Proceedings of the Standing Senate Committee on
National Finance
Issue 7 - Evidence - February 26, 2014
OTTAWA, Wednesday, February 26, 2014
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to study Supplementary Estimates (C) for the year ending March 31, 2014.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this evening, we are beginning our study of Supplementary Estimates (C) for the year ending March 31, 2014.
[English]
We're very pleased to welcome back officials from the Expenditure Management Sector of the Treasury Board of Canada Secretariat. Each one of our guests this evening has been here before and has gotten to know us quite well, and we certainly appreciate your agreeing to come back in spite of the other meetings.
Appearing this evening are Bill Matthews, Assistant Secretary, Expenditure Management Sector; Marcia Santiago, Executive Director, Expenditure Management Sector; and Darryl Sprecher, who hasn't been here quite as many times. We'll get to know how to pronounce your name in due course. You are the Director, Expenditure Management Portfolio. Thank you very much.
Mr. Matthews, you have some introductory remarks, and you know the way we like to deal with things here. You give us a bit of an overview and deal with one department so that we have a little bit of a flavour of how you're doing things, and then we'll get into question and answer.
[Translation]
Bill Matthews, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Thank you, Mr. Chair. It is a pleasure to be here this evening to discuss Supplementary Estimates (C) for 2013-14.
As you mentioned, some of my colleagues are with me this evening to lend a helping hand.
Before answering your questions, I would like to give you an overview of Supplementary Estimates (C).
[English]
You should all have, senators, a presentation in front of you. Yes, that's the one. I'll walk you through this and hit the highlights as we go through, and then we're happy to take your questions as you go.
Maybe I could start us on slide 3, and this is just the organization of the supplementary estimates. It is a bit of a refresher for senators as we go through the presentation, but, as we've discussed before, some of this material does not necessarily stay with people. It can be quite technical, so we will do a refresher as we go. When I'm finished the presentation, I will turn to Ms. Santiago, and she will walk you through the supplementary estimates for Transport Canada, just to give you a quick sense of what's in there as an example.
The Chair: There is no need to apologize for refreshing senators. We very much appreciate any opportunity to be refreshed.
Mr. Matthews: In the document itself there are no major changes in the structure. The major items are still there, and those are the biggest items in the supplementary estimates. I have a slide on that that we can talk about. That links with the major net changes to individual votes, which is in tabular format in the supplementary estimates document.
There is a section up front on new votes in statutory authorities, and there are two in this year's Supplementary Estimates (C) that I will speak to now.
Citizenship and Immigration has a new authority in there for debt writeoff, which we can take questions on if that is of interest, and also a rather technical one related to a draw-down authority for Passport Canada's revolving fund, and that is quite technical. Again, you will find that in the new vote and authorities section, and we're happy to take questions on that if it's of interest.
We will speak to the horizontal items; we have a specific slide on that. Those are items where departments are working together to achieve shared outcomes. We will walk you through that in a few moments.
The largest section of the supplementary estimates is details by organization, and that's always the way it is. Just to remind you, there's also other information available online, such as statutory forecasts and the information related to strategic outcome and program, standard objects, transfers, et cetera. That's kind of the whole package, but we will focus on the main things as we go through this deck.
On slide 4, we have 35 organizations in this year's Supplementary Estimates (C). Voted and statutory items, it's quite interesting in Supplementary Estimates (C): We have voted amounts of $358.3 million, and statutory amounts — these are for information only — are being reduced. This is the best estimate of spending for this year for the statutory items. And the reductions in statutory items are actually greater than what is being sought through voted items. Again, the statutory is just for information.
When you see the appropriation bill it's for the voted items, not for both. If you look at the total authorities being sought, there is a net decrease of $15.4 million, but the appropriation act itself will be on the voted items.
We do have non-budgetary on this page. There are no non-budgetary items in this year's Supplementary Estimates (C), but a reminder of what those are. Those are things that, if all goes as planned, don't impact the fiscal framework. Something like a loan, where we expect to be repaid, is non-budgetary. There are none of those in these Supplementary Estimates (C); all of the items in here are budgetary in nature.
Slide 5, we do like to provide you with a comparison to previous years' authorities versus fiscal year 2013-14. Regular pattern at play here, and we've spoken on this before, but you can see the voted amounts of $94.8 billion for 2013-14 are decreased over the previous year, which was $98.6 billion. That decrease is $3.8 billion lower, and $5.1 billion lower than 2011-12. That is a reflection of some of the expenditure reviews and restraint activity that has been happening.
Those reductions are more than offset by increases in statutory forecasted spending. Again, we've spoken on this before, but statutory spending is projected to be increased over the previous year, so we're looking at $165.1 billion versus $160.4 billion in the previous year. The story on the statutory spending is really two major items: the Canada Health Transfer, which I think we've spoken about before, and programs related to our aging population, so Old Age Security and GIS programs. They're forecasted increases as well, so that's what's driving that change.
The pattern itself is very similar to previous years. Supplementary Estimates (C) is usually our smallest supplementary estimates, and it is again this year. Usually Supplementary Estimates (B) is the largest, and that's again the pattern this year.
I do sometimes remind the committee of the split between voted and statutory. Voted authorities this year are 36 per cent, and statutory authorities make up the balance. The voted of 36 per cent is lower than the previous year, which was at 38 per cent. Again, that's a combination of reduced spending authorities related to some expenditure restraint on the voted side and increased forecasted spending on the statutory side.
On slide 6, for those of you who prefer pictures, we have the split here between transfer payments, operating and capital, and public debt. Again, the same story here: A good majority or a good portion of our transfer payments are statutory in nature. You can see the transfer payments spending related to 2013-14 of $162.2 billion — greater than it was in the previous year of $158.7 billion — and you're seeing a decrease in operating and capital and a small decrease in public debt as well.
I will speak to what's driving that decrease in public debt. The story here again is related to the Canada Health Transfer and the Old Age Security forecasted spending I mentioned earlier.
Slide 7 is horizontal items, and I will walk you through these. These again are items where we're seeing multiple departments receiving funding. Some of these you will have seen in previous supplementary estimates.
The first one on this list is related to the Official Languages Roadmap, and there is funding in there for Atlantic Canada Opportunities Agency, Canada Council for the Arts, Heritage, Citizenship, Health, Justice and Public Works. There are three pillars under that: education, immigration and communities. That's the first one: $18.2 million coming from Budget 2013.
The second item on this list is related to the Centres of Excellence for Commercialization and Research. There are three organizations there, the Canadian Institutes of Health Research, NSERC and SSHRC, and that is a result of the fifth round of competition. These are competitively awarded funds, and they're going to three organizations: the Canadian Digital Media Network, GreenCentre Canada and Ocean Networks Canada. That's $9.9 million in here, coming out of Budget 2013. Sorry, not Budget 2013. I read my previous line.
The third item on this list, Finance, Public Safety and Public Works, related to government advertising, is $8.5 million. The Finance funding in here is related to the economic action plan. Public Safety is the campaign on anti- cyberbullying. PWGSC is a new pilot project on a whole-of-government web purchase of advertising. Those are the three organizations receiving advertising funding here.
Canada Revenue Agency is funding for various tax administration measures from Budget 2012. The few I'll highlight right now for you are transparency and accountability for charities, as well as Pooled Registered Pension Plans for $7.2 million.
Fisheries and Oceans, this is around strengthening the prevention, preparedness and response regime for oil spills. You would have seen funding under this program in previous supplementary estimates, Supplementary Estimates (B), if I recall. Funding here is around improving the area monitoring as well as the incident command capability for the department.
Canada Border Services Agency and Foreign Affairs — funding to address increased demands on the temporary resident and citizenship programs. This is again a Budget 2013 item. There was $42 million in Budget 2013 for the temporary residents side of this, and $44 million in Budget 2013 for the citizenship side. In Supplementary Estimates (C) we're drawing in $3.4 million in total.
Last on this list is Public Works and Government Services Canada and Treasury Board Secretariat, funding to modernize the disability and sick leave management regime in the public service. Again, Budget 2013 is the first mention of that: $2.6 million.
Slide 8, we can speak quickly to the major voted items, and this will likely be the focus of your questions, but not necessarily. Shared Services Canada, Workplace Technology Devices software for $102.3 million. This is a bit of an interesting one because this money is actually being transferred from all of the other departments, so it's not new money going out into the framework. If you look into the details of Supplementary Estimates (C) you will see a transfer from all other organizations, and this is basically to fund Shared Services Canada for functions that used to be performed by departments. This one is actually a transfer, but it was just easier to do it this way rather than do vote transfers from all these organizations.
The second item on this list is Treasury Board of Canada Secretariat compensation adjustments, $73.3 million. I'm sure that senators are familiar with the operating budget freeze announced for the upcoming fiscal year, starting April 1, 2014. There was also an operating budget freeze in the previous fiscal years, but there is not one in place for the current fiscal year. We have a one-year hiatus on the operating budget freeze.
What happens there is that as collective agreements are reached, and nine of them were settled recently, a determination of the salary impact for each department is figured out. Correctional Service, prison guards is one of the agreements that were reached. To be simplistic here, we would figure out the actual financial cost of that agreement in the current fiscal year and transfer those resources to Correctional Service to hold them harmless, effectively, for the negotiated salary increases.
That $73.3 million actually relates to nine agreements that were settled, and I'm happy to go into details as to what those were.
There is funding in here for Public Works' office space fit-up related to three buildings: one in Miramichi; Ottawa; and D'Estimauville, Quebec. For Indian and Northern Affairs, we have $36.1 billion related to N.W.T. lands and resources devolution agreements.
Citizenship and Immigration Canada is an interesting one. There is funding in there for the Canada-Quebec accord on immigration. That relates to an escalation clause, so there is actually funding already in CIC's reference levels, but every year the formula — it's a formula-based transfer — is updated on the number of non-francophone immigrants into the province of Quebec as well as total federal spending. This is simply an adjustment to that amount based on applying the formula for immigrants and an update on the spending.
