Proceedings of the Standing Senate Committee on
National Finance

Issue 1 - Reports of the Committee


THURSDAY, March 21, 1996

The Standing Senate Committee on National Finance has the honour to present its

FIRST REPORT

Your Committee, which was authorized by the Senate to incur expenses for the purpose of its examination and consideration of estimates and such legislation as was referred to it, reports, pursuant to Rule 104, that the expenses incurred by the Committee during the First Session of the Thirty-fifth Parliament are as follows:

Contract Consulting.........$250,520.00
Hospitality................................901.11
Miscellaneous...........................110.00

TOTAL...........................$251,531.11

The following expenses, incurred by the Committee, were charged to the budget of the Committees and Private Legislation Directorate:

Witnesses' expenses.........$6,154.92

During this Session of Parliament, your Committee held 39 meetings, during which it heard 129 witnesses. It reviewed two sets of Main Estimates (1994-95, 1995-96), five sets of Supplementary Estimates: Supplementary Estimates (B), 1993-94, Supplementary Estimates (A), 1994-95, Supplementary Estimates (B), 1994-95, Supplementary Estimates (C), 1994-95, Supplementary Estimates (A), 1995-96, and 12 Bills (C-3, C-17, C-26, C-207, C-73, C-43, C-76, C-65, C-85, C-82, C-108). It issued 20 reports.

Respectfully submitted,

DAVID TKACHUK

Chairman


TUESDAY, March 26, 1996

The Standing Senate Committee on National Finance has the honour to present its

SECOND REPORT

Your Committee, to which were referred Supplementary Estimates (B), 1995-96, has, in obedience to the Order of Reference of Tuesday, March 19, 1996, examined the said Estimates and herewith presents its report.

Your Committee held a meeting to review these supplementary estimates on Thursday, March 21, 1996. On the previous day, the Committee met informally and in camera with officials of the Treasury Board Secretariat at their request. The purpose of the earlier meeting was to identify matters in the supplementary estimates of particular concern to individual Committee members. Consequently, at the meeting on March 21st, Treasury Board officials were accompanied by officials from the Departments of Justice and of Agriculture and Agri-Food, who were in a better position to respond to questions concerning the estimates of their particular departments.

Three explanatory tables provided by the Treasury Board form part of this report. The first, Supply to Date for 1995-96, shows the amounts of supply already approved for the Main Estimates in Appropriation Acts No.'s 1 and 2, 1995-96 and for Supplementary Estimates (A), 1995-96 in Appropriation Act No. 3, 1995-96 and the amount of supply for Supplementary Estimates (B) awaiting approval in Appropriation Act No. 4, 1995-96. If Appropriation Act No. 4 is approved, supply for 1995-96 will total $49.832 billion.

The second table, Summary of Expenditure Framework and Estimates for 1995-96, displays the budgetary and non-budgetary expenditures, and the amounts of each that are statutory and to be voted, for the 1995-96 Main Estimates, Supplementary Estimates (A) and (B) and their total. This table is an expansion of the table "Summary of Estimates to Date for 1995-96" on pages 8 and 9 of Supplementary Estimates (B). Finally, there is a list of one-dollar votes included in the supplementary estimates, including detailed explanations of votes that amend existing authorities.

Supplementary Estimates (B) are the second and last supplementary estimates of the 1995-96 fiscal year that ends on March 31, 1996. They total $1.387 billion, of which $675.757 million (all budgetary) is to be voted and $711.03 million (minus $187.137 million budgetary and plus $898.167 million non-budgetary) are statutory expenditures that appear in the supplementary estimates for information only. Supplementary Estimates (B) raise voted expenditures for the 1995-96 fiscal year to $49.832 billion and statutory expenditures to $118.817 billion for total overall government expenditures of $168.649 billion. As the summary table shows, the negative $187.137 million in budgetary statutory expenditures and the $675.757 million in budgetary expenditures to be voted total $488.62 million and increase budgetary expenditures for the 1995-96 fiscal year to $167.094 billion. The latter amount exceeds the government's 1995-96 expenditure framework of $163.5 billion by $3.6 billion. 1995-96 non-budgetary expenditures now total $1.555 billion.

