Proceedings of the Standing Senate Committee on
National Finance
Issue 17 - Evidence - May 2, 2012
OTTAWA, Wednesday, May 2, 2012
The Standing Senate Committee on National Finance met this day at 6:40 p.m. to study the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2013.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, tonight we are going to resume our study of the expenditures set out in the Main Estimates for fiscal year 2012-13, which were referred to our committee.
[English]
Tonight we are pleased to welcome officials from Fisheries and Oceans Canada for our first panel: Mr. Roch Huppé, the Chief Financial Officer; Mr. Kevin Stringer, Assistant Deputy Minister, Program Policy; Mr. David Balfour, Senior Assistant Deputy Minister, Ecosystems and Fisheries Management; and Ms. Jody Thomas is the Deputy Commissioner, Operations, with the Canadian Coast Guard.
I understand, Mr. Huppé, that you have a few introductory remarks, and then we will get into our usual back and forth. Mr. Huppé, you have the floor.
[Translation]
Roch Huppé, Chief Financial Officer, Fisheries and Oceans Canada: Thank you very much, Mr. Chair. Thank you for giving us the opportunity to submit our Main Estimates for 2012-13.
[English]
If you would allow me, I think you received a small slide deck, and I will walk you through it.
The Chair: We are on deck.
Mr. Huppé: You are on deck, perfect.
I will take you to page 3 right away. It provides you with the total overview of our Main Estimates for 2012-13. As you can see, our total Main Estimates for this year are slightly below $1.7 billion compared to just over $1.8 billion in 2011-12, representing a slight decrease of $157 million overall. I will walk you through the main reasons for this variance a little bit later in the deck.
Vote 1, operating expenditures, which include our salary expenses, represent just over $1.1 billion; 65 per cent of that are actually salary expenses. Vote 5 represents our capital expenditures, so major refits and construction projects, which represents $313 million, a decrease of $14 million from last fiscal year. Our vote 10 represents our grants and contributions envelope, which is set at $61.8 million this fiscal year compared to $127.7 million last fiscal year, so a considerable decrease in that particular envelope. As I said, I will talk about the major reasons for that a little bit later.
I will take you to page 4. On the next three pages I will provide you with an overview of the estimates by program activity. I promise you I will not go through every number on every page. I will just glance over them.
You will notice that Fisheries and Oceans funding is distributed through 26 program activities, including the Internal Services program activity, which line up to three key strategic outcomes. The first strategic outcome on page 4 is the economically prosperous maritime sectors and fisheries, which include the program that supports effective and sustainable use of Canada's water resources. You will note that the overall spend for that strategic outcome is $456 million, just above; and close to 50 per cent of that is spent in the two first program activities, which are the Integrated Fisheries Resource Management for just over $111 million, basically the activities for the management of the recreational and commercial fisheries.
Small craft harbours is another very important program where the spend is close to $107 million. A considerable portion of our vote 5, as you will note, envelope is dedicated to construction and major refits on small craft harbours, $41 million.
I will take you to the third item, which is the Aboriginal Strategies and Governance. The note there is that basically in our vote 10 envelope close to 70 per cent of our spend is actually linked to this particular program activity. As you can see, just over $41 million is projected in that particular program activity relating to our vote 10.
I have one last comment on the page. You will notice there is a column called Revenue Credited to the Vote. You will sometimes see a red number appearing. That represents our vote netting authority we have whereby we are allowed, entitled to spend some of the revenues we collect against these activities. This vote netting authority is with the Canadian Coast Guard and basically represents marine service fees, icebreaking fees and dredging fees.
I will walk you through page 5. The second strategic outcome is sustainable aquatic ecosystems, which basically are the programs that contribute to the conservation and protection and sustainability of our aquatic ecosystems. There is $238 million worth of spend with two key programs. Close to 70 per cent of the spend is linked to compliance and enforcement with $108 million in spend. That is basically our fisheries officers monitoring fisheries activities, and habitat management with close to $59 million.
As indicated on page 6, our last Strategic Outcome is the Safe and Secure Waters, which represents the programs that contribute to maintaining and improving maritime safety. Many of the programs dealing with the Canadian Coast Guard are under here. You will note that is our largest spend with $675 million, and 80 per cent of that spend lies with the two first program activities that you see, Fleet Operational Readiness at close to $418 million. You will also note that close to 70 per cent of our vote 5 envelopes are capital funding, with $173 million spent within that program activity, so basically construction of new ships and major refit projects on these ships. Fleet operational readiness consists basically of ensuring that our fleet and our ships' crew are ready to go and ready to operate.
Shore-Based Asset Readiness represents a considerable spend also with $113 million on that front. The other point I will make on this page is with the internal services program activity that supports the three strategic outcomes. We have a spend of close to $296 million. It may seem high. That being said, Fisheries and Oceans has one of the largest real property footprints in the government, and of that close to $296 million we have close to $120 million dedicated to our real property footprints.
I will take you to page 7 for the explanation of the key changes to explain the variance of $157 million.
In the increase category, the first item is $14.3 million, and it relates to money that the department received through Budget 2011. Last year we received $57 million for two years, $43 million for year 2011-12, to repair small craft harbours that were damaged mainly in the storm that we had in the Atlantic in 2010. This represents an increase but, as you can see, we had $43 million in 2011-12 for that purpose. It is just that it was not reflected in the 2011-12 Main Estimates as it was a Budget 2011 announcement. The 2012 Budget announcements are not part of our 2012-13 Main Estimates. Money will be drawn through the supplementary estimates process, as you know.
The second item, $8.2 million, relates to additional funding that we received for the Federal Contaminated Sites Action Plan. Again, through Budget 2011 DFO received close to $26 million over five years for that initiative. Here our spend for 2011-12 was roughly $5.5 million. Our projected spend for 2012-13 is $8.2 million. You see the increase because the $5.5 million was not included in our Main Estimates of 2011-12.
The third item is $5.1 million, which is money to help Canadians adapt to the impacts of climate change under the Canada's Clean Air Agenda. Again, this is funding that we received in Budget 2011. We received $16.4 million over five years and our projected spend for this fiscal year is $5.1 million.
I will walk you through the next two pages, the key items of our decrease. On page 8, the $40 million in decrease relates to the Pacific Integrated Commercial Fisheries Initiative. That is a contribution program that was sunsetting in March 2012. In Budget 2007 we received $175 million over five years and the last year of that initiative was March 2012. Through Budget 2012 we received one-year renewal funding for that program.
The second item is a $23.4 million decrease, and that relates to the DOF transfer for the creation of the Shared Services Canada agency. Thirty-three or 34 departments participated and transferred funding and resources to create this new agency. Our share of the funding was $23.4 million.
The third item is a nearly $20 million decrease relating to the Divestiture of Non-Core Harbours Program. That is sunsetting funding that came to an end in March 2012 through Budget 2008. The department had received close to $45 million over four years for the Divestiture of Non-Core Harbours Program. As I said, this program ended in March 2012.
Item 4 is an $18.9 million decrease, and that relates to our strategic review measures that were announced in Budget 2011. As per Budget 2011, the reduction for Fisheries and Oceans relating to the strategic review exercise that we conducted was $56.8 million. In the first year, 2011-12, the reduction to our budget was $9 million. It was not reflected in the Main Estimates of 2011-12 as it was a Budget 2011 decision. The second year reduction to our budget, for 2012- 13, represents $18.9 million.
The fifth item is a $14.3 million decrease relating to the Atlantic Integrated Commercial Fisheries Initiative. This is a contribution program that ended in March 2012. Also for this one, through Budget 2012, renewal funding for one year for 2012-13 was secured.
I will move to page 9. There is a $13.1 million decrease relating to the Quebec and Atlantic Canada lobster harvesters program. This was a contribution program that was set for five years. We received close to $65 million for that program. This program is a sunsetter, but there are two years left, 2012-13 and 2013-14. The reason for the decrease is simply a variation in our cash flows from year to year. We were close to $21 million in 2011-12 Main Estimates as a projected spend for that program, which we did spend, and the projected spend for the two last years is $8 million this year and $5 million next year, so the Main Estimates are from $21 million to $8 million, which is a decrease of $13 million.
The $11.9 million is a decrease relating to funding to support science and sustainable fisheries. Through Budget 2007 the department received $104 million over five years, a portion of which was ongoing funding and a portion of which was sunsetting funding. The $11.9 represents the portion of funding that was sunsetting, and it was sunsetting in March 2012. For this item we received one-year funding through Budget 2012.
The last item on the page is a $10.2 million decrease relating to funding for the implementation of the Species at Risk Act. Again, the department received, in Budget 2007, $73.4 million over five years. Again in this case we had ongoing funding attached within that $73 million and sunsetting funding. This is the portion of the money that was sunsetting after the five years, which ended in March 2012. On this item, Budget 2012 also secured funding at $8.2 million a year for the next three years.
To conclude, on page 10 is a summary of key items in our Main Estimates key. As I mentioned, Budget 2012 items and new funding are not reflected in these Main Estimates. Funding will be accessed through the supplementary estimates process.
The Chair: Thank you, Mr. Huppé. You indicated that you have received additional funding in two or three of those projects that had sunsetted. I interpret that to mean that in Budget 2012 there is an indication that we should see that in the budget implementation or in the Main Estimates and we will determine whether we should vote for it at that time.
