THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, June 13, 2023
The Standing Senate Committee on National Finance met with videoconference this day at 9 a.m. [ET] to study Supplementary Estimates (A) for the fiscal year ending March 31, 2024.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: I welcome all senators, as well as the viewers across the country who are watching us on sencanada.ca.
[Translation]
My name is Percy Mockler. I am a senator from New Brunswick and the Chair of the Standing Senate Committee on National Finance. I’m going to ask my fellow senators to introduce themselves, starting on my left.
Senator Forest: Good morning. I am Éric Forest, and I represent the senatorial division of the Gulf, in Quebec.
Senator Gignac: Good morning. I am Clément Gignac from Quebec.
Senator Galvez: I am Rosa Galvez, an independent senator from Quebec.
[English]
Senator Loffreda: Tony Loffreda, Quebec. Welcome.
Senator Boehm: Peter Boehm, Ontario, replacing Senator Pat Duncan of the Yukon. It was on this day in 1898 that the Yukon Territory was established.
Senator Pate: Kim Pate. I live on the unceded, unsurrended territory of the Algonquin Anishinaabeg.
Senator Smith: Larry Smith, Quebec.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
[Translation]
Senator Dagenais: I am Jean-Guy Dagenais from Quebec.
[English]
Today, we will begin our study on the expenditures set out in the Supplementary Estimates (A) for the fiscal year ending March 31, 2024, which was referred to this committee on June 1, 2023, by the Senate of Canada as an order of reference.
[Translation]
We have with us today the Parliamentary Budget Officer, Mr. Yves Giroux. He is joined by Ms. Kaitlyn Vanderwees, Analyst.
[English]
Welcome to both of you. Again, Mr. Giroux, thank you for always accepting our invitation to share your opinions and your comments on the budget.
[Translation]
Mr. Giroux, I was told that you have opening remarks. After that, we will move into questions and answers. The floor is yours, Mr. Giroux.
Yves Giroux, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: Honourable senators, thank you for the invitation to appear before you today. It’s always a pleasure.
We are glad to be here to discuss our report on the Supplementary Estimates (A), 2023-24, which was published on May 30, 2023. With me today, I have our lead analyst on the report, Kaitlyn Vanderwees.
The government’s Supplementary Estimates (A) for 2023‑24 outline $21.9 billion in incremental spending. Parliament’s approval is required for $20.5 billion. Statutory authorities, for which the government has Parliament’s approval to spend via other legislation, are forecast to increase by a total of $1.4 billion.
Roughly one-fifth, or $4.4 billion, of spending is for 15 Budget 2023 measures. Most notably, this includes $2.5 billion to the Department of Health to improve health care for Canadians.
[English]
More than half of the proposed spending in these supplementary estimates, or roughly $13 billion, relates to the negotiation and resolution of Indigenous claims. Including these supplementary estimates, the total proposed year to date budgetary authorities are $454.8 billion, which represents an $11.5 billion, or 2.6%, increase compared with the estimates to date for the preceding year. This is generally consistent with the spending growth forecasted in Budget 2023.
To support parliamentarians in their scrutiny of Budget 2023 implementation, we have prepared and published tracking tables that list all budget initiatives, the planned spending amounts and the corresponding legislative funding authority. These tables are available on our website and will be updated over the course of the year as the government brings forward its legislative agenda.
We would be pleased to respond to any questions you might have regarding our estimates analysis or other PBO work. Thank you.
[Translation]
The Chair: Thank you, Mr. Giroux.
[English]
Senators, you will have a maximum of five minutes each for the first round.
Senator Marshall: Thank you, Mr. Giroux and Ms. Vanderwees, for being here.
In the Supplementary Estimates (A), under the Department of Finance, under the statutory authorities, there is a number there for interest on unmatured debt. With the result of the Bank of Canada’s increase last year, have you recalculated what you think the interest will be this year on the government’s debt? They thought it was going to be $43.9 billion, but I think it’s going to be a little higher than that.
Mr. Giroux: The last estimate we provided for the cost of servicing the debt was this past March. We will be updating that in the fall to take into account the change in the overall level of the debt as well as interest rates. It will probably go upward given that the Bank of Canada has revised its own interest rate and has increased it recently.
Senator Marshall: I think they have also said there is a possibility of an increase in July or September.
You mention in your opening remarks about — I don’t know if you referred to Crown-Indigenous Relations and Northern Affairs Canada, or CIRNAC, or Indigenous Services Canada; I’m talking about the claims. I don’t know if you’ve read a report that the Fraser Institute released recently. They did a study of reconciliation and discussion of claims saying elected officials had no meaningful oversight of the claims.
When the two Indigenous departments come in to answer questions on spending documents, we usually ask them questions about the claims. Some of the larger ones, like the $23.3 billion for child and family services, and then there is another $20 billion to upgrade their child and family services reform — then you mentioned in your report the $2.8 billion for the Gottfriedson Band class settlement agreement.
But when the departments were in a little while ago, they were talking about how many claims and settlements there are. One of the officials said, for example, there are 500 claims. I think I’ve mentioned this to you before: As parliamentarians, how are we supposed to provide oversight to the claims, the settlements and the agreements? We can carve out the big ones, but if there are 500, we can’t get a handle on what’s going on.
Do you have any suggestions? We spent a bit of time in my office trying to figure it out and track it. I know I’ve asked you the question before, but I’m no further ahead, so I’m asking it again.
Mr. Giroux: It’s an issue that’s complex given the number of claims and also the level of subjectivity as to whether a claim makes it into the contingent liability and the stock of claims that the Crown assesses to be valid, whether they are or not. So there is quite a bit of subjectivity. It requires legal analysis to determine whether the Crown is likely to be held liable in court, and that’s obviously a subjective assessment; there is no science to that. It requires looking at historical facts.
It’s true that there are a significant number of claims. At my office, we don’t have a clear handle on that. It’s not that we asked and didn’t get — well, we asked, but we didn’t do a report on that. Asking the departments to be more thorough in providing you a list of claims and the departmental assessment, as well as the Department of Justice’s assessment, on the liability associated with each of the claims. They may not be able to provide you that in a public forum, but it’s something that the Department of Justice and the CIRNAC should be able to provide you in camera because that’s something that they probably have on their books — one would hope — and they should be able to provide you a briefing in confidence on this issue.
Senator Marshall: Because even in these Supplementary Estimates (A), there are amounts being requested to put into a general fund so they could make multiple payments to various claims.
When you released the report — and I’m sure your office does the same thing — we are trying to track from the budget to the Main Estimates and to the supplementary estimates. When the budget came out, you identified certain numbers that you really didn’t know what the numbers were. The two in particular I’m thinking about, there is one there for net fiscal impact of unannounced measures, and for last year, it was $5.6 billion. Then there was another one on page 192, realigning previous amount spending, and that one was $6.3 billion.
Now that we have Supplementary Estimates (A), is it clearer now what those numbers relate to because looking at them, there is nothing there that would tell us what they are. Are you any more knowledgeable as a result of your work on Supplementary Estimates (A)?
Mr. Giroux: No, there is not significantly more clarity on these aggregate amounts for unannounced measures.
One speculation was that some of these amounts could have been for the Volkswagen deal or provisions for collective bargaining that concluded with some unions last month, but it’s not guaranteed.
Even if some of these amounts, like the amounts for undisclosed obligations or expected decisions soon to be made, it wouldn’t account for the totality of these amounts. We’re not significantly further ahead than we were at the time of the budget.
Senator Marshall: They are significant, and the transparency is lacking in that we don’t know what they are.
[Translation]
Senator Forest: Thank you, Mr. Giroux and Ms. Vanderwees, for being here today. It’s always very enlightening and informative for us when you’re here.
I still find it surprising that, under the government’s financial cycle, the Main Estimates are tabled at the end of March or the beginning of April, and that just a month and a half later, so much additional funding is being requested.
What I’m concerned about today is that more than half of the proposed spending, so $13.1 billion, is for the resolution of Indigenous claims. The government certainly didn’t start negotiating with Indigenous people last week. It’s been going on a long time.
How do you explain the fact that the Main Estimates did not include an order of magnitude — not necessarily the exact amount — for the potential cost of the resolution of Indigenous claims?
Mr. Giroux: That’s a good question, and I think the officials from the Department of Crown-Indigenous Relations and Northern Affairs could give you an answer. If you ask them, though, you could also get a non-answer. I can tell you that, if I were in their shoes, I would certainly want to put it in the Main Estimates, since that is where all or the vast majority of the government’s planned expenditures appear. One reason why they may not have had that ability could be that the negotiations weren’t far enough along to include a realistic amount.
