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Proceedings of the Standing Senate Committee on
National Finance

Issue 14 - Evidence


OTTAWA, Wednesday, March 9, 2005

The Standing Senate Committee on National Finance met this day at 7:03 p.m. to examine the Main Estimates laid before Parliament for the fiscal year ending March 31, 2006.

Senator Donald H. Oliver (Chairman) in the chair.

[English]

The Chairman: Honourable senators, I would like to call this 18th meeting of the Standing Senate Committee on National Finance to order. As honourable senators know, this committee's main field of interest is in government spending, directly through the estimates or indirectly through bills.

[Translation]

On Monday, March 7, our committee was authorized to study and report on the spending projected in the Estimates for the year ending March 31, 2006.

[English]

We are joined again tonight, honourable senators, by Treasury Board officials Mr. Mike Joyce, Assistant Secretary, Expenditure and Management Strategies Sector; and Ms. Laura Danagher, Executive Director, Expenditure Operations and Estimates Directorate.

Mr. Joyce will report to our committee on some of the outstanding questions from our meeting of yesterday on the Supplementary Estimates (B). We will be joined later by the President of the Treasury Board, Mr. Reg Alcock, who will speak to us on the Main Estimates.

Mr. Joyce, you now have the floor. If you answer all of our questions before the president comes, maybe there will be a few more questions.

Mr. Mike Joyce, Assistant Secretary, Expenditure and Management Strategies Sector, Treasury Board of Canada: Thank you, Mr. Chairman. That is not an invitation to speak slowly, I take it. Mr. Chairman, perhaps before I start, if I could express appreciation —

[Translation]

I would like to thank our people responsible for the research they did in order to find answers to all the questions in so brief a period of time.

[English]

I would also like to thank the program analysts and those departments that were able to respond. I am in some respects just a mouthpiece here. People put much time into doing this.

I do not have answers to all of the questions, but I can go through some of them. I think we have reasonable answers to many of them, but I will leave that up to the judgment of the senators who asked the questions.

Mr. Chairman, yesterday you asked me if the new funding for CIDA for the Global Alliance for Vaccines and Immunization and the Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria was part of the commitments made in what is referred to as the Jean Chrétien Aid to Africa bill. This funding actually represents incremental funding to existing global initiatives that are intended to benefit developing countries worldwide. While this funding will significantly benefit Africa and its people, it is not part of the specifics of the Jean Chrétien Aid to Africa bill.

Just to give you an overview of these initiatives, which are supplemental, the mission of the Global Alliance for Vaccines and Immunizations — or GAVI, as the acronym is — is to save children's lives and to protect people's health through the widespread use of vaccines. It is a public-private partnership that brings together governments in developing and industrialized countries, established and emerging vaccine manufacturers, non-governmental organizations, research institutes, UNICEF, the World Health Organization, the Bill and Melinda Gates Foundation and the World Bank.

GAVI was formed to harness the strengths and experience of multiple partners to advance global immunization. Collectively, the alliance serves to expand the reach of immunization services, introduce new vaccines and establish tools and systems to promote sustainable financing in developing countries. GAVI is designed to raise new resources for immunization and swiftly channel them to developing countries' health systems. GAVI provides funding for vaccine and immunization projects and programs to governments that have a gross national income below U.S. $1,000 per capita. Funding decisions are based on governments' applications and their ability to demonstrate results. The funding to date is $6 million in both 2003-04 and 2004-05.

The Chairman: It is only $6 million.

Mr. Joyce: That is the funding to date for this particular initiative — GAVI — that the federal government has contributed.

The second element of the amount that is in the Supplementary Estimates (B) is the Global Fund to Fight HIV/ AIDS, Tuberculosis and Malaria. The global fund is a concerted multilateral effort to accelerate global action to tackle AIDS, tuberculosis and malaria by improving access to information and goods and services needed by those suffering from the diseases. The fund is a partnership between government, civil society, the private sector and affected communities and represents an innovative approach to international health financing.

The global fund is based on the following principles: It operates as a financial instrument, not an implementing entity. It makes available and leverages additional financial resources. It supports programs that reflect national ownership. It operates in a balanced manner in terms of different regions, different diseases and different ways of intervening. It pursues an integrated and balanced approach to prevention and treatment. It evaluates proposals through independent review processes — more than one — it establishes a simplified, rapid and innovative grant-making process and operates transparently.

Canada has been active in the development and management of the fund and assumed a two-year-term seat on the board of the fund in March of 2004. The funding to date for this particular initiative is U.S. $50 million in 2001-02, and U.S. $50 million in 2004-05 in CIDA's estimates, so the monies in Supplementary Estimates (B) are in addition to the funds I have reported. That is the additional information we have been able to provide you with.

[Translation]

CIDA has requested $495 million. Of that amount, $140 million will be paid to support the Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria.

The second question put to us was whether we know the donor countries and what progress has been made to date.

[English]

The global fund was established as a result of the Okinawa G8 Summit in 2000. Since then, it has attracted U.S. $4.7 billion in financing through to 2008, so some of that is commitments. In its first two rounds of grant making, it has committed U.S. $1.5 billion in funding to support 154 programs in 93 countries worldwide. Canada has provided U.S. $100 million to the global fund over the past four years. Budget 2005 adds an additional $70 million to this to cover a pledge made to the fund in May of 2004 and an additional $7 million to be pledged to the fund for the 2005 fiscal year. A progress report and an independent strategic assessment of the fund are expected to be made available prior to the March 14 to 16, 2005, replenishment conference. That is the extent of the information we have been able to provide in the time available.

[Translation]

Senator Ferretti Barth's second question concerned CIDA and its NGO subsidy programs. She wanted to know why a cut had been made to the $240-million budget. Unfortunately, I can only answer in English.

[English]

There is no overall reduction in grants and contributions for 2004-05. Out of the net amount of $562 million in new appropriations, $237.9 million is available due to reduced contribution requirements. Here I have examples of the major ones, not a complete list. One is that the violence and instability in Iraq has prevented the international community, including CIDA, from carrying out many reconstruction projects, so CIDA has had to defer spending that it had planned to make this year. My understanding is that in fact it will be making those expenditures in the next fiscal year. That simply is released funding that is now available for these other priorities.

A second example is that the need to complete environmental assessments and consultations with regional stakeholders has delayed the implementation of various projects supported by the Canada Fund for Africa, most notably, the centre for excellence in bio-science and agriculture in Africa, which has resulted in reduced spending requirements. This again is a particular regulatory requirement, and again it is just a slowdown, in that CIDA did not foresee, as I understand it, the extent of the environmental assessments that it had to do undertake.

A third example is the postponement of the Algeria potable water project due to a delay by the Algerian government in awarding a critical contract. Again, this was a delay beyond CIDA's control. I understand it still intends to continue the project, but again, the funds that it had planned to spend are now available for reallocation.

There are deferrals in schedules and planned spending in many other projects being administered by the agency. Just to give you, without details, some examples, these include the micronutrient initiative led by the International Development Research Centre, various agriculture and education projects in the Americas, the Industrial Cooperation Program, food aid in South Korea under the World Bank and the mortgage market funds in Russia. These are delays, and you will see the spending in the next fiscal year.

[Translation]

Senator Ferretti Barth: I wanted to know whether it was true that CIDA had reduced its grants to NGOs from $240 million to $75 million. First, is the work the NGOs do not more important or necessary than that? Second, will these NGOs survive these cuts?

Mr. Joyce: If I correctly understood CIDA's answers, these cuts have nothing to do with the quality of the NGOs' work. The grants were not cut, but simply delayed because of unforeseen circumstances. If you want, I can request a more specific answer.

Senator Ferretti Barth: If that is possible, I would appreciate it.

[English]

Mr. Joyce: To continue then, Senator Massicotte yesterday asked me two questions. One was, when you look at the supplementary estimates, what is the total budget increase that you are now seeking compared to last year's budget and actual. The simplest answer I can give is that if you look at the total authorities included in Main Estimates and supplementary estimates in 2004-05, there is a total of $186.9 billion, which is $0.2 billion or 0.1 per cent less than the total estimates for 2003-04. I have a table here that gives more information about the components and the percentages. I do not have it translated, and the normal protocol would require me to have translated versions here. I could pass it to you.

The Chairman: We will translate it ourselves, because we would like to have the table.

Mr. Joyce: Then I will be pleased to leave it with the clerk at the end of the meeting. Thank you, I appreciate that.

Senator Massicotte's second question was, if you exclude the transfers to persons and other organizations, what is the percentage increase relative to inflation and GDP growth? The total major transfers to persons and other levels of government actually declined by $2.6 billion, or 3.4 per cent, from last year. If you exclude these transfers from the total estimates, the difference shows an increase of $2.4 billion, or 2.1 per cent. The inflation rate over the same period is 1.6 per cent, and real GDP growth is 1.7 per cent. Once again, I can leave a table here that gives a little more detail on those figures.

Senator Murray asked me yesterday about the alternative payments for standing programs and how that works. I gave you a brief answer in terms of the tax abatements. I can give you a little more detail here. Alternative payments for standing programs represent recoveries from Quebec of an additional tax point transfer above and beyond the tax point transfer under the Canada Health Transfer and the Canada Social Transfer. During the 1960s, the Government of Canada offered arrangements for certain programs, such as hospital care and social welfare, to provinces opting out. Only Quebec chose to use these arrangements. Under the arrangements, the Government of Canada reduced or abated personal income tax by 13.5 percentage points, while Quebec increased its personal income taxes by an equivalent amount. The impact on the taxpayers in Quebec was neutral because the federal tax went down and the provincial tax went up. Quebec continues to receive the value of these extra tax points through its own income tax system in lieu of cash, while other provinces receive the corresponding amounts in cash. The notion is that it is a different way for Quebec to get the money. It is done through the tax system rather than a direct transfer from the federal government.

Senator, I have to say that you now know as much about this as I do. If you would like more detail, I would suggest that if you are intending to have the Department of Finance before this committee, they would be, as they manage these programs, in a position to give a much fuller answer than I can. Alternatively, I could go back to the Department of Finance and get a fuller answer, but that is as far as I can go, recognizing that I am not an expert in this area and am getting to the limit of my knowledge of this program.

Senator Murray: It is getting rather technical, but that is shown in brackets in the Main Estimates here somewhere — on page 9 — but then I just wonder what the difference is between that arrangement and the so-called tax transfers, the tax points, because they are not in brackets, they are the subject of a footnote below. I am talking about chapter 9-6 in the Main Estimates, finance department payments for 2005-06.

Mr. Joyce: We were talking about the amounts.

