Proceedings of the Standing Senate Committee on
Issue 41 - Evidence - May 29, 2013 (Afternoon meeting)
OTTAWA, Wednesday, May 29, 2013
The Standing Senate Committee on National Finance met in public this day,
at 2 p.m., 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.
The Chair: Honourable senators, this afternoon, we are continuing
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, introduced in the House of Commons on April 29, 2013.
Honourable senators will know that we received permission yesterday from
the Senate to meet out of our normal time, and that is what we are doing at
this time to try to move ahead with this legislation. We expect that we will
be meeting next week in the afternoons as well. We will try to have meetings
here so that we are not far from the Senate Chamber in the event that we
have to return.
This is our sixth meeting on the subject matter of Bill C-60. We will
begin today where we left off yesterday in that warm room. We decided that
we would not push things further yesterday. Where we left off was at Part 3,
Division 17, clauses 228 to 232 in the English version, which can be found
at pages 108 to 111 of the bill.
We welcome back Mr. David Belovich, Senior Director, Strategic Non-Core
Public Administration Compensation Management with the Treasury Board
Secretariat. I cannot imagine the size of that title on your door.
Before I start, I would like to welcome and announce that Senator Wells
has joined us as a permanent member of this committee. We welcome you and
thank you for agreeing to join us.
Senator Wells: Thank you.
The Chair: Mr. Belovich, can you give us a very brief precis of
where we were when we left off and what Division 17 is hoping to achieve?
David Belovich, Senior Director, Strategic Non-Core Public
Administration Compensation Management, Treasury Board of Canada
Secretariat: With pleasure, chair.
By way of introductory comments yesterday, I had mentioned that within
the context of the government's stated intent to work more closely with
Crown corporations to improve their financial viability around compensation
levels, particularly with an intent to more closely align the pension
schemes at the Crown corporations with those across the broader public
service, the government is proposing to make some amendments to the
Financial Administration Act.
Broadly speaking, the first of these would be to enable the
Governor-in-Council to direct a Crown corporation to have its negotiating
mandate approved by the Treasury Board. If Treasury Board had provided a
collective bargaining mandate to a specific Crown corporation, then that
Crown corporation would subsequently require the authority of the Treasury
Board to enter into a collective agreement with regard to the contract
negotiated within that approved mandate.
Concurrently, the changes proposed would also provide the
Governor-in-Council with the authority to direct the Treasury Board to be
the approving authority for a Crown corporation with regard to any changes
to the terms and conditions of employment for non-unionized employees within
that Crown corporation.
The Chair: Are there any parallel situations that exist now where
Treasury Board can have the same oversight and direction with respect to
entities that are in any way related to the federal government?
Mr. Belovich: There is, in fact. The model is very similar to the
mandating protocols that have been in place for the separate agencies over
the past 50 years or so, since the late 1960s. Pursuant to a cabinet
decision in 1967, we have a collective bargaining protocol that applies to
the 26 separate agencies listed at section 5 of the Financial Administration
Essentially, as contemplated here in that particular situation as a
function of other pieces of legislation, most of the separate agencies are
required to get collective bargaining mandates specifically from the
President of the Treasury Board and most of them are also required to get
Governor-in-Council approval to enter into an collective agreement.
The Chair: Could you give us an example of separate agencies?
Mr. Belovich: Sure. Some of the better known ones would be the
Canadian Food Inspection Agency or the National Energy Board, CSIS, the
Communications Security Establishment; Parks Canada agency is a separate
agency as well.
The Chair: Thank you. That is helpful.
Colleagues, yesterday I had a list that we did not get through before we
ran out of time. We still have that list here and I will call on honourable
senators. If your question has been answered or you do not wish to
participate, just pass. Senator Callbeck from Prince Edward Island was first
on my list.
Senator Callbeck: Just so I am clear in my own mind, under this
legislation, the Crown corporation will have to negotiate the mandate or it
will have to be approved by Treasury Board. Once they get a collective
agreement, it has to be agreed to by Treasury Board, right?
Mr. Belovich: That is correct.
Senator Callbeck: That is going to be the situation. Explain to me
exactly what it is right now. You said, I think, that most of them had to
have a collective agreement.
Mr. Belovich: Currently, if my memory serves me correctly, there
are 48 Crown corporations. The Crown corporations that have represented or
unionized employees will negotiate their own collective agreements, and
these proposed changes in this legislation do not amend the actual conduct
of collective bargaining within the Crowns. The collective bargaining
mandates that are applicable to the individual Crown corporations' current
situation are provided by the board of management or the board of directors
that are established to oversee the activities of that Crown corporation.
Yesterday I had mentioned briefly, in passing, what this would do. On a
case-by-case basis, when the government felt that extraordinary efforts were
required, I guess you could say, the Treasury Board would be directed for
that particular round of collective bargaining or for that particular
collective bargaining unit situation to substitute itself as the approving
authority for the collective bargaining mandate for that Crown corporation.
Senator Callbeck: For those two things that this new legislation
is going to bring in, which Crown corporations will be exempt from getting
that mandate? Are there any?
Mr. Belovich: No Crown corporations that currently exist, none of
the 48, are specifically exempted in the legislation. I do not know. I could
not presume to guess which ones the government may identify or, if any,
when, but certainly they are all subject to these provisions on a
case-by-case basis through order-in-council, potentially.
Senator Callbeck: On a case-by-case basis?
