Proceedings of the Standing Senate Committee on
National Finance
Issue No. 89 - Evidence - February 27, 2019 (afternoon meeting)
OTTAWA, Wednesday, February 27, 2019
The Standing Senate Committee on National Finance met this day at 2:15 p.m. to examine Supplementary Estimates (B) for the fiscal year ending March 31, 2019; and Interim Estimates for the fiscal year ending March 31, 2020.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: My name is Percy Mockler, senator from New Brunswick and chair of the Finance Committee. I wish to welcome all of those who are with us in the room and viewers across Canada who may be watching on television or online.
[Translation]
I would now like to ask senators to introduce themselves, starting on my left, please.
[English]
Senator Klyne: Marty Klyne, Saskatchewan.
[Translation]
Senator Forest: Senator Éric Forest, Quebec.
Senator Pratte: Senator André Pratte, Quebec.
Senator Forest-Niesing: Senator Josée Forest-Niesing, Ontario.
Senator Moncion: Senator Lucie Moncion, Ontario.
[English]
Senator M. Deacon: Marty Deacon, Ontario.
Senator Boehm: Peter Boehm, Ontario.
Senator Jaffer: Mobina Jaffer, British Columbia.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
The Chair: Thank you, senators.
Honourable minister, we are aware this is your first appearance and we want to say thank you for accepting our invitation.
Today, our committee continues its study of the Supplementary Estimates (B) for the fiscal year ending March 31, 2019.
Honourable Minister Philpott, we will also look at the Interim Estimates 2019-20.
Both documents were referred to the Finance Committee, by the Senate of Canada, last Thursday, February 21.
Honourable senators, to discuss the matter, we welcome the President of the Treasury Board and Minister of Digital Government.
[Translation]
Madam Minister, thank you for accepting our invitation. There is no doubt in my mind that your appearance here will help us clear up a lot of issues.
[English]
We know you have a busy schedule and we appreciate your flexibility. Thank you for being here. We have been informed that you must leave by 3:00 p.m. and we will make sure that we will be on schedule.
Treasury Board Secretariat officials will stay with us for a short while thereafter to answer honourable senators’ additional questions.
[Translation]
We have with us today, accompanying the minister, Ms. Karen Cahill, Assistant Secretary and Chief Financial Officer, Treasury Board Secretariat of Canada.
[English]
We also have Glenn Purves, Assistant Secretary, Expenditure Management Sector.
[Translation]
We also have with us Marcia Santiago, Executive Director, Expenditure Strategies and Estimates, who is almost a fixture here at committee.
[English]
Madam Minister, I have been informed that you have comments to make.
[Translation]
You have the floor, Madam Minister.
[English]
Hon. Jane Philpott, P.C., M.P., President of the Treasury Board and Minister of Digital Government: Thank you, very much, Mr. Chair and senators.
[Translation]
Thank you very much. I will start by acknowledging that we are gathered here on unceded traditional territory of the Algonquin people, for which we are grateful.
[English]
I want to thank all of you for welcoming me here today for a discussion on the supplementary estimates and the Interim Estimates. I do appreciate your flexibility with my schedule, and I apologize in advance that I will have to slip out just a little before 3:00 for duties in the other place.
I’m very proud to be here as the new President of the Treasury Board and to have the opportunity to talk about the estimates. It’s really an unprecedented effort that we have tried to make to appear before committees both of the House and Senate. I understand that my appearance here today is the sixth time in this mandate that you’ve had the Treasury Board President appear at your committee. I’m told that that’s more than the previous government did in a decade, so we’re proud of that.
I believe, during the last mandate of the previous government, the Treasury Board President wasn’t here at all. I think we can do better when we work together and I’m happy to be here today with you.
[Translation]
Through these supplementary estimates, the government is seeking parliamentary approval for funding to address issues that are important to Canadians. The funding in the supplementary estimates will also support the government’s plan to strengthen and grow Canada’s middle class.
[English]
We are seeking parliamentary approval for $2.5 billion in additional spending for 48 organizations.
Of note, you will see that the items include a number of important initiatives, including $323 million for programs and services for eligible veterans and their families. The need for additional funding stems mainly from more veterans accessing support, which is a good thing. I know our Canadian Digital Service and Treasury Board Secretariat has been working with Veterans Affairs to ensure that more veterans take up the services available to them.
There is also $163.5 million to write off debts owed to the Crown for unrecoverable Canada student loans.
[Translation]
There is also $150 million to implement the Feminist International Assistance Agenda announced in Budget 2018. We have $115 million to provide temporary housing for asylum seekers and $105 million to renew the VIA Rail fleet for the Quebec City-Windsor corridor.
[English]
Honourable senators, $100 million goes to a cause that I’m familiar with, and that is to reimburse First Nation communities, provinces and territories and non-governmental emergency service providers for costs that were incurred during the response and recovery activities on reserve, particularly as a result of wildfires.
In addition, these supplementary estimates include an increase in planned statutory spending in the order of $3.7 billion.
Of note is $409 million in funding for Employment and Social Development Canada for the Canada Student Grant Program.
With that let me turn briefly to the Interim Estimates. The Interim Estimates provide an overview of spending requirements for the first three months of the fiscal year as they compare to the 2018-19 estimates. You’ll see a list of planned grants in order to allow organizations to make their grant payments that will be due effectively as of April 1, 2019. There are proposed schedules to the first appropriation bill for 2019-20.
