Proceedings of the Standing Senate Committee on
National Finance
Issue No. 18 - Evidence - November 16, 2016
OTTAWA, Wednesday, November 16, 2016
The Standing Senate Committee on National Finance met this day at 6:48 p.m. to study such issues as may arise from time to time relating to federal estimates generally, including the public accounts, reports of the Auditor General and government finance.
Senator Larry W. Smith (Chair) in the chair.
[English]
The Chair: Good evening colleagues. Welcome to the Standing Senate Committee on National Finance.
Colleagues and members of the viewing public, today the committee is pleased to welcome the President of the Treasury Board, the Honourable Scott Brison. For the first part of the meeting the minister is here with his officials to discuss possible changes to the estimates process.
My name is Larry Smith, a senator from Quebec, and I chair the committee. I will briefly introduce the other members of our committee: Senator Grant Mitchell, Senator André Pratte, Senator Diane Bellemare, Senator Salma Ataullahjan, Senator Nicole Eaton, Senator Tobias Enverga, Senator Beth Marshall and Senator Raynell Andreychuk.
[Translation]
Hello, minister. Welcome to the committee. I would like to mention that your reference document pertaining to potential changes to the budget process was distributed to the members in advance.
[English]
We will have a question period after your statement. To help with answering questions, we welcome your official, Brian Pagan, Assistant Secretary, Expenditure Management Sector.
Minister, the floor is yours.
Hon. Scott Brison, P.C., M.P., President of the Treasury Board: Thank you, Mr. Chair. It is great to be back with you at this committee. I'm pleased to have Brian Pagan with me, our Assistant Secretary of the Expenditure Management Sector at Treasury Board.
When I was here in April I was delighted to see the level of interest and engagement on estimates reform and, if I may say, expertise on this issue.
There is an awful lot of expertise in the Senate on a range of issues. This is one of them, and we look forward to active engagement. A number of senators came to a recent briefing I did with parliamentarians in October, which was the second briefing. You were at the first one. Beth, you were at the most recent one, and I appreciate your interest in this subject.
[Translation]
We continue to move forward on this agenda, most notably on the question of budget and estimates timing and alignment, which I will talk more about in a moment.
Estimates reform is so important because the ability to exercise oversight is the most important role we as parliamentarians can play on behalf of those we represent. However, the current process makes it difficult for us to carry out that function.
[English]
This June it will be 20 years, and at that point my views on this will have been formed by about four years as a minister and about 16 years in opposition as a parliamentarian. In my view, the system as it is now is quite dysfunctional. In fact, if you were to try to design a system to be opaque and illogical and difficult to explain, you wouldn't do much better than the system we have right now.
A recent editorial in the Globe and Mail underlines the problem quite well.
. . . the current sequence is bad to the point of absurdity, with spending estimates usually coming before the budget, and in a different accounting format, rendering them virtually meaningless. It's a discredited practice that has only served to keep MPs —
I would add "and senators."
— in the dark about how tax dollars are being spent. Almost any improvement will be welcome.
Due to these issues, I'm personally committed to estimates reform, as is our government. Our intention is that parliamentarians will be able to study documents that will be substantially more meaningful and that Canadians will benefit from this clarity as well.
In fact, Robert Marleau, former Clerk of the House of Commons, has noted that the form and content of the Main Estimates have only been modified on four occasions since Confederation, most recently in 1997. In each case, the impetus was a desire to improve the quality and utility of the information provided to parliamentarians.
We need to do a lot more, and I firmly believe the vision we are proposing, the paper you have received, will help address the many issues raised over the ineffectiveness of the estimates process we have currently.
[Translation]
This includes concerns of the Auditor General who underlined the importance of better timing between the budget and the estimates.
[English]
Our vision includes four areas that are currently the source of much frustration for parliamentarians.
The first area is the timing of the Main Estimates and the budget. Currently, the Main Estimates for the upcoming year need to be in Parliament by March 1, according to the Standing Orders. In practice that means that the Main Estimates can only reflect decisions as of about January, well before the actual budget comes out. This timing reduces the ability of parliamentarians to provide useful oversight.
The Main Estimates, which are meant to be scrutinized to vote on, don't reflect the government's most recent plans and priorities as outlined in the budget, so a lot of work goes into studying the Main Estimates, and then the budget comes out rendering much of that work out of date or irrelevant.
Therefore we proposed changing the tabling date of the Main Estimates so they will include budget items. This is similar to other jurisdictions where the Main Estimates sequentially follow the budget.
This is a significant, substantial change that will take some time to operationalize. We proposed for the next two budget and estimate cycles that the Main Estimates be tabled on or before May 1. This this would allow departments to make the necessary adjustments and give them time to ensure that portions of the budget are reflected in the Main Estimates. The estimates would become a more useful and relevant document because they would actually include and reflect budget priorities.
This would also prevent the situation we have where basically parliamentarians waste a lot of time doing good work on the Main Estimates when it really isn't pertinent once the budget comes out.
By tabling the Main Estimates later, we would eliminate the need for a spring supplementary estimate. We would also create the added benefit of allowing parliamentarians to focus their attention on one estimates document in the supply period ending June 23. After the two budget cycles of May 31, Parliament could then examine the reform and come to a decision on a permanent change of the Standing Orders.
The second challenge is in scope and accounting methods between the budget and the estimates, and we discussed this the last time I was here. The challenge is more than just about accounting concepts. The budget represents the entire universe of federal spending. This includes the consolidated accounts, the EI account and its tax expenditures, and the new Canada Child Benefit. But the estimates support more limited appropriation requirements of departments and agencies.
Parliamentarians need to be able to compare items in the budget with the estimates, and with the Main Estimates tabled after the budget, there would be a high-level reconciliation of planned spending in estimates to the budget, and this would allow more effective study of the cash requirements in the estimates that are derived from the accrual-based budget plan. We intend to have better reconciliation between cash and accrual accounting so that parliamentarians can clearly understand the budget and estimates process.
Other jurisdictions have moved towards accrual accounting. Ontario I believe has done that. It took about 10 years to get through that process, but moving towards a full reconciliation is an important step to take as we move forward.
The third area is the difficulty parliamentarians have in connecting the money we vote on with the program it's actually used for. Departments get their expenditure authority from Parliament on the basis of votes in the appropriation acts, and these describe how funds are spent on items such as capital and operating and grants and contributions. Instead we'd like to focus on why we're spending and strengthen the link between votes and the programs they fund.
Regarding having more program-based expenditure reporting, I will draw your attention to a pilot project under way with Transport Canada to test a new program-based vote structure.
We look forward to the results of that project, but that will actually provide a greater level of accountability to parliamentarians and ensure that program funding approved for a specific program will be spent on that program and provide greater clarity on that, so that is a significant step forward. As I said, we're doing the pilot at Transport now.
[Translation]
Last, many departmental reports are neither meaningful nor informative.
[English]
Our new Treasury Board policy on results will simplify how government reports on the resources it uses and the results it achieves.
There are a lot of people in departments and agencies now generating reports. I don't know how many people are actually reading those reports, but those who do find the information is not necessarily that helpful, nor is it that clear. We think it would be better to actually focus reports on what a program is trying to achieve and on how they measure success so that we actually have departmental plans and departmental results to measure results. We moved forward with this at Treasury Board, and we're working across departments and agencies to implement that.
In addition, detailed information on program spending and the number of employees will be provided in a user friendly online database.
