Proceedings of the Standing Senate Committee on
National Finance

Issue 30 - Evidence

The Standing Senate Committee on National Finance met this day at 5:46 p.m. to examine the expenditures set out in the Supplementary Estimates (A) for the fiscal year ending March 31, 2002.

Senator Lowell Murray (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, we have before us Supplementary Estimates (A) for the fiscal year ending March 31, 2002. You will know, from previous experience, that we should report on these Supplementary Estimates sometime during the first week of December because the supply bill is apt to be presented in the House of Commons on December 4 and may arrive in the Senate as early as December 5. It will probably be debated the next week if all goes according to plan, as it seldom does.

In any case, we will begin our consideration of Supplementary Estimates (A) this evening. We have officials from the Treasury Board. You will recognize Richard J. Neville. He is the Deputy Comptroller General now of the Comptrollership Branch, and with him is Mr. David Bickerton, the Acting Executive Director, Expenditure Operations and Estimates Directorate of the Comptrollership Branch. Mr. Neville has an opening statement to make, copies of which are before honourable senators in both official languages.

Mr. Richard J. Neville, Deputy Comptroller General, Comptrollership Branch, Treasury Board of Canada: Honourable senators, I am appearing before you today to discuss the government's Supplementary Estimates (A) for the fiscal year 2001-02 introduced in Parliament on November 1, 2001. I am pleased to have Mr. David Bickerton joining me today.

Let me begin by stating that from a fiscal planning perspective, these Supplementary Estimates seek Parliament's approval to spend $4.8 billion on expenditures, voted appropriations, for 2001-02. These were provided for within the $167.1 billion in overall planning for 2001-02, as set out in the October 2000 Economic Statement and Budget Update, and adjusted to include the impact of the policy initiatives announced in the May 2001 Economic Update. These estimates were not included in the 2001-02 Main Estimates.

These estimates also provide information to Parliament about a net increase of $2.1 billion in changes to projected statutory spending from amounts forecast in the Main Estimates. As you know, Parliament has already approved this spending in separate legislation. These items include, for example, $1.25 billion for a grant to the Canadian Foundation for Innovation, and an increase of $616 million in fiscal equalization payments to provinces.

[Translation]

Regarding items affecting more than one organization, $425.9 million for 69 departments and agencies under the carry-forward provision to meet operational requirements originally provided for in 2000-01.

This provision is intended to reduce the year-end spending and improve cash management of operating budgets. It allows managers to carry forward, from one fiscal year to the next, and amount of up to 5 per cent of their operating budget of the previous fiscal year. The operating budget includes salaries, operating expenses and minor capital expenditures.

Allocations will be as follows: $382.3 million for compensation for collective bargaining; $216.5 million to 27 departments and agencies for incremental funding to address core operational and capital requirements; $164.6 million to 10 departments and agencies for incremental information management and technology infrastructure requirements; $114.4 million for the Canadian Firearms Program; $100.0 million for the Sustainable Development Technology Fund; $98.6 million for Government On-Line initiatives; $96.9 million for public security and antiterrorism initiatives; and $62.5 million for the Federal Tobacco Control Strategy.

[English]

Items affecting a single organization include $550 million to Agriculture and Agri-Food Canada under the Farm Income Protection Act for contributions to farmers to provide immediate assistance to help them deal with hardships experienced last year; $225.3 million to the Canada Customs and Revenue Agency to address operational workload pressures and pursue revenue-generation initiatives; $221.9 million to Transport Canada to provide assistance to air carriers; $160 million, for loses incurred due to temporary closure of Canadian air space, and additional payments to VIA Rail in support of an expanded capital investment program, $61.9 million; $152.5 million to National Defence for additional costs for NATO Flying Training in Canada and other profession services - $98.8 million - and pay comparability and pay adjustments for military judges, medical and dental officers - $53.7 million; $114.8 million to Fisheries and Oceans Canada for the Fisheries Access Program; $109.7 million to the Canadian Institutes of Health Research for program enhancements; $97.1 million to the Department of Foreign Affairs and International Trade for contributions to provinces related to softwood lumber export controls; $74.5 million to Indian and Northern Affairs Canada for the settlement of specific claims with the Horse Lake First Nation and the Fishing Lake First Nation; $60 million to the Canadian Broadcasting Corporation to strengthen and revitalize radio and television programs; $57.7 million to Health Canada in support of federal hepatitis C initiatives; $57.3 million to the Cape Breton Development Corporation for additional costs, including workforce adjustments; $53 million to the Privy Council Office for the Office of Indian Residential Schools Resolution of Canada; $50 million to the Canadian International Development Agency for programming against hunger and malnutrition through international development and nutritional institutions.

Non-budgetary includes $6 million to Indian and Northern Affairs Canada for additional loan requirements.

The aforementioned items represent $3,491.5 million of the $4,830 million for which parliamentary approval is sought. The $1,338.5 million balance is spread among a number of other departments and agencies. The specific details are included in the Supplementary Estimates.

With respect to the update to Parliament on forecast statutory expenditures, $2,122.9 million of the $6,952.9 million in spending identified in the Supplementary Estimates represent adjustments to projected statutory spending that had been previously authorized by Parliament. The updates shown in these Supplementary Estimates are provided for information purposes only.

