Proceedings of the Standing Senate Committee on
National Finance

Issue 4 - Evidence

The Standing Senate Committee on National Finance met this day at 5:50 p.m. to examine the Main Estimates laid before Parliament for the fiscal year ending March 31, 2001.

Senator Lowell Murray, P.C. (Chairman) in the Chair.

[English]

The Chairman: We have a quorum. With us today are the same witnesses who appeared yesterday. They are here in connection with the Main Estimates for the fiscal year ending March 31, 2001. These estimates were tabled in Parliament on February 29. Our witnesses are from the Treasury Board of Canada.

Mr. Keith Coulter, Assistant Secretary, Planning, Performance and Reporting Sector, Comptrollership Branch, Treasury Board of Canada Secretariat: It is a pleasure to be here today to discuss the government's Main Estimates for the fiscal year 2000-2001, and the related interim supply bill.

Yesterday, a number of questions were raised for which we did not have complete answers. We have been working on those questions and I have with me today the unofficial answers. We will forward to you our official, bilingual answer sheets later this week.

The Main Estimates were tabled in Parliament by the President of the Treasury Board on February 29, 2000. Departmental "Reports on Plans and Priorities" for 2000-2001 are expected to be tabled on March 30, 2000. Those documents will give the full spending plans of all departments and agencies. The Main Estimates is the government's overview of the expenditure plan.

The two people accompanying me have played key roles in both Supplementary Estimates and Main Estimates. These activities go on simultaneously and the team must include all three of us. Kevin Lindsey took the lead on Main Estimates and is also the senior director of that division. Andrew Lieff took the lead on Supplementary Estimates and was helping with the questions yesterday.

I would like to outline for you the key elements of the interim supply bill and provide an overview of the scope of the spending in the Main Estimates. We will attempt to respond to any questions you have about this stage of the supply process. You will have an opportunity to consider the Main Estimates more fully in the context of your deliberations on the full supply bill later in the spring.

[Translation]

The interim supply process is essentially a technical exercise. Its purpose is to provide sufficient spending authority for the government to meet its non-statutory spending commitments, while the House and the Senate deliberate on the detailed spending plan.

[English]

Interim supply provides bridge funding without which the continuity of government operations would not be possible. This year's interim supply bill covers the period beginning in April and running to the end of June, which is the end of the first regular supply period.

The process of determining interim supply requirements is quite straightforward. The basic amount of each vote for this three-month period is set out at three-twelfths of the Main Estimates amount. Departments and agencies may request more than the basic amount, but must justify those requirements in one-twelfth increments. Details on these additional requirements are contained in the schedules to the appropriation bill, copies of which were included in your briefing material.

One of the rules of the game for interim supply is that departments' and agencies' requests cannot exceed eleven-twelfths of the Main Estimates amount. Full funding can never be obtained in interim supply, ensuring that the rights and privileges of legislators to question and debate items in Estimates are protected.

[Translation]

There are typically several reasons behind departments' and agencies' requests for additional interim supply amounts.

[English]

These include: the seasonality of expenditures when they are linked, for example, to the construction season, which is largely confined to the spring; legal and other commitments, for example, payments in lieu of property taxes that are typically payable in the spring; contractual payment schedules or transfer payment agreements. An example of that is the Department of Indian Affairs and Northern Development, where payments are made to bands early in the fiscal year. Finally, some revenue-dependent organizations require bridge funding, or working capital, until they begin to receive revenue from their operations.

[Translation]

This year's interim supply request includes only four votes, including Treasury Board's government contingencies vote, seeking eleven twelfths of the Main Estimates amount.

I would now like to turn to some of the specifics of this interim supply bill.

[English]

This year's Main Estimates include a total of 185 votes. Departments and agencies are seeking additional twelfths for 29 of these votes, or 16 per cent of the total, through the interim supply process. The total spending authority being sought for the upcoming interim supply period is $15.6 billion, or 31 per cent of the total amount to be appropriated through the Main Estimates. If we were going for three-twelfths, the figure would be $12.6 billion, so there is an additional $3 billion being requested through interim supply, taking us from 25 to 30 per cent.

[Translation]

As I mentioned, there are four votes for which eleven twelfths of the Main Estimates amount is being sought. They are: the Canadian Commercial Corporation is seeking a total of $9.8 million to supplement working capital balances to meet obligations to Canadian exporters, particularly small and medium-sized businesses.

[English]

The Department of National Defence is seeking $552.6 million in its Grants and Contributions vote to provide for the payment of outstanding claims for Disaster Financial Assistance Arrangements.

The Department of Natural Resources requires $7.2 million in its non-budgetary Vote L10 to facilitate a loan to Nordion International Incorporated. Terms of the agreement with Nordion dictate that the full amount of the loan is transferable on April 1, 2000.

Finally, and consistent with past practice, the Treasury Board Government Contingencies Vote 5 is seeking $504.2 million to provide for unforeseen expenditures that may arise through the 2000-2001 fiscal year.

[Translation]

Among the other more significant interim supply requests are the following items which seek between three and six additional twelfths above the basic three twelfths amount.

[English]

The Library of Parliament is seeking $14.8 million, or nine-twelfths, for activities taking place during the spring and summer months on Parliament Hill. The Department of Indian Affairs and Northern Development requires $170.9 million, or eight-twelfths, in its Operating Expenditures Vote to help cash manage a large out-of-court settlement expected to be paid early in the fiscal year.

The National Battlefields Commission requires $4.5 million, or eight-twelfths, to pay municipal taxes to the City of Quebec. There is a total of seven-twelfths, or $862.7 million, for the Department of Finance Vote 15 to provide payments for territorial governments in accordance with established financing agreements.

The Canadian Centre for Occupational Health and Safety requires $893,000, or seven-twelfths. The centre receives most of its revenue in the last quarter of the fiscal year, creating cash flow pressures in its vote-netting authority. The Copyright Board requires a total of $438,000, representing seven-twelfths, to cover the cost of additional responsibilities conferred on it by the new Copyright Act.

