Proceedings of the Standing Senate Committee on
National Finance
Issue No. 32 - Evidence - May 9, 2017 (afternoon sitting)
OTTAWA, Tuesday, May 9, 2017
The Standing Senate Committee on National Finance met today at 2:19 p.m. to consider the subject matter of Bill C-44, An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Welcome to this meeting of the Standing Senate Committee on National Finance.
[English]
I wish to welcome all of those who are with us in the room and viewers across the country who may be watching on television or online. My name is Percy Mockler, senator from New Brunswick and chair of the committee, and now I would like to ask the senators to introduce themselves, starting on my right.
[Translation]
Senator Eaton: Nicole Eaton from Ontario.
[English]
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
[Translation]
Senator Forest: Éric Forest from the Gulf region of Quebec.
Senator Moncion: Lucie Moncion from Ontario.
Senator Pratte: André Pratte from Quebec.
[English]
The Chair: This afternoon we continue our consideration of the subject matter of Bill C-44, which was referred to us by the Senate yesterday evening.
[Translation]
Bill C-44, An Act to implement certain provisions of the budget tabled in Parliament on March 22, 2017 and other measures, is what we call a budget implementation act.
[English]
First, to cover Part 4, Division 7, relating to the Parliamentary Budget Officer, we welcome from the Privy Council Office, Allen Sutherland, Assistant Secretary to the Cabinet; and Don Booth, Director, Strategic Policy. Welcome, gentlemen.
I want to take this opportunity to say that our public servants are professional people, and on this, you can pass our message from our committee that we will continue with the order of reference from the Senate of Canada that we will work for identifying predictability, accountability and transparency as we move forward in budget implementation.
I would like to present the clerk, Ms. Lemay, and the analysts, Sylvain Fleury and Olivier LeBlanc-Laurendeau.
Mr. Sutherland, please make your presentation. Afterwards, senators will ask questions.
[Translation]
Allen Sutherland, Assistant Secretary to the Cabinet, Privy Council Office: I am very pleased to be here this afternoon to explain the technical aspects of Division 7, which pertains to the Parliamentary Budget Officer and the Board of Internal Economy. I will begin with the proposed legislative amendments that pertain to the PBO.
[English]
Let's start with the PBO. I will provide a summary to set up the context. The proposed legislation fulfills the government's commitments to ensure the Parliamentary Budget Officer is properly funded and independent, with a mandate focused on accuracy, transparency and costing.
The Parliamentary Budget Officer, as we know, supports Parliament by providing an expert and objective source of research and analysis on fiscal and economic matters. These amendments will strengthen this important resource for parliamentarians by — and I'll just mention a couple of them — first, establishing the PBO as an independent officer of Parliament, separate from the Library of Parliament, with his or her own dedicated office; two, appointing the PBO to serve for a term of seven years, removable for cause, rather than serving at the pleasure of the sitting government, with the appointment and removal of the PBO subject to parliamentary approval; three, ensuring the work of the PBO is responsive to the needs of parliamentarians and parliamentary committees; and four, providing the PBO with wider access to relevant government information to better inform the research and analysis provided to Parliament.
Under the proposed legislation, the PBO's mandate will also include for the first time the costing of election platform proposals at the requests of political parties, providing a credible, nonpartisan way of assessing a party's fiscal plans and encouraging informed public debate. These changes will provide parliamentarians with the information and analysis they need to best serve Canadians and effectively hold the government to account.
Turning to the Board of Internal Economy, as part of delivering on its commitment to deliver more open and transparent government, the government is proposing to end the secrecy that surrounds the Board of Internal Economy. This is the body that makes decisions and provides direction on financial and administrative matters of the House of Commons. The proposed legislative changes will make the board's meetings open by default. This means that in all cases except those involving sensitive or personal information, business of the Board of Internal Economy will be made public.
It is important to note that the proposed changes in this area will not change the role or the composition of the board. All recognized parties — so those parties holding at least 12 seats in the house — will continue to be given representation on the board.
With that, Don and I welcome your questions.
The Chair: We will go to questions, then.
Senator Eaton: Thank you very much for coming.
You remarked that the Parliamentary Budget Officer will become completely independent, have his own office and no longer be part of the library. Does that not mean that he will have less access to the information that, being part of the library, he could force a ministry or committee to divulge? He will no longer have those powers; is that correct?
Mr. Sutherland: A couple of thoughts on that. First, there is nothing preventing the PBO and the Chief Librarian from cooperating; there is nothing in the legislation that prevents that.
