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CANADA
Standing Committee on Government Operations and Estimates
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EVIDENCE
Thursday, April 19, 2007
[Recorded by Electronic Apparatus]
[English]
I will call the meeting to order and welcome back the minister, the President of the Treasury Board.
Mr. Toews knows how it works. He has been here before. Perhaps we will give you the floor and let you have your say, and then we'll give you a hard time after.
Mr. Toews.
Thank you, Madam Chair. I am looking forward to the questions and the hard time.
Madam Chair, honourable members, I am pleased to be with you this afternoon to discuss the 2007-08 main estimates for the Treasury Board of Canada portfolio organizations.
I am joined today by Wayne Wouters, the secretary to the Treasury Board of Canada Secretariat, or TBS; Nicole Jauvin, president of PSHRMAC or the Public Service Human Resources Management Agency of Canada; and Coleen Volk, assistant deputy minister, corporate services branch, Department of Finance; David Moloney, assistant secretary, expenditure management sector, TBS; and Su Dazé, senior financial officer from PSHRMAC.
In my introductory statement, I'd like to present the Treasury Board portfolio of priorities in the context of strengthening public sector management and public service renewal. I am referring to our efforts to make government more effective and realign our priorities along the needs and expectations of Canadians for their government.
After l've concluded, the witnesses and I will be pleased to provide details on the allocation of the funds in the main estimates and respond to your questions and comments.
The Treasury Board portfolio includes the Treasury Board of Canada Secretariat, the Public Service Human Resources Management Agency of Canada, or PSHRMAC, and the Canada School of Public Service.
I'd like to start with the secretariat, which serves as the administrative arm of the Treasury Board. Its mission is to ensure that the government is well managed and accountable, and that resources are allocated to achieve these results.
In fulfilling this mission, the secretariat plays two key central agency roles as a management board and the budget office of government. Through these functions the secretariat also supports the Treasury Board in its role as the principal employer of the public service. In carrying out these functions, the secretariat plays an important leadership role across government in advancing an integrated management agenda.
Today, l want to focus on both of these program areas.
As the management board, our 2007-08 priorities include strengthening governance, accountability, and management practices, including commitments to implement the Federal Accountability Act.
As the budget office, we are strengthening results-based expenditure management, including commitments to support renewal of the expenditure management system. We are already seeing the fruits of our efforts in these areas.
On the management board side, we have successfully led efforts to develop and implement the Federal Accountability Act. We have moved forward on policy renewal, including undertaking reviews of three key policy areas as announced in the federal accountability action plan: financial management, procurement, and grant and contribution programs. We have made progress in strengthening the management accountability framework, an increasingly important tool for tracking departments' progress in improving their management competencies and highlighting deficiencies. We have supported service transformation initiatives. And we have been working on labour-management relations, which should provide us with a good basis for negotiating 24 of 27 collective agreements later this year.
On the budget office side, we have put in place the function for a new expenditure management system. This has included strengthening the quality of financial and expenditure information, working with our central agency partners on our blueprint for the expenditure management system renewal, putting in place plans to strengthen program evaluation, and moving forward with the management resources and results structure policy. This will provide a government-wide approach to the collection, management, and reporting of information.
Looking ahead, we intend to build on this progress. l would now like to highlight a few of the commitments we have in our business plans throughout the portfolio.
Our number one priority is to continue to ensure the seamless implementation of the Federal Accountability Act and action plan across government. We have made great progress to date. Since last December, when the act received royal assent, we have moved swiftly to implement the act, and we will continue on this track until every measure is in force. By implementing the Federal Accountability Act, we are delivering on our promise to make government more accountable.
This is one of the most comprehensive and complex pieces of legislation ever passed in this country, and fully implementing it will take time. But it's worth it. The act and action plan will help restore Canadians' trust in their public institutions and lay the foundation for the more effective government Canadians need and deserve.
As part of our effort to improve accountability in government, we will also continue to renew our suite of policies to clarify the management responsibilities of ministers and deputy heads. We will also continue our efforts to strengthen public sector management by measuring and reporting on management performance through the management accountability framework.
One of the cornerstones of accountability is responsible spending. That is why the government announced directions for a new expenditure management system focused on the priorities of ordinary Canadians. Through this system we are developing a framework for the development and implementation of the government's spending plans and priorities within the limits established by the board.
The new expenditure management system will improve the way departments manage and evaluate the performance of their programs. It will also improve the way cabinet reviews the relevance, funding, and cost-effectiveness of existing programs, and the rigour with which it examines new funding proposals. It will enable us to manage spending more tightly and ensure that government spending achieves results effectively and efficiently. The outcome will result in more oversight and accountability in government.
This new approach to expenditure management is good public administration that will support the following: managing for results by establishing clear responsibilities for departments to better define the expected outcomes of new and existing programs; decision-making for results by ensuring that all new programs are fully and effectively integrated with existing programs, and by reviewing all spending to ensure efficiency, effectiveness, and ongoing value for money; and finally, reporting for results by improving the quality of departmental and government-wide reporting to Parliament.
Through ongoing reviews of all departmental spending on a four-year cycle, the new expenditure management system will make government more efficient and will ensure better value for Canadians' tax dollars.
Let me now turn to the work of the Canada School of Public Service and PSHRMAC.
The Canada School of Public Service serves the learning needs of federal public servants. Key among these is “required training”, as identified in the Treasury Board policy on learning, training, and development. This means making sure that public service employees and managers have training in all the core functions of government, including human resources and financial management.
Looking ahead, its priorities are to deliver and develop individual and organizational learning products to support the public service in meeting the needs of Canadians.
As the focal point for people management in government, PSHRMAC, the agency, leads the development of workplace policies and practices in areas such as learning, official languages, employment equity, and values and ethics. It is also responsible for a number of programs related to employee development, particularly of managers and executives in the public service.
With all components of the Public Service Modernization Act now in force, the agency is focusing on putting in place the mechanisms and infrastructure to support the modernization and renewal of the public service. One result will be increased staffing flexibilities for managers, which will in turn strengthen government accountability.
By strengthening and streamlining how government works, the Treasury Board portfolio is leading the way in making government work better for Canadians. This leadership is important for Canada and Canadians' interests.
A strong, well-functioning, accountable public sector is a competitive advantage. The modernization of public sector management is a challenge that is being addressed across most, if not all, OECD nations, including the United States, Australia, France, Germany, and the United Kingdom.
Canada must keep pace with these broader efforts, and that takes leadership. That's why we are implementing and supporting the Public Service Modernization Act, the Federal Accountability Act and action plan, and the renewal of our expenditure management system. These initiatives affect all of government. They are complex, and their successful implementation requires support and resources. That's why the government has supported growth and resourcing for the Treasury Board portfolio.
Put simply, if we are to meet the aspirations and needs of Canadians in a competitive world, we must make the shift to more accountable, results-based management in the public sector. The estimates we are here to review today reflect this central goal and our commitment to providing leadership in ensuring that Canadians have a government that acts responsibly, rewards integrity, and demonstrates clear accountability—the government Canadians need in the 21st century.
Thank you. I would now be pleased to answer any questions you may have. Or more accurately, I think, my officials will answer the bulk of questions; I will assist where I can. Thank you very much.
Thank you very much, Madam Chair, and I'd like to thank the minister and the witnesses for being here this afternoon.
Where I'd like to start is with some of the issues that really jump out at you when you're looking at these estimates.
The first question with regard to the main estimates would be this. The budgetary expenditures are $210 billion, but the actual total is $230.8 billion. And then we talk about reconciliations and net adjustments for a substantial amount. The question is, is it normal to have this kind of discrepancy? What kinds of items would be included in these reconciliations and adjustments, and what are they exactly?
Could I get that explanation, please?
