Proceedings of the Standing Senate Committee on
National Finance
Issue 36 - Evidence - April 16, 2013
OTTAWA, Tuesday, April 16, 2013
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to examine the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2014.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Honourable senators, this morning we are continuing our review of the expenditures in the Main Estimates for the fiscal year ending March 31, 2014.
We are very pleased to welcome officials from the Expenditure Management Sector of Treasury Board of Canada Secretariat. Appearing this morning are David Enns, Deputy Assistant Secretary; Amanda Jane Preece, Executive Director; and Sally Thornton, Executive Director.
Each of you is welcome, and you are welcome as a team. We are familiar with one another, and we very much appreciate the guidance we get from the Treasury Board Secretariat.
Ms. Preece, you have not been as here as often as some of your colleagues, but we will try to make that up for you. I understand that Supplementary Estimates (A) will be coming down later, and you will be able to talk to us about that; as well, honourable senators can anticipate a budget implementation; and then we also have to deal with full supply, all before late June.
The purpose of the meeting today is to review the new format of the Reports on Plans and Priorities, which is one of the sources of information we have in order to deal with the various supply bills as they come along, and budget implementation. We will explore this morning how to examine and connect the plans and priorities, in their new format, with the estimates that we look at.
We are in possession of the Main Estimates, and we have already done one interim report on the Main Estimates. I will be calling on Mr. Enns, but I believe we will be dealing with Agriculture and Agri-Food Canada as an example for the Report on Plans and Priorities. We should all have that document with us, and we can follow through on that.
Mr. Enns, the floor is yours, sir. Thank you very much for being here.
[Translation]
David Enns, Deputy Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Thank you very much, Mr. Chair and honourable senators.
[English]
I am pleased to be here with you today to discuss the Reports on Plans and Priorities. You mentioned that there are some changes in the format and content of the RPPs. These documents really are in continual evolution as we try to ensure they meet the needs of parliamentarians in their study of the estimates. We are looking at them every year, as Ms. Thornton has told you about looking at the Main Estimates documents, trying to find a way to make them more useful to you and to Canadians who want to consult them.
[Translation]
Today, we are giving an overview of the 2013-14 Report on Plans and Priorities. My colleague Bill Matthews has appeared numerous times in order to talk about the parliamentary supply cycle and explain the Main Estimates in considerable detail. This time, we are here to explain the structure of the reports on plans and priorities, which were submitted on March 28 of this year, as well as the improvements made in response to the recommendations set out in the 15th report of the Standing Committee on Public Accounts and the 7th report of the Standing Committee on Government Operations and Estimates.
[English]
I will go through this deck presentation with you, and then we would be happy to take any questions that you have.
If you move to slide 2 of the deck, you will note that there are two major objectives of our presentation today. First, we want to provide a broad overview of the purpose of the RPPs, including a relationship to the Main Estimates. Then we wanted to highlight for you some of the formatting changes of the RPP that we adopted for this year in response to recent requests from parliamentary committees such as Public Accounts and Government Operations. I will also tell you a little bit about future directions and our ongoing work to further improve the utility of the documents.
As you know, the estimates are tabled reports that contain expenditure data to assist parliamentarians in studying appropriation acts or supply bills. They are produced in three parts. Parts I and II are the Government Expenditure Plan and the Main Estimates, and Part III is the Departmental Expenditure Plans, which include the Reports on Plans and Priorities and the Departmental Performance Reports. These are commonly called RPPs and DPRs. Today we are here primarily to discuss the RPPs.
Specifically, we have been asked to integrate in a better way or "crosswalk" data that is in the estimates documents to the RPPs in order to improve our ability and your ability to understand expenditures at a more granular level. The RPPs provide for you a window into the department of progressively more detailed information. You will get the expenditure data from the estimates. The RPPs detail departmental plans at a lower level, and explain to you the operating context and the situations in which departments operate. Beyond that, we provide a number of links to departmental documents on their websites so you can further drill down. It is not all in the RPP, but it provides you with a navigation tool to get progressively more detailed information on what departments are up to.
If you move to slide 3, there are two quick bullets there. The purpose of RPPs, as I mentioned, is to inform Parliament how appropriation-dependent departments and agencies intend to use funds identified in the Main Estimates for the coming year. This year, 92 reports were tabled. They are tabled each spring, following the tabling of the Main Estimates, and they present the details of what each individual department plans do with funds for the current year and on a three-year horizon.
An RPP presents a department's main priorities and plans by strategic outcomes and programs. These are articulated in the program alignment architecture, and I believe you are familiar with that. That is the structured inventory of all departmental activities. They are arranged in a hierarchical manner by department and describe both the activities but also the logical relationships between programs and how a program will contribute to an expected result or a broader outcome.
Departments must identify plans, spending and expected results, along with related human resource requirements for those programs in RPPs. They also identify performance indicators and targets as a means to demonstrate progress toward achieving a program's intended results.
Taken together, this information forms the basis upon which the departments will subsequently report in their DPRs. The RPPs set out the plans and the DPRs, later on, tell the story about how those results were achieved.
On slide 4 is something you have seen many times before.
[Translation]
The slide outlines the parliamentary reporting cycle that you are all familiar with already. We are currently in the January to March period — on the left-hand side. Reports on plans and priorities and departmental performance reports are in bold, so that you can identify them more easily on the page. You will note that reports on plans and priorities are submitted after the Main Estimates, and departmental performance reports are submitted after public accounts.
[English]
That is the slide we would use frequently, in one page, to explain the parliamentary reporting and supply cycle.
