Proceedings of the Standing Senate Committee on
National Finance
Issue 2 - Evidence - Tuesday 2, 2016
OTTAWA, Tuesday, February 2, 2016
The Standing Senate Committee on National Finance met this day at 10:31 a.m. to study such issues as may arise from time to time relating to federal estimates generally, including the public accounts, reports of the Auditor General and government finance.
Senator Larry W. Smith (Chair) in the chair.
[English]
The Chair: Good morning, everyone, and good morning to anyone who is listening to us today. Welcome to the Standing Senate Committee on National Finance. My name is Larry Smith, senator from Quebec. I chair the committee. I would like to introduce the other members of our committee.
First, from British Columbia, we have Senator Larry Campbell. Senator Campbell is the deputy chair of the committee. Our third member of the National Finance steering committee will be Senator Percy Mockler from New Brunswick. We also have, from Quebec, Senator Bellemare, who is not with us today. We are aware of her importance to our committee. Senator Nicole Eaton from Ontario is not with us today. Senator Fabian Manning from Newfoundland and Labrador is not available today, but we have Senator Elizabeth Marshall, former auditor general from Newfoundland and Labrador. We have, from Alberta, a Queen's graduate — I checked his background — Senator Grant Mitchell. Representing British Columbia, we have a very successful, long-time provincial politician and businessman, Senator Richard Neufeld.
Of course, I didn't want to forget this individual, chair of the Banking Committee for numerous years, a man who has made a major contribution to the Conservative Party of Canada, a true gentleman and a great Canadian, Senator Irving Gerstein.
Senator Gerstein: Thank you. Mr. Chair.
The Chair: I would like to take time to quickly introduce our National Finance team: committee analysts Sylvain Fleury and Alex Smith; our clerk, Ms. Gaëtane Lemay; and our administrative assistant, Miss Louise Martel. So we know everyone.
Colleagues and members of the viewing public, the mandate of this committee is to examine matters relating to federal estimates generally, as well as government finance. At the start of the First Session of the Forty-second Parliament, the purpose of the meeting today is to review and get an update on the parliamentary financial cycle. To that end, we are pleased to welcome Mr. Brian Pagan from the Treasury Board of Canada Secretariat, where he is Assistant Secretary, Expenditure Management Sector.
Mr. Pagan will follow a presentation that members have in their hands. Mr. Pagan, you're free to commence. The floor is yours.
Brian Pagan, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Thank you, senator, and congratulations on your appointment as chair. It is great to be back here at Senate Finance, a committee that takes the time to engage in the estimates process and understand the requirements of government. I look forward to a discussion today to reintroduce to you the budgeting and estimates process and begin a discussion about some possible changes in store that are aimed to provide better information and a more coherent process with which we transact business with Parliament.
I will speak to the presentation in front of you, and I will try to go page by page and let you know where I am at. As always in a group of this size, relatively small and intimate, I would like to make it less of a presentation and more of a discussion. So I would welcome questions at any point. If I say something that provokes your interest, or if it is not clear, please do not hesitate.
Slide 2 simply presents the purpose here today. We have a new government, a new Parliament. The President of the Treasury Board, Scott Brison, has a mandate from the Prime Minister, a public mandate, including a mandate to align budget and estimates documents, with the goal of providing better costing and better information to parliamentarians so that they can fulfil their responsibility of controlling the public purse and holding the government to account. He also has a mandate to improve a focus on results in government programming. At the Treasury Board Secretariat, we see those two taskings or mandates as mutually reinforcing. A foundation for those is better information and better documentation.
The budget and the estimates, as you know, are among the most important documents relating to government spending. The budget is the signature policy piece of a government. It sets out what a government wants to do; it is aspirational in nature. The estimates are intended to present more concrete plans and specific resource requirements required to carry out that plan. But there is a disconnect in the process, as this committee would know.
The budget does not have a fixed date. It can vary anywhere from mid-February to mid-April generally, but the estimates, by requirement of house Standing Orders, must be tabled before Parliament on or before the first of March. So we are in a situation where we have locked down the estimates now. It will be tabled later this month. Therefore, we know that as soon as the estimates are tabled, they are effectively out of date because they will be supplanted by a budget, which is to follow sometime in March.