Senator Murray: These are the same thing, I am sure. It says that the amounts shown are cash contributions authorized by Part V.1 of the Federal-Provincial Fiscal Arrangements Act and the table shows the total federal contribution in respect of the CHT and the Canada Social Transfer, including the tax portion of the transfer. Total cash transfer payments are $21 billion, plus tax transferred at $18 billion, for a total of $39 billion. That applies to all provinces. These items in brackets under "Alternative Payments for Standing Programs" refer to the tax abatement in Quebec. Anyway, we will just have to find out how it works. Does the transfer of tax points work differently?

Mr. Joyce: As I expect you know, senator, the reason that they are negative is that is the way the fiscal framework is built up by the Department of Finance. It assumes that they are cash transfers and these represent an adjustment because in fact Quebec gets the money by a different means.

Senator Murray: As do other provinces.

Mr. Joyce: Yes, but the net amount. My understanding is that in terms of Quebec, when you add it all up, it comes to a negative amount. If you look at the summary, there are two programs where Quebec has opted out. One of them is the one we are talking about and the other is the youth allowances recovery, and they are both negative amounts.

Senator Murray: Therefore, we get that amount back.

Mr. Joyce: However, we lose it through our income tax system because the federal income tax is reduced for Quebec residents and so the two amounts net out.

Senator Murray: We will leave it there for the time being. I just wonder why it is in the Main Estimates, but that is another subject.

The Chairman: Mr. Joyce, did you have further responses?

Mr. Joyce: I am just thinking about that question, why it is in the Main Estimates. It has to be shown because it is a statutory payment, and we show all statutory payments for information purposes. It is consistent with our practice to show in the Main Estimates the true estimates of statutory programs. I think it is just that, senator.

The Chairman: Senator Murray, I think you had a question earlier that you wanted to ask.

Senator Murray: I have several questions but I want to wait.

Mr. Joyce: I will continue with these questions, with your indulgence. Senator Stollery asked me clarify the following: What is the $500 million decrease in federal-provincial transfers composed of? The answer is there is a decrease of $601 million in equalization. These payments are calculated according to a formula set out in federal legislation and regulations. Provinces with revenue-raising ability or fiscal capacity below a threshold or standard amount receive equalization payments from the Government of Canada to bring their capacity up to that standard. The fiscal capacity of a province is a measure of its ability to raise revenue from each of the 33 revenue sources, including personal income tax, corporate income tax, sales tax, property tax and other sources, assuming they have average tax rates. Estimated equalization payments change as further data on the 33 revenue sources become available. Therefore, it is in fact an update based on forecasts of the 33 revenue sources available to the provinces.

Once again, that information will have an extreme amount of detail, but the Department of Finance would have it available. We have just been through a description of the alternative payments for standing programs. This is simply, as I understand it, an estimate that updates the amount that was included as a statutory payment in the Main Estimates for 2004-05 for information purposes, based on an estimate of tax rates and the tax revenue coming from them. The youth allowance recovery is a similar update of the estimates of what goes into the tax abatement calculations. The Department of Finance, in response to the growing concerns about adequacy, stability and predictability of the major transfer programs, is reviewing the system of equalization and territorial formula financing in Canada. As part of this review, the Prime Minister announced the creation of an independent expert panel during the October 2004 first ministers' meeting. The panel is conducting the first independent review of equalization and territorial formula financing since their inception and will provide a report by the end of 2005-06.

The next question is from Senator Downe, who asked about advertising, on page 11. I will just finish this question before passing it over to my minister. Why is Finance requesting $11 million for the advertising of the Canada Savings Bond program when it may be considering plans to eliminate this program? The Department of Finance, as we mentioned yesterday, is currently reviewing the Canada Savings Bond program with a focus on ways to design and deliver the program to meet the evolving needs of the government and Canadians. When the Minister of Finance announced the review in September 2004, the government made a commitment that there would be no immediate changes to the Canada Savings Bond program, which is why they decided to proceed with the annual advertising campaign to support that commitment and to present a business-as-usual picture to Canadians. Program elimination over a period of years was just one option presented to the Department of Finance by Cap Gemini Ernst & Young in a commissioned report. This is one of the elements the government will be using in looking at the future of this program.

Those are not all the answers we have, but I think now you will be more interested in hearing from Mr. Alcock.

The Honourable Reg Alcock, President of the Treasury Board of Canada: Do you want to hear more answers?

The Chairman: We would like to hear more answers, but honourable senators would like to hear from you. After we finish with questions and answers, we can revert to Mr. Joyce. Honourable senators, I would like to extend a warm welcome once again to the President of the Treasury Board, the Hon. Reg Alcock. Tonight we will begin with him the examination of the Main Estimates laid before Parliament for the fiscal year ending March 31, 2006. Mr. Alcock, we understand you have a few prepared notes, and following that, I hope that you will be available for questions from honourable senators.

Mr. Alcock: I will always be available for questions, honourable senators. I appreciate your tolerance of my late arrival. I am surfeited with cabinet committees right now, as well as other things. I am always pleased to come before this committee because we always have an interesting discussion. As I have said in the past, the debates that take place here have been quite helpful to us in some of the work that we are doing to try to improve the quality of the discussion on the estimates that takes place in Parliament. You know Mr. Joyce and Ms. Danagher; I do not need to reintroduce them. It is your diligence in reviewing the estimates, which certainly the officials and I appreciate, that helps us zero in on those areas that can be of most use to Parliament. I appreciated your second report on the 2004-05 supplementary estimates and was glad to see that you were in favour of the various changes to the estimates formats. We see this as an informative process as we engage with parliamentarians and have an interest in more and different kinds of information and different ways of accessing it. There will be more improvements to come. Before I take your questions, I would like to say a few words on the 2005-06 Main Estimates.

Let us look at the estimates in the context of the budget presented on February 23. This is our eighth consecutive balanced budget. I could give you the commercial on the fact that it is the longest string of balanced budgets and so forth. We know that. You know that it is important that we have our fiscal house in balance and that we have been able to maintain that discipline throughout all of these budgets.

The 2005-06 Main Estimates provide information on the $187.6 billion in government expenditures, including a total of $185.9 billion in budgetary spending and $1.7 billion in non-budgetary spending for loans and investments. In total, the 2005-06 Main Estimates have risen by $1.5 billion relative to the previous year, an increase of $2.6 billion in budgetary spending and a decrease of $1.1 billion in non-budgetary spending.

The change in budgetary spending is mainly due to an increase in major transfers to other levels of government, major transfers to persons and transfer payments and subsidies.

You will note that the almost $11 billion in reallocations identified by the Expenditure Review Committee is not reflected in the 2005-06 Main Estimates. It is typically the case with any budget decision that timing is such that detailed financial information is not available in time for the preparation of the estimates documents. There is a two-day difference. Typically, these are the kinds of decisions you would see later, in the supplementary estimates.

However, more information on the Expenditure Review Committee reductions can be found on the expenditure review website. Departments and agencies will include a reference to this information in their reports on plans and priorities in the spring. You will also remember that we have had some interesting discussions here about how to revise the estimates so that Parliament can more easily oversee government spending. I have listened to your comments. The results of some of our discussions are reflected in improvements in transparency, particularly in the supplementary estimates.

You will also find some, what I believe are positive improvements in the Main Estimates. The financial information has been organized in a different way. Part I of the Main Estimates has been significantly expanded to show government spending by sector; for example, the social, cultural, transport or public security sectors. Within each sector, spending is broken down further by federal department and agency. More detailed explanations are provided of the year-over-year changes in spending by sector.

There is another significant difference in the presentation of information from past years. There is no change to the financial information provided. It is just organized in a different way. For the first time, departments and agencies are using the new program activity architecture. Instead of reporting their Main Estimates according to business lines, they are reporting according to program activities, which are also now linked to the strategic outcomes of the organization.

These changes result from the implementation of the management resources and results structure this April. The MRRS, that is, the management resources and result structure, provides a framework that supports results-based management, demonstrates value for money and provides stakeholders, including parliamentarians, with the information needed to support decision making.

In Budget 2005, the government committed to further improvements in reporting to Parliament, and we are taking action. As indicated in the budget booklet entitled "Strengthening and Modernizing Public Sector Management," the Treasury Board Secretariat will be consulting with parliamentarians in the coming months to develop a blueprint for improved parliamentary reporting. The blueprint will include the estimates, as well as many other reports, but this project is not confined to a narrow interpretation of reporting. I would like to hear from you and other interested parliamentarians on the nature of the information we provide to support Parliament's role in approving expenditures, including how we might make these processes more effective. My aim is to develop a solid plan for providing parliamentarians with more timely and accessible information on program spending and results, information that helps you hold us accountable.

Before I conclude, however, I should like to update you on our ongoing work on vote 5. There has been a passing interest in that particular question in this committee. First, you will have noticed that we expanded the explanation of the contingencies vote in the Main Estimates, as well as in Supplementary Estimates (B). This is a first step in addressing the concerns raised by the Auditor General and by this committee. As a next step, I have also developed a proposal for changes to the vote wording and to the guidance framework in managing the contingencies vote. I am tabling with you today a summary of the changes I would like to introduce. Once we have discussed the proposal with this committee and others, I would like to see the changed vote wording in the fall supplementary estimates.

Mr. Chairman, honourable senators, I look forward to working with you and to your questions, as always.

The Chairman: The tabling is taking place now. Is that what we are getting? This is a summary of your proposals for changes to vote 5?

Mr. Alcock: That is correct.

The Chairman: How closely does it reflect some of the recommendations that this committee has made for strengthening the transparency in vote 5?

Mr. Alcock: You will find it reflects them very closely. We discussed this the last time I was here. We were pretty much on the same page. Before we finalized this, I felt I had a responsibility to consult the Standing Committee on Government Operations.

The Chairman: That is what you told us the last time you were here.

Mr. Alcock: That is right. I had a lengthy series of verbal discussions with the committee, but they have been preoccupied with other things. I have written to them and asked them to respond because I do not want to wait any longer. I would like to move on with this. If they find themselves unable to deal with it in the short term, I will have to seek advice.

The Chairman: Minister, I note that one of the things you said today, which I found somewhat shocking, is that all of the work that the Expenditure Review Committee did — and we are talking not about a few hundred million dollars but $11 billion — is not reflected in what you are here to discuss tonight. I wish there was something that we could do about it so that the Main Estimates, the main documents that the Government of Canada will rely upon for the year, could more clearly reflect much of the accounting and expenditure review work that has been done.

You said:

As is typically the case with any budget decision, timing is such that the detailed financial information is not available in time for the preparation of the estimates.

Why would that not be taken into consideration when compiling the budget? In other words, if the Expenditure Review Committee had said to a department, "We have found $1 billion in programs that are no longer needed or that are redundant or being better done in another department, so we will no longer give you that money," why could that not be reflected in these Main Estimates?

