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FINA Committee Meeting

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Standing Committee on Finance


NUMBER 061 
l
1st SESSION 
l
41st PARLIAMENT 

EVIDENCE

Thursday, May 17, 2012

[Recorded by Electronic Apparatus]

  (1530)  

[English]

     I call this meeting to order. This is the 61st meeting of the Standing Committee on Finance. We are televised today. Our orders of the day are pursuant to the order of reference of Monday, May 14, 2012. We are studying Bill C-38, an act to implement certain provisions of the budget tabled in Parliament on March 29, 2012, and other measures.
    Colleagues, we are on part 4, division 13, which deals with the Bretton Woods and Related Agreements Act.
    We have with us Mr. Campbell, from the Department of Finance.
    Mr. Campbell, I'll let you give an overview of this division, and then we'll have questions from members.
    Division 13 pertains to strengthening the legitimacy and effectiveness of the International Monetary Fund. The IMF is a key global institution in assisting the international community through economic, financial, and monetary crises. The fund is referred to as a Bretton Woods Institution, along with the World Bank, due to their origins under the 1944 agreement.
    The legislative provision relates to the ratification of the 2010 quota and governance reform agreement among 187 countries, in particular to double all countries’ quota share in the international financial institution and to allow for more voice and representation of emerging market and developing economies. The agreement stems from the IMF resources agreement following the G-20, and the IMFC following the 2008–09 financial crisis. Each member country is assigned a quota share, based broadly on its relative position in the global economy as determined by a formula. A member's quota determines its voting power as well as its financial commitment to the IMF.
    Clause 375 amends section 7 of the Bretton Woods and Related Agreements Act to reflect an increase in Canada's quota subscription from roughly $6.3 billion special drawing rights, SDRs, to $11 billion. An SDR is the unit of account at the IMF and is worth approximately 1.5 Canadian dollars at the current exchange rate. Canada's quota--i.e., potential financial commitment--will therefore increase to approximately $17 billion Canadian from $10 billion. This is a non-budgetary item, in which it has no direct fiscal impact. Any lending under the IMF is paid interest and is treated as an asset under Canada's foreign exchange reserves.
    Clause 376 is a housekeeping measure that amends section 13 of the Bretton Woods Act to change the date of the annual report to Parliament under the act from March 31 to September 30. This will align the date of the government's annual report on the operations of the IMF and the World Bank with the annual report on development assistance.
    Aside from the quota doubling included in this bill, there is a treaty amendment before Parliament that pertains to amendments of the article agreement to reflect modest changes to the governance structure of the IMF. That's sitting before Parliament now.
    I am willing to take questions, Mr. Chairman.
    Thank you very much, Mr. Campbell.

[Translation]

We will begin with Mr. Caron.
    You have the floor.
    I would like to know whether you think the special drawing rights and general resources of the International Monetary Fund are currently at a sufficient level to protect Canada, the United States and the European nations from a potential default on Greece's debt.

[English]

    Rather than speculate on any particular event, I would say that the government's position is that with the conclusion of this agreement with the IMF having roughly $1 trillion, at present, of what we call forward commitment capacity--available lending resources—Canada's view is that the IMF, after this agreement, has sufficient resources to deal with any imminent threats and risks. At the present time, the IMF has $400 billion U.S. worth of available lending capacity at its disposal. It also has commitments from all the member countries that if it were to need additional resources, they would be there in a time of need. The view of the Government of Canada is that following the ratification of the 2010 agreement, there is sufficient quota, and there are sufficient resources commitment behind the IMF at the present time. The IMF is already engaged in a program to support Greece at the present time.

  (1535)  

[Translation]

    I assume you base your projections on various scenarios, but do you have an idea of the impact a potential default on Greece's debt would have on Canada's economic growth?

[English]

     I'm not prepared to answer that at the present time. However, I believe the minister has stated that Canada is not immune from international crisis, and that's why we're following the issue in Europe very closely.

[Translation]

    Thank you.
    I am going to keep my subsequent questions for the witnesses who speak later.

[English]

    Merci.
    I'd like to--
    There are three minutes left.
    I have a question about the World Bank. Who's our representative right now at the World Bank?
    Canada has appointed an executive director who leads the Canadian constituency, along with a number of Caribbean countries and Ireland, and that person's name is Marie-Lucie Morin.
    Are you aware whether they have ever been present at a committee of Parliament?
    I look after the IMF, not the World Bank, but I can certainly get back to the committee on that question.
    For the record, Chair, I think you'll find we haven't had a presentation—unless I'm wrong—at the foreign affairs committee. I'm wondering if you've recently had a presentation from our representative to the World Bank at the finance committee.
    We haven't, but for clarification, what does this have to do with the budget act?
    What was referenced are changes to Bretton Woods, which is touched by the World Bank. If we're going to be looking at this in a fulsome way at some point, I was wondering if you would contemplate having representatives from the institutions that are being touched on.
    For clarification, do these amendments touch on the World Bank at all?
    No, they do not.
    Okay.
    We can certainly take it under advisement.
    It was just a point of clarity. Thank you.
    Okay, great. Thank you.
    I'm going to go to Mr. Brison.
    Thank you, Chair.
    Thank you for being before us today.
    Given the current turmoil and challenges, we understand the rationale for increasing our commitment, and other countries' IMF partners are doing the same. Are we doing so with our other partners proportionally?
    Has there been some analysis, or do you have some analysis or insight on the impact on what the prudential strength of the IMF would be if the euro were threatened by a Greek departure and the contagion that would lead to others with similar fiscal challenges potentially doing the same? What would be the potential threats to the prudential strength of the IMF in that sort of event?
    That's a very good question.
    On the first one, the agreement pertaining to quota, Canada is participating with its proportional share. The quota determines what our financial contribution is, and a quota system determines the size of our economy and a degree of openness. Roughly speaking, the size of one's economy leads to the amount you must contribute as a commitment to the IMF pending an agreement, and that also translates into voting rights, which you're able to use and exercise when managing the fund.
    The basic tenet of the International Monetary Fund, first and foremost, is that it has primary creditor status. It means that whenever it engages in any entity—a sovereignty entity—everything else is subordinated. Whatever happens when the IMF is involved, part of the conditions are that the IMF always gets paid back. That has been the case through the history. When it's been involved, particularly in emerging market crises and Asian crises in the past, agreements under which the IMF lends its balance sheet are always according to very strict stringent conditionality, to which the receiving sovereign must abide in terms of what structuring it needs to make. Then, it's usually monitored very closely by the IMF such that it does in the end get paid back.
    The concept of the IMF is that you take a country off borrowing from sovereign markets, you get a lower borrowing rate, and you force it to make structural change such that it's in a position to repay all other countries. At present the IMF has 50 years of experience and a lot of resources at its disposal to withstand any major shock.

  (1540)  

    That's helpful. I guess to a certain extent it's a subjective judgment. Certainly primary creditor status helps, but you're a maritimer, so if you don't mind my saying, if the arse falls out of the euro, even with primary creditor status these are uncharted territories.
    Do you think your firewall commitment is going to be sufficient to get us through this, or is there some analysis now that the current firewall is not going to potentially be a large enough commitment?
     For clarification, are you pertaining to the European firewall or the--
    Yes, the European firewall.
    It's very delicate for me to comment on the situation in Europe at the present time, and perhaps it falls outside the scope of the provision here. However, again on behalf of the minister, we are certainly following closely and are very concerned and mindful of what's happening, and we hope that the European governments make full use of their support facilities.
    Thank you.
    I don't have any other colleagues on the list, so I'll thank Mr. Campbell very much for presenting to us today.
    We will bring forward officials for division 14, Canada Health Act. For colleagues' information, that's on page 281 of Bill C-38.
    Welcome to the committee. Thank you for joining us this afternoon. We'd appreciate it if you had an opening statement, an overview, then we'll have questions from members.
    Thank you.
    I would first like to thank the committee for inviting the RCMP to appear at this meeting today on the study of clause 377, where it is proposed that paragraph (b) of the definition “insured person“ in section 2 of the Canada Health Act be repealed to enable the modernization of the RCMP's health services program. The amendment to the definition of an insured person within the Canada Health Act will allow members of the Royal Canadian Mounted Police to be included as insurable persons under the provincial and territorial health programs.
    The RCMP would divest itself of the administrative functions of providing basic health care services for its members, and in turn eliminate the indirect costs related to the administration and management of this activity.
     Provinces and territories would assume the provision of basic health care to RCMP members under the provincial and territorial health programs. The provincial and territorial health programs are currently funded to provide and administer basic health care services for the force's members, as they receive federal transfer payments based on total population figures that include RCMP members as part of their overall population base.
    The amendment to the Canada Health Act would come into force upon royal assent to the proposed Jobs, Growth and Long-term Prosperity Act.
    Again, thank you for inviting me today. I look forward to answering your questions.
    Thank you for your presentation.
    We'll start with Monsieur Caron, s'il vous plait.

[Translation]

    I will be brief.
    If services are no longer provided by the federal government, I assume the costs will be borne by the provinces. Is that correct?
    Yes.
    Have the provinces been consulted?
    The provinces with which we have contracts have been consulted. They asked us to look at this last year when we were negotiating police services contracts with them. It was at their request that we suggested the government make this change.
    As regards the health departments, I will be in Toronto next week with a Health Canada representative to meet with officials from every province.
    You say the provinces. Have all the provinces been consulted?
    We haven't signed a contract with Ontario or Quebec.
    All right.
    However, you are going to meet with the representatives of the health departments of those two provinces.
    We will be meeting them next week with the other health partners.
    All right.
    Do you have an idea of the amount that would go to the provinces as a result of this decision?

  (1545)  

    If we are talking about the costs to provide basic care to regular members of the RCMP, it's about $40 million. The cost to the federal government is $25 million. The cost to the provinces is $15 million.
    That cost is incurred because, when we receive services in the provinces, we are not considered residents. So we pay more than a resident. In some places, it's two or three time more expensive. That's how we will be saving money.
    We conducted an analysis of what the costs will be in each province. That analysis is based on what residents would be charged for the same services that have been received in the past.
    What you say is interesting. People weren't considered residents of a particular province, but were Canadian. So they were considered residents of another province.
    That's it. We are not considered residents because we don't have health insurance cards.
    I see.
    For example, in British Columbia, a medical procedure that normally costs a resident $100 costs an RCMP member $300. We bill the provinces 70% of that amount under the agreements and contracts. So the province had to pay $210 for that service and the federal government, that is to say the RCMP, paid $90. Under what is being proposed, that transaction would cost the provincial government $100. That's one example among many.
    What were the arguments of the provinces that you consulted for repatriating those services? I find this a bit strange since it will result in additional costs to them.
    When we renegotiated the RCMP's service contracts, which were signed in early 2012, the provinces with which we have a contract said that this was one of the points they wanted to discuss. They wondered why RCMP members were not covered by the provincial plans. In this way, we could reduce the costs that are billed to RCMP members and then, indirectly, to the province when we send it a bill. That consultation was conducted with the provinces and territories with which we have contracts.
    I have a final question to finish with.
    You tell me you have not yet started discussions with Quebec and Ontario. It is possible that those provinces may find themselves facing a fait accompli before the negotiations culminate in a decision. Is that correct?
    They are aware of the proposed change to the act. There have been discussions between the provincial health departments and Health Canada. We will address those questions with them next week to determine how implementation will be done because the provincial legislation and regulations must be amended to enable RCMP members to obtain health insurance cards, even if the Canadian act is amended.
    Thank you very much.

[English]

     Thank you.
    I'll go to Ms. McLeod, please.
    Thank you, Mr. Chair. I have a quick comment.
    Certainly I can see there will be significant opportunities in terms of the RCMP and the administration. It was very interesting a few weeks ago when we met with a number of physicians and physician offices and hospital administrators. There are also some savings at that end, I understand. One of the physicians indicated to us that between these different separate and special programs they were spending a day a week, which could be spent on patient care, taking care of aboriginal affairs or the RCMP or whatever. Not only are there going to be savings within the federal government at our end, but certainly at another system and structure at the provincial end.
    I'm a police officer. It's an observation you're making. Perhaps that would make sense.
    Thank you.
    Thank you.
    Mr. Brison, go ahead, please.
    Thank you very much for joining us today.
    The federal government has a responsibility for health care for the RCMP and for first nations, aboriginal. Those are the primary two, I guess, the military and....
    Yes, the military, members of the Canadian Forces, and people in federal penitentiaries as well.