As the question pointed out, there are what we describe as “adjustments to reconcile”—to the update, in this case; we update to the latest fiscal framework. Given that these estimates were tabled before the 2007 budget, we're reconciling back to the fiscal update.
Secondly, we have what's called a net adjustment, from “net” to “gross” basis of budget presentation.
You ask if these are normal. The second one is new as of last fiscal year. The Auditor General had for a number of years been recommending that the government move its overall basis of presenting to Parliament its spending and revenues from a net basis to a gross basis. What that means is, for example, that some individual departments will receive revenues directly, and their vote wording allows them to re-spend those revenues—perhaps a parks entry fee, or purchasing a publication from a department.
What we are proposing that Parliament vote, through the estimates, is access to the consolidated revenue fund. That is by nature a net amount of spending, so we need to show Parliament that each of the individual departmental pages in the estimates shows what revenues are credited to a vote and re-spent, and then what additional amounts Parliament is being asked to approve through an additional vote. There are some $14.8 billion of those adjustments. That's in the net adjustment.
The “adjustments to reconcile” reflects a different sort of gap, if you like, between the accounting bases. That's the “near cash” versus “accrual” basis, which the committee has had quite a number of discussions around. Given the fact that the estimates are not yet on an accrual basis, we have a further substantial, multi-billion dollar adjustment there. That is a difference that has been in place since 2003, when the budget moved to accrual.
Okay, thank you.
The second question is with regard to the Treasury Board Secretariat's actual increase in the budgetary estimates, a $401.9 million increase. I guess part of it is explained through the Toronto waterfront revitalization. I understand that, and I understand that it will be moved out of Treasury Board and into Environment at some point in the future.
The second cost seems to be the public service insurance. Again, there's a 9.9% increase. When you look at everything else, that seems to be very high. Apparently this is a cost that's risen by $1 billion over the last 10 years.
Can you explain exactly what this is, why it has increased so rapidly, and why we can't foresee these increases?
It is true that your first point is that the Toronto waterfront revitalization initiative is reflected in the main estimates of the Treasury Board Secretariat, but of course in January of this year, as a result of the change in ministers, that particular initiative has now moved to the Department of the Environment. But since the main estimates had already been finalized, we could not make the adjustment. So that will be reflected in the supplementary estimates that will be tabled as part of supplementary estimates (A) in the fall. So it'll be a net-in and net-out.
The other increase you've noted is the increase in vote 20, which is the public service insurance increase of about $164 million. This is the result of a number of factors. We have seen increasing costs in our various plans, whether that be the health plan, dental plan, and the like. The cost of these services is similar, I guess by way of comparison, to what provincial governments are seeing in some of these plans. It's true in our public service plans as well. Drug costs are going up significantly.
As well, often the substitution for surgery is the prescription of drugs, and of course our plan does cover off all of those costs. And the membership continues to increase in the plan because when you retire you're still eligible for these plans. So each year—and we are back to hiring significantly in the public service, so that's having an impact as well, and of course the aging of the public service.
Would it be possible, sir, for you to provide us with maybe a detailed list of those increases? That would be interesting.
I think we could try to break that down more than, clearly, what you have in the estimates. We can try to do that.
Thank you.
I have a question for the minister with regard to the Public Appointments Commission. There's $1 million that is set aside for that, and I'm just wondering where it's at. I'm assuming that everything's in place, that it's functioning.
If I'm not mistaken, the chair of the CBC has been open for the last six months, and we understand that there's not even a process in place to replace that person. It seems to me that the CBC is a fairly important institution and that we should be looking at that in the very near future.
Can I have some kind of response on that?
Yes, I will, but just before I get to that, you had directed the question to me and the secretary in respect of the breakdown of the health care costs. I do have some background on that.
The estimate of $164 million is attributable to the following: $138.8 million increase for health care and other insurances; $27.5 million increase for provincial health payroll taxes; $1 million increase for a Quebec parental insurance plan; $0.6 million increase for provincial health premiums; $0.3 million increase for health and other insurance plans for employees engaged locally outside of Canada; $1.1 million increase for the Quebec retail sales tax; and $3.04 million new funding for a joint learned program between the PSAC and the Public Service Human Resources Management Agency of Canada.
On the CBC, on the issue of the head of the commission, as you know, the government brought forward the name of a very distinguished individual. The opposition chose to defeat that nominee, and at this point the issue remains within the Prime Minister's purview and he will appoint the individual at the appropriate time.
I think that we are all concerned that--
I believe some of the background work has been done, but I don't believe as a commission it is up and running.
With regard to the Office of the Registrar of Lobbyists, is it the same thing? It's not up and running either, although the Accountability Act was passed some months ago?
On the Federal Accountability Act, I can indicate that before the amendments to the Lobbying Act can be brought into force, regulations have to be developed prescribing the form and content of the monthly returns. I announced those public consultations. We have conducted those public consultations, and we're now in the process of developing options for the regulations based on the results. We are also conducting a selection process for the position of the Commissioner of Lobbying, who will administer the act when the regulations have been completed.
Thank you.
At one of our previous meetings we were told that while the Public Appointments Commission exists on paper, it has no employees. I believe the last employee left about a month ago. I haven't heard of anybody else going to that, so right now there's nothing there. I just wanted to add that because it was said here and you might not have been here when that happened.
Madame Bourgeois.
[Translation]
Thank you, Madam Chair.
Good afternoon, Mr. Minister, ladies and gentlemen.
Mr. Minister, in your statement, you often spoke of results-based management, decision-making, and reporting. If there are results to be achieved, it means that the needs have been properly defined.
Now let me ask you if you have a plan. If you do, with regard to the public service, was it presented to our committee so that we can see whether, in fact, the budget management that you referred to yields the expected results?
The chair spoke of the renewal of the current expenditure management system. Regarding the results-based aspect, we intend to step up our current efforts to apply results-based management. For example, since 2005-2006, every department presents specific objectives to Parliament to justify its expenses. In fact, the expenses are targeted towards specific objectives. This is followed by a brief description of the departments' activities in view of the said objectives.
The government is currently studying a procedure that would provide more details on the results of each activity. In the annual performance reports tabled before Parliament in October or November, the government wants to see concrete results that can be objectively measured and evaluated. This is not really a change. It will allow us to get more detail, and to broaden a procedure that has already been in place for two years.
I understand all that. In the minister's statement, especially with regard to the Canada School of Public Service and the agency, I noted that there were major changes in personnel management due to the demographic crisis that we will be facing in the years to come. I also noted a substantial cut in the budgets of the school and the agency. I think that they both go hand-in-hand. If I had ambitious projects for the school and for the agency, I would normally have a working plan to justify my expenses or any reduction in my expenses.
Could you show us the management plan that I already discussed with Ms. Jauvin? Last Tuesday, I requested a strategic plan. How do you expect us to evaluate your work if there is no plan except for a few flowery sentences? We trust you, but I would like to see your plan. I imagine that anyone involved in management would know what strategic planning is. We also spoke of integrated planning so that we could see the splendid results promised by the minister. Mr. Minister, how do you expect us, in a year or two, to evaluate your results if we have no documents to show what you have decided and where we are going?
[English]
Before I turn it over to Ms. Jauvin to answer the question, I want to just express my support for your concern about dealing with the demographic change in the public service. That is a very important issue.
It was something that, for example, I learned firsthand when I was in the provincial government in Manitoba back in 1998. We were negotiating contracts with the RCMP, and we were told at that time that within five years, one-half of the RCMP officers would be eligible for retirement. We had incredible struggles trying to get sufficient RCMP officers, since they act in Manitoba, Saskatchewan, Alberta, and to a large extent B.C. as the municipal police forces. They're contracted to the provinces.