The major statutory items to which there are changes in the projected spending amounts as follows: Budgetary, $1,250 million to the Department of Finance Canada for a grant to the Canadian Foundation for Innovation; $616 million to the Department of Finance Canada for transfer payments to provincial and territorial governments; $56.4 million to the Commissioner for Federal Judicial Affairs for payments pursuant to the Judges Act.

Non-budgetary includes $172 million to Department of Finance Canada for the issuance of a loan to the International Monetary Fund's Poverty Reduction and Growth Facility.

The above major statutory items represent adjustments totalling $2,094.4 million out of the $2,122.9 million in adjustments. The $28.5 million balance is spread among a number of other departments and agencies. The specific details are included in the Supplementary Estimates.

[Translation]

Mr. Chairman, this concludes my opening statement. I will now be happy to answer your questions.

The Chairman: The amount of $164.6 million requested is clearly sufficient to draw the attention of the Leader of the Opposition, who is with us tonight.

[English]

Senator Lynch-Staunton: This is one committee where I know I can contribute nothing and come away with a lot because I always appreciate the help and information our friends from Treasury Board are willing to share with us.

I have two areas for discussion that are linked. The main one is the Sustainable Development Fund, which was the topic of debate, as you know, in front of the Energy Committee and in the Senate. In summary, the Energy Committee reported to the Senate that the way that the monies were given to a non-profit corporation was an affront to Parliament.

I am not asking you to comment on that but I will ask you to comment on the Auditor General's report, which details the entire transaction from beginning to end, and since I see everyone is familiar with her comments I will summarize them by saying that she is troubled by the way this was done. She points out, and I quote:

I also question Government statements that the Corpor ation had to be established and the funds transferred to it quickly or the spending authority for the initiative would lapse. Parliament had not granted any spending authority for 2000-2001; therefore, there was no spending authority to lapse.

I could go on at length on the background to this, but to save time and assuming everyone is familiar with the topic, my first question is: If there is no parliamentary authority for the expenditure of funds, how can Treasury Board advance those funds?

Mr. Neville: Mr. Chairman, I certainly appreciate the opportunity to clarify that particular transaction. I will go through more of a chronological sequence of events to help you understand what actually transpired. I trust that that should answer your concerns.

After the Budget 2000 announcement, legislation was drafted to create a foundation. To put it in perspective, the Minister of Finance announced this initiative responding to a significant environmental climate change priority addressing the Kyoto Protocol in the February 2000 budget. After that, while the existing program legislation of both the Minister of Natural Resources Canada and the Minister of Environment, together with the funding agreement with the private sector corporation would have been sufficient for the long-term management of the fund, the government preferred to have a legislative foundation. A legislative foundation provides additional parliamentary oversight and allows flexibility to change the mandate of the organization if need be.

Legislation was initially introduced into the House in October 2000. Remember though that this was introduced in the budget speech in February 2000. With the call of the election, Bill C-46 died on the Order Paper and was tabled again in February 2001, as Bill C-4, after the election. Parliament gave Royal Assent to Bill C-4 on June 14, 2001.

The act created the Canada Foundation for Sustainable Development Technology. However, during this period the government was concerned with the delay in delivering the program. Hence, to expedite delivery of the program the government entered into a funding agreement with a private sector foundation incorporated under the Canada Corporations Act, Part II.

A funding agreement approved by Treasury Board in March 2001 and signed by both parties outlined the terms and conditions for the use of a $100 million grant. Since the funding agreement and the necessary Treasury Board approvals were completed too late for this item to be included in the 2000-01 Supplementary Estimates, or the 2001-02 Main Estimates, this item has been included in the 2001-02 Supplementary Estimates.

Temporary access to Treasury Board Vote 5 of $50 million in 2001-02, $25 million each for Natural Resources and Environment Canada, was provided to advance funds to the foundation to begin delivering on the initiative. Without access to TB Vote 5, funding would not have been made available for the initiative until the 2001-02 Supplementary Estimates are tabled and approved, hopefully in December 2001. This would be almost two years after the initiative was first publicly announced and 10 months after the government entered into a financial obligation to provide $100 million to the foundation.

This also recognized the government's liability under the funding agreement and allowed the foundation to begin delivering on this high priority initiative consistent with the government's intention. The $50 million will be returned to replenish TB Vote 5 upon the tabling of supplies for these Supplementary Estimates. Funding for projects will be provided to eligible alliances, private sector corporations, universities, and not-for-profit organizations whose aim is to develop or demonstrate new technologies to promote sustainable development related to climate change and clean air.

The funding agreement will terminate on June 30, 2011. This will allow five years to commit funding to eligible projects to 2006, three additional years to disburse the funding to 2009, and two years to monitor results and conduct a final evaluation. The interest on the amount will accrue to the foundation, enabling it to do more work in support of sustainable development technologies.

I have two comments in closing. First, if the foundation is dissolved, any remaining funds will be distributed to eligible recipients who have received funding from the foundation and are still carrying on projects with the objectives of the SDTF.

With regard to your specific question, while in her report the Auditor General questioned the advisability of making large payments to foundations in advance of their use - and in this case the need to make such a large advance payment prior to consideration of Bill C-4 and Supplementary Estimates - she did not place reservations on the accounts of Canada and noted that the payments followed an acceptable legal interpretation of parliamentary authorities.

I trust that answers the question. It was a lengthy response, but I wanted to give you the chronological sequence of events.

