Proceedings of the Standing Senate Committee on
National Finance
Issue 3 - Evidence - December 3, 2013
OTTAWA, Tuesday, December 3, 2013
The Standing Senate Committee on National Finance met this day at 9:30 a. m. to study the Supplementary Estimates (B) for the fiscal year ending March 31, 2014; and the subject matter of Bill C-4, A second Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures.
Senator Joseph A. Day (Chair) in the Chair.
[Translation]
The Chair: Honourable senators, this morning we are going to continue our study of the supplementary estimates (B) for the fiscal year ending March 31, 2014.
[English]
We're very pleased to welcome a number of officials this morning. From Health Canada, we welcome Jamie Tibbetts, Assistant Deputy Minister and Chief Financial Officer, Chief Financial Officer Branch; and Michel Roy, Senior Deputy Minister, First Nations and Inuit Health Branch.
From Public Works and Government Services Canada, we welcome Alex Lakroni, Chief Financial Officer, Finance Branch; and Brigitte Fortin, Assistant Deputy Minister, Accounting, Banking and Compensation Branch.
I would ask each of the departments to give us a brief overview of what you're looking for in Supplementary Estimates (B). If possible, could you refer to the particular page of the supplementary estimates? That is helpful to us because we will be asking questions based on that and it just makes it flow nicer.
Will begin with Health Canada, which is at page 2-44 of Supplementary Estimates (B). Mr. Tibbetts, will you be giving the introductory remarks on behalf of Health Canada?
Jamie Tibbetts, Assistant Deputy Minister and Chief Financial Officer, Chief Financial Officer Branch, Health Canada: Yes, I will.
On behalf of Health Canada, thank you for inviting me and Mr. Roy to discuss proposed changes to spending that were previously outlined in the Main Estimates.
As you're aware, the department has put forward a number of important initiatives, as outlined in Supplementary Estimates (B), which will result in a net increase to the department of $395.7 million that you can see at the top in the grey section on page 2-44. This means that Health Canada's total budget will be raised to approximately $3.8 billion for the current fiscal year.
In terms of specifics, the department is seeking its largest item in supplementary estimates, which is $285.5 million to support First Nations and Inuit health programs and services, which is in line with strategic investments announced in Budget 2013.
[Translation]
This funding will stabilize, renew, and expand important health programs and services for First Nations and Inuit individuals, families and communities in the area of supplementary health benefits, primary care nursing, accreditation, and e-health.
If you wish, I can comment further on this.
[English]
Health Canada is also seeking an increase of $43.9 million linked to the First Nations Health Authority to support the transfer of programs and services for B.C. First Nations as part of the implementation of the British Columbia Tripartite Framework Agreement on First Nation Health Governance. That's also on the same page, 2-44.
This funding is connected to a recent announcement that highlights just how instrumental it is to collaborate with First Nations and provincial governments when it comes to improving First Nations' health.
The Government of Canada, the Government of British Columbia and First Nations in British Columbia have worked for several years now to prepare for the day when the federal government would transfer the design and delivery of its programs in British Columbia to a new First Nations Health Authority. That includes staff as well as funding.
[Translation]
As of October 1, 2013, this transfer successfully took place and the new First Nations Health Authority assumed full responsibility for the design and delivery of health services for First Nations in British Columbia.
[English]
Health Canada is also seeking, as you work down the lines, $3.8 million, which will enable the department to deliver better integrated and more effective services for cross-border trade. With this funding, Health Canada will move to electronic processing to transmit and receive import data, which will support trade and economic growth under the perimeter security and economic competitiveness action plan.
Health Canada is also asking for an additional $3.2 million so the department can continue to respond to the increasing number of health risk assessments and food safety investigations, as well as update policies and guidance for the industry.
[Translation]
This funding will also allow Health Canada to continue to develop new, and improve existing, test detection methods for listeria and other food-borne hazards. In addition, it will support the department's proactive food safety communications strategy.
As announced in Budget 2013, an additional $2 million in funding will help establish a network of mental health- related professionals treating depression, with a focus on suicide prevention and post-traumatic stress disorder.
[English]
The Mood Disorders Society of Canada is collaborating with stakeholders, including the Mental Health Commission of Canada, to undertake the development of this network.
Finally, a major item on here, going further back to Budget 2012, is that McMaster University is receiving $1.7 million in this fiscal year in research funding. This project, which will receive a total of $6.5 million over three years, is evaluating the use of health care teams to achieve better health outcomes for patients while making health care systems more cost-effective.
[Translation]
As you are aware, Health Canada plays an important role when it comes to health care in this country. It is a department that is constantly evolving in order to ensure that we are well placed to meet emerging demands and adapt to new realities as they come up.
[English]
The funding being requested in Supplementary Estimates (B) will help us meet the challenges of today, better positioning us for the future. Thank you for inviting me to the committee today. I am pleased to answer questions.
The Chair: Thank you, Mr. Tibbetts, for following pages 2-44 and 2-45.
Can you explain the transfer within vote 5b? You didn't mention that. It's a $1 item.
Mr. Tibbetts: The $1 item. This is a fairly technical adjustment. It links to four items. If you go very high up on page 2-44, you'll see vote 5 capital expenditures on the second line from the top. You'll see a transfer of $535,000 and the $1 item there. The transfer is a net number. You have to flip to page 2-45. The third item down, you'll see funding from National Defence of $606,000. It's that number minus — if you look to the next grey box down a little farther — the $70,000. It's the net number.
Those numbers are transfers between departments. So in one case, it's coming to us from DND, and then the $70,000 is a transfer internally that offsets — the vote is actually increasing by $535,000.
However, because no new money is being asking for, we put a $1 item in the adjustment column to get Parliament's approval to spend it this way. But it's not a new appropriation; it's already part of the Main Estimates.
The Chair: So that $1 really represents — because it's internal — the $70,000, and the other part is coming from another department?
Mr. Tibbetts: Correct. The $1 is a conventional protocol to ensure we're transparent to Parliament. You are giving me $1 at the end of the day. But to have those two items approved as an offset for the adjustment, that's how we had to do it.
The Chair: So you're taking the $70,000 from the B.C. Tripartite Framework Agreement on First Nation Health Governance and you're transferring it to First Nations Health Authority.
Mr. Tibbetts: This block here — you'll see $108.7 million, which is coming as a minus number being transferred from vote 1, which is our operating vote, as well as the $70,000, which is our capital vote. Those two numbers are being transferred to vote 10, which is our grants and contribution vote.
We're doing that because of the establishment of the British Columbia Tripartite Framework Agreement on First Nation Health Governance and the First Nations Health Authority. That $108,000 is being flowed now; instead of us spending it internally on staff and operations, we are moving that, as of October 1 onwards, to the First Nations Health Authority — as well as our people and operations — so that they can manage those operations.
The Chair: And it becomes a grant and contribution?
Mr. Tibbetts: Correct. It's no longer an operating cost of Health Canada; it's now a transfer payment, basically, to this new authority that is now responsible for the service delivery there in British Columbia.
The Chair: Thank you. That clarifies that. Now we'll go on to Public Works and Government Services Canada. Then, following that, we'll go to questions and answers, and I have quite a list already.
Mr. Lakroni.
[Translation]
Alex Lakroni, Chief Financial Officer, Finance Branch, Public Works and Government Services Canada: Thank you, Mr. Chair and members of the committee. I am pleased to appear before this committee on behalf of Public Works and Government Services to discuss the 2013-2014 Supplementary Estimates (B) for our department.
Joining me today is Brigitte Fortin, Assistant Deputy Minister, Accounting, Banking and Compensation.
For those committee members who may be unfamiliar with PWGSC, the department plays a key role in the operations of the federal government, serving, as we like to say, as its treasurer, accountant, real property manager, central purchasing agent and linguistic authority.