A total of $54.4 million, or six-twelfths, is required by the Canada Council for block grants to publishers and operating grants to performing arts organizations. The Department of Fisheries and Oceans requires six-twelfths, or a total of $88 million, in its Grants and Contributions vote to meet cash flow requirements of the Aboriginal Fisheries Strategy and the Fisheries Access Program.

A total of $42.9 million, or six-twelfths, is required by the Cape Breton Development Corporation for payments associated with planned workforce reductions. Schedules 1.6 and 1.7 in the bill before you also contain information on seven departments and agencies that require an additional two-twelfths, and 15 departments and agencies that require an additional one-twelfth. That is the supply above three-twelfths that is being requested, for a total of $3 billion.

[Translation]

As I mentioned earlier, interim supply is the first step in Parliament's consideration of the Main Estimates.

With this in mind, let me give you an overview of the Main Estimates for the 2000-2001 fiscal year.

[English]

The spending outlined in this year's Main Estimates reflects 99 per cent of the expenditure plan of $158 billion outlined in the Minister of Finance's budget of February 28, 2000. The adjustments to reconcile the budget are there in the Main Estimates.

The difference between the budget and the Main Estimates consists primarily of provisions for changes to statutory spending forecasts, and for further appropriated spending, authority for which will be sought through Supplementary Estimates.

The 2000-2001 Main Estimates support the government's request for Parliament's authority to spend $50.2 billion under program authorities for which annual appropriation acts are required. Parliamentary authority for the remaining $106 billion in spending, or 68 per cent of the total, was obtained under previous statutory authorities. Forecasts of statutory spending are included in Main Estimates for information purposes.

To give you some sense of the change in proposed spending on a year-over-year basis, I will provide a brief listing of some of the major changes that account for the increase of 3 per cent over the 1999-2000 Main Estimates. The changes I mention are items that exceed $100 million.

[Translation]

You should be aware however that these changes are only indicative. A fuller understanding of changes to the government's spending plan will be available when planned spending figures, as distinct from Main Estimates, are tabled with the reports on plans and priorities next week.

[English]

That being said, the following are major increases in the 2000-2001 Main Estimates: $1 billion for Canada Health and Social Transfer payments; $895 million for National Defence spending; $700 million for Income Security -- Old Age Security, Guaranteed Income Supplement and Spousal Allowance -- due to an increase in the number of benefit recipients and the average benefit rate; $500 million for farm income assistance for the agriculture community; $359 million for grants to the trustees of Registered Education Savings Plans; $247 million for salary increases, including funds for the salaries of judges and RCMP members and related employee benefits costs; $235 million in transitional financial support for the implementation of Canada Post Corporation's pension plan; $234 million for Fiscal Equalization payments; $200 million for Indian and Inuit programming; $190 million for non-budgetary requirements related to payments to international financial institutions; $180 million for transfer payments to the territorial governments, including funding for the Government of Nunavut; $166 million for RCMP policing costs; $145 million for Safety Net Companion Programs to assist the agriculture community; $142 million for initiative announced in December 1999 to help alleviate and prevent homelessness in Canada; $119 million for First Nations and Inuit health care to strengthen home and community care in First Nations and Inuit communities as announced in the 1999 budget, and to meet increased demand for health programs and services by a growing aboriginal population; $110 million for the Canada Jobs Fund set out in the 1999 budget; $102 million for the Fisheries Access Program and co-management activities under the Aboriginal Fisheries Program.

The major decreases on a year-over-year basis include the following: $1.6 billion reduction in the forecast of EI benefit payments; $500 million reduction in the forecast of public debt costs; $260 million as a result of adjustments to equalization to Quebec this year for tax credit provided last year to compensate Quebec for its Youth Allowances program; $287 million reduction in one-time funding to assist departments and agencies in addressing Year 2000 compliance requirements; $225 million reduction reflecting the wind-down of the Canadian Fisheries Adjustment and Restructuring Program; $112 million in the Canada Student Loans Program, reflecting a decrease in the liabilities estimated for the program, given that no guaranteed loans were established after August 1995; and $110 million reduction for the Agricultural Income Disaster Assistance Program, reflecting the cash flow for this two-year program.

[Translation]

That concludes my opening remarks. We would be happy to respond to any questions you may have concerning the Main Estimates.

The Chairman: Thank you, Mr. Coulter. I have a short list of questioners.

[English]

Senator Stratton: To bring fellow senators up to date, the day after the main budget was tabled in the House and the Minister of Finance gave a speech, the Treasury Board officials held a briefing session that I attended. I have an ongoing interest in natural disasters. On page 4 of the presentation today, there was $552.6 million in grants and contributions for Disaster Financial Assistance. I have this ongoing interest because it is costing Canadians a great deal of money.

At that briefing session, I asked the Treasury Board officials how much money we estimated we would spend in this year's budget. My question relates to that $552.6 million in grants on page 4. Is there a breakdown of that, for example, from province to province? I am sure there is. Second, I do not see here, because you are only talking about amounts over $100 million, any other sums of money from other departments. Are there any that we could add to this? You have already said that that would be forthcoming. If it is not available today, I am putting on the record that I am asking that it be made available.

Mr. Coulter: The $553 million is to provide for outstanding claims that have come due for settlement early in the fiscal year. They are primarily for the Saguenay flood, the Red River flood, and the 1998 ice storm. Those are the big ones. There are some others that I do not have listed.

Mr. Andrew M. Lieff, Senior Director, Expenditure Operations and Estimates Division, Planning, Performance and Reporting Sector, Treasury Board of Canada Secretariat: We are in the process of going beyond just the grants to provinces under the Disaster Financial Assistance Arrangements, which is our cost-sharing arrangement to deal with disasters when they in fact occur. We are going beyond that to look at more preventive type measures, which are spread throughout a number of departments, including Parks with respect to mud slides and keeping highways open, and Environment with respect to climate disasters. We hope to get back to you in very short order, and to the committee, with the breakdown you requested.

Senator Stratton: I appreciate that. I will move to 1-3 in the Estimates. It is connected to your explanation as to why things end up in Supplementary Estimates. Under Transfer Payments, major transfers to other levels of government, Fiscal Equalization is shown as $9.522 billion, but an asterisk below states a forecast of $10.6 billion was used. So why is $10.6 billion used in the explanation rather than the $9.5 billion printed there? Will that come down in Supplementary Estimates or what?