Through these estimates, the government is seeking parliamentary approval of $37.7 billion in budgetary expenditures and $14.3 million in non-budgetary expenditures to start off fiscal year 2019-20.
In the coming weeks, the government will be introducing supply bills for Parliament to vote on appropriations for both the 2018-19 Supplementary Estimates (B) as well as the Interim Estimates for 2019-20.
[Translation]
Mr. Chair, as we have previously said in this committee and elsewhere, the government is committed to improving the transparency of the estimates documents as well as their usefulness for parliamentarians. As you know, Mr. Chair, my predecessor made a commitment to improve parliamentary oversight of government spending based on four pillars, and he took appropriate action in each of those areas.
[English]
First, as you’ll know the sequencing was changed in the other place so that the Main Estimates are tabled after the budget for the duration of this parliament, last year and this year.
Second, the government has reconciled the accrual-based budget forecast with the cash-based estimates.
Third, the government has been piloting a vote structure that shows parliamentarians the purpose of funding provided for grants and contributions.
Fourth, the government’s policy on results lets Canadians know how their tax dollars are spent, what results are expected and how they are being achieved.
With those changes we’ve made so far, the government is demonstrating its commitment to openness and transparency.
This was recently recognized in the Open Data Barometer survey, where Canada tied for first place in a global measure of how governments publish and use open data for accountability, innovation and social impact. It’s also reflected in the Government of Canada becoming the lead government co-chair in the Open Government Partnership for 2018-19.
Mr. Chair, I can assure you and your committee that I am committed to working with parliamentarians and other stakeholders to find additional ways that we can improve the estimates process.
Tracking how tax dollars are spent is one of the most important roles that we as parliamentarians play, and my officials and I would be pleased to take your questions. Thank you.
[Translation]
The Chair: Thank you, Madam Minister.
[English]
Honourable senators, because of the number of senators lined up for questions, I would ask that we look at the rules of three to four minutes maximum questions and answers. If time permits, we will go for a second round with the officials of the department.
Senator Marshall: Welcome, minister. My question is very general in nature. As you mentioned, Minister Brison has appeared a number of times and he spoke on the reforming of the estimates process. I’d like to hear your views on reforming the process and whether it will continue. I’d especially like to hear your views on vote 40 and what’s going to happen with vote 40 for several reasons. One is that vote 40 was not what we were promised when Minister Brison appeared before the committee. Now that we’ve had a year under our belt, we know that it has reduced parliamentary oversight. It’s moved it over to the Treasury Board, either of ministers or the Secretariat. In the most recent report released by the Parliamentary Budget Officer, he’s indicated that it hasn’t sped up the implementation of the budget initiatives.
Could you just speak to that, but vote 40 would be the specific area that I’d like to hear your views on.
Ms. Philpott: Thank you. I’m very happy to respond to that. I have to take my hat off to my predecessor, former Minister Brison who did take this issue very seriously and looked into a whole range of reports and recommendations that had been given over the years by a number of bodies, including some committees, who had recommended that there needed to be a realignment of what the budget and estimates process looked like. It didn’t make sense to a lot of people. It seemed a little bit out of order, and there had always been this desire that the budget would be presented first before the Main Estimates.
We undertook a two-year pilot for last year and this year to attempt to do that. We will have an opportunity to look at the results of how it’s gone. I would say, even on the basis of what took place last year, I think lessons were learned. I think people were happy with the effort to try to align the budget and estimates process more successfully. The mechanism that was used, vote 40, was a way of being able to recognize that some of the items in the budget had not gone through the Treasury Board process, for example, at that point, but needed to be put before Parliament with a recognition that any spending that comes out of government does need to go through the Treasury Board process.
I’ve had some good discussions with my officials in the few weeks that I’ve been in this position. We’re looking at the experience from last year to see whether there are some ways that we can improve how that was done within the vote 40 mechanism. We haven’t landed on something, and I would certainly be very welcome to hear your suggestions. So as not to go away from the concept of starting first with the budget and then having the Main Estimates there. We understand, of course, parliamentarians need to exercise their responsibility over expenditures. The more transparent we can be and the more information we can provide you the better. We’re looking at some ways that can be done.
Senator Marshall: Can we expect to see another vote 40 in this year’s Main Estimates?
Ms. Philpott: We’re obviously getting close to budget time in just a few weeks. We would have Main Estimates as quickly as possible after that. I have asked my officials to look at a mechanism, whether it be vote 40 or a variation on vote 40, that would provide a bit of a greater breakdown so that people won’t be feeling like it’s — obviously everything that was in vote 40 was accounted for and has continued to be accounted for. But I think that we should learn from the feedback that we got last year that people would like more information.
Senator Marshall: Thank you very much.
Senator Pratte: Welcome, minister. Last year, when the first Interim Estimates came out, our committee looked at that and mentioned that there were still questions as to how exactly these estimates were produced. If you compare them to the previous years’ Main Estimates, there are wide variations, depending on the department you look at. Some department already have 40 per cent of their expenses in the Interim Estimates; for other departments, it’s much lower. It’s not absolutely clear how you produce these numbers.
Would you care to explain a little bit? Also, are there improvements that would be warranted in this particular field?
Ms. Philpott: Thank you for the question. I will initiate a response, and Glenn may want to add a few other details.