There may be other reasons I’m missing, but that’s the only good reason I can see for not including it in the Main Estimates. When it comes to the sound management of public finances, the thing to do is include it in the Main Estimates.
Senator Forest: You’re absolutely right. Those negotiations have been going on for quite some time. I think it would’ve been possible to budget or set aside an approximate amount for the resolution of claims under negotiation.
Last month, you appeared before the House of Commons Standing Committee on Indigenous and Northern Affairs to present your research and comparative analysis report on the two departments that deal with Indigenous affairs, the Department of Crown-Indigenous Relations and Northern Affairs and the Department of Indigenous Services. You told the committee this:
The analysis conducted indicates that the increased spending did not result in a commensurate improvement in the ability of these organizations to achieve the goals they had set for themselves.
That was the sense we got when we were examining the issue of contaminated water in First Nations. The government hasn’t been able to reduce the number of boil water advisories despite the money it’s invested.
How do you explain the fact that, in spite of significant investments, the government can’t manage to fix these critical problems within Indigenous communities?
Mr. Giroux: Indeed, that’s an excellent question, and unfortunately, I don’t have a conclusive answer or even a possible answer. It’s actually quite worrisome. You would expect the government to ensure that a considerable increase in spending produces the desired results. That’s not the case, so the question is really whether the department is using the right performance indicators.
Perhaps significant improvements were made but not measured. Perhaps the funding wasn’t well spent or wasn’t spent in a way that benefited the populations it was meant to help, unfortunately.
Senator Forest: It’s very intriguing and worrisome when you consider accountability for that spending, when you look at objectives versus results. I would say the results are contaminated. Thank you.
Senator Gignac: Welcome, Mr. Giroux. It’s always nice to meet with you.
Before I get to my specific questions on the supplementary estimates, I’d like to take advantage of your being here to get an economic update.
I’m curious whether you still favour the same scenario, meaning that Canada should be able to avoid a recession. The Bank of Canada is back at it, raising the policy rate again.
History has shown that, when the Bank of Canada does that, it seldom stops after just one increase. Usually, a series of rate increases ensue. Canadian households have a record level of debt in comparison with other G7 countries.
Are you still optimistic about Canada’s smooth landing? Since the return to a balanced budget hinges on economic scenarios, I want to take this opportunity to get your insight.
Mr. Giroux: Thank you for your question, senator. When we prepared our economic and budgetary projections update, we were counting on a pause in rate hikes by the Bank of Canada and the U.S. Federal Reserve. We assumed that the two central banks would raise their rates to the level necessary to contain inflation.
Since then, the Bank of Canada and the U.S. central bank, or Fed, have raised their rates beyond what we had estimated at the time, in other words, the levels necessary to bring inflation under control. That is largely due to the fact that the economy was doing well and continuing to exert inflationary pressures.
We included a scenario in which the central banks raised their rates beyond what we estimated was necessary at the time. The conditions changed. In that scenario, where the central banks raised the interest rates further, we anticipated that there would be a mild recession.
We will be updating our economic and budgetary projections in the fall. However, given that the rate increases continued, the likelihood of a recession has clearly gone up. That said, the bank raised the rate again in order to slow the growth that is creating inflationary pressures.
Has the likelihood of a recession in Canada gone up? I think so. Is a recession unavoidable? I don’t think so.
A smooth landing is still possible because of how well the economy is doing. In the first quarter, we saw pretty solid growth, more solid than expected. The labour market is faring well at the moment, despite recent numbers. A smooth landing is still possible, but we can’t rule out the possibility of a recession.
Senator Gignac: The last time you looked at it, how likely was a recession, percentage-wise?
Mr. Giroux: I’m not sure whether we came up with a percentage, but it was a bit below 50%. We are probably —
Senator Gignac: Now I’ll come back to the focus of today’s meeting, examining the supplementary estimates.
I want to commend you on your report. You’ve included a good few charts and data, which are always very informative.
What I’m mainly interested in is the increase in payroll, the spending on personnel. I believe that appears in figure 2-3, on page 11 of the report. The growth rate is a bit scary. The government is going to hit $68 billion in personnel spending in 2022-23. If I’m not mistaken, that’s an increase of 60% since 2016-17.
Can you break down how much is due to growth in the number of full-time personnel and how much is due to payroll indexing? The government now has 428,000 full-time equivalents, or FTEs. Would you mind unpacking for us how much of this is due to the growth of the public service and how much is due to an increase in compensation?
If you don’t have the information with you, you can get back to the committee in writing.
Mr. Giroux: I don’t have the breakdown of how much is due to the increase in per-employee compensation and how much is due to the increase in the number of FTEs. We can get back to the committee with that information.
What we did note, however, is that last year’s departmental plans indicated a decrease in the number of personnel in the coming years. The latest departmental plans show that a decrease is still expected, but beginning at a higher level. What we see, then, is that the departments are anticipating decreases. When we look a year later, though, we see that decreases are still planned, but beginning at higher levels.
Will we actually see the number of FTEs drop? I’m not sure because every time the plans are revised, the number of people across the public service goes up.
Senator Gignac: That’s what worries me, because since 2015-16, payments to people, whether to seniors or others, haven’t gone up that much, as a share of GDP. Transfers to the provinces haven’t either, but the size of the public service, government and direct programming has.
If you can look into that, it would be helpful. Thank you.
[English]
Senator Smith: To follow up from Senator Gignac’s question, in your report on the supplementary estimates for 2023-24, you note the most important cost drivers of personnel spending are the number of public servants and their compensation. You note, based on your review of the 2023‑24 departmental plans, the number of full-time equivalent, or FTE, employees in the federal public service as of the 2022‑23 fiscal year is about 430,000.
In your reviews of the departmental plans, did you find there was sufficient information on the justification of increasing the number of staff within federal departments and agencies?
Mr. Giroux: The justification mostly relates to implementation of budget measures and government priorities, but the departmental plans do not provide detailed information as to why they need that many new FTEs. In all fairness, I don’t think it’s the departmental plan’s role to justify in detail why they need that many FTEs to deliver specifically on each policy initiative, but, generally speaking, we don’t have that detailed information.
It probably — hopefully — is justified at the Treasury Board stage when departments and ministers go to the group of ministers — the Treasury Board — to justify the number of FTEs they need, but given it’s a cabinet confidence, there is no way for us to determine whether that is, indeed, made at that stage or not.
Senator Smith: What I’m trying to understand is whether or not the departments have human resource plans that link directly to program initiatives of the federal government. Do you see that connection?
Mr. Giroux: I don’t. Maybe there is one, but it’s not something that we have scratched a lot. It’s not something that I have seen.
Senator Smith: Do you think it’s an area that could provide an opportunity not just for more analysis on your side, but maybe an opportunity for departments themselves to improve their efficiencies in terms of the productivity of their people?
Mr. Giroux: I think so because the government itself recognizes that by having included in Budget 2022 and again in Budget 2023 expenditure review measures where it aims to increase its own efficiency and find savings. However, in Budget 2022, it promised to undertake a strategic review, or one of the expenditure reviews, but then became silent on that one and replaced it with something else.
There are mentions and promises about expenditure reviews to improve efficiency or reallocate some spending from lower priority areas to higher priority areas, but we haven’t seen anything on that. To the best of my knowledge, there hasn’t been significant movement on that front in the government.
Senator Smith: Spending on personnel continues to be well above pre-pandemic levels, yet there is an argument to be made that service levels and capacity have not kept up pace. Have you had a chance to review some of the services offered to Canadians by the various departments and agencies and whether or not they’re meeting their service level standards?
Mr. Giroux: We have looked at some specific areas, notably Veterans Affairs, but that was a while ago. We have looked at departmental performance indicators that have been missed in about a third to half of the areas we looked at, but we haven’t looked at specific areas such as passports, Old Age Security, Employment Insurance and a couple of others. We have left that to other agencies, for example, the Auditor General, who is mandated to look at what happened in the past. We haven’t looked at that ourselves, but it’s a trend that is worrying: the increase in the number of FTEs while the service levels are not improving. Quite the opposite.
To go back to a question of your colleague, Senator Forest, in the area of Indigenous affairs, massive increases in spending, but performance indicators are not showing significant improvement, so that is worrying.
Senator Smith: Thank you, sir.
Senator Pate: Thank you to our witnesses. Nice to see you again.
Last week when the Treasury Board was here, they suggested I ask of you a question I asked them, so I will. The question concerned provisions in the budget to support Black employees, including the $45.9 million over three years for the Treasury Board to develop a mental health fund for Black public servants. In a CBC article in December of last year, it indicated that instances of racism from within the Treasury Board of Canada Secretariat, or TBS, included senior officials within the Treasury Board.
