Proceedings of the Standing Senate Committee on
National Finance
Issue 10 - Evidence - April 30, 2014
OTTAWA, Wednesday, April 30, 2014
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to study the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2015.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this evening we will continue our examination of the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2015.
[English]
Honourable senators will recall that the committee met with officials from the Office of the Superintendent of Financial Institutions on January 29 of this year to discuss its role in regulating and supervising federally regulated institutions, insurance companies and pension plans.
We did, at that time, have a number of questions that we felt, and they felt, could be better answered by the Canadian Bankers Association or by individual clients of the banks. We've now been able to arrange that. I'm very pleased to introduce to you to representatives of the Canadian Bankers Association, Mr. Darren Hannah, Acting Vice President, Policy and Operations; and Debbie Crossman, Director, Financial Affairs.
From the TD Bank Group we welcome Kent Andrews, Senior Vice President, Regulatory Risk and Risk Capital Assessment. From Manulife Bank and Trust we welcome Christopher Elgar, Chief Risk Officer.
Colleagues, we had quite a session this afternoon dealing with part 5 of Bill C-31, budget implementation, and you will recall that a lot of questions came up with respect to banks and the Canadian Bankers Association as potential witnesses. We've asked them to come for that, but this evening they're not here in that regard. They're here this evening as witnesses under the Main Estimates, and that's what I would ask you to try to focus your questions on. I will also ask that you try to understand the relationship between OSFI and their clients, the banks and the bankers association, which represents all the banks and a lot of other clients.
We will start with the Canadian Bankers Association representative. Mr. Hannah, if you would give us a few introductory remarks, we'll proceed to questions and answers after that. We've set aside one hour for this session, and we thank you all for being here.
Darren Hannah, Acting Vice President, Policy and Operations, Canadian Bankers Association: Good evening. My name is Darren Hannah, and I'm the Acting Vice President, Policy and Operations with the Canadian Bankers Association. I'm very pleased to be here today at the committee's invitation to discuss the banking industry's relationship with our prudential regulator, the Office of the Superintendent of Financial Institutions. With me today are representatives from some CBA member banks: Mr. Kent Andrews, Senior Vice President, Regulatory Risk and Risk Capital Assessment of TD Bank Group; and Mr. Chris Elgar, Chief Risk Officer of Manulife Bank and Trust.
Unfortunately, Mr. Sean McGuckin, Executive Vice President and Chief Financial Officer of Scotiabank, who had agreed to appear before the committee, was unable to join us today in Ottawa. In addition, I'm also joined by my colleague from the CBA, Debbie Crossman, Director, Financial Affairs.
The CBA works on behalf of 59 domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada and their 275,000 employees.
The strong relationship that exists between the banking industry and OSFI has served Canada well. This was demonstrated during the global financial crisis when Canada's banks fared much better than their counterparts in other jurisdictions. Canada is consistently recognized as having one of the strongest banking systems in the world. In fact, Canada has been ranked by the World Economic Forum as having the soundest banks in the world for six consecutive years.
We largely attribute this strong performance to two factors: first, the prudent manner in which Canadian banks are managed; and, second, the strong regulatory and supervisory framework for banking in Canada. The CBA strongly supports OSFI's work internationally, and in particular their efforts to ensure that banks in other jurisdictions are subject to the same level of high-quality regulation and supervision as Canadian banks.
The Canadian banking industry is one of the most heavily regulated and supervised sectors of the economy. For example, Canadian banks are required to meet stringent OSFI guidelines in a wide range of areas, such as capital, liquidity, leverage, corporate governance, accounting and stress testing.
Some of these guidelines are quite extensive. For example, OSFI's capital adequacy requirements guideline totals several hundred pages. However, while there is a significant cost to ensuring that banks are compliant with OSFI's guidance, the CBA and its member banks recognize the importance of effective and appropriate banking supervision, given the banking industry's critical role in the economy and our extensive efforts to manage risk throughout the system.
It is important that the banking prudential regulator have adequate resources in place to understand the risks and set out appropriate rules and guidelines. In this regard, OSFI has been very clear with the banking industry about its commitment to continually increase and improve its core competencies. This does not mean, however, that we are unconcerned about the volume of regulation.
As we've stated publicly on numerous occasions, the overall complexity of compliance has increased significantly in recent years as the quantity of regulation has expanded, and we must ensure that the right balance is struck to ensure competition and innovation in banking continues to be encouraged.
In Canada, unlike some other jurisdictions, banks are fortunate that they deal with only one prudential regulator, OSFI, which simplifies the regulatory process. The CBA and its member banks deal with OSFI on a regular basis. Banks' interactions with OSFI are wide-ranging and can include responding to OSFI requests for data and information, performing self-assessments of their compliance with specific legislation or guidance and facilitating OSFI reviews of certain business lines to identify potential deficiencies in the way banks are managing risk.
OSFI consults directly with the banks, as well as publicly, on significant changes it is proposing to make to its guidelines or other requirements. The CBA believes that these consultations contribute to the transparency in the rule-making process and result in better outcomes for all. By maintaining such active dialogue, OSFI and the banking industry are able to cooperate to ensure that the proposals will work in practice and to avoid any unintended consequences.
Consistent with its mandate, OSFI monitors and evaluates system-wide events or issues that could negatively impact the banking sector and stands ready to update its guidance accordingly.
The committee may be interested to know that in the fall of 2012 The Strategic Counsel, an independent research firm, conducted a consultation on OSFI's behalf with deposit-taking institutions to explore OSFI's performance in the discharge of a number of key elements of its mandate. The consultation comprised a series of confidential one-on-one interviews with executives and professionals, representing a cross-section of the deposit-taking institutions regulated by OSFI. The consultation's findings concluded that the overall impressions of OSFI are positive in most areas and that OSFI is perceived as highly effective in monitoring and supervising institutions. The report containing these findings can be found on OSFI's website.
The CBA and its members continue to work hard to maintain and strengthen their relationship with OSFI, which we believe is a key component to ensuring the continued success of the Canadian banking industry.
We would once again like to thank the committee for the opportunity to answer questions regarding the relationship of the CBA with its member banks and OSFI. We look forward to your questions. Thank you.
The Chair: Thank you, Mr. Hannah. Could you very briefly, before I go to my list, explain the other entity that exists called FINTRAC and how it relates to OSFI and you and your clients as bankers, your members?
Mr. Hannah: FINTRAC is the Financial Transactions and Reports Analysis Centre. FINTRAC deals with issues related to money laundering and suspicious transactions. OSFI is the prudential regulator. They look at the prudential health of banks.
The Chair: Does the information that FINTRAC receives and analyzes pass through OSFI or does it go directly from the individual institutions to FINTRAC?
Mr. Hannah: Others can correct me if I'm wrong, but I believe it goes directly.
Kent Andrews, Senior Vice President, Regulatory Risk and Risk Capital Assessment, TD Bank Group: There are two avenues. There is the direct information that goes directly to FINTRAC as it relates to transactions. The role of OSFI and FINTRAC is that OSFI does some supervisory work at the institutions to make sure the anti-money laundering regimes in the institutions are solid regimes. The information about that control environment flows through to FINTRAC.
The Chair: OSFI, in that instance, is doing an audit, in effect, of the banking institution?
Mr. Andrews: In a way. It's doing a control-environment review.
The Chair: Thank you. I think that's helpful.
Senator Hervieux-Payette: Also, CRA is the one initiating some inquiry, and they probably go to the banks to look at some people that have, let's say, 10 accounts where they deposit $9,000 at a time on a regular basis, or in five banks and always in the amount that is not supposed to be reported, which is $10,000.
I don't think OSFI could know that one person has five times and maybe four different accounts in all these banks to do the money laundering. Do you have the knowledge if the Canada Revenue Agency is contacting you?
Mr. Hannah: In that case, if a transaction is viewed as suspicious, then there is an obligation to report to FINTRAC.
Senator Hervieux-Payette: If they know.
Mr. Hannah: Again, "suspicious" is a difficult thing to assess.
The Chair: Colleagues, I refer you to the Main Estimates that we're dealing with, with respect to the Office of the Superintendent of Financial Institutions. We're at page 245. That's what prompted these further meetings.
Senator Callbeck: Thank you all for coming this evening.
The costs of OSFI are covered pretty well by membership fees from the financial institutions as well as user pay for services. Are you consulted on their budget, or do they just make an assessment to each of you and you pay up?
Mr. Hannah: I'll start from an industry basis, and then I would welcome my colleagues to talk from an individual basis.
From an industry basis, we have a regular dialogue with OSFI. Part of that dialogue is an annual discussion where they will go through and explain to us what their overall assessment is, how they're using their resources and how they intend to use their resources in the coming year. That's part of a broader dialogue we have with them on a number of issues.
Christopher Elgar, Chief Risk Officer, Manulife Bank and Trust: Senator, we have ongoing bilateral conversations with OSFI throughout the year.
At the beginning of the fiscal year, in their case, which would be April 1, they indicate some of the work on a firm basis — what they will be looking to do — give us an assessment of the work that they're going to do, the breadth and depth, based on the supervisory framework that they use, on some horizontal reviews, et cetera.
The actual assessments and the fees, while not explicitly discussed, are indicated. The work that is going to be done and the assessment levied is based on a formula that OSFI puts forward and has. It may be in the documentation. It's based on the risk-weighted assets of the firm and the type of work it's going to be doing. It's scaled to the size and complexity of the organization.
So we have those discussions on an ongoing basis. On a quarterly basis, we meet with OSFI and discuss the progression of their work — what they see is being done and if there has to be any divergence or derivation from what they had originally planned, for whatever reason, whether it be the results of their examinations or, perhaps, external and international rules that may have changed, environmental changes, market shocks, et cetera. So that is the dynamic of how the ongoing relationship between an individual member bank and OSFI would justify some of the assessment for the work that they're doing through the course of the year.