The broader area where there will be considerably more information made available to the PBO is in terms of the officer's access to government information. For access to government information currently, the legislation reads something along the lines of "economic and fiscal data.'' This has been a source of tension in the past. What is proposed now is for the PBO to have access to all information relevant to fulfilling his or her mandate. Because it's a much broader set for potential information, that would be subject to some criteria around access to information, such as personal information, cabinet confidences and solicitor-client privileges, as well as Schedule 2 of the Access to Information Act. It is very particular set of information that is tightly held, such as things like genetic discrimination, which is probably not relevant to the PBO.
Senator Eaton: There was an editorial in The Globe that said the Auditor General has the power to get the information it wants. He can access tax information, cabinet memoranda, classified Department of National Defence information related to procurements that the PBO cannot. Is that correct?
Mr. Sutherland: That's correct.
Senator Eaton: And this is a good thing?
Mr. Sutherland: You would have to look at the different mandates of the two.
Senator Eaton: But why wouldn't he just remain part of the library? What is the advantage of making him independent?
Mr. Sutherland: It elevates his level and stature. In the past, as I understand it, being part of the library has been problematic. So the proposed legislation would make the PBO a deputy head in his own right with all the administrative powers of a deputy head.
Senator Eaton: But none of the information powers.
Don Booth, Director, Strategic Policy, Privy Council Office: Currently, it is basically a business line in the library. By making it a deputy head of its own entity, administratively, the PBO will be responsible for its own spending and staffing without having to go through the librarian for approval.
In terms of access to information, he would not have more access to information by being part of the library.
Senator Eaton: One of his complaints right now is that he will lose access to information. I guess it's a difference of opinion.
The other subject I'd like to discuss is that he would have to submit his work plan for the year to the two Speakers of the upper and lower chamber.
Mr. Sutherland: Correct.
Senator Eaton: Does that not make it partisan, as both Speakers are appointed by the Prime Minister?
Mr. Sutherland: This is an area where you are probably more an expert than I am, but the Speaker of the House, I believe, is appointed by members of the house.
Senator Eaton: If you have a majority in the house, you are going to elect a speaker of your stripe. The Speaker in the upper chamber is appointed by the Prime Minister.
Mr. Sutherland: On the recommendation of the Prime Minister, correct.
Senator Eaton: By the Prime Minister. Sorry, so you don't see that as a partisan decision? Why would he have to submit a work plan?
Mr. Sutherland: Part of the proposed legislation is looking at the role of the PBO, and the role of the PBO is to provide costing and economic and fiscal analysis to parliamentarians so parliamentarians can better hold the government to account. In doing that, he will have to set priorities, and he does now. The idea of the work plan is to provide a tool for prioritizing. So there are different aspects to the work plan, and it would allow the PBO, with the approval of the Speakers, to set the expectations for the year. Given the service role of the PBO, using the work plan would also help inform the budget, which is approved by the Speakers as well.
The Speakers' role is not to somehow get in the way of the PBO. The Speakers' role is to facilitate the workings of Parliament, and that's part of what they would be doing in this capacity.
Senator Eaton: That's a very idealistic, lovely way to think, but I also think that Speakers, as fair as they may be, would have something to say about their priorities and what they are doing.
The Chair: We'll take that as a comment not a question, Senator Eaton?
Senator Eaton: Yes.
[Translation]
Senator Forest: Thank you for being here today. I am having difficulty understanding why Bill C-44, a bill to implement budget provisions, includes major changes to the position of PBO whose role, we hope, is somewhat independent. In fact, I believe that is part of the PBO's mandate. I cannot understand the link between the nature of Bill C-44, which should set out the provisions for the implementation of the budget, and the structural changes to the PBO.
For my second question — further to what my esteemed colleague said —, when the PBO is asked to submit his work plan for approval by the Speakers of both houses, this obviously imposes definite and major limits on the independence of the PBO.
My final point pertains to clause 79.4, which limits access to the information that is relevant to his mandate. I cannot understand why a bill, which is intended to provide for the implementation of the budget, includes structural changes to the mandate of an officer of Parliament as important as the PBO. Those are my three questions.
[English]
Mr. Sutherland: I'll do my best to answer.
On the issue of should it be included, that's a bit outside my purview. I'm here to answer technical questions, but I will say a couple of things. The announcement of the government's intention to move forward with the PBO was announced in the federal economic statement in the fall, so it was previewed there. There is of course a very tight connection between budget matters, which is actually one of the many deliverables that the PBO has, and the PBO.
With regard to the work plan, and I know it has been an area of some discussion and different viewpoints, the work plan is meant to help set priorities. The need to set priorities exists whether you have a work plan or not because the PBO has finite resources. This is meant to make sure that parliamentarians, through their Speakers, understand those priorities.
There is a real challenge that the PBO has, which he manages. I'm not intending to say it's a challenge in the way we often use the word "challenge'' in government, but inherent in his job is he has to set priorities between requests from MPs and senators, parliamentary committees, as well as some of the main documents we have come to expect from the PBO. So the work plan is meant to work that through in a transparent way so that parliamentarians know what they can expect from the PBO.
