Appropriation Bill No. 6, 2020-21

Second Reading

March 30, 2021

Hon. Raymonde Gagné (Legislative Deputy to the Government Representative in the Senate) [ + ]

Moved second reading of Bill C-26, An Act for granting to Her Majesty certain sums of money for the federal public administration for the fiscal year ending March 31, 2021.

She said: Honourable senators, I rise today to speak to Bill C-26, Appropriation Act No. 6, 2020-21. Let me give you an overview of the Supplementary Estimates (C) for the year ending March 31.

As this chamber well knows, each year the government tables up to three additional supplementary estimates that outline incremental spending plans to the Main Estimates, which are tabled prior to the start of the fiscal year.

This year the President of the Treasury Board tabled Supplementary Estimates (C) for 2020-21 on February 16. They include a summary of the government’s incremental financial requirements, as well as an overview of major funding requests and horizontal initiatives.

Colleagues, I cannot overstate how important the estimates are to government accountability and to our democracy. It is the right of every Canadian and the parliamentarians who represent them to know how public funds are being spent so that the government can be held to account.

In fact, due to the extraordinary circumstances caused by the pandemic, several changes have been made to the presentation of Supplementary Estimates (C) to further enhance transparency. For example, these supplementary estimates include a detailed listing of COVID-19 legislation in Part 1, and additional information on planned expenditures related to the government’s COVID-19 response in an online annex.

Honourable senators, I expect you will find the online annex particularly helpful, as it reconciles the $159.5 billion shown in these estimates with the $275.2 billion announced as part of the COVID-19 Economic Response Plan. The document also includes a comparison between the projected total expenses for 2020-21 in the Fall Economic Statement 2020 and the planned expenditures for 2020-21 in the estimates.

To provide further transparency and make things simpler, these estimates, along with other data related to government finances, people and results, are also available on GC InfoBase, an online visualization tool that turns complex data into simple, virtual stories.

Through these estimates, honourable colleagues, the government is committed to providing parliamentarians and Canadians with as much information as possible.

Let me now turn to the supplementary estimates in more detail.

Through these estimates, we can see how the government invested in the economy and what role COVID-19 relief played in the economy’s recovery.

These estimates present $13.4 billion in planned spending, which honourable senators will know is exceptionally higher than usual. This is due to the economic and emergency response measures to the COVID-19 pandemic. In fact, $9.9 billion, or approximately 74% of the proposed spending, is for the government’s response to the public health, social and economic impact of the pandemic on Canadians.

The estimates also include, for information purposes only, details regarding an overall decrease in the forecast of statutory expenditures of $5.4 billion. The total decrease in statutory expenditures reflects increases of $18.6 billion in various planned statutory expenditures and decreases in statutory expenditures of $24 billion due to revised forecasts in the Fall Economic Statement 2020 or to the repeal of the Public Health Events of National Concern Payments Act on December 31, 2020.

Overall, funding requirements for the top 10 organizations account for almost 90% of voted spending sought through these estimates.

Of those 10 organizations, 3 are each seeking more than $1 billion to support their priorities. This includes the Public Health Agency of Canada with $6.3 billion; the Treasury Board Secretariat with $1.7 billion; and the Department of Indigenous Services with $1.6 billion.

We have often said that no relationship is more important to this government than the relationship between Canada and First Nations. We also recognize the impact that COVID-19 has had on Indigenous groups in this country. That’s why the Supplementary Estimates (C) include $1.56 billion in new funding for the Department of Indigenous Services.

Of that amount, close to $1.2 billion is earmarked for pandemic response. The funds requested in this budget will enable the Department of Indigenous Services to uphold its priorities by providing emergency medical and socio-economic intervention in response to the pandemic in Indigenous communities.

Honourable senators, let me list two of the most significant proposed expenditures. The amount of $525.7 million will be used to address pressures on existing health services, support community-led public health measures to prevent the spread of COVID-19, and establish temporary isolation, assessment, and accommodation structures. This funding will also be used to ensure that Indigenous communities have an appropriate level of health human resources, transportation, medical supplies and equipment.

In addition, $383.8 million will be allocated to community-based COVID-19 prevention and response measures, including support for elders and vulnerable community members, measures to address food insecurity, educational and other supports for children, mental health assistance and emergency response services.

Dear colleagues, the pandemic has created mounting economic challenges, and in order to address these challenges, the government has invested $10.1 billion in the Canada Recovery Benefit, or CRB; $2.9 billion in the Canada Recovery Caregiving Benefit, or CRCB; and $780 million in the Canada Recovery Sickness Benefit, or CRSB.