Senator Lynch-Staunton: I appreciate that, although I am familiar with them. You have done them in the right order. However, I want to quote the Auditor General from her report:

The Government Contingencies Vote authorizes the Government to "supplement other appropriations for paylist and other requirements and to provide for miscellaneous, minor and unforeseen expenses not otherwise provided for..." It is likely that Parliament will approve the Supplementary Estimates, retroactively authorizing the two $25 million payments to the Corporation and the replenishment of the Government Contingencies Vote. However, I question whether it was appropriate for the Government to use a general contingency vote to provide $50 million in tempor ary authority so the departments can make the grant payments to the Corporation, all before Bill C-4 received royal assent.

This is our preoccupation, that there had been no parliamentary authority; the bill had not passed. How can justification be given for the use of the contingency vote to justify the transfer of funds when the program itself had yet to be approved by Parliament? That is the part that I find mystifying.

Mr. Neville: I thought I had gone over that, but I would be pleased to go over it again.

Senator Lynch-Staunton: I want to know what the legal mechanism is allowing Treasury Board to transfer funds to a program yet to be approved by Parliament.

Mr. Neville: There was a legal entity created by way of the Canada Corporations Act, which was approved by Parliament.

Senator Lynch-Staunton: The Canada Corporations Act was approved by Parliament, but the Parliament had nothing to do with the creation of the corporation.

Mr. Neville: The point is that there was a legal entity out there; therefore, the Treasury Board was legitimate in authorizing the terms and conditions with that legal authority, which then allowed us to make a payment under TB Vote 5.

Senator Lynch-Staunton: That is exactly it. Under what authority does a private corporation get public funds without parliamentary approval? How can Treasury Board by itself - on the recommendation of departments, obviously - allow this transfer of funds to a private corporation without Parliament having any say over it and only being asked to rubber-stamp it after the deed is done?

Mr. Neville: The TB Vote 5 is structured is that in a way that we have those funds voted first in the Main Estimates, so they have in fact been voted by Parliament in that sense for specific use. When a grant is deemed appropriate and presented by a minister to the Treasury Board for approval, if that is in fact approved, the draw can be made from TB Vote 5 if funds are required immediately, until such time as they are actually sought for replenishment by way of the next Supplementary Estimates.

TB Vote 5 is a mechanism that can be used to allow for that kind of payment to be made, and in this case, it was with a legal entity.

Senator Lynch-Staunton: What would have happened if the legal entity had spent all the money and Parliament had refused to accept the Supplementary Estimates?

Mr. Neville: If that had occurred, the government of the day would have to deal with that issue when in fact that transpired. That is an "if" question, but they would have to deal with it in due course.

Senator Lynch-Staunton: The Auditor General also questions why the entire amount was transferred over to this corporation that was only going to be there for as long as needed. Why was the entire $50 million transferred instead of $1 million or $2 million? It would then have been a little more defensible to say we were setting up this fund and to ensure it stayed alive we were given temporary funds, but the bulk would only come after Parliament approved it.

My point is that all this was done without parliamentary approval.

Mr. Neville: No. That is not fair. There was a legal decision sought and a legal decision given.

Senator Lynch-Staunton: I know she says that.

Mr. Neville: The decision says it was approved as per the proper authorities. The Auditor General also states that.

Senator Bolduc: May I interject? This is a supplementary question.

[Translation]

You use the expression "contingency vote", and that amount was voted by Parliament in the spirit of Parliament; those monies are not meant to be used to create a corporation, which is just about what is being done in the private sector. We set out a mandate for that corporation and then we give it the money. I would say that you are verging on - I am not saying that this is illegal - I would say that is damn close to being illegal!

This is an improper principle and an improper action. I would even go further: my feeling is that you did this because you got your knuckles rapped by the Auditor General the year before when a Crown Corporation was set up after the budget year. I tell you: "I can smell an election coming".

Mr. Neville: Mr. Chairman, if you allow me, I would disagree with the comment because we did not come close to being illegal. We did what we were entitled to do in accordance with the laws of Parliament and the practice over many centuries with this vote.

[English]

The Chairman: I think we had better flag this Treasury Board Vote 5 for some serious consideration. Are there any limits to which this vote can be put? Does contingency mean only for the convenience of ministers or the government at any particular time?

Perhaps we should look into the vote and to what Parliament said - if Parliament said anything about it. Perhaps you could start by tabling one of these days the rules, which I am sure exist over there somewhere in the government, as to what is permissible and not permissible by way of uses of that contingency vote.

Mr. Neville: I have it here, Mr. Chairman. If I could take a moment, I would be pleased to do that.

First, Treasury Board Vote 5 has been around for decades and has been prudently managed by this government. I would even go so far as to say that it has been around since Confederation. This contingency vote allows the government to respond to high priority requirements falling outside the normal supply cycle, while respecting the principle of responsible spending and Parliament's scrutiny and approval of government expenditures.

Mr. Chairman, it is important to note that the initiatives given bridge financing through TB Vote 5 are already approved expenditures within the fiscal framework. All of the initiatives included in the temporary funding listed in these Supplementary Estimates are being presented in the Estimates of various departments for the review of Parliament.

TB Vote 5 provides interim parliamentary spending authority, where Treasury Board must approve all allocations, which transfers spending authority from Vote 5 temporarily to existing appropriations. It is a temporary transfer only. Expenditures are not incurred directly against the vote and the un-transferred balance lapses at year-end.

