Proceedings of the Standing Senate Committee on
National Finance
Issue No. 4 - Evidence - March 10, 2016
OTTAWA, Thursday, March 10, 2016
The Standing Senate Committee on National Finance met this day at 2:02 p.m. to examine the Main Estimates for the fiscal year ending March 31, 2017; and the expenditures set out in the Supplementary Estimates (C) for the fiscal year ending March 31, 2016.
Senator Larry W. Smith (Chair) in the chair.
[English]
The Chair: Good afternoon, everyone. Welcome to the Standing Senate Committee on National Finance. My name is Larry W. Smith, a senator from Quebec, and I chair the committee.
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.
Before we get to the specific topic of today's meeting, let me introduce briefly the other members of the committee. To my right, from New Brunswick, is Percy Mockler. Next to Percy, from Toronto, is Senator Eaton. Next, we have, from Newfoundland and Labrador, a former Auditor General, Senator Elizabeth Marshall. And finally, we have one of the greatest skiers in the history of the sport and a senator from British Columbia, Nancy Greene Raine. She needs no introduction. I'll have to practise that for the next one.
This afternoon we continue our study of the Supplementary Estimates (C) for the fiscal year ending March 31, 2016, and we also continue to examine the 2016-17 Main Estimates.
To discuss both topics, we have with us officials from three departments. On our first panel, for the first 45 minutes or so, from Global Affairs Canada — formerly known as the Department of Foreign Affairs, Trade and Development — we have before us one of our very important people, Arun Thangaraj, Assistant Deputy Minister and Chief Financial Officer. We've met before. I guess you've been with us probably the last — would it be three years?
Arun Thangaraj, Assistant Deputy Minister and Chief Financial Officer, Global Affairs Canada: Probably three years, yes.
The Chair: Nice to see you again. We also have Jeffrey Johnson, Acting Director General, Financial Resource Planning and Management Bureau.
Of course, these two gentlemen have the same hair style, which we've all noticed. We're so excited to see you. I'm sorry for fooling around, but it is Thursday afternoon, and we're excited to be here. Do you have some comments to start?
Mr. Thangaraj: I do, Mr. Chair. The previous chief financial officer at DFAIT had the same haircut, so now we joke that it's an initiation ritual: If you want to work at finance in the department, you have to give up your hair.
Thank you very much for the invitation to be here today on both supplementary estimates and Main Estimates. I'll make some brief opening remarks, and then we would be pleased to answer any questions you may have.
[Translation]
My last appearance before this committee to discuss estimates was in the latter part of the last fiscal year, in late February 2015. Over the last year, Global Affairs Canada has promoted Canada's values and interests internationally, enhanced prosperity, alleviated poverty, addressed humanitarian and global security challenges, and served Canadians at home and abroad.
The breadth, scope and international reach of Global Affairs Canada's mandate makes it one of the most complex departments in the Government of Canada. This international reach is demonstrated by Global Affairs Canada's management of Canada's international platform — a global network of 177 missions in 109 countries, which provides a range of services to Canadians and Canadian businesses, while also supporting the international work of 26 federal departments and agencies, Crown corporations and provincial governments.
[English]
As is typical for an organization of our size and international reach, we face challenges arising from our international environment, such as security, currency, inflation, natural disasters and conflicts, et cetera. In light of those international operations, our expenditures are influenced by factors such as currency fluctuations, inflation, changes in assessed contributions from membership in the United Nations organizations.
Against all of this backdrop, as well as our expanded mandate, we continue to place an unwavering emphasis on prudent and careful financial management to deliver our mandate in a sustainable, effective and efficient manner. We continue to explore new ways of operating in our international environment and in the financial constraints that we face.
[Translation]
The department has requested new funding of $525.5 million through the Supplementary Estimates (C), which will bring the department's total authorities to date to $6.17 billion.
This funding includes $168 million for the Green Climate Fund, which will help developing countries adapt to the impacts of climate change and reduce their greenhouse gas emissions.
[English]
In addition, around $109 million is requested for Global Affairs' contribution to Canada's rapid resettlement of 25,000 Syrians. This amount includes a $100 million grant to the United Nations Office of the High Commissioner for Refugees to support critical humanitarian relief activities in the region and to enhance resettlement capacity. There is an additional $8.6 million in operating funds to increase the capacity of the missions impacted in Lebanon, Turkey and Jordan to support the implementation of Canadian resettlement initiatives. Another around $121 million is linked to currency fluctuations either from assessed contribution payments for membership in international organizations of for operating costs incurred through our extensive mission network.
[Translation]
The 2016-2017 Main Estimates for Global Affairs Canada are $5.52 billion. This is a decrease of $11.3 million over last year's Main Estimates.
[English]
Year over year, there are significant funding increases of around $62 million for the cost of assessed contributions, and those are mainly due to currency fluctuations. There is $40 million for operating costs for our network abroad impacted by currency fluctuations; $24 million related to security projects; and $21.6 million related to the relocation of our chancery and mission to the European Union in Brussels.
There are decreases in the amount of $130.1 million for the sunset of the funding for the Stabilization and Reconstruction Task Force and Global Peace and Security Fund and $30.5 million related to the sunset of funding for the administration of the Softwood Lumber Agreement. Both of these are subject to renewal in the current fiscal year.
Global Affairs' Main Estimates funding will be used to deliver on the department's priorities as defined in the Report on Plans and Priorities in 2016-17. In the year ahead, we will focus on delivering results in four key priority areas: advancing Canada's values and interests through leadership and constructive engagement on global issues with our strategic partners, including at the UN and other multilateral institutions; contributing to Canadian and global prosperity with an emphasis on expanding and deepening trade and investment relationships with fast-growing markets such as China, India and our traditional partners; reinforcing Canada's relationship with the United States and other key bilateral partners; and strengthening our contribution to reducing poverty and inequality by supporting fragile states, building resilience and responding to humanitarian needs.
With that, I'll stop and open the floor to questions.
Senator Eaton: Thank you very much, gentlemen. Nice to see you again. This $168 million for the Green Climate Fund, do you give that to the United Nations? Do you give it to specific countries? Does it go directly to the projects? How is that managed?
Mr. Thangaraj: The Green Climate Fund is kind of like a multilateral institution, but it's more akin to a trust fund with various member countries. The way it functions is that various countries pledge their support. Canada, in November 2015, pledged a total of $300 million, and other countries have mobilized funding to that. This fund, for which Canada sits on the governance board, will provide a mixture of loans, capital funding and grants to various developing countries to support climate change or adaptation initiatives in those countries.
Senator Eaton: So the countries themselves apply to this trust, and the trust looks at the project and green lights or red lights the money?
Mr. Thangaraj: That's correct. They will decide, for example, if it's a loan, the terms of repayment of that loan. If it's a grant for technical assistance, depending on the project, it looks at the parameters of the individual project and determines funding.
Senator Eaton: So we're giving $168 million this year, and we give them another $168 million next year or $200 million next year?
Mr. Thangaraj: It is $132 million in 2018-19.
Senator Eaton: Oh, all right, so this is for 2016-17.
Mr. Thangaraj: The $132 million is for 2015-16. Our first tranche of contribution is for this fiscal year. The next one will be in 2018-19.
Senator Eaton: So we jump a few years?
Mr. Thangaraj: Yes.
Senator Eaton: Great. Next, the $24 million to implement the security projects in real property at missions abroad. Does that mean countries like perhaps Libya or Egypt, where we have special problems, or is this just upgrades to embassies that are fine and just need upgrading?
Mr. Thangaraj: We have a process to evaluate the security posture of all our missions, and we have a priority list to identify the most critical and pressing needs to upgrade our security in our physical and capital assets. So this $24 million will be allocated to our most pressing needs in our missions. It will be in places that are most vulnerable due to evolving security or, for example, in countries where, with the location of the embassy, there are seismic issues or things like that. It will go directly to where the security and safety need is most acute.
Senator Eaton: So you already have a list of those countries?
Mr. Thangaraj: Yes, we do.
Senator Eaton: You already have the projects in hand.
Mr. Thangaraj: Yes, we have the priority locations. There is a very robust process where we rank risk. We look at the condition of the capital asset, the security that is there, what the gap is and what we need in order to bring the security posture up to where it needs to be, and then we allocate capital funding to that.
Senator Eaton: What about Iran? The minister has spoken about reopening relations with Iran. He hasn't quite said how, but he says over and over again that he wants to reopen relations with Iran. Is that in these estimates? Surely it will cost a bit of money to reopen an embassy?
Mr. Thangaraj: That is not in these estimates. Just like any opening of a mission, you will go through the process of identifying what the need is and what the cost estimates are. Again, we have a rigorous internal process for establishing those costs.
Senator Eaton: Thank you.
The Chair: A supplementary on Senator Eaton's first question: On the $168 million that you've doled out to the countries that have applied, what type of measurement system or follow-up system have you established with them? I know it's probably newer money. Do you have any feedback yet?
Mr. Thangaraj: As of right now, a couple of loans have been made. We announced our contribution in November. We seeded the fund in December, so, like any loan fund, you set financial targets. So you're looking at what your return is, what your risk appetite is for your portfolio. But what the fund is aiming to do is to enhance resilience efforts in climate mitigation. Right now, the board of the Green Climate Fund has decided that half of the projects will be looking at small, vulnerable, developing countries and African states. As of right now, there have been certain climate mitigation projects that have improved in Peru, Senegal and Bangladesh. I think there are about $2.5 billion of approvals for 2016, but it's still in the initial phase of awarding money.
