made.
The Chair: Let us get that undertaking. If you could do that and make a note of it, that would be helpful.
Mr. Meredith: Yes.
Senator Dickson: Coming from Nova Scotia, my last question relates to your research facility down in Kentville. What is the future for it? Is it closed? Will it be closed? Will it be sold? What is happening there?
Mr. Meredith: Not to my knowledge, but that is something I want to confirm with you afterwards.
As the result of an Auditor General observation, we have an extensive action plan, a detailed roadmap for our research going forward. I would want our colleague, Dr. Marc Fortin, to have an opportunity to answer that.
The Chair: Thank you, Senator Dickson. I appreciate that. I have two senators for round two, but before we go to round two, the Canadian Pari-Mutuel Agency was mentioned earlier. Is that a stand-alone agency? Are you accounting for them in a different manner than previously? I am looking at page 46, and it looks to be somewhat different from previous comparative figures.
Mr. Meredith: It is a stand-alone agency.
Ms. Levere: I can speak to the difference. What you are seeing there is the benefit we had last year of the investment in lab works with the Canadian Pari-Mutuel Agency. The difference is strictly that we had that funding last year, but it is no longer there this year because the project is complete. Other than that, it is largely on the same footing as it was previously.
Senator Murray: What is that for?
The Chair: Did you say investment in lab works?
Ms. Levere: Yes. We have labs associated with the Canadian Pari-Mutuel Agency for doing testing for drugs in horse racing.
The Chair: Does that agency have executives appointed by the government or by you?
Ms. Moritz: By us.
The Chair: They are totally controlled by you?
Mr. Meredith: They report to the minister, but it is usually an official from Agriculture Canada who heads it up.
The Chair: Is there a board of directors in this agency? What is its governance structure?
Mr. Meredith: The governance structure, again, I would have to get back to you on that.
The Chair: Please do that. We may have to ask them to come in and talk to us.
Mr. Meredith: That is an interesting aspect of our business, I must say.
Senator Eaton: You are spending almost $50 million to improve agriculture sector competitiveness. What are you doing in that respect? How are you making the agriculture sector more competitive? It is on page 47 at the top: "$49.3 million increase for the Agriculture Flexibility Fund to help the agriculture sector adapt to pressures and improve its competitiveness."
The Chair: Do you want to take that under consideration and give us a written answer?
Ms. Moritz: We can do that, if you like.
The Chair: Thank you.
Ms. Moritz: I was trying to think of how I could squeeze it into a short answer.
The Chair: A prompt written response would be very much appreciated. Thank you.
Senator Ringuette: I have three questions that I will put to you and you can send the answers in writing.
First, with regard to the two ethanol incentive programs and your statement that it is using "5 per cent of our total acreage," I would like to know if these two incentive programs have managed to increase their overall acreage.
Second, with regard to the processing program you have in place, with respect to the BSE problem we had a few years ago, one of the issues that dragged the problem along was the fact that we had no processing facilities in the Western provinces. I would like to know if the program has processing facilities in place there now.
Third, you indicated that you participated in some fashion in terms of trade discussions. I would like to know if you are participating in trade discussions with the EU, European Union, with respect to protecting marketing boards.
Senator Runciman: This question was prompted by Senator Peterson mentioning the Saskatchewan situation. You referenced the AgriRecovery program. I was curious — in the estimates there are no funds allocated to that particular line. I am wondering why that is.
Mr. Meredith: That is what I mentioned in my opening remarks. The AgriRecovery program must be renewed. It will be, and it will show up in our Supplementary Estimates (A).
The Chair: Can you estimate for us how much you will be looking for in appropriations in Supplementary Estimates (A, (B) and (C)?
Mr. Meredith: No. In fact, a large part of that would depend on the budget and policy decisions taken throughout the year.
The Chair: Which have not been made yet.
Mr. Meredith: Which have not been made yet.
The Chair: How much do you anticipate for this particular program?
Mr. Meredith: For AgriRecovery, we will book in the area of $120 million to $125 million.
Again, that is a nominal amount. It is a statutory program that goes to the Consolidated Revenue Fund if we have to exceed that amount.