To our amazement, the federal government at the time shut down RCMP Depot training in Regina. So instead of putting out about 1,000 officers a year, they just shut it down. That complicated the issue of retirements, first of all, and then, by shutting down the training at the RCMP Depot, we've had to play catch-up for years.
Take a riding like mine, for instance, in rural Manitoba; I was just speaking to the staff sergeant in Saint-Pierre-Jolys, and he has six of thirteen positions filled. It's a tremendous burden our RCMP officers are facing. Our government has responded by trying to catch up not by training 800 to 1,000 a year but by boosting recruitment up to 1,800 a year. It's putting a lot of pressure on the RCMP to get that.
That left me with an impression, as a former civil servant as well as a provincially elected individual, with regard to the importance of training and also bearing in mind demographics. Clearly that was an example of demographics not taken into account, coupled with a bad policy decision.
[Translation]
[English]
In fact, I didn't realize the time was that short. It was just an illustration, and certainly not an intent of mine to avoid the answer. Thanks to the generosity of Mr. Moore, Ms. Jauvin can now provide that answer.
[Translation]
Madam Chair, I think that I can answer the question as follows. Each department must prepare a business plan and table it before Parliament once a year. I think that the plans that you are referring to are these business plans. You get them on a yearly basis. In the report he tabled on Monday, the clerk requested that the planning be integrated with the planning of human resources and financial resources. We would have a plan that is comprised of the three elements. I hope that this answers your question.
[English]
The plans and priorities were deposited at the end of February, if I understand, and we do have them, as far as I know.
Am I right, Mr. Moore? Mr. Toews?
[Translation]
I gather that Ms. Bourgeois will have another turn in a few moments.
[English]
I want to go back to the Federal Accountability Act and talk about that. Mr. Poilievre and Ms. Jennings and I sat in this room for many very long hours going over almost 200, I think it was, amendments to that act. It was many long hours. It received royal assent, I believe, in December or in January of this year, so it has been in force for a few months. I was wondering whether you could walk us through the Federal Accountability Act and all the provisions it contains and the progress we have made on that legislation. Some things have been done; some things are still in the works, I know. But update us, if you could, on the steps you've taken.
Thank you very much.
I think it's important to emphasize the breadth and the complexity of that particular legislation. I want to compliment the former minister of the Treasury Board, John Baird, for his very diligent work in getting that bill through the House, and as well his very able parliamentary secretary, Pierre Poilievre, who assisted him in that respect.
By coincidence, of course, Mr. Poilievre is here on this committee, continuing his good work as my parliamentary secretary. I appreciate his very able assistance, and I am sure his constituents appreciate his hard work here as well.
The Federal Accountability—
He is a master of understatement. He consistently just does his work and expects no thanks. So when it comes, it takes him aback.
What we have done in the Federal Accountability Act is a number of things, first of all, reforming the electoral financing rules, which were a subject of great debate.
There is also a longer period to prosecute offences under the Canada Elections Act, to ensure that past wrongdoing doesn't slip away simply by the lapse of a limitation date.
We also dealt with the priority entitlement for exempt political staff to jobs in the public service. That in fact was removed; we felt it was unfair for political staff to get that type of priority.
We also wanted to make sure there was a merit-based appointment process for electoral returning officers, and I think many MPs will welcome that change.
Also, I had the occasion to announce the offences for fraud with respect to public funds and—I worked on this issue when I was the justice minister—the Director of Public Prosecutions Act. That person will be responsible for, among other things, the prosecution of those frauds with public funds.
We've worked on regulations for reporting public opinion research contracts. I think it is absolutely essential that those reports have to be released within six months. There was never an actual limitation for how long the government could keep those enclosed in wraps. Now at least they have to produce them within six months. There's an independent adviser to review public opinion research practices.
We have the authority to establish the parliamentary budget officer; the blue ribbon panel made its recommendations on government grant and contribution programs; and of course, we brought forward the accounting officer model.
Many have applauded as well the Access to Information Act being extended to the agents of Parliament, including the Canadian Wheat Board, which is not an agent of Parliament but was certainly created by Parliament. I understand that farmers pay about $70 million a year—is that it?—in expenses, and they should be entitled to know how that money is being spent. Five government foundations now come under it, and crown corporation such as the CBC and Canada Post.
We also are involved in consultations for new lobbying rules, including a requirement to file a monthly report. Those consultations are now complete.
And of course, last I'd like to mention the Public Servants Disclosure Protection Act, which protects public servants who want to blow the whistle on wrongdoing, and which brings into force on April 15, as I recall, the offences for interfering with a public servant who wishes to bring wrongdoing to the attention of his superiors or the authorities.
Could the minister tell the committee, then, what the next steps are—over, say, the next six months or so—with regard to the FAA and upcoming deadlines?
What I did when I became Treasury Board president was sit down with my office and say that I wanted to see a timeline and a timetable for everything to be done. Not all of it is public yet, because obviously we try to bring these things forward as quickly as possible, but I can give you some indications.
In order for the Conflict of Interest Act to be brought into force, it's necessary to appoint a Conflict of Interest and Ethics Commissioner.
I've mentioned the appointment of the Public Appointments Commission, which will come into force. The government is currently laying the groundwork for the eventual establishment of the commission.
If there's anything else I can bring to your attention in terms of a timeline, I will bring it forward. I thought it was very important to do so in the way that I have. Thank you.
Thank you, Madam Chair.
Good afternoon, ladies and gentlemen. Welcome, again.
My first question is back to public appointments. That was, of course, an issue in the last federal election, and there was a commitment on the part of the Conservatives that they would deal with the issue of patronage appointments so that they were merit-based appointments. Of course, this is part of the Accountability Act. There were a number of changes made to the Accountability Act that certainly we felt were good changes, amendments to the act that I believe offer greater accountability. I appreciate that the entire act has not fully been implemented.
My question to the minister is this. When will the accountability for public appointments be implemented, so that we have a fully functioning Public Appointments Commission and Public Appointments Commission Secretariat?
As I said, the Prime Minister brought forward a name some months ago. Unfortunately, that name was rejected by the House. That has delayed matters, but I can assure you that, independent of the efforts that are now being made to lay the groundwork for the eventual establishment of the commission itself, the government continues to insist on merit-based appointments. It is very important that we do so, even on an informal basis, as is being done now, to ensure that regardless of the political background, for example, of the individuals appointed, they have the qualifications for the position for which they are being recommended.
Mr. Minister, I'm sure that is happening. I think that a key part of the Accountability Act and the changes that were made concerning appointments was that there would be clarity and public accountability around appointments.
I guess your answer is that at this point you don't know when the commission and the secretariat will be up and running. Is that correct?
I can't give you a firm date on that, but I can say that our efforts to do so were set back by the rejection of the name of the individual who had been brought forward as the commissioner.
There is no date at this point for any implementation of the Public Appointments Commission or the secretariat.
Okay. I have a particular question about the main estimates. Actually I have a couple of questions. One of them is around education spending.
There was an item that I noticed on collection agencies pursuant to the Financial Administration Act. There was $18.5 million in 2006-07 for private collection agencies that has now been eliminated in 2007-08. This may be completely unrelated, but I know from my constituents—I hear from students who are being pursued by private collection agencies for student debts. It's making them feel like criminals, because once they're out of university, they're not making a lot of money and they're quickly pressured into paying back sometimes quite onerous debts.
Is the money that was allocated for private collection agencies related to education, for the return of student loans? Is that what that would be for, or is it for something completely different? It is not in the current budget year.
Just before I let Mr. Moloney answer that, I'd like to indicate that as an MP I've had some experience with this. I know that students in my own riding have been pursued to repay student loans.
