Proceedings of the Standing Senate Committee on
National Finance
Issue 3 - Evidence, March 9, 2004
OTTAWA, Tuesday, March 9, 2004
The Standing Senate Committee on National Finance met this day at 3:40 p.m. to examine the Estimates for the fiscal year ending March 31, 2005.
Senator Lowell Murray (Chairman) in the Chair.
[English]
The Chairman: I draw your attention to rule 89 of the Rules of the Senate, which states:
A quorum is required whenever a vote, resolution or other decision is taken by a select committee, but any such committee, by resolution thereof, may authorize the chairman to hold meetings to receive and authorize the printing of evidence when a quorum is not present.
I will read to you also the resolution that we passed here on February 10 last, moved by the Honourable Senator Comeau:
That, pursuant to rule 89, the Chair be authorized to hold meetings to receive and authorize the printing of the evidence when a quorum is not present, provided that a member of the committee from both the government and the opposition be present.
We are in that happy situation at the moment.
I will therefore call upon the witnesses from the Treasury Board, who are here to testify with regard to the Main Estimates for the fiscal year ending March 31, 2005. These Estimates will be before us for the next 12 months. Under the rubric of these Estimates, we will hold meetings from time to time to inquire into various aspects of public administration in the federal government, and we will submit interim reports to the Senate over the next 12 months.
This is our first meeting on these Main Estimates for the fiscal year beginning April 1. We have, as our witnesses from the Treasury Board, Mike Joyce, Daphne Meredith, Bill Austin, Susan Cartwright and Laura Danagher. Welcome to all of you.
Mr. Mike Joyce, Assistant Secretary, Expenditure Management and Strategies Sector, Treasury Board of Canada: It is a pleasure to be here this afternoon to discuss and respond to your questions concerning the government's Main Estimates for 2004-05. You have already introduced my four colleagues.
I realize it is unusual to have so many officials present today. This year's production of the Main Estimates was particularly challenging. We had to reflect significant organizational changes flowing from the December 2003 announcements as well as table earlier than usual.
As a result of this unique situation and in order to ensure that your questions are adequately covered to the extent possible, I have asked my three colleagues to join me today, over and above my usual colleague, Ms. Danagher.
[Translation]
As you are aware, the Estimates consist of three parts that are tabled at various times throughout the fiscal year. Parts I and II of the Estimates, otherwise known as the ``Blue Book,'' were tabled in the House by the President of the Treasury Board on February 24. Part I of the Estimates provides an overview of federal spending and summarizes the relationship of the key elements of the main estimates to the current expenditure plan that was laid out in the November Economic and Fiscal Update.
Part II of the Estimates directly supports the Appropriation Act by identifying the spending authorities — or votes — and amounts for each ministry that Parliament will be asked to approve to enable the government to proceed with its spending plans.
[English]
We expect the interim supply bill for the 2004-05 Main Estimates will be tabled in the House on or about March 22.
It is our intent to table a revised set of Main Estimates later this fiscal year. There are two reasons for this. First, this will allow us to incorporate the final results of resource discussions that are taking place amongst the restructured organizations; second, to take the opportunity to incorporate additional spending authorities that may result from the Minister of Finance's budget of this year that is being tabled after the Main Estimates.
As a result, the revised Main Estimates will provide a more complete reflection of the government's spending plans and reduce the need for subsequent Supplementary Estimates.
[Translation]
Part III — the final part of the Estimates — is divided into two components. The first, the Reports on Plans and Priorities, are individual expenditure plans for each department and agency. They provide substantially more information for each department than the Blue Book, including details on strategic outcomes, business line objectives, initiatives and planned results. This information is linked to related resource requirements over a three-year period. Here again, because of the December 12 restructuring and the later than usual tabling of the budget, tabling of the reports on plans and priorities will be delayed until later in the year to ensure that these departmental documents reflect the latest information on planned spending.
[English]
Departmental performance reports constitute the second component of Part III of the Estimates and will be tabled in the fall, as usual.
The 2004-05 Main Estimates present budgetary spending authorities totalling $183.3 billion and are fully consistent with the government's spending plans as set out in the November 2003 fiscal and economic update.
This fiscal update indicated that the planned budgetary spending for 2004-05 would increase by $2.6 billion over the expected outcome for the current year. A comparison of the 2004-05 Main Estimates to those of the previous year indicates a larger difference of $10.2 billion. There are two principal reasons for this difference. First, the previous Main Estimates did not include any of the February 2003 budget announcements, given the timing of the tabling, just one week before the Main Estimates were tabled. These increases in spending, totalling some $7 billion, have now largely been incorporated into the 2004-05 Main Estimates. Second, the fiscal update provided a revised forecast of current year spending outcome that was lower than forecast in the budget of 2003.
There are other, more technical reasons for differences between the planned spending numbers articulated in the budget and those in the Main Estimates. These flow primarily from the accrual basis of the budget and the primarily cash basis on which the Main Estimates are prepared.
We would be happy to try to answer any questions you may have. However, with the chairman's permission, before we move to your questions, I propose to take a few minutes to respond to some of the outstanding questions you raised at our last meeting on the 2003-04 Supplementary Estimates. This should take no more than five minutes.