Mr. Belovich: On a case-by-case basis.
Senator Callbeck: Some may get exempted?
Mr. Belovich: Not so much exempted, but for argument's sake,
assuming these provisions stand, 10 seconds after coming into force, none of
the Crown corporations would at that instant in time be subject to a
collective bargaining mandate from the Treasury Board because no
order-in-council would have been processed at that point. However, the
government could subsequently identify the XYZ Corporation as a corporation
into which it wished to insert the Treasury Board authority under these
provisions. An OIC would have to be drafted, the Governor-in-Council would
have to approve it and then Treasury Board Secretariat, where I work, would
have to work with the identified directed Crown corporation to determine
what it would recommend by way of its intended collective bargaining
mandate. That would then be analyzed within Treasury Board Secretariat. We
would then, having worked with the Crown corporation extensively, work with
them to put together a Treasury Board submission that would then be
considered by the Treasury Board ministers with regard to whether or not
that proposed mandate would be approved and authorized for the Crown
corporation to execute it.
Senator Callbeck: Something else that is in this legislation is
that an employee from Treasury Board has to attend all of the collective
Mr. Belovich: May be directed to attend by the Treasury Board.
Senator Callbeck: May be?
Mr. Belovich: Yes.
Senator Bellemare: I have a question about some of the wording in
Bill C-60. Certain clauses specifically refer to the Canada Council for the
Arts, the CBC, the Bank of Canada and Telefilm Canada. In every case, it is
stipulated that ``except for sections 89.8 to 89.92'', these organizations
are exempt from the provisions in Divisions I to IV.
Could you please explain what that means? Will those organizations be
given special status? Why is the bill phrased that way? It is very hard to
understand. It gives the impression that they are not subject to the new
provisions. But that is not what you are saying. They are actually subject
to them, like everyone else. Could you please elaborate a bit more on that
Mr. Belovich: I certainly can. I was smiling because I was going
to make a comment about lawyers having drafted it, but that would be
inappropriate so I will not.
It is phrased like this because those particular Crown corporations
currently are exempted from chunks of the Financial Administration Act. To
effect the direction of the government that these proposed provisions or
changes to the Financial Administration Act be applicable to all Crown
corporations potentially, the lawyers suggested that, in subclauses 228(1),
(2) and (3), we needed to make consequential amendments to the various
pieces of legislation to ensure that these Crown corporations were also
subject to these new mandating provisions, if you will. It is simply an
alignment of the changes with extant legislation.
Senator Bellemare: The second concern I have about this bill is
the fact that certain organizations, such as the Canada Pension Plan
Investment Board, the Bank of Canada and even the CBC, require a very
specific and highly specialized workforce. Will the Treasury Board's mandate
take the unique features of those organizations into account? Or is the
objective actually to bring the conditions of employment in line with those
of the public service? Are you able to answer that?
Is there an intention to somewhat respect those unique features? The
Canada Pension Plan Investment Board, for instance, clearly has an entire
pool of workers who specialize in the financial market and their rate of pay
may not be the same as that of employees who work at the Department of
Finance. Will those unique situations be taken into account?
Mr. Belovich: The answer to both parts is yes, and I will explain.
I am not trying to be flippant when I say that.
In my day-to-day duties, I work closely with the separate agencies for
their collective bargaining mandating and negotiating, so I understand the
mechanisms of the process. We have not done this yet for the Crown
corporations, but we certainly have been party to enough meetings and
discussions that the folks that will be leading this within the Treasury
Board Secretariat are very much going to take the lead from how we currently
conduct business with separate agencies.
The short answer is that we readily acknowledge as a central agency that
we do not understand the intricacies of every other employer out there and
their operations. The fact that they are set up as separate and distinct
employers in the first place means that they are doing stuff that is
manifestly different from how things are normally done within the core
public administration. That does not mean there is not a requirement for
independence and accountability. There is not necessarily a disconnect
there, so to speak. However, certainly what we do with separate agencies —
and my understanding is that this will be a similar process pursued with
Crown corporations identified — is we need to sit down with a Crown
corporation. We have to understand what their operational requirements and
priorities are. All the Crown corporations currently do corporate plans
annually anyway that are approved by the Treasury Board, so there is a
degree of understanding of the operational requirements and uniqueness of
the various Crown corporations that will certainly help to inform us on
moving forward on this particular process for any particular Crown
The answer is, is there an appetite to normalize? I do not think I have
ever heard anyone say that everybody should have exactly the same as
everyone else. However, it is a very large public service and an extremely
expensive public service, billions and billions of dollars. I understand the
government is very much attentive to the fact that if there are going to be
differences, they must be demonstrably necessary to exercise the operations
of a particular Crown corporation, not simply because one particular Crown
corporation went one particular direction during one particular set of
Senator Bellemare: Are we to understand that the mandate will be
general, perhaps a guideline, and nothing too specific?
Mr. Belovich: No, the mandates are extremely specific. We would
call it the pattern, and it is out on the street and in the public domain on
websites and whatnot. Through the last round of collective bargaining, for
example, the government determined that it, to use the translated term, was
going to normalize the severance pay regime so it was more aligned with what
existed in the private sector. That was part of the mandating that was
provided, and that is well understood. The bargaining agents know that.
The government settled with the Public Service Alliance of Canada early
on with the 1.5, 1.5 and 1.5 per cent for the three years relative to that
particular round. Those details were specifically in the mandate.
