Proceedings of the Standing Senate Committee on
National Finance
Issue 7 - Evidence
OTTAWA, Wednesday, May 7, 2003
The Standing Senate Committee on National Finance met this day at 5:47 p.m. to examine the Estimates for the fiscal year ending March 31, 2004.
Senator Lowell Murray (Chairman) in the Chair.
[English]
The Chairman: Colleagues, our witness tonight is the Honourable Lucienne Robillard, President of the Treasury Board. She is here to discuss the Main Estimates for 2003-04. This is preparatory to our consideration in the Senate of an appropriations bill, which will be before us in due course.
[Translation]
Madam Robillard, we welcome you once again to the Senate. This certainly is not your first appearance before this committee.
[English]
She is accompanied by our old friends, Richard Neville, Deputy Comptroller General of Canada, and David Bickerton, Executive Director of the Expenditure Operations and Estimates Directorate. The minister has an opening statement to make, copies of which have been distributed to you in both of our official languages.
[Translation]
Ms. Lucienne Robillard, P.C., Member of Parliament, President of the Treasury Board of Canada: Thank you for inviting me once again to discuss the Main Estimates of the 2003-2004 spendings of the Governement of Canada. As you mentioned, I am accompanied by two colleagues, Mr. Neville and Mr. Bickerton whom you know and invite regularly to your committee.
I would like to begin by saying that we have a firm grasp on government expenditures. The Main Estimates of the spendings aims at obtaining the House of Common's authorization to follow through with the financial promises made by the Government. The government spendings are balanced and our approach towards our national finances is sound. The Main Estimates reflect this through the investments aimed at Canadians, their families, their communities and the emphasis placed on productivity, innovation and on enhancing the transparency and accountability in the manner in which we fulfil our duties as a governing body. Last year, our country obtained top ranking among the G-7 in terms of economic growth — a ranking that should be maintained for a second year in a row. Our government pledges to remain cautious with regard to budget planning. The Minister of Finance Canada announced that he would continue to set aside a $3-billion dollar contingency reserve and that due to the uncertainity prevailing worldwide, he would maintain his prudent approach to budget planning. This year another improvement will be made with the adoption of an accrual basis of accounting beginning with the February budget.
This change is a follow-up to a longstanding recommendation by the Auditor General. This method will lead to a more thorough accounting of the government's assets and liabilities and offer a more transparent picture of its financial situation.
[English]
The Main Estimates for this fiscal year amount to $175.9billion in government expenditures, including $173billion in budgetary spending and$2.9 billion in non-budgetary expenditures.
This amount is consistent with and reflects the bulk of the$180.7billion in planned budgetary spending for 2003- 04, as set out in February's budget. It is anticipated that additional spending authority will be sought from Parliament through Supplementary Estimates during this fiscal year.
In total, the Main Estimates have increased by $5.6billion, mostly in budgetary spending. It is important to highlight some of these new spending investments. In the essential area of health care, there is an additional$700million this year for the Canada Health and Social Transfer program. This amount reflects the accord reached by the country's leaders and is the first outlay of an eventual$34.8billion commitment over five years. Next April, the government will provide another portion of this amount to the provinces and territories through two new transfers — a Canada health transfer and a Canada social transfer — to increase transparency and accountability. The government also recognizes that long-term health care solutions are required, and to that end, there are important new investments in the Canadian Institutes of Health Research.
We also set aside an additional$450million for direct transfers to individuals due to increases in Old Age Security payments and the Guaranteed Income Supplement. This is due to an increase in the average rate of payments and in the forecasted number of beneficiaries.
[Translation]
About a year ago, I spoke to you about the challenges that needed to be met in terms of international security. This year, Transport Canada will make some new investments to help meet these challenges.
A large portion of the additional $480 million spent by the department will be allotted to the Canadian Air Transport Security Authority.
Furthermore, $402 million have been set aside for National Defence, of which $204 million will be spent on the salary adjustments granted to military and civilian personnel. $148million will be used to offset the declining purchasing power due to inflation. Lastly, $50 million will go towards the financing of the long-term funding support announced in the February 2000 budget.
The Treasury Board of Canada Secretariat has taken several initiatives that will continue to be implemented during this fiscal year.
As for the Vote 5 of the Treasury Board — a file that you are quite familiar with — or more specifically, the vote for government contingencies, I will continue to closely monitor its usage. I am aware that this matter is an object of concern to you. We have received your recommendations, and believe you will be asked to attend an information session shortly — in fact, I think it has even been scheduled for next week — in order to study our proposal on the revision of the guidelines concerning Vote 5. We await your feedback before making our final decision.
We are also examining spendings and management as announced in the last budget to make sure that the government programs remain pertinent and efficient and that they yield results for Canadians. These analyses will be spread out over a five-year period and are essentially aimed at making sure the management is sound and that programs are implemented in accordance with budgetary planning.
The government is also introducing a new approach that consists in setting aside $1 billion for the funding of key priorities so as to increase the efficiency in the management of these new initiatives. This is for the 2003-2004 fiscal year.
The Treasury Board of Canada and its Secretariat are at the center of this reallocation process and I will announce the results of our analysis shortly.
[English]
Government believes Canadians have a right to know what is achieved through use of their tax dollars. That is why my department is reinforcing accountability and transparency in reporting to Parliament. A number of actions were outlined in the budget. In consultation with parliamentarians, parliamentary committees and the Auditor General, the government will identify opportunities to improve parliamentary reporting in order to better meet the needs of parliamentarians and the public. In particular, Treasury Board will ensure that, beginning in 2004, departmental reports on plans and priorities, or performance reports, adequately inform Parliament of the outcomes of the expenditure reviews that it is launching. These actions will ensure high standards in the management and delivery of public programs and services. In addition, I will soon announce the principle for improved management practices relating to user charges and cost-recovery fees. The new policy will include annual reporting of revenues and performance information to stakeholders and to Parliament.