The Chairman: Please proceed, Mr. Joyce.
Mr. Joyce: In responding to these questions, some of the answers I have are in some detail, in which case I will summarize. What I propose, again with your permission, Mr. Chairman, is to provide the detail to the clerk at the end of the meeting so that it is available.
The first question was from Senator Comeau. He asked us to provide a listing of the least-developed countries that are expected to benefit from the initiative that was identified with respect to funding to help Canadian apparel and textile industries. That was part of the market access for least-developed countries totalling $5.8 million. Rather than read out the list of the countries, I propose to leave that with the clerk at the end of the meeting. I have a list of some 48 underdeveloped or least-developed countries for which this market access support is being provided.
The second question was from Senator Ferretti Barth and related to the Canadian International Development Agency and the additional grant and contribution requirements for international assistance totalling $35 million. There were four questions here; the first was: Who are the recipients of this funding? The recipient is in fact the World Food Program, a United Nations organization based in Rome that is devoted to the provision of food assistance both in the cases of emergencies and natural catastrophes as well as for development purposes.
The second question is: Which countries are receiving the supplementary funding? This funding provides support for a grant to the World Food Program representing Canada's core funding to the organization for calendar year 2004. The World Food Program will use it according to its evaluation of the need of the countries experiencing emergencies or disasters. Examples of food aid recently provided by this program on an emergency basis includes to survivors of the Bam earthquake in Iran; people living in war-affected regions in Liberia; and people affected by flooding in part of Namibia.
The third question was: Have some of the major projects for which funding was received been achieved? Again, there is a fair amount of detail here that I will provide rather than read it into the record.
The fourth question was: Does CIDA supervise the programs and projects it funds? We were asked to find out how the contributions are given with respect to terms and conditions and the framework to manage them. To give you some sense of a more detailed response that I will leave with the clerk at the end of the meeting, the results are reported through country and institution program reports as well as through CIDA's annual departmental performance report that is tabled in the fall. CIDA's performance review branch provides evaluations and audits on the performance of specific programs and projects that are independent of line management.
CIDA also participates with other countries in joint donor evaluations of multi-donor programs, such as the joint evaluation of basic education in four developing countries. Currently, there are four joint evaluations underway for the World Food Program and for the International Fund for Agriculture Development.
Internal audits, as is the case in any department, support the governance of CIDA by providing assurance information on CIDA's performance and accountability. All audits and evaluations by the performance review branch of CIDA are published and made available on CIDA's Web site, and the Web link is in the information that I will leave with the clerk at the end of the meeting.
In my remarks at the last meeting, I believe I made reference to terms and conditions that exist for programs such as these. CIDA has one set of terms and conditions that covers all their grants and contributions. This is available on the Web, but I have also brought a copy with me that I will leave with the clerk.
The third question was from Senator Oliver, with respect to Industry Canada payments to lenders in respect of claims to loan guarantees made pursuant to paragraph 14(1)(b) of the Department of Industry Act.
The senator asked two questions: Who received these payments, and do we have a list of companies who have the loans? This actually is a confirmation of the answer that I gave last week, which is that despite the reference to ``plural'' in the text, the loan guarantee in question formed part of the financing arrangements in support of the Air Canada acquisition of five Canadair regional jets from Bombardier. One cheque was issued to the First Union Commercial Corporation, Wachovia Bank, National Association, in Charlotte, North Carolina, for a total of Can. $42,655,781.00.
This represents the one loan guarantee payment made to the First Union Commercial Corporation, which is a subsidiary of that particular bank.
The fourth question was from Senator Downe, with respect to Veterans Affairs contributions to support the Juneau Beach Centre in Normandy, France. The senator's questions were: What was the total cost of the centre and what is the federal government's share? The total cost of Juneau Beach Centre was $10.1 million. The federal government's share of the total cost of the Juneau Beach Centre's construction was 23 per cent and, in addition, a $0.8 million contribution was provided toward the opening ceremonies and the first year's operating costs. That brought the total federal contribution to $3.1 million.
The last question came from Senator Downe, with respect to Human Resources Development Canada and the Guaranteed Income Supplement payments. There were three questions that we agreed to get back to the senator on: What exactly is the Guaranteed Income Supplement? How does it work? Why has it decreased?
The Guaranteed Income Supplement is a monthly benefit paid to residents of Canada who receive an Old Age Security pension and who have little or no other income. This, I believe, gets at the heart of the senator's question with respect to it being a guaranteed program. Seniors must complete a one-time application. They do this once in order to establish their claim. To confirm their eligibility on an annual basis, seniors can either file an income tax return by April 30 or complete a statement of income. During 2003, GIS applications were mailed to seniors identified through the tax system as pensioners who might potentially be eligible.
I have some detail on the two factors that influence the estimated decrease but I will leave that with the clerk at the end of the meeting, if that is adequate.
The Chairman: Thank you.
Colleagues, we must be out of this room before 5:30 p.m. Another committee is due to begin deliberations here at that time. You must also leave at least a half-hour for an in camera meeting following this meeting so that we can approve, or otherwise, several draft reports that we are due to report to the Senate.