As much as possible, the mandate will identify the expectations. That
does not mean there cannot be flexibility in the mandate. That does not mean
that the mandate cannot say, for example, that in this particular situation
for this particular restructure we will not tell you exactly how to do it at
what level, but we will tell you that you cannot spend more than $2 million
total and that if you do need to spend more than that, you have to come back
Broadly speaking, it is about aligning and rationalizing compensation.
Specifically, as the government has identified in a number of fora, the
intent here focuses particularly on the pension schemes, to make them viable
and affordable and ensure that they are going concerns.
Back to my earlier comment, flexibility, absolutely, and specificity, as
much as required, to meet the government's intent.
Senator Bellemare: Thank you very much for such a clear answer.
Senator Black: Thank you very much for being here. Like my friend
and colleague Senator Bellemare, I find your answers clear and succinct. I
Mr. Belovich: That you very much. You are very kind.
Senator Black: I want to ensure that I have a clear understanding.
I have the overview that, from this moment forward, negotiating mandates
will go forward to the Crown corporations; is that correct?
Mr. Belovich: Could, may, depending on every case.
Senator Black: Absolutely.
Help me. How do I interpret subclause 228(3)? This is replacing
subsection 85(1.1). How should I read that?
Mr. Belovich: Further to your colleague's question, is this about
the Canada Council for the Arts, the Canadian Broadcasting Corporation, et
Senator Black: The problem is that when my colleague started, I
was having interpretation problems. If you answered that, I missed it. That
is what I want to understand.
Mr. Belovich: Essentially, at the front end of the act, the
lawyers do what the lawyers need to do. They scrubbed down all the Crown
corporation acts. They looked at what we were planning on doing. They
determined that aspects of the Financial Administration Act do not currently
apply to certain Crown corporations in certain circumstances as a function
of a certain piece of legislation. They had to come up with language that
said the government's intent by way of drafting instructions is that these
new mandating things for unionized and non-unionized may be applied to all
Crown corporations. Accordingly, tweak the legislation to ensure we can
reach out and touch them.
Senator Black: Good. That is not an exemption but in fact an
Mr. Belovich: Correct; absolutely.
Senator Black: That is very helpful.
I would like to talk to you for a moment about — and this is my language,
not yours — the regulation of non- unionized employees' salaries, excluding,
as I understand from yesterday, order-in-council appointments; correct?
Mr. Belovich: Correct.
Senator Black: I am now the CEO of CBC. Going forward, the intent
would be to have input on the salary range applicable to the President of
Mr. Belovich: Not so much the president as a GIC appointment.
However, if the President of the CBC, for example, decided that for all of
his or her unrepresented and non-unionized employees a 5 per cent pay
increase was in order, the government may in fact insert itself and say we
are not sure we can entirely afford that or, quite frankly, that you can
afford that. That is strictly hypothetical. You used CBC, so I mentioned it.
Senator Black: The process would be that the government would have
a right of approval.
Mr. Belovich: In that particular case, yes. Should the
Governor-in-Council direct the Treasury Board to be the approving authority
for a particular Crown corporation for unrepresented or non-unionized
employees, then essentially the Crown corporation would be obliged to submit
to the Treasury Board Secretariat for analysis of what it or the deputy head
of that Crown corporation intended to do for the non-unionized employees.
Senator Black: The process, if I understand you correctly, is that
the government would have to signal to the corporation in question that you
want to have input, however you define that, in respect of salary range. Is
that how that works, or do I, as the corporation, submit to you my proposed
list of names and salaries and that is what you approve? That is what I want
Mr. Belovich: That is what I would anticipate. With my background,
I would expect it to be unusual that Treasury Board would be given the
authority for unionized and not for non-unionized concurrently because the
two are intimately linked. In the case of the non-unionized, one would
anticipate that the process would be something like the Governor-in-Council
directs that the XYZ Corporation shall have, apart from other things, any
improvements or changes to terms and conditions of employment for
unrepresented or non-unionized employees approved by the Treasury Board. We
would then reach out and say, ``What are you looking at? Talk to us. We will
tell you what is within the realm of possibility. Ideally what you submit to
us is something Treasury Board can say yes to. If not, this could be a long
back and forth discussion.''
Senator Black: That is your expectation of how the process would
Mr. Belovich: That is my expectation.
Senator Black: Would it cover independent contractors in these
Mr. Belovich: The focus here is solely on the setting of
compensation that would otherwise be established by the employer and not
contracting relations. It is employer/employee relationship-type stuff.
Senator Black: What if I am an on-air personality with CBC but am
not an employee? I am a highly paid lacrosse commentator. Would you or the
government have any ability to control what is paid to me?
Mr. Belovich: Through these proposed changes, I cannot see how
that can be affected. Whatever else is out there, I am not an expert on
Senator Black: Just with this.
Mr. Belovich: This is solely an employee/employer relationship in
terms of compensation.
Senator Gerstein: Mr. Belovich, thank you for appearing here. My
first question is not directly related to Bill C-60 but comes from the
opening comment from our chair. I am fascinated by your title: Senior
Director, Strategic Non- Core Public Administration Compensation Management.
That begs the question, is there a senior director of core public
administration? I have no idea what either of them might be.