That creates all kinds of negative consequences. It does create confusion in the minds of parliamentarians about what the numbers are. It can hamper the ability of Parliament to actually engage with departments to understand programs, priorities and the actual amounts involved, and it undermines transparency and financial reporting because we have documents that are out of sequence and not fully aligned.
Therefore, this briefing is meant to provide senators with a common understanding of the process as it exists now. Based on that common understanding, we might engage with parliamentarians, the President of Treasury Board would engage with parliamentarians, to identify some options and some improvements moving forward.
The Chair: Could you give us a 30-second update on the meeting last night and how it relates to what we're discussing today, if you wouldn't mind?
Mr. Pagan: Thank you, senator. I mentioned the mandate of Minister Brison to improve this process. He felt it was important to launch this initiative by extending an open invitation to parliamentarians, both members of Parliament and senators, to an information session at which we could present the system as it exists now. It was, I think, a very important event to get everybody on a common starting point, as we know, a new Parliament. There are, I believe, 197 new members of Parliament that will have very little, if any, experience with the government's budgeting and estimates process. So the idea of introducing change without them having an appreciation of how we currently do business would make that change process more difficult. We offered this invitation yesterday, and I suspect it may be the first of several that we would offer. We were quite pleased with the turnout and engagement. We had some 78 members of Parliament and senators in attendance last night, with a wide range of questions and clear interest in the matter. So I think it provides a platform to move forward.
[Translation]
I am on page3 of my presentation. This information session is mainly intended to provide you with an overview of the parliamentary process for estimates and supply.
I will talk about the following issues in the first part of the presentation: deadlines for reports presented to Parliament and approvals related to estimates, the basis of Parliament's power, the information contained in budget documents, the legal basis — in other words, the appropriation acts that release the funds related to estimates — and the review of estimates by parliamentary committees.
The second part of the presentation covers the period from the development of estimates to the federal budget. I will summarize the main difficulties we are experiencing with the current system. In addition, we have been tasked with resolving those issues and proposing a better process to support Parliament in its spending oversight role.
The last three slides are reference documents, included as an annex, that list the important terms we use when we talk about estimates and supply.
[English]
Turning to slide 4 of the presentation, I simply introduce here the Main Estimates and the information contained in the Main Estimates. Committee members will be familiar with the estimates document, sometimes referred to as "the Blue Book.'' I want to take a minute to explain what is in the documents and how this leads to and supports some of the other information that Parliament and this committee will see.
The estimates are comprised of three parts: Part I is a very brief summary, a very high-level overview, of the total government spending, both statutory and voted discretionary spending. Because this is tabled in advance of the budget, it necessarily refers backwards to forecasts provided by Finance when they do their economic and fiscal update in the fall. So we take account of whatever Finance has provided at that time in terms of forward forecasts, and we connect back to that period.
The meat, the guts of the Main Estimates, is found in Part II, where we have a department-by-department listing of the resource requirements of that organization and supporting information, how their requirements are broken out by their programs and activities.
Part III of the estimates is known as the Reports on Plans and Priorities, or the RPPs, and the Departmental Performance Reports, or the DPRs. These are provided to Parliament at different times in the year. The RPP is generally tabled in March, but it can be as late as June by Standing Orders. It is intended to support a committee study of the estimates. So we have a single Main Estimates for all of government and then we will have individual departmental Reports on Plans and Priorities that provide more specific detail for each organization that supports their Main Estimates requirements. I suggest to you that these would be a valuable tool by which committees can study individual departments.
Once our fiscal year concludes on March31, we finalize the financial statements and issue the public accounts. As a companion to the public accounts, we will have the Departmental Performance Reports that provide an accounting of final financial results for that department as well as progress reports and summaries of the actual results achieved for the specific programs.
[Translation]
Those are the processes involved in estimates.
Page 4 sets out the differences between the budget and the main estimates. The misalignment of the federal budget and main estimates is a constant source of frustration and inhibits Parliament's ability to review estimates. Although main estimates must be tabled by March1, the federal budget is usually tabled between February and April.
As a result, important measures related to total spending estimates in the federal budget do not appear in the main estimates for the same fiscal year. That misalignment can create frustration for parliamentarians tasked with reviewing the estimates.
The current system also increases the period between the announcement of the budget and the implementation of programs. Therefore, significant amounts of money that are announced remain inaccessible to departments for a long time. That delays the achievement of results and increases the amount of unused funds at the end of the fiscal year.