Mr. Alcock: It took me a while to understand it actually. I would not use the word "shocking," but "interesting" might be suitable. This is true of all decisions that are reflected in the budget, given that while there are processes going into it, it nonetheless is developed in secrecy. We have to get the business done on the regular spending and get the estimates prepared. That is quite a complex and lengthy process. We prepare them based on the estimates of expenditures, given normal operations. The budget comes in with many new initiatives and they are reflected and added to the A-base in the first round of sups. That is what happens each year.

We had done the work on ERC. That went into the budget hopper. Decisions were made on how much of that was accepted or not. It is not a complete black hole. That information is recorded. You have access to that information about the size of the cut by department. It is just not in the mains themselves. We have taken action to freeze the amounts in line with the decisions that are made within the estimates and then the reductions.

Here is the other part of it. Mr. Joyce, if you are getting worried right now, poke me with something. Pick a department randomly.

The Chairman: Public Works.

Mr. Alcock: We have accepted a budget reduction of a certain percentage.

Senator Murray: Fisheries and Oceans.

Mr. Alcock: There has been some reallocation to them so that their net number may be a positive number once we go through the supplementary estimates exercise, because you take away what we have taken away and add in what has been added in, and you may end up with a lower number than you otherwise would. All of those adjustments will be worked out as we put the budget decisions into play. We wanted to ensure that you could see it, which is why the table has been included with the budget documents. Then, as we come through to the next round of sups, you will see it built into the A-base.

Senator Murray: I have one or two policy questions, and then I will ask for some help with the numbers. Do you have the estimates with you? You have your officials behind you.

First, you can answer this policy question. A couple of budgets ago, it was announced with great fanfare that the government was doing away with the famous unity reserve. Are there other reserves in the framework now, and if so, what are they?

Mr. Alcock: I do not know if I can enumerate all of the reserves.

Senator Murray: I mean policy reserves.

Mr. Alcock: You are not talking about the compensation reserve, for example?

Senator Murray: Do you mean in anticipation of collective agreements and so forth?

Mr. Alcock: Yes.

Senator Murray: I understand that one.

Mr. Alcock: There is a contingency reserve — an operating reserve.

Senator Murray: Describe the contingency reserve, just for the record.

Mr. Alcock: It is the $3 billion that the finance minister builds in as part of his prudence exercise. It is there as part of the reserve. The intention is not to spend it, and if it is not spent, it goes against the debt.

Senator Murray: It is used to pay off the debt if it is not needed, but it might be needed if interest rates go up.

Mr. Alcock: Because of the very large numbers we are dealing with, small fluctuations could put us back into deficit.

Senator Murray: Are there other policy reserves?

Mr. Alcock: I am not sure what you mean by "policy reserve." Do you mean a reserve that would function like the unity reserve?

Senator Murray: Yes. I think there was an agricultural reserve, for example.

Mr. Alcock: I have an operating reserve. Should a department be having trouble because of some short-term unanticipated action, I can provide some additional assistance, but that is directed at department operations. It is not a discretionary reserve.

Senator Murray: This is all in the fiscal framework.

Mr. Alcock: Yes.

The Chairman: How big is that one?

Senator Murray: That was my next question.

Mr. Joyce: Traditionally, the operating reserve is not something we disclose.

Senator Murray: Really?

Mr. Joyce: That is mainly because it is a small reserve.

Senator Day: You can trust us.

Mr. Joyce: I believe this meeting is being televised, and I think departments would be acutely interested if we publicized the size of it.

If I could just say one thing, the policy reserves do not exist in the way they used to, when they were explicit policy reserves. There are a number — you can see this in the budget, and I think you can guess which ones they would be — where a decision is made to allocate a certain amount of money for a policy purpose. An example of that last year would have been the security reserve, whereby, because of 9/11, the government explicitly set aside in the budget planned spending money to deal with security.

Senator Murray: There is no program to match it to for the moment.

Mr. Joyce: They did not, because it was unknown. It was a reserve. It was, in effect, a kind of policy reserve because it was there once they decided what the reaction to the security crisis would be. There was no way of knowing at the time of the budget exactly which departments should get what amounts. A process was put in place to decide how that money should be allocated to the most pressing security concerns.

Senator Murray: Once there is a draw on one of those reserves, explain how it is done, just for the record. It takes a cabinet decision to draw on the reserve for a certain purpose, and a Treasury Board process, I presume.

Mr. Joyce: There is a Treasury Board process.

Senator Murray: Is there a supplementary estimate?

Mr. Joyce: There would definitely be a supplementary estimate because it is unallocated. The process would be, as the president has said, first, it has to go through the Treasury Board, because only the Treasury Board as a cabinet committee can make specific allocations to department budgets. That results in a proposal to Parliament for a supplementary estimate.

Senator Murray: Then the public accounts.

Mr. Joyce: That is correct.

Senator Murray: You do not see them in here. What you call the "compensation reserve" is there, but you cannot pinpoint it.

The Chairman: You cannot disclose it.

Mr. Joyce: No, we would not. Quite frankly, you would blow our negotiating strategy with the unions.

Senator Murray: I understand that. However, the existence of the reserves does not necessarily bring spending up above $194.9 billion.

Mr. Joyce: In terms of the Main Estimates figure, no, but in terms of the budget, we are careful to ensure that any allocations that are made through the supplementary estimates process are within the overall spending plans of the government as set out in the budget. This is a role we play at the Treasury Board.

Senator Murray: Help me with Table 2, Part 1, the Government Expense Plan here. I am sure there is a proper explanation for this. I am looking at page 1-3, Fiscal Equalization 2004-05, $10.9 billion; 2005-06, $9.5 billion. I have the budget plan here.

This committee has just examined Bill C-24, and we had the finance officials here. We know that for 2005-06 it is supposed to be $10.9 billion, which is the number you have for 2004-05. It should be $10.9 billion for equalization, unless I am missing something, and it should be $2 billion for territorial financing payments.

Is that a misprint? Is there an explanation for it, Mr. Joyce or Mr. Minister?

Ms. Danagher: The budget items are based on the new arrangements that the Department of Finance has negotiated for some of the new equalization payments. They require legislation to be passed. We cannot reflect them in the estimates yet. The number in the Main Estimates is a forecast based on the old arrangements. You will see that adjustment coming through the supplementary estimates when we provide an update.

Senator Murray: There will be another $1.4 billion and another $200 million.

Ms. Danagher: It could change.

Senator Murray: It will not change. The base is $10.9 billion.

Ms. Danagher: It will be the budget number.

Senator Murray: I should have known that.

I am looking at the budget plan, too. On page 16, among the other things that are in here, is $398 million over the next five years to enhance settlement and integration programs and improve client services for newcomers to Canada.

Do you have in your notes any indication of how that will break down by province? I need not outline to you Ontario's grievance — it is a legitimate one — about the amount of money it gets for integration of immigrants to that province, which receives and settles a great proportion of all the immigrants coming here. Do you happen to know what the plan is?

Mr. Alcock: That will be subject to some discussion with the minister and the minister with the various provinces that have the need. That is exactly the same issue as the budget, as the allocated new resources. The minister has the resources. He will have to come to the conclusions about how they will be allocated and come back to us for approval.

Senator Murray: I have a question about the Canada Firearms Centre. I think it would be under "Public Security." It shows an actual decrease in the funding for the Canada Firearms Centre.

Ms. Danagher: It is on page 26-7.

Senator Murray: I want you to assure us that the reality and the appearance —

Senator Stratton: Wait for the sups.

Senator Murray: That is not it at all. I wonder whether they have devised a way to shift some of the spending that had been under the Canada Firearms Centre. Tell me that this is not just smoke and mirrors. It is a real reduction.

Mr. Alcock: It is not just smoke and mirrors, senator. This is a real reduction.

Senator Murray: That is what I wanted to hear.

Mr. Alcock: The reality is, as you can imagine, that this has been the subject of more than one discussion. You may recall that last May, the Deputy Prime Minister and I made a commitment to cap the expenditures of the registry.

Senator Murray: Yes.

Mr. Alcock: We have worked hard and made some tough decisions to reduce the cost to the number that you see in the estimates. We were determined to bring it in under $85 million this year and we have done so.

I should point out that normal increases, such as next year's salary adjustments, will begin to move the number in the way that other departments' numbers move incrementally. However, operationally, that is the number.

Senator Murray: I will leave it at that.

Mr. Alcock: Senator, did you want to point out that this is a reduction of $18 million over the previous year?

Senator Murray: I was looking for the percentage, which is here somewhere.

Mr. Alcock: "Substantial" was the word, if you did want to say it.

Senator Murray: Yes, but I cannot find it. The percentage decrease is substantial.

Mr. Alcock: It is that.

Senator Murray: You are telling me that the appearance and reality are identical.

The Chairman: Can you tell us where the cuts were made?

Mr. Alcock: We would need to have the minister to go through it in greater detail than I am able to provide, but this has been the subject of a number of discussions. There has been a consolidation of a number of supports available to the centre. Some of the contracting was examined and pared down. Some operational efficiencies developed as they became more experienced with the new software, and so government was able to cut back in a number of those areas.

The Chairman: Is the software now functioning? Is the three-year problem now resolved, notwithstanding the huge expenditures for software?

Mr. Alcock: Certainly, when I visited the centre in Miramichi recently, they are comfortable with the way that it is operating. Work will continue on the underlying software to improve the services, to achieve better integration with the field. Some of the transitional costs discussed over the years were to build it and get it operational. Refinements will continue as they try to deliver a better and better product.

Senator Stratton: I appreciate the efforts that have been made to cut the costs with respect to the firearms centre. I received a notice, I believe in December, because I have a firearms-possession licence only. My licence was extended for a long time. Is that one method of saving money?

Mr. Alcock: I am worried about answering that one.

Senator Stratton: I am sure you are. In essence, it would be a simple way of saving a great deal of money, which would add up over the years if you had to renew on a regular basis. I am not knocking it, and I thank you for the savings, as most Canadians will thank you. Are there any other areas that we could look at with respect to firearms? For example, are there areas where you have made savings that would benefit firearm owners, currently or in the future? Part of the problem today is what will people owning firearms do with them in the future? We still have that question hanging. I have owned three rifles since I was a kid. You have saved money on the firearms registry operationally and in other areas. Did you save money in areas that would benefit those gun owners?

Mr. Alcock: In fairness, senator, that question is more for the Deputy Prime Minister, who has responsibility for this file. It would be inappropriate for me to speculate too much. If you wish to have the details, we could obtain them for you.

Senator Stratton: I would appreciate that.