As the footnote to the summary table suggests, a number of adjustments - predominantly negative - have not been reflected in the estimates. They will be incorporated following the end of the fiscal year into the total revenues and expenditures that appear in the 1995-96 Public Accounts. Inter-vote transfers are one example of the need for such adjustments. For example, when funds are transferred from one department or agency to another, Parliament is asked to approve the new appropriation for the receiving department, which appears in the supplementary estimates. The Treasury Board creates a frozen allotment in the resources of the donor department but does not print the transfer as a negative amount in that department's estimates because Parliament is not required to approve reductions in the spending authority it has previously granted. Accordingly, the amount will appear in the year-end adjustments of the donor department as an expenditure lapse and the overall estimates will be reduced accordingly. The Committee discussed inter-vote transfers at some length in its report of December 5, 1995 on Supplementary Estimates (A), 1995-96. In all likelihood budgetary estimates will in fact be reduced by substantially more than the $3.6 billion required to meet the expenditure target of $163.5 billion. The latter projection includes a reserve of $2.5 billion on which no expenditure draws have yet been made. Budgetary expenditures will also be reduced by the amounts of expenditures for which provision has already been made in previous fiscal years.

The $675.8 million of proposed appropriations in Supplementary Estimates (B) have been provided for in the 1995 Budget and again, as part of the update of 1995-96 expenditures, in the Budget of March 6, 1996. A total of $382.4 million, $267.2 million of it for the Civilian/Forces Employee Reduction Plan of National Defence, is spread over several departments and agencies for employee separation programs, principally the Early Departure and Early Retirement Incentives. These expenditures appear in the supplementary estimates of each department under "Explanation of Requirement" as "Additional resources in respect of employee departure programs." Besides National Defence, the departments and agencies affected are: Canada Council; Canadian Broadcasting Corporation; Canadian Film Development Corporation; National Arts Centre Corporation; National Capital Commission; National Film Board; Fisheries and Oceans; Human Resources Development (three programs); Natural Resources (two programs); and Public Works and Government Services (two programs).

Under the government's expenditure management system, managers are allowed to carry forward, from one year to the next, an amount of up to five per cent of the operating budget of the previous fiscal year. This provision is intended to reduce year-end spending and improve cash management. Supplementary Estimates (B) contain a total of $141.4 million for 13 departments and agencies in this category. The separate appropriations appear under "Explanation of Requirement" as "Operating Budget carry forward."

Another major appropriation is $85.1 million in the estimates of Agriculture and Agri-Food for grants to individuals and organizations in Support of grain transportation reform. There are further reallocations of $21.3 million within the same vote (Vote 15) for other grants, namely $17.3 million to organizations to facilitate rural development and adaptation within the agriculture and agri-food sector and a $4.5 million grant to the province of Manitoba for the transfer of responsibility for the Assiniboine River Dikes System. $23.8 million is being requested for Statistics Canada to help defray the costs of the 1996 Census.

In response to questions, officials of the Department of Agriculture and Agri-Food stated that the $17.3 million in grants were provided under the department's Agriculture and Rural Development Program to agricultural associations, with an allocation of $7 million in Ontario and $10 million in Quebec that will continue in future years. Under this new program, the industry has identified its priorities and the government has specified that no payments will be made to individuals, there will be no activities that interfere with international or interprovincial trade and the funds must be used to enhance competitiveness, to improve the environment and/or to encourage research. The program has a notional allocation of $60 million per annum and the department hopes that the Western and Atlantic provinces will participate in future.

Regarding the $85 million in grants in support of grain transportation reform, officials explained that most of these funds were being paid on a one-time basis pursuant to the transitional arrangements drawn up when the Western Grain Transportation Act and the Feed Freight Assistance Act were repealed. $20 million was for feed freight assistance, a payment that will continue for two years; $20 million was with respect to grain deliveries this year in Manitoba and Eastern Saskatchewan under a pooling agreement; and $45 million went on a one-time basis to producers of alfalfa and compressed hay. Although the numbers must be interpreted with caution because of wide variations, officials informed the Committee that the average transition payment rate is $20 per acre and the average farm size is 600 acres for an overall average payment per farm of $12,000.

The federal government built the first dikes along the Assiniboine River around 1900 and transferred responsibility for them to the Prairie Farm Rehabilitation Administration in 1950. These dikes currently protect from flooding over 200 hectares of prime agricultural land. The transfer to Manitoba will permit the province to operate and manage the dikes in conjunction with two dams/diversions it already owns, while the $4.5 million grant will assist it to maintain the system.