Mr. Chair, these are the broad strokes of our vision for fundamentally changing the estimates process so that parliamentarians are better able to hold government to account. With that objective, I look forward to the committee's support and partnership in driving reform of the estimates to benefit all parliamentarians. I'll turn it over to Brian, who will take you through some details of the proposed reforms. I'm certain you have probably gone through the paper, but Brian can present an overview.
The Chair: Thank you. Mr. Pagan, would you like to present?
[Translation]
Brian Pagan, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: I would like to give you a very brief overview of this vision of estimates reform, so we can then answer your questions.
As the Treasury Board President noted, the vision is based on four pillars designed to better inform parliamentarians so they can do their job and hold the government to account.
[English]
The vision for reform builds on work of the House of Commons Government Operations and Estimates Committee report from 2012. It builds on the numerous appearances we've made here before the Senate Finance Committee in the interests of this committee, as well as feedback from a technical briefing to new members of Parliament in February 2016.
Turning very quickly to slide 4 of the presentation and to address the first pillar of timing, as the president mentioned, the Standing Orders of the House of Commons require that the government table the Main Estimates on or before March 1. I've appeared before this committee on several occasions to explain the Main Estimates.
As the president mentioned, the challenge for us is that we are walking down the content of this document by the end of January, and typically we're seeing a budget between mid-February and mid-March. So right off the bat we are presenting a false sense of the picture and priorities of the government. They reflect decisions of the Treasury Board up to the end of January or the middle of January, but we know budgets are coming and they're going to reflect in priorities.
That creates confusion, and it is arguably not the best use of committee time to look at documents that are incomplete and missing some key information. So the proposal is to work with committees to address that rule in the Standing Orders. The idea would be that the government, since our fiscal year begins April 1, would still present interim Main Estimates on or before March 1 because we need to provide departments with the authorities to commence the fiscal year on April 1. Rather than basing these interim estimates and interim supplies on something we don't know yet — the budget — the idea would be we take the current fiscal year and simply extend it and use that as the basis for providing interim authorities for departments.
Let me be very specific about this. In the fiscal year we are in now, 2016-17, the idea is that on or before March 1 we would present to Parliament a very slim version of an interim Main Estimates that would itemize all of the departments and agencies requiring an appropriation. It would itemize their authorities this year, up to this point in time, and then it would take a fraction of that authority and would automatically carry it over into the next fiscal year. In this way, we are not presenting false information to Parliament.
There was an instance just two years ago, in the 2015-16 Main Estimates, where an agency, Marine Atlantic Inc., came forward with Main Estimates that year, and the Main Estimates for 2015-16 were $19.4 million. The Main Estimates for the year before were $127 million, so it presented what seemed like a cut or a reduction of $100 million.
That was not the case. It was simply a question of timing. The monies that had been provided to Marine Atlantic were provided in Budget 2010 and were provided for a five-year period. That five-year period was ending. We were presenting the Main Estimates before the budget, so we went back to their existing authorities from 2010. Then the budget came out, and it not only maintained those previous commitments from Budget 2010 but also actually increased them. So in the supplementary estimates that year, we brought forward new requirements that brought their authorities up to $354 million.
We use this as an example because it illustrates well the problem of presenting something in advance of the budget and making resource allocation decisions on that basis. By presenting Main Estimates that are a continuation of existing authorities, departments have what they need to start the year, the budget will confirm new money or any reductions or reallocations that the government wants to make, and then we would reflect those in the Main Estimates we tabled on May 1.
So this is a very important part of the agenda because it's about getting the timing right. A lot of the other issues and challenges that we have stem from that very basic confusion right out of the gate about the budget and the Main Estimates.
Senators, if you will permit me, I will take five minutes to talk about the other three pillars and then take questions.
As the minister mentioned, the second pillar deals with scope and accounting. Quite simply, the issue here is that the federal budget represents the totality of spending in the federal universe, including monies through the tax system, expenditures through separate accounts, the EI account, and arm's-length Crown corporations that are not appropriated by the government.
The difference between the budget and the Main Estimates in last year's numbers was about $65.7 billion. Of that difference, about $60 billion is a question of scope, the fact that the budget is all-encompassing and the Main Estimates just present the cash needs of appropriated entities.
The other approximately $4.85 billion is accounting and the difference between capital amortization expenses, bad debt expenses and interest on future obligations. All of those are on an accrual basis in our budgeting system, whereas on the cash needs of departments, we do not reflect to Parliament or present to Parliament amortization and future interest charges. Through Supplementary Estimates (A) last year, we reconciled the two documents. As the minister says, we intend to dive deeper and present more and better accrual information for departments so that we can plan on accrual and permit Parliament to control by cash.
The vote structure the minister covered quite well. I need not get into that.
On reporting, the one piece I would mention is that not only do we intend to have better hard copy reports that are based on the new results policy, but we intend to complement those reports with real-time access to results information through online sources. We currently have something called TBS InfoBase. We have looked at other jurisdictions, most notably the United States, where they have very good information. They have Performance.gov and USASpending.gov. I would commend those sites to this committee because that's the model for us, and we will work hard to present similar information.
Senator Enverga: Thank you for being here tonight. I'm replacing Senator Mockler.
Mr. Brison, you mentioned that you have a discussion paper on a program-based control structure. You also mentioned that you have a Transport Canada pilot project.
Can you perhaps say a little more about the program structure, and can you also let us know what are the benefits of the Transport Canada pilot project? Are there any drawbacks or costs associated with it?
Mr. Brison: Certainly. Firstly, from an accountability-to-Parliament perspective, right now as you approve the spending of a department, the department itself can move the money around quite freely without really a lot of control or accountability to Parliament. Hypothetically, a government could move money from a border infrastructure program into building gazebos or something. I am just saying it could happen. I'm saying historically once Parliament approves a particular department's budget. This would actually narrow it to specific programs.
There's a downside to this in that you have the potential for an increased level of lapsing, but we envision having a percentage of the spending for each of the programs, say 10 per cent, that you could move within a department, and it would provide better accountability but some flexibility to departments, because you need that. You need that within departments. You need some level of flexibility. But this would be a significant step forward in terms of parliamentarians having better information but also better control over government spending, more specific.
Senator Enverga: You mentioned that they have a pilot project in Transport Canada.
Mr. Brison: Brian can expound on that. That was established when, Brian?
Mr. Pagan: This year's Main Estimates.
Mr. Brison: It was just recent.
Mr. Pagan: And we intend to expand that pilot. As it is constituted, it involves a single department, Transport Canada, and strictly for their grants and contributions vote. Previously, they had a single grants and contributions vote of approximately $700 million, and they would manage different programs within that single vote.
Under the pilot, we've created three distinct grants and contributions votes for Transport Canada, one for their Gateways and Corridors program, which is about $258 million; then a second one for their transportation infrastructure programs, which is about $103 million. Then they have an assortment of minor grants and contributions, and we have grouped those into the other category — a very popular category — and that's about $38 million.
Whereas previously they managed a wide range of programs in a single vote totalling almost $600 million, now they are managing discrete programs according to these votes.
It's a pilot. We intend to go back at the end of the year to the department and to the Transport committees to assess how they use this. Was the information, that clarity helpful? What lessons have they learned from that? And then apply those lessons to expand the pilot.
Looking ahead, the president mentioned the new results policy that will apply to all departments by 2017, and as the president mentioned, that would be the basis for expanding the idea of purpose-based votes. Using ourselves as an example, the Treasury Board Secretariat, our core responsibilities involve our role as employers, as the expenditure authority, as a regulatory authority for government.
