Proceedings of the Standing Senate Committee on
National Finance
Issue No. 26 - Evidence - February 28, 2017 (afternoon meeting)
OTTAWA, Tuesday, February 28, 2017
The Standing Senate Committee on National Finance met this day at 2:26 p.m. to examine the expenditures set out in Supplementary Estimates (C) for the fiscal year ending March 31, 2017.
Senator Larry W. Smith (Chair) in the chair.
[English]
The Chair: Good afternoon. I apologize for the delay. We submitted our infrastructure report today and I had to table it in the chamber.
Welcome to the Standing Senate Committee on National Finance, colleagues and members of the viewing public. The mandate of our committee is to examine matters relating to federal estimates generally, as well as government finance.
My name is Larry Smith, senator from Quebec. I chair the committee.
Let me briefly introduce the other members of our committee.
[Translation]
From Rimouski, Quebec, we have Senator Forest.
[English]
From northern Ontario, Senator Moncion. We have a visitor. It is very nice to see you, Senator Lankin.
Senator Lankin: I'm replacing Senator Pratte.
The Chair: Fantastic. He's upstairs doing his job adequately.
Senator David Tkachuk on my right, Senator Beth Marshall, Senator Percy Mockler and Senator Raynell Andreychuk.
[Translation]
Today, we begin our study of Supplementary Estimates (C) for the fiscal year ending March 31, 2017.
[English]
In our first hour, we have two departments appearing to give us an overview of Supplementary Estimates (C) and to answer all of our questions from the Treasury Board of Canada Secretariat.
We welcome Marcia Santiago, Executive Director, Expenditure Management Sector; Darryl Sprecher, Senior Director, Expenditure Management Sector; Renée LaFontaine, Assistant Secretary and Chief Financial Officer, Corporate Services Sector.
We also have officials from Agriculture and Agri-Food Canada to discuss the department's request for funds in Supplementary Estimates (C).
[Translation]
Joining us are Pierre Corriveau, Assistant Deputy Minister, Corporate Management Branch, and France Pégeot, Assistant Deputy Minister, Programs Branch.
[English]
During the second part of our meeting two other departments will appear.
Welcome, and thank you for being here with us today. I understand each department has a presentation. We may interrupt you if questions arise during your presentation. We'll start with the Treasury Board.
[Translation]
You have the floor.
[English]
Marcia Santiago, Executive Director, Expenditure Management Sector, Treasury Board of Canada Secretariat: Thank you, honourable senators, for having us back to support your study of the estimates. I have a short presentation to walk through on the government-wide view of the estimates. It situates the 2016-17 Supplementary Estimates (C) in the cycle of reporting and approvals for the fiscal year. I'll also point out some of the highlights of these particular estimates.
[Translation]
Turning to page 2, you will find an overview. I will begin by briefly describing the government's spending cycle. Next, I will discuss how the supplementary estimates are organized, and go over the total dollar amounts for these estimates and the entire fiscal year. I will wrap up with a report on frozen allotments.
Page 3 lists the key dates during the 2016-17 fiscal year when the Main Estimates and three sets of supplementary estimates were tabled in Parliament. The supplementary estimates are part of the budgetary process and present information to Parliament on the Government of Canada's spending requirements that were not sufficiently developed in time for inclusion in the Main Estimates or were not specific enough to take into account new program and service realities.
As you can see from the diagram, this is a busy time in the budget cycle, with the tabling of Supplementary Estimates (C), the last estimates of fiscal 2016-17, and the tabling of the Main Estimates for 2017-18. These estimates will be followed by two supply bills, one for each fiscal year, before the end of March.
As you will see on page 4, Supplementary Estimates (C) for 2016-17 are divided into a number of sections. They begin with the introduction and summary, which contain information on the most important initiatives representing major items, horizontal items and a summary of the estimates for the entire fiscal year. Next, the largest section of the supplementary estimates outlines the requirements by organization. Every institution details its requirements by vote and initiative. The last section of the supplementary estimates contains proposed schedules to the appropriation bill, which are based on the amounts indicated in the Main Estimates.
The schedules provide considerable additional information. The Treasury Board Secretariat website provides a breakdown of the budgetary expenditures by standard object and program. It also provides information on statutory forecasts, transfers, allocations from Treasury Board central votes, frozen allotments and a reconciliation of the Main Estimates and public accounts.
In addition, more information on authorities and expenditures is available through the Treasury Board Secretariat InfoBase.
[English]
In slide 5 on high level totals, Supplementary Estimates (C) provides information on $2.5 billion in voted budgetary appropriations for 47 organizations. The new funding supports many initiatives announced in Budget 2016 as well as spending set out in prior budgets. These estimates also provide an update on forecast statutory spending, including budge items as well as changes to non-budgetary loans, investments and advances.
On slide 6, comparisons with other estimates, including these Supplementary Estimates (C) the total estimates for 2016-17 are $257.2 billion. Of this amount $103.2 billion is voted, or roughly 40 per cent of the total.
Planned expenditures, both voted and statutory, are higher than in previous years. Statutory expenditures continue on an upward trend, driven in large part by the annual escalator to the Canada Health Transfer and increases to elder benefits. Voted expenditures have increased largely due to infrastructure programs announced in Budget 2016.
On slide 7, we highlight some of the most significant items in these estimates. In the introduction to supplementary estimates, starting on page 5, you can find information on the largest voted amounts. In these estimates we've highlighted 11 initiatives of $50 million or more. The 11 initiatives total approximately $1.9 billion or about 77 per cent of the voted amount in these supplementary estimates.
The largest item on the list is $545 million under Treasury Board Secretariat paylist requirements. This funding will be allocated across government upon ratification of a number of collective agreements which have been negotiated but which have not yet been finally signed at the time these estimates were prepared.
There are two other related amounts contained in Treasury Board central votes: one for $59 million in compensation adjustments for an agreement already signed and ratified with the Canadian Revenue Agency, and another $76.4 million in public sector insurance for the RCMP disability insurance plan. These three items, together, account for over 30 per cent of the voted supplementary estimates.
The second of the major items is a $350 million payment to the Government of Saskatchewan as it takes on responsibility for federal dams in the province. My colleagues from the department of agriculture are here to speak to this and other items in their estimates.
The third item on the list of major items is $178 million to write off debts for unrecoverable Canada Student Loans. While the great majority of loans are repaid some loans enter into default. Recovery efforts are then made over a six- year period and can include repayment assistance and withholding of tax refunds.
After this time a very small proportion of loans is deemed unrecoverable and is proposed for write-off. Consistent with standard accounting practices, defaulted loans are written off on a regular basis. This year's amount is comparable to the $176 million of loans written off in 2015-16. I understand our colleagues from Employment and Social Development Canada will be appearing tomorrow on their estimates.
On slide 8, statutory expenditures are those authorized by Parliament through legislation other than the appropriation acts. These include the government's largest expenditures, such as interest charges on the public debt or payments to provinces and elderly benefits. Changes to statutory spending do not affect the supply bill and are included for information purposes only.
The single biggest examples on the budgetary side reflect a decrease in interest costs that account for three things: the downward revision of forecast interest rates by private sector economists, a lower than anticipated Consumer Price Index adjustment on Real Return Bonds and lower than anticipated bond buy-back expenses.
On the non-budgetary side, a significant decrease reflects measures announced in Budget 2016 to increase amounts for certain Canada Student Grants by 50 per cent. This has the effect of reducing the disbursement of loans as more borrowers have had their financial needs met by this increase in grants.
Furthermore, the previous forecast included the estimated effects of plan changes announced in Budget 2015 to reduce the expected parental contribution and to eliminate the student income from the needs assessment process for Canada Student Loans, which would have led eventually to higher loan disbursements. At the point of Budget 2016, the Budget 2015 changes had not yet been implemented.
On slide 9, on anticipated lapses, parliamentary authority typically expires at the end of the fiscal year. For example, authorities approved through all appropriation acts for the fiscal year 2016-17 will expire at the end of next month, on March 31, for most organizations. Unspent amounts are then shown as a lapse in the Public Accounts for that year.
A large portion of the annual lapse is in fact planned. During the fiscal year the government takes decisions to adjust priorities or the implementation time frame for individual initiatives. As there cannot be negative items in the supply bill, these amounts are frozen by decisions of the Treasury Board so that organizations may not spend those funds.
As we did last year, we have published an online annex to summarize the permanent frozen allotments in the voted authorities of all organizations at the time of tabling these supplementary estimates.
This summary gives Parliament an early indication of the lapse expected in the 2017 Public Accounts. For fiscal year 2016-17, the total amount frozen in voted authorities as of the time of tabling was approximately $3 billion. Most of these frozen allotments are due to the planned reprofiling of funds to future years and to the uncommitted authorities in Treasury Board managed central votes.
[Translation]
Lastly, as indicated on page 10, Supplementary Estimates (C) reflect the third opportunity for organizations to obtain parliamentary approval of funding for programs and initiatives announced in Budget 2016. These programs represent approximately 20 per cent of the funding to be approved by Parliament.