We also continue to make good progress with the implementation of the revised policies on internal audit and evaluation. We are now halfway into our four-year implementation plan and Treasury Board has approved the continuation of financial assistance to departments and agencies. Over four years, we will have invested$90million in that operation. Treasury Board Secretariat is currently working with departments and agencies to finalize commitments to a steady, stable level of investment in these important functions, once they are fully implemented.
[Translation]
As you know, earlier this year, I tabled a bill aimed at the modernization of human resources management in the Public Service of Canada, which will allow the Federal Government to become a choice employer. It is a long-awaited, thorough study of the Government's needs in terms of human resources.
I will have the honor of speaking to you about Bill C-25 once the House of Commons has finished examining it.
Before I conclude on the topic of the Main Estimates of the spendings, I would like to make a few comments. As President of the Treasury Board, I believe that the Main Estimates are consistent with the Government's global priorities. This year's planned spendings take into account the intricate link between the social and economic policies stemming from an integrated approach that all Canadians benefit from.
As I mentioned earlier, I believe the Main Estimates reflect the soundness of the approach adopted by the Government to address both the social and economic needs within an efficient and transparent framework.
To conclude, the Main Estimates for the 2003-2004 spendings truly yield better results for Canadians.
My colleagues and I shall be happy to answer any question or listen to any comments or ideas from the senators since this will serve to improve the manner in which we present the budgetary votes to Parliament.
[English]
The Chairman: Honourable senators, with respect to some of the major programs for which there is new spending in the Estimates as identified by the minister, most of this is contained in Bill C-28, the budget implementation bill, which will come to the Senate eventually and may well be referred to this committee. I am not saying that to limit your discussion tonight but simply to point out that we will have a second kick at that can and will be able to focus on those major programs with witnesses from the Department of Finance, assuming that the bill comes to this committee.
[Translation]
Senator Bolduc: You ended your speech by stating that the Main Estimates of the spendings were consistent with the Government's global priorities.
Let me see. I will give you an example. I often go to the United States. I noted that the bridge that used to be in Detroit forty years ago is still there. The bridge in Fort Erie has been there for a long time. Same thing for the Thousand Islands bridge. In view of the security problems we have been experiencing, shouldn't we be investing some money to improve road transportation, for instance? Trucks are backed up along several miles.
I have been concerned about this matter for a while because I am a member of the Standing Committee on Foreign Affairs. We have had many discussions with Americans on this topic. It certainly has an adverse effect on international trade. Every two seconds, a truck crosses the Canadian-American border.
Canada exports a lot, and trucks from either country have to circulate both ways. You are saying that you have invested enough money. The fact is, you are only investing a few million dollars, a sum which will only barely cover the costs of a landscaping project. I have to disagree with you on this matter.
I am rarely in favour of spendings. You know I much prefer savings and yet, frankly, I do not feel that you are investing enough money in road infrastructures. What do you think?
Ms. Robillard: This year's budget indicated the government's priorities, but I think we must keep in mind that past budgets continue to operate.
Let me remind you that the second to last budget was specifically aimed at security measures across the country and that we had been forced to act. This is why the Finance Minister submitted his budget in November instead of at his regular November date. The budget provided billions of dollars for security.
Senator Bolduc: His estimate was $ 800 million.
Ms. Robillard: We had estimated $7 billion for the totality of the security measures. We had also announced infrastructure projects for the entire country, especially some intended to improve the situation at the borders. This is a supplementary amount. It may be insufficient and I await your recommendation as to how much we should increase the budget.
Senator Bolduc: You are announcing projects but there are no changes. I have been crossing the border for years and have not seen any improvement.
Ms. Robillard: I have not had the opportunity to cross the border lately but I can say that certain projets are underway. I cannot give you all the details on the border-crossings and the projects.
Senator Bolduc: Some funding has gone towards electronic equipment but in terms of decreasing the waiting lines — nothing has been done.
Ms. Robillard: There is an additional road infrastructure project specifically aimed at redesigning the boarders. We must acknowledge the efforts of the Minister of Finance, who also serves as minister responsible of security and of our relations with the United States, in attempting to improve the flow you are referring to, this delay at the border which has serious consequences on commerce and on the trucks.
If you look at the sums invested in security and transportation infrastructure, in addition to our joint efforts with the United States, you have to admit that the Government has given priority to this issue.
Senator Bolduc: I am still waiting to see the changes onsite. Speeches are fine, but I am more interested in seeing real changes. I think that ordinary people are like us. When they cross the border, they do not want to wait.
Ms. Robillard: I don't have the documents on the specific infrastructure programs with regard to borders, but I can say that they have been approved by the Treasury Board. Since you are particularly interested in this file, we will provide further information to you.
[English]
Senator Bolduc: I have a second question and this one concerns the Treasury Board itself. It is not the Department of Defence or the Department of Transport; it is your own department.
Normally, we would expect the Treasury Board to be the organization that looks carefully at the proposals for new expenditures. This year, the Main Estimates for the Treasury Board amount to $2.4 billion, which is an increase of $260million. That means 12 per cent over the last year's Main Estimates.
[Translation]
It is found in the Main Estimates of the spendings. And if we look closely, we can see that on page 226...
[English]
We have the expenditure, by article, as personnel, transport, communication, professional services, location, et cetera. Your expected spending on personnel is $1.6billion, and it is up 17 per cent from last year's Main Estimates. If we look at your bill for professional and special services, it is up by $9 million, or;26per cent. Your vote 1, operating expenditure, is at $152million, up 29 per cent.
Therefore, those increases are not at 3 per cent or 4 per cent or 5 per cent, like the economy when things go well, it is something between 17 per cent and 29 per cent for a department that is supposed to say no to others. I do not think you lead by example.
Ms. Robillard: To be fair, Senator Bolduc, we will explain each one to you. If you would give my collaborators a chance to look at their documents, they will explain those expenses for the personnel and also for the infrastructure.