I would like to say a bit about accountabilities and responsibilities, on slide 5, which are associated with the RPPs and the Main Estimates. RPPs are ministerial documents and are prepared by each department and agency, in accordance with the Financial Administration Act. They are tabled, however, in Parliament by the President of the Treasury Board on behalf of the ministers who preside over the appropriation-dependent departments and agencies. This is a matter of convenience, rather than having 93 tablings. However, the important point here is that they are ministerial documents and the accountability is with each minister for his or her RPP.
In contrast, the Main Estimates are prepared by TBS and are tabled by the President of Treasury Board. Tabling of the mains occurs on or before March 1, by law, whereas tabling of the RPPs generally occurs before or on March 31. There is no legal requirement for the tabling, but it is a convention, and we like to table the RPPs as soon as we can following the tabling of the mains.
The RPPs supplement information presented in the mains by providing a three-year outlook and trend information around expenditure. Again, this helps inform parliamentarians' consideration of appropriation acts.
Slide 6 gives you a brief overview of how the RPPs are structured. This is a common reporting template that we provide to departments so that there is some consistency in how they present information, again to make the documents easier to be used and consulted.
[Translation]
Every report begins with a message from the minister that reflects the department's vision over the planning period. After that message comes Part 1 — Organizational Overview.
[English]
This provides an overview of the department, including its strategic outcomes and program alignment architecture, roles and responsibilities, opportunities and risks, priorities, a planning summary, an expenditure profile and the votes.
Part II, which is the analysis of programs by strategic outcome, explains the plans for each department's program alignment architecture and how these plans will ensure progress made toward the achievement of strategic outcomes. Where available, departments also are encouraged to provide plans on related performance information at the sub- program and sub-sub-program levels. As time goes by, you will be seeing more and more of the lower level information as we roll that out to departments as part of becoming more informative and giving you more granular information.
Part III, which is the supplementary information, includes a financial highlights section and provides links to additional supplementary information tables. These tables are not tabled in Parliament, but they are additional information that can help in the consultation of departmental plans.
Finally, there is a small section at the end for other items of interest that will include contact information and that kind of thing. We have included in the presentation an Annex A, the common reporting structure and a table of contents so you can see how these are all consistently structured by departments.
Moving on now to the changes that were made for the presentation for 2013-14, in the chart you will see the three recommendations from the Government Operations and Estimates Committee, their 2012 study that pertains to the RPPs. Two in particular were directed at making the RPPs more transparent and linked with the Main Estimates. Those are recommendations 4 and 5. We have included there total budgetary expenditures figures from the Main Estimates alongside the planned spending numbers in the RPP financial tables so you do not have to flip back and forth to verify amounts. You will see this illustrated later on in the deck in slide 9, and we have also appended in Annex C an example from agriculture so you may see how that appears in agriculture's RPP.
We have also added two columns in our summary tables.
[Translation]
That change was made in order to include the expenditures for the previous three fiscal years and the next three fiscal years. For the purposes of that table, departments must provide a short explanation of any significant discrepancies.
[English]
In keeping with recommendation 12, it was relatively straightforward. We have added a hyperlink to the Department of Finance's Annual Tax Expenditures and Evaluations Report for ease of consultation. That was something that was recommended directly by the committee, and we felt we could move on that very quickly.
We have already implemented some of the recommendations made because they made good sense to us, and you will see these in the RPPs for the current year.
If you move to slide 8, we have made administrative or housekeeping changes that I will briefly tell you about. We have changed the nomenclature slightly to be more exact. We used to call it a "program activity architecture"; we now call it a "program alignment architecture." I know that sounds a little mundane, but we wanted to stress the fact that it is the alignment of programs to achieve results that is critical in the inventory. There was some confusion when people read words like "programs" and "activities," so we refer to "programs" now instead of "activities," "sub-programs" and "sub-sub-programs."
When you think of a grant or a contribution program, an individual program, you typically see that at the sub- or sub-sub-program level. The program level in fact is a higher level of compilation or consolidation, discrete sub- and sub-sub-programs that contribute to the same ultimate result or outcome.
We have also simplified some of the information presented in the planning summary tables, and that is available on slide 11 for you to see. We clarified some definitions of planned spending and full-time equivalents. This was done in order to ensure that departments were treating these in the same way; again, consistency across whole the government. We found when reviewing the reports that there were some areas where information was provided in two different spots, and that was not necessary, so we just tidied it up.
Those are the major changes we have made. If you move to slide 9, you can see how this actually appears and will appear in the RPPs that you will be looking at going forward.
I mentioned the financial resources table. You will see here the first column that adds the figures from the mains, and then you will see the three-year planned spending figures so that you can do in one table in one spot a quick comparison across the three-year period. It is relatively simple, but it avoids the back and forth.
On slide 10, you will see how we accommodated the request to add backward-looking financial information. Under the planning summary tables by program, in order to provide a trend across fiscal years, you will see the new columns that are labelled there that provide previous years of actual spending figures. You can see how that goes backward and forward, and then the departments indicate where there are variances that need explanation. It is a bigger, broader, more comprehensive picture of what is happening in departments over time.
Finally, on slide 11 you will see how the planning summary tables have been consolidated, again to provide easy reference to total departmental spending. It seems odd that we would have had it this way, but you would have the program summaries in one spot and the internal services summaries in another, and you had to flip back and kind of do mental calculations yourself to see what the total was. Therefore, we just put those together so you can see the program summary financial information along with the internal services, adding up to the total planned spending figures.
