Proceedings of the Standing Senate Committee on
National Finance
Issue No. 77 - Evidence - October 24, 2018
OTTAWA, Wednesday, October 24, 2018
The Standing Senate Committee on National Finance met this day at 6:45 p.m., in public and in camera, to continue its study of the Main Estimates for the fiscal year ending March 31, 2019.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Welcome to the meeting of the Standing Senate Committee on National Finance.
[English]
I’m Percy Mockler from New Brunswick and I am chair of the committee. I wish to welcome all of those who are with us in the room and viewers across the country who may be watching on television or online. And as a reminder to those watching, the committee hearings are open to the public and also available online at sencanada.ca.
[Translation]
I would like the senators to introduce themselves, starting on my left.
[English]
Senator C. Deacon: Colin Deacon from Nova Scotia
[Translation]
Senator Pratte: André Pratte from Quebec.
[English]
Senator M. Deacon: Marty Deacon from Ontario.
Senator Andreychuk: Raynell Andreychuk, Saskatchewan.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Eaton: Nicky Eaton from Ontario.
[Translation]
Senator Forest: Éric Forest from the Gulf region of Quebec.
[English]
Senator Neufeld: Richard Neufeld, British Columbia.
The Chair: Thank you, senators.
[Translation]
I would like to recognize Gaëtane Lemay, our clerk, and Alex Smith and Shaowei Pu, our two analysts, who team up to support the work of the Standing Senate Committee on National Finance.
[English]
Honourable senators and members of the viewing public, the mandate of this National Finance Committee is to examine matters relating to federal estimates generally, as well as government finance.
Today we continue our consideration of the expenditures set out in the main statements for the fiscal year March 31, 2019.
[Translation]
This evening, we’ll hear from representatives of four organizations.
[English]
In the first hour, we will hear from Agriculture and Agri-Food Canada and we welcome Christine Walker, Assistant Deputy Minister, Corporate Management Branch; Jane Taylor, Assistant Deputy Minister, Programs Branch. And from Correctional Service Canada, we have Tony Matson, Assistant Commissioner, Corporate Services; and Luc Bisson, Director, Strategic Policy.
To the witnesses, thank you for accepting our invitation and thank you for being here this evening. I have been informed that Ms. Walker will make her presentation first, to be followed by Mr. Matson.
[Translation]
Ms. Walker, you can start your presentation.
[English]
Christine Walker, Assistant Deputy Minister, Corporate Management Branch, Agriculture and Agri-Food Canada: Thank you, Mr. Chair. It is an honour to appear before the committee today to review the 2018-19 Main Estimates for Agriculture and Agri-Food Canada. These funds allow the department to help make the sector more profitable, sustainable and adaptable through investments in marketing, innovation and risk management.
The mandate of department also supports many of the government’s top priorities, including innovation, scientific research, trade negotiation, action on climate change, market access and economic growth.
The department’s Main Estimates for the fiscal year 2018-19 total $2.5 billion, and $1.8 billion, approximately 70 per cent of our Main Estimates funding, is for transfer payments, including grants and contributions. Two programs account for the bulk of this funding, the Canadian Agricultural Partnership and the dairy sector investment programs. In fact, AAFC’s 2018-19 total spending authorities increased by over $260 million compared to last year’s Main Estimates, mainly due to these programs.
The Canadian Agricultural Partnership, the new federal, provincial, territorial agricultural policy framework that started on April 1 of this year accounts for most of the $1.8 billion in these Main Estimates.
[Translation]
The partnership includes a $3 billion investment over five years, with the participation of provinces and territories, to strengthen the agriculture, agri-food and agri-based products sector.
[English]
Senators, $2 billion of this, cost shared on a 60-40 basis with the provinces, will support programming in six priority areas including science research and innovation, markets and trade and environmental sustainability and climate change.
These estimates include $206.5 million in contributions for cost shared programs for 2018-19.
[Translation]
The partnership’s $1 billion in funding over five years will target federal investments with a focus on growing trade and expanding markets; promoting innovative and sustainable growth of the sector; and supporting diversity and a dynamic and evolving sector.
[English]
Included in these 2018-19 Main Estimates are grants and contributions of $106 million for these federal programs supporting research and innovation, market development, public trust, business risk and diversity.
In addition, under the Canadian agricultural partnership, business risk management programs continue to help producers manage significant risks that threaten the viability of their farms and are beyond their capacity to manage.
The Main Estimates reflect statutory grants and contributions forecast over $1.4 billion for demand-driven business risk management programming such as agri-stability and agri-insurance.
[Translation]
In addition, producers continue to have access to a robust suite of other business risk management programs.
[English]
These estimates also include $88.6 million in contributions to support investments in the dairy sector. This is the 2018-19 portion of two programs, totalling $350 million for dairy producers and processors, which was launched on August 1, 2017 to help the dairy industry adjust to the Canada-European Union Comprehensive Economic and Trade Agreement. The dairy investment program, $250 million over five years, is helping Canadian dairy farmers invest in productivity-enhancing technologies such as robotic milkers, automated feeding systems and better herd management tools. The Dairy Processing Investment Fund, $100 million over four years, is helping dairy processors modernize operations and in turn improve productivity and competitiveness.
In addition to these major transfer payments there are also other grants and contributions, including those related to adaptation, greenhouse gases, clean technology and youth employment.
Another important component of the Main Estimates is operating funding of approximately $700 million, which also includes almost $400 million in support of science and innovation.
AAFC scientists, located at 20 centres across the country, work with industry, academia and other partners to provide science that enhances the sector’s resiliency, fosters new areas of opportunity and supports sector competitiveness.
One of the key results under science and innovation is to transform ideas into concrete tools that will help farmers and food processors be more productive and profitable, protect our environment and drive us to our goal of $75 billion in exports by 2025.
Finally, there is almost $55 million in capital to build, acquire and maintain the department’s buildings, major equipment, systems and fixed assets, which include research facilities and infrastructure across the country.
[Translation]
Thank you, Mr. Chair. My colleague and I will be happy to answer your questions.
The Chair: Thank you, Ms. Walker.
[English]
The committee will now hear from Mr. Matson, and then there will be questions from senators.
Tony Matson, Assistant Commissioner, Corporate Services, Correctional Service Canada: Good evening Mr. Chair and honourable senators. As this committee is aware, I am joining you to provide insight into the Correctional Service of Canada’s Main Estimates for the 2018-19 fiscal year and to answer any questions you may have.
[Translation]
I’m the Assistant Commissioner of Corporate Services. I also serve as the chief financial officer for our organization. I’m pleased to be joined by Luc Bisson, Director of Strategic Policy at the Correctional Service of Canada.
[English]
As an agency within the broader public safety portfolio, the Correctional Service of Canada makes a vital contribution to protecting Canadians and keeping communities safe. Through appropriate custodial measures, effective rehabilitation and safe reintegration of people serving a federal sentence, our dedicated staff, federal institutions and parole offices across the country work diligently to achieve our public safety objectives.
It is our role to ensure that when federal offenders return to Canadian towns and cities that they have been prepared to lead lives that are safe, productive and law-abiding. To this end we work to provide programming interventions and treatment required by the offender population so they have the greatest possible chance to succeed. At the same time we work to maintain an environment that is safe and secure for inmates, visitors and staff, ensuring our federal institutions are conducive to producing offender rehabilitation and instrumental in creating a safe and workplace in which our employees can most effectively do their jobs.
