Proceedings of the Standing Senate Committee on
National Finance
Issue 6 - Evidence - February 11, 2014
OTTAWA, Tuesday, February 11, 2014
The Standing Senate Committee on National Finance met this day at 10:30 a.m. to study the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2014.
Senator Larry W. Smith (Deputy Chair), in the chair.
[Translation]
The Deputy Chair: Good morning and welcome to this hearing of the Senate Standing Committee on National Finance. This morning we are going to continue this morning our study of the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2014.
[English]
We are pleased to welcome this morning a number of officials from Foreign Affairs, Trade and Development Canada. We welcome Nadir Patel, Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology; and Arun Thangaraj, Director General, Financial Resource Planning and Management Bureau.
From the Canada Mortgage and Housing Corporation, we welcome Brian Naish, Chief Financial Officer; and Debra Darke, Acting Vice President, Regional Operations and Assisted Housing.
From Employment and Social Development Canada, we welcome Alain P. Séguin, Chief Financial Officer.
I understand one spokesperson from each organization has a brief opening statement. Mr. Patel, I would ask that you begin, and then we will proceed to Mr. Naish and Mr. Séguin, if that's okay with everyone.
Nadir Patel, Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology, Foreign Affairs, Trade and Development Canada: Good morning. Thank you for the invitation to appear before this committee. It is certainly a pleasure to be here again. I will make a brief opening statement. After my colleagues present their statements, I would be happy to answer questions.
Our last appearance before this committee to discuss the estimates was in the latter part of last fiscal year, in early March 2013. Since that time, there have been significant developments that have contributed to the current context.
On June 26, 2013, the Budget Implementation Act, Bill C-60, received Royal Assent, formalizing the amalgamation of the Canadian International Development Agency, CIDA as we refer to it, and Foreign Affairs and International Trade Canada, or DFAIT as we used to refer to it, to create the new Department of Foreign Affairs, Trade and Development Canada. The acronym that we go by internally is DFATD. I will let you decide if you want to use that or not, but I will refer to that every now and then in my remarks.
The mandate of the new department is outlined in the Department of Foreign Affairs, Trade and Development Canada Act and can be summarized as follows: manage Canada's diplomatic and consular relations with foreign governments and international organizations; engage and influence international players to advance Canada's political and economic interests and the values of freedom, democracy, human rights and the rule of law; improve and maintain market access for Canadian businesses through the negotiation and management of international trade agreements; provide advice and services to help Canadian businesses succeed abroad; foster foreign direct investment in Canada and support international innovation, science and technology; deliver consular services and travel information to Canadians to help them travel safely abroad; support global peace and stability and lead coordinated Canadian responses to crises and natural disasters abroad, including the provision of humanitarian assistance; and alleviate global poverty and enhance prosperity and stability in the developing world through the management of Canada's Official Development Assistance to deliver sustainable development programming.
DFATD also manages Canada's international platform, a global network of 172 missions in 105 countries abroad, providing a range of services to Canadians and Canadian businesses, while also supporting the international work of 26 federal departments and agencies, Crown corporations and provincial governments.
As reflected by the breadth and scope of the department's mandate, DFATD remains one of the most complex departments in the Government of Canada.
The department continues to face a wide range of challenges arising from uncertainty and volatility in the international environment in which it operates, such as natural disasters, conflicts and security threats.
Given the department's international operations, its annual expenditures are often influenced by fluctuations in foreign currencies, varying rates of foreign inflation, and changes in assessed contributions related to memberships in international organizations.
Against this backdrop of complexity and volatility and combined with an expanded mandate through the amalgamation of two former departments, the new department continues to place a strong and unwavering emphasis on prudent and careful financial management to deliver its mandate in a sustainable, effective and efficient manner.
The 2013-14 Main Estimates were tabled before the announcement of the amalgamation of the former departments CIDA and DFAIT. Those departments' respective Main Estimates were tabled separately on February 25, 2013, and received Royal Assent on June 20, 2013.
Specifically, the Main Estimates for the former DFAIT were $2.311 billion, a net decrease from the previous year of $270.5 million. This net decrease is comprised of a net decrease of $152.7 million in grants and contributions, vote 10; a net decrease of $99.3 million in operating, vote 1; a net decrease of $33.7 million in capital, vote 5; a net increase of $14.6 million in respect of pensions for employees locally engaged outside of Canada, vote 15; as well as a small increase of $500,000 for statutory items such as contributions to employee benefit plans.
Specifically with respect to the former CIDA, its 2013-14 Main Estimates were $3.159 billion, a net decrease of $252 million from the previous fiscal year. This net decrease of $252 million is attributable to a decrease of $234.7 million in grants and contributions, vote 30; a net decrease of $13 million in operating, vote 25; as well as a decrease of $4.7 million for statutory items such as contributions to employee benefit plans and payments to international financial institutions.
As mentioned earlier, Bill C-60 formally created the new department DFATD and, through that legislation, both former departments' appropriations were brought together. Bringing it all together today, the total authorities for this fiscal year 2013-14, including any amounts approved through supplementary estimates, are $5.172 billion.
