THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, June 18, 2024
The Standing Senate Committee on National Finance met with videoconference this day at 9:02 a.m. [ET] to study the Supplementary Estimates (A) for the fiscal year ending March 31, 2025.
Senator Claude Carignan (Chair) in the chair.
[English]
The Chair: Before we begin, I would ask all senators and other in-person participants to consult the card on the table for guidelines to prevent audio feedback incidents. Please take note of the following preventative measures in place to protect the health and safety of all participants, including the interpreters.
[Translation]
If possible, ensure that you are seated in a manner that increases the distance between microphones.
Only use a black approved earpiece. The former grey earpieces must no longer be used. Keep your earpiece away from all microphones at all times. When you are not using your earpiece, place it face down, on the sticker placed on the table for this purpose.
Thank you all for your cooperation.
I wish to welcome all of the senators as well as the viewers across the country who are watching us on sencanada.ca.
My name is Claude Carignan. I’m a senator from Quebec and I chair the Standing Senate Committee on National Finance. I would now like to ask my colleagues to introduce themselves, starting from my left.
Senator Forest: Good morning and welcome, everyone. Éric Forest, Gulf senatorial division, Quebec.
Senator Gignac: Good morning. Clément Gignac, Quebec.
Senator Galvez: Rosa Galvez, Quebec.
[English]
Senator LaBoucane-Benson: Patti LaBoucane-Benson, Treaty 6 territory, Alberta.
[Translation]
Senator Dalphond: Pierre Dalphond, De Lorimier senatorial division, Quebec.
Senator Loffreda: Good morning and welcome. Tony Loffreda, Montreal, Quebec.
[English]
Senator Pate: Good morning and welcome. Kim Pate. I live here in the unceded, unsurrendered territory of the Algonquin Anishinaabeg.
Senator MacAdam: Jane MacAdam, Prince Edward Island.
Senator Ross: Good morning. Krista Ross, New Brunswick.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Smith: Larry Smith, Quebec.
[Translation]
The Chair: Thank you, colleagues.
Honourable senators, today, we will continue our study on the Supplementary Estimates (A) for the fiscal year ending March 31, 2025. We have with us today officials from the Treasury Board Secretariat, Finance Canada and Transport Canada. I understand that one official from each department will make a statement and will help answer questions afterwards.
We are pleased to welcome Antoine Brunelle-Côté, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat; Christopher Veilleux, Chief Financial Officer, Finance Canada; Jaime Caceres, Chief Financial Officer and Assistant Deputy Minister, Corporate Services, Transport Canada.
Welcome to you and to those who are with you. I’ll give the floor first to Mr. Brunelle-Côté, followed by Mr. Veilleux and Mr. Caceres.
Antoine Brunelle-Côté, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: First of all, I would like to point out that the land on which we are gathered is the unceded traditional territory of the Algonquin Anishinaabe people.
This is my seventh day in the job, so I’m accompanied by several officials from my department who are going to help me answer questions, because I know you have some good ones.
The Chair: We’ll try to find some traps.
Mr. Brunelle-Côté: My colleagues are very good and will be able to foil your traps.
[English]
I am accompanied by Karen Cahill, Assistant Secretary and Chief Financial Officer at Treasury Board; Stephen Burt, Chief Data Officer and Assistant Deputy Minister, Policy and Performance Sector in the Office of the Chief Information Officer; David Prest, Acting Associate Assistant Deputy Minister, Employee Relations and Total Compensation Sector in the Office of the Chief Human Resources Officer.
[Translation]
Also with me is Mélanie Laflèche, Executive Director, Leadership Policies and Programs, People and Culture Sector, Office of the Chief Human Resources Officer.
[English]
We also have Emilio Franco, Executive Director, Procurement, Materiel, and Communities Directorate at Acquired Services and Assets; and Rod Greenough, Executive Director, Expenditure Management Sector.
[Translation]
As you know, on May 23, the government tabled the 2024–2025 Supplementary Estimates (A), the first of three supplementary estimates planned for the 2024–2025 fiscal year.
As members of the Senate are well aware, supplementary estimates provide information on spending requirements that were not sufficiently well defined at the time the Main Estimates were prepared, or that were refined after the Main Estimates were tabled to reflect changes in certain programs and services.
[English]
The 2024-25 Supplementary Estimates (A) present a total of $12.7 billion in incremental budgetary spending which reflects $11.2 billion to be approved by Parliament and a $1.5 billion increase in forecast statutory expenditures. The spending is spread across 23 organizations. The $11.2 billion in voted funding is very concentrated, with five departments accounting for about $9.9 billion, or almost 90% of the total.
At the top of the list is the Department of Crown-Indigenous Relations and Northern Affairs, seeking $5.6 billion primarily for a number of settlements addressing past grievances and historic harms committed against Indigenous people. There is funding for a wide range of settlements, including both current year amounts for multi-year settlements such as McLean and Gottfriedson, as well as for agreements which have not yet been finalized. The amounts are based on estimated cash expenditures for 2024-25, and this funding will ensure that the department is in a position to meet existing commitments and to quickly implement negotiated settlements should new agreements be reached.
The Department of Indigenous Services is presenting the second-biggest increase in voted spending: $2.2 billion. The bulk of that spending relates to water and wastewater on reserve, as well as the First Nations Child and Family Services Program.
The Department of Citizenship and Immigration and the Department of Transport are another two organizations presenting significant voted spending. In their cases, the new spending is largely linked to Budget 2024 announcements. Of the planned spending in Supplementary Estimates (A), approximately $1.6 billion relates to funding announced in Budget 2024, including $604.9 million for Transport for the Incentives for Zero-Emission Vehicles Program, and there are two items for Citizenship and Immigration: $411.2 million for the Interim Federal Health Program, which offers temporary health coverage to specified groups of foreign nationals, including asylum claimants and refugees, who are not yet eligible for provincial/territorial health insurance, and $141.2 million for temporary accommodation and support services to asylum claimants.
Departments continue to work on detailed implementation plans for other initiatives announced in Budget 2024, and once those plans are approved by Treasury Board, you can expect to see those items in future estimates.
[Translation]
With regard to the statutory expenditures presented in the Supplementary Estimates, the increase of $1.5 billion in budgetary expenditures is mainly attributable to two items: firstly, an increase in public debt costs of $1.9 billion, and secondly, a decrease of $533 million in elderly benefits, owing to revisions to the projected number of beneficiaries.
The new amounts take into account the forecasts presented in Budget 2024.
Finally, I would like to draw your attention to an increase in planned non-budgetary expenditures due to the additional allocation of $1.3 billion to the International Monetary Fund’s Poverty Reduction and Growth Trust, which was announced in September 2023.
Mr. Chair, that concludes my presentation. I thank the committee for inviting us here today to discuss the 2024–2025 Supplementary Estimates (A).
The Chair: Thank you very much.
Christopher Veilleux, Chief Financial Officer, Finance Canada: Good morning, Mr. Chair and members of the committee. Thank you for the opportunity to present the 2024–2025 Supplementary Estimates (A) on behalf of the Department of Finance. I would like to begin by noting that I am on the unceded traditional territory of the Algonquin Anishinaabe people. I am joined today by department officials to help me provide a more in-depth perspective on the rationale and policies behind the numbers in these estimates.
[English]
Joining me are Alison McDermott, Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch; Clifton Lee-Sing, Director, Markets and Securities Policy, Financial Sector Policy Branch; Julie Turcotte, Assistant Deputy Minister, Economic Policy Branch; and Thomas Larouche, Director General, Budget and Government Operations, Fiscal Policy Branch.
As you know, the department supports the Deputy Prime Minister and 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.
The 2024-25 Supplementary Estimates (A) reflect a departmental budgetary increase of $1.9 billion, stemming from a $1.3 million increase in Vote 1 program expenditures and a $1.9 billion increase in statutory spending. They also reflect a $1.3 billion increase in non-budgetary expenditures. Given these increases, the department’s total proposed authorities to date are $146.2 billion.
The increase of $1.3 million in Vote 1 program expenditures relates to funding to advance the development of a sustainable finance taxonomy aligned with reaching a net-zero economy by the year 2050. The advancement of a taxonomy will support economic growth and reduce greenhouse gas emissions by helping mobilize private sector investment for Canada’s net-zero economic transition.
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.
The statutory expenditures reflect a net increase of $1.9 billion, which is mainly attributed to other interest costs, interest on unmatured debt and a payment to the Canada Infrastructure Bank. Other interest costs increased by $1.1 billion, which reflects updated modelling and interest rate expectations related to Special Drawing Rights allocations as well as higher expected interest on superannuation accounts and other specified purpose accounts. Other interest costs represent the interest on liabilities for federal public service pension plans, deposits and trust accounts and other specified purpose accounts.
The forecast for interest on unmatured debt in 2024-25 has increased by $764 million, reflecting revised projections in interest rates and borrowing requirements. The interest on unmatured debt is payments that will be made over the course of the year on Canada’s market debt. This is represented by outstanding Government of Canada bonds, treasury bills and retail debt, such as Canada Savings Bonds.
The $165.6 million increase in payments to the Canada Infrastructure Bank reflects the CIB’s capital and operating budgets outlined in its 2023-24 to 2027-28 corporate plan for the fiscal year 2024-25, which was approved by Treasury Board in November of 2023.
