Proceedings of the Standing Senate Committee on
National Finance
Issue 9 - Evidence - November 22, 2011
OTTAWA, Tuesday, November 22, 2011
The Standing Senate Committee on National Finance met this day at 9:30 a.m. to examine the expenditures set out in the Supplementary Estimates (B) for the fiscal year ending March 31, 2012.
Senator Irving Gerstein (Deputy Chair) in the chair.
[English]
The Deputy Chair: Honourable senators, this morning the Standing Senate Committee on National Finance will be dealing with Supplementary Estimates (B), 2011-12, which provide information in support of requests for Parliament's approval of $4.3 billion in voted appropriations, which represents an increase of 4.7 per cent over Main Estimates.
Our committee began consideration of Supplementary Estimates (B) last Tuesday when we first heard from officials from the Treasury Board. On Wednesday of last week, we received testimony from Natural Resources Canada and Atomic Energy Canada Limited.
This morning we are pleased to welcome officials from Human Resources and Skills Development Canada. Appearing are Alfred Tsang, Chief Financial Officer; Katherine McDade, Assistant Deputy Minister, Learning Branch; Louis Beauséjour, Associate Assistant Deputy Minister, Skills and Employment Branch; and Nancy Milroy- Swainson, Director General, Office for Disability Issues.
Mr. Tsang, I believe you have some opening remarks and I am happy to turn it over to you.
[Translation]
Alfred Tsang, Chief Financial Officer, Human Resources and Skills Development Canada: Mr. Chair, honourable senators, I am pleased to appear before you this morning as the Chief Financial Officer for Human Resources and Skills Development Canada.
[English]
For simplicity sake, I will use the acronym HRSDC throughout this presentation.
Mr. Chair, you have just introduced my colleagues so I will not repeat the introduction, but allow me to offer the committee an overview on the HRSDC portion of the Supplementary Estimates (B) tabled on November 3, 2011.
Through these estimates, we provide Parliament with an update to one statutory program, namely an increase of $43.8 million in forecasted expenditures for the Canada Disability Savings Program. Introduced in Budget 2007, the Registered Disability Savings Plan is a long-term savings and asset-building plan for people with disabilities.
Our revised forecast is based on two factors. First, provincial and territorial exemption announcements were made sooner than expected. To date, all provinces and territories have announced a full or partial exemption of Registered Disability Savings Plan income and assets. Second, financial institutions who offer RDSPs have increased awareness and individuals have greater access to the program, given the financial institutions offering it.
Senators can see this item on page 77 of the Supplementary Estimates (B). Because the Canada Disability Savings Program is a statutory program, this update is provided for your information only, as Parliament has already approved the purpose of these expenditures and the terms and conditions under which they may be made.
In addition to this statutory item, HRSDC is asking for an additional $166 million in spending authorities, of which $149.5 million is related to a request for the writeoff of debts owed to the Crown for unrecoverable Canada student loans. This student loan writeoff item is the same item contained in our Supplementary Estimates (C) of last fiscal year. Given that last year's Supplementary Estimates (C) did not receive Royal Assent, we have re-introduced this item in the supplementary estimates this fiscal year.
[Translation]
Allow me to provide a little context. A large percentage of students respect and repay their loans. Some borrowers have difficulties with repayment, and we have measures to support them through the repayment process.
Nevertheless, some loans go into default. We have a vigorous recovery process, including working with our partners at Canada Revenue Agency.
[English]
The Canada Student Financial Assistance Act establishes a limitation period of six years between the time the borrowers last acknowledged their Canada student loan and any legal activity the Crown can undertake to recover that debt. Once this period has expired, the Crown no longer has the authority to take action to collect on the debt; 99 per cent of our writeoff requests have been deemed unrecoverable for this reason.
Other requests are itemized on page 80 of these estimates. Senators will note that we have several items listed under vote 5, grants and contributions. For these items, all but $9 million represent carry forward of unspent funds from the previous fiscal year. One of the non-carry forward items is the New Horizons for Seniors Program to support projects that ensure seniors contribute to and benefit from activities in their communities.
As for our requests under vote 1, operating expenditures, our largest item is for $9.5 million related to the government's advertising program. This request is to fund campaigns to promote skilled trades and raise awareness about elder abuse and financial elder abuse.
Another item is the $2.6 million for the implementation of the enhanced Guaranteed Income Supplement for those low-income seniors who rely almost exclusively on their Old Age Security and Guaranteed Income Supplement.
[Translation]
I hope this overview has given you a more precise idea of the content of the Supplementary Estimates (B) for HRSDC.
[English]
My colleagues and I would be happy to answer your questions.
The Deputy Chair: Thank you for the opening remarks. It is hard to believe that a little has happened since we last saw you on March 1, I believe it was.
Some of this is repetition, but one thing that came to my attention was with regard to the student loans that you are writing off. You indicated in your opening remarks that it is a carry forward because they were not passed in Supplementary Estimates (C) last year. I note that in the comments made on page 10 you did not include the wording from the sup Cs of last year that said this covers a three-year period and represents less than 1 per cent of the total Canada student loan portfolio. That was deleted. Is there a reason it was deleted or is there a change?
Kathryn McDade, Assistant Deputy Minister, Learning Branch, Human Resources and Skills Development Canada: There is no change from what we told you when we appeared on March 1. You are absolutely correct that at that time we said that the writeoffs are in respect of three fiscal years. In other words, it had been at that time three years since Parliament was asked to approve the writeoff of unrecoverable student loans.
You are also correct that we talked about the amount being written off being equal to 1 per cent of the total portfolio, although we did have quite a good conversation in which one of your colleagues wanted to determine what the actual bad debt proportion is. I made the point that we probably should not use the 1 per cent number because it does not give you an accurate understanding of the proportion of loans that actually are never repaid to the government; that percentage is more like 13 per cent.
I can elaborate on that further, but we did have a good conversation about that last time.
The Deputy Chair: I recall it and thank you for that clarification.
Senator Finley: It seems eerily familiar — me sitting here and you sat there just about six or seven months ago. I have the transcript of that conversation we had then on my iPad and it is almost a mirror, shall we say.
To get this clear, the request in the Supplementary Estimates (B) for the student loan program is exactly the same amount as it was in the Supplementary Estimates (C) of last year. That did not materialize because of the election. This is not new money you are asking for; it is merely a request of money that you had previously.
For the record, the witnesses are nodding, so I assume that what I am saying is correct.
Some of these loans were in default up to seven years ago?
Ms. McDade: That is correct.
Senator Finley: Why six years? According to Mr. Tsang's remarks, the Canada student financial system established a limitation of six years. Why is it set at six years, apart from the fact it is in the act? Was there some calculation, some actuarial figures that indicated this was appropriate?
Ms. McDade: To give you an accurate answer I would have to know more about the intention of Parliament at the time that that provision was introduced in the act. That provision on a six-year limitation was introduced in 2003. As you know, the government had only begun the direct lending regime, the regime in which the government is the direct lender to students, and we no longer rely on financial institutions to do that for us. That regime only began in 2000.
At that time, there was no limitation period in federal legislation. Basically the federal government was relying on the limitation period in the province in which the student was studying. As a result, there was a whole range of limitation periods: in some jurisdictions as short as two years and in others as long as six.
My understanding, again without looking at the debates of the time, is that obviously the Government of Canada wanted to establish a single limitation period for Government of Canada loans. We went with the longest of the limitation periods that was then in place in provinces and territories.
Senator Finley: Are you and your ministry satisfied at this point in time that six years is the magic period, or do you feel if it were longer you might be able to recover more of this money?
Ms. McDade: I think we are satisfied that it is a reasonable period of limitations. You are probably correct that the longer the period of limitations, there will be modest amounts of funds that continue to be remitted to the Crown over the tail of that period. We do rely on the chief actuary from the Office of the Superintendent of Financial Institutions to benchmark our writeoff process against best practices in the industry. He does remain satisfied that the writeoff regime is appropriate and that the six years is an adequate period in which the Crown can undertake legal proceedings to get these loans recovered, keeping in mind that there is a cost associated with those proceedings.