This overview was an opportunity to briefly examine some of the key initiatives laid out in Supplementary Estimates (C) for 2016-17.
[English]
A supply bill supporting the $2.5 billion of voted funding presented in these estimates will be introduced in a few weeks, in March. With that, I have finished my walk through the presentation and we would be happy to take your questions on these estimates.
The Chair: Thank you very much, Ms. Santiago.
First of all, Senator Marshall, would you like to start?
Senator Marshall: Yes, I would. Thank you very much, Mr. Chair.
My first question is with regard to the paylist requirements that you spoke about in your opening remarks, the $545 million. My understanding is that those are tentative agreements that hadn't been finalized.
How many bargaining units are we talking about there, and when would the tentative agreements have been signed? Are they the ones in December, January and February? Could you tell us a little more?
Ms. Santiago: There are 12 tentative agreements that have been signed. One of them for the financial officers has already been ratified by the agent. The process for voting, for example, for the alliances PA table has begun. At the time we were preparing these estimates we weren't sure if all 12 of them would actually be ratified by the agents before March 31. If they were all ratified by mid- or late March, we would have expected them to all proceed immediately to Treasury Board. In fact, we are expecting to take at least the FIs to Treasury Board before the end of March so that they will be approved and fully concluded by the end of March.
If the other ones don't finish their voting process before the end of March, the Treasury Board approval will slip into early next fiscal year, and we would be back here asking for most of that $545 million to be revoted because it will lapse.
Senator Marshall: I went through the government website and I found 13 bargaining units, but I think you said one group has already been ratified. Did you say it was the financial management group?
Ms. Santiago: Yes.
Senator Marshall: My next question is relating to the Royal Canadian Mounted Police disability insurance plan, which I thought was a bit odd, because I thought that members paid for the premiums for disability insurance. Could you give us an additional description of what is in that $76 million?
Renée LaFontaine, Assistant Secretary and Chief Financial Officer, Corporate Services Sector, Treasury Board of Canada Secretariat: Perhaps, Mr. Chair, I can start answering that question.
Basically, this is a disability insurance plan, as you say. What we're proposing here is to top up the plan with $76.4 million. There will be a follow-up in terms of changes to premiums that both the employee and employer have to pay.
The plan has fallen into some financial difficulties because of the high volume of new claimants we're having, some increases to the benefits that these claimants receive, as well as low interest rates. We've an actuarial report telling us that we are actually falling below our financial threshold to make this plan sustainable.
The proposal here is to top it up with the $76 million and to follow up next year with any adjustments that need to be made to the premium rates both for the employer and employee. In this case the employer pays most of the premiums.
Senator Marshall: Why would the government be obligated to top it up? With the premiums from the employees, plus the matching premium from the employer, which would be the government, why would the government have to top it up?
Ms. LaFontaine: The employer has an agreement with Great-West Life, the underwriter for the plan. According to the arrangement with that underwriter, certain financial requirements have to be met. When those finances go below a certain threshold, the plan is no longer sustainable. As the signatory to that contract we have obligations to keep the plan under financial sustainability.
The trade-off is to top up the plan to better manage the kinds of premiums our employees have to make. We've done the analysis and got feedback from the actuary and the service provider. This is our proposal to make the plan most affordable and to meet our commitments as the employer.
Senator Marshall: Does Treasury Board have any role in overseeing that insurance plan? I think that was the one the Auditor General audited a number of years ago and found some deficiencies. Is that plan being monitored now by Treasury Board? Who is responsible for the governance?
Ms. LaFontaine: Yes, we have a sector within the Treasury Board Secretariat that actually oversees the arrangements we make. There are several stakeholders involved in overseeing all of our benefits plans. Treasury Board's primary focus is to make the arrangements and to make sure that all of our obligations are being met.
Senator Marshall: I think you said the $95 million was relating to the Canada Revenue Agency. What's that?
Ms. Santiago: That's right. The difference between this and the $545 million is that the CRA agreement has already been signed and ratified by the agent and by the government. This is the $95 million that would be the employer's responsibility in terms of meeting the economic increases.
I'd also point out that this agreement with CRA is the last of the previous round of collective bargaining. It's the last significant one from the previous round of collective bargaining. It's quite a separate arrangement from the other 12 that are sort of in process for going forward.
Senator Marshall: On the issue of the frozen allotments, there's $579 million there that it says is "related to uncommitted funds from Treasury Board central votes." Can you provide additional information on that?
Ms. Santiago: All of the amounts that are uncommitted in the Treasury Board central votes are primarily to do with the operating budget carry-forward and the capital budget carry-forward. Those are exercises where it's effectively a structural reprofiling.
On the operating side there's 5 per cent of the budget the departments have to work with, and 20 per cent. If 5 per cent of operating or 20 per cent of capital is left unspent from the prior year, they can carry up to that amount into the next fiscal year.
When we did the carry-forward exercises from 2015-16 into 2016-17 we did all the calculations. We did our disbursements. We published those in Supplementary Estimates (B). What's left is $505 million from the operating budget carry-forward from a vote that starts out at about $1.6 billion in Main Estimates. On the capital side it's about $74 million left of a vote that starts at about 600. Those are amounts that we don't need any more this year because we've already finished the carry-forward exercises from last year into this year.
Senator Marshall: Are those amounts for a variety of departments?
Ms. Santiago: This is what's left. This is what we were carrying as a provision in Main Estimates.
Senator Marshall: That's it for me. I would like to go on the second round.
The Chair: Before we get into the second round, I have to apologize. I must have been so excited this morning that I forgot to think about asking Mr. Corriveau and Ms. Pégeot to give us a little interview. Then we'll ask you questions so we can put everything back together and keep it consistent. If you'd like to move forward and give us your opening remarks, that would be great.
Pierre Corriveau, Assistant Deputy Minister, Corporate Management Branch, Agriculture and Agri-Food Canada: Thank you, Mr. Chair. I appreciate the opportunity to open this discussion about the Supplementary Estimates (C) for Agriculture and Agri-Food Canada for fiscal year 2016-17. Today I'm joined by my colleague France Pégeot from the programs branch of our department.
The Supplementary Estimates (C) you have before you for Agriculture and Agri-Food Canada total $352.1 million. The Agriculture and Agri-Food Canada 2016-17 spending authority to date totals approximately $2.7 billion.
That reflects the total of these supplementary estimates; the Main Estimates from the start of the year at $2.3 billion; the Supplementary Estimates (A) from May of $9.4 million; the Supplementary Estimates (B) from November of $33.5 million; and the funding carried over from last year, like my colleague explained, of $36.4 million.
The majority of the funding in Supplementary Estimates (C) is for the transfer of federal water infrastructure to the Government of Saskatchewan, as identified in Budget 2016.
The $350 million dollars that will be transferred to the Government of Saskatchewan will be used to take over ownership of 20 dams and 19 reservoirs that will be provided to the Water Security Agency. This will terminate all future liability of the Government of Canada associated with the ownership and the operation of these structures. The objective of the transfer is to provide the Province of Saskatchewan control over all infrastructure necessary to meet provincial water management objectives.
As well, in Budget 2016 the government indicated its intent to support modern agriculture science in Canada and provide $30 million over six years starting in 2016-17 to Agriculture and Agri-Food Canada to support advanced research in agricultural genomics.
These Supplementary Estimates (C) include $1.7 million of this funding to support genomics, digitization and data mobilization of Agriculture and Agri-Food Canada biological collections.
This funding will be used to accelerate the DNA analysis, data capture and imaging of targeted specimens from its collections of over 19 million physical specimens of insects, plants, fungi, bacteria and nematodes, as well as the digitization of rare books related to these collections.
As well in these supplementary estimates there is revenue of 440.8 thousand dollars in funding related to revenue from the sale of a property in June. That property was located in Kent County, New Brunswick. The revenue from this sale is now available for the department to reinvest in its science infrastructure.
[Translation]
The supplementary estimates also include internal reallocations. Agriculture and Agri-Food Canada is seeking an internal reallocation of $6 million from vote 1, other operating expenditures, to vote 5, other capital expenditures, as part of the implementation of the government-wide common definition of the capital expenditures vote to better align funding with proper recognition of expenditures.
This is the first year that Agriculture and Agri-Food Canada is implementing fully this common definition of the capital expenditures vote. The 2016-17 Main Estimates reflected an internal reallocation of $14.8 million to the capital vote, and this is an additional $6-million reallocation for a total of $20.8 million for the 2016-17 fiscal year.
We also have an internal reallocation from vote 10, contributions. Agriculture and Agri-Food Canada is seeking the authority to increase the vote 10 grants to foreign recipients for participation in international organizations supporting agriculture by $1.2 million. The increased investment would help Agriculture and Agri-Food Canada increase its role and influence on the international stage in advancing government priorities. The increase would be funded through an internal reallocation of existing resources and would have no net impact on the department's total authorities.