These appropriations are comprised of $3.256 billion in grants and contributions, vote 10. The vote was renamed based on the former DFAIT vote, which includes assessed contributions and development programming in that amount. Also, $1.471 billion in operating, vote 1; $229 million in capital, vote 5, which is largely for real property projects such as the Canadian High Commission in London consolidation project; and $65 million for payments in respect of pensions for employees locally engaged outside of Canada, vote 15; and $150 million for statutory items.
I should mention for reference that the first three months of expenditures of the former CIDA's operations which occurred prior to the effective date of amalgamation are not included in the $5.172 billion figure that I just mentioned. These expenditures, which will be reported separately in the Public Accounts for this year, amounted to $663 million.
To conclude, a word on amalgamation: The amalgamation of two former departments into one provides a rare and unique opportunity to build a new department, to bring together strengths and best practices, and to leverage a broader pool of talent and resources. We are moving quickly to fully integrate our corporate and administrative functions to ensure that the department continues to manage its resources through a departmental ecosystem of sound, robust financial management policies and frameworks.
With its expanded mandate and a corresponding increase in appropriations, we place an even greater emphasis on effective internal controls, on a robust risk management framework and a strong performance measurement capacity. At the same time, however, we concurrently focus on delivering high-quality support to our programs and operations in Canada and abroad.
I will conclude by emphasizing that as we look ahead, the department remains committed to the ongoing, responsible stewardship of resources and sound financial management in order to ensure that its priorities are met, its goals are fulfilled and its program results are achieved in support of a vision that strives to continuously find better ways to serve Canadians, promote our values and interests, solve global challenges and bring prosperity to Canada and the world.
Thank you very much, Mr. Chair, for allowing me the opportunity to make a statement.
The Deputy Chair: Mr. Naish, can you give us your opening comments, please?
Brian Naish, Chief Financial Officer, Canada Mortgage and Housing Corporation: I'm pleased to be here on behalf of the Canada Mortgage and Housing Corporation. I'm joined by my colleague Debra Darke, Vice President of Regional Operations and Assisted Housing.
As Canada's national housing agency, Canada Mortgage and Housing Corporation has a mandate to improve housing quality, choice and affordability for all Canadians. It accomplishes this by supporting Canada's market-based housing system and addressing gaps in the system to help ensure that Canadians have access to safe and affordable housing.
The housing needs of some 80 per cent of Canadian households are met through the marketplace, many supported by CMHC's housing finance activities. This includes mortgage loan insurance, which helps borrowers obtain financing at competitive interest rates, and securitization programs that enhance the supply of low-cost funds for mortgage lending.
CMHC is also responsible for the administration of the Covered Bond Legal Framework, which is helping lenders further diversify their sources of funding.
All of these activities promote and contribute to the stability of the financial system in Canada, and they are delivered at no cost to Canadian taxpayers.
For those households whose needs cannot be met by the marketplace, CMHC works with the provinces, territories, First Nations communities and other stakeholders to provide housing assistance. The federal investment is provided under various housing programs and initiatives on and off reserve, which are funded through appropriations voted by Parliament.
In 2013-14, CMHC is estimating budgetary expenditures of $2.1 billion. Just over $2 billion of this amount will be used to provide assistance to Canadians in housing need, including low-income families, seniors, people with disabilities, Aboriginal people and victims of family violence. This funding supports close to 600,000 households living in existing social housing.
The balance of CMHC's voted appropriations from Parliament will support our housing market analysis work, and policy, research and information transfer activities.
CMHC's estimated budgetary expenditures for 2013-14 represent a net decrease of $39.2 million from last year's Main Estimates. The decrease is mainly due to savings as a result of Budget 2012 reductions, reduced expenditures due to the maturing of long-term housing project operating agreements, and changes in the timing of funding requirements for new commitments of affordable housing.
The Main Estimates also reflect non-budgetary expenditures for CMHC. The number in the estimates is negative, as we will repay more than we borrow from the Consolidated Revenue Fund in 2013-14. CMHC is estimating non-budgetary repayments of $41.9 billion this fiscal year, primarily due to loan repayments under the Insured Mortgage Purchase Program.
The IMPP was a temporary measure introduced by the government at the height of the global economic downturn. Under the IMPP, CMHC purchased, on behalf of the Government of Canada, $69.4 billion worth of insured mortgage pools to help Canadian financial institutions raise longer term funds and make them available to consumers, homebuyers and businesses in Canada.
A large portion of the IMPP activity took place in late 2008 and the first half of 2009, with borrowing terms of five years. As a result, corresponding repayments are due in 2013-14.
Thank you again for the opportunity to be here. My colleague and I would be pleased to answer any questions the committee may have.
The Deputy Chair: Thank you, Mr. Naish.
Mr. Séguin, it's your turn.
[Translation]
Alain P. Séguin, Chief Financial Officer, Employment and Social Development Canada: Mr. Chair and members of the committee, I am pleased to appear before you in my capacity as Chief Financial Officer for the Department of Employment and Social Development. The department I represent helps Canadians at crucial stages in their lives, whether they are still in school or raising a family, looking for a job or retiring from the workforce. Our department is also responsible for delivering high-quality services that are timely and accessible, through Service Canada. We also have the mandate to maintain productive, healthy and competitive workplaces within the federal jurisdiction through the labour program.
[English]
Allow me to offer the committee an overview on ESDC's 2013-14 Main Estimates tabled on February 25, 2013.