The department has one strategic outcome: to deliver high-quality, central programs and services that ensure sound stewardship on behalf of Canadians and meet the program needs of federal institutions.
[English]
I would like to note for the members of this committee that PWGSC did not seek any appropriations through the earlier Supplementary Estimates (A) and is now seeking $176.6 million in these Supplementary Estimates (B).
This amount includes — a number referring to page 2-85 — $69.7 million for real property functions to cover non- discretionary costs in fit-up payment in lieu of taxes and municipal taxes associated with Crown-owned buildings and leased space. And $38.4 million of this is for the fit-up for three new federal government buildings in Gatineau, which will consolidate a number of departments and reduce our need to lease space.
Another $25 million is for office accommodation and for departments and agencies delivering priority programs related to, for example, agriculture and border security. These office accommodation requirements flow directly from the funding requests made by departments and agencies for new or renewed programs.
Next is $37.4 million for the pay modernization project, to continue the planned work on system design and configuration, and for the implementation of the new service model.
Then $31.5 million is to improve federal engineering assets, such as dams, bridges and crossings, including the Chaudière Crossing and the Timiskaming Dam Complex.
Following that, $13.7 million is for the reinvestment of revenues from the sale or transfer of surplus properties that were sold at market value between December 1, 2012, and July 8, 2013. The funds generated are to be reinvested in federal office facilities and common-use assets to preserve or extend their useful life.
[Translation]
Finally, $3.4 million is for the rehabilitation and reconstruction of the Quebec City armoury on Grande Allée that was damaged by fire in 2008.
The additional funding requirements are offset by PWGSC's commitment to realize its share of total government- wide savings initiatives.
Sound financial management has always been a hallmark of PWGSC. Our department ensures consistent delivery of high-quality services to Canadians while providing value for money for taxpayers.
[English]
Finally, Mr. Chair, I want to say that our departmental efforts to support our most important assets — our employees — have been recognized for a second year in a row: PWGSC has once again been chosen as one of the top employers in the National Capital Region for 2013.
The positive findings of last week of the Auditor General on the National Shipbuilding Procurement Strategy testify to our ability to meet these goals and to the hard work of public servants from across many departments. As well, I am especially proud to mention that our department is celebrating the fact that PWGSC employees contributed more than $1 million to the Government of Canada Workplace Charitable Campaign this year in the National Capital Region.
This concludes my opening statement. Mr. Chair, members of the committee, thank you for your attention. My colleague and I would be pleased to answer your questions.
The Chair: Thank you. A couple of points of clarification. I guess you and Treasury Board have used the term ``fit- up'' here. That sounds like you were talking about some properties in the Gatineau region. It basically means to fix up the buildings; is that correct?
Mr. Lakroni: Not quite. Once the buildings are constructed and ready, we have to make them fit for accommodation, which means setting the carpets, making the dividers, setting the furniture, doing the cabling, et cetera. That's what we refer to as ``fit-up'' — making it fit for accommodation.
The Chair: Okay. And the other clarification was your reinvestment. You said that certain properties were sold, and you are now asking for funds — the same amount of money — but to reinvest. Can I assume that when the properties are sold, the money goes into the Consolidated Revenue Fund as a general fund, and then you have to get permission to take that amount out to reinvest? Is that why we're seeing this figure here?
Mr. Lakroni: That is correct. Properties were sold at market value, money deposited into the Consolidated Revenue Fund, and we are seeking the authority to access those funds and reinvest them to recapitalize our existing properties in the current portfolio.
The Chair: Thank you. I'll begin senators' participation now.
Senator Buth: Thank you, chair, and thank you very much, witnesses, for being here this morning.
Mr. Tibbetts, can you give me a summary of the tripartite framework agreement? Can you give me some background on that — how long it took for that to be set up and, essentially, what it's going to do? Then can you explain the transfer amount from Shared Services Canada, as well?
Mr. Tibbetts: I'll give you a quick overview of the finances on the plate. Then I'll turn to my colleague, Michel Roy, for the specifics on the tripartite agreement, and then come back to the other item.
The $43.9 million in 2013-14 that you see on the plate is part of a $1.4-billion agreement covering 10 years, out to 2022-23. It has some escalation built into it over that period of time.
What you're seeing is that the $43 million is the top-up to our existing resources coming from the budget and the fiscal framework so that they can operate over this period of time. There is a point at six years out where the financials around the agreement are looked at again and potentially re-baselined based on trend over the next five and a half years.
Michel Roy, Senior Deputy Minister, First Nations and Inuit Health Branch, Health Canada: Thank you very much for the question. We're very proud of the B.C. initiative and very proud to be able to talk about it this morning.
At Health Canada we have the First Nations and Inuit Health Branch, which is responsible for delivering primary care services on reserves to First Nations people on behalf of the Government of Canada, in collaboration with the provinces, which give services outside of reserves.
In B.C., after negotiations for the last eight to nine years on a tripartite basis with the province and all First Nations of British Columbia, they all came together as a consensus to work with us and the province to negotiate a transfer of the responsibility of Health Canada to a First Nations Health Authority under the B.C. provincial regime. They are now integrated.
[Translation]
This is an integration of health services provided by the province and the First Nations. The integration is complete and we are now working together. On the federal level, we retain the responsibility for funding and for being part of the governance of the health model. Service delivery is the responsibility of the First Nations Health Authority and the province working in cooperation. All the programs and staff that Health Canada had in British Columbia have now been transferred to the First Nations Health Authority. This is the essence of the tripartite agreement. There is a lot of interest in the agreement nationally. All the provinces and Aboriginal communities in the country are now paying particular attention to the British Columbia experience, as we are. We are really hoping for better health outcomes for First Nations members, now that services are being delivered by their members to their members.
[English]
Senator Buth: Can I just go back, and maybe for some background information, can you explain what types of services are provided to First Nations? This is separate from Aboriginal Affairs and Northern Development.
Mr. Roy: It is separate from Aboriginal Affairs and Northern Development. For example, Health Canada will assume the responsibilities of nursing services, primary care service on First Nations reserves. We'll have nurses there to deal with public health issues and primary care issues. We have services for addiction, maternal health, community services.
The province, of course, is still responsible for providing services for physicians and hospitals. It's still the province that provides those services. For us, it's mainly at the community level with nurses. We have what we call the non- insured health service, which is a service to all status Indians. It's insurance, if I can say that.
[Translation]
For corrective eyeglasses, dental care, medications and so on, we have a non-insured health service benefit, a benefit that is in addition to the services provided by the provinces.
[English]
Senator Buth: And the amount coming from Shared Services Canada? It's coming from Shared Services to Health?
Mr. Roy: When they implemented Shared Services Canada, Health Canada had to transfer some to Shared Services for the resources they are providing. When it was done, we told them we were negotiating the tripartite agreement and once we had a deal and implemented the agreement, we would have to take that money back to send to the First Nations Health Authority. Because we have a commitment with this tripartite agreement, all of the money being spent in B.C. is being transferred, even the money coming from the headquarters. This is the part that was headquarters' money going to Shared Services Canada in terms of implementation and now we are taking it back to send to the First Nations Health Authority.
Senator Buth: Were employees within Health Canada affected by this, if you're transferring all of your services over there?
Mr. Roy: The employees that have been impacted by the B.C. tripartite agreement are strictly from British Columbia's office. From headquarters, we transfer the money but not the people.
Senator Buth: Thank you.
The Chair: Mr. Roy, when you were answering Senator Buth's question, you made a reference to responsibilities of the federal government and the provinces. Can we include territories, or is there a different arrangement with respect to the territories?
Mr. Roy: With the territories, it's a bit of a different arrangement. We still have responsibility there, but we are dealing with the territorial government instead of with communities, and it's the territorial government providing services to the communities instead of us. To transfer, we are working with the territories to provide services to their citizens instead of directly from us, like in the South.