The Canada Revenue Agency is our collector, and it is CRA that makes the decision, with respect to a particular debt, whether they will pursue it legally in order to have the option of garnishing wages and so on. Even if the period of limitation were longer, it is not clear to me that CRA would more actively be taking legal measures to recover debts that were at the tail end of that period.
Senator Finley: It is a question of value for recovery cost.
Ms. McDade: Right.
Senator Finley: I do not know where I picked up this statistic, so maybe you can confirm it and maybe not. I understand that today — you have mentioned this statistic — about 13 per cent of loans are in default. Is that for the six-year period or is that typically in one year 13 per cent go into default?
Ms. McDade: I will give you two different numbers. I am not trying to complicate the response, but just to be accurate. The rate of default at any given time we calculate as the proportion of loans that went into repayment and are now in default over a three-year period. We calculate it for a particular cohort of loans that entered repayment.
Right now we say that the default rate on the three-year cohort of loans that entered repayment in 2007-08 is about 14.7 per cent. Over the lifetime — so forget the three years — of a Crown asset in the form of Canada Student Loans, we say that a total of 13 per cent will not be repaid. Some of those are loans forgiven as a result of death or permanent disability of the borrower. Some of them are loans that we forgive because the student has applied for a repayment assistance plan. They are not all straight, defaulted, written-off loans. There is a small proportion that we actually forgive, and that is a little different from a writeoff.
Does that help?
Senator Finley: It does. My understanding is that in 1995-96 about 31 per cent of students had difficulty repaying their loans. Are you aware of that statistic?
Ms. McDade: You are right. The only reliable numbers that we have on default are the numbers that we have collected ourselves and have access to the data since we entered the direct-lending regime in 2000. You are right that at the time we started that regime the default rate was variously estimated at 28, 29 and 30 per cent. It is likely, and we do not have the data from the banks, that it was much higher during the recessionary period in the 1990s.
From our perspective, to now have a default rate of about 14.7 per cent is a pretty dramatic improvement on what it was when the banks were running the business, and certainly what it was at the beginning of the 2000s when we entered the direct-lending business.
Senator Finley: That is a great improvement.
The Deputy Chair: Following up on Senator Finley's question, can we assume that the manner in which you calculate the write-off of bad debts is consistent from year to year, that you are not changing the formula of how you arrive at the number?
Ms. McDade: That is correct. The process and criteria for write-off is set out in write-off regulations that apply government wide. I believe our colleagues from Treasury Board Secretariat talked about those regulations. Our processing criteria cannot change unless those regulations are changed. They have been in place, I believe, since 1994.
Senator Marshall: I want to talk about the Registered Disability Savings Plan. Could you give us an update as to how many individuals take advantage of that plan? It has been quite successful, and interest in the plan is growing. Could you give us some additional information on the growth of the program?
Nancy Milroy-Swainson, Director General, Office for Disability Issues, Human Resources and Skills Development Canada: It would be my pleasure.
The program has enjoyed more success than we originally forecasted, and every month new accounts are opened. Our data is updated on a monthly basis, and we have access to information that is generated by the program. Over 40,000, almost 49,000, Registered Disability Savings Plans are in place now.
Senator Marshall: Would that be 49,000 individuals?
Ms. Milroy-Swainson: It is 49,000 plans. It is close to individuals, but it may not translate directly to individuals.
Senator Marshall: Before going further, my recollection is that if you were eligible for the Disability Tax Credit you could have a plan. Is that correct?
Ms. Milroy-Swainson: That is correct. You need to be eligible for the Disability Tax Credit, which indicates you have a severe and prolonged disability, and you need to be a resident of Canada. The plan may be opened by either the individual with the disability or a family member who is acting to behalf of the member with a disability.
As of September there were over 49,000 plans in place, and Canadians had contributed $180 million of their own funds to these plans. Because there are matching provisions with respect to grants and bonds, Canadians also benefit from contributions by the federal government. As of the same date, September 2011, there had been $84 million in bonds contributed to the accounts for Canadians with low incomes. There is no matching required for that.
Senator Marshall: What about the grants?
Ms. Milroy-Swainson: In matching grants, $211.4 million had been contributed.
Senator Marshall: Is that a cumulative total?
Ms. Milroy-Swainson: Yes.
Senator Marshall: How many people are eligible for the Disability Tax Credit? The program has been very successful, so I am trying to get a handle on how much there is in the future that could be an uptake for the program.
Ms. Milroy-Swainson: The program definitely has been more successful than we originally forecast. About 450,000 people are eligible for the DTC. About 10 per cent of people with current eligibility have opened an account.
Senator Marshall: Would you know whether any liability has been set up in the Public Accounts of Canada for any future uptake of the program?
Mr. Tsang: Not that we know of. The DTC is a statutory program, so we share the information with Parliament through either the Main Estimates or the supplementary estimates. The Public Accounts of Canada merely displace the payments made.
Senator Marshall: There is no liability.
In the Supplementary Estimates (B), the authority to date is $37.7 million. Can you break that down between bonds and grants?
Ms. Milroy-Swainson: The $37.7 million this year is for grants and $45.3 million is for bonds, for a total of $93 million already booked.
Senator Marshall: Give me the numbers again.
Ms. Milroy-Swainson: Originally, $37.7 million was forecast for grants this year and $45.3 million for bonds. The Supplementary Estimates (B) is seeking $43.8 million more in grants.
Senator Marshall: Is that exclusively grants?
Ms. Milroy-Swainson: Yes, it is.
Senator Marshall: That is great.
Mr. Tsang: I may be helpful by explaining that the bonds and grants are listed as separate items in the estimates.
Senator Marshall: This is the grant.
Mr. Tsang: Do you see the item above?
Senator Marshall: Yes. There is nothing additional for the bonds; it is for the grants.
Mr. Tsang: That is correct.
Senator Runciman: The 10-year carry forward on entitlements was in the budget last year. Is that having an impact in terms of increased uptake?
Ms. Milroy-Swainson: It is not having an impact yet because the carry forward comes into force in early 2012. Two things are affecting the grants, in particular. First, more financial institutions are offering the program, so more and more Canadians have access. Second, we have some recent data that is preliminary and although we are still doing the analysis, it appears that Canadians are contributing more into the accounts than they have contributed the past couple of years, which means they attract more grants. The more they put in, the more the federal government matches. That accounts for the grant in the Supplementary Estimates (B).
Senator Runciman: Looking forward to when that comes into effect, will you do an analysis to determine what the impacts will be?
Ms. Milroy-Swainson: We will do that. In the early days, it will be estimates, obviously, because we will not have any history to base it on. As we get more experience, we will be able to have more predictable forecasts based on the experience of the program; but it will have an effect.
Senator Ringuette: I am looking at page 76 of the Supplementary Estimates (B). I assume that the item under ``Vote 1b'' of $9.684 million is for the advertising that you mentioned in your statement. Am I correct?
Mr. Tsang: I think it is a little bit more than that. If I may invite the senator's attention to page 80, you will see a column called ``Vote 1b.'' At the bottom line is the $9.685 million referred to, but above that figure, you can see that it is made up of several items.
Senator Ringuette: It includes the advertising.
Mr. Tsang: Yes; and a few other items.
Senator Ringuette: You said that this is to promote skilled trades. Would that advertising be in addition to other advertisements in place to promote skilled trades?
Mr. Tsang: That is my understanding.
Senator Ringuette: It is in addition. What would be the original amount?
Mr. Tsang: I would have to get back to you. Do you mean on the original campaign?
Senator Ringuette: Yes.
Mr. Tsang: I would have to get back to you on that. I do not have that information in front of me.
Senator Ringuette: Is this advertising within Canada only or is it outside of Canada?
Mr. Tsang: My understanding is that it is within Canada.
Senator Ringuette: Can you confirm that?
Mr. Tsang: Yes.
The Deputy Chair: Would you kindly forward that information to the clerk for circulation to the committee?
Mr. Tsang: We would be pleased to do that.