Mr. Huppé: Yes. It will be in the budget implementation act. It was part of the budget that was tabled.
The Chair: We should expect to see those items in due course. Supplementary Estimates (A) will be coming before the end of June and then there will be Supplementary Estimates (B) and Supplementary Estimates (C).
Mr. Huppé: Most of the items I have mentioned will flow through Supplementary Estimates (B), which will come in the fall.
The Chair: Is that in October-November?
Mr. Huppé: Yes.
The Chair: We will look forward to probably seeing you again at that time to talk about those items.
Mr. Huppé: I look forward to being here.
The Chair: Thank you for the brief overview of the various items. It is helpful when you show a reduction, but you say that will be supplemented in supplementary estimates that are coming along. We understand that it does not simply disappear. It is because of when we report these financial documents.
We have one hour and a bit for this panel and then we have another panel. I will do what I normally do, which is to allow five minutes for question and answer for each senator. If we have some time left at the end and you want to go on with another important question, we will put you on for round two.
Senator Buth: I have a question about the Aboriginal Strategies and Governance section, where you are requesting $57 million compared to $111 million from the previous year. That is a decrease of 48 per cent. Can you explain the program's objectives and outcomes and the decrease in funding?
Mr. Huppé: I will talk about the decrease and Mr. Ball may be able to talk more about the program. The large part of the decrease relating to vote 10, Grants and Contributions, is related to programs that were actually sunsetting. More particularly for that one, out of the $40 million that I just noted on the Pacific Integrated Commercial Fisheries Initiative, $35 million were part of that particular program activity. As I mentioned, part of that funding was secured for 2012-13. As the program was sunsetting in March 2012, you are seeing the decrease relating to that program.
Another important program that was sunsetting, also part of that program activity, was the Atlantic Integrated Commercial Fisheries Initiative. Our spending in 2011-12 was $14 million relating to that program. That is what showed in our Main Estimates. You add that to the $34 and then $5 million was basically due to a reduction as a result of our strategic review. As I said, we had $18.9 million, and $5 million of that is a reduction in our contribution program, the Aboriginal Strategies and Governance. It explains the decrease. On two of these programs, we actually secured funding for the coming year for PICFI and AICFI.
Senator Buth: What is the contribution in Budget 2012?
Mr. Huppé: The proposed amount announced in Budget 2012 was $22 million for the Pacific Integrated Commercial Fisheries Initiative and $11 million for the Atlantic Integrated Commercial Fisheries Initiative. That is the funding for the next fiscal year.
David Balfour, Senior Assistant Deputy Minister, Ecosystems and Fisheries Management, Fisheries and Oceans Canada: To add to what Mr. Huppé has laid out, the purpose of the program is to enable the department to respond to Aboriginal interests in Fisheries and Oceans. Under the program, we have a contribution program that allows us to facilitate First Nation harvesting of fishery resources for food, social and ceremonial purposes, and to allow them to participate in the co-management arrangements around FSE-type fisheries. We have arrangements on the order of 200 Aboriginal fisheries organizations in First Nations across the country where we manage the fisheries.
We also have two programs reflected in the Main Estimates: One is to assist Aboriginal organizations at aggregate levels to work with the department in terms of the co-management of the fishery and input to the scientific processes of managing the fisheries and so on.
The Atlantic Integrated Commercial Fisheries Initiative and the Pacific Integrated Commercial Fisheries Initiative are focused on providing opportunities for First Nations to become more actively involved in commercial fisheries on both the Atlantic and Pacific coasts. That provides them with the capacity to be able to strengthen their ability to harvest the fisheries successfully and safely and to be more effectively integrated into the larger governance around commercial fisheries so they can come together with other commercial harvesters and work with the department about planning the harvest and securing the conservation of the resource to maximize the harvest potential.
Senator Buth: Taking a look at your overall program, has there been any shift to different regions in Canada or is it pretty much the same as last year?
Mr. Huppé: I would say that it is pretty much the same. There is the sunset funding which was renewed, and we will address that. If you strictly look at the Main Estimates, there could be a slight difference, but with the reintroduction of money through Budget 2012, we are about the same. We spend approximately 85 per cent of our funds, and 85 per cent of our people are out in the regions with 15 per cent being in Ottawa. That has been pretty stable over the last few years.
Senator Ringuette: I am looking at your presentation with regard to decrease, which ends on page 9. I am looking at page 127 of the estimates. There are two items in the decrease section that you have not mentioned. One is the decrease of $9.2 million for the acquisition of Offshore Science Vessels, and the other is a decrease of $6.7 million related to the completion of improvements to the performance of the regulatory system for major natural resource projects under the Canadian Environmental Assessment Act. Why have you not mentioned these two decreases?
Mr. Huppé: There is no particular reason, to be honest. I wanted to be short to have more time for questions. We received $244 million for three Offshore Science Vessels and for the construction. The $9.2 million represents a fluctuation of our cash flow from year to year. That is what it is. It is not an actual decrease of money; but it is the way we spend our money. We might get $100 million to build a ship over five years. We will not spend $20 million in each of those five years. We will have a variance in our cash flow. The $9.2 million actually represents a variance in our cash flow in terms of where we are at with that item.
The last item you mentioned was a sunsetting program for which the government re-injected money. The department received $21 million over three years in Budget 2012, which you will see in the Supplementary Estimates (A).
Senator Ringuette: Notwithstanding these two last items of decrease, all of your decreases add up to $151.8 million. However, the Minister of Finance in his budget speech dated March 29 said: "Planned savings for Fisheries and Oceans Canada, millions of dollars, $3.8 million." It was page 266.
Mr. Huppé: I do not have the page in front of me. That represents $3.8 million for 2012-13. That figure is our strategic and operating review reductions that were announced as part of Budget 2012.
Senator Ringuette: Why is there a discrepancy between what the minister stated in his budget speech — $3.8 million in savings for your entire department — when we look at the Main Estimates and your presentation today and we see a decrease of almost $152 million?
Mr. Huppé: That is a good question. The Main Estimates for 2012-13 are a picture in time. The picture in time is before the Budget 2012 announcements. Everything you see in the Budget 2012 announcements are not reflected in these Main Estimates.
Senator Ringuette: You are saying that in addition to the $167.7 million, you will have an additional decrease of $3.8 million —
Mr. Huppé: For 2012-13, absolutely. For the supplementary estimates process, the central agencies will reduce our budgets by $3.8 million. As this is our first reduction relating to the overall reduction of our strategic and operating review exercise, that will take out $79.3 million at the beginning of year three, absolutely.
Senator Ringuette: I have done quite a lot of digging in my exercise in anticipation of your being with us tonight.
When I looked at your total department expenditure — that is the main, A, B and C of last year — you were at $2,012,386,972.
In comparison to the $1.66 billion there is a $346 million, almost $347 million, difference between your total operating budget of last year and the estimates of this year. When I look at the decrease here, it is $346 million over and you indicate to us it will be only $171 million. There is 100 per cent difference here in regard to estimated decrease in your budget operation. I am having a really hard time reconciling those numbers. The first number is $167.7 million, as per the estimates plus the $3.8 million that the minister has informed the general population as per the budget of March. Then I look at your total operating costs of last year in comparison to what we see in the Main Estimates.
Mr. Huppé: The difference that you are seeing — the $157 million — represents a variance between the Main Estimates from last year and the Main Estimates of this year. The actual spend in a particular fiscal year —
Senator Ringuette: No, I am comparing, and I repeat to you, your total operating budget of last year that was the Main Estimates, Supplementary Estimates (A), (B) and (C), and your operating budget was $2,012,386,972.
Mr. Huppé: I was just getting to that. I am saying we start off in our mains last year, we always add during the year or take away whatever budget decision is affecting or any funding decision that may has been during the year. It is called the supplementary estimates process. As an example, last year we had just over $1.8 billion — I had indicated that through Budget 2011 — and we had received $57 million relating to storm and damage. We actually got that funding into supplementary estimates process, which was $43 million right there to spend last year. Our spend — typically by the end of the year if you add the supplementary estimates — is slightly higher. This year again to the Main Estimates 2012-13, any budget decision you will have seen in that book will be drawn in — the $22 million I was talking about for PICFI, the $11 million around AICFI — and spent during this fiscal year. By the same token, if there are any reductions money will be taken away so the $3.8 million announced this year will also be taken away. Logically our end of the year spend, if you would take a look at the end of 2012-13 — based on what we know of the budget today — we will be higher from a spend perspective in overall budget than the close to $1.7 billion.
Senator Nancy Ruth: Fisheries and Oceans Canada has the responsibility for oceans management, and in 2012-13 the project spending is around $32 million. Can you break that down for me, ocean by ocean? How much is in the Arctic, Pacific and in the Atlantic and what activities? When I look at all these things — from hydrographic products to ocean forecasting — how do you split that up between the three oceans, or do you?
Mr. Huppé: I do not have the information here right now. It is not reflected in our Main Estimates. Mr. Balfour may have an explanation.
Mr. Balfour: In terms of the roll up numbers presented in the estimates, they are then reflected in departmental budgets. We have six regions through which we deliver the department's programs. Each has an oceans program and a hydrographics services program and so on, where they will then deliver oceans programs within the area of responsibility of the respective region.