As an organization we are also committed to listening to the input and perspectives of our many partners and stakeholders to improve how we operate, including the important voices that victims and Indigenous communities bring to the discussion.
As I am certain the committee knows, the Correctional Service of Canada is a relatively large organization with a unique operational mandate. We employ more than 17,000 staff members, with the vast majority working in federal penitentiaries and parole offices across the country at all hours of the day. Our frontline staff members often have demanding jobs to perform in challenging operational environments. Given these challenges, it is critical that we remain committed to being effective and efficient in how we deliver our public safety mandate while also providing value for money in how we allocate our financial resources.
With respect to the 2018-19 Main Estimates, the Correctional Service of Canada sought approximately $2.4 billion for the current fiscal year. This represents an increase of $43.34 million, or 1.8 per cent, compared to the 2017-18 Main Estimates level of $2.4 billion. This increase can be attributed chiefly to an increase in the operating vote of $64.28 million related to compensation for the funded portion of collective agreements, budget 2017 funding for vulnerable offenders and 2018-19 quasi-statutory requirements as well as a transfer from capital to operating funding.
However, the increase in funding is offset by decrease in the capital vote of $19.8 million related to the re-profiling of funds from previous years and a transfer from capital to operating funding, as well as a decrease in a statutory vote of $1.14 million for the department’s allocation of the employer’s share of the employee benefit plan.
As this committee knows, the results we are trying to achieve for Canadians in fiscal year 2018-19 and beyond have been detailed in our departmental plan. However, I would like to highlight that the Correctional Service of Canada has allocated financial resources to expand intermediate mental health care for inmates at eight men’s institutions and the maximum-security units at all five women’s institutions. We have also been moving forward with plans to make culturally appropriate programs available sooner to Indigenous offenders through the newly launched Aboriginal intervention centres. We are developing a suicide prevention and intervention framework, and we have taken concrete steps to re-establish penitentiary farm operations.
In addition, through the recent introduction of Bill C-83, the government has announced its intention to eliminate the use of administrative segregation which will fundamentally reshape federal corrections. These initiatives serve to demonstrate that the government and the Correctional Service of Canada are striving to find ways to improve the services we provide, that the organization is delivering on our commitments and that we are making a valuable contribution to the safety of our communities.
[Translation]
I would like to thank the committee members for giving me the opportunity to be here this evening. I would be pleased to answer any questions.
[English]
Senator Eaton: Welcome all, and thank you for your presentations.
I’ll start with agriculture. I remember sitting on Foreign Affairs when CETA was passed. Quite a few members of the dairy community came to us because they felt their cheese would not be competitive in Europe and they were not getting enough help.
Have you felt the impact yet on our agriculture sector of the benefits of CETA?
When you want to reach $75 billion in exports, I guess that’s part of the program. Would CETA be very much one of your directions, or not?
Ms. Walker: First of all for CETA, we did provide funding for the dairy industry. In this year’s Main Estimates there is $90 million set aside for the dairy investment funds; $57 million in the form of dairy farm investment program; and $31.6 million in the dairy investment fund.
Senator Eaton: What is that doing exactly? Is that marketing in Europe?
Ms. Walker: I’ll pass it over to my colleague to talk about the dairy program.
Jane Taylor, Assistant Deputy Minister, Programs Branch, Agriculture and Agri-Food Canada: I want to make sure I’m answering your question. Are you asking what is the dairy funding doing?
Senator Eaton: Have you felt the impact of CETA yet on your dairy exports? Has CETA helped you? Are we exporting more to European countries?
Ms. Taylor: I don’t have the details of what has come into effect in that sector.
Senator Eaton: Could you talk to me about the programs, the money you are spending?
Ms. Taylor: From a dairy perspective, as my colleague shared, there was money put into the dairy farm program and a dairy processors program to help the sectors adjust.
Senator Eaton: You have since explained to us, adjust how?
Ms. Taylor: Impacts would be that there was greater access provided to European countries. So the programs have been extremely well received by the sector.
From the dairy processing side, we’ve funded 20 different projects to date, which represents $22.7 million in our departmental funding. We’ve seen a number of those projects from different provinces across the country. Many of the projects are in cheese production. We do have one that is also in milk ingredients and another in the area of ice cream and yoghurt. On the processing side, that program is still open and it’s a continuous intake.
Senator Eaton: If you come back next year you might have an idea if the monies have helped? If we are exporting more to Europe?
Ms. Taylor: Yes, we will come back with that.
Ms. Walker: It’s important to note that it was just launched in August of 2017, so it is a relatively new program.
Senator Eaton: It has been a year now, so if there has been an uptick you would know.
Mr. Matson, you have been in the paper recently. But I’m thrilled to see that you’re allocating more financial resources to expand intermediate mental health care because that must be a huge problem in prisons, is it not?
Mr. Matson: Providing good mental health care for our department is a priority, and the fact that we got more resources to devote to this priority is encouraging.
Senator Eaton: Will that go to hiring psychologists and training frontline staff to spot people with mental health issues?
Mr. Matson: Most of that funding is for the hiring of professionals to provide intermediate medical health care to those who need it most. Also funding is provided for additional psychiatric beds, that we contract out, to provide those kinds of intense services. There is a broad range of mental health care services we provide, and this funding is dedicated to all of those functions.
Luc Bisson, Director, Strategic Policy, Correctional Service Canada: To respond to your question, in terms of types of resources that have been put in place, you have partially answered the question. It is providing additional resources in terms of psychologists, mental health nurses, clinical social workers, mental health counsellors, and in the maximum-security institutions, there is a slightly increased component of correctional officers to ensure the safety.
Senator Eaton: We heard this afternoon in another committee how if you could identify and help children in primary school with mental health issues, it would be great. I’m thinking in prison, if I was a guard it would be helpful if I could identify someone with suicidal or psychotic tendencies, like a frontline eyes and ears?
Mr. Bisson: We do provide training to correctional staff in terms of being able to recognize and respond to these types of situations, to help direct inmates to the proper services as required.
Senator Pratte: My first questions will be addressed to Agriculture Canada, specifically on the Dairy Farm Investment Program, which according to what you just said was very well received by the sector. However, in my home province, Quebec, I’ve heard a lot of complaints about this program. First of all, that the amount was insufficient, but everyone wants more money. But also about how the program was structured, that it was not really compensation but a program to encourage investment. For instance, producers who had already invested in their farm were too late to get help.
Eventually, you will probably have to design a new program to compensate dairy producers after the ratification of the USMCA, which the government has already committed to compensating. Have you learned any lessons from this new program, or things that you have already changed for phase 2? What changes will be made to future compensation programs for dairy producers?
Ms. Walker: I will ask my colleague Ms. Taylor to answer the question.
Ms. Taylor: Thanks for the question. We are learning about how the program was received. As you may know, we do work closely with the sector and we have been collecting input and feedback. Currently there is no new program or policy we are ready to announce. Until that time, I can’t speculate what the change might be in future programs.
Senator Pratte: Let’s talk about this program. You had phase 1 and now are we in phase 2?
Ms. Taylor: No, we are still in phase 1 at this point. Phase 2 was not announced.
Senator Pratte: Are you considering any changes to the program considering what you learned from phase 1? What you have heard from producers after their experience with phase 1?