Mr. Joyce, I do not know what to make of all this. Frankly, here you are with the Blue Book, the government's Main Estimates for 2004-05, $186 billion, and you are telling us that in due course, you will be back with revised Main Estimates — not Supplementary Estimates, which we are accustomed to dealing with, but the revised Blue Book for Main Estimates for 2004-05.
I am sure there is a precedent for this. There is a precedent for everything in the government. When was the last time that Main Estimates were brought in and an announcement made at the same time that they would shortly be outdated and overtaken by a new set of Main Estimates?
Mr. Joyce: We do have a precedent in terms of re-tabling Estimates when there is a change of government. However, there is no precedent for what we are doing this time. As a result of the two reasons that I mentioned, in order to ensure that the Main Estimates do constitute a complete and accurate as possible set of proposals to support the passage of the full supply bill, we are proposing to re-table a complete set.
One reason for proposing to do it as a complete set is because of the wide impact of the restructuring of government that was announced on December 12. There are few departments that are not affected by this restructuring in one way or another. There are some 20 departments that have been affected in a major way. While it may seem like a detail, sorting out exactly how the existing funds allocated under the old structure can be accurately allocated to the new structure is a subject of fairly intense negotiations between the departments concerned. This will take some time, therefore.
We do not expect that there will be major changes in terms of the numbers. At the margin, some of the changes could be quite significant. For that reason, we are taking the unprecedented step of offering to re-table the entire Main Estimates because it is so wide ranging.
The Chairman: When do you intend to do that, Mr. Joyce?
Mr. Joyce: I think our goal would be to do that in June.
The Chairman: Regarding the resource discussions — which is a polite word for the haggling over money among the restructured organizations — I think what you have told us is that essentially, what we are talking about there is moving money around from one organization to another, perhaps from one vote to another. The second element here is ``additional spending authorities that may result from the Minister of Finance's budget.'' Is that March 23?
Mr. Joyce: That is correct, senator.
The Chairman: I suppose we will have a better idea then. Perhaps we will have you back here after the budget for a little chat about what changes have been necessary in light of that budget. However, it is rather odd and rather difficult for us to get a handle on this when we know there is another book coming out in June, revising the Main Estimates.
Mr. Joyce: May I make one more observation, senator? Even in a normal cycle, when the budget comes down before the Main Estimates, because of budget secrecy and the fact that we do not always ourselves know of the budget measures anywhere near in time to incorporate them in the Main Estimates — and that was one of the reasons I gave for the technical differences between the mains over mains comparison — they do not include many of the new budget measures.
The Chairman: They are reflected in Supplementary Estimates?
Mr. Joyce: That is right.
Senators can correct me if I am wrong, but I think one of the frustrations that they have had in dealing with Supplementary Estimates is that because of the supply cycles, we do not get to the first regular Supplementary Estimates until well into the fall. One of the things that we are trying out here is that by doing this some distance from the budget, we are able to bring the Main Estimates a little more into coherence with the spending plans of the government as laid out in that budget. That means that both Houses of Parliament will be able to see in the Main Estimates, the re-tabled Estimates, a more complete picture rather than having to wait until the Supplementary Estimates come out.
The same will be true for the reports on plans and priorities. Even though we table them one month after the Main Estimates, there is often not enough time for the departments to adequately reflect new measures in those reports. Our hope is that with this re-tabling of the Main Estimates and the delay of the reports on plans and priorities, the combined package will actually provide better support to Parliament and will incorporate any new measures announced in the budget.
The Chairman: Well done, Mr. Joyce.
Senator Doody: Is there any point in this exercise? We will have to do it all again in June. The numbers that we have in front of us may be completely irrelevant and —
The Chairman: He thinks at the margins.
Senator Doody: — with billions of dollars, the margins can be quite substantial, where I come from.
I suppose it is important to go through the exercise, but in the 25 years I have been on this committee, I have never come across this before.
Mr. Joyce, thank you. In your Department of Justice Vote 1, the department is looking for nearly $500 million for government client services. That represents an increase of almost 93 per cent. What are ``government client services?'' How does one qualify? That is a huge increase. After telling us who the clients are, perhaps you could tell us how they managed to get that kind of increase?
Ms. Susan Cartwright, Assistant Secretary, Government Operations Sector, Treasury Board of Canada: The clients concerned are government departments and agencies who use the services of the Department of Justice for a wide range of legal functions.
The reason for the significant increase this year is that during an expenditure and management review of the Department of Justice, which the Treasury Board Secretariat conducted last year, there was deemed to be no appropriate parliamentary authority for the department to spend the revenue it received from other government departments for these services.
According to the Financial Administration Act, to be able to spend revenue, a department requires specific authority, such as vote netting, for example, or a revolving fund mechanism. Due to the practice in the Department of Justice of spending the revenues it receives from client departments, it was spending in excess of its annual appropriation.
In order to address the need for an authority to re-spend these revenues but continue to provide legal services to departments, we proposed an interim solution, while at the same time working with the Department of Justice to address the issue of cost recovery for services to departments on a longer-term basis. The interim solution is revenue neutral, although it does show in the Main Estimates as an increase to the appropriation for the Department of Justice. What this means in simple terms is that when the Department of Justice recovers revenues from its client departments, those revenues will now be deposited to the Consolidated Revenue Fund, and upon proof of that deposit, the Department of Justice will be able to draw against this increased appropriation. It provides transparency about the full cost of legal services provided to client departments by the Department of Justice.
