Proceedings of the Standing Senate Committee on
National Finance
Issue No. 53 - Evidence - November 28, 2017 (morning meeting)
OTTAWA, Tuesday, November 28, 2017
The Standing Senate Committee on National Finance met this day at 9:30 a.m. for the election of the deputy chairs and to study Supplementary Estimates (B) for the fiscal year ending March 31, 2018; and in camera, on the Minister of Finance’s proposed changes to the Income Tax Act respecting the taxation of private corporations and the tax planning strategies involved (consideration of a draft report).
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: I welcome you to this meeting of the Standing Senate Committee on National Finance. My name is Percy Mockler, senator from New Brunswick and chair of the committee.
I would share with you, for your information, that last week, in St. John’s, Newfoundland and Labrador, I was elected chair of the committee. It was agreed that the committee would proceed to electing its deputy chairs, of which we have two, upon our return here to Ottawa.
[Translation]
I must now proceed to the election. I am ready to receive a motion to that effect.
[English]
With that, I’m ready to receive a motion for the two deputy chairs. I will open the floor for nominations. Are there any nominations for the two deputy chairs of the Standing Senate Committee on National Finance?
[Translation]
Senator Forest: I would like to nominate André Pratte as deputy chair of the committee.
The Chair: It is moved that Senator Pratte be elected deputy chair of the committee.
Are there any other nominations?
If there are no others, I declare Senator Pratte deputy chair of the Standing Senate Committee on National Finance.
Congratulations, Senator Pratte.
[English]
Next, we will move to electing a second deputy chair. Nominations are open for a second deputy chair.
Senator Day: Mr. Chair, I’m pleased to nominate Mobina Jaffer as deputy chair.
[Translation]
The Chair: It is moved that Senator Jaffer be elected deputy chair of the committee.
Are there any other nominations?
If there are no others, I declare Senator Jaffer deputy chair of the Standing Senate Committee on National Finance.
Thank you, honourable senators.
[English]
Now, senators, we also need to consider two motions for the management of committee work, one on the steering committee and one on the possibility of holding meetings and receiving evidence when quorum is not present.
For the Subcommittee on Agenda and Procedure:
That the Subcommittee on Agenda and Procedure be composed of the chair and the two deputy chairs; and
That the subcommittee be empowered to make decisions on behalf of the committee with respect to its agenda, to invite witnesses and to schedule hearings.
Do I have someone to move that motion?
Senator Neufeld: So moved.
The Chair: So moved by Senator Neufeld. Is that agreed, honourable senators?
Hon. Senators: Agreed.
The Chair: Thank you.
Second is authorization to hold meetings and receive evidence when quorum is not present:
That, pursuant to rule 12-17, the chair be authorized to hold meetings, to receive and authorize the publication of the evidence when quorum is not present, provided that one member of the committee representing the opposition, one member of the committee representing the Independent Senators Group and one member of the committee representing the Senate Liberals be present.
Are there any comments on this, honourable senators? If so, I would need to have a motion.
Senator Eaton: To clarify, Mr. Chair, quorum is composed of those three members. Is that it? So you could have a member of each party and that would be a quorum? As long as there’s a member of the opposition, member of the ISG and a member of the Liberals, that constitutes a quorum of the committee?
Gaëtane Lemay, Clerk of the Committee: No. The quorum is four people, and that motion is just authorizing the chair to hold a meeting to hear from witnesses when there are not four people.
The Chair: Any other questions?
Senator Neufeld: I’ve not heard of that before. Is that common to do?
Ms. Lemay: It’s in all the committees.
Senator Neufeld: No, it wasn’t in the committee that I was in. I appreciate that if you say it’s in all the committees, but that was never a motion that we moved at Standing Senate Committee on Energy, the Environment and Natural Resources. It’s new to me; that’s all I’m saying.
Ms. Lemay: It’s usually at the organization meeting, so it would have been in December 2015. I can go back — I’m pretty sure that even your committee adopted such a motion. It had to be changed because the situation changed since December 2015.
The Chair: On that basis, you could verify to inform the chair?
Senator Neufeld: You don’t have to verify, because I was the chair and I know. Anyhow, I just asked the question, and I’m happy with the answer.
The Chair: Are there any other questions? I would like to read it for clarity:
That, pursuant to rule 12-17, the chair be authorized to hold meetings, to receive and authorize the publication of the evidence when a quorum is not present, provided that one member of the committee representing the opposition, one member of the committee representing the Independent Senators Group and one member of the committee representing the Senate Liberals be present.
Can I hear a motion to that effect? Senator Day moved that, pursuant to 12-17, the chair be authorized as prescribed earlier.
Is there agreement?
Hon. Senators: Agreed.
The Chair: Agreed. Thank you.
Honourable senators, I would like to take this opportunity as chair to congratulate our two new deputy chairs. There’s no doubt in my mind that we have a common denominator, to work to assure ourselves that the committee will take into consideration the mandate of the committee and also the order of reference given by the Senate of Canada so that we will move forward with our committee to hear witnesses and also to have officials of the Government of Canada from different ministries.
