Proceedings of the Standing Senate Committee on
National Finance
Issue 28 - Evidence - March 10, 2015
OTTAWA, Tuesday, March 10, 2015
The Standing Senate Committee on National Finance met this day, at 9:30 a.m., to consider the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2016.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
Honourable senators, this morning, we will begin our consideration of the 2015-16 Main Estimates.
[English]
We are pleased to welcome officials from the Treasury Board of Canada Secretariat. Appearing this morning are Mr. Brian Pagan, Assistant Secretary, Expenditure Management Sector, and Marcia Santiago, Executive Director, Expenditure Management Sector.
Mr. Pagan, we have most of the morning set aside to deal with this new tome, and we're looking forward to you helping us understand how it fits into the annual fiscal process for the Government of Canada. You have the floor, sir.
[Translation]
Brian Pagan, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: I am happy to be here, once again, to give you an overview of the 2015-16 Main Estimates.
[English]
As you mentioned, joining me today is Marcia Santiago.
[Translation]
I have a brief presentation. If I may, I will take a few minutes to provide an overview of that document. Afterwards, we will gladly answer any questions.
[English]
In the presentation, I would like to highlight three pieces of the Main Estimates document. First is a general introduction, the purpose of the Main Estimates, and taking the time to situate this document in the expenditure management cycle of government.
Second, the principal sections of the indictment, the structure of the document itself, summary tables detailed by department, and the schedule to the appropriation act.
[Translation]
Third, I would like to clarify a few things about the 2015-16 Main Estimates and tell you how they compare to the previous year's estimates. Finally, I will provide you with data from the Main Estimates over the past five years.
[English]
Turning to slide 3 of my presentation, I will take just a few minutes to situate the Main Estimates in the context of the expenditure management cycle of the government.
As you know, Main Estimates provide the request for spending authority that must be approved by Parliament for each department, agency and appropriation-dependent Crown corporation.
The Main Estimates present the aggregate yearly funding being sought at this point in time for each organization for 2015-16. The review and study of these departmental appropriation requirements can be facilitated by departmental Reports on Plans and Priorities, which will be tabled by the President of the Treasury Board later this month.
[Translation]
The Main Estimates represent the results of numerous decisions made over the past few years and their effect on fiscal year 2015-16. However, the report on plans and priorities is an important tool, which provides detailed information on priorities, strategic results, various programs and expected results. Therefore, it is important to refer to the report on plans and priorities for a better understanding of the Main Estimates.
[English]
Slide 4 presents the parliamentary reporting and the supply cycle. It is an illustration I believe this committee would be familiar with and has seen on prior occasions.
The key here is to identify both the beginning of the fiscal year, April 1, and the three different supply periods in which the government will bring forward estimates, documents and information for review and approval by Parliament.
Senator Hervieux-Payette: When you say slide 4, is it page 4? There's nothing that says to me where on slide 4 we are. I have a document here, but it is just written pages, and I have the French version. If I want to follow —
[Translation]
Senator Rivard: It's on page 4.
The Chair: Page 4.
Mr. Pagan: Page 4, yes.
Senator Rivard: It's the cycle.
Mr. Pagan: Is there a title at the bottom of the page?
Senator Rivard: Yes, it is Parliamentary Reporting and the Supply Cycle, page 4.
The Chair: I assume it must be the same thing in French.
Mr. Pagan: Yes.
Senator Bellemare: It is on page 4.
The Chair: Page 4 in French, as well.
Senator Hervieux-Payette: We usually receive more details, but that's okay.
The Chair: It's okay.
[English]
Mr. Pagan: Slide 4 is our illustration of the cycle highlighting the fiscal year and the three supply periods. The committee will recall that we tabled Supplementary Estimates (C) on February 19, which concludes the cycle for fiscal year 2014-15. On February 24 we tabled the Main Estimates, which begin the cycle for fiscal year 2015-16. By standing orders of the house, these Main Estimates must be tabled on or before March 1, and review of this document is essentially in two parts.
There will be two votes by Parliament, including a vote on interim supply, which allows departments to begin the fiscal year with a portion of the request, and then full supply later in June, in the supply period ending June 23.
Turning to slide 5 of my presentation, again situating the Main Estimates in the expenditure management cycle, I wanted to take a few minutes to explain the Main Estimates versus the budget.
[Translation]
Although Budget 2015 will be tabled later than usual, that will have little impact on the Main Estimates.
[English]
The reality is that the budget may be tabled at any point by the Minister of Finance. There's no standing order or requirement to table on such-and-such a date. There have been budgets in recent years in June. Going back a number of years, there were budgets in the fall. In recent times, the normal cycle is February or March, and this year, because of uncertainty in financial markets and the energy sector, the minister will be tabling his budget at some point in April, we believe.
In contrast, the Main Estimates must be tabled on or before March 1, and this document aggregates all of the approvals of Treasury Board and cabinet committees related to ongoing funding of a department or specific funding for fiscal year 2015-16. This information will be updated regularly by the government to take account of both the budget and any additional off-cycle or off-budget funding decisions to respond to emerging priorities of the government. This will be presented to you, according to that cycle from slide 4, in supplementary estimates at regular intervals.
Over the last few minutes I have taken some time to explain the purpose and timing of estimates documents. Now, turning to slide 6 of my presentation, just a few words on the structure of the document itself. At the end of my introduction, Marcia Santiago will present a bit more detail and actually walk the committee through an example of a particular department and how to navigate through the summary tables in detail by department.
The Main Estimates document itself is presented in two parts, and these are numbered I-page number and II-page number. So Part I of the document, beginning on page I-1, presents the government expenditure plan. It is the highest-level aggregation or summary of the information available in the Main Estimates. This contains an overview of all federal spending approved at this point and summarizes key elements of the Main Estimates. It also explains the linkage between the Main Estimates and the federal budget.
This section also includes global summary tables; a breakdown by type of expenditure, such as transfer payments, public debt charges, operating and capital; a description of major statutory transfers; and a summary table of the total Main Estimates for each organization listed.
We also show year-over-year comparisons, including 2015-16 Main Estimates, 2014-15 estimates to date, and actual expenditures from 2013-14 taken from Volume II of the Public Accounts.
[Translation]
Part II of the document, on page II-1, directly supports the appropriation act and identifies the spending authorities included in the appropriation bill for each organization.
Part II of the Main Estimates shows a breakdown of funding by vote and by program activity for each organization, total projected statutory spending and explanations of variances compared with the most recent Main Estimates. The presentation for each department or agency begins with a brief description of the organization's raison d'être.
[English]
Then there are highlights, including the following examples: increases for new programs which were not included in the 2014-15 Main Estimates, funding adjustments in response to price or volume pressures, changes related to funding which has been reprofiled, reductions that reflect the end of time-limited or sunsetting funding, and statements on the organization's plans for 2015-16.
Turning now to slide 8 of the presentation, as you know, the structure and presentation of the Main Estimates are somewhat different from what is presented in the supplementary estimates. The supplementary estimates are seeking in-year adjustments to spending for specific items that have been approved by Treasury Board subsequent to tabling of the Main Estimates. By contrast, the Main Estimates are presenting an aggregation of all of the spending decisions, going back a number of years and up to and including February of this year, for individual departments, agencies and appropriation-dependent departments.