The Chair: Thank you very much. We look forward to your written reply and we are hoping to have a report done by the end of next week on this. The sooner you can get to us, the more quickly we can get our report done.
Thank you to each of you. You have helped us very much with Agriculture and Agri-Food Canada. We have not had you at this committee in a while and it was very interesting and informative.
We now turn our attention to Canadian Heritage, always dealing with the Main Estimates for 2011-12. Representing the department, we are pleased to welcome Daniel Jean, Deputy Minister; Pablo Sobrino, Assistant Deputy Minister, Strategic Policy, Planning and Corporate Affairs; and René Bouchard, Executive Director, Portfolio Affairs.
Colleagues, we have less than an hour. We will start with opening remarks from Mr. Jean and then we will go to a question-and-answer session in our usual fashion.
Daniel Jean, Deputy Minister, Canadian Heritage: Mr. Chair, it is a pleasure for me to come before the committee to answer questions you may have about the Canadian Heritage Main Estimates for the year ending March 31, 2012. I am joined by Pablo Sobrino who, as you said, is Assistant Deputy Minister, Strategic Policy, Planning and Corporate Affairs. He is also our chief financial officer so he will be handling a lot of our financial questions. René Bouchard is our liaison for the various agencies in the Canadian Heritage portfolio.
I have a short opening statement to set some context that I believe will be useful as you examine the estimates before you.
Each year, the department prepares its Main Estimates in support of its request to Parliament for authority to spend public funds for the coming year. The 2011-12 Main Estimates were tabled in the House of Commons by the President of the Treasury Board on March 1. The Main Estimates identify the funding levels and authorities for the department by vote as of April 1, 2011, the beginning of the fiscal year. The starting levels are adjusted during the year to account for additional government decisions, as well as adjustments for transfers between departments.
I will speak to the two votes that make up the budget for the Department of Canadian Heritage. Vote 1 is the operating expenditures, which cover our salary costs as well as expenditures such as service contracts, computers, et cetera. Vote 5 is the grants and contributions vote.
It is important to note that funding levels vary from year to year. In the 2011-12 Main Estimates before you, the total opening budget for the Department of Canadian Heritage is $1.14 billion, made up of $209.7 million in operating expenditures and $933.6 million in grants and contributions.
Last year, the 2010-11 Main Estimates were $1.15 billion, made up of $243.8 million in operating expenditures and $902.1 million in grants and contributions. When comparing the two, there is a net decrease, when you take two votes in coordination, of $2.6 million made up of a decrease of $34.1 million in our planned operating costs and an increase of $31.5 million in grants and contributions.
The difference is largely made up of the following items, and I will give you the key variances: $31 million for the renewal and enhancement of programs that support training and preparation for athletes; $12.4 million for support to Canadian digital cultural content and innovation to support the Virtual Museum of Canada and programs for the creation of Canadian online content; $7.6 million for support to the new Canada Media Fund to ensure Canadian choices are available on television and other digital platforms; a $15-million decrease in funding for the Canada Periodical Fund as part of Canada's Economic Action Plan, which sunsets at the end of 2010-11; and then a $37-million decrease in the operating budget of the department, which is actually a way to meet our financial obligations as a result of an outstanding portion of Budget 2003's reallocation that the department has not yet absorbed. We had a time- limited source of funds to be able to face this pressure, which is no longer there and that is why we have had this decrease.
[Translation]
I can also try to speak to the main points related to the 20 Canadian Heritage portfolio organizations that will be receiving $1.9 billion in appropriations in the 2011-2012 Main Estimates. These organizations generate an additional $691 million in revenues, resulting in total resources of $2.6 billion available in 2011-2012.
I will briefly cover the more significant fluctuations for the portfolio. In terms of the funding for the portfolio organizations, you will note some variations for the national museums of Canada. The government provides substantial financial support to these organizations for their capital and operating needs. Funding for operations is fairly constant year over year, although the government did provide a one-time investment of $15 million in 2010-2011 to help the four oldest museums address their accumulated operating pressures.