The last amount: National Defence has items in here for the Aurora modernization and life extension projects. Those are two separate projects, both related to the Aurora airplanes — $34.7 million. The life extension part of the project is a structural piece, and the modernization is more around the systems and the capabilities of the plane itself, so there is $34.7 million in there.
I did highlight for you earlier that statutory forecasts are going down. I will mention briefly on slide 9 what those are. Again, statutory is just for information purposes. Much like the Canada-Quebec accord I just mentioned, Finance has a program for provinces that eliminate capital taxes, so there is an update to the formula. It is a Budget 2007 item. They've done an update to the formula based on information, and there is $92.3 million. That funding is going to Manitoba, Ontario and British Columbia. Again, it's just an adjustment to the formula.
Environment Canada: $20-million increase, and that's because of an agreement around the Nature Conservancy of Canada where the government matches funds raised by the organization itself. So that is an update based on fundraising.
Then there are the decreases. Canada Revenue Agency disbursements around the Softwood Lumber Products Export Charge Act are very much driven by lumber prices and tariffs in Canada based on level prices in the U.S. Those are down this year, in fact, zero per cent in Manitoba, Alberta, Saskatchewan and B.C. I think it is 0.1 per cent in Ontario. Based on those rates, they are forecasting a decrease in those payments over what was originally forecast of $253 million.
Finally, Finance is projecting a decrease in interest costs of $241 million. That is based on the most current economic information that was used around Budget 2014. That $241 million is split between about $180 million that relates to a lower forecast on long-term interest rates, and the other smaller portion relates to updated actuarial valuation for one of the pension plans.
Slide 10: Just to wrap up a few points here, this is $358.3 million in budgetary voted expenditures for 35 departments and agencies. The estimates are tabled to assist your study of the appropriation bill, which will be coming shortly. These are the third and final estimates for the year.
Mr. Chair, you made reference to the fact that we no longer print supplementary estimates. There is one advantage to that. I take this opportunity to update the committee on any errors I am aware of in supplementary estimates, and there is one. It has not yet been posted online but will be shortly. The advantage of the online bit is that we can update as we go, but I apologize for the error. It relates only to our statutory spending totals; they are off by about 0.3. So there will be an update on the statutory side coming on our website in the next few days.
Pages 1-3 and 1-4 are the big ones. The totals you see for statutory, I believe, will be going up based on that correction. As for the voted amounts — the appropriation act itself that is attached — they are fine.
Lastly, Mr. Chair, it has been brought do my attention that you recently had a discussion with the Privacy Commissioner about a loan for a building, and there was curiosity about how that works. Where we have an organization that is going to incur a one-time cost and can't really afford it in its current reference levels, we have discussions and sometimes allow them to basically get what they have termed an ``interest-free loan.'' We reduce their budgets in each of the next — in this case — 15 years by the amount we have advanced them this year, and there is no interest on it. Effectively, we have changed the spending profile for that organization. They could afford to pay a little bit every year, but the fit-up costs in question are a one-time expense they have to pay all at once. We've reduced their reference levels for the next 15 years to spread out that cost, because it's not something that happens every year, and they are not resourced for it on an annual basis. They've received a one-time interest-free loan from the Treasury Board of Canada Secretariat. Really, we have just changed their spending pattern.
The Chair: How is that accounted for?
Mr. Matthews: From an accounting perspective, it will show as spending in the current fiscal year, because they are actually spending in the current fiscal year.
The Chair: It will be that department?
Mr. Matthews: It flows through their agency. I have not looked at the details they've proposed, but it would be a charge to their appropriation in the year it's spent. We have to talk accrual accounting always, so if they are fit-up costs, they usually meet the definition of an asset. So from an accrual accounting perspective, it will likely be depreciated or amortized over the next however long their lease agreement is. Most fit-up costs meet that definition, but I can't speak to that one in detail.
You will see when we close the books, Public Accounts, Vol. 2 for that organization would actually have the full amount of money spent in the current fiscal year.
The Chair: Is this something new or a new way of accounting?
Mr. Matthews: It is not necessarily new. It does not happen often, but something like fit-up costs are a great example where departments are moving buildings. Often it's to cheaper accommodation and smaller space, but there is a one- time expense to get the building ready for them. They don't have money in their annual reference levels to allow them to afford that, so if it is something that is one time in nature, and they can afford a bit over the next few years, it is something that is available. They do need permission from the Treasury Board, but it does happen.
The Chair: What role does Public Works and Government Services Canada have to play in relation to this?
Mr. Matthews: PWGSC often decides which building they are going to. If a lease is expiring, they would look at the needs of the organization and decide they are moving to a new space — sometimes organizations don't have a choice; that is a Public Works' determination. But organizations are responsible for a good portion of the fit-up costs when they do move.
The Chair: Are there any questions on that particular issue?
Senator Buth: Departments move all the time. It seems offices are moving constantly, and this is the first time — I mean, I don't know how long you've been here, Senator Day, but a long time.
The Chair: First time I've seen this.
Senator Buth: It seems unusual. I've seen large departments make the move, like Agriculture and Agri-Food Canada, but —
Mr. Matthews: You've hit the nail on the head with that, because large departments are able to absorb larger expenses than smaller ones, so this sort of arrangement is more typical for your smaller agency. If you look at a small organization like the Office of the Privacy Commissioner, it is difficult for them to entertain one-time expenses, whereas a department like Agriculture has multiple projects on the go and there might be more flexibility you can handle.
It is more common for smaller organizations, absolutely.
The Chair: Mr. Matthews, you were going to have Ms. Santiago take us through something.
Mr. Matthews: Yes, she will take us through Transport Canada. Before I turn it over, I would remind senators that when you do have questions, please provide the page number. It is different in English and French, so it may take us a few seconds to find the right page in the various documents.
[Translation]
Marcia Santiago, Executive Director, Expenditure Management Sector, Treasury Board of Canada Secretariat: Honourable senators, if I may, I would like to go over with you Supplementary Estimates (C) for Transport Canada; they appear on page II-53 of the French version.
[English]
In the English version, Transport Canada is on page II-50.
[Translation]
Looking at the top of the page, at the shaded part of the organization summary, we can see that the department is only requesting additional authority for capital expenditures, vote 5. The department is seeking an adjustment of $1 and a total transfer of approximately $142,000.
The table below provides the explanation of the new requirements.
[English]
On the next table after that — the explanation of requirements — the first item for $13.4 million in grants and contributions, vote 10, is from a Budget 2013 decision to continue passenger rail services in remote communities with limited or no alternate year-round surface transportation.
Two lines below that, you will see a negative value for the same amount. This means that cash is available in the vote that the department cannot use this fiscal year. In this case, the available authorities are related to reprofiling requests from a different contribution program — gateways and border crossings.
The Chair: Is it just coincidental that it's precisely the same amount?
Ms. Santiago: There is actually more funding being reprofiled from gateways and border crossings, but we only offset by the amount of the new authority. So there's more left over that's being reprofiled.
Taken together, these two entries mean that Transport Canada is acting on a Budget 2013 announcement but is not actually asking Parliament to approve any additional authority for grants and contributions.
Further down the table, there is also an item related to the Canadian Safety and Security Program. In this case, the Department of National Defence holds the program funding but would like to support an initiative being undertaken by Transport Canada. In these supplementary estimates, DND is transferring about $142,000 so that Transport Canada can update the information system supporting its secure supply chain. This is a database of applications from shipping companies and exporters who wish to join the air cargo secure supply chain.
In this case, the funding is already in DND's vote, so Parliament is being asked to approve only the movement of the cash into Transport Canada's vote. The government cannot raise Transport Canada's vote limit without parliamentary approval through the appropriation act, and, as we've mentioned before, $1 is the minimum cost of admission into the supply bill.
To sum up, these two transactions show how a department's supplementary estimates could present quite a bit of activity and still only ask Parliament to vote on one new dollar.
The Chair: I like your expression that $1 is the cost of getting in. Is that sort of Treasury Board Secretariat talk?
Ms. Santiago: That's bill talk.
The Chair: That's good; we'll remember that. Anything else you'd like to tell us about Transport Canada?
Ms. Santiago: Not in this case. Thank you.
The Chair: That's helpful to understand those $1 items. I have quite a list of senators.
Mr. Matthews, do you have Mr. Sprecher going through something, or is he just ready to go when we need him?
Darryl Sprecher, Director, Expenditure Management Portfolio, Treasury Board of Canada Secretariat: Exactly.
Senator Eaton: Thank you. A special interest of mine is immigration. Could you talk to me about the Passport draw- down?
Mr. Matthews: Sure. This may get a bit technical, but thank you for the question.
Think about three types of votes that we have as resource organizations. The most normal is an operating vote. Parliament authorizes money, and departments spend money. That's the vast majority. We have something called a vote-netted revenue, and that's a case where we give departments permission to charge fees for their service. They're allowed to re-spend a portion of what they actually collect.
Senator Eaton: They take in X from service, and they can spend 50 per cent of what they take in?
Mr. Matthews: Fifty per cent or up to a certain cap. That's Part 2. The third kind is called a revolving fund, and the revolving fund, for those of you with private sector experience, is actually probably the closest thing we have to the private sector. We use revolving funds where an organization is supposed to basically financially break even for its activities, and Passport is one of those actives. Over time, their charges are supposed to equal their costs.
Now we know that for most organizations, in one year they might have costs that exceed revenues. The next year it might go the other way, but, over time, it should work out to a net of zero. The way we help revolving funds deal with those timing differences, where they might spend more in one year versus the next, is called a draw-down authority, which is basically a loan. Passport Canada had authority to draw down money if they needed more money in one year than they had revenues.
With the new 10-year passport and the take-up of that, Passport Canada actually has lots of cash at its deposal, so it's come forward to reduce the amount of draw-down authority it needs. It said, ``We no longer need as much authority as we used to have because we've got good cash flow.'' That's basically a technical adjustment, and they're reducing the amount of money they can draw on the framework if they need extra cash. The 10-year passport costs more money than the 5-year passport did. Many people have taken them up on that, and there's been a good influx of cash. Think of the draw-down as a line of credit. They don't need as big a line of credit as they used to. Is that clear?
Senator Eaton: Thank you.
The Chair: Why would they decide to reduce their line of credit or their draw-down?