Senator Doody: The 93 per cent increase is not really an increase. It is really legalizing what you have been doing all along.
Ms. Cartwright: That is correct.
Senator Doody: Prior to this year, the Department of Justice has been spending its own revenue without authorization.
Ms. Cartwright: That is correct. It had an appropriated amount, but over the years, its cost recovery had grown. You are correct in that it was re-spending that without appropriate authority.
Senator Doody: Is that a common occurrence in government administration? Do people just spend money without authorization?
Ms. Cartwright: No, it is not. In response to the situation discovered at the Department of Justice, we have begun a review of cost recovery internal to government, and as far as we are aware at this point — the work is ongoing — no other departments conduct significant cost recovery measures without the appropriate authority to re-spend.
Senator Doody: How long has this procedure been going on in the Department of Justice? How long has it been doing its business this way?
Ms. Cartwright: It is safe to say that the cost recovery probably began in the mid-1980s. It began as services provided to departments such as the seeking of documents and filing of documents, rather than, as it has grown to be, the provision of legal services, that is, the payment of salaries for lawyers providing legal services.
Senator Doody: Neither the internal audit nor the Auditor General's work picked this up over all these twenty-some years?
Ms. Cartwright: That is correct.
Senator Doody: Is that not rather frightening?
Ms. Cartwright: It is clear they did not have the authority to re-spend, but there is no suggestion that they were doing anything other than recovering costs for services that they were mandated to provide.
Senator Doody: The point is a set of rules and procedures is established, and now it appears that, for years, at least one government department decided these were not applicable or useful and went about doing its business its own way.
Ms. Cartwright: I would not say that that was a decision that the Department of Justice had made.
Senator Doody: Would you say I was wrong in saying it?
Ms. Cartwright: No, senator.
Senator Doody: Under the rubric of ``Law and Policy,'' the Department of Justice contributions to the provinces to assist in the operation of legal aid systems has increased by more than 50 per cent compared to last year. A footnote indicates the Estimates amount included $2.5 million for public security and anti-terrorism legal aid. Could you tell me what that is?
Ms. Cartwright: As part of legal aid, a fund of $2.5 million a year was created to assist jurisdictions to fund cases arising from the implementation of the Anti-terrorism Act, formerly Bill C-36. It was established in December 2001, and the legal aid contributions to the provinces and territories are for charges laid under the Anti-terrorism Act, for immigration and border control, stemming from the events of September 11 and proceedings under the Extradition Act.
Senator Doody: Are the substantial increases in contributions to the provincial legal aid system a reflection of this new anti-terrorism legislation?
Ms. Cartwright: That is correct.
Senator Doody: Does that account for most of it?
Ms. Cartwright: That is correct.
The Chairman: How many charges have been laid under that legislation? One would have to get behind the bare numbers, and I do not expect the Treasury Board would have that information.
Senator Doody: It would be nice to get that information.
Senator Finnerty: Funding through the appropriations for the Canadian Tourism Commission through 2004-05, on page 16-9, has been reduced by $5 million compared to 2003-04 Estimates. Is the federal government confident that tourism in Canada is rebounding and will remain strong? Are there any further initiatives to stimulate the tourism and hospitality industry, which was affected by SARS? It seems such a reduction.
Ms. Daphne Meredith, Assistant Secretary, Economic Sector, Treasury Board of Canada: The $5-million year-over- year reduction is partly explained by special, one-time resources provided to the Canadian Tourism Commission in 2003-4. Funding totalling $16.5 million was provided to address the downturn in the tourism sector related to SARS, and most of that was used in the 2003-04 fiscal year.
It is difficult to predict the expected tourism situation in 2004-05. Some forecasts predict improvement. The Canadian Tourism Commission forecasts that most of Canada's major travel markets should see some growth in 2004 over the 2003 period and beyond, but no full recovery before 2006.
This forecast is supported by the recent encouraging research results from travel intention surveys for the summer of 2004 in both the Canadian and U.S. markets.
On the other hand, other industry intelligence shows that international travel consumers in key markets such as the U.S. and Japan still harbour concerns related to last year's SARS scare. Other factors include the strengthening of the Canadian dollar. Currency changes have a direct impact on the relative price competitiveness of Canadian travel products, as well as affecting outbound travel and the deficit of the international travel account.
In terms of other further efforts to stimulate tourism and hospitality affected especially by SARS, some initiatives that were put in place last year are continuing into the next fiscal year, including $1.5 million in 2004 marketing funds devoted to the successful ``I Can'' campaign targeted to Canadian domestic markets.
In addition, a further $1.6 million in marketing funds has been reallocated internally to what the Canadian Tourism Commission calls its ``leisure marketing program'' to stimulate the lagging market recovery in the short haul market from U.S. border states and address as quickly as possible any residual damage to the travel product brand ``Canada.''
There are some measures continuing into the next fiscal year.
Senator Finnerty: Where would I find it in here?
Ms. Meredith: Those are, in a sense, behind the global spending number that you see in the Canadian Tourism Commission, and would be detailed in the report ``Plans and Priorities'' that is produced by the commission. That document would provide you with more detail.