Senator Ringuette: That brings me to the question of where we are in terms of recognition of foreign credentials of workers residing in Canada.
Louis Beauséjour, Associate Assistant Deputy Minister, Skills and Employment Branch, Human Resources and Skills Development Canada: The federal and provincial governments signed the framework for foreign credential recognition in 2009. We have identified 40 occupations that are the focus for both federal and provincial governments to accelerate the process for foreign credential recognition. We had the first group of eight occupations. We made a lot of progress last year to December 2010. Now, we are working to make progress on the second group of occupations to ensure that foreign trained people will know within a year what the next steps are to have their foreign credentials recognized.
Senator Ringuette: Was the medical occupation in the first group last year or in the current group?
Mr. Beauséjour: A number of occupations were in the first group. In the second group, we are working on physicians and registered nurses, if I remember correctly. I might have the list, but I can forward the list of occupations completed last year and the ones that we are working on this year.
Senator Ringuette: I understand the process of signing agreements with the provinces to create the ultimate body for recognition of foreign credentials. However, who takes the lead, the federal government or the provinces? Are there benchmarks or will there be discussions forever?
Mr. Beauséjour: Foreign credential recognition is complex. A number of stakeholders are implicated. We are working with the provincial governments and with regulators for each occupation. There are over 300 stakeholders that we have to work with to accelerate the process. At the end, regulators determine what the process will be to have foreign credentials recognized. We are working with those stakeholders to accelerate the process. We have contribution agreements with provincial governments for them to make some progress. We also have contribution agreements with some of the national associations to work with the regulators to accelerate the process.
Senator Ringuette: Mr. Beauséjour, is the federal government the lead hand in making this happen or is it a partner only and no leader is ultimately responsible to make this happen?
Mr. Beauséjour: I think it is joint. Like I said, for regulated professions, regulators determine the process to have the foreign credentials recognized. As such, they are determining what the rules are. The federal government plays a lead role by working with these groups to ensure that we make progress.
Senator Ringuette: What progress have you identified so far?
Mr. Beauséjour: Like I said, for the first group of occupations, we have confirmed that, within a year, foreign- trained Canadians will know if their foreign credentials will be recognized and what the next steps are to have it happen. It is very complex.
Senator Ringuette: I understand that there are a lot of stakeholders in the discussions and so forth, but I was really dismayed when I read this. This has been happening over and over and over again. It is not an issue of partisan politics, but I foresee it is probably an issue of bureaucratic politics. Three weeks or a month ago, we had a Canadian taxi driver with foreign recognition in medicine, and thank God for that, because he delivered a baby in his taxi. My concern is this: Is there too much bureaucracy in this process so that we will be looking at this issue forever and ever and have no resolution? When are we going to see results? I guess that is my ultimate question. When are we going to see results for those new Canadians who have extremely good skills that we are in dire need of, or is it that we are facing, in certain professions, closed shops? If that is the case, then I think that legislation must address these issues.
Mr. Beauséjour: For physicians, we are just starting to work with that occupation. We had a first consultation with the regulator implicated within Canada, and we hope to make good progress this year on the process.
Senator Ringuette: Mr. Beauséjour, with all due respect, do you not think that physicians should have been in the first group to be involved in the credential recognition process and not the second group?
I honestly believe, chair, that we need to focus on this particular issue in order to enhance the current process. I am afraid, by not acting appropriately in this regard, that we will lose these skills to another country. If you are a physician and you are driving a taxi in Canada, I think you would probably rather be a recognized physician in another country. Therefore, you would question why you are in Canada.
The Deputy Chair: Mr. Beauséjour, do you have a response? If I may, I will put you down for a second round.
Mr. Beauséjour: We are working really hard with our partners to accelerate the process. It is a complex issue. We do have a number of contribution agreements to make progress. For those occupations where we have met some of the commitments of the framework, we continue to contribute and make progress. Recognizing credentials is a complex process, and we have to take one step at a time. We can show good progress in some occupations that could convince other regulators to work with us to accelerate the process.
Senator Eggleton: I want to talk about people trying to get Employment Insurance cheques, because they apparently are waiting longer now to get their first employment insurance cheques. Then, when they try to call to find out what is going on, there are difficulties in getting through. This really focuses on the service that your department oversees. It is operated by Service Canada. In a recent response to a question on the Order Paper in the House of Commons, the Minister of Human Resources and Skills Development indicated that the level of calls answered by an agent was 32 per cent this year, which is the lowest in a long time. I understood it was supposed to be about an 80 per cent level. What does the department do with the other 68 per cent of calls that do not speak to an agent? This is a very serious matter, particularly when we see that one of these high volume messages comes on and indicates that there is a high volume. Apparently 51 per cent do not stay on long enough. They hang up. This is a terrible service level. On top of that, apparently the Service Canada workforce is supposed to be shrinking to help save some money. That sounds like even worse service to the people who are trying to get employment cheques. It is bad now. What will you do about it? What are the targets that you have for service delivery, and what will you do about getting to them?
Mr. Tsang: Mr. Chair, that is a series of questions. I will invite my colleague Ron Meighen with Service Canada to come to the table, and he will provide some hopefully helpful answer to the senator's question.
Ron Meighan, Director General, Benefits Processing, Service Canada: We understand the seriousness of the situation that is going on, and we are taking a number of steps to try to really help the service levels to Canadians in these trying times. Under our EI modernization initiative, we are taking steps to improve the eservices that will allow clients to begin to self-manage by introducing more and more services that they can help themselves on My Service Canada Account.
We are also introducing a number of automation initiatives that over the next three-year period will allow us to handle the claim volume in a much more effective manner. We are also looking at using a national workload. With the introduction of automation, we will be able to move people to the first available agent, which allows us to take more advantage of the capacity that is available in our network.
As for targets, we have processing automation targets of 60 per cent for initials and renewal claims, of which we have reached 57.6 per cent. For electronic ROEs, we are targeting 65 per cent and, to August 31, we have now reached 67 per cent. For electronic applications, our target is 97 per cent, and we are now at actually receiving 98.1 per cent of all applications online.
As for call centres, I will have to get back to you with more information in a written response because I do not have those figures with me.
The Deputy Chair: What is the target level for the call centres?
Mr. Meighen: I do not have the targets for call centres with me. I will get back to you with a written response.
The Deputy Chair: It would be helpful if that were included.
Senator Eggleton: That is the issue here, Mr. Chair. That is what the minister is indicating in her response. It is at a pretty poor level.
What are you going to do about the fact that there will be further reduction in Service Canada's workforce? How will you try to improve things when things are about to get worse?
Mr. Meighen: The challenge is certainly in front of us. In this transition period, we understand that there have been some service levels that have fallen. Over the next three years, as we introduce the automation and we allow more claims to be handled electronically, that will allow us the flexibility that we do not have with the capacity locally. We can use the broader capacity of the entire national network by moving claims around to the first available agent.
Over the next three years, by allowing clients to serve themselves more with electronic services and have access to where their status and claims are located, we hope they will be able to self-serve and thus reduce the calls to the call centre as much as possible.
Senator Eggleton: I hear ``hope'' and ``self-serve''; not everyone has Internet savvy and will be able to cope with that. I do not hear much that encourages me that they will get a handle on this. I think we need to keep on top of it and I would like to get them to report back on this within three months.
Senator Callbeck: I want to first follow up with Senator Ringuette's question on the foreign credential issue. She asked twice, who is in charge of this process? How can you accomplish anything if you have not got anyone in charge?
Mr. Beauséjour: There is a framework. It is a document that has been signed by the labour minister from the provincial government and our minister from HRSDC to make progress. The department tries to take a leadership role to work with partners to work through the framework to have the foreign credential recognition accelerated. At the end, it is the provincial regulators that are in charge to determine what the process is.
It is a federal-provincial responsibility to ensure that we make progress. HRSDC is taking the lead, working with partners. Like I said, for regulatory permission, we are a federation; provincial governments are responsible to create regulators and to determine which occupation will be subject to regulation. The regulator determines what the rules are in each of the provinces.