Mr. Matthews: It's not a must. They only have access to it if they need it. It's basically just good housekeeping. I guess that's the way I would describe it. They've looked at their situation and said, ``We don't need that anymore.''
The Chair: There are some of us who think it might be good planning to keep it there just in case.
Mr. Matthews: You're quite right. If, in the future, Passport looks at its long-term forecast and says, ``You know what? We might need access to that again,'' they could come back in and request an increase.
The Chair: And go through all of the procedure again to get that increase?
Senator Eaton: A department, then, can never build up a bank account of profits as a contingency for the future?
Mr. Matthews: In a revolving fund, they basically can have a surplus that accumulates. They don't actually hang onto the cash. We keep the cash —
Senator Eaton: But they have a —
Mr. Matthews: They have a surplus. If a department was bringing in more than it spent year after year, one could actually argue that they're charging too much for their services. We do expect that, over time, it is close to break even.
Senator Eaton: Thank you.
Senator Buth: Welcome back, Treasury Board. Can you explain what the funding is to modernize disability and sick leave management?
Mr. Matthews: I can. Thank you. That is one of our horizontal items. Two departments are receiving money there. You would have likely seen in Budget 2013 and, more importantly, in Budget 2014 some discussion around modernizing the sick leave management regime in the federal government. For those who are interested, in the current sick leave regime in the government, we have a long-term disability plan, so, if an employee is off sick for more than 13 weeks, long-term disability kicks in.
The federal government does not have a short-term disability plan for its employees. The way that functions presently is that, on average, employees get 15 days of sick leave per year. If they don't use them, they effectively roll into a bank. They have no cash value, but the hope is that employees build up enough of a sick leave bank to get them through to long-term disability in the event that they need it. Just bear with me while I find my statistics.
The federal government is one of the only major employers left that doesn't have a short-term disability regime. We think the current system is broken, and the reason why we think that is really twofold. The Parliamentary Budget Officer did a report recently on the number of paid and unpaid sick leave days that each employee takes, and, just to refresh your memory, it's 18 days a year — 11.5 paid and 7 unpaid. If we actually look at our sick leave balances, 11 per cent of our employees have no sick leave bank whatsoever. If they're sick, they either come into work sick, which we do not want, or, if they stay home, they don't get paid. So 11 per cent of our employees have no sick leave whatsoever. Sixty per cent of our employees do not have enough sick leave to get through to long-term disability. It's those two facts combined, plus the fact that the federal government is one of the only major employers left without a short-term disability regime. Budget 2014 indicated that in the next round of collective bargaining, putting in place and reaching an arrangement on a short-term disability regime is a priority. That's what's driving it.
Treasury Board of Canada Secretariat, as the employer, will have some work to do in helping to design what this plan looks like and negotiating with our bargaining agents. That's why Treasury Board Secretariat is getting money. By the same token, if this is to come to fruition, industry has a role to play. Industry would provide the short-term disability regime. Some consultation with industry has to happen, which, in fact, has started already. Public Works and Government Services Canada would end up running a competitive process, so the funding they're getting is to start planning around that exercise as well. Sorry for the long-winded answer.
Senator Buth: No, that's excellent. This $2.6 million, what does it go towards?
Mr. Matthews: In the Treasury Board Secretariat's case, it goes towards doing some research on what regimes look like in other industries and other companies and starting to get ready for the collective bargaining process because this is a bargaining item with our bargaining agents. The Public Works side is funding to start up the project. They've already had one industry day, I believe, where they met with industry, but there will be more of those types of things coming in the future.
Senator Buth: Is long-term disability right now provided by private industry?
Mr. Matthews: The long-term disability regime is, I believe, provided by private industry, yes.
The Chair: Just as a clarification on the 11 per cent of public employees who do not have access to sick leave so they come in sick, why don't they have that? Have they already used it up?
Mr. Matthews: They've used it up. It's more applicable to some of our younger public servants. You come in in your first year, and you might get sick right of the bat. If you've had a rough year, you haven't had a chance to build up any sick leave bank.
The Chair: I was thinking maybe there was an inconsistency in the number of days available to different departments. It's all the same?
Mr. Matthews: It's all the same.
Senator Seth: May I have a supplementary?
The Chair: Yes, absolutely.
Senator Seth: When will TBS be implementing this program?
Mr. Matthews: It's tough to say when it will be implemented because it does have to be negotiated with the bargaining agents. It is a collective bargaining item. It's a priority for the government in the next round of bargaining, which is starting very soon. I can't say how long it will take to implement because it does have to be negotiated. This is not a six-month project.
Senator Seth: Thank you.
The Chair: Senator Seth, you happen to be the next one on my list. Why not keep going?
Senator Seth: Yes, that's a good idea. I see TBS is requesting $73 million for compensation adjustment transfer to the departments and agencies for salary adjustment. Can you explain where exactly this money is going and what departments are affected and which employees are receiving compensation adjustment?
Mr. Matthews: Thank you for the question. These funds cover nine agreements that were reached with the core public service. The bulk of this money goes to the core public service. There is some small money going to separate agencies, but I'll deal with the core public administration. There are nine agreements. I'll run through them one by one.
Aircraft operations is 461 employees, largely in Transport Canada, but there may be pockets elsewhere that I'm unaware of. The second group is Correctional Services, 7,230 employees for our prison guards. We have EXs, so about 6,500 executives, and those would be spread out through all departments. We have our finance group, known as the FI group, and they're about 4,500 employees, again spread across all departments. We have our Foreign Service officers, which are just short of 1,400 employees, and they would mostly be in Foreign Affairs, as one would assume. Ships' officers is 1,150 employees, and then we have a bargaining agent called Ship Repair — East for the East Coast ship repair folks. That's 780 employees. Ship Repair — West is about 35 employees, but they are separate bargaining agents. There is a group called technical services, which I believe are spread across the public service, about 11,250. Those are the nine.
If you're wondering how much each agreement was worth, on average, 2 per cent. The vast majority of those were a 2 per cent raise. The executives were a 1 per cent raise, so they're an outlier on the down side. The Correctional Services folks, in addition to the 2 per cent, received a one-time $1,750 allowance, so that's in addition to the 2 per cent. The other group I should mention is our finance group. They received a 2 per cent raise, plus they had an allowance that was temporary, because finance was a skill that was — I guess the government had rolled in some additional temporary money to keep pace with the private sector. After several years, we realized this is a permanent part of their salary, so we rolled that in as part of their salary. It's a 3.58 per cent increase for the finance folks. Foreign Service officers received 2 per cent plus an additional 1.98. The bulk of these are 2 per cent, on average.
Senator Seth: Will this be permanent or just for a period of time?
Mr. Matthews: No, it's permanent. The agreements themselves are mostly three years in length, but it's a permanent increase to salaries, with the exception of the item I mentioned for Correctional Services folks, which is a one-time allowance of $1,750.
Senator Callbeck: It's good to have you all back. On what we were just talking about there, you said there were nine agreements. I was just looking at this document —
The Chair: Which document is that?
Senator Callbeck: It's one that they presented to us tonight, one of the many. It's ``Supplementary Estimates Allocation from Treasury Board Central Votes.'' On pages 2 through 5, you give all the departments and how much of that $73 million went to each of them. That came from nine agreements?
Mr. Matthews: Yes.
Senator Callbeck: Okay. I understood that, then.
On the disability and sick leave, has Treasury Board done any work on this already?
Mr. Matthews: We've done some work in terms of analyzing the current sick leave balances. That's why we can share statistics like 11 per cent of employees have no sick leave. We have done some consultation with industry and other employers to find out what sorts of plans they have and what their plans look like. When you're talking about a short-term disability plan, what does the plan look like? That sort of thing is where we've been looking so far.
Senator Callbeck: You're not far enough along yet to really know how we stack up?
Mr. Matthews: We stack up in that we know we don't have a plan and most other large employers do. The details of our plan have to be negotiated, and that's starting soon, so I can't actually speak to what our plan might look like.
Senator Callbeck: How much does it cost now, these plans, for the government? What percentage, roughly?
Mr. Matthews: As we have no short-term plan, the costs to the short-term plan are difficult to determine. If you look at the Parliamentary Budget Officer's recent report, his staff attempted to actually quantify the cost of paid sick leave, and they came up with basically just short of $900 million a year, or $871 million a year, in terms of what the cost of paid sick leave is. That was the PBO report.
There are other items that might be of interest that are related to this. We actually know that if you add up all the sick leave days that people have accumulated and if they took all their sick leave, it's worth about $5.2 billion. We know that not everyone will take all their sick leave. People retire in good health and they leave it. There is no cash value when you retire, so it's not all used.
When you look at the Public Accounts of Canada, last year, the Office of the Comptroller General looked, and they had enough data to actually put a liability on the books for sick leave. It's based on an actuarial valuation of what they think people might use. That liability is about $1.5 billion. Of the $5.2 billion in banks, $1.5 million has been disclosed as a liability.
In terms of the cost of the current regime, those are the key numbers, but this really hasn't been about cost. It's been about looking at our compensation practices, and we're not lining up with the rest of the employers.
[Translation]
Senator Bellemare: I know we are not voting on statutory items, but I still have two questions I would like to ask, for my own interest. The first has to do with the decrease in interest costs. You said the interest costs included the cost of servicing the debt. There is also the actuarial valuation with respect to the pension funds. I would like more details on that. Are we talking about the pension fund for parliamentarians? Is it tied to the decrease in the interest rate, provided for in the act, down to 4 per cent from 10 per cent?
Mr. Matthews: There are two considerations related to the interest costs, as I mentioned. First, the long-term interest rate expectations were lowered.
[English]
That's about $182 million.
On the pension regime that I mentioned, the valuation, that is specific to the Members of Parliament Retiring Allowances Act. It relates to a lowering of the interest rate, but it's part of that actuarial valuation that will look at things like life expectancy, interest rates, inflation rates and things like that. The long-term interest rate affected that actuarial valuation as well.
[Translation]
Senator Bellemare: So that brings down the statutory item?
Mr. Matthews: Yes.