The Chair: You're still in the embryonic phases?
Mr. Thangaraj: That's correct. Canada is on the board of this organization, so we have somebody who sits as part of the decision making for the board and who is instrumental in setting up all of those checks and balances and all of the performance measurements and indicators that will be used to judge not only the investment but also the performance of the organization itself.
The Chair: You mentioned Peru, Senegal, et cetera. Was that strategically organized, or were they the first up to the plate?
Mr. Thangaraj: That I don't have information on, but we can provide that information.
The Chair: The reason for asking is that we think our function is important to be able to say, "What checks and balances, what measurements, do you have so that you're getting maximum benefit from taxpayers' money that we're investing in these countries?'' Because it is an issue in our country, of course.
Mr. Thangaraj: The decisions to award those project funds will be done by the board. Proposals will go before the board for that evaluation. Again, they have a risk function that will look at, if they're doing a specific adaptation project, whether it will meet the environmental parameters that it set out for itself and what the financial risk is. Will it be able to pay? What kind of funding? Do we give grant funding or loan funding? All of the investments that have been approved would have gone through that process.
Senator Marshall: I'm looking at statutory. I realize it doesn't have to be voted, but there is a significant amount of money there. Under budgetary, total statutory of $352 million, what sorts of items would be included in that?
Mr. Thangaraj: This is Main Estimates that we're looking at?
Senator Marshall: Yes.
Mr. Thangaraj: You would have employee benefit plans, so that's the cost of pensions, health care plans and all of those things in that vote for all of the public service.
Senator Marshall: Just for your department.
Mr. Thangaraj: Yes. That's the major portion of the statutory vote.
Senator Marshall: What about non-budgetary? It looks to be around $45 million in the current year, but it's now reduced to $3 million.
Mr. Thangaraj: For our department, non-budgetary is used largely for making purchases of capital in international financial institutions. So, for example, in a development bank, there are negotiations to recapitalize it. Canada will have a share purchase, and because you hold an asset, it's a budgetary transaction. So that amount will vary by year depending on the financial institution.
Senator Marshall: That shows up as an asset on the books of the Government of Canada?
Mr. Thangaraj: That's correct. It will show up in the public accounts as an asset.
Senator Marshall: What's the general trend? Do they usually hold their value, or will we see them later on as writeoffs?
Mr. Thangaraj: That's hard to tell. In the public accounts, we still list them at the book value, and they're meant to be investments in those organizations. They are held for a long time.
Senator Marshall: Thank you. I notice that a significant amount of money is budgeted under grants and contributions. Perhaps you could just give me a very short differentiation between what's considered a grant and what's considered a contribution.
Mr. Thangaraj: In our grants and contributions vote, which, for the upcoming year, is $3.5 billion, we have two modalities. One is a grant, which is an unconditional payment. Those you make when certain fiduciary parameters are met. Most of our grants are done to trusted partners like the United Nations or a big not-for-profit organization where we have established relationships and they have sound internal financial management practices. So you can effectively transfer the money to that organization as a grant.
The choice between doing a grant or a contribution is based on a fiduciary test. So we will look at the partner's capacity to manage the agreement. Over time we will look at what reporting we require, depending on the type of initiative. So if we are working with a specific NGO, we will say, "We would like this kind of results reporting and financial reporting over time,'' and the contribution is the method to give that type of payment.
Senator Marshall: Okay. I notice for grants you have listed, for example, the grants for multilateral programming. Do you know now who would be the recipient of that grant, or is that determined later on in the fiscal year?
Mr. Thangaraj: Sometimes we'll make a grant for a multiple year. The $1.9 billion would already have been approved, and that would have been through that financial assessment.
The organizations we do give grants to are typically United Nations organizations.
Senator Marshall: Is it usually the same ones year after year?
Mr. Thangaraj: It typically is, yes. It's very standard. The Global Fund to Fight AIDS, Tuberculosis and Malaria is one of the organizations we do fund. Every time we choose to make a new grant, we do a reassessment of their fiduciary capacity.
Senator Marshall: Every year?
Mr. Thangaraj: Every time we do a new investment with them. Before any investment is made, we reassess the fiduciary capacity and whether the grant is still the mechanism we choose to make that investment.
Senator Marshall: Okay. The first one, grants for multilateral programming, it's about the same as last year.
Mr. Thangaraj: It is.
Senator Marshall: But then there are others like the next one, the grants for partnerships for Canadians programming, which has almost doubled. Do you know at this point in time who exactly that's going to go to and why it has doubled? Or is it just that you have a general idea, you'd like to do more in that area and therefore we will up the budget?
Mr. Thangaraj: It's a combination of both. It's a mixture of every year we reassess what we need from Parliament in terms of our grant ceiling. This is the maximum that Parliament authorizes us to spend in grants. As part of that fiduciary evaluation of who our partners are and their capacity to deliver, we will look at how much money we will give in grants. The increase from $23.9 million to $38 million is part of that analysis. Part of it is the type of programming we will be conducting throughout the year. For example, we will be doing more on maternal, newborn and child health through this channel, so the partners we will be working with would qualify for grant funding.
Senator Marshall: What about the contributions? Is it the same? Some of them, it indicates NATO, so I expect the grant will be to NATO. Further on in the list, there are specific organizations. That's what it seems. The contributions are already known. You know exactly who's getting what.
Mr. Thangaraj: These are our assessed contributions. For example, if you take United Nations organizations, these contributions are for Canada's participation and membership in these organizations. A formula is used to determine the level. This is what's called an assessed contribution. We essentially get a bill, and we are told this is what our contribution should be for the upcoming fiscal year for that particular organization. That's why those are specific.
Senator Marshall: When you look under contributions, there are a couple there that caught my eye because of the significant increase. One is contributions under the Global Partnership Program for the destruction, disposal and securing of weapons and materials of mass destruction and related expertise. There is about $43 million there. What exactly would that be for? It's almost at the bottom of page 125. It's the third one from the bottom.
Mr. Thangaraj: The Global Partnership Program. I don't have the exact details on all of that program, but it's a program that we have. It's a long-standing program in the organization. We work with organizations for reducing chemical weapons or nuclear weapons. Some of this will be project funding, and some of it will be funding we provide to organizations for that.
Senator Marshall: Would it be in a variety of countries and a variety of organizations? It doesn't go to governments, does it?
Mr. Thangaraj: No. That's correct. I can provide the committee with more details on that program.
Senator Marshall: Yes, because that's $43 million. That's quite a large program.
The Canada Fund for Local Initiatives, second from the bottom, $34 million.
Mr. Thangaraj: Yes. That's correct.
Senator Marshall: What would that be?
Mr. Thangaraj: In our mission network abroad, there are various initiatives that will arise where Canada would like to contribute, so we establish a fund where internationally our various missions can contribute to projects or initiatives that advance Canadian interests.
Senator Marshall: Okay, so you don't make the decision.
Mr. Thangaraj: This would be done by our ambassadors in missions abroad, yes.
Senator Marshall: My final question is statutory. The last item in the estimates for your department — what is that other transfer payments, total statutory, $245 million?
Mr. Thangaraj: We have contributions that we make to certain international organizations that are negotiated, so it's a non-discretionary amount that we pay to international organizations. That amount is determined, so it shows under statutory payments.
Senator Marshall: You don't know what statute it is, what legislation?
Mr. Thangaraj: It's most likely the Bretton Woods and Related Agreements Act, for international financial institutions.
Senator Marshall: It's the same recipients every year?
Mr. Thangaraj: It's a collection of recipients.
Senator Marshall: Thank you.
Senator Raine: I have to confess I'm a neophyte in this committee. I'm sitting in for Senator Neufeld. I would like a little clarification on the Green Climate Fund. Our notes here say it's part of a $2.65 billion commitment made in November 2015, so this is the first payment under that $2.65 billion commitment?
Mr. Thangaraj: The $2.65 billion was the Government of Canada's commitment; it was a global commitment to climate change. The Green Climate Fund is one element of that. Canada committed to $300 million to the Green Climate Fund, so that is included in the overall $2.65 billion figure.
Senator Raine: So the $2.65 billion is from all the other countries as well? Or is that just coming from Canada?
Mr. Thangaraj: It's just from Canada.
Senator Raine: And how many years does that extend out?
Mr. Thangaraj: I'm going by memory. I think it was for five years, but I can come back and confirm that.
Senator Raine: So that would be $2.65 billion, and that would be for five years.
Mr. Thangaraj: Yes, $2.65 billion over five years.
Senator Raine: So it's roughly $50 billion per year?
Mr. Thangaraj: Yes; $2.65 billion over five years is about $600 million and some.
Senator Raine: Yes. Sorry. That's an enormous amount of money to be sending out. That's for all aspects of climate change programs, I guess.
Mr. Thangaraj: That's correct.
Senator Raine: Where does this show up, the total amount, in our budgets?
Mr. Thangaraj: Various government departments will be responsible to program the $2.65 billion. When we request funding for initiatives like that, such as the Green Climate Fund, you will see them come to Parliament for funding. That's where you would see that.
Senator Raine: So, $168 million, a little bit here and a little bit there, and it adds up to $600 million.
Mr. Thangaraj: That's correct.
Senator Raine: That's all I have.
The Chair: Can I ask a question on the $108 million for Canada's rapid resettlement of 25,000 Syrian refugees? What exactly was that money aimed at?
Mr. Thangaraj: The $8 million is because in order to process a lot of refugees, we had to scale up our operations in Lebanon, Jordan and Turkey.