My second question, and I will give it to you now, does relate to Part 3,
Division 17. Reference was made that Treasury Board might have an employee
present at these hearings. I am surprised, and if you could clarify, that
``employee'' has such a wide range. I am assuming it must be under the
jurisdiction of the secretary of the Treasury Board, but under the
secretary, officer? Why is it such a broad description of who might be the
Mr. Belovich: We actually thought it was narrower from what it
started out with. The short answer is yes, there is a director and senior
director of core public administration. The core public administration
comprises those individuals and those entities for which Treasury Board is
the employer. The non-core public administration comprises the separate
agencies. In my portfolio, I also look after the compensation of benefits
for the Canadian Forces and for the Royal Canadian Mounted Police.
Senator Gerstein: Thank you for that clarification.
Mr. Belovich: In terms of the identity of the individual, we
started out thinking it could be someone ``under the jurisdiction of'' and
the lawyers said, ``No, we want an employee.'' The individual is there to
represent the interests of the Treasury Board if Treasury Board is so
directed to exercise specific authority by the Governor-in-Council. At the
end of the day, the individual has to be accountable under the code of
ethics, et cetera, for the Treasury Board Secretariat. It could be any
person who is an employee. The reality is that it would need to be someone,
obviously, from my line of work; that is, someone who has been involved in
collective bargaining and labour relations for enough time that the person
sitting there quietly not intervening, not participating and functioning
only as eyes and ears with the focus of the Treasury Board's finance hat as
opposed to employee hat; someone who understands what is happening and can
perhaps flag in their head that if something is going sideways through the
Governor-in-Council direction, it needs to be reported back perhaps to the
Senator Gerstein: I use the term ``in reality'' what it means. In
reality, how big a range is that?
Mr. Belovich: How many people are there?
Senator Gerstein: I am not thinking how many people as distinct
from how many levels of management could that conceivably be within your
Mr. Belovich: Oh, several.
Senator Gerstein: Several. Not many?
Mr. Belovich: We have AS2s and 3s doing administrative support
Senator Gerstein: That is what you would picture would be the type
of individual that might be involved in this?
Mr. Belovich: The type of individual I would expect to be at this
would be someone that we would call an EX minus 1; that is, a senior
administrator who has been doing this for several years in a leadership role
and someone who had functioned as a negotiator previously, that kind of
idea. It would certainly be someone with a specialty in labour relations and
Senator L. Smith: How many levels are there?
Mr. Belovich: I do not know how many levels there off the top of
my head. There are lots. I could not list it. Depending on the group,
whether you are an AS, an administrative support person; or an economist, or
a computer science, they vary depending on —
Senator L. Smith: On average, if you had to make a generalization?
Mr. Belovich: Where I work, it is a PE, essentially an analyst
compensation-type person. They start at two and go up to six. Then you kick
into the EX side of the house and they start at 1 and go up to 5.
Senator L. Smith: Those are the levels within that level?
Mr. Belovich: Those are the levels within. There would be 2, 3, 4,
5, 6 and then 1, 2, 3, 4, 5.
Senator L. Smith: In general, how many classifications would there
be of different types of employees?
Mr. Belovich: I could not tell you off the top of my head. There
is another senior director who looks after the same group, but I do not have
her portfolio memorized, unfortunately.
Senator L. Smith: Thank you.
The Chair: I think this is helpful. You indicated that an EX
starts at 1 and goes up to 4, but you also mentioned earlier in relation to
a question from Senator Gerstein that there is an EX minus 1 in there. How
many minus categories do you have?
Mr. Belovich: The EX minus 1 is colloquial, in this particular
case, for the level 6 person. It is the person immediately subordinate to
the entry of the executive cadre.
Senator Chaput: I want to make sure I have understood correctly.
The act is being amended to allow the Governor- in-Council to direct a Crown
corporation to have its negotiating mandate approved. In other words, a
Crown corporation can be told that it has to have the Treasury Board's
approval before signing a collective agreement; it can also be told to
obtain approval before setting the terms and conditions of employment of
non-unionized employees. Is that right?
Mr. Belovich: Yes.
Senator Chaput: These provisions apply to 48 Crown corporations.
The decision as to whether or not the organization will be subject to those
conditions will be made on a case-by-case basis, is that correct?
Mr. Belovich: Yes.
Senator Chaput: Is that decision made on a case-by-case basis? Who
makes the decision, recommendation or suggestion as to whether the
provisions should apply or not? Are there criteria?
Mr. Belovich: There are none that I am aware of, currently. I
would anticipate that, ultimately, there will be a senior level in the
government that would identify which Crown corporation. In terms of an
ongoing process, the Treasury Board of Canada Secretariat works closely with
all the Crown corporations constantly. There is a corporate plan, as I
I would anticipate that were the bureaucrats responsible for a specific
Crown corporation's corporate plan to identify concerns with regard to
compensation, with regard to financial viability, more broadly with regard
to certain compensation decisions, that could be flagged up the chain of
command to the secretary. The secretary may signal it to other deputy
ministers, and it might get the attention of the government at some point.
One would then anticipate that someone on high would reach down and say, ``I
think we will trigger these particular new provisions for this particular
Crown corporation for this period of time.''
Senator Chaput: According to what you just said, those
organizations were evaluated. If the evaluation revealed any weaknesses or
shortcomings in the organization, could it then be subject to the provisions
Mr. Belovich: Based on my understanding, I would just refine that
excellent summation ever so slightly to say that the analysis is ongoing and
it has been forever and ever; it is a function of what will pop out of that.