I would note too that the Speakers are able to consult committees of both chambers in terms of the work plan, including this one, I believe, and this too is part of trying to set the prioritization to make sure that resources match expectations.
Flexibility is another thing that has been discussed. The idea that a work plan is sort of one and done, you set the work plan and then you can only do the work plan is not the intention of the legislation. Indeed it's impossible because we are asking the PBO to respond to parliamentary committee requests throughout the year.
The other aspect of that is in a work plan you can include contingency resources for items that should come up throughout the year, and part of what is hoped in the work plan is you would also include things like how you would set priorities. As part of that you could say something like, "In the event of an economic downturn, priority will be given to this or that issue.'' Or government priorities for that matter.
I know it's an annual work plan and people think once a year and its inflexible, but that's not the intent.
[Translation]
Senator Forest: If I may, Mr. Chair.
The Chair: Senator Forest, since your first question contains three questions, we could get back to you in the second round and give the floor to Senator Marshall.
Senator Forest: It is just a supplementary question. Of course there is a work plan that sets out priorities, except that the PBO's work plan ultimately becomes the work plan of the Speakers of both houses. It is no longer the PBO's work plan, because it is approved by the Speakers of both houses.
[English]
Mr. Sutherland: I think that is a comment, actually. The idea is that it is a shared endeavour. It's a different view of it, but yes.
Senator Marshall: I have a number of issues, but I'd like to carry on about the annual work plan because it does have to go to the Speakers, and it goes to them for approval. The legislation is quite clear. It says "after the annual work plan has been approved.'' So it is going to the Speakers to be approved. So if the Parliamentary Budget Officer is going to be an officer of Parliament or an agent of Parliament, why in the world would they have to do their work plan? This isn't even as broad as his mandate. This is your work plan that has to go to the Speakers to be approved.
There is room there for the Speaker to say, "Thanks for your work plan, but I'm not approving it. I don't like the topics you're going to be working on, so send it back.''
My interpretation of that section of the legislation is that while a commitment was made to make the Parliamentary Budget Officer more independent, the way the legislation is worded is that there is a very small fence being put around the Parliamentary Budget Officer and his mandate.
It's not only the work plan, but when you get into the mandate, it breaks out. Does "mandate'' encompass when Parliament is not dissolved? There is this big list of things that he may do and things that he shall do. Again it's tightening that fence around the Parliamentary Budget Officer so that he doesn't have any flexibility at all for any judgment. Then when you get to the section regarding dissolution, it says, "if Parliament is dissolved before a report is provided'' that he's got to discontinue work on the requests. It doesn't even say you can't release the report. It says you can't carry on with your work.
The whole legislation for the Parliamentary Budget Officer is just a terrible piece of legislation. It really puts him in a stranglehold. This is supposed to be an officer of Parliament or an agent of Parliament. One would think that there would be legislation with a broad mandate and broad parameters, but this is getting right down into how he's going to select his projects, and it's almost unheard of. I don't know why there needs to be a work plan submitted to the Speakers. I don't know why the Speakers would have to approve or not approve his plan, and then all these restrictions on him, it's almost unheard of.
I don't know if you can comment on that. You can probably rebut what I'm saying with regard to putting a fence around the Parliamentary Budget Officer. That was the intent of government when the legislation was authored.
Mr. Sutherland: It's not my role to rebut you. I would say a couple of things on the issue of when Parliament dissolves, and why would it be the Parliamentary Budget Officer would stop work on projects at that time. It's because Parliament itself is dissolved. It means that there is an election coming, and it's basically a corollary to the convention of restraint. So there is no desire to interrupt an election campaign with a report that could be quite controversial and could shake the path of the election. That's what we're trying to do.
Senator Marshall: But if the Auditor General is doing a controversial audit while an election is ongoing or Parliament is dissolved, the Auditor General is not required to stop his audit. I don't remember seeing that in his legislation. Why would you have this in the legislation for the PBO?
Mr. Sutherland: I don't know the AG legislation to that detail, so I can't give you an answer to that. The reason why you would have it is because an election is under way. You want to make sure the election can be fought on even grounds and having a controversial report issued in the middle of an election campaign is problematic.
Senator Marshall: But it's not the release of the report. It says "if Parliament is dissolved before a report is provided, the Parliamentary Budget Officer shall discontinue work on the request.'' So it's not that he can't release his report. It's that he has to stop doing his work.
Mr. Sutherland: The committee that he would report to does not exist any more.
Senator Marshall: I just don't understand why he wouldn't be allowed to continue his work.
Mr. Sutherland: Because the committee doesn't exist. There is no one to report it to. If the committee is reformulated, they could continue the work of the last committee.
