Proceedings of the Standing Senate Committee on
National Finance
Issue 41 - Evidence - May 28, 2013
OTTAWA, Tuesday May 28, 2013
The Standing Senate Committee on National Finance met this day at 9:30 a.m., in public, to study the subject matter of Bill C-60, An Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures, introduced in the House of Commons on April 29, 2013.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I call the meeting to order. This morning, we are going to pursue our study of the subject matter of Bill C-60, An Act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures.
[English]
Honourable senators, this is our fifth meeting on the subject matter of Bill C-60. We will begin today at Part 3, Division 13, clause 200. Clauses 200 to 212 deal with Ridley Terminals Inc., and the pages are 98 to 104 in the English version of the bill.
This morning we are pleased to welcome officials who will continue the process of helping us understand what is in the bill by in effect doing a clause-by-clause with us. Ms. Kavanagh and Mr. Halverson, who would like to begin the discussion?
Soren Halverson, Senior Chief, Corporate Finance and Asset Management, Department of Finance Canada: I will. Good morning, I am the senior chief with the Economic Development and Corporate Finance Division with the Department of Finance Canada. We are here today to present the part of the legislation dealing with Ridley Terminals.
Economic Action Plan 2013 reaffirmed the government's plan to proceed with the sale of Ridley Terminals Inc. Ridley Terminals is a bulk commodity terminal facility located in the Port of Prince Rupert, British Columbia. Its business is primarily the export of metallurgical coal used for the purpose of steel making. It operates on lands leased from the Prince Rupert Port Authority.
Ridley Terminals is organized as a federal parent Crown corporation reporting to Parliament through the Minister of Transport. As announced in December 2012, the government is seeking a buyer that will operate the terminal on a long-term sustainable basis and with open access. The decision to sell Ridley Terminals is consistent with the government's commitment to the efficient use of public resources. Private ownership of the terminal could allow it to reach its full potential and maximize its contribution to economic growth, jobs and new investments in Prince Rupert and supporting communities.
Ridley Terminals is the only coal export terminal in Canada that is not privately owned and operated, and the decision to sell Ridley Terminals is consistent with decisions taken by the government, by Canada, over the last 30 years with respect to moving transportation assets away from the direct control of the government. This is one in a long line of similar actions.
Pursuant to the Financial Administration Act, legislation is required to enable the sale of Ridley Terminals to ensure that the appropriate statutory authorities are in place to support an efficient and timely divestiture process. The legislation anticipates the possibility of a sale either of assets or shares and provides the Minister of Transport with the authorities required to divest the terminal.
The Chair: I think we understand it is for coal, but could it be used for other purposes in addition to coal?
Janet Kavanagh, Director, Ports Policy, Transport Canada: Yes, it could. It has handled wood pellets in the past. It also could be adjusted going forward to handle other commodities with the approval of the landlord, which is common practice.
The Chair: Mr. Halverson, you said in your comment that this is the only coal handling facility still owned in Canada by the government, but this is more than coal. Are there any other terminals that handle other commodities or products owned by the government in Canada?
Mr. Halverson: There is no federally owned bulk export terminal in Canada.
The Chair: Bulk export.
Mr. Halverson: Bulk commodity export. In the case of Ridley, its business is 90 per cent metallurgical coal, but there are no other federally owned terminals that are shipping bulk commodities like Ridley.
The Chair: That puts it in perspective for us.
I will go to my list of senators. First, from Manitoba, is Senator Buth.
Senator Buth: I am interested in the process; this is the legislation that essentially will allow that to happen. What will the process be in terms of the sale? Who makes the decision and who will decide if it is assets versus shares?
Mr. Halverson: Since the government announced the sale and its intent to pursue divestiture in 2012, Macquarie Capital has been involved as an agent working for the government. They have conducted a market sounding and the process is currently under development. There have not been announcements with respect to the details of that process. Those details will be made public at a future date.
Senator Buth: Transport Canada is essentially working with Macquarie?
Mr. Halverson: The mandate has been provided to a Crown corporation, Canada Development Investment Corporation, which reports to Parliament through the Minister of Finance. They are acting as a sales agent for the government with respect to this particular plan transaction, and Macquarie is working on their behalf.
Senator Callbeck: I am reading here that the terminals were set up in 1984 as a joint venture between the private sector firm and the federal government. Is the private sector completely out of this now? Is it owned 100 per cent by the federal government?
Mr. Halverson: That is correct, yes.
Senator Callbeck: When did that happen?
Ms. Kavanagh: That happened in the late 1980s or early 1990s. The partner was Fednav, a shipping company, but it has been fully owned by the government for at least 20 years, I believe.
Senator Callbeck: Are there potential buyers that have expressed an interest in purchasing?
Mr. Halverson: There is a significant interest in the terminal, but it is not something that we are in a position to elaborate on at this time.
Senator Callbeck: I see where the interim chair said that it might be as high as $1.5 billion once the expansion is done in 2015. I do not suppose you have any figures in mind now, do you?
Mr. Halverson: No, and again, I think at this point in the process it would not be prudent to provide that kind of guidance into the public.
Senator Callbeck: That is fine, thank you.
Senator Black: I have a series of questions around the timing. Let me start by saying that my inclination is that assets which can be sold by a government should be sold by a government to the private sector. I like this direction, and you are taking the right direction.
I am a little concerned about Ridley, and I am hoping that you can solve those concerns for me here this morning. I liken it to Ridley owning an apartment on a street and, my goodness, now suddenly the Four Seasons Hotel announces it will build across the street from me. They will put in a Pottery Barn, high end shops and a bus route, so my value will go up. I am wondering if Ridley Terminals is not the apartment in the middle of an area which could be strategically very important to Canada. Are we selling this terminal at the right moment?
Ms. Kavanagh: From the government's point of view and the policy direction, we feel that Ridley now is a very strong and robust corporation. In that sense, the timing is very good with respect to the potential interest and the potential return to taxpayers for a very significant investment over the last 30 years. The coal market is very strong. Ridley is doing very well. From that point of view, the timing seems very good and the government certainly has approached it in that way.
Senator Black: I would agree with that. Clearly, Ridley is doing better now than it has over the last number of years. However, I would add that with the development of the gas in northeast British Columbia, the enhanced excitement, the number of proposals existing for LNG projects on the coast of British Columbia, and the continuing debate around where pipelines from Alberta will end, I would suggest to you that Ridley is sitting in the sweet spot.
Indeed, I have The Northern View, which is a paper in Prince Rupert, and I see there is a proposal that Nexen and CNOOC were making to utilize Rupert Island, which is right off Prince Rupert, for a major terminal to terminate rail shipping oil from Alberta. That would drive the value of Ridley Terminals to the heavens.
I do not doubt your judgment, because you are well placed, but I am just adding a caveat that you are in a very good neighbourhood currently. If I were a purchaser, I would be going to Macquarie, and I would have nothing to do with the coal business. The coal business would be a subsidiary. I would be focusing on how I would have this as an end point of a terminal for oil from Alberta or an LNG facility feeding the Asian market. Would you like to comment on any of that?
Ms. Kavanagh: Ridley Terminals is a tenant of the Prince Rupert Port Authority, which is a federal arm's-length entity. The land is not being sold; it is the ongoing business, so certainly that asset will remain in federal hands.
Senator Black: That is very helpful. Thank you.
Ms. Kavanagh: The Prince Rupert Port Authority has an extensive land use plan, and they do have lands earmarked for other developments at the port. Therefore, there will be opportunities. There are two oil and gas developments under way — or in the early stages — at Prince Rupert today as we speak. It is not necessarily an ``either/or.''
Senator Black: Good. That is helpful. Therefore, you think that, given the context that I laid out, you will be able to maximize value and not sit here five years from now and think, ``My goodness, we should have waited.''
Ms. Kavanagh: As any homeowner knows, that is always the sweet spot.
Senator Lang: I would like to follow up in respect to two elements that I would like to pursue.
Ms. Kavanagh, I believe you referred to 30 years of investment by the taxpayer in Ridley Terminals. Can you tell us how much government money has been invested to date?
Ms. Kavanagh: It is approximately $250 million, and that was the cost of construction, some debt forgiveness and some funding that was provided to Ridley from about 2004 to 2006 when the coal market was very bad. We were essentially helping the terminal continue to pay its operating costs during that time.
Senator Lang: In respect to my good friend Senator Callbeck from Prince Edward Island, who referred to the value that may come to the taxpayer, this is a good story for the taxpayer of Canada in view of the numbers, which I believe were well over a billion dollars.
I want to go to one other area and that is the question of the process. What time lines are we looking at in respect to coming to a final decision in respect to those who are interested? Bids are being considered so a decision can be made.
Mr. Halverson: We anticipate that the sale process will initiate relatively soon — within six months — but we cannot speak to its completion at this point in time.
Senator Lang: You must have projected timelines so that you can get to a decision point?
Mr. Halverson: We do.
Senator Lang: I do not think that should be secret; I think the public has a right to know that.
Mr. Halverson: It certainly is the intention that such would be made known in the context of other elements of the sale process that are made public at the time that the process is announced more broadly.