Ms. Taylor: We are listening to the sector, and until that phase 2 is announced, I’m not able to speculate on what those changes might be.
Senator Pratte: Where are we as far as phase 1 is concerned? First, phase 1 was $150 million?
Ms. Taylor: The five-year program is $250 million. Phase 1 is $129 million, so that envelope is for the years 2017-18 and 2019-20. We’ve had over 2,500 applicants to date and 1,900 projects have been approved.
Senator Pratte: Can I equate the number of projects and applicants? With 1,900 projects accepted, does that mean 1,900 applicants also?
Ms. Taylor: Yes, one project per applicant.
Senator Pratte: When does phase 1 finish? You can’t apply anymore?
Ms. Taylor: No, so the intake did end, and then we will wait until phase 2 is announced for the next stage.
Senator Pratte: Do we have a date for this?
Ms. Taylor: We don’t at this time.
Senator Marshall: This is following along the lines of Senator Pratte’s questions. The USMCA, the new agreement, there has been talk about compensation for dairy farmers, and I know there is nothing in Supplementary Estimates (A), no funding. When would we expect to see something on the compensation package for dairy farmers?
Ms. Walker: The department is currently assessing the full scope and the impact of Canada’s obligations under the USMCA, and no new programming has been developed or announced at this time. For the other trade agreements, I can’t speak specifically to that issue, but trade is key to the competitiveness of Canadian agriculture and treats agreements as a priority.
Senator Marshall: So you don’t know. We are doing a study on federal infrastructure. I noticed in your supplementary As there is $2.6 million for federal infrastructure initiative. What would that be?
Ms. Walker: For the federal infrastructure initiative?
Senator Marshall: Yes. It’s called funding for the federal infrastructure initiative, and it’s $2,695,000.
Ms. Walker: Right. That is for is money to enhance buildings under the federal infrastructure program, so things like roofs, major repairs, those kind of things.
Senator Marshall: Would that be on your own buildings?
Ms. Walker: Yes. We are custodial. We own a number of buildings.
Senator Marshall: So that’s infrastructure money for assets belonging to the department?
Ms. Walker: Yes.
Senator Marshall: My last question for agriculture is the “Statutory,” under the Main Estimates, is more than 50 per cent of the funding. What’s in Statutory?
Ms. Walker: The bulk of the statutory funding is related to the Business Risk Management program under the Canadian Agriculture Partnership.
Senator Marshall: What is that program?
Ms. Walker: I can turn it to my colleague.
Senator Marshall: Could I ask you to be brief because I have some questions for corrections too.
Ms. Taylor: I’ll be very brief. So the Business Risk Management programs focus on assisting producers with events resulting from severe market volatility, loss or disaster.
Senator Marshall: Okay. So that’s a statutory payment under what piece of legislation? Is it just one particular act? Perhaps you can get back to us on that.
Ms. Taylor: Yes, sure.
Senator Marshall: For corrections, the segregation policy we are reading about in the media — that you are changing your segregation policy — what impact will that have on your budget? Will that increase or decrease your budget? Could you give us some insight into how that will impact your budget.
Mr. Matson: I can’t get into details, but I will say, though, it’s a very important change for our department. It’s a fundamental shift. It is going to change the way a significant part of our operation functions. With that, and with those changes, and enhanced programming that we are going to provide as part of the proposal that was tabled, there will be a request for additional funding, for FTEs, for operating dollars. I can’t really get into the specifics. We are currently working with central agencies on options.
Senator Marshall: But there will be an increase in your budget?
Mr. Matson: We will be seeking additional funding to implement the proposed changes.
Senator Marshall: My last question for Correctional Services, correctional interventions in the Main Estimates shows $108 million in revenue, which decreases the costs of correctional interventions. What’s the source of the $108 million? Where would those revenues be coming from?
Mr. Matson: From $108 million in revenues.
Senator Marshall: Yes, that’s called “Revenues and Other Reductions,” $108,354,754.
Mr. Matson: That would be mostly related to CORCAN operations. We have a section within Correctional Services that provides inmates with opportunities to enhance their job skills. So they build products, furniture, and we sell those products. CORCAN operates on a revolving fund, so they try and recover the costs of that program.
Senator Marshall: $104 million? That must be a big operation.
Mr. Matson: It has been around for a number of years and it is a substantial operation.
Senator Marshall: And that’s where that funding is coming from, $104 million.
Mr. Matson: From the revenues, yes.
Senator Marshall: Thank you very much.
The Chair: On that same question, Mr. Matson, can you provide additional information, detailed charts, for the committee, through the clerk, on the last question that was asked by Senator Marshall?
Mr. Matson: We will undertake to do that, sir. Thank you.
[Translation]
Senator Forest: Thank you for being here. My first question is for Ms. Walker or her colleague, Ms. Taylor. Supply-managed products aren’t the only products affected by the agreement between Canada and the European Union. I’m thinking specifically of goat milk and cheese. In Quebec, these producers are experiencing serious difficulties. The producers’ main buyers have started marketing foreign goat cheese under their own brand.
Why are goat milk producers excluded from the compensation measures?
[English]
Ms. Taylor: What I would say is that under CETA there was no further access given to goat products, but the goat sector is fully able to access any of the programs under the Canadian Agricultural Partnership, such as agri marketing and agri competitiveness. A number of programs would be available there. As the program’s assistant deputy minister, I am aware that the sector has been speaking with the department. I know today that was referred to ensure that we are talking to them about the programs that would be available to them.
[Translation]
Senator Forest: The goat cheese and milk producers’ main buyers have started purchasing these products from the European market. Goat cheese and milk producers in Quebec are being significantly undermined. That’s the situation. When we talk about how the producers are being undermined, that’s a concrete example of the current reality.
Ms. Taylor: Thank you for your comments. It is important that we’re aware of the effects.
Senator Forest: Can this reality lead to a reflection on the current compensation programs?
Ms. Taylor: The announced programs have specific details. There are other programs that aren’t compensation programs, but partnership programs available in this sector.
Senator Forest: You talked about the AgriDiversity program, which will help the under-represented groups in the agricultural sector, including young women, Indigenous people and persons with disabilities, to fully participate in the agricultural or agri-food sector. While reviewing this program, I wondered whether eligible applicants must be not-for-profit organizations that operate nationally in Canada.
I don’t know which organizations you’re targeting, but the scope seems narrow. The program concerns agri-diversity. However, the diversity of applicants isn’t the focus. What results do you intend to achieve with this program, given that, to be eligible for the program, applicants must be not-for-profit organizations that operate in Canada? This criterion limits the number of applicants.
Ms. Taylor: Thank you for your question. The AgriDiversity program amounts to $5 million over five years. We don’t know the results yet. We need to conduct assessments. We plan to perhaps include groups that want to involve youth or Indigenous groups that are interested in forming partnerships across the country.
I can tell you that we’ve noticed a great deal of interest in the program. However, no projects have been announced.
Senator Forest: Are there many groups that can be eligible as not-for-profit groups and that operate across Canada? According to your analyses, are there many of these groups?
Ms. Taylor: I think there are many groups. Certainly one parameter is to have the capacity to operate nationally or to have a program that can be implemented across the country. This distinction may also be important.
Senator Forest: Can you send the clerk a list of groups that may be eligible for the program?
Ms. Taylor: We can send you a list of examples.
Senator Forest: Thank you.