For example, we have eight protected areas that have been established in each of the three oceans that we have an interest in and a responsibility for in the Arctic, Pacific and Atlantic. We have seven areas of interest for the creation of marine protected areas — they are in all three oceans — and the allocation of funds to work on the development and implementation of the protection areas is determined on the basis of business plans and assigned to regions for the delivery of the operations. It is that kind of process that we go through.
Senator Nancy Ruth: Do you have any kind of thumbnail sketch of whether it is 40, 40 and 20 or anything like that?
Mr. Balfour: We could provide that kind of information, but as I was saying we have six regions and we do not manage our budgets on the basis of the three ocean spaces. We manage them on the region. With respect to the Atlantic Ocean there are five regions that are involved in various ways in terms of the delivery of programming and expenditures on the Atlantic. We would need to be able to aggregate that. There are a number of regions that have an involvement in the Arctic, whereas the one that would be the most simple is our Pacific and Yukon region which would have a focus on the West Coast. Those kinds of numbers could be supplied if they are of interest.
Senator Nancy Ruth: That would be interesting to see, thank you.
Are there enforced ocean management plans for all our ocean waters within the 200-mile exclusive economic zones, how are they enforced and do we have any measures of the effectiveness of our enforcement of them? Does Fisheries and Oceans meet the requirements of these ocean management plans and what are the challenges you have to deal with from now on?
Kevin Stringer, Assistant Deputy Minister, Program Policy, Fisheries and Oceans Canada: Thank you for the question.
With respect to oceans management, it is a fairly large ocean and we have the largest coast line in the world. When you take the 200-mile limit, it is an enormous area we have looked at. We have large ocean management areas which we established a number of years ago, which make up I think 30 per cent of the overall ocean spaces where we have done some pilot projects about trying do marine spatial planning. That work is winding up.
The next step that we have looked at is establishing bioregions, and there are 13 bioregions in the oceans. Federal and provincial ministers announced approval in principle last September of a marine protected area network, bringing together the different stakeholders and the different departments. It is not just fisheries and oceans that does marine management, but different departments do marine protection, so ourselves, Environment Canada, Parks Canada, but also provinces and stakeholders. Those processes are really just getting going in terms of getting those pieces together.
The Oceans Program is a broad program that does involve spacial management, but it also involves, as Mr. Balfour said, establishing specific marine protected areas. It involves establishing oceans standards. We have some guidelines out there for seismic work and those types of things, and those apply in all oceans. I will stop there, but there are a number of pieces like that, and we can provide more information on the program as well.
Senator Nancy Ruth: I wanted to ask about waters outside the exclusive economic zone, particularly in the central Arctic region, now that the polar conference is over and five nations have done what they have. There is no international fisheries agreement in place for the central Arctic. What role is Fisheries Canada playing in trying to create one? How is it going?
Mr. Stringer: I would say Canada is one of the countries that is most active in the Arctic. I will say a couple of things. First of all, the fishery in the Arctic is growing. The opportunities, for obvious reasons, are growing as well. We have raised this at international tables and worked with our colleagues in other countries, so in Russia, Norway, the U.S. and the other ones involved in the Arctic. I cannot get you specifics about where that governance is, but there is a sense that that needs to move.
That said, most of the fishing that takes place in Canada's Arctic is in mostly inland areas. There is a turbot fishery. There is a shrimp fishery on the east coast of Baffin Island, which is a substantial fishery. There is also further opportunity, and we realize it is a growing need to ensure that there are systems in place with the countries that have an interest, and we are talking to them about it.
The Chair: I will put you on for round two if you have more questions would you like to pursue, Senator Nancy Ruth.
Senator Callbeck: Thank you for your presentation this evening. I want to be clear on what Senator Ringuette was asking. As I understand it, the difference in the budget or the estimates we are looking at right now as compared to the estimates last year, including (A), (B) and (C), is $347 million. You are getting a cut of roughly 17 per cent. On top of that, we will have this strategic and operating review of 3.8. There is a cut here of $350 million. It is not $157 million.
Mr. Huppé: The variance between last year's Main Estimates and this year's is $157 million. I would not call it a cut. The difference between the actual spend, if you add Supplementary Estimates (A), (B) and (C) for last year, and the projected spend in our current Main Estimates, absolutely, you are right that there is a difference of 300 some million dollars. By the end of the year, we will have drawn in funding that we will have received through any funding announcement, which includes all the announcements that I talked about earlier, which is included in Budget 2012. The difference will be something less than $300 million by the end of this year. For the cut that you are seeing there, the reduction, like all departments, DFO had to go through what we call the Strategic and Operating Review Exercise. By beginning year three, the budgets of our department will be reduced by $79 million. You are right. That portion of reduction is $3.8 million in the first year of that particular exercise.
Senator Callbeck: You are taking quite a hit.
I want to ask about small craft harbours, because that is really important to my province of Prince Edward Island. You have a figure here of $106 million. What was that figure last year, including (A), (B) and (C)?
Mr. Huppé: Small craft harbours last year was $114 million, and we are down to $106 million. If I go by Supplementary Estimates (A), (B) and (C), the most considerable amount that we got through the sups process for small craft harbours was $43 million. That is special money we got in through Budget 2011 to deal with the storm damage, as I explained earlier, of December 2010. The small craft harbours total spend last fiscal year would have been in the neighbourhood of $114 million plus that $43 million.
Part of the reduction this year is that we had received $44 million over four years for a divestiture program of our non-core harbours, of which $20 million were in our Main Estimates of last year. That sunsetted in March of 2012, so there is a reduction there of $20 million to that effect. This is the key item. Then you have an addition of $14 million, which represents an addition compared to last year's Main Estimates, and that represents a second portion of that $57 million that we actually got in for the storm damage. The spend for this fiscal year relating to small craft harbours, at the end of the year, if we add Supplementary Estimates (A), (B) and (C), will be less than last year because of a sunsetting program and because of fact that the $57 million was spent $43 million last year and $14 million this year, so you will see a reduction in that spend.
Senator Callbeck: I am sure you do not have this tonight, and I do not want you to take the time, but could you get the committee a breakdown of how that money was spent last year amongst the various provinces and how it is allocated this year, please?
There is another program I want to ask about, and it is on page 9. It is the Quebec and Atlantic Canada lobster harvesters. There is a reduction here of $13 million. Is that $13 million off the budget of 2011-12, or is that off the budget plus (A), (B) and (C)?
Mr. Huppé: It is off the budget of last year. That particular program was not affected by Sups (A), (B) or (C) last year. That is money we received for five years for a lobster program, and it is a variation of cash flow. We received two parts of our program, a long-term and a short-term program. Over all, we had received $65 million, but $50 million of that over five years is what we call the long-term program. In our planning pattern or planning spend, we had $21 million last year in our Main Estimates of 2011-12 relating to spend of this program.
The program is now phasing down in the last two years, last two years being 2012-13 and 2013-14. We have $8 million planned this year for spend, so therefore you see a reduction from Main Estimates from $21 million to $8 million, so it explains the decrease of $13 million. It is not a reduction. It is us spending the money that was given to us based on a spending profile. The last year, the residual year, to close off the program, we are planning a $5 million spend. There is basically $13 million remaining to be spent on that particular program.
Senator Marshall: I wanted some information on the Salmon Enhancement Program. It looks from the Main Estimates that it is a new program. It is just under $30 million, $29.975 million, so was there anything in supplementary estimates last year for that program or is this something new?
Mr. Huppé: The Salmonid Enhancement Program is the same program as last year. On page 129 of the Main Estimates, if you have the English version, you will see the $30 million appearing there. Internally within the department we moved that program from one strategic outcome to another. Because we have to report on these things to the centre, it is purely administrative in nature, the funding move from one strategic outcome to the other. The envelope remains the same. The activities remain exactly the same also.
Senator Marshall: What is that program? Is that something that is delivered by the federal government directly or does it go out to organizations in the form of grants? Could you give me some information on the program?
Mr. Balfour: The Salmonid Enhancement Program operates in British Columbia, and it provides for the contribution of salmon production for contributions to sustainability objective of various salmon populations. It involves the operation of fish production facilities that are operated by the department but also has as part of it a community involvement program where similar types of facilities that are operated by communities and First Nations are assisted.
Senator Marshall: The funding is specifically for the West Coast. Is there any comparable funding for the East Coast?
Mr. Balfour: No. This is exclusively a West Coast program.
Senator Marshall: Could you also give me some information on the Sustainable Aquaculture Program? I am more interested in the East Coast. What is that program? Is that something that is delivered by the federal government directly or is that put out in the form of grants?
Mr. Balfour: It does involve a program that is national in scope where it provides contributions to industry for innovation of practices and products and market access, but also to support innovation to secure the sustainability of the aquaculture industry.
Senator Marshall: That would be in the form probably to the private sector?
Mr. Balfour: Yes, that is right. That would be through contribution to the private sector, but the program also involves the department's activities in British Columbia with respect to its responsibility that has been in place now for its second year to license aquaculture operations in British Columbia.
Senator Marshall: You are talking about the West Coast again. Are you implying that the grants are directed only towards the West Coast?
Mr. Balfour: This is a program that is national in its scope, and it is application driven. Proponents from industry from all across the country apply.
Senator Marshall: Including the East Coast?
Mr. Balfour: Including the East Coast, and the projects are funded on the basis of the merits of the project.