Next, we have transfers between government departments, mainly for our commissioners abroad. To that end, Agriculture and Agri-Food Canada is proposing the transfer of $73,000 to the Department of Foreign Affairs, Trade and Development and $5,000 to Shared Services Canada to provide support to departmental staff located at missions abroad. The two transfers are related to a new position that was created in February 2017 in Chongqing, China.
Now we come to frozen allotments. The list of those frozen allotments is included in the supplementary estimates for information. The frozen amounts are not to be spent and will show as a lapse at year-end.
Agriculture and Agri-Food Canada has two frozen allotments listed. The first frozen allotment is $3.9 million in operating expenditures, vote 1. Budget 2016 made government-wide spending reductions to travel, advertising and professional services totalling $221 million per year, beginning in 2016-17. Agriculture and Agri-Food Canada's share is $3.9 million.
The second frozen allotment for Agriculture and Agri-Food Canada is $4.6 million, in vote 10, from the Churchill Port Utilisation Program. This funding is being transferred to Western Economic Diversification Canada for an economic development fund to support projects that grow sustainable revenue in the region of Churchill, Manitoba.
Mr. Chair, we would be happy to take any questions.
The Chair: Thank you, Mr. Corriveau. Senator Tkachuk now has the floor.
[English]
Senator Tkachuk: Thank you. On Saskatchewan, the federal dams, the $350 million you mentioned was announced in the 2016 budget, is that part of a national program or is it unique to my province?
Mr. Corriveau: Mr. Chair, this is unique to the department. It's a unique initiative. We have had in the past dams located both in Manitoba and Alberta. Those have been transferred in previous years. The last federal infrastructure that the department owns is located entirely in Saskatchewan right now. This was a unique thing for this fiscal year, and it was in Budget 2016.
Senator Tkachuk: It was obviously part of a policy to return these dams back to the provinces; in other words, Manitoba, Alberta and now Saskatchewan.
Mr. Corriveau: Yes, correct.
Senator Tkachuk: Is that true all across the rest of the country as well?
Mr. Corriveau: We did not own any other dams outside of those three provinces. It's a legacy infrastructure from the old Prairie Farm Rehabilitation Administration that was basically focused on those three Western provinces.
Senator Tkachuk: Thank you. On the $133 million to help developing countries on climate change, I notice in the explanation that part of it goes for the United Nations Framework Convention on Climate Change, Capacity-Building Initiative for Transparency. Could someone explain what that means?
Ms. Santiago: The UN Framework Convention on Climate Change is a large umbrella agreement. Within that are specific initiatives that have to do with building capacity in the participating nations. The idea is to help the participating countries to develop reporting, to provide information on climate change action and to improve the effectiveness of international support in those areas.
Senator Tkachuk: How would that work exactly? What does that mean? Why do countries need cash help in reporting? Let's say Nigeria. What would the money be used for there to report?
Ms. Santiago: We would have to go back to the department to get details on specific initiatives in specific countries, but the idea with capacity-building funding in general is the idea that if you were to go into the country with assistance that was to be focused only on the project, there might not be available capacity or available capacity at the right level in the country to be able to make the most of the investment that's being done with the aid funding. If there are particular countries that you are interested in, we would be happy to go back to Global Affairs for additional details for you.
Senator Tkachuk: Does the United Nations make the decision on what country gets the money?
Ms. Santiago: As I understand the way that these things work, there are working groups and working committees. There are a few participating countries on that. I don't believe it is the secretariat itself, but again we'd have to go back to Global Affairs.
Senator Tkachuk: My second question is on the International Finance Corporation support and the Africa Renewable Energy Initiative funding in these estimates.
Ms. Santiago: The Africa Renewable Energy Initiative in general is to develop the potential of that particular energy source within Africa through investment and development of infrastructure for solar, wind and hydro, and for universal access by African citizens. I also understand that Global Affairs is appearing tomorrow on their estimates, so perhaps they might be able to supply information on this.
Senator Tkachuk: They would be able to give us updates on progress and what the money is used for, et cetera.
Ms. Santiago: Yes.
Senator Tkachuk: Who would make the decision? Who sits on the International Finance Corporation? Is it member countries? Is it the United Nations? What is the International Finance Corporation?
Ms. Santiago: I have information on the climate finance contribution. We'd have to refer that to Global Affairs for you. We'll let them know in advance of their appearance tomorrow that the question was raised.
Senator Tkachuk: That would be good.
[Translation]
Senator Forest: Thank you for your presentation. I am from a town whose budgets contained a little less than nothing. I want to make sure I understand this. Originally, at the time of the estimates, the department requested $2.3 billion in spending authority. Is that correct?
Mr. Corriveau: Precisely.
Senator Forest: And today, if I add the funding requested in the supplementary estimates, the total is over $431 million.
Mr. Corriveau: That is correct.
Senator Forest: That means that the department's managers, as part of their in-year forecasting, are asking us for more than 18 per cent of the initial spending estimates.
Mr. Corriveau: I could figure out the percentage.
Senator Forest: I worked it out; it's 18.8 per cent.
Mr. Corriveau: I might be able to explain. When the Main Estimates are prepared — and this issue is common to all departments whose estimates are reviewed by Treasury Board — they are usually finalized around the December preceding the fiscal year. The government had not yet announced its budget when the events following the moment when the Main Estimates were finalized and tabled in the House of commons occurred.
Therefore, the main funding request of $350 million, which accounts for more than 80 per cent of the authorities sought here, was not included in the department's Main Estimates. It is the result of events that happened subsequently and measures that were contained in the budget. Budget 2016 provided for scientific infrastructure, which was included in Supplementary Estimates (A) but not planned for initially. The genomics measure, which we are submitting to you today, and the infrastructure investment had to be taken into account. It comes down to the timing of the Main Estimates and the budget.
As I said, the department's Main Estimates were tabled in the House of Commons last week, but the government's budget has yet to be released. That is more or less why we have to play catch-up in the budget cycle every year and why funding is requested in Supplementary Estimates (A), (B) and (C).
Senator Forest: Historically, then, this is normal as far as votes go. When the government tables its budget, as will happen in a few weeks, the budget is said to reflect a funding underestimate of 20 per cent to 25 per cent.
Mr. Corriveau: For us, this year, the $350 million is an exception. The size of the funding request is usually much lower than that.
Senator Forest: This year's situation is an exception, then.
Mr. Corriveau: Precisely.
Senator Forest: I have a question about another area that concerns me. This year, $158 million in student loans will be written off. Is that write-off for this fiscal year or the last five? If we are writing off $158 million in student loans every year, we are sending quite the message to our young people. That measure is rather worrying for our financial institutions in the years ahead.
[English]
Ms. Santiago: We do the debt deletion as a matter of good financial housekeeping. It's actually a very small proportion of the total value of the loan.
[Translation]
Senator Forest: What is the proportion?
[English]
Ms. Santiago: The default rate for student loans is about 12 per cent, but we still have to find the total value of the debt deletion in relation to the total portfolio.
[Translation]
Senator Forest: One of the reasons it concerns me is the message it sends. We are, after all, talking about a 12-per- cent default rate among young adults, the citizens of tomorrow. It's not the public purse so much as the values involved.
[English]
Ms. Santiago: I haven't done the calculation yet, but it is $178 million of debt deletion on a total portfolio of close to $3 billion. That's after six years of trying to collect and refinance the loans.
Historically, it used to be quite a bit higher than that, but for the last several years it has been in about the same order of magnitude, around $170 million or $180 million on a $3 billion loan portfolio.
[Translation]
Senator Forest: So it is between 10 per cent and 15 per cent.
[English]
Ms. Santiago: Yes.
Senator Andreychuk: I remember the days when they weren't written off in six years. There was a lot of discussion about sending the right signals to students and good fiscal management on the other side.
At that time, there was a revision of all the forms, how you apply, and who is able to apply for the loans. It was the best effort at that time to ensure that students who needed the money could get it but not as an easy way of attracting funds that could be otherwise given.
I remember parents' responsibility, the student's own responsibility and the government's responsibility. This is appreciably higher since I remember that discussion.
I am looking at today's students, today's economic situation and rethinking this. I tend to agree with the senator that we want to send the signal that you can get help. We want to educate our young people. On the other hand, we don't want to attract and be a disincentive to paying back the loans. That's the wrong message.
The percentage seems to have been higher these number of years. Before, it was a cumulative number that kept rolling over, and this seems to be that every year you're writing this off. I'm wondering what that really means. Is it time to revisit the whole plan?
Ms. Santiago: We'll refer the overall strategic question to our colleagues at ESDC who will be appearing tomorrow, but I would point out that in the highlights of the statutory changes in Supplementary Estimates (C) you'll have seen a large decrease in the statutory authority for loans granted by Employment and Social Development Canada for Canada Student Loans.
That's because there was an active decision in Budget 2016 to move more student financial support out of loans and into direct grants. That's reflected in the rather significant decrease in statutory loans ability.
The Chair: They don't give it back; we just give it to them.
Ms. Santiago: That's right.
Senator Andreychuk: All I would say is that I hope the group tomorrow can address the policy issue as well as the numbers.
