Proceedings of the Standing Senate Committee on National Finance
Issue 9 - Evidence
OTTAWA, Wednesday, June 5, 1996
The Standing Senate Committee on National Finance, to which was referred Bill C-31, to implement certain provisions of the budget tabled in Parliament on March 6, 1996, met this day at 5:15 p.m. to give consideration to the bill.
Senator David Tkachuk (Chairman) in the Chair.
[English]
The Chairman: I would like to welcome Barry Campbell and Mr. Douglas Wyatt. Do you have opening remarks, Mr. Campbell?
Mr. Barry Campbell, M.P., Parliamentary Secretary to the Minister of Finance: Yes, I do, Mr. Chairman. Mr. Chairman, members of the committee, on behalf of the government may I start by expressing our appreciation for the expeditious manner in which you are dealing with this important legislation.
I would like to begin by reiterating some remarks I made during third reading of this legislation in the House. At that time, I pointed out that of all the legislation proposed by a government, it is budgetary measures that stand at the core because they define the bottom-line capabilities and concerns of government itself. This is especially true of Bill C-31. It is legislation dedicated to dramatic discipline change; change in the way government operates, change in how government spends, and change in how government establishes and addresses priorities.
These are not changes for the sake of changes, just as our historic action to cut the deficit is not fiscal action for its own sake. Our initiatives reflect the fact that Canada exists at a time when around the world governments are having to reassess their roles and responsibilities. This does not mean abandoning activities that are at the very heart of why government exists - to encourage jobs and growth and to protect those facing hardship. These remain sacred. At a time of tightened resources and when fierce global competition affects the way the economy operates, we must look at how to meet these responsibilities in a more effective and cost-efficient way, and we must make better decisions about the priorities that we can address and those that can be better addressed by other stakeholders. It is this challenge, the challenge of, as they say, getting government right, that lies at the foundation of this legislation.
I want to highlight a number of measures in this bill that seek to further this agenda. The first concerns hopper cars. Today, government cannot spend resources doing what others can do better. This philosophy is the reason that C-31 will empower the Minister of Transport to dispose of the government's fleet of grain hopper cars. The government will weigh carefully all serious proposals from interested parties. Our decision will take into consideration the interests of producers, shippers and railways, and we will ensure that the required capacity for grain transportation is maintained. As well, freight rates will be permitted on average to rise no more than 75 cents per tonne to cover the cost of the acquisition. We expect, Mr. Chairman, that over time, the privatization of the fleet of hopper cars will result in a more efficient grain handling system with lower costs for the railways, and this in turn will lower freight rates for producers.
Other clauses in the bill, Mr. Chairman, will remove the ten-year ceiling that was imposed on the repayment schedules of students who borrowed money under the Canada Student Loans Act. Lenders will be able to more flexibly match the repayment period to the financial circumstances of the borrowers. While the borrowers will certainly benefit, I should point out that the government may actually save money with these new rules, since the default rate will likely be reduced.
Another measure in the bill which I know you will find of interest will amend the Radiocommunication Act, allowing the Minister of Industry to auction off valuable radio spectrum licences. I should point out that competitive bidding for licences will not be used in all cases, but it will ensure that we have this very useful tool available when there is not enough spectrum to accommodate all users who seek it. I do not believe that any of you will have difficulty with this proposal, as it provides an alternative to licensing by an administrative process, a situation that because it is disconnected from market forces may allow licensees to enjoy profits at the expense of the public treasury.
Let me now turn, Mr. Chairman, to the changes this bill proposes to make to the Unemployment Insurance Act, changes that will bring insurance coverage more in line with the average industrial wage for 1996. Effective January 1 of this year, the maximum insurable earnings were reduced to $750 per week, in comparison with the $845 level that would have resulted under current legislation. Similarly, the maximum weekly benefit drops from $465 per week to $413.
The measures I have just been discussing will save $200 million in the second half of this year and will reduce the UI payroll tax burden on working Canadians. These are not punitive measures, Mr. Chairman. I ask your committee to remember that the UI program, when considered in its entirety, is strongly progressive. Lower-income contributors tend to draw much more in benefits than they contribute in premiums, while higher-income earners tend to pay much more in premiums than they draw in benefits. As well, let me point out that claimants who qualify for the 60-per-cent dependency rate prior to the coming into force of the proposed Employment Insurance Act will not see a loss of that rate for their claims. To qualify for this rate, claimants must have dependants and show average earnings of $422.50 per week or less.