Funding authority is granted by the appropriation act under the conditions of specific votes. This is what Parliament controls. Typical votes are shown here, such as operating or grants and contributions. Central votes managed by the Treasury Board of Canada Secretariat on behalf of the whole public service are listed as well.
[Translation]
Part III of the Main Estimates includes the reports on plans and priorities, which present expenditure plans over a three-year period and provide a more complete picture of a department's projected expenditures.
[English]
As I mentioned, the RPPs are an indispensable tool to support study of the Main Estimates, and these will be tabled by the President of the Treasury Board later this month.
The Chair: Could you spend a bit of time explaining the Treasury Board central votes for some of our colleagues so that they understand the various central votes you have listed on page 8 of your deck?
Mr. Pagan: Certainly. On slide 8 of the presentation — and we will walk you through the reflection of this in the document itself as well — we have listed six central votes. These are votes that are appropriated to Treasury Board Secretariat, but they are not for our own use; they are for the management of the public service as a whole.
The first vote listed is government contingencies, which is TB vote 5. I'm referencing the document here now. TB vote 5, government contingencies, consists of $750 million. This vote is available for allocation by Treasury Board in the event of unforeseen circumstances. Right now, what we are presenting to Parliament are the plans and programs approved by Treasury Board consistent with departmental mandates and the priorities of the government. Should there be an unforeseen event, a drastic spike in a program that was unforeseen, some sort of natural event, calamity or international crisis, and a department or departments need to avail themselves of additional authorities and funds, these funds can be advanced by Treasury Board, in advance of parliamentary approval, through TB vote 5.
Subsequent to the allocation of those funds by Treasury Board, we would reflect that allocation in future supplementary estimates to fully inform Parliament of that use, and then the vote would be replenished upon subsequent parliamentary approval of that subsequent document.
For the interest of the committee, we can find in English the Treasury Board information at II-275.
[Translation]
In French, that information is at II-252.
[English]
Turning to page II-275 of the English, we will see Treasury Board program expenditures, vote 1. This is a common program or operating vote familiar to all departments and agencies. The next six votes listed are the central votes, which I will speak to. Of course, the actual authorities of these votes are contained in the vote wording, which we find in the schedule to the appropriation act.
The Chair: What Treasury Board has done is taken all the departments, listed all their requests for the coming year, and you have added $750 million on top of that for potential contingencies?
Mr. Pagan: Correct. This is a long-standing practice, again to provide the government with the necessary flexibility to respond to urgencies and unforeseen circumstances. At one point the vote was approximately $500 million, I believe, and it was increased a number of years ago, again to account for the potential for emergencies and unforeseen circumstances.
[Translation]
Senator Bellemare: I'd like know how this is different from the contingency funding the government provides under the budget annually. Where is that?
Mr. Pagan: That's a good question. The only contingency in the Main Estimates is the following one:
[English]
Vote 5, government contingencies. In the overall fiscal framework, the Department of Finance, when they produce their budget, will almost always include an amount for contingency.
There's a budget projection, and then over the last many years they've added a $3 billion contingency. This protects the government's forecast and allows the government to account for variations to some of their forecast drivers and potential program issues. That $3 billion is not reflected here in the TB central vote.
The Chair: Where does it come from? If it's not here, it's not —
Mr. Pagan: It is in the overall framework established by the Department of Finance. We know right now that they're working very hard to produce a budget sometime later in April, we believe. In that budget they will present their forecasts of revenue and any tax measures. They will present their forecast for program spending and new spending that we will see in subsequent supplementary estimates, and then they will have a budgetary balance, and protecting that budgetary balance will be a contingency which allows the department to protect their forecast to account for changes in their revenue, potential changes in their program or other economic considerations.
We will see that contingency used, for instance, if there is a new program requirement, a need to support a department for an environmental or an international urgency or issue. Because the monies were not programmed, there's not a specific program; they will draw down the contingency, use that as a source of funds to allow a department to move forward with a program or a response. That program or response will be reviewed by Treasury Board ministers to make sure it conforms to mandate program parameters, service modalities, and then it will subsequently be presented to Parliament as a new program or as a response to that urgency or emergency.
Marcia Santiago, Executive Director, Expenditure Management Sector, Treasury Board of Canada Secretariat: In that narrative Mr. Pagan just gave, the $750 million contingency in Treasury Board vote 5 becomes activated when you have a situation where Treasury Board approves the use of the budgetary contingency but we're too far away from an appropriation bill's being tabled to be able to get parliamentary approval of supply for the department to be available at that point in time.
An example of that would have been in the response to 9/11, where there was actually a need for the government to make decisions that acted on the contingency that was held in the fiscal framework, but we were either too far away from the supplementary estimates or from having just approved the supplementary estimates or coming forward with another one, so the only source of ready cash was what was in Treasury Board vote 5. I believe at that point we let the whole thing go to respond, and for all the different departmental responses to the 9/11 situation.
[Translation]
Senator Chaput: Could that money go unspent?
[English]
Mr. Pagan: Absolutely.
[Translation]
Senator Chaput: What will happen to it?
[English]
Mr. Pagan: I would say it is not quite rare, but it's seldom used. It really has to be an urgent, unforeseen requirement of pressing priority for the government. In any given fiscal year we will make use of this a handful of times and then report back to Parliament and have that vote replenished. If the funds are not spent, they are not recorded as expenditures and they simply contribute to the bottom line of the government. They don't lapse, or if they do lapse they're not reprofiled or carried forward into future years. The contingency does not grow in size because we don't use it. It's established at $750 million each and every year and used only if required.
Senator Chaput: At the end of the year it could have been part of the surplus, right?
Mr. Pagan: Yes.
Senator Hervieux-Payette: I was wondering if it was that vote 5 that was used to buy the building at the back of the British High Commission's new building. We were surprised that the expenditure was done without any approval. It was part of that cash that was saved supposedly for an emergency.
Do you remember you had to buy a building to renovate the building in London? Did you use the money from that vote 5 of the previous year? Is this how they have access to the money even though it was not identified at the beginning of the year where it would be spent?
Ms. Santiago: Correct, if you're referring to the purchase of the London chancery replacement.
Senator Hervieux-Payette: Yes.
Ms. Santiago: Yes, I believe vote 5 was used because they had to act on the opportunity to begin the transaction.
The way it worked was that Treasury Board ministers approved the use of the contingency fund to provide the department with enough cash up front to begin that transaction, and then it was brought forward in a subsequent supplementary estimates and reviewed in that context. When the Department of Foreign Affairs received the new authority for the London chancery, that authority, instead of going to the department, was actually used to replenish vote 5.
Senator Hervieux-Payette: When you received the money from the building that you sold so that you could transfer everybody to that new building, did you put the money back in the vote 5 reserve?
Ms. Santiago: The amount that was appropriated through the supplementary estimates was used to replenish vote 5. The proceeds from the sale are handled differently because vote 5 wasn't involved in the specific —
Senator Hervieux-Payette: You took the money from vote 5, you bought the building, and there were renovations for over $200 million, and eventually you sold the other building. But the money didn't go to the vote 5, I would say, emergency fund.
Ms. Santiago: What I'm saying is that separate money was approved for the purchase and the construction of the building. The advance from vote 5 was against that new funding; it wasn't against the proceeds.
When the department received the authority for the new funding, that's what was used to replenish vote 5. Vote 5, at the end of this, broke even. It didn't lose any money because of this. As Mr. Pagan said, we would not increase vote 5 because of the proceeds from a sale.