Senator Marshall: Also in the estimate there is a column there called Revenues and Other Reductions. Would that be all revenues? I am specifically interested in your collection rate on your revenues. Do you usually collect what you estimate you will collect or not?
Mr. Huppé: We are actually pretty stable, and we have been pretty stable on that front. What you see here is the CCG-related revenues, which represents, as I said, our re-spending authority. That is revenue for which we have a special authority that as we collect it we can re-spend it against these, re-inject it against these particular activities. We have been fairly stable, I would say, at around $45 million a year on those types of revenues.
Senator Marshall: Who do those revenues come from? Do they come from certain organizations? Do they come from other governments? What is the source of the revenues?
Jody Thomas, Deputy Commissioner, Operations, Canadian Coast Guard, Fisheries and Oceans Canada: They come from the shipping industry. There is a Marine Navigation Services Fee and there is also an Icebreaking Services Fee. The Marine Navigation Services Fee generally meets its revenue targets, but we run about $8 million short a year every year on the icebreaking fee. As a result, we are standing up a taskforce to examine the structure of the fee and how we administer it and how we can change it to close that gap on the shortfall.
Senator Marshall: Is the impetus the fact that you can re-spend the money when you get it?
Ms. Thomas: It is part of our funding source rather than an appropriation.
The Chair: Senator Marshall, you are running down on time.
Senator Marshall: Could you put me on round two? I have a question on the federal contaminated sites, in case another senator does not ask the question.
Senator Runciman: You just spoke about icebreaking. I see on page 129, as well, icebreaking services and aids to navigation. What is happening there? Is that a transfer to another line item? Has there been a reduction?
Mr. Huppé: No, no reduction. Again, it is part of our internal reallocation. These two program activities that were presented separately in last year's Main Estimates have been collapsed. We have one new program activity called marine navigation that would include both. The funding has just been shifted. The activities have not changed or the funding for that purpose has not changed.
Senator Runciman: Talking about marine navigation, in international waterways like the St. Lawrence Seaway and Great Lakes, how do you divide those responsibilities in terms of maintaining and repairing navigational aids in shared international waterways?
Ms. Thomas: We have a number of treaties and agreements with the United States to ensure the safety of the waterway and safe navigation. We revise those. We meet with them more than annually and ensure that the navigation systems are kept up to date. We review navigation systems.
Senator Runciman: I am talking about cost, essentially, and who is responsible if it falls within the U.S. side.
Ms. Thomas: It is their cost. If it is Canadian, it is our cost.
Senator Runciman: Are there any additional funds in here with respect to an increased role for the Coast Guard with respect to the Shiprider program?
Ms. Thomas: The Coast Guard is not involved in the Shiprider program.
Senator Runciman: They are not involved at all?
Ms. Thomas: No.
Senator Runciman: You mentioned the Species at Risk Act. You are responsible for enforcement of that act? Is that how that works?
Mr. Balfour: For aquatic species — our focus is aquatic as opposed to terrestrial species — our minister is responsible for making recommendations to the Minister of the Environment in terms of recovery plants for our species that are at risk. We have a responsibility then for the implementation of those plants. Where there are issues of non-compliance, then we do have an authority to follow up and to deal with that.
Senator Runciman: In terms of approvals for the construction of docks and wharves and those kinds of things, do you play a role in that as well in the approval process? Am I wrong on that? What is your role there?
Mr. Balfour: The role that we have pertains to our responsibility with respect to decisions around fish habitat. It is not that we approve the construction of wharves or any other facility; it is about a determination that there will not be an impact on fish habitat. That is also an area that we are looking at strengthening and streamlining the practices of the department.
Senator Runciman: When you are dealing with the province, for example the Ontario government, and someone applies through I guess it is Natural Resources, I am not sure, there is a check-off on that approval process for Fisheries and Oceans as well in terms of fish habitat?
Mr. Balfour: If there is a need, but in Ontario, we really have had a history of relying on other parties like conservation authorities to take a look at projects, and if it appears that there would be an issue of significance, then it would be referred to the department to have another look at it.
Senator Runciman: This is primarily a provincial matter, but it is a burr under the saddle for a lot of people in my neck of the woods. To see the Rouge Valley, if you go along the CNR, you can see all the infilling and new walking and bicycle paths that millions of dollars have been spent on, and if someone wants to put in a 30-foot dock, it is quite a headache to get approvals when you see that occurring. Do you get involved in those kinds of approvals as well?
Mr. Balfour: We have been involved in some referrals, but we are looking at providing ability for people to be able to self-assess and comply in terms of minor activities and to focus on risks.
Mr. Stringer: The current Fisheries Act says that you cannot impact fish habitat, that you cannot harmfully alter, disrupt or destroy fish habitat without authorization of our minister. We have had a number of operational statements that are in the public domain that say that if you want to install a dock and you do it in a certain way, you should be okay. As Mr. Balfour says, we are involved. We are involved in the permitting, which is to impact fish habitat. As he said, it is not to approve the project. If you are going to impact fish habitat you need an authorization.
Senator Runciman: Do you send an inspector for every application?
Mr. Stringer: Not for every application, but you will know, I think, that there is currently proposed legislation to make some adjustments to this. That is supposed to come here at some point.
Senator Neufeld: Going back to the Species at Risk Act and your application to the aquatic part of it, how successful are you? Is it a program where you can show that you have helped some fish in some area? How is it working? Are we still just floating along, or what is going on?
Mr. Balfour: The Species at Risk Act has been in place for a relatively short time and you need a longer horizon to be able to say that species have been rebuilt.
The department has been under measures to rebuild Atlantic cod stocks for the last 20 years, and for a variety of reasons the rebuilding has not produced what we hoped to see. We do have plans in place and we are rigorous about the follow-up and application of them. The approach that the department takes to the management of the fisheries is a precautionary one. We have a sustainable framework in place to guide us in terms of the management and the recovery of species. We want to ensure that all of our fisheries and species are in a healthy state. That is our objective in the bill too.
An example of a species that has shown promise is the striped bass in the Miramichi watershed. In the past we had a moratorium on this resource and it is showing great promise. We will be receiving another assessment of this resource by the committee on species at risk in the fall, but we think we will see a reduction in the status of that species. As I say, we have to take a longer-term perspective to see rebuilding results.
Senator Neufeld: How are you doing with sturgeon on the Columbia River?
Mr. Balfour: I would have to get back to you with particulars on that.
Senator Neufeld: You have said that you have not been very successful with cod, and that is over 20 years, which is a fair amount of time. Please provide information to the clerk on how you are doing with sturgeon on the Columbia and perhaps other places where it has not worked well or where you are seeing increases.
The Chair: They are now farming sturgeon on the Saint John River in New Brunswick.
[Translation]
Senator Hervieux-Payette: I think what interests me the most is our international involvement. Regarding the amount of $5,000,438 and the $9 million amount for the other program activities, what activities does that cover?
Does that cover the undertakings at the World Trade Organization regarding the seal hunt?
Does that cover all of the activities related to that sector, near or far?
Since I am also a member of the fisheries committee, I think we have to begin to focus seriously on a solution regarding the grey seal on the Atlantic coast. Will those amounts be spent on that or on other important international causes I am not aware of?
[English]
Mr. Balfour: That program activity of the department reflects all the costs for our involvement, all the international relations that we have and the various commissions that the department participants in, for example, the Pacific Salmon Commission and the North Atlantic Fisheries Commission. That is the program activity for dealing with that.
This activity involves work that the department does internationally in terms of advancing market access for seal products, and that would be incorporated into that business activity. The cost of managing the seal hunt itself and doing the science around seals is included in other program activities of the department.
Senator Hervieux-Payette: What do you call them?
Mr. Balfour: For example, the Compliance and Enforcement Program activity would involve the costs for the department to oversee the hunt and ensure that there is proper compliance with the regulations around the humane harvest of seals. The management plans for seals would be included in the business activity for the Integrated Fisheries Resource Management Plans. The science expenditure around doing stock assessment on the various seal species would be included in an ecosystem science program activity.
Senator Hervieux-Payette: These costs would be in different program activities?
Mr. Balfour: Yes, that is correct.
Senator Hervieux-Payette: We hear criticism about, for instance, the ship that is overseeing the seal hunting. Where do I find that number?
Mr. Balfour: The ships would be Coast Guard vessels that are used as platforms for fishery officers to have a presence in the seal hunt in order to oversee it to make sure that it is orderly and so on. Those costs would appear in the Fleet Operational Readiness program activity, which covers different programs of the department. Ultimately, the expenditure appears there.
Senator Hervieux-Payette: We cannot segregate them. These ships operate year-round and happen to supervise the seal hunt at one point. You cannot say that the ship is only for the seal hunt.
Mr. Balfour: No. There is not a dedicated vessel for the seal hunt. As a client in managing the seal hunt, we would request the tasking of a vessel from the Coast Guard as part of their fleet planning and operations. That vessel would be deployed, and the cost of that vessel would be accounted for as part of the fleet operational readiness but associated with the cost of the delivery of the fisheries management outcomes.
Senator Hervieux-Payette: Would it be the same vessel that ensures we do not have too many foreigners fishing in our waters?