Honourable senators, the 2020-21 Supplementary Estimates (A), (B) and (C) represent a total of $159.5 billion in spending authorities for the COVID-19 response.

Honourable senators, the government has prioritized the health, safety and well-being of all Canadians. Through the Supplementary Estimates (C), the government is being transparent and accountable about how it plans to use public funds to provide the programs and services that Canadians need.

These new spending plans will continue to provide assistance to those affected by COVID-19, all while supporting the economy and Canadians.

In closing, I want to thank all parliamentarians who worked together, in person or virtually, during this unprecedented period. I also want to acknowledge the tireless efforts of the Standing Senate Committee on National Finance in its in-depth study of the Supplementary Estimates (C) for the fiscal year ending March 31, 2021.

Thank you. Meegwetch.

Hon. Larry W. Smith [ + ]

Honourable senators, I rise today to speak to Bill C-26, An Act for granting to Her Majesty certain sums of money for the federal public administration for the fiscal year ending March 31, 2021.

This bill authorizes an additional $13.365 billion to be paid out of the Consolidated Revenue Fund as part of the Supplementary Estimates (C) 2020-21, the last of the estimates for this fiscal year. While tracking and scrutinizing government spending during normal years was hard enough, the COVID-19 pandemic provided additional challenges for all parliamentarians.

First of all, the wave of spending programs related to COVID-19 that were rushed through both Houses of Parliament gave federal departments powers under various laws for varying periods of time. Although these spending measures were necessary in the fight against COVID-19, they introduced an element of complexity in identifying the source of a specific authority. This was due in part to the fact that departments did not require parliamentary approval for expenditures as part of the detailed budget process.

For example, the Public Health Events of National Concern Payments Act, enacted under Bill C-13, which gave the Minister of Finance and the Minister of Health spending authority without parliamentary approval, was repealed before the end of 2020.

This expiration of legislative authority required the departments to revise their statutory spending program estimates and then include them in their Supplementary Estimates (C) documents.

When the Standing Senate Committee on National Finance studied these supplementary estimates, it was noted that the addition of a reconciliation document prepared by the Treasury Board Secretariat, which aligned the spending measures of the 2020 Fall Economic Statement with those of the supplementary estimates, was a notable improvement over previous years.

The problem that remains, however, is the frequency with which financial information is updated and reported on. The majority of COVID-19-related programs do not provide high-quality and timely data on the performance as well as the actual costs. Not only does this impede Parliament’s ability to scrutinize spending, but it also prevents parliamentarians from suggesting adjustments to programs that may not be as effective as hoped.

Since the start of the pandemic, the Department of Finance had been providing bi-weekly updates on the actual spending on COVID-19-related programs. This proved valuable in our efforts to monitor the success of each program. These important reports were halted as a direct result of the government’s decision to prorogue Parliament over the summer. Unfortunately, the statutes under which these reports were mandated expired in September with no commitment from the department to return to that practice.

The second concern I would like to draw to the chamber’s attention pertains generally to the extraordinary growth in the level of spending lapses over the last five years. According to the Parliamentary Budget Officer’s report on Supplementary Estimates (C) 2020-21, total lapsing funds have grown year over year, reaching almost into the tens of billions of dollars in 2019-20.

Generally speaking, reviewing how much money a department spends or does not spend in isolation as an indicator of success is simply not the best metric. This, according to Mr. Giroux of the PBO, could lead departments to:

. . . undertake “March Madness” because what is worse than lapsing is spending for the sake of spending at the end of the year to ensure that you don’t have a lapse.

I fear, however, the rise in spending lapses could be a symptom of a broader and more systemic problem within the federal government — that is the lack of effective planning that is built into program spending.

To highlight this point, I point to the government’s Investing in Canada Plan. This program, as most of us who have been here know, began in 2016 with the goal of spending $188 billion over 12 years on public transit, green infrastructure, trade and transportation infrastructure, social infrastructure and, finally, in rural and northern communities. The plan is broken into smaller projects which are administered by 21 federal organizations, including numerous departments, agencies and Crown corporations, with Infrastructure Canada being the central organization responsible for planning, implementing and reporting on the various projects.

The Auditor General’s audit on the plan, which was tabled to Parliament this month, revealed the following problems: First, in the first three years, $9 billion, or 20% of the planned spending, went unspent and was moved to subsequent years with no monitoring protocols in place.