An idea for the purpose-based votes would be to appropriate money according to those responsibilities and underlying programs rather than a single operating budget as we do now. In that way, we give Parliament a better line of sight on how we're using money for particular purposes and particular programs.
Senator Enverga: Are you using these estimates now? Is this particular pilot in practice now?
Mr. Pagan: There is one pilot now at Transport Canada. We have been informed in our approach by practice in other jurisdictions, most notably Australia, Ontario and the Government of Quebec.
It's a purpose-based approach rather than controlling by input for operating capital, grants and contributions.
Senator Eaton: Welcome, Mr. President. I think what you're doing is fabulous, because we go through this mixed chaos every year.
Starting off with the interim supply and then going to the Main Estimates by May 1. Would you ever consider fixing a date for the budget? Would the budget ever have a fixed date early in the new year?
Mr. Brison: Thank you. Firstly, starting with the Standing Orders, there is no provision in the Standing Orders in terms of budget date, and that is the purview of the minister and Department of Finance.
I've looked at the Australian model — and the budget and Main Estimates come out about the same time — and I think that that represents a model.
It takes a while to operationalize that. So what we've proposed in moving the Main Estimates date, in order to ensure that sequentially the budget would be before the Main Estimates, is a significant step, and that would be for two years. Then we would bring it to Parliament with the objective of moving it earlier, closer to the budget date. We're open to that discussion, but that's not something we can move on now. We want to try.
First of all, getting the sequencing right and operationalizing the way government does business in this area is really important. Before we consider other changes, we want to get this one right.
Senator Eaton: Thank you. You would hope that future ministers of Finance would, once you get the sequencing down right, consider that very thing?
Mr. Brison: That will help us operationalize and understand what other steps we can take, once we have two years under our belt of budget estimates process. I view this as an evergreening process. I don't view this as something that we do and then it's done. I think we should try this, and in a couple of years we will have a better idea of what we can do to improve the process.
Senator Eaton: Just one little question to do with that and then I'll go to something else. The budget is an aspirational document, is it not, as opposed to the Main Estimates? You aspire and this is what you would like to do?
Mr. Brison: It is. Broadly, it covers more than what is encompassed in the Main Estimates, which are quite narrow and specific. I would like to think that budgets are aspirational as well.
Senator Eaton: I'm very interested in the fourth pillar, and I'll tell you why. At this committee very often, and I'm sure Mr. Pagan has been here when we've done that, items come in Supplementary Estimates (A), Supplementary Estimates (B) and Supplementary Estimates (C), and one that stands out in my mind is fishing for First Nations on the West Coast. It was a $45 million expense. I'm just taking that as an example. So when one sees it come up again, one says, "You did this last year and the year before. How successful have you found that program? How many people have you taught to fish? Have you bought boats with that program?" And the answer has always been from all the officials sitting here that they don't know.
It would be very nice when you're reordering this to at some point say for last year's program teaching people to fish, was it a success?
Mr. Brison: Senator, what governments are usually pretty good at is we spend 90 per cent of our efforts on developing the policy and about 10 per cent on execution. So we get really great policies. But on the execution side, sometimes, and I'm speaking broadly, government writ large, this is a big issue.
What we are trying to do and what we are doing in terms of departmental plans and results as we're moving forward is a more results-focused approach.
One of the things we're doing at Treasury Board, for instance, when submissions come from departments and agencies, is we are demanding metrics, baseline metrics, in order that we can, over a period of time, measure results, because we want to have an idea of how a program is working. The more granular you get in terms of the metrics, the better you're going to be able to evaluate the results. It's not easy, but it's important. We should be able to evaluate the efficacy of a program and whether or not it was good value.
Senator Eaton: And whether it should be renewed for another two years, yes.
Mr. Brison: We may see something that is working really well, but in some cases we will see some things that are not working at all. In some cases we may see something that is working really well and actually needs more resources. Measuring results is key to what we're doing at Treasury Board. As Brian mentioned about InfoBase, if you go on Performance.gov, which is the U.S. reportage, it's impressive. You can go online and you can measure everything from greening of government to almost any sort of public policy objective to understand how departments and agencies are doing.
Senator Eaton: It would be nice if Main Estimates before May 1 came up and going through some of them, we could ask those questions. You got your measures, but anyway —
Mr. Brison: Rendering them public, I think, holds everyone's feet to the fire and shares information about what's working and what's not working and what could work better.
[Translation]
Senator Bellemare: I would like to continue in the same vein. I really liked the approach of the plans and priorities. I liked seeing what a department was doing through its programs, what its plans and priorities were. It corresponded in a way with the publication of the budget. We saw macro-economic data, and then the estimates were broken down into the main strategic categories. There was a relationship between the strategic results of each department and its plans and priorities. The evaluation of the results was of course through the plans and priorities, but I was used to working that way. Will your approach change the plans and priorities document and, if so, in what way?
Mr. Brison: Our goal is to make government information simpler and more direct in order to reflect the objectives and the results simply. I am very happy that you like the current approach, but would you not agree that it is too complicated? The approach can be changed by producing reports that are easier to understand and more readily accessible.
[English]
In English, to lay out what the objectives of this program are and what are results. Plans and results — those are effectively what we want to move towards. But there aren't many parliamentarians with the same background to do that, and it's admirable, but we want all parliamentarians, and not just parliamentarians but Canadians, to be able to understand what a program is aiming to achieve and whether or not it's doing that.
[Translation]
Senator Bellemare: Perhaps I will be pleased when I see the documents, but with the current method, we can see program details that we can question if necessary. I am afraid that we will no longer have access to those details.
I encourage you to provide the details, and not only the broad priorities, because right now, in the main estimates for Transport Canada, for example, I can see details by program and the amounts allocated to them. Will that information still be provided?
Mr. Brison: We will continue to provide complete details, but in a more efficient format.
Mr. Pagan: The purpose of the new results practice is to make the information simpler and easier for parliamentarians to use. We have been using the results-based approach for more than 30 years. One of our strengths is that we can break down replies by certain programs, and that will continue under the new approach. The department requires that the budget be presented with a breakdown for certain programs and priorities. The difference is in the way the key responsibilities are explained.
Senator Bellemare: So it will not in any way change the structure of the programs that Treasury Board requests from each department?
Mr. Brison: We are changing the format of Treasury Board submissions in order to focus on the results.
[English]
We have already changed the format we're using. We will not be reducing the level of detail. The objective is to have more transparency.
[Translation]
The objective is to make our reports more useful to parliamentarians and to Canadians alike.
Senator Bellemare: Thank you very much.
[English]
Senator Marshall: I want to continue talking about the reports. When will we see the first reports under the new policy? Will it be the 2015-16 or 2016-17?
Mr. Pagan: Thank you, senator. The new TB policy on results came into effect on July 1. We are working with departments now, as the president mentioned, to develop these new results frameworks. We're dealing at this time with a handful of departments, and Treasury Board will take decisions on those very soon, such that they will be reflected in the 2017-18 Main Estimates, regardless of when we table those, and in the new departmental plans that will accompany the estimates. Then the remaining departments, as I said, will be in full compliance with the policy by this time next year, by the fall of 2017.
So there is a delay. We need to approve the framework, and then they present it, but we'll be doing that for at least a handful of departments.
Senator Marshall: Are we able to get a copy of that new policy and reports?
Mr. Pagan: Yes.