Mr. Balfour: The platform normally deployed to the seal hunt is an icebreaker, given the ice conditions and the time of year when the hunt occurs. Offshore patrol vessels are designed to have an enforcement presence outside the 200- mile limit in those types of sea states. They have the capability to permit DFO officers to board and inspect vessels at sea and their logs, holds and so on. They are completely different vessels.
Senator Hervieux-Payette: Do you use helicopters to supervise activities related to fishing and seal hunting? I would say that your overall mandate is to supervise Canadian waters.
Ms. Thomas: Both helicopters and aircraft are used to monitor for illegal fishing. In the case of the seal hunt, they are used to do forward looking to ensure that the ice conditions the vessel is going into, et cetera, are safe, to do the count of the seals. Yes, all of the resources available to us are used at any given time.
Senator Hervieux-Payette: Where do I find that information?
Ms. Thomas: That is connected with the fleet operational readiness plan. Helicopters are included in that.
Senator Hervieux-Payette: That is why we are dealing with roughly $235 million?
Ms. Thomas: Yes. It includes all the vessels and the helicopters.
Senator Wallin: I will leave for another day some specific questions about the activities of Fisheries and Oceans in landlocked provinces, such as my province. We will concentrate on some of the other issues.
For item number 3 on page 7 I need more explanation. You said that this program would be $16.4 million over five years, and $5.1 million is the increase you are talking about. My question is really about the language. This is a program to help Canadians adapt to the impacts of climate change under Canada's Clean Air Agenda. The next line says "the objective of this program is to advance the knowledge about opportunities created by climate change for Fisheries and Oceans." I am trying to figure out what it is designed to do. Initially it says that it is to help Canadians adapt, but it looks like you are spending this money to kind of create agendas or new programs.
Mr. Balfour: This is primarily a research program. It is primarily being carried out through our science branch of the department. It is about looking at how we would adapt to changes and the implications of that. For example, in small craft harbours, as Mr. Huppé referred to earlier, we had some significant storm damage two years ago. It was reflective of conditions that had not been experienced in the past. Under the program, we will think about what engineering standards we should be looking at in terms of the construction of harbours in the future.
Senator Wallin: Can you give me another example?
Mr. Balfour: Another example would be to think about the shifts in ecosystems and what that would mean in terms of the abundance and presence of different fishery species. Then, we would think about how to adapt to that in terms of doing our science, the completion of our assessments and how an industry would adapt to those types of changes. What would it mean in terms of the current footprint of marine-protected areas? How would we need to consider adapting those in order to be able to continue to fulfill the objectives we have for those marine-protected areas? The footprints may need to be adapted.
Senator Peterson: We are transferring $23 million to Shared Services Canada. What are they doing for you?
Mr. Huppé: They are taking a lot of our IT operational spend. For example, all of our BlackBerry cellphone contracts will be handled through Shared Services Canada. Anything that can be centralized from an operation IT perspective, they will take on, where we could generate efficiency from grouping and managing together. That is basically what they are doing.
Senator Peterson: Is the $23.4 million your number?
Mr. Huppé: That is strictly the number for DFO. There are 43 or 44 departments that participated in that creation from a resource transfer perspective. Our number is $23 million. It is salary dollars and operational dollars.
Senator Peterson: You can monitor that and see that you get value received.
Mr. Huppé: In the transfer, we had to identify exactly the types of services that would be given through that new agency, basically ensuring that if resources were transferred over to that agency, the work was also being transferred over. We have a process in place by which this will be followed up. If there are any adjustments that need to be made, they will be made in the coming little while.
Senator Peterson: In the past, DFO has played a major role in environmental assessment reviews. Do you anticipate any changes in this regard?
Mr. Stringer: I can speak to that. Part of the Budget Implementation Act included some proposed changes to the Fisheries Act. Those things will be coming. Presuming they get through the House, they will be coming to the Senate. There are some proposed changes to the Fisheries Act in terms of our role with respect to these types of approvals. Proposed changes to the Environmental Assessment Act would consolidate the lead for the environmental assessments basically to see up to the Canadian Environmental Assessment Agency. DFO would continue to provide the fisheries habitat expertise, as we have in the past. There are some other changes proposed for the Fisheries Act, but in terms of the Environmental Assessment Act, that is the change being proposed.
The Chair: Time is not our friend right now. I will ask each of the senators in round 2 to put their question on the record. We will work between you and the clerk to get the answers so we can circulate the written answers.
Senator Ringuette: I have three questions, and I do not expect you to have the answers with you. How many employees got layoff notice letters? I want that by province and by employee classification.
How many EXs and how many DMs in your department have received those letters?
How many of your department staffers not under the Public Service Employment Act are being paid in your department and under what classification are they?
What is your program management cost?
Senator Nancy Ruth: I want to know what DFO is doing on the central Arctic ecosystem.
When Canada takes a lead in developing an international fisheries management agreement for the central Arctic, will it start with a catch level of zero? That is what I want to know, until sufficient scientific research can assess the effect of fisheries on the ecosystem. What are your next steps in this progress of making the agreement for the central Arctic?
Senator Marshall: What are the contaminated sites that the $8.2 million relates to and the estimated costs to remediate each of those sites?
Senator Runciman: In reference to a comment made about ice breaking shortfall in terms of recovery of costs — and I am assuming that is the revenue shown under marine navigation — it would be nice to have some additional information with respect to how you are proceeding in terms of cost recovery. I am also curious about fleet operational readiness and the revenue stream there. Where does that originate and what are the opportunities there for further enhancement?
The Chair: I would like to thank officials from Fisheries and Oceans — Mr. Huppé, Mr. Balfour, Mr. Stringer and Ms. Thomas — for being here. Sorry for giving you homework, but you have been very helpful and we look forward to receiving the answers to those other questions.
[Translation]
Honourable senators, tonight we are continuing our study of the Main Estimates for fiscal year 2012-13 which were referred to our committee.
[English]
In our second session this evening we are pleased to welcome officials from Agriculture and Agri-Food Canada: Mr. Greg Meredith, Assistant Deputy Minister, Strategic Policy Branch; Pierre Corriveau, Assistant Deputy Minister, Corporate Management; Rita Moritz, Assistant Deputy Minister, Farm Financial Programs Branch; and Jody Aylard, Acting Assistant Deputy Minister, Research Branch. I understand that your spokesperson will be Mr. Meredith. You have been waiting patiently and we thank you for that. You understand the method that we operate under and you have the floor exclusively at this time.
Greg Meredith, Assistant Deputy Minister, Strategic Policy Branch, Agriculture and Agri-Food Canada: I will be brief because I know you have a lot of questions for us, but it is always a pleasure to come to either the Senate or the house to participate in the democratic process. Thank you for inviting us. I would like to give you a quick overview of some of the more recent developments in our sector and then maybe look ahead just a little bit to set some context.
[Translation]
I would like to give you an overview of the main developments in our sectors over the past year. In the past few years agriculture has emerged as a driver of the Canadian economy, helping to offset some of the impacts of the recent recession. The medium-term outlook over the next few years is also positive, showing high prices for grains and oilseeds, modest growth for cattle and hog production, and stable growth for supply-managed commodities. This means that the future seems very promising for our sector.
[English]
Net cash income last year was up 24 per cent, and average net operating income for farms was up 27 per cent last year over the five-year average. The net equity that farmers now have in their operations is about $1.7 million after debt is taken care of. The sector is very entrepreneurial and oriented towards exports. Last year we exported about $44 billion worth of agricultural and seafood products. That is up about 13 per cent from the prior year. The minister, I must say, is extremely active in market access and market development activities. Recently, he has been on trade missions to China, Japan, the U.S. and he is just getting back from the Middle East. He has recently made some significant gains in beef access in the Korean market.
[Translation]
Over the past six years, the Government of Canada has concluded nine free trade agreements and has many more in negotiation, including with the European Union, Morocco and India, and the agricultural sector as a whole has benefited from these efforts.
[English]
We will see major transformation in the grain sector this year with the passage of Bill C-18, which removes the single desk monopoly from the Wheat Board. The government has committed to farmers to provide the Wheat Board with resources so it can continue to provide marketing choice for farmers across the West. By August 1 of this year, the grain sector will be wide open and all companies involved in the grain sector will be able to buy, sell and export wheat. We think this will be a major opportunity for producers. There will be more companies competing for their wheat and barley and we expect to see a very vibrant sector as a result of these changes.
The other significant initiative that I would like to draw your attention to is the negotiation of our third multi-year policy framework with our provinces. As you are probably aware, agriculture is a shared jurisdiction with the provinces. We have policy accords developed with all the provinces and territories to ensure that we are not overlapping and that we are delivering the best possible programming for the sector. The ministers just met about 10 days ago or so, and announced that we are entering into the final stages of negotiations of our next framework, which will come into force in April 2013.
We expect that new framework to place a great deal of emphasis on market development and market access activities. There will be a significant emphasis on innovation including R & D. There will be an effort, FPT wise, to get the regulatory and policy environment right for farmers so that they can earn more money from the market than the mailbox.
If I could turn to the Main Estimates just briefly, Mr. Chair, we are projected to have expenditures this year of $2.4 billion, which is a decrease of about $153 million over the previous year. Of that $2.4 billion, about $1 billion or $1.1 billion is a voted measure from Parliament or requires parliamentary approval, in other words, and the remaining $1.3 billion is statutory forecasts that do not require approval. We have direct access to the fisc. That is important because the programming associated with statutory authorities like that is demand-driven, and that has some implications.