I’m curious what specific mechanisms you feel need to be in place or you can advise us are in place that would ensure that the Treasury Board is itself properly able to receive and address some of the claims of systemic racism that have been coming, particularly anti-Black racism, and if you can elaborate on what steps you think have been taken to address this wrong and what further steps need to be taken at this stage.
Mr. Giroux: First of all, I’m surprised that the Treasury Board — or the President of the Treasury Board or Treasury Board officials — would suggest that I answer that question because they have not consulted me on any of this funding or on any of these strategies. To be honest, it’s not my area of expertise. I know, like you, that there were provisions and mentions in the budget, but I am not privy to any process to support Black employees and what the core public service is doing to address claims of racism and mistreatment of employees.
I’m very surprised they would not answer that question themselves and instead suggest that I answer it.
Senator Pate: Thank you.
Others have talked about the settling of complaints by Indigenous organizations, communities and governance bodies. As you know, the First Nations Child & Family Caring Society continues to bring claims forward and talks about the poverty that’s resulted from the federal government’s chronic underfunding of public services for First Nations communities, particularly when it comes to Jordan’s Principle requests.
I think it’s fairly common knowledge at this stage that income is one of the most significant social determinants of health. I am interested in, in addition to the information you have already provided, whether you have costed out some of the specific claims that are ongoing that if the government settled them now might result in expenditures versus what you have seen in terms of how long the government has fought many of those claims and ended up paying multiple times more. That is a general question.
More specifically, it came out last week that only two of the National Inquiry into Murdered and Missing Indigenous Women and Girls Calls for Justice have been implemented. One is a guaranteed livable income, as you know. Have you been able to cost out for Indigenous people, in particular, what that might save in the long-term in terms of health care costs, criminal legal costs and the like?
Mr. Giroux: We have costed the claim related to child and family services. That was over a year ago. We came up with an estimate that was lower than what the government has settled with the organizations that brought the government to court.
Other than that, we’ve not costed specific claims because they’re not things that we were asked to cost. Also, the claims themselves are often based on issues or information that we don’t have, so we would have to ask for the departmental assessment of those claims. One of the exceptions in our powers to request information is solicitor-client privilege, so we would very likely face a “no thanks” type of response from the department if we were to ask for information allowing us to cost specifically.
Senator Pate: In terms of the costing of the National Inquiry into Murdered and Missing Indigenous Women and Girls, have you?
Mr. Giroux: No, we have not done that.
[Translation]
Senator Galvez: Thank you, Mr. Giroux, for being here. You answered two specific questions I had, but I’m going to take advantage of your expertise because I always learn so much when you’re here.
[English]
We had Minister Freeland here last week, and she said our economy — and you said it, too — is strong and sustainable, and there are some indicators that prove this: the high rating, the lowest debt-to-GDP in the G7 and many other indicators. However, as Senator Marshall said, there is a Fraser Institute study that said that when we use comparative indefinites and other indicators, we are not as good as it seems.
In one of your reports, you also said that there is a difference between the federal and each province. You have put there that there are three provinces that are doing well and three provinces that are not doing as well.
I cannot help but to stop and reflect that our public health services are at their lowest. We are investing so much in them. But there is no progress in reconciliation despite all these billions that we are giving on the claims. Affordability of families, access to property — I know it is at its lowest. Our country is literally on fire.
So I find there is a misalignment between the economic indicators and the reality of our socio-economic status. Can you help me understand better ways of measuring the situation? I know it is a philosophical question, but if we don’t do it here, where will we do it?
Mr. Giroux: It’s a very tough interview for a job that you are asking of me.
In terms of indicators, it is true that you can look at indicators that paint a very good picture of the economic and fiscal situation of Canada. That is true, especially if we compare ourselves to other G7 countries. However, if you widen the net and look at G20 countries — for example, if we compare ourselves to countries like Australia, which is broadly similar — we are not doing as well as other countries that are similar. So a G7 comparison is good because those are our main competitors, but we can also compare ourselves to other countries that are doing better than we are. We can aim to improve ourselves and do better on the economic and fiscal perspectives.
When it comes to social determinants, it is true that it can be quite disheartening to look at the situations, such as Indigenous reconciliation and climate issues like forest fires. But, again, I think we are doing well compared to other countries. It is not all doom and gloom, but I am probably venturing outside my area of expertise and the reasons why I am here.
From the economic and fiscal perspectives, it depends where we compare ourselves. If we look at productivity growth, the best long-term determinant of wealth, we are not doing that great compared to other developed nations. That’s one area where we could improve ourselves.
Senator Galvez: Will you do reports on these aspects at some point? Can you use indicators? Numbers usually don’t lie.
Mr. Giroux: There are “lies, damn lies and statistics,” as the old saying goes. It depends on the indicators you look at. You can have a very good story for many countries if you selectively look at statistics. Something that I would like to do, resource- and time-permitting, is a study on productivity growth in Canada, for example. But I’ve been quite busy on helping parliamentarians on topical issues.
Senator Galvez: We know you are busy. Thank you so much.
Senator Boehm: Thank you, witnesses, for being with us today. I want to follow up on the questions put by my colleagues Senators Gignac and Smith. It is on full-time equivalents and the increase of 428,000 that we are seeing.
I listened carefully to what you said about the role of the Auditor General and your own role, but if we look at one particular department, let’s say Immigration, Refugees and Citizenship Canada, or IRCC, where the stated government goal is to bring in 500,000 newcomers annually for the next few years. Of course, there has been a corresponding increase in hires to make that happen, but we have seen — and it has been reported on — that there are backlogs in terms of processing immigration cases. Those only increased during the Public Service Alliance of Canada, or PSAC, strike.
Is there any way, as you are looking forward, that you will be able to measure whether there is an increase in services and whether this is, in fact, taking place? Has the service increased or decreased corresponding to the number of hires? This is a stated policy that’s going to go forward, but you should be in the position to be able to assess that.
Since we often talk in this committee about fiscal transparency and the timeliness of reporting — and I’ve asked questions about this before, as have my colleagues. What is the best way to measure to ensure Canadians are getting the services they need as hiring increases across government?
Mr. Giroux: That’s a very interesting question as a taxpayer and as the PBO myself. We’ve looked at IRCC, the number of employees they have and the funding they get to process the economic stream of immigration applications. We find they are sufficiently funded to process the number of applications they get. So if there are backlogs, it is probably not due to a lack of resources; it’s due to other factors. We can only speculate as to what those are.
From a fiscal perspective, which is what I am preoccupied with, it is about looking at whether they have sufficient resources to process the number of applications they receive. The answer seems to be “yes.” In fact, there are more resources than what they need to process the economic stream of applications. We did a report several months ago on that.
In terms of how to ensure we get services that are at the appropriate level, if the public service, in general — and there are a couple of more pointed examples that we could give — if departments were to give a cost, for example, per application or the number of hours that a certain service requires of public servants, that would be enlightening not only for the public but for senior public servants and ministers themselves.
For example, how much employee time does it require to process a typical Employment Insurance application, a typical tax return or a typical Old Age Security application? Having these metrics and having the historical information to determine how these evolve over time — or the reverse, how many Employment Insurance applications, tax returns or immigrant applications each employee processes — would be enlightening as to the productivity of the public service.
There are challenges with that. Is the government able to track that information or is this going to lead to fights with unions, as it could be perceived as imposing quotas? But as parliamentarians and taxpayers, I think it would be useful information to have, and I’m not sure the public service collects and tracks that information.
Senator Boehm: Thank you.
You mentioned that you looked at the economic stream at IRCC. Of course, there are other streams, and it is more complicated, for example, with the processing of refugees, where you are looking at having full-time equivalent personnel abroad at our various missions to process, sometimes in difficult conditions. For example, there are officers in Islamabad who are processing Afghan refugees from the country next door. You have not looked at that particular element?
Mr. Giroux: No, for that very reason, because it is much more complex. With the humanitarian situations that are varying across the globe, it is much more complex to look at refugee application processes and try to deem if the resources are sufficient because of the varying degrees of involvement and complexity of these files.
Senator Boehm: Thank you.
Senator Loffreda: Thank you, Mr. Giroux, for being with us. It is always a treat.
There are many positives in our economy, and we have outperformed G7, Organisation for Economic Co-operation and Development, or OECD, and European Union countries in many areas. How concerned are you about Canadian household debt, which is the highest among G7 countries?
Just a few weeks ago, it was reported by the Canada Mortgage and Housing Corporation, or CMHC, that households now owe more than Canada’s entire GDP and that Canada’s economy is more at risk to whatever crises may arise because of how much debt Canadian households have racked up. If we compare ourselves to the United States, we are going in the opposite direction, obviously. How can we slow down that trend, and what measures or policies could the government implement to control household debt numbers that have not yet been implemented?
