Thank you very much, Senator LaBoucane-Benson, for your comments. I rise to speak to Bill C-67 as the critic, and I will start off on a negative note. I haven’t seen the bill — it’s not posted — so I don’t know how we can vote on a bill that we haven’t seen. For the purposes of my speech — well, it might be there now, but it wasn’t there at ten o’clock, and I was checking all night.

I’ve used the schedule. Bill C-67 is based on Supplementary Estimates (C). There’s a schedule at the back of Supplementary Estimates (C), so that’s what I’m using as the basis for my speech, but I would appreciate if somebody could look and see what happened to the bill. It should be on the government website.

Honourable senators, I will get right into my speech now while somebody goes to see where the bill is.

In order to make expenditures, government must obtain the approval of Parliament, either through an appropriation bill, such as this one, or through other legislation, such as the Income Tax Act, the Old Age Security Act or the Financial Administration Act. Expenditures that are made through legislation other than an appropriation act like this one are called statutory expenditures. Expenditures made through appropriation acts are called voted expenditures.

This bill is requesting $8.9 billion — or I think it is — and is supported by the Supplementary Estimates (C) document, which provides some detail as to how the requested money will be spent. This bill is the fifth appropriation bill for this year. Once enacted, voted budgetary expenditures for the year will be $248 billion, and along with the statutory spending of $247 billion, government will have the authority to spend $495 billion. Of the $495 billion, $492 billion will affect the deficit, while the remaining $2.9 billion will be recorded as loans, investments or advances.

Last year’s Supplementary Estimates (C) indicated that total expenditures for the year were $443 billion, and when you compare it to this year’s expenditures, as indicated in Supplementary Estimates (C), it’s $492 billion, which is 11% higher.

The updated statutory expenditures of $7 billion in Supplementary Estimates (C) include a $3.2 billion increase in interest on unmatured debt, $1.4 billion for the acquisition of shares in the Canada Growth Fund, a $1.3-billion increase in student loans and a $499-million increase in Canada Student Grants.

The interest of $3.2 billion on unmatured debt and the $499 million for student grants will be recorded as expenditures this year and will contribute to the deficit for the year. But the $1.4 billion for the shares in the Canada Growth Fund and the $1.3 billion for student loans will be recorded as assets on the government’s balance sheet and will not be used in calculating the deficit, unless and until they are reduced or written off.

The Treasury Board of Canada Secretariat is requesting just over $1 billion for departments and agencies for negotiated salary adjustments. This will increase personnel costs so far this year to $60 billion, compared to $54 billion last year, an increase of 11%. Other personnel costs approved by other legislation increased last year’s $54 billion to $67 billion. These other costs include government’s contributions as employer to various employee benefit plans. These other costs will also increase the $60 billion recorded so far this year.

I expect — and this is my estimate, not the Parliamentary Budget Officer’s — that total personnel costs for this year will exceed $70 billion. Personnel costs have increased significantly over the past seven years, from $40 billion in 2016-17 to $67 billion last year. Personnel costs last year made up 15% of government expenditures.

The Public Service Commission of Canada, in its recent report, said that as of March 31, 2023, there were 274,219 employees, up 6.5% from the previous year and 40% higher than the end of 2014-15. The Treasury Board Secretariat has provided similar numbers: 271,000 employees in the core public service plus 86,000 employees in separate agencies, for a total of 357,000 employees. Compare this 357,000 employees to the 257,000 employees in the federal public service in 2015, and you will see there has been an increase of 100,000 employees over eight years.

The Parliamentary Budget Officer, in his report, uses full-time equivalents in analyzing the government’s personnel expenditures. His report indicated that the federal public service expanded from 335,000 full-time equivalents in 2006-07 to 432,000 full-time equivalents in 2022-23. The Departmental Plans indicate a further increase, from the 432,000 full-time equivalents last year, which was March 31, 2023, to 439,000 as of March 31, 2024.

The increase in the number of employees in the federal public service has raised several issues. For example, has the increase in federal government employees improved the level of service provided to Canadians? Why has the increase in the number of employees in the federal public service been accompanied by an increase in the cost of professional services?

In its 2023 budget, the government made a commitment to reduce the cost of professional services in this fiscal year by $350 million. However, for this fiscal year, once we approve Bill C-67, funding for professional services has not been reduced. Rather, funding for professional services has actually increased by $1.1 billion, from $21.3 billion last year to $22.4 billion this year.