The Chairman: You will have to wait some time before you see that. That is the other problem with these Estimates, as I understand it. This is a first draft. We will be getting another set of revised Estimates in June.
Am I right that Part III, the plans and priorities, which explains in some detail what the government is about in its spending, has been put off now until May?
Ms. Laura Danagher, Executive Director, Expenditure Operations and Estimates Directorate, Treasury Board of Canada: Yes, until May 27.
The Chairman: And new departments have been put off until the fall?
Ms. Danagher: That is correct. About 20 organizations were severely impacted by the restructuring. They are basically the new organizations that were created on December 12, and they will be tabled in the fall.
The Chairman: I do not know, and I do not think anyone at this table knows, when the election will be called. There could be a dissolution as early as next month, or it could possibly happen in the fall. If there is a dissolution next month and there is a spring election, the voters will go to the polls without knowing the government's full expenditure plans. If it is put off until the fall, the House of Commons committees that are supposed to be examining the Estimates will be examining this first draft. By the time plans and priorities and the second draft come out, according to the rules of the House of Commons, they will be deemed to have been reported.
Have you thought through how the government's new schedule with regard to Estimates, revised Estimates, plans and priorities and so on will connect with the Estimates schedule in the Commons, not to mention the Senate?
Mr. Joyce: You are correct that we do need to think this through in uncertain times. We are trying to balance two things, as I indicated previously. One is ``as soon as reasonably possible.'' We have set these as targets. Clearly, if we could re-table the Main Estimates earlier, we would, but our current sense is that that is a reasonable time, given the negotiations, within which we can get a new set of documents on the table.
As you and I have indicated, the core of these Main Estimates will not change. We are talking about ensuring that, on a department-by-department basis, the numbers are accurate in terms of the changes.
In terms of the reports on plans and priorities, our goal here, which does take a little more time for certain departments, is to ensure that these documents incorporate not only the restructured departments. This will change, and is intended, I would imagine, to change the strategies of the departments. The reports on plans and priorities are not simply a question of slicing and dicing existing numbers and existing text and ensuring they are in the right place. It is in fact the intent that these reports would set out the new plans and priorities of departments that, in some cases, have had a radical change in their way of doing business.
It is a balance between giving the departments concerned the time to do that and getting the information before Parliament as soon as reasonably possible. We have set these targets. If there is anything we and departments can do to bring them forward before then, we will try to do that. Those are reasonable targets that we have set and we will clearly stick to those. If there is any possibility of doing it earlier, we will. We have to consult, obviously, with the government house leader's office in terms of parliamentary schedules and fit in with the plans they have in place.
We want to make sure that we can do that. There may be changes and we have to be flexible enough to respond to them, but those, broadly speaking, are the goals we have set ourselves in the situation in which we find ourselves now.
The Chairman: Mr. Goodale will deliver his budget speech on March 23. If, as a result of that budget speech, there are significant changes in these Estimates, you will know what they are on the day of that budget speech, will you not?
Mr. Joyce: That is correct.
The Chairman: The morning after, or that night, you will be able to put out a statement indicating what changes the budget has brought upon the Main Estimates that are before us.
Mr. Joyce: In some cases, we could do that. You can look at previous budgets. The budget puts in place the broad plan for spending of the government. It does it at a fairly high level of detail. It typically announces new policies and programs that are being implemented. Again, these are often at a fairly high level of detail.
Part of the job of the Treasury Board Secretariat and the Treasury Board is to translate the department's proposals to implement those new policies into recommendations to the Treasury Board for the approvals of the particular programs and the detail. That detail is neither in the budget nor is it available, because the departments themselves need to take time to translate a policy decision of the government into program details. That is why, even in the normal course of events, we are not able to incorporate them into the Main Estimates, and why, even on an unofficial basis, it would be difficult to do that even the week following the budget. We would need that time to engage in discussions with departments to understand how they will implement it.
In some cases, the actual detailed implementation of a particular policy proposal can take months to work out. We have examples in the secretariat now where we are trying to put in place frameworks for many policy initiatives that cut across a number of departments. There are some examples of that in the previous budget. In terms of the Agricultural Policy Framework with regard to climate change, the amount of money allocated in the budget is a global amount, intended for distribution across a number of departments.
One of my colleagues here could speak in more detail than I about the role the secretariat has taken on to ensure that the right accountability framework and management structure is in place to ensure that those funds are most effectively used for the particular policy purposes set out. It takes time to work that out, and in those cases, it takes considerable time before we are ready to actually allocate the funds and show them in Estimates in the detail required in those documents.
Therefore, with respect, it is not quite as simple as putting out an addendum in the week following the budget.
The Chairman: At a minimum, we will know whether the program spending number in here is still operative, or is larger or smaller?
Mr. Joyce: That is correct.
The Chairman: We will know that much on budget day.
Mr. Joyce: That is correct, and the budget is quite clear on that. It usually shows quite explicitly what the new spending measures are and the increase relative to previous planned spending estimates of the government.