[Translation]
You have no doubt seen in our estimates the decrease in amounts allocated to funding the series of risk management programs such as AgriInsurance, AgriInvest, AgriRecovery and AgriStability. The reductions as such are a positive sign for the future of the agricultural sector, as these programs are demand-driven and intended to manage risks. A decline in the amounts forecasted to fund these programs speaks to the ongoing profitability and resiliency of the sector.
[English]
These programs are there to support farmers when times are bad. Farmers, if they get into particular situations, will trigger payments on a demand basis, and because the sector is doing very well, we are actually forecasting to spend less money supporting farmers.
It is important to note that the Main Estimates that you are looking at for 2012-13 do not incorporate the announcements from the economic action plan for 2012. Agriculture and Agri-Food Canada will be facing spending reductions this fiscal year of about $15 million. That will rise to about $159 million next year, and then it will rise again to $254 million on an ongoing basis the following year. More information about these reductions will be available in our departmental performance report and our report on plans and priorities in the coming period.
[Translation]
I thank the honourable members of this committee for their attention. My colleagues and I will be pleased to answer your questions.
[English]
The Chair: Thank you very much, Mr. Meredith. Are you expecting your report on plans and priorities to be forthcoming fairly soon?
Pierre Corriveau, Assistant Deputy Minister, Corporate Management, Agriculture and Agri-Food Canada: Yes, I believe the President of the Treasury Board is supposed to be tabling this in the house next week.
The Chair: For some of the departments, this committee will follow those reports as well, but we are dealing primarily at this stage with the Main Estimates. We thank you for your overview.
I will start with the two senators who were at the bottom of my list last time, two senators from Saskatchewan.
Senator Wallin: In your comments regarding the World Post, Bill C-18 and the Marketing Freedom for Grain Farmers Act, you have talked about this being a very entrepreneurial sector in the first place, and you think this will open up major opportunities for producers. I am wondering if you see any new opportunities in the research side of this business. We can think of the world of canola and all of the incredible stuff that has happened. If there are new research opportunities, is there a place where that is funded? Does government need to incent that, or is it happening on the private side?
Mr. Meredith: If you will allow me, I will reply, but then I think I will turn it to Ms. Aylard to elaborate.
In making the change to marketing choice, the government decided that it would continue to fund the three agencies that were funded through producer contributions but managed by the Wheat Board, and that is the Canadian International Grains Institute, the Western Grain Research Foundation and the Canadian Malt Barley Technical Centre, all of whom have a significant role in developing new markets, working with customers and promoting Canadian grains. Through the legislation, we have put in place a levy that will continue to draw money from producers' sales of the relevant grains and reinvest in research. That piece will continue. The government then matches that through an agri-marketing program that we run.
We do have an initiative now to try to attract more investment in variety development. Canada lags behind some of our key competitors, notably Australia, when it comes to wheat variety research and development. There are a variety of reasons for that, but we are already seeing signs that the private sector is very interested in moving more aggressively into variety development in wheat.
Jody Aylard, Acting Assistant Deputy Minister, Research Branch, Agriculture and Agri-Food Canada: Currently in wheat research we have a predominantly public model of research. The department is a major player, and universities play a small part. Only about 10 per cent is private investment in wheat research. With the new environment, we are seeing an interest in private sector companies coming to the table to help close the gap that Mr. Meredith mentioned. It is in the range of $60 million to $80 million with some of our competitors. It is a gap we see in some of the other commodities as well, such as canola and corn, where the private sector has been a big player. We have seen those commodities really take off. Yes, there is an opportunity, and part of what we are doing going forward is in terms of getting the regulatory environment right for those players to invest and to make some space for them to take part in the investment in wheat research.
Senator Wallin: You are confident that they will step up.
Ms. Aylard: Yes. They are certainly showing an interest.
Senator Peterson: Thank you for your presentation. I notice the Canadian Grain Commission has been savaged, cut by 85 per cent, from $35 million down to about $5 million. What will they be able to accomplish after that cut? What will they be doing?
Mr. Meredith: It is a little bureaucratic, senator, but because the budget came out after the mains were put together, the mains do not capture the fact that the budget reinvested $44 million over two years for the CGC. It will continue to do the same thing that it has been doing. This is not an unusual year for the CGC. It tends to get money reinvested each budget this way. It is responsible for grain quality, and it does an enormous amount of research as well. Farmers do depend on it significantly, so it will continue just as before.
Senator Peterson: You are confident they will be able to maintain the standards they have in the past, guaranteeing customers quality?
Mr. Meredith: Absolutely.
Senator Peterson: On the food product labelling and control, again, there are massive cuts there, $30 million. Maybe it is the same thing and you will find it back again, kind of implying that you have wrestled problems like listeriosis to the ground and we do not need to worry about that any more. You have cut back and we do not need as many inspections. Is it the feeling of Agri-Canada that everything is fine out there?
Mr. Meredith: For clarification, what you are referring to is actually is the responsibility of CFIA, so we could have them follow up, but I can tell you that there was a significant investment in the budget in the very things you mentioned, the listeriosis and the action plan developed by Ms. Weatherall to respond to the listeriosis crisis of several years ago. There are $51 million or $52 million for enhanced surveillance and early detection of food-borne disease. Those monies will go to the Public Health Agency, to CFIA and to Health Canada. It is somewhat of a reinvestment, just like the CGC.
Senator Peterson: What about the labelling on food products, the removal of anything indicating the contents, and people with hypertension or an allergy to peanut products? There is nothing on the food product labelling anymore.
Mr. Meredith: CFIA has put in an alternative process, or intends to, but I would have to get them to get back to the clerk with details.
Senator Peterson: How are you coming on your negotiations with the railways?
Mr. Meredith: The rail review recommended two or three things, which the government agreed with. One was to undertake a facilitation process to try to bring shippers and railways together to develop service level agreements that would be commercially driven, and that would create a dispute settlement mechanism that would be very efficient.
Again, this is Transport Canada's baby, but I know that the minister and the grain sector, particularly in the West, are very interested, likewise, with pulse and special crops. We put together, chaired by my deputy and a member of the sector, a crop logistics working group that helped inform this facilitation process, brought together all of our ag stakeholders to develop a position that we could advance in a process that Mr. Dinning has just completed.
We also are involved with Transport Canada in a grain supply system study that will look at where we can find efficiencies in the transportation system, and we will be participating with Transport Canada and the railways and others in a supply chain round table that will study how all shippers, not just the agriculture shippers, can work with railways to get maximum efficiency out of the system.
The government, lastly, agreed to bring forth legislation to provide for service level agreement and dispute settlement mechanism for shippers.
Senator Peterson: It is my understanding that the railways have said exactly that, they are not interested in either one of those, and the people they sent to the meeting had no authority to do anything. You may have to jump into that at a little higher level here, and I think you will have to go down the route because they have no intention of doing either of one of those things.
Mr. Meredith: I think it would be best to wait for Mr. Dinning's report. I know different stakeholders had different perspectives on it, but we will see if Mr. Dinning can pull something together that will be effective.
Senator Peterson: If not, you are prepared to jump in? You said you will ensure there will be guarantees of deliveries and dispute resolution mechanisms — I think you just said that a minute ago — if they cannot come to an agreement.
Mr. Meredith: No, the government's commitment was to bring forward legislation. That would be the Transport Canada minister. I would not want to go too much further into my colleague's file because they will be sending me an email a little bit later.
The Chair: It is the heart of shared services.
Mr. Meredith: My minister is intensely focused on this particular issue.
Senator Peterson: It is a big one.
Senator Ringuette: My first question is in regard to your marketing program for farm products. You participate in the Canadian potato marketing group. I would like to know what amount you invest in Potatoes Canada, and I think it is a joint partnership with Agriculture New Brunswick and Agriculture P.E.I.
Mr. Meredith: Again, for the full details, senator, we will have to get back to you. This is the responsibility of a colleague, but I can tell you in general terms the agri-marketing program is a partnership with industry associations mostly, generally on a 50/50 basis, and we invest in helping them develop strategic plans, strategic marketing plans and then develop markets abroad.
Senator Ringuette: Yes, I know. I just want to know how much you have set aside for that particular Potatoes Canada organization. I would like to know how much it was last year and the upcoming year. You can send that to the clerk.
Mr. Meredith: Perfect. They are just negotiating this year's agreement now.
Senator Ringuette: Your total operational costs last year were close to $3 billion. This year's Main Estimates has $2.4 billion. In reality, the difference between what you spent last year and what you anticipate spending this year is $450 million. That is a lot of money. You can say that you are going to be reducing your expenses in regard to the different agri-programs, but I think that we are facing another drought situation for the farming community in Western Canada, from what I am hearing.
The Chair: I am looking at a difference of $152 million, $153 million, at page 36.
Senator Ringuette: I am looking at page 36, but if you look at the main of last year plus supplementary (A), (B) and (C), their total operating budget just for agriculture and agri-food, never mind the Canadian Dairy Commission and the CFIA and the Canadian Grain Commission, just for your section of the department there is a discrepancy of $450 million. That is quite a lot of money. It is almost a fifth of your budget, 20 per cent of your budget. I certainly would like to have some explanation on that, and I understand it may be more than the time allows, but if you want to send the explanation to the clerk, I will be okay with that.