I've found, in discussing this with the various agencies responsible for the collection, that they have been actually fairly reasonable in making accommodations for trying to repay those loans, and I've known it as an opposition MP during the time the Liberals were in power. So I'm surprised that an agency would make these individuals feel like criminals. That hasn't been my experience.
We've just had complaints in our office about it. This amount may be completely unrelated, but I'm just asking the question.
In fact, for the amount that has gone to zero here on page 4-2 under Canada Revenue Agency, there's a new amount. What has happened is that the various collections activities across the government have been centralized under CRA on behalf of other departments.
This includes larger collections under the Canada pension fund, as well as the employment insurance. Those collection activities have now been transferred over to CRA to combine with their collection capacity.
I don't have a specific reference on this—yes, actually I do—in the estimates. It's on the issue of housing. I know we raised this under the budget, that there was no mention of homelessness in the federal budget.
Housing is a big issue in my community. There are 65,000 households on the waiting list for assisted housing. It can take up to 12 years to get assisted housing in the city of Toronto, and we have a lot of very low-income people. The average for a two-bedroom apartment is about $1,000, whereas a very low-income person can often only afford about half that amount.
In the estimates, I saw that spending on housing and homelessness in the Human Resources and Skills Development section will drop for this budget year by more than $44 million from last year, and that funding for assisted housing will drop by $391 million. Overall funding for affordable housing has dropped from the $800 million going to the provinces in 2006 to $92.8 million for this year.
I just want to make the point that in my community I hear huge concerns expressed about the lack of affordable housing, and the lack of commitment in this budget really creates a lot of pain for people. I see it on a daily basis in our area. I want to raise this because the drop in funding for housing is quite large.
That's not my understanding of the budget at all. I am familiar with at least the $300 million for off-reserve low-cost housing or assisted housing. I know there are a number of other programs. So to suggest that the homeless issue was not addressed, or low-cost housing—
Thank you.
Welcome, Minister.
I'd like to talk a little bit with you about the estimates and overall spending. Obviously, as Treasury Board boss, you're in charge of the government's overall spending.
According to our documents, the government spending increase for 2006-07 is just under 6%, which is double the rate of inflation ,and the overall increase to 2007-08 is 12%, which is, right now, six times the rate of inflation.
I'm wondering how, as a conservative whose philosophy is that less government is generally better government, you feel about that?
That's a big question. More government spending doesn't necessarily mean more government. Governments can spend money through agencies such as non-governmental agencies that do a very effective job, but in itself, reducing government doesn't reduce spending. You have to take a look at spending as a whole and look at how spending best achieves results, whether it's a government agency or a non-governmental agency.
Can I ask you this, Minister. If you were still in opposition and the Liberal government brought in a budget that increased spending by six times the rate of inflation to the highest dollar value ever in history, how do you think you might respond?
First of all, what I can say is that our government...and I can't say what another government would have spent its money on, because that for me has always been the issue: is the government addressing priority issues? As far as I'm concerned, our government is committed to growth and spending on average to the rate of the growth of the economy, and the overall increase in budgetary spending 2007-08 is 5.9%.
It should be noted that the 11.3% increase in operating and capital expenditures of the 2007-08 main estimates represents only one component of the total budgetary expenses of the main estimates, and as a whole, in relation to a series of other increases and decreases in budgetary amounts, the increase in operating and capital expenditure falls within the overall budgetary total as outlined with the November 2006 economic and fiscal update.
The point is this. The increase in operating and capital costs reflects a commitment of the government to very significant priority areas—defence and security, agriculture, primary sectors, and families and communities—which are all areas, as I recall, you campaigned on in the last election, saying that the prior Liberal government had not met its commitments in respect of defence and security, agriculture and primary sectors, and families and communities.
This budget is very much consistent with the types of issues you raised during the last election.
Madam Chair, we have a very limited amount of time here. If the minister is going to give four-minute answers to a question and talk about what I campaigned on—No one cares what I campaigned on. We care about what the minister thinks, and that's why we're here.
Thank you.
I'm interested, Minister, when we have federal spending that increases by six times the rate of inflation, if you are concerned at all about the inflationary impact of that spending. Has there been some serious consideration?
First of all, maybe I can refer that question to the officials, because spending did not go up six times the rate of inflation.
We have an inflation right now of 2%, and we're talking about an overall increase in the current budget of 6% in realistic terms, and then we have 12%. But whether it's twice, three, or six times inflation, is there concern?
Well, I think that is significant when you say whether it's twice, three times or six times. That is significant.
In 2006-07 the increase was 6%, which is three times the rate of inflation, so we'll deal with the budgetary estimates of 2006-07 of 5.9%, which is three times the existing inflation rate. Is there a concern that you or your colleagues have about the inflationary impact of that?
Yes. I'm telling you that the concern that we have is weighed against the pressures in defence and security—
Madam Chair, can the witness please answer the questions that I ask.
If you don't want to answer, just say you'd rather not answer it. But I'm asking you an economic question, sir, not a policy one. I'm asking an economic question about the economic implications of spending $230 billion, which in this instance is three times the rate of inflation.
Are you concerned about the inflation? I've asked it three times.
What I've indicated is that our government simply doesn't look at economic issues in and of themselves. Those economic issues have to be seen in the context of the pressures that Canadians are facing in respect of defence and security, and agriculture in the primary sectors—
I don't think that's answering the question. So you're not concerned about that. If you're not going to answer it, let's move on.
Okay.
The Minister of National Defence announced the other day $650 million for new tanks. The Prime Minister announced three weeks ago $1.1 billion for new spending on agricultural programs. Where are we finding this money? Is this reallocated money? Is it contained in your estimates right now? Specifically, let's just deal with the tanks.
While my officials search for the answer, I can say that I had occasion to be in Afghanistan the last couple of weeks. I've spoken with our troops, and our troops have an incredibly high morale. And even with the tanks—
I would like to get an answer to the question about where the money's coming from, please, minister.
Yes, I'm interested. My constituents would like to know. When they hear an announcement of $600 million one day, or $1 billion, people call me up and ask me, “Where's that money coming from?” I'm just asking you, sir.
If he wants to hear an answer, I'll give him the answer. If he's not satisfied, he can ask another question, Madam Chair.
I'm going to let my officials answer that, but I want to say that I had occasion to be in Afghanistan to speak with out troops—
On the next question then.
Are your officials going to answer it or not?
We have a limited time, minister. I don't care what you think about your visit to Afghanistan. I do care about the issues on the table.
Thank you, Madam Chair, and welcome to all.
I'd like to speak about a little hobby horse, the accrual accounting process. I sat on public accounts in the previous Parliament, and we listened on many occasions when the committee heard many witnesses, particularly the Auditor General, extolling the virtues of accrual accounting in appropriations.
In the previous government the recommendation went to Parliament to implement accrual accounting and no activity took place. Public accounts presented a report again, complemented as well from government ops, once again recommending the implementation of accrual accounting. I'm really pleased to see that now we have a response back from Treasury Board indicating that they are finally going to take a look at implementing accrual accounting. So I applaud Treasury Board for moving forward with that.
Can you give this committee a little bit more of a detailed response as to when, how, why, where, and to what extent you plan on pursuing the implementation of accrual accounting?
Thank you very much. And I appreciate the work of the committee, as you held a series of meetings in the fall of last year, I believe it was, in respect of that particular issue. As I understood it, there were representations made by Treasury Board and there was response, I believe, to specific inquiries made. I think that response was in writing, if I'm not mistaken, on that.
In summary, in answer to your question, we have divided this into two phases. Phase one will see the development of a model of appropriations in departmental budgeting and a cost implementation plan for the model, and we propose to follow the process used for the last major revision to the estimates and set up a working group of parliamentarians, along with the officials, to cooperate in the development of the detailed model.
Phase two will be the implementation of an approved, costed, and funded model. Right now a project office is being created to manage that phase one, and the development of the phase one scoping document is under way.