  (1550)  

    Yes. Those would be the groups: federal penitentiary inmates; RCMP and military; and aboriginal and first nations.
    The director of communications for the Minister of Public Safety said, when these changes were announced, “We are upgrading their status so that they can receive the same high standard of health care as any other Canadian”. She was indicating there's a delta between the quality of the health care provided to RCMP currently and the quality of health care afforded by the provincial systems. What are some of the differences in terms of quality she would be referring to?
    I would not be able to answer that question.
    Basically, the way forward is that members of the RCMP will receive the same as residents of a province or a territory. Our members are receiving health care right now, which we provide through another card that we issue to them. Sometimes they have to pay up front—pay out of pocket and get reimbursed. The whole processing and the access perhaps will be much better regarding having to submit bills when you see your doctor if you don't take your card.
     Is the situation, as it has been or is currently, universally the case across Canada? For instance, if you were in Halifax or Ottawa as a corporal in the RCMP, would you not already be using the provincial system?
    No, we don't have provincial health cards.
    At all?
    Basically, you can still get access to the same doctors; however, they will bill the RCMP differently.
    There would be no delta in quality in communities like Ottawa or Halifax or Toronto. It would be the same system; it's just a different payment system.
    The payment system is different.
    On the quality difference she's referring to, would that be more based in remote communities?
    I cannot answer that as far as what she's referring to. I would say that in remote communities, having access to a doctor or to health care will remain the same as what it is for our members. And we want to make sure that they have access to health care like any other Canadians.
    I just want to clarify this. The director of communications for the Minister of Public Safety has said they are upgrading their status, and she's saying that the reason is so that they can receive the same high standard of health care as any other Canadian. But you're saying the quality of health care was not part of the decision-making process in this.
    I don't know what she's referring to as far as the differences are concerned; however, I can tell you that our members are receiving quality health care right now and will continue to receive quality health care in the future.
    Mr. Chair, we ought to hear perhaps from Ms. Carmichael, or someone from the Ministry of Public Safety, just to help edify for us what she meant by that, the differences in health care. She clearly said that they were upgrading their status, making this change so that they can receive the same standard of health care as any other Canadian. I think it's important for us to understand that, because it's not clear. I appreciate Mr. Moreau is not aware of that. It would perhaps be helpful to have her come.
    You can certainly suggest her as a witness.
    Yes, I think that would be helpful. Thank you.
    I'll go to Ms. Glover, please.
    Thank you, Chair.
    I want to say from one police officer to another, thank you very much for your service to our country. It's been a tough couple of years. I just want you to know how much the government—and I'm sure members across the way would echo this—appreciates all the work that you do to protect our interest.
    Going back to the health care situation, I just want to make sure I understand it properly, because I too have heard from a number of police officers who think this is a good way to move forward. And I've also heard from people in municipalities that have contracting through the RCMP who believe this is a cost-saving measure for them.
    To be clear, the provinces and the territories currently are receiving federal transfers, from the federal government, based on total population figures that include RCMP members already. Is that correct?
    Yes.
    When we look at RCMP members who are treated at a provincial level, because they are considered non-residential, they are sometimes actually charged 200% more as a premium. It's as if, for example, Americans were to come to Canada and get health care services and they're actually charged a premium for not being resident. Is that correct? It's higher than the average cost. Is that correct?

  (1555)  

    Yes.
    Right. So in those cases, I know from our contract policing partners that all of those expensive costs, those premium costs, actually get charged to them. Is that correct?
    Yes. It's at a percentage based on the contract that we have. It's 70% with provinces, 90% with municipalities. With other municipalities it may be 100%.
    Which is where we demonstrate, clearly, that the municipalities that have contracts with the RCMP—of course they have partnerships with the provinces—see this as a way to save money. They shouldn't be paying 200% or 150% when they already, if you were resident, would just be paying the same basic amount as any other Canadian.
    I just want to make sure that I've understood it, because I see that's about $15 million in savings to those contract policing partners, or to the provinces, let's say. And then, of course, there would be some savings for the federal government as well, where RCMP members aren't contracted out but are simply serving as our national police force, right? And that's a $25 million savings.
     That's part of it, yes.
    Okay.
    The last point I want to make sure I have right is that RCMP members are actually being charged provincial tax premiums as part of their personal income tax for health care programs that they don't benefit from as well. Is that right?
    They don't personally benefit from them. That's right.
    So implementing these changes would obviously put them right with the rest of Canada?
    Yes.
    So this is a win-win all the way around.
    That's for you to say.
    Thank you.
    Thank you, Ms. Glover.
    Monsieur Mai.

[Translation]

    Thank you, Mr. Chair. Thank you for being here with us today, gentlemen.
    I have a question for you.
    We are talking about $25 million in savings for the RCMP and another $15 million in savings. You also said that the provinces had requested this. Will the provinces definitely be saving money, or will they be facing increased costs?
    In health?
    Yes.
    In total, there will be an increase because the federal party will no longer be involved.
    All right.
    Do we have an idea of the cost that will be transferred from the federal to the provincial level?
    We're talking about a similar cost of approximately $15 million.
    So it's $15 million more for the provinces.
    Yes.
    You say the provinces agree with that.
    Do you know whether there has been an agreement with the federal government since it is saving $25 million or the equivalent? Will it refund $15 million to the provinces?

[English]

    No, there's no plan to reimburse or provide additional funding. As mentioned in the meeting, the Canada health transfer already includes members of the RCMP who are in a particular province, so it's already funded. In fact this amendment really addresses the fact that the provision of a health care service to an RCMP member is really paid twice by the transfer, through the health premiums in the income tax that an RCMP member may pay, and then secondarily by the federal government through the current process. That would eliminate that double payment.

[Translation]

    I'd like to understand what you are saying.

[English]

    If I understand correctly, right now, with regard to the federal health transfer, even though the federal government will be having savings and the provinces will increase their costs, the current transfer amount is not being changed?
    That is correct.
    There is no intention of adjusting or modifying that portion of it?
    That's correct.
    So, again, the federal government is downloading.
    I understand your point regarding double payment, but at the end of the day, when we look at figures for the RCMP, the federal government is saving $25 million and we're making the provinces pay $15 million more, or they have increased costs of $15 million.

  (1600)  

    Yes.

[Translation]

    I simply wanted to correct what was said about the $15 million. The provinces will therefore be saving on the public safety portfolio contracts. The cost to the provinces for those same health services, which currently stands at $40 million, will total $24 million.
    They're saving $15 million, but they have to pay $24 million. That's in fact a difference of $9 million.
    Yes.
    All right. Thank you.

[English]

    Thank you.
    Mr. Jean, go ahead, please.
    Mr. Chair, thank you.
    I have just a couple comments and questions.
    If we take the premise that there's only one taxpayer in Canada—which in my consideration there is—it's really a net wash, as far as money changing hands goes. There is a little bit of difference, but taxpayers ultimately pay the price—and I see you nodding your head—so the taxpayers in this case are going to save money through administration, through eliminating duplication of services, through economy of scale. That's really how they're going to save money, is it not?
    Yes. I think the main savings will be on the administrative side. There will be one less system for billing, etc.
    Basic economics is what's going to help taxpayers actually save money. I think that makes a lot of sense.
    I think the service to the members will actually be improved somewhat. In Alberta, at least, Alberta Health Care keeps all of our information, and as we go see doctors or pharmacists and as we fill prescriptions and do things like that, it keeps track of all the costs to the provincial government. When you need that information, you can get that information easily, and usually it's posted very quickly. So on an administration basis, having only one system would be much better for the end-user of medical services, who again is the taxpayer. Is that fair to say?
     Yes, it is. One must remember that the RCMP is in the policing business, as opposed to being in the health business. I think provinces and territories are better equipped to deal with basic health care for RCMP members.
    That's because they're already doing it for everybody else in the population.
    Agreed.
    That's a great decision. Thank you very much.
    Thank you.
    Thank you, colleagues. Those are all the questions I have on this division.
    I want to thank our witnesses very much for being with us here today and for your responses to our questions.
    That was division 14.
    Our two officials for division 15, from public safety, are in a meeting and were not able to change until at least 4:40 p.m. So I'm just going to temporarily table division 15, and we'll go to division 17. We'll come back to division 15 as soon as those witnesses are here.
    We will deal with division 17, which is on page 285. It is the Federal-Provincial Fiscal Arrangements Act. We'll have Mr. MacDonald back to the table.
    Division 17, amendments to the Federal-Provincial Fiscal Arrangements Act and the Canada Health Act, will do three things through clauses 390 to 410. First, it will allow for additional fiscal equalization payments to be paid to the provinces in 2012-13, pursuant to clause 390. Secondly, the amendments legislate the elements of major transfer renewal announced at the finance ministers meeting in December 2011. Announced on page 191 of the budget, this is dealt with in five clauses: 393 through to 395, 397, and 399. And the remaining clauses make consequential and housekeeping amendments to the Federal-Provincial Fiscal Arrangements Act and the Canada Health Act.
    What I would propose is reviewing the amendments clause by clause, beginning with the transfer protection and the implementation—the announcement on major transfer renewal—and concluding with the group of 15 amendments that are consequential.
    I'll begin with clause 390. This is the protection of payments against declines in major transfers. This section is being modified to set out additional transfer protection payments that will be paid to the provinces in 2012-13. These protection payments take the form of additional equalization payments. They're designed to ensure that no province receives less in 2012-13 through the combined equalization of the Canada health transfer and the Canada social transfer than it did in 2011-12.
    The protection yields, as set out in the bill, an additional $362,127,000 to Quebec; $13,471,000 to Nova Scotia; $102,767,000 to New Brunswick; and $201,295,000 to Manitoba.
    I'll now turn to clause 393. This is the clause that will set the growth rate for the Canada health transfer. Paragraph 24.1(1)(a) of the Federal-Provincial Fiscal Arrangements Act sets out the calculation of the total Canada health transfer cash contribution. The cash contribution refers to the total amount of Canada health transfer cash paid in a year to all provinces and territories.
    As announced in December 2011 and confirmed in budget 2012, the amendment extends the calculation of the total Canada health transfer cash contribution beyond 2014, in two stages. In the first stage, the 6% annual growth is extended by changing the date in subparagraph 124.1(1)(a)(iv) that reads “March 31, 2014” to read “March 31, 2017”.
    Then new proposed subparagraph 24.1(1)(a)(v) provides that starting in 2017-18, annual growth will be aligned with the three-year moving average of gross domestic product growth. This will be estimated for the fiscal year for which the payment is to be made and the two prior fiscal years, with a minimum annual growth rate of 3%, as announced. The average gross domestic product growth approach will be the same as is used in equalization.
    Clauses 394 and 395 together describe the equal per capita transition for the Canada health transfer.
    I'll begin with clause 394. Subsection 24.2(1) of the Federal-Provincial Fiscal Arrangements Act sets out the calculation of the provincial shares of the Canada health transfer cash contribution. Provincial shares refers to the allocation of the total cash among provinces and territories.
    The amendment limits the inclusion of the tax transfers and the provincial shares calculation to the period ending in 2014. So where the paragraph that set out the calculation of the tax and cash used to say “in that paragraph” to refer to the tax and cash calculation, it now provides for the dates between “April 1, 2004 and ending on March 31, 2014”. The effect of this amendment is to prepare the way to move the Canada health transfer to an equal per capita cash allocation, beginning in 2014-15, as was originally announced in budget 2007, committed to in legislation in 2007 in current section 24.21 of this act, and reconfirmed in budget 2012.
    In companion clause 395, section 24.21 of the Federal-Provincial Fiscal Arrangements Act sets out the calculation of the provincial shares of the Canada health transfer for the fiscal years 2014-15 and beyond. The amendment replaces the commitment to equal per capita cash beginning in 2014-15, found in section 24.21, with the actual equal per capita cash calculation.
    Clause 397 deals with the growth rate of the Canada social transfer. Paragraph 24.4(1)(a) of the Federal-Provincial Fiscal Arrangement Act sets out the calculation of the cash contribution for the Canadian social transfer.

  (1605)  

     The amendment simply removes the existing end date to the 3% growth rate, which previously read March 31, 2014, to make it indefinite, as announced in December 2011 and confirmed in budget 2012.
    Clause 399 is the CHT transition protection. Section 24.701 sets out the authority for and the calculation of transition protection payments. The amendment adds a new subsection, 24.701(1.1), to set out the calculation of payments to protect provinces against the decline in the Canada health transfer cash allocations from their 2013-14 levels. This is the protection for the transition to an equal per capita cash allocation in 2014-15, as confirmed in budget 2012. For the purpose of determining protection amounts to provide to provinces and territories, the clause sets the protection floor to the second official estimate of the 2013-14 provincial-territorial allocations of the Canada health transfer. This estimate is to be calculated in September or October of 2013. It is the last official estimate for the 2013-14 payments before the first official estimate for the 2014-15 allocations and protection payments is calculated in December 2013.
    So the idea is that this is the last known amount for the Canada health transfer amount paid to any province or territory prior to entering into the equal per capita cash arrangement. This way you know prior to entering into it what that floor protection is going to be. This provides for a stable and predictable floor protection to provinces and territories.
    The various consequential housekeeping amendments to the rest of the Federal-Provincial Fiscal Arrangements Act and the Canada Health Act, I'm going to deal with in thematic bundles, the ones that fit together. I'm going to start with clauses 391, 404, and 406. The reason I'm identifying these is that they are the clauses that repeal the spent provisions referring to the Canada health and social transfer. The Canada health and social transfer—known as the CHST—was replaced by the separate Canada health transfer and the Canada social transfer in 2004-05. All the payments from the Canada health and social transfer have now been finalized so this provision may now be repealed.
    Clause 391 refers to part V, which set out the purposes, calculations, and payment mechanisms for the Canada health and social transfer. It is being repealed.
    For clause 404, we go first to section 25.7, which sets out how references in other acts would be made to the Canada health and social transfer and how they're to be read. The amendment changes the rules so that those references today are read as references to the Canada health transfer and the Canada social transfer.
    Clause 406 sets out regulation-making powers under the Federal-Provincial Fiscal Arrangements Act. There is a reference to part V, the Canada health and social transfer, so it is being removed.
    The second bundle of related clauses are clauses 407, 408, 409, and 410. This bundle of clauses corrects references to the Canada health and social transfer in the Canada Health Act. I want to be clear that nothing about the operation of the Canada Health Act is changing—we're merely updating the references within the Canada Health Act to the appropriate transfer.
    Clause 407 refers to section 2 of the Canada Health Act. This is the section that provides definitions. In the definition of a cash contribution, there's reference to the Canada health and social transfer. This is being amended to refer to the Canada health transfer. Further, there are references to sections of the Federal-Provincial Fiscal Arrangements Act. These reference sections that refer to the Canada health and social transfer. They are being amended to refer to the relevant provisions of the Canada health transfer in sections 24.2 and 24.21 of the Federal-Provincial Fiscal Arrangements Act.
    I'll deal with 408, 409, and 410 very quickly. It's the same sort of thing. These amendments change references in sections 5, 13, and 22 of the Canada Health Act. All references to Canada health and social transfer now read Canada health transfer.
    The third bundle of related clauses has to do with clauses 392, 398, and 400. These are repealing spent provisions references to the health reform transfer and the early learning and child care transfer.