The Chair: Before I go to round two, assuming that this transaction sells for more than the threshold amount under the Investment Canada Act, do you know if this sale will trigger a review by the government under that act? We have looked at the act, which is in Bill C-60, in another context, but it occurred to me that it might be a check on the sale, unless there is some exception.
Mr. Halverson: Right. The proposals received from foreign buyers will be reviewed through the standard bid evaluation process and will ensure consistency with the new guidelines that were announced for state-owned enterprises under the Investment Canada Act. This assessment would include the full consideration of the importance of free market principles, as well as the impact of the proposed investment on employment, production and capital investment in Canada.
The Chair: So all those same tests that we have looked at and are familiar with will be applied potentially, if it is a foreign buyer, to this particular transaction?
Mr. Halverson: Yes.
Senator McInnis: There is a container terminal at Prince Rupert, is there not?
Ms. Kavanagh: Yes, there is.
Senator McInnis: Where is this approximately; is it nearby?
Ms. Kavanagh: It is literally a 20-minute drive from the Prince Rupert container terminal. The container terminal is also a tenant operation of the Prince Rupert Port Authority, so they are all encompassed by that port authority.
Senator McInnis: It is new, is it not?
Ms. Kavanagh: It is about four years old, yes.
Senator McInnis: If a private operator comes in, there would have to be a fair bit of infrastructure to change, to compete. There is a tremendous demand now for post-Panamax vessels, and certainly coming from Asia, and that is why Prince Rupert probably was established and why it is growing considerably. To change this to a container terminal — I take it this is a deep-water port?
Ms. Kavanagh: Yes, it is.
Senator McInnis: Lay-down areas are all there, I suppose.
Ms. Kavanagh: Yes.
I mentioned earlier that the Prince Rupert Port Authority has a land use plan. If you look at it today, you will see where they have identified areas for expansion of the container terminal. That is still far and away from Ridley Terminals, if you will. They have allocated certain lands for development that accommodates both types of traffic.
Senator McInnis: Where it is all under one authority, it is unlikely there would be competition because there would be some control over usage.
Ms. Kavanagh: It is analogous to a mall: The landlord determines who gets to conduct what type of business there.
Maybe Mr. Halverson wants to speak to the mandate. In announcing this decision, the government has basically said that it is looking for a long-term operator for coal.
Senator McInnis: Yes, of course.
Ms. Kavanagh: There are many western mines that look to Ridley Terminals as their outlet to markets, so that is one of the parameters around the sale.
Senator McInnis: Where it is under the control of the same authority, that would prevent any competition. They can direct it, and that will be the call. Would it be a request for proposals?
Ms. Kavanagh: For the coal?
Senator McInnis: For the operation.
Mr. Halverson: It will be an open, competitive process.
The Chair: Senator McInnis raises this question: Are you familiar with the lease between the terminal corporation and the port authority in terms of potential use?
Ms. Kavanagh: We are familiar with it in very broad terms.
The Chair: Are there any restrictions by the owner of the terminal on the type of business activity that it may carry out?
Ms. Kavanagh: I would speak to leases in general at Canada port authorities. The port authority determines what their tenants will carry and not carry; that is kind of a standard provision.
The Chair: Presumably this is a long-term lease that is in existence that is proposed to be sold, so it is an ongoing entity that is being sold, with the lease being a very important part of it.
Ms. Kavanagh: Yes.
The Chair: The lease will not fall as a result of this sale.
Ms. Kavanagh: No.
The Chair: What is in the lease is important. If it is not restrictive, they can do whatever they want there.
Ms. Kavanagh: There is a lease in place now. We cannot speak to it in any detail because it is commercially confidential. That lease was set up between two arm's-length entities from the government. We are not intimately involved in what the lease says, but there is a long-term lease. The expectation is that that lease will continue under a new owner and that Prince Rupert and the new owner will come to an agreement as to what that new lease would look like. Again, the Prince Rupert Port Authority will be very much looking to how that new tenant will operate going forward.
The Chair: You are telling us that there is a provision in the sale that allows a port authority to determine future use. That reduces the value of that sale quite considerably.
Ms. Kavanagh: It is the standard way of operating at Canada Port Authorities. I suppose that is one way of looking at it. However, on the other hand, it brings a lot of certainty to an operator as well, to a new owner coming in and knowing that there is a controlled environment with respect to new operations at the port authority, as raised by Senator McInnis, that someone next door will not necessarily be opening up a competing store, if you will.
The Chair: The government will advertise this for sale either an asset sale or a share sale, with the restriction that the future use can be determined or will have to be negotiated.
Ms. Kavanagh: Yes, but we are selling the ongoing entity as a coal entity, and that is what the operations will be in the near future. After that, the mandate is really looking for a sustainable long-term coal operation, and all parties going into that lease negotiation will have that understanding.
Senator Callbeck: I want to come back to the cost to the federal government with these terminals. In answer to a question from Senator Lang, I understood you to say that the total cost to the federal government is $250 million. However, from what I have read, my understanding is that back in 1984, when the terminals were set up, the federal government put in $250 million.
Ms. Kavanagh: Yes, that is true. However, they did get some back from Ridley Terminals, particularly through the 1990s. At that time, Ridley was doing quite well. They had very good contracts with companies in Japan. Some of the debt was repaid at that time. However, in about 2000, with the collapse of the Japanese coal market, we saw Ridley enter a fairly deep and profound long-term loss of activity and revenues. It is over about 30 years. There are pluses and minuses, but at the end of the day the estimate is about $250 million.
The Chair: Senator Callbeck pointed out that expansion is going on at this time, so there is more money going in there right now.
Ms. Kavanagh: However, the expansion is being totally financed by Ridley Terminals itself. The federal government has not provided any funding. It did provide, through the Minister of Finance, two years ago now, I think, the capacity for Ridley Terminals to borrow money on its own. It borrowed $40 million. With that $40 million and with its revenues, it is now financing that expansion.
The Chair: That is helpful to know.
Senator Lang: I want to go back to the terms and conditions of the sale. From speaking to my B.C. colleagues, I know that the importance of Ridley Terminals cannot be overstated in terms of the long term for northern British Columbia and the coal industry. That is why you would specifically have this in that particular agreement, to ensure that that particular commodity can get to the port and then be shipped elsewhere.
The Chair: I do not really want you to be giving evidence here unless you want to sit down at the end. You could ask our witnesses if they confirm that.
Senator Lang: I would like them to further expand on that because it is a very important aspect, in principle, for Canada.
I would like to follow up on the question of my good friend Senator Callbeck with regard to what the investment of the taxpayer has been. I wonder if you could bring an accounting to date of exactly what has been spent on behalf of the taxpayer so that at the end of the day, when the sale is made, the taxpayer can compare it to what they have put in compared to what they have been able to sell that particular port for.
I have one other question about expansion. Perhaps you could inform us, insofar as the business is concerned and the lease they have at Prince Rupert, how much more land they have with respect to the prospect of expanding their service to the coal industry. In other words, do they have room there for more coal as they expand in northern British Columbia for the purpose of export?
Mr. Halverson: I will respond to the first question by saying that Ridley presently operates as a commercial facility with multiple users. It has contracts with multiple users. Those contracts are long term and the expectation is that those contracts will continue. Ridley's growth plan to expand from 12 million tonnes a year capacity to 24 million tonnes is predicated on the existence of contracts that justify that expansion. There is every intention that those contracts continue post-sale. There is every intention, in terms of the government's commitment to open access with regard to the way of operating the terminal, that the terminal continues to serve multiple users. Exporting coal is a continuing feature of the way that Ridley does its business after the sale.
Senator McInnis: Further to Senator Lang's question, the authority is operating under the Canada Marine Act, so for any investment that goes in, you get a return on all the users, the salaries, the stevedoring and the trucking. All of that comes out of this. The dollars you are getting from the sale are just a part of it. That is the purpose of operating under the Canada Marine Act and the port authority; it is to facilitate.
A prime example is the Port of Halifax. If we did not have that and we did not have those investments, I do not know where we would be in terms of a port. It has brought tremendous benefits as a consequence.
Ms. Kavanagh: Ridley Terminals Inc. is a tenant of the Prince Rupert Port Authority. You are correct that they make lease payments on an annual basis to the port. It is often true, in terms of all these types of activities with port authorities, that it is usually a fixed amount and then a volume element. As Ridley does well, the port authority does well. With Canada Port Authorities, those funds are reinvested in port development, so there is that ongoing benefit as well.
The Chair: That was helpful and interesting. Obviously, a number of honourable senators have some background information that has helped us all in understanding the potential impact in northern British Columbia of the sale of this Prince Rupert facility. Ms. Kavanagh and Mr. Halverson, we appreciate your being here and we look forward to seeing you again one of these days.
Honourable senators, we are at pages 104 to 107 and we are dealing with clauses 213 to 224. The heading is ``Transfer of Powers, Duties and Functions to the Minister of Canadian Heritage.'' Senator McInnis will know that is a transfer of authority from the National Capital Commission to the Minister of Heritage.
[Translation]
The Chair: We are now on division 14. Mr. Racine, you know how we are going to proceed to study the following pages, so the floor is yours.