By its very nature, everyone would prefer that the Main Estimates could be a wholesome and thorough reflection of the planned spending for the future year. In some departments, that’s easier said than done. Obviously, items come up where there are unexpected expenses. Again, I think about things in my own previous department of Indigenous Services Canada, where you’re suddenly having to respond to wildfires, for example, and going to ask for funding when it’s not during the budget cycle. It’s therefore inevitable that you need a supplementary estimate in order to put that kind of money in place.
This is certainly something that department officials are very much aware of; that it is better if we can have fulsome estimates right from the very beginning as to what the expenditures are likely to be. I don’t know that we would ever imagine that we would get to a day when we would either find that the departments hadn’t done the necessary work yet to be able to actually determine how their budget allocation was going to be spent exactly or that unexpected expenditures came up for which there was a desire for supplementary estimates from an off-cycle budget request.
Maybe you can fill in a few other details.
Glenn Purves, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Sure. Thank you very much, minister, and thank you, senator, for the question.
At its heart, as part of the pilot, when the Main Estimates date was moved to after the budget — it used to be that the Main Estimates had to be tabled by March 1. Now, this provisional standing order has it by April 16.
Last year, when we did the Interim Estimates for the first time, the whole principle, which is the same as this year, is the following: What are the cash needs for the first three months of the fiscal year such that Main Estimates can be tabled, discussed with parliamentarians and achieve Royal Assent? That’s the same principle that’s being applied for Interim Estimates in this case.
Obviously, the Main Estimates and the projection of Main Estimates feeds into that basis, but we also talk to departments and asked them if there are any cash needs for those first three months that we’re not aware of. Additionally, are there contractual obligations? Are there out-of-court settlements or any settlements of that nature? We build that into it as well.
The combination of that is what is taken forward with Interim Estimates.
That’s the same principle we used last year.
Senator Pratte: Okay. I thought everything started with a very simple rule that the Interim Estimates are a quarter of the previous year’s Main Estimates or something like that.
Mr. Purves: It’s very much that way. For the first three months, which is 25 per cent of the year, you effectively take a quarter of the Main Estimates, but you also have to talk to the departments, reach out and understand whether, in fact, that applies to them for the year or whether there are any unexpected payments that they’re expecting that we should be taking into account.
Senator Pratte: Okay. I’ll leave it at that. We’ll talk to officials later. Thank you.
Senator Jaffer: Thank you, minister, for making yourself available. Congratulations on your appointment.
I was very pleased to hear what you said about veterans. I’m a deputy chair of the Veterans Affairs Subcommittee. Hopefully, you will come to Veterans and explain more. We will make the request; I’ll speak to my chair.
I have two questions, one on pay equity and one on wage. I’ll see how my time goes.
On pay equity, they requested funds of $3 million in advance to do proactive work on the wage gap. What role would the Treasury Board play in achieving that legislative change? Minister, this is a very particular question, and if you want me to wait for the officials, I can do that later. I just wanted to know how you are going to monitor this money that’s being given.
Ms. Philpott: Thank you for the question. It’s a really important one. As you know, you and many other advocates have been asking for proactive pay equity legislation for some time. My predecessor, Scott Brison, was actively involved in the preparation of the legislation, along with our Minister of Employment, Workforce Development and Labour, as they sought to be able to address that.
We have continued to work together, for example, with bargaining agents who are very interested in this issue and in making sure it rolls out effectively. My officials are tied with the work that’s being done to ensure that legislation will be implemented effectively and that it will do what it’s supposed to do in terms of making sure people are remunerated fairly for work of equal value.
Senator Jaffer: On wages — women’s gender equality — I understand that $24.9 million was given to the department. How were the amounts presented and how are you going to monitor this on your Interim Estimates with wage?
Ms. Philpott: Thank you again for the question. As you know, one of the pieces that was part of the same initiative was to actually make a full department of what was previously the Status of Women, which was not a full department. It’s called Women and Gender Equity. That came through the Gender Budgeting Act that received Royal Assent last year. That will be under the purview of the full Minister for Women and Gender Equity. There have been significant investments in that particular area to make sure that there are not only the existing programs that were from the previous Status of Women but that she is continuing to lead now in a number of programs in terms of reduction of violence against women, for example. She has been involved in making sure there are more services available for shelters for women. This will now all fall under that new department.
As Treasury Board always does, we will make sure that each of those initiatives is examined thoroughly. We have a responsibility to make sure the new department does have a strong results framework. That’s one of the standard oversights that the Treasury Board will have as they get approval for the expenditures within that new department to ensure it achieves the results they intended.
Senator Jaffer: Thank you, minister.
[Translation]
Senator Forest: Thank you, Madam Minister, for appearing before us. I would just like get a good grasp of the methodology involved in preparing the Main Estimates. Are the various departments given an objective to attain? For example, if expenditures are limited to an increase of 2 per cent, are objectives communicated to each department as part of the Main Estimates process?
Ms. Philpott: Thank you for your excellent question. That depends a bit on the departments but also on the key objectives of our government. Every department has had objectives for a long time now. For example, when our government took office, we decided on a number of initiatives that are priorities to us.
[English]
For example, the Canada Child Benefit is one of the initiatives we undertook very early on that was, in fact, an adaptation of a previous version of a Canada child benefit.
When the Main Estimates come together, you’re seeing that many departments have some of their standard work that doesn’t actually change from year to year. But we, as a whole-of-government response to budgeting, will each present to the Minister of Finance our various goals — we’ve each been given a specific mandate to achieve — and then we decide together as a cabinet which of those move. There are all sorts of incredibly new initiatives that will help to spur on the economy and will help to make sure children and families have access to the funding we need.