The Chair: So you transported a lot of people in, right?
Mr. Thangaraj: That's correct. Not only from our department, but from other government departments as well. That was due to the increased operating costs. The $100 million was to the United Nations High Commissioner for Refugees, and that was to support urgent needs inside Syria, and the refugee responses in countries like Lebanon, Jordan, Egypt and Turkey.
The Chair: That money went to these countries, and they —
Mr. Thangaraj: That money went to the United Nations High Commissioner for Refugees, and they used that money in those specific locations, for example, if there were needs for water, health or sanitation.
The Chair: Supplies, food, blankets.
Mr. Thangaraj: That's correct: shelter, emergency education.
The Chair: That $100 million is a lot of money. I have two questions. How much of that money goes towards the actual activities? Do you have a percentage? Do we have an expectation that 90 per cent of that money is actually doing something as opposed to going to people's pockets and not getting through the system to where it should be? We always hear that there are some very good humanitarian, volunteer and relief groups, and some less-than-good ones, and there are people with reputations.
What type of research do we do to make sure that not only are we do-gooders, but we are also maximizing the benefit of the dollars we give?
Mr. Thangaraj: When we do that financial analysis, we look at the overhead rates of every organization that we do, and our objective is to maximize the impact on the poorest and most vulnerable, in this case refugees.
The reason we work with the United Nations, and especially in large-scale humanitarian issues like this, is that they can scale up rapidly and get aid and assistance to the vulnerable populations quickly, but at the least cost as well. That's why we choose partners such as UNHCR and the Red Cross and Red Crescent Societies as well, because, again, they can do this very quickly and efficiently.
The Chair: Do you demand from them statements that will actually show how much money went directly to them?
Mr. Thangaraj: We do get those things as part of the reporting, and we do assess overhead rates.
The Chair: Regarding the $100 million, could it be construed, when you talk about the rapid resettlement of 25,000 Syrians, that $108 million was given to Global Affairs Canada to handle the issues in Syria? Was any spent on the 25,000 folks we brought over? We just met with Citizenship and Immigration, and they told us they are going to spend $700 million, and they're already at $550 million when you throw everything together. I just want to make sure we're not manipulating money in terms of it going where it should be going.
Mr. Thangaraj: The $8 million was directly related to the resettlement.
The Chair: That was bringing your folks in to do the management.
Mr. Thangaraj: That's correct.
The Chair: And the $100 million?
Mr. Thangaraj: That was for refugees in the region.
The Chair: So that really has nothing to do with the Syrian refugees who came over here. Just so we get it straight, because it could be confused, with people thinking, "Well, there is another $100 million. Let's go back to the Citizenship budget and say, 'Hey guys, what did you show us that you spent?' Now we have our friends from Global Affairs Canada coming in and suddenly they spent $100 million. Does that $100 million get added on to the $450 million that you've already spent?''
Mr. Thangaraj: Of that $100 million that we gave to the United Nations High Commissioner for Refugees, $10 million was directly allocated for the identification of Syrians requesting asylum in Canada. A portion of that funding was to help UNHCR identify refugees as part of the 25,000 who would be settled in Canada.
The Chair: Don't forget that we have CBSA showing us they spent $12 million, and we have all these departments with horizontal funding. Are we really getting the true numbers on what this resettlement program is costing us? You can understand why we're asking the question.
Mr. Thangaraj: Across the organization, we work very closely with Immigration, CBSA and other partners to make sure we isolate the cost of that resettlement and that we track that separately.
Senator Eaton: Mr. Chair, Senator Marshall asked the same thing: Who could give us a horizontal line across Syrian refugees for Global Affairs, Immigration, Canada Border Services and Health? It would be nice, because it's all these little pockets of money, and it's very difficult for us to see what the cost is.
Senator Marshall: I think Treasury Board would probably have that.
Senator Eaton: We're not blaming you. It's the whole system. It's the same thing for indigenous affairs. We go crazy because Health, Corrections and Fisheries all come, and they each have a little indigenous pocket, but you never get a whole picture.
The Chair: Maybe this is a follow-up question to Senator Eaton's question: In your interrelationships with the other ministries on an issue like the Syrian refugee crisis — and you have been involved in it — do you sit down with CBSA and talk numbers that you and they put in, and then review this?
Mr. Thangaraj: Yes.
The Chair: How would we get access to that information so that we understand what the total cost is? We're the folks who are supposed to provide sober second thought and put it through when you come to us with legislation.
Mr. Thangaraj: My understanding was that they did present this as a horizontal item in one of the previous supplementary estimates with the details that would be coming in this supplementary estimate. Our portion of that is included here.
Senator Marshall: When several departments are involved, is a lead department usually designated?
Mr. Thangaraj: Typically there is a lead department or lead departments.
Senator Marshall: Who would be the lead department for the Syrian refugees?
Mr. Thangaraj: In this case, it was Citizenship and Immigration.
The Chair: Any other questions? What about Senator Mockler?
Senator Marshall: I would defer to Senator Mockler, but I still have questions.
The Chair: I think you should go ahead because Senator Mockler just gave me a signal that he wants to wait to hear your question.
Senator Marshall: I had a couple. We're talking about the grants and contributions, but the Main Estimates highlights why there are increases, and there is a little summary. It says there is an increase of $24 million to implement the security projects to real property at missions abroad.
What can you tell us about that? Would these be countries that are considered high risk? How do you select the missions that are going to have security upgrades? What's the program?
Mr. Thangaraj: This funding is for capital improvement at what we've assessed internally are our most critical needs.
As part of our assessment, we look at what the condition of the mission is, vis-à-vis a baseline security threat and risk assessment. We look at the environmental risk, and then we ask, how does this match up to the capital asset? What is needed? We've identified $24 million in real property projects or capital projects.
Senator Marshall: But the $24 million is noted as an increase, so there must be a base amount.
Mr. Thangaraj: That's correct. There is a base amount in our capital spending that we have for security and real property in general.
Senator Marshall: So $24 million isn't really a lot of money when you're talking about all the missions abroad. What is the base amount?
Mr. Thangaraj: Let me just go back to the Main Estimates for a second. If you look at our capital budget, our overall capital budget for this year is $124 million. The $24 million is part of that, but that includes all of the security and real property and other capital spending that we'll allocate this fiscal year.
Senator Marshall: Do you have the amount of the $124 million that is the base amount?
Mr. Thangaraj: That is allocated to security? I don't have that amount, but I can provide that.
Senator Marshall: The other question I had — and this came up when Treasury Board appeared before us — was about the foreign currency fluctuations. There is an incremental increase in your budget for that. The note says an increase, but where does it show up? Does it actually show up under grants and contributions?
Mr. Thangaraj: In the Main Estimates, it will show up under operating expenses but also under grants and contributions.
For foreign currency fluctuations, if you go back to those assessed contributions, they're always levied in U.S. dollars.
We make an adjustment, or there is a formula that we've agreed to with Treasury Board, where they assess our needs in terms of currency fluctuations every September, and they adjust our Main Estimates.
What you see there is a combination of what we need for the assessed contributions and for operating expenditures.
Senator Marshall: Then, the incremental increase would show up in those votes, not a separate vote set up for fluctuations.
Mr. Thangaraj: That's correct.
Senator Mockler: I have just a few questions following up on some of the comments you've made, and I will start with the first comment you made. You said that Global Affairs Canada promotes Canada's values and interests internationally, enhances prosperity, alleviates poverty, addresses humanitarian and global security challenges and serves Canadians at home and abroad. There is no doubt you play an important role. In my other life, I had the opportunity to deal with your department.
Can you explain that in the context of 2015 going to 2016, with respect to the budget that's coming? I know you cannot talk about the budget.
Mr. Thangaraj: I wish I knew about the budget.
A lot of what we have planned you will see in the Report on Plans and Priorities for the upcoming year. In our RPP for 2016-17, we talk about some of the initiatives that will support those in terms of advancing Canada's values and interests. We talk about contributing to international peace and security, enhancing our leadership on clean energy, advancing inclusive and accountable governments, peaceful pluralism, respect for diversity. The RPP will give context for each of those priorities that I talked about in my opening remarks. It will give details on what it is that we plan to do in the upcoming fiscal year on those items.
Senator Mockler: If I come to page 123 from the Main Estimates, we talk about vote, international security and democratic development. When I look at estimates 2015-16 and Main Estimates, 2016-17, there is quite a drop. Could you explain why there is such a drop in a time where we are, especially the democratic governments in the world, facing challenges in the international world? Can you explain the programs that have been or will be affected?
Mr. Thangaraj: The explanation for the decrease in that program activity is because of the sunsetting of a program called the Stabilization and Reconstruction Task Force and Global Peace and Security Fund. It's a program that sunsets and is up for renewal, and we're going through the process of renewal. Because of the timing, it shows as a decrease in the Main Estimates, but if you look back to previous years, you will see increases as that program gets renewed. That program was created, and the purpose of that program is to allow Canada to respond effectively to international crises and to build stability and peace and resilience in the world. I think that program started in 2005. It's a long-standing program, but it's just up for renewal. That's the reason for the decrease.
Senator Mockler: This brings me to a supplementary question: When you look at security, were you part of the discussion to bring back the jets to Canada?
Mr. Thangaraj: That would be beyond the scope for me and the Main Estimates. I'm not sure. That's a policy question. They don't let financial officers in on that.
Senator Mockler: Thank you. That's a good answer.
I will go to another subject matter. It would be the softwood lumber accord with the United States. Here again there is a sunset of funding — $30.5 million related to softwood lumber. Could you explain that, and how long have you been part of those negotiations? Maybe give us a highlight of what's coming.