Temporary allocations are returned to Vote 5, thereby replenishing it after each set of Supplementary Estimates upon approval of the release of supply. Temporary allocations from TB Vote 5 are identified for Parliament in the Supplementary Estimates against the relevant item.

The Chairman: I am glad to have it read into the record. What it is saying, in effect, is that the vote is a pool of funds that ministers can access at their convenience for high priority items outside the supply cycle. That does not accord with the dictionary definition of contingency. We should go into this matter, perhaps with the Auditor General, sometime in the future.

Senator Banks: I cannot remember the exact word that was used to define the circumstance in which this sort of revolving fund can be accessed. Can you tell me what that word is? Is it "extraordinary"?

Mr. Neville: "High priority requirements," I believe, is the right terminology.

Senator Banks: It can be argued that this might fall into that. I will ask a false scenario question, if I could. It may in fact be the identical question asked by Senator Lynch-Staunton, but I did not quite understand the answer.

I do not know whether the private corporation actually expended any money before Bill C-4 was approved. Let us assume for the scenario question that they did.

Mr. Neville: They did or did not?

Senator Banks: They did. It was legal. We had the parliamentary authority. We transferred the money to this private corporation in order to, you said earlier, allow them to proceed with the program because otherwise it would have been held up. That was the rationale.

Mr. Neville: Correct.

Senator Banks: Let us assume in doing that they spent $1.50 of that $100 million. For a start, let us assume that Parliament is still supreme and that Parliament, for whatever reason, did not pass Bill C-4 or passed it in a way that would have significantly amended it. Now, this corporation has spent $1.50 or $50 million, and we have not got Bill C-4. Parliament has declined to legitimize this expenditure. The program does not exist. Where is our recourse? Who is responsible? Who is in charge? How do we get the $50 million back?

Mr. Neville: It is a theoretical question. However, if that were to occur, I believe the government of the day would have to deal with that issue in the context of what are some of the actions and some of the options, and I am sure a number would be put forward. A decision would be taken by the government of day as to how to proceed.

Senator Banks: Can you tell me whether any particular notice has been taken by people in your office or elsewhere of the levels of concern that were expressed by this committee and by the Energy Committee and which have been talked about in the Senate at length in the form of, more or less, admonitions? Are you aware of the extent and level of concern?

Mr. Neville: My staff and I are very aware of the discussions, the debates and the motions that have surrounded this particular transaction.

Senator Banks: Since it is, as you suggest, a perfectly normal procedure that goes back a long way, is it likely to happen again?

Mr. Neville: It was a legal transaction. We look at all transactions carefully. Obviously, we will consider this debate for any future transactions. I wish to remind this committee that we had a legal opinion on this before taking the decision. Based on that legal opinion, we went ahead.

Before we do it again, we would certainly want to seek a legal opinion and factor in the debates, comments and discussions that surround this particular transaction.

Senator Banks: Assuming the legal opinion would not change the next time, it might happen again, as a matter of course?

Mr. Neville: As a matter of course.

Senator Bolduc: We seem to be spending a bit more, that is, from $160 billion to $173 billion. Is it fair to say that the last time he made a forecast the Minister of Finance made an error in forecasting the expenditures of the government for the year?

Usually, our minister is always on the side of having more revenues. He made mistakes in forecasting his revenues. He also made mistakes on the expenditure side. This time it is new; it is going up. I am a bit surprised. I do not know if it is because the money was pouring in like hell during those years, or if it is because of another reason.

The Chairman: Are you referring to the Main Estimates?

Senator Bolduc: I am referring to his last forecast. I do not remember if it was in May of this year or if it was October 2000.

Mr. Neville: The total Estimates for 2001-02, including the Main Estimates and these Supplementary Estimates just tabled, are consistent with the $167.3 billion in planned budgetary spending for the current fiscal year announced in the October 2000 economic statement and budget update, adjusted to include the policy initiatives announced in the May 2001 economic update.

To answer your question, yes, he is consistent. He has said that these Supplementary Estimates still allow for the amount that had been planned as the budgetary spending for this current fiscal year.

Senator Bolduc: In other words, if you add all the forecasts that have been done in the past year and a half that amounts to $173 billion; is that right?

Mr. Neville: Yes. It is a technical question, senator. What you have to factor in - and it is not something we discuss very often, but we should not lose sight of - is that there are components in the $171 billion to which you refer that are charged to the previous year.

Senator Bolduc: I know.

Mr. Neville: They are paid this year but they are charged.

Senator Bolduc: That would be $100 million.

Mr. Neville: More than that. When you subtract those amounts that are in this year's expenditure plan but are charged back to the previous year, then you reduce your expenditures of course and that is what allows you to come back to the $167 billion that the Minister of Finance had planned.

It is a very good question, but I want to make sure you understand there is a technical part to the answer that we do not normally talk about a lot only because it is not raised to the extent that you have raised the matter.

Senator Bolduc: Part of it is budgetary and part of it is non-budgetary.

Mr. Neville: No, it is prior years' expenditures that the economic event actually took place in a previous year. If the economic event took place in the previous year, we are required to charge it back to that year even though it is paid this year. You take the $171 billion, subtract those kinds of payments, which are really applicable to a prior year's event, and when you subtract them the Minister of Finance is of the view that we will be within the forecast of planned spending.

Senator Bolduc: I note that when you are saying forecasts, it is plural. Each time he made a rule we had another forecast.

My second question is about the fact that we have established for a few years a certain number of special agencies. I do not know the technical term, but do you call them special agencies?

