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THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE

EVIDENCE


OTTAWA, Thursday, June 3, 2021

The Standing Senate Committee on National Finance met by videoconference this day at 3 p.m. [ET] to consider Supplementary Estimates (A) for the fiscal year ending March 31, 2022.

Senator Percy Mockler (Chair) in the chair.

[English]

The Chair: Honourable senators, before we begin, I would like to remind you and witnesses to please keep your microphones muted at all times, unless recognized by name by the chair.

Should any technical challenges arise, particularly in relation to interpretation, please signal this to the chair or the clerk, and we will work to resolve the issue. If you experience other technical challenges, please contact the ISD Service Desk at the technical assistance number provided.

[Translation]

The use of online platforms does not guarantee speech privacy or that eavesdropping won’t be conducted. As such, while conducting committee meetings, all participants should be aware of such limitations and restrict the possible disclosure of sensitive, private and privileged Senate of Canada information. Participants should know to do so in a private area and to be mindful of their surroundings.

[English]

We will now begin with the official portion of our meeting, as per our order of reference received by the Senate of Canada.

My name is Percy Mockler. I’m a senator from New Brunswick, and I’m honoured to chair the Standing Senate Committee on National Finance. I would now like to introduce the members of the committee who are participating in this meeting: Senator Boehm, Senator Dagenais, Senator Deacon (Ontario), Senator Duncan, Senator Forest, Senator Galvez, Senator Klyne, Senator Loffreda, Senator Marshall, Senator Richards and Senator Smith.

[Translation]

I wish to welcome the honourable senators and all the viewers across the country who may be watching on sencanada.ca

[English]

This afternoon, we begin our study of the Supplementary Estimates (A) for the fiscal year ending March 31, 2022, which was referred to this committee on May 27, 2021, by the Senate of Canada.

Let me introduce our witnesses. From the Treasury Board of Canada Secretariat, Mr. Glenn Purves, Assistant Secretary, Expenditure Management Sector; Mr. Roger Ermuth, Assistant Comptroller General, Financial Management Sector, Office of the Comptroller General; Karen Cahill, Assistant Secretary and Chief Financial Officer; Rod Greenough, Executive Director, Expenditure Strategies and Estimates; Sonya Read, Acting Assistant Secretary, Digital and Services Policy; and Tolga Yalkin, Assistant Deputy Minister, Workplace Policies and Services Sector.

From the Department of Finance Canada, we welcome Soren Halverson, Associate Assistant Deputy Minister, Financial Sector Policy Branch; Evelyn Dancey, Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch; Miodrag Jovanovic, Associate Assistant Deputy Minister, Tax Policy Branch; Patrick Halley, Associate Assistant Deputy Minister, International Trade and Finance; Alison McDermott, Associate Assistant Deputy Minister, Economic and Fiscal Policy; Darlene Bess, Chief Financial Officer, Financial Management Directorate, Corporate Services Branch; and Galen Countryman, Director General, Federal-Provincial Relations, Federal-Provincial Relations and Social Policy Branch.

Welcome to everyone, and to the witnesses, thank you for accepting our invitation before our committee. We will hear opening remarks, first from Mr. Purves, to be followed by Ms. Bess. Then we will move to questions from senators.

Mr. Purves, the floor is yours.

Glenn Purves, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Thank you, Mr. Chair, and good afternoon, senators. I recognize two departments are sharing this hour, so I will keep my comments brief.

I would first like to thank the committee for inviting us to speak about the Supplementary Estimates (A) 2021-22, which were tabled on May 27.

Mr. Chair, these supplementary estimates are one part of a broad set of reports, including the Main Estimates, departmental plans, the fiscal monitor, the departmental results reports and the Public Accounts that provide transparency to Canadians and parliamentarians on spending. The government also reports through GC InfoBase, an interactive online tool that presents complex federal data as simple visual stories.

Due to the unprecedented levels of spending in response to the pandemic, Parliament has been provided with information beyond what is normally prepared. Starting last fiscal year, in my own area of responsibility, we made several changes to enhance the presentation of the supplementary estimates. For example, we published additional information relating to the COVID-19 response in both the tabled estimates and an online annex. We also worked internally and with the Department of Finance Canada to expand GC InfoBase with more information on planned spending authorities and estimated expenditures for the COVID-19 response.

Mr. Chair, changes to forecasts of statutory spending, such as those pending parliamentary approval in the first budget implementation act of 2021, are also included in these estimates.

Finally, we also include a reconciliation of the current year’s estimates to date with the spending measures announced in the budget. This provides a more complete estimate of the government’s total planned expenditures.

Through these supplementary estimates, the government is seeking parliamentary approval of $24 billion in new voted spending. Approximately $11.2 billion of the proposed voted spending responds to the public health, social and economic impacts on Canadians as a result of the COVID-19 pandemic. Of that amount, some of the top expenditures include $1.5 billion for medical research, development and the purchase of vaccines; $1.1 billion for enhanced border and travel measures, and isolation sites; and $761 million for the Indigenous Community Support Fund.

These estimates also provide funding for other responses to the pandemic, such as support for targeted sectors and businesses to promote their growth in the recovery period.

In addition, there is funding to address homelessness, the lack of affordable housing and food insecurity, all of which have been exacerbated by the pandemic.

There are also supports proposed for Indigenous peoples, with proposed funding to settle claims and to provide housing and infrastructure in Indigenous communities, child and family services, and mental health and wellness support.

Turning to funding for the Treasury Board of Canada Secretariat itself, I’ll note in my opening remarks that the department is seeking $19 million for Phoenix stabilization and HR-to-pay initiatives.

This funding is required to improve pay-related HR processes and systems, and to hire and support the employees working on compensation and labour relations issues related to Phoenix.

Mr. Chair, I would like to acknowledge the committee’s work in the ongoing study of the government’s spending in these challenging times. The Treasury Board of Canada Secretariat has always had a history of providing support to the committee in its review. We are here to support that work and look forward to your questions. Thank you.

The Chair: Thank you, sir. Ms. Bess, the floor is yours.

[Translation]

Darlene Bess, Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance Canada: Thank you, Mr. Chair and members of the committee. Good afternoon. Thank you for the opportunity to present the 2021-22 Supplementary Estimates (A) on behalf of the Department of Finance. Joining me today are departmental officials to assist in providing a more in-depth perspective on the rationale and policies supporting the numbers within these supplementary estimates.

[English]

As you know, the department supports the Deputy Prime Minister and the Minister of Finance, as well as the Minister of Middle Class Prosperity and Associate Minister of Finance by developing policies and providing advice to the government with the goal of creating a healthy and resilient economy for all Canadians. In this regard, the department is instrumental in Canada’s COVID-19 Economic Response Plan as we conquer a third wave of the pandemic. The department continues to help protect millions of jobs, provide emergency support to individuals and families, and rollout vaccination and health care support, all while keeping businesses afloat throughout the pandemic.

The 2021-22 Supplementary Estimates (A) reflect a departmental budgetary increase of $5.6 billion, stemming from a $0.4 million increase in Vote 1 program expenditures, a $5.4 billion increase in statutory spending and $224.4 million increase in non-budgetary expenditures. Given these increases, the department’s total proposed authorities to date are $109.4 billion.

The increase of $0.4 million in Vote 1 program expenditures relates to funding for the Task Force on Women in the Economy.

Statutory expenditures are not included in the appropriation bill, as they have already been approved by Parliament through enabling legislation, however, they are included in the estimates documents for information.

As noted earlier, the statutory expenditures reflect a net increase of $5.4 billion, which is mainly a result of payments related to Canada Health Transfer to help provinces and territories address immediate health care system pressures caused by the pandemic, as well as funding for Canada’s COVID-19 immunization plan, which will help with critical support for vaccine rollout.

The non-budgetary increase of $224.4 million is for funding to support the purchase by Canada of additional shares from the International Finance Corporation.

Mr. Chair, this concludes my overview of these estimates for the Department of Finance. My colleagues and I would be pleased to answer any questions the committee members may have.

The Chair: We will now proceed to questions. I would like to tell senators that, for this meeting, you will have a maximum of eight minutes each for the first round. Therefore, please ask your questions directly. To the witnesses, please respond concisely. The clerk will make a hand signal to show that the time is over.

Senator Marshall: Thank you to all the officials for being here. I want to start on a positive note and acknowledge that we are receiving additional financial information, both from the Department of Finance and from the Treasury Board. It’s very much appreciated.