[Translation]
Mr. Richard J. Neville, Associate Deputy Comptroller General, Comptrollership Branch, Treasury Board of Canada Secretariat: It is the contributions to the federal civil servants' insurance plan that have received the greatest increase. The increase represents $247 million and covers the employer's contributions to the insurance plan of federal civil servants.
Senator Bolduc: Is it included in the ``personnel'' item?
Mr. Neville: The increase is mainly aimed at the contributions to the federal civil servants' insurance plan, and there are also several increases affecting new programs such as direct services.
Senator Bolduc: It is included in the spendings for personnel.
Mr. Neville: It is in the $2.4-billion total.
[English]
Senator Bolduc: I know, but which article is it: personnel, transport, information or professional services?
[Translation]
Mr. Neville: It is found under the ``personnel'' item.
Senator Bolduc: And what is the amount of the increase?
Ms. Robillard: It is an increase of $247 million to the federal civil servants' insurance plans.
Mr. Neville: It is the greatest increase.
Senator Bolduc: Why such a great increase? Is it because the Ontario Government is sending you huge bills?
Mr. Neville: No. There are several reasons why. First the number of contributors to the health plan in the public service has risen, increasing the amount to $80 million. And then we have the increase in medication usage and cost. The dental insurance plan represents an increase of $14.6 million, also due to an increase in the number of participants and of service costs.
The disability insurance plan increases by $74 million, with an increase of 49 per cent of the premium rates going towards the payment of increases in the disability rate, the duration of the benefits and costs linked to pay equity. The plan is aimed at employees represented in the process of a collective agreement.
The costs are linked to pay equity but have not been the object of any corrective because of an important surplus which is now depleted. The last reason concerns the insurance plans for management employees in the public service. It is a 60 per cent increase of the disability insurance premium rates used to pay for the rate increases, the duration of benefits and, to a lesser extent, the costs linked to pay equity.
[English]
Senator Bolduc: How is it that the costs of disability insurance are increasing so fast?
[Translation]
Mr. Neville: It is for the same reason. A huge surplus was accumulated in previous years. That is why we did not have to increase the premiums. Now that we no longer have a surplus, we must increase the premiums. This explains the significant increases.
Senator Bolduc: A seventeen per cent increase just to pay for personnel costs, that is a lot!
Mr. Neville: There are 49 and 60 per cent increases. The significant increases of certain elements raise the global percentage.
[English]
Senator Bolduc: How about the professional and special services? It is an increase of 26 per cent.
[Translation]
Mr. Neville: Yes, in terms of direct projects and new programs. The increase stems from this context.
[English]
Senator Bolduc: You mean that you add a lot of professionals on contract, or what?
[Translation]
Mr. Neville: We have special projects that require the use of external consultants.
[English]
Senator Bolduc: However, it is a 26 per cent increase in one year.
[Translation]
Mr. Neville: This is a new government project that requires external consultants. Since it is a short-term specific project, it is less expensive to hire external consultants than full-time civil servants.
[English]
Senator Bolduc: Yes, we havealways had consultants in government — for example, professional engineers, architects and so forth. What is that special project for which you need a 26 per cent increase?
[Translation]
Mr. Neville: There are more than one projects involved here.
The Chair: What is this project?
Mr. Neville: Government on line, Direct Services.
[English]
Ms. Robillard: It is called ``Government On-Line.'' If you have specific questions on that, we have the CIO with us today to explain to you where we are at with that project, because we have a commitment to be on-line by 2005.
Senator Bolduc: The whole government?
Ms. Robillard: The whole government.
Senator Bolduc: In Ottawa, or in the regions also?
Ms. Robillard: Everywhere. This is to be able to contact your government on-line. It is not only to receive information on-line, but also to make transactions with your government.
Senator Bolduc: We have good reasons. We used to have a deputy minister of finance in Quebec who was a good man and who was preoccupied by debt management in New York. It was before the Treasury Board. It was at the beginning of the 1960s. We went many times with the deputy ministers of education and health to ask for an additional $20million and $60million. He said, ``Boys, you have good arguments and nice projects, but it is too costly.'' Apparently, we do not say ``no.''
If you look at that objectively, Ms.Robillard, there are 17, 26 and 29 per cent increases in one year. I think you are a bit lax in your analysis of proposed expenditures.
Ms. Robillard: I do not think so when you look at the government as a whole, what we have achieved over the years and where we are at right now. Compared with other countries, especially G7 countries, you can say that we control the spending, because we will not be in their situation.
You can have your opinion on the choices the government has made. That is another thing. If you look at the macro picture of what is going on now in the finances of this country, you will agree with me that we are still in control. I think Canadians are proud that we are in the sixth year of balanced budgets.
Senator Bolduc: Funnily, a man like me is not used to those things.
Ms. Robillard: You are not used to having a balanced budget.
Senator Bolduc: When the economy is increasing at less than 5 per cent in the good months and there is an increase of 26 per cent in expenditures, there is something wrong somewhere.
Senator Mahovlich: There is one line on which I would like an explanation. We are talking about $402million for the Department of National Defence, including $204million for pay and benefit adjustments approved for military and civilian personnel salary.
Ms. Robillard: What is your question?
Senator Mahovlich: What is ``civilian personnel salary''? Is that like pensions?
Ms. Robillard: This is for salaries of the civilian personnel.
It is for those who are not in uniform. In the defence department, you have military and civilian personnel. It is like public servants, if I may say so. There are two categories of people there.
Senator Mahovlich: Is this $204million extra?
Mr. Neville: The $402million is made up of several components. First, there is an increase of $204 million for pay and benefit adjustments approved for military and civilian personnel salary. This includes the related employee benefit costs. There is $148million to partially compensate for the loss of purchasing power due to price increases; and $50million relating to the sustainability funding announced in the February 2000 budget.
I could go on. There are a number of additional subcomponents. They are all in line with the budget plan.