  (1610)  

     Clause 392 is a header, so it's the heading of part V.1 of the Federal-Provincial Fiscal Arrangements Act, and contains reference to the health reform transfer and the early learning and child care transfer. They're simply being removed.
     In clause 398, the old section 24.6 of the Federal-Provincial Fiscal Arrangements Act set out the purpose and calculations of the health reform transfer, and this is being repealed.
    Clause 400 refers to section 24.71 of the Federal-Provincial Fiscal Arrangements Act, and it sets out the purpose and calculations of the early learning and child care transfer, which is also being repealed.
    The fourth bundle of clauses—clauses 396, 401, 402, and 403—all refer to the eligibility requirements for the Canada health transfer and the Canada social transfers. I'm talking about the conditionality or the withholding that can be applied. I'm actually going to deal with clause 396 last, and hopefully you'll see why.
    Clauses 401, 402, and 403 make reference to sections 24.9 through to 25.5 of the Federal-Provincial Fiscal Arrangements Act. Clauses 401 and 402 remove a reference to section 24.63, which is referring to the health reform transfer, which, as previously described, is being repealed.
    Clauses 401, 402, and 403 all add references to section 24.51. The reason we do this is that this is the clause that defines the Canada social transfer allocation for the years after 2006-07, and we're adding that to every occurrence of section 24.5, which defined the Canada social transfer allocation for the years up to 2006-07. So all we're ensuring is that we have covered all the allocations through time, and the withholding provisions apply appropriately.
    Clause 401 is the same sort of idea, except for the Canada health transfer, so we are adding references to section 24.21, which defines the Canada health transfer allocation for the years after 2014-15, to every occurrence of section 24.2, which defined it before 2014-15. So, again, that is making sure that the withholding provisions apply to all allocations through time.
    Subclause 402.(2) repeals subsection 25.1(2). Here is just a bit of backup. Sections 25.1 and 25.3 pertain to the prohibition of a minimum residency period for social assistance. This should be only linked to the Canada social transfer and not the Canada health transfer, so we're straightening that. Subsection 25.1(2) describes the exception to the minimum residency requirement for provincial health plans. Because we are ensuring that minimum residency requirement applies as withholding condition only against the Canada social transfer, and that all the five principles of the Canada Health Act and extra-billing and user fees apply only to the Canada health transfer, with this provision that referred to the minimum residency requirement and then set out an exception for provincial health insurance plans, because we have divided it and set the withholding to the appropriate transfer, we don't have to be worried about a conjunction of the two. So we don't have to worry about, for greater certainty, ensuring that there's no catching in the Canada social transfer of something that was intended and provided for in the Canada Health Act. So all we're doing is removing an extraneous 25.1(2).
    The reason, therefore, that I'm doing clause 396 at the end is that, for drafting purposes--this is all this is--once you've removed.... If you have subsections 25.1(1) and 25.1(2), if you remove subsection 25.1(2), you don't need the subsections, so we just replace it with a section 25.1. It's just straightforward, technical.
    The final clause, alternative payments for standing programs, is another clause about which I want to, at the outset, make very clear that nothing is changing. What we are doing is clarifying the legislation to ensure that it actually parallels current practice.
    So part VI of the Federal-Provincial Fiscal Arrangements Act, sections 26 through 30, pertain to the alternative payments for standing programs, which represents a recovery from Quebec of a tax point transfer that was instituted in the 1960s. These amendments don't change the calculation.

  (1615)  

     The existing section 28 sets out an adjustment methodology that compares the value of the additional tax abatement of 13.5% to Quebec and the value of the contribution for social programs under part V of the Federal-Provincial Fiscal Arrangements Act, which is repealed. It authorizes payment to or recovery from a province for the difference. We are amending this section to confirm that the province is to receive payments for the Canada health transfer, the Canada social transfer, and other social programs and to clarify that the amount of the additional tax abatement must be recovered from the province from any payment under the act. So we pay and we net out the value of the tax abatement.
    The existing section 29 states that the Government of Canada has no obligation, except as provided in this part, to finance social programs under part V of the act. We're repealing this to confirm that the amounts for the Canada health transfer and the Canada social transfer and other social programs shall be paid, which we do. This reflects what actually happens.
    Proposed sections 29 and 29.1 are being added because we made the change earlier to provide that we're making a payment and then a recovery against it. This is where we introduce the two clauses that allow for under- and over-recoveries.
    Section 30 authorizes amounts payable under the part to be paid by the minister out of the consolidated revenue fund. It modifies the section to refer to the whole of part VI, instead of referring only to section 28, which it did before.
    That concludes my overview of the contents of this division. I'd be pleased to take questions.
    Thank you very much, Mr. MacDonald. That's very thorough. I'm sure that answered all the questions the committee had.
    I have Ms. Nash to start, please.

  (1620)  

    I have a few extra questions.
    I want to ask specifically about the health transfer. Is research being done to show the impact, province by province, of changing the amount of the health transfer, and what the difference in the amounts will be ultimately or what impact this new formula will have?
    The changes in this bill are to provide clarity and certainty to provinces with regard to what's happening after 2013-14. In the act as it reads now, there is no transfer after 2013-14. These changes provide for the future growth of the transfer. The press release that was put out in December 2011 referred to $38 billion by 2018-19. That's a minimum, if you use the 3% floor as you're going out past the end of the 6%. Those are the figures that represent the impact of this change.
    I'm just trying to find out what the financial impact will be. If you're putting out a different approach to the funding, I'm sure somebody has run the numbers to project what the likely costs will be to the provinces and what this funding formula will mean in terms of addressing those costs.
    Any projection as to the costs is going to rely on data that we don't have right now. It's going to involve projections of whatever our gross domestic product will be at that time.
    So the projected formula is not based on projected costs?
    The formula is an extension of the 6% for three years, and after that it's drawn from a parallel. As I mentioned, the GDP approach is drawn from the equalization formula, so you have a parallel to treatment in other transfer programs.
    Do you have any sense of what the per capita impact of the change might be? Are there some provinces that are going to have a differential impact compared to some other provinces?
    That will depend. You have a couple of variables in there. You have what the population of the province is going to be in whatever particular year you're examining. As well, past the date when the GDP floor takes effect, what is the GDP? We know we have a minimum of 3%. Beyond that it would be a projection.
    Do you see demographics for provinces playing a role beyond GDP in terms of the age of the population or the influx of immigrants into the province? Are there any demographic factors that could have a differential impact on this particular formula and the funding that would result from it?
     I would simply mention that provinces and territories have the authority to administer their health systems. This provides a certainty as to what the federal funding contribution will be beyond 2013-14, and that enables and supports them to take decisions as to how various factors that influence different provinces would apply.
    If there is a province where the population is aging and there are fewer young people coming into the province, what would be the impact of these changes on a province like that?
     If you look solely at demographics.... I think you're referring to the Canadian Institute for Health Information, which has put out, for example, various cost profiles by age, which demonstrate that health costs do vary by age.

  (1625)  

    They increase, most likely.
    You have younger people and older people.
    That's going to be one factor the provinces and territories are going to take into account as they allocate their funding to administer their health systems.
    We can come back.
    I have Mr. Jean.
    Yes, thank you very much.
    Thank you for a very thorough presentation indeed.
    Further to what Ms. Nash was asking, has the formula itself on transfers ever taken into consideration the demographics or particular trends of demographics in the country? Has it always been the same way as it is today?
    For example, the formula now is an equal per capita cash and tax allocation. We're going to be moving to an equal per capita cash allocation, so it's always been—
    I understand, but demographics has always been considered the same way in the formula as it is today. Is that fair to say?
    Yes.
    Also, you said that the money was paid based upon projected growth of GDP. That's part of the formula.
    Is there ever a proper accounting based on the actual growth of GDP, or is all the payment made on the projected growth?
    It's all on the projected growth, because you're determining a payment for a province for that year. So you're using the data that you have for the year that you're paying, and the two prior years, which is going to contain a mix of Statistics Canada data and forecast data.
    I understand that. But is there ever a proper accounting based on what actually happens in future years? We're paying and paying and paying to the provinces every year, and it's a different amount based on projections of GDP and real growth in the economy or whatever. We get the figures a year later. Is there ever an accounting done with each province, based upon what actually takes place?
    No. For certainty to the provinces and territories for their budgeting, we leave the amount that's been allocated to them.
    Even though it's allocated based upon nothing more than a projection?
    Your total envelope is going to be allocated on the growth in GDP. That's going to set the envelope that's allocated across.
    I understand that it's not based on actual numbers.
    And for the estimates that are currently used to allocate where the population is, we'll continue to follow a cycle that we do now. So they are updated afterwards.
    Is a proper accounting done at that stage, once they're updated?
    We have a regular estimates cycle for the allocation on the transfer now, and we'll continue to do so in the future, which reviews the calculation of the years to follow.
    But it only makes adjustments for projected. It doesn't actually claw back any money or adjust the money based upon what actually takes place as far as the GDP growth or—
    On the GDP, no.
    Interesting.
    So in essence, if you're off by one-tenth of 1% on a projection, and the actual is much different, the province may actually receive much less or substantially more than what they actually should be entitled to, based upon the formula if it were based on actual and not projected.
    You're going to catch a lot of that. You're talking about a three-year moving average, so you have a window that's moving through. So you're going to have common data points that are updated for the following year's allocation, or your following year's growth.
    I understand, and I don't want to belabour the point, but it seems to me that it could be adjusted subsequently to actually reflect what takes place, and what the costs of each province are.
     For instance, in my particular community I've had 8% growth year over year, and yet Statistics Canada continually lowballs the number of residents in my community by a substantial number--I mean, 20% or 25%. As a result of those projections, my province, along with other provinces—for instance, Saskatchewan—may not actually receive what they're entitled to, based upon projections rather than actual figures.
     The information that's used to calculate the allocation, which includes population and under the current formula includes tax data, is updated through the regular estimates process, and that follows some time afterwards.
    Yes, but it always deals with projections, not actuals.
    When you're making a calculation for.... The challenge we're faced with is that we're trying to project for a year that's coming—what it is for provincial budgeting purposes.
    I don't think I have any problem with the method you use for projections. I have no problem with that, and I think you understand clearly what I'm driving at.

  (1630)  

    Yes.
     I have no problem with what you do that way, but based on the actuals that take place, I think it would change. But that is something I'll look into.
    Thank you very much.
    Thank you, Mr. Jean.
    We'll go to Mr. Brison.
    Thank you, Mr. Chair. I have a couple of questions.
    Ms. Nash raised the demographic issue, which is more of an issue now than it was 15 years ago, as an example, with the baby boom generation but also with migration within the country. There are provinces, for instance in the Maritimes, in which we're seeing an aging population with a lot of young people leaving for opportunities elsewhere.
    Have there been some discussions and consideration of adjusting the transfer formula to reflect what is more of a trend today, in terms of demographic shift, than it would have been ten years ago, when we had the last negotiation of the health care accord? We were actually negotiating ten years ago the 2004 accord; the process of negotiation had been an ongoing one. Has there been some consideration of it? Is that part of the current discussion with provinces?
    The minister's announcement in December 2011 confirmed what the future transfer arrangements are going to be. It has been determined that it will be on an equal per capita basis for the Canada health transfer past 2014-15 and that the growth rates will be as set out.
    Yes, and of course there were no discussions with the provinces during which the provinces might have expressed some concern about that.
    Will the extension of the CHT escalator be applied to the 2014 base CHT, or will it be the 2014 base CHT amount plus the funding included for wait times reduction and medical equipment, which was part of the 2004 ten-year accord?
    It's the CHT.
    Why would it not also include the funding included for wait times reduction and medical equipment that's part of the original accord?
    Those were specific initiatives that were undertaken as part of the 2004 accord. Any decision about that hasn't been taken.
    Hmm.
    That's all I have right now, Mr. Chair.
    Thank you.
    I want to clarify a couple of points. The demographic issue is obviously one the government has focused on in many ways, but the per capita cash allocation is in response to a lot of provinces saying that they're not getting their fair share in terms of transfers to the provinces. If you allocated provincial transfers for health care based on demographic issues, you would actually move away from equal per capita cash transfers to the provinces.
    I'll give you an example. The province of Saskatchewan, where you have a younger population perhaps, would not be getting equal per capita cash transfers if you took demographic considerations into account.
    Am I correct in that?
    You're correct, in that if you weight any population count by any factor, it will be different from equal per capita, yes.
    So if we choose to include demographic factors in the way we as a federal government transfer health, we would be moving away from an equal per capita cash transfer. That's the implication of doing that.
    You would be getting away from a system in which relativities.... We have an equalization program that measures fiscal disparities between provinces. You would be putting in another allocation method, yes.
    As I said, if you took any factor and applied it to raw population count, you would get a different allocation, whatever the factor was that you chose.
     So the finance equalization program addresses some other challenges provinces might have in terms of revenues—

  (1635)  

    That's right.
    —and in terms of health.
     The simplest way of transferring from the federal government to the provinces is to base it on the number of Canadians who live in that province on an annual basis.
    The purpose of the Canada health transfer is to be a contribution towards the financing of public health systems, but within the provinces. That's why the withholding provisions of the Canada Health Act are applied to it: that's its purpose.
    The second thing is, could you clarify the moving average of nominal GDP? From one of the conversations, I think this may be an issue. Perhaps you could clarify it for the committee. I think I have a fairly good understanding of it, but I wonder whether you would clarify it for us.
    Do you mean in terms of what the three-year moving average is?
    Yes.
    The three-year moving average that's going to be taken will be for the year for which you are estimating a payment and the two prior years. Of course, you're not going to have actual data for all of that.
    And the two prior years take prior years into account as well?
    That's right. You have a three-year moving average, so some of your data points are going to be common as you move three times. You will have an updating of the data as you go.
    Okay. I appreciate those clarifications.
    Monsieur Caron.