The Chair: Thank you for clarifying that point.
Senator Callbeck: My first question is to Health Canada. On page 2-44, you have a figure there, $285 million, funding to support First Nations and Inuit health programs.
Mr. Roy, you mentioned mental health and addiction services. Can you tell me how much of that $285 million is going towards addiction and mental health?
Mr. Roy: Thank you for the question. The $285 million is not for services of addiction and mental health, except for $2 million that is going towards the mental wellness teams.
Essentially, it's to stabilize the A-base of the Non-Insured Health Benefits Program and parties to stabilize the base to pay for nurses. That is essentially what the $285 million is. The $2 million is related to supporting mental wellness teams. It's a plan we already have in place. With the $2 million, we can increase the numbers of those teams.
It's a lot of money only to stabilize two aspects of the program.
Senator Callbeck: In the document I am reading from, on page 6, giving an explanation for that $285 million, it says support for mental health and addiction services. That's why I asked the question.
Mr. Tibbetts: I could give you a more detailed breakdown of the $285 million, if you wish.
Senator Callbeck: Okay.
Mr. Tibbetts: There are about six major components in it. The first is $40.7 million for primary care nursing, to stabilize and expand some of the nursing services in communities. Health Canada traditionally comes back in estimates every year to get incremental funding for growth because the population is growing fast and costs are growing. This is stabilizing this base historically.
Mr. Roy: For the nurses, for example, the stabilization is because in the past Health Canada was funded to cover services of nurses five days a week, eight hours a day. What we have to do is provide services 24-7, and we were never funded for that. That money is now to cover the services of nurses in communities 24-7. Essentially, that's what it is.
Mr. Tibbetts: That's $40.7 million of it. The next major component is $19.9 million this year for e-health infrastructure to expand the program out to 45 more communities, et cetera.
Mr. Roy: Yes, it is to extend the services of e-health; we are implementing e-health throughout the country, working with provinces when they are developing or connecting communities, so then we are there to develop the capacity of e- health in communities. In that way we are improving the access to health services of members of isolated and remote communities.
Mr. Tibbetts: Over 90 per cent of communities now have high-speed broadband access, to lever that technology.
There is a small $3.1 million for accreditation programs to expand to include about 45 additional First Nations community health centres and 18 nursing stations — to renew their accreditation and to expand the program to ensure the quality of services there.
There is the $2 million Mr. Roy mentioned for mental wellness teams to expand. We have seven teams; that will expand to 11 teams on the ground.
The big component, though, is $192 million, and that is to re-base the non-insured health benefits for which, every year, we have come back in supplementary estimates to get a top-up. In Budget 2013, it was announced that, instead of every year coming in, they would infill the historical shortfall that we were coming back annually to get and give us a 5 per cent ongoing escalation, which is kind of the recognized growth in the area of drugs, dental services and medical transportation services.
Non-insured benefits is our biggest program — it is $1 billion at Health Canada — so this is a significant line item for us to stabilize the funding. The 5 per cent is based on past spending, so we will not get a surplus; we will only get what we need to provide the services to First Nations.
The last two components — there is the $12.2 million amount for Qalipu Mi'kmaq First Nation band in Newfoundland and Labrador. They were recognized as First Nations a couple of years ago, so that is to stabilize the base funding for them. Then another $19 million for McIvor, which is another case that expanded the base of recipients of these programs.
Mr. Roy: In both cases — for Qalipu and McIvor — we will have access to that money only if the numbers are going up for membership. It is just a provision for us to make sure the money is there if ever we are increasing the numbers of status Indians — so then we have access.
Senator Callbeck: What I was interested in was the mental health and addictions — whether more money was going to be spent there. Now, you mentioned there is $2 million here, and that will help.
Is the spending in this budget much higher than two years ago?
Mr. Roy: Yes, it's increasing every year.
Senator Callbeck: But by how much, roughly? I mean $2 million isn't much.
Mr. Roy: The $2 million is only strictly to support some new innovative projects that we have with provinces for mental wellness teams. Those are emergency teams intervening in communities where there is a crisis because of suicide, addiction issues or whatever — when they declare that they have a crisis. Then at least we have those teams going. They are mobile, going to the communities to provide services in health. That's a new innovation.
And we have, of course, the Indian residential schools program, where we have to deliver services or support to the victims of the residential schools. We still have to support those people and to provide them with mental health programs.
Senator Callbeck: Can you give me a rough idea what percentage in dollars the budget has increased this year for mental health?
Mr. Roy: To give you a better idea about the mental wellness program, on addiction we are spending $94 million every year.
Senator Callbeck: This year?
Mr. Roy: This year — 2013-14.
Senator Callbeck: What did we spend last year?
Mr. Roy: I don't have the number for last year, but I think it was about $93 million or $92 million, so it's a small increase. But it's more than $90 million, and next year we are planning $95 million and $97 million the year after. It's going up every year.
Senator Callbeck: Rather than take the time in committee, could you provide the committee with the last five years of what has been spent in these two categories, so we can see?
Mr. Roy: Mental health and addiction, sure.
Senator L. Smith: Mr. Tibbetts, Mr. Roy, just in listening to the amount of money that's been committed to Aboriginal health, I have a simple question: What type of measurement systems do you folks have? Because it seems to be the federal government, the provincial government and then the Aboriginal folks working on trying to implement these various programs and systems. But how are you tracking your money other than just what you spend in terms of results, and what type of results can you tell us you have achieved in relationship to Senator Callbeck's question?
If you're going to give us a five-year running total on how much you spent, I would be interested in knowing what results you have had in terms of what you are measuring them against.
Mr. Tibbetts: At Health Canada, about $2.4 billion of our resources are for First Nations services. You have to break it down into some of these major key program areas. Mr. Roy described non-insured health benefits, which is roughly over a billion dollars now, which is an insurance-type business. You have different measures, oversight and control functions there than you would definitely in the community health services, which is the other major half of First Nations health programming.
In the non-insured health area, where we do some mental health work, it is limited because the main benefits are dental services, drugs and vision care, and transportation is a large component because the services are not in communities. For example, for dialysis and maternity care, people need to be transported out of communities to get to hospitals. So a large part of that program is to pay to get people to service points.
And there are comparative assessments for other insurance companies, where we fare very well; our growth rates are actually lower than other actuarial analyses of other insurance companies. We have a major provider of point-of-sale technology — all these things to ensure that the funding goes to the purposes for which it is intended. We do literally hundreds of audits on providers to ensure that there is no abuse of these programs.
Measuring its success is basically a funding — we are funding the things that need to be funded. And it's run kind of like a business that way, I would say.
There are other social issues around transportation or what type of products may be listed or not listed, which Mr. Roy can talk about.
On the community side, you have a performance measurement framework that we put in the RPP, the Report on Plans and Priorities, approved through our program activity alignment with Treasury Board. And we report on it in the DPR, the Departmental Performance Report; it has indicators in there. You really get down; next year we will even be down to the sub-sub-activity level of components.
So you have a different performance framework for addiction programming versus nursing or other services available. Maybe I'll turn to Mr. Roy.
[Translation]
Mr. Roy: We are facing the same dynamics as the provinces in identifying performance indicators in health. With all provincial plans, work is being done to try to determine which indicators work best in terms of their effect on health. Identifying those indicators is tough work. For example, we are better at screening for diabetes. So you might say that the number of diabetes cases has increased.
That may seem like bad news, but, on the contrary, it is considered good news because it means that we are now better at screening. We can treat people with diabetes earlier.
So the work on performance indicators in health services has not been completed, but we are doing a lot of work with our provincial partners, with researchers and with academics in order to determine what good indicators are.
Senator L. Smith: We are subsidizing a lot of programs, Mr. Roy.
Mr. Roy: Yes.