There are also increases in recoveries of $98.5 million related to the Alternative Payments for Standing Programs and $22.6 million related to the Youth Allowances Recovery. The increase in the latest estimates reflects an upward revision in the estimate of national basic federal tax. As a result, the federal government will recover more from Quebec than what had been estimated in October of 2023 and included in the 2024-25 Main Estimates.
The non-budgetary increase of $1.3 billion reflects a contribution to the International Monetary Fund’s Poverty Reduction and Growth Trust, which provides concessional financing to low-income and vulnerable countries.
This concludes my overview of the Supplementary Estimates (A) for the Department of Finance. My colleagues and I would be pleased to answer any questions committee members may have. Thank you.
The Chair: Thank you.
Jaime Caceres, Chief Financial Officer and Assistant Deputy Minister, Corporate Services, Transport Canada: I would like to begin by acknowledging that the land on which we are gathered today is the unceded traditional territory of the Algonquin Anishinaabe people.
Good morning, everyone. My name is Jaime Caceres, and I am the Assistant Deputy Minister of Corporate Services and Chief Financial Officer at Transport Canada. I am joined today by several other Transport Canada officials: Serge Bijimine, Assistant Deputy Minister, Policy; Stephanie Hébert, Assistant Deputy Minister, Programs; Chantale Côté, Director General of Policy and Governance, High Frequency Rail; and Nicholas Robinson, Associate Assistant Deputy Minister, Safety and Security.
We are pleased to be here today to discuss the 2024-25 Supplementary Estimates (A) for the Transport Canada portfolio.
[Translation]
To support the mandate of a green and innovative transportation system, the 2024–2025 Supplementary Estimates (A) include $605 million from Budget 2024 for the incentive for the zero-emission vehicle program from the Department of Transport.
Zero-emission vehicles have the potential to significantly reduce Canada’s greenhouse gas emissions and support Canada’s transition to a low-carbon transportation system. With the additional funding provided in these Supplementary Estimates (A), the department will have a total of $1.2 billion in grant funding in 2024–2025 to continue to help more Canadians make the shift to cleaner, zero-emission vehicles.
[English]
Additionally, the 2024-25 Supplementary Estimates (A) includes $76 million from Budget 2024 for VIA HFR, a Crown corporation in the Transport portfolio, to continue to lead the development and implementation of the high-frequency rail project between Quebec City and Toronto. This funding will cover activities for the ongoing government-led procurement process to select a private developer partner for the project. VIA HFR will also continue other important activities, such as preparing for impact assessments and land acquisitions, stakeholder engagement, consulting with Indigenous organizations and managing the HFR project overall.
In general, the resources in these Supplementary Estimates (A) will ensure that the Canadian transportation system supports a clean and safe environment and that it continues to serve the needs of all Canadians.
[Translation]
Budget 2024 provided other funding, not included in these Supplementary Estimates, for Transport Canada and the Crown corporations in the department’s portfolio to ensure that our transportation system is safe, secure, efficient, green and innovative.
For example, to invest in passenger rail services, Budget 2024 includes funding for VIA Rail to replace the aging fleet. Budget 2024 also provides funding for Transport Canada’s remote passenger rail program to support Indigenous-owned rail operators providing services to communities in Manitoba, Quebec and Labrador. Furthermore, to ensure reliable transportation in Atlantic Canada, Budget 2024 includes funding for Marine Atlantic to support its continued operations and keep fares affordable.
Funding for these other Budget 2024 announcements will be reflected in other supplementary estimates exercises later in the fiscal year.
[English]
Finally, I want to note that Transport Canada continues to support the government-wide refocused spending efforts announced in Budget 2023 and Budget 2024. Savings will be achieved through efficiencies from modernizing our processes and tools, by reducing activities in areas of low value for money and by eliminating functions that are no longer aligned with the department’s core mandate and Government of Canada priorities.
At this time, my colleagues and I are happy to answer any questions that the committee might have. Thank you.
[Translation]
The Chair: Thank you very much for your statement.
Now we will proceed to questions.
I would like to remind senators that they have a maximum of five to six minutes for the first round.
[English]
Senator Marshall: Thank you to all the witnesses for being here.
I will start with Transport Canada. Toward the latter part of your presentation, you were speaking about the reduction options or the refocusing of government expenditures. I’m just wondering how that works. Last year, your reduction in professional services was to be $6.5 million, but now I see in professional services with Supplementary Estimates (A) that there is an increase. Did you achieve the $6.5 million last year? Was that savings, or was it shifted somewhere else to be spent on something else? Were there actual savings?
Mr. Caceres: Thank you for the question.
Yes, there were actual savings that were put in place that were included as part of Main Estimates of 2024-25. Funding was not shifted, as you are indicating. As I indicated earlier, the series of activities are specific actions we have taken to be able to either find efficiencies within the department or reduce activities that are no longer part of the mandate of Transport Canada.
Senator Marshall: We have had the Parliamentary Budget Officer speaking to these reduction options or refocusing of spending. It is not possible for a third party to look at your accounts and see where the money has been saved. Is there a way for us as parliamentarians to see whether the monies that Treasury Board has isolated have actually been saved, or is it just netted in there with all of your other expenditures?
Mr. Caceres: No. There are specific proposals and activities that we have undertaken to be able to do those, and we would be happy to provide any details on those as required. As part of the departmental plan, we have included information in terms of how we have divided those savings by core responsibilities, so we could provide those.
Senator Marshall: That’s the $39.4 million?
Mr. Caceres: Correct.
Senator Marshall: Thank you.
My question for Finance: When I looked at the budget document was looking at the $54.1 billion for interest, my first question would be if the rate reduction announced by the Bank of Canada will make a difference with regard to the $54 billion in the budget.
My other question is, when you look at the budget document and compare different years, why do the financial source requirements vary so much? I was looking at the 2023 budget, and it said that the financial source requirements for this year would be $72 billion, but when I looked at Budget 2024, it has gone up to $102 billion. The numbers seem to keep going in one direction — up — and it is quite a significant increase. Why would there be such significant increases?
Mr. Veilleux: Thank you for the question.
I think that question can be responded to by the fiscal and policy budget branch. Perhaps Thomas could join us and respond to that.
Senator Marshall: Thank you very much.
Thomas Larouche, Director General, Budget and Government Operations, Fiscal Policy Branch, Department of Finance Canada: Thank you very much for the question.
There were two questions. One was in relation to debt charges. The amounts you will see in Supplementary Estimates (A) are catching up to the Budget 2024 projection, so right now we won’t see an impact from the Bank of Canada’s decision to reduce rates. That change will be reflected the next time we update in the fall statement, and we’ll have to resurvey economists at that point. You will eventually see the impact of change projections, but that is not what is reflected in Supplementary Estimates (A) right now.
Senator Marshall: That’s good. I understand that. Thank you.
Mr. Larouche: On the second question, which is a good one, on the non-budgetary transaction, if we were to look at 2023-24, the main driver of that difference would be, I believe, a $23.3 billion payment under the final settlement agreement for the First Nations Child and Family Services, so that is a big amount. That will be under accounts payable. I think that settlement agreement was well publicized.
Senator Marshall: I’m familiar with that one. So that’s what the driver was. You hadn’t expected it in 2023; is that what you were saying?
Mr. Larouche: I don’t have the numbers for Budget 2023 in front of me, but there is always a big difference between when settlements are paid out and when they are recognized as expenses. That might be a source of the difference. For that particular year, I recall the payment was made in February 2024, so it would factor in the source requirement for that year.
[Translation]
Senator Forest: Thank you to our witnesses for being here.
My first question is for Mr. Veilleux. Can you give us the details of the $165.6 million that will be paid to the Canada Infrastructure Bank?
Mr. Veilleux: Thank you for the question. I’ll see if someone can answer it.
We don’t have a representative from that branch here. Could we get back to you later?
Senator Forest: Yes.
[English]
Mr. Veilleux: I can provide broad tombstone information regarding that payment. Through the Canada Infrastructure Bank, the federal government has committed $35 billion to support infrastructure projects across the country. The CIB will focus on priority investment sectors, including transit, green infrastructure, clean power, broadband access, and trade and transportation. The $165.6 million increase represented here reflects the CIB’s capital and operating budgets in its 2023-24 to 2027-28 corporate plan for the fiscal year 2024-25, which was approved by Treasury Board.
[Translation]
I don’t know if that answers your question, but if it doesn’t, we can get back to you with an answer.
Senator Forest: Can you check and get back to us in writing?
Mr. Veilleux: Yes
Senator Forest: Thank you. Mr. Brunelle-Côté, congratulations on your appointment.
Mr. Brunelle-Côté: Thank you.
Senator Forest: Last month, the government confirmed that Phoenix — which cost us a staggering amount of money — would be scrapped and replaced by Dayforce. In the budget, there was talk of allocating $135 million to improve the payroll system. What will this $135 million be used for? Are we really prepared to avoid a repeat of the Phoenix tragedy?
Mr. Brunelle-Côté: My colleague Mélanie Laflèche will be able to answer your question.
Senator Forest: You have my full confidence.
Mélanie Laflèche, Executive Director, Leadership Policies and Programs, People and Culture Sector, Office of the Chief Human Resources Officer, Treasury Board of Canada Secretariat: Thank you for the question.
In fact, the feasibility analysis is still under way for the solution that will be chosen for the new system.