[English]
Senator Neufeld: Thank you all for being here. I would like to get a quick number from you. You said you wanted to drive us to our goal of $75 billion in exports by 2025. What is it today?
Ms. Walker: My apologies. I don’t have that number with me, but I can provide it.
Senator Eaton: Sixty-two.
Senator Neufeld: Thank you. I appreciate that.
Today it’s $60 billion. In seven years, you are going to increase it to $75 billion, or that’s your target. And that’s from now, or did that start a year or two ago? When did you make that target?
Ms. Walker: It’s part of Budget 2018, so it would be effective this year.
Senator Neufeld: Pardon me?
Ms. Walker: Budget 2017, so it would have started April 1, 2017.
Senator Neufeld: In your notes you say, “costs shared.” Two billion dollars of this is cost shared with the provinces.
One of the things you are doing is environmental sustainability and climate change. Can you explain a little bit about what you are doing? How are you accomplishing that? Were any targets set for climate change or reducing greenhouse gases, anything like that? I need a little explanation.
Ms. Taylor: Thank you for the question. There two things you have raised. If I’m speaking about the programs under the Canadian Agricultural Partnership there are two sets of programs. One set of programs are federal only programs. In that area, there would be programs that are specifically —
Senator Neufeld: I’m on the costs shared.
Ms. Taylor: On costs shared, those programs are administered and run by the provinces and territories and delivered by them. They align to our priorities so that we know there are programs in that area, but I don’t have specific details of those provincial or territorial programs.
Senator Neufeld: So it’s a 60-40 split — 60 federal, 40 provincial.
Ms. Taylor: That is correct.
Senator Neufeld: You just transfer that money to the provinces, and they spend it as they see fit?
Ms. Taylor: No. The multilateral agreement gives the policy framework. We also have the bilateral agreements with each province and territory. They do submit their costs to the federal government to ensure that they are in line with the priorities and then the funds are transferred.
Senator Neufeld: Then the department approves it; is that correct?
Ms. Taylor: Yes.
Senator Neufeld: Under costs shared you have science, research, and innovation. I assume it’s the same split, 60-40. Later on in your notes, you say that an important component of the Main Estimates is the operating funding of approximately $700 million, which includes $400 million in support of science and innovation.
This is under the heading of the department only. So you share money with provinces to do science and innovation, and then you do science and innovation fully funded by the department; is that correct? What link is there between this?
Ms. Walker: The money referred to of $400 million, science and innovation, that funding is to support our science and technology branch and hire scientists. Most of the money goes to the salaries of scientists for that branch. That is different than the grants and contributions that are funded for the Canadian Agricultural Partnership.
Senator Neufeld: You are not both doing the same things, hopefully.
Ms. Walker: Complementing each other.
Senator Neufeld: Other grants and contributions, you have things like “adaptation.” I have talked a lot about adaptation as it relates to climate change, and I’m just wondering if that’s what you mean here by “adaptation,” or maybe you can explain to me what “adaptation” means.
Ms. Taylor: The Canadian Adaptation Program is actually outside of the Canadian Agricultural Partnership. It’s been five years and will end in 2019. It’s a program that has been set up to seize opportunities and respond to new and emerging issues. Sometimes it’s to pilot initiatives. That’s where the word “adaptation” is used in the title of the program.
Senator Neufeld: Thank you.
Mr. Matson, in your notes you say there was $19.8 million transferred from capital to operation. I don’t have any problem with that, but what suffered in capital? If you had $19.8 million in capital that wasn’t used, something must have not been done to transfer it to operations.
Mr. Matson: We had a reduction in capital of $19.8 million, $15 million of which was related to funding we received in previous years for the implementation of a new institution, which didn’t go ahead. So we’re returning that funding. It was a reduction in our capital funding returned to the centre. There was an amount of $4.7 million that was transferred from capital to operating, so we could engage with communities to help build infrastructure for us and deliver our programs.
It was capital money that we transferred into operating, so we could give it to third parties, to help build infrastructure to help us deliver our programs. The bulk of it was funding that we returned to the centre because years ago we were given funding to implement a new institution, which never happened. So we returned the money.
Senator Neufeld: Penitentiary farm operations. Could you explain that a little bit?
Mr. Matson: Years ago we had farm operations in a number of institutions across the country. With various reduction measures, those were eliminated. This year an agreement was struck and funding provided to reinstitute farms in two institutions: one in Collins Bay and the other in Joyceville. We are getting $2.3 million this year to initiate the reinstitution of the farms.
We will be setting up operations: plants, planting and harvesting. We will have dairy and goats. It provides inmates with opportunities to attain job skills to help them reintegrate into the community.
We have opened up two operations, and that started this year. We are in the planning and implementation phases, and we hope they will be up and running by the end of the fiscal year.
Senator Neufeld: Those two, where are they at? I’m aware there was one Lethbridge, Alberta, at one point in time. Is that in the planning?
Mr. Matson: There were a few across the country and one in Lethbridge, I believe. The two we have reinstituted, one is in Joyceville and one is in Collins Bay. They are both around the Kingston area.
Senator Neufeld: Are you anticipating doing more across the country?
Mr. Matson: I can’t really comment on that. I’m assuming we’ll see how that goes and if there is an appetite for expansion.
Senator C. Deacon: This is for Ms. Walker or Ms. Taylor, to whomever it is best directed. I’m focusing in on the same sorts of issues but I want to understand more about results. I’m hearing about money being spent but I’m hearing very little about results. Spending $1 billion over five years to expand trade says you are looking at 25 per cent growth over five years. That is what I think I heard from Senator Eaton a few moments ago. Are you tracking change and improvements today? How is your reporting on that occurring today on those investments you are making?
Ms. Walker: As part of standard reporting within the government, we report regularly on our results. We have measures that we track for each one of our major performance measures, and every year we update and track the results for every single one of those.
Senator C. Deacon: So you can tell us right now how we are seeing improvement in growth of trade, increased numbers of markets, trade growth in those markets and how we are diversifying within those markets? You could give us data today on that?
Ms. Walker: I don’t have that data with me.
Senator C. Deacon: But you can provide it to the clerk?
Ms. Walker: We do those results annually as part of our report on results.
Senator C. Deacon: I would be very interested in looking at how you’re actually having an impact. I have no doubt that the investment is well worth making, I have no doubt that this is very important to do strategically as a country. What I have no confidence in, because I have no evidence from you, is that we are doing that in a way that is effective and cost efficient. I would like to see how you are tracking how each dollar you have invested through the projects you’ve chosen to fund is achieving benefits for those who need it the most: the farmers, processors and others in our country. And what markets are we getting into?
Let’s hear some of the wins and get good qualitative and quantitative data about the success you’re seeing.
In terms of choosing projects you’re doing for research, can you tell me how you choose to invest in research projects? What is the process that you go through to find the areas in which you are investing?
As I saw, you are investing $400 million a year in science and innovation directly through the department labs. How are you choosing projects you’re investing in? What is the process you go through to make sure you’re working on things that are urgently important to the agriculture industry today?
Ms. Walker: The science and technology branch works very closely with universities and other external bodies. Also, they work with farmers and a lot of consultation is going on. In fact, right now we are doing consultation and that’s how they get that feedback and that’s how they decide where to invest.
Senator C. Deacon: So you are hearing from farmers first as to the challenges they are facing in their organizations?
