Journals of the Senate
50 Elizabeth II, A.D. 2001, Canada
Journals of the Senate
1st Session, 37th Parliament
Issue 19 - Appendix "B"
Thursday, March 22, 2001
2:00 p.m.
The Honourable Daniel Hays, Speaker
Thursday, March 22, 2001
The Standing Senate Committee on National Finance has the honour to present its
THIRD REPORT
Your Committee, to which were referred the 2001-2002 Estimates has, in obedience to the Order of Reference of March 1, 2001, examined the said estimates and herewith presents its interim report.The 2001-2002 Estimates were tabled in the Senate on 1 March 2001 and referred for review to the National Finance Committee. As is customary with this Committee, several meeting dates have been set aside for the review of the Estimates. The Committee's initial examination began on Wednesday evening, 14 March 2001, and is expected to continue at later meetings this spring. At the first meeting, officials of the Treasury Board outlined the government's planned spending and explained the main features of the new Estimates. Appearing from the Treasury Board were Messrs. Keith Coulter, Andrew Lieff, and Kevin Lindsey. In addition to their presentation, the officials answered Members' questions and committed themselves to obtaining additional information on several items of interest to the Committee.
THE EXPENDITURE PLAN - OVERVIEW
This is the first year in a long time that the Estimates are not immediately preceded by a new government budget. The reason is that the government's expenditure plan for 2001-02 was laid out in the October Economic Statement and Budget Update. The Main Estimates reflect the plan presented at that time.There are four components to this year's Estimates. They include PART I, which provides an overview of federal spending by summarising the key elements of the Main Estimates and highlighting the major changes. PART II, which is traditionally referred to as the Blue Book, directly supports the Appropriation Act. It lists in detail resources that individual departments and agencies require for the upcoming fiscal year. It also identifies the spending authorities and the amounts to be included in subsequent appropriations. The Report on Plans and Priorities (RPP) provides additional details on each of the departments and agencies in terms of more strategically oriented planning and results. The RPPs, which will be tabled at the end of March, focus on outcomes expected from government spending activities. Finally, the Departmental Performance Report provides a focus on results-based accountability by reporting on accomplishments achieved against the performance expectations and results commitments as set out in the spring Report on Plans and Priorities. The Performance Reports are released in the fall.
The Minister of Finance's Economic Statement and Budget Update of October 18, 2000 set out the government's budgetary expenditure plan which amounts to $166.3 billion. The plan includes $124.6 billion of program spending, plus public debt charges of $41.7 billion. The Estimates for 2001-2002 present budgetary spending authorities totalling $163.4 billion. This represents 98 per cent of the expenditure plan found in the Economic Statement and Budget Update. It should be noted that the Estimates differ from the total October Budget and Economic Statement presented by the Minister of Finance by an amount of $2.94 billion. There may be several reasons for this difference:
- A number of items do not appear in the Estimates because of timing in the Budget decisions or because they depend on the passage of separate legislation;
- The Estimates do not include funds that are set aside within the Expenditure Plan for operating contingency purposes or for items that are still subject to Parliamentary or Treasury Board approval.
- The Estimates do not include the provisions for the revaluation of government assets and liabilities as stipulated in the Economic Statement and Budget Update.
- Some spending authorities in the Estimates are expected to lapse.
An overview of planned expenditures is provided in Table I below. For a different way of organizing the information in Table I, please see pages 1-3 of the 2001-2002 Estimates, Part I - The Government Expenditure Plan.