The 2013-14 Main Estimates for ESDC amount to $50.5 billion. Of this, $48.1 billion, or more than 95 per cent, will directly benefit Canadians through statutory transfer payment programs such as the Old Age Security program, the Universal Child Care Benefit, Canada Student Loans grants, Canada Education Savings Program, Canada Disability Savings Program, and the Wage Earner Protection Program.
Statutory items are included in the estimates for information only, as Parliament has already approved the purpose of the expenditures, and the terms and conditions under which they may be made, through other legislation.
You will note that the forecasted spending on the Old Age Security program increases year after year because of our aging population and the planned increase in the amount of the average monthly benefit. It is estimated that between 2009 and 2016, there will be an increase of more than 1 million beneficiaries for both the Canada Pension Plan and the Old Age Security programs.
In addition to statutory items, the 2013-14 Main Estimates include voted appropriations, which consist of two votes for ESDC: vote 1, operating expenditures; and vote 5, grants and contributions.
In relation to vote 1, operating expenditures, the department spent $769 million in 2011-12 and $654 million in 2012-13, a decrease of $115 million, and plans to spend $627 million in 2013-14, a further decrease of $27 million.
The total decrease of $142 million is mainly attributed to the transfer of activities to Shared Services Canada, some $31 million, and the allocation from Treasury Board central votes of 2011-12 to cover off expenditures such as immediate settlement payments for severance pay due to revisions of specified collective agreements, some $84 million.
[Translation]
As for vote 5, grants and contributions, the 2013-2014 Main Estimates level is $1,762 billion, an increase of $1 million from the 2012-2013 Main Estimates. This variance is mainly due to announcements in the 2012 Economic Action Plan such as the Youth Employment Strategy to assist more young people in gaining tangible skills and experience. These increases are offset by reductions attributable to the ending of programs and to the 2010 Strategic Review.
Through grants and contributions, the department provides funding to other administrations and organizations in the volunteer sector and the private sector to support projects which meet the needs of Canadians in the workforce and in social development. Please note that the funding of some of these programs is of limited duration, which can lead to variances in fiscal years in the case of a program that has not yet been extended.
For instance, the 2010 budget allocated $45 million over three years to the extension of the Enabling Accessibility Fund which finances the capital costs for construction and renovation work to make facilities more accessible to disabled persons. The fund expired on March 31, 2013. As proposed in the 2013 Economic Action Plan, the Enabling Accessibility Fund was made permanent and allocated $15 million a year.
[English]
Since the tabling of the 2013-14 Main Estimates, Supplementary Estimates (A) and (B) were tabled in Parliament on May 10, 2013, and November 7, 2013. Supplementary estimates present information on spending requirements that either were not sufficiently developed in time for inclusion in the Main Estimates or have subsequently been refined to account for developments in particular programs and services.
For ESDC, adjustments were approved in the supplementary estimates mainly to fund the renewal of The Enabling Accessibility Fund, for grants and contribution agreements of the Homelessness Partnering Strategy, for training to on-reserve income assistance clients to support 5,000 more paid internships for recent post-secondary graduates, and for the Skills and Partnership Fund for innovative Aboriginal labour market development projects.
Through Supplementary Estimates (A) and (B), Parliament approved a total increase of $64 million, or less than 3 per cent of the Main Estimates' level of $2.4 billion for votes 1 and 5.
I believe it is important to point out that several changes were made to the format of the 2013-14 Main Estimates in order to increase the amount of information provided and the overall usefulness of that publication. For instance, information on real expenditures for 2011-12 and up-to-date estimates for 2012-13 are provided to put the 2013-14 figures in context.
[Translation]
In the case of ESDC, you will note that Employment Insurance Benefits and Canada Pension Plan benefits are excluded from the department's Main Estimates. The Employment Insurance Operating Account and the Canada Pension Plan Account are two specified purpose accounts. The Employment Insurance Operating Account is included in the consolidated data of the Government of Canada.
The Canada Pension Plan is not incorporated into the Government's financial statements, since it is under joint control of the federal government and the participating provinces and territories.
I hope this overview has given you a better understanding of the Main Estimates for our department. My colleagues and I would be pleased to answer your questions. Thank you.
The Deputy Chair: Thank you, Mr. Séguin.
[English]
The Deputy Chair: Just to alert senators, we have 40 minutes left at this particular time because we have a shortened version of our session today.
[Translation]
I suggest that senators ask specific questions in order to obtain the proper responses.
[English]
So I would ask that everybody frame your questions so we can have good interaction between the three groups today.
Without further ado, someone who put her hand up very early in the debate, Senator Eaton.
Senator Eaton: Because there is so much material.
The Deputy Chair: There is.
Thank you for your presentations.
Senator Eaton: Mr. Patel, with Canada perhaps signing an agreement with Korea, with other TPP countries with the European Union, how do you think that will affect your ministry? Do you foresee greater costs in the future because you will have a lot more to administer?
Mr. Patel: The trade negotiations agenda for the department has increased quite dramatically in the past few years. You've named a few examples of negotiations that are underway: either concluded in principle or where significant progress has been made.