Mr. Coulter: There are two different ways of accounting for this. The Treasury Board way is based on the federal-provincial fiscal arrangements legislation. We just play it through the numbers based on those agreements. However, there are adjustments later. The Department of Finance, as the asterisk indicates, is protecting the fiscal framework. It is making conservative judgments about what will happen and has tied equalization payments to the growth in GDP, and thus the $10.6 billion. We will make the adjustments to that, for information purposes, in Supplementary Estimates as we receive the information.

Senator Stratton: I am always interested in year over year. On page 6 of your presentation, it states:

The 2000-2001 Main Estimates total $156.2 billion, an increase of $4.6 billion, or 3 per cent, over 1999-2000 Main Estimates. In contrast, Main Estimates for the 1994-1995 fiscal year totalled $161.1 billion.

Is that in today's dollars or is it in 1994-1995 dollars?

Mr. J. Kevin Lindsey, Director, Expenditure Operations, Expenditure Operations and Estimates Division, Planning, Performance and Reporting Sector, Treasury Board of Canada Secretariat: That is in current year dollars.

Senator Stratton: You have rolled it up to current year dollars?

Mr. Coulter: It is not a roll up, but it is the number in the Main Estimates during those years.

Senator Stratton: You plucked those out and plugged them in?

Mr. Coulter: That $161.1 billion would be a larger figure in present dollars.

Senator Stratton: Yes, that is why I asked the question. On page 7 of your briefing, on the major increases in Main Estimates over $100 million, the second bullet, $895 million for National Defence spending, could you give us a breakdown of what that includes? We keep looking for helicopters somewhere there. We need them and I do not see $895 million paying for helicopters.

Mr. Coulter: There is one batch of helicopters in the mix now and another one to come. The breakdown is $830 million for operating expenditures reflecting incremental funds, $307 million for increased program requirements, increased funding of $236 million for the Canadian Forces participation in the Balkans, and $41 million to partially compensate National Defence for the loss of purchasing power due to price increases. Increases for quality of life initiatives of $126.2 million, that is for military personnel. There is also incremental funding of $120 million for economic adjustment increases approved for military and civilian personnel. Finally, there is an increase of $65 million in payments to provinces under the terms of the Disaster Financial Assistance.

Senator Stratton: That is all put down in very professional terms. In layman's language, does the $41 million that you listed mean there is inflation creep in the Department of National Defence, or what are we dealing with here? When tenders are estimated, how is that attributed?

Mr. Lindsey: The item is not linked to specific contracts coming in at over the contract price. It is a general provision to provide for inflation.

Senator Stratton: Okay.

Mr. Coulter: It is a recognition that the price of military equipment and that sort of thing has gone up.

Senator Stratton: When you compile your estimates and your explanation of how we arrive at what goes in the Main Estimates and what comes down as a supplementary, there is a known price for the vast majority of the material that they will purchase. You know what that price should be, generally speaking, and you know what the inflation rate is, so that when you purchase pens, papers, through the Department of National Defence, those are known items, I am assuming. How then, if you are estimating costs for that general expense, do you separate the $41 million out deliberately and just use a base number for Estimates? I am trying to figure out why you have the $41 million in there.

Mr. Coulter: We have an ongoing dialogue with the Department of National Defence. In this last budget round, Defence made a case for certain things. Some of them were accepted, some of them were refused, and some of them were saw-offs. This is the result of a round of bargaining with not only Defence, but also Finance and through the cabinet process.

Senator Stratton: Included in the estimate here is $41 million for inflation. When the department gives you estimates for the cost of whatever material, does that not include inflation? Is this $41 million in addition to that, or is it for special items where it is very difficult to do an accurate estimate?

Mr. Lindsey: For large procurement projects, for the large equipment purchases and so forth, there are inflation assumptions built into the price. For the more mundane acquisitions, the range of supplies and material that the department buys, there is no set provision for inflation. This $41 million will go into the department's acquisitions budget, and it will not be discrete. This was simply a recognition that the effects of price increases had to some extent overtaken the department's capacity to meet its needs.

Senator Finestone: With respect to the $895 million for National Defence spending, you mentioned an amount for Canadians serving in the Balkans. That was under a UN mandate as a peacekeeping force, was it not? That is not the NATO undertaking in Kosovo?

Mr. Coulter: I am not sure exactly what those numbers are.

Senator Finestone: You gave a number to the senator.

Mr. Coulter: It is peacekeeping.

Senator Finestone: What is that number?

Mr. Coulter: It is increased funding of $236 million, a delta over.

Senator Finestone: I would like an answer, if you could get back to us in writing. UN peacekeeping forces are paid for on a prorated basis, with American input into that funding, and Canada is not absorbed into the mix without some remuneration for the United Nations. I would like to know if this is Canada's percentage of their obligations to the United Nations. Is there a compensation factor in there? Are we expecting a repayment somewhere for our troops, as they would receive if they came from Mongolia or some other country?

Mr. Lieff: This is in fact related to Kosovo, so there would not be a repayment. If it is the Balkans, the way the international peacekeeping arrangements work is that the Canadian government initially has to absorb the cost of sending the troops over and the repayments come later on, if and when they get here. They are usually several years behind. Those moneys are credited back to the CRF, the Consolidated Revenue Fund, and not the Department of Defence.

Senator Finestone: You are indicating that payment for Canada's peacekeepers comes out of the Department of National Defence, not out of Foreign Affairs.

Mr. Lieff: That is right.

Senator Finestone: On page 6, second to last paragraph, you talk about the fact that parliamentary authority for the remaining $106 billion in spending, or 68 per cent of the total, was obtained under previous statutory authorities. Does that mean that there is control by Parliament in absentia, or prior, or ahead of time, or what does that mean? It is 32 per cent whole?

Senator Stratton: Discretionary.

Senator Finestone: We do not look at the whole budget? There is a large amount like this and we see this much, is that what you are telling me? What are you hiding in there?

Mr. Coulter: You do see the whole thing in terms of the information. The appropriations part of it is $50.2 billion, so that is the 32 per cent of total government spending.