Senator Callbeck: So there's lots of communication back and forth.
Mr. Elgar: That's right.
Senator Callbeck: So you're pretty happy, then, with the assessment?
Mr. Elgar: I think it would be safe to say that, when somebody comes to say, "We're going to charge you this," you'd like to be able to debate it, and you do have conversation. You do have dialogue. I think the important point, though, is that it's not just done as a fait accompli. It is presented with rationalization and justification in the sense that we understand where the fees are going to be applied.
I need to stress that it's to our mutual benefit. The banks benefit from having OSFI come in and provide these reviews as independent third sets of eyes. They don't give us a firm, explicit indication of what the different institutions are doing, but they allow us to know what the industry is moving towards.
Senator Callbeck: So, as I said earlier, there are really two areas where they get the money. One is the assessment of the financial institutions.
Mr. Elgar: Yes.
Senator Callbeck: Then there are fees for specific services. Am I right on that or not?
Mr. Elgar: I'm not aware of the specific fees. I know we have an annual assessment based on the size of the bank and the assets and the formula that is used. As to specific fees, I'm not familiar with that.
Debbie Crossman, Director, Financial Affairs, Canadian Bankers Association: If I may jump in, I was thinking those would probably be related to issuing some common shares — sort of a one-off situation — or an institution being what they call "staged" if it's in trouble. Then that institution would pay for the additional supervision and OSFI scrutiny because of its situation.
Senator Callbeck: I saw the term "user fees" somewhere, so that's what that would apply to.
Okay, thank you.
The Chair: We probably should, at this stage, clarify the point. When OSFI was here, they said that you, as the industry, were glad, and Senator Callbeck was asking if you were happy. You couldn't say you were happy, but can you say you're glad that they increase their fees and set their fees each year?
Mr. Andrews: If you looked at the total fee basis, somewhere around $140 million — and I think the number is about 70 some odd for the banking system in particular — and the cost of that versus the performance of our banking system through the crisis, I think you would probably say that that's not a bad deal.
Senator Buth: Senator Callbeck asked some of my questions, but I've got kind of a simplistic question for you. If you were to rank OSFI on 1 to 10 — 10 being the highest — in terms of performance, how would you rank them?
Mr. Hannah: I'll answer that question. Canada has, and has had for six years, what is known to be the soundest, safest banking system in the world. I think the results speak for themselves.
The Chair: Do you need OSFI to be that?
Mr. Hannah: As I said in my opening remarks, senator, it is a combination of the prudent manner in which the banks manage themselves and the quality of the regulation and supervision of the regulator.
Mr. Andrews: If I could take a stab at answering that question as well, I won't give you a specific ranking, but I will say that, if you look at some of the things as they relate to the capital rules that OSFI had in place before the crisis, the engagement that they had with the boards in the banks prior to the crisis, the mandate that OSFI had, all of those things that OSFI did prior to the crisis — and Mr. Elgar talked about the use of horizontal reviews as well — those were all practices OSFI had in place before the crisis. These are practices that the world is now adopting post-crisis. So you would have to say that they have set leading practice globally when it comes to regulation.
Senator Buth: Have there been changes since then in terms of what they've required of you?
Mr. Elgar: Absolutely.
Mr. Andrews: Absolutely.
Mr. Elgar: That's part of a dynamic relationship. It's not by chance that they've been voted by others not around this table to be the top globally. They've evolved and moved forward in advanced areas of supervision and requirements and guidelines in conjunction with the FSB, and I think it's been beneficial for the industry and Canada generally. Having the strongest banks in Canada and globally is good for the country.
The Chair: I think what we're trying to get at is: Would you still have the strongest banks if you didn't have OSFI or if you had something else? We want to understand the importance of the role of OSFI in maintaining that high ranking.
Mr. Elgar: That's a difficult one, Mr. Chair, to definitively respond to in the sense that you can have different models. You can have a rules-based model for supervision. You can have a principles-based one and things in between.
In our environment, with what the Canadian banks have done, the fact that OSFI has indicated and follows a principles-based model and prudential guidance worked in those circumstances between 2007 and 2009 and proved to be very beneficial for the industry.
Mr. Andrews: I would say you would have a less consistent banking system if you didn't have a regulator like OSFI. The reason I say that is that OSFI has the ability to see across the practices of all of the institutions, and they're very good about communicating leading practice back to the institutions. I call that their competitive advantage. We don't see that, necessarily, as institutions. They give us that view into the system, and that helps us all to bring our practices up.
Senator Eaton: I have another simple question. Banks are deposit-taking institutions. So for IMG or whatever they are calling themselves now — Tangerine — is that considered part of the banking system, or is that a foreign bank? Does OSFI regulate foreign banks?
Mr. Hannah: Yes, OSFI regulates all of the banks.
Senator Eaton: What about Caisse de dépôt?
Mr. Hannah: That would be a provincially regulated institution that would be regulated by an entity in the Government of Quebec.
Senator Eaton: So there are tiers. There are some that are provincially regulated and some that are federally regulated.
Mr. Hannah: That's correct.
Senator Eaton: Do they have the same high standards?
Mr. Hannah: I invite you to ask them about their own standards. From our perspective, we think OSFI is the premier prudential regulator in Canada. We think they have the strongest regulatory environment, and we certainly would welcome all others to meet the same regulatory standard.
Senator Eaton: That says a lot. Your answer is telling me a lot.
Has OSFI encouraged or discouraged more foreign banks from coming into Canada? Do they look at what we've asked for in terms of regulation and shy away, or do they say, "The market's too good; we'll just follow your regulations"?
Mr. Hannah: In the recent budget, the government indicated that they want to try to streamline the development process for new banks in Canada. OSFI has recently appointed a specific individual to deal with small bank issues to try to help address some of the regulatory burden issues that are unique to smaller institutions. So clearly there is an effort to try to accommodate institutions that are small or institutions that are new.
Mr. Andrews: It's important to note, though, that OSFI should neither be encouraging or discouraging banks.
Senator Eaton: I guess I didn't explain myself. Do OSFI's regulations encourage or discourage; in other words, is it a come-on, is it a welcome mat or is it a barrier?
Mr. Elgar: An institution has to make its decision as to whether or not it wants to compete in this environment, first and foremost. If they're going to play in this environment, these are the rules.
Senator Eaton: Banks are not backing away because of our rules, are they?
Mr. Elgar: I don't know what other banks are doing through their application process.
Senator L. Smith: Gentlemen, what are the biggest challenges facing your industry right now?
Mr. Hannah: I'll start from a general perspective.
Senator L. Smith: It sounds like there are no challenges there and everything is so good.
Mr. Hannah: No, it's not that there are no challenges here. Your question is a very broad one, senator. Generally, the banking world is full of different challenges and your objective as a risk management institution is to try to assess them, understand them, weigh them and address them. The challenges come from all different angles. They could be market risk, credit risk, operational risk, cyber-risk, who knows what, and the challenge is to try to make sure that you are aware of them, that you're on top of them and that you've put in place processes to assess and deal with them. OSFI's role is to try to ensure that you've done that.
Senator L. Smith: Between OSFI and yourselves, as an association and as members, are there concerted issues on which OSFI is working with you that are public knowledge? Obviously there is FINTRAC and what they do with money laundering, the drug trade, the LIBOR rates in terms of people financing what the States went through and being undercapitalized and the problem with some of their major banks. What's out there that could, from a North American or international perspective, be threats to the success of Canadian banks?
Mr. Andrews: Mr. Hannah talked about cyber-risk. I think that is a huge concern. The banks do a very good job of dealing with that risk, but certainly we are engaged with all government parties in discussing the importance of cyber-risk.
When you look back, some very public examples would be the work that OSFI has done on retail lending. They issued what they called the B-20 guideline in 2012, which is all about retail lending and the standards in retail lending. This is an area where we've worked very closely with them to make sure we had our arms around that issue for the entire country.
Mr. Elgar: OSFI also represents Canada and the banking industry at the international forum, in Basel and elsewhere, for the capital rules, the evolving expectations from a global perspective. They bring that back to us as well and help us deal with what issues may be emerging in other jurisdictions that may not have emerged here but we should be aware of.
Senator L. Smith: The example of course is when the rules were put in place to go to Basel III and there's a time frame set up and then you read in the newspaper as users — and I'm not a banking expert by any means — that certain banks in certain countries are not getting to the point where they should be, whether it's in Italy or whether it's in the rest of the EU countries.
Mr. Elgar: The stress testing and all sorts of things.
Senator L. Smith: How do you folks perceive that? Do you sit back and say that's them and it has no impact on us?
Mr. Elgar: No, but to use explicit examples when looking at some of the liquidity guidelines and some that are coming out of Basel, the liquidity adequacy, the NSFR, the stable funding ratios, these are international standards that OSFI is adopting as part of the international environment, brings it back for dialogue to the banks who create liquidity guidelines for Canada based on discussions and consultation with industry about what makes sense. I think that's where the industry, with OSFI's help, benefits because we see what some of the standards are internationally and they bring it back to Canada. What makes sense for us here? What are the expectations? Then OSFI will take that information and calibrate the guidelines accordingly.
Senator Hervieux-Payette: Senator Eaton, I think you were talking about Caisse Desjardins, not Caisse de dépôt, which is a pension fund. I'm saying that because I think they're a member of the Canadian Bankers Association, no? They are just a member of the one that guarantees the deposit. They are a member of CDIC, I think.
Mr. Hannah: Caisse Desjardins, I don't think so. I believe they'd be a member of the provincial deposit guarantee program in Quebec. I'm not sure.
Senator Hervieux-Payette: Maybe I'm mistaken. Are you obliged to report the cyber-risk? I know the revenue agency had some very unpleasant surprises relating to contact with taxpayers. In your case, how did you deal with this question of having intrusion into your system by some bad person?