Capital budgets, on the other hand, often vary depending on the upkeep schedule and needs of each museum. That is why there are fluctuations. If you have to replace the roof or something else, there will be an increase for the one year and there will be less money for the following year.
Also of note is a change in the funding profile for the Canadian Museum for Human Rights. The Government of Canada is providing $100 million towards the construction of the facility. In 2010-2011, the Government of Canada provided $40 million for construction. This year, it is providing $10 million because construction is in the final stages. That is the government's contribution profile.
With respect to operations, the government provided $15.9 million in 2010-2011 whereas it is providing $21.7 million in 2011-2012 as the opening is getting closer.
As such, these funding changes are not due to specific cuts to these organizations but are rather planned variations. It should also be noted that the funding levels for the portfolio organizations reflect government-wide cost containment measures announced in Budget 2010 in relation to compensation for collective agreements. You will probably remember that all departments and organizations had to absorb wage increases. The same goes for the portfolio organizations. That can lead to part of the decrease.
I hope that this summary addresses some of the questions you may have. My colleagues and I look forward to answering any further questions.
[English]
Senator Gerstein: I thank the witnesses for appearing before us this evening.
I note that the estimates are nearly identical to last year, and I was particularly interested in the 15-per-cent increase in the area of sports.
Could you comment — is this to do with the Own the Podium program, or how is the money being allocated?
Pablo Sobrino, Assistant Deputy Minister, Strategic Policy, Planning and Corporate Affairs, Canadian Heritage: This is part of the development of the athletes' program. We had a successful Own the Podium for the Winter Olympics, and we have moved to invest the same effort in summer sports. This money is to invest in that area and to continue the success of Own the Podium.
Senator Gerstein: Very good. With regard to the $34.2 million that you are taking out of your operational budget, how did you approach getting this money out, and where did it come from?
Mr. Jean: We took a comprehensive approach. There are two principles we are trying to respect. We are trying to ensure there is no service impact to our clients and recipients. It is fair to say that, so far, we have managed to do this.
We are also trying to ensure that the focus is on the operating expense of the department, so we have not touched grants and contributions.
We have had a reduction across the board for some of these expenses. We are also looking at how to do things differently, in a less expensive way from an administrative standpoint. For example, we are looking at some areas of shared services and so forth to reduce our cost of administration.
Senator Gerstein: When you say you have not reduced the level of service to your various constituents, $34.2 million is a lot of money. Surely there must be some areas that you changed dramatically to get to that level. Could you expand on that?
Mr. Jean: Most of our efforts so far have concentrated on taking a better focus on where our essential needs and operations are.
For example, we have reduced some of our most discretionary programs, things that do not have an impact on recipients. Sometimes we spend more resources looking at an issue and saying, in this time of fiscal austerity we cannot afford to spend as much on this, this is not as focused as a core mandate in terms of our program administration. These are the things we are trying to do.
We are doing the same thing with our international activities. We are trying to refocus on where the main international activities should be. That is how we have done it.
Of the $34 million, $31 million has been done at this stage, and we have had no complaints, no concerns, raised by our stakeholders on service.
Senator Gerstein: How much is left on the outstanding portion of the amount that you have to reallocate? How much time do you have to get it done?
Mr. Jean: As I said in my opening statement, the $34 million was based on a major reduction that dates back to 2003. What we have done this year deals with this. There is no question that we have other financial pressures to meet. We are trying to do this. Like other departments, we have to absorb the pay increases that the department's agencies have. There were other government-wide reductions of expenditures of two years ago, which we need to absorb as well. We have close to another $15 million that we need to absorb in the next two years. We also have a plan to deal with this in a way that will not affect service to our recipients and does not affect our programming money either.
Senator Gerstein: Just so I understand, $34 million this year, $15 million over the next two years, and that will complete your program?
Mr. Jean: That will complete our financial pressures that the department currently faces in our operating expenses, roughly $200 million of our budget, and none of that affects our $1 billion G&C, grants and contributions, program.
The Chair: How many employees do you have working in your organization?
Mr. Jean: We are about 2,200 or 2,300. I am still on a learning curve. It has been four months, but it is coming.