Ms. Walker: Yes.
Senator C. Deacon: That’s great news. I’m glad to hear that. I would love for you to be reporting on benefits to Canada, if you could, for the R&D projects over time. These take time, and that’s always understood, but we need to know we are not just investing in research, but in research that gets mobilized. Thank you.
Senator Andreychuk: Somewhat along the same lines for agriculture, the Foreign Affairs Committee did a study, filed in 2017, saying that if we’re going to sign trade agreements, that’s all well and good and it’s a tool, but unless it is implemented and the government has a strategy of implementing, we will never get results or benefits.
We were told that there would be implementation strategies and we keep being told that. When we did CETA, that was our recommendation and it was to be followed up; we have done the same now with CPTPP, as of this afternoon.
Are you being asked to develop an implementation strategy either for CETA or CPTPP which would catch the small and medium industries and farms, et cetera? We say unless you actually reach out using either trade commissioners or other techniques — we are being told it’s in the works — so have you been consulted at all on the implementation strategy for either CETA or CPTPP?
Ms. Taylor: I’m pleased to report that Global Affairs Canada is working closely with Agriculture and Agri-Food Canada. They are our colleagues in a branch called the markets secretariat and branch. They are working closely, and in fact we have trade commissioners specific to agriculture abroad.
I would say they are working closely on the implementation of those agreements. I’ve noted that market access has been provided to many sectors in Canada, capitalizing on those trade missions, of which we have a number both departmentally and led by the minister, that have gone abroad for our international trade show program, which is part of the Canadian Agricultural Partnership.
Senator Andreychuk: Where will we find all this? We keep saying it is in the mix and the feedback from many sectors indicates they don’t know where to go, they haven’t been contacted and they don’t follow the trade agreements the way we do. Where would we go to find these strategies and implementation tools that they can reach for?
Ms. Taylor: It is a great question. We’ll follow up.
Senator Andreychuk: We need to know what tools you are using, and not just in the trade.
I have another question: In this new administrative segregation, how much money is being set aside to adapt and change all the institutional holding units? Or are they simply going to be changed by label and facilities will still be segregated units and perhaps there will be different policies for the programming? That feedback is that the label will change on the door, as the saying goes, but the structures will remain the same. In essence, there will still be segregated units with some better programming, one would hope. Is there any capital expenditure contemplated for the restructuring?
Mr. Matson: The simple answer is yes, there is funding that we are seeking to make adjustments to our infrastructure to accommodate the new program. There will be changes. Within my responsibilities in the department, I am in charge of infrastructure and I know we are working closely with program colleagues to make the required adjustments to the infrastructure.
Senator Andreychuk: When will we see that?
Mr. Matson: We are working with central agencies now on costing and funding proposals for implementation options, and that will be coming in the near future.
Senator Andreychuk: I’m pleased that other committees are talking about how, if we don’t work with very young children to identify mental health issues and deal with them, they will end up in institutions and with difficulties. But at the Human Rights Committee that I sit in, no doubt you know we are tracking you closely.
What about exit strategies? What programs are you planning for people to be released and to be ready to face and work with the community? We have healing lodges and elders for Aboriginals in my area, but is there a program shift? Is money being allocated to address the issue of re-entrance into society? That seems to be a big difficulty in North America.
Mr. Matson: One of our department’s philosophies and approaches is reintegration and programming toward that goal, and it includes job and skills training and mental health help. We try to develop a correctional plan for each of our clients and monitor the plan over time. They are evaluated at different points and are eventually moved into the community through a reintegration process to facilitate exactly what I think you’re talking about.
Senator Andreychuk: Is there any additional money being contemplated, or is it case by case? Has there been any shift in the last year or two in the programming?
Mr. Matson: With respect to our administrative segregation proposal, it is focused on changing administrative segregation to make it a more effective method of dealing with issues. But we’re also seeking funding in that regime to provide additional programming, both mental help and training and programming for people in segregation situations. Additional money is being sought for what I think it is you’re asking.
[Translation]
Senator Dalphond: My first question is for the representatives of Agriculture and Agri-Food Canada. Based on your response to my colleague Senator Pratte, am I to understand that the only programs implemented by the Department of Agriculture are programs designed to help with dairy production and that, as such, the programs include only investment programs aimed at renewing equipment or expanding farms, and not compensation programs for potential market losses?
Ms. Taylor: I can confirm that there are all kinds of programs, but the programs that have been discussed for dairy production —
[English]
Senator Dalphond: I’m interested in dairy farmers. What are the programs aimed at compensating for the loss of market? I understand that the programs you have described are for investing, further investments in the farm operations, improving the farm operations. But there is no compensation if I understand properly?
Ms. Taylor: No program has been announced that is titled “compensation.”
Senator Dalphond: So far, the government has not put forward any programs to compensate dairy farmers under CETA or the new Trans-Pacific agreement or the new Mexico-U.S. agreement?
Ms. Taylor: That’s right. The CETA programs have been announced and are investment programs. There are no programs announced for CPTPP or the USMCA.
Senator Dalphond: My other question deals with the targets for export. The target is to increase it in the next seven years from $60 billion to $75 billion, which I assume is a substantial increase of 25 per cent as reported by my colleagues. I understand this will also include an increase in the export of dairy products? Is the program contemplating an increase in the export of dairy products?
Ms. Walker: Part of it is improving our exports to $75 billion for agricultural products, which would include dairy products.
Senator Dalphond: Do you have specifics for the dairy products?
Ms. Walker: Not at this time.
Senator Dalphond: Does your program contemplate that the USMCA agreement provides caps on the export of dairy products in the future?
Ms. Walker: Right now, we are taking a look at all of the effects of USMCA, but I can’t comment any further at this time.
Senator Dalphond: That might imply revision of your targets for dairy productions and dairy markets.
Ms. Walker: At this time, I unfortunately cannot comment.
The Chair: If you could provide additional information to add to the response, Ms. Walker and Ms. Taylor, to the question posed by Senator Dalphond, would you please do it through the clerk?
Ms. Walker: Absolutely, Mr. Chair.
Senator M. Deacon: Thank you all for being here. It has been a very informative evening. I was looking at agriculture, agri-food, looking at the baselines and results and planning. You have that 2018-19 departmental plan with what you’re looking for, here is what it will look like and here are our targets. In many cases, however, the data is different from previous years, not available or your methodology has recently been changed or revised. As such, I’m trying to understand how you will know when you are reaching your performance targets and how you will, without past benchmarks to work from? Because the game has changed. Could you share a bit of that?
Ms. Walker: First of all, we are very committed to reporting results and measuring results in our department. There are always going to be changes, especially given the nature of our business, and we always make best efforts to compare with previous years whenever we can, that are reasonable and sound. Part of our process on an annual basis would be that when we report, ensure when we can report transparently and soundly with that accuracy. We will do our absolutely best to compare to previous years.
Senator M. Deacon: Because your whole methodology has been revised, in some ways, this year is a new set, a new beginning benchmark, a new piece. I was trying to understand. Your response is that this is looking different, it does change and we will endeavour each year to learn from our work.
The Chair: Honourable senators, due to the budget information requested from the two departments, on the second round can we ask our questions and have them to respond to the clerk? Would that be satisfactory?