Mr. Chairman, the bill also amends the Old Age Security Act to lengthen the period of time before newcomers to Canada become entitled to the full guaranteed income supplement or spouse's allowance. This is simply common sense, as you will readily understand. Under the current system, some immigrants obtain full benefits with as little as one year's residence in Canada. Restricting this easy access will improve the fairness of the system and lessen the burden on Canadian taxpayers. Under the new rules, eligibility will be phased in over ten years for those who qualify for benefits through social security agreements with Canada. As well, sponsored immigrants from countries which have social security agreements with Canada will not be eligible for benefits for the period of their sponsorship. Mr. Chairman, this reflects the fact that most older immigrants are allowed entry only because they have been sponsored by a family member. We will not penalize those who have already come to our country. Individuals now receiving benefits or those who landed in Canada before budget day and become eligible for benefits before January 1, 2001 will not be affected.
Thus far, I have addressed elements of Bill C-31 that touch on the world outside government. The key components of this legislation deal with the internal operations of the government itself and are aimed at creating vital new foundations for a more effective, responsive performance. Driving these changes is the fact that we are exploring alternative ways to deliver services. In the coming months and years, we will introduce new service agencies and other mechanisms to deliver services to Canadians, with emphasis on better service and greater efficiency.
A number of legislative amendments in this bill will give the government the administrative mechanisms necessary to ensure a smooth transition to the new service delivery system. For instance, changes proposed to the Canada Labour Code and the Public Service Staff Relations Act will permit the introduction of successor rights. This means that unions will continue to represent their employees as they move from public service employment to other employers within federal jurisdiction. Collective agreements of course will continue to be in force until their terms expire.
We also want these new service agencies to have the tools they need to operate in both an effective and affordable manner. For example, we will amend the Financial Administration Act to allow for multi-year appropriations for these organizations. Currently, we are considering this option only for the three new agencies announced in the budget: a Parks Canada agency, the single food inspection agency and a Canada revenue commission. Let me stress, however, that in each and every case where government wishes to use multi-year appropriations, we must obtain Parliament's approval, either through an appropriation act or specific legislation, and in those cases I anticipate I will be back before you.
In moving forward with our changes, we must continue to pay attention to the employees of the federal public service, the administrative arm of government. As you know, all collective bargaining in the public service came to a halt when the previous government implemented the Public Sector Compensation Act in 1991. This act will expire, as scheduled, in February 1997 and at that time, we will return to collective bargaining.
However, this legislation will suspend the use of binding arbitration as a dispute resolution mechanism over the next three years in the coming negotiations over the terms and conditions of employment. This reflects the continuing importance of sustaining our government's historic progress on deficit reduction. Meeting fiscal targets is a vital step in bringing down interest rates and boosting economic growth. Given the importance of these goals, we simply cannot risk awards being made by independent arbitrators not accountable to Parliament. However, employees at the House of Commons, Senate, Library of Parliament and the Canadian Security Intelligence Service are exempt from this suspension because they are prohibited from striking and must rely on binding arbitration. For these groups, however, arbitrators will be required to take into account wage settlements in comparable occupational groups within the public service.
The bill will also provide authority for a 2.2 per cent wage increase for non-commissioned members of the Canadian forces. This measure will address the disparity in wages between members of the forces and public service employees, a disparity which existed before the wage freeze. As well, we are amending the Public Sector Compensation Act to reinstate performance pay after a five-year suspension and annual increments for those employees for whom it was suspended when we introduced the in-range increment freeze two years ago.
Let me also touch on the pension reform measures in this bill. All public service employees, those who will be transferred out and those who stay, will benefit from changes we propose to the Public Service Superannuation Act. This includes the two-year vesting of pension benefits and the new lock-in provisions, and pension benefits of public servants transferring to other organizations will be fully protected. I would like to emphasize the fact, Mr. Chairman, that the government will consult on the details of these proposals before they come into effect.
The Committee recessed for 20 minutes
Upon resumption.
Mr. Campbell: Mr. Chairman, I was concluding with respect to pension measures. I had been talking about amendments to the Public Service Superannuation Act which will provide the flexibility to extend coverage under the act for a limited term to employees who are transferred out of the public service.
Before finishing today's presentation, I would like to mention two further measures the government will take, to enable it to deliver better service while being fiscally responsible. First, we will modify the Financial Administration Act to provide Treasury Board the authority to establish group insurance plans for the public service, to set terms for the management of those programs and to acquire such programs by contract. This will allow these programs to be managed in a way that is more consistent with insurance practices in the private sector.
Second, we propose to amend the Public Service Staff Relations Act so that the government can better meet its ongoing youth employment responsibilities. We plan to provide students with learning opportunities and to facilitate their transition from school to work. Their employment benefits will reflect their trainee status.