Do the officials have anything to add on that?
I think the work that we need to do with the parliamentary committee—We have to get that launched, get our people in place. We expect that will take probably up to a year, looking towards the budget of 2008, to come up with some recommendations that then have to go, of course, to the board and cabinet for approval. We do expect there will be incremental resources required to put this in place.
The first step, which we think is a very good model, is working directly with parliamentarians, because at the end of the day they are the ones who will be very much implicated by this as a means of coming up with recommendations to move forward.
Thank you.
Regarding the second question, we're pleased to see the blue ribbon panel report on the public service modernization. Truly it's a welcome document. Of course, welcoming the document is one thing, but once again the implementation process is a concern and/or at least an issue about which I would hope the Treasury Board and/or any of the officials here could shed some light.
Just as accrual accounting was reported again and again, finally we're taking some action on this. With this blue ribbon panel report, can you give us a timetable and/or the extent of the Treasury Board's action? How did you receive this report?
The report was a welcome document and well received. We are committed to reducing the paper burden, the regulations, and the onerous method in which grants and contributions are sometimes regulated or administered. So this commission brought forward some very good ideas. We reviewed them, and I intend to take action in that respect.
At present, we don't have a timetable that I can give you, but I can tell you that it's an issue the staff is working on.
Thank you.
I have one last brief question that was a concern of a former member, Madam Thibault, who did stellar work on this committee.
An hon. member: Hear, hear!
Mr. Daryl Kramp: She always came well prepared, and to my estimation, made a valuable commitment to this committee.
On many occasions, she and others discussed the difficulty that we've been having with payroll, which is an ongoing problem, and activities—
What I'm suggesting is that there was a great deal of difficulty with the payroll. Perhaps Madam Jauvin could shed some light on the improvements that I hope we will see imminently.
Thank you very much.
Yes, we call them compensation advisers. We're very aware of the fact that a number of them are expected to retire over the next 10 years or so. We have a recruitment campaign going on right now. We've had over 5,800 applications, of which 4,000 were seen as meeting the requirements.
We're expecting to have about 120 positions to offer to these compensation advisers, who'll be coming in from the outside at entry level. We will be training them, and it takes about a year or two to become fully efficient in the art, I would say, of payroll.
We have many ongoing problems. There's classification, and sometimes people don't get paid the wage difference for up to a year. Obviously that's not acceptable. Obviously we're making improvements in the hiring processes and the upgrading, but it's crucial to all public servants, who work with a great deal of care and concern, to be recognized at least with a proper paycheque.
So I would like to have some kind of assurance that you're moving in an expeditious manner on this topic.
Absolutely we are, not only on recruitment, but also on the development and training of this very important community for the public service.
Can I add to that? It's a pet peeve of mine as well.
We've received a lot of correspondence on this point. It appears that in the departments where they've centralized the payroll functions, versus those that have not, they are having a huge challenge. It takes about two years to train a payroll adviser, and often as soon as they're trained, they're on to another job. So it's an immediate problem now. Yes, perhaps hiring more in two years' time will help, but something needs to be done now. I think you need to look at the systems that are in place—the centralized system versus the non-centralized systems—because you may have to go back to the non-centralized systems.
There's a real challenge in some departments where new employees are not paid for some time. A lot of these kinds of extras are the areas where the problems are, and that's where I've received a lot of correspondence.
I thought you should know this, because the question has come up many times. It's more than just hiring new people who will come on stream a year or two from now. The problem is here and now, and we have to find a way.
You have to find a way, because it's too important to have people work for three weeks and then not get paid for two months. It's crazy; I mean, it's just unacceptable.
[Translation]
Thank you, Madam Chair.
I thank the President of the Treasury Board and the other witnesses.
[English]
Before I ask my question, and I do have a question, I would just like to correct certain timelines in information that the President of the Treasury Board has provided to this committee concerning the Public Appointments Commission and the whole issue of the prospective candidate the Prime Minister had appointed, or wished to appoint, who was rejected by members of the House of Commons.
In fact, all of that took place, in terms of the appointment of Mr. Gwyn Morgan and his rejection by members of the House of Commons, prior to the conclusion of the committee before which the Federal Accountability Act came.
Before that Federal Accountability Act even left committee and was reported back to the House, the creation of a Public Appointments Commission with a clear mandate and clear composition in terms of membership and authorities was created within the committee through amendments brought by members of the opposition following the rejection of Mr. Gwyn Morgan as a suitable candidate to be a public appointments commissioner.
So we are talking about a year ago, Minister. Therefore I find it difficult, in a population of 33 million, that this government has been unable to find another suitable candidate to fill the position at the head of the Public Appointments Commission. It has had over a year, and the legislation received royal assent in December 2006.
I can describe the experience of a previous government that created a new commission. It was the Military Police Complaints Commission. The act came into effect; the day it came into effect, the chair and the other members were appointed; and the ability to receive and begin to investigate complaints under the legislation took place three months later.
So I believe there is no excuse. But whether there is or is not, I simply wish to correct the record in terms of the timeline. The government has had over a year to find another candidate.
My question, Madam Chair, is concerning the government's commitment in the 2006 budget to cut $1 billion over two years from programs and activities that it would deem no longer effective. The supplementary estimates (A) and (B) of 2006 did indeed provide information on approximately $223 million in savings, leaving, therefore, a balance of approximately $776 million to achieve the government's commitment to cut $1 billion over two years. The government stated at that time that the balance would be found in future estimates or in reductions of its expenditures. However, the main estimates for 2007-08 are silent on that balance of approximately $776 million.
First, I would like to ask the minister, has that balance been in fact cut? If it has, would he provide a detailed list of the departments that have contributed to achieving the remaining savings of approximately $776 million to reach the $1 billion mark the government set for itself?
If it has done that, has it conducted an evaluation of the effectiveness of its 2006 budgetary restraint initiative? That is, how efficient and how effective was that $223 million in savings through the cuts from programs and activities that had been deemed non-effective?
If it hasn't conducted such an evaluation, will it conduct the evaluation? If it has conducted the evaluation, will it provide this committee with the written evaluation of the effectiveness of that 2006 budgetary restraint initiative?
Before I answer the number of questions that were raised, I want to make clear to the committee I made no indications of any timelines with respect to the appointment of Gwyn Morgan. The issue there was the treatment of Gwyn Morgan by members and the concern, as I've heard it expressed by the Prime Minister; that here we had an eminent Canadian willing to do the job for $1 a year, and the rejection of that, as well as the concern of putting another eminent Canadians through that process. And I think that was the concern raised by the Prime Minister and perhaps has contributed to the delay.
In respect of the specific question posed, the details of the $1 billion in savings over two years were provided in the government's news release of September 25, 2006. These savings were found in four key areas. First, we found programs that weren't providing Canadians good value for money. Second, we found unused funds from programs that have already achieved their objectives or had lower than expected take-up. Third, we identified efficiency savings by streamlining some programs. And fourth, we saved money by cutting non-core programs.
Adjustments to approved spending were made in supplementary estimates 2006-07. Adjustments to departmental budgets in future years have been reflected in the main estimates 2007-08. Not all of the savings announced by the government were to spending that has been approved by Parliament. For instance, many of the savings initiatives in the category “unused funds” simply required eliminating the corresponding funding that had been earmarked in the fiscal framework for these purposes in previous budgets.
And I would refer any additional comments to my staff.
[Translation]
Thank you very much, Madam Chair.
Ladies and gentlemen, Mr. Minister, good afternoon.
I have a few questions, and we do not have much time. Therefore, I will put my questions right away.