Ultimately, the Prime Minister and the Finance Minister have to look at a whole range of potential new ways we can make investments.
The good news that we have seen, now that we are well into our fourth year in government, is that we are really pleased with the way that some of those early investments have had the effect that we hoped for.
You may have seen the StatsCan report that came out just yesterday talking about the Canada Child Benefit, which we hoped would raise 300,000 children out of poverty and in fact, StatsCan has been able to confirm that it has achieved that objective. It’s probably not all that different from other governments, but I think the work of determining what those Main Estimates look like doesn’t come out of patchwork pieces of departmental input. It is actually intended to be a whole-of-government initiative according to the priorities that we have set for ourselves.
[Translation]
Senator Forest: If I understand correctly, certain objectives may differ from one department to another at the government level. Will the Prime Minister and the Minister of Finance be called upon to arbitrate if the amounts allocated are exceeded?
Ms. Philpott: As I said before, the requests always exceed the budgetary limits. The Minister of Finance always has difficult decisions to make, but it is important to discuss them around the table. I recall the discussion we had about the Pay Equity Act. People expressed different opinions and proposed various solutions to help us attain our objectives. We settled on a plan that was well received by the community.
[English]
I am not sure if I have gotten exactly the root of your question. But what I have found in this government is that as ministers come forward — in both my department and my role as Minister of Health and even more so in my role as Minister of Indigenous Services, I wanted all the budget money for myself because I thought Indigenous Services was the most important area to invest in. I still think it is a pretty important area.
But we have to make the case before our colleagues and say we have to be fiscally responsible as a government. We need to make sure the areas in which we are investing money are areas that will get us good value for money and where there will be a return on investment. Things like investing in First Nation education do give a fantastic return on investment because it makes those young people more capable of entering the workforce, for example. There isn’t necessarily a magic formula, but that’s a bit of the inside of the sausage-making process.
Senator Andreychuk: Welcome, minister, to your new portfolio. You have been talking with some of the senators about what part of the role of this budget and the transparency is in your bailiwick. We looked at supplementary estimates and saw there was a shortfall in the statutory appropriations. We are being told again that the shortfall is expected to be eliminated by a one-time credit. But I have heard that before. So who makes the assessment? Do you oversee in any way these projections on what the interest rates will be in these, what the downturn or upturn in an economy can be?
It seems to me that we are often caught with a wonderful objective but when it hits the ground, there are always more costs. My concern is that in your previous portfolios, two departments were created out of one. They added staff. We were told originally that it probably would not be much of a significant increase. We are hearing more and more there is an increase.
Are you the person who looks at it and says, “Are we getting value for money?” Or is it going into more administration and these fine objectives which every government — I’m not going to say anything about this government or the last government. They have their own objectives.
But when you hit the road sitting down the line in Saskatchewan or Manitoba, has it really gotten down to a program result or is it still in the planning consulting and the dollars then are eaten up in the objectives to get there but we don’t seem to see the results on the ground? And I’m very concerned in Aboriginals that we are creating and adjusting two departments. People are still waiting for the results on the ground. And I find it, as I think you did, a critical issue that we have to address. So I keep looking at these numbers being moved around. Who stands back? Is it your department?
Ms. Philpott: I think it’s a fantastic question. You asked several questions at once. I won’t be able to answer all of them, especially as my time is short so I will jump into a few.
In terms of the statutory and the fact that there is always a little extra that needs to be added in the supplementary estimates around statutory funding, some has to do with interest rates or payments that were not recognized. There is a bigger uptake on veteran services, for example.
I think your other larger question you asked, which is a really good one, is who stands back and looks at this. I have to say that in the three and a half years we have been in government so far, I don’t think we have gotten it perfect but I think we have made some really strong progress in terms of looking at whether we are getting the outcomes that we want.
Let’s go to something like First Nations education, which I think is a great example. The Auditor General looked at this last year and raised a few concerns about whether we were getting the results that we want. But what we determined in our previous department is that sometimes in the past, governments had been measuring the wrong thing. You don’t necessarily need to know exactly how many pencils are in every classroom. You need to know how many kids are graduating from high school and is that getting better along the way.
One of the things we have been doing is a whole-of-government initiative and the Treasury Board has a large oversight capacity in this, demanding that each department has a strong departmental results framework. We at the Treasury Board cabinet committee have ministers come in to us regularly and we look at the results framework. I am a big challenger of those. They come in with fear and trembling, apparently, when I’m asking some of the questions, which might be hard to imagine. But we need to dig into those. What is it that we are measuring?
And you are absolutely right that sometimes you can’t assume throwing money at a problem is going to solve it. You have to be fastidious looking at what the outcomes are. We have, I think, done well in a large number of areas. Look at something like the boil water advisories, which lends itself beautifully to that. You can say we put in about $2 billion spending to make sure there is clean water on reserve, and we tracked it meticulously to make sure we can see how it’s coming out.
I think departments all have more work to do to make sure they have better measures, and you collectively need to hold departments to account on that.
The Chair: Thank you. We have four senators left. And I have to look at the watch; it’s eight minutes. So could we be succinct, one question per senator.
Senator Forest-Niesing: As a gift to my colleagues, I will say that I believe I understood the answer to the question I would have asked you. So I will give up my time to my colleagues.