Ms. Santiago: They are the policy holders, senator, for the Canada Student Loans regime. I have to correct a statement that I made earlier. The $178 million in debt deletion that we are requesting in these supplementary estimates is on an $18 billion portfolio of outstanding principal, which is the total value of the direct lending regime at ESDC. It's actually closer to 1 per cent; it is not 10 per cent.
Senator Andreychuk: The question they should answer tomorrow is why it's in supplementary estimates. Why doesn't it come in on a routine basis and be known in advance in the budget process as opposed to the supps?
The Chair: Any response? There have been European countries that have taken measures to reduce similar situations and maybe we can find that out.
Senator Tkachuk, are you okay?
Senator Tkachuk: As a follow-up, do they use collection agencies as a last resort to collect the money?
Ms. Santiago: I don't believe it's a last resort but it's part of the collection process.
Senator Tkachuk: Would the court be the last resort since we can't throw them in debtor's prison?
Ms. Santiago: They would have to explain to you what their exact sequence of activities is but, yes, all of these things are involved.
Senator Moncion: The student debt in Canada is about $2.8 billion right now. I think there is accrued interest on the amount of $178 million. These amounts are written off every year. The thing is that the money being loaned to students is given to students who are in need of the money. Wealthy families don't have access to these funds or very little. The people we are helping are from financial situations that are not as good as some. In my case, none of my kids come out of school with debt but most of their friends do.
I find that it's a little amount for the amount that is being loaned. I have been in loans for a long time and lending to students. The population that we're helping is deserving. I understand that not having them pay back the loan is bad but I don't see this as major.
Senator Tkachuk: I don't see it as major either, but it is important.
The Chair: We can find out exactly how the vehicles are used. Maybe one of the things we can check on is getting information to see what recovery some of these countries have actually been able to achieve, so we at least understand. We may do nothing but we can understand.
Senator Andreychuk: To your point, if we'd gone to a grant for the needy that really can't and can qualify, is this going to be a recurring defaulting on the debts? What I'm saying is: Have we thought through the proper strategy to assist students to get to university and to help those who really need it?
What vehicles are we using? The publicity that came out with the government was that those you're talking about, Senator Moncion, would be covered by grants, not by debts. I don't know if this is the old ones working their way out or whether this will continue to reoccur. I'm questioning the policy and the application of it as opposed to your point, which I think is a valid point.
The Chair: That enables us to have an interesting question for tomorrow.
Senator Cools: Thank you very much. I'd like to welcome the witnesses before our committee, but I must make a confession that I want to ask you some questions that are puzzling me in the supps (C). As a matter of fact I admit that I'm quite baffled by them, and I wonder if I could have some assistance.
I've never seen this before, but if you look to page A3 of schedule 1 you will see under the Department of Agriculture and Agri-Food an item that reads as follows:
The payment to each member of the Queen's Privy Council for Canada who is a minister without portfolio, or a minister of State who does not preside over a ministry of State, of a salary. . .
This is very strange. It is not payment to every member of the Queen's Privy Council but to a minister:
. . . — paid annually or pro rata for any period less than a year — that does not exceed the salary paid under the Salaries Act, as adjusted under section 67 of the Parliament of Canada Act, to ministers of State who preside over ministries of State.
I have been here for many years and I have never seen such an entry under a department of such a payment. As I was scouring through I observed that they are all listed on vote 1c but this continues through about 12 departments.
If you look again at page A3 you will see in vote 1c that exact statement. There is not an individual sum that's paid there. There's a lump sum.
You will see repeated in the next department, which would be the Department of Canadian Heritage, the exact same words on the payment to ministers who are not heads of ministries.
That continues right through 1, 2 and 3. Then you find it under the Department of Employment and Social Development. It goes on for many more departments. I have never seen such an oddity.
The Chair: Ms. Santiago, do you have a response?
Senator Cools: Perhaps somebody could help me because I'm baffled.
Ms. Santiago: The basic salary for members of Parliament is a statutory payment that's listed under the House of Commons. However, these are additional allowances that are paid to ministers and ministers of state. They happen to be voted through the supply bill. The only difference is that the authorities are in separate places for the difference between the base salaries for ministers. His or her salary for being a member of Parliament is paid out of one statutory authority.
Senator Cools: They are paid out through the Parliament of Canada Act, those salaries, aren't they?
Ms. Santiago: Yes. Then the increment happens to be voted because it isn't provided for in the Salaries Act.
Senator Cools: The Salaries Act is the statute respecting ministers' salaries, if I'm not mistaken.
Ms. Santiago: Yes. This happens to provide for any additional allowances that aren't already covered by either the Parliament of Canada Act or the Salaries Act.
Senator Cools: Why is a payment coming out of so many departments?
Ms. Santiago: It is because it's paid out of basically the lead department of their portfolio.
Senator Cools: Every single department? It's paid out of the Department of Employment and Social Development, the Department of Fishery and Oceans, the Department of Foreign Affairs, the Department of Health, the Department of Indian Affairs and Northern Development, the Department of Industry, the Department of National Defence, and the National Department of Natural Resources.
Ms. Santiago: Because those are the principal departments of the portfolio of that minister. We wouldn't expect to see the charge for the Minister of Finance to be coming out of agriculture's vote 1, for example.
Senator Cools: I've never seen this before. Is this a novelty? Is this a new idea?
Ms. Santiago: It's not a new idea. It might be a new formulation. The Department of Justice has adjusted the presentation of the vote wording in the appropriations acts in the last couple of years, mostly for clarity and transparency.
Senator Cools: Which minister has been redoing the Appropriations Act?
Ms. Santiago: The Department of Justice is responsible for all the legislative drafting.
Senator Cools: I am aware of that.
Ms. Santiago: The section that you are looking at is part of the supply bill.
Senator Cools: I still don't understand it. The most puzzling question for me is: Why is this happening at this period in the annual cycle of supply? Why is it happening? We are at the end of the supply year.
Ms. Santiago: That wording for the vote is the wording that it has had since Mains Estimates. When we vote Mains Estimates, those are the words that appear. The substance of the vote is essentially there. Then in supplementary estimates we're adding to the vote. We're not adding for that purpose.
For example, with Agriculture and Agri-Food, their $350 million is itemized on their page for Supplementary Estimates (C), and none of it is for a minister's payment specifically.
The Chair: Hold on for one second, Senator Cools, if I may.
Do you have something you can help with?
Senator Marshall: My question follows up from what Senator Cools was asking. It's the end of the fiscal year, so hasn't the salary been paid out already?
Ms. Santiago: It has. We use the same wording. The same wording appears in all of the estimates, unless something is added or changed. We don't change the wording for vote 1 of Agriculture and Agri-Food in every estimate.
Senator Marshall: The impression that's left, now that Senator Cools mentions it, is that the salary has already been paid out. Why is there provision in supplementary supply for salary if it's already been paid out?
Senator Cools: At this time in the supply cycle. We're at the end of the supply cycle. We start over. The cycle starts April 1. That wording doesn't usually appear at the end. The end is usually odds and ends.
Darryl Sprecher, Senior Director, Expenditure Management Sector, Treasury Board of Canada Secretariat: That wording is included in all appropriations acts. I'm looking at Supplementary Estimates (A) and that same wording is in the Appropriations Act for Supplementary Estimates (A).
The wording continues throughout the course of the year. You are noticing it now partially because the formatting of the Appropriations Act for the schedule has changed. It looks a little different now. It sticks out more.
Senator Cools: Perhaps you could you help me again because it is not clear in the documentation. What would be the sum for the total of the year that has been paid to members of the Privy Council?
Ms. Santiago: The way that the supply bills work right now is something that the President of the Treasury Board is looking to change going forward as part of our estimates reform agenda to give Parliament a way of seeing the vote as it evolves over the course of the year, or at least how it looks as we're closing up the fiscal year.
As it is now, the way it works is that there is a supply bill for Mains Estimates which gives the full vote wording and an amount that we start the year with, and then with every supplementary estimate we add to the vote but we don't really change the wording. We see the same wording every vote.
Part of the reason that we can't actually take words out of the votes is that every supply bill, no matter when it's voted in the fiscal year, has an effective date of April 1. I guess there is a small risk that if we put in less wording in a Supplementary Estimates (C) supply bill it would appear to reduce the permissive authority of the vote wording because it would also be effective on April 1.
Senator Cools: I'm still very curious; you are awakening more curiosity as we go along. I wonder why, for example, you're proceeding with these payments under the supply process rather than doing it by bill. We have the Parliament of Canada Act for these kinds of things, especially for judges. Judges are the ones who set the standard years ago when it was decided that their salaries would be paid by statute, pursuant to a statute. The situation with members of the house and senators has been very similar in a way. It is set out in their own statutes.
I'm just wondering why you've gone to the supply process and not to a statutory process. I'm just curious. I'm not being suspicious.
Ms. Santiago: To be honest, we are too.
Senator Cools: You have awakened my curiosity.
Ms. Santiago: I think part of this is just historical habit.