Even leading up to where we're at now, those negotiations would cost additional funds, whether it's travel, whether it's making sure that the number of rounds are fully supported by our experts and whatnot. When I go back to my opening remarks, we talk a bit about the need to ensure we have good internal management practices around financial management. One thing we do is reallocate resources internally to align with our priorities.
So when we look at our priorities or programs as a department, if there's one program — the trade negotiations — that's going to need additional resources, we will constantly revisit how we optimize our resources across the department, either on an annual basis, multi-year basis or even on an in-year basis. That leads up to the fact that we've had an ambitious trade negotiations agenda, and we've been able to fund internally through reallocating or optimizing our resources.
Going forward, as we conclude, it will be a bit of a mix. Some of those negotiations and the negotiating work will have been concluded. It would move to a different type of a stage. There could be a legal scrub before they're ratified, so that would require a different type of investment of resources.
Beyond that, once they're fully ratified and approved and in force, the amount of work and expenditures for the department would be less down the road, foreseeably, except when you get into maybe dispute resolution and things like that.
Then, long term, we would take those resources and reallocate those to other priorities and departments. We look at that in the context of a longer term up and down.
That was a bit of a long answer, but the short answer is I don't foresee any significant financial challenges as a result of concluding those negotiations. In fact, I see potential opportunities to reallocate some of those resources to other areas. They could be other trade negotiations, other trade priorities or other departmental priorities aligned with our corporate priorities as a full department.
Senator Buth: Mr. Séguin, in terms of the grant and contribution agreements for the Homelessness Partnering Strategy, does that include the Housing First initiative, and can you give me more detail about that? I understand that we're expecting a report on those programs. Can you tell me when that might be expected?
Mr. Séguin: Just give me a few minutes here. My partner will help me out here.
The Deputy Chair: You have a partner in crime. What is your name, please?
Jacques Paquette, Senior Assistant Deputy Minister, Income Security and Social Development Branch, Employment and Social Development Canada: I'm Jacques Paquette, the Senior Assistant Deputy Minister for Income Security and Social Development.
The Deputy Chair: Thank you, Mr. Paquette.
Mr. Paquette: Thank you for your question.
The first answer is that the current program that is ending in April doesn't include the Housing First approach, per se. What was announced in the last budget is that the renewal of the program, starting April 1, will then include an emphasis on the Housing First approach. At the moment, we're discussing with the communities how to implement this and put it as one of their main priorities of the program.
On your second question concerning the report, the Mental Health Commission of Canada conducted five pilot projects over five years in five different cities. This was a way to research and look at this model. The final report of these projects will be coming this year. In fact, in the few coming months we should have the final report on the results. It was based on research. They were comparing, I would say, business as usual versus the Housing First approach. They have already identified very positive outcomes.
That's why the government has decided to put some emphasis in the next Homelessness Partnering Strategy program, to use that knowledge and, based on these positive outcomes, be able to pursue that even further.
Senator Buth: What a ratio do you expect in terms of the program going forward, or Housing First versus some of the traditional things we have done?
Mr. Paquette: What the minister has indicated is, first of all, some of the ratios of the targets, if I can use that term. There are two elements. One will depend on the size of the community. We have said that for the big communities, what we call the big 10, basically, the major cities across the country, over one year, we want to see a shift of the HPS funding. That's really the federal funding, because there's also funding coming from communities and partners and so on. But we would be asking that up to 65 per cent of the federal money be put towards this.
There's a combination of two priorities, in fact. On the one side there's Housing First, but also we want to put an emphasis on those homeless people who are chronically or episodically homeless, so people who have been on the street at least six months per year. What we've noticed is that even though the percentages are relatively small, they are also drawing a lot of social resources from the shelters and so on. We think that the first focus on this will probably help to address the issue and lead to some reduction.
For smaller communities, the target is more 40 per cent. For very small communities there's no target, per se. People are encouraged to look at this, but it goes with what is available in the market, and the big cities also have much more leverage that they can use to achieve this result.
Senator Buth: Thank you. I think it is a really important program, so it's good to see that it's progressing.
[Translation]
Senator Hervieux-Payette: My question is addressed to the CMHC witnesses.
You said that $69,350 billion of the mortgages you bought back from our banks and other financial institutions would be reimbursed in 2013-14. I would like to know with which money and where that money came from. You certainly did not borrow that money from the banks since they were the ones who needed it. Did this money come from the Bank of Canada? And will you now be paying it back over a five-year period?
How will you reimburse it? By borrowing on Canadian markets, foreign markets?
[English]
Mr. Naish: Thank you for the question, honourable senator. When we borrowed the funds to fund the initial purchase of these mortgages, those funds were borrowed from the Government of Canada through the Consolidated Revenue Fund. The terms of those borrowings were matched to the repayment terms associated with the underlying mortgage pools. So there is a match between the repayment that comes to us from the financial institutions and the maturity of the debt and our payment to the Government of Canada.
[Translation]
Senator Hervieux-Payette: That does not answer my question. Where did this money come from? You talk about the "consolidated fund," which means it was sitting in a vault somewhere waiting to be lent out. Where did this considerable amount of $69 billion come from? Are these taxpayer funds? Where did the money come from? And to whom will you be reimbursing it? To the Department of Finance? To the Bank of Canada? To whom?