Senator M. Deacon: Thank you. In a similar vein, looking at from the balcony, who is monitoring the difference that we think we making? Are we measuring the right things? How do we make sure Canadians from coast to coast to coast are getting some sense that the resources going in are going to successful results coming out?
And I think one of the things I hear around this table is our desire not to meddle, but our desire to perhaps know a little more frequently on some of the depth of reporting that we receive. I think that would be a fair piece of feedback to pass to you.
Ms. Philpott: I think it’s a fantastic question. I was very sad to be moved from a department that I loved. It’ not that I don’t love my new place, but one of the things that made me happy about being able to be given this opportunity and privilege of being President of the Treasury Board is because it is one of the places in government where you do get to dig into those details. And I totally agree that Canadians want to understand that. I have my son-in-law asking me, “Where can I go to see how much money the government spends on everything?” To my delight, I have discovered we have a website that was established under Minister Brison. I can’t rhyme off the URL. Do you know the name?
Mr. Purves: GC InfoBase.
Ms. Philpott: If you Google “GC InfoBase,” there is a remarkable amount of information in there. It actually tracks what the budget allocations are, has it gone through Treasury Board, and is that money out the door. I think it has the results framework attached to it as well.
Mr. Purves: It has results as well.
Ms. Philpott: I think it can always get better and more user-friendly, but it is not bad from a user-friendly point of view. So I take your point. It is something important.
Senator Boehm: Thank you for joining us, minister. My question is about collective agreements. The government seems to have had a pretty good record in terms of coming to agreements with the various unions. In the ask in Supplementary Estimates (B), how many collective agreements does this request cover? This is for the $8.2 million in addition. And are you anticipating any more, or if there is still some under negotiation, how would you calculate that?
Ms. Philpott: Thank you for the question. One of the really unsung achievements of my predecessor Mr. Brison was around collective agreements. I believe that in his time in Treasury Board he negotiated about 26 out of 27 agreements, many of which had expired. The work is undergoing now to make sure all of those are put in place and the pay is being delivered appropriately in that regard.
There are now a couple of major collective agreements that are standing before us. In fact, I would say one of my top priorities over the next four months is to be able to negotiate very large collective agreements with our two largest public service unions.
I’m happy to say that on the day that I was appointed to this new position, on the advice of both Minister Brison and my team, they said, “You need to reach out immediately to the head of PSAC and PIPSC and let them know this is a priority.” I did that, and I have met with them both. I do not want to wrap up our term without having found a way to achieve agreements that will be good for those members but also good for Canadians. I consider it one of my very top priorities, and I’ll certainly be working on that.
Senator Klyne: Thank you very much, minister, for attending. It’s a great honour to have you here. I like your energy and enthusiasm.
I have a broader question, and it’s somewhat in your bailiwick. I find line items quite easily on the Missing and Murdered Indigenous Women and Girls, and that’s a good item to be pursuing — First Nations, fiscal institutions and the Métis Nation housing strategy. When I look for the housing agenda on reserves, potable water and reconciliation, I have trouble trying to line all those up.
The bigger question for me — and this is not something you are going to be able to answer but it may be as a takeaway that I could get an answer on for this committee — is when it comes to Indigenous peoples, First Nations, Metis and Inuit, there is a family of departments which will have line items that will either fall into the category of social issues or economic issues. I’d like to see, in those two columns, where the buckets are within all the departments, whether it’s 20 or 26 family departments, whether it’s Department of Fisheries and Oceans, Natural Resources, Indigenous Services, Crown relations within the Indigenous realm. Of all those departments, which ones have line items that cover either the social issues or economic issues of Indigenous peoples?
The Chair: Minister, you can respond by sending the reply in writing to the clerk.
Ms. Philpott: We will, perhaps, get a more fulsome answer to you in writing. I will very briefly say that I think that’s a fantastic idea. It’s there to a certain extent, but it could be better.
I will also say that it’s my bias that social issues are economic issues and that investments in social needs, whether it be education, housing, clean water, are ultimately going to have economic benefits for not only those populations but also for all of Canada. So I’ll just put that little perspective in there.
I apologize that I have to get over there so I don’t miss a vote. It’s been a pleasure to be with you. I know my officials will enjoy getting into some of the details. I thank them for that.
[Translation]
Thank you very much and until next time.
[English]
The Chair: Thank you, minister, for your availability again.
Senator Pratte: Thank you.
This may be a silly question, but I’m still learning here. When I look at the expenses in the estimates or the public accounts, I see that in the last couple of years there have been significant increases, 7 or 8 per cent year per year. When I look at the budget, and I understand the budget is on an accrual basis, not a cash basis, eventually, and if you have a relatively large increase in expenses in the estimates, somehow it should reflect in the budget and program expenses. Or is there something that I really don’t understand? Because when I look at the budget, year per year the program expenses are increasing by 2.5 per cent or something like that. So there is a huge difference between what I see when I look at expenses in the estimates or the public accounts and the budget documents.
Mr. Purves: Thank you very much for that question, senator. This is one of the reasons why starting last year we ended up putting into the budget that cash and accrual reconciliation, because there is, as Senator Marshall would know from her background as an AG, a huge difference between what’s a cash projection as well as an accrual projection. There are some expenses that have to be accrued upfront, and then there are others, such as capital, that are accrued over time.
So having that reconciliation is very important because it’s an important key for mapping through the incremental change in spending for the government going forward in terms of the plan and trying to compare that to what’s actually being put forward for approval by Parliament.
