THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, March 2, 2022
The Standing Senate Committee on National Finance met with videoconference this day at 12:51 p.m. [ET] to study the Supplementary Estimates (C) for the fiscal year ending March 31, 2022.
Senator Éric Forest (Deputy Chair) in the chair.
[Translation]
The Deputy Chair: Before we begin, I’d like to remind senators and witnesses to keep their microphones muted at all times unless recognized by name by the chair.
Should any technical challenges arise, such as those we just experienced, particularly with interpretations, 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 with the technical assistance number provided.
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 information. Participants should know to be in a private area and to be mindful of their surroundings.
With that, we will now begin the official portion of our meeting as per the order of reference we received from the Senate of Canada.
My name is Éric Forest, a senator from the Gulf region of Quebec, and I am the Deputy Chair of the Standing Senate Committee on National Finance.
I would like to introduce the members of the Standing Senate Committee on National Finance who are participating in this meeting: Senator Dagenais, Senator Duncan, Senator Galvez, Senator Gerba, Senator Gignac, Senator Loffreda, Senator Marshall, Senator Moncion, Senator Pate and Senator Richards.
Welcome everyone, and welcome to all Canadians watching us online at sencanada.ca.
This afternoon, we are beginning our study of the Supplementary Estimates (C) for the fiscal year ending March 31, 2022, which were referred to this committee on March 1, 2022, by the Senate of Canada.
We have the pleasure today of welcoming Yves Giroux, Parliamentary Budget Officer, from the Office of the Parliamentary Budget Officer, accompanied by analysts Jill Giswold and Kaitlyn Vanderwees.
Welcome everyone, and thank you for being here. We apologize for the technical issues. Thank you for accepting our invitation to appear before the Standing Senate Committee on National Finance.
We are ready for your introductory remarks, Mr. Giroux. The committee always enjoys hearing from you. You have the floor.
Yves Giroux, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: Honourable senators, thank you for the invitation to appear before you today. We are pleased to be here today to discuss our analysis of the government’s Supplementary Estimates (C) for the 2021-22 fiscal year, which was published on February 21, 2022.
With me today I have our lead analysts on the Supplementary Estimates (C) report, Jill Giswold and Kaitlyn Vanderwees, to answer your questions.
The government’s third Supplementary Estimates for the 2021-22 fiscal year outlines an additional $17.1 billion in budgetary authorities.
Voted authorities, which require approval by Parliament, total $13.2 billion.
[English]
These supplementary estimates bring the total COVID-19-related authorities included in the 2021-22 estimates to $59.8 billion, compared to $159.4 billion in the 2020-21 estimates. COVID-19 measures account for $6.9 billion — or 52.5% — of the $13.2 billion proposed in voted authorities.
A notable item is $4 billion to the Department of Health and Public Health Agency of Canada for the procurement and distribution of COVID-19 rapid test kits, which is a duplication of spending being sought through Bill C-10 and Bill C-8. Parliamentarians should, therefore, continue to monitor spending on rapid tests to avoid duplication of payments.
On that, I will end my opening remarks. We would be pleased to respond to any questions you may have regarding our analysis of the government’s Supplementary Estimates (C) or other PBO work.
[Translation]
The Deputy Chair: Thank you very much for your presentation.
We’ll move on to questions now. Senators, you have five minutes today. Please be concise so we can make up for lost time. Ask your questions directly. Witnesses, please keep your answers brief. The clerk will give a hand signal when time is up.
[English]
Senator Marshall: Thank you, Mr. Giroux, to you and your officials for being here today and for the report.
I want to focus on the issue you raised in our opening statement, and that’s the $2.5 billion in Bill C-10, the $1.7 billion in C-8 and the $4 billion in Supplementary Estimates (C). It’s on page 8 of your report.
With this issue of the possibility of the government duplicating a funding request, I’ve never seen that in all the years that I audited government departments, both in Nova Scotia and Newfoundland. How unusual is this? What was the department planning to do with the extra $4 billion if all the spending authorities were approved? Also, are you able to tell us how you picked up this duplication? Since it’s so unusual, I’m wondering how your officials picked it up.
Mr. Giroux: Thank you for the question.
I don’t remember seeing that in my experience, which doesn’t mean it never happened. It’s just that I don’t remember off the top of my head seeing another occurrence in the past of trying to get the same funding through two different approaches. Maybe it has happened, but I don’t remember it.
When we asked questions about the intended use of this funding, it was to procure rapid tests for COVID-19 and to distribute them to provinces and then to Canadians. When we asked why try to have it go these two different routes to get to the same end, the government responded that it wants to get the funding as soon as possible, so they’re trying this through Bill C-10 and Bill C-8, as well as Supplementary Estimates (C). They will use whichever authorities come first to procure these tests. However, they have already started procuring these tests, so they are doing some risk management should the spending not be approved. That seems to be the reason why they are pursuing the two different approaches.
We picked it up by just looking at the bills that are presented in the House and in the Senate. It’s something that stood out for us. We saw spending items in Bill C-8, Bill C-10 and the same items again appearing in the Sup (C). I wouldn’t say it was fairly easy to pick up, but due to the eagle eyes of Jill and Kaitlyn, it was picked up.
Senator Marshall: Was there discussion with Treasury Board? Would you be aware if there was a plan to freeze the additional $4 billion once they got their initial $4 billion, that what was left, the other $4 billion, would be frozen? Was there any indication that it would be frozen? My concern is that if all the authorities got approved, they would have an extra $4 billion that they could transfer around and use for whatever purposes. Was there any discussion with Treasury Board with regard to the freezing? Would you have any information on that?
Mr. Giroux: You raise an interesting point, senator.
Before I answer the freezing part, if the government gets funding through the Supplementary Estimates (C), they could indeed reallocate to other purposes because that would be granted to the department through vote 1. There wouldn’t be that much time left in the fiscal year to reallocate and spend it on other items, but in theory, that is possible.
As to mechanisms for freezing these funds, should they get funding through all three appropriations, I’m personally not aware that there has been such a mechanism envisioned, but maybe Jill or Kaitlyn could confirm that.
Jill Giswold, Analyst, Office of the Parliamentary Budget Officer: Thank you for the question. No, we have not heard from Treasury Board that they would necessarily be frozen, though they might be able to provide more details. If the authority is not used through Supplementary Estimates (C), it would lapse at the end of the fiscal year, after March 31.
Senator Marshall: Do I have any more time, Mr. Chair?
[Translation]
The Deputy Chair: No, we’ll put your name down for the second round of questions.
Senator Gignac: Welcome Mr. Giroux. It’s nice to have you here. I found your answer to Senator Marshall’s question disturbing because you said it was a precedent and once the bill is passed, it will be out of our hands and could happen again in theory. I look forward to seeing what transpires with that.
I’m going to change the subject. There’s a part about student loan write-offs. It seems that’s becoming a habit. I’m a new member of the committee, and I know that Quebec has a loans and bursaries program. Was a comparison done with Quebec’s loans and bursaries program? Will there be as many write-offs at the federal level? Did you talk about this with the Auditor General? Should we be concerned about the amounts we’re seeing? If I understand correctly, this happens every year. This time, it’s $170 million for 26,700 unrecoverable debts. Are these the mechanisms that are in place? If so, maybe the Auditor General can clarify for us. Would it be useful to compare this with how the loans and bursaries system is administered in Quebec?
Mr. Giroux: Thank you, senator. Unfortunately, we didn’t do a comparison with how Quebec writes off unrecoverable debts. Maybe Employment and Social Development Canada has, maybe not. Maybe the Auditor General did it as part of her mandate, but the amount in the Supplementary Estimates (C) doesn’t seem to be an anomaly. Proportionally, it might seem like a big amount, but the debts are written off only once they have been in default for six years. It’s quite a long process. The debts being written off this year are from 2016 or before and were incurred before 2016. It’s old stock. More lenient repayment rules and various student support programs will begin to have an effect on debt write-offs in a few years. That’s why the program’s chief actuary expects debt write-offs to stabilize in the future, but not right away. These are good questions, but I think they might be better put to the Auditor General and Employment and Social Development Canada because we didn’t do a comparison with Quebec’s loans and bursaries program or with how that program is managed.
Senator Gignac: Thank you. I’d like to be in the second round of questions.
[English]
Senator Richards: Thank you, Mr. Giroux, for being here.
I have asked this question for the last four years. I only got the supplementary last night at about eight o’clock, and I tried to go over them. I’m thinking of the audit and oversight of all of this money, and I have been asking for four years, is there any definitive way where the audits and oversights can come in to the committee so we know where this money is actually going? I know where it is going in a general way and have been told where it is going in a general way and why we need it, but there is no specificity here that I have seen since I have been on this committee, not really. I know that you do an absolutely excellent job in what you do, but I wonder if you do worry about that and if you could maybe bring me up to speed on what you think of it.
Mr. Giroux: Thank you, senator.