[English]
Turning to page6, this is simply a stylization or illustration of how Parliament authorizes spending from the Consolidated Revenue Fund. I introduced earlier the distinction between "statutory'' and "voted'' or "discretionary'' programming, and this committee will recall that of the approximately $250 billion authorized by Parliament, almost two thirds of it is statutory spending that is based in separate legislation to support social transfers, transfers to provinces, payments directly to individuals. Programs such as the Canada Pension Plan, Employment Insurance, equalization, these are all based on their own statutory authorities and represent approximately $160 billion of annual spending.
Information on these programs is provided in the estimates. We have the most updated forecast of planned disbursements, but the estimates are not authorizing these expenditures. These expenditures are authorized by their own statute and will happen with or without an estimates document or an appropriation act of Parliament.
The bar charts here in red reflect the voted spending that requires an appropriation act of Parliament, for which the estimates provide information. This represents approximately $90 billion annually or approximately one third of government spending. This, of course, covers the operating budgets of departments and agencies; approximately 130 departments and agencies receive specific spending authority from Parliament. It covers grant and contribution programs of these departments, and it will cover capital investments in major equipment in buildings.
Information on both statutory and voted is provided in the estimates, but of course the primary purpose of the estimates is to provide information on that voted discretionary spending of departments.
Perhaps I will pause at this point for any questions.
The Chair: We can start off with Senator Marshall, who had a question. We have four speakers who would like to address you.
Senator Marshall: Thank you very much for being here today.
You are talking about the estimates and the time lag between the budget and the estimates. The budget comes after the estimates are prepared. When do the departments or the agencies start putting the estimates together? It must be November, is it?
Mr. Pagan: Right. Thank you, senator. That is a very good question.
It is a never-ending process, because the estimates documents are based on budget decisions, budget aspirations of the government and the subsequent detailed Treasury Board approvals of the terms and conditions of that program.
Treasury Board will meet throughout the year to provide approval to program terms and conditions, and we will reflect those approvals in different estimates documents throughout the year. I have a slide here that will explain that to you momentarily.
In a fiscal year, Parliament can provide authority only for that fiscal year. Routinely, Parliament will provide authority in a supplementary estimates exercise that ends March31 of the fiscal year, but the program authority from Treasury Board would roll over into subsequent years. We have a process within the secretariat where we take account of the rolling approvals of Treasury Board and we aggregate those into the Main Estimates. That process starts in the summer, actually, working with departments, and there is a challenge function at Treasury Board to validate that this is a TB approval, that it is not time-limited, etcetera. We will present that to ministers now, in sort of the January, early February time frame, so that it can be reported to Parliament by March1 as per the standing order. So it is about a six-month process.
Senator Marshall: Yes. I am thinking in terms now of the new government. You started to prepare the estimates way back before you really had a good handle on the direction the new government was going in, so I would think that this year there will be an extra disconnect. Is that right? I am getting the feeling that there is disconnect in a regular year, but when there is an election year, there will be a much bigger disconnect. Is that correct?
Mr. Pagan: Well, again, a very good question. What is different this year is simply that the return of Parliament is a bit later and committees are just being stood up now to review estimates documents.
Much of what Treasury Board's cabinet committees approve is intended to be ongoing programs. Some are finite and time-limited, but for the most part, government programs are intended to serve a longer-term purpose.
Every government will want an opportunity periodically to go back and review that stock of spending to make sure that previous decisions of any government remain valid and aligned with the new realities and new priorities of government.
You are quite right that this government has not yet had an opportunity to look at that full stock of spending, but there will almost certainly be the processes by which they do that to satisfy themselves that the current programs of government continue to serve a valid purpose in the priorities of this government.
Senator Marshall: Thank you. Just in the interest of time, I don't have another question but just a suggestion that when you are going through this, could you explain to us what is on the cash basis and what is on the accrual basis? I think somewhere along the line you will be doing that. I would be interested in that.
Mr. Pagan: I will address that right away. Everything that I present or that the Treasury Board Secretariat presents in the estimates documents is on a cash basis.
As the committee may know, we use two accounting systems in the public service. The budget and Volume I of the Public Accounts are on an accrual basis; the estimates and Volume II of the Public Accounts are on a cash basis. I will speak later about the differences in those systems and the relative merits of that different approach.