Senator Callbeck: You have a document and you have a framework. I understand that at the end of the process it is under the provincial regulator. However, who is driving this thing? Who is responsible to see that the file moves?
Mr. Beauséjour: Our department. We take the lead, working with our provincial partners to make progress to ensure that we can deliver on the commitment made in the framework for foreign credential recognition. We work with partners; for example, we are working with Citizenship and Immigration and with Health Canada to make progress.
Senator Callbeck: Human Resources and Skills Development Canada is the driver of this file — what division within HRSDC?
Mr. Beauséjour: As I stipulate in the framework, our goal is to have a system that is fair and transparent for immigrants; what are the steps they have to follow to have their foreign credentials recognized? One of the key commitments is that within a year, foreign-trained Canadians will know if their foreign credentials will not be recognized because the regulator will know that the training they had will not be recognized in Canada, and they may redirect them to alternative work; or they will let them know what are the steps they will have to follow to have a complete recognition of their credentials.
Sometimes it could be more training, sometimes it could be work experience in Canada, depending on each occupation; but they will inform them of the path and what are the next steps required to have their foreign credentials fully recognized in Canada.
Senator Callbeck: I understand that. There is a process here, but who is in charge of driving that process? It has been my experience that there is no one in charge; it is going nowhere. If you want to get back to the committee with who is in charge, that is fine, but I would like to know.
Mr. Beauséjour: I can provide a written answer.
Senator Finley: Apart from doctors and nurses, are there other perhaps non-regulated occupations that you are working on — for example, aviation maintenance or software engineers?
Mr. Beauséjour: I do not have the list, but we have contribution agreements with non-regulated occupations, working with the employer to facilitate foreign credential recognition.
Senator Callbeck: On page 81, we have an explanation of funds available. There is about $60 million there that the government has because of savings. Would you provide this committee with the list of what those savings are? What makes up the $5 million and the $54 million?
Mr. Tsang: These available funds can be directly attributed to the strategic review. This is referenced on page 223 of the June 6, 2011, budget document. The bulk of the available funds for this fiscal year, well over 80 per cent, are from the category of increasing efficiency and effectiveness.
An example of this is the streamlining of internal services such as finance, human resources and information technology. Another example is the merging of the apprenticeship incentive grant and the apprenticeship completion grant. Senators may remember seeing this in Supplementary Estimates (A) earlier this fiscal year.
Then a small portion comes from the other two categories, which are referred to in the budget document. They are focusing on the core role and meeting the priorities of Canadians. An example of this would be the sector council.
Senator Callbeck: Could you provide the committee with a list of what makes up the savings for those two amounts?
Senator Nancy Ruth: Mr. Beauséjour, to follow up on the ``doctor in the taxi'' issue, how are provincial regulators such as the Ontario Medical Association involved in this loop?
Mr. Beauséjour: We are working with —
Senator Nancy Ruth: Who is ``we''? Is it the provincial labour groups' job to get their own regulating professions on board, or yours or whose?
Mr. Beauséjour: It is us. HRSDC invited the regulator to come to the table to work together. We work with national associations, who work with their members who are provincial regulators. We invite both national associations and the provincial regulators and also provincial departments to work together. For physicians, we had the first meeting to do some consultation to know where we are, what the challenges are, what kind of progress could be made, looking at what will be needed to be able to meet the framework commitment, which is to provide, after one year, the steps needed to be recognized as a physician. We then work with all the partners. We bring them together and work with them during consultation.
Senator Nancy Ruth: One wants to ask about effectiveness, but never mind.
I am going on to page 80, the $11 million on the Targeted Initiative for Older Workers. I understand this is a federal-provincial-territorial, cost-shared initiative. Can you explain how that works between the various levels of government? Whose responsibility is this?
Mr. Beauséjour: Basically, affected communities will propose projects that provincial governments will look at and approve. After that, it will be sent to HRSDC's minister to concur with that project.
Senator Nancy Ruth: How many older workers are we talking about here that are in the program?
Mr. Beauséjour: In fact, since the introduction in 2006, there were 16,000 older workers who have benefitted from the Targeted Initiative for Older Workers.
Senator Nancy Ruth: What would be the top three territories or provinces in which these 16,000 workers come from?
Mr. Beauséjour: I will have to come back. I do not have that information.
Senator Nancy Ruth: Could you take a guess at it?
Mr. Beauséjour: My guess would be the biggest provinces. Ontario, Quebec and British Columbia will probably be the big provinces.
Senator Nancy Ruth: Do you, by any chance, know what percentage is male and what percentage is female?
Mr. Beauséjour: I do not have that information.
Senator Nancy Ruth: I would appreciate that answer, too.
How are you measuring success of reintegration? My question around the gender breakdown is I want to know whether it is easier to reintegrate female workers or male workers. If there is one where there is a huge gap, what can you do to help those workers reintegrate, and how do you measure it to know you are being effective?
Mr. Beauséjour: Again, for that, I do not have the details, how to measure the success. My guess would be, what is the proportion of those to whom we are providing training and support, what is the proportion that maintains permanent employment. That would be my guess, but I do not have the details.
Senator Nancy Ruth: And what the gender breakdown of that group is.
Senator Peterson: I would like to know the percentage of people who are turned away because you do not have the capacity to handle it in this initiative for older workers.
Mr. Beauséjour: Can you repeat the question?
Senator Peterson: Of those who apply, what percentage is turned away because you do not have the capacity to handle it?
Mr. Beauséjour: Like I said, with the initiative for older workers it is not people who apply. They are community- based projects. It is each community that faces high unemployment rates for older workers and develops projects. It is the provincial government that first assesses the project, if it is a project that can go forward. I do not think that I know that people have been turned down. It is the community that has to develop the projects and propose it to their provincial government.
[Translation]
Senator Nolin: Senator Nancy Ruth has asked some very interesting questions. Honourable colleagues, as you know, I am new at this table. Thank you for welcoming me.
I have a sort of generic question. My understanding has always been that the purpose of the supplementary estimates was to address financial pressures that were not expected when the main estimates were prepared. That is what I have always thought.
How can you explain this morning that you are asking $149.5 million for student loans that have been in default for almost six years, and for which you are unable to recover the amounts owing? You are asking us for money today to be able to absorb this loss, but could you not foresee this loss eight months ago?
Mr. Tsang: The senator is absolutely right. In principle, that is included in the main estimates, which are prepared in October, but there is another reason for requests appearing in the supplementary estimates.
[English]
It is timing. It is the timing of the approval process.
What happened was, in this case for the student loan, the thrust of the question is why we did not include this in the Main Estimates. The Main Estimates were prepared last fall. We had included this, as we have discussed earlier, in Supplementary Estimates (C).
It is just a timing issue. When we prepared this, obviously the expectation we had was that it would be included in Supplementary Estimates (C).
In fact, I would suggest to you, Mr. Chair, that if we had included it both in Main Estimates and Supplementary Estimates (C) for last year, that would have been like a double entry.
It is just timing and the sequence of events that happened that drove us to where we are.
[Translation]
It is a question of approval and, in this case, it has to do with royal assent.
Senator Nolin: This morning, you are reassuring us that everything you are asking from us was not expected when the main estimates were drafted. Is that what you are saying?
Mr. Tsang: That is correct. We also have to keep in mind the calendar. In terms of grants and contributions, most of our requests are being carried forward from previous fiscal years. For obvious reasons, that means that it really is the sum that we did not spend last year, and so we have to wait until the end of the fiscal year. Then we will be able to determine the exact sum. That is why those types of initiatives are usually included in the supplementary estimates.
Senator Nolin: As for older workers, I heard Mr. Beauséjour's answer. Clearly, it is difficult to anticipate which activities have to be subsidized under the program because we do not know beforehand which company is going to close and which older workers are going to be affected. That is an example of an unexpected expense.
But you will understand how a regular senator like myself can have a hard time believing that this was not foreseeable. Eight months ago, almost 62,000 student loans were going into default within six months and they were not budgeted. But I hear what you are saying and I accept that.