Now, it’s possible that the $350 million that Minister Anand spoke about is frozen within the $22.4 billion, but I don’t know that for sure. If so, there has still been a significant increase. If the $350 million had been frozen, there has still been a significant increase of $750 million in funding for professional services — not a decrease, but an increase.

Of the $8.9 billion being requested in this appropriation bill, the Department of National Defence is requesting the highest amount, $2.2 billion or one quarter of the funding requested. More than half of the funding is for capital projects, the largest ones being the Canadian Multi-Mission Aircraft project, the Strategic Tanker Transport Capability project, both of which Senator LaBoucane-Benson mentioned, as well as the Canadian surface combatant project.

Now, $590 million is being requested for the Canadian Multi‑Mission Aircraft project. It was a major project identified by the 2017 strategic policy review of the Department of National Defence. This is the first funding request for this project. The estimated cost for its acquisition, project management, infrastructure and contingencies exceeds $5 billion, so we can expect many more funding requests in the future for this project. Major in-service support of the fleet is expected to be over $10 billion.

The government announced the replacement of the 14 aircraft in its Aurora fleet with the Poseidon aircraft in November of last year. The Aurora fleet has been in service for more than four decades and faces significant obsolescence challenges. It has been deemed difficult to maintain and will be removed from service in 2030.

The government has indicated that it will purchase 14 of the Poseidon aircraft with options for an additional 2. The first delivery of the new aircraft is expected in 2026, and final delivery is expected in 2027-28. As Senator LaBoucane-Benson mentioned, the government’s website states that the Poseidon aircraft is an “. . . enhanced long-range, long-endurance multi-mission aircraft specialized in anti-submarine and anti-surface warfare . . . .”

The second large project, for which the Department of National Defence is requesting funding of $509 million, is the Strategic Tanker Transport Capability project.

Last June, the government awarded a contract for the acquisition of a new fleet of nine Husky aircraft, which would include four new and five used aircraft. This aircraft will conduct multiple tasks, such as in-flight fuelling of other aircraft, military personnel and cargo airlift, medical evacuations and, as my colleague said, “. . . strategic transport of Government of Canada officials.” I don’t know what that means, but that’s from the website.

The new aircraft will replace the Polaris aircraft, which have been operating since 1992. The acquisition and conversion costs of the new aircraft are estimated to be $3.6 billion. We will see more requests for funding for that project.

The government’s level of military spending has been criticized, especially in light of the fact that it has not reached NATO’s funding target of 2% of GDP. In addition, a number of years ago, the government made a commitment to update its 2017 defence policy. The promised update has never materialized.

The 2017 defence policy indicated capital spending of $163 billion over a 20-year period from 2017 to 2037. The department recently increased the $163 billion to $214 billion over the same 20-year period.

However, the Parliamentary Budget Officer has determined that the department never delivers on its spending commitment; rather, it revises its plans to push spending further into the future.

For example, under the 2017 defence policy, capital spending this year, 2023-24, was projected to be $11.1 billion. When the 2022 update was released, capital spending was revised downwards to $10.8 billion. But when you look at Bill C-67, you will see that the department will have funding of only $7.2 billion. We’ve gone from $11.1 billion, down to $10.8 billion and now down to $7.2 billion. But that’s not the end of the story.

The Parliamentary Budget Officer has indicated that for the period between 2017 and 2023, there was a cumulative shortfall of almost $12 billion between what the government actually spent on capital projects and what was originally planned in the 2017 defence policy. In addition, although the funding provided for capital projects through appropriation bills has never been at the level indicated in the department’s capital plans, historically, the department has not even spent all of the funding approved in appropriation bills for capital projects.

I will now move on to public debt charges.

The Department of Finance indicates additional interest costs of just over $3 billion on unmatured debt, bringing the year‑to‑date total to just over $36 billion. Also disclosed are other interest costs of $1 billion, bringing these other interest costs to almost $5 billion.

Because interest costs are statutory payments authorized by the Financial Administration Act, it is expected that public debt charges will exceed the amounts reported in Supplementary Estimates (C).

The Fall Economic Statement, which was released in November, indicates that public debt charges will be $46.5 billion this year — $2.6 billion more than the $43.9 billion estimated eight months earlier in Budget 2023. Public debt charges have consistently been underestimated by the government in the last number of years.