Mr. Alcock: I know there was an extensive review and consultation with stakeholders. Extensive changes have been made to the program and they have adapted it to make it efficient in relation to the various users. My intuitive answer to your question would be, absolutely, but I could not enunciate the details. In one way, this is a massive operation. Could I encourage you to go to the centre at Miramichi?

Senator Stratton: I would agree with you, because we spend $82 million per year on it — and just multiply that by a number of years.

Mr. Alcock: You spend a goodly portion on a number of people who work hard to try to deliver an effective program. It is interesting that, like many people who care about what they do, they have enough experience to be able to anticipate needs and offer support to people in ways that they never thought of before.

Senator Stratton: I am not knocking the civil servants at all. My concern is that we are spending $82 million per year on this so-called gun control program. If it runs another 12 years, that would add another $1 billion. Will this $82 million per year continue? Mr. Alcock, you are a forecaster, so you must be able to speculate about that.

Mr. Alcock: I hope that we will operate every service that this government provides as efficiently and as long as possible.

Senator Stratton: You are telling me that $1 billion is not far off the mark.

Senator Murray: I have one policy question, Mr. Alcock. Is the government giving any thought to separating the post-secondary education transfer, as you separated out, with good reason and to good effect, the Canada Health and Social Transfer, CHST?

Mr. Alcock: As you know, senator, that debate is active and the government has not come to a decision yet.

Senator Murray: Currently, the Canada Social Transfer consists of post-secondary education and welfare, which used to be under the old Canada Assistance Plan. Are you giving some consideration to separating it out, as is being discussed?

Mr. Alcock: A resolution on this was before our convention last week and discussion among members has ensued. I am not sure whether one of the standing committees dealt with this at an earlier stage, although discussion is active. I do not know whether the cabinet has made a decision.

Senator Murray: Are there serious arguments against it? In the interests of transparency, I believe it ought to be done.

Mr. Alcock: I have not been a party to the discussion.

Senator Murray: Thank you.

Mr. Alcock: I will not tell you how I voted on the resolution.

Senator Harb: My question is on the Supplementary Estimates (B), page 83, dealing with the Department of Finance and the $1 items.

Mr. Alcock: Did you know that these are the smallest sups in the history of the government?

Senator Harb: I am on page 83, at $1 items under Finance. I will read, beside the top item, L11b:

To create a new Vote to authorize the issuance and payment of non-interest bearing, non-negotiable demand notes to the International Bank for Reconstruction and Development (IBRD), for the purpose of maintaining the U.S. dollar value of the initial capital subscriptions in the IBRD.

I was looking through the Supplementary Estimates (B) and all of the $1 votes seem to have a dollar figure. How much are we considering in this area?

Mr. Alcock: Is that just for this one?

Senator Harb: Yes, I would like to know about that specific one.

Ms. Danagher: On page 118, under Finance Ministry Summary L11b, the $1 ensures that the vote wording will be included in the appropriation bill. The authority that we are looking for is vested in the wording of the vote.

It is basically to create non-negotiable demand notes in an amount not to exceed a dollar threshold, and to establish that authority we have to have the vote included in the appropriation bill. Because we have to have an amount associated with the vote, it is given the nominal amount of $1.

Senator Harb: Normally, with the $1 items, you take from one spot and move it to another spot.

Ms. Danagher: No, they are used for a number of things. They are used to transfer money from one to another, but they are also used to create financial authorities, as in this case, for the issuance and payment of this note. There is no immediate cash requirement; it is a non-budgetary loan. It is just creating that authority and we need to include it in the appropriation bill.

Senator Harb: There are no dollar figures?

Ms. Danagher: No.

Senator Harb: Then why is it here?

Ms. Danagher: We need Parliament to vote to provide the authority for the issuance. It will not be automatically included in the appropriation bill unless it has a dollar value, so we give it a dollar value.

Senator Harb: However, it is more than $1. Every one of the $1 items in those pages has a value attached.

Ms. Danagher: No, not all of them.

Senator Harb: Let me take you to L25b on page 83, where you amend a vote wording in order to increase the ceiling.

Ms. Danagher: That is a similar situation. Again, that is amending the vote wording to increase the ceiling of an issuance. It is a non-budgetary item, which means that no cash is exchanging hands in the current fiscal year.

Senator Harb: Bear with me for a second. You are changing it from $180,459,059 to $232 million. That is a difference of $50 million.

Ms. Danagher: That is the ceiling on the loan, yes.

Senator Harb: Where are you taking it from? Are you moving it from CIDA to International Trade?

Ms. Danagher: We are recognizing an increase in the ceiling. The Government of Canada is increasing the ceiling on those payments. There is no cash actually going out the door; it is just a ceiling on the loans that will be made.

Senator Harb: You say that the $1 items in the supplementary estimates allow the department to reallocate funds from one program to the next. As well, in some cases, it takes money from one department and gives it to another. How many of those $1 items are to do through the back door what the department cannot do through the front door? In other words, the department may have received the money for a specific project and at some point decided they want to spend it on another project. Is it within the mandate of Treasury Board to ask about that, or do you just pass them on as they come to you?

Ms. Danagher: They have to come to Treasury Board to move the money from one organization to another. It is not necessarily coming through the back door. There are a number of instances where a $1 item is used. Normally, that is because there is no supplementary appropriation required for that organization, but they need parliamentary authority to move the money from one organization to another, which is why it is given the nominal amount of $1, so that it is included in the appropriation bill.

Senator Harb: I know why you put it in and I know why it is $1. It is because you are not asking for extra authority; you are only shifting money from one pot to another within the department or between departments.

How much money are we dealing with overall in the $1 items and how much of it comes from program review efficiencies in government operations versus actual government policy decisions, or is there such a breakdown?

Ms. Danagher: I do not have a breakdown available to provide to you. We could certainly do that if you want, but the information is in the table.

Senator Harb: I find it a little ambiguous. There are so many of them. Inquiring minds would want to ask those questions and I am sure the minister would want to have a closer look at it. There are so many of them coming back to Parliament annually. We asked one witness how often, after a department gets funding authority for a specific program, they end up spending it on something completely different. They get authority through a $1 vote and no questions are asked.

Mr. Alcock: If there are substantial funds in an appropriation that will not be used and there is another use for them, this is a device to move them across vote boundaries, but it is all reported. It is not done in a hidden way.

For example, in the case of 53b on page 85, it is simply the transfer of money from a fund that was managed by PCO to one that is managed by the Deputy Prime Minister. It is a device for aligning the accounts with reality. I cannot think of an instance where those transfers would take place without a public report.

Senator Harb: I know that you do report them. Obviously, they are here for a reason. When there is a reallocation from one program to another within the department, is it because there has been a change of policy or is it because the manager of the program has decided to spend it on something else? Of course they do have to report it, and it is reported here. It is a matter of whether Treasury Board has the role of telling departments that they need to have a proper explanation for moving money from one pot to the next, even within the department itself. I know that some departments have made a habit of doing that.

Mr. Alcock: If the senator would care to identify any departments about which he has concerns with regard to that practice, I would be interested in hearing that.

Senator Stratton: In the establishment of the budget for this fiscal year there were cuts of $10.9 billion, which is a significant amount of money. I want to ask you about policy rather than the detail in the book.

When you ask departments across government to make these kinds of cut, do you build in something for extraordinary contingencies? You are cutting $10.9 billion and the departments are asked to identify how much they can contribute toward that. Do you build in a contingency in case they are not able to cut that amount?

Mr. Alcock: This has been an extraordinary process and an enormous amount of time was spent on it. There are categories of these cuts, and we have talked about this before. It is a fascinating exercise. A good portion of this comes out of process improvements. Changing how we procure goods and modernizing our supply chain management will produce significant savings. Changing how we deliver services to Canadians, managing that more efficiently and collapsing some of the infrastructure necessary to do it will save considerable sums of money.

As to whether we have provided for some bumps along the way, we have.

We have spent an enormous amount of time on this and the numbers we have chosen are prudent. They understate some of the potentials here, but we wanted to make certain we were able to deliver on it over the time period. There are categories that are specific program cuts. You will recall that one of the motivations here was to start a process that we would like see continued as part of the ongoing budgeting process, of asking departments to examine their offerings, to be constantly looking for areas where they feel that they are not producing the kind of value they started out to produce, and to look at reallocating those resources to where there is a more urgent need.

This is one category of them there. The department has put forward a great many options. The ones that you see reported here were selected, and some of them are immediate, some take place over five years. The big change items are Service Canada, real property and procurement. They will take several years to be fully realized, but we are quite pleased with the results.

There is another issue here I should flag for you. We talk about trying to move to a focus more on results and outcomes and less on a transactional monitoring process. Some of that took place. We said to deputies and ministers "You have to manage your department and make decisions on where you will reallocate and where you will cut." We withdrew from that process, although not absolutely at this point; we still offer oversight to see whether we think it is realistic. We wanted to put the responsibility and accountability squarely in the hands of the deputies and the ministers.

Senator Stratton: As you go through this process — and $10.9 billion is a lot of money — have you thought of going into a department and talking to those people who have to live with it? The common complaint you hear is that all that seems to happen is there is more and more burden placed on those individuals in the service and nothing transpires except they have fewer people to do more work. What have you done to listen, and what have you done to respond to those people? I keep hearing that, and I am sure you do. It has been persistent for quite some time.

Mr. Alcock: There are a couple of perspectives to take on that. The first is that all of these proposals, including the service improvement proposals, came out of the departments. We did not have a hot idea and say "Go do that." We said "You come to us with it." For larger projects like procurement, where there is a split responsibility, where we hold the policy and they hold the operations, we have been heavily involved with them in trying to ascertain that the estimates and the forecasts being put forward are accurate. All of it comes from the decisions made by the people who have responsibility for driving it. Within that, there are people who will be affected, and there are estimates of the number of people who will be affected by these changes over the five-year period. We think they are modest, but nonetheless, for the individual who is affected, we will have to manage that very sensitively, and I have some responsibilities there as the employer.

One of the problems in management at large is that we are very good at describing the problem and defining the possibilities, but we are not so good at getting it done. That is because you have to make some hard decisions, and we have done that, we have made some tough decisions. Better procurement is a good decision, but better procurement means downsizing, for example, the number of people doing it.

Senator Stratton: Like any good manager, you go down to the shop floor once in a while and kick tires.

Mr. Alcock: I personally have not kicked those tires, but I am not the deputy responsible for anything.

Senator Stratton: Perhaps you should.

Mr. Alcock: I have great faith in the deputies who are driving these files and in their teams.

Senator Stratton: I am not suggesting otherwise. I am suggesting that perhaps going down to the shop floor once in a while might help.