We’re working in partnership with Public Services and Procurement Canada and using their system to analyze Dayforce’s capabilities, but the decision hasn’t been made yet.
As far as investments are concerned, there are three things we’re focusing on.
First of all, we need to stabilize the current environment. Secondly, we need to look at the backlog and try to reduce it. Finally, we need to look at optimization and transformation to prepare for the new solution.
Senator Forest: At the moment, Canadian Heritage’s payroll system uses Dayforce, but it hasn’t been extended to all the organizations?
Ms. Laflèche: Exactly.
Senator Forest: We are in the process of upgrading.
Ms. Laflèche: Analyses are still under way to test Dayforce’s capabilities before we can make a decision that will serve the Government of Canada well.
Senator Forest: According to your timetable, how long do you give yourself to do that?
Ms. Laflèche: A decision should be rendered or a proposal for a decision should be made by the end of the fiscal year.
Senator Forest: That’s good. Are we going to correct the payroll errors that are still pending before migrating to the new system, as the Public Service Alliance of Canada is calling for?
Ms. Laflèche: Indeed, we are working hard to correct and simplify things, because the system is very complex at the moment. We want to make sure that in preparing for a new solution, we’re doing everything we can to succeed, so that we have less complex rules to administer in terms of the payroll system and so that we can harmonize the systems to avoid the issues we had last time.
Senator Forest: Thank you. My question is still for the Treasury Board. You have set aside a reserve of $250 million for potential government expenditures. An amount of $750 million was already earmarked in the budget. Do we know yet what this money will be used for?
Mr. Brunelle-Côté: You’re probably talking about Vote 5, where we increased the amount from $750 million to $1 billion. In fact, this is a contingency fund that we use for unforeseen events. At the beginning of the year, we don’t know what it will be used for. Departments must apply to use this fund if they need money quickly. It’s like a credit line.
At the beginning of the year, we don’t know who is going to apply for this fund. During the year, when a department needs money quickly between two supplementary estimates, we provide it. This is why we have increased the contingency fund, since it had not been increased since 2001–2002. It had never been indexed to inflation and there were a lot of demands with the war in Ukraine and other things, so we thought it was a good idea to increase the contingency fund.
Senator Forest: In the budget, there was $750 million earmarked for this contingency fund to potentially bridge a gap. Does that mean that the $750 million has already been dipped into, which is why you are adding another $250 million?
Mr. Brunelle-Côté: No. In fact, last year we didn’t use the entire envelope. We want to be cautious, to make sure that we are in a position to respond in the event of a crisis. If memory serves me correctly, we haven’t used the entire envelope in the last two years.
Senator Forest: We didn’t use the $750 million?
Mr. Brunelle-Côté: No.
The Chair: It’s petty cash, a billion dollars.
Senator Gignac: My question is for Mr. Brunelle-Côté.
Congratulations on your appointment and good luck in your new duties. I was looking at your career path, and as a fellow economist, I find it impressive. You’ve worked at the International Monetary Fund, the Department of Finance and the Privy Council Office. You’ll have trouble delegating my question. It’s addressed directly to you. I’m asking for some latitude, because it has nothing to do with the Supplementary Estimates (B).
Can you reassure us a little? What is your vision? We are under the impression that the government has somewhat lost control of its spending. I was looking at the department’s forecasts two years ago. The size of government is about 1% higher. Do you intend to make any changes or tighten up controls or install key performance indicators in the department? How do you see your mandate?
Mr. Brunelle-Côté: That’s a good question. It’s almost an interview question. I answered it two months ago in an interview.
The Chair: It’s borderline irrelevant, but we’ll allow it.
Mr. Brunelle-Côté: I’m not going to answer in too much detail, because I’m still new in my role. Obviously, we work in consultation with others. Clearly, controlling spending is an important issue for the government. We’ve already started work on phase 1 of the refocusing government spending initiative. We’re about to launch phase 2, because we haven’t fully achieved the objectives of the first. Additional cuts were announced in the autumn economic statement, so the top priority is to finish the job.
It’s too early for me to tell you exactly how we’re going to do that. We’re in the process of consulting our ministers, the Prime Minister’s Office, and so on, to implement a process for phase 2. It’s absolutely crucial for the government to control spending, as you mentioned, not just to add more programs, but to review the relevance of programs. In my team, there are people in charge of measuring the results of the various departments and programs on an ongoing basis so that we can reallocate spending where it’s needed.
Senator Gignac: Thank you. That’s a very good answer. I understand why you are in this position. In reality, when we look at departmental results, we see that there is a delay; often, we have a result almost two years later, but we realize that the departments have not achieved their objectives. Often they set their own targets, but they don’t achieve them. Is there a system in place, or are you considering putting a system in place, so that there are sanctions or something to ensure that their budgets are not automatically renewed? How do you see this? I look at the results, but often there are departments that are in default for several years. As parliamentarians, we want to be reassured.
Mr. Brunelle-Côté: That’s an excellent question, Senator Gignac. Measuring results must be linked to spending reduction exercises. There has to be a link. In phase 1 of the refocusing government spending initiative, Treasury Board reviewed spending. When departments submitted their spending reduction proposals, the achievement of targets was an important criterion for determining whether programs were still performing well and continuing to meet their objectives. It’s important to link the two. Whether there are sanctions mechanisms, I don’t know, but there has to be a link between the two exercises.
Senator Gignac: Thank you. I’m going to change the subject. I’m going to turn to Transport Canada.
I understand that the incentives for the zero-emission vehicles program (iZEV) is for two fiscal years. What will happen if the program is too popular? Will you come back to us? Or will the government do what it did with the Canada greener homes grant, and terminate the program at very short notice? Do you intend to give a date so that people can plan their purchases? What happens when the funds run out? You may run out of money.
[English]
Mr. Caceres: Thank you for the question.
A series of funds has been provided for this particular program. We’re working with those specific funds to ensure that we can deliver that program as we go through. Should the take‑up of the funds be much faster than the time period going forward, at that point the program has only been given that much money to be able to advance. Right now, that program is estimated to continue until the end of this fiscal year, and that is the base of our planning and program assumptions on that.
Senator Gignac: Thank you.
Senator Smith: My question is for Mr. Brunelle-Côté and Treasury Board. One of your core areas of focus is to modernize and strengthen the public service. According to the Departmental Plan 2024-25, Treasury Board of Canada Secretariat will work with the Privy Council Office and consult with public sector unions on planning for future of work. It’s well known that the public sector unions are unhappy with the return-to-office directive issued by the government and have threatened actions over the summer. Could you discuss the work being done to address the concerns from the union?
Mr. Brunelle-Côté: My colleague from the Office of the Chief Human Resources Officer is best placed to answer that question.
David Prest, Acting Associate Assistant Deputy Minister, Employee Relations and Total Compensation Sector, OCHRO, Treasury Board of Canada Secretariat: Good morning. Thank you for the question.
To maximize the benefits of presence in the workplace and to bring more fairness and consistency across the public service, we’re looking at calibrating the return to the office in a hybrid environment from two to three days to a full three days. That’s in line with what we’re seeing in the provincial and territorial governments as well. This leads to improved human connections for those who are in the office — those collision conversations and the team building. We have to remember that a certain subset of employees who are part of the public service have not had an opportunity to work in an office environment on a day-to-day basis. For these individuals, this is all new to them. It’s about balancing that against work-life balance and the other flexibilities that allow for hybrid with respect to working from home.
Senator Smith: What feedback have you received from members in terms of moving back to three days in the office? Have you outlined and identified a productivity consideration as a key indicator? How are you able to measure telework versus in-person work?
Mr. Prest: Productivity is a challenge. Individual productivity research on hybrid models varies quite significantly. In terms of an office environment and how that relates to productivity, we have to remember that we have 150 years of experience with that model and about 15 months with a hybrid model. At this point, analysis leads to different conclusions, especially those studies that rely on surveys. The formulas don’t apply to all jobs. We have in-office jobs, border guards and other types of work. Our conditions for success include feedback from our bargaining agent colleagues, as well as from our employees directly, as part of the success for this hybrid model.
Senator Smith: Is there a clear indication of the type of feedback you were anticipating? Have you received that? What have you been able to measure to this point, or is it too early to tell?
Mr. Prest: As I said, I think it’s too early to tell. We’re still in the transition phase, in the early days of going from two to three days a week to moving to three days a week this fall.
Senator Smith: Thank you.
[Translation]
Senator Dalphond: Welcome. My questions will first be addressed to Treasury Board.
I see that you are asking for an additional amount of $250 million. Is this a contingency envelope or are these budgets already earmarked for allocation?
Then I have a related question. The responsible minister for the Public Sector Integrity Commissioner is Treasury Board. As sponsor of Bill C-290, which amends the Public Servants Disclosure Protection Act, I met with the Commissioner, and she told me that they had an exponential number of complaints compared to previous years. Resources are limited and the operating budget has always been around $4 million a year and $6 million to $7 million in total. I was looking at their site this morning and this is the first thing that appears in a notice:
The Office is receiving an unprecedented number of disclosures of wrongdoing, reprisal complaints and general inquiries. As a result of increased submissions, delays … are expected.
Does Treasury Board plan to increase the resources of the Office of the Commissioner in order to meet the demand?
Mr. Brunelle-Côté: I’ll start with the question on the contingency fund, on Vote 5. Yes, it’s a contingency fund, so there are no requests in relation to what we have at the moment, at the beginning of the year; requests are made during the year, so it’s really a contingency fund, as its name indicates. That was the first question.