Senator Marshall: I would be very interested in seeing that. The other question I had is with regard to the proposed vote structure. Do you have a timeline for when you think you'll make a final decision? I know you have the Transport Canada project under way. Are you looking favourably on what you're doing there to implement it? That looks like a good solution.
Mr. Brison: As Brian mentioned earlier, other governments are doing this already, and Quebec is one of them, but there is more program-based expenditure approval or vote structure in other jurisdictions — Australia, Ontario and Quebec. So we can get there. It's going to take us a while. The Transport Canada one is going well.
Senator Marshall: What would be the timeline? Part of the Transport will be done now. Are we still talking about a phased-in?
Mr. Pagan: The idea, senator, is that we would use the new results policy and the results framework from departments as the basis for what we're calling purpose-based votes. Decisions have not yet been taken on those departments, so I can't speak at this point, but I can assure you that several departments will be coming forward with the new results framework in the 2017-18 Main Estimates and that we would select from among those departments to pilot the purpose-based votes according to their new results framework.
Senator Marshall: What you are doing in Transport Canada is grants and contributions, right?
Mr. Pagan: Correct.
Senator Marshall: So you have to expand that now to cover all types of expenses.
Mr. Pagan: Just suppose, for instance, that the Treasury Board Secretariat was moving forward with the new results framework; then the idea would be to perhaps work with the Treasury Board Secretariat — right now they have an operating vote of $200 million — to change that operating vote to a vote structure that reflects the results framework approved by Treasury Board. That's the idea.
Senator Mitchell: Thanks, minister and Mr. Pagan. This is very interesting, extremely complicated, and I find myself in that difficult position of maybe not knowing what I don't know. So bear with me in my questions. I'm interested in better understanding the move to this fractional roll-forward. I don't see how it's different than what's actually happening now, where you take three twelfths of the year, based on the previous estimates, and roll them forward. How is this fractional roll-forward that you're talking about now different? They are both fractions.
Mr. Pagan: The concept is exactly the same. It's not different at all. The difference is that in the current process we base that fraction on the Main Estimates that are tabled before the budget, and we know that, in several cases, those estimates reflect the appearance of reductions, using that Marine Atlantic example. So it's presented to Parliament as the government having taken some sort of decision around a reduction or ending a program, when, in fact, that isn't the case. It's that the timely budget decision has not yet been taken because we're tabling the estimates in advance of the budget. I'm sorry; I'm explaining that awkwardly.
Again, from 2014-15, in their estimates, Marine Atlantic's Main Estimates authority was $127 million. The next year, in 2015-16, we presented Main Estimates of $20 million, so it appeared to Parliament as if there had been a decision to cut $100 million. That wasn't the case; the money that was not showing up in the Main Estimates, that $100 million, was time-limited funding announced in Budget 2010 for a five-year period. That five-year period was over. The government was about to take a decision with respect to Marine Atlantic that would be announced in the budget, but we tabled the Main Estimates before the budget. So that decision of the government was not known and was not presented to Parliament.
In the approach that we're proposing here, we would take this year, the current year, and we would simply extend the authorities, no additions, no subtractions.
Senator Mitchell: So it would look like they had continued funding.
Mr. Pagan: You take your base, your budget, and that is assumed to be steady state, and you simply get a fraction of that to start the year. Then the budget will come forward, and we'll announce any additions or subtractions to government priorities. Then our Main Estimates will be adjusted accordingly.
Senator Mitchell: If it turned out that the government wasn't going to extend the Marine Atlantic funding, that rollover would be high, but it would be misleading high, not misleading low, which might be better. Is that what you're saying?
Mr. Pagan: Yes. The point is that, if the fraction that we are using to extend the authorities is based on a base that is going to be reduced, then we're allowing that fraction on an artificially high base. But, again, we're only rolling over a fraction, three twelfths, so that would be money that they need the start the year. If there were any adjustments or reductions, those would be reflected in the Main Estimates, fully transparent, and the government would make clear that they have determined to reduce or to end a program. Then Parliament would vote on the real requirements of the entity, as opposed to the incomplete information as in years past.
Senator Mitchell: I absolutely understand it now, but tomorrow morning it may escape me.
My next question: As to this idea of results framework, it's excellent to have reporting on objectives and measurements of success, but there is this balance. You can report yourself into fiscal oblivion. So how much extra money is it going to cost departments to provide this extra reporting? Clearly there is a cost-benefit, but have you assessed the point at which there are diminishing returns?
Mr. Brison: A couple of things on that: We're already spending a lot of money generating reports. Within departments, there is an infrastructure generating reports. With the exception of Senator Bellemare, not a lot of people are reading them. Part of it is that they are not designed to be understood, and you need a real technical background. They shouldn't be like that. They should be written in plain language, focused on what the objectives are. What is the departmental plan? What's the objective of this program, and what are the results? So we're already expending resources, and good public servants are spending a lot of time generating reports. The quality of the information in those reports — This is not a reflection on the public service, by the way. I'm saying that I believe the quality of the information is quite poor in terms of usefulness. That's not a reflection on the public servants but on the design of the report. We want to make it more useful, not just for parliamentarians but for the broader public to understand how their tax dollars are being used and what results are being generated from these investments. That is going to hold our government and future governments more accountable.
Senator Mitchell: Can I ask one more? Will this change in format have any implications for the presentation of public accounts, after-the-fact reporting?
Mr. Brison: Again, further to Senator Bellemare's question, there won't be a reduction in detail, and that's one of the things we're committed to. Brian may want to expand on that.
Mr. Pagan: Volume 1 of the public accounts reconciles entirely to the budget. Volume 2 reconciles to the Main Estimates according to the authorities voted by Parliament. So, right now, you're voting on operating, capital and grants and contributions, and we break that out or segregate it by the existing programs. With our proposal, we're proposing to change the vote structure. So instead of operating, capital, Gs and Cs, it would be the core responsibilities, the purposes, of departments. So that would be one change, and the other is the underlying programs underneath those. There are going to be some adjustments and reconciliations required to reflect the new results framework.
The concept is the same — vote and program — but we're proposing to change the nature of the vote and make some simplifications and clarifications to the programs.
The Chair: Our group is focused on the last two years and spending a lot more time getting your operation people in from departments, with the finance people, because we're more interested in understanding the business operation and supporting what you've talked about, minister, with the objectives and results and trying to find out if departments are being successful in accomplishing what they say they are.
I just wanted to make that point to reinforce the importance.
We've had good support from most of the departments in terms of putting key operations people in with their key finance people because we're more interested in finding out what's going on and the results concept, as opposed to the number of employees that have been let go. Those simple financial numbers don't really give anything.
It seems to be take a long period of time to get the results information actually written up. If I understand correctly, it's usually about six months after the fiscal year ends. Is there a way to accelerate getting the results information actually documented — maybe I could be wrong, and if I am, I apologize — to link results to the actual numbers? I recognize it's a timing issue and you're trying to create a new balance, but when you give us these types of numbers it looks like there is a discrepancy between what actually came out at the time, whether it is estimates or the budget, and you're trying to reduce that and accelerate the timing, if I understand correctly.
But the actual results, so that our committee can spend more time tying them to the actual numbers, would be very helpful too, in terms of that reducing the timing. Has that been discussed?
Mr. Brison: Treasury Board InfoBase is a significant step towards that, and it's an improvement in terms of information being available in real time.