My first question is for Mr. Purves or one of his officials. The reconciliation you mentioned in your remarks when you compare Budget 2021 to the estimates today — the document shows that, of the $383 billion, $29.5 billion relates to Budget 2021. Are you able to provide us with a link to where that is itemized, or do you have a document? I haven’t been able to figure out what’s in that number.

Mr. Purves: We would be happy to provide the committee with a list of all the items going up to that $29.5 billion.

Senator Marshall: I didn’t have a problem with the voted; it’s with the statutory items where I’m having the problem. That would be appreciated. Thank you very much.

Mr. Purves: We have listed everything in there that has a Budget 2021 tag. It all should add up to $29.5 billion, but we would be happy to provide a specific list.

Senator Marshall: Thank you. My second question, Mr. Purves, is about the amounts in the Supplementary Estimates (A) that haven’t been approved by Parliament yet. The government departments or organizations that are requesting funding in Supplementary Estimates (A), would they be spending any of that money yet?

Mr. Purves: They would be spending money on the basis of what is set out in the Financial Administration Act, or FAA, and on the basis of what is set out in existing appropriation act language.

Under the FAA, sections 32 and 33 are pretty precise about what departments are able to spend funds on. When you look at the vote wording, it has three pillars. First, in the FAA, there are sections 32 and 33, which provide context for what departments can spend in terms of commitments and what they can spend in terms of authorities and so forth. Second, you would want to look at the interim supply bill. In the first appropriation act for the current fiscal year, sections 3 and 4 specify what they can spend as of April 1.

Senator Marshall: Okay.

Mr. Purves: Third, if you look at the vote wording for each vote — and there is a copy of it in the Supplementary Estimates (A), for instance — that provides the guidance and the parameters by which a department is able to spend. So long as the department is complying with the law as per the parameters of the first appropriation bill, then it’s in scope.

Senator Marshall: The third pillar that you mentioned was in the Supplementary Estimates (A) document. Is that in the front part of the document?

Mr. Purves: Yes. Effectively your question was on what they are spending on right now.

Senator Marshall: No. I was more interested in if they are spending the money that’s in Supplementary Estimates (A) before they get parliamentary approval.

Mr. Purves: Departments are able to spend on the basis of parameters that are permitted in the vote language of the appropriation acts. You really want to see sections 3 and 4 of the Appropriation Act No. 1, 2020-21, and you want to look at the vote wording of each of the votes. That, along with the FAA provides the framework — do you mind if I just —

Senator Marshall: I’m going to go to the Department of Finance to make sure I get all my questions in, but thank you very much.

Mr. Purves: Sure.

Senator Marshall: The purchase of shares, Ms. Bess, that you mentioned in your opening remarks, can you tell us about that because I’d never heard of the International Finance Corporation before? I looked that up. Tell me, the $224.4 million in shares, is that to provide cash to that corporation so they can lend it out? I’m just looking for some information.

Ms. Bess: Thank you very much for your question, Senator Marshall. Yes, you’re right. It is to purchase shares to help other countries. I will let my colleague Patrick Halley provide more context about that.

Patrick Halley, Associate Assistant Deputy Minister, International Trade and Finance, Department of Finance Canada: Thank you, senator. The International Finance Corporation is part of the World Bank Group that provides financing to the private sector in developing countries. Canada is the eighth-largest shareholder of the International Finance Corporation.

As you mentioned, in Budget 2021, we committed to provide $224.4 million to fully purchase shares allocated to Canada in 2021-22.

Senator Marshall: Could I stop you there? How do you come up with the $224 million? Is it apportioned between a number of countries?

Mr. Halley: That’s right. Shareholders like Canada generally have the flexibility to schedule their payments according to their needs, but the World Bank Group has called on shareholders like Canada to accelerate their payments. Therefore, we are front loading our payments. That is helping the International Finance Corporation to get more resources to provide rapid and efficient relief to developing countries, to allow them to cope with the COVID-19 response.

Senator Marshall: Thank you. Also in the Department of Finance, in the federal-province fiscal arrangements, there is a negative amount there of $58 million. What would that be for?

Ms. Bess: Thank you for your question, Senator Marshall. I’ll be able to answer part of it.

These are adjustments to forecasts for the Alternative Payments for Standing Programs. These adjustments are based on income tax data.

I will let my colleague Galen Countryman provide a little more context on that. It’s a statutory payment.

Galen Countryman, Associate Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: Thank you, senator. To answer your question, the Alternative Payments for Standing Programs relates back to an agreement with Quebec from the 1960s, whereby the federal government transferred some of its tax points to Quebec in lieu of programs that they are delivering on the social sphere.

Later on, the federal government was transferring money through the Canada Health Transfer and the Canada Social Transfer on an equal per capita basis. So taking into account those tax points that occurred in the 1960s, there is a recovery made from Quebec for part of that transfer. To do that, we estimate the value of these tax points. The latest estimate was a revision at [Technical difficulties] which has gone up in Quebec. Therefore, we have a larger recovery.

Senator Marshall: That dates back to the 1960s?

Mr. Countryman: Yes.

Senator Marshall: The tax transfer, that’s not current now, is it?

Mr. Countryman: That was a specific agreement with Quebec from that point in time. That tax point transfer is still part of the fiscal arrangements with Quebec.

The Chair: Mr. Purves, in sharing documents or sending information to the Finance Committee, please do it through the clerk. When I look at the time frame that we have, I just want to bring to your attention that we would appreciate receiving it before or on June 10. Do we agree on that?

Mr. Purves: Agreed.

The Chair: Thank you.

[Translation]

Senator Forest: My first two questions are for the Treasury Board of Canada Secretariat. I see funding for the operating and capital budget carry forwards to the tune of $600 million, including $19 million for Phoenix stabilization and HR-to-Pay initiatives, funding to compensate former employees for damages related to the Phoenix pay system and contributions to employee benefit plans. I would like to know why those expenditures were not included in the Main Estimates, which were tabled just two months ago. Those must have been foreseeable expenditures when the Main Estimates were developed.

[English]

Mr. Purves: Thank you, Senator Forest, for that question.

When we put together the Main Estimates, we close it in February because we have to table it before March 1. Currently, the Supplementary Estimates (A) has been tabled May 27, so there are quite a few months there of additional information that can be provided.

There is a system in place where there are carry forwards, so departments can always carry forward on the operating budget about 5% that lapses from one fiscal year to the next, and 20% that lapses from one fiscal year to the next. That has been around for a few decades.

The amounts that have been set have been set there for a while, but given the combination of the volume and size of voted spending, the difference between the two fiscal years and the timing of COVID and supply chain disruptions and so forth, we weren’t sure how much would be needed in that central vote to facilitate that carried-forward framework. We really only had a line of sight on it come April, May of this year, to be able to make that adjustment. Had we tried to make this adjustment as part of the Main Estimates, we could have been too low or too high. From our standpoint, what we are looking to do is facilitate a regime that’s been in place for the best part of three decades for financial management, and to provide parliamentarians with comfort that we have done our homework and ensured that it’s calibrated the right way.

In terms of the Phoenix elements, I’ll turn to my colleague Karen Cahill to answer questions on that.

[Translation]

Karen Cahill, Assistant Secretary and Chief Financial Officer, Treasury Board of Canada Secretariat: Thank you, Mr. Purves. With respect to the Phoenix pay system, the funding in Supplementary Estimates (A) is the funding announced in Budget 2021. Therefore, as Mr. Purves said, when we prepared the Main Estimates for the department, the funding had not been approved, so we could not include it in our Main Estimates. So that is why you find it in the Supplementary Estimates (A).

Senator Forest: It was announced and you could not include it in the Main Estimates. Why?

Ms. Cahill: It is a matter of timing. When the Main Estimates were prepared, as Mr. Purves mentioned, they were tabled before Budget 2021 was announced. Once the budget is announced, we have to go through a process, which is to get approval from the Treasury Board of Canada Secretariat on the plan for the initiative, how to implement the initiative, and how the funds will be used, which we did. The next step is to include the initiative in one of the supplementary estimates for parliamentary approval. That is exactly what we are doing with this exercise.

Senator Forest: Mr. Purves, in developing the Main Estimates, are departments given objectives or targets to meet? For example, do they have to limit the increase in spending to 1% or 1.8%, or are the various departments required to meet budgetary targets?

Mr. Purves: Thank you for the question, senator.