Senator Hervieux-Payette: This could go to any government expenditure. For instance, if we were increasing our presence in Syria and Iraq and they needed $500 million, they would take the money there if it's not already voted?
Mr. Pagan: Perhaps, to turn your attention to the schedule of the appropriation act where we can look at the actual wording, in the English version it's page A-23. We see there the wording of the authority:
Subject to the approval of the Treasury Board, to supplement other appropriations and to provide for miscellaneous, urgent or unforeseen expenditures not otherwise provided for . . .
That's the essence and gist of it. Over the years there's been, as there should be, a great deal of attention and scrutiny paid to this vote, because it is an exceptional measure. Parliament is providing Treasury Board with the authority to make allocations for urgent and unforeseen measures. There is a process, a protocol by which the use of that vote is reflected back to Parliament in a very transparent manner where we itemize, in subsequent supplementary estimates, actual allocations, what that urgency or emergency was, and then with approval of those supplementary estimates the vote is replenished so that the government has the flexibility to respond to emergencies in the future.
I'm not sure what else we can say other than it is an exceptional authority that we take quite seriously. As this is my second appearance before this committee in a number of weeks, we understand fully Parliament's interest and mandate in scrutinizing all expenditures. We have worked with this committee, with the Auditor General's office and with other parliamentary committees to make sure there are sufficient information and full transparency on the authorities and how those authorities are used.
It is not a power and authority that is in any way treated lightly. There is a rigorous process by which we would challenge a department as to whether they have the mandate to do what they want to do and whether there are sufficient resources that provide room to do that. If not, we take them through a cash flow analysis where they have to demonstrate why they don't have the resources to respond to the priority, the urgency or the emergency at hand. When we are satisfied that there is a case, that there is a requirement, we take that to Treasury Board ministers who will give this very careful scrutiny, recognizing that in using this power, they are availing themselves of an extraordinary power provided by Parliament.
Again, lots of work has been done on this issue with this committee and with the OAG over the years, and I believe that we have gotten to a point where the interests of all parties are respected and protected in terms of flexibility, transparency and the need to respond to urgent situations.
There are many examples, but one that I recall quite well was my very first encounter with vote 5, in my last tour through Treasury Board, where there was a ferry that sank off the coast of British Columbia very late in the fiscal year, March 28 or 29. The fiscal year ends March 31. The Transportation Safety Board had to do an investigation. They missed the Supplementary Estimates (C) deadline to get additional resources to Parliament. They had to send an emergency crew out to work around the clock to conduct this operation. They didn't have year-end funds available, so they availed themselves of vote 5 and were provided with the resources to be able to do their job. That's the sort of thing the vote is intended for, where there is some change in plan consistent with the department's mandate but beyond their resources. If it is truly a priority, then the government requires it, and I think Parliament would want the government to be able to respond in a timely way.
[Translation]
Senator Chaput: I would like a clarification. The building my colleague mentioned was sold for a certain amount of money. Where can we find the proceeds of the sale of that building? Is that amount considered to be revenue? Is it part of the year-end budget surplus? Where does the money go?
[English]
Ms. Santiago: The proceeds from the sale of real property are recorded in the public accounts. I don't have an exact table, but we do record that particular class of revenue.
Senator Chaput: And the revenue —
Ms. Santiago: It's deposited to the CRF.
Senator Hervieux-Payette: Can you write us back and tell us where we can find that?
Ms. Santiago: With a specific reference for proceeds? Okay.
Senator Hervieux-Payette: It's $300 million. It would be interesting to know where it went.
Ms. Santiago: It's unlikely that you would find a specific transaction, but we do report them in aggregate for all of the departments.
The Chair: So it's hidden in there somewhere.
Ms. Santiago: Yes.
The Chair: It would be helpful to clarify the record on the difference between the $750 million contingency vote 5 for Treasury Board and the planning that Senator Bellemare talked about, the $3 billion annual — I don't want to say cushion — additional contingency that the government plans in its budgeting process.
As I understand it, the budget takes a look at all the estimates, all the money that the various departments need and the new initiatives, whatever they might be, that are expressed in the budget. The Finance Department will then make a prediction as to the total amount of revenue that is needed to do all of those things, to meet all the estimates that are already there, plus new initiatives. Then on top of that, they will add on $3 billion to cover contingencies. Have I got that right?
Mr. Pagan: Yes.
Ms. Santiago: That's essentially it.
Mr. Pagan: To point out a slight distinction, Mr. Chair, the amount of vote 5 government contingencies is prescribed by Parliament. We're proposing $750 million; Parliament will approve that. The contingency in the Department of Finance's fiscal framework and budget is not prescribed by Parliament, or it's a convention. It's $3 billion. They could decide because of heightened uncertainty to increase their contingency or, with better certainty, to decrease their contingency. But it's based on their best reading of the underlying economic and financial environment, whereas with our contingency, it's quite clearly limited to the amount approved by Parliament.
The Chair: We're voting on these estimates, and then we're authorizing Treasury Board, within certain parameters, to have the $750 million contingency. Because we won't be consulted until after the money is committed, the parameters are important to us. Presumably Treasury Board has a series of rules that they follow in order to trigger that expenditure out of the $750 million.
Ms. Santiago: The general parameters are written out in the vote wording, so it's actually quite a long paragraph, on page A-23 in English.
The Chair: The A's are at the back, and that is a schedule attached to the supply bill. And the parameters?
Ms. Santiago: The parameters are at A-23, and the vote wording in French is A-22. Those are the general parameters that are established by Parliament.
The Chair: Is that under vote 5? I just read that paragraph and it will tell me all the rules being followed by Treasury Board.
Ms. Santiago: Those are the overall rules, and then more specific criteria are developed by the secretariat. They're what we use to review the proposals from departments as they bring them in for Treasury Board.
The Chair: Are they available for parliamentary consumption?
Mr. Pagan: To respond to Senator Hervieux-Payette's question about the distinction between finance contingency and vote 5, we will outline that more clearly, and we will provide our criteria with which we review.
Senator Chaput: Which page in French? I missed it.
[Translation]
Ms. Santiago: It's on page A-22.
The Chair: At the end of page A-22.
Senator Chaput: At the very end of A-22.
The Chair: It's in the schedule attached to the bill — so A-22, vote 5.
[English]
Mr. Pagan: There are a few more central votes to walk through. I want to make sure the context is clear. These are votes administered by Treasury Board on behalf of the public service. These Main Estimates totalled $241.6 billion, some 130 appropriation-dependent organizations. Therefore, this government contingency vote needs to be understood in that context. It's a very small percentage of the overall projected government spending, and, as I said, we have worked very closely with the committee and the Auditor General's office to ensure that the rules around this use are clear and its use is transparent. I'll be happy to respond with more detail on that.
[Translation]
Senator Bellemare: I have a few questions. After close examination of page A-22 in the schedule, my first question is about vote 20 and the second one is about vote 25. If I understand correctly, the $2.25 billion is for public service insurance. Does that include employer contributions to the pension plan?
[English]
Mr. Pagan: Vote 20 public service insurance comprises a number of different insurance plans for the public service and members of the RCMP and the Canadian Forces. At our last appearance on Supplementary Estimates (C), we spoke to an increase in this vote related to the program known as SISIP. What does SISIP stand for?
Ms. Santiago: Service Income Security Insurance Plan.