Senator Downe: I am wondering if the minister could advise us on the reallocation of the $10.9 billion. Has the government assessed how many jobs will be lost?

Mr. Alcock: The best estimate that we have come up with is that around 10,000 public servants will be affected by the change. I say "affected by the change," in that their workplace may shift. Their jobs may be redefined as we go through this. We will be changing how we procure things and that will affect everyone in procurement in one sense. In terms of net losses, those are the people touched by it. The actual loss will be 1 per cent of the public service over five years. It is hard to make an exact estimate because we have a robust workplace adjustment policy in place that will help people who are affected retrain and get redeployed. The exact impacts of retirement are unknown at this point, but we do have a significant number of people who are at or approaching retirement age.

The Chairman: Do you have a chart on that, an impact study on employment?

Mr. Alcock: There has been a great deal of study on it internally.

The Chairman: Anything you could lay before us on employment impact?

Mr. Alcock: We are in discussions with the unions and employees right now. I think it would be premature to do that. That is the estimate, a net of about 1 per cent of the public service over the five-year period.

Senator Downe: That would be regionally or nationally?

Mr. Alcock: There were several lenses through which the ERC process was measured. One of them was a regional lens, because there was a concern expressed in the major exercise in 1995-96 that the cuts had been disproportionately visited upon the regions. This is quite even across the country. That is also true in Service Canada, which is part of this.

Senator Downe: Was any assessment done of how many public service jobs were lost through the $1 billion reallocation that was referred to as the Manley reduction?

Mr. Alcock: I do not know if I have numbers. It was of an order of magnitude that any losses would have been dealt with through attrition. I do not recall any specific layoffs in that set of cuts. I could get back to you, Senator Downe, with details on that, if you like.

Senator Downe: I raised this at the November meeting when we had some Treasury Board officials here — how a cut of $1 billion under Minister Manley resulted in a cut to Canadian Heritage that resulted in a cut to CBC that, two years later, resulted in CBC cameramen in Charlottetown losing their jobs. You can trace it all the way back. Has that been done across government?

Mr. Alcock: I have not heard the example before. I will see what information is available.

The Chairman: You told Senator Downe that you do a regional analysis of the employment impact; do you also do it regionally by department?

Mr. Alcock: By and large, where that was possible to do, yes.

The Chairman: Have you done it?

Mr. Alcock: No, no, the regional analysis.

The Chairman: By department?

Mr. Alcock: Yes. Now, when I say that, it does not mean that we would have the numbers by department. We looked at the impact of each of the cuts and the impact on the regions, but it does not mean it would be exactly proportionate in every department, no.

The Chairman: You could not go to your computer back in your office and determine what the employment impact was in a particular department in a particular region of Canada? You would not have those numbers?

Mr. Alcock: Are you talking about the question that Senator Downe is asking?

The Chairman: Exactly.

Mr. Alcock: No, definitely not with that one. I was referring to the $10.9 billion. In that one, Senator Downe suggests a link back that goes through quite a complicated value chain, including handing off grants and such to others who make decisions about what they do that could get visited on the life of a particular cameraman — no.

One would argue that there may be a whole range of other decisions involved in the ultimate result that are not necessarily the direct consequence of the government's decision, although that may be a handy excuse.

Senator Ringuette: I have another issue, EI. On Monday, we were reviewing the supplementary estimates for 2004-05. On page 30, the last item, we have the consolidated specified purpose account, which is the Employment Insurance account, estimated at $16.45 billion. The latest estimate is 15.9, which is a reduction of almost half a billion dollars in payments to EI recipients. The net result for the fiscal year ending this month is $15.9 billion.

Mr. Alcock: A result of the exceptionally strong management of the Government of Canada.

Senator Ringuette: Very good try, because I am not persuaded of that in regards to this particular item. If we move to page 1-4 of the 2005-06 estimates, on page 1-3, right at the beginning, you have the transfers to governments, and then in the middle of that page you have major transfers to persons.

Mr. Alcock: Right.

Senator Ringuette: You estimate an increase in benefits to the elderly, which corroborates the budget speech. Then you have Employment Insurance, which was estimated in the Main Estimates for 2004-05 at $15.5 billion, but yet Monday night the estimate we got was 15.95. We are missing over $400 million.

Mr. Alcock: Keep answering your question.

Senator Ringuette: Why the disparity? We have the new books, the latest estimates for this year end, and we have 15.9.

Mr. Alcock: I understand the question, senator.

Senator Ringuette: In addition to the fact that already there is a reduction of $496 million from the Main Estimates, we have here Main Estimates for 2005-06, 15.4, so there is almost half a billion dollars missing there in addition.

Mr. Joyce: Senator, in order to really do justice to the answer, we would have to develop a table. This question was asked yesterday, a legitimate question about the fact that we simply put in a single line for the consolidated special purpose account, which is clearly an aggregate of many other different numbers. One thing we would need to do is break that down.

The second and simpler explanation here is that when we do the table in the Main Estimates, we are trying to do a comparison of the equivalent number in the previous Main Estimates with the number in the current Main Estimates. Because we are just trying to compare snapshots in time of the status of Main Estimates, we do not build in the revisions to the forecast.

Senator Ringuette: Mr. Joyce, you told me on Monday that the $496 million in the consolidated specified purpose account was the Employment Insurance program.

Mr. Joyce: That is correct.

Mr. Alcock: Maybe I could take a stab at this. This talks about EI year to year. The consolidated special purpose account includes EI, but also includes other amounts.

Senator Ringuette: I am not trying to be difficult, but I am trying to follow the numbers here. There is almost half a billion dollars.

Mr. Alcock: Senator, the discussion you are getting into is a very interesting one. Frankly, if we can, we should provide such a table so you can better understand this. We might want to look at modifying how we present this in the future as part of this process of trying to make things clearer each time. It has taken me a fair amount of time to come close to understanding it. Anyway, that is enough said.

The Chairman: Mr. Joyce, is one of the questions that you did not have a chance to respond to yet part of the question that Senator Ringuette is asking now?

Mr. Joyce: It is part of the question, and we have a response to that part.

Senator Ringuette: It is complicated by my new question.

The Chairman: Mr. Joyce, would you mind giving that part now to help us, please?

Mr. Joyce: The specific question from Senator Ringuette was why has the consolidated specified purpose account decreased by $496.359 million and why have we had a decrease in EI payments. The answer is that the reduction of $496.359 million is made up of two components, a reduction of $483 million in the forecast of EI benefits as set out in the November 2004 economic and fiscal update and a related reduction of $13.4 million in EI administration costs. The reduction in EI benefits resulted from the fact that, according to the economic and fiscal updates forecast, the economy had rebounded strongly in 2004 and was expected at the time to exceed growth forecasts made earlier. This strong rebound has produced a number of favourable results for Canadians, including the best rate of job creation amongst the G7 countries.

Senator Ringuette: So you have $300 million less in EI benefits?

Mr. Joyce: A reduction of $483 million was forecast due to the fact that the economy created nearly 400,000 additional jobs. That clearly reduced the demand. It was not a change in policy. There was no change that restricted the benefits. It was simply that the forecast of the demand went down.

Senator Ringuette: That brings me to my new question. In the budget speech, and followed up by Madame Robillard's press release, there are four pilot projects this year for the EI account, which Madame Robillard and the department estimated to cost about $325 million. I look at the numbers in the Main Estimates for 2005-06 and —

Mr. Alcock: They are not there. The $325 million is not there.

Senator Ringuette: It is not there, because there is another reduction in the estimate of payments to persons who are on the EI program. Why is it not there?

Mr. Alcock: It is not there for the same reason the cuts in the ERC process are not reflected in the mains, because that was a budget decision. It will be reflected when we move to the sups. In the same way, many of the decisions made in the budget are not reflected immediately in the estimates.

Senator Ringuette: What you are saying, Mr. Minister, is that for the time being, you are forecasting a reduction of $300 million.

Mr. Alcock: The estimate is if there were no change to the policy and there continued to be, because of strong job growth, a reduction in the EI account, yes.

Senator Ringuette: There is no change in the policy.

Mr. Alcock: What the mains reflect is what the fiscal position would be, absent the policy decisions of the budget.

Senator Ringuette: I thought that it was part and parcel of the budget speech.

Mr. Alcock: That is the point we made right at the beginning. We put the mains down two days after the budget. There simply is not the time to reflect the budget decisions. The budget will indicate, "Here is the new program. We will add so many million dollars to this." There is not the time to reflect it, so it is reflected in the next sups and built into the annual reference level.

Senator Ringuette: The next issue is the Atlantic Canada Opportunities Agency, on page 1-13.

Mr. Alcock: Is that of the mains or the supplementaries?

Senator Ringuette: It is the mains for 2005-06.

Mr. Alcock: Yes.

Senator Ringuette: I notice that the economic development agencies for Northern Quebec and Western Canada are not listed here, but that is another issue.

Mr. Alcock: They are listed further down the page. That is, the Western one.

Senator Ringuette: What about Northern Ontario?

Ms. Danagher: That is part of Industry Canada.

Senator Ringuette: That is part of Industry Canada. I will have to look there.

Why has the Atlantic Canada Opportunities Agency received a decrease in the Main Estimates from $476 million to $437 million?

Mr. Alcock: It is a decrease of $38 million.

Senator Ringuette: It is a decrease of $38 million.

Mr. Alcock: If you turn the page, on the next page under Part 1, the Government Expense Plan, regional initiatives, the major part of the reduction in funding to the Atlantic Canada Opportunities Agency relates to a decrease of $16 million due to the sunsetting of the cod fisheries closure initiative.

Senator Ringuette: That is the TAGS program.

Mr. Alcock: There is a decrease of $8 million in requirements under the Saint John Shipyard Adjustment Initiative.

Senator Ringuette: The Strategic Community Investment Fund is the SCIF program; that is not the TAGS program. On page 1-15, there is also a decrease in funding for VIA Rail Canada. I know that we transfer money to support passenger rail services. I am questioning this at a time when we are talking about green energy, greening the environment, urban transit facilities and so forth. Why is there a reduction for VIA Rail? Will you tell me to go to another page?

Mr. Alcock: Again, turn the page, and it says the decrease of $22 million in VIA Rail spending is related to the completion of its $401 million capital investment program in 2004-05.

Senator Ringuette: That is capital investment.

Mr. Alcock: Right.

Senator Ringuette: Do you have another item for VIA Rail operations? I did not see it.

Mr. Alcock: The decrease you are talking about is related, though, to unused capital authorities that they had.

Mr. Joyce: With regard to the payment to VIA Rail, we just show a single amount. In the past, that included capital.

Senator Ringuette: Does this include operations and capital?