I would ask the witnesses to come to the table now, please, for Supplementary Estimates (B).
Honourable senators, today our committee is beginning the study of the expenditures set out in the Supplementary Estimates (B) for the fiscal year ending March 31, 2018.
[Translation]
To present this budget and its highlights, we welcome officials from the Treasury Board Secretariat.
[English]
To the officials, thank you very much for accepting our invitation so that you can share your opinions. I would also like to bring to your attention that we will close at 10:40, at which time there will be an in camera meeting.
This morning, honourable senators, we have Mr. Brian Pagan, Assistant Secretary, Expenditure Management Sector. We also have Marcia Santiago, Executive Director, Expenditure Management Sector. We also have Renée LaFontaine, Chief Financial Officer and Assistant Secretary, Corporate Services Sector.
I have been made aware by the clerk that presentations will be made, starting with Mr. Pagan; then, if the other officials want to add something, please feel free. Following that, we will have questions from the senators.
[Translation]
Brian Pagan, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Thank you, Mr. Chair. I am pleased to be here once again with my colleagues to present the supplementary estimates. I will begin with a brief presentation in order to give you an overview of the Supplementary Estimates (B) tabled in the House on October 26. I will then be pleased to answer your questions. To begin, I will outline the government’s spending cycle.
[English]
As we’ll see on slide 3 of the presentation provided to the committee, the parliamentary calendar is organized according to three supply periods ending June 23, December 10 and March 26. These Supplementary Estimates (B) are a normal part of the supply process. This document was tabled in the house on October 26, and it represents the spending requirements that were not sufficiently developed in time for inclusion in the May estimates that were tabled February 23 of last year. They also reflect new developments in programs or services articulated in Budget 2017 or subsequently announced by the government.
Turning to slide 4 and an overview of the organization of the supplementary estimates document, the first few pages of the supplementary estimates document summarize the authorities and the amounts presented in these estimates for Parliament’s approval or provide information and give additional detail on major items and horizontal initiatives. That’s the first part of the document.
The second and larger more substantial part of the document details requirements organized by department and agency. Each organization displays its requirements by vote, and then we break down those votes by initiative. Where applicable, we have tagged or associated the initiative to the appropriate budget year.
The tabled document ends with the proposed schedules to the appropriation bill, which are based on amounts presented in these estimates and will be tabled in the house at the end of the supply period.
In addition to this tabled document, there is also a rich amount of information available online, including a graphical summary that was introduced for the first time in Supplementary Estimates (A).
I would also remind the committee of the detail that is available on TBS InfoBase, which was presented to this committee in March of 2017. InfoBase has recently been updated to reflect not only the Supplementary Estimates (B) but also departmental results that were recently tabled in Parliament.
I’ll now turn to the details of these specific Supplementary Estimates (B). As we see on slide 5, Supplementary Estimates (B) provides information on $4.5 billion in voted budgetary appropriations for 71 organizations. The new funding supports many initiatives announced in Budget 2017, as well as spending set out in prior budgets.
These estimates also provide an update on forecasted statutory spending. The $395 million increase reflected in these supplementary estimates for statutory spending reflects adjusted forecasts for public debt charges and major transfers, as well as the cost of employee benefits associated with the initiatives funded in these estimates. It also includes a new statutory transfer payment for home care and mental health services, as announced in Budget 2017. Details on each statutory forecast are available in the online annex that I referenced previously.
In the introduction to the supplementary estimates, we highlight for the committee’s attention those major items that total more than $100 million in expenditures, and these are summarized on slide 7 of my presentation. In these estimates, we’ve highlighted eight initiatives totalling $100 million or more. These eight initiatives represent $2.3 billion of the $4.5 billion in these estimates, or almost half of the voted amount.
The largest item in the list relates to compensation adjustments for the public service following the ratification of a number of collective agreements. This funding will be allocated across departments impacted by these contract settlements.
The next item is for National Defence, and this represents a reprofile, an adjustment of spending forecasts, for 19 different capital projects, including the Arctic and Offshore Patrol Ship Project and the Tactical Armoured Patrol Vehicle Project.
The third item on the list is also for National Defence, and this represents pay increases to the Canadian Forces, which are similar to the pattern established for the public service.
The remaining five major items totalling $100 million or more cover a wide variety of programs and initiatives, such as humanitarian assistance, public service insurance and benefit plans, a settlement payment to follow Royal Assent of the Cree Nation governance legislation, funding to DND for search and rescue aircraft and a reprofile of funding for the new Champlain Bridge.
Mr. Chair, you’ll recall that Budget 2017 was tabled in Parliament in March, which was after the tabling of the Main Estimates for fiscal year 2017-18. As a consequence, Supplementary Estimates (A) was the first opportunity to bring forward new programs announced in the budget. That first supplementary estimates, tabled May 11, included $1 billion for Budget 2017 items.