Supplementary Estimates (B) also include an update to Parliament on forecast 1995-96 statutory expenditures. In the estimates of the Department of Finance, $1.328 billion is being recorded as an adjustment to the Accounts of Canada to reflect the sale of Petro Canada shares. Similarly, the estimates of Transport include two adjustments, one of $1.101 billion and the other (non-budgetary) of $900 million, reflecting the sale of shares of Canadian National. The $900 million item represents an additional equity injection in CN just prior to privatization to reduce CN's outstanding debt and make the company more attractive to investors. The government states that neither of the budgetary statutory items will have any effect on the 1995-96 deficit.

The adjustments in respect of the sale of shares of Petro-Canada and CN are required in the Accounts of Canada to report the difference between the total value of the investments in the corporations that Canada has reported in the Public Accounts of previous fiscal years and the amount that investors were willing to pay. These adjustments generated a number of questions from members of your Committee. The Treasury Board presented a more detailed explanation, as follows:

The Public Accounts of each fiscal year report the total cash value of Canada's assets related to such things as loans and investments, including investments in various Crown corporations [such as CN and Petro-Canada]. At the end of each fiscal year, the true or book value of each asset is determined. If the value has changed from the amount of the previous fiscal year, the amount of the change is recorded in the Public Accounts within the "Provision for Valuation". However, when an asset is sold or otherwise removed from the Accounts, Parliament must appropriate the difference between the original value and the amount received upon disposal. Parliament authorized the appropriate Ministers to effect these adjustments when the two pieces of legislation were approved. These Supplementary Estimates items are now reporting the amounts of these adjustments.

Officials of the Treasury Board Secretariat undertook to supply responses at a later date concerning: the total amount of cash injected by the government into Petro-Canada during its history; the controversy between the Auditor General and the government concerning the prices paid by the government for the shares of the companies it purchased to form Petro-Canada in the first place; the composition of the $900 million CN debt and its ownership; and the identities of the lead and subsidiary underwriters and the commissions they received in respect of the sales of shares in both CN and Petro-Canada.

Under the estimates of the Treasury Board, the $400 million statutory item for employee departures represents the estimated present value of the additional costs to the Public Service Superannuation Plan of providing early retirements to employees. Whereas the expenditures to be voted are for pay in lieu of notice, severance and separation, the $400 million is to defray the future costs of paying unreduced pensions to those who accepted the Early Retirement Incentive, which waived the usual penalties applied to the pension payments of employees who retire prior to reaching age 55 and completing at least thirty years' service.

The estimates of the Social Development and Education Program of Human Resources Development include two statutory increases totalling $325.4 million related to assistance under the Canada Student Loans Act and the Canada Student Financial Assistance Act. As well, transfer payments to the provinces for fiscal equalization and under Established Programs Financing for health and postsecondary education have been increased by a total of $273 million, distributed among the estimates of the Departments of Finance, Health and Human Resources Development respectively. In the Public Debt Program of the Department of Finance, statutory interest payments on the public debt have decreased by $2.5 billion, reflecting lower interest rates than were forecast for 1995-96 in the 1995 Budget.

Because of the repeal of the Western Grain Transportation Act, the Atlantic Region Freight Assistance Act and the Maritime Freight Rates Act in Bill C-76 in the last session, there are reductions in payments to railway and other transportation companies totalling $412.1 million in the estimates of the National Transportation Agency. Finally, benefit payments from the Unemployment Insurance Account are now expected to be $656 million lower than originally forecast. This reduction does not appear in the estimates of any department. It can be found at the end of the departmental summary on pages 8 and 9 under Consolidated specified purpose accounts.

The table on pages 30 and 31 (pages 31 and 32 French) shows the amounts advanced to six departments and one agency for temporary funding from the Government Contingencies vote (Vote 5) of the Treasury Board since the last supplementary estimates were tabled. These total $110 million, which will be repaid to the vote if the supplementary estimates are approved unchanged. Paylist and other permanent allocations now amount to $22.9 million and therefore Vote 5 will total $427.1 million following passage of the appropriation act. The amount approved by Parliament for the vote in the 1995-96 Main Estimates (and also proposed in the 1996-97 estimates) was $450 million. The individual advances appear as footnotes in the supplementary estimates of the receiving departments.

Treasury Board of officials provided additional information about the $325.4 million in the estimates of Human Resources Development paid under the Canada Student Loans Act and the Canada Student Financial Assistance Act. Most of this funding was to pay off part of the backlog of defaults on student loans, including interest. The default rate is currently running around 11 per cent, and there remains a default backlog of approximately $1.3 billion in the accounts receivable of the lenders. Under the Canada Student Financial Assistance Act, loans are negotiated between lenders and borrowers and the government guarantee no longer exists.