Mr. Minister, the last time we met, I spoke of a matter that is of great importance to me because it has to do with my riding. It has to do with the issue of the proportional number of jobs on the Quebec side of the Outaouais area as compared to the number of jobs in Ottawa, or the well-known 25-75 distribution standard. At that time, you told me that you had not been informed about this issue, and I could understand that because you were new in your position. I wanted to know whether anything has been done since your last visit so as to ensure fairness in employment. The Quebec side is short of about 6,000 or 7,000 jobs, according to our figures. Has anything been done about this?
[English]
You're talking about the split in the public service—25% being in Gatineau and 75% being in Ottawa.
A voice: It's the other way around.
Hon. Vic Toews: The other way around—75% in Gatineau?
[Translation]
It is as it should be. I gave you a document regarding this. You do not seem to be aware of this. Currently, 18.1% of the jobs are on the Outaouais side, and the remainder is on this side of the river.
All right. I must say that I already met Mr. Fortier regarding this issue. Perhaps we could meet in order to shed some light on this, Mr. Toews. Moreover, your predecessor, Mr. Baird, had been informed about the issue. For the record, I had, in fact, provided information about this at the last meeting, but we can come back to it.
To follow up on the questions put my colleague Ms. Bourgeois, who has left, let me highlight another aspect of this, Mr. Minister. I would like to explain what we wanted to do earlier. I do not want to put spokes in your wheels, I just want to clarify matters. We are aware of the fact that every department must table its business plan before the House of Commons in February. Some elements have been developed, you have some approaches right here. This is what we presume, but we want to see whether the business plans of the various departments should be treated as a whole and analyzed to produce an overall management plan. Thus, we could see the connection between what has to be done and what each specific commitment costs.
In other words, do your plans show how each specific commitment will be met and how much it will cost? The documents we have here contain some elements of information, but we do not know how these things will be done or how much they will cost. Let me go further, Mr. Chairman, just to make sure that I can say everything before my time is up.
We are currently debating the issue of personnel. There is a shortage of personnel in the federal public service because people are retiring, due to the age of certain public servants, and to other demographic factors. For example, we see that in the last budget, there was a cut in the funding of the Canada School of Public Service. In the budget document, on pages 10-2 and 10-5, we see that there is a substantial cut in investment at a time when we should, on the contrary, be recruiting. We need an efficient school to ensure that things go smoothly in the public service. This is why we would like to know how each specific commitment will be met and how much they will cost, in order to avoid problems and to ensure that the Canada School of Public Service is ready to face current and future needs.
[English]
Thank you. I'm going to defer that question to Mr. Moloney.
Before I do, on your prior question, I want to state that Mr. Fortier will be here on Tuesday. You may want to raise that issue with him, because it's an issue directly the responsibility of the Minister of Public Works. It's not that I'm avoiding it, but you might want to raise it with Mr. Fortier when he's here on Tuesday. That's your prior question, about the 18.1% split.
As to the other question, Mr. Moloney will deal with it.
[Translation]
Let us take the Canada School of Public Service as an example. The document tabled before Parliament explains to a certain point the cost of each commitment, namely the total expenditures are distributed according to program activities. Each activity is carried out in view of a specific objective. We also find the costs of operational budgets and subsidies, if any, such as capital costs. Consequently, the cost of each commitment for each activity has been explained. The reports on plans and priorities contain more details regarding the expected results of each activity. We did not—
Mr. Moloney, I do not want to be rude, but the thing that you are talking about now, namely how these things are done, has not been provided to us.
All right, but we do not have that here today. This is what was tabled in late February, according to the business plans.
[English]
Thank you very much for appearing, Minister. We've all found your presentation to be very informative. I think I even extracted some material from your comments that might be useful in some of my community newsletters, so it's very informative for my constituents.
My question is directed to Mr. Moloney. I just want to clarify the increase in spending. Mr. Turner was talking about a 12.5% increase in government spending. That would be an inaccurate characterization, as I read it, given that $14,893,000,000 in line 21, page 5, part 1 of the government expense plan is a net adjustment. That's not an actual difference in the amount of dollars being spent but the way in which they're recorded. Is that correct?
I think that summary would be only partially correct, if I understood it myself. The total budgetary main estimate spending as displayed on page 1-5 is in fact a 5.9% increase. It is true that within that there is an operating and capital amount, which is increasing 11.3%. If I understood correctly, that was one of the earlier questions.
However, that in fact only refers to about $53 billion of the total $210 billion. When we also take account of transfer payments, payments to crown corporations, and public debt charges, we come to a total $210 billion, which rose 5.9%. That is in excess of the overall growth in the economy of about 4% this year.
I tell you, I just think that last point is that when we compare growth to the economy, it's normally on the basis of nominal GDP as opposed to inflation. We usually look at the overall growth including real growth, and that's projected to grow about 4%. So normally the comparison there would be 5.9% to 4%.
So it's not six times the inflation rate. We're not growing spending at six times the inflation rate, which is less than a quarter of the budget.
We're distinguishing between the inflation rate and the rate of growth in the dollar value of the economy, which is inflation plus real growth.
Right. So in fact Mr. Turner did have it wrong.
On net adjustments, I'd like if you could re-explain the point, number 21 on page 1-5, “Net Adjustment, from net to gross basis of Budget Presentation”. Could you explain how that impacts on the change in spending found on line 22?
What we're referring to there in terms of net adjustment, from net to gross basis, is in fact helping the reader go from the voted spending to the basis of the budget documents, which are in fact on a gross basis. So the overall spending--and in fact, for reference, if members or the committee staff have occasion to look at the latest budget, page 295, the Department of Finance and the Treasury Board Secretariat have arranged that going forward, and this budget was the first example. We will be providing a more detailed disaggregation of what goes into this adjustment and net adjustment and reconciliation.
Right, but this is a change in reporting. This is not a change in fiscal expenditures of $14,893,000,000. It is a change in reporting.
Right, but the point is that in 2006-07 it says zero, and in 2007-08 it says $14,893,000,000. That is a change in reporting. It's not that there has been the birth of $14 billion in new expenditures.
I'm sorry, I misunderstood. That's absolutely right. There was a change in the budget's basis of reporting—
I think that's where Mr. Turner had made his mistake. It was based on that change in reporting that he came up with the notion that spending has gone up by 12.5%, which is demonstrably false now that you clarified that for him.
I'll move on to my next question. Your estimates have an allocation for the Toronto waterfront revitalization initiative. How are those funds being used and why is it important that this be with Treasury Board? I can offer that to the minister or one of the officials.
The question relates to the Toronto waterfront revitalization initiative. We're just wondering how the funds are being used and why it's important that Treasury Board give guidance at this point for those expenditures.
Again, what is shown in the main estimates is the funding that has been allocated to the Toronto waterfront initiative. Those funds are not being administered at this time by the President of the Treasury Board and the Treasury Board Secretariat. Those funds were being administered by the Treasury Board Secretariat, but with the change in ministers that funding is now being administered by the Minister of the Environment.
They are in the Treasury Board Secretariat's main estimates now. We will be making adjustment in the supplementary estimates in the fall to reflect the transfer.
Thank you.
Just to clarify after the Conservative clean-up squad attempt here, Mr. Maloney, the overall budgetary expenditure is 5.9% on the overall absolute dollar terms, your increase.
And 5.9% is basically three times two, right? I mean, that's the way we do math in Halton, but it's basically three times 2%, which is three times the inflation rate. We just want to clarify that.
That's as of today, Minister, yes. It just went up. Actually, part of that is attributed by economists to the spending in the federal budget, which is one reason inflation is going up, thank you very much.
Minister, I wonder if you could comment for me, please. I'd like to refer back to the Conservative platform, which you reminded me I knew so well.
A Conservative government will:
Limit the future growth of spending on federal grant and contribution programs and by federal departments and agencies...to the rate of inflation plus population growth.