[Translation]

    Thank you.
    The current figures, 6% over the next three years and 3% in subsequent years, are obviously the result of a government decision. In the past, however, the manner in which payments were established was generally determined following a federal-provincial health summit. Negotiations were conducted there and led to an agreement that might cover a number of years. Is that correct?

[English]

    I'm not too aware of the deep history. I know that the 2004 accord was negotiated. I'm not familiar with all the history prior to that.

[Translation]

     I was there during the negotiations in 2004. I obviously didn't take part in them, but I was there in another capacity.
    The objective of negotiations such as those of 2004 was to enable the provinces and territories—although we are talking about the provinces in this case—to meet to determine health care spending projections and to try to agree with the federal government on necessary funding, eventually with certain structural adjustments on their part to demands that would be made of their health budget.
    I am simply trying to see how the Canada Health Transfer previously correlated with spending projections and whether we are currently straying from that objective or process.

[English]

    In the press release of December 2011, there was a table that set out what the past growth rate in provincial and territorial health expenditures has been, and it contains a projection for going forward.
    We now have most of the provincial and territorial budgets, which have indicated, I think it would be safe to say, that in most cases the provinces and territories are aware of the significance of health spending for their overall budget and budgeting and that most of them are putting plans in place to target lower growth rates.

[Translation]

    That's not really what I asked you, except for the end of your answer. I am talking about the Canada Health Transfer. Negotiations used to be held to try to determine projections. Various measures were negotiated to lower costs, structural measures that took future projections into consideration. The approach presented to us here does not take into account projected health spending. It imposes a minimum threshold in this area which could be beyond what the projections suggest for the next 6 to 10 years.

  (1640)  

[English]

    Is it a fair assessment?
    I would simply say that I wouldn't know which data you're referring to that in the next three to six years would indicate a particular profile of future provincial and territorial health expenditures. We are aware of what provincial actions are from their budgets.

[Translation]

    We can extrapolate health care spending projections, based especially on the aging population and the data we have on spending for the past 10 or even 20 years. That will not necessarily be very different or considerably lower than what we have seen to date.
    Excluding the three territories, we see that the lowest annual spending growth, by province, in the past 10 years, has been 6.1% and that the highest has been 10%. The parliamentary budget officer is projecting average annual growth of 5.5% for the country as a whole, with variations, for the following 10 years, again based on the figures that we have.

[English]

    I think the Parliamentary Budget Officer, for the purpose of the long-term projection and for the purpose of presenting a scenario that was taken out over a very long period of time, took an average of expenditures and I think indicated that that's what he was doing and it was getting paired against a particular assumption for GDP.
    With respect to extrapolation of past provincial and territorial spending growth figures into the future, and the range that you suggested, I have information here from Prince Edward Island indicating that they will cap health care spending growth at 3.5% in subsequent years. Quebec is indicating a target of no more than 5% annually. Ontario is targeting an average of reduced health-spending growth of 2.1% annually over the next three years. Saskatchewan and British Columbia have also indicated very clear targets.
     My intention in reciting that is simply to show there is a realization by provinces and territories, they've known this, that they have to take actions, and they are. So extrapolating past behaviour to the future, I think what we're seeing from provincial and territorial budgets is that in fact there is a change.
    Merci.
    We'll go to Ms. Glover, please.
    Thank you, Mr. Chair.
    I want to thank the witness for his candid responses.
    I want to make it clear that given this formula, it's very clear to me and to most Canadians that there will be increases for the next five years of 6%, and thereafter a minimum increase of 3% for the Canadian health transfer for many years to come. Increase means increase means increase. I want to make that clear. For whatever reason, some people don't understand that an increase is more, it's not less.
    Having said that, you made a very good point about budgets that have been projected by the provinces. What is really surprising to me is that as the federal government gives a contribution toward health care--because it is, as you said, simply a contribution--of 6% every year as an increase, the provinces' own budgets show they are not spending 6% more. You went over a number of numbers--two point something, three point something.... So in fact the average of provinces, when you look at all of their budgets, is a 3.8% increase, and the federal government is giving them 6% over the next five years.
    Am I accurate with that number--it's an average of about 3.8% that they're projecting to spend?
    That is correct. That's the average we've taken from the budgets that are in so far.
     Thank you.
    In essence, the federal government is being quite generous in moving towards 6% predictable, stable funding so the provinces can plan ahead. And as we've indicated, their own budgets say they're not spending 6% anyway. But we're going to increase it anyway. We're going to make sure there's a floor of 3% after the next five years, which to me is a good plan.
     I have a family, five children. I know when I have to spend money on certain things, I cannot spend more than I actually make. I can't earn $1,000 a month and spend $1,500 a month. So taxpayers also are cognizant that they pay every dime that the government pays out. It is taxpayers' money that gets paid out. It's not some government bottomless pit.
    So when taxpayers are able to afford to pay more, they will pay more, because not only is there a 3% floor, it's going to go according to growth of economy. That would mean there is potential in the future, even with that floor of 3%, for taxpayers to actually even be paying more than 3% if the economy grows more than 3%.
    Am I accurate in that?

  (1645)  

    If the three-year moving average of GDP fails to attain the 3% floor, it will be 3%, yes.
    If it is more, if the economy actually grows more than the 3%, let's say it grows 6% in that year, how much will the Canada health transfer be?
    It depends on your three-year moving average, but it would be more than 3%.
    Correct. So it's a very generous formula that provides some predictability.
    I want to share with you and get your comments on something that's happening in my riding. I have St. Boniface Hospital in my riding, and I'm very proud of some of the measures they've taken. They realize there's waste in the health care system and they're trying to address it. They have a program called Lean.
     I went to observe what they're doing with this program called Lean. Things as basic as the nurses having to drag around the cuff and the thermometer on a cart from room to room was causing them a lot of delays. Time was spent looking for the cart to help patients and to do their jobs. So doing simple things like putting that equipment on a wall in every room makes it more efficient.
    Hospitals across the country are actually looking to St. Boniface Hospital to learn how to do these very basic common-sense measures to increase efficiency, which essentially also saves money and reduces waste within the health care system. I mention that in my effort to also say that the provinces have a responsibility here as well to look for those inefficiencies and to move towards having a health care system that operates in an effective manner.
     I know I can't ask you for your opinion on that, but have you heard of this program?
    Just a brief response.
    I had not heard of that program, no.
    Thank you.
    Okay, thank you, Ms. Glover.
    We go now to Ms. Nash, please.
    Thank you very much.
    First of all, I have a question about process, which you may or may not be able to answer.
    When the government brought in this new formula, the provinces were surprised, and I'm wondering why they were left out of the consultations. It was imposed on them, as opposed to bringing them into the conversation. Do you have any background on why that was done?
    I don't think I have any comment on that.
    This change of formula is different from the old formula that the federal government has used. How much money is it going to save the federal government throughout the period of the projections that you have calculated? Do you have any background on that?
    First of all, with respect to savings over a period, I repeat that the legislation expired at the end of 2013-14, so what the measure has done is define what the growth of the transfer following 2013-14 will be. So the figures that have been set out are the total spending that will be put to the Canada health transfer.
     Right, but my question is that if the formula had not been changed and had stayed the same, how much more would the government have spent on health care?
     Given that this is dependent on what future GDP growth would be, I don't have figures of that nature.
    Well, you must have some calculation of what this change would bring or surely the government wouldn't have changed it.
    There was an existing formula, and the government has made a change to the formula, which will require a lower percentage of spending than what the government would have spent with the old formula. Have I got that right?
    You're nodding...sort of.

  (1650)  

    The old formula was a 6% escalator through the period up to 2014.
    And this new formula is not. So if the new formula of the 6% escalator every year had been maintained, versus the new formula, what is the difference in that amount?
    I don't have a figure for what the difference in the amount of various scenarios would be. I know that there have been various scenarios put out about what that amount might be or could be. That's not...as I said, what we have done is in this bill set out what the growth of the transfer will be after 2013-14.
    In terms of the measure, the new formula, as I said, it's another parameter that's familiar from federal-provincial transfers in the three-year moving average of nominal GDP, which has been what is a reflection of the federal government's capacity to pay.
    Can you provide this committee with background research that you may have conducted in order to determine what this formula would be and why the change of formula? There must have been some research work that was prepared to help the government make this change. Is that available? Can you make that available to this committee?
    I'm not certain there's anything available that's not subject to cabinet confidence—
    Can you check that out and let us know?
    —but I can take that under advisement.
    Okay.
    That's it.
    Thank you, Ms. Nash.
    Mr. Jean, please.
    Mr. MacDonald, if you ever come up with the number that this would be projected to be, based on the formula itself and forecasting GDP, which in my mind would be, quite frankly, near impossible, I would really like to partner up in the stock exchange with you, because it would sound like you'd be able to project figures that are, quite frankly, contingent completely on the GDP growth.
    I did want to clarify, I think, on what Ms. Glover had said earlier, which is that I think only one province, and that being the Province of Alberta, has estimated an actual increase in health care spending at about 7% or 7.2%. Out of all the provinces, it's the only one that's gone actually above and beyond the transfer of 6% increase.
    Is that fair to say? Isn't Alberta the only one that's actually more than the federal government has promised?
    Yes.
    And is there in fact one province that, if I remember correctly from reading it some time ago, has actually projected a decline in spending?
    I don't have a record of the decline figures here for 2012-13—
    I thought it was around 2.1% or 1.8%.
    I thought it was one of the Atlantic provinces, actually.
    You might be referring to New Brunswick in the 2011-12 year.
    Yes.
    Actually, the increase to 6% is quite a dramatic increase compared to the provinces and what they project.
    Now, could you table the chart for provincial budget estimates for health care expenditures and the increased estimate that they put? Could you table that to the committee for us?
    From provincial budgets?
    Not the budgets themselves—
    No, no, just the collation.
    —but the projected increase of health care spending.
    Finally, is it fair to say...? I mean, I've had an opportunity to ask questions of the PBO officer in relation to this. Isn't it true that when he was doing his projections on estimated health care increases, he didn't look at any of the provincial budgets at all, so his projections were based on trends rather than on actuals?
     Given the timing of when he did the report, if my memory serves, I don't believe he would have had access.
    I'm sorry...?
    If memory serves, I don't think he would have had access to that prior to the budget season.

  (1655)  

    Yes, exactly, because many of the budgets weren't out yet. In fact his estimates were based on trends rather than actual projected budgets of the provinces, so they wouldn't be accurate.
    That's right.
    I think that's my only other question.
    Thank you very much.
    Thank you.
     Monsieur Caron.

[Translation]

    Thank you very much.
    I am fascinated by this series of questions. So I'm going to continue in the same vein.
    A few provinces have put limits on their health spending. Did the provinces impose those limits on themselves before or after the federal government's announcement that it would limit transfers to 6% for three years and 3% after that?

[English]

    The provinces all issued their budgets early this calendar year. The announcement was made in December 2011.

[Translation]

    So the federal government's announcement was made before the provinces decided to set their own ceilings locally.

[English]

    That's in reference to the 2012-13 budget cycle. However, provinces have been taking steps in this area. For at least the last couple of budget cycles, that I'm aware of, there have been initiatives put in. I don't have a table that documents those, but off the top of my head I know that Ontario and Quebec made reference in their 2010 budgets about the magnitude of health spending as a proportion of the total, and they were making measures at that time.
    The reason I point that out is because the projection that was included in the press release in December 2011, which was based on CIHI data, shows the impact of those measures in a lower projected...I believe it was 3.2%.

[Translation]

    I understand what you are telling me. I know that the provinces are also aware of the high costs of health, which are growing far faster than GDP in general. The fact nevertheless remains that, even though the provinces acknowledged the need to cut their spending, they did not think to make such deep cuts to their budgets. We are talking about quite significant structural changes for them to be able to reduce their health spending. Their reaction in setting a ceiling came after the federal government's decision to limit transfer increases to 6%, and to 3% thereafter. The provinces adjusted. The federal government didn't adjust to the provinces. It was the reverse. The provinces adjusted to the federal government's decision. Chronologically speaking, it seems to me the relationship is clear.

[English]

    Well, yes. Chronologically there were provincial budgets that contained measures in the health care field.

[Translation]

    I want to get to that aspect. If it had been easy for the provinces to reduce health spending by establishing a ceiling, they would already have done that. However, there are costs associated with that in terms of services offered. I find it hard to understand how a province like Quebec, for example, can significantly reduce its spending without services suffering in one way or another. We can say that it cut growth in its health spending by half. However, whether it be the number of guaranteed services or the budgets allocated to the hospitals or other institutions, costs will be associated with that, in the form of financial costs or lesser coverage offered by the provincial system.