Denis Racine, Executive Director, Major Events and Celebrations, Heritage Canada: Mr. Chair, division 14, as you mentioned, includes the transfer of the mandate to promote the National Capital Region, from the NCC, the National Capital Commission, to the Department of Canadian Heritage. The sections included in that division amend, change, modify the Department of Canadian Heritage Act, as well as the National Capital Act to transfer authority and resources currently dedicated to many initiatives intended to promote the National Capital Region.
Also, at the end of the division, an amendment transfers the responsibility for building the national holocaust monument from the Department of Foreign Affairs to the Department of Canadian Heritage.
The Chair: What is the paragraph for that last transfer?
Mr. Racine: Paragraphs 2-22 and 2-23.
The Chair: We will start the round of questioning with Senator Chaput from Manitoba.
Senator Chaput: Where does this idea of a transfer come from?
Mr. Racine: From what I understand, the Department of Canadian Heritage has the mandate to commemorate significant events throughout Canada, as well as being responsible for what is known as the Road to 2017, which is the commemoration of significant historical events over the next few years to prepare for the 150th anniversary of Confederation.
Since this department already has this mandate and a pan-Canadian presence and many initiatives that reach Canadians from coast to coast to coast, it seemed preferable to put both entities together to benefit from synergies and possible connections between them, knowing that the National Capital Region will be an important location for the 150th anniversary celebrations of Confederation.
Senator Chaput: During this transfer, there will surely be a transfer of employees. How many employees will be transferred from the National Capital Commission to Canadian Heritage? Will a budget be transferred to Canadian Heritage?
Mr. Racine: There will be a transfer of employees and of the budget from the NCC to the Department of Canadian Heritage. We do not have the exact number yet, because we are still checking which employees will migrate from the NCC to the Department of Canadian Heritage. It is relatively easy to know how many employees deliver programs and initiatives directly. It is a little more complicated to determine which employees offer support services for finance, human resources, and communications, for example. It is now a matter of disentangling all that, and after a certain amount of time, we will have a relatively precise number.
Senator Chaput: Was the NCC in favour of this change?
Mr. Racine: I have not heard any negative reaction to it.
Senator Chaput: What will happen to the yearly celebrations in the capital like Canada Day, Winterlude, et cetera.?
Mr. Racine: Currently, for Canada Day, the Department of Canadian Heritage and the NCC were jointly responsible for organizing festivities in the region. The Department of Canadian Heritage was responsible for the noon-time show and all related protocol, given the fact that the Prime Minister and the Governor General are in attendance, and the National Capital Commission was responsible for evening programming and activities in the various sites. That will be merged into one group that will continue to organize these events as has been done over the last few years. Winterlude programming will be transferred to Canadian Heritage.
Senator Chaput: Are there other events that will be affected aside from the two I have mentioned?
Mr. Racine: Those are the main two, possibly the Christmas lights and a few other initiatives, but those would be the three main events that would be transferred from one to the other.
Senator Bellemare: I had the same questions as Senator Chaput and they were answered.
The Chair: You are side by side, she must have read your documents.
[English]
Senator Black: After this change is effective, what role will the National Capital Commission have? It sounds to me like they are losing a lot of their jobs.
Senator Chaput: And power, too.
[Translation]
Mr. Racine: The NCC's role would essentially return to what it was before the promotional aspect of the commission's operations, in other words urban planning, the management of lands that fall under its responsibility and infrastructure, including the residences which they are also responsible for.
[English]
Senator Black: Which are?
[Translation]
Mr. Racine: All official residences, lands, the green belt, all of the NCC's current assets remain with the NCC. What will be transferred is the promotional, organizational and event aspects.
[English]
Senator Black: That is helpful. Thank you.
What changes should Canadians expect to see from this change?
[Translation]
Mr. Racine: The point is for the public not to notice any change. Events currently offered in the region will continue to be offered. There is a good chance the National Capital Region will be better showcased throughout Canada. In preparation for the 150th anniversary of Confederation festivities, there will be a greater pan-Canadian presence here in the National Capital Region at major events.
[English]
Senator Black: Am I to assume from what you have said that we should have been unhappy with the performance of the NCC in capturing the national spirit up until now?
[Translation]
Mr. Racine: No, I do not believe that the purpose of this change is really to maximize results by bringing together two groups whose mandates complement each other very well, but by working together, we can simplify planning and decision-making and most probably also bring about synergies that will allow both parties to achieve better results.
[English]
Senator Black: We will look forward to the results.
Senator Callbeck: You say it will maximize results, bringing two groups together. Did these two groups not work together before this change?
[Translation]
Mr. Racine: They already work together. As I mentioned earlier for events like Canada Day on Parliament Hill, we hope that by bringing together two groups that are already doing wonderful things, we can increase the impact of activities and initiatives to promote the National Capital Region and to prepare for the 150th anniversary of Confederation. We want to position these two entities so they may play a major role in the planning and celebrations of the 150th anniversary of Confederation.
[English]
Senator Callbeck: You say we will get a better impact. Would you comment further on that?
Also, the material I have claims that Canadian Heritage will ensure that a national perspective is brought to all celebrations in the NCR. How will they do that? Did the NCC fail to do that?
[Translation]
Mr. Racine: It is difficult for me to comment. I do not believe it is a matter of having failed or not having done things properly. In terms of opportunities, important anniversaries are coming up over the next few years. I am thinking, for one, of the Charlottetown and Quebec conferences. The Department of Canadian Heritage is already working with stakeholders in Charlottetown and in Quebec City, so there can be celebrations in both of these cities and throughout Canada; this anniversary is a rather important event in the history of Canada.
Knowing that the Department of Canadian Heritage has already put forward these initiatives and is working closely with those involved, we could fold these initiatives into our planning of events in the National Capital Region.
[English]
Senator Callbeck: I come from Prince Edward Island and I am wondering what advantages will the people of Prince Edward Island expect to see because of this change in mandate?
[Translation]
Mr. Racine: I believe it will increase the options available to us so that Canadians, from coast to coast to coast, can join with Islanders to celebrate the 150th anniversary of the Charlottetown Conference. It will give people throughout the country an understanding of the historical significance of the event and of the way in which it shaped and changed the future country, heading towards Confederation.
[English]
Senator Callbeck: You say it increases the possibilities. That sounds great to me, but can you comment on how you are proposing to do that?
[Translation]
Mr. Racine: The details are yet to come because we are currently looking into the way in which the transfer will occur. The NCC will put forward initiatives that exist and will continue to exist, Canadian Heritage will put forward initiatives on commemorative plans already being considered, and once we have brought together these initiatives, we will be able to see potential synergy and opportunities. We are confident that very interesting options will open up.
[English]
Senator Callbeck: The NCC already has initiatives under way for this 150th anniversary?
[Translation]
Mr. Racine: No. When I talk of initiatives, I mean existing initiatives like what they do for Canada Day, Winterlude, the Christmas Lights program, to promote the capital here in the region and throughout the country. We believe that linking these two sets of initiatives will generate synergies rather quickly.
[English]
Senator Callbeck: I thought you were referring to the 150th anniversary celebration.
[Translation]
Mr. Racine: Not yet.
[English]
Senator Buth: Under the National Capital Act, who does the NCC report to?
[Translation]
Mr. Racine: Currently, they turn to the Department of Foreign Affairs, Minister Baird.
[English]
Senator Buth: Good. Thank you very much.
[Translation]
Senator Hervieux-Payette: Could you not simply have taken charge of the 150th anniversary and let the status quo prevail at the NCC? I do not see the purpose in reinventing what already exists. I do not know why you would transfer the Christmas Lights program to Canadian Heritage. It seems to me that in terms of urban planning, it falls within the purview of the National Capital Commission far more so than the Department of Canadian Heritage. I think that the NCC has done extraordinary work for many years. As they say, if it is not broken, do not fix it. In my book, the Christmas lights are absolutely magnificent. I do not know how they could be any better under Canadian Heritage.
As far as Canada Day festivities are concerned, I do not know if you hired two more artists, but it seems to me a phenomenal success that has always worked very well. Why change something that works?
I feel that the departments' propensities to always want to expand, to have more officials seems to be an illness that has existed for a long time. It seems to me that an independent entity with experience, that has been very successful in the past with events such as Winterlude, Canada Day and lighting up the city, I do not see why we would change that.
I do not understand your logic. What will you be able to do better?
Mr. Racine: I believe the change is intended to allow the tools, programs and authorities that Canadian Heritage has, the mandates within the framework of arts and culture or with major celebrations, to help the influence of the National Capital Region extend from coast to coast. And it is also intended to ensure that the events organized here, in the National Capital Region, truly reflect the Canadian identity across the country.
Senator Hervieux-Payette: There must be some coordination with the City of Ottawa. It seems to me that it is much easier to have an independent organization that has organized certain area events and planned them for years in the City of Ottawa, rather than have a minister who organizes international fairs, et cetera. There is a kind of marriage between the City of Ottawa and the National Capital Commission.
Who is the major beneficiary from a tourism perspective? It is the City of Ottawa. Consequently, it seems to me that it is more logical that it be an organization called the ``National Capital Commission'' that works together with the City of Ottawa rather than the Department of Canadian Heritage, which has a mandate to serve all of Canada.