Mr. Thangaraj: That I can't do either. They don't tell finance people everything.
The softwood lumber is a program that we have had internally to manage the agreement since 2006. The funding was meant to sunset as our current agreement expired in October. There is a process to renew the funding for the upcoming year, and the negotiations, I understand, are ongoing. So as that program sunsets, the funds drop out of our reference level, and once there is a new agreement, the funds will be back to perform the same functions in terms of managing that agreement through the next period.
Senator Mockler: Are you confident that we will have an agreement?
Mr. Thangaraj: That's subject to negotiation. I'm confident —
Senator Mockler: Who is negotiating it?
Mr. Thangaraj: Our trade branch is responsible for that negotiation.
The Chair: Last year, when we were talking, you were kind enough to give us an overview of the currency fluctuations. Now we have had a significant, drastic drop in the dollar. We had, through our Banking Committee, all of the economists that we could possibly get into the room to discuss the reasons why.
I'm wondering, since you deal with so many different currencies, what has transpired within your department? What problems have you faced, and how have you adjusted to the new reality of where the dollar is?
Mr. Thangaraj: It's very challenging, especially if you look at the period between September and January, where we had a very rapid change in the value of the Canadian dollar vis-à-vis other currencies. When you're in 177 locations, you have to manage very carefully, and you have to look at what your budget is and what your purchasing power can accomplish in those changing environments.
I think Treasury Board recognized this a number a number of years ago when they put in place a really robust framework to deal with that, whereas in the beginning of the fiscal year, based on our best estimates, we look at what the value of the Canadian dollar will be and adjust our operating costs.
We also work with Statistics Canada to look at inflationary pressures. Depending on the region of the world that you're in, they have indices where we can look at separating what our inflationary pressures are and what our currency pressures are. They will adjust our Main Estimates.
As you see from Supplementary Estimates (C), those predictions don't always hold. So, while operationally we will try to cash manage, there is only so much you can do. That's why you have the quasi-statutory framework or that currency adjustment that we get through supplementary estimates to make sure that, based on what your planning assumptions are, you have still have the same amount of money. The quasi-statutory doesn't give you a dollar more than you need. It makes sure that you meet your currency needs. A few years ago, when we were having gains on the currency, the department returned money. So it works both ways. When the currency does what it has done over the past few months, we get extra money, but if the value increases based on the base rate, we return money back to the Consolidated Revenue Fund.
The Chair: We had a $2 trillion economy. This may be a Department of Finance question. Given the amount of hedging we do, do we keep hedging reserves to protect ourselves?
Mr. Thangaraj: That would be a Finance question.
The Chair: I think I see a Finance person in the room, so I look forward to asking.
You talked about the department's expanded mandate. You were kind enough to give us an overview of the consolidation or the change from an organizational standpoint that took place within the last year and a half.
Where are you now in terms of that? You were kind enough to give us a great overview last time. Will you give us a six months or eight months later perspective of where you are at?
Mr. Thangaraj: As every month goes by, we get further ahead. Operationally, for example, if I talk about the mechanics of an organization, they're pretty much seamlessly knit together. You have one financial system, one HR system; our IT systems are all amalgamated, and it functions like one specific entity.
That was a fairly significant challenge when you take two departments that functioned and operated very independently. However, when you look at how we function in terms of our policy and our mandate, there are missions where you see the vast integration, especially in some of our developing countries. Heads of missions have been key integrators of the pillars of trade, foreign policy and development, and you see a lot of that richness of the discussion and flow into our policy-making and our decision making.
If you look at the mandate letters of the organization, you see the interdependencies or the different mandates and how they impact each other.
In February when I was here the last time, I said there is still some knitting together we have to do. A year later, the nuts and bolts are pieced together well. We have groups sitting beside each other working together.
The most tangible outcome is that we are working as an integrated department, and people are taking trade development and policy and integrating that into decision making.
The Chair: If you had to say out of 100 per cent your challenge of cultural change, cultural adjustment, where would you be on the metre?
Mr. Thangaraj: Cultural change is an ongoing thing. We're much farther ahead. I'm a hard marker, so I will give us a 90 per cent. It was a substantial cultural change, in 2013, when they put the organizations together. We are an international organization, so we do depend on our embassies. I think that's where you saw amalgamation and integration happen most rapidly. That has spilled over quickly into the headquarters aspect of the organization. It's something this organization pays attention to constantly.
If you look at governance committees, policy or programming, all three parts of the organization, you don't have just development programming, but all programming feeding into each other, so that cultural change is taking root.
The Chair: Cultural change in organizations can be anywhere for up to three, five or seven years depending on the flexibility of your organization. So a mark of 90 per cent after a two- to three-year period, the message in my mind is that you must have strong people in the field, and those people in the field are versatile enough to be able to take on new responsibilities and to bring your operation forward. You did have two distinct bodies that you put together. Is that a fair assessment?
Mr. Thangaraj: That integration was catalyzed very quickly, and there were a lot of spillover effects. In terms of the organization as a whole, this was made a corporate priority for a number of years. We talked about it in our Report on Plans and Priorities. It was part of all of our expectations of building culture, integration, identifying opportunities to do that.
Even simple things that we did procedurally, we made sure that groups sat together instead of being piecemeal. So there were a lot of things we did to get that culture to take hold.
We had groups that had similar mandates in different areas sit close to collaborate and work together. It has been a very intentional process for two years with a lot of management oversight.
The Chair: There has been some criticism in the press about our foreign affairs policies. When you hear some of the criticisms that have been in the press in the last the months, how do you respond to that?
Mr. Thangaraj: In terms of the amalgamation?
The Chair: I'm not sure they're talking about the amalgamation, but Canada's role and position in foreign affairs. There is a perception that our role is not as strong as it once was. I wondered if you have heard those comments. If you have, how do you respond to people who have negative feedback?
Mr. Thangaraj: That question is probably best left to somebody else to answer. Our organization has dedicated people throughout it, from the internal services, finance people, HR people, our policy people and our ambassadors, and our people who work with multilateral organizations and our trade commissioners.
Look at the Departmental Performance Report. Canada as a country, through Global Affairs Canada, has accomplished some significant things. If you look at trade agreements, the Green Climate Fund, for example, and if you look at our work on Syria, Canada has done some great things in the past few years, such as our leadership on maternal, newborn and child health. This organization and this country have done some very good things. I would ask anybody who would doubt that to read our Departmental Performance Report.
Senator Mockler: You said internal services in your answer to the chair. When I look at your budget for 2015-16 and 2016-17, there is a dramatic drop from $270 million down to $236 million. Could you explain that?
Mr. Thangaraj: That's due to a number of factors. One is internal services. We tried hard to respond to the government's priorities to streamline and modernize the back office. We tried hard to ensure we're lean and efficient. That explains part of the reduction.
We've done some reprioritizing. We are looking at when we do modernize and become more efficient, how do we allocate that to other functions that are of higher priority for trade, development and other programming areas?
There has been an adjustment in the methodology for calculating internal services. A portion of that reduction is attributed to that.
Senator Mockler: However, you said to the chair that in doing so you were using internal services, and if that's the case, did we have any reprofiling, to will use your nomenclature, any job cuts in that particular sector?
Mr. Thangaraj: No. There have been reallocations. The reason I referred to internal services is because we are using more web-based services. For Canadians travelling abroad, we have consular and travel apps where we're using our IT platform to leverage them. That was my reference to internal services.
There haven't been job cuts. What we've tried to do is look at how we run that aspect of our business more efficiently.
The Chair: How is your relationship with Shared Services Canada?
Mr. Thangaraj: Our relationship with Shared Services Canada is good. It's complicated by the fact that they have to provide us services internationally. As a service provider, they have been responsive. They worked with us to resolve problems, and they are complicated problems. Every time, they've worked with us collaboratively to say you can't apply a domestic solution, so here is how we need to deal with that. In our missions we have IT systems, so we have bandwidth needs. For the scale-up in that Syrian crisis, we worked very well with Shared Services Canada so that they enabled our IT systems to be able to function with those increased demands that people had with BlackBerrys. My experience with them is they have been responsive to us.
The Chair: They have taken some heat publicly and within the government itself. With the number of operations that exist within the government, it's a major task to suddenly go from a decentralized to a centralized system and expect to have this happen.
Mr. Thangaraj: That's correct. Notwithstanding that transformation that they're going through — I deal with them very closely on a number of these things — they have done yeoman's work trying to find solutions, given all of the other competing demands they have. Whether it be on domestic or international, our working relationship is good. They have a vested interest in our success, and we have a vested interest in theirs. We have worked very well together.
The Chair: What type of internal cost transfer would you do to Shared Services to pay for the service they give you?
Mr. Thangaraj: In 2011 or 2012, we had our major transfer from both CIDA and Foreign Affairs. This year, you see about $2.6 million in the supplementary estimates for software related to workplace technology devices. That's essentially the transfer that they have to provide us services.
We will do transfers, for example, if there are new things that we've asked them to do or If the costs that they have don't match with what they've been appropriated.
Again, I think we have a good working relationship with them on those things. They don't just send you a bill; they work with you and say, "Here's what we're doing. How do we find a solution?''
The Chair: Any other questions from our colleagues?
I have one last question. We talked about this last time also. What are your top two major challenges that you face that you want to move forward on and establish the solution that you need to have success in your department?
Mr. Thangaraj: From a financial perspective?
The Chair: It's an open question.