Many questions were addressed to officials of the Department of Justice concerning federal transfer payments to the provinces, in particular Ontario, that are used to fund legal aid and related matters. Committee members were concerned about media reports of fraud in the Ontario legal aid program and the fact that Parliament was apparently powerless to demand accountability for these expenditures.

In response, officials stated that the federal transfer payments have no strings attached and that the Ontario legal aid program is managed by the Law Society of Upper Canada. They also suggested that the Committee might wish to hear testimony from legal officials with responsibility for the Department of Human Resources and the Canada Health and Social Transfer (CHST). The Committee observes that, in the 1995-96 Main Estimates of the Department of Justice, there is provision for $88.2 million in contributions to the provinces and territories to assist in the operation of legal aid systems. $85 million has been requested under Justice for similar contributions in the 1996-97 Main Estimates. Contributions, in contrast to grants, contain explicit conditions and in this instance should be monitored and periodically evaluated by the Department of Justice. The officials professed themselves unable to answer additional questions concerning the Airbus case, the associated suit of the government by the former Prime Minister, and the actions of the RCMP and the responsible unit of the Department of Justice that led to the latter's request to the Government of Switzerland for assistance. They did indicate that, as in all cases brought against the Crown, a contingent liability would be recognized but that the amount could not be made public for obvious reasons of legal strategy. Justice officials undertook to supply the Committee with responses to some of these questions at a later date, and the Committee indicated that it might pursue the issues when it examines the 1996-97 Main Estimates.

Other questions were raised concerning the growth of Canada's public debt over the past twenty years. Treasury Board officials reviewed the growth of interest payments on the debt over that period: they amounted to $3.2 billion in 1974-75, $24 billion in 1984-85 and $42 billion in 1994-95 (the 1996-97 Main Estimates of the Department of Finance request $47.8 billion for the Public Debt Program). One of the major causes of growth in expenditures has been the growth in social programs indexed against inflation. For example, Old Age Security/Guaranteed Income Supplement rose from $3 billion in 1974-75 to $20 billion in 1994-95 (expenditures on this program were also increased by the growth of the elderly population and recessions that increased the demand for the Guaranteed Income Supplement).

However, as a consequence of the government's program review and the currently low rate of inflation, program expenditures are now on a downward trend. Direct program expenditures, which exclude major transfer programs and interest on the public debt, will decrease by 24 per cent between 1994-95 and 1998-99 as a direct result of the program review. As the consequence of continued restraint in all areas, the government's financial requirements are projected in the recent Budget to decrease to $6 billion in 1997-98, suggesting that the government might actually be in a position to start paying down the public debt shortly thereafter.

Additional questions concerned the use of recommendations from the reports of the Auditor General and the question of performance reporting. Treasury Board officials stated that the Auditor General's work had evolved from a concern simply with compliance audits to the use of value-for-money audits and more emphasis on small, focused studies. Departments are consulted during the audits and their responses printed along with the Auditor General's findings. Major studies are followed up after two years and changes that departments have undertaken or failed to undertake reported. However, officials indicated that perhaps only 10 to 15 per cent of the Auditor General's work appears in his reports to Parliament. Routine findings are reported in management letters from the Auditor General to departments that typically result in management changes without further auditing. In view of your Committee's long-standing interest in program evaluation and accountability of departments to Parliament, the implementation of the Auditor General's findings and recommendations may well be reviewed further at a later date.

Respectfully submitted,

PIERRE DE BANÉ

Deputy Chairman


SUPPLY TO DATE FOR 1995-96

Three Appropriation Acts have been approved in respect of the Estimates for 1995-96

Supply Approved to Date:

Appropriation Act No. 1. 1995-96

granted Interim Supply for the 1995-96 Main Estimates
equal to an initial allocation of 3/12ths for all votes
plus 36 additional proportions....................................................................$13,678,486,367.24

Appropriation Act No. 2. l995-96

granted Supply for the balance of the Main Estimates for 1995-96.....................$34,541,624,427.76

Appropriation Act No. 3. 1995-96

granted Supply for the whole of Supplementary Estimates (A) 1995-96............$936,249,674.00

Total Approved to Date.............................................................$49,156,360,469.00

Supply Awaiting Approval:

Supply for the whole of Supplementary Estimates (B) 1995-96...............$675,757,475.00

Total for 1995-96........................................................................$49,832,117,944.00

SUMMARY OF EXPENDITURE FRAMEWORK AND ESTIMATES FOR 1995-96

Expenditure Framework:

Budgetary Main Estimates

$164.2 billion

Budgetary Estimates To Date

$167.1 billion*

Projected Budgetary Expenditures

$163.5 billion

ESTIMATES TO DATE FOR 1995-96

TO BE VOTED

STATUTORY

TOTAL

(in thousand of dollars)

Main Estimates

Budgetary

$48,005,907

$116,185,502

$164,191,409

Non-Budgetary

214,204

416,150

630,354

$48,220,111

$116,601,652

$164,821,763

Supplementary Estimates (A)

Budgetary

$909,770

$ 1,504,328

$2,414,098

Non-Budgetary

26,480

26,480

936,250

$1,504,328

$2,440,578

Supplementary Estimates (B)

Budgetary

$675,757

$(187,137)

$488,620

Non-Budgetary

0

898,167

898,167

$675,757

$711,030

$1,386,787

Total Estimates to Date

Budgetary

$49,591,434

$117,502,694

$167,094,128

Non-Budgetary

240,684

1,314,317

1,555,001

$49,832,118

$118,817,011

$168,649,129

* Estimates will always differ from the Total Budgetary Expenditures due to adjustments not reflected in Estimates for such items as anticipated lapses, budgetary reductions and those expenditures already recognized in prior years.

LIST OF ONE DOLLAR VOTES INCLUDED IN SUPPLEMENTARY ESTIMATES (B), 1995-96

The 46 One Dollar Votes included in these Estimates are listed in Appendix I by ministry and agency along with the page number where each vote may be located in the Estimates.

These One Dollar Votes are grouped below into categories according to their prime purpose. The votes are also identified in Appendix 1, according to these categories. The category for each vote has been designated by an "X". In those instances where a vote falls into more than one category, the prime category is designated by an "X" and other categories by an "*". Category A identifies a Transfer of Funds between Votes, Category B identifies a New Grant, and Category C identifies New Legislation.

A. 29 votes authorize the transfer on funds from one vote to another. (An explanation of the new requirement and the source of funds is provided in Supplementary Estimates "B").

B. 4 votes authorize the payment of grants. (An explanation of the new requirement and the source of funds is provided in Supplementary Estimates "B").

C. 13 miscellaneous votes. (Additional explanations are provided in Appendix II).

- one vote which allows the Minister of Canadian Heritage to amend Environment Vote 21b by changing the title of a Revolving Fund and increasing the amount by which expenditures may exceed revenues;

- one vote which allows the Minister of Canadian Heritage to make expenditures out of the Consolidated Revenue Fund to operate, maintain and develop townsites within the boundaries of Canada's National Parks;

- one vote which authorizes the Minister of Finance to guarantee loans to the State Development Bank of China;

- one vote which transfers from the Department of Transport to Fisheries and Oceans authority to make recoverable advances for transportation, stevedoring and other shipping services; and authority to spend revenue arising from the activities of the Canadian Coast Guard;

- one vote which allows Foreign Affairs and International Trade to spend revenue received arising from the provision of services related to Canadian Education Centres;

- one vote which allows Foreign Affairs and International Trade - CIDA - to forgive $11,910,000 in debts and obligations owed by five debtor countries

- one vote which allows Indian Affairs and Northern Development to write-off certain debts and obligations arising from loans made from the Indian Economic Development Account, the Indian Housing Assistance Account and the Indian Economic Development Fund;

- one vote which allows Indian Affairs and Northern Development to reduce the amount that may be outstanding at any time under the Indian Economic Development Account;

- one vote which allows Indian Affairs and Northern Development to write-off certain debts and obligations arising from loans made from the Inuit Loan Fund;

- one vote which allows Indian Affairs and Northern Development to reduce the amount that may be outstanding at any time under the Inuit Loan Fund;

- one vote which allows the Minister of Public Works and Government Services to make expenditures out of the Consolidated Revenue Fund for the purpose of disposing of real property;

- one vote which allows the Minister of Public Works and Government Services to delete from the accounts of the Translation Bureau Revolving Fund certain operating losses;

- one vote which allows the Minister of Public Works and Government Services to delete from the accounts of the Canada Communication Group Revolving Fund certain costs due to restructuring.