Senator Finestone: I should not ask questions about that, is that the point?

Senator Stratton: Yet you sign contracts for that amount of money. You can ask questions on it, but you do not have a choice.

Mr. Coulter: This is the complete expenditure plan, and we are here to answer questions on anything.

Senator Finestone: So 32 per cent is shown here and 68 per cent is in this other big book that is giving me a hernia.

Yesterday I asked you a question about the decrease of $170 million in payments by HRDC with respect to OAS, GIS, and spousal allowance, if you recall. Now I see on page 7 of today's presentation that you have, under the major increases, $700 million for OAS and other income security, which is due to an increase in the number of benefit recipients and in the average benefit rate. Is this a correction of what you presented to us yesterday, the forecasted decrease of $170 million, and today you come in with $700 million in increases?

Mr. Coulter: We do it year by year, and Supplementaries B was the final estimate of the present fiscal year. This is about the next fiscal year.

Senator Finestone: Is that good for the health of the economy of our country?

Mr. Coulter: It is adding up a lot of things.

Senator Finestone: In the RCMP figures, there is an amount of $247 million in salary increases. Is there any undertaking to look at the kind of contract leasing that takes place in the RCMP? Is this to pay contract leasing, some of those figures from yesterday and today? In other words, we are short 700 police officers in the RCMP, so we are hiring Good Samaritan citizens, some kind of security agents?

Mr. Lindsey: I believe that the reference is to contract policing rather than contract leasing.

The Chairman: In eight provinces, not including yours.

Senator Finestone: There is a recognition we are severely short of policing staff.

Mr. Coulter: Yes.

Senator Finestone: Is there any provision for hiring in the figures that you gave us yesterday?

Mr. Coulter: Yes. These estimates show a net increase of $244 million. The major change is primarily for RCMP policing costs, including additional constables in local communities, more staff, and better resources to fight organized crime, high-tech crime, telemarketing fraud, immigration enforcement and drug crime, improvements for the force's management practices, and for the rehabilitation of police stations. That is all part of a major upgrade in a number of areas.

Senator Finestone: So they are hiring?

Mr. Coulter: They are on the upswing.

Mr. Lindsey: These are RCMP members, not private police augmenting the force.

Senator Finestone: The information I received yesterday from the police on the Hill is that we now hire, by a three to one ratio, security agents to handle policing in this country because we are so short staffed. The big concern there is that there is no oversight of the nature of the training, and further to that, there are additional Good Samaritan citizens being supplied with walkie-talkies with no training and no oversight. That is very serious, so I was curious as to how much of the money you announced yesterday included hiring of additional RCMP personnel.

Mr. Coulter: I cannot give you numbers today.

Mr. Lieff: In terms of the salary budget for the amounts we talked about yesterday, which was $79 million in total, for salaries there is $24 million, the bulk of that being for RCMP members.

Senator Finestone: That could be salary and salary increases, not necessarily new people.

Mr. Lieff: There is no salary increase for the RCMP in Supplementary Estimates B. It was all dealing with new hiring.

Senator Finestone: You noted that there was a major increase of $1 billion for the CHST payments. Can you tell me how much in total we pay in CHST to all the provinces? Can you find for me how much we paid in 1993-1994?

Mr. Coulter: The first part is in the Main Estimates every year. If you look on Page 1-3 of the blue book, which is part 1 of the government expenditure plan, the Canada Health and Social Transfer is listed as $13.5 billion for this upcoming year.

Senator Finestone: So $13.5 billion?

Mr. Lindsey: Yes, for 2000-2001. It is difficult to compare to 1994-1995 because the CHST is a relatively new approach to these transfers. It replaced Established Programs Financing. What we can do for you is dig up the comparative components of this program in that year.

Senator Finestone: I would like very much to know, within those figures, what percentage has been given specifically for the health care field, which would be hospitals and doctors. Is that correct?

The Chairman: It is notional, is it not? These are supposed to be block grants, unconditional block grants?

Senator Stratton: They determine where it goes.

The Chairman: Since under the Canada Health Act, the federal government must be in a position to withhold funds from provinces that contravene the act, they have settled somehow on a notional amount of the CHST as being applicable to health care. Is that a fair description?

Mr. Lindsey: Yes, it is. The provinces have considerable flexibility in how they actually spend those transfers. We do not bind them to specific amounts for health and educational components.

Senator Finestone: Can I bring up the bank accounts in Toronto?

The Chairman: Yes.

Senator Finestone: It did not go to the nurses on strike or anybody else.

The Chairman: What you are talking about is that some of the provinces put some of the money in an interest-bearing account?

Senator Finestone: Yes.

Mr. Lindsey: The money I believe you are referring to was part of the $2.5 billion top-up in health spending last year, which was not directly under the auspices of CHST. That was directed specifically to health care.

Senator Finestone: Have we any other directed funds for health care?

Mr. Lindsey: Not to my knowledge.

Senator Bolduc: In your presentation, you described the interim supply request. Some of them, more than I expected, are for more than three months for various situations. Is that a new trend? If they can get six- or nine-twelfths without any discussion in Parliament, most of the ministries will ask for that at the very beginning. The more you allow that, the more you encourage people to ask for more. If it is a trend, it is not a good one.

Mr. Coulter: We agree with you and we try to exercise a lot of discipline in the system. However, departments come forward with legitimate requests for the reasons I outlined in my opening remarks, such as, they need money specifically in the spring. There are one or two in here that are asking for funds into July and then you must really wonder why they need it. However, there are a few people on our team who scrutinize these requests very closely and who lean on departments when it is not warranted. We only bring forward what we believe is legitimate.

Senator Bolduc: Your guideline is your good judgment in this situation, which is good for the administration. Do members of the Treasury Board ensure that the ministries will be responsible? Most of the time it is civil servants from all over the place answering to all kinds of pressure groups. It is embarrassing. There is no type of rules about that, and finally we will approve these things when the money has been spent. It is a little embarrassing.

Mr. Coulter: The three-twelfths is absolutely needed because full supply does not occur till June. We have gone from 25 to 31 per cent of supply, based on what we feel -- having looked through them all and dealt bilaterally with all the departments -- are legitimate requests. Everything in here is reasonably justified. This money is needed.