Mr. Neville: We have created three agencies: Parks Canada, the Canadian Food Inspection Agency and the CCRA.

Senator Bolduc: What strikes me is the fact that since we have done that in the last four years those people are hungry for money. They ask for money in the amount of $300 million for customs and revenue this time and another two are asking for big amounts of money.

Does it mean that it is more costly when it is administered only by civil servants and less costly when the minister is in charge? We change them for economic purposes, and it is going up. I do not understand.

Mr. Neville: When they became agencies we did carry out an A base review of those two organizations and looked at their requirements. In so doing a Treasury Board submission was prepared that sought additional resources based on the third-party independent study that had been carried out. There was in fact substantiation.

Senator Bolduc: What strikes me is the fact that you are partly responsible for the suggestion of taking measures of economy in building and creating those things, and at the same time when you look at their base you are more generous in looking at their base than when it is a minister.

Mr. Neville: The reason they were created was not just a question of economy. They were created for many reasons - economy was one. However, it was also to allow the entities to have more flexibility, whether it is in the area of human resources in the case of Canada Customs and Revenue Agency, to also interact with the provinces in terms of offering services to help the provinces in terms of collection of specific taxes. There were a number of reasons for those agencies being created.

Senator Bolduc: We do not have much in those Supplementary Estimates for security. In other words, what happened on September 11 is not reflected in that. Will it come in the next time?

Mr. Neville: Yes, there are three specific items in there. If you give me a moment I would like to be specific about them.

There is $96.9 million in the Supplementary Estimates, which includes $57 million for Transport Canada and $39.9 million for the Department of Citizenship and Immigration, which is in this package. There is also $160 million for Transport Canada. There are three components in here that are directly related to the September 11 incident.

The Chairman: For the record, Mr. Neville, with regard to the $288 million sought by the Canada Customs and Revenue Agency, this is said to be needed to address operational workload pressures and pursue revenue generation initiatives. Those last three words should give us all pause. Hang on to your wallets. Are these operational workload pressures related in any way to the events since September 11?

Mr. Neville: No, none of these resources provided were directly related to the events of September 11, 2001, although $16.2 million was provided to Canada Customs to address workload increases at major airports and land border crossings. They were not directly related to September 11.

The Chairman: With regard to all the extra work on security matters one assumes they will be back again with the next set of Supplementary Estimates.

Mr. Neville: Your guess is as good as mine, Mr. Chairman.

Senator Tunney: I thought I had a good question, Mr. Chairman, and I thank you for the opportunity.

My only question relates to your statement on page three of your presentation. Under the heading "Items affection a single operation," you have $550 million to Agriculture and Agri-Food Canada. I notice what it is for. It says Farm Income Protection Act, and it does not seem to refer to the need for extra food inspection. It looks to me like it is to help deal with hardships experienced last year.

I would like to know if this is in addition to the programs that we already have in place or will this be in addition to one or more of the programs that are in place. The shortfall presumably was caused by lower grain and oilseeds prices, I think, as opposed to drought because drought occurred this year, 2001, beginning in July when it affected the crops most - July, August, September. Have I mixed you up too much here?

Mr. Neville: No. I think it is fair to say that it is in addition to the existing programs. Let me be more specific. As you said, farmers faced unusually hard conditions last year, 2000-2001, so the federal government responded with a one-time injection of $500 million to provide immediate assistance to help farmers with hardships experienced. These contributions were matched by the provinces usually in a 60-40 federal-provincial ratio.

Senator Stratton: Welcome again, Mr. Neville. I did not notice, and I have not gone through it all, the natural disasters. Have you got a final number on that now? Is there anything in this year's estimates or supplementals to do with that?

Mr. Neville: It was wrapped up. I have gone through my briefing book and I do not recall it.

Senator Stratton: Would you mind giving me a final number on that? I would appreciate it.

Mr. Neville: Sure. Can you be specific?

Senator Stratton: What is the total number? It is difficult to find because the numbers always come from many different sources. They come from Agriculture, Western Diversification and other departments. I have always asked in the past what the number has been.

Mr. Neville: Can you be specific, please?

Senator Stratton: I am talking about the total for meeting the floods and for the ice storm.

Mr. Neville: I recall a number of discussions. We tabled it and we showed it to you.

Senator Stratton: If that has not changed, please tell me.

Mr. Neville: That has not changed. If it has, I will get back to you.

Senator Stratton: That is all I need to know.

Mr. Neville: I know the specific tables to which you are referring.

Senator Stratton: Yes, you do. You referred to "previous year's" events. In other words, you were talking about $4 billion that was budgeted for in the last fiscal year. Even though it was expended last year, it goes into the previous year's budget.

I have always asked you as well: What is the final number for last year's budget? I know you do not have that number with you tonight. Do you have it? I have asked it before and we have not got it. I am always interested in knowing if the number was "x" dollars last year, how much has it grown by this year.

I have the document; however, I have not gone through it.

Mr. Neville: I just happen to have the Public Accounts for fiscal year ending March 31, 2001.

Senator Stratton: I am always curious to know what it was then and what we estimate this year's to be for comparison.

Mr. Neville: I will just take a moment to look at the financial statements. It has been three months since I looked at these in detail.

Senator Bolduc: That is your own work, by the way; is it?

Mr. Neville: Yes, it is.

Senator Stratton: You could always send the answer to me.

Mr. Neville: No. I would like to give it to you this evening.