Slide 9 speaks to the progress in implementing Budget 2017, as reflected in these Supplementary Estimates (B). The estimates before you today include 46 different items for Budget 2017, totalling $1 billion or roughly 22 per cent of the $4.5 billion in these supplementary estimates. With these Supplementary Estimates (B), we have now brought forward for Parliament’s approval 76 per cent of the spending measures forecasted in Budget 2017. We would anticipate seeing additional funds related to Budget 2017 in the final supplementary estimates of the fiscal year, to be tabled in February.
Mr. Chair, before concluding, an update on our estimates reform project, which the president and I have previously presented to this committee and to the house: In June, a number of changes were made to the house standing orders with respect to supply. Changes to order 81, which deals with supply, will allow, on a two-year pilot project basis, the tabling of the Main Estimates on or before April 16, that is to say, tabling the Main Estimates after the budget. We expect this will allow the inclusion of many of the budget initiatives in the Main Estimates to be presented to Parliament for fiscal year 2018-19.
We’re working closely with our colleagues at Finance to improve the transparency of both documents and, as a result of this effort and this pilot project, we believe we will be in a very good position to address one of the key challenges of our estimates and budget process, which is the misalignment of the documents caused by that tabling.
[Translation]
Mr. Chair, that concludes my presentation of these supplementary estimates. As to the next steps, the government will introduce the supply bill for these supplementary estimates in December. Then the President of the Treasury Board Secretariat will table the Supplementary Estimates (C) for 2017-18 and the Main Estimates for 2018-19 next February. If you have any questions about these supplementary estimates, my colleagues and I will be pleased to answer them. Thank you very much.
[English]
The Chair: Thank you, Mr. Pagan. Before we move to questions, I would like to ask the senators to introduce themselves, please, starting on my left.
[Translation]
Senator Forest: Éric Forest from the Gulf region of Quebec.
Senator Pratte: André Pratte from Quebec.
[English]
Senator Day: Joseph Day from New Brunswick.
Senator Cools: Anne Cools from Toronto, Ontario.
Senator Black: Doug Black from Alberta.
Senator Eaton: Nicky Eaton from Ontario.
Senator Neufeld: Richard Neufeld from British Columbia.
Senator Oh: Victor Oh from Ontario.
The Chair: Thank you, senators. At the head table, we have the clerk, Ms. Lemay, and the two analysts, Mr. Smith and Mr. Fleury, who make up this team.
We will now turn to questions from senators.
Senator Eaton: Thank you very much for coming back. I notice in sups B that there’s $39 million for a marijuana regulatory framework, but I also notice that the regs will not be prepublished, which is usual when there’s a great deal of interest by stakeholders. I think you would agree with me that the provinces are very worried about this deadline of July 2018. Why is there $39 million in the sups B while the regulations will not be dealt with until after Royal Assent. For the provinces and cities that have problems with the marijuana legislation, it’s kind of an after-effect. It will have no effect on the legislation. I notice it doesn’t really fall into your exemption for prepublication for any of your rules.
Mr. Pagan: What I can present to you is the requirements that have been approved by Treasury Board for some of the preplanning and positioning of legalization, which is expected to take place in 2018. With respect to some of the finer points around regulatory affairs, I’m afraid I’d have to direct that question to a colleague at the Treasury Board Secretariat responsible for regulations.
What I can tell you is the funding brought forward in these estimates, which totals $53.8 million, is for five different departments involved in the planning of the federal responsibilities in this area. We have funds to Public Health Agency, for instance, on research, and to Public Safety and Emergency Preparedness on the policy framework, data collection work with the provinces. We’ve got funding in the amount of $39.2 million to Health Canada related to licensing, inspection, education and policy.
Senator Eaton: I understand, Mr. Pagan, and that sounds very reasonable, but I guess I have difficulty when there haven’t been the regulations or the consultation done with the provinces or the municipalities. You’re allocating this money in sups B when the regulations haven’t even been thought about.
Mr. Pagan: I can’t speak, senator, to the issue of regulations, as I say. I do understand that there are ongoing consultations with provinces and with other stakeholders. This is a complex undertaking, so we’re prepositioning some of the work related to federal programming with respect to the regulatory nature of those. As you point out, there are not any requirements for regulations at this point, but I can endeavour to get more detail on that front from a colleague here at Treasury Board.
Senator Pratte: My question relates to the $100 million for the new Champlain Bridge. From previous testimony with respect to the Champlain Bridge on previous estimates, I understood that the money for the Champlain Bridge was just as the project moved forward, and the estimates showed money that was needed for each step of the project. Now this indicates that funds allocated are a reprofiling of operating and capital funding. I’m having a hard time understanding why funds need to be reprofiled. Would you elaborate further on this, please?
Mr. Pagan: Reprofiling is, in fact, a very common but misunderstood aspect of project management. In each project for the Government of Canada, there will be an initial project profile that is established in negotiation with partners, according to contract terms, et cetera. Then, as projects unfold, there will be adjustments based on weather, specific project developments, issues related to contract clauses, et cetera. In a process where monies are allocated on a fiscal year, the reprofiling is simply a way in which we show money being moved from what had been in one year to another to take account of those new project schedules or requirements.