Senator Bellemare: But it is recorded even though it is not paid out.
Mr. Matthews: Yes.
Senator Bellemare: It is an accounting entry. My second question has to do with softwood lumber, specifically the payments to the provinces that decreased by $253 million. We understand that we do not have any control over the situation; what happened happened.
But there are provinces, such as Quebec, that export a lot of softwood lumber products. I imagine, then, that Quebec is affected by this?
Mr. Matthews: Yes, but it is really the other provinces I just mentioned that caused the decrease. If memory serves, the rate in Quebec is still 2.6 per cent.
[English]
There are certainly still some tariffs being paid. Quebec's share is based on that tariff.
The reduction is really caused by the fact that we have 0 per cent in Alberta, 0 per cent in Manitoba, 0 per cent in Saskatchewan, and I think 0.1 per cent in Ontario. That's where it has really decreased, and it's a formula, based on the actual tariffs in place. I think Quebec has held fairly steady, if I recall correctly.
[Translation]
Senator Bellemare: I would think that has an impact on the provinces' budgets? The provincial governments have to make up that shortfall, do they not?
Mr. Matthews: If I recall correctly, it does not involve the provinces.
[English]
I think it goes right to the actual producers themselves.
[Translation]
Senator Bellemare: That is what I wanted to know. So it affects the producers.
Mr. Matthews: Yes.
[English]
The Chair: Refresh our memories, if you would. When you say it's 0 per cent in various provinces, that doesn't mean they're not shipping anything, but they're just under the quota.
Mr. Matthews: It's the actual tariff in play.
The Chair: The tariff comes into play if they go over the quota?
Mr. Matthews: There's the quota, but I think, more important in this case, it's the actual price of the lumber in the U.S. that's driving things. It's really around the prices, Canada versus the U.S.
The Chair: Does the exchange rate impact on that?
Mr. Matthews: Not to my knowledge, but I'm not certain. That question may be better for Finance.
The Chair: There are many different factors happening there. I think the important thing for our viewing public is that that doesn't mean there are no sales from those various provinces.
Mr. Matthews: No, my understanding is that this reduction in the forecast is based on the price of this lumber in the U.S., and that's what's driving this.
Senator Gerstein: Thank you, panel, for being with us.
My question is first on page 2-47, Shared Services. I'd like to understand. Total budgetary expenditures to date are $1.688 billion; is that correct? Am I reading that properly?
Ms. Santiago: Those are the total authorities that you've seen in the estimates.
Mr. Matthews: Can we pause for one second? The page in French?
[Translation]
Senator Bellemare: Shared Services Canada?
Mr. Matthews: Yes.
Senator Bellemare: Page II-51 in the French.
Mr. Matthews: Page II-51, thank you.
[English]
Senator Gerstein: Of the $1.688 billion, $88 million is being funded by transfers from other departments; is that correct?
Mr. Matthews: That's correct.
Senator Gerstein: So is that saying 5 per cent of the approved authorities is being transferred in, 95 per cent of it is money that has to be provided to Shared Services to run this operation?
Mr. Matthews: Yes and no, if I can say that.
Senator Gerstein: That's helpful.
Mr. Matthews: Shall I stop there?
The Chair: No, I think we should have an explanation.
Mr. Matthews: When Shared Services Canada was first established — this is not their first year of operation.
Senator Gerstein: I understand that.
Mr. Matthews: Their first budget was funded by transfers from other departments.
Senator Gerstein: Totally?
Mr. Matthews: Totally, and then we transferred in and, if I recall correctly, we took some money back to the framework, because Shared Services Canada is supposed to deliver things more efficiently.
Senator Gerstein: If I can just stay on my train of thought.
Mr. Matthews: Sure.
Senator Gerstein: So $88 million of the $1.688 billion is transferred in and they have to be provided with the rest of the money.
If I may direct you to page 1-6, what I read here is:
As announced in Budget 2013, funding for the procurement of Workplace Technology . . .
Now ``funding'' suggests that's where you're getting your funding, but it's partial funding; is that correct?
Mr. Matthews: Shared Services Canada, when we first started it, was responsible for three key things, if I remember: email, servers and data centres. In the past, every department had their own spending for email, servers and data centres. So Shared Services Canada was initially given money from departments to basically coordinate this for the whole of government. That was one.
What's happened in Budget 2013 is we've expanded the role of Shared Services Canada. If you look at the lines here, what we expanded to add to email, data centres and servers is the procurement of software for end-user devices.
For those of us who aren't computer literate, like me, those are things like Microsoft Windows and Adobe. It's the software you would have on your computer, those sorts of things.
In the past departments would have money to purchase those things themselves. We've taken effectively what they used to spend on that, took something off it for savings and given the balance to Shared Services Canada. It's really an expanded role for Shared Services Canada.
Senator Gerstein: Now if I may come to my question.
Mr. Matthews: Okay, I'm sorry.
Senator Gerstein: What I read here, this consolidation, why is the government doing this? The reason the government is doing it is, ``. . . undertaken to drive economies of scale, improve security. . .''
If I may say, it's tough to quantify in numbers, ``. . . and achieve savings for taxpayers.'' Achieving savings for taxpayers, that's a real number. I suspect that Shared Services had to provide a plan when they went into business, so to speak, as to how they were saving money for Canadian taxpayers.
My question to you, Mr. Matthews, is this: Who could opine as to whether or not this program is successful? Are we saving money? If so, how much? Is it on schedule? Is the time frame established to accomplish certain savings in fact taking place?
Mr. Matthews: In terms of how we know if we're saving money, there are two things. One, as I mentioned, Shared Services Canada's funding comes from other departments. They started the year with money we permanently transferred from other departments, and we're now adding to it.
The reason we know we're getting savings is that when we take what departments were spending, in this case on end- user software, we know what they spent, we removed it from their budgets and we gave Shared Services Canada less than that. So they can't actually spend what the departments used to spend. That's where we know the savings are coming from.
Some of these savings are very long-term in nature. If you think about data centers and consolidating them, which is what they're doing, that involves building space and things like that, but Shared Services Canada are the best folks to speak to about the efficiencies they're driving. But keep in mind that things like software procurement are fairly short- term in nature. Reconsolidating all of the government's data centres, you're looking at a pretty long window there.
Senator Gerstein: To summarize that, are you prepared to say whether, first of all, the program is successful? If it's successful, more than just saying, ``Yes, we know they're saving some money,'' is it $10, $1,000,000,010? What do you think they're saving?
Mr. Matthews: On the software one, I think my colleague —
Senator Gerstein: What about the whole concept of Shared Services?
Mr. Matthews: That's a better question for Shared Services Canada to talk about the spending.
Ms. Santiago: To the particular issue of what's being saved in this initiative, it's something in the order of $2 million in the first year and then $8 million going out.
Senator Gerstein: On $1 billion?
Ms. Santiago: On $100 million.
Mr. Matthews: The broader plan —
Senator Gerstein: We might have Shared Services sometime.
The Chair: That would be a really good idea.
Senator Gerstein: It might be helpful for understanding it. Thank you very much, Mr. Matthews, as always.
The Chair: Just for clarification, we know how much you keep transferring over to Shared Services, and you're taking that away from various departments. Could we follow through the various departments over the years and see how much their expenditures have been reduced because they're no longer doing that service?
Mr. Matthews: You can look to department spending and see that it's down. It's down for two reasons: One, there have been some reductions; second, there have been some transfers to other organizations. You can follow through the transfers we've done through things like supplementary estimates. I think if you went to most departments' quarterly financial reports, many of them give disclosure on the reason their spending is down. One of the reasons they often cite is, ``We've moved money to Shared Services Canada.''
The Chair: So we should be able to see —
Mr. Matthews: You will see it in some cases. I can't say you'll see it in all cases, but certainly in some.
The Chair: Is a department billed for the services by Shared Services? Does Shared Services say, ``You have to pay us some money for providing the services''?
Mr. Matthews: There are two things. We have permanently transferred the responsibility from the department over to Shared Services Canada. There is no bill; Shared Services Canada gets the money. They keep it and procure software or whatever. Where the department is looking for extra or specialized services, there would be billing back and forth.
The Chair: Are there some ongoing services that Shared Services is providing?
Mr. Matthews: Where we have given Shared Services Canada responsibility for it, we've taken money from departments and given it to Shared Services Canada, so it would not be fair to then bill the department for it, because we've already taken the money from them.
The Chair: We will remember that.
[Translation]
Senator Chaput: I hope my question is clear. On page 15 of the Estimates by Strategic Outcome and Program section, under Treasury Board Secretariat, Internal Services is listed, with the amount appearing in the Estimates to Date column.
And above the Internal Services entry, it says this: ``The following program supports all strategic outcomes within the organization.'' Does that mean that Internal Services includes employee salaries?
Mr. Matthews: Yes and no. Internal Services includes the financial and human resources functions. The department cannot meet its strategic objectives without spending money on financial and human resources functions. So to meet its strategic objectives, a department has to provide internal services.
Senator Chaput: On page II-51 of the 2013-14 supplementary estimates, where do we see the Internal Services expenditure for the Treasury Board Secretariat? Is it included somewhere?
Mr. Matthews: That is something the House committee has studied and continues to study. Parliament grants votes to each department, and usually there are three.
[English]
They are operating, capital, and grants and contributions. That's how most departments get their money voted.
We also provide information on programs, and it's a different way to slice up the money. In the study we have spoken about here before, there was discussion at the House of Commons Standing Committee on Government Operations and Estimates on the idea that it would be better if Parliament voted money on strategic outcomes or on programs, because this capital, operating, and grants and contributions is different. That was the question.
Really, when you think about the two points you've raised, it's just a different way to look at the money. What Parliament actually votes on — operating, capital, grants and contributions — for most departments is one way of slicing it. If you go to the other document referred to — strategic outcomes and programs — it is just a different way of slicing up the same money. It gives you a sense of what departments spend on programs.
Senator Chaput: Okay. If I wanted to know where the expense is, where do I look?
[Translation]
Is it included in the Operating Budget Carry Forward entry?
[English]
Mr. Matthews: For most departments, ``internal services'' is part of the operating expenditures.