Senator Pratte: I share many of the concerns already expressed, but I'll limit my questions for the moment to the provisions on access to information. Let me see if I understand correctly what the bill says.
There seems to be an opening up of access to information to all kinds of information, not only financial and economic information.
Mr. Sutherland: Correct.
Senator Pratte: But then right after that, the bill restricts, first of all, by the confidentiality provisions which narrow the possibilities for the PBO to publish the information that he has received. He cannot publish anything if the deputy minister or the head of the department or a Crown corporation decides that he should not publish that information.
Mr. Sutherland: It says consented in 79.21, subsection (9) that refers only to personal information of which the deputy is the keeper. It is just limited to personal information.
Senator Pratte: Well, it says in the case of 79.4. I misunderstand the intent here.
Mr. Sutherland: I want to make sure I have it right for you.
Senator Pratte: Confidentiality, that is 79.5.
Mr. Sutherland: I'll speak in general terms. The mandate is expanded in a couple of ways. We haven't seen any coverage of this. It now includes Crown corporations as well as departments, so that's an expansion. The type of information that's available is financial and economic data. That's an expansion as well.
Amid that, the proposed legislation would restrict it along the lines of access to information, client-solicitor privilege, and the third is cabinet confidences.
Keep in mind, the PBO's mandate is primarily one of economic and financial information. It's really up to you as legislators to judge whether that is appropriate. It certainly represents a large expansion from what was available before. The hope, I believe, in the legislation is that it will reduce the conflict that we've seen in the past between government departments defining economic and financial data in a very narrow way. So we're trying to get around that by broadening the access to information.
Mr. Booth: In terms of the confidentiality provisions and publicly availability, currently the PBO has access to economic and financial data. The legislation is going to greatly expand what the PBO can go to a department or parent Crown and request. Basically what this is saying is the PBO can certainly publish any publicly available information it has, and if the PBO gets documents from a department, it can use that information as part of its analysis, but if it was to release a secret memo, the PBO would need to seek the department's permission that it's not disclosing a government secret. It could use the information in an aggregated manner for its costings but not release the document itself.
Senator Pratte: The difficulty, sir, is that in the act as it is now, these types of cases were covered by exceptions in the Access to Information Act, under clause 14, 18(a), et cetera. Now, it's simply whether the minister's deputy consents to disclosure, or whether the head of the department or parent Crown corporation has consented to disclosure. So it's at the discretion of the deputy minister or the head of the department.
As a follow-up to that, if I understand the provision correctly, there is no appeal mechanism. So if the head of the department says, "No, I'm sorry, you can't publish this,'' there is no appeal mechanism. There is in the present act, if I understand correctly, the PBO could appeal to the Federal Court. Now that's abolished. There is no appeal mechanism.
There is an opening up, but right afterwards, everything is narrowed down.
Mr. Sutherland: I would argue it's very subtle. Let me try and talk it through with you as best I can.
Senator Pratte: Please help me. Maybe I'm not subtle enough.
Mr. Sutherland: Having read your work, sir, I shouldn't have even said the word.
Before we start, can I just say there's another area where the access to information for the PBO is greatly increased, and that is the requirement that it is merely information under the government's control. It's not necessarily just documents created by government, like consultants' reports and that sort of thing.
On the issue of the role of the deputy, it is the department's information, and they have a residual responsibility to make sure it is well treated. Let's say there is a dispute between the PBO and a department on revealing information — not the use of the information behind the scenes, but the actual revealing of the information in the report.
First, they should work it out.
Second, the PBO, as the Parliamentary Budget Officer, has an appeal to committees, members and to the Speaker. He has lots of recourse. Part of being an officer of Parliament is that Parliament is the appropriate venue for reconciling some of these tensions. So that would be a part of what I would argue. It allows him a way of recourse if there is what we might call an honest difference of opinion as to what could be publicly revealed of the information that has been provided from government.
We've heard the PBO still has recourse to send something to Federal Court. It's not in the legislation. He has recourse. What has been dropped is an ability to refer a question to the Federal Court, which was that it wasn't clear whether he had that responsibility. Some people say yes; some people say no.
But if he thinks the department is behaving unlawfully, he can take the government to Federal Court. Our recommendation would be, and I'm sure the PBO would do this, to exhaust parliamentary avenues first, but he still retains that right, in my view.
Mr. Booth: The clause that has gotten the attention on this is the clause basically says that the PBO would not be a commission or tribunal of government. That was included basically to put the PBO on the same level footing as all the other parliamentary actors. The intention of that clause is the courts cannot do a judicial review of parliamentary actors. This was literally just included so the PBO would be on an equal footing.
The corollary to not having the judicial review in the Federal Court is the fact that parliamentary actors cannot refer issues for opinions to the Federal Court. As Mr. Sutherland has said, if the PBO feels a department is acting unlawfully, it has a common law recourse to the courts; it doesn't have the ability to seek an opinion of the court.