This is simply a new tool in the government's tool box to be able to say
that this particular Crown corporation has perhaps worried us for a while,
for whatever reason, and we would like to go in and take a look around and
have a discussion with them on where they are going.
Senator Chaput: At that point, would there be a discussion with
the organization before it is required to go through those steps?
Mr. Belovich: Absolutely. As someone who has been working with the
separate agencies for a number of years now, I could not fathom being able
to reach out unilaterally to the Parks Canada Agency and say, ``Here is what
you are going to do this time. I do not care what is really happening with
you or what your problems really are.'' That is not the way business is
We have to understand what matters to them, what makes them tick and what
is unique about them. Again, they would not have been set up as a separate
agency. In this case, these Crown corporations would not have been set up as
Crowns if they could have just been integrated into departments.
We cannot unilaterally swoop in and pretend that we are high and mighty
and tell them how to live; it will not work. There is a bit of pull and push
Senator Chaput: It will require more work. Will you need more
Mr. Belovich: The decision has been made that we will not be
requiring more human resources, so we will absorb this as part and parcel of
our normal function. That is my understanding at this time. If the
government decides in its wisdom to identify a corporation or two, I do not
expect it will break any organizations.
If, for some unfathomable reason, all 48 Crown corporations would be
subsumed by this new approach suddenly, then certainly there would have to
be discussions about incremental resource requirements. However, if this is
not to happen frequently and is not to happen for extensive durations, then
I cannot imagine that we would need — if anything — more than a resource or
two to help us get through the tough parts.
Senator L. Smith: How are you presently set up resource-wise to
cover your mandate? What do you have in terms of resources?
Mr. Belovich: We are pretty lean and mean. I have a staff of 12
people to look after 28 employers. My counterpart has a similar construct
except that he also employs all of the core public administration
negotiators, so he has more people, but these are people who are out with
the bargaining agents at tables constantly.
Senator L. Smith: Your people do what, as a role?
Mr. Belovich: I have a junior and senior analyst, for example,
with the Royal Canadian Mounted Police and two with the Canadian Forces.
They are responsible for understanding the entire policy suite for personnel
benefits and compensation for each of those organizations. They are
responsible for facilitating Treasury Board submissions for pay increases,
new benefits, new policies — the Fort McMurray allowance, for example, is
the one we did last year — and the cadet recruitment allowance for Depot
that was recently renewed for a period of time by the Treasury Board
ministers. We work closely with the RCMP for those sorts of things. With the
Canadian Forces, it is the same sorts of things. We have heard in the media
about hardship and risk allowances in Afghanistan. That is part of my
portfolio, so we work closely with the Canadian Forces to ensure those
processes are refined and responsive to Canadian Forces' needs.
Senator L. Smith: Are those people on-site with those particular
Mr. Belovich: Those people are around the corner from my office at
400 Cooper. As required, we jump on a bus or in a cab and head over to meet
people from time to time to ensure we keep our finger on what is making them
The Chair: Would you also include oversight of the reaction to the
Supreme Court decision — or maybe it was the Federal Court of Appeal
decision — in National Defence for the clawback situation on pensions? Is
that part of your area?
Mr. Belovich: Not of mine, specifically. Treasury Board of Canada
Secretariat has a separate sector that deals with pension benefit schemes,
disability and whatnot. However, it is certainly within the same umbrella
organizations — yes, under the secretary.
Senator Buth: Can you provide specific examples of Crown
corporations where you are aware that this legislation might have prevented
financial issues relative to terms and conditions of employment?
Mr. Belovich: I do not have any examples for you, which may have
been why they selected me to come here. I am not with the group in Treasury
Board that actually works on corporate plans. We are the negotiations types.
I do not know specifically, hand on heart, of any particular Crown
corporation that is under the microscope.
One would assume that if these provisions are being put in that they are
being put in for a reason. However, I do not personally have any insight
into a particular Crown corporation.
The Chair: Mr. Belovich, we thought you volunteered to be here. I
am sure you will next time.
Senator McInnis: I sitting here, listening. When I read that this
was coming in, I was surprised that it actually was not there in the past.
It is important when you have this many Crowns that could go off on their
own and negotiate contracts. It was a surprise to me.
When I was in government in Nova Scotia, I used to pretty much know the
percentage of the budget in terms of salaries. What would it be in these
Mr. Belovich: I do not have that figure.
Senator McInnis: Generally speaking, would it be 50 per cent or 60
Mr. Belovich: I do not think it is that high —
Senator McInnis: It is not far from it.
Mr. Belovich: — but it is a lot of money.
Senator McInnis: Yes, it is. If governments will control spending,
obviously these are huge budgets for these Crowns. If you are to control on
behalf of the taxpayers of Canada, it strikes me that this is just great
legislation. I would have thought that it would have been put in place some
It is not a witch hunt; it is nothing like that. It is just looking
after, as the Treasury Board should, the estimates and the costs of
government. This is a huge government, as you said, and there are billions
and billions of dollars in salaries. These 18 Crowns, or whatever, are
I congratulate the government for doing it, because I just would have
thought it was there. I was surprised to see this legislation coming in. I
think it is a wonderful thing, Mr. Chair.
The Chair: Thank you for that.
The Canada Labour Code applies to these various Crown corporations, does
Mr. Belovich: Yes, it does, senator.
The Chair: Would this legislation replace part of the Canada
Labour Code, or supplement it?
