Appropriation Bill No. 3, 2019-20

Second Reading

December 11, 2019

Hon. Grant Mitchell (Acting Legislative Deputy to the Government Representative in the Senate)

Moved second reading of Bill C-2, An Act for granting to Her Majesty certain sums of money for the federal public administration for the fiscal year ending March 31, 2020.

He said: Honourable senators, I rise today to speak to Bill C-2, which provides for the release of supply for the Supplementary Estimates (A), 2019-20. I want to thank the committee for carrying out an in-depth study of the estimates on such a short time frame.

I just had a minute to look at this report. I want to say that even at that first glance this is a very well-done report, done in very short order, as even Senator Mercer has indicated. But it’s a tribute to the kind of work that that committee and the Senate do, so thank you all very much.

I also want to thank Senator Mockler, the Chair of the Finance Committee, for his leadership during the study of this bill, which required poring over numerous budget documents, including the estimates from the past few years. I want to highlight the work of Senator Day, who served as acting deputy chair of this committee and previously chaired the committee for many years. His knowledge of the Senate’s role in evaluating public expenditures was greatly appreciated.

As well, I would like to say specifically that some of the most fulfilling times in my experience in the Senate were working on the Finance Committee when Senator Day was its chair, and it was very well run, very professional and always extremely productive. I should also say that tradition has been sustained admirably by Senator Mockler.

Bill C-2 allocates the funds that are required for items that were not fully developed in time to be included in the Main Estimates.

The government is seeking parliamentary approval for $4.9 billion in new voted spending, including several important budgetary items, such as $677 million to the Department of Veterans Affairs to strengthen programs that support veterans and their families; $296 million to Global Affairs Canada to support climate change adaptation efforts in developing countries; $467 million to the Treasury Board to fund recently negotiated collective bargaining agreements; $166 million to Transport Canada for the Zero-Emission Vehicles Program; and $177 million in funding to the Department of National Defence to purchase 360 armoured combat support vehicles.

Since 2016, the Government of Canada has invested more than $10 billion in social benefits and other forms of support for veterans, including $3.6 billion for a new Pension for Life program. In these Supplementary Estimates, the government is allocating an additional $677 million to Veterans Affairs Canada to meet increased demand for veteran services and consolidate those services.

Global Affairs Canada has been allocated $296 million to help developing countries adapt to climate change. This upholds Canada’s commitments to support international climate action and is in line with the budget 2019 commitment to invest in international assistance.

The supplementary estimates include $467 million to cover the costs associated with the collective bargaining agreements negotiated by the Treasury Board.

A total of $165.5 million is allocated to the Department of Transport for the zero-emission vehicle program announced in budget 2019.

The supplementary estimates allocate $176.9 million to the Department of National Defence to purchase 360 armoured combat support vehicles, providing services such as ambulances, mobile repair, troop carrying and command posts.

These are some of the main items in the supplementary estimates that allocate funding to some 30 federal bodies.

Dear colleagues, I thank you for your attention. I hope that my speech gave you an overview of the budget process and I encourage you to support Bill C-2.

Thank you very much.

Hon. Elizabeth Marshall

Thank you, Your Honour. I have a prepared speech, but I want to pick up on some of the preliminary comments made specifically by Senators Mercer and Day. Sometimes I’m quite dismayed when people speak about the supply bill because they say, “It’s only the supply bill.” The supply bill provides money to the government so it can function. The supply bill usually provides almost 50 per cent of the funding. Without the supply bill, the government will shut down. It’s not just the supply bill, it’s a very important bill and we see several of these each year.

The Finance Committee does a lot of detailed work, especially around the time of estimates. The supply bill and the budget, there is a lot of extra hours put in. We do a lot of detailed work. Senator Joyal, I know this is your last day, so I want to tell senators about a comment you made on the Finance Committee several years ago. What you said was there is a lot of hard work and no glory. I thought that was a very good description of the Finance Committee.

The report that was tabled by Senator Mockler is very detailed. It goes through every individual item that is in the supplementary estimates and it gives an explanation. It is very detailed. I won’t get into every item because it would take more than the 45 minutes allocated to me. But I want to hit on a couple of areas that interest me. Every senator brings a different perspective to the questions when we get into the Finance Committee.

I want to speak briefly to the bill. It is requesting $4.9 billion, as Senator Mitchell indicated, and it’s additional funding for 39 organizations. If this funding is approved, government will have approval to spend a total of $308 billion in the current fiscal year. That’s a lot of money. We don’t see the $308 billion at one time, we see it in dribs and drabs. It’s up to $308 billion, and we’re going to get a request for more funding before the end of the fiscal year. It will be more than $308 billion.