Some would argue that being within the Library of Parliament, it doesn't have that right currently.
The Chair: Before we go to round two, I have a question.
[Translation]
Under the current act, that also pertains to the supplementary question from Senator Pratte.
[English]
I'll say it this way: under the current act, members of the House of Commons or Senate may ask the Parliamentary Budget Officer to estimate the financial cost of any proposal that relates to a matter over which Parliament has jurisdiction, and under Bill C-44, parliamentarians could only request estimates of the financial cost of any proposal they are considering making before Parliament.
Why was this change proposed if we are going to give more authority to the PBO?
Mr. Sutherland: First off, you're correct. In fact, the current legislation allows individual members and senators to request financial costings of things like PMBs or if they propose an amendment, so it is more narrow. If a member wished to ask the PBO for something broader, they would need to work through the committee, or they could also raise it with the PBO in the context of the annual work plan.
The Chair: On round two, are there any other questions from the senators? The chair will recognize Senator Marshall, to be followed by Senator Forest.
Senator Marshall: The proposed fence that's being put around the Parliamentary Budget Officer, is this something that has been contemplated for other officers of Parliament? Are we on a slippery slope here, that by putting in these conditions around the Parliamentary Budget Officer other agents of Parliament would see the same constraints imposed on them?
Mr. Sutherland: Not in my view. I think each officer is unique. By the way, I would say that, in fact, the role of the Parliamentary Budget Officer in total is actually getting much larger. He's going to be more capable of doing the job that parliamentarians expect of him.
[Translation]
Senator Forest: I have one final question. As you know, we are extremely concerned about the role of the PBO, who must be an independent officer of Parliament. This independence is crucial for him to be able to fully perform his role. Bill C-44 pertains to the implementation of budget provisions. I cannot understand why this bill should include changes that affect the PBO. Are the Chief Electoral Officer, the Auditor General or the Commissioner of Official Languages also required to submit their work plan to the Speakers of both houses for approval? Are they required to indicate their actions and priorities to the Speakers of both houses? Would these changes create a climate that is not conducive to the PBO serving his role fully and freely?
In my opinion, the role of the PBO is of course to identify inconsistencies, but above all it is to provide for the more effective allocation of parliamentary votes. I am referring to all corporations and departments. Organizational effectiveness must be increased in view of the nature and amount of public funds invested.
[English]
Mr. Sutherland: The quick answer is no. The annual work plan is not something that other officers of Parliament are required to do. I think the intent of legislation is to simply reflect the role that the PBO has in providing a service to parliamentarians, and that is the idea behind the work plan, so that it's well understood what the PBO can do, where his or her priorities are for the year and what service they can expect, because it also includes priorities.
Senator Woo: I wanted to ask about the costing of election campaign proposals. I note that the legislation refers to costing party proposals rather than a party platform as such, which of course could mean multiple proposals. That may or may not end up as being part of a platform.
I'm wondering about the practicality of this initiative. Worthy as it may be, given that the clock starts ticking 120 days before the election and we will have multiple parties of course, there is a question of equitably. How do you distribute the costing exercise? The fundamental question is: Have you thought about how practical it is for the PBO to actually entertain and deliver on what could be very many proposals from multiple parties, technically up to the day before the election but it could be up to the week before? How will the PBO possibly manage this?
Mr. Sutherland: It is something we worried about, and the intent in the legislation is to try and reduce some of the workload effects. This is done in a couple of ways. One is completely voluntary, so parties are not obligated to submit requests.
A second way of addressing it is, especially with our fixed election dates, it will be known in advance when an election is, unless there is something very surprising, and so therefore it would be caught up in the annual work plan and also in the resourcing. This will be a bit of a journey because it's new for Canada. It does exist in Australia.
The Australian case is an interesting one. We did reflect on it. In Australia the PBO there, or the equivalent name, is required to cost all parties' election platforms after the fact. That's not in the Canadian legislation. If we go back to the core purpose of the proposed legislation, it's to provide an avenue for parties to have their proposals costed in a professional way, a neutral way, as a way of informing democratic debate. So that's the purpose. I think it's a very noble one, and so the question is how do you go about doing it.
Another way we have tried to address the resource issue is the legislation provides recourse for the PBO to engage with departments. You can imagine something like a request on Canada Student Loans. It might be that the department would have the information, and so if the PBO were trying to recreate that from scratch, it would be all that they would do. To try and minimize that workload surge, it is proposed that they would have recourse, if they wish, understanding that it is always the PBO's numbers, to departmental information which they can use or not use as they see fit.
The other important part of it, if I may stray just a touch from your question, is that parties may have proposals that once they find out the true cost of them they may choose not to adopt them. If that happens, it's unfair if that information were released. So it's only when the party announces it as part of their platform, part of their election commitments, noting that the PBO has validated the costing, that they are meant to inform, in writing, the PBO so the PBO can release the complementary information.