[English]
Senator Peterson: Thank you for your presentation.
On page 78, the Canada Mortgage and Housing Corporation item there, $2.1 billion is to reimburse CMHC for amounts of loans forgiven, grants, expenditures made, losses, et cetera; a whole list of items. Do you have a break-out on that?
Mr. Tsang: I would have to ask my colleagues at CMHC to supply that information to the committee.
The Deputy Chair: We are now moving to round two. We are almost at the end of our time, but perhaps you could ask the question and we could receive a written response if it cannot be answered quickly.
Senator Ringuette: Service Canada is closing offices in different communities around the country. I would like for you to provide a list to our clerk, for the benefit of all members of this committee, which offices are being closed, how many employees in the different offices throughout the country are being reduced, and what is expected in these communities to increase or at least maintain the level of service that is required.
Mr. Meighan, as you stated earlier in regard to obtaining your objective, not everyone has the technical skills to apply online either for EI, regular CPP, CPP disability and the whole slate of federal government programs. Could you give us a breakdown of which offices are closed and so forth?
The Deputy Chair: Mr. Meighen will take on that question as a responsibility to get back to us.
Senator Callbeck: I would like to know the criteria used in determining which offices were closed.
The Montague EI processing centre in Prince Edward Islandwill close. That means the loss of 20 to 30 well-paying jobs, which means a great deal not only to those families but to the whole community. Montague is a small place and that many well-paying jobs means a great deal. I would like to know the criteria used by the government to close the Montague processing centre and offices in other places. There must be a report on how Montague and other places rated.
Also, I am hearing a lot of reports that EI claims are taking longer. I would like to know exactly what the situation is. Could you provide statistics for the last five years that will tell us how long claims are taking so we can see whether the reports that I am hearing are true?
I have one other question. On page 12, the bottom paragraph says, `` . . . transfers the Internal Electronic Staffing Process from Human Resources and Skills Development . . . .'' Why was that under HRSDC in the first place? You will give me a written answer on why you are transferring it out.
The Deputy Chair: I thank the witnesses for appearing before us. It seems like only yesterday that they were here before the committee. We appreciate the answers to our questions and look forward to receiving written responses, of which there will be a number.
Senators, we will move to our second panel of witnesses this morning on the Supplementary Estimates (B). We anticipate this panel will be our last on the subject.
We are pleased to welcome officials from the Canadian International Development Agency. Appearing this morning are David Moloney, Executive Vice-President; Sue Stimpson, Chief Financial Officer; and Leslie Norton, Director General, International Humanitarian Assistance Directorate.
Mr. Moloney, please proceed with opening comments.
[Translation]
David Moloney, Executive Vice-President, Canadian International Development Agency: Mr. Chair, on behalf of Margaret Biggs, President of CIDA, thank you for the opportunity to discuss the proposed appropriations through Supplementary Estimates ``B'' for the Canadian International Development Agency.
With me today is Sue Stimpson, Vice-President and Chief Financial Officer, and Leslie Norton, the Director General of CIDA's International Humanitarian Assistance Directorate.
[English]
The main item in CIDA's 2011-12 Supplementary Estimates (B) is a proposed increase in grant ceiling for CIDA of $125 million. CIDA is seeking additional authority for $125 million in grants to international organizations to help address emerging global requirements for development and humanitarian assistance. This is not a request for net new funding or increased appropriations for CIDA. The funding associated with this grant authority will be sourced from CIDA's existing reference levels as approved by Parliament through Main Estimates for 2011-12.
In more detail, CIDA is proposing a realignment of existing spending authorities from contributions to grants. Grants are the established approach to providing funding for programs with multilateral organizations, global agencies and humanitarian organizations that are assessed as low risk and as sound managers of taxpayer funds.
Grants provide CIDA with the flexibility it needs to respond to development and humanitarian needs in a timely manner for programming such as food aid and nutrition, and other kinds of emergency assistance. For example, this past summer, the government provided, through CIDA, life-saving help — food aid and non-food aid — to people from Djibouti, Ethiopia, Kenya and Somalia caught in the Eastern Africa drought. Canada supported the Word Food Programme and its partners, for example, which are now feeding nearly 10 million people across the Horn of Africa. With this increase in grant ceiling, CIDA will be better able to respond to unforeseen humanitarian assistance needs that could emerge before year end.
Over the past several years, the agency has consistently needed grant authorities somewhat beyond those initially specified in the Main Estimates in order to respond to humanitarian crises. This relates in part to the way in which aid resources are managed collectively by the government in order to ensure that emerging priorities can be met through the year from within the government's overall international assistance envelope.
To qualify for grants, recipients for our response to humanitarian crises or for any other purposes must be experienced partners of CIDA and are required to demonstrate a proven track record, including the capacity to respond efficiently on the ground as well as to demonstrate sound financial management. This would include, for example, the World Food Programme, the Red Cross movement, including the International Committee of the Red Cross and the International Federation of Red Cross and Red Crescent Societies, and certain Canadian non- governmental organizations.
CIDA is also requesting authority for a smaller, specific initiative as part of Supplementary Estimates (B) to deliver on a commitment made by the Minister of Finance at the meeting of finance ministers of the Americas and the Caribbean in Calgary in March of this year. He announced a $5 million contribution to the regional infrastructure integration fund as part of a multi-nation initiative to boost regional infrastructure investments in the Americas with a particular focus on the Caribbean. CIDA will manage a contribution to the Inter-American Development Bank for this purpose.
[Translation]
I also want to bring you up-to-date on the reference in Supplementary Estimates (B) to Canada's contribution to the Advance Market Commitment, as set out in the Budget and the Economic Statement Implementation Act of 2007.
Canada made a commitment totalling $200 million for the purpose of ensuring a market for manufacturers of low- cost vaccines for the lower profile, unmet needs of the poorest countries. Because the payments for this commitment are statutory in nature, the payment for 2011-12 of $22.9 million is presented in Supplementary Estimates (B) for information purposes only.
This approach is bearing fruit. The first pneumococcal vaccines were distributed in Yemen, in Kenya, and in the Democratic Republic of Congo this year.
[English]
Finally, CIDA is requesting a number of small transfers of appropriations to other government departments.
In the interests of time, I will be happy to set my explanations aside and respond to questions, if there are any.
The Deputy Chair: Thank you, Mr. Moloney.
At the last visit of your president, Ms. Biggs, to our committee, a majority of the discussion was focused on Haiti. As we well know, Canadians opened their hearts and their wallets to the people of Haiti. There was a matching program for a period of time. Could you give us some idea as to where that stands? It was not remarked on in your comments today.
Mr. Moloney: I am happy to provide an update on that. We have not sought additional funds specifically for Haiti through these supplementary estimates, nor indeed through the estimates for this year.
In terms of Haiti, the government did make a commitment of $400 million overall. Within that, it made a commitment to match qualifying donations by Canadians over a set period early last calendar year. That amounted to $220 million, approximately. Those funds have all now been committed, and the $400 million will be delivered by the end of this fiscal year. A substantial portion of those funds were programmed for humanitarian assistance, food aid, shelter and medical in the immediate period. Throughout that period, as senators may know, there were an initial number of people in camps who had lost their shelter, totalling roughly 1.5 million. Those numbers are now down to around 500,000, so there is an ongoing humanitarian need that we continue to fund. There is, however, substantial reconstruction activity now under way, as well as beginning again the school year, which was successfully put in place. CIDA has been using the committed funds towards supporting those education programs, provision of health services both to those in the camps as well as to rebuilding hospitals and re-establishing health care elsewhere, as well as helping farmers and small businesses have access to credit and to supplies to restart their own economic activity.
The Deputy Chair: Thank you for that.
Many numbers have been coming out, and I cannot follow them as quickly as others members of the committee can. It would be helpful to the committee if you might provide us in writing with the amount of the public subscription that was received from Canadians, the amount that was matched and the total commitment of the government to the people of Haiti.
Mr. Moloney: Certainly.