There is a little bit about ongoing work on slide 12. We are committed to modernizing RPPs and DPRs on a continual basis, as I mentioned. Obviously, much of what we will do will be in the realm of electronic reporting and trying to make things more readily consultable, if I can use that word, in online searchable format.
We are also looking at business process tools at the secretariat to facilitate the work we do with departments in bringing this information together. We have a new automated system that allows us to send stuff out to departments and pull it back in, which will facilitate our work greatly in terms of efficiencies and will reduce the risk of manual errors being introduced when people are transposing figures.
Ultimately, having information available in a database format will further improve the ability for drill-down and for making comparisons, as you can follow the links, go into departmental websites and get further levels of detail on activities and the results that departments are achieving. That is the broad vision of where we want to go. We are taking that in steps, and we would look forward to your feedback on how that is working for you.
Just a little bit about benefits; clearly, consistent data is better data. We want to increase the transparency around results. We would like to allow a long-run financial trend in variance analysis and, again, less time spent on data collection with fewer errors.
I think I will end with that. I would be happy, along with my colleagues, to take any questions you have.
The Chair: Thank you.
Ms. Thornton, did you have anything that you wanted to add at this stage, or will it just come out through questions?
Sally Thornton, Executive Director, Expenditure Management Sector, Treasury Board of Canada Secretariat: It should come out through questions, and then perhaps at the end if you would like me to address anything else, I would be happy to do so.
The Chair: We would be interested in knowing about some outstanding issues in relation to the House of Commons committee's recommendation for changes. I know the date of the end of March is in the minds of many of us here, which has come and gone.
Ms. Thornton: There were two commitments from the Treasury Board Secretariat to OGGO and PAC. The first one was to both OGGO and PAC, and that was to provide our final study on accrual budgeting and appropriations. It was due March 31.
The second was follow-up to the government response to OGGO on improving the scrutiny of supply. Again, we had undertaken to provide follow-up March 31.
March 31, however, fell on a weekend. There has been a two-week recess and I have not yet been able to confirm receipt of either of these materials to those committees. Perhaps we could just put this forward and discuss it at the Supplementary Estimates (A). We would be pleased to provide and update at that point, but I do have to confirm receipt.
The Chair: We will allot a bit of additional time when the Supplementary Estimates (A) come along to deal with those things.
The other point that keeps floating around in my ahead, and I suspect for many of my colleagues, is accrual versus cash accounting. I look at the Main Estimates that come out and then the plans and priorities. I will then look at the departmental reports that are after the fact, after the year is over, in the fall, six months after the year end, and then how they relate to the departmental reports and public accounts, and at the front end the estimates and the plans. Are they all in the same type of accounting? So that we can make good comparisons, are they all cash accounting or are they all accrual accounting?
Mr. Enns: All of the estimates documents are in cash accounting. The public accounts are accrual.
The Chair: Plans and priorities and estimates are both cash?
Mr. Enns: Yes, as are DPRs as a part of the estimates family.
The Chair: However, the budget that comes out at the front end is otherwise.
Mr. Enns: Yes, that is correct.
The Chair: Part of Ms. Thornton's report that we will hear from in due course will try to solve some of this inconsistency. You point out consistent data collection and expression of that is important for comparative purposes, and if half of it is in one type of accounting and half in another, we are not doing well at being able to compare these.
Ms. Thornton: You will find that it is very important to have information on both a cash and an accrual basis. It is just understanding which is which, for purposes of your study, but to say that either one or the other could give you sufficient information for decision making is not fair. You need to understand the longer-term implications, but because of the way our Financial Administration Act is structured, approvals are annual and the near cash tends to be more suitable for yours. It is understanding the crosswalk and the difference. It is not necessarily getting the information on the same basis, but certainly understanding how they relate.
The Chair: There was one other document. You talked about the annual tax expenditure and evaluations report. It is not one of the reports that I carry around in my binder on a regular basis. Could you tell us a bit about that and what it is?
Mr. Enns: It is an annual report published by Finance — it is not formally tabled — that gives an accounting of the expenditures on tax measures.
Ms. Thornton may want to add to that.
Ms. Thornton: If you will recall, there are many ways to support policies, not just appropriations or investments in cash, but also using tax policy as a tool. To understand the full impact of some of the delivery in certain areas, certain departments, it is important to understand what they are doing in terms of tax measures. One of the questions we have had at this committee as well as others is, "Where do I see that?" As a matter of course, the Department of Finance produces an annual tax expenditures and evaluation report, which is posted, and their 2012 report is available now.
For example, today when we touch on agriculture, there is a sector in there that deals with farming and taxes.
The Chair: That typically would come out in the new year for the previous year, or does it go by fiscal year?
Ms. Thornton: It came out in February 2013 for 2012.
The Chair: It is a calendar year then?
Ms. Thornton: It looks like it may be, but I would have to confirm.
The Chair: We will check into that as well.
Senator Black: I want to assure my colleagues on the other side of the table that there has been no change in my status over the last two weeks; there were just not enough chairs.
I would like to start by commending the witnesses. I think it is a tremendous initiative, because it is underpinned, in my view, by a commitment to transparency and a greater ability to understand the mystery that is the Government of Canada finances. I think that is very much to be commended and that is a track we want to continue on because it is helpful to us and to Canadians.
Having said that, I want to make sure I clearly understand the descending order of priorities. If I am wrong, you just tell me.
At highest level, we have the estimates, then following from those we have RPPs. What I do not understand is where the DPRs fit in. I am not sure I understand what DPR stands for and then I am not sure where they fit in.
Mr. Enns: I should have probably given you a little more on that.