[English]

    The result of this bill is to put in legislation the growth and the continued growing federal contribution in health to the provinces and territories. It's using a formula that, as the minister stated, is the best measure of government revenues so it represents a sustainable formula for the federal government.

[Translation]

    The government's measure takes into account the government's capacity to pay, but not necessarily the needs of the provinces to maintain the same level of service or funding for their hospitals as was previously the case. The provinces have to adjust.
    In 2004, and before that, when there were negotiations, the projected costs to offer the same services, taking into account those frightening costs, were considered. That is no longer the case in this budget. We are looking at the budgetary aspect related to GDP; that's it. The provinces have to adjust accordingly.

  (1700)  

[English]

     Just give us a brief response, please.
    I would simply add that what the announcement has done and what the formula will do is provide certainty about the federal contribution for the long term.
    I'm going to attempt to clarify this again, because it is a question of whether provinces are adjusting based on what the federal government has done
    Mr. MacDonald, when you talked about provincial increases in their health care budget, you had a number of figures. Can you just read those again for the committee?
    This is a series of figures from various budgets where specific spending targets were identified in the area of health care—not all provinces identified a specific target.
    Prince Edward Island, in the 2012-13 budget, indicated that they'll cap health care spending at 3.5% in subsequent years. Nova Scotia, though it didn't provide a specific restraint target, did indicate that it has reduced health care administration costs to below the national average and has cut the rate of growth of health spending. New Brunswick said in their 2012-13 budget that health spending is projected to grow by just 3%, and can be managed to further reduce growth while focusing on priority improvements financed within the current system. Quebec, in budget 2010-11, shows a heath care funding growth target of no more than 5% annually, and this was reiterated in budget 2012-13. Ontario targets reduced health spending growth of 2.1% annually over the next three years. Manitoba indicated, although no specific target was identified, that they would manage spending in the health care system by increasing efficiencies and legislating a cap on administrative costs for regional health authorities. Saskatchewan targets a health care budget increase that is less than the increase in provincial revenue growth by March 31, 2017, based on a rolling five-year average. British Columbia provided no specific restraint target, but mentioned a 3% average annual growth in health care spending.
    That would be the sum of it.
    I appreciate that very much. You have 3.5%, 3%, 5% in Quebec, 2.1% Ontario. The health accord agreement expires in 2014, but what we're doing is increasing by 6% in 2014-15, 2015-16, and 2016-17. We're increasing by 6% until 2017, and provinces are capping at 2% over the next three years. I don't quite understand that argument. Then in 2017-18, it's a moving average of nominal gross domestic product.
    I want to clarify this—I think this is important for the committee. It is 6% until 2017, according to the budget and this legislation, and provinces can plan on this until 2017. You've correctly indicated that none of the provinces are spending up to that 6% year-over-year increase. I appreciate that clarification.
    We'll go to Mr. Marston, and then Mr. Brison.
    I think it's fair to say that a large chunk of the government costs are with the OAS and the transfer. At this point, the word would be that the federal government is seeking to stabilize the liabilities, especially after 2017, with this new model. I'm not going to critique that part of it. But I would think if that's the case, based on a reasonable increase to gross domestic product, there would be some pressure taken off the federal government in the area of the transfer.
    Would you agree with that?

  (1705)  

    Sorry, can you repeat the last part of that question for me, please?
     As we go forward, year to year, there are generally increases to the gross domestic product that are projectionable. At some point it's 2%, other times it's 3%, and other times it's even down to 1%. There's a flow of that and there's growth to the government over a period of time. So if you have a change where they're no longer giving the 6%--and I understand that--from that time forward in particular, would you say that some of the pressure has been taken off the liability, for lack of a better word, of the government?
    As I said before, as the minister stated, it indicates this is a level that reflects taxpayers' ability to pay.
    I don't dispute that.
    What I'm really saying is that the relationship between the dollars coming in, generally speaking, and the costs going out will be stabilized because it will be linked to the GDP average. So at that point, instead of 6% they could conceivably have 2.5% that they're giving from that time forward. Would that be a reasonable assumption?
    It depends on the—
    Of course it depends on factors.
    —numbers relative to the fixed point as a percentage.
    I'm only using that as a hypothetical example.
    At that point there's then a saving to the government of 3%, or approximately that. Would that be a reasonable assumption?
    In this specific case—
    Relative to today.
    —it would, yes.
    This kind of strays, Mr. Chair, a little bit.
    From my perspective, we know from a second report released by the PBO today that they're saying that he believes OAS is sustainable, principally because of the changes to the transfer. As I've said, some of the pressure is taken off here to allow for some of the pressure.
    Would that be a fair statement?
    I haven't had the luxury of reviewing the report, but—
    I'm not trying to put you on the spot.
    Mr. Caron would like to take the rest of my time.
    Okay.
    Two minutes.

[Translation]

    I believe I will be quicker than that.
    I would like to go back to the list you just read about the ceilings the provinces are setting for the next fiscal year. Is that in fact province by province? Is that the list you just read? Are those estimates, projections?

[English]

    Targets.

[Translation]

    Were those projections, those targets, known to the government when the decision to set a ceiling of 6% for three years and 3% for the following years was announced?

[English]

    I can tell you that the actions that provinces took prior to December 2011 were known to the federal government, and we did have the—

[Translation]

    My question concerns the targets that the provinces have announced.
    We know that the provinces are trying to lower their costs. However, I'm talking about the targets that the provinces have set for themselves. Was this list, which you just read, known to the government when it was announced that transfers would be limited to 6% for three years and subsequently to 3%?

[English]

    Unfortunately, the list I have in front of me isn't comprehensive about the date on which we knew each individual one.
    As you know, I'm looking at Quebec, which dates to 2011. I know we knew about that. I know we knew about Ontario. My memory doesn't serve which ones we also knew about. Most of the ones I read out are the latest we had.

[Translation]

    Thank you.

[English]

    Okay. Merci.
    Do you want to start, Ms. McLeod?
    Yes.
    For the Conservative round I'll go to Ms. McLeod first.
    Thank you, Mr. Chair. I'll share this round.
    I only have a brief statement. Again, having lived health care on the other side of the issue, I certainly remember the deputy ministers with the charts showing how health care was moving to 30%, to 40%, to 50% of the budget and onwards to 70%. I think every single province was very concerned with this trend and had done a very good job in terms of looking at how they were going to contain it.
    I simply find it quite incredible for people to suggest that 6% increases are cuts. To me, that is pretty basic math in terms of 6% increases being increases. As our provinces have very clearly indicated, they have a desire and a necessity to look at how they're doing business, and there truly are options for the provinces. I think they're really tackling this challenge with all the dedication they can because they recognize it is an issue that needs tackling.
    I guess I simply had to make a comment because it's something near and dear to my heart.
    I'll turn the floor over to my colleague.

  (1710)  

     Ms. Glover, please.
    Thank you, Mr. Chair.
     I want to thank Ms. McLeod. She has a nursing background, so she really does have her heart in the subject.
     I'd like to ask you to table something else, Mr. MacDonald. In answer to the several questions repeated by Mr. Caron about the 6%, we've already said that the table you're going to submit shows an average of 3.8% increases, not 6%, which is what the federal government's contribution is going up by. But just to alleviate his concerns, I'd ask you to table not just the averages, but the provinces' budgetary expenses for health care from the year before, because in that case, the average was 4.8%.
     Reiterating what you said, Mr. MacDonald, the provinces had already started to make some changes on their own, recognizing they have a large jurisdictional responsibility to ensure health care is sustainable. They too have to make sure that taxpayers and the revenues that come from taxpayers ensure that all Canadians are eligible for what we think is very important: a provincially or a federally funded, publicly funded health care system.
    So if you could table that other chart as well, perhaps that would alleviate Mr. Caron's concerns, and he would see very clearly that his position makes no sense.
    Thanks.
    Okay.
    Mr. Jean, do you have a quick question?
    I wanted to make note of what Mr. Marston said in relation to the PBO report. It is germane to the report that came out today, which did mention on page 3.... Of course the PBO is based on projections, and he said in this report the updated analysis indicated that as a result of the change to the Canada health transfer to grow in line with nominal GDP—which we projected as a government—then of course OAS may be sustainable. But he admits in the report itself that cost pressures are coming on OAS, and he also clarifies it by saying, and I quote: “However, the change to the federal CHT structure is mirrored at the provincial-territorial level. The provincial-territorial long-term fiscal situation has deteriorated.” As a result of that, and as a result frankly of the PBO doing projections and using projections instead of actuals, I quite frankly almost need an interpreter for the paragraph itself on where we are, and whether we're going or coming.
    I wanted to make a point of that with Mr. Marston's comments earlier about OAS being sustainable.
    Okay. Thank you.
     I have Mr. Brison next.
    Thank you.
     I have a question and a comment. It has to do in part with some of the information you've brought to committee, Mr. MacDonald, and also some of what my colleague Mr. Jean has raised.
    If you look at the provinces--and Mr. Jean referenced a 7% increase, I believe, in Alberta, and I think a 1% decrease, for instance, in New Brunswick, in round figures--what I find stark about that is that New Brunswick has an aging population. I think Alberta's population is probably getting younger as more young people are moving to Alberta, yet the cost of health care is increasing significantly. If Alberta can afford to do that, I think that's great, but it raises the issue of demographics that I mentioned earlier. Nova Scotia is an example of a province that's teetering on decline in population and certainly has an aging population. We have higher health care costs, and you would agree that the health care costs as people get older tend to increase.

  (1715)  

    Yes.
    And the tax base has fewer people working.
    I'll go back to that question I posed earlier. Is there an initiative or study within Health Canada to evaluate these demographic factors and what their potential impact is or what the public policy response ought to be from a federal government?
     I can't speak for the Department of Health on that particular matter.
    In terms of government, you've spoken to us on health care transfers. Is there some discussion within government on this?
    In terms of the policy with respect to the CHT as it's expressed in the current arrangement, as was committed starting in 2007, was legislated within the Federal-Provincial Fiscal Arrangements Act, there are two steps: equal cash and tax support for health in all provinces and territories, and starting in 2014-15 equal per capita cash support to all Canadians, regardless of where they live.
    Sure, but--
    That's what the bill reads.
    I'm comparing the government's approach, for instance, to the OAS, where ostensibly it's a demographic issue that is rendering OAS in its current form unsustainable, according to the government's arguments. We have a demographic-based sustainability issue, I would posit, in terms of health care. I'm just asking, is there some discussion within the machinery of government on how to address this?
    This is a very significant issue. I'm certain that if the government were to sit down with the provinces and have this discussion it would be an important one. Again, all power to Alberta with the ability to have a 7% increase, but for some provinces, particularly those provinces with a declining or stagnant population growth, an aging population, and a resultant lower tax base and higher health care costs, the demographic issue is a very important part of the public policy dialogue we ought to be having.
     I'm just asking the question, is there a discourse within government on this?
    I think you mentioned.... There was a point I wanted to make earlier about something like demographic change, and a number of things associated with it, which will have different impacts. There's also to be considered the overall transfer package, if you will, the different transfer tools that the federal government has.
    You mentioned that another consequence of population aging is the working age, and then into retirement, and the effect that has on the fiscal capacity of a province to raise revenues from that population, for example. You were talking about issues there that are dealt with by the equalization program already. That's the program that deals with fiscal disparities from a number of causes between provinces.
    I just point out that there are various tools that the federal government has for addressing various things, and that's one of those effects that would already be captured.
    Okay, thank you.

[Translation]

    Mr. Caron, you have the floor.
    If people can make comments, I would like to make one as well.

[English]

    I don't think there is anyone here denying the fact that the provinces are facing the brunt of a very high part of their budget going to health care. That's a given, and we understand that. We understand the need for restructuring health care as well. That effort is actually not something you can do with a snap of your fingers, saying we're just going to set ceilings. It's a major effort of restructuring, of redoing ways, of rethinking the ways we've been delivering health care in the provinces. The question is, how are we going to do it?
    Before the idea was to actually have the federal government working with the provinces to actually try to achieve this change in mind frame, the change in the way of seeing things, and trying to find outside-the-box solutions to actually do it. By saying that we're going to set ceilings, without looking at the way the ceilings will be respected, is actually a problem. Because in the end, the cost of saving money will actually be depriving the system and the citizens of services that they have been receiving.
    That's why I was asking the questions about when the decision was made and how the provinces reacted. My point is that the provinces reacted to the decision of the federal government to set that cap. Now they might very well be achieving it, and that's good.
     In response to Ms. Glover and the request, I'd like to see that, actually. In the last five or six years.... But the money is not the only thing. If you can actually table this document, I'd like to know how the provinces were able to achieve it. What decisions did they make to do it?
    There are some good initiatives that we can fully support, like the one in your hospital, for example. There are some other savings that are achieved by delisting and by basically cutting hospitals and transferring services to the private sector. Citizens are still paying for it; they're not just paying through their taxes but they are paying out of pocket as well.
    If you are preparing this list of the growth in health care costs, I'd like to also know how they were achieved. That will have to be part of the document for it to actually encompass the whole situation. You cannot only talk about financial costs without talking about the way citizens are deprived of services or might be receiving services of lower quality than what they were receiving before.
    That's the whole point of the line of questioning. I just wanted to set that out.