I am not able to link the two. You have my support as far as the festivities for the 150th are concerned. I have no problem with that being an anniversary, a special event that unites all of the provinces. But for the rest, what does the federal government have to do with the festival of lights in Ottawa? I do not see it at all. There is a lack of consistency with this change of policy.
One of the great inadequacies that we currently have, and that everyone across the country laments, is indeed the cutback of budgets in the tourism sector. Will Canadian Heritage have a bigger budget to promote it than did the NCC? Because there is an aspect of promoting tourism underlying all of this.
Mr. Racine: I do not believe that there will be any new funds invested. We will attend to the transfer of funds that are already allocated to promoting the National Capital Region, from the NCC to the Department of Canadian Heritage. There will be no new investments or major overhaul in the sums already being spent towards that objective.
Senator Hervieux-Payette: The transfer costs, what would they be?
Mr. Racine: There are very few costs, it is really a transfer of machinery in the end. We are in the process of making the necessary legislative changes to the Department of Canadian Heritage Act.
Senator Hervieux-Payette: But these people have offices, do they not? They have to be set up somewhere.
Mr. Racine: The people who work at the National Capital Commission are already paying rent. So when they move in with the people from Canadian Heritage, transfers will be made.
Senator Hervieux-Payette: And the leases are all expiring on the same date and there will be no other amounts requiring payment?
Mr. Racine: Unfortunately, I cannot comment on that, the two parties are at the initial stages of discussion.
Senator Hervieux-Payette: I do not think that there will be any savings. Rather, I think that there will be additional expenses that will in all likelihood not enable us to do any better than what is being done right now. I am very satisfied with what the National Capital Commission was doing.
The Chair: Could you tell us how many people will be involved in the move?
Mr. Racine: We do not yet have an exact number. At present, there are at least 50 people who are assigned to promotion activities. This figure will vary over the next few weeks, once we will have determined how many employees will be assigned to this new team in the area of support or secondary services, either in administration, human resources or communications. At times, a half-person will be assigned. This all needs to be somewhat clarified.
Senator Chaput: You said that there could be a minimum of 50 people involved in the transfer. Where are the offices of these people currently working for the National Capital Commission located? Are they in Ottawa?
Mr. Racine: Yes.
Senator Chaput: And where will they be transferred once they work for Canadian Heritage?
Mr. Racine: They will be located within the Department of Canadian Heritage.
Senator Chaput: Which is located where?
Mr. Racine: Canadian Heritage offices are located in Gatineau.
Senator Chaput: Still in Gatineau?
Mr. Racine: Yes.
Senator Chaput: I have some concerns which are not necessarily justified. I am not going to repeat what was said by my colleagues about taking something that works well and changing it.
You have talked about better outreach and increased visibility. My primary concern, because we are now transferring this responsibility to Canadian Heritage, is that we will dilute the regional and local flavour of the celebrations currently organized by the National Capital Commission, using its own employees and local volunteers.
The decision has already been made and I have nothing further to add, other than the fact that I have a concern.
Mr. Racine: Duly noted.
[English]
Senator Black: I would like to change gears, if I can, to the National Holocaust Memorial. First, congratulations to you and your people, through to the Government of Canada. This is an extraordinarily important statement, so thank you very much for all that you are doing to advance it.
Similar to the question you just endured, so to speak, why the change? Why is it felt that it needs to move from one ministry to the other?
[Translation]
Mr. Racine: When the National Holocaust Monument Act was passed, responsibility for the project was given to the Department of Canadian Heritage, with the NCC reporting to Parliament. Usually monuments come under the jurisdiction of the NCC, which works with a range of partners.
With this transfer, responsibility for creating monuments will go from this group, which promotes the national capital region, to the Department of Canadian Heritage. We already have other monument projects under way. As this monument was under the responsibility of our minister, it seemed logical to transfer it as well along with all of the monuments that are already being developed, either by the Department of Canadian Heritage or the NCC, depending on the project.
[English]
Senator Black: For example, the other monument that I have heard proposed for Ottawa is one for the victims of communism. Are you aware of that monument?
Mr. Racine: Yes.
Senator Black: Who will have authority for that?
[Translation]
Mr. Racine: The group that looks after promoting the national capital and which is becoming part of Canadian Heritage will be responsible for this monument. However, the Canadian Heritage Commemoration Program may provide financial support for the development of monuments. Now the two will be able to work together.
[English]
Senator Black: This particular transfer is not a one-off. You are suggesting that the transfer for the Holocaust memorial is consistent with the management of other memorials in Ottawa. That is your response, is it not?
Mr. Racine: Yes.
Senator Black: Great, thank you very much.
I see 2015 is the date you are targeting. Where are you with design, fundraising, et cetera, if there is any fundraising?
[Translation]
Mr. Racine: I do not have any detailed information on that matter. I do know that the funding campaign and design are proceeding according to plan. There have been no major issues resulting in any delays or drastic changes to the project. Work is progressing and is on track according to the plan established a few years ago.
[English]
Senator Black: Great. Thank you and congratulations.
[Translation]
The Chair: I did not completely understand the discussion about the monument. You have made a change and the Heritage Minister will be responsible for the construction but not the maintenance of the monument. How will the departments be able to work together if the Department of Canadian Heritage is responsible for the construction of the monument alone?
Mr. Racine: According to our usual practice, the NCC or the Department of Canadian Heritage or the two together have responsibility for the creation, development and construction of monuments. Once the monument has been inaugurated, maintenance responsibilities are handed over to the National Capital Commission or Public Works should the monuments be located on the Hill. That will remain unchanged. Once monuments have been inaugurated, it is the NCC, as the organization that manages urban furniture, monuments, that will ensure the maintenance.
The Chair: Ascertaining who is responsible is starting to get complicated.
Senator Bellemare: I have been trying to determine whether there are any savings underlying these changes. I have just noted in the main estimates that, indeed, the budget for Canadian Heritage has been maintained, and there has even been a slight increase; however that of the National Capital Commission has been reduced. Ultimately, there will no doubt be some savings achieved as a result of the synergies that will develop.
[English]
Senator McInnis: I wanted to offer a comment. We in Atlantic Canada always felt left out, not being invited to the national capital events. Perhaps now, with this being broadened, we will get an invitation to some of these events. That will be a good thing because this is not an Ottawa event; it is our national capital's event. That is important.
As a senator, I might get an invitation, but I hope my people back home will as well, and that this will be more inclusive as a result of this change, particularly in light of what will be taking place in a few years' time with the one- hundred-fiftieth celebration of Confederation. Where better to have it than under Canadian Heritage?
I think it is a great move and I compliment you. No one is losing their jobs. It is not costing any money. It will be a wonderful thing. It will be all-inclusive, and I think the government deserves credit for this. If you were the brain-child behind this, I congratulate you.
[Translation]
The Chair: Thank you for these comments, Mr. Racine. Congratulations and thank you very much. We will now be turning to division 15, with a new panel of witnesses.
[English]
Division 15 deals with the Privy Council Office, parliamentary secretaries and ministers, also known as adding overhead.
Mr. Ward, you have the floor, sir.
Eric Ward, Director of Strategic Policy, Privy Council Office: Thank you, Mr. Chair and senators.
The Chair: Why do we need more ministers and parliamentary secretaries?
Mr. Ward: I am here to speak to what this bill does.
The Chair: Okay.
Mr. Ward: This division does three things. First, it amends the Parliament of Canada Act to change the way the maximum number of parliamentary secretaries who may be appointed is calculated. Under these amendments, the maximum amount of parliamentary secretaries would be set at the number of ministerial offices listed in the Salaries Act, as opposed to the number of persons occupying those offices.
Second, it amends the Salaries Act to reflect the legal title of the Minister of Public Safety as no longer being the Solicitor General of Canada.
Third, it establishes in the Salaries Act three new ministerial positions for the Federal Economic Development Initiative for Northern Ontario, the Federal Economic Development Agency for Southern Ontario and the Canadian Northern Economic Development Agency.
Those are the three things it does, and I am in your hands for questions.
Senator Callbeck: You said that the maximum number of parliamentary secretaries cannot be greater than the number of ministers. What is the situation now?
Mr. Ward: The way it is currently calculated, it is the number of persons who are appointed to those ministerial offices listed in the Salaries Act. If there is a cross-appointment — for example, if the size of the ministry decreases by one — then automatically, even though that office is done by someone else who maybe has two or three offices under the Salaries Act, we would have to eliminate a parliamentary secretary. What this does is it counts the number of offices listed under the Salaries Act, all those ministers listed in the Salaries Act, and sets that as the maximum number that can be appointed.
Senator Callbeck: Therefore, the bottom line is that it opens it up to appoint a lot more parliamentary secretaries.
Mr. Ward: Maybe not a lot. It depends on how many cross-appointments there are in any particular ministry. Right now there are 30 ministers listed, plus the Prime Minister, so 31. There are four cross-appointments, so that means that the maximum allowable is 27.
Senator Callbeck: Rather than 31 ministers, we will have 34; and for parliamentary secretaries, rather than 27, we could have 34.
Mr. Ward: That would be the maximum, but of course there is no requirement that those parliamentary secretaries be appointed. That is correct, yes.
Senator Callbeck: Right now, the ministers and parliamentary secretaries are 58, 31 and 27; right?