Senator Black: No, I am new; it will be me.
Mr. Enns: The DPR is the departmental performance report. It is the other bookend of the RPP. The RPP will set out the department's priorities and plans, and expenditure plans and their context and how they intend to achieve the results they articulate there. The DPR then, based on those plans, will assess after a year the results that were achieved, and then provide the financial information from the public accounts on spending in departments. It is the story about how the plans were achieved and any variances, what went on in that intervening period.
Senator Black: It is the denouement of the story.
Mr. Enns: Yes.
Senator Callbeck: Are the DPRs tabled?
Mr. Enns: Yes, they are. They are generally tabled in the fall, around October, November.
The Chair: As we understand it, they follow the March fiscal year end. The departmental performance report comes in the fall. Six months afterwards gives the department time.
Mr. Enns: Exactly.
The Chair: You indicated earlier that the plans and priorities is a departmentally generated document.
Mr. Enns: Yes.
The Chair: It is the department generating the document to explain what it is doing.
Mr. Enns: Exactly.
The Chair: How about the performance report against those plans and priorities? Is someone overseeing the plans and priorities and saying, "You did not meet this or that?" or is it the department itself evaluating and commenting on itself?
Mr. Enns: The departments prepare the departments' performance reports themselves based on what they have achieved during the year and then it is the opportunity for parliamentarians to perform the oversight. PAC, for example, the Public Accounts Committee, regularly reviews a series of DPRs. They pick a few a year to get a sense of how departments are doing and how the reporting is going.
The Chair: We in the Senate committee have not been doing that in the past, but now that you are informing us of these other resources we may consider doing that. We will talk about that in the steering committee.
Senator Buth: Ms. Thornton, I am wondering if you can explain what OGGO and PAC are.
Ms. Thornton: My apologies. They are committees of the House of Commons. OGGO is Government Accounts and Estimates. It is charged with reviewing estimates and statutory spending. PAC is the Public Accounts Committee, which looks at that. Over a period of time there have been a number of recommendations from both of those committees that touch on our work, and our responses are due.
Senator Buth: You made the comment that we need both cash and accrual, and we need to understand how they relate. Can you explain how they relate?
Ms. Thornton: In a very general sense, and now that Mr. Matthews is not here, I can use my favourite example; he always chooses military, but I deal with cars and houses.
Say you are purchasing a house and the overall purchase price is $1 million. If you are looking at it on an accrual basis and you are purchasing today, you are going to book that as $1 million today. To make the math easy, perhaps you get a $200,000 mortgage over five years. What you also need to know is that each year for the next five years you are committed to paying $200,000. You need both. You need to know it is $1 million today. When I pay down that first $200,000, I am committed. Every year thereafter for the next five years, there will be $200,000; there is your cash. You also might want to factor in the fact that there is some depreciation, some investments to maintain the house so it is in good saleable condition at the end and understand the value of that investment after the five years.
However, you would say to me, "$1 million accrual is fine, but then next year you are saying another 200K? What is that about?" It does not work for me to come today and say "only 200K" when for the next four years you will see another 200K each year. You need to understand both.
Senator Buth: That is a great example. I know we could do it with tanks as well, but I will leave that for Senator Gerstein.
I have been looking at the plans and priorities for Agriculture and Agri-Food Canada, and I am looking at the estimates. Now I need to understand how they link. On page 18 of the plans and priorities, we have the total departmental planned spending of $2.450 billion for 2013-14. In the Main Estimates on page II-1, we have $2.191 billion.
Mr. Enns: It is an issue of timing, really. Mains are produced earlier than the RPPs. In this case, after the preparation of the Main Estimates for Agriculture and Agri-Food Canada, there would have been initiatives that received Treasury Board approval that they then include in their planned spending for RPP.
It is a catch-up to try to provide a more up-to-date figure of the planned spending for the year.
Ms. Thornton: To get into an appropriation act, an item needs cabinet and Treasury Board approval. At the time of the Main Estimates, that is what we had.
Subsequent to that, there has been some activity. They are really good in the Agriculture and Agri-Food Canada RPP; they tell you what they are planning. They talk about Growing Forward 2. Therefore, you can expect to see that difference in supplementary estimates throughout the year because that, too, will require approval. However, we did not have it for mains.
Senator Buth: I am still trying to relate the two. You have forecast spending for 2012-13. Does that reflect the mains and the sups?
Mr. Enns: The forecast spending in that one year will be the best picture the department has at the time of the tabling of the RPPs as of February 1 as to what their spending will be.
Ms. Thornton: The forecast spending is for last year. They were trying to estimate their actual spending for last year but before the year ended. That number, or something close to it, will show up in the public accounts in the fall as their actual spending for last year, but it is not yet nailed, so there might be some modifications. However, that is their best estimate of their actual spending for the last fiscal year.
The Chair: It will appear —
Ms. Thornton: In the public accounts in the fall, yes.
The Chair: Departmental performance reports, as well?
Ms. Thornton: Yes.
The Chair: That is very helpful; that is what I was hoping our witnesses could help us out with, as well as any other examples where you can tie them in and go through them. We all have the Agriculture and Agri-Food Canada Reports on Plans and Priorities, so the more you can make it real for us — not that your presentation was not, but that is theory and this is what has happened — the better.
[Translation]
Senator Bellemare: I may have missed something, but I would like to come back to the expenditures for major investment projects. The example you gave prompted my question.
In the case of investments and public infrastructure, we know that the government will invest so many billions of dollars in a year, but that is a major investment. How does that fit into the estimates and the planning? For instance, you tell us that the total spending is there when we buy a house, but will we have the total expenditures for the infrastructure plans during the year when the announcement is made?