Mr. Thangaraj: That's the perspective I speak —
The Chair: We can go in the weeds, or we can go in a macro way. You might give me an example of each.
Mr. Thangaraj: For us as an organization, being in an environment where you have rapid currency fluctuations is a significant challenge. You want the business, and you need to make sure the business has enough funds to deliver. Managing in that environment is challenging, and we want to make sure that everything we do enables the success of the business. That would be our most significant challenge.
Just responding to the mandate that the organization has, it is a very bold mandate, and we are working aggressively to make sure that we deliver on those commitments to achieve our outcome, to make sure that we have a safe and prosperous Canada.
The Chair: Anything else from our colleagues?
Gentlemen, we thank you very much for your time.
We will continue with our next panel of witnesses. Just so our witnesses understand, we've had a very interesting week with the budget coming. We participated with the Treasury Board meeting that Scott Brison had explaining the path that I guess most of you will be involved in — working together trying to realign how we do a budget first, then estimates after. We have a history of doing estimates and then the budget. I guess it will be an interesting experience to see where that goes.
What we've been doing this past week is getting in front of as many people as we can to try to understand the Supplementary Estimates (C) and looking ahead to 2016-17, recognizing that with a new government, the budget might have changes. If you've been informed of the changes at this point, it would be interesting to know. If not, which we would expect, then I guess we'll have changes as we move forward in the next couple of weeks.
I'd like to welcome you all here. For the second part of our meeting today we combine two departments. First, we have two officials from the Department of Finance: Randy Larkin, Assistant Deputy Minister of the Corporate Services Branch; and Glenn Purves, Director of the Economic and Fiscal Policy Branch. Thank you very much for being here. They're accompanied by a delegation of other officials who, if required, may be called to the table to answer specific questions. We welcome you all.
We also have officials from Veterans Affairs Canada. In her first week with the organization is Elizabeth Stuart, Assistant Deputy Minister of Human Resources and Corporate Services; and Maureen Sinnott, Director General of Finance, Human Resources and Corporate Services.
I understand that each department has an opening statement. Maybe we could begin with Finance, and then we'll hear from Veterans Affairs, to be followed by a question period. Mr. Larkin, the floor is yours.
Randy Larkin, Assistant Deputy Minister, Corporate Services Branch, Department of Finance Canada: Good afternoon, Mr. Chair. Thank you very much. As chief financial officer, I'm the lead executive responsible for financial reporting and disclosure of the 2015-16 Supplementary Estimates (C) and the 2016-17 Main Estimates for the Department of Finance.
With me today, as you mentioned, are officials to assist me in providing you with more in-depth perspective on the rationale and our policy that supports the numbers within these estimates documents.
[Translation]
I will begin with an overview of the 2015-16 Supplementary Estimates (C), as they represent the financial requirements for the remainder of 2015-16.. The Supplementary Estimates (C) reflect a net decrease in departmental budgetary spending of $2.447 billion composed of forecasted decreases in statutory expenditures of $2.452 billion and increases in voted expenditures of $4.5 million.
[English]
The statutory items are displayed in the supplementary estimates for information purposes and will not be included in the appropriation bill.
Within the statutory forecasts, the contributing factors to the $2.5 billion decrease are as follows: approximately $2.5 billion decrease in interest on unmatured debt; $21 million decrease in other interest costs; $8.8 million increase in additional fiscal equalization payment to Nova Scotia; $10.9 million decrease in youth allowance recovery payments from Quebec; a $48.6 million decrease in recoveries of alternative payments for standing programs; and a $52.5 million increase in incentives for provinces to eliminate taxes on capital.
The new funding requirements for vote 1, our operating vote, is approximately $4.5 million and consists of the following: a reprofile of $1.8 million from 2014-15 to 2015-16 for the James Michael Flaherty Building redevelopment project, which is the final round of funding for the 90 Elgin project, the headquarters office of the Department of Finance; funding related to government advertising programs of $1.5 million; and funding from Budget 2015 initiatives for the Department of Finance, approximately $1 million, which includes the G20 framework working group, which is about $600,000, and activities related to the corporate asset management review, approximately $400,000.
[Translation]
Let us turn to the 2016-17 Main Estimates. Departmental priorities for the Department of Finance for 2016-17 and beyond are clearly articulated in the Prime Minister's mandate letter to the Minister of Finance.
[English]
Here are some of our key priorities: ensuring that our fiscal plan is sustainable by continuing to reduce the federal debt-to-GDP ratio throughout our mandate; implementing the middle-class tax cut and asking the wealthiest Canadians to contribute a little more; meeting with provincial and territorial colleagues to begin a process to enhance the Canada Pension Plan to provide more income security to Canadians when they retire; supporting the Minister of Employment, Workforce Development and Labour in delivering on our plan to make post-secondary education more affordable for students in low- and middle-income families; and working with the President of the Treasury Board and ministerial colleagues to conduct a review of tax expenditures and other spending to reduce poorly targeted and inefficient measures, wasteful spending and government initiatives that are ineffective or have outlived their purpose.
[Translation]
The 2016-17 Main Estimates identify spending authorities being sought, and what will be included in any subsequent appropriation bills that Parliament will be asked to approve. They provide information on anticipated statutory spending, including provincial transfer payments and public debt charges.
Statutory expenditures totalling approximately $89.4 billion are not included in the appropriation bills, as they have been approved by Parliament, but are included as information in the estimates document.
[English]
The 2016-17 Main Estimates identify total budgetary requirements of $89.5 billion for the Department of Finance, which is $182.6 million lower compared to the 2015-16 Main Estimates of $89.6 billion. This decrease is due to a net decrease of $170.4 million in statutory votes and a $12.2 million decrease in voted amounts.
Within the statutory forecast, the major contributing factors to the $170.4 million decrease are as follows: a $2.3 billion decrease in interest on unmatured debt to reflect private-sector economists' expectations from the 2015 update of economic and fiscal projections; a $536 million decrease in other interest costs due to a decrease in the average Government of Canada long-term bond rate, which is used to calculate interest on the public sector pension obligations pertaining to service pre-April 1, 2000; and a collective $2.677 billion increase in transfer payments to the provinces and territories resulting from the legislated funding formula.
In these 2016-17 Main Estimates and ongoing, departmental operating expenditures and grants and contributions are consolidated into vote 1, program expenditures. This change was asked of the department by the Treasury Board Secretariat and provides a more efficient approach to the management of voted expenditures given our relatively small amount of voted grants and contributions.
The decrease of $12.2 million in vote 1 program expenditures, our operating vote, is due to a decrease in funding for government advertising programs of approximately $7.5 million; Harbour Front Centre funding program of $3 million; cooperative capital markets regulator system of $1.5 million; and other program funding of $200,000.
[Translation]
This concludes my overview of the estimates for the Department of Finance.
[English]
The Chair: Thank you, Mr. Larkin. Ms. Stuart, please go ahead.
Elizabeth Stuart, Assistant Deputy Minister, Human Resources and Corporate Services, Veterans Affairs Canada: Good afternoon, Mr. Chair and committee members. Thank you for the opportunity to discuss Veterans Affairs' Supplementary Estimates (C) submission, as well as our 2016-17 Main Estimates submission.
I was recently appointed Assistant Deputy Minister of Human Resources and Corporate Services. I served 30 years in the Canadian Armed Forces. I am here with Maureen Sinnott, Director General of the Finance Division and Acting Chief Finance Officer in Charlottetown.
[Translation]
Esteemed members of the committee, as you know, the department has the following responsibilities: provide benefits and programs to veterans, Canadian Armed Forces personnel and their families in recognition of their service for Canada; and ensure to honour and commemorate their accomplishments and sacrifices through commemorative activities.
[English]
Mr. Chair, committee members, the department is proud of this dual mandate, just as it is proud to continue doing everything in its power to enhance the programs and services that are important to Canada's veterans and their families.
I will now outline what is contained within our supplementary and Main Estimates submission. As you see from our Supplementary Estimates (C) submission, VAC's overall total spending this fiscal year, including these supplementary estimates, is almost $3.67 billion. That's close to a $150 million or 4.2 per cent increase over our 2015-16 Main Estimates budget of $3.52 billion.
[Translation]
As evidenced by these supplementary estimates, our main priority is to ensure that veterans and their families obtain the support they need, when they need it, and for as long as they need it. In the case of younger veterans, that often means ensuring that they can successfully transition to civilian life.
[English]
That's why the largest portion of this new funding, $81.3 million, is for veterans' programs and services, the majority of which flow to Canadian Armed Forces veterans through the New Veterans Charter. Another $25.5 million is purposed to enhance the delivery of services and benefits by increasing front-line and case management staffing levels to provide increased support to veterans and their families. These funds will also be used to improve the timeliness of disability benefit decisions so that veterans have earlier access to benefits.
A further $2.7 million in new funding is requested to support implementation of three new grant programs: the Retirement Income Security Benefit, the Critical Injury Benefit and the Family Caregiver Relief Benefit, which were initially approved through VAC's 2015-16 Supplementary Estimates (A) submission. This current submission includes an additional $400,000 for the Family Caregiver Relief Benefit. It also includes funding to hire additional staff to implement three programs: First, to provide online training to primary caregivers and to improve system interoperability between Veterans Affairs and National Defence.
[Translation]
Second, thanks to that additional funding, we will be able to continue to ensure that Canada is there for the men and women who are there for Canada, as well as for their families. Our supplementary estimates also include $1 million to extend the Community War Memorial Program by one year. That program had initially been approved for five years in 2010, and then extended by one year to cover the final costs of contributions for the construction of new monuments previously authorized by the department.