[English]

Mr. Purves: When we do our Main Estimates, it’s on the basis of prior approvals. We work with departments to ensure that our reconciliation of what the approvals are, and programs that might have sunsetted, and ones that may have been added, is correct and aligned with what the department sees as well.

We do that reconciliation process. It’s called the annual reference level adjustment process. We do that every fall as part of the ongoing work as we construct and build the Main Estimates for the year ahead.

[Translation]

Senator Forest: So it is more about budget reconciliation than budget planning?

[English]

Mr. Purves: It’s a reconciliation on the basis of authorities that have been approved and continue to be approved.

Ensuring that the reference levels that we have at Treasury Board are reflective of the reference levels that departments have and is concurrent with the Department of Finance’s understanding as well. It’s part of the construction effort of building the Main Estimates.

[Translation]

Senator Forest: Let’s go quickly to the Department of Finance Canada.

I see that there is $348 million for interest on unmatured debt. Can you explain to us — us mere mortals, because the budget process is quite complex — what that debt is, what it is made up of, and why we have to pay interest on an unmatured debt?

This question is for the Department of Finance. I’m not sure who would like to answer it.

[English]

Ms. Bess: I’ll let Alison McDermott, my colleague from fiscal policy comment on that. Overall, we forecast the interest rates, so the change that you’re seeing here is the changes in forecast interest rates from the Fall Economic Statement to Budget 2021. Alison should be able to provide a little bit more information on more complexities of the calculation.

Alison McDermott, Associate Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance Canada: I apologize. I didn’t catch the nature of the question that was asked about the federal debt.

[Translation]

The Chair: Senator Forest, if you could ask Ms. Bess your question directly, I will ask her to get back to us with a written response.

Senator Forest: An amount of $348 million is allocated for unmatured debt. I would like to know what that debt is made up of, and why the supplementary estimates contain an amount for interest on a debt that has not matured.

[English]

The Chair: Ms. Bess, Senator Forest’s time has expired. Can we agree that you will take that under notice and you will send an answer in writing on or before June 10, please?

Ms. Bess: Yes, Mr. Chair, we will do that.

Senator Klyne: I hope to get three questions in, but I expect the first two to be answered quickly. My first question is for the Treasury Board. It’s one around presentation.

There are many items scattered throughout these estimates documents outlining government spending on social and economic supports for Indigenous peoples. This makes it difficult for parliamentarians and Indigenous nations to summarize and monitor the government’s commitments to advancing resolutions and solutions around social and economic issues, let alone reconciliation.

I understand that the document has a horizontal item section that summarizes the various department spending for specific policy initiatives. Can you tell the committee if it would be possible to include an additional annex or appendix with a horizontal summary of all the Indigenous-related expenditures in one place within the estimates documents?

Mr. Purves: Senator, we’ve got a tradition of trying to meet your expectations, so we will certainly take that back and will square back with the committee.

Senator Klyne: Thank you. This is a question whomever might be able to respond. In the Supplementary Estimates (A) document on page 16, the government laid out funding to implement natural climate solutions in Canada. Specifically, $1 million will be spent by the Department of Agriculture on operating expenditures to co-develop projects with the agricultural sector aimed at reducing carbon emissions or minimizing environmental degradation.

Since this committee may not hear from the Department of Agriculture, I pose my question to any department which may have a response. Regarding carbon tax, will there be fairness to consider all ag producers — recognizing Canada has crop producers, livestock producers, and mixed farming operations, which are all making valued contributions toward supporting food security in Canada and elsewhere — and are there any proposed timelines for when these consultations will take place?

Mr. Purves: I’m wondering, given the nature of the question, whether my colleagues at Finance would be better prepared to answer that. I see Evelyn Dancey has her hand up. We’ll pass it to her.

Evelyn Dancey, Associate Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance Canada: That question goes beyond my area of expertise at the Department of Finance. What I could suggest is that we come back with a written response that takes account of the various government announcements and measures in place in support of the transition of the agriculture sector, among other sectors, to a lower-carbon economy. We can provide that information along the timeline that had previously been identified for June 10, if that’s helpful.

Senator Klyne: It is very helpful. Thank you.

I have another question for Finance. On page 29 of the Supplementary Estimates (A) document, vote 1A outlines $394,000 in funding to support the Task Force on Women in the Economy. According to the government:

The Task Force will harness the best ideas from a diverse group of experts to advise the government on a feminist, intersectional action plan that addresses issues of gender equality in the wake of the pandemic.

The feedback is also intended to inform the government’s plans for jobs and growth.

Can you provide the committee with any specific deliverables or timelines the task force has been given to report their feedback to the government? Have the recommendations from the task force already been made to the government and incorporated into Budget 2021, or should Canadians expect more spending targeting gender-specific initiatives meant to create jobs and grow the economy?

Ms. Bess: Thank you, Senator Klyne, I’ll let my colleague Alison McDermott respond to that she’s been heavily involved with that file.

Ms. McDermott: Thanks for the question. I can give you a bit of an explanation. Indeed, the task force, which was created in March, has provided advice to the government. It had a kind of dual role. I would be pleased to provide the terms of reference for the task force for the benefit of the committee members, if that would be helpful. It’s available on our Department of Finance website.

Essentially, the mandate is to advise the Deputy Prime Minister and the associate Minister of Finance, who are both the co-chairs of this task force, on policy actions to address the impacts on women caused by the COVID recession. In addition to that, they are to provide broader advice on advancing gender equality over the medium and long term. Part of their function was to provide advice in the lead-up to Budget 2021. We had, I think, five meetings of the task force with the two chairs, the two ministers, and their advice was indeed important in helping inform the government’s decision making on Budget 2021. I would also highlight that in annex 4 of Budget 2021, there’s some information provided about the nature of the advice from the task force and how that fed into some of the government’s decisions on Budget 2021.

That second part of the mandate will be fulfilled throughout the rest of the year, during which the task force will continue to provide advice to the government throughout the rest of the calendar year on broader, future gender equality issues for the government.

Senator Klyne: Thank you all for your answers. They were very good.

Senator Richards: Thank you to the witnesses for being here.

Senator Forest kind of brought up my question in a way. On April 22, I asked the panel why we didn’t know where so much of this money was actually going to end up. The supplementals seemed to be like that. I was wondering about the $62 million supplementary to the Atlantic Canada Opportunities Agency. How is this money going to be divvied up between the provinces? Do we know where this money is going to go — how much New Brunswick or Nova Scotia? How much to northern New Brunswick, which never seems to get all that much? Is any of it going to be used for the Phoenix pay system? I don’t think it is, but I thought I’d ask that. Can anyone help me out here?

Mr. Purves: I’ll take a crack. If anyone else wants to jump in, that would be great too.

Senator Richards, I think the $62 million you’re referring to is the total grants and contributions amount that ACOA is getting in this supplementary estimates. It’s broken out according to three different areas.

The first is support for small- and medium-sized businesses, in which case that’s really funding under the auspices of the Regional Relief and Recovery Fund. There’s approximately $29 million that is being carried over from the last fiscal year into this fiscal year. Then there’s an additional $5 million that was part of Budget 2021 that’s being added to that initiative.

I don’t have a breakdown specifically, senator, about where that money will be going in particular. I think it would be ACOA itself that would be responding to that, but we could certainly put a question back to them.

Senator Richards: I believe that’s the case. Is some of this supplementary estimates COVID-related? Is that why?

Mr. Purves: It’s all COVID-related. I talked about the 29 plus the 5, so that’s 34. Then there’s an additional 18, which is for the Community Futures network. That’s ongoing support. That was in the budget. It’s new money from the budget. That’s going toward helping business financing and support services, community economic development and strategic planning through the Community Futures organizations, which is a network of not-for-profit organizations that the regional development agency works with.

The final one is through the Regional Air Transportation Initiative, which again is COVID-related. It’s intended to strengthen the resilience of the air transport ecosystem in the region during the pandemic.

Again, these are all grants and contributions, so these are funds that the department receives and provides recipient organizations.

Senator Richards: Yes. Thank you for that. We’re just a little bit worried because of what happened to Air Canada in the last little while, about funds being given to executives. I have this idea when I look at some of these enormous amounts of money and I wonder where they’re going. While $62 million isn’t an enormous amount, I would like to know how it was divvied up, so thank you.