For the fiscal year ending March 31, 2001, which means for the fiscal year 2000-01, gross consolidated expenditures of the Government of Canada were $175,202,000,000, rounded; the net expenditures were $161,442,000,000, rounded. Those are the audited numbers in the financial statements of Canada.

If you were looking for it, it is specifically in the statement referred to as Statement of Revenues, Expenditures and Accumulated Deficit for the year ended March 31, 2001, you will find it on page 1.8 of the Public Accounts of Canada for 2001, Volume 1.

Senator Stratton: This year, we have grown by roughly $6 billion.

For my final question, I return to an old question I have asked you before on numerous occasions. When will we quit spending money on guns? What are we at now as a total number? You are now asking for a staggering sum of $158.6 million in new appropriations. The minister responsible at the time - the Minister of Justice, Mr. Rock - sat in that very chair and promised us that it would be no more than $85 million. What are we at now?

Mr. Neville: Do you want the short answer or the long answer?

Senator Stratton: Take your pick.

Mr. Neville: I will give you both, but I will give you the answer you are seeking.

We are talking about the Canadian Firearms Program. There is $113.9 million for the Department of Justice and $0.5 million for the National Parole Board are in these Supplementary Estimates (A) to cover the incremental costs related to the implementation and administration of this program. This is all part of the government's "Safe Homes, Safe Streets" policy agenda, which the Department of Justice sponsored with regard to an Act Respecting Firearms and Other Weapons, or the Firearms Act as we know it, which was passed by Parliament in 1995.

There have been a number of challenges to the act. Two of those major implementation challenges were with regard to the licensing of roughly 2.3 million firearm owners and the registration of 7 million firearms within a short time frame. To date, 2 million owners have complied with the licensing requirements. Over 2 million firearms have been registered or are in the process of being registered. As you know, the statutory deadline for firearms registration is January 1, 2003.

Due to difficulties in the early stages of the program, it appeared that the licensing phase of the program might not be attained as planned. In May 2000, the Minister of Justice presented a program to cabinet with the goals of encouraging compliance, increasing processing capability, and improving technical systems efficiency. Cabinet approved this program improvement plan in May 2000.

In spite of the positive results with the program, there were still problems with the licensing phase because of inefficiencies in the operation and accountability structures. This indicated that the registration deadline of January 2003 could not be met with the current information technology and supporting operational processes. Therefore, a major restructuring of the Canadian Firearms Program was presented to cabinet in February 2001.

Cabinet approval was received, based on the understanding that the restructuring would not only be done within the funding profile approved by cabinet, but would also generate savings, mostly due to the redesign of the IT systems and business processes.

To achieve substantial compliance for the statutory deadlines for licensing of firearms owners and registration of firearms, cabinet approved measures, such as the reduction of licensing fees, the waiver of transfer fees and a temporary waiver of registration fees.

These measures contribute an overall cost to the Canadian Firearms Program that is higher than originally predicted. The bulk of the funding - some $90.5 million - that was sought by Justice in these Supplementary Estimates, relates to the cost of implementing this restructuring plan. The remaining $23.4 million is an increase to Justice's grants and contributions to cover the costs incurred for the operation and administration of the Firearms Act, as administered by provincial and territorial agreements in the provinces of British Columbia, Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island. In the remaining provinces and territories, the Department of Justice provides similar services with support from the RCMP. These service costs are included in the operating costs of the Department of Justice, Law and Policy Budget.

Funding of $0.5 million for the National Parole Board is to assist them with the incremental costs associated with the implementation of the Firearms Act. Because of legislation, the National Parole Board deals with longer correctional sentences and additional conditional release reviews.

That brings us to the resource profile. For previous years - if you care to jot this down - before the beginning of this fiscal year, it was $541,262,000. In the Main Estimates - that is, the Main Estimates for this year, 2001-02 - there was a planned additional $34,611,000. The amount in these Supplementary Estimates, as I have already explained, is $113,886,000. The total at this point is $689,760,000.

I trust, Mr. Chairman, that answers the senator's request.

Senator Lynch-Staunton: What is the cost to the government in waiving the fees and in refunding certain fees?

Mr. David Bickerton, Acting Executive Director, Expenditure Operations and Estimates Directorate, Comptrollership Branch, Treasury Board of Canada: I could answer that for you, Senator Lynch-Staunton. At this point in time, the government has collected somewhere in the order of $44 million. The costs for the remission order passed and the refund of the monies will amount to some $3.5 million that will be paid back this year.

Senator Lynch-Staunton: That is just the money being paid back, not the cost of processing?

Mr. Bickerton: No, the costs of processing those orders are included in the operating costs for the organization.

Senator Stratton: The concern I have is that this is $689 million, which is virtually $600 million more than the minister promised it would be. How can someone be that incredibly wrong? I know you can go through the litany of reasons forever, but I guarantee you, because of September 11 you will never get people to register. After that event, there is no way. That is a forecast. I should not say it, but I am making that prediction, because if you think people will register their firearms after September 11, forget it.

Mr. Neville: I will comment on one specific aspect. You said it was $600 million more than originally forecasted. If we were to go back over the minutes of this particular committee while I was a witness at numerous presentations, I believe you would find a thread of continuity because you have asked that question on many occasions, and I have given you the rationale each time for the increase. If you add all those together, I think you would have the total picture.

Senator Stratton: How can it be that wrong from the original? Where will this end? Do you have any forecast? I am sure you do not.