I'm sorry it's a bit of a long and winding answer. We've tried to give the PBO the option to engage departmental resources during a election campaign to help minimize the workload surge. It's voluntary. It only gets released when parties make an announcement, and it should be contained in the discussions around the budget in the year running up to it. If the PBO finds that every party wants to have the PBO do their election costing and the surge is unmanageable and the departments aren't as helpful as thought of, the PBO can decline. If it's too much, they can decline and explain why that's the case.
Senator Woo: If I may follow up, as an independent non-partisan senator, I would have liked to see a mandatory costing of all party platforms so that no party can kind of run away from, as you put it, third-party independent scrutiny. Was this option considered?
Mr. Sutherland: Yes because it was in the Australian approach. It's after the fact. Most parties in Australia don't actually have their platforms costed by their PBO.
One answer to your question is the long view, which is good information beats bad information, and if and when the PBO provides superior costing and trusted costing; in other words, build a better mouse trap and the world comes to your door.
Senator Woo: Maybe that will happen because they will come to see it. Thank you very much.
Senator Pratte: Let's go back briefly to the annual work plan. Whatever happened to the annual work plan? Whether it is tabled with the Speakers or not, every organization needs a work plan. You need to set priorities and it's a good thing to have a work plan to function efficiently.
How did the idea come about that the annual work plan needed to be approved by the Speakers? You would achieve the same goal, it seems to me, whether or not the work plan was approved. You could simply have the work plan tabled in both houses or with the Speakers, if you want. Approval is not really necessary, and in my view, and I think in the view of many senators, it is a hindrance and inconvenient. You could achieve the same goal by having the priorities of the PBO tabled in front of both houses of Parliament, could you not?
Mr. Sutherland: You might be right. I think the idea at the time was that it would mean more buy-in. You would have to work it through together, and so the priorities would lead to a richer document, but I take the senator's point.
Senator Pratte: Thank you.
The Chair: I wish to thank the witnesses for appearing. If there is need to call you back, we will.
We will now proceed, honourable senators, to Division 15, Part 4. This would be transportation.
[Translation]
From Transport Canada, we welcome Ms. Marie-Hélène Lévesque, Executive Director, Cost Recovery, as well as Ms. Mary O'Connor, Legal Counsel.
[English]
Could you please advise the chair who will make the presentation in order that we do address Division 15, agreements Minister of Transportation clauses 312 to 316?
[Translation]
Marie-Hélène Lévesque, Executive Director, Cost Recovery, Transport Canada: Mr. Chair, it is I, Marie-Hélène Lévesque, who will give the first presentation and attempt to answer your questions.
Mr. Chair: Thank you, Ms. Lévesque, and welcome to the committee. You may proceed and, after your presentation, the senators may perhaps have some questions for you.
[English]
Ms Lévesque: Division 15 pertains to amendments to four acts under the purview of the Minister of Transport, the Aeronautics Act, the Navigation Protection Act, the Railway Safety Act and the Canada Shipping Act, 2001.
Collectively these amendments will allow the Minister of Transport to enter into service level agreements or contracts with industry organizations for activities in the aviation, navigation, infrastructure, rail and marine transportation sectors.
[Translation]
These amendments do not pertain to creating new fees or charges, nor will they increase fees or charges. The amendments are intended to give the transport minister the power to conclude contractual agreements with organizations or users of Transport Canada services.
[English]
These amendments will allow the Minister of Transport as well to spend the funds received from an agreement in one fiscal year or the next fiscal year and this is in recognition of the fact that service level agreements will be signed in respect of work that is likely complex and time-consuming and done likely in the span of more than one fiscal year.
[Translation]
That is what I had to say.
The Chair: Thank you. Do you have any questions in this regard, senators? As there are no questions, you have done a good job and we thank you for that.
We will now move on to Division 21 of Part 4. We welcome the Treasury Board of Canada Secretariat.
[English]
Going to Division 21 of part 4, we have before us the officials from Treasury Board of Canada Secretariat.
Roger Ermuth, Assistant Comptroller General, Financial Management Sector, Office of the Comptroller General —
[Translation]
— and Ms. Nathalie Meilleur, Senior Director, Financial Management Sector, Office of the Comptroller General. Who will be giving the presentation?
[English]
Mr. Ermuth will make the presentation on the basis of responding to clause 451 of Bill C-44.
Mr. Ermuth, the floor is yours.