Senator Chaput: That's what I needed to know.
Mr. Matthews: Sorry, I should have started with that. There are other things in there as well.
Senator Chaput: Because you can't take this and find it here.
Mr. Matthews: No.
The Chair: That would be too easy.
Mr. Matthews: Mr. Chair, it comes down to the question of what is the best way to vote money in. That was the subject of the study that House of Commons committee did. There are ongoing discussions to some extent. The current model is that we vote on operating, capital, and grants and contributions, and we provide information on planned spending, by program and strategic outcome.
[Translation]
Senator Chaput: With respect to the transfers from various departments to Shared Services Canada for set-up and service delivery, no transfers were made from Treasury Board to Shared Services Canada. Is that right?
Mr. Matthews: Yes, I believe so.
Senator Chaput: You said that your department did make a transfer to Shared Services Canada for technology?
Mr. Matthews: To purchase computer programs and so forth.
Senator Chaput: A transfer was made for technology, okay.
[English]
Mr. Matthews: It's actually not listed as a transfer.
[Translation]
To see the transfer, you need to look at page II-51 in the English version of the estimates. What page is it in the French?
Senator Chaput: Page II-49 in the French. Is that for Treasury Board?
Mr. Matthews: Page II-49 in the French.
Senator Chaput: So where would I find the transfer?
[English]
Ms. Santiago: Under ``available authorities,'' the reduction of $479,606.
Senator Chaput: It is $479,606?
Ms. Santiago: Yes. That's an amount available right now in the Treasury Board's vote, but the secretariat can't use that anymore because that's part of the $102 million transferred to Shared Services Canada.
The Chair: I think you should explain to our honourable senators that you've got a chart on ``available authorities.'' What do you mean by that term?
Mr. Matthews: When we first tabled the Main Estimates, it's based on information we had at the time. That's the available authorities, and that gets increased as the year goes on through supplementary authorities. But we only go to Parliament when we want to increase or transfer something. In the case of Shared Services Canada, after we had prepared the Main Estimates, there was this notion of transferring money over to Shared Services Canada for the procurement of software for end-user devices. In that case, we froze an amount in every department's budget and said that even though it's in their authorities, they can't spend it. We can do that internally; it's called a freeze. That money was effectively being moved to Shared Services Canada.
Because the department can't spend that, when they come in looking for new resources, rather than give them more resources, we say, ``Look, you already have the authority for this. We have frozen some of your money, but we will now allow you to spend that because you've come in for new money.'' That's kind of how it works.
The Chair: Do you need parliamentary approval to dip into that available authority for another purpose?
Mr. Matthews: No.
Ms. Santiago: That's a Treasury Board approval.
The Chair: Okay.
Senator Eaton: Very quickly. Do you anticipate spending all the $7.2 million you have for the CRA to look into charities? Will you be short at the end of year?
Mr. Matthews: The CRA amount is actually for three things. I did highlight the charity one, but the CRA — a couple of measures. Enhancing transparency and accountability for charities is one. Pooled registered pension plans is two. I believe the third was around the small business hiring credit, if I recall correctly. That's the money for all three. By coming in for Supplementary Estimates (C), the department is indicating that they intend on spending that this fiscal year.
Senator Buth: I'm curious about the Citizenship and Immigration debt writeoff. Can you explain that?
Mr. Matthews: We can. When a department loans money and it turns out to be uncollectible, to actually write off the money, active management of these loans, when it comes time to say this money will not be collected, we actually come in for parliamentary authority to write it off. In this case, this relates to loans related to immigration programs, so very small dollar loans. By way of background, the program itself has $42 million roughly in outstanding loans. The bulk of these loans that are being written off today occurred after 1995, but there were a few dollars from before. Basically, this is just good housekeeping. These loans are not collectible and, to actually write them off, we need parliamentary authority.
Senator Buth: Whom did we loan the money to?
Mr. Matthews: This would be immigrants, to help them in settling.
Senator Buth: And then they didn't pay it back. Do we still do that?
Mr. Matthews: We still do that, as far as I know, yes, and the $42 million is the total balance of loans outstanding.
Senator Callbeck: I'm just looking at the document you provided. I notice that for the RCMP, the total there is minus $23 million. With Supplementary Estimates (C), are the RCMP losing $23 million?
Mr. Matthews: I will just find the RCMP. I think you might be looking at the standard object table.
Senator Callbeck: ``Budgetary Expenditures by Standard Object.''
Mr. Matthews: Apparently we can see it on the estimates document itself on page II-45 in English. What you are actually seeing is that the RCMP is transferring funds to other organizations. Page II-45 in the English version of the supplementary estimates itself will give you some information. It is II-37 in the French version.
What you'll see here is the RCMP's page, and down toward the bottom you have some transfers. There is money coming into the RCMP from Public Safety that relates to First Nation policing, and that's the $16.742 million. Then you've got some transfers out. In the transfers out, the first one is RCMP for shared Services Canada, $136,000, and then you have the Bi-National Radio Interoperability Project, Beyond the Border, $671,000, for a total of $808,000. Then there is another amount, vote 45c, for $39 million related to Border Services, CRA and Shared Services Canada. It's not that the RCMP is losing money; they are transfers to other organizations.
[Translation]
Senator Chaput: We just discussed the transfers from the RCMP to Shared Services Canada. They were very easy to understand. Why are they not listed in the same way for the Treasury Board Secretariat?
Mr. Matthews: Because it is something a bit different. In the RCMP's case, they were actual transfers.
[English]
In the case of Treasury Board Secretariat, it's a case of having the funding available.
The Chair: Mr. Matthews, the horizontal items you gave in your document, these items are horizontal amounts under Supplementary Estimates (C) only. This isn't a yearly amount?
Mr. Matthews: You're quite right, Mr. Chair, but if you went to the introduction section of Supplementary Estimates (C), there is a table on horizontal items. If you bear with me, page 1-17 in English and in the French version —
The Chair: This just shows a supplement to what had been claimed earlier for these various horizontal items.
Mr. Matthews: It's the same page in French. If you actually look at the first one on the list, 1-17, it's government advertising. You'll see the details of Supplementary Estimates (C) at the very bottom here, but you'll actually see what happened in Supplementary Estimates (A) and (B) as well. All three are there. It starts with Supplementary Estimates (A), Canadian Heritage, Employment and Social Development, Health, Natural Resources, and then we hit (B) and then (C), so you do get the whole picture there.
The Chair: Page 1-17.
Mr. Matthews: In English, yes. Do you see it?
The Chair: I don't, but I have made a note of it so I will have a chance to look at it. Unfortunately, we've run out of time. We very much appreciate your being here to help us out, and we know you'll be back here next week with the Main Estimates. Mr. Matthews, Ms. Santiago, Mr. Sprecher, we appreciate very much the work you do for us.
Colleagues, we've got quite a few panellists here for our second session this evening.
[Translation]
Honourable senators, we are continuing our study of Supplementary Estimates (C) for the year ending March 31, 2014.
[English]
I am very pleased to welcome officials from two departments to help us with their departmental requests for supplementary estimates. We always like to know why they're asking for additional money at this time of the year, so that's why we've brought them along. I'm pleased to welcome, from Indian and Northern Affairs or Northern Development — I don't know what your name is; you keep changing it back and forth — Pamela D'Eon, Acting Chief Financial Officer. We've had Ms. D'Eon here previously, so we're glad you're back. We have also Janet King, Assistant Deputy Minister, Northern Affairs; Serge Beaudoin, Director General, Sector Operations Branch; and Paul Schauerte, Senior Policy Manager, Program Design and Regional Partnerships. From Public Works and Government Services Canada, we welcome Alex Lakroni, Chief Financial Officer, Finance and Administration Branch; and Pierre- Marc Mongeau, Assistant Deputy Minister, Real Property Branch.
I understand each department has brief introductory remarks, after which we will engage in a discussion. We do have your supplementary estimates here, so we can focus on those if you could just go through and tell us the various line items after you've had your introductory remarks. Who would like to go first? I have Mr. Lakroni on the list. Did you toss a coin down there? Sir, you have the floor.
[Translation]
Alex Lakroni, Chief Financial Officer, Finance and Administration Branch, Public Works and Government Services Canada: Mr. Chair, members of the committee, I am pleased to appear before this committee on behalf of Public Works and Government Services Canada, or PWGSC, to discuss the 2013-14 Supplementary Estimates (C).
Joining me today is Pierre-Marc Mongeau, Assistant Deputy Minister, Real Property Branch.
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 its treasurer, accountant, central purchasing agent, linguistic authority and real property manager. PWGSC is home to the Receiver General, which manages a cash flow of more than $2.2 trillion a year and prepares the annual Public Accounts of Canada. It accommodates more than 272,200 federal employees in a diverse real estate portfolio involving approximately 2,000 leases and $1 billion in annual rental payments. It injects more than $14 billion annually into the Canadian economy through government procurement. And it translates more than 1 million pages of text a year on behalf of federal organizations, and provides translation and interpretation services for Parliament.
[English]
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.
Through the 2013-14 Main Estimates, the department asked for $2.6 billion to deliver core services related to accommodation, renovation, construction, procurement, translation and industrial security screening.
Please note that PWGSC did not seek any appropriations through the earlier Supplementary Estimates (A) and had requested $176.6 million in Supplementary Estimates (B).
These Supplementary Estimates (C) seek additional net funding of $66.3 million. The net funding request is based on total required funding of $98.7 million, less $29.7 million of internally available funding and transfers to various departments of $2.7 million.
The total funding requirement of $98.7 million is based on the following items: $63.8 million for real property functions, to cover inflationary pressures on non-discretionary changes affecting PWGSC's real property budget. It includes funding adjustments for rental costs, fit-up of office space, payments in lieu of taxes and municipal taxes.
Another $13.1 million is for necessary building upgrades, special-purpose space and information technology for the Carling Campus project.
Next is $8.1 million for accommodation requirements, flowing directly from the funding requests made by departments and agencies for new or renewed programs.
Next, $6.5 million is to implement the standard component of the Build in Canada Innovation Program. This program allows us to procure innovations from Canadian companies for use by federal departments and agencies.