Mr. Hannah: In the case of the heartbleed bug, which I think is what you're referring to, when the issue arose we talked with our own members and from our point of view and as we said publicly, the banking industry was not affected by it. We take cybersecurity very seriously. We have some of the best and most secure banking systems in the world and certainly some of the strongest protections in Canada. We certainly take the privacy and security of our clients very seriously.
Senator Hervieux-Payette: Why do you comply when you deal with Visa to allow them to get the information and give it to the homeland security agency in the United States? I just read a document that said when you open a Visa account they inform you that whatever you put on your card is available to U.S. authorities. Were you involved with that? Are you aware that all the Visa information is available to the U.S. government?
Mr. Hannah: I can't really speak to the issue of what happens at the time you apply for a Visa card and where information flows. I can certainly look into the general question of privacy and get back to you, if that would be helpful.
Senator Hervieux-Payette: I have contacted the Canadian Imperial Bank of Commerce, I spoke to their VP and I was told they are printing that in all the documentation, with very little characters. Because this is violating our own privacy law, how can you agree that when you deal with Visa that they use this information for homeland security?
To give an example, if you are somebody from an Arab country and you go through New York you will take about five times more time than those of us who are born in Canada and have no foreign origin, because they know that you've been to several countries in the past through your Visa card. You are identified in their system and it comes from our Visa cards and you are all members of the Visa operation.
Mr. Hannah: Senator, I can assure you that all Canadian banks comply with Canadian privacy legislation, and I can also assure you that the privacy legislation is strongly enforced in this country, both by the government and by the Office of the Privacy Commissioner of Canada.
Senator Hervieux-Payette: Is any information forwarded? When you deal with Visa, you have a contract with them. They dispose of all the information. When I'm travelling outside of the country I have to go through their system.
Mr. Hannah: I can't speak to what information would flow in behind but what I can say, certainly, is that institutions in Canada obey privacy legislation in the country.
Senator Hervieux-Payette: I'd like you to check and to report in writing. I think this is something that is really bothering us and I was totally appalled that one bank would tolerate that, but now I've been informed it's all done by Visa and most of the banks in Canada are users of Visa credit cards. That's my question.
We read in the newspapers one week that we have a housing bubble and the next week everything is fine. The Governor of the Bank of Canada appeared before the other committee a few minutes ago and said that they are not expecting any problems, but the assessment of the housing portfolio that you have, and when the CHMC invested nearly $70 billion in the banks during the crisis, they bought back your housing portfolio. I'm wondering if this is part of the screening and part of the exchange of information with OSFI.
Mr. Hannah: Let me start with the quality of housing. I think the best way to address the question about the housing issue is to look at the mortgage and arrears data. Right now, mortgages in arrears in Canada are running at about three-tenths of 1 per cent. Clearly, Canadians are borrowing prudently. They are making decisions about how much they can borrow and they are borrowing accordingly. I think that speaks volumes about the quality of the housing portfolio and the housing loans.
Senator Hervieux-Payette: When the Minister of Finance, Mr. Flaherty, introduced a new rule so that people had to invest a certain percentage higher than before, a rumour started — because I have not experienced that personally, but I've been told — that the banks were making a personal loan so the person could meet that threshold. Is it the practice, or is it true; is it false?
Mr. Elgar: I can't respond explicitly to what other banks are doing, but I can say the Ministry of Finance has made changes to the mortgage rules four times, as the committee is aware. Each time, it was designed to ensure that the Canadian public was staying within what their affordability and debt serviceability criteria is.
To answer your original question about the information with CMHC and OSFI, OSFI is very conscientious, and has spent a lot of time in the last 18 months looking at residential lending practices at all Canadian banks, big and small, and written new guidelines, B-20, as I think as Kent has indicated. Those are being followed consistently across the industry. OSFI has indicated to many of the banks, mine included, that they are coming back again the end of this year, early part of next year, and they will continue to be looking on an ongoing basis across the industry: Are we following those guidelines? Are we following the rules to ensure that the residential mortgage lending is within the capacity of the Canadian population?
Senator Hervieux-Payette: In the foreign investment of each bank, is there some supervision of what they're doing outside the country? Is there some approval at this level, because it would represent a risk when you invest outside, and you're competing with what is a more risky business in the United States.
When I'm talking about banks operating abroad, I'm talking about mostly the U.S., but I know that Scotiabank is very present in South America and Central America. Is this portion of the activities of the bank supervised by OSFI?
Mr. Andrews: Yes, OSFI is what they would call our home supervisor. When OSFI is our home supervisor — and we're a Canadian bank — they have the oversight over the entire consolidated bank. For instance, if a bank had a U.S. operation, OSFI would actually go to the U.S. as well and do supervisory reviews in the U.S. If a bank had a U.S. operation, they're actually not only subject to OSFI review they're subject to the review of the U.S. regulators, too. In some ways you have double oversight happening in some foreign jurisdictions.
Mr. Elgar: They will go to Latin America.
Senator Hervieux-Payette: Presumably the Americans also have that double supervision when they are operating in Canada.
Mr. Andrews: If it was a U.S.-based bank operating in Canada that would be the case. The U.S. regulators, though, wouldn't come to Canada to supervise the Canadian banks because that's outside their jurisdiction.
Senator Hervieux-Payette: What would they do to supervise them?
Mr. Andrews: They would supervise the foreign bank in and of itself at the top of the consolidated entity within that jurisdiction.
The Chair: So OSFI wouldn't go to the U.S. branch by branch. They would go to the consolidated head office for U.S. operations?
Mr. Andrews: For a Canadian bank? OSFI has the ability to go to any of the operations that we have.
The Chair: And do they?
Mr. Andrews: They do, yes, absolutely.
Senator Hervieux-Payette: Are you obliged to be incorporated under the state law? When you operate in the United States, are you governed by a national or a state law?
Mr. Andrews: I think it depends what charter you choose.
Senator Hervieux-Payette: What is the trend of our banks? Are they mostly going national?
Mr. Elgar: I think there's a mix, because it's either the Federal Reserve, or the OCC, the Office of the Comptroller of the Currency.
As Kent said, it depends on the charter. I'm not an expert on that, senator, but I know both of them are evident in the banking system for Canadians.
Senator Hervieux-Payette: I will tell you why. I was told that the fact that they had to go state by state, this was more or less a barrier to our banks to penetrate the U.S. market. Maybe the legislation has changed so that now they can have one charter and operate in several states.
Mr. Andrews: You get the charter through the Office of the Comptroller of the Currency and have a broader charter, but the U.S. system is still very fragmented, so you have state bank regulators on top of national bank regulators as well.
[Translation]
Senator Bellemare: I would like to address something concrete, a crisis that occurred in 2007 with the whole issue of securitizing asset-backed commercial papers.
I know that banks were involved in this situation. There were a lot of losses across Canada. When this began, Caisse de dépôt executives knocked on the Bank of Canada's door, and the bank said that it was not familiar with these commercial papers and what it really entailed. The banks got involved. It created an economic uproar in the country.
Could you please tell me what role the Office of the Superintendent of Financial Institutions plays in its oversight of banks in this issue of commercial papers?
[English]
Mr. Elgar: I'll answer that question. There were very complicated circumstances in 2007 and 2008 with the asset-backed commercial paper market. I don't need to go into the details, but fundamentally, the assets that were backing that commercial paper were not widely known as to what they were, how they worked, et cetera. There were a lot of derivatives involved.
To explicitly answer your question, OSFI is organized within their supervisory group to look at very specific areas, whether it is credit risk, operational risk, accounting policy, but importantly, to your question, capital markets, trading, liquidity, foreign exchange, commodities, et cetera. They have a group within OSFI that looks explicitly at those operations for all banks across the industry.
To the earlier question about the jurisdictions, they will go to the United States if the trading room is in the United States, where they're fabricating the asset-backed commercial paper, as an example, or to London, and they'll examine to ensure that the controls and the work is up to the standards and the guidelines in place.
OSFI is aware and works very closely to ensure that there is some transparency, but the asset-backed commercial paper, explicitly in 2007, is a little more complicated than just paper not working any longer. Without getting into those details but to confirm your question, OSFI looks at that very closely and regulates and supervises the banks to ensure they're meeting the guidelines and the market practices for those kinds of products that are complicated.
[Translation]
Senator Bellemare: What you are basically saying is that, at the time, the Office of the Superintendent of Financial Institutions did not understand the fragility or true nature of these commercial papers, which is why the crisis was so serious? Otherwise, it would have played a role to prevent it.
[English]
Mr. Elgar: What precipitated the actual collapse of the asset-backed paper was twofold. One factor was the underlying derivatives that supported them were derivatives on derivatives, and buyers didn't understand the fragility of those; caveat emptor. In all fairness, some of the market participants didn't understand it either.
Also, the actual paper itself, there was a loss of willingness to buy it once there was uncertainty in the marketplace. Where some of the banks had difficulty in this was they were using this paper, which was very short term in duration, and rolling it over on an ongoing basis to fund themselves. When that was insufficient, you had a problem, so it was a combination of things.
OSFI, I feel very strongly, was well aware of what was going on after August 2007. They understood the market and worked very hard with all Canadian banks to ensure the problems were not like they were elsewhere in the world. There were a couple of smaller institutions that got caught. They were more market driven than regulatory driven in response. It's a complicated subject.
[Translation]
Senator Bellemare: Yes, I know. I looked at it in detail at that time. But is there any guarantee today that, somewhere, the financial community will not invent a new commercial paper? Are people being vigilant? Because we know that there are a lot of financial and model experts who are able to —
[English]
Mr. Elgar: I understand, yes. The short answer is we hope we have the frameworks in place, speaking as a bank and speaking as an industry. The framework is in place to ensure that sort of issue would not be replicated.