Mr. Belovich: It would not. We were given clear direction that we
were not to supplant any of the authorities, rights and responsibilities
within the Canada Labour Code. There is language within the changes being
proposed that specifically say that directors are obliged to effect orders
from the Treasury Board. It goes on to say that directors are indemnified if
they act in good faith in concurrence with their duties under the Financial
It is all linked back to the Canada Labour Code. This is not about
replacing that in any way, shape or form. If a bargaining agent in the
process should determine that somehow this is unfair labour practice, they
would be within their rights to exercise, under the Canada Labour Code,
whatever provisions were there to pursue that. That is again to reinforce
the intent to support the Canada Labour Code, which is why one of the other
provisions here specifically says if an employee of the Treasury Board is
directed to attend, then that employee has a right to be there. That is to
anticipate those types of considerations and concerns.
The Chair: Thank you very much. I think you have explained these
sections very well and succinctly. We appreciate your attention and for
coming back a second time to help us get through it.
We will be going to Division 18 next. This section is Keeping Canada's
Economy and Jobs Growing Act. We are amending that particular act. We will
find out shortly, but it is just section 233. I think it is only one
We are very pleased to welcome Sébastien Badour, Principal Advisor,
Policy and Communications, Policy and Planning, from Infrastructure Canada;
Louise Atkins, Director of Planning, Monitoring and Reporting, from
Aboriginal Affairs and Northern Development; and from the Department of
Finance, we have Ross Ezzeddin, Director, Sector Policy Analysis, Economic
Development and Corporate Finance.
Ross Ezzeddin, Director, Sector Policy Analysis, Economic Development
and Corporate Finance, Department of Finance Canada: I am here in place
of Ms. Lajoie.
The Chair: We are happy you are here. Will you be giving us a
background on this particular division?
Mr. Ezzeddin: Yes.
The Chair: You have the floor.
Mr. Ezzeddin: As mentioned, this division consists only of clause
233 and it would amend the Keeping Canada's Economy and Jobs Growing Act of
2011 related to the Gas Tax Fund. As members of the committee are likely
aware, the Gas Tax Fund is one of the mechanisms through which the
government provides support for infrastructure. In this case it is stable,
predictable funding specifically for municipal infrastructure.
The amendments contained in Bill C-60 are for two purposes. First, they
would allow for increases to the sum that may be paid under the Keeping
Canada's Economy and Jobs Growing Act for the purposes of the Gas Tax Fund.
Economic Action Plan 2013 proposes to index the Gas Tax Fund at 2 per cent
per year starting in 2014-15, with the increases to be applied in $100
As it stands now, the current legislation defines the sum that can be
paid under the Gas Tax Fund at $2 billion per year. The amendments would
increase this sum by $100 million per year when an underlying calculation,
which is defined as the initial sum of $2 billion increased annually by 2
per cent, reaches the next $100 million threshold.
Overall, these increases will provide an additional $1.8 billion in
funding over the next 10 years. The brief material you have been provided
gives a numerical example of how this works, but I can work you through that
at the end of my presentation.
The second purpose of the amendments is to allow for sums to be paid
under the statutory authority on the requisition of the Minister of
Aboriginal Affairs and Northern Development. As was mentioned yesterday, the
minister's legal title is still the Minister of Indian Affairs and Northern
Development, so that is what is actually contained in the bill. Economic
Action Plan 2013 proposes that funding will be allocated within the Gas Tax
Fund to First Nations infrastructure based on First Nations population on
reserve. This allocation will be delivered through the First Nation
Infrastructure Fund, which is a program managed by Aboriginal Affairs and
Northern Development Canada. The amount for First Nations infrastructure
will be set in terms and conditions that will be approved by Treasury Board.
For a bit more detail in terms of how this mechanically works in the
bill, clause 233 essentially creates subsections under section 161 of the
Keeping Canada's Economy and Jobs Growing Act. Subsection 161(1) replaces
the previous section 161 to allow for sums to be paid on the requisition of
Minister of Aboriginal Affairs and Northern Development. It removes the
reference to a permanent sum of no more than $2 billion per year and
replaces it by a reference to a new subsection 161(2).
The new subsection provides for the sum that may be paid under the Gas
Tax Fund to be increased by $100 million when the underlying calculation
defined in the next subsection, 161(3), reaches the next $100 million
Finally, the new subsection 161(3) provides the formula for the
underlying calculation to determine the amount that may be paid in
subsection 161(2) and that is a formula that reads A x 1.02 to the power of
B, where A is $2,000,000,000 and B is the number of years over which the
increases compound starting in 2014-15.
The Chair: Does that formula provide for compounding after the
$100 million is added after three years? According to my calculations, it
will take three years before anything is added; is that correct?
Mr. Ezzeddin: That is correct.
The Chair: After the fourth year, it is $2 billion plus $100
million that has been put in there, and then there is 2 per cent of that
that will start happening for the future?
Mr. Ezzeddin: The underlying calculation is not effected, so the
underlying calculation after the third year is, I think, $2.122 billion. It
is that amount that will continue to be indexed going forward.
The Chair: It is compounded.
Mr. Ezzeddin: Yes, that is correct. You do not start over each
time; the increment is applied on top.
The Chair: That is important from the municipality's point of view
to understand. There is a built-in growth factor for them as well.
Mr. Ezzeddin: That is correct.