Mr. Giroux: To answer the first part of your question, how concerned am I with household debt? It’s something that we have flagged in economic and fiscal outlook reports, notably, probably since I was appointed, so it is something that worries me significantly. It seemed vain or useless to be concerned about that when interest rates were low, but now that interest rates are rising, I think it is even more worrying to see that household debt is high and seems to have increased significantly over time, if we take a longer-term horizon.
It is concerning because when interest rates rise, it reduces the amount of discretionary income that can be spent on something else, notably savings for retirement or other types of spending. So it is very concerning for me because it presents a significant risk.
What types of policies? That’s a bit more delicate as to what could or should be done to reduce that because you get into trying to influence the behaviour of individual households. Presumably, if people are well-informed and are financially literate — which many Canadians are — if they contract debt, it’s with full knowledge of the risks and consequences, so it might be revealing preferences from households to consume now and pay later.
Aside from informing Canadians better, I would not be the best person to talk about what types of policies should be put in place to reduce levels of debt.
Senator Loffreda: Who would be responsible for doing stress testing? In the banking industry — where I came from — we would do stress testing, and if the interest rates — well, we all know what stress testing is, but for Canadians who are listening, if the interest rates were to go to a certain level, what impact would it have on our economy? What impact would it have on households?
Is there any form of stress testing that you are aware of, and if so, could you share that with us? We don’t know where interest rates are headed. We all thought the Bank of Canada would take a pause, and we have seen what happened.
What happens to Canadian household debt if interest rates continue to increase? What happens to our economy? I think that stress testing is extremely important.
Mr. Giroux: We did some fan charts regarding the future path of the government’s own fiscal situation, its deficit and debt. But to my knowledge, we have not done that on household debt and the impact it would have on the Canadian economy.
We could certainly do that, looking at the future path and a couple of scenarios with respect to interest rates and what it would do for the entire economy.
Senator Loffreda: I would like to see that. It is the major concern at this point in time, and stress testing would reveal how vulnerable we are to increasing interest rates. It would show the Bank of Canada what the impact of increasing interest rates will have on Canadians; although, their mandate is to tame inflation, obviously, but I think there are consequences. I think it’s a report that I would look forward to.
Mr. Giroux: Thank you.
Senator Loffreda: Thank you.
[Translation]
Senator Dagenais: Good morning, Mr. Giroux.
We are obviously finding out from the supplementary estimates that Immigration, Refugees and Citizenship Canada is requesting $469 million to provide health care to asylum claimants and refugees. Since it’s not easy to obtain information on the actual number of refugees that Canada takes in, I’m going to use the latest figure, which is 39,000. At that number, the requested funding works out to be about $12,000 per refugee. Although health care spending is under provincial jurisdiction, do you know whether this funding will be transferred to the provinces or whether it’s to cover strictly federal expenditures? If they’re strictly federal, what is the $469 million going to pay for?
Mr. Giroux: As I understand it, the interim health program for refugees provides federal coverage to refugees who are waiting for their claims to be processed, so while they are waiting, which can be months. In some cases, unfortunately, it can be more than a year or even a bit longer.
The cost per refugee needs to take into account more than just the number of refugee admissions per year. It needs to take into account all refugees, so those who are still waiting for their claims to be processed. That would bring down the average.
I’m not sure how it works. Does the provincial government cover the cost and bill the federal government, or do refugees have a special card? Officials from Immigration, Refugees and Citizenship Canada would be able to give you a fuller, clearer answer than I can today.
Senator Dagenais: Like us, you noted that over half of the funding requested in these supplementary estimates is for Indigenous and Northern Affairs Canada. The government is seeking approximately $13 billion more, bringing the total for the year to nearly $62 billion. Indigenous and Northern Affairs Canada’s spending has increased by 328% since the Liberal government came to power in 2015.
The government spent $20 billion in 2019-20. In 2023-24, the figure is $62 billion. Do you think the government is rigorous enough in overseeing how those huge amounts of funding are used? Is all the money being spent in the right place? Do you have enough information to provide an assessment of the spending in these supplementary estimates?
Mr. Giroux: I’m not the best person to say whether the funding is being well spent or going to the right place. That’s probably more within the purview of my colleague the Auditor General.
I can tell you, however, what we’ve noted: The increase in funding is not consistent with better outcomes for Indigenous populations. That is based on the two departments’ performance indicators, which they themselves chose. The targets are largely unmet. The expectation is that a considerable spending increase will lead to tangible results for the populations being served who depend on that funding, but that’s not what we’ve seen, at least not recently.
Maybe things will improve significantly in the coming months and years, but there seems to be a complete mismatch between results and the resources allocated to Indigenous issues.
Senator Dagenais: Quickly, I’d like to revisit something one of my colleagues brought up, the number of public servants. Under the current government, the number of public servants has gone from 340,000, when the government came to power in 2015, to 413,000 this year. The government plans to bring on another 15,000 FTEs this year.
Are you able to tell us, from your comparison and analysis work, whether Canada really needed 90,000 more public servants? If it did, will we see an improvement in the delivery of certain services to the public?
Mr. Giroux: The question of whether Canada needs more public servants depends on a host of factors. Does the government need all those employees? That is a question the government should be able to answer.
What’s troubling, however, is that the number of public servants is increasing while the services Canadians rely on or expect to receive are not improving. Perhaps the government needs a significantly larger public service for reasons that aren’t obvious or clear to us. As far as services to the public are concerned, I don’t think we’ve seen a significant improvement. Some say that it only makes sense that the public service would grow when the population does.
We measured the number of FTEs or employees per million or per 100,000 inhabitants, and that too went up. Even on a per capita basis, the size of the public service has outpaced population growth. As far as Indigenous populations go, neither services nor results seem to have improved significantly. If we look at all the services that have been talked about in the past two years, there have probably been increases or improvements in recent months since we no longer hear about horror stories in the news. Conversely, we don’t see the government being praised because things are back to pre-pandemic levels.
The public service has grown considerably, but service levels dropped during the pandemic and appear to be on track to return to what they were pre-pandemic. I do question what is happening throughout the public service.
Senator Dagenais: Just think of the passport situation.
Mr. Giroux: That’s one, but not the only one.
Senator Moncion: My apologies for being late. I always appreciate hearing your opening remarks and your excellent answers.
I want to follow up on household debt in Canada. To what extent can we compare it with household debt levels in other countries? In Canada, many people own their homes, whereas in Europe, most people are renters, not homeowners, and that significantly affects household debt levels.
Could you comment on the comparability of household debt levels from country to country? Canada is always at the bottom of the list, but our economy isn’t the same as those of other countries. I’d like to hear your thoughts on that.
Mr. Giroux: When we do international comparisons, it’s obviously advisable to take each country’s characteristics into account. If you look at Canadians’ household debt as a share of income, certainly, it’s like comparing stock and flow. The comparison is, however, a good indicator of households’ ability to service and repay their debt.
Canada is among the countries with the highest debt levels. The competition for top spot is usually between us and certain northern European countries, such as Denmark and the Netherlands. We tend to come in first place or close to first place, but in this case, that’s not a good thing.
Non-mortgage consumer debt is another way to look at it, but there as well, we are usually near the top. Even when we take into account the fact that Canadians can have higher mortgage debt because housing costs and home ownership rates differ from one country to another, Canadian household debt is still quite high.
Senator Moncion: Thank you very much.
On the subject of retroactivity, I don’t know if a colleague asked the question this morning about clauses 114 to 116 of Bill C-47, which proposes retroactivity for financial institution service fees. We’re talking about retroactivity to 1991. Have you had a chance to do some calculations to find out how much this could represent and the impact it could have if we’re talking about the legal and financial consequences for the government and for financial institutions?
Mr. Giroux: Unfortunately, these are not parts of the bill or sections that were addressed, given the large number of sections there are in the bill.
Senator Moncion: Thank you. Regarding service fees, the new bill talks about Vanessa’s Law, and it talks about recovery of user fees. Again, is that a part that you’ve looked at?
I’m also thinking about the calculations related to the natural products sector, because we’ve had meetings with representatives of these sectors who were saying that they had no service fees and that all of a sudden, in 2025, they find themselves with fees of $58,000 for an analysis, for making new natural products available. Is this a sector you analyze or have analyzed?
Mr. Giroux: The answer is clear and simple: unfortunately, no.
Senator Moncion: All right. Thank you very much.
[English]
Senator Marshall: Mr. Giroux, I’ve been on this committee now for a number of years, and we’ve had Treasury Board in on a regular basis. I see a change in their role. I would like your comments on whether their role has changed or not and how it has changed.