I don't know to what extent senators are using InfoBase now, but if you aren't already, we could do a briefing on InfoBase, because it is a powerful tool and we view it as a good start. If you look at Performance.gov in the U.S. you will see they have moved further, but the idea is to have information and results in more of a real-time format.
Part of the challenge with the way departmental reports are done right now is they're not as results-focused, and to be honest within the public service there is a lot of enthusiasm for these changes. We've been meeting with a lot of public servants over the last while in departments and agencies, and if you think of it, what draws them to public service in the first place is they want to make a difference and they want to know to what extent something is working. You can't manage what you don't measure. It's important work within the public service.
The other thing we want to do more of in time is horizontal reviews of activities and objectives. For instance, every government talks about innovation. Every department has a group of people working on innovation. We need to do some sort of horizontal review across departments and agencies to evaluate, in these pockets of activities, what is really working. Where are there best practices that can be shared with other departments and agencies? Where is something working well and needs more resources and could be duplicated and could flourish?
I think this focus on objectives and, in this case, innovation, but also results, is going to crystallize a more results based approach by government, and I think it will really move the needle.
The Chair: That would be very helpful, especially as we study the infrastructure programs as a group. As we found out as we got involved with this, there are, I've heard, up to 20-plus departments involved with infrastructure money. When we asked the infrastructure department who controls the money, we got not a blank look but a look that said, "It's not us." At the end of the day, there is a pot of money that's being given out to projects that exist across the country, and there are many programs.
But when you have the horizontal involvement of other departments, then the questions to ask are, where are the control points, and is there a central group that oversees that? Maybe it's the Treasury department, but the fact of the matter is that it's sometimes hard to actually see getting the money out. Where is the money and what level of completion are the projects at? We're starting to see as we study 2006 to 2015 — we study the past — the lapsing that is taking place over time. It goes towards the reporting mechanisms and asking if this is just about getting money out. Or is this about getting money out, and results?
For us what we're trying to understand — and we're very supportive of you folks — is making sure that as a group we can have access to operational people tied to the finance people. We really saw that with the data processing. That department came in front of us, and Senator Marshall was on that one early. We sensed that something was going on and things weren't going necessarily as well as the projections we were given. Having the reporting and the results tied more quickly to the actual numbers would be helpful.
Mr. Brison: Just in terms of this broader results focus, within PCO now there is a results and delivery unit that's headed up by Matthew Mendelsohn, and it's focused on new government expenditures and programs. Treasury Board's wheelhouse is in the stock of existing programs, in terms of evaluating all the existing programs which are presented, the majority of expenditures. Over a period of time we want to, on an evergreening basis, review programs based on results. That's something we're engaged in.
Of any committee in Parliament, your committee is the one most closely aligned with Treasury Board in terms of the work you do. As we move forward, Brian will do the InfoBase briefing for you, and we would be very interested in your views on some of the changes we're making. As we make these changes, we'll find some things work well and some things we'll want to improve, but we want to, as I say, on an evergreening basis, work and strive towards a more results-focused government for our government and future governments, as well as for greater accountability to all of Parliament.
The Chair: Colleagues, we were fortunate enough to get the minister and Mr. Pagan to come in for an hour, and we thank not only yourself, sir, but Dr. Buckley for that great relief that you were able to participate in. I have my package of Buckley's back at the hotel room.
Mr. Brison: Is this televised? These are from the Maritimes, from the honeybees of P.E.I. It's a good Maritime product.
The Chair: On behalf of all us here tonight, we thank both of you, and Mr. Pagan, we would like you to follow up with us on that model you have been working on in terms of the info system.
Mr. Brison: Thank you to the committee. I have really enjoyed this. I want to thank Brian and his team, as well. We have great public servants. Treasury Board has exceptional folks, and Brian and his team do really good work. I know this committee works closely with them, and I know you appreciate the work they do; and I want you to know that in my role at Treasury Board I very much appreciate the work they do. We appreciate the work you do as well, and look forward to coming back.
The Chair: Thank you very much.
Colleagues and members of the viewing public, for the second part of the meeting today we continue our special study on infrastructure.
[Translation]
From Infrastructure Canada, we welcome Darlene Boileau, Assistant Deputy Minister, Corporate Services, and Marc Fortin, Assistant Deputy Minister, Program Operations. Welcome to you both, Ms. Boileau and Mr. Fortin. Which of you would like to begin? Mr. Fortin, you have the floor. We have until 8:45 p.m.
[English]
I know it's late for many of you. Please go ahead.
[Translation]
Marc Fortin, Assistant Deputy Minister, Program Operations, Infrastructure Canada: Good evening, Mr. Chair, and thank you for welcoming us. I am with my colleague Darlene Boileau, Assistant Deputy Minister, Corporate Services, at Infrastructure Canada.
We have been invited here to explain the operations of the main infrastructure programs.
[English]
Infrastructure Canada has been the lead department for many different capital programs through the years, many of which had different requirement and criteria. For example, under the Federal Gas Tax Fund, originally established in 2005, Infrastructure Canada makes payments twice a year to the provinces and territories, which have to flow this funding to their municipalities. Municipalities have the ability to bank funds for future use and decide themselves what projects to fund.
To receive funding under the Provincial-Territorial Base Fund of the 2007 Building Canada Plan, provinces and territories had to submit a capital plan with a list of initiatives for federal cost sharing that corresponded to the eligible categories.
Under the other Infrastructure Canada programs, such as the 2007 Building Canada Fund and the provincial territorial infrastructure component of 2014, New Building Canada Fund, provinces and territories received specific allocation for projects, and those projects chosen for funding under these programs were prioritized by the municipalities against and submitted to the provinces and territories. These are the generation of programs establishing a different approach in terms of dealing with municipalities and provinces.
The provinces and territories presented their prioritized projects to the department. Infrastructure Canada then reviewed and approved projects based on the eligibility criteria. In respect to flow of funds under our contribution programs, for most of the Building Canada Fund and the New Building Canada Fund programs, the department required signed contribution agreements with project proponents. These contribution agreements included such information as the maximum amount of funding and the maximum percentage of total eligible costs, generally set at one third.
[Translation]
The department has several measures in place to encourage sound financial management and solid project planning processes. First, the department reimburses claims submitted by the project proponents under the contribution agreement for the actual costs incurred. This is a key approach in terms of managing risks to ensure that payments are made only for work that has been undertaken and not for work that has only been announced.
[English]
Second, the department does not fund cost overruns, and this is included in the contribution agreements that the project proponents sign with our department.
Cost overruns are the responsibility of the signatory of the agreement, such as municipalities, provinces, territories and sometimes other recipients.
Finally, under all of Infrastructure Canada's programs, federal funds are reprofiled on an as-needed basis to future years to match the construction needs of its partners. Funding that has been committed to a project is not lost.
[Translation]
Infrastructure Canada has a solid track record in responsible administration of government funding and delivering infrastructure that responds to the country's and our communities' needs. Through Budget 2016, the federal government announced phase 1 of its long-term infrastructure plan. Emphasis was placed on repair and rehabilitation work, and more than 760 projects were approved for funding. To date, over 70 per cent of those projects are under way.
[English]
More recently, the fall economic statement has extended the government's commitment to infrastructure and now proposes to invest more than $180 billion over 12 years. This includes the establishment of the Canada infrastructure bank, which will provide another tool to invest in much-needed infrastructure.
Mr. Chair and committee members, thank you for inviting us to speak with you today about the important work that our department is doing. I welcome any questions you may have for me or Ms. Boileau.