That’s the difference between a budget as well as Main Estimates. One is a plan and the other one is seeking appropriations approval by Parliament.
In terms of how we can do that better or how we can think about communicating that so that that interpretation is better we are open to having that dialogue and listening to how that kind of reconciliation could be improved. However, it’s very important for people to understand there is a huge difference between cash and accrual, and we need to make sure that people understand what the differences are.
And that is why we put that table, that reconciliation in the budget. We also put it into the Main Estimates now, so people can actually flip back and forth to it.
Senator Pratte: I’m not an accountant, as I’m sure you understand. My concern is whether the government is increasing its expenses too much. You could look at expenses versus GDP and there is no worry there, but when you look at public accounts on a cash basis, the increase is large. Which one is the best measurement of the evolution of government’s expenses over a 10-year period?
Mr. Purves: In terms of an accrual plan and in terms of an accrual projection in the budget, it is giving that sort of five-year plan. There is also the long-term sustainability plan that the Department of Finance puts out that looks at these questions. But there are different reasons for why programs grow. Some of it is due to demographic factors, interest rate projections, and currency. Then you get into the public debt side and there’s a whole host of reasons there. When you’re looking at different programs it is important to ask is it growing too much or is it growing at a sustainable pace in order to understand what are the key drivers underpinning these programs.
When the Department of Finance puts out its budget it includes details to explain why there is growth and what is the projected growth going forward. A lot of the details are there. It’s very hard to dig through some of these documents to pick it out. That’s something that as parliamentarians it’s important to point out to officials and to elected officials as well.
Senator Pratte: I need additional courses with Senator Marshall, I guess. Thank you.
Senator Marshall: I want to talk about vote 40 again. I raised it briefly with the minister, and I expect we’re going to see it again for the new year. It’s really confusing in that it’s very difficult to track the numbers. When the numbers were showing up in supplementary estimates you could ask the departmental officials what their plans were for the money, et cetera. Because it’s now all shifted over into vote 40, Treasury Board Secretariat gets to do what the parliamentarians used to do. They get to question the departments.
In going through Supplementary Estimates (B), I’ll give you an example of one that came up yesterday. When you look through you can still see line items that refer to Budget 2018. If all the Budget 2018 initiatives are over in vote 40, I wouldn’t expect to see any reference to Budget 2018 in the supplementary estimates, but yesterday one came up and this is an example: Department of Employment and Social Development, there was $3 million for the 2030 agenda for sustainable development, and then in brackets it says Budget 2018. When I saw the Budget 2018, I wondered why are they getting their $3 million again? The $3 million is over in vote 40, and therefore Treasury Board should have given them the money from vote 40. It shouldn’t come through sups again. And then we found out that, okay, Treasury Board has marked it as being “withheld” for some reason.
From a parliamentarian’s point of view, it’s really difficult to trace the numbers because you’re trying to go from the budget document to vote 40, then when you pick up your supplementary estimates you see it there again. So it’s really quite confusing. You’re usually sitting down with three documents trying to cross-reference the numbers.
For vote 40, I expect to see it again this year, but have you given any consideration to maybe take one small department and include their new budget initiatives right within their own estimates and just phase it in? Hopefully vote 40’s not long-term. It’s really confusing.
Mr. Purves: Thank you, senator. I won’t get ahead of what the minister said just in terms of vote 40 and the plan for this year. I’ll introduce this one and then Marcia who, as everyone knows, is the real expert in the room, will either correct me or will validate what I say.
When it comes to vote 40 — and this is the one thing I would say has confused me a bit being new in this job — there’s a tremendous amount of controls on vote 40. When I came in I read a lot of the concerns about controls on the vote and the fact that people had concerns about the lack of them. In fact, there are a huge number of controls on this vote. If something is specified for a department, for an initiative, with an amount, it has to go to that department for that initiative, for that amount. If there’s any deviation on that, or if there’s anything that hasn’t been broken down at the outset when the vote was created and attributed to that department and so forth, it then needs to exit and go back into the formal sups process for approval again by Parliament.
There are items that are withheld for this purpose. They cannot get approval by Treasury Board and cash distributed to the department because there has been a variation through the implementation or there has been a change in one of those factors. But maybe Marcia could enlighten a little bit more.
Marcia Santiago, Executive Director, Expenditure Strategies and Estimates, Treasury Board of Canada Secretariat: Yes, just to continue from what Glenn said, at the president’s direction we amended the vote wording for vote 40 in the full supply bill for Main Estimates so that it would refer specifically to that combination of departments, measures and initiatives.
The issue with that $3 million for ESDC — and there’s also some funding for Global Affairs for the international feminist agenda that’s in the same situation — those are listed in the budget annex and in the Main Estimates annex as allocations to be determined or they’re part of something called a “net adjustment.” In other words, there is no department mentioned.
On your suggestion to basically break up what is in vote 40 and try to assign pieces to individual departments, we’re definitely looking at ways to do that. Again, it depends on how much detail we get that’s workable from the budget tables.
Senator Marshall: You’ve talked about the controls, but the controls are exercised by Treasury Board, either the Treasury Board ministers or the Treasury Board Secretariat, and parliamentary oversight has been degraded, but what you’re doing in Treasury Board has been improved. I’m looking at it from the parliamentarian’s point of view. Thank you.