Mr. Pagan: So the Service Income Security Insurance Plan supports medically released members of the Canadian Forces, and that's just one component of vote 20. There are a disability insurance plan, a dental plan and a number of other plans.
Senator Bellemare: Is there a pension plan, too?
Mr. Pagan: No.
[Translation]
Senator Bellemare: It says, "Payments, in respect of insurance, pension or benefit programs or other arrangements. . .".
[English]
Ms. Santiago: It's mostly the insurance programs. The actual employee benefits and pensions are listed as a statutory item, so they're not in the main table document; they're in one of the online annexes.
[Translation]
Senator Bellemare: I would like to hear your opinion on the operating budget carry forward. After all, that involves $1.6 billion. It is stated that a vote would be taken to authorize the Treasury Board to carry forward unspent amounts from the previous fiscal year. Is that right?
Mr. Pagan: It is.
[English]
Concerning the operating budgets of departments, dating back to I believe it was 1993, there was the introduction of the carry-forward provision. Up until that point in time, departments were provided appropriations by Parliament, and they had until the end of the fiscal year to use those funds, and if they didn't use those funds, they lapsed and they started next year with new authorities.
At the time, that practice came under a great deal of criticism by both parliamentary committees and the Office of the Auditor General because studies suggested that year-end spending was not always directed to items or requirements of the highest value or purpose. Departments were using the money because if they didn't use it, they would lose it.
So the introduction of carry-forward came out of a government-wide study at the time called PS 2000, how to improve our rules and modernize our practices. This was evaluated in other jurisdictions, and it was found to be beneficial to create an incentive or to otherwise guard against a practice where departments would just use funds that weren't always directed to the highest purpose.
Again, in our construct, there is some logic here. We have just presented to Parliament Supplementary Estimates (C), and this committee reviewed that two weeks ago. It won't be voted on and approved by Parliament until sometime towards the end of March. Effectively, that provides departments with one week before the end of the fiscal year to spend the monies that are provided, which can be a tricky dance.
The purpose of a carry-forward is to provide that flexibility. Departments can anticipate approval and can begin putting their plans in place, but if those plans involve contracting, hiring of staff or working with other partners, it may not be possible to do all that in the space of the one week provided after parliamentary approval.
A carry-forward allows the ability to move a portion. At the time the carry-forward was introduced, it was 2 per cent. It was subsequently increased to 5 per cent, and it has stayed at 5 per cent since 1994 or 1995. It has been a number of years. I think it has withstood the test of time. It has contributed to a sufficient degree of flexibility that allows departments to manage their multi-million-dollar or multi-billion-dollar programs in an environment where absolute final parliamentary approval is not certain until very late in the year, which would leave a very small space of time.
[Translation]
Senator Bellemare: That $1.6 billion is not only for the Treasury Board. Does that amount apply to all departments?
Mr. Pagan: Yes. That's a central vote managed by the Treasury Board. The money is not intended for our own purposes. It will be used to manage the operating budget.
Senator Bellemare: I would like to have something else clarified. Do these kinds of amounts have to be on the books to be carried forward? Could we be talking about unspent money?
[English]
Mr. Pagan: This is a forecast, the possible carry-forward, but the actual calculation of what is eligible for carry-forward is done by Marcia and her team at the conclusion of the fiscal year.
The starting point of whatever is approved in Main Estimates becomes the base, and that base is adjusted to account for some subsequent TB decisions; some money might be held in abeyance, frozen allotment, so we would deduct that from the base and come up with a calculation of the eligible amount for carry-forward. Then this amount is presented to Parliament in the fall supplementary estimates, generally Supplementary Estimates (B), and we will itemize by department the actual amount carried forward for each and every department.
This is a forecast. Generally the amount of the carry-forward is less than the amounts that we are presenting here. So this is a maximum. This is an up-to. If there are carry-forwards above this forecast, departments may not be provided with that full amount because it is an up-to amount.
The Chair: You were at page 8 of your deck, and we were talking about Treasury Board central votes. I think Senator Bellemare anticipated a couple of the other items, but I think it would be helpful to make sure we understand all of the votes that Treasury Board is handling on behalf of all of the departments across the board. I think we understand government contingency of $750 million. What about government-wide initiatives of $2 million?
Mr. Pagan: Obviously, this is the smallest amount of the central votes. Again, referring to the annex, the schedule to the appropriation act, you'll see the specific authority:
Subject to the approval of the Treasury Board, to supplement other appropriations in support of the implementation of strategic management initiatives in the public service of Canada.
Marcia may have an example or two, but generally what we're looking at here are items horizontal in nature that support emerging government priorities, such as transformation or changes to back-office systems. Do you have an example?
Ms. Santiago: I think the last major use of that would have been the financial information systems where we started to standardize processes and coding and that sort of thing across government.
The last major example that I can think of for the use of vote 10 would have been the — I think it was called the financial information strategy or financial information systems. It was a government-wide effort to standardize processes around financial management and coding and approaches and that sort of thing.
The Chair: Horizontal items are already allocated to different departments, and you just show us horizontally; you add them all up so we can see. It might be advertising, for example, for Public Works and various departments, and you show that as a horizontal item, but the actual portion of that goes to each of the departments. Here you say it's like a horizontal item, but it's going to Treasury Board.
Mr. Pagan: It's administered by Treasury Board in support of a government priority.
Mr. Chair, to go back to your introduction, the six votes that we are talking about here are administered by Treasury Board on behalf of the public service. They are not for our own use or use of the Treasury Board Secretariat, per se. They exist to support government-wide management. So contingency, I think, is clear.
Government-wide initiatives: You're quite right; there are flagship government-wide initiatives, or horizontal items, dealing with mad cow disease, health, coordination of Aboriginal issues, et cetera. There is a policy decision to do something in a horizontal way, and budget funding is associated with that priority.
This central vote is different in that we're generally talking about the back office. We're generally talking about initiatives or transformation agendas that can provide better coordination or standardization in terms of the way the government manages itself or its information holdings.
The financial interoperability system that Marcia referred to is an example. Each department has their own operating budget, and to this point in time they have their own HR and financial systems. Some use SAP, some use Oracle, some use Cognos, or any number of others. It actually makes it very difficult for the government to generate consistent information in response to media calls, parliamentary questions, et cetera, because the system often limits how departments will classify or arrange information. So one could ask the same question to two different departments and get slightly different answers because the way their information is structured can be different.
An appropriate use of this vote in the past has been to recognize where there is an opportunity to provide greater coordination or standardization of common identifiers, common lexicon, common ways of classifying information, and be able to invest in the adjustments required by departments to support that.
Ms. Santiago: A smaller, more recent example: Maybe two years ago we would have seen an approval come through for Public Works. In this instance, it would have been only one department receiving an allocation from the government-wide initiatives vote, but the money was for Public Works in order to pay for essentially photocopying rights for the whole of government, for us to be able to reproduce material for our own use, for example.
Mr. Pagan: Turning to Treasury Board Secretariat page II-275 in English.
[Translation]
It's on page II-252 in the French version.
[English]
We see the government-wide initiatives, vote 10, and in 2013-14, no expenditures; 2014-15 estimates to date, an amount listed there; and then the amount for 2015-16.
I draw your attention to that because the use of this is fairly rare, much rarer than the use of government contingencies. There simply are not that many initiatives where the government would want to invest in an enterprise-wide approach. If it's worth doing, it's usually a bigger flagship initiative led by Public Works or Shared Services Canada — advertising, this sort of thing.