Next, $3.1 million will enable the Translation Bureau to maintain the quality and accessibility of the Language Portal of Canada at current levels.
Next, $2.5 million is to develop web-based materials and media plans on behalf of the Government of Canada, as well as to purchase media on the Internet through the official agency of record.
Next, $1.1 million is for the reinvestment of revenues from the sale or transfer of surplus properties that were sold at market value. The funds generated are to be reinvested in federal office facilities and common-use assets to preserve or extend their useful life.
Finally, $500,000 is to support the Treasury Board Secretariat in its strategy to modernize disability and sick leave management in the federal public service through, for example, the provision of procurement services.
[Translation]
As befits our stewardship responsibility, we seek whole-of-government solutions that are efficient and cost-effective, while striving to deliver high-quality services to Canadians.
Mr. Chair, members of the committee, thank you for your attention. My colleague and I would be pleased to answer your questions.
[English]
The Chair: Before we go to Ms. D'Eon, could you just confirm, about halfway down, your voted appropriations on page 2-43? You said $6.5 million for vote 1c, funding to implement the standard component of the Build in Canada Innovation Program. It's $6.3 million here. Did you misspeak? Did I mishear, or is this miswritten? There are three options.
Mr. Lakroni: It's $6.5 million comprised of two items: $6.284 million, as you see here on page 2-43, and there is a component that is statutory that is included at the bottom — total statutory appropriations. In that $213,000, there is $182,000 to account for employee benefit plans. For this program, there is a component of salary.
The Chair: That's good. That helps us understand these documents. Thank you.
Pamela D'Eon, Acting Chief Financial Officer, Aboriginal Affairs and Northern Development Canada: Mr. Chair and committee members, thank you for the opportunity to discuss the Supplementary Estimates (C) for fiscal year 2013-14 for Aboriginal Affairs and Northern Development Canada. We appreciate the role that the committee plays in reviewing the department's requests for changes in spending levels.
The investments in Supplementary Estimates (C) are part of the Government of Canada's overall strategy to address the needs of First Nations, northerners, Metis and non-status Indians.
These supplementary estimates give the department the resources necessary to help improve the quality of life for Aboriginal peoples and northerners. The supplementary estimates seek authority for revised spending levels during the fiscal year that Parliament will be asked to approve in an appropriation act. Access to these supplementary estimates by the department is a regular process, given the timing of announcements made as part of federal budgets.
To begin with, we would like to share with you the details about these investments found in our Supplementary Estimates (C). They include initiatives totalling $72.4 million that will have appropriations of the department at $8.8 billion. Technically, these initiatives are being offset by funds previously appropriated and available within the department's reference levels due to the reprofiling of activities to future years.
Supplementary Estimates (C) were tabled in Parliament on February 13, 2014. Specifically, Supplementary Estimates (C) will provide the financial resources to take action on a number of key initiatives that I will briefly describe.
The largest item in these supplementary estimates is $36.1 million to allow the department to satisfy obligations in the Northwest Territories devolution agreement to make payments to the Government of the Northwest Territories and Northwest Territories Aboriginal groups to offset their one-time costs associated with devolution. These funds will also be used to undertake consultations with Aboriginal groups on legislation necessary to implement devolution.
To meet additional pressures, under the Emergency Management Assistance Program, these supplementary estimates include $33.2 million to address urgent health and safety for First Nation communities in 2013-14, especially as they relate to evacuations in Manitoba and Ontario due to forest fires, recovery from flooding in Saskatchewan, and floods and storm surges in the Atlantic region.
Also included in these supplementary estimates is $1 million for out-of-court settlements. Out-of-court settlements are one of the many mechanisms that the Government of Canada uses to mitigate risks and arrive at resolutions. These particular resources are as a result of an out-of-court settlement concluded with the First Nations pertaining to loss of income associated with oil and gas royalties.
The department is also receiving $1 million to provide implementation support for the Family Homes on Reserves and Matrimonial Interests or Rights Act that includes provisions for First Nations to develop, ratify and implement their own matrimonial real property laws and the application of a federal regime. The Centre of Excellence for Matrimonial Real Property will be established with an existing First Nation organization to focus on the distribution of knowledge on the legislation to assist First Nations to develop their own community-specific laws.
In addition to the Supplementary Estimates (B) $5-million contribution to Indspire to provide post-secondary scholarships and bursaries to First Nation and Inuit students, these estimates include $1 million to the Cape Breton University Purdy Crawford Chair in Aboriginal Business Studies to encourage business studies by Aboriginal students. The Purdy Crawford Chair in Aboriginal Business Studies is a research chair supported by the five Unama'ki communities on Cape Breton Island and is focused on promoting interest among Canada's indigenous people in the study of business at the post-secondary level while undertaking pure and applied research specific to Aboriginal communities.
The Department of Fisheries and Oceans is providing $80,000 for the support of co-management of the Tarium Niryutait Marine Protected Area, Canada's first Arctic marine protected area in the Inuvialuit Settlement Region. These funds will be used by the joint secretariat for administration, community engagement, and design and delivery of community-based monitoring programs collecting annual baseline information.
In closing, I would like to thank you for inviting the department to appear before the committee today and for permitting us the time to share information on Supplementary Estimates (C), 2013-14. My colleagues and I would be happy to respond to any questions and comments that the members of the committee may have pertaining to these supplementary estimates.
The Chair: While you have your book open, could you explain ``internal transfers to reduce the amount of new appropriations required'' of $22 million? It looks like you're moving it from operations to vote 10.
Ms. D'Eon: Vote 10 is our grants and contributions vote. Sometimes if there are resources in the department that cannot be used at that point in time and are found to be in the wrong year, they can be reprofiled to a subsequent year. Therefore, they are available to offset any increases to the appropriation.
It's pretty much a technical measure that is managed through the central agencies. If resources are available to offset the request for appropriated funds, then they move those monies. Those monies are not reduced; they're just moved to the following year.
The Chair: There is $22 million you didn't spend in operations this year.
Ms. D'Eon: Yes, and there are valid reasons for that. It does require the approval of central agencies in the Department of Finance before we can get permission to move monies to the following year.
The Chair: Yes. We understand. Thank you. We will now go to honourable senators.
Senator Buth: Thank you for being here this evening. My first question is for Public Works and Government Services Canada. In your presentation, you made the comment that $63.8 million is for ``real property functions to cover inflationary pressures on non-discretionary changes affecting the real property budget.'' Can you tell me how you typically forecast covering this? What has happened that you need to come back and ask for additional funding?
[Translation]
Pierre-Marc Mongeau, Assistant Deputy Minister, Real Property Branch, Public Works and Government Services Canada: What we call ``Quasistats'' are the tools we use to adjust our funding levels during the year. That includes considerations like the ones we are presenting to you today, refits, for example. It also includes adjustments related to heating, all the things we deal with on a daily basis. It is often extremely difficult to forecast a year or a year and a half ahead of time what heating costs will be or what new programs certain departments will put in place.
Our methodology is based, first and foremost, on curves to ensure we can forecast service costs correctly. We also do a project-by-project review. In this area, we have a few that I could speak to specifically. Every year, we also have up to 150 projects that require us to make adjustments during the year to the forecasts we did a year and a half in advance. We always have to make minor adjustments here and there during the course of the year, and Quasistat is the tool we use to do that.
My branch's total operating budget is $2.4 billion. What we are requesting today is $63.8 million in adjustments, which represents about 2.7 per cent of our total annual needs for all the buildings we manage across the country. While it may seem like a huge amount, it simply represents an end-of-year adjustment across the spectrum of our operations so that we can address specific projects, changes or leases that were not part of our forecasting a year prior but that we have to provide for in light of new programs in the department.
Our role is solely to ensure that federal employees have office space. We do not create needs. All we do is meet the needs of other departments. And to do that, we have our beginning of the year budgets and our $63 million in Quasistats to help us make the necessary adjustments at the end of the year. Again, that accounts for 2.7 per cent of a $2.4-billion budget, which is rather good.
[English]
Senator Eaton: I have a supplementary question. Are the renovations of the Parliament buildings in any part of that figure?
[Translation]
Mr. Mongeau: I have happily been in charge of the Parliament project for the past three years. Unfortunately, the figure does not include any of the buildings in the Parliamentary Precinct.
Senator Eaton: It is not included in that amount.
Mr. Mongeau: It is not included. It does not include the projects for Parliament or the buildings in the Parliamentary Precinct.
[English]
The Chair: Senator Buth, you still have the floor.
Senator Buth: Thank you.
We recently learned about an interest-free loan that was provided to the Office of the Privacy Commissioner for their move and outfitting of a new building. My question isn't really related to that, but how many moves occur in any given year? How many employees are being moved, and what is happening in terms of buildings and real estate, refitting, and things like that?
Mr. Mongeau: That is a very interesting question, and it could be a long answer. I will try to reduce it.
[Translation]
In a given year, we have anywhere between 1,600 and 2,000 leases, and we estimate that about 15 per cent of them expire every year. So, year after year, we are having to renegotiate at least 15 per cent of our leases, and that means hundreds of leases, as you know. We have these leases, then, that are always based on the needs of our client departments. They tell us what they need, and we check whether we have enough space, whether we can accommodate them with our existing buildings or leases. And if not, we find other accommodation solutions for the departments.
It is a giant process carried out by a huge team. We do a five-year look-ahead in terms of every department's square footage requirements, but it always changes a bit, so we are constantly making adjustments to the needs of our client departments.
Staff sizes change and so forth. I could not tell you what the figure is today, as I would have to do a historical analysis, but I can tell you that we renew at least 15 per cent of our 2,000 leases every year. That is a lot. We have an estimated $175 million in fit-up costs a year for all office space preparation work. This year, we expect the cost to be $175 million.
[English]
Senator Buth: I have a question for Aboriginal Affairs and Northern Development Canada. In your supplementary estimates, you've got emergency management organizations, and you mentioned Saskatchewan and Manitoba fires and Saskatchewan floods. Where are we at in terms of the floods in Manitoba?