  (1720)  

    Thank you.
    Mr. Jean, please.
    Thank you, Mr. Chair.
    Something that we keep missing here is that this is a provincial responsibility. The province has ultimate control of the administration of health care. What we've heard today is clear evidence that the provinces, on average, are increasing their health care expenditures by somewhere in the neighbourhood of 3.6% to 3.8%, and the federal government, as a funding partner only, is coming forward and saying, here are 6% increases. And we're complaining about it. Well, we're not, but clearly somebody is complaining about it, and we're simply a funding partner. I think what needs to be clear is that it's not a federal responsibility. That is what I would like to say.
    I would also like to respond to Mr. Brison's comments in relation to Alberta. It might have something to do with the extreme growth that we've had over the last eight years. I would indicate to him that in my constituency of Fort McMurray, we have the lowest doctor-patient ratio in the country. In fact, I think we're the lowest in the OECD as far as the doctor-patient ratio is concerned. So as far as the delivery of health care services goes, Albertans need the increase, because, frankly, we've had such tremendous growth from your constituency and many other constituencies around the country where people want to get a job and have a great career and live in a great place.
    If we had had the wisdom and foresight and vision—
    Of having the oil sands....
    —to put oil under the ground, we would have done the same thing. We just didn't think about it.
    You are digging it. It's in Alberta.
    Is there a question for Mr. Macdonald?
    There is no question there.
     Okay. It's just a comment.
    May I finish with this division, then, colleagues?
    Some hon. members: Agreed.
    The Chair: Thank you.
    Mr. Macdonald, I want to thank you very much for answering our questions and for being with us and giving your presentation.
    Colleagues, I am going to take a five-minute health break in the interests of all of us. We'll resume in five minutes.
    Six minutes.

    


    

    I call the 61st meeting of the Standing Committee on Finance back to order. We are studying Bill C-38.
    Colleagues, we had just finished with division 17, but we had also just tabled division 15. We are glad to have two officials from Public Safety join us here today. They are going to talk about the Canadian Security Intelligence Service Act.
    We look forward to any overview you may have of these amendments, and we will have some questions from members after that.

  (1730)  

    Thank you, Mr. Chair, and I apologize for messing up your order earlier on.
    Division 15, or clauses 378 to 387 of the budget implementation act, is relatively straightforward. It amends the Canadian Security Intelligence Service Act to abolish the Office of the Inspector General.
    For those who are perhaps unfamiliar with the role of the Inspector General, I'll briefly go through what it does. The main task of the Inspector General is to produce an annual report, what is called in legislation a “certificate”, for the public safety minister. The certificate is basically an attestation by the Inspector General that the Canadian Security Intelligence Service is abiding by its mandate, legislation, and ministerial direction, and that the report of the director of the service is accurate. That's the primary function of the Inspector General. The Inspector General does not deal with complaints in any way; it's a review body.
    Clause 380 in the BIA repeals the functions and the powers of the Inspector General. Clause 381 gives those functions and powers over to the Security Intelligence Review Committee, which is another review body of the service. Basically, the director's report will be looked at by the Security Intelligence Review Committee and it will proceed from there.
    For those of you who are unfamiliar with the Security Intelligence Review Committee, it is a legislated external review body that reports to Parliament. It does external reviews of the performance of CSIS—I guess that would be its main function—and it also deals with complaints about the activities of the service. Again, as with the Inspector General, it looks in particular at CSIS's adherence to its mandate, to ministerial direction and, to some extent, CSIS's internal operational policies. I can go over some of the work of the Security Intelligence Review Committee in more detail, if you're interested.
    But to finish off on the other clauses in the budget implementation act, there are a few other clauses that tighten up the reporting role that the Security Intelligence Review Committee will have to ensure that all reviews will go to the minister. It also ensures there will be at least an annual briefing to the minister, or at any other time the minister requests.
    As I said, these 10 clauses are relatively straightforward in transferring the primary role of the Inspector General to the Security Intelligence Review Committee.

  (1735)  

    Thank you very much for that overview.
    We'll begin members' questions with Mr. Marston, please.
    Thank you, Mr. Chair.
    Before we start, I want to assure you that I'm not a conspiracy theorist. One of my favourite writers is Kris Kristofferson, and he's written a song The law is for the Protection of the People. Understandably, with all of the rhetoric—and I want to stress that word—around the intelligence communities of all countries, there's a kind of mystery to it all, as is necessary.
    We're changing the oversight with these changes, and with regard to the SIRC, is there a similar expertise, particularly an intelligence-related type of expertise, compared to those on the existing committee?
    Yes. It's very similar. A number of analysts who have worked in the Inspector General's office have also worked at the Security Intelligence Review Committee and vice versa. It's the same thing in Public Safety with the national security branch, of which I am part. A number of analysts have worked in both places, so they have a similar or complementary skill set.
    As one point of clarification, neither the Security Intelligence Review Committee nor the Inspector General is really an oversight body. Oversight implies that it's ongoing, and now it's more of a review function looking back at activities.
    Would that be an annual review? How frequently would it be?
    The Security Intelligence Review Committee and Inspector General both produce annual reports summarizing all the reviews they've done during the year.
    So those reports would go to the minister, and then to the Parliament by the minister?
    The normal review function of the Security Intelligence Review Committee would continue. Their annual report would be submitted by the minister to Parliament. In addition, there would be an internal report prepared by the minister—the certificate—which is the former Inspector General's function.
    By “internal”, do you mean it doesn't go to Parliament?
    That's right. It goes to the minister. An unclassified version is released, though.
    That covers my questions.
    Thank you, Mr. Marston.
    Mr. Brison.

  (1740)  

    I want to confirm the justification for this change. Was it purely budgetary?
    It was part of the deficit reduction action plan, so it was a budgetary decision. I think it's also a strong policy rationale, given that we're consolidating similar functions.
    From what I understand, the Inspector General is usually chosen from within the security establishment. Is that right?
    Are there benefits to having former intelligence officers knowledgeable in the area provide this type of oversight? I realize you've said that in some ways it is not oversight. But are there advantages to having former intelligence officers from the security establishment in this role?
    There could be advantages. It could also be advantageous to come from outside the security intelligence community—it could result in a different perspective. The important thing is to make sure the analysts who work in the secretariat have the right skills to do the job.
    I've read that this change, abolishing the Inspector General, will save about $1 million a year.
    The target under the deficit reduction action plan for this mission is about $800,000.
    Does the government plan to reallocate these savings to the budget of SIRC?
    No, the budget for the Inspector General is part of the Public Safety budget. When you cost out the nine staff and the associated operating costs, it comes to more like $1 million, so there's a bit of a differential there, and we're exploring how to reallocate it within the Security Intelligence Review Committee. We're looking at that.
    So the money will be reallocated within SIRC.
    Yes.
    So the intention is to reallocate within.
    Yes.
    Thank you.
    Ms. Glover.
    Make sure it's the differential. You said it was a reallocation of the differential. I just wanted to clarify that.
    Mr. Mai.

[Translation]

    Thank you, Mr. Chair.
    I would like to have a clearer understanding of the inspector general's role. Here we see, in particular, that:

[English]

CSIS activities have complied with legislation and Ministerial Direction
    That is one of the functions of the Inspector General?
    Yes.
    So who will now look at whether or not the obligations have been fulfilled?
    The Security Intelligence Review Committee.
    Before that, was the SIRC also looking at this?
    Yes, essentially.
    Were there cases where the report would differ in terms of what the Inspector General was saying versus what SIRC was saying?
    I think SIRC's reviews might differ with, say, those of the Inspector General. They might look at other things, and they might be a bit more operationally focused. Usually, though, it's more of a duplication or an overlap—there's no substantive difference in the findings that we've observed.
    The question for us has to do with accountability and transparency. We are taking out someone in the system whose role is to make sure that the activities comply with legislation.
    You were talking about duplication. So basically, everything the Inspector General has done so far was useless? What was the original reason to have an Inspector General?
    I think it was in 1984 or 1985 that the CSIS Act was put in. Probably at the time it was to give independent eyes and ears for the minister, different from the external review body of SIRC. I think, though, what's going on here is no change to the proportion or amount of review that's going to be done. Two-thirds of the CSIS Act still deals with accountability and reporting and review. That proportion stays the same. It's one function that is done in many ways already by SIRC, but it's going to be done specifically in a different place.

  (1745)  

    At the end of the day, we are losing someone who's independent and whose role is to oversee.
    Again, the Inspector General is part of Public Safety. It's like another part, so the office is not really independent. It's part of the bureaucracy of Public Safety. The Security Intelligence Review Committee is truly independent—it's arm's length—so they will be given additional powers here.
    Thank you.
    Okay. Thank you.
    More questions, Ms. Nash.
    I have a couple of quick questions.
    Thank you for being here today.
    When the Inspector General was re-appointed in 2010, the minister said that her office helped to ensure that CSIS operated within the law and followed current policies. When did that cease to be important under her office? You're saying it's going to be done through SIRC, but the minister at the time said it was important that the Inspector General fulfill that function. What has changed since then?
    I'm not sure much has changed. The key point here is that the function is what's important and that same function is going to continue. It's only going to be dealt with around the corner basically, in a different building downtown. The main thing that's changed since 2010 is the deepening financial crisis and the policy priority of going after the deficit. I think that's the main issue here.
    So if there were not austerity measures brought in by the government, this change would not be made to the Inspector General's office. The minister himself wouldn't be initiating this change.
    I can't answer that clearly. I'm not sure what our advice would be with or without a deficit reduction action plan. As I said, I think there's strong policy merit either way. I think there was clear duplication going on in the system and there are efficiencies to be gained, which is a good policy to have under any fiscal situation.
    Yes.
    Did the fact that the Inspector General has often been publicly critical of CSIS play a role in eliminating that position?
    No.
    Is there currently a chairperson at SIRC now?
    There is not currently a chair. I believe that's a Governor in Council appointment that's being worked on. It's not my area.
    So the position of Inspector General is being cut and that function will be replaced by a committee that doesn't have a key leader, the chairperson, as part of it right now.
    As I said, that's being worked on now. The Inspector General herself actually retired at the end of last year.
    How long has the position of chair been vacant at SIRC?
    I'm not sure, but a few months.
    A few months, okay. All right, thank you.
    Thank you.
    I have Monsieur Mai.
    Just so that I understand this, in practice the Inspector General was able to go out in public and talk about some of the issues that were wrong or problems with CSIS?
    No. To be clear, the Inspector General position is an internal accountability mechanism for the Minister of Public Safety. Anything you've seen in the public from the Inspector General came out through an access to information request, a sort of redacted version on a website.
    So you say someone will replace the equivalent of the Inspector General. In terms of the fiscal implications of this, with the elimination of the Inspector General can you tell us how much it will cost in additional resources for SIRC?

  (1750)  

     Yes, as I said before, the deficit reduction action targets are now at $800,000. That's what we're working to.
    If you impute the cost of full-time equivalent positions at the Inspector General, in operating costs it comes out to about $1 million or so. We are looking to reallocate that differential to the Security Intelligence Review Committee. It's in that neighbourhood that we're looking. It depends upon the exact amount available and so on.
    If you're saying that the target reduction is $800,000 and the positions were worth roughly $1 million, there hasn't been any plan yet on how much will be allocated to replace....
    We're just working through that with our corporate services folks on how this is going to translate.
    Okay.
    Thank you.
    I thank our officials for being with us here today. We appreciate your responses very much.
    Thank you.
    We'll move on to division 18, the Fisheries Act. I will ask the officials responsible for it to come forward.
    Thank you. I want to welcome you both to the committee.
    Could you give us a brief overview with respect to division 18? Then we'll have questions from members.
    I'd like to thank you for inviting us here today to discuss part 4, division 18. This refers to clause 411.
    The proposed legislative amendments introduce a new section to the Fisheries Act, section 10, specifically subsections 10(1) and 10(2). These would authorize the Minister of Fisheries and Oceans to allocate fish for financing purposes in the context of a joint project agreement.
    There are additional amendments to the Fisheries Act contained in part 3; these also allow for entering into agreements with others. Those are in proposed new section 4.4 of the Fisheries Act.
    These new amendments together would provide the department with the ability to use moneys that flow from these agreements containing the aspect of the use of fish for the purposes of defraying incremental and operating costs attributable to activities set out in such agreements.
    Mr. Jean has a point of order.
     Mr. Jean.
    I apologize, as I don't have the witness's submission.
    Could you repeat that last sentence? I don't think I got the gist of it.
    I apologize, Mr. Chair.
    Oh, I'm sorry.
    Okay.
    Do you want to just repeat that?
    I just made the point that we are talking here about an amendment that is contained in part 4, indicating that it should be read into a section that we've introduced in part 3 for responsible resource development, which allows for the minister to enter into agreements with others. The reason it's there is that it is an integral part of that part of the bill, concerning the minister entering into stewardship agreements with others as part of habitat protection.
    You had also said “to use moneys...”.
    Oh, that part, yes. As part of the agreement we'd use the money in these sorts of agreements for the purposes of defraying incremental or operating costs attributable to activities that would be part of this agreement.
    Thank you.
    Given the benefits that would derive to industry from various scientific and management activities, an approach of this sort of shared stewardship and a stronger role for industry in activities is appropriate, we feel. For example, additional scientific data generated through these sorts of agreements can assist in setting higher allowable catches and in supporting eco-certification of fisheries, which generate additional economic opportunities for fishers.
    Thank you very much for that overview.
    Do we have questions from the NDP?
    Ms. Nash, please.
    Why is this change before the finance committee?
    Why is this part of the budget bill?