When you look at the website, they are concerned with the financial management of government and the human resources management within government. When you look at the performance reports — even their own — of all the performance reports in government, the average is only 50% for all departments. They set their own goals, yet they can’t meet their own goals. When we raise it with Treasury Board, it almost seems as if it is a hands-off issue.
We are seeing spending by the government increasing, we see the number of people being hired by government increasing and we don’t see an improvement in the level of service that’s being provided by the government. Where is Treasury Board in all of this? Not the Treasury Board ministers, but the Treasury Board Secretariat.
When we have them here to testify, the feeling I am getting is that, over time, their role or their impact has diminished. You must be having some interaction with them. Has their role changed? Is there a change in their area of responsibility or is that just something that I am seeing?
I’m very concerned about it because they do have a very important role within government.
Mr. Giroux: Yes, they do. Their role has expanded over time, certainly since I joined the public service. For example, they were given additional responsibilities when it comes to the Chief Information Officer role. That’s a significant addition to the responsibility of an institution. They already have to cover expenditure analysis, some regulatory approvals as well as the Chief Human Resources Officer function. These are important roles for a relatively small institution, and the turnover at the department has not been insignificant. It’s been quite high, in fact. So it may explain why they are, at times, perceived as struggling with enforcing their oversight role.
It’s something that I have noticed too. They’re very strong when it comes to expenditure analysis and expenditure management, but when it comes to challenging departments specifically on performance targets, on implementation of spending and management of individual spending items, then that’s where the staff turnover begins to take a hit.
Senator Marshall: That’s what I’m seeing. They’re almost retreating when it comes to certain areas. Thank you for those comments.
[Translation]
Senator Forest: Thank you for being here. In organizations, as in the public service as a whole, where there are full-time employees, I have the impression that it’s a bit like a buffet, in that when we draw up our main budget, there doesn’t seem to be a limitation objective as such. I also wonder who in the public service is ultimately accountable.
If a department decides it needs 100 more public servants, does anyone defend that request or is anyone accountable for the consequences of hiring those public servants? It’s a bit worrying. We’re talking about public funds, hundreds and hundreds of billions of dollars from taxpayers’ pockets. These same taxpayers also pay taxes in their province or territory and property taxes at the municipal level.
Somewhere there is a significant lack of accountability. We don’t seem to have a strategy to be able to say that yes, we’re going to meet the targets, or that we had to increase staff numbers significantly during COVID, but we need to get back to a set level because we’re in the post-COVID period.
Does your research indicate a concern to properly justify the increase in human resources, especially the number of full-time employees, which has a major financial impact?
Mr. Giroux: There are two parts to my answer. First, we look at the figures and only at what the figures say: an increase in the number of employees, not an increase in performance or results. That’s what the figures say, and it’s a generalization. It’s clear that there are aspects, sectors of excellence where there have been excellent efforts, where employees are making a considerable effort that is producing results. That’s generally what the figures show.
What we hear, what I hear from discussions with the various departments, is that when an initiative is presented, when we have to launch a new program or expand a program, the reaction and reflex is to ask how many additional employees we’ll need.
There’s not a huge amount of research that goes into reallocating funds, reallocating employees or trying to find efficiencies. What this does mean, in a region like the National Capital Region, where about a third of the workforce lives, is that a public service that grows does so, generally speaking, at the expense of other employers. In particular, in the National Capital Region, not-for-profit employers cannot afford to offer salaries competitive with those of the public service.
We hear a lot of anecdotes in the National Capital Region that non-profits are losing employees and having trouble retaining employees.
Senator Forest: I have a short sub-question. My fear is that when we increase needs because we have a new program, the entire public service consolidates existing programs and makes sure that to keep jobs, we have to put rules in place, obligations, and provide reports. We’re adding layer upon layer to the public service, and I think someone has to question the effectiveness and efficiency of the system at the end of the day. It’s a huge challenge for any organization, but particularly for our organization.
The Chair: If you don’t mind, I have a question.
I notice a situation that affects the Canadian budget as well as that of families. Mr. Giroux, I think this situation has repercussions on Canadians, and it is worrying: in 2018, there were 384,000 problem cases attributable to the Phoenix payroll system. By 2021, that figure had dropped to 94,000 cases, while today, in May 2023, there are 230,000 cases.
In 2019, you tabled a report on the Phoenix payroll system. Since I’m from New Brunswick, several people have approached me lately, and this happens frequently when I’m there, to tell me that this system isn’t working.
Four years after the tabling of your report — an excellent report, by the way — do you intend to do a follow-up report in relation to the Phoenix system?
Mr. Giroux: The simple answer is: not at the moment. There have already been many reports on the Phoenix situation. So for now, we don’t intend to update our 2019 report on the famous Phoenix system. Unless a committee requests it, it’s not part of my work plan.
The Chair: To you and your team, thank you very much for the professionalism you have clearly shown, once again.
[English]
Senators, for our second panel, from the Treasury Board of Canada Secretariat, we welcome Annie Boudreau, Assistant Secretary, Expenditure Management Sector; Karen Cahill, Assistant Secretary and Chief Financial Officer; Samantha Tattersall, Assistant Comptroller General, Acquired Services and Assets Sector; Mireille Laroche, Assistant Deputy Minister, People and Culture, Office of the Chief Human Resources Officer; Rod Greenough, Executive Director, Expenditure Strategies and Estimates; and Stephen Burt, Chief Data Officer of Canada.
[Translation]
Ms. Boudreau, you have the floor.
Annie Boudreau, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Thank you, Mr. Chair. I would first like to remind you that the territory on which we are gathered is the unceded traditional territory of the Algonquin Anishinaabe people.
[English]
I’m very pleased to have this opportunity to provide the committee with an overview of the Supplementary Estimates (A), the first of three supplementary estimates planned for the 2023-24 fiscal year. The Supplementary Estimates (A) provides information on $20.5 billion in planned voted spending and highlights $1.4 billion in forecasted statutory expenditures.
The majority of this voted $20.5 billion is being proposed for three main groups of initiatives: $13 billion for settlements and programs for Indigenous groups, including agricultural benefit claims, the specific claims settlement fund and out-of-court settlements; $2.6 billion to support improvements to health care, including bilateral agreements with provinces and territories, which is part of $198.3 billion over the next 10 years announced in Budget 2023 to improve our public health care system; and finally, $997 million to launch the Housing Accelerator Fund, which will provide incentive funding to local governments, encouraging initiatives aimed at developing and increasing housing supply and encouraging the development of complete, low-carbon and climate-resilient communities that are affordable, inclusive, equitable and diverse.
The voted funding presented in these estimates will appear in the third appropriation bill for 2023-24, which will be introduced in Parliament before the summer recess.
[Translation]
In this budget, statutory spending forecasts are updated to provide additional information on total spending planned by organizations for the current fiscal year. Legislative spending in these Supplementary Estimates (A) would need to be increased by $1.4 billion to reach a total of $236.2 billion.
The most significant changes are as follows: firstly, an increase of $790.3 million in payments to the AgriInsurance program, due to the launch of a new five-year Sustainable Canadian Agricultural Partnership, and the cost of insurance following higher commodity prices and increased demand for the program; a $737-million increase in interest on unmatured debt, due to higher-than-projected interest rates as well as increased borrowing requirements; a $568-million decrease in Old Age Security benefits based on updated forecasts of the average monthly rate, the number of beneficiaries and the amount of benefit repayments.
These changes in interest on debt and Old Age Security are in line with the forecasts made in the 2023 budget.
Honourable senators, here is a very brief overview of the spending planned in Supplementary Estimates (A). I would like to remind you that these estimates and other government financial, personnel and performance data are also posted on the Government of Canada’s InfoBase, a visualization tool that transforms complex data into simple illustrations.
My colleagues and I are now at your disposal to answer any questions you may have. Thank you.
The Chair: Ms. Boudreau, I want to thank you and your team for accepting our invitation.
[English]
We will now move to questions. Senators, you will have five minutes each.
Senator Marshall: Thank you very much, Ms. Boudreau, for being here with your officials.
We just heard from the Parliamentary Budget Officer, and there was quite a lot of discussion around the growth in the number of employees in the government and also, from my perspective, the incremental spending. The service levels don’t seem to be improving.
I just want to bring in the Departmental Results Reports, or DRR. When you look at government overall, the agencies and departments are meeting 49.8% of their performance indicators, and those are indicators that they’re setting themselves. They’re not even meeting their own targets.
With all the spending, the additional staff and the perception or reality that service levels aren’t improving, is there a plan? What’s the plan within government to address those issues? At some point in time, it has to come together, and the Treasury Board Secretariat has a big role with regard to financial management and human resources within government. Could you just talk about any plan within government to start addressing those issues?