[English]
Amanda Jane Preece, Executive Director, Expenditure Management Sector, Treasury Board of Canada Secretariat: There are supplementary tables that show on the departmental websites only. In those supplementary tables are things like the Status Report of the Transformational and Major Crown Projects, as well as the Summary of Capital Spending by Program. Within those two summary documents, by department, you can look at the way that they have articulated their investments and how they will play out in the next three years.
They are there, but they are on the departmental website. They are not tabled.
Senator Bellemare: In the government statistics, when we look at expenditures, revenues, the deficit and all those things, do they take account of the full amount of the main investment that has been announced or only that part, less depreciation and so forth?
Ms. Preece: Basically, these reports look at how you will invest over a period of three years. These reports do not look at depreciation, per se.
Senator Bellemare: But it is distributed through time.
Ms. Preece: Exactly. This is the cash management side of it, in this particular document.
Senator Buth: I have a supplementary question regarding that point. I just made the comment that each department reports on their capital and infrastructure funding. Does each department use the same principles and accounting procedures in terms of how they report?
Ms. Preece: Yes, they do.
The Chair: Thank you.
In what legislation or regulations would those instructions appear, so we know we have conformity?
Mr. Enns: We generally issue, from time to time, guidance to departments on how they should be preparing a report.
The Chair: This is a Treasury Board Secretariat document, then. Thank you.
Senator Callbeck: Thank you for coming today, for your presentation and for the improvements that you have made.
I want to look at page 15 of the Reports of Plans and Priorities. At the top are total figures for the estimates for four different years.
In this document, I am wondering whether there is a chart illustrating what the Main Estimates, for example, those for 2013-14 — $2.191 billion — have been spent on? We have the total figures here, but is there a document or a chart that one can look at to see what makes up those total figures for each year, so you know whether certain programs have been decreased or increased?
Ms. Preece: If you look at page II-3 in the Main Estimates, you will see the bottom number of that "Main Estimates" aligns with the number that is at total budgetary expenditures. From that we align the planned spending. The planned spending in this case differs because the number between January, when the mains were put together, and the February 1 cut-off date for the more informed planned spending for the following year are different. This is a rare case where budgetary expenditures and planned spending are different.
If you want to follow this down by "Strategic Outcome and Program," you turn to Part II of this report to the overview and the planning highlights, which is on page 23. You can follow along against strategic outcomes and the drill-down.
You can now begin to see that by strategic outcome — and there are a number of them; there is Strategic Outcome 1, 2, and 3 — you will be able to see the breakout of what they are doing with that total amount of money and how it supports that total summary.
There is also an internal services aspect to this, and there is a total number against that as well. When you add together internal services, plus all the strategic outcomes, you come to that total planned spending number.
Senator Callbeck: Would it not be much clearer, rather than having to go through 50 pages to find out what that figure is made up of, if there were a chart, or a page or two pages?
Ms. Preece: The chart in the mains will show you the summary of all the different programs by name. That is the chart of what it is. Electronically, we will have so much more opportunity, where you will be able to just click through and drill down. When we move from paper, it will become easier.
Senator Callbeck: That will show you the figures for the Main Estimates 2013-14. However, for example, 2015-16 — spending is being decreased a bit there — if I wanted to know where that decrease came from, how do I know?
Ms. Preece: You would have to look through the various strategic outcomes and how it differs in each particular case, and the drill-down. There is a summary overview at the front that allows an easier view of that. If you look at the planning summary tables, for instance, you begin to understand that the actual spending by strategic outcome. For instance, on page 15 — you can begin to track by strategic outcome. On page 16 reflects "Strategic Outcome 2"; and page 17, "Strategic Outcome 3"; and then "Internal Services" subsequently.
The first part is where you can quickly, at a glance, do the top-level changes. Then, if you want more information, you turn to the second section, and you can drill down to the actual programs that support that strategic outcome. Yes, right now it is very manual.
Senator Callbeck: I would think it would be much easier and more simple to see at a glance if there was a chart that illustrated all these figures that we have in these 50-some pages.
Ms. Preece: It is very difficult to put them all in one view on a piece of paper. Electronically, we have opportunities to make these changes. As we move to an electronic version, it will be easier to do those types of things, as well as charts, by the way, to help more clearly outline the changes.
Senator Callbeck: I notice that you said here that it will contain financial information for program activity, for three previous years and three future years. Many of these charts do not have the three previous years. Is there a reason for that?
Ms. Preece: We were asked to put forward a summary that showed the three previous years and the three years forward. It is not for every single chart. It is only a summary at the top levels. We just look backward for the total spending and forward for the total spending. We did not do it by program.
Senator Callbeck: Why did you not do it by program?
Ms. Preece: Right now, that has just not been the way we have been doing it. We did a summary table that departments could fill out, and they have completed the table, which is the summary top-level information, looking backward and forward. We did not ask for it at that level.
Senator Callbeck: On the Main Estimates, if you look at agriculture, under the contribution payments, for example, the AgriInnovation Program, under Growing Forward 2, you have $60 million. However, there is no explanation whatsoever. We have to wait for this document. Is it not possible to put some explanation in the estimates?
Ms. Thornton: You will note that there are highlights on the previous page, page II-2, and that is as far as we go in the Main Estimates. That one talks about the Growing Forward but not the specifics of the different tools, i.e., the contribution agreement, but it does signal where they are going. The next step is indeed the Report on Plans and Priorities. It is actually highlighted or flagged in the Main Estimates. However, for the detail, the window to the organization, the department, to understand, you need to go to the Report on Plans and Priorities.