[English]
Mr. Naish: The Minister of Finance.
[Translation]
Senator Hervieux-Payette: How much money will be saved by pushing the age of retirement forward from 65 to 67?
[English]
Mr. Naish: CMHC sponsors our —
[Translation]
Senator Hervieux-Payette: No, no. I am talking about old age pensions, not CMHC.
M. Séguin: This question should be asked of Employment and Social Development Canada.
Senator Hervieux-Payette: As I am told I do not have much time left, my questions are addressed to all three.
[English]
The Deputy Chair: We're into rapid fire, so Mr. Séguin and Mr. Paquette, please go ahead.
[Translation]
M. Paquette: Here is a short answer to your short question.
According to assessments published by the Department of Finance, based on projections that include amounts identified by the chief actuary, that would be some $10 billion by the year 2030, if we are talking about the money saved by changing the age of retirement from 65 to 67 for Old Age Security.
Senator Hervieux-Payette: And when will this begin?
M. Paquette: It has been announced that the change will be gradually introduced, beginning in the year 2023 and will take place over six years. The announcement was made 10 years before the change is to be implemented, and in the budget — and it is also on the websites — you can see precisely the speed at which the changes will take place, which is to say one month every three months, for example, over a six-year period.
Senator Hervieux-Payette: My last question is addressed to the Department of Foreign Affairs and has to do with the recent announcement of aid for Palestine made by the Prime Minister during his trip to Israel. Are such announcements, whether they be for Somalia, Syria, et cetera planned in advance or do they come out of supplementary estimates? Are these amounts already in your budget? Or do you say: we will give this amount and then we will go before the Finance Committee?
[English]
Mr. Patel: These are planned in advance. We would have a number of different projects in the pipeline that we would propose for consideration. In the case where we would have a minister or a Prime Minister or a high-level visit, it would be an opportunity to either reconfirm or announce those projects that are currently in the pipeline.
Some things are planned well in advance and some midway through the fiscal year, depending on what is happening in the international environment. If you take examples like Syria, where so much is happening on an in-year basis, we would be able to adjust on the fly.
It's typically within the department's appropriations that have already been provided. I mentioned a 3 point some odd billion dollars in grants and contributions as an example. That's where it would be.
Occasionally, we would have additional funds we would request through supplementary estimates. This year, for example, in Supplementary Estimates (B), we requested some additional funding for Syria. That happens occasionally, but largely it's planned in advance. It's not something we would mobilize on a short notice type of basis, particularly as we deal with the flow-through channels, delivery partners, those types of mechanisms, which would typically require well-planned, advanced mechanisms.
[Translation]
Senator Bellemare: I will ask all my questions right away, and the witnesses will be able to answer me in turn. That will give them time to think of their answers.
My first question is for the Department of Foreign Affairs and International Trade. In the expenditures forecast in the Main Estimates, with respect to grants and contributions, at the time of tabling this document, expenditures were projected at $695 million. However, I understand that CIDA is now included in your operations, and that in supplementary estimates, grants and contributions now amount to $3,256 billion. I would like to know a bit more about this.
All the more so since when we looked at CIDA's budget, as forecasted last year in the Main Estimates, we can see that the total estimated budget was $3,159 billion.
Are cuts being planned for CIDA in the grants they will receive? That being the case, how will they take place?
For example, yesterday on the Téléjournal, a great deal was being said about subsidy cutbacks in the former CIDA's programs. There were stories about programs with which will no longer exist. I would like to hear your general comments about the choices that were made.
My next question is addressed to Mr. Séguin. Your budget mainly has to do with legislative measures; these measures will therefore not be subject to a vote, and pensions make up the lion's share of the increases.
With respect to pensions, I would like to know whether these increased expenditures are mainly due to the guaranteed income supplement or to the universal pension plan? Do you have the details on the demographic group made up of people 65 years and over who receive the guaranteed supplement?
We know that recently in Quebec, 46.5 per cent — if memory serves me well — of people aged 65 years and over were receiving the guaranteed income supplement whereas that number is a bit lower in other provinces. Is that percentage rising?
[English]
Mr. Patel: You were referring to the tabled Main Estimates for the former Department of Foreign Affairs and International Trade, where we had a $695 million amount in our vote 10 at that time. That $695 million reflects just the DFAIT portion, if I use DFAIT in the tone and text of the former department.
Of that $695 million, approximately $515 million reflects assessed contributions to international organizations; for example, our membership in the United Nations, the World Health Organization, et cetera, and they are all listed in the mains. The remaining amount to get to that $695 million would be different programming money, which would include various programs.
Then what happens is the amalgamation, and as you've reflected, through the supplementary estimates, that was the first time you would have seen the new departments' appropriations come together, as I mentioned in my initial remarks. So that vote 10 now jumps to about $3.1 billion. I'm using approximations to illustrate the fact. That 695 remained the same, and the jump from the 695 to the $3.1 billion would have been the 2 point something billion, and that would have reflected the former CIDA's programming money, for development programming, not including what would have been spent for the first three months of the fiscal year. Because the amalgamation took effect June 26 — April, May, June — it would have been separate. It comes together in there. So that two point some odd billion would have been the remaining CIDA programming money for the rest of this fiscal year; hence, you have the $3.1 billion amount.