I have another question that you might not be able to answer. It is not about the supplementary estimates but it’s about the Civilian Review and Complaints Commission for the RCMP and the proposed $10 million. Is that money to set up the commission, or is it to be given as payment to the complainants? Might you know about that?

Mr. Purves: I will turn to my colleague Rod Greenough, who may have the answer to that. As you can imagine, there are a lot of items in this, so it’s just a matter of seeing if the information is available.

Senator Richards: Of course.

Mr. Purves: Perhaps this is one we could get back to the committee for the senator. Is that acceptable?

Senator Richards: Absolutely. Yes, thank you very much. I yield the rest of my time. Thank you.

The Chair: Thank you. I remind you about the question from Senator Richards vis-à-vis ACOA. Can you provide a breakdown of that particular vote for all four provinces?

Mr. Purves: We can certainly go back to the department with that question. We’d be happy to do that and get back to the committee in the time that you set out, of June 10.

The Chair: Thank you.

Senator Smith: Thank you to the witnesses. I would like to ask a question to the Treasury Board. Mr. Purves, maybe you could handle it.

Table 3 of the estimates document provides a comparison of the spending in Budget 2021 to the total estimates to date for 2021-22. There’s a line item that includes netted revenues; about $12 billion. The explanation for it is that some programs are funded by departmental revenues, and these revenues are netted against the expenditures in the estimates.

Could you elaborate on this concept and explain what departments, as well as programs, are accounted for in this $12 billion figure?

Mr. Purves: Certainly. I think I can handle just the definitional aspect, and certainly my colleagues from Finance and Mr. Greenough, if there’s something that you’re not hearing that’s correct, then please wave your hand and jump in.

Senator, there’s a difference between an accrual lens and a cash lens. The Department of Finance, when they do their financial fiscal [Technical difficulties] does it on an accrual basis. When they’re showing the expenses, they’re showing the gross expenses.

Whereas for the estimates, it may be that a department doesn’t have a full cash need that reflects the full amount of that estimate because they may be bringing in revenues that will offset that expense. So the actual additional appropriation they may need from the Consolidated Revenue Fund would be, on a net basis, smaller than what the gross expense would be.

Now, in terms of which departments build that amount up and are responsible for that, I think that in the Public Accounts, for instance, there are a lot of organizations that have net voting structures that would be composed of that. We would certainly, I think, be able to furnish the committee with a sense of what those organizations are.

Mr. Greenough, do you have anything to add to that?

Rod Greenough, Executive Director, Expenditure Strategies and Estimates, Treasury Board of Canada Secretariat: I have nothing to add, just to reiterate that it’s part of the reconciliation because it’s not in the estimates. The estimates are shown net of these revenues. That’s why we have it as a reconciling line.

Senator Smith: Thank you. For the Department of Finance, they have once again started to provide reports to the House of Commons Finance Committee on planned actual spending with respect to COVID-19. However, this time around, these reports are provided on a monthly basis instead of biweekly. This is sort of an administrative question.

Could you please explain the rationale behind the monthly updates compared to the biweekly updates that were provided at the start of the pandemic?

Ms. Bess: Thanks for your questions, senator. I think that my colleague Ms. McDermott will be able to respond to that.

Ms. McDermott: Thanks for the question. Last year, when we were in the middle of the COVID crisis, there were a lot of changes to programs and, as you know, the priority was on getting the response out quickly and making adjustments as needed to address gaps and make corrections. There were so many changes taking place to the basic core programs of the government, and new ones being added, that it made sense, in our view, to report more regularly.

Now the program structure has more or less stabilized and we’re reporting a bit more on how we’re doing with respect to the implementation of these programs, so that’s where I think we ended up with a less frequent basis of reporting at this point.

Senator Smith: Thank you.

[Translation]

Senator Dagenais: My first question goes to the officials from the Department of Finance. I would like to talk about the government debt. Given the pandemic, and the difficulties of the last two years, the country’s debt stands at about $50,000 for each Canadian. In 2019, the debt was $33,000 per Canadian. With the measures the government is announcing, analysts are forecasting no improvement until 2025, if the trend continues. Could you tell me how far the government can allow the per capita debt to increase before it becomes unacceptable and dangerous for the country’s economy?

Ms. Bess: Thank you for the question.

[English]

I’m thinking my colleague Soren Halverson might be able to answer that.

Soren Halverson, Associate Assistant Deputy Minister, Financial Sector Policy Branch: This is more of a fiscal question, so I suggest turning the question to Alison.

Ms. McDermott: Happy to take the question.

I would disagree a little bit with the premise that the government’s plans are to continue to drive up the debt. In fact, the government in Budget 2021 announced that it was committed to unwinding COVID-related deficits and reducing the federal debt as a share of the economy over the medium term. So that’s the government’s fiscal anchor.

In Budget 2021 we did show a declining trajectory with respect to debt as a share of GDP. It goes down to below 50%, it goes to 49.2% by 2025-26. You’re absolutely right, this is a really important area on which the government is focused, which is continuing to control an ingrowth and ensure that that debt is on a downward track.

[Translation]

Senator Dagenais: My second question goes to Mr. Purves. I am always astonished to see supplementary estimates, which are often submitted shortly after the country’s real estimates. I always get the impression that it’s because of a lack of vision or a lack of knowledge of the real costs of the measures that are announced, specifically on the part of the Department of Finance.

My question deals with the new amounts allocated to fight homelessness and the lack of affordable housing. How will that money be spent and how soon? When will that plan become something other than promises in the budget for those who really need it?

[English]

Mr. Purves: Thank you very much, senator.

The one thing I would say is that I believe that the Canadian Mortgage and Housing Corporation — which is the agency with responsibility for many of these items — they will be coming to the committee in the next week or so. It’s an opportunity for the question and time to be able to ask them those questions.

When you say the affordable housing item, are you talking about the rapid housing initiative? Is that the item that you’re speaking to?

[Translation]

Senator Dagenais: Yes, exactly.

[English]

Mr. Purves: This is something that started last year and there’s been a bit of an additional $1.5 billion that’s been announced as part of Budget 2021.

The requisite authorities have been put in place and, as a consequence, that’s why it’s in this supplementary estimates. The one thing I would say is typically for Supplementary Estimates (A), the reason items are there in Supplementary Estimates (A) is that they need the authorities from Parliament in order to augment spending in these areas before Supplementary Estimates (B). When you think of the supply calendar, the difference is seven months between when you table it and when you get Royal Assent for Supplementary Estimates (B) in December.

The interest here is certainly to advance — I understand that it’s the rapid construction of up to 30 new permanent affordable housing units that is envisaged with this additional amount — and again I think the interest was to get it into Supplementary Estimates (A) with the requisite authorities in order to move on it fairly quickly.

Again, it’s a great question for CMHC who will be through the committee, I believe.

[Translation]

Senator Dagenais: Mr. Purves, now I would like to talk to you about the funds allocated to long-term care. The federal government has previously announced its intention to become involved in the area, even though health is in provincial jurisdiction. If these expenditures are approved, do you have an action plan, do you know how you will move forward? We would like to know how this money will be spent, and I would like to know that specifically for my province, Quebec.

[English]

Mr. Purves: Certainly, health is in this supplementary estimates. There’s about $500 million I believe for this initiative, senator. The intention really would be, as I understand, to provide transfers to provinces and territories. I don’t have any status to provide in terms of what level it’s at, but we could certainly take that question back to our colleagues at the Department of Health in order to get a response.

[Translation]

Senator Dagenais: You know as well as I do that, when money is transferred to the provinces, the provincial governments do what they like with it. It does not guarantee that the amounts will actually be spent on long-term care. We have seen that in the past for other services, and we knew very well that the money was not being spent on the services for which it was intended.

I fully understand that health is a provincial responsibility, but we have to make sure that these amounts will actually go to long-term care.

[English]

Mr. Purves: It’s certainly an important message, senator, that I’m happy to bring back to Health Canada for sure.

[Translation]

Senator Dagenais: Thank you, Mr. Purves.

Senator Galvez: I would like to ask two questions about the money allocated to Environment and Climate Change Canada and Natural Resources Canada for assistance to oil and gas companies.

[English]

I have a question with respect to vaccines and research.

We are giving large amounts of money to ECCC — page A-10 of Schedule 1, for example — for federal leases to oil and gas companies. I would like more detail concerning the annual revenues associated with leases for oil and gas operations. Also, I would like to hear details on company delinquencies on issues related to paying the rent or cleanup activities after operations.