Senator Ringuette: I will follow up on the discussion about the Estimates, the budget, policy and how the departments will be dealing with all of that. It is well known that Treasury Board will be undergoing program review in addition to all of these other activities. How will we know what programs have been eliminated from these Estimates, what programs will have reduced funds and what programs will have additional money, and how soon will we know?
Mr. Joyce: The term that we are using, advisedly, is not ``program review'' but rather ``expenditure review.'' The government is using that term for a particular reason, I think, because this is not a repeat of the program review that took place starting in 1994. One of the focuses of an expenditure review is better management of government programs, with reallocation and looking at refreshing the A base as a key part of that review process.
The President of the Treasury Board will be appearing before you tomorrow. I understand that this is an area that the committee has signalled to his office that they want to explore with him. He will be prepared to talk at greater length than I am able to on the plans for expenditure review.
I can say that there is a very clear statement from the government, to which the president has committed, that the results of an initial series of reviews that are being set in place are to be reported to the Prime Minister in the fall. It is at that time that we will know, from the review that will have been done between now and then, what the results are and what future agenda may be set as a result.
Senator Ringuette: My next question relates to the Department of Justice cost recovery practice. We have just undergone a study of the user fee bill brought forward by Mr. Cullen. It does not relate to user fees interdepartmentally. How does this cost recovery within Justice Canada compare to the private sector?
Mr. Joyce: My colleague Ms. Cartwright will respond in a little more detail than I will. There is a key difference. The principle of internal cost recovery is one where the departments look at whether it is appropriate to charge for particular services rendered.
In the case of the Department of Justice, it is simply a question of deciding what costs are incurred for particular services, which are then effectively charged to the client department. It is straightforward cost recovery of particular expenses that the department incurs for a particular purpose on behalf of another department.
The principle for internal cost recovery is really quite different from that which governs the external cost recovery regime.
Ms. Cartwright: If I might continue, it is important to remember that these are mandatory services. The departments are not able to seek the provision of these services other than from the Department of Justice.
There is a schedule of cost recovery rates that the department is currently using. If work toward moving to a full cost recovery regime within the Department of Justice is completed, those rates will be subject to consultation with client departments. My assumption is that we would want to ensure that they are compared with the kinds of rates charged by other providers of similar services.
It is important to remember that the Department of Justice is not providing these services as a business. It is providing mandatory services to Government of Canada clients.
Senator Ringuette: Therefore, if they are not providing the service on the basis of a business, it should be less than the private sector would charge any given department for the same kind of service?
Ms. Cartwright: I am not in a position to speculate on that. If they do move to a full cost recovery model, that would be examined. Yes, absolutely.
Senator Ringuette: My eternal question to Mr. Joyce is in regards to the public service and the commitment that was made to go from a geographic restriction on hiring to hiring on a national basis. What is the amount of money provided to the Public Service Commission to move away from the geographic restriction?
Mr. Joyce: I do not believe that I can give you the specific amount because of the new human resources management agency and the changes to the Public Service Commission. It is one of the issues that needs to be looked at between them.
I would undertake to get the specific answer to that question for you. We will do that.
Senator Ringuette: It is my understanding that there are some human resource and additional technical equipment requirements to make that shift from geographic limitation to a national hiring policy. I want to know if the money required to make that happen is within your Estimates.
Mr. Joyce: We will undertake to answer the question, senator.
Senator Ringuette: This question goes to another of my priorities. The regional economic diversification agencies are still under Industry Canada?
Ms. Meredith: One of them, the Canada Economic Development Agency for Quebec, falls squarely under Industry Canada. Western Economic Diversification Canada falls outside of Industry Canada and —
The Chairman: Where does it fall?
Ms. Meredith: It has its own minister. It is independent of Industry Canada.
ACOA is independent in a sense, although it does have a relationship with the Minister of Industry, to the extent that the minister can seek the cooperation of ACOA in fulfilling some of the objectives of Industry Canada. The answer, senator, is a mixed one, depending on the regional agency.
FedNor is run as a program within Industry Canada. It is not a separate agency.
Senator Ringuette: The FedNor and ACOA have relatively the same authority under Industry Canada. They have a minister responsible, but that minister is still responsible to Industry Canada. That is not the case for the western diversification agency. Why is that?
Ms. Meredith: There is no particular policy rationale for why they are treated differently. It is perhaps partly historical. It is partly the Prime Minister's prerogative as to how he wishes to structure the relationships among the departments. This is evidence of how those choices have been made.
In terms of the mandates of the agencies, while there are some differences, there are many similarities as well. It is hard to argue on a policy basis why you would have those different relationships.
Senator Day: My questions are really for clarification purposes.
Natural Resources Canada is under 20 in the Main Estimates. I have been looking for that section that we dealt with the last time you were here, with respect to contributions to the communities across Canada through regional development agencies to help with the impact of the softwood lumber problem.
Could you help me locate that and tell me if there has been further money allocated in that regard, or is that program over?
Ms. Meredith: Senator, the program to which you are referring is actually included under the Industry Canada estimates.
Senator Day: Of course, that is why I did not find it in Natural Resources Canada. Could you give me a page?
Ms. Meredith: I am now told that it is actually indicated in both places.
Senator Day: I will go back to Natural Resources Canada because that is where I was looking. I am disappointed that you are coming out with another book because I am finding my way around this one.