The report stated:

No one was tracking the effect of the reallocation of unspent funds to later years on the plan as a whole. However, delaying and reallocating unspent funds each year mean that Infrastructure Canada and its federal partner organizations risk not meeting the plan’s objectives by the 2027-28 fiscal year. In turn, this may hinder the overall objectives of improving economic, environmental, and social outcomes for all Canadians over the course of the plan.

Second, the Auditor General’s report found that inconsistent and poor-quality data from the different departments and agencies did not provide sufficient evidence as to why spending was delayed. This included a lack of complete data on project approvals, start and completion dates, as well as information concerning payments.

In conclusion, the Auditor General found that Infrastructure Canada, as well as its federal partner organizations — and don’t forget, there are 21 organizations tied to this plan — could not demonstrate the plan’s progress or if it would meet its intended targets.

This, I believe, is a clear indication and one of the many examples of poor planning which has plagued federal programs for years.

Colleagues, in closing, I would encourage the government to continue refining the process for disclosing COVID-19- and non-COVID-19-related spending information. One suggestion offered up by the Parliamentary Budget Officer — a suggestion that I hope we’re all in favour of — is one central document, updated in real time, tracking the progress of spending decisions announced by the government.

When asked if this was a viable option, the PBO told our committee, and I quote:

. . . we can provide you and Canadians in general with information that is relatively comprehensive on government expenditures related to COVID with two analysts . . . . They cannot provide regular updates on a weekly basis . . . . The government, with hundreds of thousands of public servants, could certainly do that.

I would also urge federal organizations to implement more robust planning tools in relation to the important programs they are tasked with carrying out. Under-planning leads to unspent funds and subsequent program delivery delays which could have adverse consequences for intended beneficiaries. Setting reasonable targets, planning accordingly and implementing vigorous reporting protocols will, in my view, be the best value for money but will also promote a climate of transparency and accountability from top to bottom.

It’s great to say that a lot has been done, which we all agree with, during this terrible situation with the pandemic, but there is no excuse for lack of execution or lack of planning during the most critical time we are faced with possibly ever.

Thank you very much.

I rise to speak to Bill C-26, the appropriation act granting money for the federal public administration and the Supplementary Estimates (C) for the fiscal year ending March 31, 2021, on which the Standing Senate Committee on National Finance reported last week.

These estimates provide the necessary funds for the proper functioning of several necessary federal programs. The Supplementary Estimates (C) request a total of $8 billion in incremental budgetary spending, which reflects $13.4 billion to be voted, partially offset by a $5.4 billion decrease in the forecast in statutory expenditures. Approximately $9.9 billion, or three-quarters of the voted requirements, are related to the government’s response to the COVID-19 pandemic.

The committee held four meetings and questioned 39 officials of 12 organizations that are requesting total voted appropriations of approximately $11 billion in the supplementary estimates, which represents 83% of the total voted amount requested.

The committee also heard from the Parliamentary Budget Officer.

In this speech, colleagues, I aim to highlight three main areas of my concern: transparency issues with the Large Employer Emergency Financing Facility; issues with vaccine acquisition and vaccination; and new subsidies that we are handing to the oil and gas sector.

First, the Senate, the National Finance Committee and Canadians are lacking information regarding the Large Employer Emergency Financing Facility, the LEEFF program, which has approved just over $1 billion in loans to four corporations.

The program is the first and only of its kind in Canada to require loan applicants to disclose climate risks, how they can contribute to Canada’s net zero by 2050 at the latest target, but also to prohibit them from paying out dividends and limiting CEO bonuses. These are important and necessary conditions that should in fact be placed on all government financial support.

The National Finance Committee could not perform adequate oversight over the LEEFF program because the Department of Finance is not willing to disclose the detailed terms and covenants of the loan agreements. The program requires loan recipients to, as I mentioned, publish “an annual climate-related financial disclosure report.” However, without knowing the terms under which these conditions must be met, Canadians do not have sufficient accountability for over $1 billion in loans that has been approved under this program.

In their follow-up, the Department of Finance stated:

The detailed terms and covenants of the loan agreements are commercially confidential and, therefore, are not publicly available.

Colleagues, I find this to be unacceptable and continue to push the Department of Finance to provide the specific covenants, with any commercially confidential information redacted as appropriate.

It seems to me that the covenants in question, which should be the same for each loan recipient, are not a matter of commercial confidentiality. I would like to see a legal opinion stating such and, if that is the case, to make arrangements to hear the covenants in camera. This program risks public funds and, therefore, the program and department must be subject to extraordinary transparency and accountability requirements.

Second, I am concerned about vaccine procurement and domestic production capacity. You will be reading more on this specific issue in a Hill Times op-ed to be published tomorrow.