TABLE I
THE EXPENDITURE PLAN AND
MAIN ESTIMATES 2001-2002
(In millions of dollars)
| Public debt charges | 41,700 |
| Operating and capital expenditures | 34,335 |
| Elderly Benefits | 25,181 |
| Employment Insurance | 12,247 |
| Canada Health and Social Transfers | 17,300 |
| Fiscal equalisation | 10,479 |
| Other transfers and subsidies | 18,996 |
| Other statutory obligations | 3,118 |
| Total Budgetary Main Estimates | 163,356 |
| Adjustments to reconcile with Budget | 2,944 |
| Total budgetary expenditures | 166,300 |
Of the $165.2 billion set out in the Main Estimates, $112.8 billion, or 68 percent are statutory expenditures. The remainder, $52.4 billion, requires Parliamentary approval. In this year's Estimates, 17 departments or agencies plan to spend over a billion dollars in fiscal 2001-2002. The three largest budgets belong to the Department of Finance ($68.9 billion), the Department of Human Resources Development ($28.2 billion), and the Department of National Defence ($11.4 billion).
Senators began their discussion of the Estimates by reviewing the changes in total planned spending between fiscal 2001-02 and the previous year. Regardless of the reasons provided by the Treasury Board, Senators are troubled by the apparent inability of departments to more accurately forecast government spending. The Main Estimates 2000-2001 originally came in at $156.3 billion. During fiscal 2000-2001, $16.4 billion was added to government expenditures to bring the final estimates total to $172.68 billion. While the Treasury Board officials were able to account for the increase through supplementary estimates, Senators feel that there is too much reliance on this approach to government finances. The Committee would prefer that departments achieve more accurate forecasts, and that more information be provided on amounts not in the estimates but provided for in the Budget. For instance the Main Estimates 2001-2002 project expenditures of $163.4 billion. However, the Budget and Economic Statement of October 2000 allows for spending of $166.3 billion. This additional $2.9 billion needs to be better explained in the estimates documents.
The frequent use of supplementary estimates raises credibility issues in regard to the precision of the Main Estimates. In response, the officials assured Members of the Committee that every effort is made to prepare accurate estimates of the government's expenditure plans for the up-coming fiscal period. The supplementary items are truly the result of items that are new, or for which Parliament has not yet approved expenditures, or for which details are not complete.
A related concern involved the upward drift in government spending. While the figure of $166.3 billion for the Main Estimates 2001-2002 is $6.4 billion less than the final figure of $172.7 billion reported in the Supplementary "A" 2000-2001, it is nonetheless $10.0 billion more than the original estimate reported in the Main Estimates 2000-2001. Senators are concerned about the widespread reports of a slowdown in the global economy. In light of world events, the Committee wonders if the relatively rapid rise in expenditures may come up against declining government revenues.
Members observed that the contributions under the SchoolNet/Community Access Program at Industry were declining from $95.3 million in 2000-2001 to $47.0 million in 2001-2002. The officials reminded the Committee that the program, which assists communities in establishing public Internet access, is designed to provide only start-up assistance. As the objectives of the program are realised, the funding is expected to decline.
Questions were asked about the fact that the level of grants provided by Heritage Canada to organizations to further the use, acquisition and promotion of the official languages has not grown for some time. Officials could not be precise on the methodology that determines the annual allocations, but promised to look into it and report at a later date.
Members were interested in the operations of the Canadian Centre for Management Development (CCMD), which is receiving a $1 million increase in funding for fiscal 2001-2002. This government agency provides training services for senior government managers. There is a perception, as is evident from public statements and from the Throne Speech that there is much concern over public service reform. The CCMD has made a compelling case for a substantial increase in its funding base so that is may contribute to the process of public service reform. Members sought information on the functioning of the Centre and on the composition of its Board of Directors.
Industry Canada is responsible for delivering large sums of money to corporations and institutions in Canada. The Members expressed concern that much of the criteria by which recipients of federal assistance are selected, is outside of the realm of the Department. Two programs were singled out for discussion. The Canada Foundation for Innovation, which administers an endowment fund of over a billion dollars, provides assistance for research projects in universities and hospitals. The Technology Partnerships Canada Program at Industry Canada is expected to distribute $356.8 million in grants to corporations in the coming fiscal year not only for strictly research projects, but also for more commercial endeavours. Members are a bit sceptical about the ability of public servants to select successful commercial activities for government assistance. The Committee has requested additional information on these programs and in particular information on the selection criteria and on their operations.