The Chair: Are they mainly based here in the Ottawa region?
Mr. Jean: We have about 500 employees in the regions, we have five regions, and the rest are based in Ottawa.
The Chair: There are 1,800 here.
Mr. Jean: Yes, about 1,800 or 1,900.
Senator Peterson: Could you provide some clarity — on page 4 of your speaking notes you talk about the funding profile for the Canadian Museum for Human Rights, providing $100 million towards the construction of the facility, and in 2010-11 the Government of Canada is providing the last $40 million for construction, whereas in 2011-12 it provided $10 million?
Mr. Jean: For the coming year there is $10 million that will go toward the conclusion of the $100 million. Last year there was $40 million. The construction is over several years.
Senator Peterson: In 2011-12 you will provide an additional $10 million?
Mr. Jean: Correct.
Senator Peterson: On the contributions to support the Aboriginal Peoples' Program, you cut that by 13 per cent. What have you cut out? What have you dropped?
Mr. Sobrino: The Aboriginal Peoples' Program is sunsetting. A decision has not been taken as to the future outcome of the program. It does not show up in the Main Estimates at this point because the decision has yet to be taken.
Senator Peterson: Do you have any provision to make the RCMP museum in Regina a national museum?
Mr. Jean: That would be a policy decision that would be the prerogative of the Prime Minister. It is not something we can comment on, senator.
The Chair: It was $40 million last year and $10 million this year for the Canadian Museum for Human Rights in Winnipeg.
Mr. Jean: Correct.
The Chair: Does that use up the $100 million commitment?
Mr. Jean: Yes. There are operating expenses that are ongoing. It is $23.7 million, if I remember exactly.
The Chair: $23.7 million per year?
René Bouchard, Executive Director, Portfolio Affairs, Canadian Heritage: If I could clarify, it is $21.7 million. It is for the fiscal year 2011-12.
The Chair: Per year?
Mr. Bouchard: Per year for that year, $21.7 million, yes.
The Chair: Each year for two years?
Mr. Bouchard: This coming fiscal year, 2011-12, and then a determination will be made about how much money they will receive in future years. That has not been determined yet, because the museum is not in operation.
Senator Gerstein: Could you comment as to whether the monies from the private sector have matched what the original projections were?
Mr. Bouchard: The amount of money that the organization has been able to collect is quite impressive. I understand that they continue to gather some of the resources from the private sector. I do not think I am wrong in saying that it is probably a museum that has collected more money from the private sector. Yes, it goes in accordance with the plan that they have set up.
Senator Gerstein: You are saying it is in accordance with the original plan as to how much money was going to come from the private sector?
Mr. Bouchard: This is the plan they had set up in terms of raising the amount of money. There is always a question of over how many years and so on but, fundamentally, they are on target.
Senator Gerstein: Thank you.
The Chair: What do they plan for a year out in terms of operating expenses from the federal government?
Mr. Bouchard: That has not been determined as of yet.
The Chair: There is no plan for that?
Mr. Bouchard: At this point in time, we would have to see how much money they will require. It will be a political decision as to how much money they should receive to operate the buildings, exhibits and so on.
The Chair: Thank you. I will not pursue that further. Some other senators may wish to.
Senator Murray: I am rather bemused by the item of $1.8 million for the Registry of the Public Servants Disclosure Protection Tribunal, described here as an independent, quasi-judicial body that "deals with reprisal complaints referred by the Office of the Public Sector Integrity Commissioner." On the basis of what one hears, they would not be very busy recently.
Mr. Jean: That is correct. They have not had any cases. That is one of the reasons why we have not spent what would have been budgeted for them originally.
Senator Murray: They did not spend the $1.8 million that they were voted in 2010-11?
Mr. Bouchard: To my knowledge, they have not spent it all.
Senator Murray: Would you describe the estimates process? I should know it. However, for these various independent, quasi-judicial bodies, you have the Public Service Commission, the Public Service Labour Relations Board, the Public Service Staffing Tribunal, et cetera. Do they go directly to Treasury Board with their estimates, do they have to satisfy you first, or do you just carry their message?