Senator Finley: I do not have very many questions, but I would like to know the rationale for switching $125 million from a contribution to a grant. My understanding from Treasury Board last week, I think it was, or two weeks ago, was that this loosens up the accountability. It means there are not as many strings attached to the money. First, can you tell me if that is the case? Second, what is the rationale for doing that? Third, could you give me some idea of where this now grant is going to go specifically?
Mr. Moloney: Certainly. Perhaps I could start with the vote that is presented to Parliament on behalf of CIDA.
Like all departments, we have an operating vote. We have a vote, I believe it is vote 30, which is for grants and contributions combined. As is the standard practice across departments, within that vote, Parliament sets a ceiling, in our case not for any specific grants but a maximum number within that vote that can be used for grants as opposed to contributions. As we proceed through the year, we of course manage within that ceiling for grants, and we have such a ceiling for a reason I will come back to.
As we go through the year and assess the needs that are coming our way, and in particular the needs for humanitarian assistance, as has been the case in the last two years and is the case this year, we, for example, saw the extraordinary need in East Africa, to which the government had, by the end of July, already committed $75 million, and that was before the matching fund in this case, which the Minister of International Cooperation had announced. It was clear that we were headed, in our view, for another extraordinary year of demands on humanitarian assistance. We had the floods in Central America, the floods in Asia and so on.
By the nature of the humanitarian catastrophe, one that we would respond to on behalf of Canada, the funds need to be delivered quickly. The assistance needs to get quickly to the people on the ground, hence the points I was making in my opening remarks that we need to work with partners that we are certain have the capacity, are on the ground and can deliver; that have the financial management that we are certain we will be able to track and have adequate monitoring and reporting on how that money is used; and to be able to facilitate both of those, that we have a standing relationship with those organizations so we will be sure that the aid gets where it is needed, we will be able to see it and we will be able to track the money.
That set of characteristics matches those for a grant, which is an unconditional financial transfer. Normally, we do not operate that way. In the case, for example, of our country-specific programming, in our Main Estimates, 99 per cent of the money that we are showing to Parliament is contributions. In a contribution agreement, we have considerably more requirements for reporting and monitoring. We pay for specific purposes and, in certain cases, we will pay on evidence of a delivery of a service or of a good.
That is a slower process; it is more burdensome. The long-time assessment of Canada and other major donors is that in the case of a humanitarian emergency, the fast disbursing payment mechanism of a grant is appropriate for trusted partners.
Given the nature of the two instruments, we have the transparency for Parliament that we would not use more than a given proportion. That is the balance of risk management and risk mitigation that we are putting in front of Parliament. In the public accounts, after the fact, all of these monies will be clearly reported as one or the other.
Senator Finley: That was a very comprehensive answer to my main question.
I was recently reading the OECD mid-term report — I think it was on the 2007 visit they made — on Canadian aid or CIDA. I understand you are currently undergoing a peer review. First, I was very encouraged by the evident advances that CIDA had made from prior reports, prior situations. How do you feel that peer review is going at the moment? Do you think you will see a continued gold star for OECD?
Mr. Moloney: We have just completed the first phase of the OECD review, which is done every four years. The last full review was 2007; and the review at that time did outline a number of challenges for Canada's aid program, of which CIDA is about 70 per cent. They are evaluating the entire program.
The mid-term review you may be referring to was in 2009. Interestingly enough, both the 2007 report and the 2009 mid-year update attracted a fair bit of media attention at the time; some editorials posted in 2007 said we have work to do. In 2009, a corner has been turned essentially; however, we will not actually receive the outcome until April or May.
A team from the OECD secretariat, along with two examining countries, as is normal — this time, it was Netherlands and France — spent a week in Ottawa and did meet some parliamentarians, as well as civil society groups and government officials. They will then go to Africa and visit one or two of our country programs to see how things are going on the ground. They then go to a committee of about 25 donor countries, which will weigh the advice of this initial group.
So far, we have indications that they believe the positive trends, from their perspective, that the OECD's development assistance committee identified in 2009 have continued. As is the case in what we call ``multilateral surveillance,'' they always identify further challenges to come — do more and do better — as they should.
We do think that in regard to their strong challenges to the Canadian aid program in 2007 to become more focused, decentralized and efficient, and to build more broadly into development cooperation and not only aid — which means, for example, thinking about the needs of developing countries in trade policy — that we have made further progress in each of those areas.
We are hoping for a strong assessment again.
[Translation]
Senator Nolin: I would like to sort of follow on that. Perhaps we can get a written answer because my question has to do with the evaluation criteria for the international organizations you are dealing with on Canada's behalf.
I would like to understand how your partnership with those organizations works. What are the criteria? Which are the organizations, and how do you choose them? How are you involved in choosing the projects those organizations are working on? And how do you evaluate the return from those programs?
It is a rather broad question and it might require a written answer. I would really like to understand how contributions work compared to grants, which I think are more flexible but you have less control over.
Mr. Moloney: Perhaps I can give you a quick overview now and send you the rest later in writing.
First, as I was saying before, in humanitarian crises or emergencies, we only respond to the request for help of a country that appeals to the international community. Second, we weigh the possible specific intervention options provided by international bodies, such as the world humanitarian assistance program or other examples.
In those cases, there is a need that requires useful intervention and that has been identified by a reliable partner. Only then do we think about providing financial assistance.
Senator Nolin: Do you award a grant or do you contribute to a broader program?
Mr. Moloney: Take Kenya, for example. We are helping Kenya. We contribute to a very concrete program in order to address needs based on a profound call to fund a specifically detailed program, whether it is specific assistance for food, medical, housing or other needs. The program must be quite detailed.
So one way of choosing our partners is based on the needs they will have to face.
We then work together with other sponsors in order to assess the response. Was the program sufficiently well delivered, targeted and effective? Were there any losses or anything else? Was the financial accounting acceptable?
Senator Nolin: Could you explain what contributions are?
Mr. Moloney: Contributions are something completely different. In that case, we were the ones who identified the priority results, and so we worked with one or more partners to achieve a result that is in keeping with our strategies per country or per institution, results that the government and the minister find to be priorities.
Senator Nolin: Thank you very much. And I would greatly appreciate it if you could send us all those details in writing.
[English]
Senator Ringuette: I have four short questions. The first one is in regard to page 64. It is money that has been transferred from the Economic Development Agency for Quebec Regions, $531,000, to the United Nations Convention on Biological Diversity. When will that particular convention be held?
Mr. Moloney: I believe, if I am not mistaken, that this is within the Department of Foreign Affairs portion of the supplementary estimates.
Senator Ringuette: You have some money, however. You have $420,000 from CIDA going to this event.
Mr. Moloney: I am sorry. I am looking at the wrong item, excuse me. I will have to get back to you on that item.
Senator Ringuette: I would like to know who is leading this.
Mr. Moloney: According to the notes we have in front of us, this is a three-year agreement with the Department of Foreign Affairs. We do not have the specific answer in terms of the timing of the event you are asking about. I will have to come back to you in writing on that, if I may.
Senator Ringuette: If it is in 2015, and already there is some money from the Economic Development Agency for Quebec Regions being taken away from that portfolio and given to Foreign Affairs to hold an event three years down the road, I certainly think that we need a lot of clarification on that particular issue.
The Deputy Chair: Mr. Moloney, will you clarify that in writing?
Mr. Moloney: To clarify, are we speaking about the Convention on Biological Diversity or the Forum of the Americas?
Senator Ringuette: No, the biological diversity, as stated on page 64.
Mr. Moloney: We understand that to be an annual conference, but we will confirm that.
Senator Ringuette: If it is an annual conference, why would money be taken from the Economic Development Agency for Quebec Regions on these specific supplementary estimates?
Mr. Moloney: I am looking at the $420,000 transferred to Foreign Affairs and International Trade for Canada's annual host country grant to the secretary to the UN convention.
The next item, which is a transfer to the Economic Development Agency of Canada, would be separate. If there is a DFAIT transfer to the Economic Development Agency, that would be a question to them.