Senator Marshall: Thank you.
Senator Campbell: Thank you very much. I am new to this committee, so if my questions seem a little odd, please advise me.
We continually hear about the misalignment between the budgets and the estimates. Forever we have been hearing this. Why can't we fix it? Why do we keep complaining about it? We keep wasting money on it. It doesn't make any sense at all in the real world, so why don't we just move to bring them into alignment?
Mr. Pagan: Right. Thank you, senator, for your question.
Change is always difficult. It doesn't happen — very rarely does it just happen. You need to sort of build some awareness and generate some momentum. I think we are at a point now with a mandate for the President of the Treasury Board to both acknowledge some of the challenges and maybe dysfunctions of our system and make real change. But this won't happen simply because of a mandate; it will happen because of some of the supporting studies and engagements.
For instance, in 2012, your counterpart in the house, the Standing Committee on Government Operations and Estimates, OGGO, produced a very important report that identified some of the disconnects and some of the frustrations with the current process. The government responded to that in part by making some immediate changes, and some of the other recommendations they committed to study; and the mandate, I think, is consistent with that response.
That is just by way of background, some context. Change does take some time around which to get some consensus.
The other important element here is that I and my colleagues at the Treasury Board Secretariat have some ideas and some very specific proposals, but at the end of the day, this is really going to require Parliament to take ownership and make changes.
The fundamental obstacle to us is house Standing orders, and we can't change that with Treasury Board policy or ideas. It will require a motion in the house and approval by members of Parliament to make that change. Again, the house standing order requires Main Estimates on or before March1, so one of the things we will be working on with parliamentary committees is to look at other timings, other opportunities to table that document without a loss of information to parliamentarians. We think there is a good case to be made for that. We think there is a simple and easy way to align this with the budget, but it will take some study and support in Parliament to do that.
Senator Campbell: It would seem that we have been studying this for years; 2012 was four years ago.
Can we bring changes from the Senate, or does it have to come from the house?
Mr. Pagan: It's a standing order of the house. That is my understanding.
Again, there is a very specific mandate to the President of the Treasury Board and the government house leader. We had three ministers in attendance last night, including the government house leader and the minister for democratic reform. I think that is a very clear signal that the government is quite intent on identifying a challenge, a problem to be solved, and engaging parliamentarians in addressing that problem and making our process more coherent.
[Translation]
Senator Bellemare: My question is very simple. It has to do with slide 6, on page6 of your document. The capital budget for 2015-16 is $10.2 billion. Does that amount include the planned annual expenditures in infrastructure, or are those expenditures part of transfers to provinces and territories? I would like to distinguish between those elements.
Mr. Pagan: Actually, both are true. The amounts we see here in capital — the $10.2 billion — represent the government's investments in federal infrastructure — for instance, Parks Canada and the Department of National Defence — as well as transfer payments. For example, a very significant portion of Infrastructure Canada's budget is set aside for transfer payments to provinces for infrastructure projects.
Senator Bellemare: When it comes to transfers to provinces and territories, we do not know what portion is meant for ongoing programs and what portion is set aside for capital costs. Of course, we could have a very long discussion on the topic.
Mr. Pagan: Statutory authorities do not include infrastructure transfers. Only the discretionary portion — in red — is part of Infrastructure Canada's budget.
[English]
Senator Mitchell: Thank you, Mr. Pagan. I was struck by something you said, that the moment the budget is presented, the estimates are obsolete, in a sense.
It's my understanding that generally the budget is presented before or at the same time as the estimates. But you did imply that the estimates were presented and then the budget could be presented afterwards, in which case the estimates couldn't, in fact, reveal anything new because you can't reveal anything new until you've done the budget; is that right?
Mr. Pagan: That's it. There is no fixed budget date, and in fact it was one of the recommendations of the OGGO report in 2012 that we fix another date.
That's really, I think, for the Minister of Finance to determine, but in my mind there is a benefit in having a flexible budget date that allows the government to take advantage of the best information available. And we saw that last year with the precipitous decline in oil. They waited until April to see if it was temporary or more permanent and then based the budget on what appeared to be an ongoing situation rather than a temporary situation.
As Senator Marshall made clear, the timing is such that to lock down the estimates for March1, we really have to complete the exercise by January. In that respect, even with the earliest possible budget date of mid-January or February, your estimates would essentially be out of date because the budget is a relatively secret process. It's a confidence of cabinet to determine what their priorities are and what resources they will devote to those priorities.