Senator Cools: I don't think so. I'm not sure of that.
The Chair: Is this something for Ms. Santiago to research so that we can get some answers?
Senator Cools: Yes, perhaps she could give us some questions and some answers to that. I find it very baffling. The system has gone to a lot of trouble to pay members of Parliament and senators out of a particular statute. Judges have their Judges Act. It's very important because if you know these statutes you can actually locate and go to the exact clause that says such-and-such moneys would be paid to the judges or paid to whomever.
They have been very careful about this because, especially with the judges, there are constitutional requirements that the salaries of judges be fixed and provided by Parliament.
That set the standard many years ago in the field. I find this odd. I could be perhaps having a poor reaction to something I thought was novel, but you're telling me it's not novel. You're telling me that this is customary in a way, so that really awakens even more curiosity, because it is standard to set these individuals apart and pay them by statute. Ministers and other senior folks have their own statute called the Salaries Act. I'm just curious.
Ms. Santiago: We will consult the Privy Council Office.
Senator Cools: Think about it, consult with everyone and get back to me the next time we are here. Are we here tomorrow?
The Chair: We'll be here tomorrow night.
Senator Cools: We're here tomorrow. The chairman has to tell me where I have to be.
The Chair: It's an honour to do so, Senator Cools.
Senator Cools: Great.
The Chair: We have about four minutes left in this particular session. We have two senators left on our list.
Senator Andreychuk: I hope I can be quick.
Going back to Saskatchewan, the federal dams and the reservoirs that are being turned over, I understand the uniqueness of the Prairie provinces and why this occurred. There's also an initiative on drainage. It's a pilot project, I understand.
The whole issue nowadays is water: the effective use of water and the effective retention of water. What is the federal government's residual power, if any, to oversee throughout Canada the whole issue of water, or is it now purely a provincial matter?
Mr. Corriveau: In general water is a provincial responsibility. On the movement of international waters —
Senator Andreychuk: Yes, I appreciate the international. It's more the national I'm interested in.
Mr. Corriveau: — and between provinces as well, I obviously would not be the specialist on that. The Department of Environment and Climate Change usually has the responsibility for water management.
In this case in particular in Saskatchewan it's a bit of an historical issue. Like I said earlier, we used to be in the business both in Manitoba and Alberta. Simply, the Government of Saskatchewan is in a much better position as they do manage other water infrastructure. It's a natural process for us to divest of our infrastructure to the right level of government in that perspective.
In terms of water usage, and basically from an agricultural view our Growing Forward framework, right now we're in the process of renegotiating a five-year agreement with the provinces. There are a number of initiatives in terms of research related to water usage and drainage issues. Usually agriculture, as you know, is a shared responsibility between the federal and provincial governments. On a number of those research projects we are working together with the provinces.
Senator Andreychuk: Another area is the RCMP disability insurance plan. There was some explanation about the insurance and the coverage. Why would this not be factored in originally? Why is it coming in, in supplementary estimates? Is it again a timing thing we're talking about as opposed to main budgets?
Ms. Santiago: A lot of it is timing. It's when we're aware of when the funding decision has been taken. In some cases additional time is required to clarify details of the policy authority or how a program is going to be delivered. A lot of it is tied up in the timing and sequencing of the budget and estimates.
Senator Andreychuk: The residual responsibility is on the federal government in this case. It's not shared with the policyholders, then.
Ms. LaFontaine: If I can restate, on the timing side of things we get a report from the sponsor for the insurance program. According to the arrangements we've signed the finances that are backing up all the employees and RCMP officers on disability are getting dangerously low. Actuaries tell us what that number should be. Our responsibility is to ensure that for every one we have out on disability we should have at least 40 per cent of the premiums required to keep those employees financially sustainable. We at least have a base of that in the funding with Great-West Life. This $76 million is to meet that obligation, and that was in the contract we signed with them.
In order to go forward and to assume the same volume of applicants, the same volume of claims and future interest rates, and so on and so forth, we're going to forecast how that is going to change the premiums paid by the employees and the premiums paid by the employer. That would be a subsequent decision. Does that answer your question, senator?
Senator Andreychuk: Yes. I just wondered if the estimates were too low at the start, or is it a greater take-up?
Ms. LaFontaine: It's a greater take-up. There are three reasons why we're having financial difficulties in this plan.
The first reason is that there was a court case several years ago with RCMP officers. Previously what we used to do is that RCMP officers who were eligible for pension benefits while they were on disability used to have their disability amount reduced by that amount. They took us to court and they won, so we had to increase the benefits that we give to all of those employees. We had to do it retroactively and going forward.
The second point is that RCMP like most of the public is an aging population. We're noticing an increase in the number of employees that are going on disability, so we're dealing with that volume.
As well, as I mentioned, there's a reserve fund. Every time we take on a new RCMP employee on disability they're on for several years. We set up a reserve fund and that reserve fund gets interest. We've had very low interest rates lately, so that's not meeting the financial obligations we thought it was going to.
Those three factors are causing this financial deficit. This one-time top-up will put us back to where we have to be in terms of 40 per cent of meeting the obligations of the premiums, and then we'll go forward from there to make sure the plan is financially sustainable.
Senator Lankin: I have a supplementary to that.
The second factor is the increase in take-up, and you alluded to the fact that there's an aging population. There's also a decreasing population. There are problems in hiring in the RCMP right now. Some might connect to that potential decline in usage because we're not setting up as many reserves; there's not as many young people coming on.
I don't know whether or not you would have the answer to this, but is the uptake primarily because of the aging population or is it with respect to some of the things we've heard about in terms of post-traumatic stress disorder and post-harassment, sexual harassment issues and disabilities that have come forward?
In part, one speaks to a problem across all benefit plans of all employers, aging population and workforce, and the other speaks to potentially particular conditions within a workforce that would demonstrate there are additional problems from a policy perspective for government to be concerned about.
Ms. LaFontaine: Senator, I can answer your question with two points. The first one is in terms of uptake or new claimants coming forward for disability support. They become medically disabled and then they are eligible for the plan.
To give you a sense, every quarter we take stock. Employees are on the plan for years, but for the third quarter of 2016, for example, and then moving forward, we've actually gone from 36 new applicants to 71. That gives you a volume, a quantum of what's changing.
On the second point, we do have the information. TBS has this information. If not, we could work with the RCMP to get it for you. We could break down what are the highest incidents of reasons why these officers are going on disability, if it's PTSD, if it's cancer or if it's something else. I don't have them now but I could provide it to you.
Senator Lankin: I have a quick supplementary with respect to that. One of the things I think we're seeing across all employers is an increase in the number of disability leaves related to mental health issues, not necessarily just PTSD. There has been some interesting work by the OECD and others on this. It's a broad phenomenon. As you look at those numbers, could you look to see if that is broken out in any way so we can understand it?
Ms. LaFontaine: I will.
Senator Marshall: This was supposed to be an original question, but what Senator Cools brought up was very interesting. It reminded me that there's a bill in the House of Commons, Bill C-24. I'm looking it up here now. The first reading was September.
It provides authorization for ministers of departments to pay salaries for eight new ministerial positions. Have those salaries already been paid out? The bill is still over in the House of Commons, and I'm wondering if that's what's covered in those items that have been listed there in supps (C). I'm wondering what the relationship is.
Ms. Santiago: There's no relationship between Bill C-24 specifically and supps (C), but we will have to check to see which new offices are being created and how those are related to the authorities that we have.
Senator Marshall: And whether it has been paid out.
Ms. Santiago: Yes.
The Chair: Thank you to our two groups. Mr. Corriveau is so happy because he skated through those questions with such unbelievable quality and athleticism.
One of the things, Ms. Santiago, we would like to get back from Treasury Board is to understand exactly where the ministers' plan to modify the whole financial structure in terms of reporting is at. It has been about six or eight months since we've talked about that.
Ms. Santiago: Yes.
The Chair: Not today, but if we could organize another session that would be great. Thank you very much.
To continue our examination of the expenditures set out in the Supplementary Estimates (C) for the fiscal year ending March 31, 2017, we now have before us two departments. First, from Infrastructure Canada, we welcome Marc Fortin.
[Translation]
He is the Assistant Deputy Minister, Program Operations. Also joining us is Cynthia Cantlie, Director General, Finance and Contracting.
[English]
We also welcome officials from Indigenous and Northern Affairs Canada, Paul Thoppil — Paul, thank you — Catherine Blanchard, Director General, Planning and Resource Management; and Serge Beaudoin, Director General, Sector Operations Branch, Regional Operations. What a title, Serge. Congratulations.
Thank you for being here today. Let's start off first with Infrastructure Canada and then with Indigenous Affairs and then we'll ask questions. Go ahead, Ms. Cantlie.
Cynthia Cantlie, Director General, Finance and Contracting, Infrastructure Canada: Good afternoon and thank you for inviting Infrastructure Canada to speak to you today. I'm here with Marc Fortin, as you already indicated, Assistant Deputy Minister of the Program Operations Branch.