[English]
The Chair: Ms. Stuart, when speaking, can you slow it down a bit because the translators are working hard to try to keep up with you. They're impressed with your ability to communicate in Molière's language, but they're panicking in the back. Their faces are going red; I can see them.
Ms. Stuart: There is also a return of $200,000 to Canadian Heritage for funds previously provided to VAC to support a commemorative initiative. However, as the funds were not required, they were returned.
The last item of note in VAC's Supplementary Estimates (C) submission is an increase of $3.8 million for an increase in employee benefits planned costs that relate to increased personnel costs.
I will now summarize the contents of VAC's 2016-17 Main Estimates submission.
Firstly, it is important to understand that VAC's budget fluctuates each year, attributable to the demand-driven nature of its programs and services. VAC updates its client and expenditure forecast each year to ensure that all veterans who come forward receive the benefits to which they are entitled. It should be noted that expenses are only incurred for those veterans who actually come forward qualifying for our programs and services.
As VAC's program budgets can only be used for the purposes for which they were intended, excess funds cannot be directed without explicit consent from Treasury Board. This reality has led to repeated criticism in the media in recent years around lapsed funds. That is to say, not spending our entire budget, which is attributable to the primary number of veterans we are supporting. For example, we are forecasting a net decrease of approximately 11,000 war service veterans and survivors who are receiving VAC benefits this fiscal year. This is the most significant reason for the lapses in our overall spending.
VAC's total Main Estimates submission for 2016-17 is $3.6 billion, an increase of $106 million, or 3 per cent, in comparison to our 2015-16 Main Estimates. This increase is primarily the result of two factors: continued increase in demand for programs under the New Veterans Charter and faster adjudication of disability benefit applications under VAC's Disability Award program. There is also an increase in our regular operating budget attributable to our department's efforts to hire new staff to provide better, faster service to veterans.
[Translation]
Although the Department of Veterans Affairs continues to have increased financial needs under the New Veterans Charter, those requirements are particularly offset by a smaller demand for more traditional departmental programs, and that is attributed to a decrease in the war service veteran population. There has also been a decrease in funding for the Ste. Anne's Hospital, the transfer of which to the Province of Quebec is planned for April 1.
[English]
VAC's 2016-17 Report on Plans and Priorities sets our course for the coming year. These plans are driven by three basic principles: care, compassion and respect. Our top priority is to provide veterans with excellent service from their first moment of contact with our department. We will place veterans at the centre of everything we do — our philosophies, ideas and operations. This means being proactive and responding quickly and compassionately to veterans' changing needs.
[Translation]
Second, we provide veterans with the services they need, when and how they need them, in a way that works for them.
Finally, we work closely with the Department of National Defence in order to fully support our Canadian Armed Forces members, facilitate their transition to civilian life and focus on their well-being.
[English]
In closing, I would like to point out that in 2016-17, as in previous years, approximately 90 per cent of VAC's budget, or $3.3 billion, will flow directly to veterans, their families and other Canadians served by Veterans Affairs Canada.
Thank you, Mr. Chair. Maureen and I await any questions you and other senators have regarding these supplementary and Main Estimates.
The Chair: Thank you very much, Ms. Stuart.
Senator Marshall: I'll start with the Department of Finance. There is funding there that has to be voted, but most of it is statutory, so a lot of my questions relate to statutory.
I notice there is always a reduction in the estimates because the interest rates are so low. I think that was the case a number of years ago when I served on the Finance Committee.
Do we still have foreign currency debt? Where does that fit into the picture with the overall debt of the country?
Mr. Larkin: Do you want to answer that on foreign currency debt, Mr. Purves?
Glenn Purves, Director, Economic and Fiscal Policy Branch, Department of Finance Canada: Yes. We hold foreign currency debt. We have an exchange fund account that holds foreign currency assets in our reserves, effectively. We also have obligations with the IMF in terms of special drawing rights, and so forth.
Typically, we generate income on those assets in that we capture that information in standard reporting in a budget through the financial requirements in the non-budgetary tables. The income that we generate from it flows through to the budgetary balance.
Senator Marshall: Is it mostly U.S. currency?
Mr. Purves: The majority of foreign denominated debt is U.S. denominations, yes.
Senator Marshall: Am I to understand that where interest rates are so low in Canada, and the value of our dollar is so low, is there some mandatory requirement that we carry some foreign currency debt? Why would we still have foreign currency debt with the American dollar being so low? Is that a factor?
Mr. Purves: I will take the initiative on this to answer: We have prudential and liquidity requirements. We have plans for thresholds on the level of reserves, for lack of a better word, that we would like to hold, and that continues to be updated.
For the most part, it's reflective of different international standards and norms with respect to the amounts of foreign currency denominated debt that is useful for a country to hold. Certain countries that don't print their own currency, for instance, may choose to hold more foreign denominated debt if they want to have an influence on their own currency, whereas often countries that produce their own currency and are able to generate their own currency have their own rules based on the size of the money circulation.
Senator Marshall: It doesn't appear to be a significant amount, so why do we even bother? From what you're saying there is a mandatory requirement.
Mr. Purves: I used to work at the IMF, so my recollection is that there is no country in the world that doesn't have a certain level of reserves, foreign denominated instruments. They are used for different purposes. Other countries may use it for interventions in terms of buying more of their currency. Some countries may use it for financial safeguards. There are different reasons why countries hold these reserves.
Senator Marshall: The department would decide every fiscal year that, yes, we're going to have this amount.
Mr. Purves: Based on prudential requirements and based on the plan for the exchange fund account, yes.
Senator Marshall: Do you have any role in overseeing the government pension plan, the employee purchase plan? Does that fall under your auspices?
Mr. Purves: There are two parts. There's the pre-2000 pension plan and then the post-2000. Post-2000, the pension assets are managed with the Public Sector Pension Investment Board, and they're actively managed there.
Senator Marshall: They're arm's length?
Mr. Purves: That's right. The setting of the funding policies and so forth is determined largely through Treasury Board, with consultation centrally with Finance.
With respect to pre-2000 pension, that is an ongoing liability. It's reported on through the public accounts and so forth.
Senator Marshall: That falls under the Department of Finance?
Mr. Purves: I'm not sure whether it's included specifically under the statutory for Finance, but Treasury Board has an important role to play with their pension side, but any financial issues pertaining to that and the implications of the interest on our pension liabilities is something that would be calculated by the Department of Finance.
Senator Marshall: Could somebody also speak to the borrowing programs of CMHC and Export Development Canada? I think Farm Credit is done under the auspices of the Department of Finance. I was wondering how that works.
Rick Stewart, Assistant Deputy Minister, International Trade and Finance Branch, Department of Finance Canada: All of those organizations are Crown corporation organizations, and they are accountable in their own right for their borrowing and operations.
Each of those organizations submits an annual plan through the Treasury Board for government approval of its operating plan, which includes information on its lending practices, borrowing requirements, activity plans, et cetera. In some sense the Department of Finance has some oversight responsibility through the Minister of Finance for those organizations, but their operations happen at arm's length, and their business plans are effectively approved by the government through the Treasury Board.
Leah Anderson, General Director, Financial Sector Policy Branch, Department of Finance Canada: It's similar for the borrowing program as well. As part of their corporate plan, they submit an additional borrowing plan, and as part of the minister's authority under the FAA, he will approve their borrowings for the year and the terms and conditions related thereto.
Senator Marshall: Are they completely at arm's length, or does the Department of Finance do any monitoring of them, for example, with regard to their collections, with regard to bad debts? Are they entirely independent?
Ms. Anderson: Through their borrowings they have to return regularly. Every year we renew their borrowing authority concurrent with their corporate plan approval and any extensions required. We will look at past history to inform our judgment on that.
Senator Marshall: Mr. Chair, I do have some more questions with regard to some of the statutory items, but I defer to my colleague.
Senator Raine: Thank you very much. I want to clarify something. The Finance Department is responsible obviously for the finances of our country, but in terms of the development of policy, good policy involves revenue in and revenue out, so hopefully earning more revenue, if that's what you're trying to do.
I'm not 100 per cent sure, but I think the only product we sell outside of Canada that has to have GST or HST paid on it is holiday packages sold in travel agencies all around the world for visitors coming to Canada.
How does the analysis in terms of tax policy work? I once tried to figure it out and was bounced between Treasury Board, Revenue and Finance until I got dizzy, and everyone seemed to point their finger at Finance. They're the ones that have the final say. The problem is that in Canada we have a huge opportunity in tourism that is being unfulfilled because our prices are too expensive in travel agencies where the visitors are shopping for their holidays because they include GST or HST, and it gets marked up and we don't get the sales.
What is Finance's role in that? That's a huge opportunity that we're missing out on.
Miodrag Jovanovic, General Director, Tax Policy Branch, Department of Finance Canada: The general principle underlying the GST, which is basically a value-added tax, is that this is a tax on consumption; so it's taxed typically where the consumption happens. The general policy guideline is to try to achieve that outcome. If there are no administrative limitations in doing so, we reach that outcome.
With respect to goods purchased in Canada, for instance by a non-resident, typically, whether it's for a diplomat or other people, there is a possibility for individuals to claim a rebate or a refund on GST at exit. They may have to fill out a form or something like that, so that is generally a possibility.
With respect to travel, I wasn't certain whether you were talking about Canadians buying travel packages or non- residents buying packages to travel in Canada.