Ms. Danagher: Senator, it is on page 20-7, around the middle of the page. There is, under contributions, assistance to the Canadian softwood lumber sector for $20 million.
Senator Day: Yes. It is $20 million estimated for this year, compared with $33.7 last year; is that correct?
Ms. Danagher: That is correct.
Senator Day: Do you have the responsibility for checking the terms and conditions of these programs? Are you able to share with us the terms and conditions with respect to the distribution of this anticipated $20 million?
Ms. Meredith: Senator, the terms and conditions of programs are normally brought to the Treasury Board for approval through submissions.
I would have to know the details for each program. In some cases, they fall under terms and conditions of more general programs, so I cannot answer that question for this specific program.
I am wondering, in this case, whether, when you are referring to the softwood community assistance program, you are not particularly interested in the program that is run through Industry Canada, a $110-million program in total delivered by the regional agencies across Canada. I do not believe that is the program that you are referring to under Natural Resources Canada. This is more of a community adjustment program for those communities that rely heavily on softwood lumber.
Senator Day: That is correct. It is the latter. It is an adjustment for the communities as a result of the Canada-U.S. lumber dispute and the high tariffs. I would be interested in knowing how the distribution is determined. You have told me now, I believe, that that is the program we just looked at, the $20 million versus $33 million.
Ms. Meredith: Senator, I am afraid we will have to refer you to a different page. It is on page 16-6.
Senator Day: Yes?
Ms. Meredith: You will see it at the bottom of the contribution column. The number there referenced is $72.326 million. That, of course, is for the national program.
Senator Day: There was nothing in the Main Estimates for 2003-04. Did that come through Supplementary Estimates last year?
Ms. Meredith: That is right.
Senator Day: Can you help me with how much that was? I am looking for a comparison. How much was it last year?
Ms. Meredith: The total program was $110 million. The $72 million that you see here is the remaining funding for the program that was not spent in the previous year. Does that help to answer your question?
Senator Day: It does if you are suggesting to me it was somewhere around $35 million or so.
Ms. Meredith: In fact, senator, I think the number contained in the Supplementary Estimates was probably closer to the $110 million. The fact is that they have not paid out the contributions within the time frame originally anticipated. What you see for this coming year is the amount of money left over and that will now be spent in fiscal year 2004-05.
Senator Day: If you have already had approval through appropriations and then did not spend it all and are bringing it back for another year, is that not dealt with in a different manner accounting wise?
Ms. Meredith: Mr. Joyce could speak perhaps to the issue of re-profiling funding from one year to the next. This is one of several programs to which that process applies.
Senator Day: It would be helpful if you could clarify that for me, Mr. Joyce.
Mr. Joyce: To build on what my colleague has said, senator, close to the end of the fiscal year, we actually have two types of programs where we do this re-profiling, or carry-forward. One is with respect to operating budgets, and I think we discussed that a little in my previous appearance. The other thing we do concerns departments that are involved in what we call ``projects,'' where there is a fixed pot of money allocated over a finite period of time to achieve a particular objective. If for reasons outside their control they have been unable to spend in the year, or they do not think they will be able to spend, the full amount that they had planned to allow that project to be completed, it is reasonable to allow them, in our terms, to carry the unspent amount forward from that year to the next fiscal year.
Unfortunately, you would have to track that in different documents. If you compared the Public Accounts to the Main Estimates for that particular program, you would see what is identified as a ``lapse in spending'' against the authority that Parliament has given. Administratively, in those cases, we use something called a ``frozen allotment.'' If a department planned to spend $100 and at the end of the year say they will only be spending $80, if it is a legitimate request under the terms that we use for re-profiling, we accept the fact that they will be only spending $80 and put a frozen allotment on that $20. That prevents the department from having access to that $20, so that even if they suddenly discovered close to the end of the year that they could spend a little more, they would be unable to do that if we have said that they can carry it forward into the next year. That is the administrative action, if you like, that the Treasury Board takes and requires a Treasury Board decision.
Then the Estimates for the next year would be $20 more than whatever they otherwise would have been by virtue of that unspent money in the previous year.
Senator Day: Should I be able to look at page 16-6 of these Main Estimates and determine that $72 million, or a portion of that, was already approved by Parliament last year through Supplementary Estimates?
Mr. Joyce: No. Unfortunately, that information is not shown in the Estimates. You raise a good point about how we deal with this. It is a fairly technical issue. It is possibly something that we might look at, in terms of information that we could provide, because you would have to study three separate documents right now to get the information I have just characterized in conceptual terms.
We have that information in the Treasury Board; we know that. You raise a good point, senator. We should look at trying to improve the readability of the information and also adding to the information you need to do your work.
Senator Day: I will let you work on that.
Could I come back to a summary of what we have discussed? I am interested in the terms of reference and conditions for the distribution of funds to the various parts of Canada for community adjustment by virtue of the Canada-U.S. softwood lumber problem. I would like to know the total amount that was actually distributed last year under those terms of reference and the amount that we anticipate will be distributed this year.
That is the information that would be helpful to this committee. If you could provide that to the clerk, we would be happy to receive it that way.