Do we have records of these delinquencies when it comes to federal lands? That’s my first question.

Mr. Purves: I’m wondering whether one of our colleagues at Finance would be better placed to respond to that question. Otherwise, I don’t have the answer for you, unfortunately, senator. I’d be happy to take that back to the ECCC for an answer.

Senator Galvez: So you will send back the answers before the date that the chair is going to announce.

The Chair: Ms. Bess, do you have any comments on that question?

Ms. Bess: No, Mr. Chairman. I looked around to see if any of my colleagues do and I don’t think anyone has an answer. So sorry for that.

Senator Galvez: Also, Environment and Climate Change Canada appropriations provide funds for monetary services with respect to the oil sands; page A-10 of Schedule 1. Can you describe these activities for me, why they are needed and whether they overlap with other monetary activities that are led by the Alberta energy regulator?

I will go ahead with my third question, the one with respect to NRCan. These supplementary estimates provide $121 million for the emissions reduction fund. There are also onshore and offshore $75 million, and the applicants can receive between $500,000 and $40 million, to cover 75% of project costs. I find that these large multinational oil corporations have been posting — during the COVID crisis — record profits at the cost of our environment, our health and undermining our decarbonization efforts. I find this very disturbing that we are helping them with so much money.

I would like to know what the justification is for providing taxpayer money to large corporations in order to reduce their methane emissions. If nobody can answer that question, I would appreciate a written answer.

I have a last question.

The Chair: Mr. Purves and Ms. Bess, do you have any comments to answer the question posed by Senator Galvez?

Mr. Purves: No, I don’t. I could go into the context around that $121.5-million fund — the Emissions Reduction Fund — but I think the question had more to do with the raison d’être of it, and I wouldn’t have an answer for that.

Senator Galvez: As long as you provide the answer in written form later on, I’m okay with that.

My last question is about the waivers for intellectual property and vaccines. You know that this is essential for global vaccine equity. The United States took the world by surprise on May 5 this year when it announced its intention to support the World Trade Organization proposal that would temporarily waive intellectual property rights on COVID-19 vaccines. Our government hasn’t decided or made an announcement in this same direction. However with these supplementary estimates, we are giving a lot of big funds to research. Can you tell me why this is not done — waiving intellectual property — when we keep giving money for research, and will we have new vaccines made in Canada?

Mr. Purves: Mr. Chair, it’s a critical and important question that the senator is asking. I do know just by looking at your future schedule that the Public Health Agency of Canada is coming to the committee. I’m just wondering whether that would be the best and appropriate time for engaging that question. You can get a complete answer from the agency. The other thing I just wanted to point out is that we will, senator, on your other questions, absolutely undertake to square back with ECCC as well as NRCan. We will put to them the timelines you’ve set out, but we can’t control whether they will provide the answer in the week. We will put as much pressure on them as possible, but I just wanted to put that out.

Senator Galvez: Thank you very much.

The Chair: There is no doubt if Treasury Board links with them, they would be cooperative to make sure we can have some answers.

Mr. Purves: Mr. Chair, I can guarantee you will have the full weight of the secretariat to try to get answers as promptly as possible.

Senator M. Deacon: Thank you everybody for being here this afternoon. Right out the gate, I love the questions and a few of them have already been asked. I’m going to have one question and give my time to whomever else may wish to use it.

The 2021 budget proposed to provide $80 million over two years to Canadian Heritage to remove barriers to participation in sports programming and to help community organizations kick-start local organized sports that are accessible to all. In these sups, the Department of Canadian Heritage is requesting $100 million for heritage arts and sports sectors. It has that handy budget label in parentheses, but I would like to confirm with our witnesses that this request of $150 million includes part of the $80 million that was earmarked in the budget for sport.

Mr. Purves: My understanding, on the basis of my notes, is it does. If there is any difference in that, when I go back to check, we will confirm with you in writing before June 10.

Senator M. Deacon: I appreciate that.

Mr. Purves: It is for heritage, arts and the sports sector.

Senator M. Deacon: Thank you very much for that. Assuming it is, I’m wondering if anyone can give me insight into how the Department of Canadian Heritage will decide how the money is distributed. There are a number of organizations and sport-related activities that absolutely could use the help right now. Would Treasury or Finance be able to give me an idea as to the process of deciding who the money gets to?

Mr. Purves: Absolutely. I’ll start and maybe Galen or someone with responsibility for that sector might want to jump in. As you know, that $150 million that is portioned for both heritage and arts, as well as the sports sector, is grants and contributions. Their plan is to create an online portal where all applications can be centralized. In terms of the timing of when they plan on launching this, that’s something that I don’t have right now. Certainly, if you’d like, we could go back and ask for additional detail on how they plan on operationalizing that.

Senator M. Deacon: I appreciate that. You know, you get to this point, which is great. However, I’m really trying to understand, as a senator, that next step, so thank you.

Mr. Purves: Sure, absolutely.

Senator Boehm: I’d like to thank our witnesses for being with us today, and I admire their professionalism. I wanted to reflect a bit on the past year. We have all made the move to digital work. We’re doing that now. It’s happened with our schools. It’s happened in terms of the access Canadians would have had to various support programs that were rolled out by the government. Businesses, as well, have all moved to an online format.

My questions relate to the additional $263 million in Supplementary Estimates (A) that are for the Universal Broadband Fund. In that sense, Mr. Purves, perhaps it’s for you or for Sonya Read who I think is with you. I wanted to start with digital access. I think surveys have shown that only 30% of households in Indigenous communities have the recommended internet speeds to conduct business and indeed education from their homes. We also saw in the recent Newfoundland and Labrador election that many citizens experienced internet issues that prevented them from casting a ballot. The same thing goes for getting online to get your vaccine and indeed follow-ups of all kinds. I’m wondering: How is the transition online offering alternatives for those who do not yet have that access to high-speed internet? Is there a program within the program, and are you monitoring that?

Mr. Purves: Senator Boehm, it’s a very thoughtful question and certainly, it’s a priority. It’s in Supplementary Estimates (A) because of a real interest in investing in that right away. As I think the budget said, the objective here is to try to front-end providing high-speed internet access to all Canadians ahead of schedule from where it was set out in terms of 2030, and at least having 98% of coverage by 2026.

In terms of the precision of your question, I’m wondering if Ms. Read would have a nice line of sight and be able to respond to that.

Sonya Read, Acting Assistant Secretary, Digital and Services Policy, Treasury Board of Canada Secretariat: Unfortunately, I really don’t in terms of the details of how that is rolling out with respect to ISED. I think we would have to go back to the department on that question.

Senator Boehm: Related to that is also the question of digital literacy. You can have all the broadband access in the world, and if you don’t know how to use it, it’s not going to help you very much. Indeed, in a world that is full of disinformation and difficulties, everybody wants to have an ethical and safe internet experience — at least I do. I’m just wondering whether any of these funds are looking towards an investment in digital literacy as well. I think of elderly Canadians in particular or those who might have disabilities and difficulty in working their computers?

Ms. Read: Again senator, it’s a really good question and a really important issue. I think, once again, we would have to defer to the department for details on that.

Senator Boehm: If you have some information on that I would be more than interested.

My next question is for the Department of Finance. The recent economic outlook report from the OECD indicated a rebound of our economy from an estimated growth of 4.7% in March to now perhaps 6.1%.

The main factors were said to be the vaccine rollout and the subsequent easing of public health restrictions. However, to achieve this, the report states that the government scheme supporting businesses and households that are experiencing revenue-and-income losses need to remain available until economic recovery is well underway.

Do you have any forecasting to indicate when this economic recovery is supposed to happen? Will the government adopt a position that aligns with the OCED projections?

My second point goes to what Senator Dagenais asked earlier. The public debt burden, as estimated by this new Economic Outlook report, is expected to stabilize in 2022, but the OECD suggests that, once the economy is stable, Canada needs to engage in a medium-term fiscal strategy to reduce public debt. Are there any current measures in budget estimates now or developed in anticipation of the federal debt reduction that will have to start next year?

Ms. Bess: Thank you very much for the question, senator. I will refer to my colleague Alison McDermott to see if she can provide some more details on that.

Ms. McDermott: Sure. Thank you, Mr. Chair, for the question. Maybe I’ll start by talking about the need to gradually withdraw supports. I would say that is consistent with the advice of the OECD. It is quite consistent with the approach being taken in Budget 2021, which allocated significant fiscal resources to extending some of the COVID supports throughout the summer and into September, and actually creating legislative space for us to extend them even further should the economic situation deteriorate and require them to be used further. But one of the features of the way those supports were extended is that some of the magnitude and the generosity is wound down gradually in respect of the CRB as well as the wage subsidy.