These are very legitimate concerns, because you’re being asked to vote on billions of dollars, and essentially what the government is telling you is, “Trust us and trust the officials that we will use that money efficiently and we’ll use it for the best purpose and to the purpose that we are saying that we’ll use it for.”
I don’t have the capacity to follow that money that closely. That’s, unfortunately, the way the system is designed. By delegating financial signing authorities to ministers, deputy ministers and managers, that makes it very difficult to ensure that the money is effectively used efficiently and for the purpose for which it’s supposed to be used, especially when we consider the fact that departments have the capacity to reallocate within certain categories of expenditures. As I have alluded to when answering a question on rapid tests, for example, if the Public Health Agency of Canada and the Department of Health do get the $4 billion that they are seeking for rapid tests, they could, in theory, reallocate that for other purposes, because once the funding is allocated it can be moved within categories of expenditures for other purposes.
There are mechanisms to prevent inappropriate expenditures, but there’s no guarantee that all of these mechanisms are properly followed, especially from a senator’s perspective. Once the money is approved, it is much more difficult to follow each and every dollar.
Senator Richards: Thank you very much for that. That’s what I’ve been afraid of for four years, sir. I think it is a legitimate concern so I thought that I would ask you.
Another legitimate concern is about the inflation rate and the idea that the interest rates have just risen. We could see this coming too, sir, I think, over the last couple of years. I don’t think that there is any way to stabilize this at the moment because of the amount of debt that Canada is incurring through the Bank of Canada and other things. I’m just wondering if you think that the interest rates are going to rise and inflation is going to become a real problem. Maybe that’s not what you are here today to talk about, but I thought that I would ask you that anyway. Thank you.
Mr. Giroux: That is an interesting question. Personally, I think there’s a strong likelihood that inflation is going to be brought back under control over the medium term, especially with actions that the Bank of Canada will be taking, and also as bottlenecks and supply chain disruptions are addressed. However, as we are seeing in Eastern Europe, there are geopolitical events that could throw a monkey wrench into the plan that central banks have. The fact that there is a war going on in Ukraine could push up the prices of certain commodities, notably oil, and that could increase inflation further.
We are already seeing in these supplementary estimates the impact of inflation with debt servicing costs being higher than the government was expecting, and that’s in part due to what we call real return bonds. These are bonds that the government issues, and the return of these bonds is linked to inflation. The government issues a relatively small proportion of its debt through real return bonds, but the increased inflation that we have seen recently has an impact on the cost of servicing the public debt, notably through real return bonds.
Senator Richards: Thank you very much. That has been helpful.
[Translation]
Senator Loffreda: Thank you, Mr. Giroux and your team, for being with us today.
[English]
I do appreciate your work. It’s always excellent work, so thank you.
I want to pursue inflation and interest rates a little further. What we’ve discussed is important. It is so important given the debt level charges that we’re all seeing. Throughout the pandemic, the government has justified its borrowing on the fact that interest rates were low. In its fall economic statement, the government explains that it continues to maximize the financing of COVID-19-related debt through long-term issuance, and that is a fine strategy. This strategy provides security by lowering debt rollover and providing more predictable public debt charges over the long-term. So the government does claim that the debt is sustainable.
I raised my question yesterday during our private briefing. Given the uncertainty, and with respect to the uncertainty and new projections, can we expect new projections from your office in the near term, maybe the most possible scenario, best-case scenario or worst-case scenario? If so, when? It is important given what you mentioned: the Russia-Ukraine war, a new Cold War, inflation concerns, supply chain concerns. Last night we heard President Biden saying “made in the U.S.A.” Forty-five per cent of our GDP is exports and three quarters is to the U.S.A. It is a high percentage.
Your last report I’ve seen does show an increase in public debt interest costs in the medium term. You suggest that public debt charges will reach 1.5% of GDP by 2026-27 from its current 0.9%, which is an all-time low. What’s your impression of all that? Are you going to make projections beyond 2027? Will we see new projections? Do you feel the debt is still sustainable given all of these concerns?
Mr. Giroux: Thank you, senator.
We released an updated economic and fiscal outlook earlier this week in which we mentioned that we anticipate debt servicing costs to go significantly higher due to a larger stock of debt and also rising interest rates. As you pointed out, these projections go out until 2026-27. To go beyond that, we usually do that through fiscal sustainability reports, and we published two fiscal sustainability reports in 2021.
We plan on updating it again sometime this year. I don’t have a definitive timeline yet for that, but we definitely will update our fiscal sustainability report because it is an important tool to assess the long-term sustainability of federal and provincial finances.
Based on the last fiscal sustainability report that did not take into account additional spending that was announced in the fall update of December or any of the government’s plan in the electoral campaign, we assessed that the federal finances were sustainable over the next 75 years, but there was not an immense amount of room for manœuvre.
We will see what the results yield when we update our fiscal sustainability report, taking into account economic and fiscal update developments, expenditures as well as revenues, and possibly budget 2022 expenditure measures. We will provide that information to you over the coming months, but I would not venture an assessment at this time without the benefit of having seen what the government has in store in its budget, and also with the developments that are taking place in Europe right now.
Senator Loffreda: I have seen those reports. It is the lack of wiggle room that is concerning.
[Translation]
You mentioned that there is not much wiggle room. Given everything that’s going on, that’s very concerning.
[English]
I would like to explore the other side of the balance sheet and talk about revenues. Our committee reviews the government’s budgets, estimates and all of its spending activity, but we don’t often look at the other side of the balance sheet.
Yesterday during your briefing on your most recent economic report — I see all of those reports, study them religiously and dream about them at night — you mentioned that your projected budgetary deficits were only $1.7 billion higher than your August projections, despite all of the spending measures in the fall economic update and Bill C-8. You attribute this small increase to, as you note in your report, stronger-than-expected results in 2021 and strong in-year data for 2021-22. Your new projections indicate that the revenue outlook has been revised up to $8 billion on average over 2021-22 to 2025-26. Can you further elaborate on these additional tax revenues? Given everything we are seeing right now, is there a concern that they won’t be there? The debt sustainability relies on additional revenues. And perhaps more broadly, what measures do you think that the government should consider to increase its revenues? Distributing wealth is easy; creating wealth is very, very difficult. How can we do it? You have talked about this before. Given everything we see now, it is a big concern for me, and I’m interested in knowing your point of view. Thank you for that.
Mr. Giroux: Thank you, senator. I know there’s at least one avid reader of our reports. It is humbling to hear you talk about the reports. You seem to know them at least as well as I do.
I will venture a response to the points you raised. We see revenues increasing at a healthy pace, in large part because the broadest measure of the government’s fiscal basis is the GDP, nominal GDP, and when inflation exceeds expectation, as we see right now, nominal GDP increases faster than expected, and that broadens the tax base, so that leads to higher revenues. Even without increasing tax rates, it leads to higher tax revenues for the government.
What we have seen, however, and we talk about that in the economic and fiscal outlook report that we released yesterday, is that when there is fiscal room generated by broader or faster, better economic activity, the government tends to spend it either in totality or almost spend it all or spend slightly more than that. That is why we are seeing a deficit figure that is going down, but despite better-than-expected economic developments and some less expensive programs, notably COVID-19 support programs — some of them have come in less expensive than expected — we don’t see any big improvement in the deficit compared to the budget, for example, or compared to our own economic outlook. That is one aspect of the point you raised.
The other aspect: How can the government become better at collecting revenues or collecting more revenues? That is an interesting question that is coming up quite often from parliamentarians on both sides and in both chambers. That is why we decided to look at the performance of the Canada Revenue Agency compared to its peers. We will be in a position to provide you with this type of information in the coming weeks, probably in the spring, where we will look at the comparative performance of the Canada Revenue Agency, compared to other tax agencies across the world.
One way to improve revenues from the government would be to target areas of higher non-compliance, and that could generate additional revenues without having to increase taxes, but that requires resources that are specialized, and they are not always readily available, and it also at times requires that the tax agency improve the way that it does business.
Senator Loffreda: Thank you for that. I am looking forward to it. Bad debts and collection will be important. Thank you.
[Translation]
I’d like to be in the second round of questions if there’s time.
Senator Dagenais: My question is for Mr. Giroux. The government’s decision to keep interest rates low will definitely have an impact on the economy in general and the price the government will have to pay for Canadians’ debt load. Can you paint us a picture of the threat hanging over us as citizens and, of course, as taxpayers?
Mr. Giroux: Thank you, senator. The fact that interest rates are low and have been for a long time resulted in higher debt levels than we would see in a higher-interest environment, and we see that especially in the affordability of property ownership.
People often take on whatever monthly payments they can afford. With low interest rates, mortgages can be bigger, which boosts demand for certain types of housing and puts ownership out of sync with interest rates. I’m probably not using the right terms, but it pushes prices up, and then you have a spiral. People take on more debt more easily because it costs relatively little to service that debt in a lower-interest environment.