Senator Mitchell: Thank you. This is very timely. I've been approached by municipalities in my province of Alberta. We're trying to understand these programs. Also, if I'm not mistaken, a number of the city mayors and senior staff who presented here on infrastructure have echoed the problem that I'm hearing, and that is that they're not absolutely certain how to access these funds. You can go to a beautiful small city such as Drumheller, Alberta, which is world renowned for its dinosaur museum — as the minister did, I want to put a plug in for Drumheller — and it's unbelievable, it's fantastic, but it has a huge problem in that Drumheller is subject to severe flooding about 35 hours after Calgary has a flood. They have a dike problem, and they need $30 million to build those dikes to a new level. They've getting 90 per cent funding from what they think is the province, and they've got $3 million that 8,000 people have to come up with. It's not really possible to do it.
They don't necessarily know what's available and where the 90 per cent is coming from. Is there federal money in that? How do they access it? How can we make it clearer to everyone so that I don't have to ask this question?
Mr. Fortin: I want to address the clarity, if you allow me.
We have made a lot of effort in the last year to make information accessible. I know it sounds like a classic response, but we have populated the website as much as possible in terms of transparency and the amount of allocation that each province has on the programs and where they are in terms of spending on a monthly basis. The public can see where their own province is in terms of programs and money flow, as well as the criteria and what is accessible to them.
In my opening remarks I talked about the relationship that is very important between the municipalities and the provinces. We sign bilateral agreements with the provinces. They prioritize the projects in terms of when they come to our department. I will take the examples of highways or waste water projects. The provinces and territories go to an intake process in asking the municipalities to tell them what projects they want to submit under such and such a program. There is a relationship taking place between the province and the municipalities.
Senator Mitchell: If this municipality needs the information that I'm being told they need, who is the person they can call and what's the phone number that they can call to get this explained somehow in a way that is operable?
Mr. Fortin: They should first go to their provinces, but they could connect with our department to get the information.
Senator Mitchell: Okay, so I go to the website. I've been there. Who knows? Which part of your department, which person and which phone number? Can you get me that?
Mr. Fortin: The information is on the website. They can access to some area.
Senator Mitchell: Okay. Thank you.
The Chair: Just to follow up on that with Senator Mitchell, part of the feedback we got is that with application based programs, the applications were sometimes very complex and hard to understand. Depending upon the size of the municipality or the city, there was a degree of sophistication that was not there. Maybe that ties in a bit to Senator Mitchell's question.
The other thing, of course, that came up was that all of the cities, big or small, all said the gas tax was fantastic because they felt it was predictable, consistent and easy to understand in terms of the relationship. You guys had 110 per cent support with the Gas Tax Fund.
Senator Eaton: I'm going to ask you a very basic question. Infrastructure Canada is currently managing 15 programs, and Budget 2016 introduced 27 infrastructure programs managed by 10 organizations. What steps are you taking to reduce and consolidate the number of infrastructure programs you manage? Are you thinking of developing a single window to allow municipalities and community organizations to access all federal infrastructure funding in a simple, straightforward manner? Lastly, can you tell me how much on average infrastructure money is reprofiled every year because it goes unspent?
Mr. Fortin: Your question about the single window, a one-counter shop, this came out in our discussion with the provinces and municipalities last summer. We had a round of consultations, and that came out very loud. We are trying to streamline as much as possible.
One thing I would like to bring to the attention of the committee here is that when we established Phase 1, one thing that we tried to do, because it's a two-year program, which is a pretty short time to establish projects in place, and it's linked to your comment about the number of other departments that are involved that we have to coordinate with, the reason for that is — yes, go ahead.
Senator Eaton: Could you just explain something to me, which will add detail, if you have 27 infrastructure programs, for instance, are programs divided up into houses, roads, waterways? Is that the makeup of a program?
Mr. Fortin: Not necessarily, no. Those are eligible. There are some specific cases. You talked about waste water. This is a new program that was put in place under Phase 1, but when you talk about the green category you can have a diversity of things there.
Senator Eaton: Could you give me an example of a couple of programs?
Mr. Fortin: There are multiple programs that are not necessarily all under the Infrastructure Department. What I was going to say is that to accelerate the pace of putting the money into the system, we can use existing programs with other departments that were already in place so that the money can flow as fast as possible. That's why you could have the perception that we created multiple programs, but there are programs that were existing in the federal family that we used for Phase 1 itself.
Senator Eaton: Here when it says, "Budget 2016 introduced 27 infrastructure programs managed by 10 organizations," those were programs already in place.
Mr. Fortin: There were some existing and some that were created. We can provide a more specific breakdown of those created under the budget and those that were with existing departments already.
Senator Eaton: You answered my single window question already. How much money on average do you end up reprofiling that's allocated to you every year?
Darlene Boileau, Assistant Deputy Minister, Corporate Services, Infrastructure Canada: Last year we reprofiled approximately $450 million. Generally we are in the range of 15 per cent to 22 per cent, depending on the authorities or what's appropriated during the year. On years where we had large injections of funds through the budget or through supplementary estimates, that may vary with regard to the ability to commit, but it's between $400 million and $600 million, generally.
Senator Eaton: It doesn't leave the program; it remains reprofiled.
Ms. Boileau: Right. The money is never lost. The money comes into our reference levels on a yearly basis. The money is committed based on the projects identified, and if that money is not expensed during the year, that money moves until the project is completed.
Senator Enverga: In its Fall Economic Statement 2016, the government announced an investment of $10.1 billion over 11 years in trade and transportation projects that address congestion along vital trade corridors and around transportation hubs and ports providing access to world markets, as well as marine and rail safety.
To what extent would the trade infrastructure funding be directed to trade corridor projects, which were very effective in the past, according to the Canadian Chamber of Commerce?
Another question on top of that: Does your study include the Northern Gateway that's being proposed?
Mr. Fortin: The statement that you use of the budget — the statement of the fall — is still in discussion in terms of amount. We and other departments are involved right now. I can't be specific about how much will be dedicated to the trade corridor or others. It's still premature for us to be specific.
Senator Enverga: Ms. Boileau, do you have an answer for that? I was thinking more of the Northern Gateway project. Is that actually on your plate right now?
Mr. Fortin: It's premature for us to make a statement there.
Ms. Boileau: It's premature.
[Translation]
Senator Pratte: One of the fundamental issues that the committee must consider is the following. The municipal representatives who appeared before the committee to talk about infrastructure programs stressed the benefits of the gas tax program. It seemed that they would like all the money allocated to infrastructure to come from the gas tax. We have to consider what the ideal balance would be between a program such as the gas tax program and applications based programs. What is the benefit of applications-based programs as compared to a gas tax program? What is the benefit of those programs? Why not simply transfer the money from a program such as the gas tax program to the provincial and municipal governments? In the end, they are the ones who know what their needs are and they are accountable to taxpayers.
Mr. Fortin: That is a very good question. As a public servant, I will try to stick to my field. We are talking about the desire to deliver a platform and about the government's mandate. In the case of the gas tax, the criteria are very broad. For programs based more on allocations, we want to make sure there is a balance. We must make sure that the government's priorities are taken into account, as regards environmental issues and public transit, for example. We have to make sure that things are done fairly.
Senator Pratte: That is the issue. Essentially, the more complex the programs and the more difficult they are to access, as Senator Mitchell pointed out, the more the provinces and municipalities want a program that is simple. The more complicated the programs and the greater the requirements from the government, the greater the resistance from the provincial and municipal governments. That is why we a focusing so much on simplifying the programs.