Senator Neufeld: You have public trust here. Is there any way that your department is responsible for anything to do with marijuana now that it’s a product that we sell in Canada? Do you administer any dollars, are you responsible for anything at all with marijuana?
Ms. Taylor: Cannabis growers and processors will be eligible to apply for federal programs under the Canadian Agricultural Partnership and applications would be looked at case by case to see whether they meet the funding criteria.
The Chair: If you want to add additional information, please do.
Senator C. Deacon: I’ll quickly go to Mr. Matson. The Aboriginal intervention centres, I assume, are providing job skills and working to enable people to successfully transition. Do you have quantitative results that you could be providing in terms of success you are achieving? And anything that you have that’s bench marked from outside organizations like Elizabeth Fry, John Howard, wherein they are reporting and sharing agreement with the success you are seeing? You don’t need to answer it now.
Regarding Agriculture Canada, I am looking forward to seeing data on the results. When you’re planning investments, it’s important to know what you are going to get out up front, and it is key that we start to see some of the data and the assumptions underlying your projections.
The Chair: Good point.
To the officials from Agriculture and Agri-food Canada and Correctional Service Canada, thank you for appearing.
We will continue our study of Main Estimates 2018-19. We now have before us representatives from the Canada Revenue Agency.
[Translation]
We’re joined by Kami Ramcharan, the Chief Financial Officer and Assistant Commissioner of the Finance and Administration Branch.
[English]
With her is Ted Gallivan, Assistant Commissioner, International, Large Business and Investigations Branch. From Global Affairs Canada we have Arun Thangaraj, Assistant Deputy Minister and Chief Financial Officer; and Shirley Carruthers, Director General, Financial Resource Planning and Management Bureau.
Welcome, and thank you for accepting our invitation. I have been informed that Ms. Ramcharan will make the first presentation, followed by Mr. Thangaraj.
[Translation]
Ms. Ramcharan, you can give your presentation.
[English]
Kami Ramcharan, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency: Thank you for the opportunity to appear before the committee to present the Canada Revenue Agency’s Main Estimates for 2018-19 and to answer any questions that you might have about the associated funding.
As you are aware, the CRA is responsible for the administration of federal and certain provincial and territorial tax programs, as well as the delivery of a number of benefit payment programs.
Each year, the agency collects hundreds of billions of dollars of tax revenue for the governments of Canada and distributes timely and accurate benefit payments to millions of Canadians. In order to fulfil its mandate in 2018-19, the CRA sought a total of $4.2 billion through these Main Estimates. Of this amount, 3.3 billion required approval by Parliament, whereas the remaining 0.9 billion represents statutory forecasts that have already been approved under separate legislation. The statutory items include the Children’s Special Allowance payments; the employee benefit plan costs; and, pursuant to section 60 of the CRA Act, the spending of revenues received for activities administered on the behalf of provinces and other government departments.
[Translation]
The 2018-19 Main Estimates represent a net increase of $41.8 million or one per cent when compared with the 2017-18 Main Estimates authorities.
[English]
The largest component of this change is an increase of $89.8 million to implement and administer various measures to crack down on tax evasion and combat tax avoidance. This represents the incremental 2018-19 funding for measures totalling approximately $1 billion over five years announced in Budget 2016 and Budget 2017. The majority of these resources will fund new GST/HST measures aimed at preventing tax evasion and improving tax compliance, expansion of existing compliance and verification measures and business intelligence activities and improved strategies to promote enhanced compliance.
[Translation]
The CRA is currently on track to meet the incremental revenue generating commitments associated with these measures. Other increases to the CRA’s budget include $11.8 million to support the introduction of a new tax regime related to the legalization of cannabis, which involves adjustments to our systems. The funding will also be used to start processing early licence applications so that cultivators and manufacturers are authorized to provide legal cannabis on the implementation date.
[English]
These increases are partially offset by a $21.5 million reduction in statutory contributions to the employee benefit plans and in the forecast of cost recovery revenues, pursuant to section 60 of the CRA Act, for initiatives administered on behalf of provinces and other government departments; a $17.1 million adjustment associated with changes in the funding profile for various measures announced in previous federal budgets; a 16.2 million adjustment related to accommodation and real property services provided by Public Services and Procurement Canada; and finally, a $5 million reduction in forecasted payments under the Children’s Special Allowance Act.
To give you a sense of the kinds of programs that are being supported by the funding requested through these estimates supports, Mr. Chair, allow me to touch on some service improvements that the CRA introduced last year.
[Translation]
At the beginning of this year, the 2017 T1 tax forms and guide were mailed directly to the homes of Canadians who filed paper returns last year. As a result, these individuals didn’t need to pick up guides and forms to fulfill their tax obligations. This is especially helpful for people with mobility problems or for people who live in remote areas.
[English]
Also, in January 2018, CRA launched an automated phone system called File my Return. This phone system is expected to help more than 950,000 Canadians meet their tax filing obligations, particularly those with low or fixed income. After identifying themselves on the phone system, these taxpayers answer a series of short questions and their income tax returns are then filled. For those who use the system, there is no need to fill out forms or make complicated calculations. As well, the Canada Revenue Agency continues to promote another Canada-wide program called the Community Volunteer Income Tax Program, which includes a Quebec component called the Volunteer Program. Through these programs, free clinics are offered when trained volunteers assist people in filing their income tax returns so as to ensure that they receive the benefits and credits to which they are entitled. These free clinics serve individuals with low incomes and simple tax situations, including seniors, students, Indigenous peoples, newcomers and people with disabilities.
[Translation]
In closing, the resources requested through these estimates will allow the CRA to continue to deliver on its mandate to Canadians by making the task easier for the vast majority of taxpayers who want to pay their taxes and by complicating the process for the small minority who don’t want to pay them. Canadians are given ready access to the information they need about taxes or benefits.
[English]
It should be noted that the CRA’s 2018-19 Main Estimates do not reflect incremental resources for announcements made by the Minister of Finance in the February 2018 Budget. In closing, the resources requested through these estimates will allow the CRA to continue to deliver on its mandate to Canadians by making it easier for the vast majority of taxpayers who want to pay their taxes, more difficult for the small minority who do not, and by ensuring Canadians have ready access to the information they need about their taxes or benefits.
Mr. Chair, at this time I would be pleased to respond to any questions.
[Translation]
Arun Thangaraj, Assistant Deputy Minister and Chief Financial Officer, Global Affairs Canada: Thank you for your invitation to appear before your committee. It’s always a pleasure to be here.
Global Affairs Canada supports Canadian businesses through a global network of 170 missions in 110 countries. We operate in a complex international environment in a time of growing uncertainty. In this context, we’re responding to ever increasing humanitarian needs and defending Canadian values and interests in a more unpredictable global political and security environment. We’re tasked with helping to support Canadian businesses operating in an environment with evolving challenges and opportunities.
[English]
Our Main Estimates for 2018-19 reflect the requirements to respond to our environment. We have sought approval for approximately $6.5 billion in total funding. This represents an increase of $488.7 million over last year’s Main Estimates.
Ensuring the safety and security of our people and facilities is imperative. The 2017 Fall Economic Statement provided a commitment to ensure the Government of Canada is fulfilling its duty of care obligations and protecting Canada’s mission, people and information abroad.
Accordingly, these estimates include an increase of $112.7 million to fund these obligations. These funds will help to hire additional security personnel, fund security protection contracts and provide additional training to our personnel abroad. It will also help ensure that we secure our information, have safe communication facilities, and provide strengthened physical infrastructure through security upgrades and fund studies for future major infrastructure projects.