In the case of Champlain, I understand that there’s an additional component here related to the use of some contingency funding for the project, which is also a normal part of project management. To the best of our ability, we will forecast all known costs and requirements, and then there will always be an amount set aside for contingency to account for the unknowns.
In the case of Champlain Bridge, one of the unknowns was related to contamination of land that was acquired to support the project and some costs involved in mitigating that contamination prior to construction. This is a reprofile of some of the work that was begun last year related to decontamination of the land in support of the project.
Senator Pratte: I don’t know what the contingency was in the project, but does that mean that out of the amount that was put aside for contingency, $100 million has been taken out because land was contaminated more than was expected?
Mr. Pagan: I can’t speak to the exact amount of the contingency used, but yes, this reflects both a drawdown of some of the contingency for the project and a reprofiling of some of the other costs related to the project.
Senator Pratte: If I want to know where we are in the funding of the project and, for instance, how much has been drawn on the amounts that were put aside for contingency, is that possible?
Mr. Pagan: Yes, certainly. I don’t have that detail for you, but we can get that for you.
Senator Pratte: Can you provide that through the clerk?
Mr. Pagan: Yes.
Senator Pratte: I’d appreciate that. Thank you.
Senator Neufeld: Thank you for being here today. I have a quick question. In Budget 2016, the government announced $75.2 million for a back office transformation initiative, and I see that another $10.8 million is in Supplementary Estimates (B). Can you give us a rundown on exactly what the back office transformation initiative is and where it’s at to date? Will this $10.8 million that’s being asked for now actually complete the process, or is it anticipated that it’s going to take more funding?
I ask that in light of what’s taken place with the Phoenix pay system and Shared Services Canada. I believe we all know what’s happened there. Maybe you could explain how well we’re doing and whether we have a good plan. Are we on target and on budget?
Renée LaFontaine, Chief Financial Officer and Assistant Secretary, Corporate Services Sector, Treasury Board of Canada Secretariat: I’ll start with the back office transformation.
Basically, the Treasury Board Secretariat started to lead this transformation effort in earnest in 2015. You have, across the government, very diverse kinds of HR and financial systems, and they don’t talk to each other. This is an initiative whereby we are trying to ensure that we have an enterprise view of our HR management systems that provide support all across the government. The same thing applies to our financial management systems, and we’re also looking at our information management systems as well. That’s sort of the scope of the back office transformation.
Another piece of it is that we are trying to build what our IT folks are calling a bus, so that when you get financial information about a department’s activities, you can link it with the information in your pay system about the people so that we have better information. That’s what back office transformation is about.
In terms of this $10.8 million, there are two sources of funds for this broad, long-term initiative. One is that departments who are managing these systems now have to maintain and operate what they’re doing in their existing systems, and they are contributing to this because they will benefit from it in the long term. This $10.8 million is money from other departments that is being moved into TBS so that we can use it to develop the project. This year, that $10.8 million is going to be added to $24 million we have already received through previous supplementary estimates to focus on this year’s activities in the project.
In total, what we’re focusing on is building 40 per cent of a Government of Canada enterprise-wide financial management system. We are looking to stabilize the 44 departments that are already on our HR system, called My GCHR. We’re stabilizing that and making sure it’s connecting better to Phoenix, and we are focusing on that common information exchange in terms of how the systems talk to each other.
That’s what’s happening this year with the project. We see this as a long-term tenure transformation exercise as opposed to a project with a start and an end date. To date, since 2015, we have spent about $105 million on all three broad aspects of the initiative, and we expect this to go forward in an iterative way for the next couple of years.
Does that answer your question?
Senator Neufeld: Sort of. What surprises me is that it’s going to take 10 years. What’s the estimate and what’s the plan forward for the next eight years, then? We’ve been into it now for two years, right?
Ms. LaFontaine: Right.
Senator Neufeld: Is there a written plan? Is there something that’s outlined that says these are targets we’re going to meet with this kind of money? Actually, it gets to the way Shared Services just ballooned. It’s not any different than other places. I was in British Columbia where it ballooned so much we had to finally give up. Is that where we’re going?
Ms. LaFontaine: We don’t have a total transformation cost over the next five to ten years, but we’ve learned our lessons from big initiatives like Phoenix and others the government has undertaken. We are taking a more agile approach.
Basically, our project is going forward. Right now, this project is on a two-year trajectory in terms of financial management. In terms of the My GCHR project, the idea we already have is well established and we already have 44 departments on it. The next step is to focus on improving the functionality and linking better with Phoenix. The exchange has a two-year timeline to make sure that, once the financial system is built, the two talk to each other. We’re taking more of an agile approach. Generally speaking, we will focus on the next two years, look at our results, course correct and then go forward from there.
This is the way that this kind of back office transformation was done in other major countries, like the U.K., and the way other provincial governments have done it. We’re learning our lessons from their experience and taking an iterative, correct-as-you-go approach to it.