The government took advantage of low interest rates during COVID-19 and borrowed heavily to create programs. Government debt makes consumers and taxpayers more vulnerable to rising interest rates.
This is a risk factor that affects future economic growth. For example, if interest rates were to rise more sharply than anticipated, that would have a negative impact on economic growth. There is also added risk given the situation in Europe right now. That could boost inflation and put us into a situation with both rising inflation and rising interest rates, which would slow economic growth.
We’ve been saying for years that household debt is a risk to economic growth.
Senator Dagenais: Thank you, Mr. Giroux.
[English]
Senator Pate: Thank you very much, Mr. Giroux, Ms. Giswold and Ms. Vanderwees, for your work, as always, and for being here.
As you will know, part of the rationale for the Department of Health requesting the extra monies for rapid test kits includes the reality that the Public Health Agency data is revealing that low‑income Canadians are having significantly worse health outcomes during this pandemic, as well as prior to the pandemic. But during this pandemic, they’ve been two times as likely to die of COVID versus those with higher incomes. Obviously, we’re all horrified by some of these realities in terms of how the health, human, social and financial impacts of the pandemic have disproportionately hit the most vulnerable groups.
I’m interested, given that you have costed in other areas, in things like guaranteed livable income. What are the costs that you are seeing associated with these unequal health outcomes? How could those costs have been reduced if we had adopted some of those measures, like having a guaranteed livable income, in advance of the CERB or instead of the CERB? How could that not only have lifted people out of poverty but saved health care costs?
Mr. Giroux: Thank you, senator. It is a very interesting question, a question for which I might only have a partial answer.
The costs that I see resulting from unequal health outcomes are, first, the costs on the individuals themselves by being prevented from working due to poorer health outcomes. For example, if a certain population is suffering from COVID at a higher rate than the rest of the general population, it reduces income and employment gains, and it also reduces attachment to the workforce. It also has implications for the social issue. For example, individuals with poorer health outcomes tend to have weaker social networks, which can lead to further isolation, which is difficult to quantify. They often have to incur additional expenses: medication, drugs, supports, at-home supports and others. I’m sure you can think of more examples than I can.
There are also costs that have to be borne by society. I mentioned having to quit a job, and that imposes costs on society. For example, we are experiencing labour shortages in many areas of the country. If people with poorer health outcomes have to withdraw from the labour force, that imposes costs on each and every one of us when jobs go unfilled.
There are also the costs of treating people. Those costs would be lower if they had better health outcomes in the first place. It is much more expensive to treat diseases and illnesses than it is to prevent them, generally speaking. These are, in short, the types of costs that I can imagine arising from unequal health outcomes.
The extent to which a guaranteed livable income would be able to address these differences in health outcomes is a much more difficult issue for me to pronounce on because I’m not aware that there exists literature on it. It probably does exist, but I’m not aware of it. I’m not putting in doubt the fact that a guaranteed livable income would reduce the costs associated with unequal health outcomes. I’m just not able to quantify them or to give a sense of the order of magnitude of cost reductions due to improved health outcomes through the implementation of a guaranteed livable income.
Senator Pate: Thank you. It sounds like something we should probably look at in more detail.
Mr. Giroux: If there is a desire by parliamentarians to have us look at that issue, it’s certainly something we can consider.
[Translation]
Senator Moncion: I have two quick questions, Mr. Giroux.
You were asked earlier about student debt write-offs. Can you tell us how much student debt is on the federal government’s books?
Mr. Giroux: That’s the question, Madam Senator. Maybe Jill and Kaitlyn have the answer, but I don’t. I do have a number in mind, but I wouldn’t want to put it out there.
Senator Moncion: That’s okay, I think I have the same number as you because I’ve already asked you this question. I wanted to know where we were at.
My second question is about economic stimulus measures. Are they still necessary at this point in the pandemic?
Mr. Giroux: I’ve already commented on that, so I don’t mind answering that question.
In its fall 2020 economic update and the 2021 budget, the government said it was earmarking between $70 billion and $100 billion to economic recovery. At that point, particularly in the 2020 update, it said it would use indicators to determine the amounts and the timing for reducing spending to ensure economic recovery specifically in relation to labour market measures.
In the December 2021 update, the government said that several of the labour market indicators, including jobs numbers, had surpassed pre-pandemic levels, but there was no mention of scaling back economic stimulus and economic recovery measures.
At that point, I said that if we determine or use the criteria the government itself identified for deciding when economic recovery measures would no longer be necessary, we are now at a point where they are no longer necessary insofar as those measures are meant to stimulate the economy. We no longer need economic stimulus measures if the goal is to restore the labour market we had before the pandemic.
However, if the government is pursuing other objectives, such as public policy objectives like setting up a childcare program, that has nothing to do with the economic situation or the labour market.
However, what the government itself said was that $70 billion to $100 billion would be reserved for economic recovery measures and that those measures would be scaled back once the labour market was back to where it had been prior to the pandemic from a macroeconomic point of view. That is now the case except in some sectors that are still affected by the pandemic. Overall there is no longer any justification according to those criteria for economic recovery measures.
However, as I said, if the government is pursuing other objectives, that is wholly within its power and its prerogative.
Senator Moncion: Well, we are studying a bill that contains COVID-19 measures, but more so in relation to economic recovery. I understand that we are at a turning point. Thank you very much.
[English]
Senator Duncan: I have the permission of my colleagues to remove my mask. Thank you very much. I’d like to express my thanks to Mr. Giroux and his staff for your attendance and for reporting to us. It’s greatly appreciated.
I would like to follow up — as you know, I’m the senator from the Yukon — on the situation of our friends and neighbours in British Columbia. In the Economic and Fiscal Update in 2021, the government provisioned $5 billion for its share of the recovery costs under the Disaster Financial Assistance Arrangements as well as other costs related to the natural disasters that occurred in British Columbia. Those natural disasters were significant and affected the supply chains not only, of course, to the Yukon and to the North but throughout the country.
I noted that in your March 2022 report, you again mentioned the Disaster Financial Assistance Arrangements program. I’m wondering if any of the $5 billion that was promised is in the frozen allotments that you mentioned. There was the reference to, as well, other costs. If I was a citizen of British Columbia, I didn’t find any extra money in these supplementaries. Perhaps you could advise if there is any additional money to cover these as well as other costs. Thank you.
Mr. Giroux: Thank you, senator.
Under the Disaster Financial Assistance Arrangements, or DFAA, the amounts are often paid years after disaster strikes because of the need to reconcile the expenditures or the claims that a province or territory submits to ensure that they are indeed related to the disaster in question and to ensure that they are covered by the federal program. Therefore, I’m not sure whether there is any money in the supplementaries that relates to Disaster Financial Assistance Arrangements for British Columbia. Jill and Kaitlyn are probably in a position to be more definitive.
Ms. Giswold: Thank you for the question. It was not something that we saw listed in the frozen allotment items in the supplementary estimates.
Senator Duncan: I would like to follow up on one point made by Mr. Giroux. The money is paid afterward under this program. British Columbia has already incurred significant costs in, for example, reopening the Coquihalla Highway. Are the carrying costs of all that money that has already been expended and is paid out some years later additional money also paid by the federal government under this program, or does the provincial government have to bear the costs of the additional money that they borrowed to pay for these repairs?
Mr. Giroux: There is a formula that determines how much the federal government will cover for a specific disaster, and the formula has a cost-sharing component. The first few million dollars is usually covered by the province. As the costs incurred go up in magnitude — and it’s on a per capita basis — the federal share increases until it reaches, if I’m not mistaken, 90%.
With respect to what type of expenditures can be included, such as the costs of borrowing that money, I’m not sure. The Department of Public Safety would probably be in a better position to answer that specific question.
I said that the expenditures or the funds can be paid years after the fact. It’s for the final conclusion of the settlement of these costs. It’s also quite possible that the bulk of the transfers from the federal to the provincial government can happen relatively quickly after disaster. It can be a matter of months, but until all is settled it can take several years, as we saw in the 1998 ice storm situation.
Senator Duncan: We might see some of the funds expended in the review by the Auditor General for the accounts of 2021-22.
[Translation]
The Deputy Chair: We have five minutes left for a second round of questions. We’ll start with Senator Marshall, followed by Senator Gignac. Senator Marshall, a quick question please.
[English]
Senator Marshall: Thank you very much, and a response in writing would be fine too.
The reconciliation at the beginning of the Supplementary Estimates (C) shows that there was $36 billion in Budget 2021 initiatives but the budget had provided for $49 billion. It looks like there is just over $13 billion in new initiatives. That money hasn’t been spent so far. I’m wondering if your office, Mr. Giroux, does anything with regard to that? Is there a listing that would indicate which budget initiatives did not get off the ground?
Mr. Giroux: I can ask Jill or Kaitlyn if they have more information. I know we briefly talked about that before the meeting, but I’m not getting any younger so I might forget important details.