Let me conclude with the observation I made before the House of Commons Finance Committee. This bill is the heart and soul of the government's fiscal agenda as laid out in the budget. The story here is simple: getting government right. It is one we can all agree with in principle. I trust that in your deliberations you will concur that the measures set out here take us towards that goal.
I look forward to your questions. Mr. Wyatt, General Counsel to the department, will quarterback to assist me here.
Senator Stratton: Is it correct to say that there is an over-contribution to the UI fund of $5 billion annually?
Mr. Campbell: No, I do not think that is exactly correct. The fund has been in deficit; it is moving into surplus. It is anticipated that it will hit that level of surplus by year end.
Senator Stratton: This year end?
Mr. Campbell: I can assure you it is not there yet. It is moving towards that.
Senator Stratton: You assume that by the end of this fiscal year, it will be at $5 billion. What is your "troubled-times" target? Is it $10 billion, $15 billion, $20 billion?
Mr. Campbell: I think in the fall, as is normally the case, we will be setting the premium rate for the following year. I would suggest that on that occasion, there will be more discussion on this point. For planning purposes, in the budget we anticipated a reduction in the premium rate, which is what workers and employers are most concerned about, but there is an anticipated growth in the surplus for the very reasons that you have indicated. We would like to provide for that cushion.
Senator Stratton: I just want to know when you will cap it and at what level?
Mr. Campbell: I think we all agree that, at some point, we will reach that target. As we move into a surplus situation, the question that you raise is one that we will be addressing.
Senator Stratton: You have forecasters; you have very brilliant people working for you. I believe that the Department of Finance must know what that target should be. Realistically, I think it is good planning.
Mr. Campbell: I think the answer, senator, is that the government has not yet taken a decision. This is an unprecedented situation, to find ourselves moving into surplus. It is a happy one, for the moment. It becomes of greater concern to business and working people, as you have suggested, and so again I would suggest that the fall is the time when there will likely be more discussion from the department with respect to what is an appropriate level of surplus in that account.
Senator Stratton: I believe I elicited from you the last time you were here that you were aiming for $10 billion to $12 billion. The UI fund was in the red around the $18 million mark, so you wanted to build a contingency. I am not trying to nail you to the wall on this. For the sake of prudence and good fiscal management, I am sure you have a target in mind. You are pretty good managers, I would hope, and I would hope that the target would be in the $10 billion to $12 billion range. Business would like to know, I am sure, as quickly as possible and you have already answered that. I still cannot believe that you do not have that target number in mind. That is my point.
Mr. Campbell: Well, I do not, senator, and I do not believe I speculated as to a possible target.
Senator Bolduc: It is my understanding that the government will spend about $2 billion on the incentive program to retire early, or perhaps to motivate people to leave the service. I understand that there has been a new study which suggests that the same employee reduction in the public service could have been obtained through attrition. Is that true?
Mr. Douglas Wyatt, General Counsel, General Legal Services, Department of Finance Canada: Mr. Chairman, perhaps I could ask the officials from Treasury Board to help answer that question.
Senator Bolduc: I have two questions. Is it true that we are spending $2 billion? And is it true that through attrition programs we could get the same result and not spend $2 billion?
Mr. Ric Cameron, Assistant Secretary, Human Resources Development Division, Treasury Board of Canada: I have two comments. First, attrition in the public service has been at an all time low for the past two years, and our analysis did not show that attrition alone - that is, those leaving through attrition not being replaced - would reduce the workforce to the magnitude the government wanted in the time required to achieve the expenditure targets that are required.
Senator Bolduc: That was something like 45,000 jobs or positions?
Mr. Cameron: Yes, 45,000 in the broader universe, about 33,000 in the Treasury Board universe. Attrition alone would have not done it, even without replacement. One of the objectives was to have a targeted change in the program delivery, so that we would be reducing some areas much more dramatically than others. Again, if your veterinarians want to retire but it is the architects that you do not need, that does not really help.
In other words, it would help if you had full transferability - that is, an employee who left could be replaced by an employee who was still around. However, between the two factors - our very low natural attrition rate and the fact that the government was looking to change the mix of program delivery, where programs were delivered, the kinds of skills mix - it was felt that that would not accomplish it.
To answer your second question, yes, it was in the accounts last year. About $2.3 billion is put aside for the programs for the total cost of adjustment over a three-year period.
Senator Bolduc: I understand your example about a veterinarian and an architect. They are both professionals and their specialties are not interchangeable. However, that applies to only about one-fourth of the service, I suspect. The remainder, the clerical groups, and so on, are much more interchangeable, I suspect.
Mr. Cameron: In those cases, wherever possible, people are being moved to where there is work available. Natural attrition still occurs, and if those jobs are not eliminated, we put people in them who would otherwise be displaced.