[English]
Senator L. Smith: When I hear mental health and non-insured, one of the measurements is how much money we give. It kind of makes me worry a bit because is it the issue of giving money or of trying to get results?
[Translation]
What is important for us, I feel, is not to get into the details, because we are not the ones managing the activities; you are. But could you give us some indicators that would tell us, for example, that you have been doing this, that or the other for five years with the grants we have given you? Because we need to communicate with Canadians about the money that our government spends and this would help us to give people some good news.
You mentioned that category B deals with community funding. You have begun to develop indicators.
[English]
It would be really helpful to formalize those and have consistency among the three groups so that we would understand just the results so we can talk to people about results as opposed to money.
[Translation]
Mr. Roy: We have information, of course. I think you are looking for more than this, but we can talk to you about the number of workers who have been trained at community level to provide certain services. The workers are there: we see an increase, we see an improvement. But we have difficulty in giving health status indicators as such.
We have data, we have teams that go and provide mental health support. Each community, many communities, have more than they once had. More communities are covered by different services. But we have figures.
Senator L. Smith: The point I am trying to make is that, instead of just having money to hand out to people, it would be better to have more specific indicators in the sense of results that will help our society.
Mr. Roy: Yes, I understand. Thank you.
[English]
Senator Eaton: This is a follow-up for Mr. Tibbetts and Mr. Roy. For this tripartite agreement of $43.9 million with British Columbia, which is very exciting — and it's to be hoped that the other provinces follow suit — is the amount of money determined by the number of First Nations people who live on-reserve? Is that how the $43 million was determined in British Columbia?
[Translation]
Mr. Roy: The $43 million is only part of the transfer. It represents the annual budget increase. This year, about $250 million was transferred.
Senator Eaton: To the First Nations Health Authority?
Mr. Roy: Yes, exactly.
Senator Eaton: Do you calculate the number of people in British Columbia who live on reserves?
Mr. Roy: Yes. What we did was take the budget that we were spending in our British Columbia office. That budget was specifically linked to the number of people living in the community. The entire budget was transferred as a lump sum.
Senator Eaton: So what happens with Aboriginal people who live in cities and not on reserves?
Mr. Roy: They are covered by provincial plans. We only provide services on reserves, except for the non-insured health benefits program. They have access to our programs, in Vancouver or in any other urban community, if they do not live on a reserve. The program is based on their Indian status. If you have Indian status, you have access to the program.
[English]
Senator Eaton: We are hearing that more and more young people now are leaving reserves and choosing to live in urban centres, so every year you will take that into account; there will be a kind of census, or every five years there will be kind of a census. So if the reserve has two people and downtown Vancouver has 50,000 —
[Translation]
Will it be handled in that way?
Mr. Roy: There is the $1 billion program that we spend on non-insured services. That program will not change. People have access to those services whether they live on reserve or in a city. That aspect will not change. The rest are community services. At that point, in British Columbia — because we have that province as a partner now — we are going to work together. We put the two budgets together and the entire population is covered.
Senator Eaton: Each community can decide what it needs most. If I am in a community that needs a lot of services to address depression, suicide, drug addiction, for example, can I allocate more of the budget to mental health nursing services or prevention?
Mr. Roy: We have two realities: in British Columbia, we now have the First Nations Health Authority. They will work with the communities to decide which types of services to provide. So the communities are now served by the First Nations Health Authority.
Senator Eaton: So they will decide for themselves what they need?
Mr. Roy: Correct. The rest of Canada has to work with us at Health Canada to determine the services that are needed. If they have a major crisis and have specific needs in their community for whatever reason, there is always the flexibility to negotiate a way to tailor services to the needs of the community.
[English]
Senator Eaton: That's a very welcome thing that they can decide for themselves what they need.
Perhaps these newspaper articles were faulty, but I read somewhere that there was a First Nations community in British Columbia that was going to open a hospital, a luxury hospital. It was going to be like the Mayo Clinic, and you were going to go there and get your knee operations the next day; and you will have all these wonderful things because they, being on reserve, did not have to obey the rules that the rest of the health system in Canada has to obey.
[Translation]
Is that true or not?
Mr. Roy: It is not true in the sense that there is a provincial jurisdiction and the community now has to work with the province. I am kept up to date on the project; they have talked about it quite openly and they now have to work with the province. They are also subject to the Canada Health Act. They are subject to Canadian and provincial legislation.
Senator Eaton: Thank you.
[English]
Mr. Lakroni, this is probably ignorance on my part, but I don't see anything in the book about the cost of the Parliament buildings, the ongoing renovation of the Parliament buildings. You didn't mention it, and it's something we look at every day.
[Translation]
Mr. Lakroni: Thank you for the question.
[English]
The cost of the Parliamentary Precinct is embedded in the Main Estimates for this fiscal year.
Senator Eaton: Right.
Mr. Lakroni: That's where you will find it.
Senator Eaton: Thank you very much.
The Chair: That means there were no surprises this year; so you didn't need to come back in Supplementary Estimates (B). Your planning as of the first of the year is still holding true?
Mr. Lakroni: Still holding true. Remember that the long-term plan for the Parliamentary Precinct is a cycle of five years over 25 years.
The first year often is where the planning for the cycle happens, and the approvals don't necessarily align with the timing of the Main Estimates. So that's why, two years ago, we didn't have it in Main Estimates; we had it in supplementary estimates.
But for the future, the projects are well under control, and the planning is well under control; therefore, they will align with the usual cycle of Main Estimates.
[Translation]
Senator Bellemare: My question goes to both organizations and is a variation on the same theme.
Let me start with Mr. Tibbets on the subject of health. When we look at the appropriations to date, we see that the appropriations for operating expenses, including the votes in the supplementaries today, will come to almost $2 billion in total, and grants and contributions come to $1.7 billion.
We know that health is normally a provincial responsibility and that services are delivered by the provinces. What are the services that your department is covering directly? Are a lot of the services going to Canadians or are they third party services?
[English]
Mr. Tibbetts: Thank you. In the $3.6 billion, roughly $2.5 billion of it is for First Nations health. A large part of that is operating for the Non-Insured Health Benefits Program.
[Translation]
Mr. Roy: We serve the First Nations population exclusively. Health Canada's responsibility in delivering health services is to First Nations.
Senator Bellemare: All the rest is for research?
Mr. Roy: Yes, and for the regulations and everything else.
Mr. Tibbetts: Nurses' salaries.
[English]
And for environmental health inspectors.
[Translation]
Mr. Roy: This is for First Nations. In the rest of the department, it is for regulating medications, food and so on. We respect the fact that the provinces have the primary responsibility for delivering health care.
Senator Bellemare: In your case, Mr. Lakroni, if we look at the broad strokes of the appropriations that you are proposing today, we see that operational expenses are more than $2 billion and capital expenses are $700 million. There are no grants or contributions. So does that mean that all the public works under your department's jurisdiction are done by federal employees?
I would like to know how these things work. It surprises me that there are no grants and contributions. Generally, you see them all over the place, but it is not so for you.
Mr. Lakroni: Our department has a mandate to provide common services, meaning that we mainly serve other departments. For shared technology services, we are the federal government's administration. We provide procurement services, real estate services. We provide the space for public service employees; we provide departments with translation and so on. So we do not really have programs that need direct grants and contributions to the public. There are some exceptions, but the amounts are not large enough to justify setting up a grants and contributions program.
We provide our services through consultants, subcontractors and internal employees. Take real property, for example. For that, we provide design and program management services within the department. The services are provided by private sector subcontractors. Therefore, it is a blended format that is appropriate for the delivery of our services.
Senator Bellemare: Is it your department that is responsible, for the Champlain Bridge, for example, or is it the bridge corporation? Is it your department that will take care of Gilmour Hill in Quebec City, for example, and that kind of thing?
Mr. Lakroni: The Department of Transport will deal with the Champlain Bridge. Public Works, for example, will take care of the procurement side.