Departments make requests; they've identified priorities, but they don't know until the budget comes out whether those priorities will be funded or not. Therefore we find ourselves in a situation where, after the budget is finalized and made clear, departments find out if they have money for new initiatives, and they have to race to catch up and be able to present that to Treasury Board for approval and to Parliament for approval.
In that sense, the estimates are out of date after the budget. The good news is that we do have a process to update the information through subsequent supplementary estimates, but to a certain extent it's like a dog always chasing its tail, and there are some real costs in terms of the time required to stand up the proposals.
The budget creates expectations. It's aspirational — this is what this government wants to do — but then we lose some of that urgency and momentum because it takes time to develop the proposals. We've looked at other jurisdictions and how they do it in a more timely way, and there are some good and clear examples out there that we can study and learn from to improve our process. This is of great interest to the president.
Senator Mitchell: The estimates are more than just taking what you spent in 2015-16 and just lumping it over on a temporary basis to get you started into 2017. That would be my first question. A corollary question would be, is it the estimates themselves that fund us for the first three months, or is that the Supplementary Estimates (A) that get us to June?
Mr. Pagan: On the first I would argue that the estimates should be more than simply taking existing spending and rolling it over because they should include budget priorities. Unfortunately now they don't.
Senator Mitchell: Okay.
Mr. Pagan: The current process, the idea behind tabling estimates on March1, is that it gives Parliament one month in advance of the fiscal year to have a sense of what department plans are for the new year and then vote into what we call interim supply, which essentially is an advance. It's a fraction of a department's total requirements during the year so that they can begin the fiscal year, and then Parliament would review the estimates in more detail in April and May and vote full supply for Main Estimates in June.
I've got a very detailed slide that will present that to you.
Senator Mitchell: Thank you.
[Translation]
Mr. Pagan: The current situation is shown on page7. Estimates are tabled in March, and the budget is tabled between March and April. As a result, the information submitted to Parliament is misaligned. This is just an overview of the current situation.
[English]
Slide 8 presents, again, a reference to the question from Senator Campbell, the reasons why we order our business this way. The process by which the government presents information to Parliament and Parliament approves that is known as the business of supply. The house has codified certain processes that include specific supply cycles.
In our fiscal year that runs April1 to March31, Parliament has identified three supply periods in which the government can bring forward new spending requests and Parliament will review and grant approval for those. The three supply periods are the period April1 to June23, September to December10, and January to March26. So I think it is worthwhile to spend a couple of minutes understanding this cycle.
First, there's no requirement, other than Main Estimates, for the president to table any other estimates document. He or she can table as many or as few estimates documents as he or she would like in a supply period. We've had instances in the past where we've presented as many as 14 or 15 supplementary estimates during a fiscal year. But what is codified in the business of supply is that Parliament will transact those estimates on a very specific date; by Standing Orders of the house, the estimates will be considered on the last opposition day in a supply period. So the government house leader negotiates with his counterparts to identify opposition days, and the last opposition day in a supply period is when the President of the Treasury Board will introduce a supply bill looking for the appropriation authority for the estimates documents. This isn't Treasury Board policy. We can't change it. It's the house.
Typically in the period April1 to June23, the president will table Supplementary Estimates (A), which is the first opportunity to reflect budget items that have been presented after the tabling of Main Estimates, and then Parliament will transact that. Fast forward to December, when we would generally see a Supplementary Estimates (B), which is generally the better opportunity to bring budget measures before Parliament because there's usually very little time after the budget before Supplementary Estimates (A). Then finally there is the period we are in now, January to March, which is a very busy period for Parliament, and you'll see three primary transactions. You'll see the final supplementary estimates of the year, Supplementary Estimates (C), which would close out a fiscal year. You'll see tabling of Main Estimates for the year that will start April1. And you'll see a budget. The Supplementary Estimates (C) and the Main Estimates will get supply bills for March31, and the budget will be studied by Parliament.
It's very important to make clear that the budget, with very few exceptions, does not actually provide spending authority. There's a budget implementation act that will perhaps make changes to some statutory provisions and introduce new regulations or new requirements, but very rarely does a budget implementation act authorize a department to make direct program spending. That's all done through the estimates.