That is quite in keeping with the advice of the OECD. Indeed, it reflects the economic views that were provided by private-sector forecasters that underlined the budget planning. The assumption, to elaborate on that more, is that we will have a stronger increase in the second half of the year in terms of economic growth. There has certainly been a bit of slowing of growth in this year as a result of the increased restrictions associated with the third wave. We are hoping and anticipating that, with the vaccination effort proceeding well, and with good efforts on the part of governments to restrict activities now, we will clamp down on the spread of the new virus variants, and we should see — at least that’s what most economists are expecting now — a strong recovery throughout the summer and into the fall.

I hope that answers your question with respect to the first part. You also asked about taking a long-term view into how we will achieve the government’s more medium-term objective of ensuring that the debt remains on a downward track.

The focus so far hasn’t really gotten into many details of that forward thinking yet. There is one measure announced in this budget — to reduce travel budgets to all departments of the federal government — to reflect the fact that we have seen some savings in travel. It’s expected that some of those savings will be ongoing. There is a little bit of that activity, but it’s at a very early stage.

Senator Boehm: I think those savings in travel are because we are meeting like this, and you don’t have to travel internationally either. Thank you very much.

Ms. McDermott: That’s it. That’s right.

Senator Duncan: Thank you to our witnesses who are appearing today. I’m speaking to you from the traditional territory of the Kwanlin Dün First Nation and the Ta’an Kwäch’än Council.

The chair reminds us that our scrutiny of the expenditures is about transparency and accountability. Today, we have Treasury Board and Department of Finance officials. I would echo Senator Boehm’s comment and thank you so much for your professionalism in your answers today.

My question concerns accountability measures. Forgive me; I haven’t been a senator for a long time, but I’m looking to see where I might find accountability measures in all of these documents. For example, we discussed the clean-water and boil-water advisories. In the department, we receive commitments that there are so many boil water advisories and the government wants to reduce it by this number. So there is an accountability measure in place for that money. I’m looking to see where I can find other accountability measures in these documents. If you are able to provide me an answer in writing or an immediate answer, I’d appreciate it.

Mr. Purves: It’s an incredibly thoughtful question, and I wouldn’t mind at least starting with an answer. It does speak to the broader question of why you are here and why we are having a discussion about estimates and spending. Senator Marshall had a very thoughtful question about how we do financial management. Your question about accountability is kind of part of that broader spectrum.

When we do the Main Estimates at the beginning of the year, it’s a very technical plan, lots of numbers, a lot of votes with items. We identify the full spending plan. We give a reconciliation between the cash and the accrual. Right? But we also include, as a system, departmental plans that go beside them. The departmental plans are intended to spell out exactly what the departments are intending to achieve over that period.

When we have these discussions with the supplementary estimates, this document, the Supplementary Estimates (A) document, is intended to provide parliamentarians with enough information to be able to ask the relevant questions and at least ask the questions to which we can get answers for you within the seven days.

Senator Duncan: Right.

Mr. Purves: At the end of the year, they have the departmental results reports. When you go on GC InfoBase, you actually can see a lot of the results and how the departments did against those results. The intention is to have the plans and the departmental results reports facilitating and providing those bookends during the financial reporting year to provide that accountability to parliamentarians and Canadians on what has been spent.

I can give you that sense from that broader lens, but as it pertains specifically to measures, maybe from Indigenous Services or Crown-Indigenous Relations, it would be the departments that would be able to give additional information pertaining to those specific targets.

Senator Duncan: In other words, Mr. Purves, what I hear you saying to me is that, with an in-depth examination of the departmental plan and the year-end reporting, we would be able to assess whether or not a department had met their targets and spent the money the way it was intended. Theoretically, departmental plans — for example, in a provincial budget — might indicate that X number of kilometres of highways were intended to be paved, or X number of students should graduate from high school. We might see that kind of information in an accountability measure. You are telling me that it’s there, and I think I heard where I could find it.

Mr. Purves: At the end of a fiscal year, it takes a while to complete our fiscal year.

Senator Duncan: Of course.

Mr. Purves: So Roger Ermuth and company are busy putting together the public accounts, but after the public accounts come out, which is the financial lens of the fiscal year, then the report of what has been accomplished over that year, which is the departmental results report, comes out. Really it’s intended to provide parliamentarians and Canadians with that easier-to-read lens of what actual accomplishments were achieved, versus the results that were set out.

We actually include that in GC InfoBase as well. You can peruse that through GC InfoBase, if it’s convenient.

We are always open to suggestions on how we can improve these documents and the reporting of them.

Senator Duncan: Following up on Senator Dagenais’ point about accountability and how money is spent, perhaps a suggestion I could make would be that the Government of Canada considers showing a breakdown of transfers to provinces and territories. For example, there is an extraordinary payment of $4 billion in health care. There is $1 billion for vaccines. Perhaps the government might consider demonstrating how that money is being shared amongst provinces and territories.

The $915.1 million shared between a number of agencies for early learning and child care, the note says the funding will be used to establish a federal secretariat in support of a Canada-wide system to sustain existing early learning and child care, to help support Indigenous participation in the development of a Canada-wide system, to improve the quality and accessibility of Indigenous child care programs. Throughout this very heavy, challenging week, we have heard that initiatives must be Indigenous led. Would officials provide us in writing how the government will ensure the Indigenous Early Learning and Child Care Secretariat will receive direction from the Indigenous people of Canada?

Mr. Purves: We would be happy, on behalf of the senator, to follow up with the department responsible for that.

Senator Duncan: Thank you very much. Thank you again to the officials for your answers. I appreciate it.

The Chair: Mr. Purves, please keep in mind June 10.

Mr. Purves: The list is growing, but absolutely. We will use the full weight of the secretariat to get answers as quick as we can.

The Chair: Thank you.

Senator Loffreda: Thank you to our panellists for being here today.

Because of unused operating funds from the previous fiscal year, $600 million is being carried forward in Supplementary Estimates (A). Is this amount comparable to previous years or is this number exceptional because of the pandemic? Could you provide us with a breakdown of where and why these funds were left unspent last year? Were these funds unspent due to a reduction in operational costs in various departments? Some additional information would be quite helpful. Thank you.

Mr. Purves: Senator, I missed the first part of your question. Is it on the carry-forward funding you were mentioning?

Senator Loffreda: Yes, it is. Because of unused operating funds, $600 million is being carried forward in Supplementary Estimates (A).

Mr. Purves: Every year, departments never use the full authorities that have been provided by Parliament on a voted basis, so there is always a lapse at the end of a year. It’s typically reported as part of the public accounts. Thirty years ago, it was determined that a regime should be in place to allow departments to automatically carry over 5% of the lapse of their operating budget and 20% of the lapse of their capital budget. In any given year, a department may have a lapse greater than 5% or lower than 5%.

In 2007, the Standing Committee on Public Accounts recommended that central votes be created to facilitate the provision of these carry-forward amounts for both operating and capital. We have had this for the best part of 15 years. These amounts that were in the Main Estimates have been in place since, I believe, about 2014 or 2015. Any augmentation to them has typically been on the basis that the size of voted spending is increasing, so as a consequence, your operating votes have increased on a nominal basis, making it such that the 1.6 is not enough.

In this particular instance, I would say that it’s a timing issue as a consequence of COVID as well. The COVID dislocation has led to a larger amount being needed on a voted basis, but also the supply restrictions and disruptions have led to disruptions that mean that you are going to have a larger amount needing to be carried forward than otherwise needed. In the past, we have always had a bit of an amount left over from that central vote. We publish that in the fall as part of Supplementary Estimates (B), to show what has been disbursed from that vote, and we would do the same this year as we have been doing for the past 15 years.

In this case, given the amount of funding we are talking about, and the timing issue with respect to supply disruptions and so forth, we are seeing the need for a larger demand for it. As a consequence, that’s why we are seeking an augmentation to those votes, in order to facilitate a practice which has existed for over 30 years.

Senator Loffreda: Thank you for that response.

I have a question for Finance Canada. There were two lines in these estimates that caught my attention and that fall within your department’s statutory authorities: interest on unmatured debt and interest costs. Is the department concerned that interest rates will rise, considering the anticipated higher than expected growth in our economy? Are your projections still valid, and have you factored in the impact of budget measures on revenues if interest rates were to increase, like many economists are predicting?