Senator Dalphond: It’s your purse, it’s the purse we’re going to dip into —
Mr. Brunelle-Côté: If money is paid out of that fund, the departments have to repay the amount later when they get the funds through supplementary estimates.
We advance the funds to the departments that request them, and they eventually have to reimburse their Treasury Board submission. Once they’ve obtained the funds, they make a request in Supplementary Estimates (B), for example, and they reimburse those funds.
The second question was about services. Obviously, when we make cuts, the government is keen — and this is quite clear in the announcement of the parameters of the first round of cuts — to avoid touching programs that have a direct impact on services; this is an important consideration.
The question is whether we should give more money to the Commissioner, as you suggested. That is a budgetary issue that the Minister of Finance should address in a budgetary context; it’s not up to Treasury Board.
Senator Dalphond: I understand that we don’t have the answer, so this is a matter for the minister’s office.
Mr. Brunelle-Côté: That is a matter for the minister’s office; budget decisions must be made by the Minister of Finance and the Prime Minister.
Senator Dalphond: My second question is for the Department of Crown-Indigenous Relations.
The Supplementary Estimates provide $5 billion, the bulk of which goes to funding settlements.
Could you explain that to us? Last time, we asked some questions. At the end of February, when the Main Estimates were prepared, no amounts were claimed, and now, in the Supplementary Estimates (A), we are being asked for $3.5 billion for settlements, in addition to $1.8 billion for agricultural benefits claims.
Can you explain why this wasn’t known two months ago, but it is now? What is the implementation policy for the allocation of funds?
Mr. Brunelle-Côté: First of all, it’s important to remember that, although the Main Estimates are tabled in February, work on them begins upstream, and at that point, as you noted, these expenses were not yet planned. It was only later in the year that we realized there were these expenses, so that’s why they’re in the Supplementary Estimates (A), and not in the Main Estimates.
Senator Dalphond: At what point do we realize that the settlement must appear in the funding? Is there a magic letter? Is the settlement signed or authorized by the court? Are there negotiations?
Mr. Brunelle-Côté: There are two types of expenditures, if I’m not mistaken, and my colleagues can correct me if I’m wrong: there are expenditures for agreements that have been signed, so we have to pay out the money, but we also have to bring certain envelopes up to standard. There are therefore two types of expenditures.
In addition, if we look at the nature of certain expenditures, there is also a lot of rescheduling from one year to the next; we often reschedule funds from one year to the next.
At the time of writing the Main Estimates, the fiscal year had not ended, so we could not foresee that we would be doing this rescheduling between years.
Senator Dalphond: Thank you.
[English]
Senator Loffreda: My question is to Transport Canada. In these estimates, Transport Canada is requesting a sum of $604.9 million for the incentives for the Zero-Emissions Vehicles Program, iZEV. Canada is positioning itself to be a major player in the ZEV supply chain, with recent multi-billion-dollar investments for Northvolt, Volkswagen and Stellantis. For example, the government announced in Budget 2024 a new 10% Electric Vehicle Supply Chain investment tax credit on the cost of buildings used in key segments in the EV supply chain. Beyond the funds being requested in these Supplementary Estimates, can Transport Canada address the government’s total funding commitments in the EV sector? I see these as important investments for the future of our economy and our planet, and I do agree with them, but I also recognize that a lot of money is being poured into it. What are your comments with the funding that’s currently happening and your objectives, and how are you managing all of this?
Mr. Caceres: Thank you for the question.
As you can appreciate, I can speak only for the funds that are being provided for Transport Canada specifically for the iZEV vehicles. There are other government departments that are involved in other aspects of the broader activities. Those questions can be directed specifically to those particular departments.
For the broader question of what this indicates in terms of where we’re going as a program, I invite my colleague Stephanie Hébert to speak in terms of how the program is using the funds associated with this. I am corrected. My colleague Serge Bijimine. Thank you very much.
Serge Bijimine, Assistant Deputy Minister, Policy, Transport Canada: Thank you for the question.
What I can say is that the North American car manufacturing industry has been integrated for decades, and going forward, our expectation is that it will remain integrated. As far as other investments, they’re made with that frame of mind, to continue our integration with the American markets, and watching very closely measures that the U.S. government has taken. The game plan and the aim is to maintain a North American integrated car manufacturing industry.
Senator Loffreda: Once again, I want to further explore the iZEV Program, given that Serge is there now, and we also have Jaime. We know the government wants 100% of light-duty vehicle sales in 2035 to be ZEVs. That’s 11 years away. That’s not a long time, and it goes quickly. In December 2022, the government proposed sales regulations that require at least 20% of vehicles for sale must be ZEVs by 2026, at least 60% in 2030 and 100% in 2035. According to your most recent departmental plan, the expectation is that these regulations will be implemented in 2024-25. Can you provide us with an update on the implementation of these regulations, and can you also speak to us about your discussions with manufacturers since the government’s December 2022 announcement? You did say you’re trying to integrate with North America. What discussions are you having with the manufacturers? I’ve seen, in recent months, some companies scale back on their EV projections and slowing things down a bit. Will these market changes impact your regulations and your projections?
Mr. Bijimine: At the moment, as we currently stand, I believe around 13% to 14% of all sales are ZEVs.
Now, as far as the regulatory regime, I would leave that question to my colleagues from Environment Canada, but I can tell you the work is progressing and progressing quite well to meet the regulatory regime and the re-adds needed to have those in place as per schedule. That work has been progressing.
On the North American integrated market, what I’m trying to say is that we’ve had an integrated market, and those investments, similar to what the United States has been doing, are meant to ensure that Canada is a player and remains a player as the shift to zero-emission vehicles happens throughout the North American market.
It is, indeed, a very ambitious target, and I have no doubt that we will do everything necessary to try to meet it.
Senator Loffreda: What kind of discussions are you having with the manufacturers? In these estimates, you’re getting over $600 million. It takes a long time to count to 1 million, let alone 600 million.
Mr. Bijimine: We have a Zero-Emission Vehicle Council that includes manufacturers, and it includes our colleagues from the Department of Transportation in the United States, Transport Canada, Environment Canada and Natural Resources Canada. We do have a forum where we talk about all these issues to make sure that we move in a concerted effort.
Senator MacAdam: Thank you for being here.
My first question is for Transport Canada. The lack of investment and availability of charging infrastructure across Canada, especially in rural and remote areas, is a cause for concern for Canadians, despite the EV incentive program. Last year, the Commissioner of the Environment and Sustainable Development raised similar concerns. Similarly, Natural Resources Canada has also recognized that this is a key barrier to the adoption of EVs and announced $680 million for a Zero Emission Vehicle Infrastructure Program, which is currently in its adoption phase, to provide needed funding out to 2027 to serve both the hydrogen and EV markets. I wanted to get your comments on the infrastructure issue. Also, do you have any early information on how the infrastructure program will be rolled out to support Canada’s EV program?
Mr. Caceres: Thank you for the question.
The lead for infrastructure is Natural Resources Canada and others in terms of who is involved in that process. They will probably be in a better position to comment on that. Our program is obviously directed to specifics of the vehicles themselves, so I wouldn’t be in a position to comment.
Senator MacAdam: Okay. With regard to the program, though, the Incentives for Zero-Emission Vehicles Program, can you tell me what the actual impact of the program has been so far, such as the estimated number of additional zero-emission vehicles purchased due to this program? Not necessarily the allocated dollars, but the actual vehicles as a result of this program.
Mr. Caceres: Thank you for the question.
There has been a significant amount of take-up in terms of the use of the particular program in terms of vehicles, both for heavy vehicles and for light vehicles. Right now, I’m just trying to find the specific numbers in terms of broad distribution. That has demonstrated that there’s a lot of interest right now in terms of moving forward.
I’m going to invite Stephanie Hébert, the ADM of Programs, to elaborate on the specific take-up.
Stephanie Hébert, Assistant Deputy Minister, Programs, Transport Canada: Thank you.
With regard to vehicles purchased, we can say the program has contributed to over 400,000 vehicles that have been purchased under this program. That’s going to result in a significant reduction in greenhouse gas emissions. We know that the transportation sector contributes about a quarter of greenhouse gas emissions, of which vehicles comprise a significant amount. Through the incentives and the incentivization of the purchase of these vehicles, we know that we’ll contribute significantly to our environmental goals.
If there’s more time, I can go into details about market share and take-up in different provinces, if you wish.
The Chair: Yes.
Ms. Hébert: The program is quite popular in the provinces of Quebec and British Columbia. The federal incentives combined with the provincial incentives have really encouraged take-up. After that, I would say the other percentage is approximately 10% within the province of Ontario and about 4% is where we see vehicles purchased in the rest of Canada. Obviously, that is something that we wish to tackle so that we can see broader take‑up of the program throughout Canada, but right now, we see about 80% of the vehicles are purchased in Ontario and in Quebec.
Senator MacAdam: Thank you.
[Translation]
The Chair: Excuse me, Ms. Hébert, but I have a question and I don’t want to make you come back.
When there are subsidy programs, we often see manufacturers adjust the price. Are there any studies on this, or have you compared or analyzed manufacturers’ pricing behaviours? For example, when the price is a little higher than the subsidy eligibility figure, manufacturers will lower the price to qualify for the subsidy; conversely, manufacturers whose price is much lower will allow themselves to increase the price by $5,000, because they know that there is a subsidy that reduces the price of the vehicle.