[Translation]
Senator Hervieux-Payette: The term "government-wide initiative" is confusing to me. What does that term mean? What is a government-wide initiative? Can you give us some examples of such initiatives? What do they do in government-wide initiatives?
[English]
Mr. Pagan: Again, the use of this vote is very limited and, quite simply, we don't have a lot of examples on hand. The two that we're familiar with are FIS, the financial information system —
Ms. Santiago: — and reprography, which is from a few years ago.
Senator Hervieux-Payette: Could you talk a bit louder?
Ms. Santiago: Just the example about photocopying, the reprography rights that we paid for, for the whole government, through Public Works. It's all back-office stuff.
Senator Hervieux-Payette: We don't know what's going to happen there. At least we know what happened before. It's not a new title. This was there before. If you used it, where did you use it and what was it for? You don't make photocopies for that many millions.
Mr. Pagan: It might be beneficial to the committee if we were to respond in writing with the actual allocations from this vote over the last five years. It's a very small list.
The Chair: We recognize it's $2 million, and we're talking about billions here. But still, there's a principle here that should be sorted out. You might have finished now, but the Treasury Board central votes?
Mr. Pagan: I believe we covered public service insurance. I believe we've addressed the operating budget carry-forward.
The Chair: Five per cent?
Mr. Pagan: Correct. So the two remaining votes: Pay list requirements, that's $1 billion, and again this is administered by Treasury Board on behalf of the public service. The pay list is — I'm reading from the vote wording:
Subject to the approval of the Treasury Board, to supplement other appropriations for requirements related to parental and maternity allowances, entitlements on cessation of service or employment and adjustments made to terms and conditions of service or employment of the federal public administration including members of the Royal Canadian Mounted Police and the Canadian Forces, where these have not been provided from Vote 15, Compensation Adjustments.
Pay list, the most common use is parental leave. When a parent takes leave from the public service, the employer will protect their salary, and those costs are reimbursed to departments upon the submission to us of information from their financial systems demonstrating that those payments were made. This was a measure introduced some years ago, obviously to protect families, and in particular to prevent discrimination against anyone taking family leave.
[Translation]
The Chair: Senator Hervieux-Payette, do you have any other questions on this matter?
Senator Hervieux-Payette: I initially looked at the large discrepancies between previous and current votes and considered the paylist requirements in the amount of $1.45 billion and $1.85 billion. All of a sudden, the amount has dropped to $1 billion in 2015-16, or $850 million less. Will you make cuts to public servants' pay? How come $850 million can be cut in pay? Where will you make cuts to come to such a high amount?
[English]
Mr. Pagan: In the case of this pay list vote — and I believe we spoke to this when we appeared before the committee on Supplementary Estimates (C) — there has been an increase over the last two or three years related to the cessation of severance. This was a policy decision taken by the government in a budget a few years ago, and the government has been negotiating with unions to terminate that measure or initiative. As a result, a significant number of public servants cashed out those entitlements over the last couple of years. We're at the point now where there is very little left in terms of unions to negotiate with. I believe there are some 20 —
The Chair: It's a contingent liability of the government.
Mr. Pagan: It's recognized as a contingent liability. I believe the largest group not yet to settle is Canada Revenue Agency. They are in collective bargaining at this time. There are approximately 28,000 public servants whose right to severance has not yet been cashed out, and therefore the forecast for this requirement is going down as the bulk of that work has been eliminated.
Senator Hervieux-Payette: Is it part of the $1 billion?
Mr. Pagan: It is.
Senator Hervieux-Payette: The 28,000 people that don't have the settlement?
Ms. Santiago: No. I will back up one step to last year's mains. In the Main Estimates for 2014-15, the number was unusually high. It was about $500 million higher than what is in the 2015-16 Main Estimates. That particular increase was the combination of an anticipated cash-out expected for some of the groups that were still in the process of signing and ratifying their agreements. The single biggest part of the amount in last year's mains was the provision for the transition payment to implement pay in arrears. That by itself was something in the order of $700 million. That is a one-time adjustment, so we were expecting most of that cash requirement to be in 2014-15.
We are still waiting to see the extent to which departments actually need those allocations. We haven't allocated most of what we have in vote 30 for 2014-15, and it is possible that a lot of it will lapse.
What you are seeing in 2015-16 is the fact that we don't need that transition payment anymore, but we still are expecting some other cash-outs of severance liability. Probably the single biggest one that we have provided for in mains is a continuing tale of requirements for members of the Canadian Forces, so people returning from leave would then just be able to elect to receive their severance cash-outs. We're still resolving it, and it's a fairly big draw still.
Senator Hervieux-Payette: Maybe for this one, too, we will need to have more specific areas for this $1 billion. You talk about Revenue Canada, about the people at National Defence, and so on. You don't pull the figure of $1 billion out of nowhere. You have had to make some calculation on who is going to lay off the people or compensate them. As you say, the army has a supplement for when they retire, whatever. I don't know exactly how this $1 billion will be awarded, which means that once you have almost fired every extra technocrat, this item would be to zero?
Ms. Santiago: No. The historic level is about $600 million, and that's for regular severance that —
Senator Hervieux-Payette: People taking their pension?
Ms. Santiago: No, it is not voluntary —
The Chair: It is employment that employees had that was cancelled, but they had already accumulated certain rights that they could cash out, take the cash equivalent and continue to be employed, as I understand it. But they can take the cash-out or leave it there and take it later on.
If you had something in writing to explain that to Senator Hervieux-Payette, to expand on it —
Senator Hervieux-Payette: I am sure I am not the only one.
The Chair: No, but I think a written request has come from you, so if you have something that could be helpful, we will see that it gets circulated to everybody.
Senator Hervieux-Payette: It is nearly $1 billion; $850 million over one year is a bit strange for us.
The Chair: The other is a capital budget carry-forward. Is that 5 per cent as well?
Mr. Pagan: No. The capital budget carry-forward is established at a higher threshold. It is 20 per cent. It is established at a higher threshold because, quite simply, we are dealing with fewer but larger projects. So first of all, not every department would have capital programs or capital requirements, but those that do — National Defence, the Department of Fisheries with the Coast Guard, Infrastructure Canada, Public Works — tend to have very big requirements, bridges, ships and planes, et cetera.
If there is project slippage in that area, and we're dealing with billion-dollar requirements, the carry-forwards can be quite a bit more significant.
This vote was developed in consultation with departments and parliamentary committees to understand needs and support for the initiative, and analysis suggested that 20 per cent carry-forward would support a good majority of carry-forward requirements of departments. Anything above and beyond that, we're talking very significant, and it should be dealt with on an exception basis.
I believe that was introduced in 2012 as the last of our six central votes administered by Treasury Board on behalf of the public service.
The Chair: Are the special arrangements that the Department of National Defence has factored in here without being mentioned, or are they somewhere else?
Ms. Santiago: Correct. The way we work with the Department of National Defence is that they have a lower threshold for the combination of both votes, but we will pay out of the operating budget carry-forward for what was actually lapsed from their operating vote or from the capital budget carry-forward, perhaps. Their thresholds are lower, but all the other rules still apply.
The Chair: And these estimates that you make for this year include National Defence?
Ms. Santiago: Yes.