The Chair: Can you take us there?
Ms. Thornton: Growing Forward 2.
The Chair: Now we are looking for contributions and Growing Forward in the plans and priorities.
Ms. Preece: Page 29, it talks about AgriInvest, AgriStability, AgriInsurance and AgriRecovery. There are quite clear references as we move forward down that page to under "Growing Forward." The linkages would be within the planning highlights against that particular area.
Senator Callbeck: Where is AgriInnovation on that, this $60 million we are talking about?
Ms. Preece: You would have to follow that forward to "Strategic Outcome 2," in the second area, in part II, and that would be on page 35. On page 35, in the English document, it is under GF2 and it is the AgriCompetitiveness initiative.
The Chair: Could you wait for a moment?
[Translation]
We will check what page this is on in the French version.
[English]
Ms. Preece: On page 35, it describes how the GF2 and its AgriCompetitiveness initiative, and it talks about the performance indicators for that expected result, which is that the agriculture, agri-food and agri-based products sector is able to adapt to a changing regulatory environment. You begin to see it highlighted and described in that section.
Senator Callbeck: Is the AgriInnovation here, the $60 million?
Ms. Preece: It is throughout that section because it relates to that strategic outcome. All of these subsections relate to that total. It is divided out against the separate supporting program areas in here. Some program areas will give you that total in the AgriInvest.
Senator Callbeck: If I look at the estimates here, the $60 million, and I want to know more about it, how would I find out? Can you take me through this document as to where I would find that $60 million?
Ms. Preece: No, because we do not break it down by grants and contributions; we break it down by program. That Gs and Cs could show in one program or it could show in many programs. We do not break things down by grants and contributions; we break things down by programs and where it would fit into a program.
Senator Callbeck: When I look at the estimates here, $60 million, there is no way I can really delve into that to find out what this is all about?
Ms. Preece: No. Not at this time, no. However, again, when we go to the electronic, we will be able to list it underneath the program description. We have a process ongoing at the moment where departments are identifying, under each program description, where the grants and contributions lie. In our amendment process this year, we are asking all the departments to identify their grants and contributions by program. By the time we get to the electronic version, you will actually be able to search by that. It is one of the improvement areas, for sure.
Senator Duffy: Thank you to the witnesses for coming to guide us through this incredibly complex framework on which hangs the Government of Canada. I am interested in your electronic modernization program. On page 12 of your PowerPoint deck, you talk about the adoption of the use of a standardized data collection application. Frankly I am surprised, considering how long we have been in the IT business and with mainframes having existed long before personal computers, that the Government of Canada had not before now gotten to this kind of real-time accounting. How long before you expect it to be fully operational?
Mr. Enns: I will provide a bit of background, and then I will answer your question directly.
It is fully operational now, just this year. We are using it now to collect information from departments on their program alignment architectures and all the performance measures that are associated with each box, if you will, in the program alignment architecture.
The whole PA structure is actually relatively recent. It stems from the 2005 TB policy on managing for results in Canada. It is not so much that the technology took so long, but the policy and the program alignment architectures had to stabilize to a certain degree because there was a lot of shifting in that initially.
Senator Duffy: You had to get everyone playing with the same set of rules and using the same terminology.
Mr. Enns: That is exactly it.
Senator Duffy: I spent part of my life working for a Crown corporation. Every spring there was a mad rush to spend before the budget was gone, but after the end of the fiscal year, we also discovered that there were all kinds of bills out there that had to be paid that no one had mentioned. In that case, when you have an operation around the world, people in Hong Kong are sending in invoices and mailing them before the deadline but they arrive afterwards, and you suddenly realize you have all this unbudgeted stuff that has to be paid.
How often do you now at Treasury Board get updates on the state of spending? Are you getting it in real time, weekly, monthly or quarterly?
Mr. Enns: We get it monthly, and we do anticipate that there will be some bills coming in past at the end of the year and payable at year end. Accounts are set up.
Senator Duffy: Because you have seen what is coming, there are fewer surprises today than there were years ago.
Mr. Enns: Yes. It is more or less a mechanism to ensure that payment is attributed to the appropriate fiscal year.
Senator Duffy: How long do you think it will be before this new approach is available to folks at home? Senator Callbeck was talking about agriculture, and we know many people who are quite interested in these various agricultural programs, and when they change, they would want to know specifically how it will affect their operation. Do you foresee in the not-too-distant future that kind of detail being available so that individual operators can find out how this program has changed and how it affects their bottom line?
Mr. Enns: I think this is something that will evolve. We will take it in stages. That is certainly the vision. Right now, as I mentioned earlier, you have the high level of the estimates. After that, you go to the RPPs to get that window into the department, and there are numerous links you can pursue to departmental websites that provide information, and then you can always call a department in to get further explanation. It is a process of successively automating more and more of that information and making it available.
Senator Duffy: Would your branch be aware of what the impact will be on person years? We hear all kinds of talk about massive layoffs in the federal government, yet my research suggests that most of the stuff that has been happening to has been as a result, one, of attrition and, two, of modernization. Trying to do what you people are telling us about today manually, you can imagine hundreds of clerks and people involved in doing it all on paper. All of those positions presumably will eventually be phased out. Do you have any idea of the downstream effect of all of this electronic renewal?
Mr. Enns: Ms. Preece could provide more detail. What we have done to date has been relatively inexpensive. The system we use to automate the business process that I mentioned earlier, which is really just a starting point, was off- the-shelf stuff that was customized for our use.