Senator Marshall: It can be followed up with the clerk, because we know we’re short on time. I don’t want to have to go back and do it myself if you’re doing the process, so thank you very much.
[Translation]
The Deputy Chair: Can you provide the answer to the clerk?
Mr. Giroux: I would be happy to, Mr. Chair.
The Deputy Chair: Thank you very much.
Senator Gignac: I would like to pick up on an important subject Senator Marshall talked about at the start of the meeting, which is duplication of spending. This is about the $4 billion for rapid tests being sought in Bill C-10 and Bill C-8. The government is also seeking approval for that amount in the supplementary estimates.
Could it possibly be 4.3 billion? Let me explain. On page 9 of your document, you mentioned $300 million for the provinces. However, that amount is also in Bill C-8, which I am very familiar with because I will be the sponsor. Should this amount be $4.3 billion or just $4 billion? Am I right in thinking that this is the same issue, with the government trying to ram this through in both cases? If this $300 million is approved, can it be transferred to the provinces under some other framework? You said that once we’ve voted we no longer really have any control over how the money is allocated.
The amount is on page 9 of the English document. This is $300 million for the Public Health Agency of Canada for payments to the provinces, and all of that is in Bill C-8. This is the same way they’re handling money for rapid tests.
Mr. Giroux: I think that, in this case, it’s there for informational purposes because of increases to the statutory program. It’s in the supplementary estimates for informational purposes. It’s not something parliamentarians need to approve because it’s already in another legislative instrument that provides that money.
It’s kind of the same thing as the $2.4 billion to Employment and Social Development Canada for the lockdown benefit.
Senator Gignac: So there is no duplication of spending, unlike with the rapid tests?
Mr. Giroux: In this case, I don’t think there is duplication of spending.
Senator Gignac: Thank you very much.
The Deputy Chair: That’s it for this group of witnesses. I would like to thank our witnesses, especially Mr. Giroux. It is always a pleasure to have you here at our committee because the clarification you provide is very important. We will now take a break for 30 minutes and come back at 2:15 p.m.
Welcome back everyone. I am counting on you to be diligent so we can finish the meeting at 3:30 p.m. For the second part of the meeting of the Standing Senate Committee on National Finance, we will continue our study of the Supplementary Estimates (C) for the fiscal year ending March 31, 2022, which was referred to the committee yesterday by the Senate. We are pleased to welcome our second group of witnesses from Health Canada. We have Serena Francis, Assistant Deputy Minister and Chief Financial Officer; Cameron MacDonald, Assistant Deputy Minister, Strategy, Integration and Data, COVID-19 Testing Secretariat; Manon Bombardier, Assistant Deputy Minister, Pest Management Regulatory Agency, Transformation; Lynne Tomson, Associate Assistant Deputy Minister, Strategic Policy Branch.
Also with us today from the Public Health Agency of Canada are Martin Krumins, Vice‑President and Chief Financial Officer, Corporate Management Branch; Cindy Evans, Vice‑President, Emergency Management Branch; Brigitte Diogo, Vice‑President, Health Sciences and Regional Operations Branch; Dr. Guillaume Poliquin, Vice‑President, National Microbiology Laboratory; Candice St-Aubin, Vice‑President, Health Promotion and Chronic Disease Prevention Branch; Stephen Bent, Acting Vice‑President, COVID-19 Vaccine Rollout.
We will listen to your opening remarks. Ms. Francis, you have the floor.
[English]
Serena Francis, Assistant Deputy Minister and Chief Financial Officer, Health Canada: Good afternoon, Mr. Chair and members of the Standing Senate Committee on National Finance. Thank you for inviting me today to discuss Health Canada’s 2021-22 Supplementary Estimates (C). I welcome this opportunity to highlight some of the department’s priorities and to share with you the work the department is doing to support the health of Canadians. With me today are several of my colleagues in the event you have questions that require more detailed program responses.
For the 2021-22 Supplementary Estimates (C), Health Canada has a net increase of $3.5 billion, bringing its proposed authorities to date to $9.2 billion for the current fiscal year. This net increase consists of $3.48 billion in operating funding, $812,000 in capital funding and a reduction of $15.6 million in grants and contributions.
The majority of this funding is part of the continuing health response to COVID-19. The COVID-19 pandemic has created unprecedented challenges for Canadian health systems. Health Canada is playing a key role in the development and implementation of the responses to the pandemic at the regulatory, operational and policy levels.
The Supplementary Estimates (C) funding is comprised of voted appropriations of $3.73 billion, statutory appropriations of $2 million and negative $2,272.7 million in net transfers to and from other government departments and agencies.
In voted appropriations, Health Canada will be receiving $3.2 billion for the procurement of additional rapid test kits for COVID-19. Also as part of these estimates, $267.5 million is being transferred to the Public Health Agency of Canada for the same initiative. This is to ensure a stable supply and equitable access to COVID-19 rapid tests for all Canadian residents. These tests will remain a critical tool to minimize community transmission as Canada reduces measures and opens up the economy.
Health Canada will also be receiving $500 million to support emergency measures related to the pandemic. This contingency funding will provide the resources for Health Canada to respond to any unexpected shifts, including, but not limited to, the procurement of additional rapid tests, if necessary, and the associated logistics and operational costs.
Stemming from Budget 2019, the government has committed $35 million over four years to work with provincial and territorial partners and stakeholders to develop options for a Canadian drug agency in order to improve pharmaceutical management in Canada. This includes $9.1 million in funding that is being used this year to create the Canadian drug agency transition office. An investment of $2.9 million is also proposed for the first year of implementation of the P.E.I. pharmacare demonstration initiative, which will help improve access and affordability of drugs for Islanders. In August 2021, the Government of Canada and the Government of Prince Edward Island announced an agreement of $35 million over four years towards this initiative. These investments will contribute to progress towards national pharmacare.
Other items to note are $8.1 million in funding to strengthen the capacity and transparency of the pesticides review process to ensure there is no harm to human health or the environment; $3.5 million in funding to address anti-Indigenous racism in health care by providing contributions to support systems-level, community-supported projects and build capacity; and $3.2 million in funding to support long-term care, improved access to palliative care and safe access to medical assistance in dying for strengthening the enforcement of standards and better support for the workforce.
This year has been another remarkable and challenging year. This proposed spending will ensure the government can continue to respond to the COVID-19 pandemic and continue to focus on important health priorities designed to result in better health outcomes for all Canadians.
Thank you once again for inviting me before the committee today. We are pleased to answer any questions that you may have.
[Translation]
The Deputy Chair: Thank you for your remarks. We have to wrap up at 3:30 p.m., so you have a maximum of five minutes per question. Please put your questions directly to the witness, and let’s keep responses brief.
Mireille Aubé, Clerk of the Committee: Mr. Chair, Mr. Krumins was supposed to do an oral presentation.
The Deputy Chair: Okay, let’s have Mr. Krumins’ brief remarks.
[English]
Martin Krumins, Vice-President and Chief Financial Officer, Corporate Management Branch, Public Health Agency of Canada: Honourable senators, I would like to thank you on behalf of my colleagues here today for the opportunity to present to you the Public Health Agency of Canada Supplementary Estimates (C) for 2021-22.
The agency continues to play a crucial role in the Government of Canada’s response to the COVID-19 pandemic. These Supplementary Estimates (C) reflect the continuity in the agency’s COVID-19 response and seek to increase its voted authorities by $3.3 billion, statutory authorities by $301 million, for total authorities of $16.8 billion. This increase consists of $3.25 billion in operating funding, $11.7 million in capital funding and $44.3 million in grants and contributions. I will take the next few minutes to highlight the key items of these Supplementary Estimates (C).
The agency is seeking $1 billion for the procurement of lifesaving COVID-19 therapeutics and treatments, and associated logistics and operational costs. This is half of the funding announced as part of last December’s Economic and Fiscal Update, with the other $1 billion coming in fiscal year 2022-23. These new treatments, including antiviral drugs, will help protect Canadians from COVID-19 hospitalization and save lives. Also as part of these estimates, the agency is seeking $500 million to support emergency measures related to the pandemic. This funding will also be applied towards the procurement of therapeutics, for a total of $1.5 billion through these estimates.
The agency is also seeking $750 million of new funding to procure and increase access to rapid COVID-19 testing supplies across Canada. In addition, Health Canada is transferring $267 million to the Public Health Agency of Canada for the procurement of rapid tests. Altogether, this means that the agency is seeking $1 billion for the procurement of these rapid tests that will help identify cases early, break the chain of transmission and reduce outbreaks. This funding will contribute to increasing access to rapid tests across every community in Canada.
To continue supporting vaccination efforts across the country, the agency is seeking $687.2 million for the procurement of boosters. This is existing funding that was originally scheduled to be received in 2022-23 based on initial estimates of delivery schedules for boosters. This allows the agency to meet the current public health needs related to boosters, especially given the challenges from the rise of the Omicron variant.