The Chair: Thank you. Sorry to get you off script here, but —
Mr. Pagan: No, it was very much part of the script and the slides. It was very useful to spend some time making it clear, and we have noted a couple of follow-ups here. We will provide some additional detail in writing. It is very helpful if the committee is fully comfortable in understanding the importance of these votes.
Now that I have explained the purpose and the structure of the estimates, I will take a few more minutes to provide some detail on the actual content for Main Estimates 2015-16. I'm now on slide 9 of my presentation.
[Translation]
Slide 9 highlights the key elements of the 2015-16 Main Estimates compared with the previous fiscal year. The 2015-16 Main Estimates are set at $241.6 billion. That includes voted and statutory budget amounts.
[English]
Overall, budgetary Main Estimates have increased by $6.24 billion, or 2.7 per cent over the 2014-15 Main Estimates. Looking at this table, we can break down this increase according to the following elements: Statutory spending is set to increase by 2.9 per cent in 2015-16. The increase is largely driven by two items — increases in elderly benefits as both the number of recipients and the average benefit amount increases, and increases in the Canada Health Transfer due to the escalator in that agreement. Voted spending shows a planned 2.2 per cent increase, and in slide 11, I will walk you through the major items contributing to that increase.
On page 10, this is a follow-up to a question we had at our last appearance.
[Translation]
Year-over-year increases in the Main Estimates have remained below 3 per cent since 2011-12. That reflects the impact of the deficit reduction action plan and other cost reduction measures implemented by the government during this period.
[English]
Transfer payments account for most of the growth in spending during this period, increasing by $16 billion over these five years. Looking at the table, top line transfer payments, $132.2 billion in 2011-12 and $148.8 billion in 2015-16, these are the amounts as reflected in the Main Estimates at this point in time of the year for each of the last five years. Marcia has detail on the actual amount of expenditures in these categories.
Turning to operating and capital, we see $67.8 billion in 2011-12 and in 2015-16, $67.2 billion. Finally, public debt charges stood at $30.3 billion in 2011-12, and for 2015-16, the forecast is $25.6 billion.
The Chair: This is anticipating that interest rates will remain low for the next year?
Mr. Pagan: This public debt charge is based on the most recent available information provided by the Department of Finance, which is their update of the economic and fiscal update from the fall.
When Finance does present a budget later this spring, they will be presenting a revised forecast of public debt charges, and we will be incorporating that subsequently.
The Chair: We have seen over the past few years that the amount set aside for public debt has been conservative and tends to be more than the interest rates at the time would normally require. Then somewhere in one of the sups you reduce that amount. We have seen that.
Now, this one you are going bare bones, are you? You are moving down rather than taking the conservative approach.
Mr. Pagan: I think everyone realizes that the actual movement of interest rates has not been consistent with forecasts over the past couple of years. Observers continue to predict an increase at some point, and we're seeing movement in the other way.
For 2015-16, as you say from the fall update, I can tell you that when the Department of Finance comes forward with the budget, it will incorporate the latest information based on the overnight rate from the Bank of Canada and the collective wisdom of their private sector economists in terms of forecasts for the future.
[Translation]
Senator Bellemare: We see that the operating and capital expenditures have remained at a fairly low level, and they even decreased in 2013-14. Can you tell me whether the number of employees in the public service decreased significantly from 2011 to 2015?
Mr. Pagan: I have a table that reflects the number of employees. There has definitely been a decrease since 2010-11 that is due to the deficit reduction action plan.
[English]
If I recall correctly, in Budget 2012's Strategic and Operating Review, there were projected or planned reductions in operating of some $5.2 billion and approximately 19,200 positions in the public service. I have on hand here the most recent information available to us about the federal public service employment, including members of the Canadian Forces and the RCMP.
I have figures here for only three years. In 2012, the total public service employment, including the Canadian Forces and the RCMP, stood at 401,228. In 2014, which is the last year for which we have complete information available, the number stood at 374,242, so a reduction of some 26,000 over those two years. Again, that would underlie some of the numbers you see here in terms of that reduction.
Senator Bellemare: Capital expenditure remained as we saw in another slide. That's a relatively constant and nominal term. With inflation, does it mean that we are building fewer roads?
Ms. Santiago: It could also mean that we are extending the length of time it takes. For a lot of capital projects, that's why we have a 20 per cent carry-forward. We have a lot of capital reprofiling as well.
Senator Bellemare: I can see that.
[Translation]
Senator Rivard: When it comes to transfer payments, which are increasing from $143 billion to $148 billion, is there a breakdown by province, or do we have to refer to different departments?
Mr. Pagan: Unfortunately, we do not have a breakdown of transfer payments by province.
[English]
Ms. Santiago: We can get that for major transfers paid by the Department of Finance: health transfer, social transfer and fiscal equalization. We can get those from the Department of Finance website if the committee would be interested.
[Translation]
Senator Rivard: I know there are different ways to establish transfers — some are done per person, and others are based on wealth. It depends on the price of oil. For example, Quebec is complaining that its transfers should be changed, but when the oil price was high, everyone was happy to receive transfers. Now that the price has dropped, the situation has changed. Where can we see the transfer mechanism, be it for education or other areas?
Mr. Pagan: Each program is very different. Some transfers are established in the legislation.
[English]
There are statutory enablers. That statute would have some of the criteria considerations. Others are the result of federal-provincial agreements. I'm not familiar with a single site where one can compile all of the different factors that go into forecasting cost reduction. I will check on that to confirm.
[Translation]
But I think that is done on a program-by-program basis, as they are very different.
Senator Rivard: Thank you.
[English]
Mr. Pagan: To conclude our overview of spending, I will turn to page 11 of my presentation, which presents the $241.6 billion in budgetary expenditures according to the categories we have just laid out: transfer payments, operating and capital, and public debt charges. Roughly 62 per cent of expenditures in 2015-16 are forecast as transfer payments. We see the amount $148.8 billion representing approximately 62 per cent, which is an increase of 3.9 per cent over 2014-15; operating and capital at $67.16 billion represents 28 per cent of expenditures; and public debt charges at $25.62 billion represents 11 per cent of forecast spending in the 2015-16 Main Estimates.
You can see on the table that the composition of these expenditures by transfer, operating and public debt has remained relatively similar to 2014-15. In 2015-16, the increase in transfer payments, as we have mentioned, is driven by increases in major statutory payments. The 2 per cent increase in operating and capital is partially offset by a decrease in public debt.
[Translation]
Turning to page 12 of the presentation, you will find a table showing the 10 major voted amounts in the 2015-16 Main Estimates.
[English]
While most of the requested amounts represent new draws or new items from the fiscal framework, a couple of these major items are funding reprofiled from a prior year. For instance, under Indian Affairs and Northern Development, the Disaster Financial Assistance Arrangements of $250 million in contribution funding has been reprofiled from 2014-15. Under Office of Infrastructure of Canada's Building Canada Fund, the item of $211.7 million in contribution going back several years from 2011-12 and 2012-13 is now being reprofiled into 2015-16.
Other major funding items in the 2015-16 Main Estimates include National Defence's Canada First Defence Strategy, new funding included in the Main Estimates totalling $447.9 million; Employment and Social Development Canada's job fund, which totals $499 million; and Indian Affairs and Northern Development's Indian residential school settlement agreements, which total $266.6 billion.
Turning now to slide 13, we simply highlight by department the largest increases in budgetary expenditures and the largest decreases.
The largest increase, of approximately $2.6 billion, is in Employment and Social Development, again mainly due to increases in Old Age Security and the Guaranteed Income Supplement payments.