Senator Stratton: Thank you, Ms. Robillard, for appearing before the committee. To Mr. Neville and Mr. Bickerton, it is good to see you again.
Senator Bolduc was worried about the passage of vehicles and trucks across the U.S. border. How much does the government receive in gas tax every year? I would imagine it is a quite staggering amount.
Mr. Neville: I would have to ask the Department of Finance.
Senator Stratton: I am sure you would. I posed that question just to make the point that naturally, it goes into general revenues.
Mr. Neville: It does. It goes into the CRF.
Senator Stratton: Naturally, not very much of it goes toward roads. My point is that I believe that if you have a tax, it should be used to service that from which it is derived.
Mr. Neville: On that specific point, one has to recognize that $600million was announced in the 2000 budget to enhance the efficiency and safety of the national highway system.
Senator Stratton: Over how many years?
Mr. Neville: I am not sure. I would say that $500million was dedicated to highway construction and $100million to system integration. Today, approximately $220 million of the $600 million has been committed or spent. Therefore, a significant portion, obviously, has in fact gone on planned expenditures.
Senator Stratton: I think Winnipeg alone is looking at a $1-billion shortfall in infrastructure costs that it cannot address. I think many cities are faced with that same issue. We are not addressing it. Yet the government is bringing all this money in on the gas tax. That should be going to infrastructure programs, to build roads and sewers in cities, towns and villages across this country. I do not think you are even close — $600 million is probably over five years. I am sorry; this is an editorial comment.
Mr. Neville: It is a significant amount of money.
Senator Stratton: I know it is. We will have to go to the Department of Finance to find out how much you bring in, too. That is the real question.
Minister, I wish to return to the matters Senator Bolduc raised. Essentially, you are going for a 12 per cent increase in your budget for this fiscal year. That is four times the growth in the economy. How do you justify that?
Ms. Robillard: We explained to you that we have had an increase in salaries for public servants, as well as an increase in the public service insurance system.
Senator Stratton: As Senator Bolduc pointed out, you do not, on principle, spend close to four times the growth in the economy.
You would think that the alarm bells would go off. One becomes concerned. If that is 12 per cent this year, will it be 12 per cent next year? Do you have those projections, Mr. Neville?
Ms. Robillard: My colleagues can complete my answer, but I would remind you that some expenses under the heading of the Treasury Board Secretariat are for the whole government. It is for all of the government and our public service that delivers the services to Canadians. We have to look at that closely.
We have some specific initiatives at the Treasury Board. Again, the budget is there, but it is for the government. I told you in my statement today about the internal audit component, the new policy that we added two years ago, and the program evaluation. We want to increase the capacity of our department to be more accountable to Parliament through those initiatives. We do have an increase, but the money was there in the budget. It is not for the secretariat; it is to help the departments deliver on that. We could go on with all the different initiatives.
Mr. Neville: I would complement the minister's comments by saying there are a number of government-wide initiatives that we have funded through the Treasury Board Secretariat. Three specific ones come to mind. We have provided funds centrally for implementing an internal audit across government. We actually transfer those funds to departments, but it is in our overall vote. We have the evaluation initiative. Again, we are assisting departments to move forward. There is additional funding for modern comptrollership, which we discussed on a number of occasions. There is money for departments, and in that sense we are moving the agenda forward. There are also a number of initiatives in HR.
We have to look at the overall responsibilities of the Treasury Board Secretariat to be a change agent, to make things happen within government, and therefore there is a requirement for funding from the centre.
Senator Stratton: I would be very surprised if a school board, a town, a village or any city in Manitoba increased its budget by 12per cent in a fiscal year. The citizens would be in an uproar, and, I think, deservedly so. I would go on record as saying that I think it is fundamentally wrong. If the school boards, the school divisions, the towns, villages and cities of this country cannot afford a 12 per cent increase, neither should the federal government implement one, on principle.
I want to go to my favourite topic, the gun registry. Minister, we had a great deal of trouble last year over the process of the gun registry, which leads to several questions about the process by which the government pulls together and approves its expenditure plan. At the outset, can the President of the Treasury Board assure us that the government will not seek any further funding for the gun registry this year, beyond that approved through votes arising from the Main Estimates— in other words, no supplementaries? Are you saying you have enough money in the Main Estimates for the gun registry for this fiscal year and that you will not be seeking additional funds through Supplementary Estimates?
Ms. Robillard: It is difficult to make a commitment like that at the beginning of the year. As you remember, this committee followed that file most closely over the years. I remember a question every year about where we were and how we spent that money. It was not a surprise for honourable senators when the Auditor General tabled her report in the House because you had followed that file over the years. It was a surprise for some other members, but not for you.
One of the concerns was that we perhaps used the Supplementary Estimates too much for that program instead of the Main Estimates. This year, you see that this is in the Main Estimates. You have the budget. What will happen over the year? This is the plan we have from the minister. I imagine that you have looked at the plans and priorities for this year that the minister tabled in the House. His plan for this year is in accordance with what we are looking for in this year's Main Estimates. We will see what will happen during the year. However, we have Supplementary Estimates precisely to fulfill certain demands that could occur during the fiscal year. It is very difficult for meto say, for any department, ``That is it. You have the money April1, and you will have no more for the rest of the year.''
We all know there are specific concerns about that program. I think the Minister of Justice knows that very well, and now the Solicitor General, because the Public Accounts Committee of the House of Commons followed that closely. There is also a commitment from the Minister of Justice to table in the House, in his performance report, all the expenses that occur under that program, not only in his department, but in other departments as well. I think that you will see an improvement in reporting to Parliament specifically on that program.
Mr. Neville: I would suggest that you might want to look carefully at the Report on Plans and Priorities tabled in March. There is a significant amount of information. It is more complete and transparent than in prior years. I would suggest you might want to also look at the departmental performance report when it is tabled later this fall. You will find a significant amount of information for parliamentarians.