Ms. Bess: Thank you very much for your question, senator. I’m going to turn it over to my trusted colleague, Alison McDermott, in fiscal policy, who looks at these things in much greater detail than myself.

Ms. McDermott: Thank you for the question. I think it’s a good point that we are indeed watching inflation very carefully. Obviously with the large stimulus in the United States and the significant stimulus here, some increase in economic growth would be a very good thing.

Overall, we are still of the view that the very significant deflationary pressures that are associated with the pandemic are the big concern, and this is why governments have introduced these strong responses. As I mentioned, the forecast that underlies Budget 2021 is taken from the private sector average, and when they provided their input into that, this was after we announced in the Fall Economic Statement our intention to spend between $70 billion and $100 billion of stimulus spending. Our sense is they would not be greatly changing their outlook on the basis of what was done in the budget.

The most important thing to keep in mind is that an important factor in inflation is expectations.

Senator Loffreda: Exactly. I have always said that.

Ms. McDermott: We have good reason to have confidence in the Bank of Canada’s ability to manage those expectations. Canadians have faith in the Bank of Canada’s ability to manage inflation.

I think most private sector economists expect inflationary expectations to be contained. That is our situation right now, but we are, of course, continuing to monitor those developments.

Senator Loffreda: We talked about virtual work, and I would like to look at the other side of the balance sheet. We have explored and questioned expenses. I would like to see if there are any possible cost savings.

One of the Treasury Board Secretariat’s priorities is to prepare the public service for the future, with a focus on exploring enhanced flexibility in working arrangements, and assessing the need for greater flexibility in policy and in delegated authorities, particularly with respect to talent mobility and remote work.

Your website — last updated on April 16 — says that many public service employees will continue to work remotely and effectively for the foreseeable future.

In light of the increased vaccination, anticipated reopening, can you provide our committee with an update on the government’s plan to allow its employees to reintegrate their workplaces. I appreciate the situation is quite fluid, but is the government entertaining implementing permanent policies that would allow its employees to work from home? If so, what consequences might this have on the government’s coffers, including our real property portfolio, and possible sales and savings in that portfolio? Thank you.

Mr. Purves: I’ll ask Mr. Yalkin to speak to this. Thanks.

Tolga Yalkin, Assistant Deputy Minister, Workplace Policies and Services Sector, Treasury Board of Canada Secretariat: Thank you for the excellent question, Mr. Chair, one we are seized of at the moment.

Certainly, as members of the committee will be aware, the nature of the public service is such that deputy heads are responsible for the administration of their organizations, but we at Treasury Board Secretariat have a key role in providing them with guidance and frameworks and support for them to help them navigate the environment that we’re finding ourselves in.

Within our organization, we are actively exploring what ultimately will be a phased-in approach, which will support deputy heads in determining how and under what circumstances they will support their organization in returning to the workplace, or continuing to work remotely.

So we will be providing guidance and support for them in doing that. There are many bigger questions, ones that the question implies relating to the long-term implications for the public service, including the real estate footprint that it may require in order to deliver services to Canadians.

Those are much broader questions that I think will become clear over the course of time. Right now what we’re focusing on is ensuring that deputy heads have the key guidance in place to be able to navigate what will be, we hope, the post-pandemic workplace.

Senator Loffreda: Thank you.

Senator Marshall: One quick question for Mr. Purves. I only need a yes or no. We’re going to get a breakdown of the $11.9 billion, right? That’s on your list for June 10? That’s on the reconciliation between Budget 2021 and the estimates.

Mr. Purves: I believe you asked for reconciliation of the 29.5?

Senator Marshall: I did. Senator Smith mentioned the 11.9.

Mr. Purves: Absolutely, for sure.

Senator Marshall: Perfect. Thanks.

My other question is for Finance. It’s a follow up to Senator Forest’s and Senator Loffreda’s questions on the interest. The interest on the unmatured debt and the other interest costs; are they all part of what you call public debt charges in the budget? I want to make sure I’m comparing apples and apples.

Ms. Bess: Thank you for your question, Senator Marshall. Alison looks like she’s ready to answer that one.

Ms. McDermott: More or less. Some of the specifics of this I may not be able to answer. In terms of growth showing up in these supplementary estimates — why it shows up in this estimate rather than another — I’d have to get back to you on. Ultimately, these are debt charges. It’s all reflecting the fact that these are under the statutory and for information. Ultimately, we want to report that these are expenditures or expenses that are being recorded on our financial balance for this year.

Senator Marshall: Okay. If the budget documents say the estimate for this year is $22.1 billion and I try to track it, looking at the estimates documents, then if I add together the $16 billion and the $5 billion, and I’m getting close to $22 billion, I’m comparing apples and apples, am I, Alison?

Ms. McDermott: Again, the best information on our expectation for the total debt service charges would be what we have in our budget and our outlook for program expenditures, and how that is conveyed in these estimates documents, I should know the answer to that but I’m not 100% sure.

Senator Marshall: Could you follow up on that?

Ms. McDermott: Sure.

Senator Marshall: I want to make sure I’m comparing apples and apples. Those are my questions.

Ms. McDermott: We will get back to you with that.

Ms. Bess: Mr. Chair, can I add something to that?

Senator Marshall, these are forecast estimates. The amounts of interest that are reflected in these supplementary estimates are based on changes in the actual amounts of debt issued — the interest rates themselves based on projections, revisions to expected borrowings. I’m not sure if that’s what you’re answering. So from time to time in every estimates period you’ll see adjustments to these based on the forecast for all of these different elements of the debt.

The Chair: Thank you. Senator Marshall, is that your last question?

Senator Marshall: I can make one comment, if I have time, as a follow up to Senator Duncan’s question on the accountability question.

I look at the Departmental Results Report that Mr. Purves mentioned a lot and find there are some issues with them. I don’t know if Treasury Board gives the departments any guidance, but the most recent one I looked at was for the Department of Transport. Some of the targets are for 2025. There are other targets for which the information is not available. For example, I was interested in targets relating to marine because I live on the island of Newfoundland and we’re surrounded by water, but none of the targets were available. The target is four years into the future. I don’t know, Mr. Purves, does anyone go back to the departments and tell them their targets aren’t sensible?

Mr. Purves: I don’t know if Senator Duncan has her hand up. I don’t know whether it’s related to it. What I was going to suggest, though, is this is great feedback. I’d be happy to provide that to our colleagues at the Department of Transport.

Senator Marshall: I’m not picking on them. It’s just that they were the most recent one I looked at a couple of days ago.

Senator Duncan: I wanted to add to Mr. Purves’ comments that, while on the break, my staff were looking at Indigenous Services Canada, the report, and content was restricted to valid or authorized IP addresses. If we want to go back and look, we need to be able to access this information.

My second-round question was: Public Health Agency of Canada is asking for funding for border and travel measures related to COVID-19, and travel restrictions for individuals entering by land and air. I would like to see a breakdown of how these monies are spent. I’m especially interested in expenditures on the Canada-U.S. border in northern B.C. and the Yukon, with Alaska. Some folks are able to cross the border because they are deemed essential. I’m wondering — I’m grateful for this — what the process of appeal is to determine whether citizens meet that criteria? Also, regarding the land border with Chicken, Alaska — which has the only shared border where the facility itself, the building, is shared between Canada and the U.S. — how will that be staffed this summer? Is there money in the budget for that?

How is this money being spent, if I could have the breakdown by area, and also some of the processes involved. Thank you very much.

Mr. Purves: It’s a great question. Given the fact that there are a number of departments — senators, you’ve asked a lot of questions of departments that are actually returning. To expedite this, what we’ll do is follow up with those departments that are returning with the questions and have them provide you the response ahead of the appearance so that you can have a more productive conversation, as opposed to being the importer or exporter on these questions. I think it would be more expedient for you, chair and the committee, to be able to do that, if you agree.

The Chair: Thank you.

[Translation]

Senator Forest: My question goes to all our guests and has to do with the process. We hear a lot about accountability and the importance of clear understandings. A number of us have worked as managers for a provincial government, a territorial government or even in the private sector. As we look at the whole area of infrastructure, and more specifically, the whole naval procurement strategy, we see that it is taking on water, with costs skyrocketing and deadlines going unmet. I wonder whether there actually is an accountability process. Looking at the infrastructure in our ports, which is the property of the Government of Canada, all over the Maritime provinces, Quebec and in the West, we see a huge amount of infrastructure items that are not maintained and that are falling apart. Where is the responsibility and the accountability process? Is it with the Treasury Board, the cabinet, the inner cabinet? Is there responsibility and an accountability procedure in the federal government? That’s an open question and it goes to all the witnesses.