Senator Bolduc: We should move more seriously into examining the Estimates of the Ministry of Foreign Affairs and International Trade in the Foreign Affairs Committee, so I will not move into that today. I have noticed, under the Ministry of Foreign Affairs transfer payments, that there are grants and contributions. In French it is on 2-6.

Mr. Lieff: In English it is 9-14.

Senator Bolduc: There is a whole list of contributions to various organizations, but some of them are public, international institutions. In that group there is the International Energy Agency, the World Trade Organization, various francophone organizations, and the Commonwealth. However, staying with the public institutions, there are the specialized agencies of the United Nations -- such as the International Labour Office -- the World Trade Organization, energy, maybe the OECD, the International Civil Aviation Organization, and many others.

We do not have here the budgets of those institutions, but some of them, for example UNESCO, are very large. Some of them we pay, for example, $23 million or $15 million or $7 million or $4 million. There is a large variation. Is it based on the budget of each international institution and then we make a specified contribution -- for example, the gross national product of Canada is 2 per cent of the world total so we pay 2 per cent -- or, because we are richer, do we pay 4 or 5 per cent?

Mr. Coulter: It is a very uneven playing field. They are all different. We have a good answer to your question yesterday on the World Trade Organization. I can leave that with you, but they are all different and we have a different status on each of them. There are different expectations in each case, and Foreign Affairs spends a lot of time on them.

Senator Bolduc: It is done case by case by the Foreign Affairs Department?

Mr. Lieff: Foreign Affairs was one of the agencies that I examined in a former role. For most of the UN organizations, these are membership dues, and the key variables are the size of the organization and the budget overall, which the international membership votes on every year. That is usually based on the GNP of the participating government.

A few years ago, the standard rule of thumb for reimbursing international organizations was maintaining, in currency terms, nominal spending levels, taking into account both inflation and currency fluctuations, and also paying 100 per cent of any salary increases to bureaucracies that these organizations voted themselves. The Treasury Board, a number of years ago, gave a direction to Foreign Affairs to have the Canadian negotiators work with our international G-7 counterparts to change the built-in institutionalized growth, so instead of working in terms of real purchasing dollars, we would work in terms of deflated dollars. They were successful. Australia and Canada took the lead on that.

Senator Bolduc: Most of them were established after the war. We were, in that period from 1945 to 1950, one of the richest countries in the world. We still are, more or less, but at that time, compared to France, England, Italy and Germany, we paid more than our share. For example, for the defence set-up in NATO in those years, Canada paid more than all the European countries. I was really surprised, when I looked at the first budgets of NATO in 1948 and 1949, to find that we were a major contributor, and not just a small piece of the pie.

If we were billed that way for other organizations in those years, and the same percentage is in effect today, it is a different ball game. Japan was in economic difficulties in those years, as were Germany and Italy and France. We are important, but I do not think that we should pay more than our fair share, particularly for an organization like the International Labour Office. It is a big bureaucracy that was established in 1930. I do not know what they do.

Mr. Coulter: The formulas are difficult to change once they are set. The United States' percentage of global GDP has gone down, but the UN is holding their feet to the fire and insisting that they pay their previous percentage of the funding.

Senator Bolduc: In some of those areas we pay too much, but I do not want to debate that now.

Senator Moore: At the bottom of page 5 of your presentation today, you mention that the Department of Fisheries and Oceans requires six-twelfths, or a total of $88 million, in its Grants and Contributions vote to meet cash flow requirements of the Aboriginal Fisheries Strategy and the Fisheries Access Program. That is one-half, so the budget for the whole year is $176 million. Is that correct?

Mr. Lindsey: Not exactly. The twelfths that we are referring to are twelfths of the total amount of the Fisheries and Oceans Grants and Contributions vote. That vote will include other initiatives, apart from the Fisheries Access Program and the Aboriginal Fisheries Strategy. We are saying that, in order to meet its obligations for those particular programs early in the year, it needs incremental twelfths of its total Grants and Contributions vote.

Senator Moore: Is that incremental as to months or to some other factor that you use?

Mr. Lindsey: It is an incremental factor measured in twelfths of their total Main Estimates.

Senator Moore: What do you think the actual will be? I thought six-twelfths is obviously one-half, and times two is $176 million. You say that may not be right. It may be more or less than that?

Mr. Lindsey: I understood you to be referring to the cost of the programs.

Senator Moore: What is the difference?

Mr. Lindsey: The Aboriginal Fisheries Strategy and the Fisheries Access Program are just two of many programs in this Fisheries and Oceans vote.

Senator Moore: So the $88 million covers more than the Aboriginal Fisheries Strategy and Fisheries Access Program?

Mr. Lindsey: That is right.

Senator Moore: You meant to say "including"?

Mr. Coulter: You are right. It is poorly worded here.

Senator Moore: How much of it would be for the Aboriginal Fisheries Strategy and the Fisheries Access Program?

Mr. Lindsey: I do not have the answer to that, but we can get back to you.

Senator Moore: I would like to know that. At the bottom of page 8, among the major increases is one of $102 million for this program. I thought that this program was new since the clarification in the Marshall case. Am I wrong?

Mr. Lindsey: I believe there was a modest amount spent in the current year for this program. It is new since Supplementary Estimates (A), for example. The bulk of the program will kick in in the 2000-2001 fiscal year.

Senator Moore: Is $102 million your forecasted total for the year?

Mr. Lindsey: Yes, it is.

The Chairman: What about your question about the relationship, as you put it, to the Marshall clarification? Has that been answered?

Senator Moore: This is dealing with the strategy and the access, and the access means buying licences from commercial non-native fishers, so I think that is what the funding is for primarily.

Mr. Lindsey: That is right.

Senator Moore: Next is the Cape Breton Development Corporation at the bottom of page 5. Yesterday, with respect to Supplementary Estimates (B), you told us that it included $74.9 million for operating losses and workforce reduction in connection with the closure of the Phalen mine. Now that was to the end of 1999-2000.

The Chairman: The end of this month.