Senator Chaput: My question is for the Health Canada representative. In the programs indicated here in Supplementary Estimates (B), has any money been set aside to improve water quality in first nations communities? Has an amount been set aside for that somewhere?
Mr. Roy: We do indeed have money to improve water quality. We do not have any in the supplementary estimates this time because it is in our base. However, we have money under the legislation adopted on drinking water for aboriginal communities. Health Canada receives an envelope of about $20 million a year to check it. Water samples will be taken and our agents visit the communities. Employees in the communities are trained to check water quality. Infrastructure and that kind of thing is really a matter for the Department of Aboriginal Affairs. They are the ones responsible for infrastructure.
Senator Chaput: In Health Canada's report on plans and priorities, which is on the website, you have a goal to increase the percentage of first nations communities with acceptable water quality grades.
Mr. Roy: Yes.
Senator Chaput: Is that the target you yourself have set?
Mr. Roy: Yes.
Senator Chaput: Which would mean that some communities currently have an unacceptable quality of water?
Mr. Roy: Not all communities have an acceptable quality of water. What is important is that we can identify the communities where there is a problem so that a boil water advisory can be issued if necessary. Or sometimes bottled water has to be provided. This is mainly for planning the work with respect to new, needed infrastructure.
Senator Chaput: Do you know what percentage of communities currently have an unacceptable grade? Could you obtain that information?
Mr. Roy: Yes, I could try to find that information for you.
Senator Chaput: I asked a different department this question last year, I think, and we have not received that information. Could we get that information?
Mr. Roy: I will make sure you get the information.
The Chair: As soon as possible, please.
Mr. Roy: Certainly.
The Chair: Because we will have to vote on this bill.
Mr. Roy: If I may, I have been told that 85 per cent of water systems meet the chemical parameters, which is a 9 per cent improvement over 2009-10.
Senator Chaput: A 9 per cent improvement?
Mr. Roy: Yes.
Senator Chaput: Thank you.
Senator Rivard: My first question is for Health Canada. Mr. Tibbetts, in the second paragraph of your speaking notes, you say that with the increases requested, the total budget will be raised to $3.8 billion for the current fiscal year. Since health comes under provincial jurisdiction, am I to understand that the $3.8 billion is strictly for first nations, or is it Canada's total health spending?
In the second paragraph of your speech, you say, ``This means that Health Canada's total budget will be raised to $3.8 billion for the current fiscal year.''
Mr. Tibbetts: The budget represented is $3.8 billion. Approximately 65 per cent is for first nations, as stated this morning. The rest is for other Health Canada programs.
[English]
The health protection and food area is looking at ensuring that drugs and medical devices are safe and effective and allowable into Canada. There are food safety aspects of Health Canada for labelling and ensuring that food is properly represented and safe as well.
There is a large regulatory component that represents close to $1 billion of that.
There is also a pesticide area working with Agriculture that ensures pesticides are safe and effective in Canada. That's kind of the regulatory business. There's our overhead as well, internal services, which was about 10 per cent three years ago. In two years' time, through the cycle of Main Estimates, we will be down to around 6 per cent of the department with the implementation of the economic action plan, et cetera.
Another large component is our work and leadership within Canada, funding organizations to do research and provide advice within the system.
We do not flow funding through the transfer payments to provinces. That's done by the Department of Finance. That's not part of the $3.8 billion, of course.
So those are the three major areas: regulatory, First Nations and leadership around the system.
[Translation]
Senator Rivard: My next question is for Public Works and Government Services Canada.
You will not be surprised that a senator from Quebec City is wondering about the armoury that was almost completely destroyed in winter 2008. Five years later, all we are seeing are the stabilizations that ensure the walls are preserved. Shelters have been installed so that bad weather does not ruin the building further.
An additional $3.4 million is being sought. What amount was for the current fiscal year? Why ask for an additional $3.4 million when you have not yet finalized the plans and estimates? We are far from issuing a call for tenders and even further from doing the work.
Mr. Lakroni: The Quebec City armoury is an important project and is a heritage undertaking for the Crown, as well as for Quebec City. Specifically, we are seeking $3.4 million to start the definition phase and develop the plans and specifications for preliminary site preparation.
Based on the plans, construction will cost $93 million and will end in 2016-2017. The definition phase is $6.8 million; the implementation phase, meaning construction, will cost $80.5 million; and there will be internal funding of $5.7 million. That is what is represented in the plans for building the armoury.
Senator Rivard: You mentioned $38 million for tax compensation for the new buildings, including in Gatineau. I worked in municipal government for 15 years, and I remember that there was a tax compensation for federal buildings; you do not pay the same assessment percentage as a business or residence.
Are the percentages the same if we compare what Quebec requires in federal buildings with other provinces? If the building in Gatineau had been in Ottawa, would the tax compensation be almost the same or is there a marked difference between certain provinces? If so, why?
Mr. Lakroni: I do not really have the exact details to answer your question. However, I will say that municipal taxes are based on the market rules and conditions where the municipalities are located.
I do not really have a detailed analysis that compares the various provinces, but I can tell you that, logically speaking, it depends on the municipalities and the market conditions of each municipality and province.
Senator Rivard: For example, if a federal building was in downtown Vancouver or downtown Toronto, the assessment would be much higher in Vancouver than in Quebec City. So the amounts in lieu of the tax are based on the assessment and not on the square footage. Each province has its requirements.
[English]
The Chair: That concludes round one. We are going into round two, which is made up of short, snappy questions with quick answers.
Senator Callbeck: Thank you. On page 2-45, there is $169 million for ``Contributions for First Nations and Inuit Health Infrastructure Support.'' What kind of infrastructure are we talking about here?
Mr. Tibbetts: Again, this is the contribution authority for the transfer of the B.C. tripartite. It's the name of the authority in Main Estimates under which we'll flow funding to the First Nations Health Authority.
Senator Callbeck: But it says ``Infrastructure.''
Mr. Tibbetts: Yes. It's not direct primary care and it's not the insured services we provide. It's a bit of both, but the majority of the funding in the B.C. tripartite still flows through that authority from Parliament. It doesn't have a separate wording — funding — to British Columbia tripartite, which could have been the option, but it's here.
Senator Callbeck: Okay. Going to Public Works, there is $2.3 million for ``audits primarily related to defence contracting.'' Can you tell the committee what contracts were audited?
Mr. Lakroni: Thank you for the question. The $2.4 million is spent on auditing the contracting, primarily defence — approximately $7 billion per year for military contracts transit via PWGSC on average. So we focus on high-risk, complex contracts, and we ensure that the payments requested on those contracts are in accordance with the terms and conditions of the contracts. Basically, this is to deter contractors from overbilling the Crown. The government's objective is to demonstrate due diligence and prudent use of taxpayers' money.
We operate on a risk and complexity basis for these contracts.
The Chair: As a supplementary to that, wouldn't that be a Treasury Board function?
Mr. Lakroni: It is a PWGSC function because the procurement resides with PWGSC, and PWGSC is the agent of procurement that is familiar with the terms and conditions of the contracts that we award on behalf of departments.
The Chair: So before Treasury Board releases the money, it does no due diligence on its own? It just says, ``What do you think, Public Works?''
Mr. Lakroni: The due diligence, depending on the procurement type, I would say there is there is commensurate due diligence. Treasury Board approves the funding for projects, approves the contract in the definition of their broad terms, and Public Works delivers or implements the contract. Therefore, Public Works is the agent on the ground that deals with the suppliers. And we do this audit.
This same function exists in the U.S., for instance. It's just much larger, because these functions pay for themselves. The recoveries are estimated to be over two to one and on average four to one. So for monies spent, their recoveries are expected to come to the CRF to pay for this function.
The Chair: Thank you for that clarification. Thank you. Senator Callbeck, you still have the floor.