Senator Stratton: To go back to this issue of Supplementary Estimates, they were used 11 times with respect to the gun registry between 1995-96 and 2002-03. The total was $469million, or more than half the cost of the program to the end of last year.
You look at that and you say, ``How did the Department of Justice come to the Treasury Board year after year and essentially get their main funding out of the supplementaries?'' How could you let them get away with that?
Mr. Neville: Senator, we have had this discussion before, and just to reiterate—
Senator Stratton: I will haunt you with this until either you or I retire.
Senator Bolduc: If I may interject, I had a long discussion one day with somebody in Washington. He was a foreign policy adviser to President Johnson, among others. I was talking about the Vietnam War. That began under Kennedy and continued under all the others after him, and then suddenly it ended in 1972. I said, ``You are explaining to me each move in 1961, 1962 and 1963, and all the moves were logical, but the end result was absurd.'' I get the feeling that this is a bit like that.
Mr. Neville: I will not go down that road, but I will get back to the previous question, which is why did we entertain the amounts through the Supplementary Estimates. That was very much a volatile program at the outset in terms of its scope. There were changes and legislative amendments put through. There were discussions as to how best to implement the program. There were bureaucratic decisions taken. As a result, there were changes to the program. Hence, it became clear during the year that what was in the original Main Estimates was not enough and that we had to come in each instance to Parliament. We discussed this around this table on numerous occasions. I think that you were well briefed about the content of each of those requests.
Senator Stratton: Yes. I agree with you, but I will haunt you with it. This is something that should not be repeated.
Mr. Neville: I wanted to clarify one point. For the year2003-04,you will see a significant increase. It is in the Main Estimates.
Ms. Robillard: We hope you will see that as an improvement.
Senator Stratton: We have now transferred the gun registry from the Department of Justice to the Solicitor General. You may not be able to answer this, but how much will the transfer cost? In a transfer between departments, management and computer systems must be adjusted. Did you identify a cost for shifting it from the Department of Justice to the Solicitor General?
Ms. Robillard: We did not identify any specific costs. That program is the responsibility of a team who worked at the Department of Justice. That team will now be linked directly with the Solicitor General. The cost to link the IT system is included in the figures you have in front of you.
Senator Stratton: The cost for that transfer is in the Main Estimates?
Ms. Robillard: Yes.
Senator Stratton: There will be no Supplementary Estimate?
Ms. Robillard: Did I say that? No, I did not.
The Chairman: I thought there was some money in a previous supplementary for the transfer from the Department of Justice to the Solicitor General — perhaps not?
Mr. Neville: Not that I am aware of.
Senator Maheu: I wanted to touch on the Department of Human Resources Development in regard to student loans. I was surprised to read that there is quite a large reduction, $229million, in student loans. Of course, that involves the Canada Student Loans Act and the Canada Student Financial Assistance Act. Can you share with us what that means? Are we helping fewer students? Are our young people seeking less financial assistance? I am curious as to why that number would drop when everything else seems to be increasing.
[Translation]
Ms. Robillard: This is a $245-million reduction and we should be asking ourselves how this is possible since student needs are so important. In a general manner, the reduction is linked to legislative changes and to a reduction in the portfolio of old loans. The transfer payments to non-participating provinces has decreased by $135 million. This means that we have changed the terms and conditions of the transfer payments, or, the way in which they are calculated. Now they are calculated on the basis of the actual cost of direct loans instead of on the basis of the allowance for recoverable accounts. In addition, we have also modified the definition of ``net cost'' in the Canada Student Financial Assistance Act. My colleagues could surely offer more details in terms of the accounting and as to the exact definitions, but I do not see this as being a direct reduction for students. These are more like the terms of conditions of the payments.
Mr. Neville: That is exactly right.
[English]
Mr. Neville: That is exactly right. There is no real decrease in level of service. The accounting treatment has changed. These are statutory expenditures in that sense.
[Translation]
Senator Maheu: Can the decrease in the net costs simply be explained by the fact that we are paying the interest — as if we had two accounts in separate bank accounts — calculated on two separate pages?
Mr. Neville: No. According to my notes, this does not explain the reduction.
Senator Comeau: I would like to get back to the topic of grants to individuals, professional organizations and other non-profit companies or associations, as well as, to institutions whose activities contribute to Initiatives to Respond to the Need of Victims of Crime. Last year nearly $380 000 dollars were granted to groups that hired lobby groups to do their lobbying before Members of Parliament. Am I wrong or am I on the right track?
Ms. Robillard: I can neither confirm nor deny this. My colleague from the Justice Department could surely fill you in on the details.
Senator Comeau: The Treasury Board grants sums of money to certain departments upon their request, and all of these departments offer sums of money to lobby groups and you do not question this procedure?
Ms. Robillard: Each department has its own basic operating budget. When a specific program is offered to the population, the terms of the program — to whom it is aimed at, the criteria, as well as performance report — are submitted to the Treasury Board. The program is accepted in accordance with the level of authority granted to the department. Therefore, the Minister and Department may authorize all the grants or contributions, up to a certain amount, and not have to go back to the Treasury Board again. This is probably what occurred here. A specific bid does not exist for each grant allotted by the Tresury Board. This is why I cannot give you more details. Is that a newspaper clipping you are reading Senator?
Senator Comeau: It is an article published in today's paper. Ms.Wendy Cukier confirms that they received grants stemming from this program and that this year, you sunk half a million dollars in this program. She confirms that they used some of the funds to hire lobbyists to do their lobbying before Members of Parliament. The fact that the taxpayer's money is being spent in this manner makes me really uncomfortable. The Treasury Board has to exert more control over the departments to stop them from granting funds for these means.