Ms. Boudreau: Thank you very much for the question. Regarding the result indicators, I would start by saying that it is a challenge for all of us. I think I’ve said that in previous appearances at this committee. At the end of the day, it is really the deputy minister and the minister as the officers for the organization that are accountable.
Having said that, when a department or an agency comes forward to Treasury Board to request money to do implementation, we do sit down with the organization, and we look at their performance indicators. We challenge them, and we make sure they are taking into consideration all the elements they should — for example, gender-based analysis plus or quality of life. I think we should be focusing a little more on why some of the indicators are not met. I would probably talk about three categories in there.
The information is not always available. I think I’ve said in the past that if it is census related, obviously we need to get the census data in order to be able to report. Sometimes, they don’t control the intake. I’ll give you an example. When we talk about Indigenous claims from the past, sometimes the department cannot really foresee how many claims they’re going to get within a specific fiscal year.
Those are all the elements for why it is extremely difficult sometimes for departments to assess. Sometimes, the information or the data will be available in future years, and that’s not only for departments and agencies but also for offices of Parliament — for example, the Office of the Auditor General of Canada, or OAG. If you look at the OAG, you will see as well that they have a column of information that will be available in future years. That’s why they’re not able to report.
If I may, my last comment will be that if we were to reach the 100% target, from my perspective, that would mean the indicators are not strong enough or challenging enough. That is my last comment. Thank you.
Senator Marshall: Is there some plan within government to look at these issues, like the increase in the number of employees but the service level going down? Somebody within government — I was thinking somebody within the Treasury Board Secretariat would be saying, “Oh, look, our employees and our spending are going up, but our performance is going down. We’ve got a problem.”
Is there any sort of initiative within the government looking at that? I just need a yes or no.
Ms. Boudreau: I know you just need a yes or no, but I don’t think we can say performance is going down. We’re looking at growth in the public service — yes, we are cognizant of that. As you know, we have a lot of new programs and initiatives, so in order to be able to carry out those programs, we need more public servants.
Senator Marshall: I think the general public might disagree with you on that.
[Translation]
Senator Forest: Thank you, Ms. Boudreau, and those who are with you. I think that the size of the increase in the number of full-time employees makes me wonder whether we’re really assessing the needs. We’re adding programs, and therefore people. By adding people, if we don’t question or evaluate previous programs — and it’s human nature, when I administer a file and then consolidate it, it can lead to complexity, it secures my work and my job, because I’m managing this file. However, do you do an assessment?
The machine is huge, it’s a colossal challenge. Eventually or periodically, I think it’s necessary to evaluate the programs we deliver. There are five-year-old programs that we’re delivering today with much less budget. Are we going to readjust? It’s a huge challenge within the public service, but it’s quite astonishing to see such a significant increase in the number of full-time employees, after the COVID-19 pandemic; it surprises me.
I really wonder about organizational accountability and responsibility: We have a new program that requires new resources, but are previous programs at the same level? Do they require the same resources? If this exercise isn’t done, it’s clear that from year to year, we’ll add and add, and lose sight of sectors or programs that are no longer there, but where staff are still present.
Ms. Boudreau: Thank you for your question. I’d like to give you two answers. You mentioned accountability and responsibility. I agree with you that it’s a shared responsibility. When departments come to Treasury Board with their submissions to start implementing their programs, we have an oversight function.
We look at the number of full-time employees that are requested, we discuss the need to hire these people with the departments. We not only discuss the need to hire people, but also how the distribution will take place. Will they be located in the National Capital Region, or will there be some in the regions as well? Again, it’s still the deputy minister’s responsibility, at the end of the day, to tell us what they need to proceed with the implementation of their programs.
The second part of my answer is in the 2023 budget. You may have noticed that the government has decided to carry out horizontal program reviews. This year, we will begin the review of skills and youth. The conclusions of this review will be included in the 2024 budget. The aim of these reviews is to observe the whole spectrum of skills and youth, and to make sure that there isn’t, among other things, any duplication of work, but also that there aren’t any programs falling through the cracks, as we say.
The aim is to measure program efficiency, effectiveness and economy. That’s the second part of my answer. Thank you.
Senator Forest: This is a project you’re going to undertake this year, which is excellent news from my point of view.
My other question concerns Phoenix, which in my opinion is really incomprehensible. We find ourselves in 2023 with the same number of files as we had in 2019, i.e., over 200,000 files. We’ve invested huge sums in this system. I’m deeply concerned. In terms of conscience, the unions have argued that the department is reallocating compensation specialists to recover overpayments rather than focusing resources on compensating our own employees, who have suffered major consequences. That we are trying to increase pressure to recover certain overpayments is a matter of fundamental organizational values, a matter of fairness, honesty and respect for our employees.
If this claim on the part of the union is true, I’m not so proud of the way we’re proceeding with this file.
Ms. Boudreau: Thank you for your comment. In all honesty, the department that would be most able to talk about its challenges, what it’s doing right now, is Public Services and Procurement Canada. They would be better able to answer your questions, since they are responsible for this file.
Ms. Laroche, can you add anything?
Mireille Laroche, Assistant Deputy Minister, People and Culture, Office of the Chief Human Resources Officer, Treasury Board of Canada Secretariat: Thank you for your question. I agree with Ms. Boudreau that Public Services and Procurement Canada is responsible for payroll management.
As far as we’re concerned, we’re working with Shared Services Canada in terms of the future, to determine whether we’re going to replace the Phoenix system or whether we’re going to keep it.
We’re an integral stakeholder. Our priorities are to try to eliminate any proliferation of systems when it comes to payroll, to consolidate our systems and to promote policy simplification. As you know, within the public service, there are a lot of payroll rules and a lot of collective agreements with their own specificities and details. We are working in particular with the unions precisely to simplify the system and be able to have a more efficient payroll system.
Senator Forest: We wish you the best of luck, because this is a major challenge that absolutely must be met.
Senator Gignac: Welcome, Ms. Boudreau, and your colleagues. First of all, before asking you my pointed questions, I’d like to congratulate you on two counts. Firstly, on the reconciliation and comparison between the 2023 federal budget and the estimates to date. The table on page 1-4 helps us to situate ourselves, because we know that the Employment Insurance account is not treated in the same way as the Canada Child Benefit account. Secondly, there’s also the Government of Canada’s InfoBase, which I often consult; I find it easy to navigate.
Let’s go now to the questions. To follow up on Senator Marshall’s questions about spending trends, I’d like you to reassure us. Since 2016-17, the sum of budget spending has increased considerably. In fact, spending has increased by 50% as a percentage of GDP; we’ve gone from 14.4% to 15.5%.
Even more troubling is the fact that transfers to the provinces have remained stable at 3.3%, transfers to individuals have declined from 4.5% to 4.1%; finally, direct federal government programs have increased from 6.8% to 8.0%. So I’m concerned for these reasons and I’d like you to reassure me.
I’m skeptical that we’re being told that, magically, over the next five years, program size will return to what it was in 2016-17, without much explanation. What’s more, in absolute terms, program spending this year will drop from $225 billion to $217 billion. That’s an absolute decrease in the context of inflation. I’ll take your word for it, but can you explain how we managed such a feat? How do you explain the fact that it is possible to reduce the size of the federal government’s direct spending in absolute terms over the next five years?
If you are unable to respond today, I will be pleased to accept your written answers.
Ms. Boudreau: Thank you for your questions. Perhaps I can give an overview of the main increases since 2016-17.
You have read numerous reports from the Parliamentary Budget Officer. There are many expenditures for Indigenous communities. The Parliamentary Budget Officer referred to that again in his report on the Supplementary Estimates (A). Compared to 2016-17, they have increased by roughly 200% to 300%. I think that is a key element that must not be overlooked.
Another element is, of course, the housing sector. Many investments have been made in housing, not necessarily as direct transfers to the provinces and territories, but there has nonetheless been a great deal of investment in the housing sector in the past five years.
You will also recall the universal $10-a-day child care program from two years ago. That is a voted expenditure and not a statutory one. So you can see a major increase there.
I cannot give you a general answer because you really have to look at each point and see the evolution. In terms of investments in Indigenous communities, I think you have heard about this and you can see the numbers. Even in the current budget, we are proposing $13 billion, for the settlement of claims and in direct support to Indigenous peoples.
Senator Gignac: We are not disputing the importance of and need for investments through Indigenous Services Canada and for reconciliation. Even excluding that, though, I note the increase in the size of the budget. Correct me if I am wrong, but the projections do not yet include the future dental insurance program. The program has not even been rolled out and the cost estimate has already doubled. That does not include a future dental care program that will be relatively expensive.
Ms. Boudreau: That is correct, that is not included in the Supplementary Estimates (A). Once the program is implemented, you will see that funding in future supplementary estimates.