Mr. Meredith: I think my colleague can give you a quick answer.
Mr. Corriveau: Maybe I can give a 30-second explanation; it might be 45. I will go quickly and then we can reply in writing.
You have to look at mains to mains.
Senator Ringuette: I know all that. It is the fact last year you spent all that money and this year —
Mr. Corriveau: You are correct. In fact, today we just signed our sups (A), and that will be tabled in the house.
Senator Ringuette: How much will that be?
Mr. Corriveau: Unfortunately I cannot reveal that at this time. It still has to be tabled in the house, but I think the track record of this department last year and the year before was about $400 million in Supplementary Estimates (A), (B) and (C). I cannot forecast what will be in the (A), (B) and (C) this year, but looking at mains to mains, I think the difference is $152 million dollars, but our Supplementary Estimate (A) that we are working on, it is almost finalized, will bring the budget of the department upwards also. Mains to mains, $152 million, some of those things will be coming in the sups (A).
Senator Ringuette: You are cautiously optimistic.
Mr. Corriveau: Always.
Senator Ringuette: My next questions, I know you do not have the answers right now, but if you could send them to the clerk I would appreciate it. How many employees from your department, from CFIA got a letter of notice of layoff, by province, by classification? How many EXs and how many DMs got those letters? How many of your staffers, i.e., non-employee status people, are being employed in your department and under what classification? Last, but certainly not the least, what is your program management cost?
The Chair: If could you provide us with a written answer to those questions, that would be appreciated.
Senator Nancy Ruth: I wanted to ask about the $35 million that you have for food safety and biosecurity risk management systems. Can you give me, say, three examples of the largest risk management systems that you have in this category? How do you manage them? What are you looking for? What will you do if there is trouble, this kind of stuff?
Rita Moritz, Assistant Deputy Minister, Farm Financial Programs Branch, Agriculture and Agri-Food Canada: Maybe I could start that. Some of that is, again, a shared responsibility between Canada Food Inspection Agency and my department. We do have some programming for food safety, and it really is around the food safety system development, so there is this programming that is intact around that.
Senator Nancy Ruth: Could you just explain what that meant?
Ms. Moritz: It would be development of systems that may help an industry to mitigate a disease or to look at what diseases might be coming or what risks might be coming and then what actions could they take or what mitigation strategies could they put in place to avoid that type of a disease affecting.
I can give you an example of one of those. We have committed, for example, to the Turkey Farmers of Canada development of a management system for on-farm food safety systems and to complete a second phase of a recognition system with CFIA recognizing those systems and the fact that those are robust systems to mitigate disease.
The Canadian Industry Traceability Infrastructure Initiative Program also uses part of that funding. That is also for development of industry-led systems that can verify and track products from the farm through the entire system. There is funding to help industry set up those biosecurity standards and the systems in some instances so that they are put in in a way that the industry can sustain them and in a way that makes sense for them.
Senator Nancy Ruth: How much would turkeys get out of this?
Ms. Moritz: This particular one was $136,437.
Senator Nancy Ruth: Do systems for mad cow come out of this allotment of money?
Mr. Meredith: BSE is largely controlled through feed regulations that are developed and enforced by CFIA to prevent the disease. CFI has installed methods and standards in the processing side of the business that remove any risk material from a carcass when it is being butchered. There are two important points with respect to BSE; one is at the feed level and one is at the processing level.
[Translation]
Senator Hervieux-Payette: Some time ago, but not that long ago, a report was published on agrifood policy. Your department, the provincial departments and industry contributed to it. In that report the authors deplored the fact that there was less and less research on agriculture and new products.
I will give you an example, because I found a new use for seal meat. I decided that it could become a product to feed fish in fish farms. You can find an application, but then you need research to get there.
So where do you go and who do you work with? With the National Research Council? Or do you have laboratories? Where is the research done and why does one hear that Canada — even though you said that exports were at 15 per cent — is doing less research?
I suppose that at the international level there is quite an astounding increase in the population. Normally, we should have a more or less equivalent increase, but it seems that certain OECD countries are doing better than we are. So, where is the decision made to take part in research, to subsidize new products, new animal food or new fertilizers, or all sorts of products which would ultimately increase the value of our agricultural production?
[English]
Ms. Aylard: Research is supported in a number of different ways in the department. The research branch does a lot of research itself. We have 19 research centres across the country with about 500 scientists who undertake that research and close to 37 additional sites, including research farms. We do research in a number of different areas including crop production and diseases as well as beef and various other commodities across the country.
We also support research through cluster program funding in collaboration with other organizations, industry-led research being an example. In the federal-provincial Growing Forward framework that we talked about we have invested $115 million in funding and research. This is industry-led research, so this is where industry is defining the research priorities and is determining what is important for their needs, and that has leveraged another $42 million of private-sector research on top of that.
We also collaborate with many partners. We work with universities, so we have universities participating in some of these industry-led research clusters, as well as bilaterally doing work with them.
Finally, we do work as well with the NRC in some interdepartmental research programs. For example, there is an interdepartmental program on genomics research. Several departments collaborate on projects or get funding for their own research in those areas. It is done in a number of different ways. It is a very collaborative approach.
In the last budget, there was another $50 million in the Agriculture Innovation Program that supported collaborative research with industry.
Senator Hervieux-Payette: How do we compare with the OECD countries in terms of the amount of money that is put into research compared to GDP?
Ms. Aylard: I would have to get back to you on the specifics of that. We will get that data.
Senator Hervieux-Payette: We are competing with these countries. Quite often there is a return on investment if we do research.
Ms. Aylard: There is a high return on investment. Numerous studies have shown a 10 to 1 or 15 to 1 return on investment. As well, we have a fairly good track record for research investment. Where do need to do more work in getting the research results out and adopted by the sector, or commercialized, depending on what the research is. We do lag behind on private-sector investment and research in the agricultural sector.
I will get the specific numbers for you.
Senator Hervieux-Payette: I would have to explain that to the people in Quebec. How do I explain the amount of money that we see in budgets, both at the provincial and the federal level, with regard to the production of pork? We always say here that X, Y or Z millions of dollars have been spent in the production of pork. I know that according to the rules of the world association we should not subsidize. How do we get involved in spending millions for the production of pork that we export to Japan? At the end of the day we are subsidizing food for other countries that certainly can afford to produce food.
I cannot explain that to the people of Quebec. I cannot explain to journalists why we spend so much money on that. I hear that in Quebec it is more than half a billion dollars.
Mr. Meredith: I believe that you are referring to some of the rules of the World Trade Organization.
Senator Hervieux-Payette: Yes.
Mr. Meredith: You are quite right that we do give a fair bit of money to farmers as income support. However, we do it in a way that is consistent with WTO rules. It has to be a whole-farm operation. It cannot be specifically to a pork producer or a cattle producer. It has to be common. It cannot be an export subsidy on a per-animal basis.
There is recognition that people in the farming business face risks that a normal operation would not face, specifically pests and weather, and there are agreements that govern how you subsidize business risk management. Those are the risks that farmers face. We are careful to do it in a way that is consistent with WTO and with countervail rules so that we avoid countervail or dumping actions.
[Translation]
Senator Hervieux-Payette: There are individual farmers who receive financial assistance, and we have aggregators who put things on the market. This seems like a complex and convoluted system to me.
Mr. Meredith: Yes, we have targeted subsidies for producers, large and small. But as I said, the type of subsidy is specifically developed to ensure that it is coordinated with the WTO rules.
[English]
Senator Runciman: I want to ask you about meat processing establishments and inspections. A meat processing establishment is the same as a slaughterhouse, essentially. Is there a distinction?
Mr. Meredith: The distinction is that the slaughterhouse is the first stage in processing.
Senator Runciman: It is a larger operation.
Mr. Meredith: That is right. The meat processor finishes a ready-to-eat meat, for example.
Senator Runciman: In the changes, you are speaking to the sunsetting of resources. Could you speak to that issue and what impact, if any, that may have? This issue has been raised by some folks. Could you address that?
Ms. Moritz: Would that be for the slaughter improvement, senator?
Senator Runciman: Yes.
Ms. Moritz: That program sunsetted March 31 this year. It was a program over three years. It was a $50 million slaughter improvement program put into place in order to help slaughterhouses or those facilities update to more modern, more effective, efficient and cost-effective standards to help them be sustainable and cost-effective.
Senator Runciman: Does it have anything to do with inspections?
Ms. Moritz: It does not have in this instance.
Senator Runciman: It is for upgrading facilities.
Ms. Moritz: Right. Those projects had to be finished for March 31 this year. We will be going back to gauge the success of that program as we gather the information on what the proponents did with the money.
Senator Runciman: Grant payments for the Canadian Cattlemen's Association Legacy Fund. I am curious. Is that to trace cattle? Is that what this is all about?
Mr. Meredith: No. Primarily it is more market development activities. Ms. Moritz could speak to the traceability issue, but it is not included in that money.
Senator Runciman: Is the intent to annualize this? Will it be an allocation on an annual basis?
Mr. Corriveau: This program was set up during the BSE crisis. There was $50 million over ten years. I do not know when this expires, but every year they can draw up to $5 million of this 10-year program. At the end of the 10-year program, it is planned to sunset.
Senator Runciman: Where does the traceability show up?