Mr. Joyce: Correct. The operating part is effectively an operating-loss subsidy.

Senator Ringuette: Are they losing $22 million in subsidies?

Mr. Joyce: Correct.

Senator Ringuette: Will that justify closing some routes linking the East and the West or reducing service to mostly rural communities?

Ms. Danagher: No. Back in 2000, the government provided VIA Rail with $401 million over five years. It was a capital investment program.

Senator Ringuette: That was notwithstanding the operations.

Ms. Danagher: That was notwithstanding the operations. It was spread over the five years. It ends on March 31, 2005. The estimates for 2005-06 are now just for the operations. There is no more capital money because it has completed the capital program.

Senator Ringuette: You are saying that in the Main Estimates for 2004-05, the $191 million included both operations and capital?

Ms. Danagher: That is correct, and it included the one-time money of $22 million that was related to this capital investment program.

The Chairman: Minister, today when you made your opening remarks you tabled with us for the first time a document of several pages entitled "An Overview of Proposed Changes to Treasury Board Vote 5." As you know, this is a subject that this committee has spent much time on over many years. It is the type of document on which I know a number of honourable senators will have questions they would like to put to you. We cannot reasonably read it, study it and analyze it quickly when we are trying to put other questions to you tonight. Are you prepared to come back at a later time to answer questions that we would have on this?

Mr. Alcock: Absolutely.

The Chairman: This deals with government's ability to spend money for unforeseen events even before Parliament can review it. That is why it is so important to us. We really need time to study it before we can put proper questions to you.

Mr. Alcock: I absolutely agree with you, senator. I would be pleased to come back. This has been an issue for this committee and for the Auditor General. Officials have done terrific work looking at the concerns that your committee had and working with the Auditor General. As I say, we have tried to put some of these questions before the House committee. I would be more than willing to come back. I want to get this right.

The Chairman: I appreciate that. I for one have not had a chance to read it because I am trying to run the meeting.

I have a quick question about the Auditor General of Canada. The Office of the Auditor General of Canada is seeking $71.8 million on page 1-42 in new appropriations for 2005-06, a decrease of 1.3 per cent or $1 million over 2004-05. What are the reasons for this reduction in the planned spending? Which categories of expenditures will be affected by this reduction and what will be the impact on the conduct of audits and studies? Do you have anything to lay before us about the blue-ribbon committee that you discussed on a previous occasion in relation to that?

Mr. Alcock: Let me first give you the reason for the reduction in planned spending. The main explanation for the decrease of $995,000 is a technical adjustment, in that the percentage used to calculate the employee benefit plan contributions went from 21.5 per cent in 2004-05 to 20 per cent in 2005-06. That is the bulk of the net reduction. There is no impact on her operations because it is mainly a technical adjustment.

You refer to the new funding mechanism.

The Chairman: Could I say, as more background, I do not know if you know all of the things that this committee does, but this year we have had all of the parliamentary officers before us and we asked them a series of questions. Some of the questions we put to them were: "How do you get your funding? Are you underfunded? Do you get enough funding? What do you think of the system by which you get your money to operate?" and so on. It is something that we may include in our report.

Now that you are here, I would like to hear your views, particularly on the Auditor General and the blue-ribbon committee that you discussed with us briefly your last time here.

Mr. Alcock: This is an issue that I have had some interest in also. When I chaired the Standing Committee on Government Operations and Estimates, we put down a recommendation that the House undertake a study of this in order to come up with a new mechanism that dealt with some of the obvious conflicts. It first surfaced with the Privacy Commissioner's office, but the same holds true for any of the parliamentary officers who have oversight responsibilities to government.

There were discussions going back some years with the Auditor General, who is the one who has raised this issue most frequently. I had met with her several times before, talking about the issue in general; and I met with her just before Christmas to look at a process. Officials have been working with her office to look at a range of options. There was the British model, a blue-ribbon panel, and there were many other options.

We have made a decision to proceed. We intend to use this year to test out a couple of processes. The discussion is perhaps lengthier than you want right now, but it would be interesting to bring officials forward at some point if this committee has an interest in this issue.

We have spoken to the Speaker of the House of Commons and the Speaker of the Senate, believing that they and the House processes should be brought into this, as well as the chair of the Public Accounts Committee and the chair of the National Finance Committee in the Senate. I am not sure which senator that is.

Senator Day: Senator Furey.

Mr. Alcock: Without being too cute about it, there is a range of questions here that have been well identified by the staff. Meetings and briefings are being arranged now with both the Senate and the House.

There has been an argument that we need to standardize this process. One of the arguments that we have begun to develop is that we probably need a standard piece of legislation at some point that defines the accountability relationships for all parliamentary officers. Then they can manage their legislation independent of that. This is the first step. This is looking at trying to bring the House and the Senate into the oversight of these parliamentary offices.

The Chairman: When will parliamentary committees have an opportunity to view it, comment on it, analyze and debate it?

Mr. Alcock: I would have to determine where it is at right now. However, I see no reason why that could not happen very soon. The two administrations are just now sitting down to start the conversation.

The Chairman: As we have had parliamentary officers, Mr. Reid and others, before us who have some financial difficulties in funding the work they ought to be doing, it is an issue that we have looked at seriously. We would love to have such a document laid before us so we could analyze it.

Mr. Alcock: That would be not only a reasonable request, it would be very useful to have you do that. It would be interesting to bring officials forward because a specific proposal has been developed.

The only hesitancy you hear in my voice is that I do not want to pre-empt the two Speakers, who are part of this process. You are to be invited to a meeting to discuss this, because the chair of this committee and the chair of the Public Accounts Committee are two of the people who would be acting in this. However, if you are planning to discuss the appropriateness of the size of the resources provided to different officers, you might want to call me in for that chat too. You might find some disagreement.

Senator Day: I have a follow-up to the chairman's question. Estimates for the Governor General and the Auditor General are both reduced slightly. You indicated the reason for the Auditor General's reduction was a readjustment with respect to certain calculations. Who makes that calculation and makes the readjustment based on it? How does that happen?

Ms. Danagher: It is the Department of Finance.

Mr. Alcock: In the case of the Auditor General.

Senator Day: In the case of the Auditor General.

Ms. Danagher: For the EBP.

Senator Day: The Auditor General would have submitted a larger budget to Treasury Board, but someone would have adjusted that?

Ms. Danagher: No, the adjustment is statutory. It is not provided by the Auditor General. The information is provided by the Department of Finance because it is an adjustment. Mr. Joyce, is it the Department of Finance that provides the EBP calculation?

Mr. Joyce: The employee benefit calculation is an estimate of the cost of the employee benefit plans. All we are doing is adjusting that estimate. It has no impact on the Auditor General.

Ms. Danagher: In the previous year, it was based on 21.5 per cent of the wage bill. This year, it is based on 20 per cent. You will see in the Main Estimates a decline in every department's budget related to the employee benefits.

Senator Day: Could you explain to us whether you only get from the Auditor General or the Governor General a request for the operating part of their budgets? Are all the statutory amounts developed in some other department in government to put together the full budget?

Ms. Danagher: Normally, we provide them with the guidelines in terms of the percentages. They do the calculation and we verify it.

Senator Day: Because it is statutory, it will be an amount that —

Ms. Danagher: That is correct. In our guidance to them when we are developing the annual reference level update, which is determining the Main Estimates for the next fiscal year, we tell them what the percentage will be, and we get that percentage from the Department of Finance.

[Translation]

Senator Ferretti Barth: Mr. Minister, I am dying to ask a question. Among the government's promises, an amount of money was promised for seniors. We see in your presentation that you classify them in the dynamic communities included in the New Horizons program.

I have been sitting in the Senate for eight years now, and all those years I have urged the government to reopen this program for seniors. I have formed 77 seniors clubs in recent years. I started organizing them in Montreal and Quebec when I was very young. With this program, I emphasized the fact that it was very important that seniors clubs be reconsidered because the first New Horizons programs brought seniors closer to the government, to the Liberal Party. Members visited the seniors clubs and brought cheques. There was a relationship between voters and their MPs. They attended all the parties. At one point, it all ended and seniors have been marginalized.

The New Horizons program will get $10 million for all of Canada. When will the government start granting this $25 million a year to the program?

The government sent that money to the provinces. The Government of Quebec received the money. We have a form to complete in accordance with federal criteria. The Government of Quebec has prepared another form, which automatically excludes seniors clubs. In my opinion, the money now goes to community centres which are concerned with the welfare of seniors. Where are we headed with this promise the government made?

Mr. Minister, is there any chance of harmonizing the federal government's criteria with those of the provinces so that seniors clubs can benefit from these programs?

In your presentation, you also say that the purpose of this program is to improve seniors' quality of life, to reduce the risk of isolation, for example. That cannot happen with the community centres. I think it is the little seniors groups that take care of their members, that organize things and help each other break down this isolation. The money was given to the provinces; the seniors clubs got nothing. It is over. All the propaganda we did, the advertising; look, this is not good. We have to find a way to tell the provinces there is something else. We created a foundation for postsecondary education. We could create another one — even though I am opposed to foundations — that would take care of the welfare of seniors. I would be very happy about that.

You also say in your presentation that this program will reach out to the most vulnerable members of our senior population. What do you mean by most vulnerable?

[English]

Mr. Alcock: There are two or three parts to your question that would be better directed to the minister responsible. He has been working hard to deliver on the promise to augment the Guaranteed Income Supplement. A significant commitment to that was made in the last campaign and delivered on in this budget. A promise was made and a promise was kept, in that case, to quote somebody else.

Senator Murray: To coin a phrase.

Mr. Alcock: The issue that you raise is a serious one that has been debated at some length by people who are concerned about seniors. Your concern about what has happened in the past, when money has been taken and not delivered for the intent that it was voted, if you like, or the intent of the government, is something that the minister is working out as he goes into discussions with the seniors' groups in the provinces. There has been no decision made yet because he just received the money.

[Translation]

Senator Ferretti Barth: Listen to me, Mr. Minister. The government said, "Here is the New Horizons program for seniors." It did a lot of advertising everywhere and published pamphlets setting out the criteria for applications. These seniors clubs prepared applications — they have been forgotten for years. Everyone filed an application. Seventy-seven did so at my community centre alone. Not one was accepted. When the forms reached the selection table, the provincial government said: "They do not meet our criteria."

What are you going to look like when you go to meet these seniors? And they were our human capital. How can you forget that so easily? And it was only $10 million! I think we have to find a solution.

I wrote to Minister Dryden. I wrote him more than a month ago, and he still has not answered me. I explained everything to him. This is really something important for me.

I entered the Senate as a result of the work I did in the field for all seniors. Today, these people are an asset for us, and it is thanks to the work we did.