Slide 9 takes me to this table and committee review of the estimates. Upon tabling, the estimates documents are referred to the various standing committees of the house and to the Standing Senate Committee on National Finance. Committees review or are encouraged to review each item or departmental vote. Committees may approve, reduce or negate a vote, but they cannot increase a vote, and they cannot move money from one vote to another or from one department to another.
Committees report back to Parliament, or they are deemed to have reported back. They're assumed to have reviewed this. Then as I say, on the last opposition day, the supply bill is introduced. Any recommendations of Parliament to approve, reduce or negate are dealt with in the house, and then a vote on the appropriation act is held.
That is the committee review, and it goes without saying that we value very much the contribution of Senate Finance. I can say in all sincerity it is the committee that engages the most frequently and the most consistently on the estimates. In going forward, I believe that if there are ideas to make this process better, you have a very important voice in that discussion.
The next two slides are very important to understand or to put in context everything I have tried to explain to this point. If you will bear with me, I will take some time on slide 10 to make this as clear as I possibly can.
What you see in front of you is a representation of the different documents that are presented to Parliament — the different transactions we have with Parliament over a calendar year. If we understand the sequencing of this, we will have a better understanding of why the system can be so difficult for parliamentarians to understand and so incoherent to the uninitiated.
Starting on the left, the period we are in now here in February, you will see at the very bottom of the page a reference to Supplementary Estimates (C). I can tell you that the President of the Treasury Board will be presenting to Parliament later in February supplementary estimates to close out the fiscal year. That is the first report or document that is provided in the calendar year 2016. That will be supported or concluded with a supply bill, which is part two of that transaction. There are two opportunities for Parliament to engage and make a decision.
In the top left, we see the Main Estimates for the year ahead. That is the third transaction with Parliament. And then the fourth would be interim supply for those Main Estimates.
Then we have part three of the estimates, the Reports on Plans and Priorities, which will also be tabled in March. They are intended to help committees understand those estimates requirements.
Finally, to close out the fiscal year, we would generally see a budget; it is not always before the end of the fiscal year. As we saw last year, it can be in April. Generally, in February or March you will see a budget.
Within that period between February and March, we will see six different transactions, decisions or information products provided to Parliament. Then, as the new fiscal year begins, we will see again a series of transactions. Following on the heels of the budget, we would table Supplementary Estimates (A) to start the new fiscal year. That would be concluded with an appropriation act for that Supplementary Estimates (A). We will also have a separate appropriation act for the Main Estimates. So we're transacting the Main Estimates in two parts: We have interim supply, which is provided by Parliament before March31, and then we have full supply, which is provided by Parliament in that supply period ending June23.
In that period between now and June, we will have nine different transactions with Parliament. Summer recess, we return in the fall, the fiscal year has concluded — we present the financial statements, the public accounts. Then, to support public accounts, departments produce their Departmental Performance Reports. That becomes the tenth item that is transacted with Parliament.
Finally, to close out the calendar year, we will have Supplementary Estimates (B), usually tabled in November, and a supply bill for Supplementary Estimates (B) that is tabled in December.
You add all that up, and it is 13 different information products, transactions or decisions of Parliament over the course of a year. As we see in that period now, February to March, we are blurring fiscal years. I present that as a way of trying to make clear the sequencing of different products.
Slide 11 simply presents the structure that I have just described to you and presents it in terms of a very real example — a very real program — that was a priority of this government, namely, the response to the Syrian refugee crisis. With the election of a new government in October and the formation of a cabinet in November, one of their very first priorities was to respond to their platform commitment. There was a policy decision of cabinet to initiate a program to respond to that Syrian refugee issue. That was one of the very first decisions of this cabinet.
Once they made that policy decision, our colleagues at Immigration, Refugees and Citizenship Canada actually designed the program — the very detailed terms and conditions of how they were going to do this, who they would work with, what the timing and costing were. They presented that to Treasury Board, which challenged and ultimately reviewed and approved the program. Then that was presented as the key piece of the Supplementary Estimates (B) that was presented to Parliament in December.
Now, as a supplementary estimates, it extends only until the end of the fiscal year. IRCC only obtained the funding that they needed between December and into the fiscal year for that program. But it is a two-year commitment, so we know there will be funding requirements for fiscal year 2015-16. We see that in the Main Estimates here, at the top of the page, which will be tabled in February. This committee will see the IRCC requirements for fiscal year 2016-17 in the Main Estimates.