Last year government had approval to spend $292 billion, so it has been a significant increase, up 5.5 per cent. We will see what the next supplementary estimates bring and the Finance Committee will keep an eye on that.

Bill C-2, along with the Main Estimates, provides government with $131 billion of the $308 billion that I mentioned earlier.

There is $177 billion approved by legislation other than a supply bill. There is a number of statutes that provide statutory funding for different kinds of programs. This $177 billion, we always refer to it as statutory funding because it’s approved by statutes other than a supply bill. The two amounts, the $131 billion in the supply bills and the $177 billion in statutory funding, provide government with total funding of $308 billion. Some of the senators stated that when I start speaking numbers, they just glaze over. I want to make sure you’re aware that it’s a significant amount of money.

The $177 billion in statutory funding is 57 per cent of the funding that government spends. It’s not included in the supply bill, and it is not reviewed by the Finance Committee.

I’ve spoken about this area previously, so again, I am recommending that this Finance Committee review statutory funding even if we are not required to approve it. Statutory funding is now well over 50 per cent of money spent by government and I feel that it is very important that we at least realize where the money is going.

When we met on Monday, we reviewed the funding requests from eight departments, and in addition, a representative of Electric Mobility Canada appeared before the committee to support the $165 million being requested by the Department of Transport for the iZEV Zero Emission Vehicles Program.

When we review the Main Estimates and the bill, supplementary estimates, there are several challenges we face when we start reviewing these requests for money. First, quite often the requests are for multi-year projects. When we look at something, it might look like a very small dollar amount. We have to look, not at the funding requested, but at the funding for those projects in the past years and talk about the future funding requests that are pending and will come in the future years. We have to look at the timelines. I will give an example: Treasury Board this year is requesting $5 million for a project called the financial and material management solution project. It appeared to be a minor item in their $527 million request. However, when we discussed it with them, we determined that the $5 million was for a project that is multi-year, impacts 18 government departments, and at this point in time it has already cost $139 million. I expect it will cost more in the future. That’s the sort of thing we have to keep an eye on in Finance Committee. The costs relating to those 18 departments are going to be reflected in those departments, so it’s a project we have to track.

The second area that we have to be conscious of is that funding being requested by an individual department may also impact the funding in other departments and agencies.

For example, Treasury Board has requested $44 million to compensate employees for damages related to the Phoenix pay system. However, we know that Phoenix impacted many government departments and agencies, and the costs to date exceed $2.6 billion. We were also told that the $44 million in these supplementary estimates for damages is only the beginning of payments for damages. That’s another area we have to look at from year to year.

When we spoke to the Treasury Board officials, we also discussed the status of the estimates reform project. The Finance Committee will know what it is, but the government was trying to do something with the estimates to bring them better in line with the budget. The past two years we had a pilot project underway, and the Main Estimates were tabled after the budget. As a result, the budget initiatives were included in the Main Estimates for those two years and it was a bit easier to follow. I found it easier. There were shortcomings, but I kind of liked what they were doing.

However, when we talked to the Treasury Board people, it appears that government may revert to the old way of tabling the Main Estimates before the budget, so I think they’re taking a step backwards. While the two-year pilot program had its shortcomings, I find it disappointing to learn that the government may actually revert to the old process rather than trying to improve the new process they’ve put in place for the past two years.

Of the $4.9 billion that is being requested by 39 government departments and agencies, Veterans Affairs is requesting the largest amount, $858 million, primarily to fund demand-driven programs and services for veterans. Treasury Board has the second-highest request, at $527 million, primarily to compensate departments, agencies and Crown corporations for the impact of collective bargaining agreements concluded between April 1 and October 18 of this year. The Department of National Defence, an area I am interested in, is requesting $177 million to support and upgrade the armoured combat support vehicle fleet for the Canadian Armed Forces. This one is part of a $2 billion contract. The department has committed to providing additional information to the committee on the payment schedule and delivery timelines. Again, there is $177 million in Bill C-2 and there’s still about $2 billion outstanding.

Departmental officials also discussed the underfunding of capital defence projects. Usually the capital defence projects have been underfunded by $2 billion a year for the past three years, so that department is now committed to providing some revised numbers.

The Department of Transport is requesting $165 million for their iZEV Zero-Emission Vehicles Program. Rebates of $2,500 and $5,000 are provided, with the dealer passing the rebate to the consumer and Transport Canada reimbursing the dealer. Senators were particularly interested in the details of the program, such as the number of vehicles receiving rebates and the impact the rebates have had on greenhouse gas emissions, which they were not able to tell us. That was a very interesting discussion we had with Transport Canada.

The departmental officials from Crown-Indigenous Relations and Northern Affairs, in reviewing their funding request for the committee, informed us that funding for the two new Indigenous services departments — if you remember a couple of years ago, there was one department split into two — has increased funding by $4 billion when compared to the funding provided to the original single department. It has gone from $14 billion to $18 billion. In addition, we were told that 8,300 federal employees were working at the two new departments, compared to the 4,600 employees who worked at the original single department.