Mr. Jean: All these organizations have different status, but in general, most of them, when they go to Treasury Board, have to go through the minister. The minister signs their Treasury Board submissions. If they need new budget appropriations, they are subject to the same kind of appropriation process as others.
Senator Murray: They do not go through you, as deputy minister.
Mr. Jean: My relationship to the agencies' portfolios is to provide policy advice to the minister on the portfolio. However, they are arm's-length and independent organizations. The Treasury Board submissions have to come through the department because the minister signs the Treasury Board submissions for those organizations.
Senator Murray: With regard to organizations like the National Gallery, the National Gallery has an impressive number of supporters, donors and so forth. They list them in their materials, which you get if you are a member. They have a list of people who subscribe more than $25,000 a year.
Where are those revenues to be found here? Are they here under "Less: Revenues Credited to the Vote," — the $8.7 million? Is that how much they have been able to raise in their various fundraising campaigns?
Mr. Jean: Correct.
Senator Murray: You were talking about the Canadian Museum for Human Rights, CMHR. What is your involvement in this quite hellish policy row that seems to be taking place out there? As I understand it, reading in the media only among various ethnic groups, some of themm feel that plans for the museum are not going to represent their needs or wishes.
I had understood that, although the federal government was supporting it financially, that it would be arm's length; you would not have much say as to what was the content of the museum. Still, some of these groups are pointing the finger at the federal government and are saying withhold funding until such time as the management of the museum comes up with a plan that is broadly acceptable.
Do you know anything about this? What is the department's involvement in it?
Mr. Jean: As you have pointed out, the Museums Act puts these organizations at arm's length, including when it comes to content. The museums have their own advisory panels and receive their own advice on how to make the museums representative. We are not involved in that.
Senator Murray: I should not be singling out one group, but the group that comes to mind is an organization supposedly representing Ukrainian people out there. They are dissatisfied with the plans, but the government will not enter that argument, correct?
Mr. Jean: That is correct. The museum has to be structured in such a way that it is arm's length.
Senator Murray: However, they may be coming for more money.
Mr. Jean: An organization can always come for more money.
Senator Murray: I took it from the earlier questions and answers — perhaps I misunderstood — that in due course, they would be.
Mr. Jean: For the operating, yes, they will at some point.
Senator Murray: At that point, what will the criteria be for a decision as to whether to grant them the money and how much?
Mr. Jean: The criteria, as for all the other museums, would be both an issue of needs and the capacity of the government in the current environment. We have now six national museums, four in Ottawa and two new ones. The CMHR is being built and we just opened Pier 21. We have to look at how to maintain these museums well in an environment where we do not have a lot of money to spend.
Senator Murray: It seems to be becoming an unpleasant controversy out there. I will leave it at that.
Senator Marshall: You were speaking earlier about the portfolio organizations, and you were talking about how they are at arm's length. How closely do you monitor them? Do you just provide the funding and they are left to operate on their own? You have a large staff, you were saying earlier. Do they do any reviews or assessments of those organizations? How close is your relationship to them?
Mr. Jean: They all have different statutes. A number are subject to the same oversight mechanisms that we have — Treasury Board, an audit system. That is not where our role is. Our role is, first, in being able to provide advice to ministers on things where they may need support. Our role is to try to create a good relationship in terms of bringing our synergies where there are synergies to work on projects together.
For example, if we were to work on the anniversary of Confederation in 2017, we would like to make sure that the department is focused on 2017 and our museums are focused on 2017. However, they are arm's length and we have to respect that.
Some of them have a particular status, like the Public Service Labour Relations Board, which was put under our minister just not to be under the president of Treasury Board — to create a bit of distance from the president of Treasury Board, who is also the employer.
Senator Marshall: Who would be the one that would be monitoring? How do the funds flow? Do they automatically get their money at the beginning of the year or is it monthly or quarterly? If they do not spend all their money from the previous year, do you still automatically flow the same amount?
Mr. Sobrino: All of the portfolio agencies receive money through appropriations — Parliament votes, as with the review you are doing on the Main Estimates — and that money flows to those agencies. They are accountable for the disbursement of those funds, and have to provide a performance or an annual report, depending on the agency.