Appendix I

LIST OF ONE DOLLAR VOTES IN
SUPPLEMENTARY ESTIMATES (B), 1995-96

Page Department and/or Agency Vote Categories
A B C
Atlantic Canada Opportunities Agency
35 Department 1b X
5b X
Canadian Heritage
36 Communications 1b X
26b X
27b X
44 National Archives 85b X
Citizenship and Immigration
50 Department 5b X
Finance
51 Department 31 b X
56 Fisheries and Oceans
1b X
5b X
Foreign Affairs and International Trade
58 Department 1b X
10b X
20b X
21b X
Human Resources Development
65 Employment and Immigration 1b X
10b X
15b X
30b X
Indian Affairs and Northern Development
71 Department 1b X
5b X
6b X
7b X
15b X
36b X
37b X
40b X
45b X
Industry
76 Department 30b X
78 National Research Council of Canada 65b X
Natural Resources
88 Department 1b X
20b X
Public Works and Government Services
96 Public Works and Supply and Services 2b X
15b X
20b X
22b X
23b X
Solicitor General
101 Department 1b X
15b X
20b X
Transport
106 Department 10b X
25b X
35b X
36b X
113 Veterans Affairs 1b X
21b X
115 Western Diversification 1b X

Appendix II

Additional Explanation Category C - Miscellaneous $1.00 Votes

Vote 26b Canadian Heritage - Parks Canada Program - to amend Environment Vote 21b, Appropriation Act. No. 3, 1993-94 by: deleting the title "Parks Canada Enterprise Unit (Hot Springs) Revolving Fund" and inserting the new title "Parks Canada Enterprise Units Revolving Fund"; and increasing from $6,000,000 to $8,000,000 the amount by which expenditures may exceed revenues received in respect of the purposes of the Fund.

Explanation The new title "Parks Canada Enterprise Units Revolving Fund" allows expansion to include the Highland Links Enterprise Unit. The creation of the enterprise unit is seen as the first step toward eventually contracting out the management of the Highland Links operations.

Vote 27b Canadian Heritage - Parks Canada Program - Parks Canada Townsites Revolving Fund - Pursuant to paragraph 29.1(2)(b) of the Financial Administration Act, to authorize the Minister, effective April 1, 1996, to make operating and capital expenditures out of the Consolidated Revenue Fund, in accordance with terms and conditions approved by the Treasury Board, for the purpose of operating, maintaining and developing such townsites as the Treasury Board may approve, that are located within the boundaries of Canada's National Parks including: authority for the Minister to spend for the purposes of the Fund any monies received in respect of these purposes; and the aggregate of expenditures made for the purposes of the Fund shall not at any time exceed by more than $10,000,000 the monies received in respect of the purposes of the Fund.

Explanation Canadian Heritage is creating an Enterprise Unit Revolving Fund to manage the operations of six townsites located within its national parks. The fund will have a statutory drawdown authority of $10 million. The revolving fund is intended to reduce the reliance of townsites on appropriations by increasing the percentage of the costs of municipal services paid for by residents. The revolving fund will also improve the ability of the townsites to recapitalize municipal infrastructure.

Vote 31b Finance - Pursuant to Section 29 of the Financial Administration Act, to authorize the Minster of Finance to guarantee, from time to time, the payment in the currency of the United States of all amounts payable under or pursuant to loans and other financial arrangements, which shall not exceed a maximum principal amount of $1,500,000,000 Canadian dollars at the time of disbursement and which loans or financial arrangements shall be entered into by the State Development Bank of China for the purpose of financing the purchase of nuclear reactors from Atomic Energy of Canada Limited.

Explanation In February 1996, Treasury Board authorized the Minister of Finance to guarantee US dollar loans and other financial arrangements entered into by Export Development Canada with the Development Bank of China, up to a maximum of the equivalent of $1.5 billion (Cdn) at time of disbursement in support of the sale of two Candu nuclear reactors by Atomic Energy Canada Limited to China. The new vote authorizes the Minister of Finance to guarantee China's performance in servicing the loans.

Vote lb Fisheries and Oceans - Operating expenditures, and Canada's share of expenses of the International Fisheries Commission, authority to provide free accommodation for the International Fisheries Commission, authority to make recoverable advances in the amounts of the shares of the International Fisheries Commissions of joint costs projects; authority to make recoverable advances for transportation, stevedoring and other shipping services performed on behalf of individuals, outside agencies and other governments, in the course of, or arising out of, the exercise of jurisdiction in navigation, including navigational aids, and shipping; and authority to spend revenue received during the year in the course of, or arising from the activities of the Coast Guard - To authorize the transfer of $33,971,436 from Vote 10, and $419,202,000 from Transport Vote 1, Appropriation Act No. 2, 1995-96 for the purposes of this vote.