  (1755)  

    Yes.
    I really can't comment. It was not my personal decision.
    Perhaps a question for the chair is, would this not be more appropriate to go to the subcommittee, where we at least have some of the fisheries critics who are going to be examining these changes? I just feel as the finance critic that I really can't comment on fish and the appropriateness of these changes. I'm happy to offer opinions, but your expertise is in the fishery, and it might be more appropriate to have the fisheries critics as the proper people examining this.
    I just raise this as a question.
    There are a couple of members who want to answer the question. Do you want to have a...?
    Sure.
    Ms. Glover, and then Mr. Jean.
    Thanks, Mr. Chair. I welcome the question by Ms. Nash.
    The fact is that many of the sections in the budget implementation act don't require expertise. For example, we just heard from SIRC and CSIS, and the public servants who work in those areas. We heard from police officers before. Those measures aren't going before the public safety committee either.
     This measure, in fact, is a result of a change following a court case. As in many other budgets and budget implementation acts previously, quite often the changes that come about as a result of a court decision get put into budget implementation acts.
    This particular section also has nothing to do with environmental assessments or anything like that, which is why it's entirely appropriate to have it before this committee as another measure in the budget implementation act. But it certainly doesn't require any kind of assessment, or that kind of thing, requiring experts.
    I want to share the rest of my time, if I could, with Ms. McLeod.
    Ms. Nash, do you want to continue with your time? Mr. Jean and Monsieur Caron wanted to comment as well, but I can have them—
    Do you need the whole five minutes, or do you want to complete my time?
    Actually, it's just to discuss this issue—
    I've actually frozen the time. So this is just a discussion on why it's here.
    Do you want to comment on why it's here?

[Translation]

    Yes, that's correct.

[English]

    I had Mr. Jean, and then Monsieur Caron.
    Mr. Jean, on this point.
     I have two points, Mr. Chair.
    First, I was going to make the same comment that Ms. Glover made. It is a financial issue, not a quality of work issue. That's the first.
    Second, Mr. Chair, I have to be clear that I don't think there's any better fisherman, anywhere in Ottawa, than I am.
    Voices: Oh, oh!
    Shocking!
    Since her leader, Mr. Mulcair, is coming up to Fort McMurray in the near future, I'd like to invite him on a fishing trip up the Clearwater River to fish first-hand and to see the skill and agility with which I catch fish. I promise, Mr. Chair, they won't be disappointed. And Ms. Nash is invited as well.
    Okay, I appreciate that. I'm sure there's no exaggeration whatsoever in your answer.
    Monsieur Caron, s'il vous plaît.
    We should ask him about the size of the fish he's catching.

[Translation]

    It is appropriate to refer only division 18 to the committee because, according to the witnesses, that section is intrinsically linked to the other proposed provisions for the Department of Fisheries and Oceans. If the subcommittee studies the provisions respecting that department and if this measure is related to them, I do not see how we could prevent it from doing so. The subcommittee is currently discussing part 3. So it is appropriate to refer only section 18 to the subcommittee so that it can examine it together with all the measures proposed for the Department of Fisheries and Oceans.

[English]

    I'm going to have to leave that as a matter of debate. The reality to me, as chair, is that the motion passed by this committee stated that part 3 should go the subcommittee. That's why they're dealing with part 3. As to why it's in here, my sense is that it's about fish allocation for financing purposes. That's why it's in part 4. But we'll have to leave that as a matter of debate.
    I froze Ms. Nash's time. She has four minutes. Then I'm going to go to Ms. McLeod.
    I have no further questions, but I do want to comment.
     It is talking about fish allocation and the appropriate authority to set aside a certain quantity of fish, fishing gear, and equipment that may be allocated for the purpose of financing scientific and fisheries management activities.
     I just don't believe the finance committee has the appropriate expertise to deal with fish allocation. I have no questions because I really do believe this should be with the subcommittee. Actually, it should be with the fisheries committee, but our critic is going to be in the subcommittee.

  (1800)  

    Thank you.
    I'll go to Ms. McLeod, please.
    Thank you, Mr. Chair.
    What I'd really like is an example from before the court of appeal's decision of what might have happened in using an allocation to finance some activities. Can you give me a specific example?
    Yes, I can. There are quite a few arrangements that we had in place before the court action in 2006. One involved a fishery for which the department had a science program that was able, using our own resources, to take us a certain distance in terms of understanding the resource. We worked with the industry to involve them in that process. They asked us whether we could do further work on that resource to provide more clarity, less uncertainty, about the status of the resource. We weren't able, with the existing allocations, to do that, so we began to discuss an arrangement whereby we would have a joint project between the industry and Department of Fisheries science inn which we would cooperate to bring additional activities for more clarity.
    The industry agreed to finance a part of that. They requested that we do so by setting aside a portion of their allocation, which could be used, with their engagement, to offset the costs that fishermen would incur in doing the work on the water, which would generate the information that we would then assess and use to provide more advice.
    That was done, and it carried on for several years prior to the court case's indication that the minister did not in fact have the authority to allocate fish for that purpose.
    That's an example. There are many others.
    Thank you. That's all.
    Mr. Brison, please.
    Thank you very much for joining us today.
    Some critics are saying that the federal government is circumventing the 1871 agreement that made B.C. a province, in which the federal government agreed to provide B.C. with services, including the protection and encouragement of fisheries.
    How do you respond to that?
    I think we have to keep in mind that the regular appropriation comes to the department and, among many other activities, we use it for the activities that go to the purpose you speak of.
    There always seems, however, in my experience to be an additional amount of information that the resource users would like to have. It may help them make their business cases; it may help them make their decisions for investment in the fishery. This creates an opportunity for us to have a joint project to meet our common needs, the needs we would share between the government and the industry, and to do more work than we can do with our regular allocations.
    We have quite a portfolio of these types of collaborative projects. We have had several hundred in the past. I don't have a current count right now. In a lot of those cases, fish was a part of the mechanism by which the industry was able to bring their part.
    In order to finance your scientific and fisheries management activities, I wonder whether the federal government should be doing this more out DFO's budget, not by taking fish quota or gear or equipment away from fishers to finance these activities. Are you putting more responsibility for science on the backs of fishers themselves. Is that part of this?
    I think I would describe it as creating an opportunity, maybe a better opportunity than we currently have, to enter into a joint project agreement with fishermen through an organization, maybe, or a company. It's always something that's done with their engagement and obviously their agreement. This would need to be done within the context of that joint project, so I'm not sure that we're pushing anything onto them.

  (1805)  

    In terms of the control and direction of science research, is there a risk to the credibility of the science and research if there's a devolution of it to fishers? Look at what happened off the coast of Atlantic Canada with the cod fishery when science was ignored, some would say, during that period. Is there not a risk of repeating some of the same mistakes?
    All of the work that we would do, and all of the work that we do now collaboratively with the industry, is brought into the department and is put through our existing science peer-review program. In fact this program, which is the basis from which we provide our advice to the minister, regularly brings in and meshes together our own research, research that we might do collaboratively, and any other research that's relevant, which might even be done independently. In an open and transparent manner, it allows us to crunch that and—
    As it is now, before this change, approximately what percentage of the research that—
    You have one minute.
    —you rely on would be government-sponsored research versus private sector-sponsored, and how will this change that? I'm just looking for ballpark figures.
    In ballpark figures, the fisheries science program at the department is in the order of $82 million at the moment. The amount of relief funding that we are putting into this package of projects, which used to be funded with fish but are now covered with relief funding, and which we would now hope to move off relief and onto fish, is in the order of $10 million. So that gives you the relative scale of where we are now.
    It's difficult for me to answer the other part of your question, because I don't know what the demand is going to be from the industry and the agreement from the government will be to augment that in the future. We'll have to see.
    But there is a reduction in the public science investment?
    No.
    No?
    No. I don't believe so.
    Could we have just a brief response, please?
    Yes.
    The value of the resource that would be used if this tool were available would be fully in addition to what our current investment in science and management is.
    Okay, thank you.
    I have Mr. Jean.
    I don't want to hog the time, Mr. Chair. I was just interested in hearing, if we could, about some of those opportunities that you suggested these changes would drive.
    Generally speaking, we feel there is an opportunity to re-engage more fulsomely with the fishing industry in the discussion about collaborative work. The court ruling of 2006 has had the effect of dampening the amount that we have been able to do with the industry, because, quite frankly, it's been more difficult for the industry to fund its side of a collaborative project. Everything else being equal, I think if this tool were available, it would reopen the opportunity to have discussions with the industry, which is interested in doing joint projects with us.
    Obviously, they're interested in doing that, because we all have the same goal, which is to make sure we have a sustainable fish industry that's going to continue to serve Canadians for generations. Do you think that's fair?
    Yes.
    Okay.
    Those are my only questions.
    Are there any other opportunities, just before I devolve my time?
    It's difficult to be specific, because—
    I understand, but you feel the model that this legislation is pursuing is going to open up opportunities for the industry, and also open up opportunities generally, to make sure that we have a sustainable fish population?
    Yes, and I believe it will—because of the industry engagement, as my colleague explained—provide it the opportunity to bring more detailed information about the resource that it can use in its business-planning and economic-planning cycles, as well as in conservation.
    Excellent.
    Thank you.
    Thank you, Mr. Jean.
    Monsieur Mai, s'il vous plaît.
    Even though I agree with Ms. Nash that this should go to the other subcommittee, just so we understand, since we're talking about this, there was a Court of Appeal decision, because the money from licences was to be used for financing purposes. Is that correct?

  (1810)  

    Yes.
    In 2006, the Federal Court of Appeal, in the Larocque case, held that the Minister of Fisheries and Oceans didn't have the authority to use fish for financing. Among other things, the court held that the minister, by deciding to pay a contracting party the proceeds of the sale of fish was utilizing a resource that didn't belong to him for funding Fisheries and Oceans undertakings. The court found that this was an action that the federal crown couldn't perform unless we made an amendment such as the one that's being proposed here today.
    Who brought that to court? Who was against the minister's use of the licensing?
    The individual who brought the case was a member of a snow crab fishing fleet in New Brunswick.
    So now are the fishers for or against using that money?
    Certainly the sense we have developed over the last few years is that the industries that we currently collaborate with in the established group of projects that we keep going with relief funding are generally in support of continuing. In our general dialogue with the industry, we also hear that it would appreciate having a better basis for collaboration with the department on science issues and management issues, although I'm speaking from the science point of view.
    So we believe there is general support for this.
    This is a tool for the minister to use. It's not automatic, and there certainly would be consultations. Once this is in place, we'd be developing directives to frame the new authority and ensure the proper balance between private and public funding.
    When you talk about consultation, is it with smaller fishers or with the industry in general?
    I think that because what we'd be talking about is pretty much based on a small fisher group, a group that we would want to be using the quota for this sort of a project and why we would be entering into an agreement, you would consult with the group and talk about the best use of this as an appropriate action.
    Thank you for being with us here tonight. I appreciate the information.
    We will ask officials for division 19, the Food and Drugs Act, to come forward.
    Welcome to our committee tonight. We'd ask you to give an overview of division 19, and then we'll have questions from members.
    Mr. Lee, please.
    Division 19 has two major changes to the Food and Drugs Act that are fairly narrow in scope. The first relates to how Health Canada will tell the system what is or is not a prescription drug. The second relates to food and food safety.
    If you go to clause 413, that's where the prescription measure begins. What we're looking at here is that Health Canada will do a scientific assessment when a drug comes in and will measure whether a drug needs to be sold under prescription or not. That science is meant to remain stable. We use very long-standing criteria to make that assessment. We're intending to make the change as a result of the following. Beyond the science, it takes quite a long time to reflect a change to the regulatory schedule, which we now call schedule F. So we want to eliminate that long time to reflect the scientific decision.
    The tool allows the minister to create a list of what were formerly schedule F drugs. That list is then incorporated by reference to proposed section 29.2. To make sure that works in a very transparent way, you'll see measures ensuring that no one is held accountable in terms of compliance unless that list is accessible.
    The changes to food would also follow the same pattern. So we're looking at a set of decisions that Health Canada has to make on issues like food additives, for example, or a substance used in a food. There's a scientific assessment made before that substance is allowed to be used by manufacturers. The instrument would allow the minister to make a new housing for that rule through a ministerial regulation and incorporate a list of substances. So it would eliminate the very long time it now takes to express the scientific finding in a regulation. So we can move away from taking something like citric acid in peaches rather than pears and going through a whole regulatory amendment.
    Following the marketing authorization sections, there is also a more general incorporation by reference to provision in proposed subsection 30.5. This would create the same agility except around issues like contaminants. So it would allow the minister to incorporate by reference a list of contaminants that should not be in something like fish or other products, for example.
    Again, the premarket science is intended to remain the same. The efficiencies are gained through the administrative lists, and we think there's also a safety gain to be made in this system since it moves important antimicrobials and other food safety measures into the system faster.