Have you seen and analyzed these behaviours? I’m telling you this because I’ve shopped for vehicles and I’ve seen price adjustment techniques. I would like to know whether you have documented this and whether you have seen the real effect of the subsidy on consumer behaviours.
[English]
Ms. Hébert: Mr. Chair, what I can speak to is the amount that would be eligible and the amount that we would provide, how we assess the eligibility of the actual vehicles to qualify under the program and then what the federal incentive would be. We look at the base model of the vehicle, and then we look at whether there are additional trims and features added to the vehicle in terms of what that means for the overall eligibility. I’m not able, though, to speak to manufacturers’ behaviour. Rather, we just look at how we manage the program, very clearly determining what vehicles are eligible and, if items are added to those vehicles, what that does in terms of their overall eligibility for the price.
[Translation]
The Chair: Given that you have an idea of the cost, have you correlated the price changes? Have you checked the studies to see how efficient the program really is?
You could say that it contributed to the purchase of 100,000 vehicles. However, it may have also contributed to increasing the price of 75,000 vehicles, which means that the money went into the manufacturers’ pockets.
[English]
Ms. Hébert: At the end of the day, we want to make sure that the vehicles that are deemed to be eligible for the program fall within a certain price point. We can provide to this committee, if we have any, the analyses we have undertaken in terms of how the incentive program may ultimately affect the price of the vehicles. Ultimately, the objective of the program is to encourage the purchases and to encourage the take-up, but we want to do that in a way that’s fiscally responsible and that captures certain vehicles that will achieve our overall program objective.
[Translation]
The Chair: I understand that these analyses exist. Would it be possible to provide them to us? I’m curious to see how this complies with the new competition standard we’ve adopted on advance pricing.
[English]
Ms. Hébert: Absolutely, Mr. Chair. Thank you.
Senator Kingston: Thank you very much for being here.
My questions are for Mr. Veilleux and Mr. Brunelle-Côté. I’m looking at the health care support for asylum claimants and refugees. In the Supplementary Estimates (A), you give a description:
The Interim Federal Health Program provides limited, temporary healthcare coverage to specified groups of foreign nationals, including asylum claimants and refugees, who are not yet eligible for provincial or territorial health insurance.
In my province of New Brunswick and in my area, which is the capital city of Fredericton, we do have a significant number of refugees and have had for many years, so I’m familiar with the Interim Federal Health Program. Recently, over the last couple of years, we have also started to receive asylum seekers, and they have been housed, if you will, in local hotels and are accompanied by health care workers.
I have two questions. One is a policy question. It appears from the point of view of someone like me who was involved in a primary health care clinic that there is limited effectiveness, I guess, of those workers working in a silo. Yet, there does not appear to be a lot of planning or implementation either of some sort of a knitting together of what the province needs to provide for these asylum seekers and what the actual benefit is to having these health care workers that seem to be attached to the accommodation, if you will, and the asylum seekers themselves. I would like comments from someone on how that is working in terms of interprovincial relations and provision of health care to people who are in our jurisdiction, for instance. Can anyone speak to that?
Mr. Veilleux: We have an official from the Federal-Provincial Relations and Social Policy Branch who can respond to that. Alison McDermott is here.
Senator Kingston: I saw her name on the list.
Alison McDermott, Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: Thank you for the question.
This is probably a better question for officials from Immigration, Refugees and Citizenship Canada and from Health Canada. As the only representative of departments that are here, the Department of Finance has some role in the policy aspects of this, and I can speak to it at a very high level, which is just to note that the intention of the program is to help defray the costs of these asylum seekers and migrants upon arrival, before they have become eligible for provincial health care. It’s not intended to be a long-duration separate arrangement but, rather, something temporary until such time as the paperwork and residence requirements are met to allow them to come onto the provincial systems. It is not a policy decision per se to do that.
Did you have a question about lodging as well?
Senator Kingston: No, but I’m thinking of these health care workers who seem to be attached to and actually living in the same accommodations — the local hotels in Fredericton, for instance. I am thinking about health care workers who are coming with or who are attached to the asylum seekers. Yet, the asylum seekers may require primary care, meaning they have to access the New Brunswick health care system or the emergency room care — same thing. I’m just not sure how effective that is without some sort of deal, for lack of a better word, with the provincial government in terms of how this happens. What are the linkages between whatever health care is being augmented by the federal interim health care agreement and the provincial government which, indeed, has to be involved with most of the cases that require any significant amount of health care?
Ms. McDermott: Certainly, that is an objective of how the system should work. There should be some good interaction between the systems. Perhaps the department could follow up with you in more detail.
Senator Ross: Good morning.
I have a question for Mr. Veilleux. I read in the Parliamentary Budget Officer’s report that these estimates are seeking $1.6 billion across only 11 of the over 200 Budget 2024 initiatives. Do you agree with that? Will you be able to get the authority for the rest of it in (B) and (C)?
Mr. Veilleux: I will invite the Fiscal Policy Branch to respond as it relates to the federal budget, as opposed to the authorities that I manage as Chief Financial Officer for Finance proper. I invite Thomas Larouche to respond to that.
Mr. Larouche: Thank you for the question.
There are two components to this question. One is whether it is normal that a small portion of spending from the budget is in Sups (A). The other component is whether we will make it until Sups (C).
On the second component, it is more a question for my Treasury Board colleagues because they have a better sense of how far along departments are in their TB submissions and the documentation they have to provide to access the funding, so I will let them answer that second part.
For the first part, it is not unusual, because the budget was tabled in April. There is not a lot of distance between the tabling of the budget and the supplementary estimates. There is not a lot of time, once departments and agencies are aware of the government’s plans or the funding on which the government has decided, for them to turn around and produce their submissions to Treasury Board to access these authorities. That is when it comes to voted spending.
I don’t have in front of me a history of Supplementary Estimates (A) right now, but I would say it is not unusual, especially with a budget tabled in April, that there is a small portion of the budget. I would suspect a larger part of Budget 2024 spending would be reflected in Sups (B) in the fall.
Mr. Brunelle-Côté: To add to the first part of the question, it is true that there is no pattern in terms of how much of the budget is in the supplementary estimates. It is less than last year, yes, but it is more than the previous year. It often depends, as Thomas was mentioning, on the date of the budget. That is not the only factor, but it is a key factor.
In terms of whether we will be able to catch up, yes, that’s the plan. The government is very focused on budget implementation, so you can expect that in Sups (B) and Sups (C). There will be a significant chunk of the budget in Sups (B). The centre is very much focused on budget implementation now. There are committees following. It is a key priority of the government to ensure that the budget is implemented. So, yes, we can expect that, in the future supplementary estimates, there will be more of the budget.
Senator Ross: In your opinion, do you think the budget, in general, should be tabled earlier?
Mr. Brunelle-Côté: There are positives and negatives about an earlier budget.
An earlier budget will not necessarily completely solve this issue of alignment between the Main Estimates and the budget because, as you know, with the Main Estimates, we have to start early. The budget is concurrent. As Thomas was mentioning, departments need some time after they receive the announcement in the budget of the funding. They need to consult stakeholders. They need to have their estimates approved by Treasury Board. It takes time. There will always be a discrepancy between the Main Estimates and the budget.
The fact that we have a later budget sometimes is a good thing because it allows flexibility to the Minister of Finance to table the budget at a time that is convenient for the government. There is a lot of uncertainty in the economy, so it’s good to have a bit of flexibility. I can see that there will be some advantages to an earlier budget. There are arguments on both sides.
Senator Ross: Thank you.
Senator Pate: Thank you to our witnesses.
My question is for you, Mr. Veilleux. As you know, the Assembly of First Nations and others have expressed disappointment with the funding allocated for and in cooperation with Indigenous-led priorities, including the National Inquiry into Missing and Murdered Indigenous Women and Girls and the United Nations Declaration on the Rights of Indigenous Peoples. At the same time, we see in the supplementary estimates allocation for more than $5 billion to the Department of Crown‑Indigenous Relations and Northern Affairs and ISC to cover the cost of legal settlements and Indigenous claims. Last week, the PBO reminded us that preventive measures are better than retrospective and compensatory measures.
I’m curious as to what concrete steps the department is taking to ensure spending priorities that articulate and align with these issues and that we are seeing prioritization of the Calls to Action of the TRC, the Calls for Justice of the MMIWG and the ways to ensure that inherent rights are upheld. I don’t need to tell you that the long-term financial as well as the social, economic and cultural costs are huge if we don’t take a more proactive approach.
Mr. Veilleux: Thank you very much for the question.
I did take note of the PBO’s comments and narrative around that. That is funding that is directed to the organizations that were mentioned. Rather than providing a response myself, because the funding does go to those organizations, I can certainly reach out and provide a written response to the committee leveraging some of the interaction that we could have with the lead organizations to ensure that you have a comprehensive and fulsome response to that rather than my own narrative around what we could do in that space. I would rather speak to and coordinate with the lead departments.
Senator Pate: That would be great. I see your colleague has some input as well.
Ms. McDermott: At a high level, the government is very much in agreement with your proposition that it would be desirable to put more resources into preventative measures rather than settlements. Settlements are necessary. In fact, the government has put a lot of focus on economic reconciliation, and the Indigenous loan guarantee that was announced in this budget is one example of that. There are billions of investments that have been made in education, in clean drinking water, in infrastructure and other areas that are more preventative in nature. As Chris said, the department could overview some of these investments, but I think the point is well taken in general that it is important to do both.