We have been invited here to speak to you about Infrastructure Canada's Supplementary Estimates (C), which were tabled in the House of Commons on February 14, 2017.
[Translation]
Through Supplementary Estimates (C), Infrastructure Canada is requesting a net decrease of $2 million. This decrease is broken down as follows.
[English]
In our operating expenditures vote, Infrastructure Canada is seeking an increase of $600,000 in new funding approved by Treasury Board for the oversight of the Windsor-Detroit Bridge Authority, or WDBA.
In our capital expenditures vote, the department is seeking a decrease of $2.6 million to transfer funds to the WDBA for the rehabilitation of land under a transfer agreement with Hydro One. Through this agreement, the department will provide space on the former Ontario Power Generation lands for future expansion. The land has to be rehabilitated first, and WDBA will be undertaking this site remediation.
[Translation]
You may have noticed in Supplementary Estimates (C) a section on frozen allotments.
[English]
The Supplementary Estimates (C) are showing a frozen allotment for Infrastructure Canada in the amount of $829 million. These funds have been frozen mainly because they are to be reprofiled. They will be moved forward to be spent in future years.
[Translation]
This reprofiling is a standard business practice for the department. Infrastructure Canada requests to have funds reprofiled so that funds can be provided to our partners when they submit their costs for reimbursement.
I would now like to take a minute to talk about the work the department is doing to deliver on the Government of Canada's commitments to funding infrastructure.
[English]
Since November 2015, under all of our funding programs, over $6 billion in federal funding has been approved for over 1,300 projects. More than 840 of these projects are currently under way.
[Translation]
These funding programs include the new programs announced in Budget 2016, under phase I of the Investing in Canada plan: the Public Transit Infrastructure Fund and the Clean Water and Wastewater Fund. Accelerated funding in our legacy programs is also anticipated.
[English]
By fiscal year's end, the department will also have transferred over $30 million in unallocated legacy funding to the federal Gas Tax Fund. This represents a top-up to the program for the municipalities who can bank, pool, borrow against or save this funding for eligible projects that they prioritize.
[Translation]
In support of the government's commitment to openness and transparency, the department will continue to report back on the results of our investments as we deliver the programming and funding that are key to the future of Canada.
[English]
Thank you for inviting us to speak with you today about the important work that Infrastructure Canada is doing on behalf of Canadians. We would be happy to answer any questions you have.
The Chair: Thank you very much.
Next up, Mr. Thoppil.
[Translation]
Paul Thoppil, Chief Financial Officer, Chief Financial Officer Sector, Indigenous and Northern Affairs Canada: Honourable senators, thank you for the invitation to discuss the Supplementary Estimates (C) for fiscal year 2016-17 with my colleagues from Indigenous and Northern Affairs Canada.
I would like to draw the members' attention to a deck entitled 2016-17 Supplementary Estimates (C), which I have tabled.
[English]
Supplementary Estimates (C) includes initiatives totalling $92 million and will bring total investment for the department to approximately $9.5 billion for 2016-17 to address the needs of indigenous peoples and Northerners.
With respect to financial highlights, the net increase of $92 million is comprised of initiatives such as $56.4 million to support emergency management response and recovery activities on-reserve; $22.7 million for the Operation Return Home Manitoba Interlake Flood Remediation and Settlement Initiative; $10 million for the Williams Treaties settlement negotiations; and $1.8 million related to Budget 2016 investments for the Arctic Regional Environmental Studies.
On slide 3, in terms of voted expenditures, these supplementary estimates will have a decrease of $13.2 million in vote 1, operating expenses; and $105.1 million will flow through vote 10 for grants and contributions, primarily for emergency management, Operation Return Home and funding for the Williams Treaties settlement.
I will now briefly describe the major items.
On slide 4, the largest item in these supplementary estimates, $56.4 million, will support the emergency management response and recovery activities. This funding will reimburse First Nations and emergency management service providers for on-reserve response and recovery expenditures that occurred this year. As you know, flood recovery costs across the country were significant this year.
You'll note on slide 5 an example of what we're doing in terms of rebuilding First Nations on reserve as a result of these incidents.
On slide 6, the second-largest item in these supplementary estimates is $22.7 million for the continued construction of housing and community infrastructure that is required to repair, rebuild and re-establish four Manitoba First Nations that were impacted by severe flooding in 2011.
On slide 7, you will see some of the spending results that we're doing in some of these First Nations in terms of homes, roads, sewage lagoons, water treatment plants, to bring these evacuees back to their First Nation communities.
On slide 8, the third item, which totals $10 million, is related to the Williams Treaties settlement negotiations. Canada, Ontario and the seven Williams Treaties First Nations are working together towards an out-of-court settlement process related to the Alderville litigation. The funding sought is to support any future negotiation and settlement of this litigation.
Finally, the last few slides provide information pertaining to additional key initiatives, including objectives, outcomes and status.
[Translation]
Mr. Chair, the supplementary estimates will enable us to continue to take concrete steps to address the needs of Indigenous peoples and northerners.
I look forward to discussing any aspect of the supplementary estimates with you and welcome your questions regarding my presentation.
[English]
The Chair: Thank you very much, Mr. Thoppil. First up, Senator Forest.
[Translation]
Senator Forest: I have a question about planning with respect to the infrastructure projects in phase I, which is two years. The first phase, albeit significant, is rather modest in comparison with the overall plan. Some $828 million has been frozen. You said it was in relation to commitments. Among other things, I'd like to know whether the Rimouski project was frozen. These are commitments that were made, but not announced, or they are under way but you have yet to receive the claims for reimbursement.
What does the $829 million cover?
[English]
Ms. Cantlie: The $829 million that's frozen is mostly for reprofiles under four of our infrastructure programs: PTIF, the Public Transit Infrastructure Fund; the Clean Water and Wastewater Fund; the provincial-territorial infrastructure base fund; but also for a project Lion's Gate Wastewater Treatment Plant in British Columbia, which is under the New Building Canada Fund.
Those funds are being reprofiled to the future when we understand our recipients will be sending us the claims for reimbursement.
[Translation]
Marc Fortin, Assistant Deputy Minister, Program Operations, Infrastructure Canada: To answer your question, Senator, these are projects in progress.
Senator Forest: Does this include the Small Communities Fund?
[English]
Ms. Cantlie: No. The Lion's Gate is under the New Building Canada Fund, but that's under the national and regional projects component.
[Translation]
Mr. Fortin: It's not the Small Communities Fund when we're talking about fewer than 100,000 inhabitants.
[English]
Senator Lankin: I want to state for the record that with respect to Infrastructure Canada's presentation, and most particularly the capital expenditures vote item regarding the Windsor-Detroit Bridge and the transfer agreement with Hydro One, I have a conflict and I won't be discussing, considering or taking any part in decision making with respect to that.
Senator Tkachuk: In the infrastructure section you mentioned:
Since November 2015, under all of our funding programs, over $6 billion in federal funding has been approved for over 1,300 projects.
Of that 1,300, were some of them approved under the 2015-16 budget?
Mr. Fortin: Do you mean for the $60 million?
Senator Tkachuk: You mentioned 1,300 projects since November 2015 have been approved.
Mr. Fortin: Yes, that could be from the previous budget, the previous program, the ongoing program.
Senator Tkachuk: How many of the 1,300 would be under the 2015-16 budget, and then what would the balance be for 2016-17?
Mr. Fortin: I would have to dissect exactly because that could come from different programs. I would have to come back to you with the breakdown of that.
Senator Tkachuk: I'm surprised. You mentioned the number, 1,300 projects since November, so one would think you would know how many of those would be under budget 2015-16 and how many would be under 2016-17.
Mr. Fortin: Yes, but we're talking about projects that are approved, that have been announced and approved. That could be from NBCF or that could be from phase 1 of the new projects coming out, the new programs under the transit or the wastewater one too.
Senator Tkachuk: But those would be in the 2016-17 budget, right?
Mr. Fortin: Some could be.
Senator Tkachuk: Those wouldn't be in the 2015-16 budget, or would they be under that budget too?
Mr. Fortin: Some could be from the previous budget too.
Senator Tkachuk: Perhaps you could get that.
Mr. Fortin: It's the total number of projects that have been approved with that number, but we're not providing it on that statement. We don't affiliate that number necessarily with a specific program, which we can do in terms of giving you a percentage of the total number of projects that have been approved and which programs they're coming from.
Senator Tkachuk: While you're getting that information, perhaps you could also find out how many of those were approved previous to November of 2015.
Mr. Fortin: Yes.
Senator Tkachuk: Thank you.
Senator Marshall: Thank you very much. My first question is also for Infrastructure Canada. The money that has been profiled, the $828 million, are there actual projects to back that up or is that just an overall sum? Are there individual projects approved backing that up and therefore you know that the project is not going to be under way until next year? You are confident the money will be spent, but can you back that up with individual projects?