Mr. Ward: Yes.
Senator Callbeck: Under this new legislation, the ministers will be 34 and the parliamentary secretaries will be 34. That is 68.
Mr. Ward: It is not possible from this legislation to predict how the appointments will be made. For example, there may still be a number of cross-appointments. Right now, four ministers hold more than one office under the Salaries Act and they could continue, so that would reduce the number of ministers. However, the maximum number of allowable appointments of parliamentary secretaries would be increased so that in theory there could be one parliamentary secretary responsible for assisting a minister with each of the responsibilities listed under the Salaries Act.
Senator Callbeck: Really we have gone from 58 to the potential to have 68; is that right?
Mr. Ward: If the maximum number of ministers was appointed and the maximum number of parliamentary secretaries was appointed.
Senator Callbeck: Going up 10 people, roughly how much will that cost in terms of the budget?
Mr. Ward: Again, I do not know how much it would cost the budget because it is theoretical. This just sets the maximum numbers. I can tell you what the salaries are for those positions under the Salaries Act. Approximately $70,000 per minister is payable if there was a separate minister under each of these Salaries Act offices. However, it is not obvious that those new offices would be created. There are other associated costs.
Senator Callbeck: The potential is there.
Mr. Ward: There is a potential there currently to appoint more ministers. However, the government has chosen not to do so and has, in fact, restricted the size of its ministry by using cross-appointments.
The Chair: Can you explain to us what a cross-appointment is?
Mr. Ward: A cross-appointment is when one individual holds multiple Salaries Act offices. Minister Lebel, for example, in addition to being Minister of Transport, is also Minister for the Economic Development Agency for the regions of Quebec. Minister Lebel is also the President of the Queen's Privy Council, which is a listed Salaries Act office. Instead of having the full complement, the government may always choose to have a smaller ministry, which in fact this Prime Minister has.
Senator Buth: Is the number of ministers enshrined in legislation?
Mr. Ward: What is enshrined in legislation is the list of ministerial offices. Under subsection 4.1(3) of the Salaries Act, there is currently a list of 30 offices. No one can be paid as a minister under the Parliament of Canada Act unless their position is listed as a minister under the Salaries Act.
Senator Buth: My other question is related to the three ministers for the development agencies. Do the other economic development areas have ministers appointed to them?
Mr. Ward: Yes, there are currently ministerial positions for those other economic development agencies.
Senator Buth: Does this make this consistent, then, across the board in that all the economic development agencies may now have ministers appointed to them?
Mr. Ward: Yes, it does.
Senator Buth: Is that a ``may'' versus a ``shall''?
Mr. Ward: That is a ``may.'' In the current Canadian ministry list, I believe that for all of those economic development agencies, the responsibility is through a cross-appointment.
Senator Buth: In terms of the list of ministerial offices, how many are there?
Mr. Ward: Currently, there are 30 ministerial offices and the Office of the Prime Minister listed in the Salaries Act.
Senator Buth: How many cross-appointments are there?
Mr. Ward: There are currently four cross-appointments. Those are for the Economic Development Agency of Canada for the Regions of Quebec, the President of the Queen's Privy Council, the Western Economic Development Agency and ACOA.
The Chair: And northern Ontario?
Mr. Ward: Northern Ontario would be one of the new ministerial positions created under the Salaries Act amendments.
Senator Black: I hope this is a very simple question. Why is this change being made?
Mr. Ward: The Economic Action Plan announces on page 105 of the English version amendments to the Salaries Act to establish these ministerial positions in law for regional development agencies. The change for the Minister of Public Safety and Emergency Preparedness is essentially a housekeeping thing.
For the parliamentary secretaries, it is essentially a tool. It can be used in many different ways. If you read it with the Economic Action Plan, one way it could be used would be to appoint parliamentary secretaries for ministerial positions in respect of FedNor or CanNor or the Federal Economic Development Agency for Southern Ontario. Really, it just allows a greater support for the ministry in their parliamentary functions across the board. It is for the Prime Minister to assign one or more parliamentary secretaries to a minister as the need arises.
Senator Black: Not to put words in your mouth, but you would have me believe, in response to my question, that this is a better governance model and that you are advancing good governance.
Mr. Ward: I work in the machinery of government and I would hesitate to do anything that did not advance good governance. This is how we understand the Parliament of Canada Act and the Salaries Act. It provides a tool for good governance that the Prime Minister may use in many different ways.
The Chair: This committee is responsible for overseeing governments and the machinery of governments. That is why we are asking these questions, to understand why.
Mr. Ward: I welcome that.
The Chair: You understand that.
In Bill C-60 there is a discussion that the Minister of Foreign Affairs has under his or her umbrella two others: the trade side and now the international development side. There are specific provisions in there. There can be three ministers out of that group, three deputy ministers and presumably three parliamentary secretaries. Am I reading that correctly?
Mr. Ward: Yes. For every minister listed under the Salaries Act, that creates the possibility of an appointment of a parliamentary secretary. Any minister with a Salaries Act office would count in the total, and parliamentary secretaries may be assigned to any minister. It is not necessarily one-to-one. Some ministers may have no parliamentary secretary and some with heavy parliamentary duties could be assigned two. That is done at the discretion of the Prime Minister.
The Chair: This cross-appointment is used to describe the changes to Foreign Affairs where CIDA is now part of Foreign Affairs and there is a Minister of Foreign Affairs. The Minister of Foreign Affairs is ultimately responsible for all CIDA activities as well as foreign trade activities, and they are all in his department.
Mr. Ward: I think that is a different relationship. I should have been clearer. When I say ``cross-appointment,'' I only mean that the same individual holds more than one ministerial office, which is the case currently with four ministers, and that is why we do not currently have the maximum allowable size of ministry.
The Chair: The Minister of Foreign Affairs has two other ministries, in effect, in his office. It is foreign affairs, trade and international development.
Mr. Ward: I would speak to this section, which says that any minister that is listed in the Salaries Act will generate part of that maximum allowable number, and parliamentary secretaries may be assigned to any minister.
I am sorry. Perhaps I am not understanding the relationship between the changes at CIDA and DFAIT to the parliamentary secretaries changes.
The Chair: I am not either, and that is why I am asking the question. I do not understand the changes and the increases here in relation to the activity of amalgamating various departments under Foreign Affairs, but my understanding is that there would be — I do not want to call them ``lesser ministers.'' The Minister of Foreign Affairs is responsible for it all, but there are ministers responsible for subsections of it. That is my understanding.
Mr. Ward: I understand it the same way.
[Translation]
Senator Hervieux-Payette: So that we can have a comprehensive overview of the cabinet, how many new ministers will we get? How many ministers will we have? We are increasing this by three points, and where are we starting from? What are we talking about, 30 or so departments? How many departments do we have right now? With these three new departments, how many ministers will we have in all?
Mr. Ward: At present, there are 30 minister positions, according to the subsection. The Prime Minister makes 31. If we were to add three, this would bring the number up to 34.
Senator Hervieux-Payette: Do the ministers of state also sit in cabinet?
Mr. Ward: No.
[English]
I will speak in English so that I do not mix up technical terms. We consider that cabinet is solely ministers. Typically, when we say ``the ministry,'' we mean the ministers and ministers of state, and parliamentary secretaries are not part of the ministry.
[Translation]
Senator Hervieux-Payette: A ``Minister of State'' and ``ministre d'État'' is one and the same thing.
Mr. Ward: Yes.
Senator Hervieux-Payette: So does the minister of state sit in the cabinet?
Mr. Ward: No.
Senator Hervieux-Payette: You just said ``minister of state.''
[English]
Mr. Ward: We say that the cabinet is made of cabinet ministers. I am speaking in English because this is how I understand the terms most clearly. When we say ``the ministry,'' we mean the ministers of state and the ministers, and they are listed on the Parliament of Canada site as the Canadian ministry. Parliamentary secretaries are not part of either the ministry or cabinet.
[Translation]
Senator Hervieux-Payette: That implies that each one will have employees, a chief of staff, a communications person, a policy person. With respect to support staff, how many additional people will be the in budget which will now include these three ministers?
[English]
Mr. Ward: I am very sorry that I cannot speak to that. It would depend on how many individuals were appointed and how many new offices were created. There is a Treasury Board policy with respect to the maximum allowable resources and classifications, but you just said ``global maximum,'' so I am not able to give a price range for establishing different configurations of offices.
[Translation]
Senator Hervieux-Payette: If we do not know how many employees there will be, do we know the total cost that the addition of these ministers will entail? Do we know how much money the government will have to pay for these new ministers? They will no doubt have a chauffeur, they will of course have a minister's office, in addition to their MP office. So there will be some costs. We cannot create a new department without additional costs, unless by magic.
[English]
Mr. Ward: None of these changes necessarily creates any structures on their own, so the government could decide to continue to cross-appoint ministers. It could even decrease the number of ministers or could increase the number by one or two. It is completely within the discretion of the Prime Minister to structure that cabinet and that ministry. The costs could be zero if there are no changes. If the Prime Minister wanted to create new ministerial offices and non- cross-appointed ministers, there would be additional costs for each of those decisions.