Senator Gignac: When does the federal budget have to be tabled to avoid supplementary estimates a month later? We review the Main Estimates, but the budget measures are not yet in the Main Estimates. A month and a half later, we come back to study the supplementary estimates.
We invite you about four times per year and we are always happy to see you. I am wondering though if there isn’t some way for the supplementary estimates to include the budget measures. When does that budget have to be tabled?
I covered federal budgets for many years as an economist, and that was usually in early February. Would that be the right date to avoid supplementary estimates?
Ms. Boudreau: The Main Estimates have to be tabled on March 1; that is the date we have to stick to. Even if the federal budget were tabled a month earlier, in February, I could not 100% guarantee that the Main Estimates would include all expenditures. Why? Because the departments often need time to determine what is to be implemented and the program indicators they will require to roll out their programs.
Unfortunately, I cannot give you a specific date. On the other hand, I can tell you that the supplementary estimates you have before you now include 60% of the initiatives announced in the 2023 federal budget. You can see, incidentally, that we always refer to initiatives from the federal budget.
Senator Gignac: If I understand correctly, we will see you again for the remaining 40%?
Ms. Boudreau: Yes, you will.
Senator Gignac: Thank you very much.
Senator Smith: Hello, everyone, and welcome.
[English]
Ms. Boudreau, we have discussed in the past the need to reduce and simplify the number of performance metrics that departments publish and ensure that these metrics are suitable and relevant to the programs. One of your performance metrics is part of your spending, and your oversight role is to ensure that the government programs have suitable measures for tracking performance and informing decision making.
Could you provide us with an update on the work that the Treasury Board has been doing to support departments and agencies in reducing the number of redundant and irrelevant performance metrics?
Ms. Boudreau: Thank you for the question.
We are doing that work in connection with the review of the policy and results. The policy and results were established in 2016, so now it is time to do a refresh — a review — to make sure that that policy is still effective.
We are reaching out to departments and agencies to gather feedback, and at the same time, we are, obviously, gathering feedback on performance indicators, like you said, with the goal of streamlining the Departmental Results Reports and the Departmental Plans, or DPs, and also maybe looking at those indicators that are duplicative or irrelevant. This work is ongoing, and I don’t have a date that I can tell you when it will be finished.
I’m sure I am going to come back, so you can ask me the question again, and maybe at that time I will have a firm date on when I am going to be done with this review.
Senator Smith: Do you have any indications of how far advanced the departments are? Are you at 20%, 30% or 50% in terms of the evaluation?
As you look at the runway, what can we expect to get feedback on? It would be great if you could say to us now, “Based on our initial work and based on where we are today, we are at X per cent.” Can we say that at this particular time?
Ms. Boudreau: Unfortunately, I cannot give you a percentage. If I give you a percentage, I would not have any evidence for that percentage. I would prefer to go back, and if the chair will allow me, I can come back with a written answer if you give me a number of days to do some research and come back to you.
Senator Smith: The mentality of asking the question is that we have heard over time and listened to you folks that there has been delay in getting departmental results out in terms of the actual timing, and we want to make sure that there is a connection in terms of all of the various elements. It looks like performance metrics is a key element within your operation. That’s the basis of asking the question and following up a little bit on Senator Marshall’s questions.
Ms. Boudreau: If I may, year after year, in the last five years, we have tabled the Departmental Results Reports in an average of six days after tabling the Main Estimates. I want to make sure that I put that out there because, roughly, it is an average of six days.
Senator Smith: Six days after when?
Ms. Boudreau: After tabling the Main Estimates. So, for example, last year, we tabled the Main Estimates on March 1 because that’s our deadline, and the plans were tabled March 2, the day after. The year before, it was tabled the same day, at the same time.
This year, because of the House of Commons not sitting, we needed to table the Main Estimates by February 15. Usually, we don’t do that. It’s always March 1. It was two weeks in advance, and the plans were tabled three weeks after. But if we had tabled at the same time on March 1, it would have been a week in between.
Senator Smith: With redundancy of metrics that don’t need to be utilized, have you made significant progress in that particular area? That is the basis of my question. What about the redundancies and cleaning some of those areas up?
Ms. Boudreau: Like I was saying, it is a work in progress, but, unfortunately, I cannot give you a percentage, such as 20%, 30%.
[Translation]
Senator Smith: Could you ask the question so we can get an answer the next time?
Ms. Boudreau: I will be pleased to provide a more solid figure.
Senator Smith: Thank you.
Senator Galvez: Thank you very much to our witnesses for being here to answer our questions.
[English]
By now, you must be quite aware that this committee is worried about increasing our debt and the fact that the public service in different provinces is suffering. We are also worried about the affordability of household debt and the increase of function in the public service, the number of employees. Personally, I am very worried about the state of climate change and the forest fires.
For each one of these issues, you have performance indicators. What I am realizing after listening and reading is that your role has been expanded, and I would like to know if you feel — because you also have to follow some performance indicators as the Treasury Board.
I’m trying to understand what the part that is not being efficient is. Is it the departments that are not being efficient? I agree with you that if we have performance indicators that are 100 per cent, they are useless. I understand. I agree with you. But what is the right number? How can we help you in achieving more efficiency so you can ask for more efficiency from the other departments that are responsible for these issues?
Ms. Boudreau: Thank you very much for that very important question.
How can you help us? It’s probably by inviting more and more departments and agencies to talk to you about their own indicators and maybe the processes that they have within those organizations in order to come up with them. Challenge them on why they have so many and why they are important to the department or agency. How are they determined? Are they co‑developed with their key stakeholders? That would be helpful to us, if you want to do that.
Senator Galvez: We know that there is a big number of funds going into reconciliation of the claims. It seems that there are not enough details on historical facts that justify this claim. We have even heard from Mr. Giroux that there is some subjectivity. He suggested that we bring them into in camera conditions to listen.
Do you agree with him that there is not enough information going out for you to do your performance analyses?
Ms. Boudreau: I don’t think I would use the word “subjectivity,” to be honest with you, but I think it is a great idea to ask the two departments in charge of Indigenous portfolios — Indigenous Services Canada and Crown-Indigenous Relations and Northern Affairs Canada — to come to you, maybe both at the same time, so you have the comprehensive story of what they are doing and where they want to go.
Having only one department is not enough because one is more about past claims, past grievances, and the other one is more about the future. Having the two departments together could give you the information that you need. But, again, I would not use the word “subjectivity.”
Senator Galvez: Thank you.
Senator Boehm: Thank you, Madam Boudreau and your team from the Treasury Board of Canada Secretariat, for being with us today.
I wanted to ask about the status of negotiations with the various collective bargaining units and whether there are any in a legal position to strike at this point. Have you drawn any lessons from the PSAC strike, in particular, and do you have any data in terms of opportunity costs and funds that may have been lost? I will have a few more questions related to that.
Ms. Boudreau: Thank you very much. I will turn it over to my colleague Ms. Laroche. If we don’t have all the information, we will make sure to come back to you. Ms. Laroche may have some things to offer.
Ms. Laroche: Thank you very much for your questions.
In terms of settlements where we reach agreements with different unions, about 65% of employees have tentative agreements, either signed or in the process of being ratified.
Many are currently under way, and some of them have also chosen mediation as a way to achieve that. In that perspective, I don’t have the information about who would be in a strike position. I don’t think there is any, but I will confirm with my colleagues and we can get back to you in that regard.
Can you please repeat the last part of your question?
Senator Boehm: Do you have any sense of how much money the government lost during the PSAC strike? That is in terms of lost work hours, backlog creation, that sort of thing.
Ms. Laroche: No, I do not have any information at the aggregate level. This is really from a department-by-department situation. As you know, there were some services that were deemed essential and the services continued, whereas in others, there was a stop, and then the departments put in place some action plans to make sure they could resolve those backlogs and move forward with providing service to Canadians.
Senator Boehm: If I may pivot to something else, and it is really what my colleagues have all been asking about, and that is the increase in full-time equivalents, the 23,000. Is there any particular employment category — AS, PM, EC — where is the real focus in that growth or does that really depend on departmental leaves or the programs that Ms. Boudreau referred to? Are there any spikes in any of those groups?
Ms. Boudreau: For sure, we saw some spikes. For example, with the Canada Revenue Agency, you can see a big increase in their workforce, as is true for Employment and Social Development Canada.
We can come back to you with more details in terms of which categories we are talking about. We have that information.
Senator Boehm: Thank you.
But it seems to me that an increase of 23,000 FTEs runs rather counter to the stated goal, as expressed by your minister here at this committee, to engage in something of a review across all departments. It is not necessarily a program review; I get that. But do you have any sense of this juxtaposition — this greater hiring? At the same time, any review does not seem to be resulting in savings?