Senator Jaffer: I want to continue with the question I asked the minister on the pay equity. I’m a little intrigued that there is an advance rather than an estimate given for pay equity to look at the wage gap. How would you monitor it and how would you look at whether there was work done to improve the wage gap? This is different from an estimate that a department would give.
Mr. Purves: Just to walk back, the Pay Equity Act was approved and received Royal Assent in December. The question is what’s going on right now. A lot of the regs are being put in place that will provide the details and the framework for the implementation of that work.
Once those regs are in place, which we’re expecting at the end of the calendar year or spring 2020, then it’s Treasury Board working with collective bargaining agents that work through on specific pay equity plans. That process will “put the meat on the bones” in terms of what is the actual gap and where will the attribution of funds be directed in order to close that gap.
You asked a specific question about that $3 million. There’s a new pay equity commissioner that’s supposed to be established. There’s a pay equity unit that’s supposed to be created at the Canadian Human Rights Commission. Also, there’s work to be done on job descriptions to be able to allow for those engagements with collective bargaining agents in order to come to a common pay equity plan. So that $3 million is to get that work under way.
Senator Jaffer: What will your oversight role be? I get it that all that has to be set. I thought it was to help to decrease the wage gap but what you’re talking about is to set up the infrastructure.
Mr. Purves: It’s setting up the framework and the system to be able to work through how to address those pay equity gaps. Once that’s established then there’s a better line of sight in terms of estimates. We wouldn’t see that closing of the gap element at this point just because the act has just been established. Regs still have to be developed.
[Translation]
Senator Forest: As part of the Interim Estimates, which, as you said, seek to provide the government with the funding it needs for the first three months of the fiscal year, it was announced in January that there would be a new department responsible for an area very close to our hearts, rural economic development.
In the Interim Estimates there is no money allocated to the new minister to ensure that she can discharge the responsibilities entrusted to her in the mandate letter. In that light, will the new department be running in July?
Mr. Purves: Thank you very much for that question, senator. I’ll answer in English, if you don’t mind.
Senator Forest: No problem.
[English]
Mr. Purves: There is no separate vote for that minister’s office specifically. In terms of where the funding would come from, it would be under the infrastructure portfolio. That’s why you don’t see a separate vote just for that position. Having said that funding would come from the funding that has been established within the infrastructure portfolio.
[Translation]
Senator Forest: The new minister isn’t just responsible for contributing to the implementation of infrastructure projects. Her mandate letter lists multiple objectives, such as collaborating on rural development in partnership with other departments. How are infrastructure programs going to help with the red tape or core operations of this department? Will the funding for that also come from the infrastructure portfolio?
[English]
Mr. Purves: It’s not to say that there’s no funding that will be allocated for the mandate that is being discharged for the minister and their new responsibility. It’s just to say that there’s no specific vote that’s been directed for that minister in order to discharge it. Effectively, the funding that would come in support of that minister’s operations would come from the — it’s the infrastructure portfolio or the minister’s office, yes. But the program is separate.
Again, a minister’s office effectively would carry the funding for that minister, but specific programs that are within that portfolio have funding to carry out the operations of that mandate.
[Translation]
Senator Forest: That’s really a new approach. As I see it, this is the only department that doesn’t have its own operating budget. Would its operations be funded by Infrastructure Canada?
[English]
Ms. Santiago: It actually isn’t the only one in that situation. The Minister of Labour, for example, doesn’t have its own vote. The work of the Minister of Labour is funded from ESDC, 1. It is the same thing with the minister who is responsible for international trade. There are multiple ministers in the foreign affairs portfolio, but all of the votes are designated only to Global Affairs. It’s not unusual for there to be ministers’ offices, multiple ones, that are funded from one vote, but the programmatic work that they do is funded from different places.
[Translation]
Senator Moncion: I’d like to come back to Senator Pratte’s question about the 2.5 per cent increase. How do you monitor spending growth? I realize you receive many requests and you have to distribute the funding, but what do you do to keep an eye on this growth, since it seems to increase every year?
Mr. Purves: Thank you for the question.
[English]
When you have a budget plan the Minister of Finance is the one who has that perspective of the programming, tax revenues coming in and all the projections there. In terms of looking through and seeing what the forecast is for growth of programs and so forth, it’s really carried in the budget in terms of their projection going forward. You can see that with respect to program spending, broken down by transfers to people, transfers to other levels, and so forth. A lot of those are predicated on various formulas, some of which are linked to GDP some of the. Some of them are inflation dependent. Some of them are based on demographics. Some of them, like equalization, are based on prescribed formula. So there’s a host of different factors that carry that.
In terms of your question of who’s watching this, it’s very much from the global standpoint, the projections coming out from the Minister of Finance in terms of the budget planning for the way ahead.
In terms of looking at issues through the lens of government spending, programming and so forth, Treasury Board is looking at the incremental items coming through and is doing the scrub. As these things come forward in terms of Main Estimates, as well as supplementary estimates and so forth for consideration by Parliament, they’re bringing that forward so people can have that perspective on a cash basis.
From a fiscal sustainability standpoint, for the most part we’re on a modified accrual basis. That’s why the budget and the focus of the Minister of Finance and the Department of Finance in that purview is on that basis.
Senator Moncion: I see the Treasury Board as the one who distributes funds according to what you receive. Do I understand it well? According to the demands that you receive or the programs that —
Mr. Purves: Treasury Board will look at programs that come through, but looking at it in comparison to the base and so forth, and will do the due diligence on items that come through. Once those are approved, they form the base, depending on if it’s a multi-year projection or if it’s a one-year projection.