Ms. D'Eon: I'd like to pass the question on to my colleague, Serge Beaudoin. He is in charge of the emergency management program at Aboriginal Affairs.
Serge Beaudoin, Director General, Sector Operations Branch, Aboriginal Affairs and Northern Development Canada: The question is about the Manitoba 2011 flood evacuees?
Senator Buth: Yes.
Mr. Beaudoin: There are still 1,891 flood evacuees that are out. As you may know, Minister Valcourt announced on February 14 the appointment of a federal negotiator to have a comprehensive package to have the evacuees return home. That negotiation will be under way with the province of Manitoba for cost-share arrangement and the First Nations themselves.
Senator Buth: Have there been any repercussions regarding the administration of those funds? They were transferred from the firefighters over to the Red Cross. Is the Red Cross still managing those funds for the evacuees?
Mr. Beaudoin: That's correct. As of February 1, the Canadian Red Cross took over the management or support for the 1,891 flood evacuees. There was a long transition period where this went from the Manitoba Association of Native Firefighters to the Red Cross to ensure the services provided to the evacuees had a seamless transition to them. The full transition has taken place. Just as recently as last week, speaking to the Red Cross on this, they are saying that the transition has occurred rather optimally, in their view, and that they're well seized of this.
It's worth noting that before taking on the transition, the Red Cross did a complete needs assessment of the requirements of the evacuees. They looked at more than issues of shelter and daily allocations and looked at this from a really holistic perspective to make sure that the services they're providing are complete.
Senator Buth: Criticisms were made public about the management of the funds under the Manitoba Association of Native Firefighters. Has anything occurred because of those accusations?
Mr. Beaudoin: There is nothing I can say about that, really. What I can say is that the Manitoba Association of Native Firefighters has recognized that their specialty is in preparedness activities, so emergency management planning, as well as short-term response, so evacuations. That is their niche. The Red Cross is taking over longer-term services for evacuees.
[Translation]
Senator Chaput: My question is for the Public Works and Government Services Canada officials and concerns the Build in Canada Innovation Program. When you explained your estimates, you mentioned that the program was implemented through businesses. Could you please explain what that means?
Mr. Lakroni: Thank you for the question. The program is designed to help businesses looking to commercialize their innovative products or ideas. The federal government helps them with the commercialization process by giving them the opportunity to have the federal government procure and use their innovations. The advantages of the program are twofold: first, it provides businesses with their first contract, and second, it allows them to receive feedback from users so they can improve their products going forward.
Since the program began, 84 innovations have been prequalified. That translates into some 67 real contracts, worth nearly $23.6 million, with 21 or so federal organizations, giving these businesses the opportunity to have their innovative products put to the test.
And just recently, in January, a call to proposals closed, so we are now evaluating the submissions to prequalify new participants.
Senator Chaput: Does the Office of Small and Medium Enterprises implement the program?
Mr. Lakroni: For the most part, yes.
Senator Chaput: What is the office in charge of? Does it have a hand in the evaluation process?
Mr. Lakroni: The office manages the program, under the direction of the Acquisitions Branch. The program has a number of components; it includes the dissemination of information to the businesses, industry and regions and, of course, the evaluation of requests. That means administering the program from beginning to end, from the sending out of information to the signing of contracts. And, above all, it means liaising with key departments to ensure the innovation and user are well-matched, so the program is a win-win situation for both sides, benefitting the department as well as the industry or business.
Senator Chaput: How much does the office receive to perform that function for the government? Does it get a percentage of the contracts?
Mr. Lakroni: There is a minimal cost to run the program, between $1 million and $1.7 million. The $6.5 million you see in the estimates reflects the first year of the program, because its budget will eventually reach $40 million in the years ahead, according to the 2012 budget. That $40-million envelope, then, comprises a standard component for all departments and a component specifically for the military sector to encourage innovation in the military arena as well as for the other departments.
Senator Chaput: Could you give us an example of an innovation in the military sector?
Mr. Lakroni: I can give you a few, without going into all the details. For instance, new technologies are one area.
[English]
For example, there is the remotely deployable operated vehicle for surveillance. I can give you, for instance, an example of a marine training simulator designed especially for the Coast Guard. It's paramilitary.
[Translation]
There is also miniature technology with respect to satellites and communications, as well as technology to detect explosives or radiation, such as radioactive products. A variety of technologies support the military industry.
Senator Chaput: Military innovations are quite expensive. Does a large proportion of the funding go to military innovations?
Mr. Lakroni: It was a three-year pilot project that was not aimed specifically at military or non-military products. The products I mentioned are pilot project examples from previous years.
This is the first year since the program was approved. The military component will develop further in the years to come.
Senator Chaput: With the same amount of funding requested or more?
Mr. Lakroni: As I told you, the amount approved in the budget was $40 million.
Senator Chaput: For how many years?
Mr. Lakroni: On an ongoing basis. The program will be re-evaluated at the end of the fifth year, so in 2017-18.
Senator Chaput: When you say ``on an ongoing basis'', do you mean $40 million per year?
Mr. Lakroni: Yes, $40 million per year.
Senator Chaput: Until 2017-18?
Mr. Lakroni: Until 2017-18, yes.
Senator Bellemare: My question is for Ms. D'Eon. Looking at page II-28, we see a contribution to support the building of governance, administrative and accountability systems for Indian Affairs.
Some $654,000 is being added to the $33,789,000. How does that devolution agreement work? Is it a one-time thing? Are you allocating the money and transferring public servants? Is there an evaluation date? Can it be withdrawn? How does it work?
Ms. D'Eon: I will let Janet King answer that because it comes under her area of responsibility.
[English]
Janet King, Assistant Deputy Minister, Northern Affairs, Aboriginal Affairs and Northern Development Canada: Devolution of responsibility for lands and resource management in the Northwest Territories happens once. The implementation date is April 1, 2014. The funds that you see included in the Supplementary Estimates (C) here include two sets of obligations. One are some pre-implementation obligations, one-time costs that include, for example, transfer of records, assets, all the work involved in transferring our workforce to the Government of the Northwest Territories, those types of costs — the creation of inventories of waste sites, contaminated sites, operating sites, excluded lands, all the work involved in identifying and transferring the lands that go with the deal.
The ongoing costs include funds transferred to the GNWT. Ongoing costs include establishing the Mackenzie Valley Resource Management Act and some of the work in that, initiating offshore oil and gas management discussions, trilateral onshore and offshore oil and gas discussions, remediation of the contaminated sites themselves, the engagement and management of those contaminated sites with the federal government, and the management of some excluded federal lands as well.
[Translation]
Senator Bellemare: Has the agreement been finalized?
Ms. King: Yes.
Senator Bellemare: There is nothing indicating whether it will happen in 10 or 15 years or what have you?
[English]
Ms. King: No. It's similar to the Yukon devolution agreement, which occurred just over 10 years ago, 11 years ago now. It was concluded and has been successfully implemented. Looking at it now, 10 or 11 years later, it has stood the test of time.
[Translation]
Senator Bellemare: Mr. Lakroni, I have a question about government advertising. You are requesting a $2.5-million increase in government advertising funding. That is on top of what?
Mr. Lakroni: First of all, as I mentioned in my opening remarks, Public Works performs a coordination function, especially as regards Internet acquisitions. We do this on behalf of those departments who choose to take part.
This is a pilot initiative that began in 2013-14. Our role is to coordinate and facilitate the initiative, serving as the link between the departments and the business or businesses responsible for putting the media on the Internet.
Senator Bellemare: So it is not a matter of government advertising per se? It involves using the Internet to raise Canadians' awareness of programs and services?
Mr. Lakroni: Precisely. A commitment has been made to provide information to Canadians. The departments choose the content they want and the messages they wish to convey. We are the administrator or facilitator in this case.
Senator Bellemare: You provide the technological support?
Mr. Lakroni: Yes, exactly.
[English]
Senator Callbeck: You say that government advertising program is to purchase Internet on behalf of departments. I thought this Shared Services division was going to include that.
Mr. Lakroni: Shared services division of PWGSC or Shared Services Canada?
Senator Callbeck: Shared Services Canada.
Mr. Lakroni: I think Shared Services Canada provides the infrastructure of technology to government departments, such as the data centres, the telecommunication — this could be the phones, et cetera — and email services, not necessarily the procurement aspect of liaison in terms of the private sector to deliver Internet, media and making that liaison of procurement. This is pure procurement and intermediary between departments and the supplier.
Senator Callbeck: So you purchase on behalf of departments, so the departments then reimburse you?
Mr. Lakroni: No, not necessarily. This money is to coordinate the purchase of online advertising on behalf of departments. They have their own budget for advertising.
Senator Callbeck: There's a line there on funding to modernize disability and sick leave, $105,000. We had Treasury Board in here earlier and they said they were working on that and that that had to be negotiated. What is the $105,000 for?
Mr. Lakroni: The role of PWGSC is to support the Treasury Board Secretariat in their initiative. Basically we are going to procure the services of one or more contractors to administer the program. There is a component that we will be developing a business solution for implementation in the PWGSC pay system.
Senator Callbeck: Is that done before or after? The benefits have to be negotiated. Are they negotiated first and then you spend that money, or do you spend it before?
Mr. Lakroni: The money is sought for this fiscal year to be able to do the procurement of the administrator, the contractor who is going to support in terms of processing disability claims and may provide access to services of the plan members, but, for the component of the pay system, we need to start working on that right now. I think work has commenced on that front.
Senator Callbeck: Okay. On Aboriginal Affairs and Northern Development, I have a couple of questions.
On the emergency management assistance, you mentioned floods and storm surges in Atlantic Canada. What are you including there?
Ms. D'Eon: Before Mr. Beaudoin gets into that, I would like to mention that the funds we are receiving through these supplementary estimates are for activities and natural disasters that have happened within this fiscal year that are beyond the level of resources we would have had within the department, so we have that opportunity to approach the centre.
Mr. Beaudoin: Emergencies affecting First Nations communities. There were 45 First Nations communities this funding went to for response and recovery, and that was in seven provinces, including Atlantic provinces. Would you like the names of the First Nations communities affected?
Senator Callbeck: Yes, as long as it's not too long. Atlantic Canada is what I'm interested in.