Does that answer your question, senator?
Senator Neufeld: I’m still a little worried. Is there a plan? You’ve apparently studied across Canada and around the world how this is transformed, and I appreciate that. Those are very good things to do. But is there a set plan, or is it just, “Well, in about 10 years, we’re going to have it done and each year we need another $10 million,$20 million or $30 million?” Is there some plan to this, or do we just get to whatever happens each year and that’s what we spend?
Ms. LaFontaine: I can get back to the committee on the exact plan because — I’m sorry — I don’t have the numbers with me. The idea here is these are existing systems across the government, and money is being spent to maintain them. Some of the vendors of the financial systems will actually be out of business because we need to deal with the rust-out and some of these systems have been in place for a long time. You’ve got to look at it from the point of view of its normal transformation in terms of IT back office and going forward. Those are the assumptions behind the longer-term approach we’re taking.
In terms of what we would expect to spend if we did nothing versus the benefits provided by taking this approach, that’s something where maybe we could go back and I could get you more information on that. I know there was research done on that before we decided to take this approach. I just don’t have the numbers with me. I’m sorry.
Senator Neufeld: I would appreciate if you could get that to us through the clerk.
Ms. LaFontaine: Sure.
Senator Neufeld: I have a few more questions. As I understand, in Budget 2016, there was $75.2 million. Am I correct there?
Ms. LaFontaine: Yes.
Senator Neufeld: You mentioned the number $24 million, and I also see $10.8 million in Supplementary Estimates (B). Is that the amount of money that’s been spent so far and anticipated to be spent?
Ms. LaFontaine: Yes. What I had put together is that, to date, we have received, or expect to receive, $160 million for the project since 2015, but we have spent $105 million to date.
Senator Neufeld: Can you provide those numbers to us, too? They’re not jiving with some of the information that I have here.
Ms. LaFontaine: I think that’s because this project is being funded. In Budget 2016, we actually needed to accelerate quite quickly the work we’re doing in the financial management system because some of the systems were becoming obsolete and we needed to replace them in certain departments, so we sought funding in Budget 2016 to actually accelerate that development. Otherwise, it was funding that was coming from departments in terms of their investment in the system that they will all be part of in the future.
Senator Neufeld: We will look forward to that explanation.
You say here that there are a number of things, and maybe can you help me a bit. You probably don’t know all the things that are going to happen, but you mention creating more opportunities for indigenous peoples. Maybe you can give us a high-level rundown of what that actually is.
Mr. Pagan: Senator, are you speaking to my deck?
Senator Neufeld: I’m speaking to page 9, bullet 2 of your deck.
Mr. Pagan: Successive budgets, including Budget 2017, have introduced new programming to deal with a range of issues confronting the Aboriginal peoples of Canada. This includes infrastructure for communities, homes and medical facilities, job training, skills development and monies for off-reserve Aboriginals.
In this particular budget — I’m just reaching for the actual amounts — we’ve got six different initiatives. There’s $200 million for a final settlement that INAC will make in terms of the settlement payment to the Crees of —
Senator Neufeld: I have that. That’s in another part.
Mr. Pagan: We have $91.8 million for comprehensive land claims and $52.2 million for specific claims administered by INAC.
There’s $97.6 million that will be going to Health Canada for the Non-Insured Health Benefits Program that they administer. There’s $27 million also going to Health Canada that is funding for Jordan’s Principle, which is the agreement with the provinces that no Aboriginal will go untreated as a result of jurisdictional disputes.
We’ve got $13.4 million for the Indigenous Advisory and Monitoring Committee in support of various energy infrastructure projects across the country, and there’s a number of smaller items totalling less than $10 million for specific programs at INAC.
What we’ve presented to you in that one number is the six or seven different initiatives across government, primarily in INAC and Health Canada, in support of priorities for Aboriginal programming.
Senator Neufeld: Out of the $1 billion, do you have a total for creating more opportunities for Indigenous peoples? I’m reading your presentation.
Mr. Pagan: It would be the aggregate, senator, of the numbers. We’ll provide a detailed listing to the committee, but it represents the settlement payments, the comprehensive claims, health programming, the energy infrastructure projects and some very small projects within INAC.
Senator Neufeld: Can you expand on the energy ones, or should we get that from —
Mr. Pagan: We can pull that up here for you.
We continue to revise the estimates document to reflect feedback from committees and from the Library of Parliament researchers.
As I said in my introduction, in the introduction of the tabled document, we provide a summary of the amounts in question, so $4.5 billion voted. Then we do try to focus your attention on the largest items. There are eight items totalling $100 million or more. That represents over $2 billion of the $4.5 billion. So we’re trying to provide a scale, but we don’t want to have you just focus on an individual item.
There are a number of issues that have a similar theme. On the question of Aboriginal programming, we’ve got $200 million for a settlement but we also have a number of other large projects, not quite $100 million. We’ve got funds for the energy projects for health programming, et cetera. What we do on slide 9 is recast the amounts so that we’re showing you some of the larger spending by theme. Aboriginal programming amounts to just over $1 billion.