As I said, senator, the key was that the government had program reductions, departments had their budgets reduced by a set amount, and we had to find a way to ensure that the wage bill was reduced in time to allow the departments to achieve those objectives, and the conclusion was that natural attrition would not accomplish that.
Senator Bolduc: How would you assess your incentive programs in comparison to the armed forces programs and to private business? I suspect that you have had a look at that.
Mr. Cameron: I would say that ours are in the range that good employers provide. The military program is somewhat different.
Senator Bolduc: For another reason.
Mr. Cameron: Yes. They have different pension arrangements and thus different provisions.
Our program was designed to be fair to public servants, as well as being fair to the taxpayers. We looked around at large public-sector employers and found programs of a similar nature. At that stage, we also recognized that we had employment security provisions that we were having to adjust in order to accomplish the government's objectives.
Senator Stratton: You mentioned private-sector employers who you used as examples. Can you name any?
Mr. Cameron: We looked at Imperial Oil; we looked at Southam; and we looked at some of the steel companies.
Senator Cools: This country has an aging population, to use the vernacular. With respect to old age security, a lot of concern has been expressed about the adjusting of ages. Many aging persons have a lot of concerns. I understand that the minister has been very open and has been meeting with a lot of the seniors groups. I wonder if you can offer us any reassuring words that you will proceed carefully and cautiously?
Mr. Campbell: We will indeed proceed cautiously and carefully. With respect to seniors, the budget speech spoke of the new seniors benefit, and I think you were speaking to that. At least a substantial part of your comments were directed towards that. I should point out that this bill does not incorporate that program. It will be the subject, I believe, of separate legislation, in time.
Senator Cools: An independent piece or an omnibus?
Mr. Campbell: I am not sure. I would suspect that it may be its own piece of legislation.
Mr. Wyatt: At this point, we expect that it will be an independent piece of legislation brought forward sometime in the fall.
Senator Cools: I am pleased to hear that.
Mr. Campbell: I suggest that that bill will merit very careful study.
In direct response to your question, Senator Cools, I think indicative of the care with which the minister is going about this is the fact that the benefit which he spoke of in the budget will not be in effect for five years. The reasons for that is to provide people with planning opportunities, to adjust and consider the implications of the new plan. And of course the other element about which you are familiar is that today's seniors, as we have come to call them in the context of this discussion, and near seniors, will have the choice of whether or not to go under the new plan or stay with the existing benefits.
Senator Gustafson: I have a couple of questions about grain transportation, more particularly rail cars, and how much projection has been put into this. First, with the traditional Crow no longer applicable - the Minister of Agriculture was before another Senate committee yesterday, and I didn't get a chance to ask him this question. What remains to be paid out to the farmers?
Mr. John Dobson, Senior Policy Advisor, Rail Policy and Programs Branch, Transport Canada: I cannot answer that question because the payment program is being administered by Agriculture Canada.
Senator Gustafson: Who makes the decision on this? Will it be Agriculture Canada or will it be the finance department? Farmers want to know what the increased freight rates will be - whether or not it will even be affordable for them to grow grain. My question is: Will it be affordable to the farmers?
Mr. Dobson: In terms of the hopper car decision, because the government is very much concerned about the impact on grain farmers it decided to limit the freight rate increase to 75 cents a tonne on average. When WGTA was reformed in the 1995 budget, the government decided to continue to regulate maximum grain freight rates, and that is in fact the case, subject to any statutory review in 1999.
Again, as part of the hopper car decision, the government did in fact limit the freight rate increase and take into consideration the needs of taxpayers as well as grain farmers.
Senator Gustafson: Are you saying that this 75-cent increase per tonne is what the increase will be? Or are you saying that they will take 75 cents out of every tonne to pay for the cars?
Mr. Dobson: The 75 cents is strictly related to the sale of the government hopper cars. The government realized that whoever bought the cars would need a source of funds to pay for them.
Senator Gustafson: You have the 75 cents plus whatever freight increases there will be for the actual cost of freighting grain. There will be no subsidy, right?
Mr. Dobson: There is no subsidy.
Senator Gustafson: The subsidy is gone.
Mr. Dobson: The subsidy is gone. The 1995-96 freight rates have been established and included as a schedule to the National Transportation Act and they are subject to annual increases as determined by the National Transportation Agency, basically related to railway information.
Senator Gustafson: Out of Weyburn, Saskatchewan, the actual cost of moving grain, with the subsidy, has been about $35 a tonne. We have heard that it could go to $75 a tonne, or more. Fortunately for the government, right now grain prices are up there, so there is probably a little bit of room to play, but what happens when it goes the other way?