Roger Ermuth, Assistant Comptroller General, Financial Management Sector, Office of the Comptroller General, Treasury Board of Canada Secretariat: Like most other governments, the federal government charges fees for services that provide recipients with direct benefits beyond those received by the general public. Examples of those fees include: fees for services, for example ice breakers or the inspection of cattle for export; fees for products, such as marine navigation charts; fees for facilities such as the use of a wind tunnel; fees for the rights and privileges which mainly include authorization to use publicly owned or managed resources, so in this case for example commercial fisheries.
It should be noted that the proposed service act does not apply to bridge tolls as the federal organizations responsible for the administration of these bridges do not fall under the scope of the legislation.
For the fees subject to the act, the amount charged is normally intended to recover all or part of the cost of delivering that service. In setting fees, departments must consider the private versus public benefit associated with a fee. In other words, consideration is given to the extent to which a product or service benefits all Canadians, for example food safety, versus a specific business benefits from the service, for example profit from the sale of safe food.
Under the current legislative framework governing the setting of fees, many fees have not changed for years or even decades. As a result, taxpayers are currently subsidizing a high percentage of many services and products, many of which are for the primary benefit of specialized users of government services.
So in Budget 2017, the government announced its intention to propose changes to the legislative framework governing fees for government services. The Budget Implementation Act seeks to deliver on that commitment by introducing a modern legislative framework that will support more cost-effective delivery of services. It will also help improve transparency and oversight and ensure those who set fees are accountable to Canadians.
The key changes included under the Service Fees Act include: all fees being subject to the legislative framework; an improved accountability regime to ensure fee payers are reimbursed when performance is not met; a streamline approach to better support and speed up the fee-setting process while reducing duplication of requirements covered in other laws or regulations; the introduction of an automatic inflation escalator to make sure fees maintain pace with costs; enhanced transparency to provide Canadians and parliamentarians with annual information on fees including revenues versus costs and performance. This includes both mandatory requirements that departments table annual information in Parliament as well as a requirement that the President of the Treasury Board make available to the public a consolidated report of those fees.
It should be noted that introducing this new legislation will not increase fees beyond the proposed inflationary escalator. Fees are set under ministerial authority after consultation with interested stakeholders. The modernization of this legislative framework opens the door for departments and agencies to rebalance the burden of costs between the general taxpayers and those benefiting from specialized services.
At this point I would be pleased to take any questions.
The Chair: Thank you very much, Mr. Ermuth. The chair will recognize Senator Eaton, please.
Senator Eaton: Thank you very much. Could you just clarify for me, fees from now on will be able to rise along with inflation?
Mr. Ermuth: That's correct. The intention is through the Service Fees Act where a department does not have already in their legislation an escalator that it would be set through this legislation.
Senator Eaton: The second thing, it's lovely to hear about accountability. Fees would be returned if performance is not met. How would that work?
Mr. Ermuth: The idea would be that if I as a provider of a service to a stakeholder don't meet my pre-established performance indicators, so the service standard agreed upon through the consultation process, there will be a mechanism whereby I as a department would reimburse all or a portion of those funds, depending on how far off the service standard the department is.
Senator Eaton: In other words, if I was a food inspector and went through a food processing plant and it later turned out that I missed something, and it hurt the business, my fees would be refunded?
Mr. Ermuth: I'm not an expert on food inspection, but I don't believe that is how they would set up their performance standards. My anticipation would be to the effect that we will come through or review your new product within X period of time to ensure you are not hindered getting it to the market or there would be some degree of making sure we come out on an annual basis so you maintain your certification.
Those types of things again that for the industry would be important to understand or for the stakeholder interested to understand in terms of what I'm buying or what level of service I'm expecting from this.
Senator Eaton: From the government?
Mr. Ermuth: From the government, correct. Sorry.
The Chair: We turn now to the sponsor of Bill C-44, Senator Woo.
Senator Woo: This legislation fundamentally changes the way in which you determine fees and set fees. It gives you more flexibility in doing so, which of course could lead to a sharp spike in certain fees whereas the previous regime may have been way underpricing the service that government has been providing.
Is there any restraint or any caution around overly high spikes in fees overnight because the review process, while correct, may be adjusting for significantly underpriced services? Do you know what I'm getting at?
Mr. Ermuth: Yes. Thank you for the question. One key thing to keep in mind with the Service Fees Act is that it reinforces the fact that consultations are important and that a minister who retains the responsibility for setting and increasing fees has a responsibility to consult with stakeholders. In terms of that, part of the discussion has to be with the stakeholder group. What is the impact of this increase? How much can the industry take? What is the longer-term impact?
The flip side is that in the absence of these fees becoming adjusted, what is actually happening is the general taxpayers are subsidizing specialized users of government services.
There is a fine balance there, and obviously each department, each minister will have to weigh, in conjunction with their stakeholders, what and how fast, if they are determining that they want to increase fees, they would be doing so.
Senator Woo: Thank you.