[Translation]
Senator Hervieux-Payette: I will ask the question differently. What will the budget be for these three ministers? They will be accountable and will have to allocate budgets to the various activities of the action plan. You cannot be a minister and have absolutely no responsibility for managing economic development. How much money will be assigned to these three new ministers?
[English]
Mr. Ward: I understand the question. I wish I could be more helpful. The problem is that I cannot predict what decisions would be made with these tools. If there were changes in cabinet, the Prime Minister could decide to increase or decrease the number of ministers. There could be decisions about whether to have separate minister's offices for each position or whether the same minister's office would take care of multiple functions. There could be decisions under the Treasury Board policies with respect to ministers' offices to either maximize or decrease the costs associated with those offices.
It would be wrong for me to try to give you a cost on a hypothetical scenario. I can tell you that there are salary costs associated with ministers, approximately $70,000 per minister, although you do not get it twice if you are cross- appointed; you only get it once. The maximum costs would depend on the change between the current state and the future state. If someone is already a minister of state but not a minister and they become a minister, that might be the difference between $54,000 and $70,000 of salary. Depending on whether there was an office to support them and how that office was built, there would be salary costs and overhead costs. I am not able to provide you a more clear answer than that.
[Translation]
Senator Hervieux-Payette: Just as a thought, Mr. Chair, it seems to me that we should have this information included in the next budget, namely, when new positions are created, we need to ensure that the people have budgets to spend. We are in the process of studying a budget, but we do not know what type of responsibilities these people will have, how many staff members they will have, and how much money they will have to administer. I do not know why, at present, these positions were created. As you said, this means that some ministers will simply be wearing an extra hat, which will not lead to much additional cost. I am therefore somewhat confused about the need for having three new ministers and by the fact that we do not even know how they will be operating. We expect this to be spelled out in a budget. But I do not see that here.
[English]
The Chair: Mr. Ward, I understand your position that the Prime Minister has the discretion to determine what appointments will be made, but Parliament previously introduced a cap, so we knew the cap existed. The Prime Minister might not have gone right up to the cap, but now we are changing that. If the difference between this cap and that cap was all filled up, what would the total cost be?
Mr. Ward: I understand the question. I do not have the number right now. I can explain how I would try to get at the maximum theoretical number that could be spent on the ministry. You would imagine that there are no more cross- appointments, as they currently are, and that the Prime Minister has chosen not to maximize the size of the ministry. Look at the salary costs for each of those and then under the Treasury Board policy look at the maximum potential expenditure if there was an office for each one that expended its maximum. That has not been the approach of this government. It gives you a theoretical number, but it does not really express the political reality as well.
The Chair: We understand that. We commend the Prime Minister for his frugalness in not filling right up to the maximum, but we are being asked to change the cap. Perhaps the next Prime Minister will not be quite as frugal and he will not have to come back to Parliament and talk to us. We want to know what we are being asked to potentially expose the taxpayer to.
Mr. Ward: I think it would be the maximum salary costs if each office is held by a senator and the maximum office costs under the Treasury Board policy if the maximum complement of the highest level employees were assigned to it, plus any other incidentals.
The Chair: Could you talk to Treasury Board and work with them to see if you can come up with a figure for us, maximum?
Mr. Ward: I will certainly speak to Treasury Board and try to get back information that would help you put together an understanding of that.
The Chair: Would that help you, Senator Hervieux-Payette? That is what you are looking for?
Senator Hervieux-Payette: It would be nice to an estimate of where we are going, because I certainly do not know.
Senator McInnis: I have a comment. We can talk about the costs for parliamentary secretaries but let us look at the genesis of what we are trying to do here. We are giving more emphasis to two areas of Ontario, presumably under the auspices of the drive of the Economic Action Plan to pay more attention to those regions. Ontario used to be the driving force of the economy of Canada. It suffered and now we are paying attention to it, like the other portfolio with respect to northern economic development. That is the crux of this. There will be a return, and every time we bring about another minister or parliamentary secretary, we must try to understand that benefits will accrue to those respective areas.
We can talk about the costs of a minister, and we now know that we are well under the quota, but there is a reason for doing it. The reason is to pay more attention and to see that there is a voice around the cabinet table with more emphasis on the economies of this region. That is the purpose of it. We can talk about the cost of a minister and a parliamentary secretary, but obviously some thought went into this to do it. I think, quite candidly, it will be a great help to Ontario and the northern parts of this country.
Mr. Ward: Thank you, senator. I have tried as a public servant to be very circumspect about the political use of these tools; that is the way I understand my job. However, in the Economic Action Plan you will see that the discussions in the Salaries Act fall into the headings of ``Helping Southern Ontario Prosper'' and ``Supporting Manufacturers in Ontario.'' That may signal some of the way that the government currently understands the purpose for these amendments.
The Chair: You are quite right. You are not here to defend or even comment on government policy. We understand the policy. There is not always consensus on policy reasons or decisions, but we are looking for impact and the machinery of government that is being proposed here.
You said we are changing the name of the Solicitor General to Public Safety and Emergency Preparedness. Is this just catching up with something that has already been done?
Mr. Ward: This is catching up. The powers, duties and functions of the Solicitor General of Canada were transferred to the Minister of Public Safety, and this catches up and expresses the legal title of that minister in the Salaries Act.
The Chair: We were hoping that it would be catch-up with respect to Indian and Northern Affairs to call it Aboriginal Affairs and Northern Development. I guess that was not a machinery-of-government step that was felt advisable at this stage. Would it take more than a Salaries Act amendment?
Mr. Ward: The legal title of a minister may appear in both departmental acts for which they are responsible and in the Salaries Act. I am not sure in that case how many times it is expressed in law, but as in this case there is a fair bit of cleanup to do to track those changes.
The Chair: That is the one that has been hanging around for a while. When the ministry is here they use the new term, but their official term is still the older one. One of these days we will have to try to catch up on that.
Senator Buth: I have one point of clarification and then a question. The first is a follow-up from Senator Day's comments about Department of Foreign Affairs, Trade and Development. Right now there are three ministers under that new department that exist right now. Foreign Affairs is responsible for the overall department; international trade cooperates clearly with the Minister of Foreign Affairs and now international development, CIDA. There already is a minister, but that is going into the new department. There are no real changes in terms of the Salaries Act required because those ministers will essentially have the same title. Would that be correct?
Mr. Ward: I do not want to mislead the committee. I would like to look at the —
Senator Buth: My comment is just that we currently have those ministers. The configuration is slightly different, but would those ministers still continue under the Salaries Act?
Mr. Ward: That is correct, but I think for the first time a minister for international development will be appointed, and that shows a difference between some ministerial positions which are mandatory — they must be appointed — and others that may be filled.
Senator Buth: That is what we were led to believe when officials from the Department of Foreign Affairs and International Trade appeared before us.
The change would be that each of those ministers could have assigned — not will have assigned — a parliamentary secretary. Is that correct?
Mr. Ward: Any minister may have a parliamentary secretary, or more than one, assigned to them. How that total maximum number is allotted is a matter of discretion.
Senator Buth: A final question: When you have a cross-appointment, what salary is allocated to that minister?
Mr. Ward: The minister is only paid once as a minister. There is a formula that establishes it — I think it is about $70,000 — and that would be paid once to each minister no matter how many Salaries Act offices they hold.
Senator Buth: That is where some of the savings come in in terms of these cross-appointments.
Mr. Ward: Yes, you avoid maximizing the cost of the ministry by cross-appointments.
The Chair: I am still not sure that we understand this foreign affairs situation. At page 87, I am looking at short title under Division 12. Mr. Ward, you indicated that a minister for international development is to be appointed, so that sounds like it is a new minister, and presumably that is going to have to appear in the Salaries Act. The comment is that we already have the minister, and so the Minister for International Trade already appears in the Salaries Act.
Mr. Ward: Yes, under paragraphs 4.1(3)(q) and (r) you will see the Minister for International Trade and the Minister of International Cooperation already listed, so those options currently exist. Until these amendments go through, I do not believe there was a requirement that an individual actually be appointed to that office, and now that is a requirement, I believe.
The Chair: This section now makes it so they will be appointed. It was discretionary previously and is now mandatory?
Mr. Ward: I believe that is the effect.
The Chair: That is the way you read it?
Mr. Ward: Yes.
The Chair: They are already in the Salaries Act and that is really what we are talking about here with these amendments. We do not have to make any amendments.
Mr. Ward: That is right. The only additional ministers are the three for economic development.
The Chair: Okay. Good. I think I am starting to understand the foreign affairs situation.
Mr. Ward, thank you very much for helping us understand this part of the bill. We look forward to your undertaking in relation to the costs so that we can get a flavour for what we are being asked to approve from a financial standpoint.
Mr. Ward: Thank you, Mr. Chair.
The Chair: Colleagues, we are now moving on to page 108 of the bill, Division 16, which is Public Works and Government Services Canada. It is one clause, clause 227.
Mr. Laverdure, please go ahead.
[Translation]
Christian Laverdure, Acting Director General, Policy, Risk, Integrity and Strategic Management Sector, Public Works and Government Services Canada: I am the Acting Director General of Procurement Policies for the Department of Public Works and Government Services Canada.
[English]
I will keep this short, since it is only one clause.