Senator Duffy: I am just thinking of the person years in terms of no longer needing rooms full of clerks doing whatever to generate the numbers that you provide to the committee.
Mr. Enns: I think that definitely the automated tools will improve efficiency. That is the goal.
We also want to ensure that we are continually improving the quality of information and the level of detail we can provide so that decisions can be better and better informed by the kind of information we provide. For me, that is where the real gains are to be made, in improving the understandability, the utility and the breadth and depth of information that you have in order to consider the estimates.
The Chair: Mr. Enns, we know your time is tight and you have another appointment, but I am wondering if we could borrow five or 10 minutes more of your time. How tight is your time? We had planned on concluding at 10:30; we have about three minutes left in that time, and I have two senators on the first round and two senators with clarification or supplementaries.
I would propose asking each of the senators in the first round to pose their questions. If you can answer them quickly, that is great. I want you to answer them thoroughly, so if need be, you could provide us with written answers to those answers. I have Senator Gerstein and Senator Chaput on for first round.
Senator Gerstein: At several meetings we have talked about the reallocation of funds, the transfer of funds and the reprofiling of funds. I think the committee has come to understand that in each of those cases they have to pass through Treasury Board and are brought before Parliament for approval.
I could not find the information coming out of the agriculture area, but my question goes back to the Department of National Defence, where we have in the Main Estimates approximately $16.6 billion of expenditures among operating, capital and grants and contributions.
The problem I have as I look at page II-215, it breaks it down clearly between operating and capital. However, when you go to the next page to look at how the budget is laid out, you cannot get the numbers to total up to match how much is operating and how much is capital. What is the rationale of this so to speak commingling of two different types of expenditures that, quite frankly, you cannot follow — or I cannot follow; perhaps other members of the committee can — as you go through the estimates?
Ms. Thornton: First, I would refer you to the Government Operations and Estimates report on improving the scrutiny of supply because they actually address the issue that we do our vote structure, which is the primary control mechanism, by type of expenditure, but increasingly, parliamentarians are looking for information on a program basis or on a strategic outcome to actually understand what the money is being spent on. We are in a hybrid.
You are absolutely right that any shift in monies from one vote to another must be approved by Parliament, and a vote is by type or expenditures, but we are increasingly trying to provide information based on the strategic outcomes and the program alignment architecture, which is more meaningful for many of the decision makers.
We do have the two systems. There is a dynamic and a dichotomy, and it is difficult in some instances to do a direct one for one. It is the totals, but it is because we are trying to provide increased information on the strategic outcome and program alignment.
Senator Gerstein: I understand what you are saying, but if you go back to the fact that $13 billion has been approved for operating in DND and $3.6 billion has been approved for capital, yes, it comes back if it is shifted from one to the other.
Let us go to the extreme circumstance that nothing was spent on capital and that the $3.6 billion, with the approval of Parliament, was shifted into operating, but the commitments are still there for the $3.6 billion of whatever it was that went into the budget. How does one come to understand how this will be looked after in the ensuing years?
Ms. Thornton: Typically, in some sort of supplementary estimates you would see an offset or something that required your approval to actually trigger the movement of funds from capital to operating. At that point, DND would normally be invited in to discuss what they are doing.
Parliament always approves up to amounts. It does not necessarily mean an organization must spend that much money, but they are obligated to meet their commitments. Frequently, those commitments can be met in a different mechanism, or the time frame has been shifted or there has been a delay. At that point you really do need to bring in the department and talk to them about where they are at in their plans, but it is very rare that they just do not meet a commitment without a high level awareness. Usually, it is done in another way or on another time frame, and that is why those resources are then freed up for subsequent reallocation through Parliament.
Senator Gerstein: With that explanation I will look at them a little differently as they come through in future.
The Chair: We want to get you back to the military. We will have to bring Mr. Matthews back. It was actually your Mr. Matthews that got us looking at agriculture, you will recall, because he felt that that was illustrative of many of the points he wanted to make. Here we go for this year. We will try to keep looking at agriculture, so you can let him know that for us.
[Translation]
Senator Chaput: If I have understood correctly, 92 reports similar to the Agriculture one were submitted — with the same type of report production, the same plan or a similar one.
Mr. Enns: That is correct.
Senator Chaput: In the Agriculture report, on page 44 in French, where agri-business is covered — in the financial resources tabled in millions of dollars, in the first box — an amount of $14.4 million is set out for estimates, while in the other one, planned spending is $117.3 million. That is a major increase. The explanation you are giving is that the funding guidelines were not set early enough to be included in the Main Estimates.
Here is my question. Seeing as how this has happened in the case of Agriculture and Agri-Food Canada, could it also happen in the case of most other submitted reports? If so, the situation is rather worrisome, as this would significantly change the planned spending for 2013-14.
[English]
Ms. Thornton: If I may, it is rare that there is that much of a difference between what is approved in Main Estimates and what is planned on a go-forward. This deals with Growing Forward 2, a very specific initiative that received approval late but does not yet have parliamentary approval. Agriculture is telling you to stay tuned. You are going to see this in supplementary estimates, because even though they are putting it here as planned spending, they do not yet have parliamentary approval or authority. You can anticipate this in Supplementary Estimates (A). It must come forward for your approval before they can actually use those resources.
[Translation]
Senator Chaput: Will we see similar situations in other reports?