[English]

Mr. Alcock: I think you would get a very positive response or interest from Minister Ianno, who has responsibility for this program and has been meeting with seniors across the country as he has developed it. I would encourage you to do so. I am not equipped to answer for him in any way on the program design that he is working on, but I am sure he would be interested in talking to you about it and trying to understand how the problem you are identifying could be addressed.

[Translation]

Senator Ferretti Barth: You prepare a program, you distribute the grant application forms, you transfer the money to the provinces, and they have other criteria. That makes no sense. We do not know where the money went.

[English]

Mr. Alcock: I would encourage you to speak to the minister responsible for the program. I am sure he would be more than willing to do that. I do not have policy responsibility for the program, nor do I have the experience he has in trying to address the issues you are raising. I know he has a deep interest in the subject that has led to him receiving the $25 million on top of the $2.7 billion he received for seniors.

[Translation]

Senator Ferretti Barth: It is your responsibility to see where the money you grant goes, isn't it? You have written it here, "for seniors, for seniors clubs." And they are excluded!

[English]

Mr. Alcock: The minister will come back with a program and lay out his intentions. We will approve it if it seems to be consistent with the policy of the government as voted by the House and we will hold him to account for that.

Senator Downe: I am sure the minister may want to refer some questions to the officials, who can get back to us with more information.

In the estimates, on page 27-5, under Transport Canada, the minister may be aware that there is a controversy in Prince Edward Island regarding the seasonal ferry service in the eastern part of the province. Is that the contribution toward ferry and coastal passenger and freight services? I am referring here to the Wood Islands ferry service. Wood Islands is the place it leaves from and, as we like to say in P.E.I., arrives at. Could you send me a breakdown of that expenditure for the last year?

Mr. Alcock: Certainly. There was some discussion of this the other day. We will get you the details on that, Senator Downe.

Senator Downe: This question I should ask of the Minister for Veterans Affairs, but I will raise it here. I am sure you can send me some information that will assist me when I see her at a committee meeting. It is on page 29-4, third from the bottom, the Last Post Fund. As you know, that is a fund that helps with the burial costs of veterans when their families cannot afford it or the veterans themselves had made no provisions for that. I notice it is the same amount as in previous years. I have also seen in the media recently that various businesses are making fundraising efforts for this fund because there does not appear to be enough money to cover the requests. I know this is a grant to the independent group that manages the Last Post Fund.

Could you provide me with information, if you have it, on how many requests were received and what the dollar value was; how short we are in funding it?

Mr. Alcock: I certainly will undertake to get the detailed information to you. I would encourage you to talk to the minister, who is, as you know, extremely energetic and seized of this file. I do not recall the details of that particular fund, although I do recall her raising it with me not too long ago.

Senator Downe: My colleague suggested, and I agree, that we should ask what other sources of funding there are or who else funds this. I refer back to the memorial that was constructed for the World War II veterans in Europe. In Canada, Wal-Mart Canada — a much criticized corporation — to their credit, stepped forward to fill the vacuum for a memorial for which, in my opinion, the Government of Canada should have provided the money. I hope this is not a similar case. I would like some background information on that.

My last question refers to the same page. The Veterans Review and Appeal Board is a very important body that deals with benefits for veterans, current members of the forces, and others who may have been injured in the performance of service to the country. I am curious as to the proposed reduction. Is that a direct result of members not being appointed to that board to replace those who have resigned or whose terms have expired, or is there another explanation for that reduction?

Mr. Alcock: I am sorry; I do not see the reduction, senator. Which line is it?

Senator Downe: I am at the top of the page, 29-4, Veterans Review and Appeal Board. There appears to be a reduction in my copy. I think it may be simply the fact that members have not been reappointed, but if not I would like to know the reason for it. Could you send me that as well?

The Chairman: Minister, did you want to add anything?

Mr. Alcock: No, that is fine. Although I would encourage the senator to speak to the minister herself, who I know has been quite successful in prying money out of the finance minister.

Senator Downe: As well she should be.

Mr. Alcock: As well she should be.

Senator Day: Mr. Minister, could you help me with respect to your comment: For the first time, departments and agencies are using the new program activity architecture, or PAA, instead of reporting their Main Estimates according to business lines. You said that is the result of the implementation of the management resources and results structure this April.

Can you pick one of the pages here, or one of the departments, and just explain?

Mr. Joyce: Let me be candid about the nature of the change here. We were operating under a previous policy that resulted in a display in the Main Estimates that basically had atrophied. The way the estimates were displayed, in terms of the old business lines, really did not reflect the way departments managed. One of the intents in renewing the policy — and it is more than just a name change, I do not want to suggest that — was that we wanted, under the program activity architecture, the departments to actually say, "When we look at our department, these, for management purposes, are the units we break it down into, these are the activities." That was one objective of the change in the policy. The program activities you now see are, in some cases, very similar to, and in some cases, the same, as the business lines when in fact they were still relevant to the departmental management. In many cases, they have changed, and so you now have a display that reflects how the department sees its operations.

Senator Day: I understand what you are saying. Can you give me an example? Do we change the votes?

Mr. Joyce: No.

Senator Day: Do we do any of those things?

Mr. Joyce: No, that is, as the president indicated, one of the things that we want to start discussing when we come back under the improved reporting.

Senator Day: Therefore, is it true that the architecture has been changed but none of the line items have been changed?

Mr. Joyce: To be honest, senator, if we had wanted to make that change — and we were not ready do that — we could not have done it without consulting you and the members of the other House. That is not something we would have introduced without consultation. Vote changes, as you can appreciate, will be a major change in the estimates.

Senator Day: Is there any example you can show me here of this new way of doing things? Is there an obvious one? Maybe you would want to think about it, because we are running out of time. Maybe you could just give me a few examples. The bad news is we have only had these estimates for a short time, but the good news is we have the mandate to study them all year, so we will be dealing with you on a regular basis and we will get to know and understand this over time.

Mr. Joyce: What you see in the Main Estimates is very much the top part of the program activity architecture; it is the program activities, the primary elements against which a department manages. Below that, they have provided, in many cases, many lower levels. We have a structure that looks like an organizational chart that will be the basis, once we get it up and running, for providing departmental management with information that they need to manage; us as the Treasury Board Secretariat to provide the advice to the Treasury Board on resource allocation; and also, you will see increased use of that in the departmental reports on plans and priorities, because they will then have a consistent basis for reporting to you in greater detail.

What I can do is provide you with some examples — the department, and the complete program activity architecture that you do not see in the Main Estimates — and I think that might provide a basis for further discussion.

Senator Day: That would be helpful, just to give me a flavour of this.

Mr. Joyce: We will pick out a few good examples and provide them.

Senator Day: I would like to refer you, in the Main Estimates for next fiscal year, to page 1-25. This is under Government Expense Plan, and I find the detailed explanation that you give very helpful. I am looking under the explanation column, and in this time of restraint I note that the Treasury Board Secretariat has a net increase of $82 million. However, you give an explanation for this in breaking it down into two items. The net increase under operating expenditures that will go to Treasury Board Secretariat next fiscal year, if we see fit to pass this, consists primarily of a $38 million increase in Treasury Board Secretariat's incremental funding requirements. Could you explain to me what the $38 million incremental funding requirement might be?

Mr. Alcock: Part of it was simply that a lot of the funding we had at Treasury Board was project related, and so year over year, we have been funding these through funds that were temporary and lapsing. A decision to solidify that in the ongoing funding of the Treasury Board for the Chief Information Officer Branch was one part of it, and the second part was to provide the support for the new responsibilities of the Comptroller General's office and the internal audit.

Senator Day: Okay.

Mr. Alcock: That would be the lion's share of it. It shows up differently in the budget because you will see in a previous year we would have had a certain amount, and it continues on with the relatively modest increase, but what in fact has happened is that some money has lapsed and we put it back in to provide the support to that office.

Senator Day: Is that what "incremental" means?

Mr. Alcock: That would be over the year previous.

Senator Murray: Minister and officials, you may want to make a note and send us information on some or all of the matters I will raise now.

Budgetary Main Estimates by standard object of expenditure: One of the standard objects of expenditure is called "information" and the total for all departments and agencies in the coming fiscal year is $281,000,532. I do not think you have the information at hand and you will have to get it.

Mr. Alcock: What page are you on?

Senator Murray: Page 1-58, Budgetary Main Estimates by Standard Object of Expenditure. I am looking at the total amount for all departments and agencies for that standard object of expenditure known as information, $281 million. Do you see it?

Mr. Alcock: Yes, I see it.

Senator Murray: If you go back a little way, you will find on page 1-34 that that standard object, "Information," contains three main categories of expenditures, namely, advertising services; publishing, printing and exposition services; and public relations and public affairs services. You see my question coming. I would like to see a breakdown of the $281 million as among those three main categories of expenditures, and in fact, because I think it can be obtained, I would like to see that done for all the departments and agencies. That information will surely be available.

Mr. Joyce: Departments provide estimates for the upcoming fiscal year against those standard objects. I am not sure to what extent each department does in fact do a breakdown of their total estimates among those standard objects. We would have to go back to each department and ask. We could do that, but gathering the responses would take some time. I suspect some departments only provide the estimate at the standard object level.

What we can do, however, because there is a fairly good database, is give you a detailed breakdown in terms of the previous fiscal year once the public accounts come out.

Senator Murray: That is not a bad idea. That is fine.

Mr. Joyce: We have done some analysis of these and we could probably give you some historical trends if that would be useful.

Senator Murray: You will probably find that they know how much they will spend on advertising, for example.

Mr. Joyce: Yes. As you know, that would be a pure projection because the funds have been centralized. If you recall, all the advertising funds were removed from departmental budgets. This is another example of a reserve. You asked what reserves exist, and this is not a policy reserve, but rather a reserve in the fiscal framework for advertising. The process is such that departments have to go to PCO to make their claims as to what they want to spend the advertising funds on. An assessment is done by the Privy Council Office, followed by a cabinet decision on the distribution of those funds.

Senator Murray: I am confident that it is done at the beginning of each fiscal year.

Mr. Joyce: It would not be in the Main Estimates because the funds are held centrally.

Senator Murray: Someone would know about it.

Mr. Alcock: Are you talking about just the advertising funds?

Senator Murray: The Department of Finance knows how much it will spend on advertising Canada Savings Bonds. That information is somewhere. Whoever runs the tourism business knows what their advertising budget will be in the coming fiscal year, I think.

Mr. Joyce: They would know how much they will seek from the Privy Council Office, but that would not be in the Main Estimates because all the funds are held centrally.

Senator Murray: I understand that it is not in the Main Estimates, but it exists.

Mr. Joyce: You are absolutely correct. They would know what they want to spend.