Senator Marshall: Do they provide that to you or Treasury Board?
Mr. Sobrino: Some are provided to Treasury Board and others are tabled in Parliament. The Public Service Commission tables its report annually in Parliament. It is an agency of Parliament. None of them report to us; that is why they are considered arm's length.
Senator Marshall: What about all these other miscellaneous organizations that you are providing grants to? Based on the estimates, it appears there are many of these other small organizations. What sort of oversight do you provide there? Is that your department, or is it Treasury Board also?
Mr. Jean: That is our grants and contributions program, for the most part; that is $1 billion. We receive 9,000 applications every year and we grant somewhere between 7,000 or 8,000, depending on the programs. There are terms and conditions associated with these things, and there are a number of oversight mechanisms in place to ensure the money is well spent — value for money.
Evaluations are done regularly and audits are conducted. If we have a concern with one particular program with a particular recipient, we can also, under these terms and conditions, require an audit. It is done through the terms and conditions that are associated with the programs for this vote 5 money.
Senator Marshall: When you decide up front who will get one of these miscellaneous grants, there is a standard process. The people who make that decision would be employees of your department, is that right?
Mr. Jean: That is correct. On the eligibility, yes.
Senator Marshall: After the money is given out, is spent, then your staff would also go in and ensure it is spent according to the terms and conditions. How many employees did you say you have? Was it 2,000?
Mr. Jean: Right now, we have around 2,300 employees.
Senator Marshall: What would they be doing? Give us a general idea.
Mr. Jean: It is a combination of things. Many of our employees do deliver the $1 billion in grants and contributions. Some employees prepare policy for our various sectors. We have the official languages program and we cover broadcasting under the Broadcasting Act. Some employees do policy under Sports Canada and others work on all the major events, such as Canada Day and the Queen's visit last year.
Senator Marshall: The portfolio organizations would have their own boards of directors. Is that right?
Mr. Jean: Most of them would have their own.
[Translation]
Senator Ringuette: Mr. Jean, my first question follows from your statement that the government provided $15.9 million in the previous fiscal year and $21.7 million this fiscal year, before the estimates, for a total of $37.6 million for the operations of the Canadian Museum for Human Rights, though the museum is not even operational. How can we justify operating expenditures when an organization is not even operating?
Mr. Jean: We will be reviewing the anticipated amount when the museum opens. The total amount has not been used yet. Part of the amount has been allocated to preparing exhibitions, training staff and maintaining the facilities that have already been built. So operating costs have already been incurred. But you are absolutely right, the anticipated amount has not been used in full.
Senator Ringuette: What are the operating costs going to be, once the museum opens?
Mr. Jean: Based on the figures we currently have, we are talking about $21.7 million, the amount Mr. Bouchard mentioned earlier. That is what is anticipated for when the museum opens. We will then have to see whether that amount covers the needs. Since the opening of the museum is coming up, many preparations have to be done. Facilities have already been built and they must be maintained. Current expenditures amount to about 50 per cent of the anticipated operating costs once the museum is open.
Mr. Bouchard: There are additional costs. We only have to think of the consultation process and the research needed to develop the content of the museum. The museum will rely heavily on technology. So we have to look at the whole issue of technology development to ensure that everything is ready when the museum opens. Some other aspects to consider are the hiring of staff, human resources, finances and construction.
We expect to be at a cruising speed after the year 2011-12. The current anticipated figure is $21.7 million for the year 2011-12. After 2011-12, there will still be some unknown parameters. One major parameter is the municipal tax. That will only be determined once the value of the building is established, after construction is complete. We cannot forecast what the needs will be in the years ahead without having all the data.
That being said, there are some basic parameters, as Mr. Jean mentioned. For example, there is the ability to pay. Other museums operate with different amounts, but there is a basis for comparison. Those factors will be taken into consideration in determining the future funding of the organization.
Senator Ringuette: This will certainly be worth watching. I am looking at the data in the estimates.