[English]
Ms. Thornton: It is rare. It does happen and that is one of the reasons we have supplementary estimates throughout the year. When an organization knows in advance that it is coming, they will signal it in their Report on Plans and Priorities. Agriculture has been very transparent from almost the first paragraph of this; they have told you. Even in the Main Estimates they say there is a drop between our mains this year and what we have authorized next year because we have not yet got our approvals. They have been consistent in all of their material. However, it is unusual. Most of the departments do not have this situation.
[Translation]
Senator Chaput: Yes, as the discrepancy between $14 million and $117 million is fairly substantial.
The Chair: Senator Chaput, thank you for this information, which really helps us understand what is going on here.
Senator Bellemare: I will ask my question, but if it is too long, we can leave it for another time. It has to do with tax expenditures. How many billions of dollars do tax expenditures account for annually?
[English]
Mr. Enns: That is a question I think you would need to talk to our colleagues in Finance about.
[Translation]
Senator Bellemare: I will tell you why I am asking the question. If the amounts involved are significant, would it not be useful for us parliamentarians to have an idea of how various departments meet their strategic objectives in terms of expenditures and in terms of tax expenditures? I suspect that, in some departments, most of the work is accomplished through tax expenditures. We do not see them at all. We know that they exist — the information is published, but it is overlooked. We see the impact of budgetary measures on taxation in the government's budget. We have to look for it to know what that impact is, but we do not have the whole picture. That is what I wanted to say.
[English]
Mr. Enns: That is a very good point. That is the point of providing the link here, so that you can quickly see the tax measures that department uses to achieve a policy end or an objective. Before, you would have to wait for the report or go look for it. This way you get a broader picture at a click instead of having to do research that takes more time.
[Translation]
Ms. Preece: The non-financial measures apply to the whole program. That includes the two kinds of revenues or expenditures.
[English]
Senator Buth: I know we are unique in the world, but do you ever take a look at how other governments manage and report financial information and how we would stack up?
Mr. Enns: I think Ms. Thornton could tell you a lot about that, because part of the Government Operations and Estimates Committee work involved looking at other jurisdictions, particularly ones like ours, Westminster systems, and how they do that. That was a fundamental research piece in the work that was undertaken.
Ms. Thornton: Our greatest comparison is with Westminster systems, obviously, because of the similarity in the role of government. We stack up very well. That does not mean there is no room for improvement. There is lots of room for improvement, but we do well.
One of the oddities is actually comparing our own reporting over time, but also the role of Parliament, because if you recall, you approve appropriations, so those are voted expenditures each year. About 50 years ago, two thirds of federal spending was appropriated and now one third of federal spending is appropriated. The balance is through statutory spending, which has received approval by Parliament, but through other pieces of legislation and it is ongoing. We report on it for your information. There are opportunities to review those statutes and that spending, but that has been a huge shift. One third of the expenditures is what comes up annually for review. That is probably one of the areas where a couple of the countries, particularly Australia and the U.K., have some of the reviews of statutory spending by committees, but it is a different field. You are not asked to approve that spending every year, although you are provided it for information. That was one of areas where I saw a bit of a disconnect.
Having said that, in terms of transparency, everyone is struggling right now between a paper presentation and an electronic format. When we give you paper, you look at it in different ways and you get a sense of what is there. With an electronic format, we can provide a lot more drill-down, but unless you know what you are looking for, it does not work. Our approach is a bit schizophrenic.
Only a few of other countries have actually moved to a vote based on strategic outcomes approaches. Having said that, all of the witnesses who went to the committee were very supportive of that type of approach. Whether we move from expenditures, which are really well defined accounting terms, and consistency and comparison over time, or something that perhaps is more popularly understood, those are some of the issues that came up, comparing with other Westminster countries, but overall we do well.
Mr. Enns: In terms of Canada's reputation in this area of parliamentary reporting and managing for results, we are world leaders. We are asked all the time to talk to international delegations about these kinds of things.
There are Western democracies that do not have an inventory of what they do. We have departmental program alignment architectures that describe in some detail — not enough; we want to do more to make it more transparent — and outline a range of activities. We know how much things cost, and we are now working toward the next big goal of trying to refine how we measure success against the expected results that we are trying to achieve.
We have met with the Philippines, Mexico, Bolivia, Indonesia, South Africa and Japan on two occasions. We are constantly being asked to spend time when people come here; they seek our advice on this.
We think we are on the right track here, but there is a lot of work to do to make this more easily understood and available.
Senator Buth: Thank you for that. Maybe another time we can have a discussion about where the balance is between reporting and doing the programs. At some point, departments can spend so much time reporting that it is difficult for them to complete the programs.
This is the first time that I have looked at pans and priorities, and it is good to see that the departments are clearly linking what they are trying to accomplish to the dollars. Now I am looking forward to going back and taking a look at the DPRs.
The Chair: Thank you, Senator Buth. We will perhaps have another session in the fall looking at the departmental performance reports, particularly Agriculture and Agri-Food Canada, so that we can keep an overview on them.
However, I remind colleagues that we have 92 of these Reports on Plans and Priorities that will be another resource for us as we continue our work on the Main Estimates. We will want to develop another report on the Main Estimates for full supply, which will be forthcoming in late June.
Following on the Main Estimates, tomorrow we have the Canadian Space Agency, the National Research Council Canada and Canadian Heritage. They will be our witnesses, dealing with the Main Estimates — if you wish to go to that resource of the plans and priorities.
On behalf of the Standing Senate Committee on National Finance, it is always a pleasure to have before us the Treasury Board Secretariat of Canada. Mr. Enns, Ms. Thornton and Ms. Preece, thank you very much for being here, and we look forward to our continued dialogue.
(The committee adjourned.)