Mr. Fortin: I understand. In what we called phase 1, we took a step forward in order to be more balanced. It was a two-pronged approach. First, we had the legacy funds, programs that were several years old. They were also based on allocations. For phase 1, the deadline for allocating these funds to projects was April 2016, rather than leaving them in bank accounts where they were seen as available. This goes back several years. These funds were allocated to the provinces on a per capita basis. This initiative had some success. We started out with a few million dollars and ended up with about $20 million that will be transferred to the gas tax, using the same formula as the original gas tax.
Moreover, we tried to simplify the project information we requested from the provinces. We also try to be rigorous in managing risks. Instead of reviewing the business plans for one project at a time, we ask the provinces to provide shorter lists and more specific information. We work closely with them through oversight committees to manage risks. In the past, we did that at the beginning of a project. Now we do this as the project evolves, in partnership with the provinces.
[English]
Senator Ataullahjan: How do the current federal government's infrastructure priorities align with the priorities of municipalities or provinces? We heard from some mayors that they wanted to be in control of their own priorities.
Mr. Fortin: I think we have a fair number of common priorities. If you're talking about cities, transit is something the government is focusing very strongly on in terms of dedicated funding there. We hear a lot about having access to clean water for smaller communities. There are a fair number of priorities. In the discussion that our minister has in forums and with municipalities, they are pretty well aligned.
Of course, as Senator Pratte raised earlier, there is a demand for more flexibility in accessing. But in terms of the generic priorities, I think we meet the various levels of government pretty well.
Senator Marshall: I wanted to talk about the Gas Tax Fund. Some of my colleagues were mentioning that when we had mayors here from different provinces, they do like the gas tax. In my province of Newfoundland and Labrador, the municipalities do like the Gas Tax Fund. They would like more money put into a Gas Tax Fund if were fairly flexible.
When the Commissioner of the Environment and Sustainable Development did her audit earlier this year of the Gas Tax Fund, she made a number of recommendations, including targets, timelines, developing indicators, focusing on results — things of that nature.
Where are you with regard to the implementation of the recommendations? Also, once you implement the commissioner's recommendations, do you think the municipalities will like the Gas Tax Fund to the same extent that they do now?
Mr. Fortin: That's a good point.
Originally when the Gas Tax Fund was put in place it was to allow municipalities predictable funding. At that moment, we had a wide range of criteria and eligible funds under the Gas Tax Fund, and that came out in the report itself, where we are in an era of performance indicators outcome, so we took note of that.
With the subsequent program that took place, we do have a robust process to align with — I think Senator Eaton was referring to connecting with the federal family, and how do we manage all those projects and programs that are delivered by departments other than ours?
We put a very sophisticated process in place; we have joint committees with other departments, horizontal reporting, evaluation, communication elements where, on a monthly basis, we are reporting on data and information to measure the impact and the success of those projects.
Senator Marshall: That's in response to the commissioner's recommendation?
Mr. Fortin: It was not necessarily in response to a specific report, but with the evolution of the new generation of programs that came in, which was in a different case for the Gas Tax Fund, we have embedded now more criteria for data reporting and performance measurement.
Those were the two new programs we put in place. The transit one and the waste water one were in the bilateral agreement that we signed with all the provinces and territories, and they have to report on progress on the projects.
Senator Marshall: Those are fairly recent changes, are they?
Mr. Fortin: In Phase 1, yes.
Senator Marshall: What has been the response of your clients?
Mr. Fortin: Since last year, we started to put in place a structure with the other departments at the federal level, but we do have an oversight committee we put in place with the provinces and the territories. It's only a year after the new programs are in place, so it's still early.
Senator Marshall: Those changes are also made for the Gas Tax Fund?
Mr. Fortin: In terms of the Gas Tax Fund, there is a report that every five years the provinces have to bring back to the federal level, but in the meantime, every year there is an attestation process that takes place where they are sending the details back to us of the project itself under the gas tax.
Senator Marshall: It's almost like a Catch-22, because the municipalities would like more money to be put into the Gas Tax Fund, because they like the flexibility.
Mr. Fortin: And less reporting.
Senator Marshall: Right. We move in that direction, but you're changing all this criteria now after the fact. We might be moving in the direction that once they see the changes that have been made, they're going to say, "We changed our mind; we don't want that money."
Mr. Fortin: The changes I refer to are not on the gas tax.
Senator Marshall: Not on the gas tax?
Mr. Fortin: No. What I said about the gas tax and the annual reporting and the five-year plan they have to present, that was already embedded when we initiated.
Senator Marshall: What about the recommendations? These recommendations by the commissioner are fairly recent, aren't they? This audit was done in 2016.
Ms. Boileau: If I may add to what my colleague has said, a lot of those recommendations were embedded in our Phase 1 programming under the new transit fund as well as our waste water fund. We were already moving in that direction when the recommendations were made. It was supporting where we were going.
Senator Marshall: Do you think the municipalities are going to be so enthusiastic about the Gas Tax Fund once those changes are made? I'd really like to know, because we've discussed it among ourselves. I'm very interested.
It would be unfortunate if the Gas Tax Fund is expanded because the mayors want to see it expanded, and then we say, "By the way, all that flexibility you like, guess what? That's all changed now."
Mr. Fortin: It's not only a question of flexibility. What we're talking about is to be able to report on the projects and to demonstrate to the taxpayers that the criteria are followed and due diligence is exercised. In terms of the gas tax itself, I made two references there at the beginning when the original agreement under the gas tax was put in place.
Senator Marshall: But you must be beefing it up as a result of the commissioner's report.
Mr. Fortin: We're taking good note of the comments of the commissioner, and we will try to address those in the next generation of programs that follow.
Senator Marshall: When will she do her follow-up audit? Did she give you any indication? She will be back. I'm pretty confident she will be.
Senator Andreychuk: She knows something we don't know. We heard evidence that this yearly attestation isn't fundamental information that might be useful. It's more, "We've spent the money," rather than, "Did we meet our objectives? Was it on time?"
We're hearing that on one hand they like it because it's simple, and yet I've heard from other sources that it's not very productive information.
You're saying you're not changing the gas tax system at all; it's going to stay the way it is. What we need to get as a committee is what information is being produced.
Mr. Fortin: That's why there are reports that come out of the gas tax itself. The department has the ability to conduct audits and evaluations on any of our programs.
Senator Andreychuk: Are these public documents on the gas tax on the website?
Mr. Fortin: The reports themselves are not necessarily on the website, but we can produce them.
Senator Andreychuk: They're public?
Mr. Fortin: We're not at the end of the five-year cycle of the plan, but we do receive, on an annual basis, the projects that have been put in place under the gas tax by each of the municipalities.
Senator Andreychuk: And just following up on Senator Marshall's question, the Commissioner of the Environment and Sustainable Development makes these recommendations; we see and are interested in them. You say you take note. Are you obliged in any way to reply to her, or do we have to wait until another audit? It seems that's the gap.
We've got everyone overseeing everyone. She makes a comment. We don't know what happens to them unless there is some formal response. Very much, if I can say, the way we used to do reports. We would do reports and recommendations in the Senate to the government. They would receive them, thank us very much, and that would be it, until we started putting in a motion to say that we want a reply, which has become much more productive.
Where is the connect between your department and the good work you're doing and the good work she's doing? There were recommendations, and we're in the dark as to how they're implemented.