[Translation]
Moreover, the duty of care funding has provided enhanced security to our personnel in Afghanistan. The funding has provided assessment conditions to help protect against seismic events at 13 missions, and has secured new contracts for armoured vehicles to protect employees in dangerous locations.
The Government of Canada remains committed to taking action on climate change and to following through on commitments made through the Paris Agreement. To this end, the Main Estimates include an increase of $256 million to help developing countries address the impact of climate change. This new funding will be provided to the Green Climate Fund and other global funds to help developing countries to increase their resilience and ability to adapt in response to climate change.
[English]
The funding will support projects to help developing countries reduce greenhouse gas emissions and adapt to the impacts of climate change. Funding will also help support initiatives that invest in renewable energy in developing countries. Today, over 135 million are in need of immediate humanitarian assistance, and millions are displaced by conflict and violence. The Government of Canada has made meaningful contributions to help eradicate poverty by helping to ensure access to health care, proper nutrition and education in developing countries.
This year’s Main Estimates include an increase of $80 million to facilitate the quick response to unexpected global crises, including natural disasters and outbreaks of civil and international conflict. The world is faced with the rise of humanitarian needs due to extreme weather events. Global security has reached record levels with some 76 million people estimated to require emergency food aid, the majority of which are women and children.
To date, Canada has spent $1.4 billion supporting food assistance through its annual commitments to the Food Assistance Convention. So far, this funding has helped the United Nations and non-governmental organization partners, such as the Canadian Foodgrains Bank, reach over 100 million people in approximately 80 countries. Although these Main Estimates reported a decrease in food assistance funding this year, Budget 2018 reconfirmed $70 million in ongoing funding to meet Canada’s total annual contributions to the convention, which will be included in future estimates.
[Translation]
Canada has provided strong support to global efforts to fight disease in developing countries. A further $36 million was provided in the Main Estimates in support of the Global Fund to fight AIDS, tuberculosis and malaria. The Global Fund provides a focus on delivering health services to vulnerable populations such as women, adolescents and children. Approximately 60 per cent of the Global Fund’s spending is directed to women and girls, who are disproportionately affected by disease.
Canada has contributed over $2 billion to the Global Fund since its creation in 2002. Funding has helped provide over 11 million people with antiretroviral therapy for HIV. It has helped provide treatments to 17 million people for tuberculosis and about 800 million mosquito nets to fight malaria.
The Main Estimates also authorized an increase of $108 million for the Global Alliance for Vaccines and Immunization, a global health partnership created to address inequities in accessing vaccines.
[English]
The Government of Canada continues to make important investments in support of the government’s feminist international assistance and development goals. In fact, Budget 2018 committed to the largest expansion of international assistance funding since 2002. Many of the new Global Affairs initiatives announced in Budget 2018, and a total of $223 million this year, were provided through Global Affairs Canada through a dedicated Treasury Board budget implementation vote.
[Translation]
This new funding, which will be accessed throughout this fiscal year, will help make important progress to advance gender equality in global development and humanitarian efforts. The government committed new resources this year not just to support international assistance priorities, but to invest in Global Affairs Canada’s political, security and trade activities and mandates. Canadian businesses today operate in a volatile and rapidly evolving global trade environment. The Government of Canada is committed to helping Canadian businesses expand and diversify their trade presence abroad.
[English]
New funding will help further establish a stronger Canadian diplomatic and trade presence at these missions abroad to support Canadian businesses looking to expand. Global Affairs Canada also has funding allocation to support the softwood lumber industry. Litigation through the World Trade Organization and NAFTA dispute mechanisms is also included in this vote.
The government will continue its negotiating efforts and is committed to supporting and defending the Canadian forest industry.
These Main Estimates 2018-19 reflect Canada’s ongoing commitment to help build an inclusive world free from strife. They support peace, dignity and equal treatment, and provide needed resources to respond to ever-increasing global demands.
With that I’ll stop, and I welcome your questions.
The Chair: Honourable senators, please bear with me. I’ll need your cooperation because of time constraints. At 8:35, I will ask to go in camera for a decision we need to make vis-à-vis a department making a special request. This will impact on our witnesses for next week. It’s a request that has to be blessed by the committee.
If we could have succinct questions, reduce the preambles, ask a question for each department. You know we have the luxury of asking them to come back. On this, with two questions each, we could cover all the senators who have made a request.
Senator Marshall: I have a lot of questions for Canada Revenue Agency. I’ll pick out two.
The $89.8 million that was in the 2016-17 federal budget, has all that been drawn down now or is there still some remaining? I just need a “yes” or “no.”
Ms. Ramcharan: The total amount, all of it won’t be drawn down in one year. It will be split over five years. Our increase is for this year.
Senator Marshall: That’s $89.8 million. I see that you have also drawn down on your vote 40 allocation for the cracking down on tax evasion and combating tax avoidance. You have drawn down $15 million. Have you spent it?
Ms. Ramcharan: For 2018-19, we are in the midst of spending.
Senator Marshall: You’re not going to lapse any of it, are you?
Ms. Ramcharan: It’s difficult to tell at this point in time. We are just finishing up our results on our mid-year review. We don’t always spend every single dollar of it, but we have the opportunity within the agency to bring that money forward into the future to be used for that purpose.
Senator Marshall: For the writeoffs and remissions that were in the public accounts tabled last year, do they show up in your estimates?
Ms. Ramcharan: It does not show up in our estimates because that’s our financial statement.
Senator Pratte: The last time we had the CRA in front of us, there was a lot of discussion about a new software for the call centre that would improve service to Canadians who call and sometimes don’t get an answer at all, or get the wrong answer. Do you know if the software is now up and running? What was the cost of implementing the software?
Ted Gallivan, Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency: Even in the last year tax program we saw an improvement in terms of the service that Canadians were experiencing. Roughly speaking, there are 700 new employees. That doesn’t go to the software, but that goes to the multipronged strategy that our service branch has.
The software is being rolled out, and all signs show that it should be ready for implementation for the 2018 tax filing season. As people start in February and March to have questions for the agency, my colleagues are working to have that in place in time for that.
There is a combination of increased funding and resources, the new software, and technologies like gating and nesting, and different approaches. I think it bears repeating that early signs from last filing season show that people, instead of making 3.3 calls, made 2.1 calls. Now, that’s not great. Ideally, it would be the first call, but the tide has started to turn. Moving through the next filing season, Canadians will see that services that they expect are being delivered to them.
Senator Pratte: Thank you. For Global Affairs, can you tell us anything more about the writeoff of the loan to Chrysler? If not you, who?
Mr. Thangaraj: The writeoff that was declared on our public accounts this year was part of financing that was provided to the auto industry in 2009 when the government decided to support those industries. It was made to an entity that’s called old Chrysler.
That loan has been on the books for a number of years and has been deemed uncollectible. It’s shown on Export Development Canada’s books. When the cost of maintaining the loan, after it was deemed uncollectible, when those factors were considered, the Auditor General made a recommendation that the loan be written off. That’s why it was written off in the last fiscal year and reflected in the public accounts.
Senator Pratte: Under the circumstances, can you understand why for many people it’s very hard to understand why a loan is deemed uncollectible when new Chrysler is profitable, even though old Chrysler has failed?