Could I say that would never happen again in some other form? I can't sit in front of the committee and make that statement.
Hopefully the lessons we've learned from that crisis in 2007, 2008 and 2009, we have put the regulatory framework in place, some of the rules, and the market discipline, which is part of capital, to avoid that going forward.
Mr. Andrews: I would add that one of the lessons OSFI learned from that, and everyone learned from it, is the fact that they have now been strong advocates for what they call new business and product approval processes within institutions. There have been strong proponents and it's in place now — strong governance process over new products. When a new product is being developed it needs to have the proper oversight, governance and discussion and to document the thoughts that go into that. If those products morph over time, then there should be triggers to have that come back to those committees as well.
Ms. Crossman: To add one thing from a funding perspective, the banks are now implementing liquidity coverage ratio and the longer term structural measure, which is the net stable funding ratio, and as well OSFI has a third one. These things also will help from a liquidity perspective.
The Chair: Does OSFI set the provisions that you have to set up for loans you have out? Do they determine that kind of risk mitigation?
Mr. Elgar: There are different models that one would use. OSFI reviews the models and approves them, but they do not explicitly set the provisions. They approve the model that you use to determine the provisions.
The Chair: That helps us understand the role a little bit more. Thank you.
Senator Hervieux-Payette: Mr. Andrews, I know your bank never sold this kind of vehicle, and TD Bank was probably the one that was not at all part of the subprime — I know that some banks knew what was going on — and you have to be complimented for the management of your bank.
Mr. Andrews: Thank you.
[Translation]
Senator Rivard: I have two short questions. The profitability of Canada's big banks has been established. As evidence, in the past two or three years, the big banks have reported quarterly profits between $750 million and $1 billion, which leads a lot of people — taxpayers and consumer associations — to say that the big banks do not pay enough taxes. I do not share that point of view, but the fact remains that it draws a lot of criticism.
Whether it is the Royal Bank or any other big bank, we know that shares change hands at the rate of millions of transactions a day.
That brings me to a question that I suspect will be difficult to answer: do you have an idea of what the percentage is for pension funds? Whether we are talking about the Caisse de dépôt et placement du Québec or other provincial institutions that invest save by buying bank shares, is it 10 per cent, 15 per cent, 20 per cent or 25 per cent? I understand that you may not have the exact statistics for each bank, given the number of transactions, but do you have an approximate idea for shareholders of big banks the percentage that pension funds represent?
[English]
Mr. Hannah: I don't have an exact number, but I can certainly say that Canadians broadly are well invested in Canadian financial institutions, and therefore share in the success of those institutions through dividends that come back to them. It's important.
To your earlier point in respect of taxation, Canadian banks are the largest source of corporate taxation in Canada.
[Translation]
Senator Rivard: Thank you. My second and last question: I find that in the banking world, mergers or sales of one bank to another are very rare. As far as I know, the last merger took place in the 1970s, when the Provincial Bank of Canada and the Bank Canadian National — that was its name at the time — became the National Bank. Do you know of any other Canadian banks that have merged since then? And why are there not more bank mergers? Are there regulations? I remember a certain government several years ago, and there were rumours of a transaction between BMO and the Royal Bank. It all fell apart. Is it because the market does not demand it or are there regulations that would prevent a merger of one bank with another?
[English]
Mr. Hannah: First off, you're the first one to ask me the merger question in a very long time, senator.
Honestly, I think part of it is that institutions have all adopted their own strategies. I mean, they are going off in different directions and they're doing their own things.
There is a merger policy. I mean, it is known, it's available and it's part of the public domain. Why institutions choose to or do not choose to take advantage of it would certainly be a business-level decision from the institution.
That's really, unfortunately, all I can say on the topic.
[Translation]
The Chair: Thank you. Esteemed colleagues, Senator Rivard is now a permanent member of the Standing Senate Committee on National Finance. Congratulations and welcome. Those were the first two questions of a new permanent member.
[English]
Colleagues, as I mentioned, at page 245 is the Office of the Superintendent of Financial Institutions.
Mr. Hannah, it's not usual for us to see this kind of increase year over year from $909,000 to $937,000 — 938,000 almost — in one year, and that is what OSFI has asked for and asked us to approve, that kind of a significant increase.
Is there an increase in activity that would justify that from your point of view? Do you see things happening that would justify that kind of increase? You're going to be presumably paying an increase similar to that for your portion of this.
Mr. Hannah mentioned about $140 million per year for OSFI, somewhere in that range. The government portion, the taxpayer, generally is $930,000, but all of your clients and customers are paying the other costs, presumably.
Mr. Hannah: I think what I'd say is that, again, no one likes cost, but we understand it and we recognize that there has been a great deal of regulatory reform in this area. OSFI needs to have quality staff and quality people in order to make sure that it can engage both internationally and domestically and implement those regulations in a way that's efficient and effective. To do that takes resources, so we understand.
The Chair: To what degree do you participate? Did you participate at all, either through the bankers association or individual banks, in knowing what OSFI would be asking the federal government purse to come up with to support their activities for the year, or is it entirely up to them to do that?
Mr. Hannah: When they come to us — my colleagues can jump in here — but it's principally in respect of the assessment upon the industry as opposed to the assessment or the ask from the federal government itself. Would that be a correct statement?
Mr. Andrews: Yes.
The Chair: Senator Callbeck mentioned this, but are the banks in a user-pay service, in addition to this user-pay service that OSFI uses to generate some of its revenue?
Mr. Hannah: Overall I wouldn't know, senator.
The Chair: We should have asked that of them, but we're just getting a flavour for that.
You indicated in your remarks that OSFI requires you to do a stress test. Can you explain to us OSFI's role in that along with the bank and how that takes place?
Mr. Andrews: Sure. If you look at the latest financial sector assessment piece that came out from the IMF and the World Bank, that was the FSAP that was done on Canada, which is very favourable. There's a good piece on the back that talks about the macro stress testing that they did. That was a group effort between the Bank of Canada and OSFI and the IMF and the World Bank as well.
So OSFI's role in any macro stress test is to talk about what are the things that we think might happen in the economy, how deeply might certain key drivers change during a stress event? And then push those to the banks. The banks would run those through their models and develop an income statement and a capital projection to see what that would do to our capital.
The Chair: Do you work with OSFI on that?
Mr. Andrew: Absolutely.
The Chair: Is that a collaborative-type approach?
Mr. Andrews: Yes.
Mr. Elgar: OSFI will set a specific target in the residential mortgage portfolio, and they will set a scenario to run over a couple of years, and they'll set some of the parameters of the stress elements that you want to look at. Then they'll go back to the banks and say, "Would you run this for the last three years through your portfolio and do a projection?" So they get a sense of what the vulnerabilities are of the mortgage portfolio at a bank. They do that across an industry, and they get a sense of the stress event health of the banking industry.
[Translation]
Senator Chaput: Perhaps you have already answered my question in part. It is simple, but I would still like to ask it. The office is the overseer, and it assesses incidents or issues in the entire system that might be risky for you or your members. What is the process for that? Is it the office that determines what risks will assess or is it the banks that ask the office to look into a certain issue because of a concern you have? How is it rectified afterwards?
[English]
Mr. Elgar: The determination of the work that OSFI will do is made by OSFI. They receive the financial information, and it's not just one time, it's on an ongoing basis — quarterly, monthly, weekly — as well as the annual statements. They look at the business strategy of an institution. They look at the objectives going forward, the past performance. There's a comprehensive tool in the OSFI framework whereby they can look at all the significant businesses in an institution — retail banking, commercial banking, corporate banking, treasury, et cetera — and they do an internal assessment of where they see the various elements of inherent risk there, based on the information, and what are some of the control features — strong, weak, medium or otherwise — that they assess. Then they go back and prioritize the riskiest elements of the business, and that is how they determine what work they're going to do. That's different than how they make the assessment on the fees because that's based on the overall balance sheet. There's a risk assessment to determine the work, and then it is the balance sheet that is used to determine the fee structure or appropriations they need.
Mr. Andrews: You asked a question about the findings and the outcome of the review. When they do a review on a particular area of an institution, OSFI will issue a findings letter, which is not only sent to the business head in the institution but also sent to the chairman of the board and the CEO. So it's a very transparent process to say that these are the things we found in our review of your business that need to be corrected. They will ask us to come back in 30 days with remediation plans on each finding.
The Chair: On behalf of the Standing Senate Committee on National Finance, I want to thank each you for being here and helping us to understand this relationship better and thank you for the work you do to serve Canada.
Mr. Elgar from Manulife, Mr. Andrews from TD Bank, and Mr. Hannah and Ms. Crossman from the Canadian Bankers Association, thank you very much.
In our second hour this evening, we will continue our examination of the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2015.
From Industry Canada we welcome Mr. David Enns, Chief Financial Officer, Corporate Management Sector; Iain Stewart, Assistant Deputy Minister, Strategic Policy Sector; and Robert Dunlop, Assistant Deputy Minister, Science and Innovation Sector. Welcome.
From Public Works and Government Services, we also welcome Alex Lakroni, Chief Financial Officer, Finance and Administration Branch, and Pierre-Marc Mongeau, Assistant Deputy Minister, Real Property Branch.
I understand that each of you has brief introductory remarks, which always helps us to get going and to prompt honourable senators to then engage in a question and answer. We have our Main Estimates before us, and, any time you can refer to the Main Estimates by page number, that's always helpful as well.
Have you flipped a coin between you? We could start with Industry Canada, if you like, and then we'll move to Public Works and Government Services unless you've decided otherwise amongst yourselves.
David Enns, Chief Financial Officer, Corporate Management Sector, Industry Canada: We haven't discussed it.
The Chair: Industry Canada it is, then.