Senator Cools: I have a suggestion to that, Mr. Chairman. Maybe we should bring the minister.

Senator Stratton: He is no longer minister.

Senator Banks: I have two questions. The first question I ask on behalf of Senator Milne, who regrets that she cannot be here. I think you may have been given notice of this question, Mr. Neville. If it is not easily obtainable you can answer later.

Before I ask it, may I say how much I admire the way you and Mr. Bickerton are able to respond to our questions? I am glad you are working for the good guys.

The background of my question is that currently there is an arrangement in place between the National Archives and Statistics Canada under which the National Archives had agreed to store the census records. Control of their release, of course, resides with Statistics Canada. At the time the agreement was made, it was understood that the arrangement was not to be permanent because it was anticipated there would be some decisions made on how those records would be released to the public, or that Statistics Canada would make a different arrangement for the storage of those records. To date neither of those things appears to have happened.

Statistics Canada originally made, but then withdrew, a request for funding of the project to continue the process of transferring older census records from paper onto some kind of appropriate electronic copy, and perhaps including census records going back as far as 1906.

The result is that the National Archives is spending money hand over fist to keep those old records in some kind of usable condition, with no plan or funding to properly preserve the documents. The records currently occupy a number of storage facilities that are the size of a few football fields. I believe that there was an application process that was started and then withdrawn.

In the Supplementary Estimates, on page 104, there is an entry for government on-line initiatives under Statistics Canada. I wonder whether that or any other part of the Estimates for Statistics Canada include any funding to transfer those historic census records from paper to electronic form, as was once applied for? If so, how many years of census records will be processed with the funding allocated? If not, was any request ever made that that process should be done and was that request ever withdrawn?

It is a long and complicated question but I would be grateful if you could answer either now or later.

Mr. Bickerton: Thank you, Senator Banks. I do appreciate the fact that you were able to give us a heads up for that question. We were trying to find the information. We will give you the benefit of what we have been able to determine thus far.

At this time, the estimates for Statistics Canada do not include any incremental funding for this transfer of pre-2001 census data into electronic form. It is our understanding that Statistics Canada has not requested any incremental funding to undertake the conversion of data prior to 2001. From what we have been able to determine, none of the 1996 census data has been transferred from paper to electronic format.

You are correct that the prior years' data for census up to and including 2001 is the responsibility of the National Archives. As far as I know, they remain in paper form. To the best of our ability and knowledge, there is no funding requested for that conversion.

Senator Banks: My second question has to do with page 91 of the Supplemental Estimates (A), and this is the Atlantic Canada Opportunities Agency. I notice that there is a figure at the very bottom, under Objects of Expenditure, Public Debt Charges, which I think is $504,000. I am assuming that thousands of dollars that are going out here. Why would the Atlantic Canada Opportunities Agency have a public debt charge?

Mr. Neville: Can you give us a moment on that?

Senator Banks: The larger question is: How can an opportunities agency have a debt?

The Chairman: Would it be a defaulted loan guarantee or something like that?

Mr. Neville: Public debt has a very specific meaning for us. We will get back to you on that, Senator Banks. It may be this evening, but if not we will get back to you.

Senator Lynch-Staunton: Before I move to a topic similar to the one I brought on earlier, I thought colleagues would be interested if they got to page 70, where there is a contribution by the Department of Foreign Affairs of $1 million to the Catholic World Youth Day 2002 Council. I recently read in the Canada Gazette that the Governor in Council approved a waiving of visa fees for those attending the conference and in the explanatory note, it was stated that this would cost the government lost revenues of $3 million. In effect, the government is giving at least $4 million to this. The point I am making is we do not always get the total picture in one document. We have to search around a few other places to find a total picture.

That is just a comment, but do you agree with me that that lost revenue of $3 million should be factored in for the cost of the government's contribution to the youth day council?

Mr. Neville: I would have to know more about it before I could answer. There are probably other related costs. I do not know what they are.

Senator Lynch-Staunton: It would be nice to have them.

I will go to page 143, and it is along the same lines as the Sustainable Development Fund transfer, which I still question. Although it may be legal, I, like the Auditor General, found it inadvisable. It is a $152 million grant to Canadian Airlines, et cetera.

In the United States, when a bailout package was discussed, it went to Congress. It was debated. The president had his say. An agreement was reached, and the bailout was in a form of a bill.

Here, the minister announced it in a press release. As I recall, there was never an announcement in Parliament - certainly not in the Senate through the Leader of the Government - that millions of dollars would be available for airlines and airline services because of losses incurred because of the tragic events of September 11.

This is a comment more than a question. How can $152 million be approved for a program that the minister devised on his own and which was never referred to Parliament? I do not understand how this amount of money can be spent and Parliament is only asked to ratify and approve it in and, in effect, rubber-stamp it, without any debate, discussion, defence or explanation. All we have is the press release of the minister and the reference here, and that is it.

Mr. Neville: In effect, the tabling of the Supplementary Estimates (A) is, in fact, seeking Parliament's approval for the content therein. That program is being requested as part of the total amount being sought.

Senator Lynch-Staunton: The money has already been spent. The other day the Parliamentary Secretary to the Minister of Transport in the House of Commons said that most of the money had already been spent. There were 1800 or so applications and Air Canada had already received its money. The money is gone.

Mr. Neville: The minister responsible has the Department of Transport Act, which allows payments to be made.