[English]
I am looking at all of the decreases. The CBC will face a decrease of 2 per cent, notwithstanding the famous $220- million property that it sold. When CBC officials appeared before the committee two years ago, they said that they were obligated by the department to sell the property to fund their operations. They no longer have that funding to operate and they have to sustain a 2 per cent decrease.
We have looked at the Canadian Museum for Human Rights. Decreases are as follows: the Canadian Museum of Civilization, 3 per cent; the Canadian Museum of Nature, 6 per cent; and Library and Archives of Canada, 6 per cent, including a 14 per cent decrease in capital expenditures. Are you saying that all the requirements, as stated in a report from the Auditor General in respect of the shameful state of our Archives, have been rectified?
[Translation]
Mr. Jean: Your question has a number of parts and I will try to answer them all.
First, let us talk about CBC. A year and a half ago, during the economic crisis, CBC/Radio-Canada, like other broadcasters, was experiencing some difficulties with their revenue. They had to make some budget cuts and monetize the assets they had already sold.
The anticipated votes you see before you have nothing to do with those cuts. We can see some small decreases for Radio-Canada. But, like the other organizations, Radio-Canada has to absorb the wage increases.
In terms of the other museums that you mentioned, there is an explanation for each and every one of them—and we can provide you with it, if you wish. For example, at the archives, some projects are on a one-time basis and require significant budgets. Once completed, those projects will cause a decrease for the following year.
Senator Ringuette: I had the following question about the archives. I asked you whether the capital expenditures for the restoration of our archives, which have suffered a 14 per cent decrease, are in compliance with the requirements in Ms. Fraser's report that our archives be protected. After all, you are representing Canadian Heritage.
Mr. Bouchard: I will provide you with an indirect answer. Some of the amounts mentioned earlier, which are included in the decrease you have just mentioned, have been or will be invested to ensure better preservation capacity than in recent years.
Let us use the example of the decreases you mentioned. During 2010-11, the Government of Canada's action plan provided for $1.6 million to improve the preservation capacity. A sum of $1.2 million was allocated for the preservation capacity on the site now located along Highway 50, in the former Zellers store. Though temporary, this preservation capacity is still significant. The Nitrate Preservation Facility was able to move forward because it received roughly $6.4 million in funding.
We can compare reports from one year to another. But if we examine the figures for last year and this year, we can see that money was allocated to the organization to increase its preservation capacity.
Senator Ringuette: Is there enough money invested to meet the recommendations that were made?
Mr. Bouchard: To be honest, the question should be for Library and Archives Canada. We could provide you with a detailed answer. But today, I would not be able to tell you exactly whether they actually meet the auditor's recommendations.
If I may, I would like to answer a question you asked earlier about Radio-Canada. I think you referred to the $220 million and Radio-Canada's borrowing authority.
This borrowing authority was granted to facilitate transactions. It is still in force this year.
Senator Ringuette: Are you saying that, if Radio-Canada needs additional money, it has to borrow it? Do we agree that this is what that means?
Mr. Bouchard: The borrowing ability that was granted to them last year continues to apply this year. When we look at the numbers, we might get the impression that there was a decrease, but that is not the case. This borrowing ability is still valid. It may be partially used, but there are still $220 million.
[English]
Senator Ringuette: Continuing on with my list here, I am on page 69, the National Battlefields Commission, a reduction of 2 per cent; the National Gallery of Canada, a reduction of 1 per cent; the National Museum of Science and Technology, a reduction of 5 per cent; Status of Women, a reduction of 4 per cent; Public Service Commission, a reduction of 2 per cent. Then, lo and behold, on page 68, CRTC, Canadian Radio-television and Telecommunications Commission, an increase of 97 per cent.
[Translation]
Mr. Jean: This increase mainly has to do with their mandate under the anti-spam legislation. Just like with telemarketing calls, they had to put a system in place for unsolicited emails, better known as "spam."
Mr. Bouchard: That is correct. This is money for implementing the legislation and for the salaries of the new employees who are taking on this new role. That is where the significant increase in percentage comes from. I think it is around $5.5 million when we add the two together.