Explanation The 1995 Budget announced the transfer of the Canadian Coast Guard (CCG) to the Department of Fisheries and Oceans from the Department of Transport, effective April 1, 1995. Treasury Board authorized the inclusion of an item in Final Supplementary Estimates for 1995-96 to transfer the financial resources of the CCG and the related corporate services to DFO.

Vote lb Foreign Affairs and International Trade - Operating expenditures, including the payment of remuneration and other expenditures subject to the approval of the Governor in Council in connection with the assignment by the Canadian Government of Canadians to the staffs of international organizations and authority to make recoverable advances in amounts not exceeding the amounts of the shares of such organizations of such expenses; authority for the appointment and fixing of salaries by the Governor in Council of High Commissioners, Ambassadors, Ministers Plenipotentiary, Consuls, Representatives on International Commissions, the staff of such officials and other persons to represent Canada in another country; expenditures in respect of the provision of office accommodation for the International Civil Aviation Organization; recoverable expenditures for assistance to and repatriation of distressed Canadian citizens and persons of Canadian domicile abroad, including their dependants; cultural relations and academic exchange programs with other countries; and pursuant to paragraph 29.1(2)(a) of the Financial Administration Act, authority to spend revenues received during the year arising from the provision of services related to Canadian Business Centres and Canadian Education Centres located abroad.

Explanation This change in vote wording is to reflect authorization provided to Foreign Affairs and International Trade by the Treasury Board to respend revenues associated with payments from the Asia Pacific Foundation of Canada for services provided in relation to the operation of Canadian Education Centres.

Vote 21b Foreign Affairs and International Trade - Canadian International Development Agency - Pursuant to Section 24.1 of the Financial Administration Act, to forgive certain debts and obligations due to Her Majesty in Right of Canada amounting to $11,910,000 representing adjustments to the principal balances owed by five debtors:

Colombia $2,750,000 El Salvador $2,690,000 Honduras $3,300,000 Nicaragua $ 900,000 Costa Rica $2,270,000 - To authorize the transfer of $11,909,999 from Vote 20, Appropriation Act No. 2, 1995-96 for the purposes of this Vote.

Explanation This item is required to forgive Official Development Assistance (ODA)Debt of countries with which Canada has signed an agreement under its Latin American Debt Conversion Initiative launched at the 1992 Rio Summit on the Environment. This initiative involves the conversion of ODA debt into local currency to help finance environment and sustainable development projects.

Vote 6b Indian and Innuit Affairs - Pursuant to Section 25 of the Financial Administration Act, to write-off from the Accounts of Canada, certain debts and obligations due to Her Majesty in Right of Canada amounting to $832,571 representing the principal of 51 accounts owed by 42 debtors arising from direct loans made from the Indian Economic Development Account established by Vote L53b, Appropriation Act No. 1, 1970; $56,100 representing the principal of 9 accounts owed by 9 debtors arising from direct loans made from the Indian Housing Assistance Account, established by Vote L51a, Appropriation Act No. 9, 1966; and $1,799,701 representing the difference between the gross book value and the fair market value of principal balances of 48 direct loans made from the Indian Economic Development Fund in relation to the sale of the loan portfolio to Unlooweg Development Group Inc. (UNLOOWEG), NWT Co-operative Business Development Fund (NWTCBDF), Indian Agri-Business Corporation (IABC), All Nations Trust Company (ANTCO), Western Indian Lending Association (WILA) - To authorize the transfer of $2,688,371 from Vote 15, Appropriation Act No. 2, 199596 for the purposes of this Vote.

Explanation Because these debts are recorded on the Statement of Assets and Liabilities, the write-off required Treasury Board approval and pursuant to Section 25 of the Financial Administration Act, the write-off of these debts must be authorized by Parliament and recorded as a budgetary expenditure. This is an accounting transaction only. It does not forgive the debts or affect the right of the government to enforce collection in the future should it become apparent that the debtors' financial situation has changed. Under the Canadian Aboriginal Economic Development Strategy, DIAND is authorized to sell as much as possible of its direct loan operation for the Indian Economic Development Loan Fund (IEDF) to Aboriginal Capital Corporations (ACCs). DIAND has obtained independent evaluations for the portions of its commercial portfolio which are being sold. Sales agreements have been confirmed with the following ACCs: All Nations Trust Company (ANTCO), Western Indian Lending Association (WILA), Indian Agri-Business Corporation (IABC), NWT Co-operative Business Development Fund (NWTCBDF), and the Unlooweg Development Group Inc. (UNLOOWEG). The writing down of the difference between the gross book value and the market value is an accounting transaction only, undertaken in accordance with Section 25 of the Financial Administration Act.