Ms. Robillard: Every time a program is supported by the Treasury Board, there are conditions to be met. We would have to see which programs were used and evaluate whether the program was respected as to what was approved by the Treasury Board. I have absolutely no knowledge of the example you are presenting to me. You are saying that when providing grants to these groups in view of supporting them — and the majority are non-profit groups, community based-groups — that these organizations should not be doing any lobbying before the government. Is that what you are saying?
Senator Comeau: Exactly.
Ms. Robillard: This is a much broader question. You are not talking about professional lobbyists, you are talking about community organizations. I am unfamiliar with this particular case.
Senator Comeau: No, I will name them, ``Capitol Hill Group Communications and Strategy Inc.'' These are not community lobbyists. These are not people who meet with members of Parliament and senators to request aid for a certain program. They are lobbyists, people who attempt to sway our views on the gun control issue. If there is a problem, we would like you to address it.
Ms. Robillard: Understood.
Senator Comeau: A second question. It concerns the preservation of our heritage. Did you know that Canadian Heritage has plans to provide funds for a program aimed at the safeguard of historical and natural sites, and of buildings?
Ms. Robillard: I cannot recall whether the Treasury Board received such a request but it may be possible that Canadian Heritage is considering such a program without us being aware of the matter. Not recently anyways, senator.
Mr. Neville: There is no specific amount, it would show up here. It may be something done internally on a yearly basis, we do not know of any new initiative.
Senator Ferretti Barth: I work closely with senior citizens. In your report, on page 11.5, I see that on line L, concerning the social security allowance, there is a $7 million difference in respect to last year.
Ms. Robillard: What is the amount?
Senator Ferretti Barth: A seven million dollar difference, on page 11.5 of the French version, under the heading ``Social Security Grant.''
Mr. Neville: Yes, I see..
Senator Ferretti Barth: Last year $402 million were invested whereas for the 2003-2004 year, you are planning to spend $395 million. What accounts for this difference? Will there be fewer senior citizens in the future? Will seniors be so prosper as to no longer need to rely on a guaranteed income allowance when they enter the 60-65 age group? Can you elaborate on the fact that with an increasingly aging population, we have a $7 million dollar difference in the payment of the guaranteed income allowance?
Ms. Robillard: You mentioned a $7-million fund reduction senator?
Senator Ferretti Barth: Yes.
Ms. Robillard: $ 7 million?
Senator Ferretti Barth: Yes.
Ms. Robillard: I would simply like to say that, in a general manner, an amount of $450 million has been added to the OldAgeSecurity Program. I will get back to this. But you noted a $7-million reduction that exists because of my fellow accountants. The accountants have modified the method and that is why you see a reduction in the book. On the whole, you are right because the population has risen there are more recipients. This is why, there is a $450 million increase in total. This amount shall cover the increases in Old Age Security and shall be paid directly to the individuals. $241 million are available, but also an amount of $216 million strictly intended for the guaranteed income supplement. It is therefore apparent that the increase is really based on an increase in the number of recipients. But, our accountant friends decided to modify the method and that is why you see a $7-million reduction.
Mr. Neville: It is a net reduction of $7 million. The estimated number of recipients went from 92,006 individuals to 89,162, which corresponds to a $13-million reduction. The forecast for the average monthly spendings has risen from $364.11 to $369.05 resulting in a $6-million increase. In this context, the difference between the two corresponds to a net reduction of $7 million dollars.
Senator Ferretti Barth: Does this mean that a percentage of the people who received allowances between the ages of 60 and 65 are now dead?
Mr. Neville: The number of individuals receiving this allowancehas decreased. We have just saved $13 million. The fact that there is an increase in the monthly spendings means that the costs are higher. If you calculate the difference, you come up with a $13-million reduction. The fact that the monthly amount has been raised to $6 million means that there is a $7-million reduction. This does not mean that an individual shall receive less money than in the previous years.
Senator Ferretti Barth: What struck me was that there is anaging process. And we can note that last year, we spent $402million on guaranteed income and that this year we are planning to spend $7 million less. So I ask myself, ``How is that possible?'' We should have $7 million more not less.
Mr. Neville: I want to make sure that you understand me. Forecasts show that there will be less recipients this year compared to last. Within this context, there will be a reduction in payments. This is why we see a $13-million reduction. But there will be an increase in the monthly spendings for each individual. The fact that there is an increase in the monthly spendings for each individual means that the costs will increase by $6 million. And if we calculate the difference between the reduction and the increase, we are left with a net reduction of $7 million. It is based on the fact that there are fewer individuals.
Senator Ferretti Barth: I am finding it hard to follow you, Mr. Neville.
Senator Bolduc: Perhaps the people who were part of this group and who died are replaced by weathly individuals.
Senator Ferretti Barth: Are you saying that poverty does not affect senior citizens? That explains it. On page 24.12, there is a mention of grants for corporate communications at the Public Works Department. This year, $30 250 000 shall be given to support project activities aimed at improving the understanding and appreciation of the Canadian identity and at enhancing social conscience. Last year, the amount was for $1 500 000; next year, the amount will be $30 250 000. This means that there is still a lot of work to be done in terms of Canadian identity. We need money and projects but here the difference is considerable.
Ms. Robillard: This is because this budget was transferred from the Public Works Department.
Mr. Neville: We transferred the budget from Public Works and Government Services to Communications Canada. This may seem like a significant increase but it is the same budget.
[English]
Mr. David Bickerton, Executive Director, Expenditure Operations and Estimates Directorate, Comptrollership Branch, Treasury Board Secretariat: That program was formerly run as a contract program under Communication Canada. The government made a decision last year, because of the concerns, to make it into a contribution program. Just the accounting presentation has caused a change in the way the information is presented.
[Translation]
Ms. Robillard: Do you remember the controversy concerning sponsorships? In the past, contracts were signed with outside firms. From now on, the Department will be in charge of them. The sum that used to be allocated externally shall now go directly to the Department's civil servants. For accounting purposes, this sum will come directly from the Department's budget.