Senator Pate: Thank you. Could you include in that some of the downstream impacts in terms of the criminal legal system as well? We are seeing contradictory messages when we see certain things being criminalized at the same time as there are new Black and Indigenous strategies to reduce the involvement of those folks in the criminal legal and penal systems.
My second question is with regard to the Canada Disability Benefit. Although it was announced in 2024, we don’t see much in the estimates about this. When we look at this, we see the inadequacy that has been highlighted by many organizations. Most recently, during this process at the Legal Committee, we heard from Vince Calderhead, a leading human rights and poverty law expert, who urged us to look at this issue. I’m curious what the timeline for funding the Canada Disability Benefit is at this stage, and is the time being taken? Does that mean we can expect to see an expansion of the benefit to more people and an increase to ensure that it’s a livable amount, given the clear feedback that $200 per month will not make a difference for some 98.5% of Canadians with disabilities living in poverty?
Mr. Veilleux: Thank you once again for the question. I’ll have Federal-Provincial Relations respond to that.
Ms. McDermott: Again, at a high level, I think this is a measure that will be implemented in 2025. The implementation will reflect the budget decision that has been made to date.
With respect to additional funding, that is a high-level commitment that the government has made, an interest in, over time, making that benefit more generous, but I can’t speak to the specifics of when that might happen.
Senator Pate: Thank you very much.
Senator Galvez: My first question is for Mr. Christopher Veilleux, who talked about the taxonomy. We are behind our peers with this taxonomy. There are 47 countries that already have one. Actually, this provides stability and clarity for investment and how we are going into this transition. When I read the road map for the taxonomy, it talked about transition activities and green activities. The transition is new. None of the other countries have this transition. We don’t have a calendar that will say when it is going to finish. You’re asking now for $1.3 million, for a total of $145 million. When is it going to be delivered, and what are the key performance indicators in relation with the goal, which is reaching net zero?
Mr. Veilleux: Thank you very much for the question. I will have Clifton Lee-Sing, the lead from the Financial Sector Policy Branch, respond to that.
Clifton Lee-Sing, Director, Markets and Securities Policy, Financial Sector Policy Branch, Department of Finance Canada: Thank you very much for your question.
With respect to the timing, the government did announce in the latest budget that we would provide advice to cabinet by mid‑this year, so targeting September 2024. We will have advice on the structure, the type of taxonomy. The intent is to have not only a green taxonomy but one that involves transition activities because of the nature of the economic activity in Canada and the particular sectors and activities that are required to help Canada transition to a net-zero economy.
In terms of key performance indicators, the design of the taxonomy is very important. The metrics that are going to be designed and used for the taxonomy are generally rooted in science. The criteria are established in a way that scientists feel will take emissions down to the appropriate targets by 2050. It is based on the specific criteria chosen for various sectors to reduce the emissions accordingly to reach the zero target.
Senator Galvez: If you have those details, can you send them to the committee clerk?
Mr. Lee-Sing: In terms of the criteria, the Sustainable Finance Action Council recommended that those criteria be designed and developed as part of the taxonomy in consultation with various stakeholders.
Senator Galvez: We are not there yet?
Mr. Lee-Sing: The government doesn’t have those criteria. We would look to a custodian to develop them in consultation with market participants.
Senator Galvez: My second question is for Mr. Caceres. We are giving grants for electrifying transport vehicles. When I look at the program, you are giving $5,000 for certain eligible vehicles, which are Alfa Romeo, Audi and BMW, which start at a price of $85,000. I cannot afford those. I am on my second Prius, and it is a hybrid. I have been driving it since 2015. I never received any credit for that. Yet, we know that the hybrids are the ones reducing the greenhouse gas emissions. My question to you is similar to what I asked previously. What are the performance indicators that tell me that all this money is going to produce a great deal of reduction in greenhouse gas emissions? How does it compare to public mass transport electrification?
Mr. Caceres: Thank you very much. I will invite my colleague Stephanie Hébert to speak to that.
Ms. Hébert: Thank you very much.
In terms of the program eligibility, we look at the suggested retail price of the vehicle. That helps us determine eligibility into the program. For cars, it has to be approximately $55,000 to be considered eligible. I previously mentioned, Mr. Chair, the trim. If additional features are added to the vehicle, the maximum amount can be $65,000. It is not necessarily based on a specific type of car, but rather, it is the overall price of it and its ability to contribute to our program objectives in terms of reducing greenhouse gas emissions. That fundamentally enables access into the program.
If I can, Mr. Chair, I would like to return to a question asked about the manufacturer’s actions. Colleagues have advised me that the program is very competitive. The electric vehicle market is also very competitive. Therefore, in terms of behaviour, we are seeing that vehicles are often sold at a loss. We are not seeing prices increase, but rather, prices decrease to gain access to the market and to gain opportunities for people to be able to purchase electric vehicles and help us advance our program objectives.
[Translation]
The Chair: You’ve partly answered my question from earlier, and I thank you for that.
I understand that you talked to us about analyses, work that has been done and the results of studies; are we still going to receive them?
[English]
Ms. Hébert: Indeed.
Senator Marshall: I would like to continue with my first question. I think we need someone from the fiscal policy branch. I was told that one of the reasons the financial source requirement decreased from $72 billion this year, which was in Budget 2023, to $102 billion in Budget 2024 was because of the $23 billion child welfare agreement with Indigenous Services Canada. That department has updated us regularly on the progress of that settlement. My understanding was that the $23 billion was actually paid out to Deloitte last year. Is it possible that the $23 billion was paid out last year but the borrowing occurred this year? Would you expect to see a match in the same fiscal year? That’s my first question.
My second question is, what year was the $23 billion recorded as an expenditure? I ask because one of the challenges of serving on the Finance Committee is seeing these large settlements in which the expenditure is recorded one year, the money is borrowed another year and the estimates have it in another year. We are trying to match it up from year to year. Can you answer those two questions?
Mr. Larouche: Regarding the difference between when the settlement payment is made and when the expense is recorded, it has to do with the different accounting bases. The budget is on a full accrual basis. Here we are talking about a cash projection. If my memory is correct, for the Canadian Human Rights Tribunal and the First Nations Child and Family Services, the expense of it would have been recognized in the Economic and Fiscal Update 2021. The accounting rule is that when there is a liability and a certain probability that this liability will materialize, then the expense will be recorded at that time, and it could be different from when a settlement is actually paid out because there are multiple negotiation attempts.
Senator Marshall: Can you confirm that the $23 billion was recorded as an expenditure back in 2021? The Treasury Board and Finance are here, so if somebody could clarify that, it would be a big help.
Mr. Larouche: We will get back to you about when it was recorded in the public accounts. I don’t have it in my notes. I know it was in our forecast for the Economic and Fiscal Update 2021. That’s my recollection. We will endeavour to get back to you as a follow-up and confirm those details.
Senator Marshall: To return to my first question, is it possible that the money went out to Deloitte last year but the borrowing is this year? Is it possible to have such an overlap?
Mr. Larouche: I don’t have that detail with me. I believe that in our fiscal monitor we disclosed that the payment was in February 2024. Why don’t we get back to you as a follow-up?
Senator Marshall: Could you? It’s a very confusing issue because these claims and settlements cross over into different years. What year do they show up in the public accounts? What year do they show up in the estimates? That would be great. Thank you.
[Translation]
Senator Forest: My question is for Transport Canada. Mr. Caceres, you talked about the department’s objective of supporting regional rail services in particular.
I don’t know what your plan is in that regard.
The Bas-Saint-Laurent region and other regions have never been so poorly served. At one time, we had a train that ran every day in the middle of the day. Nowadays, there are only three trains a week in Rimouski, and they run in the middle of the night.
The VIA Rail station is closed. The environment is not conducive to using public transport. And yet, when we consider the challenges of global warming, we know that we should be taking cars off the roads and moving in the opposite direction.
We understand that this is VIA Rail. Is there a strategy in the measures to be put in place to improve this service? The fewer users there are, the fewer services there are, and the fewer services there are, the fewer users there are. We’re in a negative spiral that doesn’t encourage the use of public transport.
[English]
Mr. Caceres: Thank you very much for the question.
For questions about the choices of the type of service and service levels, in terms of what they are as well as looking at the different pieces, I’ll invite my colleague Serge Bijimine to speak to that. Thank you.
[Translation]
Mr. Bijimine: Good morning, and thank you for your questions. VIA currently offers services on three different branches. There’s the Quebec City-Windsor corridor, and for the corridor, there’s the high-frequency train project that’s moving forward. Outside what we call the “long corridor,” there’s the Canadian and the Ocean.
Your question concerns regional routes. You’re right to say that service has declined. However, VIA has purchased new fleets that began to be delivered in 2022, and this process will continue until 2025.
In addition, Budget 2024 set aside additional funds for everything to do with the long corridor, such as regional roads. So we expect that over the next few years, within the next 5 to 10 years, we’ll be offering a better service. But you’re absolutely right: This is something we’ve been trying to rebuild and get back on track since the pandemic.