Vote 7b Indian and Inuit Affairs - To reduce from $53,442,443 to $50,598,234 the amount that may be outstanding at any time under the Indian Economic Development Account established by Vote L53b, Appropriation Act No. 1, 1970.

Explanation This item is to reduce the limit by $2.8 million for the amount of loans outstanding within the commercial loan portfolio of the Indian and Inuit Affairs Program. The $2.8 million adjustment reflects the conclusion of loan sales agreements in accordance with accepted offers and the removal of loan accounts.

Parliamentary approval is required to reduce the authority for loans outstanding at any one point in time. The adjustment in this case reflects the conclusion of loans accounts from departmental records and is essentially a technical adjustment.

Vote 36b Indian and Inuit Affairs - Pursuant to Section 25 of the Financial Administration Act, to write-off from the Accounts of Canada, certain debts and obligations due to Her Majesty in Right of Canada amounting to; $146.747 representing the principal of 10 accounts owed by 10 debtors arising from direct loans made from the Inuit Loan Fund, established under the authority of Resources and Development Vote 546, Appropriation Act No. 3, 1953; and $438,303 representing the difference between the gross book value and the fair market value of principal balances of 6 Inuit loans made from the Inuit Loan Fund in relation to the sale of the loan portfolio to NWT Co-operative Business Development Fund (NWTCBDF) - To authorize the transfer of $585,409 from Vote 35, Appropriation Act No. 2, 1995-96 for the purposes of this Vote.

Explanation These accounts are older debts held primarily with individuals. Appropriate collection action has been taken in accordance with approved policies and the balances to be written off are deemed uncollectible. Debts are so deemed where individual debtors are deceased, no longer reside in Canada or are unable to pay the balance owed without causing undue hardship; and where corporations are bankrupt or inoperative without assets. This is an accounting transaction only. It does not forgive the debts or affect the right of the government to enforce collection in the future should it become apparent that the debtors' financial situation has changed.

Vote 37b Indian and Innuit Affairs - To reduce from $7,072,000 to $6,633,697 the amount that may be outstanding at any time under the Inuit Loan Fund, established under the authority of Resources and Development Vote 546, Appropriation Act No. 3, 1953.

Explanation Parliamentary approval is required to reduce the authority for loans outstanding at any one point in time. The adjustment in this case reflects the conclusion of loans accounts from departmental records and is essentially a technical adjustment.

Vote 2b Public Works and Government Services - Real Property Disposition Revolving Fund - Pursuant to Section 29.1 (2) of the Financial Administration Act, to authorize the Minster of Supply and Services, effective April 1, 1995, to make expenditures out of the Consolidated Revenue Fund in accordance with terms and conditions approved by the Treasury Board, for the purpose of disposing of real property and, the authority for the Minister to spend for the purposes of the Fund such revenues received for those purposes as approved by the Treasury Board from time to time; and the aggregate of expenditures made for the purposes of the Fund shall not at any time exceed by more than $5,000,000 the revenues received in respect of the purposes of the Fund.

Explanation On January 19, 1995, Treasury Board approved the operational terms and conditions of the new Real Property Disposition Revolving Fund and approved the request to exempt the new revolving fund from the requirement to pay interest on the use of its drawdown authority.

Vote 22b Translation Bureau - To authorize the Minister to delete from the accounts of Translation Bureau Revolving Fund an amount of $13,606,000 representing operating losses incurred during a three year transition period towards self-sufficiency.

Explanation At the time of the establishment of the Translation Bureau Revolving Fund, authority was granted to delete the net operating losses for the first three years of operation from 1995-96 to 1997-98. The purpose of this authority was to eliminate constraints beyond the control of the Translation Bureau. The main constraint is the collective agreement for the translators and workforce adjustment implications.

Vote 23b Canada Communication Group - To authorize the Minister to delete from the accounts of Canada Communication Group Revolving Fund an amount of $37,045,443 representing extraordinary items due to restructuring.

Explanation The Canada Communication Group (CCG) has accumulated a deficit of $37 million resulting from organizational restructuring costs associated with the Senior Executive Network (SEN) and the subsequent transfer out of parts of SEN to the Government Telecommunications and Informatics Services. Restructuring costs and revenue loss related to the transfer of print procurement business to Public Works and Government Services also contributed to the accumulated deficit.