Also related to vaccines, the federal government is committed to a national proof of vaccination standard and is working with every province and territory to develop a standard proof of vaccination. The agency is seeking $8.5 million for this fiscal year to cover actual and expected costs for developing the Canadian proof of vaccine credentials, including the technical solution, oversight, governance, communications and engagements. This funding will help fully vaccinated Canadians travel within the country and internationally. In addition, the government approved funding of $300 million to compensate provinces and territories for costs to implement the associated COVID-19 proof of vaccination credential programs.
The agency is also seeking funding through these estimates to help support Canadians and their mental health. As the pandemic continues to heavily impact the daily lives of Canadians, the agency is seeking $56 million to help support new ways of delivering programming and reaching populations in need of support for mental wellness. This funding will help support those most affected by the COVID-19 pandemic.
Securing the funding for these important initiatives will allow PHAC to continue the fight against COVID-19, advance our pandemic response and better protect Canadians.
My colleagues and I will be pleased to answer any questions you may have.
[Translation]
The Deputy Chair: Thank you for your remarks, Mr. Krumins.
[English]
Senator Marshall: My question is for both the Department of Health and the Public Health Agency, and it relates to the request for $3.2 billion in health and $750 million in the Public Health Agency. We heard testimony from the Parliamentary Budget Officer a few minutes ago. He said the request for a total of $4 billion is a duplication of funding that’s requested in Bills C-8 and C-10. I spoke on this issue yesterday in the Senate. If all the funding requested in Supplementary Estimates (C) and Bills C-10 and C-8 is approved, you will have an extra $4 billion. What are the plans for the extra $4 billion? Why did you request the money twice? I’ve never seen it done before. Could you answer those two questions, please?
Ms. Francis: Thank you for your question, senator.
Let me start with the question of whether we are going to spend the money twice. The answer to that is no. Every dollar that is spent in the statutory authority will be frozen in the appropriation so that it cannot be spent twice. The Treasury Board Secretariat will take care of that, and it will be reported in the public accounts accordingly.
As for why we requested it in both cases, we’re really close to the end of the fiscal year now at this point, and any flexibility that exists within either of the departments or any contingencies that exist from a government perspective have pretty much been exhausted in terms of supporting this initiative.
There are two key authorities that we need. We need the ability to enter into contracts to actually be able to purchase these rapid tests, and we also need the authority to make payments associated with those purchases.
The reason that we sought it twice is so that we have the maximum flexibility in the timing to be able to procure those rapid tests. When Supplementary Estimates (C) was tabled in the House, it gave the departments the ability to enter into and sign the contracts, but the delivery date of any tests in those contracts has to be March 31 if it is tied to the appropriations. Also, we don’t have the ability to make payments against that until Supplementary Estimates (C) receives Royal Assent, which is not until very late in March. That’s why it was asked for in Supplementary Estimates (C), so you can make the commitments and sign the contracts.
Where the statutory authorities kicks in, once those receive or if they do receive Royal Assent, it allows us to make payments sooner. If we’re going to buy the rapid tests, we’ve signed the contract, and there is a significant global demand right now for these rapid tests, so we need to be able to make the payments sooner as well so that we can actually secure the supply, due to the demand from all of the countries who are looking to buy these rapid tests. By having both Bill C-8 and Bill C-10, we can make the payments sooner as well.
Senator Marshall: If it gets approved by Bill C-8 and Bill C-10, does it also enable you to make the payments after fiscal year end?
Ms. Francis: Yes, exactly. That’s what I was about to say. With Bill C-8 and Bill C-10, we can commit to stuff that could be shipped to us in April, in May, so later in the calendar year but after fiscal year end, and so we can make those payments. Again, any dollar we spend in the statutory authority will be frozen in the appropriation accordingly.
Senator Marshall: Do you do this very often? I have never seen it. I’m a government auditor. That’s my background, and I’ve never seen this done before. I see it now. It looks odd. Do you do it regularly, or have you done it before?
Ms. Francis: We at Health Canada have not done it before. My understanding — you would have to talk to Treasury Board Secretariat officials on that — is it has happened in the past. But there’s always a measure and a control in place to make sure that it’s not spent twice.
Senator Marshall: You’re saying that Treasury Board will freeze the extra $4 billion, so you don’t have control to spend it on something else but Treasury Board could.
Ms. Francis: Treasury Board would freeze it for us and we would not have the ability to spend it on anything else, and they wouldn’t take it from our appropriation to spend it elsewhere either.
Senator Marshall: That’s very interesting. Thank you very much for those explanations.
I have a question on pesticide review. Is that about the product Roundup, or is it more general?
Manon Bombardier, Assistant Deputy Minister, Pest Management Regulatory Agency, Transformation, Health Canada: It is more general, Senator Marshall. It is about reviewing the processes around the review of pesticides to strengthen the whole process. It is the entire agency and all of its activities on pesticides.
Senator Marshall: Okay, thank you.
[Translation]
Senator Gignac: I want to thank the officials from the Public Health Agency of Canada and Health Canada for being here today.
Thank you, Ms. Francis, for your explanation. As the sponsor of Bill C-8, I was concerned about potential duplication.
I want to thank Senator Marshall for asking the question to ensure that this money will be managed properly.
We understand the importance of rapid testing, especially given the whole saga in Quebec resulting from a lack of rapid tests in December compared to other provinces. What does the $3.2 billion for rapid test kits mean? Do these tests come from domestic or foreign suppliers? How long do rapid tests last? Does the inventory become outdated at some point?
[English]
Ms. Francis: Thank you for your question, senator. I will turn it to my colleague Cameron MacDonald, who is from the Testing Secretariat.
[Translation]
Cameron MacDonald, Assistant Deputy Minister, Strategy, Integration and Data, COVID-19 Testing Secretariat, Health Canada: With the $2.5 billion, we’re trying to purchase about 400 million rapid tests. The number of tests will depend on the contracts, but that’s the estimate.
Regarding your question about how long the tests last, we would like them to last for several months. However, the fact is that Omicron is active in the regions. At this point, we hope to send about 185 million tests to the provinces and territories by the end of March. If we add 400 or 450 million tests, we’re looking at about three to four months’ worth of tests. This will depend on the situation in the provinces and territories and on how many tests we need to send out.
In terms of manufacturers, there are some in China. There are two or three in Asia. There’s one in Canada and a second one that’s just starting up. Canadian manufacturing is starting, but most of the tests come from Asia.
Senator Gignac: We’ve seen recently with Quebec — I don’t know whether this is also the case in Ontario — that the provinces are purchasing rapid tests. I hadn’t seen this in previous months. Why? Is there less cooperation now between the federal government and the provinces? Is there a bidding war and is the cost of testing higher given that the provinces are competing with Health Canada to purchase the rapid tests?
[English]
Ms. Francis: I will turn it over again to Cameron MacDonald for that one.
[Translation]
Mr. MacDonald: Senator Gignac, to answer your question, it isn’t a new thing for provinces and territories to purchase their own tests. However, they’re purchasing a minimal number of tests compared to the total used.
We don’t always know the strategies of the provinces and territories. They aren’t always upfront with us when they tell us their plans. Sometimes, having tests is a strategic plan, if there’s an additional reason.
In the Quebec City area, I believe that there were strategies in place. Steps were taken and certain things had to be done in conjunction with the pharmacies. We weren’t in contact with them, but it was very complicated with Omicron. Several provinces and territories were reluctant to purchase their own tests and develop rapid testing strategies. However, the Quebec City area, Ontario and others started to do so.
Provinces and territories can also purchase their own tests for specific uses developed by the provinces and territories. As you probably know, not all provinces and territories wanted to have programs for schools. Instead, some wanted programs for the general public. Depending on the number of tests planned for delivery, the provinces and territories may have wanted to do more themselves and may have tried to obtain contracts.
Lastly, the same manufacturers and companies sell the tests. There aren’t any other tests available. We can see that most of the provinces and territories didn’t necessarily receive the expected number of tests because not enough tests were sent to Canada.
The Deputy Chair: Thank you.
[English]
Senator Richards: Thank you for your presentations.
I’m just wondering when the funds were discussed and allotted. Was it when the Omicron variant was at its height? I’m just wondering about money allotted for the proof of vaccination and other things. That is no longer the case in New Brunswick.
I am just wondering about the rapid tests, too. A month ago, everyone I know was trying to acquire rapid tests, and then it kind of petered out. I’m not saying they are not needed, and I would not be so foolish to say that the Omicron variant is not deadly. Will these be used efficiently, and will they be needed for the time for which they are allotted to be needed? If we are spending this money, what will happen if we find out they are no longer needed and we spent millions and millions of dollars on them? I am not sure if this is a proper question, but it is one I thought I would ask.
Mr. MacDonald: I will try and answer it. I do want to recognize that I also have esteemed colleagues from the Public Health Agency who may want to add.