Senator Raine: Foreigners purchasing, and I understand in the past there was a question because they couldn't tell who they were tracking, but now with electronic travel visas it should be a lot easier to control.
Mr. Jovanovic: Yes, I guess that's where there is a trade-off between what you can do administratively that is easily achievable within a cost envelope and the policy objective.
We have a visitor rebate program in the context of conventions, for instance, that are organized in Canada whereby you have non-residents coming to Canada for some conventions or conferences. Through that measure they can get a rebate, and the reason for that is it's more easily administrable, but there are some limitations.
Senator Raine: I would like to meet with you to discuss it further because I'm sure we're losing a lot of revenue once visitors are here in terms of having a much stronger industry because of our tax policies.
Mr. Jovanovic: Thank you.
The Chair: Ms. Stuart, can you give us an overview of your main focus? You went over your Supplementary Estimates (C) request and your budget.
My particular interest is that I come from the Hudson area and spend a lot of time at the veterans' hospital as a volunteer through various community activities. I recognize that the average age of people in the hospital is about 93 years old, and they are World War II veterans. There are still around 350 folks there, and we're going to divest ourselves of the last hospital we have.
Where is the actual process at? How will you protect veterans' rights in terms of the service requirements they need? For those folks who went to Bosnia, Serbia and of course Afghanistan and who have operational stress, I'm not sure how many beds we have, but it was a new unit that was part of that $130 million makeover for post-traumatic stress disorder. How do we make sure we preserve the expertise in that area for veterans in Eastern Canada? They come to Ste. Anne's for counselling for that particular issue. When that's turned over to the province, will it still exist? If so, how do you see it moving forward in the future?
Ms. Stuart: I'll start with my knowledge of the situation in the short time I have been serving at Veterans Affairs Canada. We have an agreement to transfer Ste. Anne's Hospital to the Province of Quebec. This is the last hospital we're transferring to a province, and it's scheduled to occur on April 1.
We have commitments to continue to care for the veterans in those hospitals and to ensure that Quebec, as every other province, continues to care for our older veterans.
As I'm not an expert in that area, I will ask Maureen to provide more detail.
Maureen Sinnott, Director General, Finance, Human Resources and Corporate Services, Veterans Affairs Canada: To follow on what Elizabeth has said, we have a transfer agreement signed with the Province of Quebec. The hospital was to transfer a year ago; it did not, and so we finalized our agreement. It will transfer on April 1, 2016. Payments will be made to the province and the health organization in Quebec on the date of the transfer, and a number of payments will be made afterwards.
As a follow-on to the transfer agreement, in the agreement we have levels of care that the veterans are to receive in the hospital. They will be served in their language of choice and so on, the same as every other veteran across the country.
We will also be providing funds or paying a per diem for the care of every veteran at the hospital after it's transferred. So once we've transferred it and paid the various transfer payments, then we pay for the care on a per diem basis as a follow on.
That goes on for as long as there are veterans requiring care in that facility, the same as has gone on in other facilities across the country that we've transferred. You're probably aware that we've transferred Sunnybrook, Shaughnessy, Rideau Veterans' home, Brock Fahrni, and a number of others since the Glassco commission recommended it in the 1960s.
The Chair: There is a concern in the community because the St. Anne's group has developed an expertise that is beneficial throughout North America in terms of chronic care for veterans, for dementia, Alzheimer's, et cetera, and there is a fear that there will be a loss of expertise as these people see the dwindling importance of the hospital as it changes to a longer-term care public hospital.
I want to make sure that people are conscious of the importance of keeping that expertise in Canada because we should be able to build off that expertise. The other issue that people are concerned with is, for those more recent vets of Bosnia, Serbia and Afghanistan — and I had a chance to meet some of these folks in post-traumatic stress disorder care — it is frightening to see what has happened to some of these people in their thirties and forties and to see the mental anguish they are in. How do we make sure we keep that expertise around to provide services to those people?
Chances are, even if we're not supposedly in a war moving forward, with the support that we're going to give in the Middle East, there will be more cases of this. The challenge that a lot of these people have, men and women, is mobility, getting to the various facilities.
Just as a citizen who has lived there most of my life and has had some involvement, how do we maintain our services and expertise? Don't underestimate the fact that when you go from a federal to a provincial job level you're getting a 20 to 30 per cent cut in pay. There is also a morale issue. This is not just a transfer. This is a major cultural shift. For our government, no matter what stripes you wear, it's important that we have the proper presence and support, and the level of consciousness has to be extremely high.
I made a bit of a speech, but the fact is I wanted to impress this upon you, from a user perspective and as someone who cares about his community. I deal with a lot of the veterans because I'm the Honorary Colonel of the 34 Royal Canadian Hussars. I meet people constantly, and veterans are very proud at all ages, but afraid. They're insecure, and the last thing people with mental issues need to be is insecure.
Elizabeth, I know this is your first week on the job, and I know you've spent 30 years in service. You're a dedicated person and understand the game, but we really need strong leadership.
Ms. Stuart: In the short time that I have been at Veterans Affairs Canada, I'm very impressed with the leadership in the department. I can assure you my deputy minister and minister care about every single veteran that we care for.
I should add that our programs are evolving. They're somewhat complicated, but we have policies and programs in place to address numerous aspects of life as a veteran, not only for those who are older but also the younger veterans who are coming out. Some of them have only five years in service, right up to the older generation.
In addition to the care for the older generations, we have a number of operational stress injury clinics across the country to serve the needs of veterans in locations where they live with their families. We also, from a service delivery aspect, are in a hiring phase to increase the number of specialists and caregivers across the country. I believe the number we've hired to date is 180, and we have growth expected to 309.
The Chair: And you'll have beds in each of these areas? Because there's an issue of daily support in terms of going in and out, but my understanding with some of these individuals is that they would go up to St. Anne's for six weeks, and so when you take away that facility, then the issue is what type of facilities will you have to give the total care package required for some of these folks who are more serious cases of the traumatic stress problem that exists.
Ms. Stuart: I'd like to add that the vets who remain in the province of Quebec will receive the same great care that all of our veterans receive. The transfer agreement is very detailed in respect of the continuation of care in a seamless fashion.
The Chair: What may be important as a suggestion, as a concerned citizen, is it should be a priority to do a hell of a marketing job in terms of how you sell the continuity, how the service will continue on in the community, because in that community is the west island component, which is still about 68 per cent anglophone and about 30 per cent francophone, the mix, and everyone gets along well together. But there's a political issue, and there's a service issue, and there's a sales issue of selling the project because there is tremendous uncertainty still. To say that the transaction is going to be completed, you still have some of the soldiers who are 91, 92, 93 who don't believe they will get the same service, and sometimes as you get to a more advanced stage of life you have more insecurities.
I would suggest it's more than just completing the transaction. It's more than saying we're going to give the service. There are issues that have to be addressed: How do you maintain staff? How do you maintain expertise? It's great to hire more folks, but do they have the same competence level of the people who were there? What type of attrition will you have? There are some real issues, and you may have all the answers, but I don't think the community has necessarily heard all of them.
It's just a suggestion from someone who cares.
Ms. Stuart: Mr. Chair, I take your suggestion seriously and will follow through with it.
Senator Marshall: I'm back to statutory under the Department of Finance. I have a question on the Canada Health Transfer, and I think this year, 2016-17, will be the last year for the 6 per cent increase. Do you have any preliminary numbers with regard to what the increase will look like after 2016-17?
There is a little bit of coverage in the media with regard to the various provinces and the concern for health funding, but I haven't heard much lately.
Diane Lafleur, Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch, Department of Finance Canada: You're correct that for 2016-17 the Canada Health Transfer will continue to grow at a rate of 6 per cent. After that the Canada Health Transfer will grow at a three-year rolling average of nominal GDP. However, we have not yet forecasted what that growth rate will be going forward.
Senator Marshall: My next question is probably an inappropriate question, but I will ask it anyway.
Would there be any discussions now among the provinces with the federal government with regard to any revisions on that? Health care funding always seems to be a pressure point with all the provincial governments, or is this just something that is sort of hanging out there waiting until the time comes?
Ms. Lafleur: We have a number of different fora at which we discuss transfer issues writ large with provinces and territories, both at my level and at the working level. In addition, the minister meets with his provincial and territorial counterparts on a regular basis, and as part of those discussions inevitably transfer issues come up and are discussed.
Senator Marshall: I have a question also on the Canada Social Transfer. Does that agreement expire? When does it expire?
Ms. Lafleur: The growth rate has been legislated to continue at 3 per cent. There is no expiration date per se, but there is a review to take place. If memory serves, I think it's 2023-24.
Senator Marshall: There is a while before that one will be a worry.
For the statutory subsidy — the one for Newfoundland and Labrador's Term 29 payments — the increase is $8 million. I was trying to remember, and I don't know if I remember correctly, didn't the province take advance payments on that at a certain period of time? Was it always $8 million? Is this the first year that it's back?
Ms. Lafleur: This is the first year it's back, you're correct.
Senator Mockler: On the same line of questioning, what would that impact be for New Brunswick?
Ms. Lafleur: We've communicated to the provinces and the territories their forecasted payment amounts for what the transfers are in 2016-17. Can I get back to you in a minute with the exact numbers for New Brunswick?
Senator Mockler: Can you confirm to the chair, if you have that sheet, that you will distribute the sheet itself?
Ms. Lafleur: I can give a province-by-province breakdown that I can leave with the chair before I go.
The Chair: That would be great.
Senator Mockler: There is another I would say pressure point going forward, and that's the aging of our population.
[Translation]
Is that right, Ms. Lafleur?