We also have a very significant amount in this estimates document related to government-wide compensation. In the list of major items, we identify two items, public service pay and military pay, but there are also aspects of this related to the RCMP and health insurance. So you put all that together and that is part of a pay package. That totals $1.3 billion in this estimate.
Senator Marshall has pointed out that, in the slide you’re speaking to, there may have been a misunderstanding on the numbers. When we look at this by spending theme, it’s $1.3 billion by compensation and $600 million for Indigenous peoples. That’s slide 8 of my presentation. The listing that I just referred you to totals that $600 million.
Senator Eaton: I’m looking at the Nunavik Housing Agreement,$3 million, and then First Nations for child abuse, neglect and another program, family violence. When all this money goes out, is there any form of accountability? For instance, with the child abuse or family violence or the housing, is there some kind of follow through to make sure that the houses are built to code, that fewer children are being abused, that there’s less family violence, or that the programs are actually having an effect? Or is that not part of your mandate?
Mr. Pagan: It’s certainly a very clear interest of the Treasury Board ministers to make sure that when monies are allocated, that they’re being used for purposes going to add value or achieve a result in better programming and services for Canadians.
There are two dimensions to your question, senator. The first, and I believe the president has spoken to this committee about the results agenda, is that we have a new results policy. That was, I think, part of a presentation we made to this committee last year. We are working with departments now to put in place new results frameworks that clearly identify the top priorities and responsibilities of a department and then organize their programming under those responsibilities with very clear result statements in each area.
Senator Eaton: To see what works and what does not?
Mr. Pagan: Right. As I mentioned in my introduction, we’ve recently updated the TBS InfoBase to show some progress in this area. I commend the site to the committee. We’re reflecting results information from 70 of 83 departments. We’re still working on a few more. But these provide a report card, if you will, that will summarize progress. We reflect this as met, on track or not met. Then there’s detail to substantiate that report card.
It is our intention, as the results policy unfolds and matures, to deepen that results information. We want to make this as data-specific as we can. Met or not met is not always the most satisfactory measure of results. Where we can get it, we want quantitative measures of progress, so if we planned to build 100 houses, we’ve built 98 or some measure of what the success is. With respect to health and safety and code, there would be a measure of the number of buildings or structures that are subject to inspection and subject to code. So that’s part of the response.
With particular respect to Aboriginal programming, there is an additional dimension, and that deals with self-government and the administration of programming on reserves. Indian Affairs is working very closely with Aboriginal communities to identify needs and ensure that there is accountability for the investments that are made on behalf of the Government of Canada.
Senator Eaton: That’s interesting. I look forward to talking to you next year to see how far it’s come. That’s great; thank you.
[Translation]
Senator Forest: I am surprised to see that one of the largest items in the supplementary estimates is $654.6 million in compensation adjustments. Compensation is usually covered by collective agreements and is foreseeable. Why do we need $654.6 million in supplementary estimates for compensation?
Mr. Pagan: Thank you for your question, Senator Forest. Where shall I begin?
Senator Forest: The new collective agreements?
Mr. Pagan: That is right; it is because of the collective agreements. The government has ratified agreements with most public servants, nearly 90 per cent of them. Out of 27 unions, 20 signed an agreement, representing more than 150,000 public servants and therefore 90 per cent of public service employees. The collective agreements cover the period from 2014-15 to July 2018. These amounts are allocated to the departments to cover the cost of the agreements, and that includes a retroactive period.
Senator Forest: I was surprised to see supplementary votes for Canadian Armed Forces compensation. Also, more than half of the supplementary votes are allocated to the public service as a whole. There are 150,000 public servants. Do more than half of those people work for the Canadian Armed Forces?
Mr. Pagan: Thank you again for your question, Senator Forest. For the Canadian Armed Forces, there is obviously no collective agreement. There is no union. So our approach is based on model agreements signed with unions.
Senator Forest: The public service?
Mr. Pagan: Yes, for example, for members of the Canadian Armed Forces. There is another complexity, a 2.1 per cent adjustment specifically for the military to reflect certain conditions of their work in the armed forces.
Senator Forest: Canada’s public service has about 165,000 to 170,000 members. So the Canadian Armed Forces have about 30,000 or 40,000 members?
Mr. Pagan: No, it is close to 80,000, roughly.
Senator Forest: 80,000?
Mr. Pagan: Yes, but I could check.
Senator Forest: Very well, thank you. In the budgets, I note that no additional votes are requested in Supplementary Estimates (A) or Supplementary Estimates (B) for the infrastructure program. Given the current pace of investments designed to achieve the government’s objectives for one of its key strategies to revitalize the Canadian economy, are we trailing the pace of investments set out in the supplementary estimates?