Senator Forest: I think the challenge posed by global warming is the sheer volume of vehicles on the roads. We need a national strategy for the purchase of electric vehicles. However, as far as rail services are concerned, we went from one service every day to three services a week, at night. As for airport transport, Air Canada no longer provides the service. All our means of public transport are in decline, and that calls for a national strategy, in my opinion.
Is Transport Canada aware of this? Even if we can’t reverse the trend in the next few months, there has to be a start somewhere to develop a comprehensive national public transport strategy. At the moment, we’re going in the opposite direction to where we should be going.
Mr. Bijimine: Thank you for your question. I can assure you that we are in the process of analyzing the full impact and studying the multimodal mode to ensure that the train, the plane and the bus, as well as all the other modes of transportation, can be better integrated to offer Canadians a better service.
Senator Forest: Thank you.
Senator Gignac: My question is for Ms. Hébert, from Transport Canada, and it relates once again to zero-emission vehicles. There is a big disparity between the provinces. In Ontario, zero-emission vehicles accounted for only 6.9% of sales in the first quarter, compared with 25% in Quebec and over 20% in British Columbia. Why is the percentage so low in Ontario? Can you give us more details? Is your subsidy the same from coast to coast? Something is going on in Ontario.
Ms. Hébert: There is one factor that explains the difference in program take-up rates.
[English]
The federal investments or the federal incentive is matched, in some cases, by provinces. When a province, equally, has a program that provides an incentive, that becomes very attractive for a consumer, and it makes it easier for consumers to be able to purchase an electric vehicle. I think what you’re seeing in the provinces of British Columbia and Quebec, and somewhat in Ontario, is that stacking of federal and provincial incentives. In Ontario, that has changed more recently, and I think that’s where you’re seeing the different percentage and participation. However, in the rest of the country, we’re also seeing other provinces and territories come forward with incentives. You’re seeing that take-up increase in the rest of Canada.
Senator Gignac: Since Ontario had no mandate, no rebate and less infrastructure than Quebec, how is it realistic to have a 60% target in Canada for 2030 if we only have 6.9% of the most populous province in Canada?
[Translation]
The Chair: They may not have the information, but I would like to add something. Could it be that the stacking of federal and provincial incentives increases sales in Quebec, whereas there is no equivalent provincial incentive in Ontario? I don’t know if there is a subsidy in Ontario.
[English]
Ms. Hébert: Correct. That was the point I was trying to make. With the federal incentive and the existence of a provincial incentive, we see higher take-up in those parts of the country where the two coexist.
Senator Gignac: I understand that, but how can we reach 60% nationally in 2030 if Ontario has only 6.9% of the zero net emissions? Ontario has no rebate, no mandate and less infrastructure. Is there any possibility of having more conditional subsidies to push provinces to do something? That province is the core of automobiles in Canada. Carmakers receive submissions from the federal government and the provincial government, but they are doing nothing really to reach that target.
Mr. Bijimine: I can take on that question. There are a few things here.
As Stephanie said, there are three parts when it comes to influencing and getting a bigger uptake when it comes to electric vehicle sales. The first one is the federal incentives, which is 5,000 across the board. The second one is provinces that do have provincial incentives. However, there is also a third one, which is a sales mandate. Quebec and B.C. have a sales mandate. In Canada, we’ve committed to put into place a sales mandate by 2026, 2030 and 2035. Cars across Canada, regardless which province it is, will have to meet that sales mandate and sales objective. If they don’t, certain steps will need to be taken. So, that’s the other measure as well. The regulations are being developed as we’re speaking, but that’s more or less the-carrot-and-the-stick approach.
Senator Gignac: Some provinces have no mandate.
Mr. Bijimine: The mandate will be national.
Senator Gignac: Yes, okay.
Senator Smith: Just to go back to Transport Canada, I’d like to piggyback on Senator Marshall’s comments earlier. Could you point to specific areas where you’ve reduced spending on professional and special services? Can you give us an update on that?
Mr. Caceres: In terms of specific amounts, we have a broad amount that has been targeted for the department in order to be able to meet its obligation for reducing government spending. In terms of the specific measures that are taking place, they tend to be very broad, depending upon the nature of the particular program or area. All those have been examined collectively in terms of what the specific areas are that they are going to reduce.
Senator Smith: Do you have a top two or three areas that you really focus on, or are they generalities where you go through the whole list and figure out bits and pieces here and there?
Mr. Caceres: It is more going through all of them. Again, it’s a review to make sure we’ve examined all the different professional services across the board. We’re not necessarily looking specifically that this is the one area we’re focusing in on. All of them are essentially being examined to make sure we can meet that reduction.
Senator Smith: You mentioned that Transport Canada is looking to increase operational efficiencies and reduce spending in areas you called “low value for money.” Could you elaborate on what constitutes “low value for money” for the department?
Mr. Caceres: As we were going through it, we found numerous processes that, for example, might be paper-based or labour intensive in terms of how that work is conducted. Those are the areas where there are opportunities either to simplify the process in terms of how some of those different programs operate or to discover different ways to ensure that they are adopting newer technologies. That allows us to have a much lower cost in terms of delivering some of those services.
Senator Smith: If we go from the opposite of low value, do you have two or three high-value areas where you had the basic or the strongest focus?
Mr. Caceres: One of the key priorities for the department is in the area of safety and security. Obviously, we want to ensure that, as part of the mandate of Transport Canada, those services are provided and are provided to Canadians.
Senator Loffreda: My question is to Finance Canada. As you might know, I am the sponsor of Bill C-69, the budget implementation act, which includes a division that amends the Borrowing Authority Act to increase the maximum borrowing amount permitted under the act. In light of this information, I would like you to speak to us about the department’s sound fiscal management plan as laid out in your departmental plan.
In your report, you write that you plan to achieve the departmental result that the Government of Canada’s borrowing requirements are met at a low and stable cost to support effective management of the federal debt by undertaking the following two things: First, manage the government’s debt program in order to raise stable and low-cost funding; and, second, adapt the government’s debt management strategy to respond to Canada’s evolving economic needs.
Can you expand on the department’s mandate to fulfill these two objectives? Will the adoption of Bill C-69 have an impact on your ability to meet these goals? If so, how?
Mr. Veilleux: If it’s fine with the member, perhaps we can return to the committee on that with a written response from the leading branch.
Senator Loffreda: Thank you.
I have a supplementary question on that. Do you have the proper officials to answer for Finance Canada, or should I move on? Perhaps Treasury Board? No? I’ll try with Finance Canada — no, I’ll have to go to the Treasury Board because you won’t be able to answer this question. Sorry. It was related to the first question, so no regrets there.
My next question is for our friends from the Treasury Board Secretariat, and it focuses on the data in table 1 in your most recent departmental plan. In this table, TBS is evaluating the percentage of government programs that have suitable measures for tracking performance and information decision-making. In other words, we’re looking at how government organizations measure, evaluate and report on their performance. I must admit that I’m a bit skeptical about this exercise. Correct me if I am wrong, but it seems that the same people who choose the indicators are also establishing the targets and assessing the annual performance. Can you educate us on how this process is objectively and independently conducted?
Mr. Brunelle-Côté: My colleague Rod Greenough will answer.
Stephen Burt, Chief Data Officer and Assistant Deputy Minister, Policy and Performance Sector, OCIO, Treasury Board of Canada Secretariat: We talked a bit last time we were here about service standards. We do have expectations of those departments that do set the standards that those standards are both realistic and ambitious in terms of how services are delivered to Canadians under normal circumstances. There is a back and forth on that, and we do have conversations with departments about whether or not their standards are ambitious enough to hit those kinds of targets.
Senator Loffreda: Basically, they set their own standards?
Mr. Burt: They set their own standards.
Senator Loffreda: That is important. In the estimates, we’re funding many departments. Many times, we see the departmental plans, but I rarely see 100%. The finance department is 100%, so, congratulations. However, sometimes they’re not. I’ve seen 40%, 45%, 35%. When you’ve got 40% or 35% in the corporate world, you don’t have a chance to explain why you’re there. I’d like to know more about how that happens.
Mr. Burt: If we see too many 100%s, we have questions on that, just like I do about my kid’s report cards. There will be times where we want to make sure about what we’re doing in those situations. If you have 100% consistently, then your standard is probably too low, there’s not enough take up of your service or your reporting is wrong. We try to aim for around 80% as an acceptable standard in terms of what kind of response rate or delivery we want to see in that case. For sure, over the last few years, the service standards have been well below what we would expect, but we are seeing a rebound in the last two reports.
Senator Loffreda: I see. Thank you.
Senator MacAdam: My question is for Treasury Board. In last year’s refocusing government spending exercise, and I’m citing our Parliamentary Budget Officer here, departments that could not find savings in professional services or travel were asked to find savings elsewhere. As such, this measure could be largely considered a general spending reduction rather than a focused effort to curb spending in travel and professional services in some cases. Does the Treasury Board Secretariat plan to collate and publish these savings by department so Canadians can understand where these cuts have been made? I’m thinking about last year’s exercise but also on a go-forward basis. If any restraint programs are implemented, what would be the expectation in terms of transparency on these cuts?
Rod Greenough, Executive Director, Expenditure Management Sector, Treasury Board of Canada Secretariat: I’ll start, and then others can join in as needed. There are two things to consider.