Senator Marshall, that's an example of how we take a decision, taken at one time of the year, and make sure it is reflected in the Main Estimates moving forward.
Senator Marshall: As you were talking, something just occurred to me. If you look at page11, or the document at 11 down at the bottom, for the Syrian refugee crisis you referred to, you are saying Supplementary Estimates (B) came in in December and Supplementary Estimates (C) were also in February. Does that mean that the estimates that were done up in December weren't sufficient and that a second —
Mr. Pagan: Right. It can arise where a program approval — the department presents the best information available, and then circumstances change and they find out that they have new requirements. A subsequent supplementary estimates would allow for that.
In this case, that is not the situation. The context here is that Parliament came back December4, I think. They sat for only seven days. Ministers were just getting established, so there wasn't time.
We know IRCC is the lead of the file and that they had immediate requirements, but we also knew that, as part of the program, they were going to be working with other departments: the Public Health Agency of Canada, the Canada Border Services Agency and the Department of National Defence. The requirements of those departments were simply not finalized — were less clear.
We transacted with the department and Parliament in December only the requirements for IRCC. There was a subsequent Treasury Board submission to look at the requirements of the other departments I mentioned. It is those requirements that will be presented to Parliament in Supplementary Estimates (C). I appreciate that it is confusing.
Senator Marshall: No, it is not confusing. I'm just thinking of more questions.
Mr. Pagan: Right. If you are clear on that, I will introduce one other dimension: the timing of the transactions. I mentioned that to table Main Estimates on March1, we need to lock it down in advance of that. The requirements for IRCC were approved in time for the Main Estimates, but the requirements of its partner organizations were not approved in time for the Main Estimates. Therefore, Parliament will see a request in Supplementary Estimates (C) for the partner organizations, a request from IRCC in the Main Estimates for the year ahead and then a request in Supplementary Estimates (A) for the other organizations that missed that Main Estimates cutoff.
I use this as an example to explain some of the challenges of very fixed timing dates. This was just one initiative — a signature initiative of the government. That complexity is exacerbated when you have budgets introducing a whole raft of other priorities, and then we have to race to catch up in subsequent supplementary estimates.
Senator Marshall: It raises the spectre of government making expenditure commitments for which no funding has been provided. We will pursue that at another meeting.
[Translation]
Senator Bellemare: A question came to me after I read page9. It has to do with the powers of the Standing Senate Committee on National Finance and House of Commons committees.
You said that committees can agree to, reduce or negative a vote. Has the Standing Senate Committee on National Finance ever negatived or reduced votes?
Mr. Pagan: I don't have a specific example involving this committee, but I can tell you that it has happened. I do not know whether it was in the Senate or the House of Commons, but committees have decided to reduce a vote requested by a department in the past.
The most recent example is from 2006 and has to do with the Governor General. A program concerning the Arctic proposed a trip to the Arctic with a delegation of notable personalities. The committee decided not to approve the program, and its recommendation was approved by the House of Commons.
Senator Bellemare: I have a follow-up question about that. When it comes to committee powers, you say that it can happen. However, the budget is normally reviewed as a whole and is not subject to specific recommendations.
I am not talking about estimates, but about the budget. Generally, it is reviewed here, but it is recommended in its entirety. In fact, no committee has the power to amend it.
Mr. Pagan: I am not really familiar with the way committees review the budget, but you are correct. It is not a matter of approving a specific element of the budget. The Budget Implementation Act is considered in committee and voted on in the House of Commons and the Senate, and it helps implement legislative and regulatory amendments proposed by the government.
[English]
The Chair: We have about five minutes left. We have a couple of senators who would like to ask questions. Let's do quick questions, and then maybe, Mr. Pagan, you can wrap up your presentation, if that would be okay.
Mr. Pagan: Very good.
Senator Campbell: I want to thank you for coming today. This is incredibly interesting. I can see there's a long learning curve on the road ahead of me, but I had no idea of the complexity, quite frankly. I have a hard time fathoming how things don't close in together when we're dealing with money.
I look forward to going through the rest of your brief and to having you back here again. You have made common sense.
Mr. Pagan: Thank you.