Senator Marshall: The report she produced at the back summarizes the recommendations and the response. To all her recommendations, it says the department's response: "Agreed."
Senator Andreychuk: "Agreed," but what does that mean? How are you following up? Take note, agreed. How do we track whether those recommendations are workable and deliverable? We have another layer of difficulty in tracking.
Mr. Fortin: With ANY of the recommendations that are directed to the department or any department when you're using the statement, "They agreed," usually a follow-up is done, and the department has to prepare a response.
Senator Marshall: The department will implement a more practical performance reporting strategy.
Senator Andreychuk: What does that mean?
Mr. Fortin: It refers to the new approach we took with the other programs that came in.
The Chair: One piece of feedback we received from some of the municipalities is the complexity of applications, which Senator Pratte mentioned earlier; there seems to be red tape and the process itself seems to be very bureaucratic. Not the gas tax. This is your Building Canada programs, your application-based programs.
Are you folks looking at ways of streamlining it? They say sometimes it takes so long to get the application in that we miss the cut-off date, and then we don't have a chance to apply for the budget.
Mr. Fortin: That's a fair comment. One element that I probably forgot to raise about the complexity and accessing the information and the application for the programs, and please, I don't want to initially pass the ball to the provinces or the territories, but in those jurisdictions when they are connecting the municipalities, they have their own system because it's not directly with Infrastructure Canada. Some provinces are running intake processes to collect the information, and the projects that are submitted by the municipality, so it could be a provincial system in some cases, so it's not necessarily directly linked to Infrastructure Canada in those cases.
The Chair: With the provinces going to the municipalities, you would think that that might provide an opportunity for your department to work with the provincial departments to try to streamline so that you have more efficiencies. Maybe you're already looking at that.
Mr. Fortin: Yes, these are the discussions that are ongoing. We have joint efforts on outcomes, on reporting, with the provinces themselves and the territories as we speak right now.
The Chair: Last point before I ask you to give us the five-minute update on the supplementary estimates. Your statement says:
Through Budget 2016, the federal government announced phase 1 of its long-term infrastructure plan. Emphasis was placed on repair and rehabilitation work, and more than 760 projects were approved for funding. To date, over 70 per cent of these projects are under way.
We saw some newspaper reports that said that money was slow getting out in Phase 1, and at one time only eight projects were under way.
Mr. Fortin: That's correct, but in my opening remarks we're talking about projects that have been committed. I also said that we're managing our risks. The money goes out of the fiscal framework when we receive a claim, so between the moment where the project starts and we receive a claim, then we pay the claim. We don't necessarily advance the money for the projects. In some cases, some projects are going to start in 2018, and they have a phase of planning or study that is required in order that the project can take place.
The Chair: We have Phase 1, which was shovel-ready projects, and then we had phase 1 where you had studies done on major projects, like some of your urban transit projects.
Of the 760, what percentage of those would be shovel-ready projects that should be completed within this fiscal year? It seems that "shovel-ready" means they will be done right away.
Mr. Fortin: Under the new programs, it's two years.
The Chair: So would you reframe or would you restate how many projects are actually approved for funding? Is that accurate at 760?
Mr. Fortin: That's correct.
The Chair: Is it accurate to say that 70 per cent of the projects are under way but it doesn't necessarily mean the money has been given to them?
Mr. Fortin: No, we pay when we receive a claim. But the money is dedicated to the project. It's there.
The Chair: Why don't we leave it at that because we have other questions that we're sure to ask.
Ms. Boileau, would you give us an update on the supplementary estimates?
[Translation]
Ms. Boileau: Grants are the second component that you invited us to speak to you about this evening.
[English]
Infrastructure Canada is requesting an additional $47.2 million in funding to bring our total funding for 2016-17 to $5.31 billion. This additional funding reflects the reprofiling of unspent funds from previous years and transfers from the departments. So the additional funds that we're requesting are broken down into three main areas: the operating expenditure, capital expenditures and our reprofiling of unspent funds, which my colleague addressed earlier when he was talking about money going to the Gas Tax Fund.
[Translation]
As you may already know, Infrastructure Canada is now the department responsible for oversight of the new Champlain Bridge Corridor Project and the Gordie Howe International Bridge, which will span the Detroit River and connect Windsor, Ontario, and Detroit, Michigan. Several of the line items in our Supplementary Estimates (B) are related to the management and oversight of those two major projects.
[English]
The first item I would like to address is under our operating expenditures, which include a transfer to Indigenous and Northern Affairs Canada of $20,000. This funding will support the participation of the Mohawk Council of Kahnawake and the Crown's consultation process for the new Champlain Bridge corridor project. This is a transfer we do on a regular basis annually.
In simple terms, we're giving $20,000 to INAC to be able to assist the Mohawk Council in participating in any of the consultations we might be doing on the Champlain Bridge corridor, so if there are meetings or things they need to attend, this allows them to be able to attend the various committee meetings we'll be having. It's a budget for their consultations.
We're seeking to transfer over $2.4 million from Transport Canada for project management costs related to the Gordie Howe International Bridge. Last November, a decision was made that the Gordie Howe work that used to be under Transport Canada would move to Infrastructure Canada. This is the formal transfer of the funds that support the people in the organization who are working on the Gordie Howe Bridge.
[Translation]
The second item I would like to address is related to our capital expenditures. The department is requesting $23.9 million for reprofiled funding for the new Champlain Bridge Corridor Project. This funding is required to be reprofiled from 2015-16 to cover the costs of unforeseen events and unanticipated work such as the removal of uncontaminated soil.
[English]
Finally, the last item is the reprofiling of unspent funds from the legacy programs to the Gas Tax Fund. This was a commitment the Government of Canada made in Budget 2016, and represents $21 million in funding that will be going to the federal Gas Tax Fund. The Gas Tax Fund was amended to permit a transfer of any of Infrastructure Canada's legacy funds not prioritized for projects by provinces and territories as of March 31, 2016, and we needed to make that amendment because the Gas Tax Fund is a statutory fund which is set with regard to the way it's indexed and the way the allocations are made.
[Translation]
The funds that we are requesting to be transferred are from the Municipal Rural Infrastructure Fund, which was introduced in 2004 and sunset in 2014, and the Border Infrastructure Fund, which was introduced in 2003 and sunset in 2014.
[English]
These are two sunsetting funds from which money came back into our coffers because projects were under budget, so additional monies were available and are moving then into the Gas Tax Fund.
In support of our department's mandate for transparency, we will continue to report back on the results of our investments as we move forward to deliver the programming and funding that are key to the future of our country.
That's in a nutshell what's going on in Supplementary Estimates (B) for Infrastructure Canada.
Senator Marshall: It's the Gas Tax Fund again, so for the transfer of the fund, are you transferring that fund between provinces, or if it was initially with a province, is it still with that province?
Mr. Fortin: Yes.
Senator Marshall: So that $21 million, how many provinces would be in that?
Ms. Boileau: There are maybe two that we're look at right now, and that's an initial transfer. We may have more.
Senator Marshall: Which two provinces would that be?
Ms. Boileau: Globally, I would say Ontario and Quebec.
That's the biggest parts of those allocations.
The Chair: Any other questions?
[Translation]
I would like to thank Mr. Fortin and Ms. Boileau for their time.
[English]
We appreciate the relationship we have with you. We thank you for your ability to move fast and come and see us and share the information and the questions that we have for you.
On behalf of our colleagues, thank you and good evening.
(The committee adjourned.)