I have been watching the futures very closely, and since the crop has gone in the ground, the futures have dropped significantly. I would hope, and I sound the warning here, that the finance, agriculture and transport departments look very carefully at the outcome of what is happening in Agriculture Canada in regards to grain movement.
Mr. Campbell: We very much share that concern, which is why the 75-cent cap was utilized with respect to the sale of the hopper cars. With respect to ending the subsidy, the $1.6 billion in assistance to producers was to reflect the very concern that you raised. By contrast, we hear from other regions of the country, when we are talking about dairy subsidies, an adjustment period but no compensation.
Senator Gustafson: The dairy producers have done pretty well.
With respect to the farmer-owned rail car buy-out, if you will, from the various consortia, there is a lot of concern - and I am sure you have heard about this - as to allocation of cars and so on and whether that would be advisable. I have questions of my own in that regard. There is a lot of politics in the grain business - as much as there is in politics - and whether they could work together in completing the job that has been done under the Canadian Wheat Board and the railroads, there are some questions out there.
Mr. Dobson: In terms of the car allocation, the government received a recommendation from industry to set up a car allocation policy group. That group would have had representation from the Canadian Wheat Board, the grain companies and the railways. In making its budget decision, the government announced that it supported producer participation and representation on that committee. Because it is an industry-led group, we are encouraging the ministry to include producer participation.
Senator Gustafson: The system of allocation has worked very well, as you may know, up to this point. My thinking is that if you get a lot of different players involved, you may have some problems pleasing them all.
Senator Poulin: Mr. Campbell, I want first of all to thank you and your team for this excellent book. Because of the fact that Bill C-31 is an omnibus bill, and because it is lengthy and complex, this book is a very useful tool for us as members of the committee. It helps us to simplify and to clarify many things.
I would like to bring your attention to the amendment to the Radio Communications Act. Could you tell me if that amendment will have an impact on the parts of the Broadcasting Act which are administered by the CRTC?
Mr. David Dawson, Regulatory Policy Analyst, Radio Regulatory Branch, Industry Canada: No.
Senator Poulin: Could you, therefore, explain to us the link, since certain radio licences, as we all know, are allocated by the CRTC? Could you explain the difference to us?
Mr. Dawson: The CRTC issues broadcasting licences. The Minister of Industry issues radio licences to people who use two-way radios, police departments, microwave links. Broadcasters do not actually get a radio authorization or radio licence as defined by the Radio Communication Act. A broadcaster makes an application to the CRTC for a broadcasting licence; at the same time, the Spectrum Management Program does some technical and engineering work and provides a broadcasting certificate. In other words, broadcasters do not get a radio licence; they get, if you will, an administrative handshake concurrent with the CRTC's authority. There is no money involved in the broadcasting certificate that is issued by the Minister of Industry.
The Chairman: You use a particular frequency free of charge, provided you get permission from the CRTC?
Mr. Dawson: That is correct. The technical and engineering work is for interference management purposes only. That is what the Minister of Industry does to make sure, for example, that they can use 106.9 or channel 32 without interfering with other users and without getting interference. The CRTC handles the rest of the considerations.
Senator Bolduc: I do not think that this bill is an efficient way to deal with the legislation of the budget. The Minister of Finance or Treasury Board should know that. If I were in the Department of Justice, I would be very embarrassed with this type of bill. It deals with too many areas. There are provisions with respect to the civil service - in other words, the machinery of government - but also included in the bill are issues dealing with transport, unemployment insurance, social programs, social assistance, education, health, old age security, radio communication and student loans. I do not congratulate you for that. I think it is badly done. I am not referring to the content of the legislation.
[Translation]
Mr. Campbell: I can certainly understand what you mean.
Senator Bolduc: You are a practising lawyer. Every year at the end of the session, you are confusing us. All kinds of crazy things are done at the end of June and December.
[English]
Yes, and we have what we call omnibus legislation. You put everything in one bill. I think you should tell the people in the Department of Justice this is no longer acceptable in the Senate. It is a matter of principle. And I know that you agree with me, senator.
The Chairman: We can talk about this later, but this was a very good point. We will ask the witness to answer the question about why is it done in this way.
[Translation]
Mr. Campbell: I think it would be a good idea to hear our General Counsel, Mr. Wyatt.
Senator Bolduc: I do not want to put the blame on him. I have some sympathy for department officials.
[English]
Mr. Campbell: He is the senior lawyer. I do not practice law any more and I suffer from the same frustration that you do.