And a Conservative government will:
Maintain the currently projected growth rates for transfers to persons...and transfers to other levels of government
to the same formula.
Does this budget adhere to that Conservative commitment?
I think that, as you point out, it's committed to limiting growth and spending on average, and so we have to take that average over the course of the government's lifetime.
I didn't actually say that, Minister. The Conservative platform is very specific at limiting the growth of spending on federal grant and contribution programs by federal departments and agencies “other than National Defence and Indian Affairs” and also transfers to other levels of government to that formula, and I'm just wondering if—
Right. And I'm just wondering if the budget adheres to this.
I don't think he needs coaching. If he does, he's in a lot of trouble.
Minister.
It is whether the increase in spending in the budget adheres to the government's campaign promise that the limit in spending overall on grants and transfers will be limited to the inflation rate and the growth in the population, inflation being 2%. I don't think the population...I don't know, maybe you can tell me if the budget actually adheres to that.
Madam Chair, if you read the government's commitment on this, the government's commitment was refined and reflected in budget 2006. Budget 2006 said that it is committed to limited growth in spending on average below the rate of growth in the economy.
If you look at budget 2007—
Actually, I was asking specifically whether the budget adheres to the campaign that Mr. Toews campaigned on.
We have not done that calculation to determine whether it adheres to it. We have looked at it on the basis of what the government's commitment is—and of course, this is the responsibility of the Department of Finance—but we have looked at what the government's commitment is in 2006 and how that's reflected in 2007, and budget 2007 does indicate that they are very much consistent with—
I am wondering, Madam Chair, if we might be able to get an answer to that question from the officials, please.
Sure. I mean, through the President of the Treasury Board to the Minister of Finance, I think that could be done.
But you're in charge of spending, and this is a commitment on government spending from the Conservative Part. I'm just wondering, because you're the minister in charge of spending, if you could actually get us that answer.
Thank you, Madam Chair.
With regard to the Public Appointments Commission once again, given that your government campaigned on transparency, could you maybe tell this committee how many appointments have been done without the supervision of the new Public Appointments Commission to date?
On their behalf, you will get back to us.
Secondly, with regard to the $776 million of cuts, again can we get a list of those cuts and which departments they were in and which programs, because in fact they were cut based on programs that were no longer effective.
I wonder if you can tell us what criteria you used to establish what was no longer effective, because for instance, on the court challenges program, literacy, status of women, there was a lot of backlash on those programs when they were cut. Obviously people thought they continued to be effective. Can you tell us what the criteria were on those programs?
As I understand it, there were no cuts in respect of actual programming in respect of women. I've been through those numbers. I notice that the budget addressed that quite generously.
In respect of the other issues that you've raised—
All I can say is that the criteria that were utilized for any program adjustments I've outlined in my initial response to that question.
Thank you, Madam Chair.
Thank you, Minister, for coming. Thank you to each one of you who have come to speak with us today.
Minister, I want to talk a little bit about the expenditure management system. I think for the average Canadian, people who are paying taxes in my constituency and the hard-working people who pay their taxes and expect certain services from government, the past decade has been obviously scandal-ridden and people are very concerned about the method by which cabinet made decisions with regard to spending and funding certain programs.
I'm wondering if you can tell me about the government's movement toward very stringent and strong criteria when it comes to effective and efficient spending in terms of government programs. I'm wondering if you can give us an overview as to what you're doing to ensure effective and efficient spending.
Thank you.
It was a concern of our government—certainly it was a concern of mine—when we learned that in six years under the Liberals the A-base budget had moved from $45 billion to $90 billion, which reflects an increase of about $1,500 for every family of four in this country.
In reviewing the particular situation, my concern was—and I think this was a concern of the government generally—that there needed to be a more effective expenditure management review system. And so we set out key directions for the development of this system in the budget 2006, and “Advantage Canada”, and in a backgrounder released by my predecessor in November 2006.
Budget 2007 announced more details on the elements of the new approach that we are putting in place to ensure that all taxpayers' dollars are spent as effectively as possible. I think you will recall that in the budget there was a commitment made that these expenditures would be reviewed in a four-year cycle. That type of cycle was not in place prior to that announcement, and so the new expenditure management system will fundamentally change the way government operates in reviewing these expenditures in every four-year cycle. We are entrenching responsible spending as a new way of doing business, so that Canadians can be assured that they're getting value for money.
Now, on that expenditure management system, I can reveal details as the planning continues, but I can assure you that discussions in that respect are continuing, as they did before the budget, between the finance minister and myself, and they are continuing at this time as well. I know that I'm involved in a number of meetings with the Minister of Finance to develop the exact details of how we're actually going to implement that. I know that my staff has indicated that there are resource ramifications for that expenditure management review system if we're going to review these expenditures every four years, and that's something that certainly needs to be borne in mind as we're developing the system.
I appreciate that, Minister, and I appreciate your efforts in this area.
One of the biggest things I hear from my constituents is this idea that government just continues to add more, and I think it's a concern about the A-base budget. I think people are concerned about the fact that the previous government just started to move to increase that A-base budget regardless of whether the program was working or not. There maybe wasn't a criterion to assess it after a certain length of time.
In fairness, after the prior government had cut a number of programs and had reduced the A-base from about $55 billion to $45 billion—and certainly many of us in the provinces at that time felt the impact on health care, education, social programs—because it had been cut down to the bone so much, in fact right into that bone in many respects, what they didn't do was put into place a mechanism to review that particular $45 billion. It was always assumed that the $45 billion would always be good spending. There was no mechanism to determine that those priorities were still relevant for the people of Canada.
So the expenditure management system will in fact review all of that spending to ensure that the spending continues to address the priorities of Canadians.
[Translation]
We have enough time to allow a member of the Bloc Québécois to put a question.
Do you have a question, Mr. Nadeau?
Yes.
Mr. Minister, in another vein, there is a principle whose application I would like to understand. The issue of lapsed funds was raised. As I understand it, three or four times a year, on a given date, the government committee that deals with operations, or with priorities, meets in order to evaluate the status of expenses for major projects, to see if there is enough money or whether some projects have not yet gotten off the ground for various reasons. During the time that Mr. Mulroney, and even Mr. Chrétien were in power, this was called the Prime Minister's money—this is an expression I picked up in my reading. This is not a pejorative term, we want to see what is being done with that money.
First, I would like to know how the lapsing system works. Am I right in what I've just said? Back then, if there was a budget surplus, the money was redirected elsewhere or else a program would be terminated because the decision had been made to do so even before the funds had actually lapsed.
[English]
For clarity, is there a concern here that there are moneys being transferred from one appropriation to another appropriation without the authority of Parliament? Is that the question?
[Translation]
Perhaps I am not using the right words, but I would really like to know whether, among the host of programs, there are funds that have not been spent for various reasons, not necessarily bad reasons, and that can be redirected elsewhere, either within the same department or for other objectives, following a decision of the Committee on Government Operations and Estimates.
[English]
If an appropriation hasn't been made for that specific expenditure, I don't think that a committee of cabinet or otherwise is authorized to take that money and spend it in another appropriation. We have adjustment votes for precisely that eventuality, and that is always reflected, and should be reflected, in the documents brought to cabinet.
I know that there was a concern, for example, with the gun registry, that there had been a commitment to spend no more than $25 million a year, I think it was, and then money was taken from an appropriation that was not authorized for that gun registry and spent on the gun registry. That drew criticism from the Auditor General, as I recall.
If that's the issue you're raising, I think it's a very important issue, because if money is not appropriated for a specific use or within that general appropriation, it cannot be used for that. There must be a vote of Parliament and not of the operations committee to transfer money from one appropriation to another appropriation.