There were no additional reductions as a result of amalgamation or since the Main Estimates were tabled. From the previous fiscal year to the current fiscal year, there was a decrease in the overall appropriations, and there was a reason for that. About $180 million of that relates to the Budget 2012 spending review reduction. There was a three-year profile. That was the amount that would take effect the second year.
Then there were programs that would have sunsetted over a period of time. For example, we also had money in the reference levels for something we refer to as the "quick-release mechanism." It's money made available to respond rapidly to natural disasters that we would bring forward again for approval in future years.
In summary, there were no reductions as a result of amalgamation or what you saw in the Supplementary Estimates (B). It's basically accounting for everything, bringing it together, but you wouldn't have seen the first three months in there, which is why the amount looks a bit lower than it might otherwise.
To the senator's point, there were the Budget 2012 spending review reductions, which began two fiscal years ago, went through the current fiscal year and will end at the end of the next fiscal year. That total amount was $319 million over the course of those three fiscal years, so that $180 million reduction from last year to this year is a portion of that. That would be it, but there were no further reductions as a result of amalgamation over this fiscal year.
[Translation]
Senator Bellemare: Were the programs that were cut mainly humanitarian programs? Yesterday, on television, they were discussing programs combatting child slavery in certain countries and other humanitarian issues. The approach was rather high profile.
[English]
Mr. Patel: I will answer that. I would also just mention something because the senator asked a follow-up question that I didn't address about some of the media reports, which I've also read, regarding further cuts. I can see why that might imply that there were some further reductions this year. The reality is that there were no further reductions. At the end of last fiscal year, if we don't spend the entire envelope of money — there is certainly no concerted effort not to spend the entire envelope of money, but we will spend it in a responsible manner. If the committee is interested, I can walk through the breakdown of the money that we didn't spend.
The Deputy Chair: Maybe what you could do is write it down and send it to our clerk so that we can distribute it, if that's okay.
Mr. Patel: That's causing some confusion in the sense that it is taken to be an actual cut to our spending, but in fact it isn't. If you look at the approximately $290 million or so on the development side last year, when you break it down, there is money there that we only use for international crises that wouldn't be spent or that we weren't able to spend because our due diligence wasn't done or we weren't satisfied with our due diligence or the risk assessment wasn't substantial enough to support money going out the door. We won't just put money out the door. We will do it in a prudent manner, but the following year, the full amount of the budget is made available in our reference levels.
That's an explanation of what's been in the media. It's reflected that there have been cuts, but in fact there haven't been any.
The Deputy Chair: We'll move on to the next response.
[Translation]
Mr. Paquette: As to your question about Old Age Security and the guaranteed supplement, these budget numbers show that a small portion of the increase is related to the cost of living index. So that shows an increase. As for the rest, in mainly concerns an increase in the number of beneficiaries.
Senator Bellemare: Of the pension?
Mr. Paquette: I will provide you with specific numbers for both. For the pension itself, the number of recipients, according the forecast, will go from 5.1 million to 5.3 million. That represents the number of people who receive Old Age Security. In terms of costs, that explains the $1.2 billion increase.
For the guaranteed income supplement, the number of recipients will go from 1.7 million to 1.8 million, which translates to an increase of $536 million. You can see at the same time that a little over 5 million people receive the entire pension whereas 1.8 million receive the guaranteed income supplement, so just a small fraction.
We have the advantage of seeing the chief actuary's long-term projections, which project the number of people who will receive Old Age Security as opposed to the guaranteed income supplement. The Minister of Finance uses these projections to make his own forecasts. From one year to the next, the numbers pretty well match what the chief actuary had projected. There are some fluctuations, but nothing major.
To answer your question more specifically, I would say that obviously, the guaranteed income supplement is provided to seniors who have little or no income. The number may vary from one region or one province to another. However, over the last few years, we have seen a decrease in the number of people who request the GIS. This is largely due to the arrival of women on the job market. Many of them are nearing the end of their career, in one way or another, and far more women have income — which was not the case previously. This explains the slowed growth. One does see a growth nonetheless, but the rate of growth is decreasing.
[English]
The Deputy Chair: Mr. Paquette, in answer to that last question, you rapid-fired back to us dans la langue de Molière. It would be great to have a consolidated, one- or two-paragraph response that you could send to our clerk because those are the types of questions that people are being asked when they go back to their geographic areas of responsibility. People ask, "What's the impact of having to work two extra years? What's it costing the government? What does it mean to me?" If you were able to give us some information, I think that would be really helpful for the senators to be able to talk to their constituents. Thank you.
Senator Callbeck: Thank you all for being here today.
The first question I want to ask is to the Canada Mortgage and Housing Corporation. If I recall correctly, last summer agreements were signed or completed — maybe they're not signed yet — regarding several programs. I think that we have maybe 40 programs with the federal government. One of them, I believe, was this affordable housing program. My understanding of the deal was that it would be the same amount of money. According to the estimates here, you're going to have $20 million less for that program. Am I right in assuming that P.E.I. is going to get the same amount of money?
Mr. Naish: The reason you're seeing that $20 million decrease is strictly due to the timing of expenditures in 2012 relative to 2013. We've just got a blip. The actual pot of money being allocated, under both the new investment for affordable housing and the old, is exactly the same, but there is a timing blip between the two years.