Mr. Pagan: In Budget 2017, the government announced phase 2 of Canada’s investment plan. That represents $33 billion over 20 years. This plan has four phases, which include public transit, green community infrastructure, and programs for rural areas and Canada’s north. The office of the Parliamentary Budget Officer has repeatedly raised certain challenges with the programming of that amount, and that pertains to the approach to concluding these agreements, the selection of projects, and the ability to follow regulations as to reporting on these amounts. These amounts have been significantly redistributed. For the past year, I think it was more than $2 billion, but it is a challenge for the Office of Infrastructure Canada to create a profile for these projects that reflects the current rate of expenditures. So the amounts in these supplementary estimates reflect just a small part of the total costs, and we are working with the Office of Infrastructure Canada and the finance department to more clearly define these projects.
Senator Forest: The government’s main action plan is for partnership with the provinces and territories, municipalities and communities. What are the votes available for the four phases? That is a fundamental question for the government’s economic strategy.
Mr. Pagan: I agree with you, Senator Forest. It begins with a partnership with the provinces. So there are criteria for each part of the plan, and the projects must meet the criteria set by the government. It is up to the provinces, however, to select the specific projects themselves. It is an approach whereby the federal government sets the criteria and the provinces determine their own priorities. Then there are negotiations to validate that the projects meet the criteria set by the Government of Canada.
[English]
Senator Cools: I’m looking at Supplementary Estimates (B), page 2-38, the Department of Health. In particular, my eyes have fallen to the quantum of roughly $39 million for the purpose of funding to implement and administer a federal framework to legalize and regulate cannabis. I was just wondering if you could tell me exactly what the public good is that is being served by the Cannabis Act?
Mr. Pagan: Well, senator, that question definitely delves into questions of policy, and that would be more appropriate for a discussion in the house than at this table. What I can tell you is that, as a result of a policy decision to move forward with the decriminalization of cannabis or the legalization of cannabis, departments are working collaboratively to identify the regulatory policy and programming responses that will be required to ensure that this is done in a responsible way.
As I think I responded earlier to Senator Eaton on the question of Health Canada, their role in this horizontal initiative deals with aspects of licensing, monitoring to ensure compliance against that licensing framework, inspections and public education.
Senator Cools: I may be naive or uninformed on some of these matters, but we do have something called the “liquor control board,” and as far as I know, the Department of Health is not involved in the regulation of liquor. Why is the Department of Health involved here in developing the regulatory framework for cannabis?
Marcia Santiago, Executive Director, Expenditure Management Sector, Treasury Board of Canada Secretariat: The Department of Health isn’t specifically involved in establishing the regulatory framework itself. Health Canada’s costs, for example, are related to things like the licensing of producers to ensure that Canadian adults have access to a safe and controlled supply of cannabis. They’re regulating what the producers can produce and the circumstances under which they can do that.
Health Canada is also involved, as Brian said, in compliance and enforcement of the industry. Their role in that is to make sure that the industry follows the regulations that are set. They’re not necessarily involved in establishing the specific requirements of the industry as a whole.
The other aspect in terms of public education is to design and implement campaigns to support positive lifestyle choices for youth and to talk to young adults particularly about the health risks of cannabis use.
Senator Cools: You’ve given me quite a wide range of activities there. I was just concerned with the statement here as articulated under the Department of Health, which clearly says: “Funding to implement and administer a federal framework to legalize and regulate cannabis.”That’s what I’m talking about. I want to know why the Department of Health of Canada is going to be involved in regulating cannabis.
Mr. Pagan: Senator, in an attempt to avoid confusion — and I hope we haven’t sowed confusion — we use the same description wherever there’s a horizontal initiative. This is based on feedback from committee in years past.
Increasingly, we are seeing instances where the program response transcends a single departmental mandate. In these supplementary estimates, we have 15 different horizontal initiatives. To deal with immigration or cannabis regulation, as examples, necessarily involves more than one department. So when we involve more than one department, we highlight this for you. It’s in the introductory part of the sups document. Then we use the same description when we go to the individual departments so that you can understand and relate it back to that horizontal initiative.
The description is meant to be broad because it encompasses the activities of five different departments. As Marcia said, they’re involved in a range of measures: licensing, compliance and inspections. I know there were newspaper accounts months ago with respect to the use of pesticides in the production of marijuana, so that would be an example.
Senator Cools: We could call it production of narcotics. Cannabis is a narcotic.
Mr. Pagan: There were instances of pesticide use in that production, and so this is something that Health Canada will enforce in terms of that inspection and compliance regime.
The Chair: I have a few questions, if you permit me.
If we go to Supplementary Estimates (B) 2017-18, Canada Border Services Agency, the question is an offshoot of what Senator Eaton was asking. This is funding to supplement and administer a federal framework to legalize and regulate cannabis, vote 1b, a little over $3 million. Can you apprise the committee about how that will be distributed?
Mr. Pagan: Senator, again, we’re using the same language for the two departments because it’s the same initiative.
With respect to CBSA, this is to support enhanced border screening. The agency is going to introduce a primary inspection line regarding or related to the importation of cannabis and provide the travelling public with the opportunity to declare cannabis in their possession. This will require a change in business processes, taking something that had previously been interdicted and is now legal, and they will be adjusting their business processes to allow that declaration and to allow for the legal importation of cannabis.