Mr. Enns: Okay. Good evening, Mr. Chair, to you, the committee members and my colleagues from PWGSC.
As you mentioned, my name is David Enns. I'm the Chief Financial Officer for Industry Canada. My colleagues and I are here this evening to provide you with an overview of Industry Canada's Main Estimates for 2014-15.
As you know, the Main Estimates reflect our spending authorities of $1.1 billion. Transfer payments represent 65 per cent of that total. Thirty per cent is for operating and capital, and the remaining 5 per cent is for other statutory expenditures.
[Translation]
Items identified in the most recent budget, such as continued support for the Automotive Innovation Fund and for access to high-speed broadband networks, are not yet reflected in the Main Estimates. These items will be addressed through the supplementary estimates process.
[English]
Industry Canada's budget supports three strategic outcomes. Forty-five per cent goes to fostering the knowledge-based economy and supporting advancements in science, technology, and innovation. Thirty-four per cent goes to advancing the marketplace in order to ensure that it is efficient and competitive, and 14 per cent goes toward encouraging business innovation and productivity by promoting economic development in communities across the country. About 7 per cent is for administration of resources to support the needs of programs and other corporate obligations or what we call "internal services."
You will note in the estimates documents that there is an overall decrease of $82.4 million compared to estimates of last year. The majority of this decrease is due to the scheduled wrap-up of temporary program funding.
Programs that have reached their natural end include a six-year transfer payment program to support research and development for the Bombardier CSeries airliner. The sunsetting of this program results in a $55.4 billion decrease in funding requirements.
Also, Budget 2009 contribution programs for the Institute for Quantum Computing and the Ivey International Centre for Health Innovation have also terminated.
Finally, the $1.7 million structured financing facility has ended. This program is no longer necessary given the new National Shipbuilding Procurement Strategy, which is managed by PWGSC.
There is also a decrease of 41.6 million in the Strategic Aerospace and Defence Initiative due to the end of temporary resources that were approved for the aerospace industry in the context of Budget 2009.
[Translation]
The remainder of the decrease is attributable to a variety of factors, including a forecasted drop in claims under the Canada small business financing program; an expected increase in revenues at the Canadian Intellectual Property Office; and the implementation of the final phase of Industry Canada's deficit reduction action plan measures.
[English]
While the estimates don't reflect items announced in Budget 2014, they do include contributions announced in previous budgets in 2012 and 2013. Among these that I would like to highlight are: $19.4 million for the Automotive Innovation Fund; $14 million for Mitacs, which supports research internships; $10.2 million for the Technology Demonstration Program, which supports large-scale collaborative research and development projects in the aerospace, defence and security sectors; $9 million for the Canadian Youth Business Foundation, which provides financial support and business expertise to young entrepreneurs; $7.9 million for Genome Canada, which funds genomics research and supports six regional genome centres across Canada; and $3.4 million for Canarie, which operates and develops an advanced high-speed research network that helps Canada's research and science facilities, educational institutions and hospitals to connect to each other.
[Translation]
In sum, the changes you see between last year's Main Estimates for Industry Canada and this year's are largely due to increases and decreases in contribution funding. This ebb and flow in contribution funds is completely normal for Industry Canada. In all other respects, the department's financial situation is stable.
[English]
This concludes my introductory remarks, and my colleagues and I would be pleased to answer questions.
[Translation]
Alex Lakroni, Chief Financial Officer, Finance and Administration Branch, Public Works and Government Services Canada: Mr. Chair, members of the committee, joining me today is Pierre-Marc Mongeau, Assistant Deputy Minister of the Real Property Branch.
Mr. Mongeau and I appeared before this committee in February to discuss Public Works and Government Services Canada — PWGSC's — Supplementary Estimates (C) for 2013-14, whereas today, I am pleased to discuss the 2014-15 Main Estimates.
With its broad mandate as the Government of Canada's principal treasurer, accountant, central purchasing agent, real property manager and linguistic authority, PWGSC plays a large role in the operations of the federal government.
[English]
PWGSC provides accommodation to parliamentarians and more than 272,000 public servants, makes annual rental payments of $1.2 billion on over 1,870 lease contracts across Canada, injects more than $14 billion annually into the Canadian economy through government procurement for 140 federal departments and agencies and processes around 50,000 contracts annually. PWGSC is home to the Receiver General, which manages a cash flow of more than $2.2 trillion a year, prepares the annual Public Accounts of Canada and issues more than $14 million federal pay and pension payments. PWGSC also provides translation and interpretation services annually for more than 1,700 parliamentary sittings and committee meetings and manages translation for more than 1 million pages of text on behalf of other government organizations.
For the 2014-15 Main Estimates, PWGSC's net spending is anticipated to decrease by $196.8 million from 2013-14 levels to $2.7 billion. This reduction is primarily related to a decrease of $102.8 million due to the annual fit-up funding adjustment for real property that occurs later in the year; a decrease of $71.2 million due to the completion of the remediation and future land use of the Sydney Tar Ponds and Coke Ovens remediation project; a decrease of $57.28 million due to the savings generated from the measures identified in Budget 2012, which led to operating efficiencies and improved productivity; a decrease of $49.9 million due to the completion of the purchase of the Les Terrasses de la Chaudière complex, in the National Capital Region, for which one-time funding was provided last year; a net decrease of $7.5 million due to various items, such as the termination of current funding for the Surplus Federal Real Property Initiative and the transfer for Shared Services Canada for the Cyber Authentication Renewal; and an increase of $91.9 million to ensure the preservation of Parliament buildings as heritage assets and national symbols.
[Translation]
As befits our stewardship responsibility, we seek whole-of-government solutions that are efficient and cost-effective while striving to deliver high-quality services to Canadians.
Mr. Chair, members of the committee, thank you for your attention. My colleague and I would be pleased to answer your questions.
The Chair: Thank you very much. We will begin the questions with Senator Buth.
[English]
Senator Buth: Thank you very much for being here this evening.
Public Works, can you tell me what your relationship is with Canada Lands?
Mr. Lakroni: Canada Lands is part of PWGSC's portfolio. It reports to the same minister as Crown corporations.
Senator Buth: Do you administer Canada Lands, essentially? Can you talk to me about what Canada Lands does and how it manages property from PWGSC?
Mr. Lakroni: We do not manage Canada Lands Corporation. It reports directly to the minister of PWGSC.
Senator Buth: Can you tell me what the process is through PWGSC in terms of land that's being sold?
Mr. Lakroni: I'll turn to Mr. Mongeau to answer the questions.
[Translation]
Pierre-Marc Mongeau, Assistant Deputy Minister, Real Property Branch, Public Works and Government Services Canada: Thank you for the question. As my colleague said, Canada Lands is an entity that reports directly to the minister. Normally, when Public Works and Government Services Canada decides that a building is no longer required or declares the building to be surplus, there are always two options. We have to determine whether it is a standard transaction with no added value or whether it is a strategic property. If it is a strategic property, that means that there is possible development or an opportunity to develop the land and increase its value. That is when we sell the land to Canada Lands, which then becomes responsible for the development
Once a property is declared surplus, is considered strategic property and is transferred to Canada Lands, PWGSC releases the files. Canada Lands then becomes responsible for managing the properties.
[English]
Senator Buth: We might want to hear from Canada Lands at some point.
The Chair: We'll make note of that.
Where do we find Canada Lands in the Main Estimates? Is it under Public Works? I've been looking for it as we've been going through this answer.
Mr. Lakroni: What you would find in the Main Estimates are organizations that are appropriation dependent. Given the funding structure of Canada Lands — I don't want to speak for them — that's why you don't see them in the Main Estimates.
The Chair: Thank you. That's how they get overlooked coming to our committee from time to time.
Senator Buth: This is for Industry Canada. There was an innovation strategy that was announced a couple of years ago. It's an interest of mine in terms of innovation and this issue that we have — we've been studying it at the Agriculture Committee as well — it is this value of death that occurs from lab bench to commercialization in Canada. One of the things I was trying to follow was that I think it was a $400-million allocation in Industry Canada that one program was ending and a certain amount of money was going to be spent on an innovation strategy.
Can you tell me where that's at, or have I forgotten something?
Robert Dunlop, Assistant Deputy Minister, Science and Innovation Sector, Industry Canada: I'm not sure. There have been so many announcements recently about innovation that $400 million doesn't ring a bell with me. The government announced through the Department of Finance Canada a venture capital strategy. That may be what you're referring to.
There are some elements of that being delivered through the Industry Canada portfolio that address the area about which you speak. In particular, I would point to the Canada Accelerator and Incubator Program, which had the objective of identifying the organizations across the country that are particularly successful in taking companies in that situation you described and getting them to the other side. The government announced in Budget 2013 there would be $60 million available for those organizations to be distributed after a competition. Then in the most recent Budget 2014, they announced they were so encouraged with the way that was looking, that an additional $40 million was added to it. The competition is being wrapped up now with additional winners as a result of the top-up provided in the most recent budget.
Senator Buth: That was a component of it. It was a response to the Jenkins report — the initial strategy, et cetera. Where would I find the $60 million in terms of the Canada Accelerator and Incubator Program?
Mr. Dunlop: The $60 million I was referring to was in Budget 2013, so I'm not sure whether that was dealt with in mains or supplementary estimates last year. The $40 million top-up is not dealt with in the Main Estimates. I'm assuming it's in supplementary estimates at some point.
Senator Buth: It was in Budget 2014?
Mr. Dunlop: Yes.
Senator Buth: Can you tell me what systems you will have in place for measuring the impact you will have in the allocation of these funds? How are you going to measure how well this program does?
Mr. Dunlop: I'd say that like our colleagues from Public Works, there is an issue here of the portfolio. This isn't being delivered directly by Industry Canada; it's being delivered by the National Research Council. They are the ones responsible for the finer points of program delivery. We would normally assist the National Research Council with their cabinet submissions and things like that, so that's why I'm aware of the program and the processes.