Mr. Jean: Two or three years ago, legislation for the do-not-call list was passed to avoid calls from telemarketers. There was a similar initiative for emails.
Senator Ringuette: That never worked!
Mr. Jean: I think there have been some guilty verdicts. Similar legislation has been introduced for email. The new mandate explains the significant increase in the amounts you were referring to earlier. Votes have been awarded to CRTC for that.
[English]
Senator Runciman: I was curious about Telefilm Canada. The bulk of their budget, on page 97, is going to audience development. Can you give us a broader explanation of what audience development means and what they are spending that money on?
[Translation]
Mr. Bouchard: Telefilm Canada uses the funding for audiovisual production.
[English]
One of the objectives of the film policy support mechanisms is to reach about 5 per cent of the audience for Canadian programs. Telefilm recognizes that the way people consume film these days is probably different from the way people used to do it a few years ago, so they are definitely looking at new ways of accessing film and determining different targets for different ways to have access to film. That is one of the aspects that I would mention.
The second aspect is that of marketing, ensuring there are resources devoted to the marketing of films at the different points of sale, whether talking about rentals, sale of cassettes or wide screens.
Senator Runciman: What kind of films are we talking about?
Mr. Bouchard: We are talking about Canadian-produced films, films employing Canadian artists and mostly shot in Canada. There is a determination about what is a Canadian film in accordance with a certain number of criteria.
Senator Runciman: How does that fit in with what the National Film Board does?
Mr. Bouchard: The National Film Board is more of a national producer than a funding body helping independent producers.
Senator Runciman: They actually make the product?
Mr. Bouchard: Yes, and they focus mostly if not exclusively on documentaries, while Telefilm funds independent, private companies to produce a theatrical release, commercial films, trying to get the big box office. That is the main difference between the two. One actually produces and supports film producers, and the other one will support companies.
Mr. Jean: To use a practical example, two movies were candidates for Academy Awards recently, Barney's Version and Incendies, and both received funding from Telefilm Canada.
Senator Runciman: Has there ever been any consideration of moving them into one body rather than having these two separate entities and the costs associated with that?
Mr. Jean: That would be like the earlier question for the prerogative of the Prime Minister under the machinery. We would not be able to comment on that.
Senator Runciman: You commented on the CBC's 2 per cent reduction, but also in here you have support for Canadian periodicals that has been cut by 20 per cent. When you are looking at the National Film Board and Telefilm Canada supporting Canadian culture or Canadian values, I am wondering about the rationale that goes into a decision to cut support for Canadian periodicals.
Mr. Jean: The funding is because it is part of Canada's Economic Action Plan, which is sunsetting at the end of March. When we are presenting Main Estimates, we do not know what may be in the budget or what might come in interim supply.
Senator Runciman: This is not a big part of your estimates, but I was curious about page 73, "Grants to the Lieutenant-Governors of the provinces of Canada toward defraying the costs incurred in the exercise of their duties." That cannot cover the complete costs of the operations of a lieutenant-governor in a given province, can it?
Mr. Jean: It is shared with the provinces. The provinces provide money, and we provide money as well.
Senator Runciman: Is that a 50/50 arrangement?
Mr. Sobrino: I would have to look.
Senatur Murray: We pay their salaries, do we not, the federal government?
Senator Runciman: I see $147,000 and change to Quebec, $105,000-plus to Ontario, and then $57,000 to $97,000 to the other provinces. I was wondering why one province, which is not the biggest province, gets so much more money than the others. Is there some rationale for that?
Mr. Sobrino: I would have to get back to you with detail on that. I believe it has to do with the land area they are responsible for.
Mr. Jean: For example, it could be that the summer residence is in Quebec City for the Governor General, but we will check into that and get back to you.
Senator Runciman: Thank you.
[Translation]
The Chair: Gentlemen, thank you for appearing before us this evening.
[English]
A very interesting session, we have not had you here to tell us about all the various portfolios, but you are overseeing quite a list of different matters. We are appreciative that you came to give us a bit of insight. We look forward to receiving your undertakings.
This meeting is adjourned.
(The committee adjourned.)