Senator Pratte: I just want to make sure I understand correctly this idea of performance standards which sounds really revolutionary. I read this part of the bill very fast, but the provision on remissions reads as follows:
If the responsible authority with respect to a fee considers that the performance standard in relation to the fee has not been met in a fiscal year, the responsible authority must remit, before July 1 of the following fiscal year, the portion of the fee that the responsible authority considers appropriate to any affected person . . . .
If I understand correctly, the responsible authority determines what the performance standard is and then decides if it met the standard, and if it decides it did not meet the standard, decides what part of the fee it should reimburse. It is a good idea, but it's a responsible authority that determines what the standard is, whether it met the standard and what part of the fee it should reimburse.
You have to rely on the good faith of the responsible authority, whether there will be any reimbursement of any fee at any point in time.
Mr. Ermuth: First, in terms of when the service standards are set, there is a responsibility or an accountability to actually consult with the stakeholders group as to what the performance standard will be. At the end of day, the responsible minister makes that final determination and will consider all of the input from the stakeholders, but they are taking accountability in saying this is what and how I will deliver.
In the legislation we note that it links with the Treasury Board policy. We recently released a policy on results. We have a policy on service. So again, the government's objective around how we will manage result and manage service are already to be considered in terms of that statement.
When it comes to the performance reporting, again taking a hypothetical situation where it's supposed to take 100 days to review something and it takes 120 days, obviously that is a pretty cut and dry situation, and that's part of establishing good solid performance standards that are measurable and one can figure out and have reasonable agreement in terms of when a standard is met or not met.
Part of what will support this is policy around, when you don't meet it, what departments should be doing around that. If you miss it by 20 days, is that an egregious problem? It may very well be; it may be the fact that the industry and that same company has been putting in three times as many requests this year and there needs to be some discussion. The point is that all of this should be discussed as the standard and recourse as part of establishing those performance standards.
Senator Pratte: All this will be published in a reasonable time?
Mr. Ermuth: My apologies; I should have mentioned that as well. Another thing being introduced through this legislation through these annual reports to be tabled in Parliament is what the costs will be, how much money was brought in, what the service standard was, how often the service standards were met, how often there have been reimbursements as a result of not meeting the standard. All of that stuff will be made public, also tabled in Parliament.
Senator Pratte: Thank you.
The Chair: I have a question for the officials.
Would defining "low material fees'' be at the discretion of the responsible authority until Treasury Board looks at it? That is what you're asking us to consider.
Next, could you give us some examples across Canada of what would be low material fees and what would be low material?
Mr. Ermuth: In the absence of actually having the regulations in place — and it would be the regulations that would state what are the low materiality fees — there would be no change as there would be no definition of low materiality. Therefore there is no low material fees until such time as the regulations would come into force.
We have some working examples across Canada. We will make recommendations to the government and through the regulatory process on exactly what those low fees would be, but you could imagine some of the fees that are really small. If the costs of running a public consultation grossly outnumbers or outspends the costs or fees brought in over a single year, it doesn't seem to make sense.
One that we did and why you see it in here actually was the inflationary factor. That's a low materiality. To have all the departments on an annual basis come back and go through the process didn't seem to be worthwhile for what is currently about a 1.8 per cent annual increase. That is the type of thing we are still in the process of investigating.
The Chair: That would be applied across Canada?
Mr. Ermuth: The low materiality regulations would apply to all the departments covered by the service fees act, yes.
The Chair: Our thanks to the witnesses. Before you leave, I would like to remind the senators that completing Division 21, Part 4 means that we have covered all parts of Bill C-44 not sent to other committees. Therefore, we have covered our mandate and are then awaiting the other divisions that were sent to other Senate committees, and they will report to us .
Senator Eaton: Does that mean we have no meeting tomorrow afternoon?
The Chair: I will come to this immediately.
To the witnesses, thank you for your professionalism. Again, I'm proud to say that when I travel Canada the great majority of Canadians say that we have professional public servants.
Honourable senators, I want to remind you that our next meeting will take place tomorrow afternoon in this same room, starting at 1:45.
[Translation]
By way of information, tomorrow we will welcome Mr. Jean-Denis Fréchette, the Parliamentary Budget Officer, from 1:45 p.m. to 2:45 p.m. The second witness will be Mostafa Askari, the Assistant PBO, and the third will be Mark Mahabir, General Counsel and Director of Policy at the PBO. Then from 2:45 p.m. to 3:45 p.m., we will welcome as an individual, from the University of Ottawa, Mr. Sahir Khah, Executive Vice-President, Institute of Fiscal Studies and Democracy, and Geneviève Tellier, full professor, School of Political Studies, University of Ottawa, who will comment on the provisions pertaining to the PBO. So we will have the opportunity to hear from these witnesses tomorrow afternoon.
If there are no further comments, the meeting is adjourned.
(The committee adjourned.)