Mr. Thangaraj: That’s a question for Export Development Canada. I’m not privy to the decision to write off. I know there was a determination that it was uncollectible. What went into that would be for Export Development Canada.
Senator Eaton: I was excited to see that you have been allocated money for client services, because I’ve been waiting for my refund since I filed my taxes in April. I’m excited that you have more money to help look after me.
I’m going to ask you about the Phoenix pay issue. You received, I believe, $5.5 million over two years in the 2018 Budget for the processing of federal employee income tax reassessments required due to Phoenix pay issues. How many income tax reassessments have you had to date? Have you had a lot, a few? How is that working out?
Ms. Ramcharan: I don’t know the exact number of the different reassessments we have had, but it would have been significant. The money we received was to provide additional support in our T1 processing sites to respond to the needs for people having difficulty with Phoenix, making sure that their T4s are correct and understanding whether overpayments were included or not. That’s the funding that would have been provided to help people who are providing the additional support.
Senator Eaton: Maybe next year you will be able to tell us; you will have more of an idea.
For Global Affairs, I’m intrigued by so much. One hundred and twelve million dollars to support mission security abroad. Is that specific embassies? Is that general? How does that work?
Mr. Thangaraj: There are a number of pillars that we fund. Some of it is for specific missions where we will harden the physical infrastructure or conduct major capital projects.
Senator Eaton: Could you give examples of embassies?
Mr. Thangaraj: No, I cannot. The rest is for training. Some of it is for protecting our information that goes into IT systems and for security guard contracts.
Senator Eaton: Thank you. Good answers we are not going to get.
[Translation]
Senator Forest: To briefly follow up on Chrysler, Senator Pratte, who can tell us the conditions of this loan? Has interest been charged? Were there any guarantees? The average person has trouble understanding how a loan of over two billion dollars can be written off. A person who takes out a small mortgage of $100,000 or $200,000 puts up their house as collateral, and they take 60 per cent of its value. How can we explain to small taxpayers who pay their taxes that this type of loan has been made? I want to know the conditions under which the loan was made.
[English]
Mr. Thangaraj: As I said to the previous senator, I don’t have that information with respect to the particulars of the loan and the conditions under which it was made.
[Translation]
Senator Forest: Who would have that information?
[English]
Mr. Thangaraj: Export Development Canada holds the loan.
[Translation]
Senator Forest: This should be noted.
The Chair: It’s done.
Senator Forest: Your main priority to increase the budget by $89.8 million specifically targets GST and HST measures. Given this $89.8 million investment, when do you expect the return on your investment to be completed? During the year? Over a three-year or five-year period? What specific measures will you focus on for the GST and HST?
Mr. Gallivan: With a $1 billion investment, we expect a $5 billion return on the overall investment. The ratio is five to one in terms of the return on our investment.
With regard to the GST, since fraud is committed by organized crime and by others who try to defraud the system to obtain rebates, investments are being made to stop these fraudulent practices.
Tax planning is under way — initially for the Income Tax Act, which is quite large — and is starting to be implemented at the CRA with regard to the excise tax and GST. Additional resources are being added to put the shoulder to the wheel.
We also serve provinces, and some provinces have tax rates of 13 per cent and 11 per cent. We want to ensure that we can serve provinces that rely heavily on sales tax revenues.
I would focus on these three aspects.
[English]
Senator Andreychuk: If it works you will have extra time, I think. You have got us straight.
I wanted to ask Global Affairs one question. You said that you are continuing on softwood lumber but I see there is a decrease in funding. Why is that? What has changed, when, in fact, that is still one of the pressing issues?
Mr. Thangaraj: In our Main Estimates, there is a decrease for softwood lumber. We had authority to include that in our Main Estimates until this fiscal year. Budget 2018 renewed that funding for the next few years, so that’s why you see a drop in this and then you will see, in the budget implementation vote, the increase.
Senator Andreychuk: That explains it. I noted that you have identified that there was $65.3 million, if I understand correctly from my notes, to support the summit in Charlevoix. What were the total figures for everything?
Mr. Thangaraj: The total figure across the entire government was $604.5 million. That’s the total amount budgeted. We are still in the process. The G7 presidency lasts until the end of the year so there are still activities that go on. When the year wraps up we will do the full accounting.
Senator Andreychuk: One final quick question. I guess the rest will have to wait. You said there is some money being transferred from other government departments for placing staff overseas, and you also talked about increasing trade capacity. I presume it’s to do with the implementation of our trade agreements. Where could we get that? If you don’t have that, could we find out exactly what increases you and other departments are receiving for the implementation of CETA, CPTPP and perhaps the new NAFTA? Personnel, dollars and programs would be helpful.
Mr. Thangaraj: We can provide details on the increase in the trade commissioner service abroad. What you see in the transfers from other government departments is often for personnel who are already there or for creating new positions. We have a number of partner departments such as agriculture, and when they have positions there the costs fluctuate from year to year, so they will transfer to us when costs increase, and we transfer back when costs fluctuate down. That’s the cost of the presence abroad. We can segment. We can provide that.
Senator Andreychuk: Thank you.
[Translation]
Senator Dalphond: My question is for the representatives of the Canada Revenue Agency.
[English]
It’s about the budget of almost $12 million to implement the fiscal regime for cannabis. I understand many provinces will be selling cannabis through crown corporations, so why is money needed to adjust the tax collections by provincial crown agencies?
Mr. Gallivan: I’ll give you a general answer and if you need more details we’ll follow up. You have to think about the tobacco tax. The agency has an excise tax function around explaining the rules, issuing the stamps and ensuring compliance. You could look at the cannabis regime as a cousin of the tobacco regime: educating people on the rules; making sure the stamping regime and the mechanics to receive that were in place; and making sure that the work to validate was happening correctly.
You mentioned crown corporations. Even in the not-for-profit sector, the agency sometimes finds technical noncompliance. Not all noncompliance is deliberate or tax evasion; sometimes there are just mistakes of interpretation. A lot of our compliance work is educating. Even in a Crown corporation or another not-for-profit organization, mistakes can happen.
Senator Dalphond: Thank you.
Senator Neufeld: This is for CRA. One of the bullets was a $5 million reduction in forecast payments under the Children’s Special Allowance Act. Can you explain that?
Ms. Ramcharan: Because it is statutory, we typically look at the use and nonuse of funds. We usually make adjustments based on the uptake of those allowances; if we have the forecasted need to use those additional resources, we’ll get them and if we don’t have them, we return them. We can’t use them for other operations.
Senator Neufeld: It says forecast payments. I understand there were some people who were refused the right to write off some of their health costs in relation to some certain diseases. This doesn’t have anything to do with it, does it?
Ms. Ramcharan: No, that would be a different tax credit. This is the children’s allowance. It’s specifically for children. It has nothing to do with health care or health costs.
Senator Neufeld: Thank you.
The Chair: We have time for a second round.
Senator Marshall: I have no further questions, but I would like to have these witnesses come back. We have Supplementary Estimates (A) now, so perhaps in our meeting we can talk about timing and have these witnesses back.
The Chair: For the benefit of the senators, we do have EDC scheduled to come as a witness when we do our public accounts.
To the witnesses, thank you very much. As you’ve heard, there is no doubt that you could be called back. We want to say thank you for appearing here this evening.
(The committee continued in camera.)