Ms. Boudreau: That is correct. We need to maybe go back to the Budget 2023 wording. The review will be done in two streams. The first one will be a reduction on professional services, with a focus on management consulting. The other one will be on programs and on operating, operating meaning the FTEs. But that stream will be done with a phase-in approach. The first savings will be accounted for next year, and it will be roughly one third of the target that we have, and the year after two thirds. That will give enough time to departments to assess their staffing plan and to look at people leaving or retiring. They will be able to adjust according to that.
We don’t see a big decrease in terms of employees coming from that review.
Senator Boehm: Thank you for the clarification.
Senator Loffreda: Thank you, Ms. Boudreau, for being here with your team and all other panellists.
Household debt, housing affordability and housing supply are major concerns in Canada, as we know. The Canada Mortgage and Housing Corporation is requesting $996.7 million in voted appropriation for the Housing Accelerator Fund, which was first announced in Budget 2022. According to the CMHC, the Housing Accelerator Fund provides incentive funding to local governments to encourage initiatives aimed at removing barriers to development and increasing housing supply. The fund begins in summer 2023.
I have a few questions, so I will continue and give you the full five minutes to prepare for those answers, which are always very insightful. Can you explain how exactly this fund will increase housing supply? It is essential that we do increase housing supply across Canada. What hindrances do local governments or municipalities have in increasing that housing supply? With three levels of government, do you feel we can get across those challenges with all this funding going into the housing supply?
What are the reporting requirements for the funding recipients? How does the government determine whether the additional housing units are a result of the funding? I ask that because follow-up is not only key in improving results, but also in modifying the funding if the results do not meet the targets. Do we have targets for that housing supply? I would like to see it as an investment, not an expense. In order for it to be an investment and to evaluate this investment, we need targets.
How many additional housing units to do you expect to create with this fund? Do you see it improving housing supply significantly across Canada given that it is almost a billion dollars? It takes a long time to count to a billion.
Ms. Boudreau: Thank you very much for your questions. Unfortunately, I don’t have the level of detail that you are looking for, but the chair will give me a date, and I will come back with all the information that you have requested.
Senator Loffreda: Great, so we got two things accomplished today: the stress analysis on the housing supply and the date for getting all this information.
I would like to continue with the strategic review. Can you elaborate with any information on that matter? It’s so important. When the President of the Treasury Board appeared before our committee last month, she was unable to provide us with any additional information. She told us the government remains committed to reducing spending on outsourcing, travel and certain areas across departments and operations.
I know your department has been mandated with this strategic review, so I would like to hear if you have any comments or elaboration on that. She said:
At the end of the day, it is about trying to be a smarter government, not a smaller government. That’s the objective.
We have discussed smaller government here, but she did mention that wasn’t the case. They were trying to find a total of $15.4 billion in savings in the next five years.
How do you expect government will achieve those savings? Is there any way to track how well the government is doing with respect to its review? You did elaborate a little on it; I would welcome any other comments. Is it naive to think we can achieve all these billions of dollars in savings by not reducing the size of government?
Ms. Boudreau: Thank you for the questions.
Like I was saying, there are two streams. The first one is professional services, and it will not touch the FTEs; it will not touch the personnel.
If you look at the budget, there was a financial profile. In the first year — this year, 2023-24 — we need to reduce $500 million in professional services and travel. We intend to report in one of the next supplementary estimates, either (B) or (C). That is for this year.
For next year, that $500 million becomes $1.6 billion in profession services and travel. Again, we will have a phase-in approach for operating and programs, and it will be one third of the final savings. So next year, we will see a $681 million reduction in operating and programs.
For the next year, the information will be included when the president tables the Main Estimates. You will be able to see a reduction, department by department, for those categories.
Senator Loffreda: I’m looking forward to seeing that, and I look forward to your answers regarding the housing affordability crisis we are in, as well as some targets for those billion dollars we are investing. I would really like to see that.
Ms. Boudreau: Absolutely.
[Translation]
Senator Dagenais: I have two quick questions. The Parliamentary Budget Officer did not have all the necessary information to answer my question about the use of the $469 million allocated to health care for refugees and asylum seekers.
With the amounts to be transferred, will the provinces really be in charge in practical terms or can you tell us how the government will use that money, if it is not transfers to the provinces?
Ms. Boudreau: Thank you very much for the question. The funding will not actually be transfers to the provinces. Those refugees are here and are not yet covered by the provincial program. So the funding is very much transitional. Then, it will become part of the federal program and will be managed by the provinces and territories. It is just for temporary measures.
Senator Dagenais: You announced a skills review, I believe, and you will ensure that there is no duplication of jobs. I have to admit that I was a bit surprised.
Does that mean that it wasn’t clear if all the public servants really needed to be there? Does it mean that people may have been hired without really being needed?
Ms. Boudreau: Thank you for the question. Let me clarify that. The review of skills and youth that I mentioned relates to federal programs that assist with skills and youth. I am not talking about federal government employees, but rather programs delivered by the federal government. We will look at all the programs in all departments and organizations and make sure that someone looking for work really has all the support they need to find their way through the myriad federal government programs.
Senator Dagenais: Thank you, Ms. Boudreau.
[English]
Senator Pate: Thank you for being here. I want to apologize; I asked a question of the Parliamentary Budget Officer that I should have asked you. I mistakenly said that your colleague from last week encouraged me to ask him, but he actually encouraged me to ask you, Ms. Laroche. My apologies for that to my colleagues as well and to the public watching.
I wanted to follow up. I asked questions, and we received some feedback from the Treasury Board about the issue in terms of anti-Black racism and the mental health fund for Black public servants. Your written response indicates that Black employee networks and experts have been engaged in the process of developing an action plan, yet there has been an indication of concern of anti-Black racism also within the Treasury Board itself, including within senior ranks.
Can you elaborate, please, on what specific steps you’ve taken to redress these issues and how the initiatives moving forward will adequately reflect the needs and desires of Black public servants?
Ms. Laroche: Thank you very much for your question. I’ll start by just mentioning that in Budget 2022, we received money to work on and design both a mental health fund for Black employees and dedicated career development programs. At that point, we did it very much with the networks. We hired a number of Black employees to work within the TBS. Those employees were on secondment and worked with TBS in terms of co‑development to ultimately propose a way forward to the government, which resulted in money that was allocated in Budget 2023. When the work was done in terms of that portion, the secondments were ended and the employees went back to their organizations.
Right now, we are, as an organization and as a public service, truly committed to having a harassment-free and discrimination-free environment where everybody has a sense of belonging. For that particular project right now, we are in the midst of working with our partners, including the networks, to relaunch toward the implementation of these two very key initiatives.
We plan to re-engage with the networks, but also go broadly and talk to Black employees within the federal public service to really make sure that the initiative that will be put forward will actually answer their needs. We are also working with our partners across the organization — such as Health Canada, which is delivering the Employee Assistance Program, or EAP, as well as the Canada School of Public Service, which offers a multitude of programs at the leadership level and also for employees — to make sure we can build upon what exists but also build some things that will meet the needs of employees.
The other thing we’re doing is working with Canadian Heritage. As you may know, they are responsible for a number of initiatives such as anti-racism and anti-hate. What we’re doing with them is looking at how we can incorporate a lens for the public service. Basically, as the largest employer in Canada, we are just a smaller representation of Canadian society, so we want to make sure that we have a racist-free and hate-free work environment for all groups, including Black employees.
In addition to that, there was also some money provided in Budget 2023 to advance a restorative engagement program to empower employees who have suffered harassment and discrimination and drive cultural change in the public service. An expert panel will be established this year to have consultations and enable the development of recommendations by the winter to see how we can best address that and to review all the processes we have internally to make sure they’re efficient, timely and can address the historical complaints of harassment, violence and discrimination within the public service.
Senator Pate: Thank you.
The Chair: Honourable senators, this brings us to the end of our meeting. Thank you to Ms. Boudreau and your team.
[Translation]
Thank you very much for your professionalism and for being here.
[English]
I think we have a common denominator about transparency, accountability, reliability and predictability of budgets and expenses. On this, I would like to remind you, Ms. Boudreau, to please submit written responses to the clerk by the end of the day on Tuesday, June 27, 2023.
I would like to inform senators that our next meeting will be Wednesday, June 14, at 6:45 p.m. — tomorrow — to possibly consider clause-by-clause consideration of Bill C-47 should the Senate refer it to us today or tomorrow.
Before closing, I would like to take this opportunity to thank all the staff for their support in order to help us parliamentarians do our jobs. On this, honourable senators, I declare the meeting adjourned.
(The committee adjourned.)