Senator Buth: I understand that the NRC is coming out with a new strategy, because the old strategy is sunsetting; is that true?
Mr. Dunlop: The National Research Council's new mandate was announced last year, so they are very active now in implementing the new direction announced last year, which is a greater focus on collaborative work with business. The delivery of this program is part of that — having them connected more directly with that ecosystem that works with small companies, universities, with a keen eye on taking products to market.
Senator Buth: I would like to suggest we have NRC come before us.
The Chair: That would be a good idea.
I want to clarify a point in your answer to Senator Buth. When you say, "We don't have any responsibility to them; we send it off to NRC," are you just a conduit through all of this? Surely you must assume some responsibility if the money passes through your account on the way to NRC.
Mr. Dunlop: In this case, we have some responsibility with respect to policy. I hope my answer was saying that on the finer points of designing, for example, the program evaluation framework would be more the responsibility of the NRC, given that they are the ones delivering.
The Chair: And you take no —
Mr. Dunlop: We would work with them on that, but it's ultimately their responsibility because they are the ones administering it.
The Chair: So they produce a document that shows results. Do you participate in a review of that and say, "I thought we could have done better than that"?
Mr. Dunlop: It would be informal. Again, we are two organizations that report to the same minister. They have a deputy minister equivalent, so they would be working with us, sharing expertise, because we have some similar activities on things we deliver directly.
The Chair: I guess we're trying to get to why it has to flow through you, then. Why doesn't it go directly?
Mr. Dunlop: This doesn't flow through us directly; it goes directly to the NRC. It doesn't come through us. We have some policy involvement with them, but the funding flows to the NRC. They have their own appropriations.
The Chair: Okay, I misunderstood. That's my fault. I'm just not hearing clearly this evening. Thank you.
[Translation]
Senator Hervieux-Payette: There are two paragraphs on page 2 of the Industry Canada report that I do not understand. It says that 34 per cent goes to advancing the marketplace to ensure that the Canadian marketplace is efficient and competitive. What does that mean? How do you ensure that the Canadian marketplace is efficient and competitive? Do you measure that in terms of jobs created, the increase in revenues or some other way?
[English]
Iain Stewart, Assistant Deputy Minister, Strategic Policy Sector, Industry Canada: One of the fundamental roles of our department is a series of pieces of legislation called marketplace framework legislations like the Canada Corporations Act, the Competition Act and intellectual property laws. So a very big part of our activity, which is captured in that category, is the people who design the laws and then administer them. The Competition Bureau administers the Competition Act and so on.
We try to create a competitive market that's a free and open market in which companies are competing with each other and achieving efficiencies, growing or not growing and going into bankruptcy and insolvency legislation and so on.
Senator Hervieux-Payette: You're talking about the budget of the Competition Bureau?
Mr. Stewart: The Competition Bureau, as far as the appropriation is concerned, is actually within Industry Canada's appropriation, for example, in that case.
We do have, for instance, the Canada Business Corporations Act, and so we also have the office of corporations. It does a registry function for corporations and so on. That 34 per cent is all about these market operation pieces of legislation and the civil servants who administer the different organizations that uphold those areas.
Senator Hervieux-Payette: Mr. Chair, I think all of you knew what this meant, but I confess that I never thought it was related to the Competition Bureau and other organizations. Maybe the next time you can write something such that we know who is using that money.
Could you give me some explanation about the 14 per cent in the same way you did about the 34 per cent, from the third paragraph?
[Translation]
It says that 14 per cent goes toward encouraging business innovation and productivity by promoting economic development in communities across the country.
Are these tax credits?
Mr. Stewart: No.
Senator Hervieux-Payette: Is it money that is paid directly? How many programs are related to this 14 per cent: one, two, three?
Mr. Stewart: For the most part, it is probably the fund for innovation activities. The FedNor regional development agency is also included in our budgets.
Mr. Dunlop: My colleague mentioned the Ontario regional development agency, which is called FedNor. It is an element of this part.
Senator Hervieux-Payette: Did you dismantle the agency in Quebec?
Mr. Dunlop: I am sorry?
Senator Hervieux-Payette: The regional development agency of Quebec no longer exists?
Mr. Dunlop: That department is completely independent from Industry Canada. We have ties with FedDev for Southern Ontario, but that is also a department with a minister and deputy ministers. FedNor is a branch in our department.
Senator Hervieux-Payette: On page 3, it states, ". . .the implementation of the final phase of Industry Canada's deficit reduction action plan measures."
We have dozens and dozens of pages of documents. I cannot know what you are referring to when you talk about "the final phase of [the] action plan measures."
What is the final phase? You are making a general statement, but I do not really know what activities of your department allow for the implementation of the final phase.
[English]
Mr. Enns: Budget 2012 measures were phased in over three years. Industry Canada implemented all of those measures earlier than actually anticipated, but the last slice of funding that was removed from our budgets is the $14 million that is being reduced in the current fiscal year. Most of that is for administrative and operational savings. We've done things like eliminate a sector that was responsible for our regional activities. We consolidated the overall responsibility for that in headquarters without affecting the staff in the regions. We've reduced spending on library services, things where we can go online instead of using subscriptions. We have consolidated some offices like the Competition Bureau in a couple of locations.
In some cases, we've narrowed the focus of research — and I'm talking in particular about Communications Research Centre Canada — to focus more on things that are specifically related to mandate.
So those are some of the operational efficiencies that were achieved in the overall target of $79 million, which was our Budget 2012 reduction target. As I said, most of that was done in the first two years, and we're just finalizing the last slice of the funding now.
Senator Hervieux-Payette: It's a good thing that for a line and a half you spoke for about five minutes. Thank you.
[Translation]
My other question has to do with PWGSC and the decrease of $102 million because of the annual fit-up funding adjustment for real property that will occur later this year.
Are you going to postpone the expense and come back for supplementary estimates?
Mr. Lakroni: The $102 million is a decrease because, the way real property is funded, part of the budget is subject to volume and market fluctuations. Instead of requesting amounts at the start of the year in the Main Estimates, we wait to see how those fluctuations will play out and we adjust accordingly.
This exercise is usually done at the end of the year, and we and the Treasury Board Secretariat feel that it is a healthy way to manage the Real Property Branch's quasi-statutory budget. With respect to the source of the $102 million, $39 million is for the fit-up of three government buildings located at 22 Eddy, 30 Victoria, and 45 Carrière.
Last year, we requested $63 million in the supplementary estimates C for the fit-up of four buildings for rental, mainly for the Canada Revenue Agency, the Treasury Board Secretariat, the Department of Finance and for another building, at 22 Eddy in Gatineau. There is another envelope of $36.3 million for approximate expenses related to 310,000 square metres in various parts of Canada to accommodate a number of departments, and $2.5 million for increase in the cost of leases.
That provides an overall summary of the expenses from last year. I cannot predict the cost increase for this year, but we will assess it using a very sophisticated formula. We will ask the Treasury Board Secretariat for authorization to have access to the funds.
Senator Hervieux-Payette: So I was not mistaken in thinking that you will be back?
Mr. Lakroni: No, you were not mistaken. The issue is determining the amount.
Senator Hervieux-Payette: Who owns the Terrasses de la Chaudière building? I always thought it was the federal government.
Mr. Lakroni: I will ask my colleague Pierre-Marc Mongeau to answer that question.
Mr. Mongeau: If memory serves me right, the building belonged to a company called Rosedale, but we bought it last year. When the building was being constructed, we had planned for a purchase option after 25 years, and that time has come. So we bought the property for about $54 million, but it was worth several hundred million. It was a good deal, as they say.
Senator Bellemare: My questions are for Industry Canada. In your presentation, you said that there have been some reductions but there have also been increases. I would like an explanation about two programs, first one found in the detail, the $14 million envelope for Mitacs, "which supports research internship".
The other program has an amount of $9 million, for the Canadian Youth Business Foundation. I found it in a note, but I did not find it in the contributions or the grants. Can you explain these two programs for me? After that, I will have another question.
Mr. Dunlop: I can explain what they are about.
Mitacs is an independent organization with expertise in providing scholarships and programs to students, especially students working in private sector research.
Senator Bellemare: University students?
Mr. Dunlop: Exactly. Recently, in Budget 2014, the government announced an increase for postdoctoral positions to run research programs in private companies. Last year, it announced an increase for doctoral students; it is a way for those students to gain experience in the private sector. It shows that there are not only university careers, which are very useful, but that researchers are also needed in the private sector.
Senator Bellemare: And the scholarships — the word escapes me.
Senator Eaton: Learning?
Mr. Dunlop: Internships?
Senator Bellemare: Yes. How long do they last?
Mr. Dunlop: It depends on the situation. That is one of the advantages of Mitacs. They work with companies, universities, professors, in order to create internships that are mutually beneficial.
Senator Bellemare: How many internships are you looking at this year?
Mr. Dunlop: It is really difficult to give you a precise answer, because there are several programs and we have several contracts with Mitacs.
Senator Bellemare: Because it is an independent organization. Is it a grant or a contribution?
Mr. Dunlop: It is a contribution.
Senator Bellemare: So they are evaluated afterwards.
Mr. Dunlop: Yes.
Senator Bellemare: Turning to the $9 million for the young entrepreneurs, is that a contribution too?
Mr. Stewart: This was in the 2013 budget; it was $9 million per year for two years. It is a not-for-profit organization whose goal is to encourage young people to become entrepreneurs. Each young person gets a fund of about $15,000 in order to become an entrepreneur. There is also a fund for mentorship.
Mr. Stewart: The idea was to encourage people to become entrepreneurs. The organization was founded by two Canadian banks.
Senator Bellemare: This is a start-up fund, because it is going to continue.