Mr. Beaudoin: There are a couple of pages.
Senator Callbeck: No, no.
The Chair: Why don't you just provide us with a copy of that?
Mr. Beaudoin: It would be a pleasure to do so.
The Chair: That would be good, and then we can circulate it to everybody.
Senator Callbeck: The other question I had from your presentation is the $1 million to Cape Breton University's Purdy Crawford Chair. Is that set up now, or does $1 million help to set it up?
Ms. D'Eon: No, the Purdy Crawford Chair was already set up, and it was a research chair supported by five communities on Cape Breton Island. The chair has two goals — to enhance analytical research capacity and to promote the recruitment of Aboriginal students to post-secondary studies in regard to business opportunities. There was a fair bit of conversation and consultation with Aboriginal leaders, and they said there was a need for entrepreneurship, business investments and corporate skills training to further try to move to self-reliance.
Senator Callbeck: What sort of interest has this generated?
Ms. D'Eon: I'm not sure that I can speak to the full interest. In terms of Aboriginal business development, it is going to be supporting economic development, and they are to enhance those studies and that research. They're also intending to do some comparative analysis as well, which is often an item of question. In terms of interest of people to participate, certainly the five communities that were part of the first consultations strongly supported it, but it is for research and analysis in building skills development and developing the studies.
Senator Callbeck: When was it set up? How long ago?
Ms. D'Eon: I think Budget 2012. I think it was at that time, but I can confirm.
Senator Callbeck: So there are scholarships or bursaries involved here? It says, ``to encourage business studies by Aboriginal students.''
Ms. D'Eon: I don't think that this is for bursaries. This is still just for the research to do the comparative analysis to set up the studies, but this part here, in my understanding, is not for the bursaries.
Senator Callbeck: Thank you.
Senator L. Smith: Just to follow up on Senator Callbeck's question, Mr. Beaudoin, you talked about emergencies and monies that you had to provide to cover the costs. Do you have an annual budget for emergency catastrophes?
Was it Finance, chair, that had about $100 million? Who was that? Public Safety. So they had $100 million and had $4 billion of commitments because of the increase in climate change and the probability of more disasters. How does that apply to your particular portfolio?
Mr. Beaudoin: We've always been going back to the reserve for additional funding. On average, since 2005-06, we've been seeking additions to reference level to the tune of $27.3 million. However, as part of the comprehensive package that the Minister of Aboriginal Affairs announced back in November, that situation has been remedied. That will be added to our reference level starting next year so that, on average, the department will be able to deal with the response and recovery aspects of emergencies.
Senator L. Smith: If I understand correctly, you're saying that approximately $30 million a year you set aside for emergency? Is that correct?
Mr. Beaudoin: That's the average.
Senator L. Smith: Okay. Since 2005?
Mr. Beaudoin: In addition to that, the department has an internal reallocation on preparedness measures in the amount of $19 million. That is to go and negotiate bilateral agreements with provinces and territories. Normally, emergencies are handled at the local level, and, when their capacity is exceeded, the provincial or territorial government supports the response effort. In certain jurisdictions, like Alberta, we have those agreements in place. So, when the severe flooding in Alberta occurred last summer, the provincial government stepped in. It was seamless, and the communities of Siksika and Stoney were taken care of rapidly. That was all specified in the agreements. In other jurisdictions, we get excellent services from provinces and territories, but those are not necessarily done through the comprehensive agreement. We have started negotiating those agreements with provinces and territories.
The Chair: We can assume that with the $100 million that has been set there for emergencies, because your $30 million won't be coming out of that every year, then that number can be reduced by $30 million?
Ms. D'Eon: Maybe I can clarify a little bit.
The Chair: We saw the other department reducing its contingency.
Ms. D'Eon: With regard to the $100 million for Public Safety, we don't access that. We're trying to create a single window for First Nation communities to come to. The department does have some reference levels existing over time. A lot of it went through fire suppression, and that was in the range of about $16 million. It has since, over the last two years, reallocated $19 million to emergency disaster initiatives, but, unfortunately, the demand has been much more than that across the country. That is what Mr. Beaudoin was referencing. For the last five years, we've not been able to manage the need on an annual basis, and that's when we come to the central agency management reserve, for which you see this $33 million here, to offset that excess need. Depending on the year, as he indicated, it has been about $27 million on average for a period of five years. However, there was one year that was approximately $142 million, the year that there was the Manitoba flooding and so on.
We're trying to manage that with central agencies a little bit better when we're approaching in terms of a single window and having a comprehensive plan more within our department instead of having to go and access the reserve on a regular basis. However, one cannot control the natural disasters as they can come.
The Chair: How do you account for that? On an emergency basis, you have to dip into this reserve, but then in the next estimate you claim that amount to bring the reserve back up?
Ms. D'Eon: The natural disasters don't always come aligned to the fiscal year, as you can appreciate.
The Chair: They'll come in some fiscal year, though.
Ms. D'Eon: Exactly. Often it's spring and summer when you're looking at floods and fires. The way we've tried to set it up — and that's why you'll see the request in Supplementary Estimates (C) — is that we work with the regional colleagues and forecast the need. We work with the provinces and the First Nations and establish the need as late as we can into the fiscal year so that we can still access any funds that exceed our existing reference levels through Supplementary Estimates (C.)
The Chair: Thank you, Senator Smith, for raising that. That's an interesting area.
[Translation]
Senator Chaput: My question pertains to the funding for Public Works's government advertising program. If I understand correctly, you coordinate the purchase of the online advertising on behalf of the departments?
Mr. Lakroni: Yes.
Senator Chaput: Does the amount reflect transfers from various departments giving you a portion of their budgets to purchase media?
Mr. Lakroni: No. The amount was granted and approved by Treasury Board.
Senator Chaput: Very well. How many participating departments are there?
Mr. Lakroni: The Department of Public Works and Government Services has $2.5 million this year and $5 million next year.
Senator Chaput: You are in charge of the coordination for how many departments approximately? All of them? Upon request?
Mr. Lakroni: All departments that ask for our assistance.
Senator Chaput: Is it your responsibility to ensure they respect the policy on official languages? The federal government has an obligation to publish content in both official languages.
Mr. Lakroni: We are fully aware of that requirement and we ensure compliance not just with official language obligations but also with other policies, such as those governing procurement. Hence the reason for entrusting Public Works with this role on behalf of the departments; this arrangement is beneficial for many reasons, including the fact that we ensure that both official languages are respected.
Senator Chaput: Last question. Do the departments have their own advertising budgets in addition to this?
Mr. Lakroni: Absolutely.
[English]
The Chair: I have two or three quick questions here. Carling Campus project is referred to under Public Works and Government Services — $6.3 million. Is that the property DND was to move into at one time?
[Translation]
Mr. Mongeau: Yes, it recently got under way. A submission was made to Treasury Board in December, and we received approval for the first phase of development of the Carling campus, which is indeed the site where DND will be moving to.
[English]
The Chair: DND is still planning, at some time in the future, to move there?
[Translation]
Mr. Mongeau: It is anticipated that, in late 2015, some 3,300 DND employees will be moving over and that number is expected to reach 8,000 or 9,000 by 2018. So things are in motion, it is under way.
The Chair: Thank you for that information.
[English]
The next question is on reinvestment of revenues from the sale or transfer of real property, and you are asking for $1.1 million. We understood that when you sell a property money goes into general revenue but you keep a tally of that so you can dip back into it with Treasury Board's approval. Where is that $1.1 million going? I'm presuming you've sold something in the past that you're now trying to replace.
Mr. Lakroni: We sold properties and they were sold at market value; money was deposited into the CRF and we are seeking here the authority to access that money to reinvest it to basically preserve the integrity of the assets we have today.
The Chair: Some other assets?
Mr. Lakroni: Some other assets; it goes back into managing the portfolio.
The Chair: You might have sold a beautiful building in Ireland or downtown London and that money went into general revenue but now you're using this money just for upkeep of other properties that you have; is that what you're telling us?
Mr. Lakroni: Aside from the London building, which is not PWGSC, as you know we manage the assets responsibly — and my colleague Mr. Mongeau could elaborate — and we manage them over a life cycle. When they reach the end of their life cycle they become surplus assets, so we do in-depth analysis to ensure that the assets for which we don't have use are not kept because when you keep the assets they become liabilities and then it's not necessarily smart to keep them because they start to cost you money. We identify those assets and we sell them at market value.
First, we bring money back to the Crown and we invest it, and second, we contain the liability for the assets.
The Chair: Mr. Lakroni, any of our questions here are not ever to be taken as going to suggest that you don't manage things responsibly. You made that point. We are all very appreciative of the work you do, but sometimes we don't understand just how the money goes, so that's what we're trying to sort out.
Mr. Lakroni: I appreciate that.
The Chair: My other question relates to Indian Affairs and Northern Development, and this is for Ms. King. You were talking about the Northwest Territories lands and resource devolution and all that activity and you said that's to come into effect on April 1 this year; is that correct?
Ms. King: Yes.
The Chair: This is Bill C-15 that came to the Senate two days ago, is it not?
Ms. King: Bill C-15 implements the NWT devolution agreement.
The Chair: That's what we're talking about here?
Ms. King: Yes.
The Chair: You're doing all this work on a schedule and you're asking for money to implement this?
Senator Eaton: They are thinking ahead.
Ms. King: We've had obligations.
The Chair: They're ignoring the role of the Senate is what they're doing. We usually like to do a sober second thought on this.
Ms. King: Bill C-15 implements those parts of the devolution final agreement that require legislative change largely related to the Mackenzie Valley Resource Management Act and lands management and so on. These costs are more related to the final agreement that was signed by the government a year ago and obligated the government then to commit funding.
The Chair: The government obviously felt that it needed legislation called Bill C-15, which is now in the Senate, and we'll look forward to looking at that, but thank you for that background. That will help us to look at this legislation from a different point of view.
Ms. King: Thank you.
The Chair: Aboriginal Affairs and Public Works, thank you very much for being here. Keep up the good work in serving Canada, and we will look forward to seeing you again.
(The committee adjourned.)