[English]
Senator Day: You refer to departmental reports on plans and priorities and performance reports on page 3 of the English version of your document. You indicate that Treasury Board will ensure, through changes to these documents, that parliamentarians are adequately informed. You know that that has been another area of concern for us in various reports.
Could you tell us about the initiatives you are planning and whether we will have the same opportunity for consultation in that regard?
Ms. Robillard: As you know, we started that new process for Estimates some years ago. We changed the process completely. The plans and priorities reports are Part III of the Estimates. This was a big change in the culture of the public service. We wanted Parliament to focus more on results. We wanted to say to parliamentarians at the beginning of the year, and the public in general, ``Here are my plans, and at the end of the fiscal year I will show you if I have achieved my objectives, if I have results for the money that I received.'' When we started that some years ago, it was a big change.
We continued with that process with the departments, but we still have room for improvement. When you look at the performance reports of different departments, you will see that some are good, but some others need to achieve a certain level of excellence in showing their results to the public and to parliamentarians.
The commitment we have made in the budget is to improve the plans and priorities reports and the performance reports of the departments. The Treasury Board Secretariat is trying hard to work with Parliament and every year we improve the guidelines to the departments so that they can give better reports. However, although there has been some improvement, there is a concern among parliamentarians that they do not get all the information they should. That is why that specific commitment was made in the budget for the Treasury Board Secretariat to work with parliamentarians— and of course you will be consulted— and with the Auditor General on how to help us and the departments produce better and more comprehensible reports.
[Translation]
This is the path we have chosen for the upcoming year. If you wish to partake in the consultation, we will be happy to listen to what you have to say. We have come a long way in the last few years. In addition, we have produced a report called ``Canada's Performance 2002.'' We have developed indicators for each department that will allow us to evaluate the productivity of the entire government. It has only been two years since we tabled this report.
This year, before tabling the report, we sought advice from the members of Parliament for ideas on how to improve it. The 2002 report is a fantastic tool for parliamentarians. It is brimming with ideas and results that were compiled by our departments. It is divided in four subjects and includes 17 indicators. If you conduct a search on the Internet, you will be able, for instance, to find out where Canada stands in the area of health both nationally and internationally. Various links will help you increase your knowledge in this area by connecting you with the programs of other departments which also contribute to the health issue. There is a wealth of untapped information.
[English]
Senator Bolduc: In other words, the civil servants do a very good job but the parliamentarians do not.
[Translation]
Ms. Robillard: No, this is not what I am saying. The jargon used by certain departments is often difficult to read and understand. However, some major improvements have been made. In the future, we will have to increase our collaborations with the members of Parliament to figure how to get to the next level, so that the departments can be made accountable to the population as to their actions and so as to be able to evaluate the results. We are not the only organization that is must meet this challenge in addition to having to set goals that can be measured. Canada is not unique in this area.
This is what this initiative is aimed at.
Senator Day: We will work with you.
Senator Biron: Twelve per cent of the budget increase is due, I believe, in part to the improvement of new social measures. Won't this increase be absorbed by the strong economy and sound administration created by the Government? Canada's financial indicators such as the GDP or figures for job creation are, I believe, the highest of the G-8. When all is said and done, can this 12 per cent increase be easily absorbed without creating a deficit in this country?
Ms. Robillard: Do you mean the overall increase in government spendings?
Senator Biron: Yes, overall.
Ms. Robillard: When we examine our spendings, measuring them against our GDP and when we also look at how these have evolved, we can conclude that these spendings remain very controlled in respect to the global economy.
In the 2000-2003 budget, we had estimated that the spendings would increase to 12.2 per cent of the GDP. This was mostly due to the transfer of sums of money in Health, an injection of funds aimed at enhancing security measures and increases in Employment Insurance.
You are right when you mention that we must always measure of federal spendings against the state of the economy in order to obtain the big picture. Our economy has thrived over the past six years. This has created a budgetary surplus that allows our government to make investments and increase its spendings. Despite our strong economy, it is important to make sure that we can afford to make these types of spendings.
[English]
The Chairman: I have a question I would like to raise that I am sure, minister, you have come briefed to deal with. It has to do with the famous Canadian Television Fund.
I am not interested in getting into the merits of Mr.Manley's apparent decision in the budget to reduce it, if that is what he did, by $25million, nor do I want to get into the exchange of pleasantries between him and Ms.Copps on the issue. What concerns me is a question of process.
A few days ago, Ms.Copps suddenly announced that she had found an extra $130millionfor the Canadian Television Fund, which I think Mr.Manley had cut by $25million in his budget. She said the new money would come from Telefilm Canada — which is another agency altogether — from the Canadian Television Fund's contingency fund and from additional private sector contributions based on an increase in cable and satellite subscribers.
There are a number of questions that come to mind. The first is, what is the meaning of this book we have here — which parliamentarians are asked to approve, and are deemed to have approved these items vote-by-vote — if a minister of the Crown has a free hand to scoop up $100millionor more intended for one purpose and simply transfer it to another fund? How is that done?
Surely there is some authority to which she must present herself to get the permission of the government or of colleagues for this. However, when this was announced last Friday, May 2, Ms.Copps said the money should start flowing on Monday in time to cover the spring production cycle.
Now, this is pretty quick work. Would it be an exaggeration, to put it in the most generous way I can think of, to say that there has been some shortcutting of the process? You see what I am getting at.
I know that eventually, this would probably be reflected in the Supplementary Estimates and some change in the votes. However, I would like to know what the process is. If you do not know what has happened, tell me what the correct process is; and tell me also, if you can, why the minister is micromanaging the affairs of the fund itself. I thought this fund was more or less at arms length. She expected approval for all this by today and the money should start flowing Monday.
If you can tell me what happened, I think it would be important to place that on the record. If not, tell us what the process is for this kind of operation.
Ms. Robillard: First of all, Mr.Chairman, I have to tell you that, despite the rumours and the articles in the media in recent weeks about the fact that the federal government would inject additional money into the fund, it was clear in the budget that it was $75million for this year. The Minister of Finance was clear that he does not intend to amend the fiscal framework.