The Chair: Can you explain that when we talk about importation?
Mr. Pagan: Senator, I’m afraid I don’t have any more details in terms of how they will be administering this, but we can endeavour to get some additional detail for you.
The Chair: Could you, please?
Also, at the beginning of your answer to the question asked by Senator Eaton, you said that there could be a possibility of asking another official to answer that question. I’ve asked the clerk to connect with you, Mr. Pagan.
Mr. Pagan: Specifically, Senator Eaton’s question was where was the money to support the regulatory framework.
Senator Eaton: Not only that. The money is there, but the municipalities and provinces have shown so much angst at the marijuana legislation coming through so quickly, and yet there’s been no pre-consultation, or there will not be published pre-consultation of the regs before the legislation goes through. That was the vein of my question.
Mr. Pagan: I will endeavour to get a full response for the committee. I can speak to the programming approved by Treasury Board. I unfortunately don’t have a direct line of sight in terms of that regulatory framework, but we will put together a response for you.
Senator Eaton: It was just interesting.
The Chair: That’s fair. Thank you, Mr. Pagan.
In the 2017-18 Supplementary Estimates (B), page 1-13, we have funding to implement and administer a federal framework to legalize and regulate cannabis. This is an offshoot of what Senator Eaton and Senator Cools said.
Then you have Canada Border Services Agency asking for over $3 million. You have the Department of Health asking for over $39 million. Then you have the Department of Public Safety and Emergency Preparedness, a little less than $1 million. Then you have Public Health Agency of Canada, a little over $200,000. Then you have Royal Canadian Mounted Police, $5.3 million, for a total of $53.8 million.
Could you provide us with additional information on those matters with respect to that framework so we can have an idea of their responsibilities vis-à-vis the new legalization of cannabis?
Mr. Pagan: Senator, I’ll be glad to provide a written response that breaks out the responsibilities of each of the five.
I would remind the committee that some of this detail is provided in the online information to the supplementary estimates, and in particular, there is an annex titled “Details of Horizontal Information, Supplementary Estimates (B), 2017-18.” For each of the 15 horizontal initiatives, we will present the specific amounts by department and a brief description of the requirements that support that horizontal action. It’s there, but for the purposes of transparency, I will reproduce that in response to the committee.
The Chair: Plus who will administer it and how it will be administered.
Mr. Pagan: Who in terms of the departments?
The Chair: The departments.
Mr. Pagan: Yes, absolutely.
The Chair: My last question is this: You mentioned that the government decided to “delay the tabling —” You didn’t say that; it’s our researchers who are putting forward the comment. Then I have a question. “. . . tabling of the Main Estimates until mid-April, in February of 2018.”
So the government decided to delay the tabling of the Main Estimates until mid-April. In February 2018, interim estimates will be tabled in Parliament so that departments and agencies have the funding they need to start the fiscal year. Right?
Mr. Pagan: That’s correct.
The Chair: My question, then, is this: What is the approval process for expenditures identified in that interim estimates? Second, what is your estimate of the total amount of expenditures that will be requested in the interim estimates?
Mr. Pagan: Thank you for that excellent question that speaks to the heart of what we’re trying to do in terms of improving the timing.
Based on the pilot project over the next two years, we will introduce a Main Estimates document in the house on or before April 16. It is our intention, to the greatest extent possible, to align that estimates with the budget.
The fiscal year commences April 1, so departments will need authorities to begin the fiscal year. As part of this pilot project, we will be tabling, in February, an interim estimates document that will provide the authority for departments to begin the fiscal year. This interim estimates document will be based on a continuation of existing authorities. For fiscal year 2016-17, Parliament has approved certain sums of money. We will take those existing approvals and provide a fraction of that to start the year.
Typically, interim estimates are provided by fractions, so 3/12, 4/12, 5/12 of a fiscal year. We will use the same process that we’ve used in the past to identify a portion of the requirement required by a department to begin the fiscal year to support their operations, grant programming, et cetera. That will be voted on in the house before the supply period ending March 26 so that departments have authorities to start the year. Then, a few weeks later, we’ll table a Main Estimates that will introduce the full authorities, hopefully aligned with the budget, for fiscal year 2018-19.
The Chair: Can you give an idea of what will be requested?
Mr. Pagan: Maybe Marcia will have it exactly in her head. Typically, interim estimates represent approximately $30 billion.
Ms. Santiago: That’s about right. Interim estimates are about 30 per cent of what eventually will be the Main Estimates, so $30 billion is about right. The form and substance of the legislation that we will be asking Parliament to vote on will actually be very similar to what you’ve seen in the past. In the past, it’s been called an interim supply bill. Now it’s just called supply for interim estimates. It’s the same concept.
The Chair: Then we will follow the crystal ball.
Ms. Santiago: Pretty much.
The Chair: Thank you very much, officials, for being here this morning.
We will suspend, honourable senators, and continue in camera.
(The committee continued in camera.)