The Committee is aware that the federal government maintains numerous public structures throughout Canada. Periodically, these federal structures are in need of maintenance. The Committee notes that the Jacques Cartier and Champlain Bridges Inc, a federal Crown Corporation, is currently seeking additional funding to make several repairs to structures that it administers. Specifically, this Crown Corporation manages, controls, operates and maintains the Jacques Cartier Bridge, the Champlain Bridge, parts of the Bonaventure Autoroute, the Pont-Champlain Jetty, the Mercier Bridge and the Melocheville Tunnel, in Montreal. At this time, the Corporation is seeking appropriations of $116.2 million to cover repairs of the bridges, roadways and autoroute under its jurisdiction. Officials agreed to obtain further details on the nature of these repairs.
The Committee remains interested in the relationship between the Canadian International Development Agency and the Canadian judiciary. In particular, the Committee is concerned about the use of funds from CIDA's Canadian Partnership program to finance overseas work done by Canadian judges through the office of the Commissioner of Federal Judicial Affairs. In the past the committee has sought information on grants and contributions given to judges for work undertaken abroad. As the earlier answers have not satisfied the Committee, the officials of the Treasury Board were asked to look further into this matter. Specifically, the Committee is interested in the overall amount spent for this purpose through the office of the Commissioner of Federal Judicial Affairs, the expenditure by project and the authority that permits funds to be spent in this fashion.
In the Department of Agriculture and Agri-Food there is a business line entitled "Strong Foundation for the Sector and Rural Communities" (see pages 2-3 of the Part II). This business line includes activities that enhance the agriculture and agri-food sector's economic viability and self-reliance and that promote the economic development of rural communities. Among other items it includes programs under the Farm Income Protection Act. On pages 2-5 of the Part II, the Department requests $227.3 million for one such program: the Crop Insurance Program. The amount requested in fiscal 2001-2002 is exactly equal to the amount requested in fiscal 2000-2001. Under the Net Income Stabilization Account (NISA), $212.6 million is requested in fiscal 2001-2002, which again is exactly equal to the amount requested in fiscal 2000-2001. Members were concerned about the methods employed to arrive at these figures and whether such estimates affected the level of payouts in the industry. The officials assured the Committee that all legitimate claims were paid regardless of the amount stated in these estimates. They noted that the claims under these income programs displayed large variations from one year to the next, and that the department cannot accurately predict the next year's level. Consequently, it simply includes a reasonable figure for the purpose of preparing the Estimates, and updates the number as hard data comes in during the year.
The Firearm Registry Program continues to draw the interest of the Committee. Specifically, Members were interested in the number of jurisdictions that refused to participate in the initiative and in the costs associated with federal departments and agencies administrating the program in such jurisdictions. Senators were informed that at the present time the provinces of Alberta, Saskatchewan, Manitoba, and Newfoundland and the Yukon, Nunavut, and the Northwest territories are not participating in the program. Officials admitted that some of the costs are not captured if the administrating federal agency simply includes them in its general operating expenses.
Although the officials always attempt to provide immediate answers to Members questions, there remain outstanding matters. The officials offered to provide information at a later date on several topics. At Environment Canada this included: its increasing contributions to environmental and sustainable development projects ($17.96 million), its declining contributions to support Canada's international commitments ($337,300) and its increasing contributions ($18.2 million) to the clean-up of the Sydney Tar Ponds and Coke Oven Sites in the Muggah Creek Watershed. They will also provide details on the funding requirements of the Cape Breton Development Corporation now that the Corporation is winding down operations.
As indicated above, your Committee expects, at a later date, to examine in greater detail various aspects of the government's spending plans.
Respectfully submitted,
LOWELL MURRAY
Chairman