Omicron was a catalyst for the level of rapid testing purchases that we were looking to make. As we saw that the new variant of concern was rising, so did the level. But before Omicron, when Delta was the prominent variant, we were still seeing a rapid rise in the use of rapid testing and the use cases for it. There is the screening use cases and then there are other use cases at play that I mentioned, such as general-population use cases, schools, et cetera.
I cannot speak for what is going to happen into the future — I wish I knew — but I think what we see is a stabilizing of the level of supply. We moved from January, where we gave provinces and territories 140 million tests, up until February or March, 185 million. Of the discussions that we have had with provinces and territories, for which we do bilateral and multilateral, they’ve all expressed intent to keep testing as part of their programming while they reopen and remove the existing public health measures. That’s from coast to coast to coast. I have not been made aware of a single province or territory that has told us they are standing down.
I agree with you, senator, in that I think we’ll see the level of demand wane, in which case, for the tests we would acquire, we would look to put them into more of a strategic supply, because I think the information we have at hand would suggest that, in the fall, there will likely be the need for more. With respect to new variants of concern and whether the tests will work, I think the jury is out on that. We were very fortunate that it worked in the case of Omicron. We would like to use every test that we have in our toolbox.
I hope that answers your question to your satisfaction.
Senator Richards: Yes, it does. Thank you very much.
I do not mean to be a stickler on this, but I’m just wondering if you have any idea the percentage of Canadians who have actually acquired and taken the rapid testing. Is it very high, or do you know? Is there any information or statistics on that?
Mr. MacDonald: Fantastic. Thank you for the question, senator.
We don’t actually collect data on usage, so I don’t have the data that suggests a percentage of Canadians who have taken them.
Senator Richards: Okay.
Mr. MacDonald: We do report on the distribution. We give a number to the provinces, and we have our federal channel, so we do have various data mechanisms. We provide it all online. We have been working with the provinces and territories to enhance reporting on where they are deploying it so that we have a better handle on knowing in each jurisdiction whether they are allocating their tests to hospitals, long-term care, school functions, general population, et cetera.
All indications are that the tests are being used effectively. However, for this table, I will lay out that I think we are, as you say, getting to a point where things are levelling off. It would be great for every Canadian to have some in their medicine cabinet, for provinces and territories to have some supply for their programming and for the federal government to have a bit of a supply in case surges require them.
I hope that that answers your question, sir.
Senator Richards: Yes, it does. I agree with you on that last point. Thank you.
[Translation]
Senator Gerba: I’m not exactly sure where to direct my question. The 2021 supplementary estimates include just over $3.5 million to address anti-Indigenous racism in the health care system. I applaud this initiative, which will provide a breath of fresh air and a sense of well-being to our Indigenous citizens.
I’m also curious about whether there are specific provisions for the health care of people from other communities, particularly the Black communities. As you know, these communities were hit hard during the pandemic. Are there any specific provisions in the estimates for Black communities?
Ms. Francis: Thank you for your question. I’ll ask Lynne Tomson from Health Canada to respond.
Ms. Tomson: As you have seen, money has been allocated to address discrimination and racism against Indigenous peoples. However, we want to ensure that racism doesn’t affect other communities.
My answer probably isn’t satisfactory. However, right now, there isn’t any program that resembles the Indigenous program.
Senator Gerba: I don’t know how this type of discrimination could be stopped. We know that Black communities also experience many mental health issues and a great deal of racism in the health care system. I think that it’s time to consider this.
[English]
Candice St-Aubin, Vice-President, Health Promotion and Chronic Disease Prevention Branch, Public Health Agency of Canada: Thank you for that question, and I thank my colleague at Health Canada.
Health Canada is providing resources and supports to the pure health care system, but what this budget does offer is supports for those communities that are more impacted by COVID, in particular, Indigenous communities and also Black Canadians. We did see a disproportionate impact of the pandemic, and this budget does provide for $100 million over three years for mental health promotion and mental illness prevention for Black communities, Indigenous and racialized communities in Canada. Those will be directly in community, on the ground, led by Black leadership in those communities to ensure it is meeting their needs directly, as advised by the community members themselves. We are very alive to the mental health supports that are needed for those communities, as we are for all Canadians across the country. Thank you.
Senator Gerba: Thank you so much.
[Translation]
Senator Dagenais: My question is for Ms. Francis. I gather that you’re asking for significant additional funding for the purchase of rapid tests. Our politicians have always suggested that they secured all purchases from suppliers.
Does this mean that the tests were purchased with no price tag, or did the prices increase over time?
I would also like some insight into the effectiveness of cost and quantity monitoring of vaccine and test purchases since the pandemic began. Are we facing a situation where we spend money and ask questions later?
Ms. Francis: Thank you for the question, Senator Dagenais. I’ll ask Mr. MacDonald to respond, since he works closely with Public Services and Procurement Canada on purchases.
Mr. MacDonald: Thank you, Senator Dagenais. I’ll start by saying that my response will concern only testing, not vaccines. I’m not a procurement specialist. I work with the people at Public Services and Procurement Canada on purchasing tests.
[English]
There is a standing offer that is used by PSPC. There is a rigorous regulatory process for manufacturers to have their tests approved in Canada. There are well over 24 tests that have been approved, and there’s a pipeline for the regulatory approvals. Once the tests are approved, they can apply to be on the standing offer. With the standing offer comes the ability to have requests for volume discounts, and that’s how Canada buys their tests.
There are currently four or five different manufacturers that are able to produce the volumes of tests that we are buying right now and that the provinces and territories would buy as well, including a couple of new Canadian manufacturers that are hitting the market.
I apologize, senator, if I’m not fully answering your question. PSPC is reporting online that they’ve spent roughly $3.8 billion to date and have purchased 520 million rapid tests. Those are the official numbers that are reported on their website at this moment. However, I will note that we are buying rapid tests regularly, on monthly cycles typically, depending upon the funding we have, which is why we’re at Supplementary Estimates (C) and why we have Bill C-10 and Bill C-8.
Maybe I will pause there. If I did not answer your question fully, I apologize and perhaps somebody from PHAC wants to jump in on vaccines.
[Translation]
Senator Dagenais: You answered part of my question. As Senator Richards said, maybe in a few weeks or months we won’t need all these things. However, I sometimes feel that we purchase the equipment and then wait and see. You answered part of my question.
Mr. MacDonald: The issue that arises sometimes is that, with one strain of COVID, it takes eight, nine or ten weeks to purchase tests and get them to Canada and to the provinces and territories, even though these places are ready to start their programs. It can take months. It’s a balancing act. We’re trying to maintain that balance with the funding once it’s approved for test purchases. We’re purchasing tests in large quantities to ensure that, if another strain of COVID comes along, we won’t lack tests for Canadians. We use provincial, territorial and federal distribution channels to send out tests. We also have programs for vulnerable people to ensure that all Canadians have access to rapid COVID tests.
[English]
Senator Galvez: I have many questions and I hope you can answer them succinctly.
We have the vaccines and we have these detection tests to know whether somebody has COVID. Among these tests to know if a person has COVID, we have the diagnostic test and the antibody test. My first question is whether we are coordinated in the fashion that we are buying vaccines for the boosters that people will require. Are we coordinating it with the number of diagnostic tests or rapid tests that we are buying? I am asking that because the authorities that we are allocating for these tests is worth a lot of money.
My second question: These tests have been evolving with time. As was mentioned previously, the expiration date of these diagnostic tests sometimes is just a few months. Some are required to be in the fridge. Others can lay on the counter for months. We are buying millions of these tests, but little is said about what type of tests we are buying. What was the process? Why are we buying so many from China when, as you are saying, we have two providers in Canada? We could have waited to order more if we needed those.
My third question is about, again, being efficient. The main goal is to stop the spread of COVID. Initially, the Delta variant was more dangerous, and it would have been great if we had the diagnostic and antibody tests at that time. Now there is Omicron. I was reading that in order for the test to be effective, you have to be in a certain stage, and it’s just over a few days for the tests to really be effective.
Nobody is taking these results. We do not have to report it to the government. So can you please answer those questions, thank you.
[Translation]
The Deputy Chair: It’s a challenge. You have two minutes to answer the three questions.
Mr. MacDonald: Thank you, Mr. Chair.
[English]
Thank you, Senator Galvez. I have colleagues here from the Public Health Agency, and so maybe I will just take one minute and speak a little bit.
For your second question on Canadian manufacturing and perhaps waiting longer, currently Artron, a company out of B.C., is producing 5 million tests a month with the goal of getting to about 15 million. We are sending out just to provinces and territories alone well over 100 million tests a month. I take your point, and we are trying to allocate as much to domestic capacity as we possibly can.
There are a number of use cases and not enough time for me to get into all of them. PHAC might want to talk about the change from PCR diagnostic testing to the use of rapid antigen tests, and there are a couple of different programs that we could perhaps discuss or follow up with afterwards with respect to different use cases, but I will stop there and turn to PHAC who may want to answer the other two questions.