Senator Callbeck: Okay.
I also see in the estimates that you're saving 24.2 as a result of the federal budget Deficit Reduction Action Plan. Could you provide an outline of that to the committee later on, a breakdown of the programs and by what amount each of the programs is affected so that we know exactly what's being cut?
Mr. Naish: We can provide that, although I have the answer here. Of that $24 million that you're speaking to, $13 million relates to the cessation of Canada Mortgage and Housing International. It doesn't relate to any social housing programs that are delivered to Canadians. A further $7 million reduction is related to our Housing Policy, Research and Information Transfer program. Again, it does not affect low-income Canadians. It's a focus of our research activities only on high-priority items.
The remainder of $3 million relates to efficiencies gained in the administration of the programs. There are no cuts to the programs themselves.
Senator Callbeck: All right, no cuts to the programs.
Something I hear a lot about on the Island and about which there is a great deal of concern concerns the agreements that the co-op housing authorities have with you. I know they're not going to run out until 2018, but there is a lot of concern because there are rumours out there that they're going to be cut completely or by a certain amount. I think we have 13 of these co-ops on the Island. They provide over a hundred units for low-income families. When will you start to talk to the province about these agreements?
Mr. Naish: It's true that the long-term commitments for funding that the federal government made — and typically those are made over periods up to 50 years — will eventually expire, and some of them are expiring in the short term, as you pointed out.
As those agreements expire, one of two things can happen. One is that the program in particular, or the sponsor, is self-sustaining, in which case it's no longer in need of federal or provincial subsidy. The other scenario is that it is, in fact, in need of federal and provincial subsidy.
In the latter case, there is the Investment in Affordable Housing initiative, which was renewed in the summer last year for this $250 million per annum. In terms, though, of timing with specific discussions with the provinces and territories, perhaps Debra could make a comment.
Debra Darke, Acting Vice President, Regional Operations and Assisted Housing, Canada Mortgage and Housing Corporation: The agreement you are talking about that was announced last year was the investment in affordable housing.
Senator Callbeck: Right.
Ms. Darke: Budget 2013 announced a five-year extension of the current funding. The funding begins in the 2014-15 fiscal year, so it doesn't apply to 2013-14.
Right now we're in the process of discussing the extension to the existing Investment in Affordable Housing agreement with provinces and territories, including P.E.I. Those agreements will be signed. I think we'll begin to have announcements and signings in the not-too-distant future, and under the extension, money will start to flow after the end of March of this year.
Senator Callbeck: Yes, I'm aware of that. I know they've been signed and I'm sure that money will come through. I'm disappointed that it hasn't been increased.
My concern is for these co-op housing authorities. When are you going to start talking to them about these agreements that I understand come up in 2018? There are a lot of rumours out there and a lot of people are really worried.
Mr. Naish: It is fair to say that we can come up with specific information on co-ops on P.E.I. With that said, the agreements with the co-ops, I believe, are with the provinces and territories, and we provide funding to the provinces and territories as they negotiate those agreements.
The Deputy Chair: Perhaps you can do that, Mr. Naish, because I think the senator has a question that's very important. It would be helpful to get as much information as we could so that Senator Callbeck can report back to her constituents.
Senator Seth: Mr. Séguin, as I understand it, Human Resources and Skills Development Canada and Service Canada handle the Temporary Foreign Worker Program, yet it is not mentioned in the Main Estimates 2013-14. Can you please describe how much money will be going to this program out of the $50.5 million that's in your budget?
Mr. Séguin: It's not separated out in the estimates document. It's a program that exists operating within the organization. I'll have to provide you that information separately.
So it's part of the operating budget of the department, and it's not separated out in the estimates, along with many operating programs in the organization. I'll have to provide that separately. I do not have the exact details.
Senator Seth: Mr. Patel, in your main budget, I notice that there is an increase of $20 million in support of Canada's engagement in Afghanistan for security detainees monitoring and also counter-narcotics. There is a lot to do with this $20 million. What programs are specifically being funded with this money? Counting all programs, how much money does the Department of Foreign Affairs transfer to Afghanistan yearly, and how is this money monitored after transfer?
Mr. Patel: With regard to the level of detail in terms of the total number of dollars that go to Afghanistan for various levels of programming, I do not have all of that with me, but that is provided very easily. We can do that within a day or so, so very quickly.
However, in terms of how we measure results and follow up, when we do have development programming dollars in Afghanistan or any other country around the world, a part of the strategy on every dollar that goes out is we do actually earmark some funding for evaluation and monitoring of results. It's done through a combination of our own development officers on the ground where there are programs under way with partners. We'll work with those partners and with recipients to ensure that the money is flowing where it's supposed to be going, and we assess the results.
It's also done very formally. At the conclusion of programs or sometimes at a midpoint, at various intervals, we will actually send out folks to do a type of evaluation or a recipient audit, depending on the type of program, to see what the results were of that and what was the impact of those dollars. We use that information to inform other programs either in that country or in other parts of the world. If we have a partner that we're working with in more than one country, it tailors some of our recommendations in terms of how we work with that partner.
That's the formal part of things. That's very important because it feeds back into our planning process, where we do look at these things well in advance. We use that information to help ensure that our dollars are spent wisely, and it is actually resulting in an impact.