Other notable increases include the Department of Finance, $2 billion, and again this is transfers; the office of Infrastructure Canada, $311.7 million; the Chief Electoral Officer, $298.8 million for requirements related to the 2015 general election; and Fisheries and Oceans Canada, $283.9 million.
[Translation]
The largest decrease — $472.5 million for the Treasury Board Secretariat — is primarily due to a decrease in central votes, including paylist requirements and public service insurance.
[English]
The other organizations with notable decreases include Natural Resources Canada, $320.2 million; the Communications Security Establishment, $290.9 million; Canadian Heritage, $135.4 million; and Marine Atlantic at $108.1 million.
[Translation]
The Chair: Senator Rivard has a question regarding page 13.
Senator Rivard: Thank you, Mr. Chair. I gather that the $298.8 million for the Chief Electoral Officer is intended for the October 19 federal election and that the fairly sizable political subsidy for parties will wind down until it is eliminated in a year or two, if I'm not mistaken. Could you tell us how much the subsidy will decrease annually and when it will come to an end? I remember that, initially, it was $1 or $1.25 per vote, but it was discontinued by the government.
[English]
Senator Gerstein: It finished in 2014.
[Translation]
Senator Rivard: So the 2015-16 estimates will not include the political subsidy. Is that correct?
[English]
Senator Gerstein: There wasn't in 2015, either.
[Translation]
Senator Rivard: The $298 million is for the federal election and, therefore, won't be recurring. It will come up only every four years. Now, I would like to know whether the financial impact of the electoral reform bill, which the Senate will soon be studying, has been included in this amount.
Mr. Pagan: I am aware of the new legislation, but I can tell you that the increase in the Main Estimates is due to the election in 2015.
[English]
In particular, turning to page 4, the Chief Electoral Officer, page II-84 in the English version, we will see a brief —
[Translation]
Senator Rivard: What page is that in the French version? Part II.
Mr. Pagan: Yes, it is in Part II.
[English]
As I said at the outset, in the structure of the document, within each department, agency or Crown corporation, there will be a highlight section that does explain a couple of the leading causes or considerations in support of an increase or decrease.
[Translation]
The Chair: It is page 172 in the French version.
[English]
Mr. Pagan: What we will see there in the section under highlights, their total increase is $298.8 million. The actual projected cost for the general election is $300.2 million, a net increase in their statutory authority of $300.2 million, mainly for the conduct of the 2015 general election, which is part of their electoral operations and regulations of electoral activities program.
Then that increase for election readiness is partially offset by a $1.3 million net decrease in program expenditures as a result of transferring some activities to the office of the Director of Public Prosecutions for compliance and enforcement activities.
[Translation]
Mr. Pagan: That summarizes the explanations we have to help you better understand the expenditure increases and decreases for each department.
[English]
Mr. Chair, that brings me to the conclusion of my formal presentation. I will hand off to Ms. Santiago in a second to walk you through a particular example, if time permits.
I wanted to conclude simply by reiterating next steps. Upon tabling of the Main Estimates, these are referred to committee, and you call witnesses, as you have done today. The review of the documents can be facilitated by a study of the supporting Reports on Plans and Priorities as well, which will be tabled later this month by the president.
The interim supply bill will also be introduced by the president later this month, which allows departments to begin the fiscal year April 1, and full supply of these Main Estimates will be introduced in Parliament at the supply period ending June 23.
[Translation]
Mr. Chair, that concludes my presentation on the Main Estimates. We would be happy to answer any questions you have.
[English]
Ms. Santiago: If I could make one small correction to the record. I just noticed a mistake in Mr. Pagan's speaking points. On slide 12, the Disaster Financial Assistance Arrangements should be attributed to Public Safety, not to Indian Affairs. The slide that you have in front of you is correct.
The Chair: It says "Public Safety."
Ms. Santiago: Yes, but he said "Indian Affairs."
Mr. Pagan: The slide was correct; my words were not.
The Chair: We're told that Transport and Foreign Affairs information may not be as factual as you would have preferred and that certain amendments will have to be made to these estimates in regard to those departments. Can you tell us about that?
Ms. Santiago: In neither case is the issue about fact; it is about mechanical errors that were made in the secretariat.
In the case of Transport Canada, we ended up publishing an older version of the distribution of expenditures by program activity. The pages that were affected would be, in the printed document in English, page II-272.
[Translation]
Page II-288 in the French version.
[English]
In both cases, the originally published one and the correction that we posted, the total expenditures are correct. They are consistent with the voted authority that's printed in the proposed schedule in the annex as well as the summary table that's given at the beginning of the department's section.
The issue was that the distribution across the different programs had to be updated, and we neglected to update it before the printing.
We provide this information on strategic outcomes and program activities as a way of adding more information to the broader spending context for the department. The information that's provided here is to help understand more of what's going on for the department's planned spending. There is no authority that's tied up in the program activity table, either at Parliament or at Treasury Board. These are descriptive summary tables. They just happen to be in the book that we provide as general information to support those schedules.
Mr. Pagan: To speak to that, Mr. Chair, what is absolutely vital to us is that we provide the most complete and accurate information possible. It is especially critical that we provide accurate vote information and vote totals and accurate authorities in the schedule to the appropriation act because that, in fact, is the information upon which Parliament is being asked to vote.
As Marcia said, we do add in additional layers of information to help with understanding and better comprehension, and we strive to make that complete and accurate.
There is a process with departments where we take our information, produce it and provide it to them for their sign-off. We don't control program activities; they are always making adjustments to reflect the ongoing evolution of their organization and management. Where they make changes, they send them back to us and we try to incorporate that. Where there is an error or clarification is required, there is an established process where we will provide that information in an online erratum so that the information is constantly kept up to date. We will do that as required to make sure that the information in the estimates and public accounts, et cetera, is accurate and up to date.
The Chair: The annex that's at the back of these Main Estimates will not require any change.
Mr. Pagan: No.
The Chair: The annex is what is taken from this and attached to the supply bill or the appropriations bill. That's what we always check because that's what we're voting on.
Mr. Pagan: Correct. And if there was ever an instance where we needed to correct the annex, we would work with the president to retable that revised annex for the parliamentary record so that Parliament always has that information available.
The Chair: Thank you. I have a senator that has a question before we go on to Ms. Santiago's analysis of one of the departments.
We talked about contingencies earlier on, and just to fill that discussion out, is there any reference in the public accounts to contingencies? When we get the public accounts, would we find how contingencies are dealt with?
Mr. Pagan: In the case of vote 5, government contingencies administered by the Treasury Board Secretariat, $750 million, throughout the year, Supplementary Estimates (A) and (B), if we were to use that vote, it would be presented in the supplementary estimates for parliamentary scrutiny and approval, and then the vote would be replenished. The amount allocated from that vote would be reflected in the authorities available to the department for which the contingency was provided. So it would reflect their most up-to-date authorities.
At the end of the year, if there is an allocation from TB vote 5 government contingencies, after Supplementary Estimates (C) are tabled, there is no opportunity to go back to Parliament to present that information and to replenish the vote. So at that point, an allocation from TB vote 5 would be reflected as a charge to the Treasury Board Secretariat with an explanation as to why that was. The money is not going to us but to the department that is having the priority.