Ms. Meredith: I would ask to get back to you, senator, on the breakdown of those numbers for last year and this year. I do not have that detail with me now.
Senator Day: That will be fine. I appreciate you might not have that with you here.
I will end my first round of questioning, then, with respect to the Atlantic Canada Opportunities Agency. In the book you have provided for us, it is at page 3-4. I am interested in the appropriation of $30 million to provide a contribution to the Saint John Shipyard Adjustment Initiative. Could you find that particular item in your book? It is two lines up from the total contributions. That particular contribution is a one-time contribution, as I understand it. Are you aware of the terms and conditions with respect to that particular contribution?
My understanding is that the same type of program existed in previous years, with funds distributed by Industry Canada and not the Atlantic Canada Opportunities Agency. This is not a newly created program. An earlier program is now being used for this particular initiative. Can you help me with that?
Ms. Meredith: Yes, senator. This is one in a series of initiatives to assist Canadian shipyards in the circumstances of a real decline in business. This program tries to either close those yards or convert them to other purposes.
Assistance has been offered to shipyards in provinces other than those in Atlantic Canada. Federal assistance to Ontario was $23 million; to Quebec, $144 million; to British Columbia, $31 million; amounting to almost $200 million on that type of activity to date.
Senator Day: I do not mean to interrupt you, but the chairman is looking at the clock and I want to get to my main point. The government is asking us to approve the expenditure of $30 million. Could we know what the terms and conditions of that distribution would be?
Ms. Meredith: I do have some detail on this particular initiative. It was established in 2003. Its objectives are to ensure the closure of the St. John shipyard site and its redevelopment into long-term economic development use. The initiative is composed of two separate programs. The first is the shipyard redevelopment program, $8 million. The other is the industrial diversification program, $22 million. It is a two-part initiative: first, to prepare the site for another activity; and second, to facilitate a new industrial activity on the site.
Senator Day: Are the terms and conditions the same as for similar-type grants you referred to in the past? Is there any matching contribution, either by the owner of the shipyard or by the province or both?
Ms. Meredith: On the latter question, the Province of New Brunswick is not contributing to this initiative.
As for other assistance initiatives, each is unique and this program has terms and conditions unique to it. I do not have details on the others, as to whether they were partnership initiatives with provincial governments or whatever. Each program, I think it is fair to say, has been individually designed for the shipyard in question.
Senator Day: Has this memorandum of understanding of the terms and conditions been made public?
Ms. Meredith: We can endeavour to get a copy for you.
Senator Day: If it has not been made public, could you let us know why not?
Ms. Meredith: Certainly.
The Chairman: Before we leave ACOA, as a small matter, I notice there is, under Enterprise Cape Breton, an offset number. I think it shows $520,000 for loan repayments, interest and other income. Perhaps I have missed something, but I do not see a number, a credit, as it were, under ACOA itself for loan repayments or that kind of thing. Do you know why that is?
Ms. Meredith: I do not, senator.
The Chairman: ACOA are still making loans, are they not? I know they are into loan guarantees; that is obvious here. I presume they are still making loans.
Ms. Meredith: I would have to verify that for you, senator. I am concerned that I do not have the answer because I think some of those loan arrangements were transferred back to Industry Canada, which I think is also reflected in these Estimates.
The Chairman: Industry Canada is the collection agency for ACOA, is it?
Senator Doody: Good luck!
Senator Ringuette: At page 16-6, Department of Industry shows a total contribution of roughly $1 billion.
Page 16-13 shows Economic Development Agency of Canada for the Regions of Quebec with $380 million. Where is the Western Diversification Agency?
Senator Doody: That is at page 28-3.
Ms. Meredith: That is right. I am finding it on pages 28-2 and 28-3.
Senator Ringuette: Explain to me whether the total contribution under Industry Canada at 16-6 includes the Quebec diversification. It is under Industry Canada?
Ms. Meredith: No, that does not include Quebec diversification.
Senator Ringuette: We see again the same contribution programs: community access, smart communities and infrastructure. Those are all in addition then?
Ms. Meredith: They are all in addition, yes.
Senator Ringuette: Are you coming back tomorrow?
Ms. Meredith: The minister is here tomorrow.
Senator Doody: The Canadian Firearms Centre is looking for another $100 million, or a little over. How much of this 2004-05 update will be spent on professional and special services? I do not expect you to have this information here now, but can you please get us a list of the recipients of these contracts and what they will do for all this money? If there would be any revenues to offset costs, information on that would be appreciated as well.
Ms. Cartwright: For the forthcoming fiscal year, the firearms agency is forecasting revenues. Obviously, those actual numbers will not be known until the year-end.
The professional services budget is expected to be approximately $54 million in the 2004-05 Main Estimates. The breakdown is largely for two contracts to support technology systems that enable the registration and licensing work. A smaller amount will fund a wide range of other services similar to those in other departments, such as translation.
Senator Doody: We do not have time for that detail here, but if you could provide a list of the suppliers and a description of what they will do for that $54 million, it would be much appreciated.
The Chairman: Thank you, officials, for being here to help us with the first draft of the 2004-05 Estimates.
We will see some of you tomorrow night at 6:15, when the President of the Treasury Board, the Honourable Reg Alcock, will be here.
The committee continued in camera.