The $20 million in the Main Estimates is the result of a multi-year, approved package of funds that goes back a few years, and I think that $20 million represents a number of specific programs. There is additional programming as well that's not reflected there because it's already built into the overall grants and contributions vote. That level of detail I will provide you very quickly.
Mr. Séguin: I do have some information that answers the question on the temporary foreign workers, if I may just provide that.
The Deputy Chair: If you could, quickly.
Mr. Séguin: This could change, obviously. Currently in our reference, we've attributed some $16 million in salary for the Temporary Foreign Worker Program in operating costs and 8 million non-salary, for roughly $24 million. That's our current allocation for the Temporary Foreign Worker Program on an operating basis. That could change, but that's the way it is now.
The Deputy Chair: Thank you.
If it's okay with the group, we'll take an extra five minutes of overtime and we'll be out of here at 11:35. Do we have agreement on that?
Hon. Senators: Agreed.
[Translation]
Senator Chaput: My two questions are addressed to Mr. Séguin. Your department had Main Estimates totalling $50.5 billion, and in your presentation you stated that 95 per cent of that amount goes directly to the Canadian population through the six programs you mentioned: Old Age Security, day care, student grants, education savings plans, disability savings plans, and the wage earner protection program.
Could you provide us with the following information: what percentage of that 95 per cent is earmarked by program, and how many people are eligible for it? The answer could be provided to us in writing if you wish, Mr. Deputy Chair.
[English]
The Deputy Chair: If you feel comfortable sending that back in writing, it would be appreciated.
Mr. Séguin: Yes, we can do that; no problem.
[Translation]
Senator Chaput: My second question has to do with payments to provinces and territories under labour market agreements aimed at increasing participation. I think I saw a decrease from $542 to $531 million. How do you explain these lower payments to provinces and territories?
Mr. Séguin: If you do not mind, I will just look for the information.
[English]
The Deputy Chair: You have someone who is moving forward to assist you. What is your name and position?
[Translation]
Catherine Demers, Executive Director, Federal, Provincial, Territorial Partnerships, Employment Programs and Partnerships Skills Employment Branch, Employment and Social Development Canada: My name is Catherine Demers and I am Executive Director of Federal-Provincial-Territorial Partnerships. With respect to funds allocated to the provinces under the labour market agreement, the amounts have been the same since 2007, that is $500 million per year. There was an additional $250 million allocated during the years associated with the economic action plan. That may explain the differences over those two years.
Senator Chaput: So if I understand you correctly, payments to provinces and territories have not been reduced?
Ms. Demers: No.
Senator Chaput: So the provinces and territories are not receiving less money to increase labour market participation?
Ms. Demers: The amounts have remained consistent.
Senator Chaput: They are consistent.
Senator Chaput: There was no reduction, but there was a supplement during the economic action plan years. Why was there a supplement?
Mr. Séguin: The supplement was linked to agreements under which the provinces did not spend all the funds. Those funds were therefore brought forward to the following year. That increased the amount for that year and this is why you see a difference.
Senator Chaput: How many provinces participated? All of the provinces and territories?
Ms. Demers: Yes, all the provinces and territories.
Senator Mockler: Would it be possible to obtain from Human Resources Canada the percentage of programs that dealt with urban regions as opposed to rural regions in Canada? You may provide that information through the clerk.
One small program that strikes a chord is the $10-million program to support the income of parents whose child has been killed or kidnapped. Could you provide us with more information on that initiative? Are you the only department to manage these funds that will be distributed? Or are there other departments responsible for distributing these funds under that program?
[English]
Senator Eaton: Mr. Naish, could you send me the answer on the cost to the federal government of housing assistance for First Nations and of the money in the 2013 estimates, what proportion will be used to address the housing problems by First Nations? We keep hearing horror stories, so it would be nice to put it into context.
Senator Callbeck: My question is addressed to the Department of Foreign Affairs, Trade and Development with regard to Passport Canada. I see that in the 2011-12 Main Estimates the figure was $19 million. In 2012-13, it was $67 million and then it went to $70 million. So there's an increase of $3 million. Is any of that $3 million going to Prince Edward Island to help us Islanders get an emergency passport in our own province without having to go to Nova Scotia or New Brunswick?
Mr. Patel: I can't offer an answer on that because we transferred responsibility of Passport Canada from the Department of Foreign Affairs, Trade and Development to Citizenship and Immigration Canada, and to Employment and Social Development Canada, the Service Canada element. That was done on July 2, 2013.
I can comment on what we would have been doing related to Prince Edward Island at that time, but since then I'm not sure what changes may have been made.
The Deputy Chair: That reminds me of a great pass in the 1976 Grey Cup game that was made from Tom Clements to Tony Gabriel. I'm not sure if you can answer that, Mr. Séguin.
Mr. Séguin: I will have to get back to you.
The Deputy Chair: If you could get back to us that would be great.
Our time is up. Committee members may not have been aware of this, but we were not able to get more time with our panel today, which is unfortunate because, as you can see, a lot of great questions were asked and there is probably significantly more information that our group would like to get from you.
We hope to be able to bring you back in the near term. We thank you again for your participation today.
(The committee adjourned.)