Ms. Santiago: We actually do publish all of those allocations in Volumes 2 and 3 of the public accounts. The most recent example of that would have been I believe in 2011, when Parliament was dissolved for a general election prior to receiving Royal Assent for Supplementary Estimates (C). At that point, because we didn't have the supply from the new sups, we addressed the most urgent of the departmental requirements by releasing what funds we could from TB vote 5. All of those allocations were reported in the public accounts for that year.
The Chair: Interesting.
[Translation]
Senator Bellemare: I have a question about the large increases and decreases in budgetary expenditures by organization. The Department of Canadian Heritage's spending decreased by $135 million; I checked and saw that it was related to grants and contributions. Specifically, I'd like to know whether the decrease was felt across the board or whether certain sectors and, especially, certain provinces experienced larger decreases. Did all provinces feel the impact equally or just certain regions?
Mr. Pagan: It's page II-234 in the French version.
[English]
In English, it is page II-42.
Turning to Canadian Heritage, we see — senator, if I may, perhaps we'll use your question as a way of walking through the structure of the particular department.
As I said in my introduction, Part I provides an overview of the overall requirements presented in the Main Estimates, and then Part II provides detail by the specific entity.
So in this case of Canadian Heritage, what you will see on the four pages presented here is a section that sets out their raison d'être and explains the mandate and mission of the organization, a graphic illustration of their budgetary requirements by both statutory and voted — you'll see that they have a very small statutory component — and then a tabular presentation of that graph.
In the case of 2015-16, we see two votes, so Parliament will be providing two votes to the Department of Canadian Heritage, one for operating expenditures and one for grants and contributions. The operating expenditures are in the amount of $173,741,400; the grants and contributions are $1,056,279,039 for a total voted amount; and then for information purposes we present their statutory authorities as well and then a total budgetary requirement. We provide that graphic illustration and that table for each and every department.
In the case of Canadian Heritage, we're looking at two votes. Some organizations will have only one; they'll have a single program vote. Some will have more; they will have a capital vote in addition to a grants and contributions vote.
Underneath that table we see the highlights. The highlights present a summary of the major increases and decreases. So in vote 1, there is a net decrease of $4.6 million compared to Main Estimates 2014-15, and they attribute that reduction to some specific initiatives.
It's a net reduction, so we see an increase of $7.2 million for government advertising, and this is the Canada 150 campaign, and then a series of reductions to some of their other activities; for instance, a decrease of $1.5 million to reflect a transfer for the continued support of the Language Rights Support Program, a decrease of $2.1 million for the Capital Experience program related to a reprofile of funds for the Sound and Light Show here on Parliament Hill, a decrease of $1.6 million for the transfer of funding responsibilities for the Canadian Cultural Property Export Review Board to the Administrative Tribunals Support Service of Canada, et cetera.
So that explains the vote 1. And then turning to page II-43 of the English version, a breakdown of the composition of the decrease of vote 5, their grants and contributions; so increases to a grant contribution program for celebration of Canada's one hundred and fiftieth anniversary of Confederation, which is entitled Road to 2017. I won't list all of them, but you'll see a series of increases and decreases. A significant decrease of $156.4 million for the Toronto 2015 Pan American games. Much of the preparatory work was done in previous years, and so their authorities this year are reduced as a result of the maturation or readiness of that program.
Following those highlights, again for each and every organization, we will break down the budgetary expenditures, which for the department of Canadian Heritage totalled $1.254 billion, and rather than presenting that by vote, we present that by their strategic outcome and program.
[Translation]
Senator Bellemare: That causes a bit of confusion. A paragraph on page II-43 caught my attention. I'm having trouble following you. The paragraph I'm talking about starts with: "The decrease of $131.4 million in Vote 5 is mainly due to" and then goes on to list the following increases: $16 million, $4.9 million for the Aboriginal program, $2.8 million, $2 million and so on. The paragraph refers to a decrease but most of the items in the list are increases. Is that a mistake?
[English]
Ms. Santiago: It is a net figure.
[Translation]
Mr. Pagan: Yes.
[English]
Ms. Santiago: Actually, the last item explains most of it.
[Translation]
The Chair: The last item is a decrease of $156 million.
[English]
Mr. Pagan: Going back to my introduction, I tried to make this clear. The Main Estimates are an aggregation of all the approvals, programs and changes and forecasts in departments; what we present are very high-level numbers, net basis, and in our highlights we deconstruct that net change by the additions and subtractions. An understanding of these changes again is facilitated by a read of the Reports on Plans and Priorities, which will provide some detail, and in some cases considerable detail, on specific priorities for the department.
Now, the RPPs are not fully tabled, but I would fully expect that for a department like Canadian Heritage they would be putting emphasis on Canada 150 and the Road to 2017. Here I have an amount, but I can't tell you in detail what activities they will be undertaking in this program; but in their RPP you would find that supporting information and detail for their priorities.
We see this depiction of strategic outcome and program according to the way in which Canadian Heritage organizes themselves according to their programs, and then in the Main Estimates we will list specific grants and contributions. We conclude Canadian Heritage with an itemized list of all the grants for which they have approval at this time and contributions with their up-to amounts for these programs.
Ms. Santiago: The only thing I would add to that is that we mentioned earlier that most of the information in Part II is descriptive or informative in nature. There is one part of this presentation that has some authority tied up in it, and it's the listing of grants. In the list of grants, the wording, the title and amount of the grant for these estimates have legal meaning, because in the vote wording, which you will find in the annex for Canadian Heritage and others, you'll see that the wording for the grants and contributions actually says, very specifically, grants listed in the estimates and contributions.
When it says they are listed in the estimates, they are included by reference in the supply bill; so that means those amounts are being approved and established by Parliament as a limited authority. The amount printed in the estimates is the upper limit of the grant that the department can make in that fiscal year.
The Chair: Did you want to refer us to any other department?
Ms. Santiago: I think we covered most of that. It is just to make the point that you raised earlier that the annex sets out the substance of what's being proposed for the appropriation act, and that does not change. Everything else that we talk about in our presentation of the estimates is meant to help understand what we're asking for authority for through the supply bill.
The Chair: We made reference to the plans and priorities document, which should be coming out any time now. Those documents, because each department prepares one, should be looked at to expand on what appears in these Main Estimates?
Mr. Pagan: That is right. As I understand the parliamentary process, it's generally upon tabling of the RPPs that the various standing committees would call on departments to explain in more detail the information provided in the RPP and how that supports the requirements or the authorities being sought from Parliament through the appropriation act; so the RPPs are for information, not for approval. They were designed to assist parliamentary committees and other interested stakeholders in better understanding the contents and the priorities and directions of the department. What is required for parliamentary approval, of course, is the vote total and vote wording in the appropriation act.
The Chair: Colleagues, any other questions of our witnesses at this time? I'm sure we will have opportunities again. We continue to study these Main Estimates, but the work we're doing now is to give us a basis for the interim supply that comes before the end of this month.
On behalf of the Standing Senate Committee on National Finance, Mr. Pagan and Ms. Santiago, thank you again very much for being here. This was a very worthwhile exercise we went through. We took our time this morning, and it was nice to have the time.
Colleagues, I will ask you to stay for a short while. I can tell you what we're planning next. Is it agreed that we now proceed in camera?
Hon. Senators: Agreed.
The Chair: Thank you. Is it also agreed that staff can remain? Agreed?
Hon. Senators: Agreed.
The Chair: Thank you.
(The committee continued in camera.)