Division 16 proposes to amend section 16 of the Department of Public Works and Government Services Act to clarify the authority of the Minister of Public Works and Government Services Canada to offer the government's tools and services to other jurisdictions, including provinces and territories.
The proposed amendment would clarify that the minister does not have to obtain a specific request from a province or territory before offering the government's tools and services to them and that the Governor-in-Council may give its approval to the minister to do so on a general or a specific basis.
I would now be happy to answer any of your questions.
The Chair: They could not do that previously?
Mr. Laverdure: No.
The Chair: Interesting.
Mr. Laverdure: It had to be a specific request from every jurisdiction, every single time, and it had to be a specific order-in-council for the Governor-in-Council.
[Translation]
Senator Hervieux-Payette: Will we be billing for the professional services to be provided to the jurisdiction? Are we going to be acting as an advisor? What will our role be?
Mr. Laverdure: I will give you an example. At present, each territorial and provincial government provides us with an annual request to purchase vaccinations against the flu, among other things. We must receive a specific request from each of the provinces and territories as well as a specific order-in-coucil for each request. We could simply submit a request to the Governor-in-Council for all of the vaccinations for several years, and that would be more of a general request. Should we do this, we would not need to go through all of the formalities for each and every order-in-council.
Senator Hervieux-Payette: That appears to make sense to me. Do you have any other examples?
Mr. Laverdure: We participate in intergovernmental committees. There are several sectors where Public Works and Government Services Canada have standing offers, online purchasing, very interesting tools for the provinces and territories, for instance. They may want to use them. We have already received requests to use our purchasing services for cars or office furniture.
Senator Hervieux-Payette: I will go back to my original question: will the services provided be billed?
Mr. Laverdure: Our decision has yet to be made. As far as I know, the province pays its share for the vaccinations, but it is not billed for the tool or the negotiation.
Senator Hervieux-Payette: I would just like to point out, Mr. Chair, that we are changing the rules of the game. We are giving federal officials more responsibilities but there has been no cost attributed to this additional work or additional staff, because if this becomes easier, the provinces may want to use it more. I am wondering if that would have an impact on the budget. You are saying that it does not, not for the time being.
Mr. Laverdure: If we have to continue providing more services, if the legislation remains unchanged, we will have to be doing more orders in council, which will probably lead to a greater demand being placed on human resources for both us and the Privy Council, which is responsible for all of these orders in council at present time. This will not require greater resources from us or the Privy Council because we will be doing this in a more general fashion.
Senator Hervieux-Payette: Will this cost less?
Mr. Laverdure: There should not be any additional costs.
Senator Hervieux-Payette: Every time we study a bill that deals with the budget, we need to know what impact it will have on the budget. We are not looking at general administration, we are reviewing the budget. If you are telling me that this change will not have any impact on the budget, I do not foresee any problems.
Senator Bellemare: Have the provinces been consulted? Perhaps the provinces liked to ask, given that this could have an impact on the federal government's spending power. Do they agree with this change?
Mr. Laverdure: We participate in several government-wide committees. We are seeing an increased demand for our services and tools. The demand is there. We are not going to provide our services if they are not wanted. That is not in our agenda. Currently there is increased interest and that is why we have seen an increase in orders in council, explaining why we wanted to change the law.
Senator Bellemare: Could, in turn, some municipalities inform you that they would like to receive certain services, leading you to provide the service without necessarily informing the provincial government that this is going on?
Mr. Laverdure: This is open to all jurisdictions, even international jurisdictions. The words used are relatively technical ``body or person.'' So it is open to many jurisdictions and it is up to the department and the minister to decide whether or not this would be a good thing to provide to the municipalities, should the need arise.
In some jurisdictions, that will lead to purchasing savings. When we talk about leveraging the government spend, that means the more purchasers there are for a tool, the more attractive it is for suppliers to participate. This is in one location so we should get better prices.
Senator Bellemare: That really targets group purchases.
Mr. Laverdure: Absolutely.
Senator Chaput: Was the idea for this change suggested or recommended to you by business people or businesses as there would be an economy of scale for the group? Did you receive a suggestion from the business or private sector?
Mr. Laverdure: The recommendation was made when we met at the government-wide committee to try and see how we could maximise our purchases. It did not necessarily come from the private sector, to my knowledge. No one was against it.
Senator Chaput: When you talk about government-wide service tools that you offer, this can go from A to Z. Do you have a list that sets out the services you offer? Could that be for any request? You talked about vaccinations and on-line purchases.
Mr. Laverdure: We buy almost anything at Public Works and Government Services Canada, except for a few small things that I will not mention. That could range from office supplies to cars, including all of the services you might imagine, including professional services, auditing services, et cetera. We buy it all. We make purchase offers, individual contracts; we mobilize this entire range and that would give the department the possibility of maximizing efficiency.
Senator Chaput: You do not however have an umbrella group with which you work in order to maximize the economies of scale?
Mr. Laverdure: We also work by commodity. We do business with the Information Technology Association of Canada in the area of management of technology and information management. We deal with other associations in various domains; when we work on car purchases, we work with the manufacturers, as well as with the dealers in order to assess the best buying method.
Senator Chaput: Thank you.
[English]
Senator Black: Is there a circumstance where, in your opinion, the Government of Canada could define a provincial need and act unilaterally?
Mr. Laverdure: Not to my knowledge. I do not think it is our job to offer a service if it is not needed, and I think we have enough on our plate.
Senator Black: As long as it is limited to services. I know exactly where you are coming from, but there is clearly a possibility.
Mr. Laverdure: If we think it is a good opportunity we could always offer, but we would not impose.
Senator Black: Thank you very much. That is great.
The Chair: Division 16 is pretty broad — ``any other Act of Parliament'' — if the minister is authorized to do anything under any act.
Mr. Laverdure: Under her act; sorry. I think it means under her act, the DPWGS Act.
The Chair: Under this, the Public Works and Government Services Canada, or ``any other Act of Parliament.''
Mr. Laverdure: That she is allowed to act upon.
The Chair: ``If the minister is authorized to do a thing under this or any other Act of Parliament.'' That means, as legislators, that we are required to go and look through every act of Parliament and find out if the Minister of Public Works has any authority to do anything: to provide a good or service.
Mr. Laverdure: To my knowledge she has two acts that she is responsible for: that is the DPWGS Act and the Defence Production Act, the DPA.
The Chair: Can we rely on you that the minister is not authorized to do anything under any other act of Parliament other than those two?
Mr. Laverdure: I will ask the Department of Justice if the way this is written does not reflect what you have said.
The Chair: That would be helpful, thank you.
Senator Black: That is exactly where my question was going because of the use of language. I understand that our witness is here to talk about streamlining efficiency and housekeeping, but the language goes beyond that, potentially. That is all we need to raise.
The Chair: I think we need to raise it and correct it if we need to. You will help us out with that?
Mr. Laverdure: Yes, I will.
Senator Callbeck: You mentioned requests for cars or office supplies in terms of examples. Are there any provinces or municipalities now that buy cars or office supplies through Public Works?
Mr. Laverdure: Right now the only concrete item that I have is vaccines. That is the only concrete example that I have right now that we are actually doing on behalf of provinces and territories.
They have shown an interest in cars, office supplies and other commodities as well as services. That is why we were looking at it with the potential of having to do this kind of Governor-in-Council approval process that would be onerous. We are trying to find efficiency.
Senator Callbeck: In the services that you could provide, you mentioned auditing. How would that work?
Mr. Laverdure: We put together what we call supply arrangements. A supply arrangement is a call for offers from any group. Let us say this would be going towards accounting firms, small and big. We would say, tell us what your prices would be, and we would have a ratio and you would have to meet certain criteria: X number of years of experience, X number of employees that are senior and junior level and so on. We would establish a supply arrangement, a listing of companies, suppliers, which would be able to offer auditing services at our request.
When a government department is interested in obtaining auditing services externally, they come under our supply arrangement and do what they call a mini competition between the supply arrangement and pick the winner, likely with the lowest price, and use their services. Those are the kinds of services we would provide on a supply arrangement.
Senator Callbeck: You say that right now you are only doing vaccines, but interest has been expressed. Where has interest mainly been expressed?
Mr. Laverdure: The two I know of recently have been office supplies as well as vehicles.
The Chair: The only other outstanding point in my mind is that the amendment in clause 227 of Bill C-60 amends only the English version. Normally that happens when it corrects some disparity in the wording. Can you help us with that? Why is it only the English that is being amended here?
Mr. Laverdure: I noticed that, too, and I have asked about the changes. I think there has been an omission, but I will need to confirm with the Department of Justice.
The Chair: Could you?
Mr. Laverdure: Yes.
The Chair: Along with the other undertaking, that would be helpful to us in determining what, if anything, we should do with this section.
Thank you very much, Mr. Laverdure.
Mr. Laverdure: Thank you.
The Chair: Colleagues, we will now go on to Division 17 at pages 108 to 111, clauses 228 to 232. It deals with the Financial Administration Act.
Mr. Belovich.
David Belovich, Senior Director, Strategic Non-Core Public Administration Compensation Management, Treasury Board of Canada Secretariat: Good morning, chair.
The Chair: Can you help us with those sections?