Senator Murray: They would have to obtain the authorization to spend it now. They do not run advertising programs month by month but rather on an annual basis.

Mr. Joyce: That information would be in the first regular supplementary estimates and the first set of allocations that result from this policy decision. You would not see that until the first regular supplementary estimates.

Senator Murray: Do the best you can.

Mr. Joyce: We will do the best we can.

Senator Murray: These are small matters, but under Natural Resources, there is the Cape Breton Development Corporation. They stopped mining coal a long time ago, but there is a total net expenditure of $56.9 million under other subsidies and payments.

Mr. Alcock: Where are you? You are still on the chart of accounts.

Senator Murray: I am on 1-54. Cape Breton Development Corporation will spend $56.9 million under other subsidies and payments. Perhaps someone could give me a note on it. Still with Cape Breton, if you look at the Atlantic Canada Opportunities Agency, on 1-50, you will see an organization called Enterprise Cape Breton Corporation, which will spend zero on personnel, transportation, information or anything else, but is about to spend $8.6 million on "other subsidies and payments." I take it that Enterprise Cape Breton Corporation is largely a delivery vehicle for ACOA programs. Are there no programs specific to Cape Breton? Perhaps there are, and that is what the $8.6 million is. Someone can send the committee a note to that effect. I will not take up your time with it now, although I would like to have the information.

Mr. Alcock: Senator, on 1-37, under other subsidies and payments, it will give you an idea.

Senator Murray: Yes, I have read that already, but I cannot say that I am any better informed. I do not know what the Cape Breton Development Corporation or Enterprise Cape Breton Corporation are spending under that heading.

The Chairman: Perhaps your officials could send a note to the committee and we will circulate it to Senator Murray.

Senator Stratton: It twigged my curiosity that you have clawed back the money for advertising from each department and put it over in PCO. If a department has an annual budget for spending on advertising, it will come out in the sups as we go down the road. Most departments would have a budget for advertising if they had one historically. Tell me about the need to request funds, because I am curious. Departments such as Heritage Canada and Parks Canada have had advertising budgets for years. I fail to see the reason for having to apply to PCO for that budget. I just do not understand the rationale. Perhaps you could help me.

Mr. Alcock: The process was largely put in place following the concerns raised about the sponsorship program. You will recall that Communications Canada, which managed much of that, was disbanded. There was a desire to exercise greater oversight of the expenditure of those funds and to reduce the overall amount of money being spent. I believe there was a cut of about $15 million.

Mr. Joyce: That is correct. The amount was $12.5 million.

Senator Stratton: I go back to the example of Parks Canada. That would be a legitimate request and there is no obvious reason, other than cost savings, to reduce their advertising budget substantially.

Mr. Alcock: It would come forward as a specific request to be evaluated.

Senator Stratton: Most, perhaps 90 per cent, of the departments would have that opportunity as well. I am trying to rationalize why government would have to go to the length of taking back all of the money and have people come begging to PCO for it.

Mr. Alcock: I think it was largely the result of two primary issues. We disbanded the instrument that managed it before, and we wanted to reduce the overall amount that was being spent and exercise greater oversight. After some experience with this, a new instrument could be developed, but that was the reason. The department you are talking about would come forward with a request for evaluation. It may vary from year to year, but the reality is that we reduced the overall envelope, so people had to adjust their expectations as well.

Senator Stratton: You could ask a department under any normal circumstances to reduce its costs. They would then look at across-the-board cuts and choose what they thought they could rationally reduce.

Mr. Alcock: This had been identified as an area of concern.

Senator Stratton: I appreciate that.

Senator Ringuette: My question is on softwood lumber. I am on page 18-7, under Industry Canada, the last item, contributions under the Softwood Industry Community Economic Adjustment Initiative. Last year there was $72 million and this year it is a blank.

Mr. Alcock: That is right.

Senator Ringuette: I know that you are an optimistic person, as are the ministers of Finance and Trade. Why is there not even $1 for this program? I cannot believe that within the next two weeks we will have resolved the softwood trade issue.

Mr. Alcock: No, although it could be seen as representative of a number of programs that were put in place for a specific purpose. In this case, it was due to a sunset provision in the previous fiscal year, and so it was extended for one additional year. Remember, this is not the solution to the softwood lumber issue, because there are many other things happening in that realm.

Senator Ringuette: It eases the transition.

Mr. Alcock: Yes, it was exactly that — an attempt to deal with some of the immediate effects of shutdowns in certain sectors in the industry. I believe it was thought that they accomplished everything possible through that program and they are now moving on to other strategies. It is as simple as that.

Senator Ringuette: I am surprised. I will be honest with you. The Atlantic Canada lumber industry is now feeling the brunt of the trade war. The Miramichi mill has closed, there are rumours that at least two mills in New Brunswick will close, and there is no transitional money, no $1 vote, to help these communities after we spent $72 million just last year, and almost $200 million counting the previous year, to help those communities affected in Quebec, Ontario and Western Canada.

Only last year did Atlantic Canada, through ACOA, get $3.8 million to ease the pain and to help in the transition. We are now feeling the brunt. As someone who is familiar with the softwood trade war, I can say that Atlantic lumber producers have certain attributes that are very different from those in other provinces of Canada. That is why we are only now starting to be crushed, and there is no program there to help us transit into something else and to help those communities.

I am asking that when you submit Supplementary Estimates (A), that due consideration be given to the communities in Atlantic Canada that are feeling the brunt of the trade war right now.

Mr. Alcock: I was in Miramichi a couple of weeks ago and met with the council, the chamber. They shared with me some of the effects, particularly of the strike that is going on at the big mill there. There is no question that the softwood lumber problem has caused a lot of pain right across Canada. A lot of communities have been through that and are suffering. I would encourage you to speak to both the Minister of Industry and the minister of ACOA, because you are identifying this particular program. It was brought in to attempt to address that problem, but that does not mean that they have stopped being concerned. There are programs through ACOA and others that the minister has been working on to try to bring a resolution to that. There is no question about that. We have a number of these files. BSE is another one that has had a particular impact right across the country, but the West has been feeling the brunt of it.

Senator Ringuette: I will take this up with the Minister of Industry, but I hope you will take this up with the Minister of Finance, too.

Mr. Alcock: The Minister of Finance and I have many conversations.

Senator Ringuette: I hope one of them is about this.

The Chairman: Minister, the hour is late and I will not ask the questions that I wanted to, but I hope I will have the opportunity to ask them at a future time. Before I say thank you for coming, minister, I want to reiterate that one of the main areas that this committee, the Standing Senate Committee on National Finance, looks into is increasing the accountability and transparency and how information on government finances can be made available to all Canadians. I would like to use the words that you used in your introductory remarks when you said, "You will also remember that we have had some interesting discussions here about how to revise the estimates so Parliament can more easily oversee government spending." That is the topic on which, had I had an opportunity, I would have liked to put some questions to you, starting with the major problem of the delay in the budget, the estimates and the supplementary estimates. I am wondering whether the timeline and system we use now is the best way to produce the kind of transparency and accountability that we would all like to see.

I know that when you put on your Harvard hat you have a number of good ideas that are designed to help Canadians find better ways, and I hope that the next time you are here we will have time to put some of the questions and open up this very important dialogue about transparency and accountability. Perhaps we will even advert to the U.K. accounting officer model.

Mr. Alcock: If I may, senator, I have a number of observations at this point, now that I have been the President of Treasury Board for more than a year. With the acquisition of greater amounts of information, you find out you know less. It has been a fascinating experience.

One aspect is contained in Senator Day's question, in a sense. Some of this is like changing tires on a moving car. The machinery is the machinery, so the vote structure is the vote structure, and one has to live within that structure until one has conceptualized and been able to implement a more substantive change. As I said before, I enjoy these sessions and I would enjoy coming back here to talk about not just vote 5, but this issue of transparency, and the reporting to Parliament group within the Treasury Board is doing some important work. They are surprising me, frankly. This is a hot group. They get it. They have some interesting ideas that we are working on right now.

It would be interesting to engage you in that conversation because part of it is that it is always a dilemma, given the volumes of information available. How do you get from the high-level discussion you want right down to the specific question? Some of these questions are very detailed, and we have some thoughts on how we might do that.

The question of the timing of the budget and of the estimates is one that some people have raised it with me and we should probably talk about it. It does create this problem. It will be a particular problem this year because we say there is a cut here but the mains do not show it, and we do see the increase.

The Chairman: That is the problem.

Mr. Alcock: I am working very hard with the parliamentary secretaries and the committee chairs to say to the House, "Look, this is not an attempt to be foolish about this. It is just the rigidity of the structures we have now, which is part of what we have to change." In the meantime, we have to live within that structure.

I have to tell you that the officials have done a stellar job. In the short time I have been here, each supplementary estimate and Main Estimate has been different, in the sense that each one has tried to build upon the conversations and the input that we have had with this committee, in particular, because this committee takes a great interest in it and we appreciate that very much. We will continue to do that.

On your specific question about vote 5, I would appreciate an opportunity to come here; and you have not asked about the governance of Crown corporations and you should have.

The Chairman: You tabled that a long time ago, and I thought it would come here.

Mr. Alcock: Here is another one, just not to let you off the hook after your accounting officer comment. I am in the midst of doing the accountability paper.

The Chairman: We are aware of that.

Mr. Alcock: It would not hurt to have a serious conversation with this committee about what accountability looks like. It is easy to import concepts from other areas, but we might want to have a made-in-Canada solution.

The Chairman: This committee is looking seriously at doing a major study on just that, and we have already done a substantial amount of preliminary work on it.

Mr. Alcock: I would be interested in engaging with you on that because I am up to my hips in it, and sinking.

Senator Downe: Chair, I share your view on that. I would hope for a future visit of the minister on a made-in-Canada solution from the late 1970s and early 1980s, from the royal commission on the financial management of Canada, often referred to as the Lambert commission. I think that is an area that the minister is interested in.

Mr. Alcock: It is not a bad starting point, but it has to be translated into the information environments of 2005. The principles and structures in it are interesting, and we might want to spend some time on the management accountability framework the Treasury Board has been developing because I think there are some gems there as well.

Senator Downe: The recommendations are interesting and were not implemented at the time.

The Chairman: I know there are some responses to questions the senators raised about supplementary estimates from the last fiscal year, and because the hour is late, would you prefer to table them or write a letter and answer in that way, or would you like to take the time now?

Mr. Joyce: I think the lateness of the hour suggests that I should take one of your other two options, so I will consult with the clerk about the best way to get you the information.

The Chairman: Please do.

Honourable senators, is there any other business to come before the committee at this time? If not, the meeting is adjourned.

The committee adjourned.