Again, it’s more on the basis of cash needs, and that’s what estimates are about. These are the cash needs for a government for the year.
When you’re asking about fiscal sustainability and so forth, it’s more through the lens of accrual budgeting where that lens is taken into account.
Senator Moncion: Thank you.
Senator Andreychuk: Just picking up on all the points you’re talking about. It’s parliamentary oversight that I’m interested in. I don’t have the expertise of Senator Marshall. I don’t think I have the time to go get the degrees. I’m not sure any province would hire me.
On the other hand, I think we are expected to be the oversight, the external oversight. You’ve talked about a lot of internal adds, which I think are very good and are necessary in a modern, complex world. But the oversight seems to be moved into more general votes, on the one hand.
What troubles me is you said the government goes with the budget, that’s their plan. We do get an opportunity to comment on it, but more and more of those plans and pieces of legislation are just general statements. Everything seems to be moved over to regulations. I think Senator Jaffer’s point is well taken. We passed a bill. We had certain expectations, but the answer was we have to negotiate, there will be regulations, we will consult, and you’re telling me some of those have not been completed much later. The regulations are coming after, not during, a discussion about the issues in Parliament.
So I see a diminishing role on the content and also on the accountability of the funds. We had some excellent conversations with the former minister to talk about the fact that in a modern world, Parliament’s role has to be engaged again in a different way.
So I will freely admit it’s very difficult, until I get experts to tell me what areas may be of concern, but I should be able to explain it to the public. We’re losing that sight. The website others go to is very difficult to track, unless you’re an expert. The average person would like to know value for money and are the women’s programs moving the way we thought they would be — the pay equity. We don’t have an answer, and we have nowhere to go. It’s always a work-in-progress.
That’s going to be a major issue and a pushback about government accountability to Parliament and the people, and it troubles me a lot.
Mr. Purves: Those are very good comments. From the standpoint of elected office and officials, the importance of communication and interpretation are key. All these comments we take away from the Senate, but also with respect to the House and House committees — we take very deep care in terms of looking through everything and making sure these things are respected.
In terms of budget planning, it is a budget plan only in that in order to get approval for funding for all these items that may be announced in a budget plan — any budget plan, for that matter — they have to go through Parliament. They benefit from the views of House and Senate committees in terms of how they’re going to be implemented. Those aspects should persist. I don’t think there’s any sort of circumvention of any of that.
In terms of regs and so forth, as Senator Jaffer noted, it’s important for regs to go through a Gazette process so people can comment and provide views — parliamentarians and Canadians. There are structures in place in order to allow for that. None of that is being circumvented at all.
In terms of what I take away from this committee, we really need to think about how we present the budget implementation vote, and what’s going through and what’s not. We ought to think through how better to communicate this to parliamentarians and Canadians. We’re certainly open to thinking through that to link back to what the minister had noted already.
The Chair: Thank you.
Before we conclude, I would have a comment and maybe, to use your word, Mr. Purves, a takeaway. I will come to a question that probably I should have asked the minister — but through you and Treasury Board. On February 22, 2019, the government provided its response to our report The Phoenix pay problem: working toward a solution. We look forward to inviting officials from the Treasury Board of Canada Secretariat, and Public Services and Procurement Canada to discuss the response and the actions they are taking to ensure that public servants are being paid accurately and on time.
When I look at the response we got — and I’ll just take a quote here: “The next-gen team” — which is being labelled — “is currently working through the initial planning phase.”
Do you have any comments, or do you just want to wait when we invite you back?
Karen Cahill, Assistant Secretary and Chief Financial Officer, Treasury Board of Canada Secretariat: What I can say on the next gen is that, in fact, they’re looking at a solution. Our Chief Information Officer has been pretty vocal about the work of the next gen. At this moment, we do not have a vendor or a proposed solution. We’re still exploring options. We’re going through an agile procurement methodology to get to the next solution to the pay system.
The Chair: And the next-gen team — how many public servants or how many employees does that team have?
Ms. Cahill: It’s about 26 employees, I believe, at the moment, coming from different government departments but on staff at Treasury Board.
The Chair: The deputy chair now will conclude with one little question.
Senator Jaffer: It may not just be a question. When we finish with the estimates, perhaps we should call the department to explain to us further to our report exactly what’s happening, because people are still not being paid. Maybe we can ask them to come back and explain exactly. I have to admit I wasn’t happy with the response.
Perhaps, once we finish this work, we should have a further presentation from the Treasury Board — a detailed one.
Senator Moncion: I would like to say, even before we go to the whole government, we can look at the one just with the Senate. You can ask all the questions to see all the problems that Phoenix is responsible for. We’re just trying to do a conversion from Phoenix to a new pay system for the Senate, and the caveats, the mistakes and the problems we have with that system are unbelievable. We’re just a small group. We’re going to be switching to another system.
Just looking at it at the Senate level, you will get all your answers, and then you’ll see how much it becomes an overwhelming thing for 200,000 employees.
Senator Jaffer: I agree with you, but I’m anxious to hear, because I understand we’re going to a new system. I’m anxious to hear what things have been put in place and what we have learned. Perhaps we can have a further discussion.
The Chair: From the comments I’ve heard, there’s no doubt this will be an agenda item in our next meeting of steering.
Honourable senators, we have a meeting this evening at 6:45. It will be the end of our witnesses that were chosen.
(The committee adjourned.)