Mr. Belovich: I will do my utmost. I am David Belovich, the senior director with the Treasury Board Secretariat of Canada responsible for the strategic compensation management area.
[Translation]
In the Economic Action Plan, the government is reviewing various options with the aim of improving the financial viability of Crown corporations, including the rates of compensation. More specifically, the government is committed to working with Crown corporations in order to ensure that the pension plan is largely in line with the Public Service Pension Plan offered to federal government employees.
[English]
To that end, the Government of Canada is proposing to amend the Financial Administration Act to enable the Governor-in-Council to direct a Crown corporation to have its collective bargaining mandate approved by the Treasury Board. A Crown corporation subject to such an order would be required to get Treasury Board approval before entering into collective agreement resulting from that collective bargaining mandate.
Further, with these amendments a Crown corporation would also be required to get Treasury Board approval in advance of fixing the terms and conditions of employment for the Crown corporation's non-unionized employees, with the exception of Governor-in-Council appointments. Specifically, the deputy head would be exempt from that.
I am pleased to answer any questions you may have.
The Chair: The latter part is for non-collective bargaining situations, where there is no collective bargaining. Does setting standards also has to be cleared by Treasury Board before the Crown corporation can establish those?
Mr. Belovich: Correct. The Governor-in-Council could provide the collective bargaining for the unionized. If it was for non-unionized, the Governor-in-Council could also oblige the Crown corporation to seek the authority of Treasury Board before establishing improvements to the terms and conditions of employment for non-unionized employees.
[Translation]
Senator Hervieux-Payette: Welcome, Mr. Belovich. As you doubtless already know, in the private sector, the salaries of the five highest-paid executives are now made public.
In the case of Crown corporations, it is perhaps not five, but rather the top 10 salaries we need to be informed of.
As far as unionized workers are concerned, there are a lot more people and there must also be a relationship between senior management, employees, and the discrepancies.
Will we manage to develop criteria that will not only be objective, but public, if we interfere in the process, and on what bases will you be working in order to be able to participate in collective bargaining and also discover what the salaries of all managers and executive management are?
[English]
Mr. Belovich: I do not have specific insight into any of the compensation situations within the 48 Crown corporations that currently exist.
From a Treasury Board/Treasury Board Secretariat perspective, we are currently almost constantly involved in collective bargaining with dozens upon dozens of collective agreements, bargaining units and bargaining agents. The salaries and the terms and conditions of employment negotiated with the employees of the Treasury Board are benchmarked to the external market predominantly and at the end of the day are set based on the recruiting and retention needs of the government.
I do not have a specific percentage or formula to quote for you, but I can tell you that the government is not in the business of deliberately overpaying above market. If the government does not have a deficiency in a particular employee group, for example, the government is loath, in my experience, to establish compensation and benefits that essentially are not required to attract employees.
In situations where there are shortages, then the government, in my experience, tends to offer very competitive salaries. If the recruitment and retention issue is identified as being short term, for example, the government has traditionally offered allowances to bridge the gap between the federal public wages and those in the private sector for the period of time during which the gap is expected to exist.
[Translation]
Senator Hervieux-Payette: There are two kinds of employees. At the Canada Revenue Agency, employees have the status of quasi-public servants, whereas in other Crown corporations, the relationships are different in terms of comparison. At Revenue Canada, we created an agency in order to be able to move away from public sector pay scales, so that we could recruit people who had the necessary competencies. A high-level tax specialist is not going to work in the department for the salary of an average accountant, because these people earn very competitive salaries in the private sector. When I talk about criteria, that is what I refer to. Will we be aware of the criteria that you will be basing yourself on for the 48 Crown corporations, because it is not just an issue of amounts but on what you base your judgments? You will have to sit at the table to negotiate with these corporations, and so you will have to have a certain objectivity as far as all of these corporations are concerned. Will this be public?
[English]
Mr. Belovich: That is a fair question and I will try to clarify. With respect to Crown corporations specifically, the provisions proposed by the government in this budget bill are not specifically to have the Treasury Board or employees of the Treasury Board do the collective bargaining for the Crown corporations. Essentially, on a case-by-case basis, in the interests of enhanced fiscal oversight, when the government determines that is required, the Governor-in-Council would substitute the Treasury Board ministers for the corporation board for a distinct period of time, and the Treasury Board ministers would, in effect, provide the collective bargaining mandate to that particular Crown corporation.
It would still be the responsibility of the deputy head and the officers of that Crown corporation to effect the collective bargaining process. Treasury Board employees would not be conducting the collective bargaining for them, and so the negotiations they would enter into would be a function of their approved corporate or business plan and to meet the recruiting retention and the operational business requirements as established by the deputy head of that Crown corporation.
[Translation]
Senator Hervieux-Payette: You do not need to be there. You can meet with them before and then set out the plan, because the way it is set out here, it is as though public servants have to be at the negotiating table.
I do not see what public servants would be doing there if the Crown corporations already have a mandate from Treasury Board, that is, it has approved the scales and work definitions. Why would we want to send Treasury Board employees to sit in on the negotiations of 48 Crown corporations?
The impression I get from the way this is drafted is that they will be in the negotiation room, but what will they be doing there?
[English]
Mr. Belovich: Yes, there is a provision. Having been directed by the Governor-in-Council to provide a collective bargaining mandate to a Crown, the ministers of the Treasury Board may direct an employee of the Treasury Board to be an observer during the collective bargaining process.
The role of the observer is basically to sit and listen. The observer is not involved in the collective bargaining and is not part of the employer and is there simply to keep an eye on things from a fiscal probity perspective. The individual from Treasury Board is deliberately not being inserted into the collective bargaining management process of the Crown corporation should a particular Crown corporation be identified under these proposed provisions.
Senator Hervieux-Payette: I still do not think they should be there. If they have a mandate with all of the definitions and all of the scales on which they will be paid — there are maximums and minimums, of course — I do not see why they should be there.
[Translation]
Could we have a list of the affected Crown corporations, because in the bill, at 89.8 in the second paragraph of clause 229, it says that ``the Governor-in-Council may, by order, direct a crown corporation.'' Could we get a list of the Crown corporations that would be subject to such an order? I would like to know which Crown corporations will be impacted by this bill.
[English]
Mr. Belovich: Certainly. All of the 48 Crown corporations currently defined under the Financial Administration Act are potentially subject to an order-in-council direction to the Treasury Board to provide a collective bargaining mandate. All of them that exist could be subject to these particular provisions. None of them currently — because the provisions do not exist — have been made subject to this. All of the extant 48 Crown corporations today could be, at the discretion of the government, made subject to these mandating provisions.
[Translation]
Senator Hervieux-Payette: So it is possible that you would have to send somebody to only three Crown corporations and not to any of the others?
[English]
Mr. Belovich: First, the order of the Governor-in-Council has to specifically identify a Crown corporation. For all of them to be implicated, there would have to have been 48 orders-in-council. If all 48 hypothetically — I do not see this being the case — were directed to be subject to collective bargaining mandates from the Treasury Board, then the Treasury Board would subsequently have to say, in the process of giving each of the Crown corporations their collective bargaining mandate, ``We want an attendee who is an employee of the Treasury Board at each of the sessions that are affected as a function of this order being given by the Treasury Board.''
That is hypothetical and I guess it is the extreme. I do not imagine it would happen that way. I would expect from time to time that the government would identify a Crown corporation or two during a particular bargaining cycle and suggest that Treasury Board, in place of the board of directors of that particular corporation, for a defined period of time — it could be for that round of negotiations or for a particular contract that is being negotiated; we do not know that specifically yet — the Treasury Board would be responsible.
There is no blanket authority within the proposed provisions whereby magically all Crown corporations would suddenly be subject to mandating by the Treasury Board. It has to be a specific, deliberate Governor-in-Council activity on a case-by-case basis.
Senator Hervieux-Payette: Just a word of caution to my colleagues. The Library of Parliament has prepared a document that has quoted ``Canada Post and CN Rail.'' I guess it was supposed to be VIA Rail, as CN is a private corporation, just so we do not confuse that. I do not think we will take over CN. We sold it some time ago. It would cost a bit too much, and I do not think they want us to participate in their negotiations.
Mr. Belovich: No, I would not imagine so.
The Chair: Mr. Belovich, we will not be able to finish this up at this time. We are designated to go to other activities, and I am sure you are as well. Would you be able to return tomorrow afternoon at a time to be mutually determined between you and our clerk so that we can finish this up?
Mr. Belovich: Of course. I am at your disposal.
The Chair: If there are any points that have come out of the first round of questioning that you can help us with, that would be great. Thank you very much.
Honourable senators, I know you have other matters on your agenda. We will hopefully have permission this afternoon to sit out of our normal time. Once we have that permission, we could sit for a short while and hear from one other witness. We will try to meet downstairs in Centre Block so that we can be close to the chamber in the event of anything untoward happening such that we have to be there in a hurry.
We will meet at our normal time tomorrow evening. You will have delivered to your offices a copy of the report with respect to Main Estimates, which supports the main supply that we will be getting shortly. We will deal with that tomorrow evening. We are working with one witness as well for tomorrow evening. We are moving along quite nicely. Thank you.
(The committee adjourned.)