Stephen Bent, Acting Vice-President, COVID-19 Vaccine Rollout, Public Health Agency of Canada: Thank you to my colleague Mr. MacDonald. I’m Stephen Bent. I’m with the vaccine rollout task force.
Senator, in terms of your question around the management of our vaccine portfolio, our acquisition strategy has evolved over time based on demand and scientific guidance. Of the products available at the beginning of the pandemic, none of the vaccines that we now have were approved for use, and so over time the strategy has adjusted.
One of our main objectives has obviously been to ensure that all Canadians can receive access to vaccines for their primary series, boosters and for pediatrics. Through the arrangements we have for mRNA vaccine and non-mRNA vaccine, we have the ability to meet those objectives. As time progresses and as there are new variants and new formulations that may become available, because at this time there are not, our arrangements allow for us to be able to give access to the most recent vaccines or the most up-to-date vaccines that are available if they are indeed brought forward for regulatory approval. Thank you.
Senator Pate: Thank you to all of you for being here with us.
Your data indicates that Canadians with the lowest income were twice as likely to die of COVID than those with higher incomes, and you have also indicated that the $4 billion for rapid testing in the supplementary estimates is going to be used to try to alleviate some of the risks for the most vulnerable in the country. I’m curious as to who you are actually speaking about, how you see them being protected and what the process will be. I’m thinking particularly of the elderly, homeless and people in prisons, as well as those working on the front lines, in congregate settings and in high-density communities.
I’m curious whether the Public Health Agency looked at to what degree these measures will close the gap in mortality for Canadians who have the least and how you see that fitting in with the social assistance rates, disability payments and the issues that we’ve seen during the pandemic in terms of continuing to try to patch up so that people can actually afford some of the measures, whether it’s PPE or social distancing, required for public health reasons. If you have looked at that, how would you compare that to the benefit that would have accrued had income-support measures like the Canada Emergency Response Benefit, or CERB, or a guaranteed livable income been widely available for a longer period of time so those unsafe living and working conditions could have been addressed more proactively?
Mr. MacDonald: Perhaps I will start with a response and then turn it over to my colleagues at PHAC. My response will deal mainly with the programming issues with respect to vulnerable populations.
I can tell you, senator, that we have federal programs that work with entities like Correctional Service Canada, making sure that inmates have adequate testing facilities. With respect to vulnerable populations, we have programs with members like the Canadian Red Cross, who are providing tests not just to members of not-for-profits but also to patrons, so boys’ and girls’ clubs, YMCAs, Canada food banks and others. They’re doing this in conjunction with the discussions we have had with provinces and territories, so everyone is aware of what’s happening. Their goal is to provide about 3 million tests a month. In terms of providing an adequate level of care and access to vulnerable populations, there are federal channels, as well as the provincial channels mentioned. We measure where provinces are allocating tests, and there are communities that would be considered vulnerable that are within those jurisdictions.
For the rest of your questions related to how that affects different potentials for mortality and what not, I will turn it over to PHAC colleagues.
Ms. St-Aubin: Thank you for the question, Senator Pate.
From the Public Health Agency’s perspective, our look at the impacts of the pandemic has been based on the social determinants of health of all Canadians. We know and can confidently say that the impacts have been felt greater amongst those equity-deserving populations, in addition to other groups, such as children, youth, seniors, First Nations, Inuit, Métis, racialized populations, Black Canadians, front-line service providers and essential workers.
Looking forward, some of the things we are doing is surveillance in the areas of these social determinants, ongoing surveillance, working closely with our provincial and territorial counterparts, to ensure that we’re seeing the impact. Because this was a novel experience for the pandemic and Canadians, we know this will take some time. We’ll also need to look at some of the counterfactuals — that backward look — as we move forward.
This budget provides investments, with the $100 million dedicated to mental health promotion. In addition, there is $50 million over two years specifically to address things such as post-traumatic stress disorder and those trauma-informed events for our front-line workers and service providers. That’s one example of the current budget investments, so we’re not just waiting until we see the manifestations of the impact of the pandemic.
Senator Pate: Thank you very much for that. As you know, poverty is one of the single most certain social determinants of health, so I would be interested to get in writing what impacts and recommendations have come from your agency around those areas the federal government could be involved with, particularly given the benefits of CERB and the fact that we know people need extra resources to live in a healthy way and to cut the costs of emergent health care as well as other systems.
Senator Duncan: Thank you very much to our witnesses that are here today.
I’d like to ask some questions — and it may be best to reply in writing — regarding the funds requested in the supplementary estimates to advance pharmacare in Prince Edward Island. There is a variety of pharmacare programs throughout the country, and I will ask our very able Library of Parliament if they could provide me with a cross-country survey of the different programs.
I understand there are three key issues in a pharmacare program: the approval of drugs and high cost of emergent drugs for rare diseases; access to drugs for all citizens, and that relates to Senator Pate’s questions about poverty; and the bulk-buy purchases by different provinces and territories. For example, I can recall the Yukon working with British Columbia on a program to bulk buy drugs.
These monies are said to advance pharmacare in Prince Edward Island. Given all of this information, could the officials elaborate either briefly or in writing on what is meant by “advance pharmacare” in Prince Edward Island?
Lynne Tomson, Associate Assistant Deputy Minister, Strategic Policy Branch, Health Canada: In August 2021, the government announced an agreement with P.E.I. for $35 million over four years, and it’s to improve access to medication for Island residents and to inform the advancement of a national universal pharmacare. In this budget, we’re seeking $2.9 million to support a pilot project in P.E.I. that will allow P.E.I. to expand their formulary, the list of drugs covered, so that it becomes more similar to the other Atlantic provinces and research the affordability of their public drug plans to match what’s happening in the other Atlantic provinces. This pilot will provide knowledge for future decisions to advance universal pharmacare. It’s doing it in an incremental manner.
Senator Duncan: You’ve said that this would advance the program to be comparable to other Atlantic provinces, and that leads back to my first point about a comparison across the country. The formulary might cover certain drugs in Atlantic Canada, but that drug may not be covered in British Columbia or Manitoba, for example. Particularly, the rare diseases are a problem for every provincial and territorial government with the extremely high cost of those experimental drugs. Where does all of that research fit into this discussion? What results are we getting, and what information is going into this discussion? Perhaps the answer is best provided in writing, as it’s quite lengthy. Thank you.
Senator Boehm: Thank you to the dedicated public servants who are with us today for your sustained effort over the past two years. I’m going to ask two questions because I have a feeling that I will not get into the second round, so I will crowd my questions in.
My first question builds on the questions asked by my colleagues, Senators Gignac, Gerba and Galvez. Rapid tests have been easily accessible in some parts of the country, more easily in some than in others. For example, in New Brunswick and Nova Scotia, they have been readily available to residents and visitors for months, but in Ontario it seems to be more difficult to get them. This is a provincial matter, of course. I’m not asking you to opine on provincial policies, but my question is whether how provinces have chosen their allocation of rapid test kits will impact future distribution cycles to the provinces, because you are going to have future distribution cycles with test kits, as you would with vaccines. In your planning, and recognizing that there are a lot of unknowns coming, does the federal government take these sorts of things into account, or will provinces continue to receive allotments based on their population?
My second question is, as of February 24, there are almost 10 million COVID-19 vaccine doses in Canada’s central vaccine inventory. Of course, along with PHAC, federal allocation includes doses for the Canadian Armed Forces, Correctional Service Canada and Global Affairs Canada for personnel abroad. We understand the central inventory includes doses held for provinces and territories at their request as well. There are, of course, doses being held for future eligibility and to support global vaccination efforts. I know there is no one from Global Affairs Canada on this panel, but Canada, along with other wealthy countries, has been criticized for vaccine hoarding at the expense of less affluent nations. How many doses of our nearly 10 million in the dose inventory are currently allocated to global efforts, including the COVAX facility, and how many of the doses that will be purchased with the money being requested will be allocated to global vaccination efforts?
Mr. MacDonald: I will take question number one and then pass it to my colleagues from PHAC.
What we saw in December was probably the highest demand from PTs before Omicron hit. We had gone from roughly 6 million a month all the way to 35 million, and in January we had demand for PTs in excess of 170 million tests. We realized it was quickly becoming a race to the top with respect to how many tests provinces could ask for from the federal government and receive free of charge. We tried to rearticulate our footprint and gave an allocation. At the time, we were ambitious and went from 35 million tests to 140 million tests, and that’s when we moved to a per capita allocation, which was requested by Ontario and Quebec.
We are now in an allocation model. We are working with PTs to understand the ebbs and flows. It takes time to get tests to them, as we saw in January with shipping and receiving tests. Now their programs are lit up. For example, in Ontario, the tests are becoming more and more online in grocery stores and pharmacies.