Senator Callbeck: You're asking for an extra $2.3 million. Now, can you be specific and tell us what contracts are going to be audited?
Mr. Lakroni: Let's take an example. In 2012-13, the program examined 41 contracts, primarily DND contracts, with a contract value of $4.7 billion spending. They vary from buying uniforms — I am just giving examples here — to all kinds of contracts on behalf of National Defence.
The Chair: You're asking for money to spend in the future. Senator Callbeck was asking what specifically you're asking for.
Mr. Lakroni: In 2013-14, the program plans to perform the same level of activity as in 2012-13. Primarily, right now, defence contracts are being supplied by suppliers. When the billing comes in, we audit the billing against the terms and conditions of those contracts to make sure that the payments made by the Crown are in accordance with the terms and conditions of the contract.
Senator Callbeck: But you're asking for $3.3 million extra dollars. Can you tell us specifically what audits that money is going to be spent on?
Mr. Lakroni: The amount spent on the program — the program is called the Cost and Profit Assurance Program — is to ensure the costs charged to suppliers to Canada are reasonable and in compliance with contract payment terms. The audit is primarily for military contracts.
Right now, we have a capacity estimated at about $1.8 million that is cost-recovered from the clients, primarily in National Defence. This money is to supplement the existing capacity and allow for broader audits of the base that we ask suppliers to provide us with.
Senator Callbeck: Can you provide us with a list of contracts that are going to be audited or have been audited with the amount of money in this budget?
Mr. Lakroni: We certainly can. We'll do that.
The Chair: Have you chosen the contracts you're going to audit yet?
Mr. Lakroni: Well, we will have to give you what we audited in 2012-13 and what the plan is for 2013-14. We are way advanced into 2013-14, the activity is not new, and so we'll be able to give you a list of the contracts audited.
Senator Callbeck: That would be great. I have one more question. It's on the $24.9 million for additional accommodation provided by government departments and agencies. I'm surprised at that figure because the civil service is shrinking.
How does the amount of money that's going to be spent on additional accommodation this year compare with last year?
Mr. Lakroni: The real property program delivers services to accommodate the federal public service, and this $25 million particularly is for two components. There is $11 million, or 44 per cent, that is related to programs being extended or renewed. It does not translate into additional office accommodation. And the other $14 million is used to acquire additional office space, specifically for civil departments, but the top three are Agriculture, CBSA and Statistics Canada. So the 13 per cent is basically calculated on the space requirements for specific programs.
Now, in terms of the overall budget to deliver accommodation services, there are firm commitments to generate savings. I'll give you numbers. Basically, by 2018-19, we are committed to saving $127 million on accommodation via the recapture of space. Basically, as departments implement their budget reduction, they use less space, so that space is being recaptured and reused.
The other thing we are doing is modernizing our space to bring it up to modern standards, decreasing from, say, 18 square metres per employee to 16 square metres per employee, using more open space, more energy-efficient space and more technology-prone space.
So savings are committed to, and they will amount to $127 million by 2018-19 ongoing.
Senator Callbeck: When do these savings start to kick in?
Mr. Lakroni: To give you specific numbers, there are two components. There is strategic review and there is the contribution to the reduction of the deficit. In 2013-14, they start with $15 million, and they ramp up to $127 million by 2018-19.
Senator Callbeck: This year, you're saving how much?
Mr. Lakroni: We're saving $15.1 million.
Senator Callbeck: How much did you spend last year in this category of additional accommodation? Are we spending more this year than last year? We have fewer people.
Mr. Lakroni: This year, we are spending $2.2 billion on accommodation, including revenues generated for services of $876 million. That's between the Main Estimates and the money being sought in supplementary estimates.
Senator Callbeck: What did we spend last year?
Mr. Lakroni: I do not have the figures from last year, but I would say roughly, in the order of magnitude, similar amounts.
Senator Callbeck: So you say we're saving $15 million. How do you get that? Where does that come from?
Mr. Lakroni: In 2012-13, we did an assessment of the space that we are using, and based on department usage, we figured that with these two streams that I talked about, recapture of space and modernizing of space — basically, shrinkage of space — we could save the profile of money I mentioned to you.
That does not mean that other departments don't have programs expanding or some sunset programs renewing. If and when that happens, we are provided 13 per cent of the salary to provide accommodation to those departments. I just gave you three examples of those departments: Agriculture Canada, CBSA and Statistics Canada. I can give you the programs specifically.
Senator Callbeck: You say you're saving $15.1 million. The bottom line is that your expenditures are basically the same from last year to this year, so I'm trying to figure out how you come up with $15 million.
Mr. Lakroni: The reason Public Works is saving more towards 2017-18 and 2018-19 is that our current status is that we have leases, basically contractual obligations, to sustain a certain level of space, although we make best use of it. As departments also shrink their space and as they implement their own programs, our savings are contingent on the savings in other departments and the shrinkage of their own programs.
The money that I talked about is really hard reductions in our budget. Our budget has really been reduced, so we are committed to delivering the savings.
Senator Callbeck: I understand what you're saying. I mean, fewer people, yes, you would think the figure would go down. I'm just having a hard time figuring out where you get $15 million in savings when the amount of money you spent last year is pretty much the same as this year.
Mr. Lakroni: The $15 million has been saved; basically, it was taken from our budget.
To give you an example, our Main Estimates this year have been reduced by $82 million, which was given to PWGSC last year for price and volume protection. So we had it last year; we don't have it this year.
This year, we're asking for $33.3 million for non-discretionary spending. So while we are reducing or saving, other programs are being approved for which there are salary components. Therefore, we have to supply accommodation to those departments. Therefore, we are funded to provide that incremental accommodation requirement.
Senator Callbeck: Right, but the bottom line is you're spending the same amount of money this year as last year.
Mr. Lakroni: As I mentioned, we have seven years to materialize the savings of $127 million and the efforts to reduce the deficit. Strategic review, we are saving another $114 million via a variety of initiatives, basically locating in suburbia buildings, renewal of leases outside the core Ottawa area and the consolidation of leases and consolidation of departments from various locations into one.
So, between strategic review and the Deficit Reduction Action Plan, $114 million plus $128 million, that's $240 million ongoing — 18, 19 ongoing — already reduced from our budget. These are hard savings.
Senator Callbeck: Well, I still say I just don't understand it, but anyway.
Senator Eaton: I have a quick, snappy question. You're providing $3.2 million so the department can continue to respond to the increasing number of health-risk assessments and food-safety investigations.
We've just signed a huge free trade agreement with Europe, a lot of which will involve agricultural and processed food. We're about to do the same with India and hopefully the TPP. Does this have anything to do with our trade agreements, or why all of a sudden $3.2 million for food safety?
Mr. Tibbetts: The $3.2 million is mostly the Weatherill report and the continuation of funding as a result of the listeriosis issue.
Senator Eaton: That's really the only issue?
Mr. Tibbetts: Yes. Basically, it's to maintain the ability to respond within the established service standards that have been put in place since that time and develop further testing and detection methods.
Senator Eaton: Perhaps next year we'll have something on our trade agreements on which you have to deal with the processed foods and other things.
Mr. Tibbetts: Perhaps. It may also be CFIA and other parts within Health Canada. There are now three departments within the portfolio responsible for foods: Health Canada, CFIA — the Canadian Food Inspection Agency — and the Public Health Agency of Canada, whom I do not represent.
Senator Eaton: Thank you.
Senator Buth: I have a couple of questions for Mr. Tibbetts and then for Mr. Lakroni.
You mentioned the Canadian Food Inspection Agency, and responsibility for the Canadian Food Inspection Agency has been transferred over to Health Canada. Are there any financial implications to Health Canada?