There is an urgent need to develop and manufacture vaccines and PPE domestically, made apparent by our unpreparedness to address this pandemic. Over the past few decades, as a result of Harper-era withdrawal of R&D funding, Canada has lost its capacity for vaccine development. This poor and negligent foresight has left us scrambling to rebuild at the last minute.

In August 2020, the government announced a $126 million investment over two years to build a new biomanufacturing facility at the Human Health Therapeutics Research Centre in Montreal, continuing to provide $20 million per year for operating costs. We must learn from this grave mistake by prioritizing basic R&D funding for pharmaceutical research in our public institutions so that they can be empowered to partner with industry and NGOs and react quickly when called upon.

Turning to procurement, Canada has administered just over 14 doses per 100 people. We are the sixth in the G7, just ahead of Japan, an island nation that has managed the pandemic much better than we have. Being so far behind is partially a result of companies prioritizing the country wherein they operate. The U.S., the U.K. and Germany all have vaccine production facilities within their borders and have priority access as a result of this.

Meanwhile, the Public Health Agency of Canada has now requested a total of $9.2 billion for research, development and purchases of vaccines and treatments. The terms of these contracts, however, have not been disclosed, forcing us — my office — to dig through Statistics Canada import data to discover that Canada paid $38 per dose in December and an average of $35 per dose in January. Perhaps the contract terms indicate why we are paying 50% more than the EU.

Disclosure of vaccine contracts, including costs and conditions, are necessary to provide compulsory parliamentary oversight, and we need domestic vaccine development and production capacity that is well resourced in order to avoid overpayment and to prevent needless infections and deaths.

My third and final concern is that I have lingering questions and reservations about the transparency and accountability of the $320 million subsidy to the offshore fossil fuel industry. Unfortunately, despite my request to hear testimony from representatives of the Department of Natural Resources, they were not called to justify their requests.

In September 2020, the government issued this one-time transfer payment to Newfoundland and Labrador to support offshore fossil fuel extraction without restrictions on how these funds are going to be used. These funds are a direct subsidy to the industry.

Charlene Johnson, CEO of the Newfoundland and Labrador Oil & Gas Industries Association, known as Noia, said:

. . . we’re pleased to see hundreds of millions of dollars come with virtually no strings attached, that is good news.

You can imagine my surprise hearing about a $320 million gift to an industry that the government committed to phasing out subsidies for. We received Noia during the study of Bill S-3, looking into safer rules for oil rig operations. Ms. Johnson said at this meeting that her industry had no financial concerns to cover the costs of new safety regulations.

According to the Auditor General:

Environment and Climate Change Canada is responsible for coordinating the identification and analysis of federal non-tax measures provided to the fossil fuel sector that could be inefficient subsidies in the context of Canada’s G20 commitment.

In June 2018, Canada agreed to produce an inventory of inefficient fossil fuel subsidies and submit it to Argentina for a joint peer review. Considering most countries were able to accomplish similar studies in less than two years, we are very late, colleagues, and it is starting to look questionable.

If the industry needs a loan, it can apply for the LEEFF Program that I just described and be held accountable for its climate risks and CEO bonuses, like other industries in Canada. The same companies that caused and then spread misinformation about the climate crisis do not deserve special treatment and backroom deals while other Canadians and sectors of the economy are struggling.

In closing, I would like to reiterate my repeated calls for the Department of Finance to restart their biweekly reporting on COVID-19 expenditures and remind you all of the importance of focusing support and stimulus on people rather than corporations. We can ensure our public funds are properly used by placing strict conditions around them. They must contribute to social and environmental well-being rather than proliferating high-polluting activities or further enriching the wealthiest among us.

As Senator Mockler, Chair of the National Finance Committee, always says: “Transparency, accountability, predictability and reliability” of government programs, including COVID-19 financial support, should be our top priority.

I couldn’t agree more.

Hon. Elizabeth Marshall [ + ]

Thank you, Senator Smith, Senator Gagné and Senator Galvez for your comments on Bill C-26. My comments will be on a number of individual measures outlined in the Supplementary Estimates (C) document that supports Bill C-26.

My first comment relates to the write-off of student loans. Similar to previous years, Employment and Social Development Canada is requesting a write-off of student loans. The write-off requested this year is $188 million. However, unlike previous years, officials from the department were not invited to appear before our Finance Committee to discuss the write-off, but some questions were posed to officials of the Treasury Board Secretariat.