For example, in Budget 2022, the government estimated that public debt charges for this year would be $32.9 billion. The Fall Economic Statement 2022 increased the $32.9 billion to $43.3 billion, then to $43.9 billion in Budget 2023, and again in November’s Fall Economic Statement to $46.5 billion. Public debt charges have increased every time the government has tabled a budget or a fall economic statement. In recent years, there hasn’t been a decrease — only increases.

Interest on the debt has increased due to the increase in interest rates and the increase in the amount of government borrowing. For example, in March of 2015, government’s market debt was $649 billion. At the end of last year, it had risen to $1.259 trillion and is expected to be $1.349 trillion at the end of this year, which is double what it was in 2015. If you include the Crown corporation debt, at the end of this month, government’s overall debt is projected to be $1.660 trillion.

Under the Borrowing Authority Act, the ceiling for borrowing is $1.831 trillion. Since borrowing is projected to exceed this amount in 2025-26, the government will have to request parliamentary authority to increase the ceiling — probably in April’s budget or in the fall fiscal update in November.

The Parliamentary Budget Officer has indicated that debt service charges as a percentage of revenues increased from 7.8% last year to 10.2% this year. Similarly, November’s fiscal update indicates that public debt charges as a percentage of GDP amounted to 1.2% last year, increasing to 1.6% this year and 1.8% next year. The fiscal update also indicates that public debt charges as a percentage of total expenses were 7.4% last year, 9.5% this year and are projected to increase to 10.1% next year.

Interest and debt are on an upward trajectory. As public debt charges increase, it crowds out funding that could be used for other programs. Public debt charges are now one of government’s most expensive programs.

The Department of Employment and Social Development Canada is requesting $273 million, of which $37 million is for the onboarding of Old Age Security under the Benefits Delivery Modernization programme.

The Benefits Delivery Modernization programme is the largest IT project undertaken to date by the federal government. It commenced in 2017 at an initial cost of $1.75 billion and was scheduled to be completed by 2030. The estimated cost has increased twice since then and is likely to increase again. As of April 2022, the cost had increased 43% to $2.5 billion. In a recent article, the National Post reported that the department was going to approach the Treasury Board with a new request of $8 billion, but this was denied by departmental officials during a recent meeting of the House of Commons Standing Committee on Public Accounts.

The purpose of the new system is to migrate Old Age Security, Employment Insurance and Canada Pension Plan benefits to a modern cloud-based platform. Currently, about 10 million Canadians receive benefits under these three programs. The new system is also supposed to transform benefits delivery and the user experience to meet the needs of diverse groups, including seniors, people in remote locations, Indigenous peoples and refugees.

Last November, Canada’s Auditor General released a report on this new system. She reported that since 2017, the department has encountered numerous obstacles and delays in the implementation of the Benefits Delivery Modernization programme. For example, she said that the department revised its estimated date for migrating Old Age Security benefits to a new platform from December 2023 to December 2024, and any delays encountered during the migration may shift the completion date to December 2025.

The Auditor General has highlighted the risks associated with implementing such a large system, especially in light of the problems encountered with the Phoenix system.

While the $37 million requested for this system in this bill is not material considering this bill is requesting $8.9 billion, it is important to recognize that many of these programs have already received significant funding in past bills and will be requesting significant funding in future bills. Total funding for many of these projects will be in the billions of dollars.

Honourable senators, this bill is requesting funding for many government programs. My comments relate only to a select few programs because of their cost. There are many more programs which would be of interest to my colleagues.

I thank senators for the opportunity to speak to this bill, and these conclude my comments on Bill C-67.

Oh, yes.

I agree. I don’t see how — well, I think I take exception to the fact that I’m being asked to vote on a bill that I haven’t seen. I know that the blue book — Supplementary Estimates (C) — the schedule is at the back and that schedule is usually what is attached to the bill.

As a former auditor, I actually go through what is at the back of the blue book and I check it against the actual bill and the schedule. We did have an incident a number of years ago — I don’t remember the details — but Senator Day was the chair of the Finance Committee, and there was something wrong with the bill that came over, but it was the actual bill. So while we had done our study of the blue book, et cetera, yes, it’s a problem.

All evening I was checking the website and all morning I was checking the website. I don’t know if that’s there now, but, yes, you need the bill to vote on it.