Mr. Tibbetts: No, there are not. As the minister has stated, putting these together makes sense from an operations point of view. We're not collapsing back offices like we did with the Public Health Agency in the economic action plan. It's really to get the right synergies and have one minister accountable for the full range of issues in the food area. We're not seeking funding. Any future funding sought is not as a result of putting them together. It would be expanding requirements, needs of Canadians, but it wouldn't be as a result of the merger.
Senator Buth: The second question is to come back to the line of discussion that Senator Smith started about targets. Just to narrow the discussion down, do you have targets to improve the health of First Nations people? Do you actually set targets to reduce the incidence of diabetes, to reduce the incidence of suicides among First Nations?
Mr. Tibbetts: I can go to Mr. Roy to answer that.
[Translation]
Mr. Roy: We have targets for tuberculosis, for example. We have developed a national tuberculosis strategy for first nations communities and have identified specific targets to reduce the number of tuberculosis cases by 15 per cent in the coming years. We have set these kinds of targets in various programs. We have the same thing for HIV.
[English]
Senator Buth: Those are two examples.
Mr. Roy: Yes.
Senator Buth: Where would we find that in the plans and priorities document?
Mr. Tibbetts: You'll see it in the Departmental Performance Report and some in the RPP as well.
Senator Buth: Thank you very much.
Mr. Lakroni, does Public Works manage diplomatic real estate, such as ambassadors' residences? Do you have anything to do with that?
Mr. Lakroni: No, Public Works manages the accommodation of public servants.
Senator Buth: Not embassies?
Mr. Lakroni: No.
Senator Buth: Even though those are public servants, that's the responsibility of international —
Mr. Lakroni: It's primarily office accommodation.
Senator Buth: I was going to go along the line of the sale of Macdonald House, but I will not do that, then.
In terms of the Parliamentary Precinct, the upgrades, you've said that it's over a span of 25 years. Is there a total budget for those 25 years, or is it, as you say, parsed out in five-year components?
Mr. Lakroni: It's parsed out by five years, and the AG used an estimate that was done by PWGSC. They are very preliminary estimates for the type of building over 25 years, plus or minus $5 billion, but that amount was mentioned by the AG.
Senator Buth: What five-year block are we in now? When is completion expected?
Mr. Lakroni: We are in the second tranche of five years.
Senator Buth: When is completion expected?
Mr. Lakroni: So we started in 2007, do the math —
Senator Buth: 2032?
Mr. Lakroni: More or less.
Senator Buth: Thank you very much.
The Chair: I'm just doing my calculations here. We had said earlier, in a discussion with respect to the Parliamentary Precinct, Mr. Lakroni, I see that you're looking for almost a million dollars, $900,000, under vote operations 1b. Can you tell us what that's about — funding for projects to rehabilitate the Parliamentary Precinct buildings? That's presumably outside the global contract that Senator Buth was just discussing with you.
Mr. Lakroni: It is primarily related to the operations and utilities for the food production facility building and preliminary analysis for the relocation of the employees from the conference centre to relocate the Senate.
The Chair: So this is extraordinary, not something that was contemplated when this overall 25-year plan was done?
Mr. Lakroni: That is correct.
[Translation]
Senator Chaput: Health Canada has requested $3.2 million to strengthen its capacity to prevent and detect food- borne illness outbreaks. Which activities associated with prevention, detection and intervention fall under Health Canada? Is Health Canada responsible for activities associated with prevention, detection and intervention?
Mr. Tibbetts: No, the funding is set aside for listeria.
Senator Chaput: Only listeria?
Mr. Tibbetts: Yes, to improve our capacity in that area.
Senator Chaput: How will you strengthen your capacity? Can you give me some fairly brief examples?
[English]
How do you do that?
Mr. Tibbetts: We do health assessments and food safety investigations based on the models with CFIA. CFIA does the inspections and we provide the lab capacity behind it.
Health Canada establishes the policies and standards to which food safety and nutrition value of food have to be maintained, as well as the labelling of food products, and it conducts the health assessments for the food. We also run a small educational program, awareness program, and some advertising, for example, to help Canadians read labels and that sort of thing. We do not do the inspections of foods.
Senator Chaput: Who does the inspection?
Mr. Tibbetts: The Canadian Food Inspection Agency, which is the entity I spoke of a few minutes ago that was moved under the Minister of Health.
[Translation]
Senator Bellemare: Mr. Chair, I would like to ask a question supplementary to Senator Callbeck's. I would like to know what percentage of your budget is taken up by your system costs. I understand that, since your budgets do not increase, you constantly have to reduce your spending. I have some understanding of math. I would like to know the overall percentage of your system costs in your budget. Do you have them? I would like to have them to see if it is the same thing. If you do not have them now, you can send them to us later.
Mr. Lakroni: I would say that there are a number of components for the system costs. There is the system to operate the department, and project systems to manage programs like the federal government's pay system and pension system.
Senator Bellemare: I do not know if you understood my question. In Quebec, we call these system costs. If your budget is three billion and it stays three billion from year to year, that means that you are going to have to reduce your expenses because the system costs — salaries, inflation — automatically increase. I wanted to know what your costs were, percentage-wise. I do not know what you call them. In Quebec, we call them system costs.
[English]
Mr. Tibbetts: The supplementary estimates here are an 11 per cent increase over our base budget at this point in time. The Deficit Reduction Action Plan or Economic Action Plan 2012 will result in a reduction of just under $200 million at Health Canada. Those reductions were on specific budget elements.
In Health Canada, however, we have this insurance business as well as some services around First Nations that are growing because of population increases, inflation increases, price of drugs, price of fuel, which provide drivers that require increases to budgets on the program side. So we're frozen and reducing in areas. My budget as head of finance has dropped by $3 million. It's not growing at all. But the area under Mr. Roy, important programs for front-line service delivery to our clients, is growing because of those drivers. We are breaking out our budgets that way.
Of the increases you see here, the $395 million, the majority are in the areas where those growths are recognized by the government to be important to do, whereas we are continuing to implement reductions even like space, to reduce our overhead down tremendously.
[Translation]
Senator Bellemare: You do not have the percentage? Is it 2 per cent, 3 per cent? If you have a budget that is frozen, what is the percentage of the reduction?
Mr. Tibbetts: In the action plan budget, the reduction was close to 10 per cent in relation to the frozen budget.
[English]
We took the Non-Insured Health Benefits Program out of that equation, so we didn't affect those front-line services. Our reductions were about 10 per cent of those frozen in budget. Health Canada was one of the larger reductions at that time, against those budget components.
For me it is financed exactly; the overhead functions were quite reduced. In these estimates you'll see the statutory item that's in here is $60 million. That is as a result of a finance mechanism where we combined the IT, finance, HR services, facility services of Health Canada, the Public Health Agency. We're collectively saving $24 million a year, or we will be next year as a result of that merger, so it's significant.
[Translation]
The Chair: would Mr. Lakroni like to add anything?
Mr. Lakroni: PWGSC does not have any budget components that adjust from year to year, aside from the protected component for price. We are compensated, for example, for tax increases, in the price of electricity, gas and so on, which are subject to market prices. There is the cost of leases and building operation. Those amounts explain the $38.3 million, the first item under the supplementary estimates. Those are price-related increases. When the amounts we are given are not spent, they are taxed back. Those amounts cannot be spent for other things. Calculated on an annual basis, in an almost $6 billion budget, that represents about less than 1 per cent.
Senator Bellemare: So if your budget increased by less than 1 per cent, you could do the same things as before, with the same employees?
Mr. Lakroni: If for example the market price rose by 1 per cent, for that component only, because the other budget components are not protected against inflation.
Senator Bellemare: So the system cost is higher than that?
Mr. Lakroni: That is right.
Mr. Roy: To give you a more specific example, for a program like the non-insured health benefits program, which represents $1.2 billion in spending a year, our administrative costs to manage the program are 4.9 per cent. We did an analysis and compared ourselves to other similar programs across Canada. The average was about 5.6 to 5.9 per cent for administrative costs, and we are below that. That gives you an idea what the administrative costs are for administering a specific program.