Senator Ringuette: From what I am reading here, certainly your agency is providing $420,000 for this event. I was hoping that, for that amount of money, we would have some information on that event, at least. You will provide, Mr. Moloney, an answer to the clerk?
Mr. Moloney: Yes, we will.
Senator Ringuette: In regard to the total portfolio that you have to manage, what would be the amount of funds for NGOs that would be allotted to our different embassies to fund them at their own discretion?
Mr. Moloney: There is a program managed jointly this year, as the last year of this joint management, between Department of Foreign Affairs and International Trade and CIDA. It is a group of funds at the embassy level referred to as Canada Fund for Local Initiatives. That is, in total, an $18 million program this year. That is under the management of the local ambassador as well as the local CIDA, with implementation support from the CIDA officers who would be in that embassy.
Senator Ringuette: Could we have a breakdown of these programs at $18 million? I assume that, because it is joint administration between you and foreign affairs, via the different embassies that we have, there must be some guidelines. As an example, who has the final word in regard to the allocation of these funds?
Mr. Moloney: The allocation by country is currently a joint decision between the Minister of Foreign Affairs and the Minister of International Cooperation. The individual ambassadors are accountable for the use. CIDA officers in the mission currently provide the back office support to the actual funding of local organizations.
Senator Ringuette: You must have some guidelines in regard to the objectives that you want to reach? I would not have thought that there was blind authority to the embassies.
Mr. Moloney: Certainly there are Treasury Board approved guidelines for the program. At the highest level, uses must be eligible to be classified as Official Development Assistance. They would be used by the ambassador for specific needs that would be viewed as meeting Canada's foreign policy objectives with the country and the relationship between Canada and the country particularly, but it must be for purposes that qualify as Official Development Assistance.
Senator Marshall: For the $125 million that we spoke about earlier, would you know now which organizations will receive the $125 million? You mentioned the Red Cross, but you also referenced certain Canadian NGOs. Is it specified now? Have you identified which organizations?
Mr. Moloney: It is not possible, senator, for us to do that. CIDA would not receive this money in terms of approval from Parliament, should Parliament vote it, until late December. We would not be able to financially commit.
As I said, this is a balance for us to try to ensure that we have sufficient headroom for Ms. Norton and her colleagues, being in charge of international humanitarian assistance, to be able to balance, as I said, the need to not ask Parliament needlessly for grant room, given what we have discussed, and yet allow the government to be able to respond as it sees fit and necessary to crises.
Certainly, as we look forward, the situation in East Africa continues to be dire, slightly less dire than it had been. We simply, as the last few years have taught us, are not good at forecasting earthquakes or floods. There are floods all over the world. We have had exceedingly volatile weather patterns in the last few years.
This is a contingent authority. We will of course not use it. We are talking about a ceiling on grants within our vote. If we do not need this for true humanitarian crises, we will not use it that way.
Senator Marshall: When you decide which organizations or whether an organization receives funding, do you specify what part of the world? For example, if you were to give a grant to the Red Cross, would CIDA indicate where they want the money spent?
Mr. Moloney: Our humanitarian assistance budget is managed roughly in two parts. There is an annual appeal starting each year from the Red Cross and the World Food Program, which are the major ones, and from some other smaller players. These are funding needs for which they would present a detailed program through the year. They are ongoing humanitarian dire needs known through the course of the year.
The World Food Programme is providing ongoing food aid all around the world, such as school feeding programs and so on; Haiti would be a current example. We do respond at the start of a calendar year with a certain portion of the budget, but we need to hold back a substantial portion to be able to deal with new crises, as opposed to ongoing. In the latter case, it is for very specific events.
The World Food Programme would come to us, or the Red Cross or major Canadian NGOs, and propose to provide shelter or medical assistance or so on, as the case may be. It is quite precise, in a precise country.
Senator Marshall: If it was to East Africa or to Haiti, you would specify the country?
Mr. Moloney: Exactly. We look at who will manage a camp — who will provide food in a camp, who will provide water, sanitation and health services — and try to ensure we are working collectively with other donors to help meet the full range of needs.
Senator Marshall: There is also $5 million allocated for Central America and the Caribbean. It says it is to support infrastructure integration. What does that mean and what countries in Central America and the Caribbean would receive the $5 million? Is it paid to the governments of those countries? Can you tell us something about that program?
Mr. Moloney: Yes. The Inter-American Development Bank, on behalf of donors — essentially Canada and the United States right now — is establishing this fund. It will manage the fund and provide funding for specific projects, which may be local government led, private sector or not-for-profit.
The guiding principle here would be infrastructure that would help knit together the Americas. In our case, we are putting a particular focus on infrastructure that would help the Caribbean countries develop a common market. They have a common market, so we are talking about ports and various kinds of physical facilities that will help promote trade inside the region.
Senator Marshall: Who identifies the projects? Is it CIDA?
Mr. Moloney: The individual countries would be approaching the Inter-American Development Bank to propose projects. On our behalf, the Inter-American Development Bank would be assessing those projects. Canada has a seat on the board, including the executive board, so every one of those projects will come to that board. Canada is part of the governance of each project approval, as a shareholder in the bank.
Senator Marshall: I guess it would be early, but does CIDA know in advance where the money is going? They do before the money is given out.
Mr. Moloney: In this case, we know the design of the fund. The Inter-American Development Bank has targeted a $20 million fund. As I understand it, they have $13 million of committed donor funds, so the operations are not launched yet.
Senator Peterson: You are providing humanitarian aid in some pretty volatile countries in Africa.
Mr. Moloney: Yes, sir.
Senator Peterson: We read about countries such as Somalia, where the rebels are confiscating the aid and reselling it on the black market. Do you have a strategy or a plan to deal with issues like that?
Mr. Moloney: We absolutely do; given the nature of our business, we must do so. There are parts of the world and situations in the world, unfortunately, where no aid organization at times is able to go. That is for reasons of safety and for reasons of the workers, but also for reasons of being able to achieve results on the ground.
We work with partners that do have great experience in these volatile areas. We work very closely with these partners to track where the aid is going. We will only work with partners who are capable of being able to track aid from a warehouse to being delivered to individuals.
Guided by laws in Canada, we must have taken eminent care to ensure that no funds could find their way, even indirectly, into listed terrorist organizations, which is a challenge in some of these areas of the world currently. We pay considerable attention to those issues.
Senator Peterson: Would there be some countries that you do not go into?
Mr. Moloney: Yes, there will be countries or situations where it is not possible. At times, Somalia has absolutely been a case, and there are portions of Somalia that continue to be a case. There are others as well.
Senator Nancy Ruth: I wanted some clarification on grants. The money that is now being moved into grants for these international organizations, does that mean that where the money came from is down — that number of millions of dollars — and it will not be available for other projects in CIDA?
Mr. Moloney: There are cases here where we have received additional funds for the purpose of response, so we are not taking money away from planned contributions. There is nothing that we had planned to do that we will no longer be doing now to create this grant ceiling.
To come back to what I said before, this is allowing CIDA to be able to manage within a single vote and within a grant ceiling. We are not saying we are moving money into grants and thus must spend the money as grants. We are seeking the room to be able to do so should the Minister of International Cooperation and the minister judge the need to.
Senator Nancy Ruth: On page 64, with all its enumeration of bits of money that you are getting from other departments, I was interested that CIDA is sending money back to DFAIT. Is that an unusual thing?
All these other categories are coming from other departments to CIDA, except this one. Can you say a bit more about how that happens and why it happens? I always think that CIDA is a smaller agency in the department, and it is going for things like salaries and benefits and inflation.
Mr. Moloney: The answer to your question is, yes, this is quite normal, and yes, it is normal that it would happen. It happens through the Main Estimates, but it also happens through supplementary estimates.
Let me explain. CIDA is by far the larger programming organization. However, when we position staff abroad, under law those employees must be seconded to and be legally the employees of the Department of Foreign Affairs when they are working in our mission in Bamako, Mali, for example, or Port-au-Prince in Haiti. This falls under diplomatic niceties between countries. DFAIT is the only department in the Government of Canada — department, as opposed to crown corporation — that is legally able to enter into contracts in another country, able to rent space, buy space and procure services.