I will say, before we turn to Mr. Wyatt, that in fact, senator, it is a little worse than you have even said. There is another bill that comes along, as well, a technical bill - I think Mr. Wyatt will confirm that - which does the income tax technical changes, but this is traditionally the way we have done these things.
Mr. Wyatt: Mr. Chairman, yes, first of all I should say to the honourable senator that it is not the justice lawyers who are to blame for this; it is the officials of the Department of Finance. From that comment, you may guess where my employer is.
Senator Bolduc: However, you have the possibility of saying "no"; you have a veto power.
Mr. Wyatt: The practice of doing an omnibus bill for budget matters goes back about four or five years. This bill may have taken it too far. From the senator's comment, I guess one could assume it has. However, there is some virtue, Mr. Chairman, in having some of the matters in a budget combined into a single bill, even though they deal with other statutes, such that the members of this committee and indeed the Senate can consider the entire budget in one package.
The difficulty with this bill, as the senator has pointed out, is that the elements are quite diverse and in some respects fairly complex. Perhaps it could have been done in two or three bills, I do not know. Certainly we will take the comments to heart and remember them when we do next year's budget.
Senator Stratton: I hope to see you here. I really do.
The Chairman: You do not mind then if we take our time over the summer in dealing with this bill?
Mr. Campbell: I would like to add that where we have a major initiative, such as the seniors benefit, which we were speaking about earlier in response to Senator Cools' question, that will be the subject of separate legislation, even though it is announced in the budget.
Similarly, when I am back before you next week, we will be discussing the GST. The provision of the GST that is incorporated in this bill is a very minor one. It is not the harmonization proposal, but rather the adjustment assistance. It is quite narrow, even though the topic is incorporated in the bill. I just wanted to clarify that for the committee.
The Chairman: One begets the other though, I would think.
Mr. Campbell: I am not sure in which order, senator.
Senator Cools: With respect to the issue that Senator Bolduc has raised - and Senator Bolduc is skilled at raising serious questions with a touch of jest and humour; nevertheless, they are profound questions.
When one conceptualizes a piece of legislation, what goes through the mind of the minister or the persons who construct this bill? Can you share with us just a little bit of that? Mr. Wyatt basically said that it would be a useful device to put several issues into one bill, for our consideration, but perhaps, Mr. Campbell, you could share some of your insights as to the conceptual thinking that gives birth to this kind of legislation?
Mr. Campbell: Unfortunately, Senator Cools, I am not sure I can shed any light on it. I suggested earlier that as a rookie - I guess three years into this I am still entitled to call myself a rookie - this is the way we have been doing it for the three years I have been involved. That is not to suggest that we must continue to do it that way. I think these are things that we examine each year, and we will take the comments of senators seriously. You have raised some questions in my mind about how it is put together.
Mr. Wyatt: I cannot speak about what goes in the minister's mind, but from the point of view of the officials, there are a number of considerations, as Mr. Campbell has mentioned. The seniors benefit is a separate bill; there are other items in the budget that will be separate.
I should add that a few years ago, one member of a government wanted to put combine absolutely everything from the budget into one bill; that would include income tax, GST, everything the government had said into one bill. We looked at it in terms of how quickly the policy that was announced could be drafted and put into legislative form - how big it is. There are a number of factors involved: how quickly the government would like the legislation to be enacted; if it is an item with considerable expenditure reduction or savings, then they obviously want it before the summer recess. Those are some of the considerations that are looked at by the officials. Clearly, the minister and his officials also have parliamentary considerations to take into account. It is not a science; it is an art, as to what you can put in and keep it within proportions and what you cannot put in.
Mr. Campbell: Mr. Wyatt causes me to add one additional comment; that is, if we split a budget into many bills, the element of time needed to deal with all of the bills would be prohibitive in implementing the budget. As it is, I appeared earlier today before the House of Commons Finance Committee on the 1995 tax measures legislation. We are now well into 1996, so you can see the problem vis-à-vis time that would arise if there were a multitude of bills. Regardless of the fact that I would be very pleased to return to this Senate committee time and time again to deal with those bills, it could be a problem.
The Chairman: I have a couple of questions on the transfer of public service jobs to entities outside of the Government of Canada, to agencies, non-profit corporations and other organizations. How is this all working?
Mr. Cameron: I think we can go back to the statements made in the budget last year. The objective is not employment reduction; the objective is to reduce the cost of government and to find better ways to deliver services. As Mr. Campbell was saying, it is "getting government right."
In things like the transfer of the air navigation service to a not-for-profit corporation, the determination was that that structure would provide greater efficiency for the management of air navigation services. In the context of that, because those jobs will no longer be funded through the expenditures of government, those jobs will in fact count as part of the reduction. Again, it is the expenditure; that is no longer money that is part of the fiscal agreement.