Senator Callbeck: That $2 billion is coming from the Consolidated
Revenue Fund rather than a special fund set aside that has the federal
Mr. Ezzeddin: That is correct, yes.
Senator Callbeck: Does the $2 billion have any relationship to the
amount of money collected by the federal government through the taxes on
gasoline, or is this the figure that was established?
Sébastien Badour, Principal Advisor, Policy and Communications, Policy
and Planning, Infrastructure Canada: Roughly speaking, it is equivalent
to revenues from 5 cents of the gas tax. The total of the gas tax is 10
cents, so $2 billion is the equivalent of 5 cents.
Senator Callbeck: Basically, the federal government is giving the
municipalities 50 per cent.
Mr. Badour: It is a rough relationship. That was the relationship
when it was introduced in 2005.
Senator Callbeck: It is based on per capita, right?
Mr. Badour: It is the current formula for this year and the
government still has not decided on the formula starting next year. The
current formula, the total amount nationally is $2 billion a year. P.E.I.
and the territories each get $15 million and the rest is allocated among the
other nine provinces and First Nations on a per capita basis. It is largely
per capita, but there is a base amount for P.E.I. and the territories.
Senator Callbeck: That is good to hear.
It goes to the municipalities. I assume the cheque goes from the federal
government to the province, and it allocates it to the municipalities. Does
the municipality have to be a certain size in order to take advantage of
this tax refund?
Mr. Badour: Typically in most jurisdictions pretty much every
municipality gets a Gas Tax Fund allocation. The exact formula in each
province or territory varies. In some provinces, some is allocated based on
transit ridership and the rest is per capita. In other provinces there is a
base amount irrespective of the size of the municipality, and the rest is a
per capita amount. There are huge variations across the country, but pretty
much every municipality gets an allocation.
Senator Callbeck: Is that up to the province or is it worked out
with the federal government?
Mr. Badour: It is set out in the funding agreements that Canada
signs with the provinces and territories.
Senator Black: I have a couple of basic questions so I can
understand more fully what you have shared with us. Is this new money?
Mr. Ezzeddin: In what sense?
Senator Black: In terms of infrastructure, the application of
funds for the gas tax. Is this something new that is being proposed here?
Mr. Ezzeddin: What is new is that starting in 2014-15 the amounts
are amounts that were not part of the previous infrastructure plan and the
indexation of the scheduled increases are also new.
Senator Black: Starting in 2014-15 it is a new $2 billion or 5
cents a litre as you indicated. Is that correct?
Mr. Ezzeddin: It was not part of the previous infrastructure plan
or the current Building Canada Plan.
Mr. Badour: When the program was introduced in 2005, 10 cents gave
you $4 billion. Since then, there has been a bit of movement. There was
never a hard direct relationship; so like I said, it was a rough link. That
was when the program was introduced in 2005.
Senator Black: The point that I want clarification on is that in
2014-15 this is new money, an extra $2 billion for infrastructure projects
for the identified parties.
Mr. Ezzeddin: In 2013-14 municipalities are receiving $2 billion
from the program in the current fiscal year. They will receive $2 billion
again in 2014-15 and the first increase from that amount will be in 2016-17.
Senator Black: The answer to the question I am asking is: No, it
is not new money; it is an existing program.
Mr. Ezzeddin: In terms of comparing the levels that is correct.
This is an existing program.
Senator Black: If I were the Mayor of Saskatoon, would I
anticipate an opportunity to access larger amounts of money from this
funding for buses or sewers or other infrastructure needs?
Mr. Badour: The first step will be to determine how the national
amount will be allocated amongst the provinces, territories and First
Nations. The second step will be for Canada to negotiate with Saskatchewan
an allocation formula for the Saskatchewan allocation.
Senator Black: Part of the mix is provinces as well
municipalities. If I am the Province of Alberta and I want to build a high
speed train between Calgary and Edmonton, I could talk to you about it.
Mr. Badour: This program is strictly for municipal and First
Nations infrastructure. We do not cover provincial infrastructure, unless it
is municipal-type assets that, on an exceptional basis, are delivered by a
province. Those are exceptions. This is for municipal and First Nations
Senator Black: In the last part of 161(1), I read, ``to provinces,
territories, municipalities, municipal associations . . . and First Nations
. . . .'' I would have read that to be broader than just municipalities.
Mr. Badour: Those are the recipients. Under the current program,
the initial recipients of the federal money tend to be the provinces and
territories. They are essentially a flow-through for the funds to be
allocated to the municipalities. The wording at the very end specifies that
the purpose of the funding is for municipal, regional and First Nations
Senator Black: Good. That is helpful.
The Chair: I note the section that Senator Black was referring to
states ``may be paid.'' Presumably if the federal government cannot arrange
a distribution agreement with the province, then it will not be paid. Is
that reason for the word ``may'' rather than ``shall?''
Mr. Badour: One reason, yes. Before we can flow the funds, we need
funding agreements with the provinces and territories.
A second reason may be that historically when a province does not respect
certain terms of a funding agreement, for example, we may withhold the funds
in a given year until they rectify the problem. In that year, for example,
we would be paying less than the amount provided under the legislation
because we are holding back the funds until they fix the problem.
The Chair: Is there a matching requirement in the existing funding
Mr. Badour: No. Under the existing funding agreements, federal
cost-sharing can go up to 100 per cent.
The Chair: Is it determined province by province?