Ms. Lafleur: Yes.
Senator Mockler: We know that population aging will have an impact on the support of future programs. The premiers of eastern provinces are very concerned by Canadian demographics. The analogy I could use would be that east of the Ottawa River, we feel a considerable amount of concern over population aging and the impact it will have on program maintenance. The tax base will disappear. So the amount of tax to be withheld will be lower. However, if we look west of the Ottawa River, that problem will not be as worrisome because of the economy and a younger population.
Have your actuaries prepared analyses for the next 10, 20, 30, 40 and 50 years?
Ms. Lafleur: The issue of population aging is a source of concern for a number of jurisdictions. It's true that Canada's population is not aging at the same rate in all the regions. That issue has been raised by several jurisdictions and has been debated at round tables held with the provinces and territories.
The issue is fairly complex, but I want to come back to the fact that the growth rate of the health transfer will remain at 6 per cent in 2016 and will continue to increase in the coming years. Even though the rate is not specified, the legislation calls for a minimum threshold of 3 per cent in terms of growth. The transfer will continue to increase over the next few years.
Senator Mockler: The transfer will surely continue to increase, but at 3 per cent —
Ms. Lafleur: At a minimum of 3 per cent.
Senator Mockler: — and not at 6 per cent, as is currently the case.
Ms. Lafleur: Unless we experience accelerated economic growth.
Senator Mockler: I agree with you. However, is population aging a topic of serious discussions at meetings between the federal government, the provinces and the territories?
Ms. Lafleur: Population aging is an issue that affects all jurisdictions. Obviously, it's an issue discussed at a number of tables.
Senator Mockler: I will understand if you cannot answer my question, but is it a topic of discussion that has been covered by premiers?
Ms. Lafleur: Unfortunately, I have no access to the discussions between the Prime Minister and his counterparts. I cannot answer you.
Senator Mockler: Can you take this question under advisement and come back to us with an answer from the deputy minister?
Ms. Lafleur: I thought you had said the Prime Minister.
Senator Mockler: I am talking about the premiers of all the provinces along with the Prime Minister of Canada. If you don't have that information, can it be obtained from the department?
Ms. Lafleur: This question should be put to the Privy Council, which would no doubt have more information on discussions between the Prime Minister and his counterparts.
[English]
Senator Raine: My question is similar. We tend to set formulas for increases, for example in the health transfer. Everybody recognizes that the cost of delivery of health services is different by age. In determining what the transfer should be, will it be purely by population or by population and age?
Ms. Lafleur: Under the current legislation, it's an equal per capita transfer.
Senator Raine: But the cost is not equal per capita. It depends on whether it's an "old capita'' or a "young capita.''
Ms. Lafleur: I can only tell you what the legislation states, this transfer is equal per capita.
Senator Raine: Obviously, the province will be lobbying to change that because it doesn't work. I'm from British Columbia. We have a lot of people who come out to B.C. and retire. Our older population is becoming problematic with the health care transfers.
The Chair: Some veterans over time have complained about access and the red tape in getting the services they require. You mentioned front-line staffing as part of the Supplementary Estimates (C) in terms of improving the new veterans program that came out a year or two ago. Could you give us a quick rundown? What are you going to do to improve your service to your clients, the veterans?
Ms. Stuart: I am here to address finance questions; service delivery is not my area.
The Chair: Maybe we'll ask some operational people to come in with you next time. Perhaps you could ask some of your associates about the service and the red tape issues. It would be really helpful for us to have good stories. As senators, our role is not only to go over legislation, sit on committees and try to do good work with the various departments to address national issues but also to get out into the population and talk to people. In the area where I live, it's a topic of conversation. If you were able to help, that would be great.
I have one other question for the Finance folks before we cut it off. We recognize how busy you are with the budget coming up. We thank you for coming out in such great numbers.
On implementing the middle-class tax cut and asking the wealthiest Canadians to contribute a little more, there has been some controversy over how this will deliver anything material to Canada and to Canadians, particularly those in the middle class. It was my understanding that people under $45,000 will have no real direct benefit, and the direct benefit occurs between $45,000 to almost $200,000; and even that seems to be marginal. I'm wondering what your comments are. The thing that really piqued my interest is the fact that there could be a $1.9-billion hit per year that could add up to about $8.9 billion. You guys have done the numbers, so you know better than I do. What's the status of that particular tax cut?
Mr. Jovanovic: I'd like to mention that the middle-class tax cut is just one part of the formula. There will be more coming, like the Canada child benefit, in the coming budget. With respect to the middle-class tax cut in particular, the goal is to rebalance the tax system — ask the wealthiest 1 per cent to contribute more — toward where the current progressivity of the system is a bit more flagrant in a sense, which has been identified as the second bracket, which is the 22 per cent tax rate that will be decreased to 20.5 per cent.
The first tax bracket, 15 per cent, is seven points lower. The other thing is that most families and individuals in that first bracket also benefit from a benefits system significantly more than individuals in the second bracket because much of the phase-out of these benefits happens by the time you reach the second bracket.
In terms of the need to rebalance the system, I guess this was seen as the place where it makes sense to do so.
The Chair: Does it make sense to rebalance the system for a larger group or for a smaller group? You could be looking at $6 a week or it could $250 to $750, depending on what tax bracket you're in, which could be a week of groceries for a family that may be earning $60,000 a year; and it depends if you have single earners or two earners in the family. I understand that.
The way it looks right now, you're not going to be able to have any impact, and you're going to create a deficit. I come from an era where once you borrow money, you have to pay it back. I recognize it's important to stimulate and change and try to create something, but do you really believe that you're going to do that with the way it's structured now? I'm not complaining about the fact we're doing it, but has it been focused on the right group? When I say "the right group,'' should it be that group from $45,000 to $90,000 as opposed to going above that because there's a benefit for people earning up to $200,000. Even though it's marginal, there is a benefit.
The other thing to consider is if you're earning over $200,000 per year and paying $100,000 in taxes, multiply that over 10 years and you're paying over $1 million in taxes, so you're a high performer. How do we retain high performers when they say, "I can move somewhere else to another tax jurisdiction where I can earn more?'' How do we retain the brains? There are only about 300,000 or 400,000 of those people in the marketplace. At one point in my life I was in that tax category.
How do we keep the upper people motivated? Is the focus on the right group now where it won't be a large gain for the people from $45,000 to $90,000 but will be bigger if you focus $90,000 to $140,000 and then $140,000 to $200,000? It seems to be infinitesimal. Is this a political or economic move? What does it do to our middle class? We're here to help Canadians no matter what colour your stripes are. I wonder what type of feedback is going on between you guys and the politicians.
Mr. Jovanovic: These are all very good questions, and I'll try to answer them.
The first one was the scope of this tax change. At the top end there are about 320,000 people who would be affected, and about 9 million individuals would benefit. About three quarters of these individuals are actually in the second bracket, between $45,000 and $90,000. It is true that individuals above $90,000 would also benefit, given that they will —
The Chair: To a lower amount.
Mr. Jovanovic: Absolutely.
The Chair: You're talking $700 at $45,000 to $90,000. Two weeks of groceries.
Mr. Jovanovic: The average benefit to a family would be about $540 and about $340 for a single individual.
I'm going to move to the other point that you raised about the competitiveness of our personal income tax system, which is a very important question.
The government is committed to ensuring that the system remains competitive. There is always the question of degree. There is no right, wrong or perfect answer when it comes to rebalancing your system. The choice has been made by the government to rebalance by taking a bit more from the top 1 per cent to give to the middle class. In that context, given that objective, it seems that what has been done is achieving this.
As I said, it's a question of degree and where you want to move your system. There is no right or wrong. At the end of the day, the importance is the overall. When you look at the overall agenda, growth agenda, and what you do with other measures, you end up achieving the right balance between fairness and —
The Chair: If I understand what you're saying, you're saying it's part of a package, and look at the whole package before you put a value judgment on it. Is that what you're saying?
Mr. Jovanovic: I'm saying this is one element of a bigger plan and that it achieves its purpose, as was stated.
The Chair: My concern as a taxpayer is the fact that if we create a deficit of $1.9 billion to fund this particular issue, why wouldn't we, on this particular piece, focus it on the people who need it most? If you're going to create a deficit, which will add up to — that's what the specialists say anyway; I'm not a specialist — $8.9 billion over X number of years, then we're starting on a slippery slope. You don't want to start down a slippery slope where you will not get back up.
I just wondered what type of discussions you had with the political folks. We're all concerned about the economics. We just spent time in our Banking Committee dealing with all the economists throughout Canada, the banks, the Chamber of Commerce and Statistics Canada. Every time oil goes down X number of dollars, it affects the Canadian dollar. I think it's $10, and oil is 3 cents on the dollar. Many of us at all ages are concerned, and the steps that we take moving forward are critical.
I know the position you're in, but just from an outsider's perspective — and I guess we have to look at this when it gets to the Senate — should we be discussing the importance of maybe if there is an observation we could make that would be helpful, would the observation be focusing it on the category that's really going to benefit the most, the tax category? Just a comment.
Mr. Jovanovic: It's well taken. Thank you.
The Chair: Ladies and gentlemen, do we have other questions? We have held those folks in, and it's 4:10, and everyone wants to go home or back to the office and finish their workday. Are we done?
We thank both groups for coming in. We appreciate your time, especially to our newest member, Elizabeth Stuart, and to Randy, Glenn and all the people at Finance. We know you have a busy time. Thank you very much for coming out.
(The committee adjourned.)