The Chairman: How do these people get paid?
Mr. Cameron: In essence, they will get paid from fees accrued from running the industry; the airlines service fees, landing charges and things of that nature.
The Chairman: So there will be new fees, new taxes?
Mr. Cameron: In essence, the government already has a number of those things. I must confess, I am not an expert in the funding of the air navigation service.
The Chairman: This is an important part of your bill.
Mr. Cameron: No, the air navigation service has its own legislation.
The Chairman: I know, but there are a whole bunch of these things. If you transfer someone from the public service to a non-profit corporation, who pays them? A non-profit corporation has no money.
Mr. Cameron: As I said, the air navigation service will be funded from air travel in Canada.
Mr. Campbell: Let me add the following, in the hope that I can respond to your question, because I want to make sure that we are not talking about apples and oranges. In my introductory comments, I referred to new service agencies, and I used three examples: Parks Canada, a single food inspection agency and a Canadian revenue commission. I stated that in each and every case, there would be the possibility of multi-year appropriations which would gain Parliament's approval through an appropriation act or separate and specific legislation. It is not anticipated that those service delivery agencies would look entirely to new fees and new sources of funding for their revenue, as we were discussing a few moments ago. It is anticipated that Parliament would continue to appropriate funds to those agencies so they can conduct their work.
The Chairman: Let's talk about Parks Canada. It is my understanding that a number of workers will be transferred - maintenance workers, for example. They will be transferred out and will be given a contract for, say, five years. That contract will be enough to pay their salaries and benefits to work in the park?
Mr. Cameron: Each contract will be negotiated consistent with the nature of the work to be done. Whether or not in the context of that contract they will be able to replicate their existing compensation arrangement, I do not know. For example, in most of those types of organizations, I suspect that it would be very difficult to establish pension arrangements similar to that of the public service. In those arrangements, they may well be their own employers; they may establish their own corporation.
The Chairman: The compensation will be about the same, though; is that correct?
Mr. Cameron: There is no guarantee that the compensation will be the same in those arrangements.
The Chairman: What kind of compensation will a person in Parks Canada have? Half time, full time?
Mr. Cameron: The first exercise will be to establish a Parks Canada agency.
The Chairman: That is a non-governmental agency?
Mr. Cameron: No. It would be a governmental agency; it would report through the Minister of Heritage. The objective would be to establish a structure where, for example, the agency could be the employer, rather than Treasury Board, which is the case now. If that is the case, then the arrangements in this bill which provide for the transfer of employees would take effect. Depending on the provisions in the new agency, that would determine whether they received any benefits at the point of transfer.
The Chairman: That will be deducted from the 45,000?
Mr. Cameron: Again, the 45,000 is a projection of employment reduction related to savings. The transfer in itself will not have any impact on the 45,000. Further efficiencies might later.
Senator Stratton: You are saying the employees are being transferred away from the Treasury Board to the agency. That agency then charges a fee to the user to pay the salaries. Is the agency a Crown corporation? Is it independent? When you call it an agency, what is it?
Mr. Cameron: That will be established within the legislation for the parks agency, which will come through House of Commons and the Senate. There is nothing in this legislation to establish the agencies.
The Chairman: What is in here is what governs the dismissal of the employees.
Mr. Campbell: Correct, to govern the framework, which will relate to people who are currently civil servants who could be transferred to these agencies when they are created.
I want to point out - because it relates directly to one of the questions being asked - that the collective agreements that are in force would continue. We have created successor rights, which some of you will no doubt be familiar with. The collective agreements that are in force would continue until they expire.
I do not want to leave people with the belief that these agencies will look entirely to fees or new charges to fund all of their revenue requirements. I spoke specifically to anticipated parliamentary appropriations, but I think it is fair to assume - and indeed there has been some talk about some fee structures that could be there. I do not think we want to leave people with the impression that it was anticipated that these agencies would create new fees to cover all of their expenses.
Senator Stratton: I understand what you are getting at, and you are not trying to determine in this bill what the agency would be or could be. My concern is in part for the employees, because they are getting transferred out of the civil service to a "theoretical" agency which could be a private company - I would assume, a private company.
Mr. Cameron: The arrangements provided for in this legislation could apply to a transfer to a private company.
The Chairman: Would that private company then get a contract to do the work? They would obviously get a contract to pay the salaries, because you are guaranteeing that the salaries, the benefits, are all the same.
Senator Stratton: I am trying to get my mind around how this would work. You would fund the base floor, and then through charges to the user, you would top it up, as it were, to pay the salaries. If it were private-sector agency, it would be up to that agency to determine what the top-up would be.