First, the reductions last year that the Parliamentary Budget Officer’s studied were done in year. They were done by freezing departments’ existing appropriations because there was limited time to do an analysis or a deep dive. They were frozen with the idea of targeting travel and professional services. Most departments reported back that’s where they found it. However, because the amounts were frozen, if they couldn’t find it in the short-term to reduce their travel because they had plans, they had to find it elsewhere. Regarding the question about how to track it, it’s frozen. It will be reported the Public Accounts. The money was not available.
Going forward, it was done on a proposal basis. The departments had to bring forward proposals on how they would meet various targets for travel, professional services and operating. In that case, the proposals were studied by the Treasury Board Secretariat and by the Treasury Board and the amounts were reported as an annex to the Main Estimates by department. They’re listed there. Each departmental plan has a box up front listing how that specific department is meeting that. That’s the reporting for the first phase.
Senator MacAdam: Okay, thank you. Would you expect to do something similar going forward if there were others?
Mr. Greenough: That’s to be determined. If there are future exercises they will be reported on, the exact nature may change depending on what is being undertaken.
Senator Kingston: My question is a follow up to the last round, and I believe it’s for Treasury Board. I’m going back to the $411 million spent on health care support for asylum claimants and refugees, but I’m also interested in how the $704 million in proposed spending on professional and special services may relate to this. These are special services in that the federal government doesn’t usually do that kind of direct service, but is this $411 million being spent on health care support for asylum claimants being augmented by other funds that are lumped under professional services and special services at this moment?
Mr. Brunelle-Côté: Yes, you’re right. Most of the amount for Citizenship and Immigration, the $472.5 million, is for professional services. It’s to pay for nurses and for primary health and welfare services. It’s found under “Professional Services.” In the sups, $703 million is related to professional services. A bit more than half of that is for these specific measures, namely, professional services.
Senator Kingston: Has there ever been any consideration given to refocusing some of that money to put toward the organizations at the provincial level? I’m thinking of the Multicultural Association of Fredericton, which does a lot of work around settlement and who, in my opinion, may be able to do this work more effectively for asylum seekers, as well as more cost effectively. They already have linkages to the health care system in New Brunswick and so on. Has any consideration been given to that?
Mr. Brunelle-Côté: It’s a good question. It’s more of a policy question. I think it is better directed to IRCC.
Mr. Greenough: The only thing to add is that, from an accounting perspective, it would still be a professional service if it was an operating expense being paid that wasn’t being delivered by a government employee. It would still show in the same reporting of professional services which, again, gives clarity to how much stuff is in that bucket. It is not all one type of spend. There are many different things under professional services.
Senator Kingston: So professional services money is being given to organizations like the Multicultural Association of Fredericton?
Mr. Greenough: I’m unaware of where it’s being given. I am saying that if it were to be given, if they were to perform the service, it would still count as a professional service.
Senator Kingston: It wouldn’t be a refocusing, then?
Mr. Greenough: I guess not, no.
Senator Kingston: Thank you.
Senator Pate: I want to follow up on some questions asked by my colleague Senator Galvez around the sustainable finance taxonomy. I’m curious as to whether you can discuss some of the concrete ways the sustainable development goals, including equality and elimination of poverty, are being incorporated into the taxonomy. Also, could you outline what steps are being taken to consult, in particular with Indigenous peoples as well as other marginalized groups, including folks in poverty, Black and other racialized communities, women, those with disabilities and others who are disproportionately experiencing environmental racism and other inequalities, as well as the disproportionate impact of climate change?
Mr. Veilleux: Thank you for the question.
I will have the lead for financial sector policy, Clifton Lee‑Sing, respond to that. Thank you.
Mr. Lee-Sing: Thank you for the question.
I understood the second part about different groups. Would you mind repeating the first part? I didn’t quite understand what you were asking for.
Senator Pate: Sure. Can you provide us with concrete examples of the steps that are being taken to ensure the sustainable development goals, including equality and elimination of poverty, are incorporated into the taxonomy?
Mr. Lee-Sing: Thank you for the question.
The sustainable finance taxonomy we’re envisioning, and which the Sustainable Finance Action Council provided recommendations on, is a tool for market participants — investors, borrowers — to label various types of activities as being green or transition. As such, these activities — and the criteria used to specify whether something is it in those two categories — do not directly take into account many of the social dimensions. That would be through other forms and tools.
That said, there is an expectation that market participants who use the tool would do no significant harm. That set of principles has been embedded by other countries in their taxonomies. There are also expectations that the users of such a taxonomy would follow other best practices, including having appropriate climate disclosure and transition plans that are public.
There are other venues to talk about more of the social aspects, and the government is working on that through different policies, but not through this market taxonomy, which is really just a tool for market participants.
Senator Pate: I was struck by your phrasing, “no significant harms.” What does that mean?
Mr. Lee-Sing: That is a set of principles that borrowers would use when they’re going out with a lending product. They would make assurances that what their activity or project is doing doesn’t negatively impact certain sectors or parts of society in a particular way. This is probably not the best example, because it’s not allowed to fund coal projects, for example, but the emissions that would be provided from that might negatively impact certain sectors, people and groups. If you were to do such a lending, you would be prevented from it by these principles which you would adhere to. You would want to ensure you’re not doing significant harm to particular groups. You would have to report on that. Those criteria wouldn’t permit you to use the taxonomy in a credible way.
Senator Galvez: Thank you, Senator Pate, for the incredibly interesting question.
I will go back to Mr. Caceres because my question was not answered. Now, hearing my colleagues, we have two problems: the traffic and reducing greenhouse gas emissions. I wonder, how did we come up with the best solution to solve these two problems was to give expensive cars to a few people? Which scenarios did you compare to solve this problem? In those scenarios, did we consider public transport, high-, medium- and heavy-sized vehicles?
Mr. Caceres: I will invite my two colleagues to speak to that, in part for the scenario policy question you’re asking and the other in terms of the specifics about the choice in terms of the vehicles between heavy and light.
Senator Galvez: We want to be effective and efficient. We should tackle several problems at the same time.
Ms. Hébert: I can speak to the program eligibility, Mr. Chair, and then I will turn it to my colleague to speak to the program objectives.
One of the things I want to make clear — and I wasn’t clear previously — is that to be eligible for an incentive, the vehicle price has to be between $55,000 and $65,000. We’re talking about cars. In terms of luxury cars, those are not the types of cars that we are looking at targeting through this program. It’s about the base model, $55,000. It can have some trims, so that may be an upgrade of your battery to have a further distance you can travel. It is up to a maximum of $65,000 to be eligible for a federal incentive. It is the same for medium- and heavy-duty vehicles. We’re not just talking about cars, but we are also talking about SUVs and trucks. Equally, we want to make an impact in that area, as well as medium- and heavy-duty vehicles. It’s about base models eligible for the incentive.
I will turn to my colleague to speak to the program objectives.
Mr. Bijimine: You also wanted to broadly know what we’re doing on other modes of transportation.
My colleague Stephanie touched on the on-road. That’s our plan for the on-road incentive, mixed with a sales mandate as well. That’s the plan to capture and ensure the on-road section, the cars we drive, are as efficient as possible when it comes to meeting our net-zero objective.
On the aviation side, we have through the ICAO, committed to reaching 10% of sustainable aviation fuel usage by 2030. We’ve committed. We have a working group with the industry. We’re hard at work to ensure that we’re well positioned to meet the 10% for sustainable aviation fuel by 2030.
On the rail side, there are two things. I mentioned the High Frequency Rail. The expectation for the High Frequency Rail is that it will be either 90% or fully electrified. We’re talking a major improvement when it comes to greenhouse gas emission reduction. On the freight rail side, we’ve been talking with CN, and CP. They are in the middle of demonstrating hydrogen hybrid trains. That’s something else we’re working with them on the freight rail side.
On the marine side, we recently launched a program called the Green Shipping Corridor Program, $165 million. That’s to green shipping between various shipping corridors.
When it comes to the full decarbonization of the transportation sector, we do have a plan.
In addition to everything I’ve mentioned, we’ve also set up a group on the marine climate action plan, the on-road climate action plan, the aviation action plan and the rail action plan to further come up with new options and ways to reduce with the industry, government and provincial and territorial governments as well.
The Chair: In conclusion, please.
Mr. Bijimine: That’s the strategy at a high level.
[Translation]
Senator Dalphond: I have a question for the Department of Finance. I know that the director of markets and securities policy is with us. Are there still expenses incurred for the cooperative securities regulator, or is the transition office completely closed and there are no more expenses at that level?
Mr. Veilleux: Could you repeat the question? They didn’t hear it.
[English]
Senator Dalphond: There was a bureau of transitions to have cooperative regulators in matters of securities and security market. That didn’t work out. I was just asking if it has closed down now and there are no more expenses for that item.
[Translation]
Mr. Veilleux: The director of the policy branch is not with us, but we can get back to you with a written answer.
Senator Dalphond: Thank you.
The Chair: Thank you. That concludes our meeting. Thank you to the witnesses for their participation. Mr. Brunelle-Côté, thank you for your first appearance. If this counts in your probation assessment, you should do well. I would remind the witnesses to provide us with their written answers by the end of the day on Wednesday, July 3. Will our clerk be on holiday?
Honourable senators, I would like to remind you that our next meeting is scheduled for tomorrow at 6:45 p.m. — I don’t think there will be one before that — to continue our study of the Supplementary Estimates (A). I’d like to thank the whole support team, the translation people, the pages and the others. Thank you for your support.
(The committee adjourned.)