The student loan portfolio was $22 billion at the end of March last year. In addition to the write-offs of student loans each year, which is usually studied by the Senate Finance Committee, other amounts are written off or forgiven under the authority of legislation other than an appropriation bill.

For example, last year, $26 million was also written off under the authority of the Financial Administration Act. Another $371 million was forgiven under the authority of the Canada Student Financial Assistance Act, while another $2 million was forgiven under the authority of the Canada Student Loans Act.

Since our Finance Committee has historically only studied amounts written off under the authority of appropriation bills like Bill C-26, Employment and Social Development Canada has been requested to provide additional information on loans forgiven and loans written off to ensure the Finance Committee has a complete picture of the student loan portfolio.

As a matter of interest, both the Parliamentary Budget Officer and the Auditor General of Canada have issued reports on Canada student loans. The most recent report issued by the Auditor General of Canada was issued less than a year ago, in July 2020.

Supplementary Estimates (C) also indicates that $200 million in statutory funding has been provided to the Department of Finance for the purchase of shares of the Canada Enterprise Emergency Funding Corporation, a Crown corporation established in May 2020. Senator Galvez spoke about this corporation in her speech. It is a subsidiary of the Canada Development Investment Corporation, another Crown corporation.

The newly created Canada Enterprise Emergency Funding Corporation has been mandated to assist in the delivery of the COVID-19 Economic Response Plan, specifically to provide emergency funding support for large Canadian enterprises facing challenges during the pandemic.

As of February 26 of this year, four loans have been approved in the amount of $1 billion, and $274 million of the $1 billion has been drawn down.

Finance officials responded to a number of questions in writing, and their response appears on the website of the National Finance Committee.

Officials provided information on standardized terms and conditions of loans issued to borrowers, but indicated that detailed terms and covenants of the loan agreements are commercially confidential and therefore not publicly available. This was also an issue raised by Senator Galvez in her speech.

Given that significant activities of government, including COVID-19 initiatives, are carried out by Crown corporations, it is important for parliamentarians to provide oversight in this area.

The Supplementary Estimates (C) document is generally easy to read. However, the document does not include all government spending. For example, spending related to the Canada Emergency Wage Subsidy program, EI benefits and the Canada child benefit are not included.

Treasury Board has, in Supplementary Estimates (C), provided a reconciliation of the amounts in the supplementary estimates to the fall economic statement. However, the problem remains. As stated by the Parliamentary Budget Officer, supplementary budget estimates do not include all planned spending, and therefore do not provide a complete picture of how much the government will spend.

I have raised this issue a number of times regarding inadequate disclosure of spending information, and I will continue to raise it in the future in this chamber.

The Treasury Board Secretariat’s funding request indicates a transfer of funds from six organizations, totalling $7 million, for the Financial and Material Management solution project. Officials indicated that this project began in 2015, impacts 14 departments, has cost $91 million to date and estimates it will cost another $29 million to complete in the next fiscal year.

It is important to track these projects because they are multi-year projects that cut across a number of organizations. If we look at the funding in any individual year, it does not convey the magnitude of the project.

The Auditor General of Canada conducted an audit of the acquisition of complex information technology projects within government and issued a report last month. At the time of her audit, government had 21 large IT procurements under way, valued at over $6 billion. These projects span several departments and organizations over several years.

The Chief Information Officer of the Treasury Board Secretariat provides strategic direction and leadership in information technology and supports, guides and oversees digital projects and programs.

Costs relating to the problematic Phoenix pay system are still being incurred by government, so it is important to exercise oversight of these large, multi-year projects that affect a number of organizations.

The Regional Air Transportation Initiative is outlined in the government’s fall fiscal update. Bill C-26 is proposing $44 million for the department of industry and its regional development authorities for the Regional Air Transportation Initiative. In its fall economic statement, government indicated that it would commit $206 million over two years for this initiative.

Officials appeared before our Finance Committee on March 8 — 23 days before the fiscal year end of March 31. Officials were unable to provide us with details of this program. They indicated that the program has yet to be launched and the process for determining funding has not yet been confirmed.

This raises concerns that $44 million of a $206 million program, which has to be delivered within 23 days, has yet to be designed.

This issue has been raised in previous years, and will be further pursued by members of our Finance Committee in the future.

Honourable senators, this concludes my comments on Bill C-26. I extend my appreciation to officials for their support during our committee meetings. I also thank the members of our Finance Committee for their excellent questions during our meetings on Supplementary Estimates (C).

The Hon. the Speaker pro tempore [ + ]

Are honourable senators ready for the question?

The Hon. the Speaker pro tempore [ + ]

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.)

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