[Translation]
Is it correct to say that this money can be simply returned to the consolidated fund, as the case may be, or does it remain in the budget without being spent?
[English]
The money lapses every year, and so in that sense it goes back into the consolidated fund. That's why, for example, trusts have been developed. There's, I think, a good use for trusts to...I don't want to say avoid that yearly lapsing, but it has to be structured in a very careful way to ensure that when money is appropriated for that purpose in that trust, it can then be continued beyond that particular fiscal year.
Other than the mechanism of the trust or perhaps a crown corporation or something like that, that money, once it lapses, goes back into general revenues. I don't know the technical transfer words, but perhaps the secretary can explain it.
Every year departments receive an appropriation of funds. They must live within that budget. If in fact the money isn't spent, there is a provision to allow, at least for operating and maintenance, a 5% carry forward. That's to prevent that ramp-up of spending at the end of the fiscal year, but anything over that, those funds do what we call lapse, so they go back into the consolidated fund.
Last year, for example, in 2005-06, $5 billion in fact lapsed, and that money would be available for other uses.
Yes, there are a couple of things.
First, I want to correct the record. Earlier there were comments about the proposed appointments commissioner. Gwyn Morgan's name was put forward, and he came to this committee as a potential candidate to head up the Public Appointments Commission. He was questioned by the committee, and ultimately the committee found that he was not suitable for the position, which was entirely within the committee's purview. He was not treated disrespectfully, nor was he given a rubber stamp to walk into that position.
So it is a legitimate question that after all this time, why has there been no other appointment or no other name put forward? It seems somewhat as if it's my way or the highway, in terms of only one person being a potential candidate.
I want to move on to raise a question about adult literacy. There are many hard-working people across the country who, for one reason or another, lack adequate literacy skills. When the government announced that it was cutting funding for literacy, many people were shocked.
In my own community, where there's a very high poverty rate, there's a growing gap in income levels. Some people are working so hard to get basic literacy skills. This government has said in the past that the actual classroom program funding was not cut. But I know from meeting with literacy teachers that funding for program and teacher development, and all of the supports that go with that important work in the classroom, have been undermined.
There may be other places where the funding is covered, but for example, on section 14, page 9, there is a cut of about $6.5 million. But there may be other places where funding is mentioned.
Maybe the minister could give us an update on where literacy funding stands. Is this an overall cut, or is the money cut in one place and balanced out someplace else?
I'm surprised that anyone would seriously advance the position that literacy funding in this country has been cut. If we look at the budgets, for example, let's say Manitoba—
No, it was cut earlier as part of the funding cuts. Mr. Baird came here and talked to us about the funding cuts.
But let's look at it in the context of the money that has been given to the provinces.
For example, if you look at the province of Manitoba—and I'm most intimately familiar with those figures, as opposed to other figures—the per capita transfers and so on for post-secondary education, those transfers are—
No, I'm talking about adult literacy, not people in university—people who maybe didn't even get their high school diplomas.
No, but it's the social transfer to the provinces. For example, in the province of Manitoba, almost 40% of all moneys spent by the provincial government are federal dollars. For 1.1 million people, $3.1 billion was transferred to Manitoba.
In respect of issues such as child care, in respect of education—
Let's look at literacy. I'm looking at the specific numbers on page 14-9, which have declined. Is there some other place where literacy funding has increased? Is that what you're getting to?
I agree. With the social transfer to the provinces, the provinces then have the right to use those increased funds for literacy training, which are exactly the educational needs that illiterate or semi-literate people would access through the provinces, as you can appreciate.
No, wait, let me just finish.
So that I understand, Mr. Minister, you're saying that literacy funding is cut federally by several million, but it's bundled into whatever money goes to the provinces, and let the provinces spend it on literacy, child care, or whatever they want to spend it on. Is that your point?
For example, if you look at Manitoba, of the $3.1 billion, $1.8 billion was equalization. There was $800 million in the social transfer.
No, obviously not. We put money toward education. The responsibility of the federal government is to ensure that there are comparable levels of service across this country, by providing appropriate dollars to provide those services. It's not for the federal government to dictate to the provinces, for example, to tell Quebec how to conduct its provincial responsibilities in education. For me, that would not be consistent with our Constitution, and how it's divided.
Mr. Minister, on page 14-9, there is a cut of about $6.5 million for literacy. Are we nationally now spending less money on literacy from the federal government? Or is there some other place that the money is—
Thank you Madam Chair. It's a privilege to finally have a chance to ask a question.
I want to thank our witnesses for being here, especially Minister Toews. It's good to have you here.
I'm thrilled to see in your remarks—and also in practice—that you believe that one of the cornerstones for accountability is responsible spending. I think that's true whether it's related to the cyclical review of programming, as you've indicated; whether it's a move to accrual accounting, in both budgeting and reporting; or as in budget 2007, whether it's just listening to the priorities of ordinary Canadians. I think the budget did that. We see this clearly in the commitment to expenses in health care, addressing the fiscal balance question, and expenditures for families.
But I want to go back to the question of literacy for a moment. I wasn't planning to address that, but let me just point out some of the value of creating the cyclical review.
I just happen to have with me the cuts that were made to literacy. Contracts for websites were cut by $81,000, $45,000, $71,000, and $70,000—that money never was spent directly on literacy. Promotions for meetings were cut by $53,000, and $220,000 was cut to promote a meeting promoting literacy. Contracts for consultants were cut by $57,000, paid to a media consultant for working for 31 days.
This illustrates, Madam Chair, the need for the constant cyclical review of these programs, so that we don't get involved in expenditures, which we lose track of.
I could go on; there are all kinds of others there.
You would need to go no further than the NDP Premier of Manitoba, who basically praised our budget. I can tell you that if we had cut those kinds of programs, he would have let us know.
One of the questions that my constituents and I think a lot of Canadians often ask—and it may or may not be valid—concerns the increasing number of employees within the government sector. I wonder if you have any projections in terms of the growth of full-time employees within the Treasury Board? That may be an unfair question that puts you on the spot, but it would help me to know. Are we also controlling that element of our growth?
Over the last five years, there has been an increase of a little over 4% per year, almost all of which was directly related to more spending in the area of security, public safety, health, and on some additional RCMP forces—generally on the protection of Canadians.
In terms of the budgeted amount for public debt, the amount is still increasing. I know that we were pretty committed to reducing the debt, by I believe it was $22 billion over the last two budgets. If I read the footnote correctly, the reason for the very small projected increase—0.9%, I believe—is due to a projected increase in interest costs.
Could you or one of your officials address this?
It is really a Department of Finance question. Perhaps Mr. Moloney can give us some direction in that regard.
The information that we present to Parliament in the main estimates for all of the statutory programs, including the public debt program, is information we get from the Department of Finance. So the statement there is reflected again in the most recent budget, which does show, in terms of the private sector forecast for the economy, a small uptake in interest rates this year. And even though there is a smaller debt stock, there's a slightly higher interest rate.
Madam Chair, I think that illustrates so clearly why we need to be diligent in continuing to pay down our public debt. I commend you for your initiatives in that regard.
There are 30 seconds left, Madam Chair.
For clarification, Mr. Minister, on the allocations here, you have under Canada Border Services Agency $131 million. My understanding is that arming the border guards will be closer to a billion dollars. Was it a five-year program or a ten-year program? What are we seeing here?
As I understand it, it's a ten-year program, but that's probably something that needs to be addressed with the Minister of Public Safety.
Okay. Well, you would know whether it's five years or ten years.
You are saying, Mr. Wouters, that it's ten years.
Thank you.
Madam Chair, I have a point of order. During the minister's remarks to our committee he made a comment, and I think his exact words were in speaking to me, “You don't care about our troops”. I'm wondering if the minister would care to either justify that or, I think more appropriately, retract that remark.