[English]

Mr. Purves: I would say that ministers have certain portfolios and responsibilities, and typically they have responsibilities and accountability for those portfolios. In terms of the exercise of that authority, they have departmental plans and departmental results reports, and we have parliamentary appearances that support these efforts. I think that, collectively, you have all the tools and apparatus to ensure accountability.

I’m not sure exactly, in your example, whether we’re talking about DFO infrastructure or whether we’re talking about Transport infrastructure, but it’s important to know which portfolio that it falls within to be able to ask the right questions to the right people.

The Chair: Ms. Bess from Finance, do you have any comments on that question?

Ms. Bess: I don’t think so. Alison, did you have something to add?

Ms. McDermott: No.

Ms. Bess: No. Sorry.

Ms. McDermott: I agree with the way Glenn described it.

Ms. Bess: Thank you. No further comments from Finance.

Senator Loffreda: My question is for Finance Canada or any one of our other panellists who could answer. Your 2021-22 departmental plan states that Finance Canada will:

Support the government’s intention to follow a prudent approach that locks in historically low rates in 2021 to enhance the predictability of debt servicing costs in managing the significant increase in debt resulting from the pandemic response.

I know that they have shared that they are locking in more long-term rates because of low interest rates. I want to know if there has been any change in strategy recently based on the new outlook that you have shared. Can you speak to and elaborate on this prudent approach? What is unique about the way the department is managing the debt servicing, besides what is already publicly known? Last, on the predictability of the service cost, to what extent have you done some stress testing or sensitivity analysis besides what we’ve seen in the budget? Thank you.

Ms. Bess: Thank you, Senator Loffreda, for those great questions. I’m going to look to my colleague Alison McDermott to see if she can provide some more details on some of the questions you have.

Ms. McDermott: I think this is one that I would actually refer to my colleague Soren Halverson from the financial sector policy branch.

Mr. Halverson: Thank you for the question, senator. To begin, the debt management strategy as it was expressed in the recent budget document is the strategy that continues to be pursued. As far as the prudent approach is concerned, I think it’s fair to say that prudence is always a central tenet of the way that the government approaches debt management. That work is done in conjunction with the Bank of Canada.

Over the past period we have put an additional focus on extending the maturity of the debt. That is consistent with what you would see in the document. What that means is that, over the coming year — and really, when we talk about long-term debt, we’re talking about things that have maturities of 10 years or greater. That represents 42% of issuance. So it’s a significant waiting —

Senator Loffreda: Is it also increased from other years? How much was the percentage historically?

Mr. Halverson: I’m looking at 2019-20 and debt. The average term to maturity is 31.5% for a debt that’s over five years. It is a considerable reweighting if you look at that average over the debt stock.

Senator Loffreda: Thank you.

Mr. Halverson: Sorry, I missed the last part of the question.

Senator Loffreda: It was on the predictability and sensitivity analysis going forward, and if you have expanded on that more than what we see in the current budget that we have.

Mr. Halverson: What I can say in that regard is that there’s a considerable amount of joint work between teams at the Bank of Canada and Finance that look at this on an ongoing basis. The debt management plan, as it is developed, goes through a wide range of scenario analysis, including looking at different yield curve profiles. That is very much central to the annual process.

Senator Loffreda: So that work is being done more extensively than what we see. That is reassuring. Thank you.

Senator Galvez: I have a general question concerning Crown corporations and it’s for the Department of Finance, but it can be complemented by an answer from the Treasury Board.

We know that Canada’s Crown corporations will demonstrate climate leadership by adopting the Task Force on Climate-Related Financial Disclosure standards as an element of their corporate reporting. Canada’s large Crown corporations, over $1 billion in assets, will report on the climate-related financial risks for their financial years, starting in calendar year 2022. Crown corporations with less than $1 billion in assets expected to start reporting on their climate-related financial risks for their financial years, beginning in calendar year 2024 at the latest, or provide justification as to why climate risks do not have a material impact on their operations. My question is, will this apply to the EDC’s account?

Ms. Bess: Thank you for your question, Senator Galvez.

I’m not sure if I can answer it. I will open the floor to see if any of my colleagues from Finance have a response to that question. We can take that back and look into it.

The Chair: Please provide the answer, Ms. Bess —

Ms. Bess: By June 10, yes.

Senator Galvez: I notice that my questions with respect to climate and environment are usually not a subject that are answered at the first stage. I would appreciate it if, for the next time, we can have somebody who can answer because there are many funds, appropriations and budgets that are going in this direction. Please consider that for the next time. Thank you.

The Chair: Senator Galvez, that’s a very good point. Since we have the Treasury Board and Finance — there is no doubt in my mind that we will call on you again to come back to this committee. Please take the notice and comment from Senator Galvez concerning someone who can answer for those particular votes.

On this, I see that Mr. Purves has his hand raised.

Mr. Purves: Thank you very much. Senator Galvez, it’s disheartening any time that we would have to go and search for the answer to a question of any senator — or any parliamentarian, for that matter.

Just to reiterate where we were, there is a long list. Again, my suggestion is this: Those items that are within our scope of Treasury Board or Finance, we would get back to you within that June 10 period. For those items that are questions for departments that are coming next week, our suggestion is that it would be an opportune time for senators to ask those questions.

We would take those questions and make sure those people are prepared to answer those questions when they appear. That would be faster for everyone involved. Then, certainly, for those departments that aren’t coming back to appear in front of your committee, we’re happy to follow up and to use the muscle of the secretariat to be able to get it by June 10.

Ms. Bess: Senator Galvez, I want to clarify something. The requirements you’re talking about are new financial reporting requirements, right? Is that what you’re referring to — new accounting standard reporting requirements?

Senator Galvez: Yes.

Ms. Bess: Okay, thank you.

The Chair: To the witnesses, I have a question. However, before I go to the question, which will be directed to Treasury Board, I want to thank Mr. Purves and Ms. Bess. You were very informative and very professional, and we appreciate that. Like you said, Mr. Purves, we have a common denominator when we ask questions. It’s about transparency, accountability, predictability and also reliability. Those are the elements of due diligence that Canadians ask us as parliamentarians.

That brings me to my question.

[Translation]

I have a question for the Treasury Board. It is often difficult for parliamentarians to find in the estimates the expenditures associated with specific initiatives in the federal budget.

What is your opinion on the recent 2019 pilot project, which was designed to harmonize the federal budget and the Main Estimates? Do you have any comments on that?

[English]

Mr. Purves: Mr. Chair, thank you for the kind comments and the very insightful question.

I would have to step back and say that if you think about some of the transparency that we’ve been doing — things we’ve included in these supplementary estimates, online annexes accompanying these supplementary estimates and our use of GC InfoBase — we’ve come a long way. But I don’t think it’s because of us in the secretariat; I think it’s every appearance that we’ve had with the Senate, with the OGGO committee and information that they’re seeking. It’s what the government wants to achieve. It’s what the PBO is putting out. Collectively, a lot of information has been requested. We’ve been trying to meet that.

So when you speak about the budget estimates alignment pilot that took place, there are many aspects to it that aren’t a pilot anymore; they’re just the way we do business. I remember Senator Marshall, in one prior appearance, talking about frustration around the fact that the estimates don’t include Employment Insurance, the Canada Child Benefit and all the elements you would see naturally in a budget document. So our commitment is that every supplementary estimate or any estimate that we put out, whatever the last policy document was from the Department of Finance, we’ll do a reconciliation to that so that you have a better line of sight.

It’s not going to be perfect. There may be things that you want to see changed, but at least it’s that ongoing dialogue that we’ve benefited from with all of you. We’re always open to ongoing improvements there.

Again, I see every appearance and any engagement we have with parliamentarians has been fruitful.

[Translation]

The Chair: Ms. Bess, Mr. Purves, we thank you and your entire team very much.

[English]

Honourable senators, our next meeting is scheduled for next Tuesday, June 8, at 9:30 a.m. EST.

Seeing that we have no other items on the agenda, I now declare the meeting adjourned.

(The committee adjourned.)