The Minister of International Cooperation is accountable to Parliament for the costs of maintaining our employees who are abroad, but she must implement that through Department of Foreign Affairs. We have, for example, locally engaged staff who work in the mission, and they are working through DFAIT for CIDA. We also have departmental staff here. As exchange rates move up and down and as inflation in different countries moves up and down, we need to square up.
Senator Nancy Ruth: This is not related to the estimates, but one does not hear much in the press anymore about Pakistan and what Canada is doing there. Can you fill me in?
Mr. Moloney: I will ask Ms. Norton. Canada has just recently responded additionally in Pakistan.
Leslie Norton, Director General, International Humanitarian Assistance Directorate, Canadian International Development Agency: Thank you very much for the question.
Most people remember the monsoon season of 2010. There was another monsoon season this year that was not quite of the same scope and scale as last year. There were in the range of 4 million to 5 million people affected by the flooding this year, whereas last year 20 million were affected, with 14 million requiring humanitarian assistance.
This year, Canada, through CIDA, provided humanitarian assistance to meet urgent needs, whether food or non- food needs. Again, it is working through its humanitarian partners to provide food, safe drinking water, sanitation facilities, emergency shelter and health care. It was for a total of $11 million.
Senator Nancy Ruth: What is happening to all the refugees still there from 2010?
Ms. Norton: The majority of people from 2010 have returned to their place of origin. There are refugees in the country from Afghanistan, but the majority of the Pakistanis who were displaced have returned to their place of origin. The floods stayed for quite a long time, but when floods recede it is remarkable to see how quickly people return to their land and try to plant. Our concern last year was that we would miss the winter harvest. That is why we provided a substantial amount of money to the FAO to ensure that seeds and tools were provided to people so they could get back to their land and plant and, therefore, prevent any further hardships and need for food aid from the international community.
Senator Callbeck: CIDA wants to transfer $125 million to the grant program from the contribution. On page 184, in the top paragraph, it says, basically, that grants are not subject to an audit, whereas contributions are. Who does the audit for the contributions?
Mr. Moloney: The important distinction there is what audit we, as CIDA, will carry out. In the case of a contribution agreement, we will require and carry out an audit.
In the case of a grant, one of the elements in deciding whether or not a potential partner is one that we will be comfortable working with, will be that we will have confidence in their audit.
In many cases, we as the Government of Canada or even we as CIDA will be part of the governance of that organization — for example, the World Food Programme, as part of the UN system — and we will have oversight of that audit. Regardless of the partner, there must be an audit. The distinction in the policy is whether we do it ourselves or whether we rely on an organization's audit and financial reporting.
Senator Callbeck: For all the grants then, you rely on the organization that you are working with to do that audit?
Mr. Moloney: Yes, and, as I said, part of how they were chosen is that we have confidence about that. Of course, we do track and monitor those ourselves.
Senator Callbeck: Those are made public, are they not?
Mr. Moloney: Yes.
Senator Callbeck: Do they automatically go to members of Parliament, or do they request them?
Mr. Moloney: Partners' audits would not go out in the way that our audits do, but they are public, yes.
Senator Callbeck: Senator Peterson brought up the stories we are reading in the press about goods in Africa getting stolen and sometimes resold. In other words, they are not getting to the people who should be getting them. I understood you to say that you are involved, somewhat, in looking into this.
Mr. Moloney: Yes.
Senator Callbeck: Are there ever reports done on this type of thing, and, if so, are they made public?
Mr. Moloney: Have we ourselves done a report on this? To my knowledge, no. Perhaps I would ask Ms. Norton if she is aware.
Ms. Norton: I was just at the executive board meeting of the World Food Programme last week. As a matter of fact, this is the type of element that the executive director would report on to the board members. When there is a case of alleged diversion of goods, which might be what you are referring to, they have set in place a method of ensuring that their food assistance is provided to the beneficiaries whereby they will hire, for instance, in the case of Somalia, truck drivers that are trusted and experienced with the organization.
Then, they will only pay once the food has been delivered. They will not pay the truck drivers prior to delivery, or they might pay 50 per cent upfront and the remainder on delivery. That is an example of a methodology that they have put in place to ensure there is no diversion of goods. For the majority of the assistance we provide, such as water and sanitation, shelter, et cetera, the risk of diversion is quite minimal. Food is of a different character, and that is why they have put in such strong checks and balances, not only to ensure that the food gets delivered to the people who need it, but also that we as board members and funders have the comfort level we require and that the due diligence is done as needed.
Senator Callbeck: When were those measures put into effect?
Ms. Norton: In the case of Somalia, they are continuing to evolve their measures, but the measures have been in place as long as the situation has been challenging. As long as I can remember, we have had to have special measures in Somalia. Other countries require different levels of due diligence for their partners, but they do undertake the due diligence beforehand.
The Deputy Chair: To wrap things up, I will turn to Senator Runciman.
Senator Runciman: I was watching the demonstrations in Egypt on the news last night. They were showing a group of people brandishing, for the television cameras, empty tear gas shells made in the United States. I know this is a humanitarian effort, but is there some way to attempt to gain recognition of Canada's role in assisting countries and of Canadians who are contributing to these causes?
Is there any effort to make sure that, as best we can, the average man and woman realizes that Canada is playing this very helpful role?
Mr. Moloney: Certainly, the Minister of International Cooperation will take steps to ensure that Canadians are aware of the assistance we are providing.
Senator Runciman: You are saying that Canadians are aware.
Mr. Moloney: Canadians are aware of the assistance.
Senator Runciman: I am talking about the citizens of the countries as well as Canadians. That is why I used the Egypt analogy.
Mr. Moloney: It is fair to say that it will very much depend on the situation. In the case of Haiti, the Minister of International Cooperation has been there at least four times since the earthquake and has met publicly with our ambassador to describe for Haitians, through the Haitian media and local groups, what we are doing there.
In the case catastrophes, such as the floods in Pakistan and the drought in East Africa, we do not have the same sort of access to media. Obviously, we ensure that the local country government is very well aware. It is a challenge depending on how dire the situation is.
Senator Runciman: I am concerned about this. Certainly, we saw in the television broadcast recognition of negative contributions. It seems that there should be some way of making an effort to assess the on-the-ground recognition levels, whether through surveys or whatever exercise could be utilized.
Mr. Moloney: For example, through the Red Cross, we fund their ability to stockpile certain goods to create a fast responding medical clinic capacity. Canadian branding and other markings are evident on those kinds of materials.
Senator Runciman: It sounds like you do not have a handle on this. I am not trying to be critical, but perhaps you should give this more in-depth consideration.
I have one question about the Red Cross. You said something about the ability to deliver being one of the criteria. I am thinking about the performance of the Red Cross in Haiti. I recall that after the first year, less than half the money had been distributed in Haiti. Do you engage at that point? Do you try to determine why the money is not flowing as quickly and effectively as it should flow? What is your role in such situations?
Mr. Moloney: Haiti was obviously very complicated. We are closely involved with the recipient organizations. If we provide money, then we want to see it move into distribution. In the case of Haiti, the reference to the fact that perhaps half of the promised money was flowing would be more generally in terms of what official donors, including the government, were providing. These were multi-year commitments. For example, Canada's $400 million commitment was over two years and was designed to be that way so that we were there for the immediate emergency needs and the initial recovery and early reconstruction. Naturally, those things cannot physically happen in the space of only three months to a year.
For large complex crises, such as in Haiti and the tsunami in Asia in 2004, a donor coordination mechanism is put in place to work with the government. I am the Canadian representative on a donor financing coordination and a donor response and approval coordination mechanism for Haiti. We put quite a bit of effort into that.
The Deputy Chair: On behalf of the committee, I wish to thank Mr. Moloney, Ms. Stimpson and Ms. Norton for an outstanding presentation, and I thank members of the committee for their questions.
As proposed by the chair and agreed to by the steering committee, tomorrow's meeting has been cancelled.
(The committee adjourned.)