The Chairman: So far, so good.
Ms. Robillard: I am not aware of any submission to the Treasury Board to ask for any authority —
The Chairman: To transfer funds within the department?
Ms. Robillard: No decision was taken by the board.
Senator Day: There was an article in the paper today saying that no funds have started flowing.
The Chairman: This is Wednesday already, so that is another promise broken.
She would have to go to Treasury Board to transfer that amount of money —
Ms. Robillard: I would imagine.
The Chairman: — from one department to another?
[Translation]
Mr. Neville: We must a request a credit transfer from Parliament.
[English]
The Chairman: It has not been done.
Ms. Robillard: No.
The Chairman: Is there something else on this?
Mr. Neville: There was one outstanding issue at the beginning of this meeting where Senator Bolduc, I believe, asked for an explanation of a significant increase in the Treasury Board's vote. I did explain the majority of it, but there are other components that Mr.Dennis Kam, who is with the corporate services group of the Treasury Board Secretariat, can explain.
Mr. Dennis Kam, Director General, Corporate Services Branch, Treasury Board of Canada Secretariat: I will give you a summary-level answer because I do not have all the details with me. We can provide it, if you wish. TBS Vote 1, the operating vote, increases by approximately $33million. The net increase involves some positive adjustments and some negative adjustments with a positive net change, as I said, of $33million. The most significant item is funding for the Government On-Line Initiative.
In addition, there are additional new monies for the travel modernization project and preparations for HR modernization. There are a number of other miscellaneous items.
That is offset by sunsetting initiatives. The internal audit and the evaluation resources are subject to a sunset. They will be renewed through Supplementary Estimates. It is indicated in the RPP that there was an adjustment made subsequent to the preparation of Main Estimates. In the Main Estimates themselves, there is a decrease due to sunsetting of internal audit and evaluation and also the Embracing Change Initiative.
There are pluses and minuses. We can give you the detail.
The primary item is the addition of another year of GOL money.
Senator Bolduc: First of all, the Treasury Board estimates represent about 1.8 per cent of the government spending, at about $2billion. I understand that you will have to cut $1billion in the entire government.
Ms. Robillard: Reallocation.
Senator Bolduc: Yes. For the Treasury Board it is about $42million. Have you begun to look into the expenditures of the Treasury Board to get that valuable information about the way you would find that $42million?
Ms. Robillard: We are looking everywhere.
Senator Bolduc: I would like more specific information.
Ms. Robillard: That is a reallocation. In the near future, I will be in a position to reveal the details of that. This is a commitment of our government. It is about making choices and setting priorities. This is good government. This is the reallocation of $1billion for this year.
Senator Bolduc: I will not be here next year, but I hope that someone here will ask you, ``How about that $42million? Where is it?''
The Auditor General made many recommendations. One was about the principle governing compensation for both chief executive officers and vice-presidents, including the pay system in the Crown companies.
We know the cost of the people on the CPP Investment Board, with their salaries, trips, company cars, annual leave, life insurance, termination benefits, et cetera.
The recommendation of the Auditor General was that you put in place some principles governing compensation in Crown companies. It is a good recommendation because those corporations are outside the government. However, they are free to do anything they wish. I have noticed, in the Quebec government and other governments, that there is exaggerated compensation when there are no formal guidelines or principles established by the government.
For example, I made a speech yesterday in the Senate about the budget. I said that the President of Canada Post, André Ouellette, earns about $400,000 or $500,000a year.
The post office is a monopoly. He is not in competition with anyone. No one can transmit a letter in Canada for less than 48 cents. He has a monopoly. You treat him like an entrepreneur, but he does not risk any money. If there is a shortage at the end of the year, you merely raise the cost of a postage stamp.
I have worked on those compensation matters for years. I can tell you that $500,000for that work is not reasonable. Some other business leader in government may deserve a $400,000 salary.
What is your response to that?
Ms. Robillard: I am not aware of the Auditor General's recommendation on that, but on the compensation, not only of the Crown corporation CEOs, but also for the executive of the public service, we have had an external committee to make those decisions for some years now. Perhaps you heard about that committee. The members are from the private sector and public organizations outside of the government.
They have made reports to the government over the years. They first reported on executive performance compensation. They said that we should measure the results that they are achieving before giving them performance raises.
If you remember, they reported to Parliament on the Crown corporations two years ago. They are not all of the same importance, as you know, Senator Bolduc.
[Translation]
They were divided in ten distinct categories, according to their responsibilities. And that group — known as the Strong Report at the time, now it is Ms. Stevenson — is always examining what is going on not only in relation to the private sector for equivalent positions but also with respect to other public organizations. Based on research studies and a method, they examine these groups' remuneration and then make recommendations to the government as to whether next year's increases should be equivalent to 2.5 per cent or 8 per cent.
I shall be happy to hear any comments on the reports that are submitted every year by this group of outside specialists. But just between you and me, I am convinced that the recommendations that have been presented to the Government, up to now, have been more than reasonable.
[English]
Senator Bolduc: They put the post office at the top. I have worked on committees such as that a great deal. Those types of committees advise executives and corporations. We have seen the results in the last five years.
Often, the remuneration of executives in big corporations is determined through a process involving outside people who have never run those corporations.
[Translation]
They tell people how much they are being paid. This amounts to salaries worth $25 million to $30 million, as we have seen in Canada and the United States. This is outrageous!
[English]
The Chairman: We have had a good exchange on that. It is a matter that the committee may want to get into in more depth at a later date.
We have had a good 90 minutes. Thank you, minister.
Ms. Robillard: It was a pleasure to be with you.
The Chairman: We will meet Tuesday morning at 9:30 for an informal briefing session by officials with regard to a contingency vote. It will be in camera, for senators only.
The committee adjourned.