Senator Moore: Today, the corporation requires $42.9 million, or six-twelfths, for payments associated with planned workforce reduction. Is that for something other than the Phalen closure? What is it for?

Mr. Lindsey: It is related to the Phalen closure, but I believe the Prince mine is involved as well.

Senator Moore: The Prince mine is for sale. Nesbitt Burns was hired to try to sell it. I did not think there were workforce reduction costs with respect to the Prince mine.

Mr. Lieff: You are quite right. What you saw in the Supplementary Estimates (B) was approximately $74 million for the operating losses incurred by Cape Breton Development Corporation because they are closing the Phalen mine early. Therefore there is a loss of revenue, because the mine was in the middle of the extraction and sale of coal season. They have lost that revenue. Only a modest amount is related to the workforce reduction costs. The majority of those costs in this year are related to the commercialization of the Prince mine and to dealing with the workers that will be impacted by that.

The Chairman: Are you saying that if you succeed in selling, the privatized mine will employ considerably fewer miners? Is that the assumption here? There will be a workforce reduction at the time of the sale, if there is one?

Mr. Coulter: It states in our own background material that an additional three-twelfths, beyond the regular three-twelfths, is to pay for commitments associated with planned workforce reductions. It is anticipated that a substantial portion of the total severance payments for employees involved in such reduction will occur in the first quarter of the 2000-2001 fiscal year. The human resource strategy component relating to the workforce reductions represents $49.2 million of the annual appropriation of $86 million.

The Chairman: They are not more specific about which mine they are talking about?

Mr. Coulter: No, but we can find that for you.

Senator Moore: Six-twelfths is $42.9 million. What are the totals? Is that the $86 million you mentioned?

Mr. Coulter: Yes.

Senator Moore: Now, do you look down the road to other fiscal years or are you providing that for this year only?

The Chairman: There are pensions for a lot of these people.

Senator Moore: Not a lot of them; only 51 joined the plan.

The Chairman: There will be quite a few receiving pensions.

Senator Moore: There will be 104 for sure, but there are others who are hoping to be included. Maybe that is what we are looking at, trying to cover the unknown?

Mr. Lieff: It is based on the arrangements that have been agreed on to date. That is not to say there are no ongoing discussions, but we have only provided for what has been agreed to date. You will see in about a week's time, in the "Reports on Plans and Priorities", a department-by-department set of spending plans for the upcoming year and two years down the road. Funding has been provided in the budgets. In the Main Estimates, we are providing authority for 99 per cent of the money in the budget on a one-year basis only. You will see in the supplementaries any further amounts drawing down that 1 per cent, but you will see the whole history, based on what the cabinet has agreed to present to Parliament.

Senator Cools: On page 15-7, under Justice, is the Commissioner for Federal Judicial Affairs. The material includes three categories -- administration, Canadian Judicial Council, and payments under the Judges Act. Yet, when I look at the actual numbers in the lines below, they are not broken out. It is shown as just one huge amount for Federal Judicial Affairs, and then there is a number for the salaries. Can you tell me what is the actual amount that the Canadian Judicial Council is estimated to cost? It says, "Federal Judicial Affairs". I thought there used to be a very clear number for the council. What is the estimate here for the next year? If anybody has a copy of last year's estimates, it would be helpful. The Canadian Judicial Council quantum is not laid out clearly. I do not remember how it was done last year.

Mr. Coulter: You are still on Page 15-7?

Senator Cools: Under Justice, Commissioner for Judicial Affairs, I am a little surprised that there is no very clear number assigned to the Canadian Judicial Council, because these aspects of the Judges Act are laid out quite distinctly. What is the quantum of the estimate for the year in respect of the Canadian Judicial Council?

Mr. Lindsey: The item on Page 15-7 is under "Grants" -- judges' salaries, allowances and annuities and so forth.

Senator Cools: There is no number. There are two other items that are not clear.

Mr. Lindsey: Those two items are the grants that are referred to, senator. They are lump sum payments for surviving spouses and family members.

The Chairman: Mr. Lindsey, the fine print states that:

The Office of the Commissioner of Judicial Affairs provides a range of services to the judiciary through the following service lines: Administration; the Canadian Judicial Council; and payments pursuant to the Judges Act.

Payments pursuant to the Judges Act are shown below under "Transfer Payments". Above that, administration and the Canadian Judicial Council are lumped together under "Federal Judicial Affairs" in the amount of $264 million. Senator Cools wants to know how much of that $264 million is accounted for by the Canadian Judicial Council.

Mr. Lieff: If I could direct your attention to Page 15-2, which is the Ministry Summary, there is a subsection entitled "Commissioner for Federal Judicial Affairs", the fourth box down, where the judicial council operating expenditures have gone from $649,000 to $507,000. If you remember, we often see these items in Supplementary Estimates, because there is a base budget for this council, but it also represents judges that are in the process of litigation. Sometimes, through Supplementary Estimates, we top up the budget to pay those costs, but we cannot predict them very well in advance.

Senator Cools: Is this normal then? I would have to look at page 15-2 to find the number for the Canadian Judicial Council?

Mr. Lieff: The convention that we use is that when it is Grants and Contributions, we explain it as such. If it is an entity of the government itself, then we would break it out and do the comparison, but the Judicial Council is not, strictly speaking, an entity of the government. We make a contribution to it.

Senator Cools: I am quite clear on how it is organized.

Senator Moore: Is it all the same thing?

Senator Cools: No, it is not. There are different parts to it. The Judges Act is a series of parts and the Canadian Judicial Council is slightly different. They all come under the commissioner, so maybe we should have the commissioner back to talk to us again. On the Canadian Judicial Council, what was the cost to us in the past year, and the estimated cost in the next year, for judges who are involved in litigation, and, second, the new initiative that the judges have set in motion? I refer to an article in the Ottawa Citizen, January 31, 2000, that speaks to the Canadian Judicial Council's new public image boost.