Ms. Moritz: The traceability would show up under Food Safety. That is divided in the programs that I had talked about earlier from the Agriculture and Agri-Food perspective. There is also funding under the Food Safety header for CFIA to deal with the traceability systems that are in place and to start linking that information and get all of the areas that gather that information to standardize data and so on. We have put them together under one umbrella. The two organizations support each other and complement the efforts.
Senator Runciman: Could someone give me an example of what non-business risk management is versus business risk management?
Mr. Meredith: I know it is not readily apparent with the language that we use. The business risk management programs are, for example, our crop insurance program. It is the disaster program that was mentioned earlier that kicks in when there is drought or flood; a program that is cost matched with farmers for self-directed risk management, which is AgriInvest; and AgriStability is a program that tries to stabilize and smooth out income over time for the farmer who generally experiences cyclical income fluctuations. Those are business risk management program examples.
Non-business risk management is a strange way of referring to them, but it captures things like innovation programming and the food safety programming that Ms. Moritz mentioned. It is anything that helps the producer to proactively develop a capacity or improve a process — that kind of thing.
Senator Runciman: Is there an application process for this? Is this a federal-provincial agreement or is this simply a federal program? Risk management programs are usually under an umbrella agreement, are they not?
Mr. Meredith: Right. That is the umbrella agreement I mentioned in my opening remarks. We share with the provinces and territories the cost of those programs, as well as a number of non-business risk management programs.
Senator Runciman: Are all provinces engaged in this?
Mr. Meredith: Yes. It is a comprehensive five-year agreement. We expect that the next agreement will be comprehensive as well.
Senator Buth: It is good to see the department here.
I am curious about where the science cluster funding is reported. From my background, of course, it is an extremely effective program. With the Agriculture Committee doing the study on innovation, it keeps coming up again and again. Every producer group that comes essentially talks about the benefits of the Science Cluster Funding. I cannot figure out where it is in the Main Estimates. Could you tell me where that is?
Mr. Corriveau: Absolutely. On page 38, about halfway down, you will see Science Innovation and Adaptation. You will see an increase of $87 million for this fiscal year. The cluster is picked up in this and maybe Ms. Aylard could talk about that.
Ms. Aylard: I have talked about the program already. As you probably know, 10 national clusters are being funded now. We are in the fifth year of those clusters. The $50 million agriculture innovation program that was announced last year in the budget is a two-year program and a portion of that is a continuation of the Developing Innovative Agriculture Products program.
Ms. Moritz: Part of that increase is also the Agri-Innovation Program that Ms. Aylard alluded to earlier. That program is in two streams. The first stream is knowledge creation and sharing of that knowledge. It is meant to encourage industry and academia, as well as governments, to share and come together on some research — the front end of the innovation. The second stream is all about commercialization and trying to get those innovations created into the marketplace and used by the marketplace to give us that competitive edge.
Senator Buth: On page 39, you have Agricultural research in universities and other scientific organizations in Canada for just under $1 million. What is that? Below it, you have grants to foreign recipients for participation in international organizations supporting agriculture. Could you describe that funding as well? That was not in the Main Estimates last year but it is in the Main Estimates this year.
Mr. Corriveau: On the international one, the department provides funding to organizations like the FAO and the OECD. This goes on a project initiative run by the line branches that are here tonight.
Senator Buth: There was not any funding allocation.
Mr. Corriveau: We have regularized the situation in the department. It is something that was picked up in a recent audit. This is now consolidated in one area of the department, and it is more efficient this way. We can manage this out of one branch and make better usage of money through consolidation.
The first is a grant that has been in place for years for research activities funded at various universities. My colleagues may want to add to that.
Senator Buth: You have a reduction of $107.9 million related to sunsetting of administrative funding under Business Risk Management programs. Can you describe the changes that are occurring in there and whether there would be less administration for farmers, which they regularly complain about in terms of their business risk management programs?
Mr. Corriveau: The reduction is basically composed of two amounts. One amount is the administration component of $53.6 million. The department could not receive its approval in time. The money for the program — the payments that go to the provinces or producers — is statutory, as indicated in the estimates. However, the money to manage or administer the processing of the forms is a voted program. We did not get our approval in time, but this should be reflected in the upcoming supplementary estimates. The second portion of the difference is a forecast reduction. As Mr. Meredith mentioned, the sector at the time of the estimates is doing well, but should there be an adjustment as we noted in previous Supplementary Estimates (A), (B) and (C), we will adjust that accordingly.
Senator Callbeck: I want to ask about the Canadian Food Inspection Agency. How many full-time positions or public service positions are there? Do you know offhand?
Mr. Meredith: Again, we would have to get CFIA to provide a response.
Senator Callbeck: I would like to have that, because I see on this paper that it says that PSAC members affected in the Canadian Food Inspection Agency, 481. It seems like a lot of people for that. However, you will provide that figure.
I have a couple of questions. One is with regard to the changes that I hear will come about at Port Aux Basques. As you know, all the vehicles coming from there have to be inspected and sprayed because they may be contaminated and have diseases which affect potatoes. If that vehicle gets to New Brunswick or P.E.I., it could have a devastating effect on our economies.
I hear that six inspectors will be laid off. Can you tell me what changes are coming?
Mr. Meredith: Senator, I wish I could tell you. I will have to plead the fifth again and direct it to my CFIA colleagues. I just do not know the details.
Senator Callbeck: You will provide those details and send them to the committee?
Mr. Meredith: Yes.
The Chair: It is best that you put your question on the record so it is clear what details you are looking for. If you had anything more, you should put it on. We have heard your question about the six employees.
Senator Callbeck: I am looking for exactly what changes will take place. I understand there will still be some inspectors who will look at the vehicles. However, if they have to be sprayed, that is possibly going to the private sector, which will mean an added expense for whoever owns that vehicle. That is what I would like to know: Exactly what changes are coming there and is there an added expense for the owner of the vehicle?
The second thing I would like to know about is potato inspectors that go through the potato fields to see if the crop is healthy. I hear the cost of the potato inspectors will be passed on totally to the farmers. I would like you to check on that and get back to the committee, please.
Mr. Meredith: We will undertake to do that.
Senator Callbeck: Thank you.
The Chair: I have one question, if you will permit me. It is a statutory item at page 36, at the bottom of the first grouping, Agriculture and Agri-Food. It is Canadian Pari-Mutuel Agency Revolving Fund. There was not anything last year and this year you are starting out in the hole, in the negative. Can you help me with that? That is not a very good entry here, is it?
Mr. Corriveau: In fact, normally the Canadian Pari-Mutuel Agency shows as zero. Last year they received money out of the Economic Action Plan for renovation to some of the laboratories. That money sunsetted last year and that is why you are seeing this as zero. They generate their own funds through a levy on every bet that is made in Canada, so this agency has a no net draw on the appropriation of the department.
The Chair: Why is it in the negative? You are anticipating it will —
Mr. Corriveau: Last year they had money out of the Economic Action Plan and this year they have none, I believe.
The Chair: It is showing a negative for this year.
Mr. Corriveau: It is a reduction from last year.
The Chair: That is not the way you are showing the other things.
Mr. Corriveau: I am being told it is more anticipated revenues, so it is not a draw on appropriation; it is generating revenue. It is a negative amount. Here in appropriation, you are looking for funds from the CRF. This is returning funds to the CRF.
The Chair: Could you think about this and get back to me?
Mr. Corriveau: I will get back to you in writing, but I believe this is a forecast.
The Chair: I am not sure we understand exactly what was said, so you could help us with something in writing. I do not want to take up colleagues' time.
Senator Ringuette had a follow-up question that she wanted to put on the record as well.
Senator Ringuette: I do not see the co-op program anywhere in these estimates. Where is it?
Mr. Meredith: I will let my colleague find it for you. One of the steps that we have taken under our Economic Action Plan obligations was to sunset the co-op program at the end of this year, I believe. That program is part of our Rural Secretariat. The Rural Secretariat is being downsized as part of our obligations.
Senator Ringuette: What you are saying, in a nutshell, is that the program is no longer in existence.
Mr. Corriveau: For this year — if you look on page 38 of the estimates, roughly about halfway down under the second PA — you will see science and innovation. Rural and Co-operatives is right there below.
Senator Ringuette: The Rural and Co-operatives Development Program?
Mr. Corriveau: Yes, exactly. This year, you see a reduction of $4.99 million. This is the sunsetting of a Community Development Program.
Senator Ringuette: This is the last year of the program?
Mr. Corriveau: For the community development, the program ended on March 31, 2012. What my colleague just described is basically linked to a reduction in Economic Action Plan 2012. The reduction to the rural community will be reflected basically next year and following years.
Senator Ringuette: Exactly what I am saying is that it is still on for $12 million this year, but that is the end of it.
Mr. Corriveau: There will be potentially other adjustments to come, but for this year, the group will be present. However, it may be a different view by the end of the fiscal year.
The Chair: Ladies and gentlemen, on behalf of the Standing Senate Committee on National Finance, I would like to thank you all for being here and ably representing Agriculture and Agri-Food Canada. It is an important part of the portfolio of government departments, as you could tell from the questions. We went from wheat to potatoes over the period of the evening. We thank you very much for being here and look forward to receiving a written reply to those items that you have undertaken to answer.
Colleagues, the meeting is now concluded.
(The committee adjourned.)