Is that correct? Or am I putting words in your mouth again?
Mr. Cameron: I would not want to comment on the funding arrangements. I would point out, however, that we have transferred employment to other sectors in the past, which includes contracting out services where it is felt that it is more efficient to do so. Employees have collective agreement provisions which determine what rights and benefits they have if their employment is transferred somewhere else. That could include lump sums on severance, transfer arrangements for pension plans, and what have you.
The Chairman: You cannot lay them off?
Mr. Cameron: That is the problem. We have within the public service a guarantee of a job offer, other than in cases where it has been suspended through last year's budget. That was one of the elements why we introduced the departure incentives. For example, prior to this legislation, if we established Parks Canada as a separate agency, owned and operated by the Government of Canada, primarily appropriations-dependent, but as a separate employer, under the provisions of the collective agreement, an employee could say, "I do not want to go to Parks Canada," which is where they were hired for, where they were trained for, where their job is. We would have had either to give them an offer of employment in the public service or to give them a cash-out under their collective agreement for separation.
We are trying to find a balance that encourages continuation of employment. The objective is not to get rid of jobs, if there is work to be done. The objective is to provide reasonable arrangements that encourages people to go with their jobs when they go. The benefit that an employee would get on transfer of his or her employment would depend on whether or not there was prejudice from that transfer.
If an employee went to a job where the salary was less, and that may be the case, there is provision for a lump sum and, in some cases, a salary top-up for a period of time. There is a provision that if it is close enough to the current job and you are made an offer to continue your employment, then that is a job offer. If you turn it down, in essence you are resigning.
Mr. Campbell: I would like to stress another point with respect to the concern that we all have for the employment opportunities and salary levels of individuals who may be affected by the creation of these new service agencies. I spoke about successor rights. What that means is that employees will continue to have the benefit of their existing collective agreements and continue to be represented, have union representation and continue to be able to negotiate the terms of their employment with their new employer. Absent that change, they would not have those protections.
Mr. Cameron: One of the key elements from the point of view of the unions was to provide for the continuation of bargaining unit representation and the collective agreements, which, as Mr. Campbell said, is not within the Staff Relations Act or going from the Staff Relations Act universe under the Canada Labour Code currently.
The Chairman: My concern is that the provisions for contracting out, creating agencies, and transferring to what is called the private sector has a lot of danger for people who are already in the private sector. I will use my own province as an example. I know this is being discussed in Waskesiu. If you are contracting out maintenance in Waskesiu, these people who have a five-year guaranteed no-cut contract to provide maintenance for Waskesiu now can go and compete with the other maintenance companies that do maintenance in provincial parks, et cetera, who do not have that same kind of guarantee. They have a highly competitive advantage.
So sometimes you must get rid of jobs because there is no job. When you try to prevent eliminating one job, other jobs fall by the wayside on the other side. I do not think that is fair. If there is no job, there is no job. If there is a job to do, then contract it out immediately if that is the direction you take. You cannot have it both ways because in the end somebody will suffer.
I am afraid that that what is happening vis-à-vis the 45,000 people I keep asking about; that is, there will be a lot of people suffering. It will not be the civil servants who are let go, it will the people who are presently in business who will be unfairly competed with. I do not know how we address these problems, but I believe these problems will be snapping at the heels of the government sooner or later. I am concerned about this.
Mr. Campbell: As we look at legislation that may come about to create these agencies, I suggest we will have a chance to revisit these issues. It has been an interesting discussion because what we have seen in a very short time here before your committee, Mr. Chairman, is both sides of the issue. On the one hand, there is concern about employees of the public service and what will happen to them in the event that the decisions is that it would be more efficient, more appropriate that certain agencies be created. On the other hand, protecting them, as we want to do, when you look at it from the other side, which you are looking at, the question becomes: Would that create certain unfair advantages vis-à-vis competition with others in the private sector?
That is a balance that we must bear in mind, try to strike that balance. We cannot ignore the government's obligation towards people in the public service and ensure that in these transfers we honour those commitments.
I can tell you that there has certainly been criticism from some unions at the very suggestion that they might be out in another agency somewhere and that some of these changes will take place; whereas, others are not troubled given the changes that are built into this legislation.
I will conclude by saying that we have a commitment to these people and we are trying to honour that commitment as we contemplate the changes that are necessary for better service delivery for Canadians.
The Chairman: Thank you very much, gentlemen. We have had a very interesting meeting.
Mr. Campbell has agreed to come back next week. I have asked him to do so because Bill C-31 is complex and there are many issues yet to deal with. He has agreed to do this. Thank you, Mr. Campbell.
The committee adjourned.