The last point I will make is that it is more of a PT jurisdiction in terms of programming and levels of tests they provide. There are a number of different use cases, as I mentioned, for rapid testing, and not all provinces have subscribed to the same use cases at the same levels, which will be a determining factor of how many tests they use. Thank you very much.
Mr. Bent: Senator, in terms of vaccination, what I would offer is that Canada is committed to donate the equivalent of 200 million vaccine doses to the COVAX facility by the end of this year. To date, Canada has donated the equivalent of approximately 100 million doses through COVAX. As of February 22, over 13.9 million of Canada’s 50 million surplus vaccine doses had been delivered so far through COVAX, and an additional equivalent of 87 million doses have been provided through financial support.
Going forward, in terms of our work with COVAX, we work collaboratively with our colleagues at Global Affairs Canada and COVAX to identify opportunities to place doses that are no longer required for our domestic COVID-19 response. As you may recall, the Prime Minister made a commitment last fall to donate 10 million Moderna doses to COVAX for the purposes of international use, and we are in the process of implementing that commitment.
Senator Boehm: Mr. Bent, thank you. Do you have any idea where we rank compared to other countries?
Mr. Bent: I would have to defer on that question, and we can get back to you in writing, senator.
Senator Boehm: Thank you very much.
Senator Loffreda: Thank you to the Public Health Agency of Canada and Health Canada for being here today. We covered vaccine updates and rapid tests in detail.
I have a question on a concerning trend for Health Canada. I appreciate this might be a minor item in your overall budgetary envelope, but I noticed half a million dollars in these estimates for investments in cannabis public education awareness, research and mental health. I wasn’t a senator when Parliament adopted Bill C-44 in 2018, but I know the government committed almost $10 million in Budget 2017 over five years to a comprehensive public education and awareness campaign that would, among other things, educate Canadians about the risks associated with cannabis use.
Cannabis has now been legal for almost four years, and data I recently consulted from Statistics Canada shows us that more Canadians used cannabis since its legalization. For example, in the first quarter of 2018, approximately 4.2 million Canadians admitted to cannabis use in the past three months. In the first quarter of 2019, that number rose to 5.3 million, and in the fourth quarter of 2020, that number was nearly 6.2 million, or 20% of households aged 15 and older.
Do you think this trend should concern us, or perhaps is it attributed to the novelty of legalization? Could you provide us with an update on your department’s role in the rollout of this awareness campaign? How successful has it been, and what feedback have you been receiving from Canadians?
Ms. Francis: Thank you for your question, senator. Unfortunately, I don’t have the detailed type of information you’re looking for with me, nor do I have the program ADM who could respond to that question. We could follow up in writing and provide you a response to that question.
Senator Loffreda: Sure.
I have another question on mental health support, and maybe you can respond to that question. My question is for either department, but perhaps the health agency can answer it. I want to further explore your work in improving mental health supports and services related to the pandemic. In these estimates, I note that $56 million is being sought for this initiative, and that cumulatively for fiscal year 2021-22, some $140 million is being invested for this work. Can you provide us with some key initiatives undertaken by your department with respect to mental health supports? I am particularly interested in the support you are providing to the Public Service of Canada and it’s more than 380,000 employees. We all know mental health has been a large concern for all Canadians, so I’m interested in your response to this.
Ms. St-Aubin: Thank you very much, senator, for your question, and I would be happy to provide you with more information to hopefully give you more of a flavour of what we are doing.
We are investing for the purposes specific to COVID and its impact a total of $150 million — $100 million over five years, which is for all populations who are more impacted, so those more vulnerable populations, and $50 million over two years for PTSD. Some of the investments that are happening right now with regard to the $100 million complement our existing health promotion activities within the area of mental health.
We have the Mental Health of Black Canadians Fund, which is led, influenced and driven by Black leadership in these communities themselves. It’s tied closely to research and academia and, of course, is being well received and driven by Canadian populations. In addition to that, we do have investments through our knowledge development hubs that is going to research areas and mental health literacy awareness campaigns in supporting populations in an effort to understand and be able to articulate and reduce stigma in the area of mental health.
Of course, Canada, in complement with Health Canada, has the Wellness Together Canada portal, which is a virtual, stepped-care approach to mental health supports for Canadians, able to access them at their place, so it’s available through text, online and, of course, the telephone, which I’m not sure folks even use any more in some of the populations.
When it comes to the Public Service of Canada, I’m happy to provide additional information in writing on this. We have our Employment Assistance Program available to all of the public service, but we also try to be proactive in identifying other areas, such as the Wellness Together portal. Although it’s for all Canadians, we do encourage public servants to also access that. There is also the Hope for Wellness Help Line which is an Indigenous-specific mental health and wellness support for Indigenous populations that’s available in Ojibway, Cree and Inuktitut. It’s virtual by text and by phone 24-7. We have Distress Centre call lines as well as the Canada Suicide Prevention Service hotline, all of which is being invested through the Public Health Agency of Canada.
Senator Loffreda: Thank you.
[Translation]
The Deputy Chair: Thank you. We have eight minutes for the second round of questions. Senators Marshall, Pate and Duncan would like to ask questions. Before we start, I want to set a date for the written responses. Madam Clerk, what date could we set for written responses?
Ms. Aubé: I think that, with the two-week break coming up, responses could be requested by next Wednesday so that the analysts can review them and write the report.
The Deputy Chair: Does Wednesday, March 9, work for our witnesses? Silence is consent.
Senator Gignac: I raised my hand. However, if there isn’t time, I’ll leave the floor to my colleagues.
The Deputy Chair: Sorry.
[English]
Senator Marshall: I have a technical question. I’m always interested in the transfers. I noticed in the Department of Health the $3.2 billion, and then later on it is transferred to the Public Health Agency of Canada for the COVID tests, but they already have $750 million. Why does the department request a certain amount of money for a specific amount and then transfer it out to another organization? Why wouldn’t you budget the $2.9 billion in the Department of Health and just increase the funding for the Public Health Agency of Canada? We’re trying to track the money. You get approval for the $3.2 million, but then $267 million is gone somewhere else. Why is it done like that? Why do you do that?
Mr. Krumins: Thank you for your question. It is a very technical question. It’s one that chief financial officers like Serena and I thrive on.
Part of it relates to the appropriation timing. I don’t want to speak for Health Canada, but at the Public Health Agency of Canada, we have received significant amounts of appropriations earlier in the fiscal year, so we have a larger space to cash-manage. Where my colleagues at Health Canada have indicated they don’t have the ability to enter into contractual arrangements until certain bills are tabled, we’re able to proceed under the cash appropriations that we have while we wait for reimbursement through the Supplementary Estimates (C).
In this case, we have been able to enter into some contracts for rapid tests that are distributed to provinces, because you will note there are tests have been distributed to provinces already, and that’s been done through a cash management strategy. We will be making transactions between each other to recover and pay back for those funds.
Senator Marshall: That prompts another question. Can I ask this one?
[Translation]
The Deputy Chair: Unfortunately, I must turn the floor over to Senator Pate. Would you like to receive a written response to your question?
[English]
Senator Marshall: Yes. The 267, do you have it already, or do you have to wait?
Ms. Francis: The money is over on the Health Canada side right now, and it will be transferred to the Public Health Agency upon Royal Assent of Supplementary Estimates (C).
Senator Pate: In addition to what I was requesting in terms of the current costing of measures in terms of how you’re calculating reducing poverty as part of the social determinants of health, could you include how much money has been spent as a result of the inadequacies in certain communities that you mentioned, how much has been spent on those various measures, whether it’s PPE, vaccinations, mental health support, all of those areas, and then do the comparator of what could have been available had there been more robust economic supports?
As well, I note that one of our very astute interns pointed out to me that $4 billion for 400 million tests is about $10 a test. I’m curious about the cost if you’re going out of country versus in country and how you’re looking at addressing some of these issues going forward.
Picking up on Senator Boehm’s question, as we’re doing more robust production of vaccinations, how do we plan to roll that out and encourage more production and more sharing across the world?
Those can be in writing, Mr. Chair.
Senator Duncan: My response could be in writing as well. I’m looking for the breakdown of the funding to address anti-Indigenous racism in health care. Could I have the regional breakdown of that funding, and if there has been an assessment of when applications for funding are assessed, is there also an evaluation of programs already in place to ensure that a learned experience in one jurisdiction can be shared with others? If I could have that answer in writing, please and thank you.
[Translation]
The Deputy Chair: Thank you. We would like to receive written responses by Wednesday, March 9. Since we’ve finished with the items on the agenda, we’ll wrap up the meeting. I want to thank our clerk, our analysts and especially our interpreters, who worked under challenging conditions. I think that the theme of the meeting was technical issues. Thank you for your cooperation. Before we adjourn, I want to inform the senators that the next meeting will be held tomorrow, Thursday, March 3, at 11:30 a.m. EST. Thank you and good evening.
(The committee adjourned.)