Mr. Stewart: For a long time. There is a network of volunteers that sets the tone. They are older, experienced entrepreneurs.
Senator Bellemare: It sounds like they could be angels.
Mr. Stewart: They are not angels in the sense of venture capital, but the same kind of person. They are people who have founded organizations in their careers and who are sharing their experience with new entrepreneurs.
Senator Bellemare: My next question deals with the regional distribution of these grants and contributions. We see them under broad headings, but do you know the regional breakdown of the funding by province?
Mr. Stewart: For all our programs or for one program?
Senator Bellemare: For all your programs.
Mr. Stewart: For all departments together.
Senator Bellemare: Yes.
[English]
Mr. Enns: We do track where the recipients are, but we don't target an area in particular for most of the programs, so they're pan-Canadian.
[Translation]
Senator Bellemare: For all these grants and contributions, is there no real objective to distribute them by region, for fairness?
Mr. Stewart: Exactly. That is not the objective.
Mr. Dunlop: In general, I would say that all our programs are provided across the country. There are some exceptions, like FedNor, which is a regional program.
Senator Bellemare: Is there a way of finding out how much Quebec might have received, for example?
Mr. Stewart: Yes, the proportion of our funding that goes to Quebec. We do not have those figures with us at the moment.
Senator Bellemare: Are they publicly available?
Mr. Stewart: I am not sure. As I mentioned in connection with the aerospace research, there is the SADI program and most of those funds go to Quebec, because most of the industry is located there. However, it is not a condition or a criterion for the program. The program is aimed at excellence and innovation; we look for the best projects.
Senator Bellemare: Region is not a factor.
Mr. Stewart: Right, in that sense.
Senator Chaput: Senator Bellemare asked most of my questions, but I have one for Industry Canada. As I look through the document, I see the heading "Contributions under the Community Futures Program." Which contribution does that refer to? What is it? Is it something distributed to communities in Canada?
Can you explain, this "Community Futures Program" to me? In the French version, it is on page 229.
[English]
Mr. Enns: We're talking about the community economic development programs like the Northern Ontario Development Program, FedNor, which is the equivalent for northern Ontario of the other regional development agencies. Also included in that grouping of programs are things like the Community Futures Program, so that's in what we call a strategic outcome area.
[Translation]
Senator Chaput: So it is for Canada as a whole.
[English]
Mr. Enns: In the case of Community Futures, yes. Our portion relates to funding for northern Ontario. The rest of Canada is dealt with for that program by the other regional development agencies, like WD or ACOA.
[Translation]
Senator Chaput: Thank you. Those were my questions, Mr. Chair.
The Chair: Thank you.
[English]
Senator L. Smith: Looking through Industry, the write-up we have in the estimates, Industry's mission is to foster a growing, competitive, knowledge-based Canadian economy. Highlights, Canadian marketplace is efficient and competitive; advancements in science and technology, knowledge, innovation, Canadian businesses and communities are competitive.
Then I look on page II-173 in terms of money: science, technology, innovation capacity, $319 million; industrial research, 262; Spectrum Telecommunications 114, et cetera.
Senator Day asked a question about flow of money and who controls what, because you'd given him an answer to one of his questions saying you don't control that, you just put money into a situation.
How do you measure success? I know you have highlights, I know you've put money into these various elements, but can you give us two or three examples of successes that you've had with the money that you've invested in terms of results?
Mr. Enns: I can speak a little bit to the general framework and then perhaps my colleagues can jump in on particular examples. Contribution programs must be evaluated every five years. All transfer payment programs, according to the Federal Accountability Act, have to be evaluated every five years, so there is an ongoing way to find out about results and conditions in terms of the results achieved and the indicators would also be built into the contribution agreements that we set up with those recipients of contribution agreements.
That's one of the primary ways we have the results information on which we can base decisions on program improvements or changes of any kind.
Senator L. Smith: So do you show results in your plans and priorities in terms of specific highlights? What would be helpful to us as a committee is when you look at budgets you say, "I've got $1.7 billion" and you look at the highlights and what you're putting the money into. One of the natural questions that comes to us, I would assume, is: What results have they achieved?
Mr. Enns: You would see those kinds of things in other documents, like the performance reports that come out in the fall. The Report on Plans and Priorities would set out the goals and objectives, give descriptive details on the programs and the outcomes intended to be achieved. And then later on you get the report against that, Report on Plans and Priorities in what we call the DPR.
There are two ways we would report on results. One is through the evaluation results and audits we do, but also through ongoing performance measurement and then obviously the recipients are obliged to report on achievements for many of the contribution agreements as well.
Senator L. Smith: It may be helpful when you do your summary to give us a couple of lines of two or three bullets just when we look at budgets to see what successes they've had. So then when we look at the end of a six-year transfer program for Bombardier's CSeries airliners and sunsetting results and a $55 million decrease in funding, then if it's over what success have you had? At least when we see numbers we can attach numbers to some form of what they end up with. It probably it comes out in some of the final reports. I know we have access to them but when we get these Main Estimates and documents, it really would be helpful if you had a couple of bullets so that we see what your raison d'être is and where your successes are. It makes it easier to say we're spending a billion dollars but look at the successes they've had.
Mr. Enns: We can point to those kinds of things in a broad way the next time we come and see you.
Senator L. Smith: Hopefully not too broad, but if you could give us a few specifics.
Mr. Enns: The supporting estimates documents, like the RPPs and the DPRs, are available online. That's where you're going to find much more of the detail that will help you understand what the intended results are on the one hand, and then what the achievements are. And those are tabled at roughly the same time as the Main Estimates. So they will be tabled in Parliament within a week or two of the tabling of the mains.
Senator L. Smith: It would be helpful to have some supplement in the Main Estimates —
Mr. Enns: We are limited by what we are permitted to do by the Treasury Board Secretariat in the Main Estimates documents.
The Chair: This is prepared by Treasury Board or by you?
Mr. Enns: The strategic outcome statements —
The Chair: The words, generally, in the estimates.
Mr. Enns: This follows a prescriptive format.
Senator Callbeck: I want to come back to page 173 and that community economic development, $61 million. Is that just for Ontario? You mentioned community futures? Is there money in that for all areas of the country or just Ontario?
Mr. Enns: There are portions of our funding that is provided for Northern Ontario because the regional development organization is in the Industry Canada department, so the focus is on Northern Ontario for those programs and the corresponding funding would be delivered by the other regional development agencies such as ACOA. But there are other activities in that strategic outcome area in addition to those that are Canada-wide.
Senator Callbeck: What is Canada-wide? How much of that $61 million is getting spent outside of Ontario?
Mr. Enns: I don't have the breakdown of that at my fingertips, but —
Senator Callbeck: Well, could you get the answers?
Mr. Enns: I can tell you that the funding for FedNor in Ontario is $38 million.
The Chair: I've got $31.8 million.
Mr. Enns: Yes, $31.8 million. The $38 million was estimates last year, $31.8 million this year.
Senator Callbeck: That's Ontario. I'm from Prince Edward Island. I look at the community economic development. How much of that can my province expect to get?
Mr. Enns: Well, the kinds of programs that are in that strategic outcome are things like computers for schools, the Canadian youth internships initiative, broadband, which is a sunsetting program but we will be starting up a next version of that as was announced in the budget. So there are a range of programs and activities that are pan-Canadian within that broad strategic outcome area.
Senator Callbeck: So could the committee get a list of those programs that are for all across Canada and the amounts allocated to each one?
Mr. Enns: We can do that, yes.
Senator Callbeck: All right. For that money I'd like to have a breakdown of how much each province is getting, but is that possible?
Mr. Enns: That's going to involve some work for all the programs to get a breakdown by province. What we can do is provide an indication in that area of which programs are involved in that strategic outcome that relate to community economic development.
Mr. Stewart: When you're running an expenditure program, you need to have, in that data set, a field that indicates the region. So we could go back and gather that information. But as per my point earlier, a lot of our programs are needs-based. They're not per capita based, or they're not proportion of population or regional based.
For instance, if you think about broadband programming, this current budget just announced a new rural broadband program and that will be based on the number of households in each region that have inadequate, low-speed service right now. There will not be a proportional per capita quite likely, but what will instead end up driving what goes to needs-based is what communities need the broadband. So when we look at those programs that we deliver for the national ones as opposed to the Ontario ones, they're needs-based.
Another example is that we're responsible under the minority language community roadmap for providing coordination services and some program delivery for minority language committees. They're not a per capita breakout nationally; some regions of the country have larger populations of minority language speakers than others and so the needs-based nature program will end up determining how the money goes out.
What my colleague is trying to say is we can gather the information from the fields on who the recipients were and their addresses and so on, but normally for our programs the regional allocation isn't a program design feature. It's more based on the target population we're trying to serve.
Senator Callbeck: You've got a budget, $1.1 billion, 14 per cent is going to promoting economic development in communities across the province. Do you have any kind of a breakdown on that for, let's say, last year so I can get some kind of a handle on it? You're talking about communities across the country. How much would the Atlantic area have gotten?
Mr. Stewart: In that bundle, the single largest program is the Canada Small Business Financing Act. That is us paying a subsidy to financial institutions — you know the program probably — to in turn make available credit. We think how much of that got allocated to Nova Scotia, where I'm from. What proportion of money ended up there? Actually what we would be doing is going through the banks. We'd have to find out where the bank's lending package ended up going. I'm sure we can do that, but we don't happen to carry those kinds of numbers because these relationships are indirect.
When you think about computers for schools, we're dealing with non-profit organizations. We're going to work through our partners to find those statistics, but we can gather up in this bundle and come back to you. Obviously this is an important area for us to come back to you on.