"The Canadian Judicial Council, the body for Canada's federally appointed judges, recently urged courts and individual judges to boost their public outreach efforts and to speak out publicly to counter major reporting errors of their personal criticism of judges in the media." The article goes on at some length, and a few paragraphs later talks about how the council advocates an active approach to media relations. "Courts are urged to create judicial response teams" et cetera, and continues at some length. The article also tells us that a new document entitled "The Judicial Role in Public Information" has been produced that is a half-inch thick. It has been approved by the judicial council. What is the estimated cost and where would the details of this new initiative be laid out, this new public relations, media relations initiative? I would like to know how that cost is broken out or how that estimate is broken out or reported in these numbers.

Mr. Lieff: You have succeeded in stumping us. There was an item in the Supplementary Estimates that related to that initiative. There is an amount in the Main Estimates for both of those items. We will get back to you. For clarification, you wanted to know how much we spent in 1999-2000 on representing judges who were involved in litigation?

Senator Cools: Yes. Sometime I would like a breakdown of that cost. So much of this material is now in the public domain. These are the sorts of articles that the public is reading daily. On a slightly different matter, but in terms of the Judicial Compensation Commission, I want to know what is involved or included in the estimates for that. For example, there is a line in this article from the National Post from February 15 of this year where the lawyer for the judges is making statements to the effect that perhaps judges should be paid as much as $380,000 a year because some lawyers are earning $700,000 a year. These are the numbers. What is this costing us?

Mr. Coulter: We have all the questions and we will have to get back to you. One of the difficulties we have is that is a thick book.

Senator Finestone: On Page 12-10, under HRD, there is the Canadian Centre for Occupational Health and Safety, and on page 5 of your presentation you say that the centre requires $893,000, as it receives most of its revenue in the last quarter of the fiscal year, creating cash flow pressures. I thought perhaps that the organization worked to help the disabled, but it does not. It provides information about occupational health and safety. We are spending $893,000 in terms of an interim supply request? That is a large amount of money to spend on education. What else does it do, please?

Mr. Coulter: This request is because of unexpected delays in the receipt of revenue. This is a revenue-based organization that receives 70 per cent of its revenue from a CD-ROM prescription service. Most of that is received in the last quarter of the fiscal year. Parliament votes on money to the centre on the basis of its net requirements rather than its gross.

Senator Finestone: Are you saying, if I read this correctly, that their budget is $7.372 million?

Mr. Coulter: That is correct. There is a description of their business line on page 12-10.

Senator Finestone: This is all for information that the Canadian public should have access to. I would like to have that money to do a little advertising myself.

The Chairman: The revenue is credited to the vote?

Mr. Lindsey: Many of the activities of the centre are carried out on a cost-recovery basis. In fact, while the gross spending of the centre is about $7.4 million, they actually recover $5.8 million of those costs. Therefore on a net basis, we are appropriating $1.5 million for the centre.

Senator Finestone: I come from the volunteer world. Second, within Treasury Board, you must have some knowledge of the number of gender impact analysis staff and how many of the departments they can be found in. Can you tell me how many gender teams there are doing analyses prior to budgets or policy going to the cabinet? Before a bill moves to cabinet, it needs a gender analysis. How many ministries have gender analysis teams, and how many person years are accredited to doing this kind of work? I do not expect an answer today. I would like it in writing.

Mr. Coulter: We can leave you the answer in writing to your questions yesterday about that, about HRDC, and the OAS analysis when it is done.

Senator Finestone: When you are bringing in a budgetary undertaking in any field, you must know how many children, young men, young women, old women, or old men are involved and what kind of support measures they need. I do not know which of your agencies or ministries does this. Do you do it for every single issue or is it done when the budget is being prepared? How do you do it?

Mr. Coulter: Status of Women takes the lead on gender-based analysis.

Senator Finestone: Status of Women does not do gender analysis of policy and progress.

Mr. Coulter: Individual departments are responsible for gender-based analysis of legislation and policy. You want an accounting of FTEs and the weight of effort that is going into this and we will do our best to provide it to you.

Senator Finestone: Please do it as a comparison of the last budget with this budget. The reason for this is that the fifth anniversary of Beijing is coming up this June. I was the minister when Beijing took place and was also the Canadian delegate at Nairobi. Gender analysis was unheard of in Nairobi, but it was very much present and a Canadian initiative in Beijing. There are over 25 countries that use this kind of measure, and if we want to be fair and reflect a good democracy, and both sides of the coin that make up this country, we must know if we are moving ahead in applying what is practically a new approach to doing budgets and deciding on staff, salaries and hiring. That is what I would like to know, please.

Senator Mahovlich: Next week I am heading to the West Coast to visit the aboriginal fisheries, and here I see $102 million for the Fisheries Access Program and co-management activities. Can I expect to see some progress being made out there?

Mr. Lindsey: The item you see in Estimates this year is primarily focused on the East Coast and is in specific response to the Supreme Court's Marshall decision of last year. That said, there has been a fairly vigorous Aboriginal Fisheries Strategy on the West Coast for many years, where the Department of Fisheries and Oceans has been more proactive in affording commercial and recreational fishing opportunities to aboriginals. I would expect you to see some of those activities on the West Coast.

Senator Mahovlich: On page 7, there is $895 million for National Defence spending. We hear a lot of static in the Senate, and questions coming from the opposition, on helicopters. Can you show me where I would find on page 16-4 money spent on helicopters?

Mr. Coulter: There are many different types of helicopters.

Senator Mahovlich: The ones on the East Coast are the big problem.

Mr. Coulter: Do you mean the search and rescue ones that we have contracted to purchase to replace the Sea Kings, or are you talking about the maritime helicopters?

Senator Mahovlich: Sea Kings, I think.

Mr. Coulter: You are talking about the replacement of the Sea King, and we do not have a government decision to proceed with that procurement.

Senator Mahovlich: So nothing is being done?

Mr. Coulter: The process is in train, but we do not have a government decision and announcement to take a specific approach to that procurement.

Senator Mahovlich: That is not currently in the budget then?

Mr. Coulter: DND is funded to a certain level.

Senator Mahovlich: We are going out and buying parts.

Mr. Coulter: Their internal assumption is that they will procure a number of items, and they need a replacement for their maritime helicopters. Therefore, they are planning for a procurement. Now, depending on what is procured and how, this will affect the time lines and a number of other things, other programs, but they are planning to purchase replacements for the Sea King helicopters within their budget.