Ms. Cantlie: For the Public Transit Infrastructure Fund and the Clean Water and Wastewater Fund there are hundreds of projects that have come forward under those. It is possible that some of the projects have not started as anticipated. There is one project for certain. It's the Lion's Gate Wastewater Treatment Plant project, which has asked to reprofile $11 million of that $828 million.
The Infrastructure Canada Provincial-Territorial Base Fund is a different type of program where we approve capital lists rather than individual projects. For that, it's a matter of getting the annual report so we can flow the funding for that program, because it's actually winding down. It depends on the program.
Senator Marshall: For the most part, would they be supported by actual projects?
Ms. Cantlie: Yes.
Senator Marshall: It's not like: Oh, we're going to put $800 million into next year and hopefully we'll get some projects coming in. It's not like that, is it?
Ms. Cantlie: It is to projects that are currently under way.
Senator Marshall: For the $600,000, they're relating to the Gordie Howe International Bridge. What's in the supps (C) and what was said in the opening remarks is a bit of a difference. The $600,000 there was approved by Treasury Board for the oversight of the authority.
Ms. Cantlie: Yes, that's right.
Senator Marshall: What specifically is in line for that?
Ms. Cantlie: For the Infrastructure Canada employees who are providing oversight to the Crown corporation.
Mr. Fortin: You could have diversity there. Some employees could have consulting firms that are monitoring the land acquisition taking place in Michigan. You have a diversity of stuff in that 600.
Senator Marshall: Is that sort of like a governance thing? It's for governance. Was that in place before? Is this something new?
Mr. Fortin: It's an additional activity that was conducted during the year.
Ms. Cantlie: When the Windsor-Detroit Bridge Authority Crown corporation came to Infrastructure Canada, we inherited a small team of employees that were transferred from Transport Canada who previously had authority for that Crown.
Senator Marshall: I also have some questions for Indigenous and Northern Affairs. Tomorrow is March 1. Are you confident? There is $95 million for supplementary supply for just next month. Are you anticipating that all that money is going to be spent in one month, $95 million?
Mr. Thoppil: Thank you, senator, for the question. If your question is with respect to the emergency management response, you'll notice its reimbursement. These are bills that we've already paid and now we're seeking parliamentary authority to reimburse for the bills that we have already cash advanced. This will be fully spent.
Senator Marshall: Does that comply with the Financial Administration Act, if you've already spent it?
Mr. Thoppil: There's a timing issue with regard to these whereby we have to cash manage. As you may know, senator, based on Supplementary Estimates (C) for the department over the past couple of years, this is a traditional item that comes. That is because the reference levels or the funding level that is our base to deal with emergency management to respond to essentially climate change is a variable issue. Unfortunately, it's insufficient over the past couple of years to deal with what has increasingly been significant incidents affecting First Nations reserves. You'll notice through the past couple of Supplementary Estimates (C) that we come back for extra funds to deal with what has transpired over the course of the year.
Senator Marshall: You're expecting to fully expend those funds before the end of the year and that you won't need to lapse some funds.
Mr. Thoppil: Yes, senator, because those bills have already been incurred and we are just reimbursing.
Senator Marshall: Also I think you're reprofiling $100 million. I'm taking a look here.
Mr. Thoppil: That is correct, senator.
Senator Marshall: What would that be for?
Mr. Thoppil: There are three major items that constitute a significant portion of the $100 million. The first one is about $41.5 million of it for four very complex contaminated sites in the North. Due to their complexity and scope, these always result in procurement delays. In order to keep the integrity of those funds and to keep moving on those projects we have to reprofile that. That's one example.
The second major one is about $33.5 million for residential schools in payments to the beneficiaries on claims.
The third one is about $8 million to fulfill a settlement agreement with the Dene Tha' First Nation in the North, relating to timing of payment associated with that. The milestone under that out-of-court settlement has not yet been triggered, so we have to keep the integrity of those funds for whenever that milestone is achieved. That constitutes about 83 or 85 per cent of the $100 million. Then there's a series of other individual items that constitute the rest, but those are the big three.
Senator Marshall: The $41.5 million for the contaminated sites, did you say there were three contaminated sites?
Mr. Thoppil: Four.
Senator Marshall: My last question relates to an article in The Globe and Mail last week about First Nations and Indigenous and Northern Affairs. It says Indigenous and Northern Affairs Canada "now spends much of its scarce capital budget fixing or replacing poorly constructed infrastructure."
I was wondering what the department is going to be doing in the future with all the infrastructure money to ensure that problem doesn't recur.
Mr. Thoppil: There are a number of ongoing things on the infrastructure front. As you've noticed, senator, there is a significant infrastructure deficit on reserves based on a bit of a legacy of underfunding. Budget 2016 provided a significant amount of funds for infrastructure in order to start making a dent on that legacy. That's the first thing we are doing.
Then there are a number of other measures in terms of policy reform that we are doing on infrastructure. The most notable one is housing, whereby we are in co-development conversations with the Assembly of First Nations on the housing reform engagement in order to ensure that the moneys transferred to First Nations for homes deal with some of the long-standing issues that have resulted in terms of housing conditions on-reserve.
Another example is what the minister cited yesterday in terms of fire protection services and working with the Aboriginal Firefighters Association in terms of reporting, in terms of ensuring that infrastructure once built is dealt with in code, and then enforced following that according to code.
Those are a couple of examples of elements that we're doing. The most important thing that the minister does cite in terms of the infrastructure is essentially ensuring that First Nation communities have a comprehensive community development plan. That is her kind of prime vision, together with First Nations, so that when moneys do become available it's not based on essentially what seems to be the most obvious.
It's based on the community. We take into account the youth, the elders, the police, the teachers in the community, as well as the chief and council, all coming together in a long-term plan so that we ensure when we put in a school that there's enough water in the community to pump it up and that it is staged accordingly
Her prime metric going forward is: What is the number of First Nation communities with a comprehensive development plan? That's what we are busy in terms of our regional offices working with First Nations in its development.
Senator Marshall: The article was focused more on the quality of the work that was done. Infrastructure projects would be carried out but probably a year down the road the realization is that it didn't do exactly what they thought it was going to do, so they have to go back and redo that project.
Did you say that you one of the features of the new policy would be looking at what exactly the codes are going to be or revising the codes? Do I understand you correctly?
Mr. Thoppil: In terms of that, we are looking at our processes. Some of it is the result of the fact that when we have had funding in the past it has not been long term in nature and has been for only a few years. That has resulted in some degree of what I would call a lack of predictability and stateability of funds that have resulted in what I would call some quick fixes or rush jobs.
One of the things the minister feels strongly about in terms of consistency with their mandate letter is to ensure that there is predictable and stable funding consistent with a plan that we talked about earlier, so that First Nations can plan for the long term to deal with the types of issues that were cited in the report.
Senator Neufeld: At previous times when you've been here, sir, you talked about, if I remember correctly, transferring the money to the First Nations and that was the end of the government's responsibility.
Now you're talking about, if I understand, that whatever they build, they are going to have to build to the Canada building code, I assume. Am I correct in thinking that? That's a bit different than what we heard a couple of years ago. Maybe you can help me here.
Mr. Thoppil: Thank you for the question. In fact, when we were here for the Supplementary Estimates (B) appearance at this committee the same question was asked. We did say that we were doing things differently with regard to Budget 2016 infrastructure funds. It's based on a proposal basis. We are ensuring, as part of the terms of proposal based funding, that it is based on code. That's our initial down payment to start fixing the process going forward.
Senator Neufeld: That will be across Canada on all things.
Mr. Thoppil: That's correct.
Senator Neufeld: From now on.
Mr. Thoppil: That's correct.
Senator Neufeld: How did you come to that realization? I know it had been asked for quite a number of years. I've been part of this committee for a while and it always kind of escaped me why they wouldn't have to build to code. The response we always received — at least that I remember, and I could be wrong, sir — was that they dealt with it however they thought they should build it. Now you're saying something different, and you've confirmed that. What brought you to the realization that you should do it to code?
Mr. Thoppil: We're trying to take advantage of the lessons learned. You have to go through a history of the department in terms of its works with First Nations. Decades ago we essentially had a model whereby we did everything on the reserve. There was no funding transfer model. Then that shifted to the current transfer model whereby we're not doing it. We're transferring moneys to First Nations to do it. That was a conscious choice decades ago to start developing accountability, governance and, most importantly, capacity development for First Nations. If they don't take on some of those obligations how will they evolve if we do if all for them?
As you've noted, senator, the financial transfer has its issues because if you never provide enough funds there are sometimes some perverse outcomes or decisions that are made, quite frankly, based on pressing needs at the community level, whereby decisions are made by them, quite frankly from their perspective quite logical, that result in some unfortunate outcomes.
With the down payment that has come from Budget 2016, we're taking advantage of that to adopt some of those lessons learned going forward.
Senator Neufeld: I think that's a very good idea. Thank you.
The Chair: It's interesting that we have infrastructure people and indigenous affairs people together. Could you comment, between the two groups, on how the ongoing relationship works? You are one of 31 departments that have infrastructure money, if I understand correctly, that you have to manage. We have Infrastructure Canada that has projects, appropriations and commitments to make.