The programs are listed there: Canada Small Business Financing Act, Canada Youth Business Foundation that we were discussing earlier, the Structured Financing Facility Program, which is a shipbuilding program. Obviously shipyards are located in Quebec, Atlantic Canada, and B.C., so that influences the distribution of funding.
And then we have the ones we were talking about that are related to northern Ontario: Northern Ontario Development Program, the Community Futures Program, the Computers for Schools Program, the Broadband Program I was mentioning, the Economic Development Roadmap for minority communities.
So there's a group of programs that fits in there, but it's not economic development if one thinks of ACOA or the regional economic development agencies where they're doing a lot of expenditure programs within a defined region. We're doing programs that have the intent of helping different kinds of communities, linguistic communities or a region, and normally they're there for a specific purpose and that specific purpose is going to determine the allocation nationally.
I can tell that we're not necessarily answering your question. We'll have to come back to you and give you this regional breakout.
Senator Callbeck: That would be wonderful.
Mr. Stewart: We want to be responsive.
[Translation]
Senator Rivard: I have two very quick questions, one for Industry Canada and the other for Public Works and Government Services Canada. One of the wisest decisions that the current government made, if not the wisest, was to have saved the automobile industry — GM and Chrysler — with an investment in capital and especially with loans. Did those sums of money come from Treasury Board, the Department of Finance or Industry Canada? If they came from the Industry Canada budget, when the shares are sold, at a much higher price than we paid for them, will the profit go to the consolidated fund or will it be used to boost your budget?
[English]
Mr. Stewart: No, it would go to the Consolidated Revenue Fund.
[Translation]
It does not come from our budget.
Senator Rivard: From the Consolidated Fund?
Mr. Stewart: Yes.
Mr. Dunlop: Our department does not administer the shares.
Senator Rivard: It is the consolidated fund, and nothing but. The profit does not go back into your budget.
Mr. Dunlop: No.
Senator Rivard: That is what I thought. Thank you. I would like to go back to the Terrasses de la Chaudière project. I am very familiar with the project. If I am not mistaken, it was built right at the start of the 1980s or the end of the 1970s.
At the time, it was done by the controversial developer Robert Campeau. Am I mistaken? Perhaps you are too young to remember.
Mr. Mongeau: I am going to check my notes quickly —
Senator Rivard: I can tell you that it was.
Mr. Mongeau: Robert Campeau built the complex with the Terrasses de la Chaudière.
Senator Rivard: Exactly. That includes, if I am not mistaken, the two Place du Portage office towers and the hotel that used to be called Auberge de la Chaudière, but is now a Holiday Inn.
Mr. Mongeau: Yes.
Senator Rivard: Does the government's purchase include the hotel in addition to the two towers?
Mr. Mongeau: Yes. We bought the hotel, but it was automatically leased back to the organization that looks after it now. We did the same thing with some of the parking as well. We subcontracted the things we are not experts in.
Senator Rivard: I understand that the price was $49 million, and that seems to be a good investment at first glance. Even though the complex is 30 years old or so, the fact remains that it has always been upgraded over the years. But once you bought it, did you have to invest almost as much money in renovations or was it ready to operate without major changes for the price you indicated?
Mr. Mongeau: Public Works and Government Services Canada has always looked at the big picture in terms of needs and locations. Our actions are always consistent with the number of officials in various departments who need office space.
When we bought the building, we did our due diligence and assessed the costs for any potential work. It took a long time. We did not do the assessment the week before the purchase; it took us a year or two. We did in fact determine that work needed to be done, but it was going to be spread over 10 to 15 years. For instance, if you are walking there, you will see that there is masonry work being done; we are looking at a timeline to determine how much time the work could take. There is also mechanical ventilation work to be done. That work will be spread over a number of years. We are also looking at the various options on how to proceed with the work: do we empty the building, do we keep the clients in the building, do we call in a general contractor who will do a P3 or will we sell? We consider all those aspects before making any major investments.
Mr. Lakroni: In terms of size, you might find it interesting that, when the building was bought for $50 million, it was worth around $298 million. Last year, we saved around $4 million in rent. In the future, we will be saving around $5.4 million on an ongoing basis. So it is a good deal, as Mr. Mongeau said.
[English]
Senator Eaton: I'm delighted to see my friend Mr. Mongeau back. He's going to tell me all about the walk behind the East Block, which is blocked off again.
Public Works Canada recently announced the creation of the Defence Procurement Secretariat. What are you requesting in the 2014 and 2015 Main Estimates in relation to the new Defence Procurement Secretariat?
Mr. Lakroni: For the Defence Procurement Secretariat, we are not asking for any money in these Main Estimates.
Senator Eaton: Will it come under acquisition, then?
Mr. Lakroni: It's a joint effort between partners, and it involves Defence, Public Works and Industry Canada. It's joining the efforts to ensure the three objectives of the strategy are met, which are basically ensuring the right equipment is bought for the Canadian Armed Forces and the Coast Guard. The second objective is the creation of jobs and economic growth, and lastly, streamlining the Defence procurement. It's a joint effort within the reference level of these departments.
Senator Eaton: What role will your department play specifically?
Mr. Lakroni: Our department will lead the secretariat in working with partners to ensure that these objectives are met.
Senator Eaton: So Defence will come to you and say, "We want X number of ships, X number of aircraft, X number of tanks." You will see as to the competitive procurement of it, or do you give the order, or do you just pay for it? Do you follow the project along as the ships are coming out of the shipyards? What is your role?
Mr. Lakroni: Our role is to ensure that the work is done in an integrated fashion as opposed to inside. For instance, Defence or Coast Guard defining the requirement and then submitting them to Public Works, Public Works does its procurement and working the suppliers, and the three organizations are not necessarily talking together.
This is an integrated approach with all parties working together with one common agenda, which, as I mentioned earlier, is that the right equipment is procured at the right price at the right time, and the economic growth is ensured as part of the strategy, and that Defence procurement processes are streamlined in consultation with the industry, et cetera, not on a one-off basis but as part of a joint effort between these two organizations.
Senator Eaton: We all know how joint efforts work. Somebody has to take the lead. Somebody has to sit at the end of the board table, put up the agenda, ask the questions and follow the money. Who is going to do that? You don't have any costs this year. Will you have costs next year?
Mr. Lakroni: There are two types of costs I think we're talking about here, the cost of the secretariat functioning, and as I mentioned, there is no additional cost for that. It's the same people, just working together.
There is the cost of procuring the goods, for instance the ships or the planes or any other military procurement.
Senator Eaton: Mr. Lakroni, who is going to take the lead if something happens? Who is going to take the lead in project management? Is it Service Canada that will do that?
Mr. Lakroni: There is different accountability at play here. There is the definition of the requirement. The lead for that is the organization involved. For instance, it could be DND, could be the Coast Guard or Fisheries and Oceans, so there is the program lead. That accountability resides with the organization.
Senator Eaton: I understood that.
Mr. Lakroni: The budget is under the organization that is procuring the goods, which is DND, Coast Guard, et cetera.
The lead for PWGSC is the cost of managing the procurement. So the cost of the procurements, that's something under our leadership.
Senator Eaton: Once the contract is given out, once the plans come from DND, the Coast Guard, wherever, it's decided who is going to build it, then it falls to you guys to make sure that it's delivered on time; it is what it is.
Mr. Lakroni: That is correct. The lead of the secretariat is with PWGSC.
Senator Eaton: Thank you. That's very helpful.
Mr. Mongeau, are you still in charge of refurbishing the Parliament buildings?
Mr. Mongeau: No, unfortunately not, but I got the point on the sidewalk.
[Translation]
Senator Eaton: No, no; I did not mean to tease you, but are the projects still on time?
Mr. Mongeau: My colleague, Ms. Chahwan, is responsible for all those projects. But speaking on her behalf and mine, I would say that yes, the projects are still on time.
Senator Eaton: Congratulations. Thank you. Thank you, Mr. Chair.
The Chair: Thank you for that information.
[English]
I see where you had allocated some more money to the Parliamentary Precinct work. Is that to make up for time or for expanded work?
Mr. Lakroni: We have a program of work that is well detailed, and it's the profile of the program. To answer the question, the profile of the program in this fiscal year calls for $91 million more than last year.
The Chair: That's it. Not because something is new?
Mr. Lakroni: Not because there is an increase. I think we have a track record of delivering on time and on budget, and sometimes under budget.
The Chair: Since we're all putting in our requests, they want the sidewalk for East Block; I'd like a tunnel between Victoria Building and the other side of the road.
Mr. Lakroni: The point is well registered.
The Chair: Thank you very much. This has been very helpful.
Senator Chaput: Just a follow-up to Senator Callbeck's question regarding economic development. Maybe you could look into that, sir.
There was a time when we had in Canada what I will call regional economic agencies. I remember, as an example, I'm from Manitoba, we had the one for Western Canada. In French it was DEO. There was one for Ontario, one for Quebec and one for the Atlantic regions, I believe. Is this still the case? I thought these were under Industry Canada.
Mr. Enns: The answer to your question is yes and no. They still exist, but they are not in the Industry Canada portfolio.
Senator Chaput: They still exist. What would the one for the Atlantic region be?
Mr. Enns: ACOA, and Western Economic Diversification still exists out of Edmonton, but with regional offices including in Winnipeg. There is FedNor, which is northern Ontario. Southern Ontario is called FedDev. SEDQ is the agency for Quebec.
Senator Chaput: The one for the Atlantic still exists.
Mr. Enns: Yes.
Senator Chaput: And there is a set budget for economic development?
Mr. Enns: Yes.
The Chair: I have exhausted our list.
Thank you very much for being here and for helping us out. This is our last meeting before the main supply, so we may see you again, but it will either be on Supplementary Estimates (A) or possibly Supplementary Estimates (B) or (C) during the year. Thank you very much. We appreciate it.
The meeting is concluded.
(The committee adjourned.)