The Chairman: Whatever they do is included in the $2 billion capital expenditures?

Mr. Coulter: Correct.

The Chairman: We do not know what they will do in 2000-2001?

Mr. Coulter: Typically, on a program like this, the first few years are very limited in terms of expenditures in any case, because they create a schedule whereby as aircraft reach certain milestones in production, certain payments are made. It takes quite a number of years. I think this one will take six or seven or eight years from the beginning till the last aircraft is delivered. It takes that long. So the expenditures are over quite a length of time.

The Chairman: Senator Finestone asked, did we not buy some off the shelf?

Mr. Coulter: Yes, a utility helicopter.

Senator Cools: I would like to put forward a concern that was raised by Senator Noel Kinsella on December 16, 1999 during third reading of the Appropriation Bill No. 3, which was Bill C-21. I would like to read it into the record because he would like an answer.

Honourable Senators, it was well that the appropriate time elapsed between the report stage and third reading stage of Bill C-21, for it afforded us the opportunity to take one last look at this bill. I would draw to the attention of honourable senators that the title of the bill is "An Act for the granting to Her Majesty certain sums of money for the public service of Canada for the financial year ending March 31, 2000."

On page 3 of the bill, clause 6 provides that:

(1) An appropriation that is granted by this or any other Act or referred to in Schedule 2 may be charged after the end of the fiscal year that is after the fiscal year for which the appropriation is granted...

In other words, clause 6 of this bill attempts to provide authority for the expenditure of funds after March 31, 2000. Then he quotes Beauchesne. A little further down, he says:

Honourable senators, clause 6 presents a problem with this bill. Is there an easy explanation for it which a member of our National Finance Committee, which examined the bill in detail, could share with us?

Then my response follows and there is no need to put it on the record. About a year previously, Senator Bolduc raised the same question and I answered then. To the extent that a second senator has raised the same question, it would be useful and helpful if the Treasury Board could actually respond to it. I also have a fair amount of knowledge about what happened and I am aware of the point of order that was raised by John Williams in the House of Commons. I am aware of the Speaker's ruling and I have a fairly good understanding of what you call the "multi-year lapsing authority", but I thought that the question should be addressed formally and directly by you.

Mr. Coulter: We have dealt with this certainly in the House, where the opposition has raised points of order on two separate occasions. In both instances, the Speaker ruled that supply was properly before the House and that the appropriations were indeed for one fiscal year. This multi-year lapsing authority that was the focus of the opposition's criticism or point of order at that time, is provided through separate legislation that established the Canada Customs and Revenue Agency and Parks Canada, the two agencies that were the focus of concern.

We have excerpts here from the legislation and we can leave you the Speaker's ruling on those points of order.We believe that the separate legislation provides for this multi-year lapsing authority. That is the Treasury Board Secretariat view, it is the president's view, and I think that it should carry the day.

The Chairman: These are two particular cases. I spoke on both of those bills and opposed them in principle, but that is another story. This multi-year lapsing authority is used because it is authorized by the legislation that created those two agencies, and therefore it cannot be used elsewhere?

Mr. Lieff: That is correct. Only these two cases have been provided for.

The Chairman: How did we let them get away with that?

Mr. Lieff: When the legislation for these two agencies was tabled, the government was in the process of experimenting with a number of alternate service delivery type arrangements. Actually, the Canadian Food Inspection Agency was also established at that time, and they did not build anything into their specific legislation. In total, there are a couple of provisions. There are those two specific provisions in the Parks Canada Act and in the new Canada Customs and Revenue Agency Act, which in layman's terms basically means the appropriation in any one year, if unspent, could be spent in the following year.

Also, an amendment to the Financial Administration Act approved by both the House of Commons and the Senate allows the establishment of these kinds of appropriations in a separate schedule to the appropriation bill, by an annual appropriation. So far, we have decided not to use that. We have just relied on the two specific pieces of legislation, which have been passed substantively, as opposed to using an appropriation act, although the authority does exist within the FAA. I believe that there was an understanding, when officials and the ministers met with the House of Commons and the Senate on those bills, that we would restrict the use of such authority under the FAA, for example, until Parliament had had sufficient time to take into account the lessons learned from these two pilots.

The Chairman: We did give the Canada Customs and Revenue Agency authority to charge various fees for service, did we not? They already do that, I assume, but we added to their authority to charge user fees of various kinds, not just to the provinces, but to the users of their services.

Senator Bolduc: In other words, you pay for your own inquiry.

The Chairman: I notice that in some cases in the Main Estimates, you have an item indicating that revenue will be applied against a vote, but I do not see it here. I certainly do not see it in Parks Canada.

Senator Bolduc: We introduced an amendment to make sure that people could get into the parks for free.

Senator Finestone: Did they pass it?

Senator Bolduc: No, the Liberal democrats voted against that.

The Chairman: Is there a reason why it is not shown here? You have to pay to get into the parks, and for various other services, but that does not seem to be referred to. On page 4-28, under "Canadian Heritage, Parks Canada Agency", there does not seem to be any item indicating how much they take in.

Mr. Lindsey: At the bottom of that page there is a title, "Program by Business Lines". The fourth column there is revenue.

The Chairman: The $15 million?

Mr. Lindsey: That is right.

The Chairman: How about the Canada Customs and Revenue Agency?

Mr. Lindsey: There is a similar table on page 3-4. They have authority to re-spend revenue of about $140 million.

The Chairman: I would have to look at last year to see whether they are wielding whatever new authority we gave them very widely. How much did they take in last year?

Mr. Lieff: It is possible that it is in the front table of the book under the standard object table, I-22. No, I am afraid not.

The Chairman: I can look it up.

Mr. Lindsey: That information will be contained in the reports to be tabled next week.

The Chairman: Thank you to the witnesses for their second appearance in a row and for answering so well and so thoroughly all the questions that have been put to them.

These written answers should be printed as part of our proceedings. I would like to see the official bilingual version tabled with the clerk. The public is entitled to that information in our proceedings.

Next meeting is April 4, 2000.

Senator Cools: We must do the interim report.

The Chairman: We will go in camera for that.

The committee continued in camera.