Senator Bellemare: Thank you very much.
[English]
The Chair: Ms. Fortin, could you look at page 2-83 of the English version? I'm looking almost at the bottom of the page and this is my understanding of available authorities.
[Translation]
There is an amount of $633,000 that was approved in the budget by Parliament last year, but it was not spent. Can you explain what projects these funds were not used for?
Mr. Lakroni: If I may, my colleague is here to answer questions about pay and pension management. There is a great deal to be said about that important program if you want to ask questions about it.
With respect to the $600,000, those are horizontal reductions and the participation of Public Works in travel reductions specifically. Our travel budget was cut, and those amounts became available.
[English]
They become available to offset other requirements, so it's pure reduction in our travel. We, Public Works, are materializing a higher number than this that we are using internally to allocate to other priorities via usage of technology, et cetera.
The Chair: Okay. When you show available authorities at the bottom here, that reduces the total amount that you're asking us to approve by that amount, so you're in effect applying it to these other items.
Mr. Lakroni: That is absolutely correct.
The Chair: I'd like to do the same thing, if I could, with Health Canada. I'm looking at page 2-44 and the available authority. This is somewhat new for us; we're just learning how you're using this. For this $2,646,000, that's a lot of travel. Is there something else involved in that, or is that just travel?
Mr. Tibbetts: No, there are two items in there. Travel is the first line, of $1.146 million. Health Canada has reduced its travel by over 11 per cent — I've used that number already today, but 11 per cent seems to be the magic number — from last year. As a result of travel restrictions, it is actually a bit larger than this overall.
Five years ago we were spending $42 million on public servant travel. We're now down to around $23 million, which is a 44 per cent reduction in five years. So it's been taken very seriously at Health Canada, with many management regimes and approval processes to reduce it.
The other item is $1.5 million. It's a reduction to the Health Council of Canada, which was set up in 2003 to support the health accord in that era. It's been in place for over a decade, and it has basically outlasted its useful life. It's being wound down, so that's what that $1.5 million is for.
The Chair: Thank you. If you could turn the page over to 2-46, you will see ``Carryforward of operating budget.'' Now, operating budget is usually number one, but you are carrying forward almost $10 million, and you're carrying it forward into capital.
Mr. Tibbetts: I don't have that figure.
Senator Buth: That's the House of Commons.
The Chair: That's the House of Commons, yes. Sorry.
Mr. Tibbetts: That's not me.
The Chair: Thank you very much. You wouldn't be able to help us with that at all, would you? I will have to bring someone in from the House of Commons to explain why they're moving from operating to capital and carrying it forward.
Mr. Tibbetts: Our carryforward amounts are already in our ``Authorities to Date'' column, just to answer your question, chair.
On page 2-44, Health Canada carried forward close to $90 million from last year in vote 1 and a small amount of about $1 million in vote 5, which are already embedded in authorities to date. It's probably the same with my colleague at Public Works; they are not separately appropriated.
The Chair: You can help me with these carryforwards. Is it 10 per cent?
Mr. Tibbetts: Five per cent of operating budget, which is exactly what we carried forward.
The Chair: Typically, I would think that you carry forward into the same vote category, if it's operating to operating and if it's capital to capital. Is that the normal way you would do it?
Mr. Tibbetts: That is correct, sir.
The Chair: That's why I was wondering what the House of Commons was up to, but as Senator Buth pointed out, you probably can't help me with that.
Colleagues, unless there are other questions, that concludes our work with Public Works and Government Services Canada and Health Canada. Thank you very much for being here. Good luck to you for the rest of the year, and we look forward to seeing you in due course.
Senators, this has been all of the witnesses and departments we thought we would have with respect to Supplementary Estimates (B) at this time, so we would allow our scribes with the Library of Parliament to go ahead and prepare the report, which you know we have to get in and debate before we finally deal with the supply bill at third reading.
Unless I hear any objection, that's the way we will operate. Have in mind that we are mandated to deal with these supplementary estimates throughout the year, so from now until the end of March of 2014, we can continue any other work we want to do with this or the Main Estimates, but this is all we intended to do at this stage.
That concludes Supplementary Estimates (B). This is good. We are progressing nicely. Now we will wait for the supply bill to come from the House of Commons and then our report to get done. We are anticipating that we should be able to deal with our report next Tuesday morning at our normal meeting time, we hope, which means we'll get it to you so you can look at it and suggest any changes you would like to make, and then we'll come here and talk about those on Tuesday morning. Then we will file it, and then the time will start running.
If you are anticipating on speaking to any of these items, Wednesday or Thursday of next week would be the time to do so, or sometime in that time frame of next week.
Now, we had anticipated having at this time two different groups. One was the Legal Committee and the other was Transport, and neither one can make it. I got messages during the meeting; they are caught up in delayed or diverted flights that weren't landing in Ottawa, so we hope this afternoon we can do that. I'd like to speak with steering about one of the two, but we will start at 2:15 this afternoon.
All six of the different committees have filed their reports, so you can get their reports, but they're not awfully helpful, with all due respect. What we were hoping is that they would come and explain to us the background because you are going to be asked to vote on a clause-by-clause basis, and you need some appreciation of what is in the clauses. But some of the reports just say, ``We support the initiative,'' and I think we need more than that in order to properly vote on these. That's the purpose for this afternoon. The chair and the deputy chair have been invited from each of the committees, and we will start at 2:15 with Foreign Affairs. I would expect 10 to 15 minutes for each committee.
If you have any questions, look at the Library of Parliament suggested questions; they are very helpful in suggesting how to analyze the work these other committees have done.
This is all the work that we anticipated doing — unless something happens this afternoon — with respect to Bill C-4, and then we'll be ready to wait for the bill to come from the House of Commons.
When we finish up Bill C-4 and the supply bill in large part depends on when we get them from the House of Commons, and then the time starts running here, and we are doing our work so we're ready to go as soon as we get them.
Senator Chaput: Are we meeting on Thursday?
The Chair: There will be no meeting on Thursday. After this afternoon, we don't anticipate any meetings until our next regular meeting next Tuesday morning, God willing and all goes smoothly.
I am told the Library of Parliament expects to distribute the report on Bill C-4, including what happens this afternoon, and estimates on Monday, fully translated into both official languages, which would mean that on Tuesday morning we should be in a position to deal with those. Okay?
Senator Bellemare: No meeting tomorrow night?
The Chair: No meeting tomorrow night. What do you think about that?
Senator Bellemare: Okay, good. I didn't know that.
The Chair: And there won't be one next Wednesday night. This afternoon we do meet at 2:15.
Senator Chaput: And that's it?
The Chair: That's it until our next meeting. This afternoon, the meeting is on the third floor, 356-S.
[Translation]
Senator Bellemare: Will the clause-by-clause be next week? Would it be next week?
The Chair: Yes.
Senator Bellemare: It will not be this week.
The Chair: Yes, next week.
Senator Bellemare: How long will it take to get to the Senate?
Senator Eaton: It will go to the Senate immediately.
Senator Bellemare: There will not be a two-day delay?
The Chair: No, the next day. After I table the clause-by-clause. We can start third reading the next day.
Senator Bellemare: Can there be a debate then?
The Chair: Yes, in third reading. There is no debate on the report unless there are amendments. In that case, there can be a debate.
If there are no amendments, we can go directly to third reading. It is a little complicated because the supply does not work the same way. We will not do a clause-by-clause study for this supply because it is the only one that goes directly from second reading to third reading.
But we will have the report that we have already done, and we will discuss it next Tuesday. It is a bit complicated.
[English]
Meeting adjourned, thank you very much. See you this afternoon.
(The committee adjourned.)