Mr. Badour: No. It is done nationally. For projects from
Newfoundland to British Columbia to Nunavut, the cost- sharing many
provisions are the same.
The Chair: You indicated that you are in negotiations for the next
round of funding. Is that right?
Mr. Badour: We will have to negotiate, but we will not be able to
start the formal negotiations before the bill passes and Treasury Board
approves the terms and conditions of the program.
Senator Buth: Is this the first time that First Nations are being
Mr. Badour: Since its inception the Gas Tax Fund has had a First
Senator Buth: Why is the addition of the Minister of Indian
Affairs in the bill?
Mr. Ezzeddin: At the time that the legislation was put in place
two years ago, it was not clear what the mechanics would be to deliver that
allocation. Now it is clear in the budget that it will be delivered by a
program managed by the Minister of Aboriginal Affairs and Northern
Development. He or she needs to be named in the bill in order to effect that
Senator Buth: You made a comment about how the dollars are
divided, $15 million each to P.E.I. and the Northwest Territories, and the
rest between the remaining provinces and territories. What about First
Nations? How is that amount determined?
Mr. Badour: That is the current allocation formula. In terms of
First Nations, we treat them like a province. We calculate using population
data from AANDC to tally up the population, which is roughly 400,000. We
base their per capita allocation on that population.
Senator Black: I want to confirm that the allocation for provinces
is based on per capita. Is that how it will be done?
Mr. Badour: I cannot speak to the funding starting next year
because the government has not made a decision on the allocation formula.
Senator Black: What was it historically?
Mr. Badour: Historically, P.E.I. and each of the territories
receive a base amount. The rest of the funding is allocated among the rest
of the provinces and First Nations on an equal per capita basis.
Senator Wells: Is the money destined for each municipality or will
it be dependent on a provincial list for specific municipalities?
Mr. Badour: The funding agreements have an allocation formula.
Historically, the formulas have been such that pretty much every
municipality has an allocation.
Senator Wells: Are there incorporated municipalities?
Mr. Badour: Yes, there are incorporated municipalities, and we
have been trying to cover unincorporated municipalities as well, sometimes
through the province.
Senator Wells: Not every municipality may have projects ready. Can
that money destined for a specific municipality be banked or does it have to
be disbursed on a project-specific basis?
Mr. Badour: Under the current program, the funding can be banked.
Senator Callbeck: I have a quick question on the allocation. You
said that it has not been determined for this year. You mentioned that last
year Prince Edward Island was guaranteed $15 million. How often does this
allocation formula change?
Mr. Badour: The allocation until this year is set. Starting in
2014-15, depending on when we negotiate agreements with the provinces, we
would need to determine the allocation of the funding. In this case, we have
not made a decision on the allocation formula or on the time frame of the
agreements. However, the time frame of the new Building Canada Plan is 10
years; and this initiative is part of that plan.
Senator Chaput: Is it a 10-year agreement?
Mr. Badour: A final decision has not been made on that. I can say
only that it is part of the new Building Canada Plan, which has a 10-year
Senator Chaput: How many years was the previous agreement based
Mr. Badour: It started in 2005. The initial agreement was from
2005-10 and was extended for another four years to 2014. There has been one
agreement that was amended and extended. The agreement covered 2005-14.
Senator Chaput: Is all of the money to be spent in this five-year
time frame of the agreement? If in the last year there is money left, do
they keep it or is it taken back?
Mr. Badour: It would not be taken back.
Senator Black: I have a question that arose from something that
Senator Callbeck raised. In terms of the infrastructure projects funded
under this program, does the Government of Canada prioritize what types of
infrastructure they want the money spent on?
Mr. Badour: The federal government sets eligible categories, such
as public transit and local roads. We will be expanding them as per the
economic action plan 2013. We only set the categories. Within those
categories, municipalities can choose which projects to go forward with
based on their priorities.
Senator Black: That is helpful. Are you able to share with us what
those categories are?
Mr. Badour: Sure. They are in the budget, but I can provide that
The Chair: That concludes all senators who have indicated an
interest in understanding Division 18. I thank each of the witnesses for
being here. We appreciate your help in understanding this division.
Colleagues, that is the end of the bill. There is a schedule, but I do
not think you want to go through the schedule of items that appear as I do
not think it would be helpful to us.
The next step will be to talk about areas either outside or within
government that have been or will be impacted by this proposed legislation.
If there are any witnesses that you would like to hear from, please let the
steering committee know as quickly as possible because we expect to get
under way with witnesses soon with a view to trying to finish Bill C-60 by
the end of next week, other than the report. That is what we are working
towards. If we do not hear from you, then areas that we highlight will be
determined by the steering committee. We will try to find appropriate
witnesses for those areas that we decide to highlight.
Before I conclude the meeting, I would like to thank Ms. Heather
Hickling— and we will not ask her any questions — who coordinated all the
witnesses for the committee over the past two weeks. Ms. Hickling is Senior
Advisor with Parliamentary Affairs at Finance Canada. We will see her again
in the fall with the Budget Implementation Bill No. 2, I hope.
Thank you very much for your help. We appreciate it.
I will see colleagues this evening with respect to the report — and you
have received a copy — on the Main Estimates, which form the basis for full
supply that the government will want before Parliament adjourns for the
summer. Please read it carefully. We would like to try to get through that
document this evening.
We will hear from a group of witnesses this evening as well. Now is the
time to get all of this done rather than in July. Thank you very much.