Finally, the Department of Canadian Heritage is requesting $10 million to support local journalism. This is part of a $50 million program over five years announced in Budget 2018 — not the last budget but the budget before — and is in addition to the $595 million program announced in Budget 2019 to support Canadian journalism.

These are only a few of the items included in Bill C-2. The report just tabled by Senator Mockler provides a comprehensive list of items requiring funding. All departments appearing before the committee provided information relating to their funding requests and in some instances committed to providing additional information.

After we return in the new year, the Finance Committee will get some new work. We expect to receive Supplementary Estimates (B), which will be the final supplementary estimates for this year. They should come in February. Then the corresponding supply bill should come in March. We also expect to receive the Main Estimates for next year. We should get that in February as well.

In closing, I’d like to thank my colleagues for their questions during our Finance Committee meetings. As I said earlier, every senator brings a different perspective to our meetings. I would also like to thank our chair, Senator Mockler; our deputy chair, Senator Day, who at one time was also an excellent chair; as well as to our clerk and analysts. Thank you very much.


Would the honourable senator take a question?

Senator Marshall

Yes, of course.


Thank you. I was listening to your costing with regard to the split of the Department into CIRNAC and Indigenous Services Canada, and you have said that there was an increase of $4 billion.

Do we know whether that $4 billion increase is due to an increase in administrative costs, like staffing for having two departments versus one? Or is it a reflection of increased payments out to individual First Nations for things like improving water treatment plants or forgiving loans to B.C. First Nations when they went into debt trying to develop their own self-governing agreements? I believe the government said it was forgiving those loans. Would some of that money have gone to those kinds of expenses?

Senator Marshall

Thank you for that question. Some of the increased money would definitely have gone into administration because there has been an increase in employees. We haven’t done an analysis of the breakdown, how much went into overhead and how much has gone into programs. That was a concern expressed at our committee meeting. Is the money going into expanding the bureaucracy, or is the money actually getting out into the front lines for some benefit?

Senator Dyck, this issue of the costs relating to the splitting of the two departments came up a couple of years ago in the committee, when they first split up. At that time, the questioning was along the lines of making sure that all the money went over into the two departments, that the government wasn’t saving money, that they got everything they should have gotten in the past. We have not done the analysis yet.

What I find is that in the Finance Committee, as I was saying in my speech, two years ago they gave us certain information. Now we’re getting more information. What happens is that, as each year passes by, we sort of build on our questions and get a better handle as to exactly what’s going on. We know some has gone into administration. How much has gone into programs? I can’t tell you. I would think there is some, but I can’t tell you if it’s a 60-40 split, no.


I have a supplementary question. Is it possible to actually get those answers? Is the committee continuing to try to sort out those details so we know exactly where the money goes?

Senator Marshall

Yes, we can get the numbers. What I find, based on the years I have been on the Finance Committee, the information for us to go into the numbers and try to pull the numbers out is sometimes a challenge. Usually what we do is go back to the officials in the department and ask for the numbers.

When we looked at this issue a couple of years ago, when the departments split into two, it was the departmental officials who came up with the numbers to convince us they weren’t saving money as a result of the organizational changes. It’s something that we could look at in the future.

To be honest with you, I don’t know if the information is available so that we ourselves could go in, look and determine what the split is. But the departmental officials definitely could, and that is something that we could request.

Hon. Marty Deacon

I would like to pass on a thought on this as a member of the Finance Committee, if I could.

In listening this afternoon, I feel, as a member of the Finance Committee and a senator, and looking at fellow Canadians, we heard a lot about numbers, and I know some people aren’t as interested in numbers as much as others might be.

But I want to say that as we continue to go with a pretty fantastic committee, we had 115 different people come through the room on Monday afternoon. On behalf of senators and Canadians, we’re trying to ensure that we’re pushing for more evidence, monitoring, accountability and more consistent reporting. We’re pushing to try to connect the dots between and across different areas of government services and delivery, pushing for notable improvements in culture. The word “culture” is coming up more and more as we come across different areas of budget and working with different groups. We are certainly pushing for innovation and forward-thinking.

I wanted to share that, apart from numbers for a moment, because it is a piece that we have to take more seriously with every single government group that we meet. Thank you.

Hon. Patricia Bovey (The Hon. the Acting Speaker)

Are honourable senators ready for the question?

The Hon. the Acting Speaker

Is it your pleasure, honourable senators, to adopt the motion?

Some Hon. Senators: Agreed.

An Hon. Senator: On division.

(Motion agreed to and bill read second time, on division.)