Senator Lynch-Staunton: Where in the act does it say that he can make payments for financial assistance in respect to losses incurred due to the temporary closure of Canadian airspace?

Mr. Neville: I do not have a copy of the act with me, but we are working here on the provision that the Department of Transport would have that authority. This would have been discussed when it was raised with the Treasury Board ministers in seeking that approval.

I stand to be corrected, but that would be the legal authority under which the minister of transport would have sought approval, and ratified in terms of the funding by way of the Supplementary Estimates (A).

Senator Lynch-Staunton: It is obvious that my frustration should be directed at the minister, not at you. However, I do not think the minister will come here and answer those questions. It is not the first, but it is the most blatant case in this book. It is highly frustrating, annoying and even improper that the ministerial discretion reaches so far that Parliament becomes an extension of government rather than the government being an extension of Parliament. That is what I am trying to get out of my system. I do not know what can be done about it.

You people make a fine presentation. You answer the questions clearly and, when you do not have the answers, you give them in writing very soon after, which is greatly appreciated.

Senator Bolduc: It is equivalent to the public accounts. It is not the budget estimates.

Senator Lynch-Staunton: Thank you for allowing me to get this out.

Senator Mahovlich: What criteria did Minister Collenette use to allocate these funds? Did any foreign-based airlines receive any funds, or was it just Air Canada?

Mr. Neville: To answer your first question, I will go back to the Department of Transport Act, which would be the legislative basis upon which the payments would be made. If you wish, we could look at the specific provision of the act that was used and make that available, if it is of interest.

Senator Mahovlich: Yes, but Canada 3000 was asking for $400 million.

Mr. Neville: I was just answering the first question. You were asking for the basis of authority. The basis of authority, as best I know it, would be the Department of Transport Act.

Senator Mahovlich: I am not asking for the basis of authority, but the criteria.

Senator Banks: Why is it $152 million?

Mr. Neville: I will answer that question then.

First, this program is intended to provide full and fair reimbursement for losses incurred to the program up to a limit of $152 million. "All Canadian airlines" does not apply to foreign-based air operators, so that answers your question.

Specialty air operators, training schools - with the exception of users of corporate and private aircraft - are eligible for financial assistance for the air services lost for six days, which was the period of the immediate disruption following the events of September 11.

The financial assistance in this case is based on total foregone revenues plus any incremental costs net of any gain from a voided expense, such as fuel. If airlines have not flown, they have not used fuel.

Claims for financial assistance need to be substantiated and attestations signed under oath by the owner, the chief executive officer, the chief financial officer or the chief operating officer. Information provided is subject to verification and refunds would be sought in the case of overpayment. Applicants will be provided substantial initial payments to minimize any further financial damage resulting from the ground stop order. Remaining funds may have to be pro-rated to ensure the program lives within its financial limits before final payments are made to qualified applicants.

That would be the criteria for the payments.

Senator Cools: I would like to welcome Mr. Neville and Mr. Bickerton. I would like to say, Mr. Neville, it is wonderful to have you back. We have missed you.

I was thinking, as Senator Lynch-Staunton was speaking, that when Senator Stratton was chairman, the committee tossed around the idea of beginning committee studies department-by-department, because of the sorts of problems that emerged again and again.

I use this opportunity to put the issue before us again. Maybe we should return to that idea and look at how these individual departments actually do enter into these kinds of arrangements.

I understand very clearly that the Department of Transportation Act would be the appropriate basis. I have not looked at the act for quite some time, but one wonders what are the limits to which any minister can spend without actually coming to Parliament with a bill at the time of the commitments to spend?

It is no longer clear. This committee has raised these questions again and again. I just put that out to us for study.

My question is insignificant tonight. On page 70, you see there is a $20 million grant to Jamaica, Vote 25. Could you tell us about that, please?

Senator Banks: Is it debt forgiveness?

Senator Cools: It is a grant.

Senator Stratton: It is on page 17, $17.9 million, Vote 2a.

Senator Cools: There are two different items.

Senator Stratton: I understand, but we are talking of a cumulative amount of $38 million.

Mr. Neville: We will answer both questions. I will deal with it as two transactions.

First, Canada is a member of the International Monetary Fund, the IMF, and a donor to its Poverty Reduction and Growth Facility, or the PRGF, at the IMF's concessional facility for balance of payments support to low-income developing countries. Canada supports the PRGF with payments and through the issuance of loans.

Two exceptional events caused the presentation of Supplementary Estimates at this time. First, the issuance of loans to the IMF's Poverty Reduction and Growth Facility is normally included in the Main Estimates. However, in this instance, the Main Estimates were closed without that item. As a result, the issuance of a $172 million loan is included in the Supplementary Estimates.

Following the closure of the Main Estimates, but before the end of the 2001 fiscal year, Canada paid its 2001 PRGF payment of $40.5 million. Having made the 2001 PRGF payment during fiscal year 2000-01, a corresponding reduction from the 2001-02 Main Estimates was required.

While on the surface it could appear inconsistent to make an increase and a decrease in the same Supplementary Estimates exercise, as you correctly pointed out, it is worth noting that the increase was to a repayable loan and the decrease was to a payment. Thus, the two are best kept separate.

The Chairman: Honourable senators, if there are no further questions, I wish to thank our witnesses. As always, it has been a most instructive and, dare I say, entertaining evening for us and, in all due modesty, we hope for you, too.

The committee adjourned.