Could you give us an update in terms of how does that relationship work on a practical basis? We have both of you together and it's seldom we have this opportunity to chat together.
Mr. Fortin: Maybe I can break the ice. In terms of the coming out of Budget 2016, one of the many bridges we create in our department is around reporting and monitoring the unrolling of various programs. In terms of the phase 1 infrastructure, our colleagues are administering their existing programs. Through the big umbrella of infrastructure we monitor on a monthly basis the reporting and the progress of the report. A report comes out every month and is reported on our DPR at the end of the cycle.
The Chair: Go ahead, Mr. Thoppil, if you have a comment.
Mr. Thoppil: I think from our perspective we see Infrastructure Canada as essentially the overall policy lead in terms of developing the framework and the programming for infrastructure across the government. Then we insert ourselves as one component of it in terms of ensuring the on-reserve infrastructure is captured within their overall framework.
Through that process we ensure through their leadership we get that coordination to ensure that there's no overlap and duplication through the exercise. Whatever is our distinct element within their overall framework is for defined purposes and is not going to be duplicated elsewhere. That's essentially the process.
The Chair: When we were doing part of our initial analysis on the infrastructure study we found out that 10 departments of the 31 haven't disclosed where they're at with their infrastructure budgets. Mr. Fortin or Ms. Cantlie, do you have a comment on that? Mr. Thoppil, from your end of indigenous affairs, have you disclosed information that's public within the government itself?
Mr. Fortin: As you pointed out, in our department we started to put on our Web the progress of the allocation by province, by territory and by program so that the public can see the money dedicated by the province itself for projects, whatever we are talking about, transit or wastewater or green. We have disclosed a fair amount of information in terms of the investments available for the provinces and the territories.
Mr. Thoppil: We are tracking results. I meet with the minister once a week, usually at the beginning of the week, and we track where we are in Budget 2016 spending and what the outcomes are.
We have data by province in terms of how much we are spending, what are the number of projects by asset category that we're getting, and the number of communities benefiting from that. We can table that with the committee.
The Chair: That would be very interesting if you could. In our last meetings we have always asked the question of your priorities. Obviously water is one; housing seems to be an important one; and education and schools, the ability of ensuring the young people get properly educated.
As you look at your performance do you stay on those three priorities in terms of your plan?
Mr. Thoppil: Senator, by province or region you will get the amount of infrastructure funding allocated; the total number of projects; a breakdown by water and wastewater, housing, education facilities, culture and recreation, energy, sustainability and connectivity, fundamental community infrastructure, and solid waste; how many projects in that asset category; and how many communities and how many people are benefiting from that. We can give you that.
The Chair: That would be great.
[Translation]
Senator Forest: Since you're here, I'll take the opportunity to inform you that, sometimes, certain decisions are made, and these decisions have major budget implications.
For 26 years, I was on the other side, in municipal politics. I understand that the deadline was March 31, 2011. We focused on many projects involving underground infrastructure. Also, unfortunately, in Quebec, it took two years for Quebec and Ottawa to reach an agreement. The municipalities organized calls for bids. We had to meet the deadline of March 31, 2011, and we noticed an imbalance between supply and demand. These are some of the things that led to the abuse, collusion and corruption related to the projects. We managed to have the deadline extended. December and February aren't ideal months for building water systems and sewers. The best time to carry out the work is from May to October. When we've already lost two seasons and we need to finish by March 31, we've lost another season.
I understand that we needed to align with the fiscal years. Sometimes, our actions have a major impact on the cost of the work. We needed the contractor to guarantee the work would be finished. Also, given the conditions, the contractor needed to adjust the cost accordingly.
We must be aware of the reality. On Victoria Island, the work period is longer than in Rimouski or in Northern Canada. We must take into consideration the guidelines and requirements of our programs to ensure the proper management of public funds. Infrastructure Canada invests a considerable amount. However, we must bear in mind that municipalities cover over 50 per cent of the responsibility for infrastructure. In each project, the municipality invests as much money as the federal government. The proportion is one-third, one-third and one-third.
We're responsible for taking these factors into account, since they can have a major impact on the public bill for the work. In doing so, we could save a great deal of money and be much more effective and efficient.
Mr. Fortin: Thank you for the comment. You referred to an issue on the department's radar. We discuss this type of thing as part of our partnership with the municipalities. Your example shows the complexity of programs such as those mentioned. We live in Canada, where some seasons are shorter than others, of course. In certain regions, such as the territories, the seasons are particularly short. I could talk about municipal and provincial elections. We must take all sorts of issues into consideration and be aware of these factors.
We must also make adjustments to allow for the necessary studies and planning before starting projects. We need to allow for flexibility. Major road and sewage treatments projects aren't planned in two months. We always try to take into account the planning of these projects.
Senator Forest: The infrastructure report is very important. The municipalities enthusiastically welcomed the gas tax program, which allows for longer-term planning.
[English]
Senator Marshall: For the department of Indigenous and Northern Affairs, you're speaking about the information that you were going to provide to the committee. I don't know if you also included a list of the individual approved projects.
I don't know if you are aware but I want to make you aware that when your minister was at Question Period in the Senate a number of weeks ago she made a commitment that individual projects would be posted on your website. I think she gave the date of March 31. I just wanted to make you aware of that.
Mr. Thoppil: Yes, senator, we are working to try to make all the infrastructure projects public on our website so that people know what's happening in their communities. It's a work in progress.
Senator Marshall: Perfect. Thank you very much.
Senator Mockler: To follow up on Senator Marshall earlier, this is about Infrastructure Canada requesting that over $800 million of its contribution votes be carried forward.
A few questions, if you can help us.
[Translation]
Mr. Fortin, you say we need to make adjustments and take municipal, provincial and federal elections into account.
Mr. Fortin: I spoke of time, but other adjustments must also be made.
Senator Mockler: I'll ask you some questions about the periods of time.
[English]
The period of time to carry forward, does that add to the delays in the infrastructure program?
[Translation]
Mr. Fortin: Do you mean the implementation of the program or the completion of the project?
Senator Mockler: The program and the completion.
Mr. Fortin: You're referring to delays as such.
Senator Mockler: In terms of the $800 million.
[English]
Ms. Cantlie: In terms of the economic impacts on the communities themselves we partner with the provinces and territories. They start the projects. They inject the money into the economy. Those projects are under way. They're having an impact in the communities where they're being built. The money is delayed because we have not received the claims for reimbursement.
Mr. Fortin: The money is not gone.
Ms. Cantlie: The money is not gone. It will still be available to the program. It will be available when the provinces and territories come and ask for it.
Senator Mockler: By of this carry forward again, would that have an impact on the program performance of those particular projects?
Mr. Fortin: Not necessarily because they can still have access to the funding.
Senator Mockler: You talk about consultation.
[Translation]
You referred to it in your answer to Senator Forest's question. When we talk about municipalities and local governments, we talk about provinces and the federal government, which is represented by your office. Is that correct?
Mr. Fortin: You're talking about infrastructure programs?
Senator Mockler: Yes.
Mr. Fortin: For the infrastructure programs, we're the representatives. We sign the contribution agreements with the provinces. The provinces then have an engagement process with the municipalities.
Senator Mockler: Can you explain the engagement process, based on your perspective, in relation to the municipalities, province and federal government? What is your process?
Mr. Fortin: We start a discussion with the provinces. I'll take the example of the two new programs launched following the last budget. For transit, public transit and sewage, we signed bilateral agreements with the provinces. At the time of the agreement, the provinces proposed projects submitted by the municipalities. The agreement is therefore signed between the federal government and the provinces.
Senator Mockler: What about the decisions regarding the choice of projects?
Mr. Fortin: The provinces and municipalities make these decisions.
Senator Mockler: Within the provinces and the federal government, who chooses the projects that will be accepted?
Mr. Fortin: We're not involved in selecting projects. Our role is to make sure the agreement is respected and the projects submitted meet our conditions.
Senator Mockler: If you're not involved in choosing the projects, who selects the projects?
Mr. Fortin: The provinces and the municipalities. The province sends us projects that meet the program's criteria.
Senator Mockler: When we look at the Atlantic provinces or Quebec, each province has its economic development project. Which corporation or association or which department is responsible for representing the federal government?
Mr. Fortin: For the federal government, it's Infrastructure Canada. The representatives can change from jurisdiction to jurisdiction.
You spoke about the Atlantic provinces and Quebec. In Quebec, agreements are signed with the finance department, but the projects are coordinated by the province's treasury board. In other provinces, the transportation and infrastructure department may become the representative. It varies by jurisdiction.
Senator Mockler: If I were to ask you who is responsible in each province?
Mr. Fortin: We have the information.
Senator Mockler: Can you send our clerk the information about each province's projects, while taking into account the infrastructure the provinces want to prioritize?
Mr. Fortin: Certainly.
The Chair: Thank you all for being here today.
[English]
I thank you again and I wish you the best as we head toward the end of our fiscal year.
(The committee adjourned.)