Senator Mitchell: On slide 10, the Main Estimates full supply bill comes out at almost exactly the same time as the Supplementary Estimates (A) supply bill. Why is it that the Main Estimates supply bill — now that you have had the budget, you have had time — wouldn't cover everything that's in the supplementary estimates? Why do you need a supplementary bill immediately as you've brought in the Main Estimates bill? Wouldn't it all be covered in the Main Estimates bill?
Mr. Pagan: We transact different information products, and it has always been assumed — but we will need to validate this — that a very complex situation will be made a little more coherent if each document has its supporting appropriation act.
To start the fiscal year, the Main Estimates, we get interim supply. That becomes Appropriation Act No. 1 for the fiscal year. Full supply becomes Appropriation Act No. 2. It is Appropriation Act No. 2 that gives you full supply for the Main Estimates.
When we table a supplementary document, it is presenting new information to Parliament, and because it is not referenced in the Main Estimates because they're transacted on separate dates, that's why we would have a separate supply bill for the Supplementary Estimates. So Supplementary Estimates (A) becomes Appropriation Act No. 3.
Senator Mitchell: Does it reflect more the budget bill, then, the budget presentation?
Mr. Pagan: It does, but in all honesty, we need to do more to make that so. What I have done today is present some of the challenges for us in terms of coherence and —
Senator Mitchell: Very well.
Mr. Pagan: We are working with the mandate that the president and the Minister of Finance have. We are working with our colleagues in Finance so that we can do a better job of bringing budget items into Supplementary Estimates (A). I think committees, in the future, will see more budget items in Supplementary Estimates (A). That's number one.
Number two, we can do a better job of reconciliation to the budget. There was a question earlier about the budget being on accrual and the estimates on cash. That need not be fatal or confusing as long as we have a reconciliation table that will do a cross-reference so that we can understand how a number in the budget equates to a cash number in the estimates.
We will be working with Finance to have that reconciliation for Supplementary Estimates (A) in the year ahead.
The Chair: Two things, colleagues.
First, Mr. Pagan, we need a 60-second summary. We are thrilled to have had you here and appreciate your thoroughness. I'm sure we're going to have you back again to continue our discussion.
Second, we have a small item in terms of budget. We have to submit a report to the Senate. I need two or three minutes of extra time with our group. It won't be long.
If you could give use a 60-second wrap-up, that would be fantastic.
Mr. Pagan: Thank you, senator. I truly appreciate and enjoy the opportunity to meet with this committee. You do play a very important role in helping parliamentarians and Canadians understand this process.
We believe that there is a problem, that we create confusion by having processes and documents that are out of sequence and misaligned.
My objective today was to bring some attention to that, to make very clear the mandate of the Treasury Board president to address that problem, to introduce greater coherence and alignment between documents and information presented to Parliament, which will result in better information, more timely implementation of government priorities and, at the end of the day, more effective programs and services.
With that, I appreciate your interest and look forward to being back here again soon.
The Chair: We thank you very much. One of the questions that we will be asking you again the next time we get together is this: If you had to give us a critical path in terms of time frame, how long will this process take, in your best estimate? What would it be, and what would the steps be? If you could give that some thought, we would love to have a one-page written response, if you are able to do that, and share that information with us.
Mr. Pagan: I will be glad to do that.
The Chair: We will have our clerk follow up with you. One of the challenges we have had — not with your group but with some of the other groups — is that when we ask for information, sometimes we don't receive it on a timely basis. We would like to send the message out that when we ask for something, we would like to get it back. You are one of the good players. We thank you for your time.
Mr. Pagan: Thank you.
The Chair: Colleagues, I would like to now address the draft report that was circulated before the meeting. You may know from your experience in other committees that at the beginning of a new parliamentary session, each committee must adopt and table in the Senate a report about the expenses it has incurred in the previous session. This is what we have before us, covering almost two years of meetings.
The National Finance Committee has spent about $7,000, of which most everything is tied to expenses for witnesses.
Is it your pleasure, honourable senators, to adopt this report?
Hon. Senators: Agreed.
The Chair: Any contrary? Thank you very much.
Well, that is our first meeting. We are off to a good start. We have a busy session before us, as you have noticed, with 13elements of the components of a budget coming to completion. We will be doing quite a lot of review. Of course, we have talked a bit about interest in studies, and we will continue that discussion in our upcoming meetings.
The meeting is adjourned.
(The committee adjourned.)