  (1815)  

    Thank you very much for that overview.
    We'll have members' questions, with Ms. Nash first.
    Thank you for being here this evening.
    So now we're moving from fish allocation to the Food and Drugs Act. So we're broadening our scope here quite considerably.
    You are officials from the Department of Health, and just so I understand the amendments that are being proposed, is it correct that this section grants the Minister of Health the power to exempt products from the regulatory process? Is that what this change is?
    We would not characterize it in that way. The minister is doing the same scientific process as always. There is no exemption from a compound either on the drug side or the food side going through the same scientific rigour. All that is changing is how that is expressed, and in fact it just goes on a list that's again incorporated by law, has the force of law, but it doesn't go through a whole regulatory amendment.
    So the substance would be going through the regulatory process, but in the meantime the minister can issue an exemption, a temporary exemption, because eventually it will get through the scientific process. Does that describe what's happening?
    No, this instrument does not give the minister that ability.
    In fact, there was an interim marketing authorization set of provisions that was introduced earlier into the Food and Drugs Act with the same aim, to make it more efficient, but those sunsetted after two years. Looking back, they did not get us to the efficiency we were looking for. So there is no fast-tracking in this process in terms of the scientific assessment. What we're carving back on is the amount of time it takes to express, after the scientific assessment, in the rule.
    So the scientific assessment takes place, and that determines if a product is safe, yes or no?
    Correct.
    Or a food or an additive is safe, yes or no?
    That's correct.
    And then the regulations that would follow would put that into the force of law.
    So what would this temporary exemption, let's call it, or list, do differently? It speeds up the process, but is there any less protection for people because of this change? I assume if regulations are going to be in place, they're there for a reason. If they are not in place at a given point in time, what is the impact of that?
    Again, these are still regulations that are being made. They will still have the force of law.
    They will when they come into force, eventually.
    That's correct. So the safety part comes in the scientific assessment. You're looking at an individual compound. Is it toxic? How will Canadians be exposed to it? That is done, again, through a very well known, well established process. We then have to make a rule after that through a regulatory package. This can take many years. So if we think about an antimicrobial that could help out with food safety, after we're very satisfied on the science, there's this delay of sometimes up to two or three years, waiting for it to go out into the market.
    This is a very difficult situation. Similarly, if we were going to delist something from the regulatory tables, even if we had determined it's not safe, we would have to make a regulatory amendment and that is not a very agile process.
    So there's no eliminating safety. In fact, it's all still there.

  (1820)  

    No, I got that point from you, but what I'm trying to understand is presumably if there are going to be regulations, there's a purpose for the regulations, and if the product is going ahead after the scientific review, on a list, before the regulations are in place, what is the impact? I presume regulations serve a purpose. Not having regulations must mean something, and I'm just asking you whether it means something would not be enforced in a certain way. What would be the impact of not having regulations there?
    We're quite satisfied that there would be no change in the protection elements of this. The expression in a regulatory table.... If you look at the food and drug regulations, it's a very thick piece—
    Forgive us, but we're the finance committee—
    Yes, of course. It's a very thick document and it's full of tables that you will look at. Those tables will look the same in the administrative list. The administrative list will also have the same force of law. So if you're looking at the website, you will see no material difference in those that have to follow those rules, and again, the science in behind it is exactly the same.
    Okay.
    Thank you.
    Thank you.
    We'll go to Ms. Glover, please.
    Thank you, Mr. Chair.
    Thank you to the witnesses for being here.
    Just to be very clear, my understanding is that there will be no changes to the scientific review and assessment process as a result of anything that is being suggested here, and the same degree of scrutiny and rigour will be maintained so that Canadians can be assured that health and safety will not be compromised.
    Is that a clear, accurate statement?
    That is completely correct.
    Okay, so no suggestion of exemptions by the opposition, etc., no wording can spin it around to being something else. There is absolutely no change to those effects, given these regulations.
    However, the stakeholders have in fact said they're having some problems moving forward. I want you to give us an example of what stakeholders have told you that require that this come into force, which I think set out to reduce duplication, reduce red tape, eliminate the long delays.
    If you could give us a concrete example of what stakeholders are seeing as an impediment to moving forward, that might help others to understand.
    I can give an example in the area of food additives with regard to the amount of time that actually can be taken after the scientific assessment has been completed and essentially the substance to be added to foods is deemed to be safe. The example I'm going to use is for an antimicrobial substance, which is a substance that is aimed to either inhibit or delay the growth of harmful bacteria in food.
    After our scientists have assessed this substance, deemed it to be acceptable, and identified the conditions for its safe use, it can take up to 36 months of regulatory work and changes—meaning amendments essentially, the drafting of the regulations and so on—before that substance essentially could be given access to the Canadian market.
    Those changes are essentially aimed to reduce that period. The scientific assessment is still the same, with the same rigour and the same scrutiny. Once the recommendation of the substance that is deemed to be safe is granted essentially a safe bill, if you will, after that it could reduce that period to as little as six months to enable the access to market.
    So it's cutting red tape, very much in line with the red tape commission's efforts that Ms. McLeod took part in. It sounds like a fairly straightforward measure to just reduce red tape, cut red tape, reduce delays, and move forward.
    But the decisions, and the decision making-process, aren't affected at all by this.
    No, it's correct; essentially there is no change to the scientific decision-making process whatsoever.

  (1825)  

    Thank you.
    Thank you very much.
    We'll go to Mr. Brison, please.
    Thank you very much for being here today.
    How many Health Canada scientists were dedicated to undertaking scientific review and assessment of food safety particularly between 2006 and 2011?
    I do not have that figure right now, but essentially we could table that information before the committee.
    Will there be any changes in that number as a result of this decision?
    The changes that are in fact proposed here are not accounted for as part of the deficit reduction action plan, so there are no changes to the budgets allocated to the evaluation of substances.
    But the deficit reduction plan you've referenced will have an effect on the number of scientists engaged in food safety from Health Canada.
    The department has identified a number of efficiency gains related to the overall operations of the department, and there will be changes overall to the food program as a result of that.
    The decision that this change reflects goes back to around 2007, does it? Was that the genesis of this?
    It was much earlier than that, recognizing that what we're changing is a very old regulatory structure. Some of it is about 50 years old, and possibly older. There have been pressures on the time it takes, following scientific review, to just reflect a regulatory amendment.
    So just to reassure us, the result of this provision—division 19 of this budget implementation bill—will not reduce the number of health scientists in Health Canada undertaking scientific review and assessment? I just want to confirm that.
    This is quite narrow—it speaks only to the regulation-making process conducted by others.
    So it's a streamlining process that ought to shorten the time required without risking safety?
    That's correct.
    Thank you.
    Thank you very much.

[Translation]

    Do any other members wish to take the floor? Apparently not.

[English]

    We want to thank you for being with us here tonight. We appreciate your comments and your responses to our questions.
    We will move on to division 20, the Government Employees Compensation Act. We'll bring those officials forward.
    Welcome to our committee, Mr. Child. We look forward to any opening remarks you may have. Then we'll have questions for you.
    Division 20 proposes one significant change to the Government Employees Compensation Act that will allow prescribed entities to be subrogated to the rights of employees to pursue claims against third parties.
     The current legislation was enacted in 1918. It provides benefits to employees of the federal public service, most crown corporations, and agencies if they are injured in the workplace as a result of accidents or occupational diseases. When an employee sustains an injury in the course of employment that's attributable to a third party, the employee may either pursue the third party or allow the federal government to do so. The amendment here proposes to grant the authority to pursue the third-party claims to prescribed crown corporations or other bodies. That's essentially the change that's being proposed. There are two other bits: the first essentially says that the employee must make a choice; the second says that once the election is made it is final.

  (1830)  

    Thank you very much for that.
    We'll go to questions from members.
    No questions?
    No.
    Ms. Nash.
    I'll ask what prompted this change. Has there been discussion with the affected unions?
    The change was prompted by the fact that 60% of the claims are against crown corporations. And 60% of that 60% are claims against one crown corporation. They are largely tasked with dog bites, and very often the employer would want to pursue the homeowner rather than the federal government. There are administrative costs to our doing it and quite often it's a very small amount. So it's essentially to save money as part of the deficit reduction action plan. It's not an awful lot of money, but there are nonetheless some savings.
    So this is someone who would be responsible for making his own claim against a third party?
    The employee can claim the benefits under the Government Employees Compensation Act. In doing so, the claim is subrogated to the government. This is proposing that it be subrogated to the crown corporation. The other option is for the employee to refuse the benefit and sue the homeowner himself. That's the change.
    Okay, I understand.
    Thank you.
    I have Mr. Brison on the list.
    Did you say primarily...dog bites?
    Well, I gave that as an example, because we see those quite often.
    So a lot of cases of postal—
    That's right. Exactly.
    Some of us who have knocked on doors in elections have sustained dog bites as well, so I don't know whether it would apply to us or not.
    It applies simply to public servants and employees of crown corporations and other agencies. I'm not quite sure if you fit into one of those.
    I think there are a lot of Conservative dogs in Nova Scotia.
    Voice: Oh, oh!
    I've dealt with a lot of vicious Conservative animals over the years.
    Voices: Oh, oh!
    Hon. Scott Brison: Rabid, really. Pit bulls, actually.
    No, a weasel is not a dog, Shelley, I'm sorry.
    What's the dollar figure involved in this?
    The overall dollar figure to us is about $260,000. Those are our costs. I don't know what the overall cost is, but it would range from very small amounts to some more significant ones. This covers fatalities, as you can well imagine, so it varies considerably. I don't know what the overall number would be. If the committee wishes, we can get that to you.
    For crown corporations, is this an improvement from a crown corporation governance perspective?
    Yes.
    Okay. Thank you.
    Thank you very much, Mr. Child, for being with us here this evening and for responding to our questions.
    Thank you.
    We'll move on to division 21, the International Development Research Centre Act, on page 299.
    Welcome to the committee, Ms. Nicholson. If you want to give us a brief overview of these sections, we'd appreciate it. Then we'll have questions from members.
    This particular item is part of the International Development Research Centre's cost-saving, by reducing the maximum number of members of the board of governors from 18 members to 14 members. There are also some follow-on amendments that would affect quorum and the size of the executive committee. There are no transition costs associated with this reduction, as attrition has already resulted in the necessary vacancies.

  (1835)  

    Thank you very much for that.
    Are there questions from members? I have Mr. Brison on the list.
    Could you describe the mandate of the International Development Research Centre and what function it provides to government in terms of advisory, or research, or...?
    The International Development Research Centre is part of Canada's official development assistance. We are part of the foreign policy family, although it is a crown corporation. It was established in 1970 with the mandate of effectively funding research for development in the developing world. Primarily, the research is done in the developing world as part of the other part of our mandate, which is capacity building for researchers and scientists in the developing world.
    Does your group conduct research and provide evidence-based advice to government?
    The grantees do that. Part of the project funding will often involve their doing research in their own countries, suggesting policy amendments that would impact their countries.
    You are saying that through attrition the number of governors has been reduced from 18 to 14. Is that right?
    Yes, currently we are actually slightly under 14 and we are awaiting some appointments. This would bring us to 14 with no additional costs.
     I apologize. I should know this, but what is the profile of your governors in terms of experience?
    Like any board, there's no typical profile because we're looking for a variety of experience. We're looking for people with expertise in the various areas in which we fund research, and we're also looking for management and financial experience for the oversight functions of a board.
    From time to time, the International Development Research Centre would take positions that any government might potentially disagree with, positions it would present to cabinet or to government or to the ministers, based on its research and evidence.
    Generally speaking, because we provide funding and not the decisions—
    I'm talking about it's funded and organized by....
    Yes, there would be evidence-based research findings, which would be presented to their governments to make their own policy decisions.
    Sure, so from time to time any independent group that the organization may fund may sometimes come up with policies that would disagree with the sitting government, a Liberal or Conservative government. Since the inception of the group in 1970, I suspect over time that has happened quite a bit. But through attrition, naturally there's always change. How long has it been since new people have been appointed to the board? It's been pared back from 18 to now you're saying 12, about a 33% reduction.
    There's natural turnover over time, and the last time we gained new members through regular appointments, I believe, was about two and a half years ago.
    You have one minute.
    Okay, so there has not been a new appointment for two and a half years.
    No, not that I can think of.

  (1840)  

    Thank you.

[Translation]

    Are there any other questions?

[English]

    Thank you very much, Ms. Nicholson, for being with us here tonight. We appreciate your briefing the committee.
    We'll move on to division 22, the Canada Labour Code.
    You have a point of information, Ms. Nash?
    I'm just looking at the time. We have two hours left for officials.
    That's correct.
    And we're not even halfway through section D. I don't want to cut into the time of other witnesses. I would just like to test the committee. Is it possible to extend the time of our meeting with officials? I think most of us would be prepared; we could go tonight or tomorrow morning.
    Or Monday morning.
    Monday is a holiday, but we might meet the following week after the break, Monday morning, just so we at least get the appropriate officials before us without cutting into other witnesses. We're limited enough in our time that we don't want to cut into other witnesses' time. It's just a question of whether we can get through.
    It's up to the committee. As chair, I've been operating under the guidelines of starting with witnesses on Monday. But if it's the committee's will, we could have officials on Monday instead of witnesses.
    I don't want to cut into the time of other witnesses. That's why I thought we probably don't need a huge amount more time, but it would be helpful to be able to get through every section here with officials before we get into witnesses.
    Okay.
    On this point, Ms. Glover, go ahead please.
    I just want to say that given the number of repetitious questions, perhaps the opposition might want to consider limiting the repetition of questions and limiting the questions that are really outside the scope of the BIA. That would gain them some time. This side has been very generous in providing extra time to the opposition. We are happy to stay an extra hour tonight, but many of our members will be leaving to go back to their ridings on late flights. So we have an extra hour tonight if the opposition would like to do that. But failing that, there won't be another opportunity, and tonight, according to the motion that was passed, is the last night to receive officials unless we cut into witnesses' time. So unfortunately, there is a time constraint, but an hour tonight would be available.
    Thank you, Ms. Glover.
    On this point, Monsieur Caron.

[Translation]

    In fact, I suggest that we have another opportunity. That would be on the Monday following the week we spend in our ridings. We come back on Monday the 28th, don't we? That would be the first day with the witnesses.

[English]

    We have Monday, May 28, but I've been operating under the motion that instructs the chair to allocate 50 hours prior to clause-by-clause debate.
     We've been operating under the suggestion that we have witnesses starting on Monday, May 28. If the committee wishes to change that and move the witnesses.... But in terms of adding hours, I think we'd need a motion to that effect or the consent of the committee.

[Translation]

    I suggest that, in addition to the extra hour this evening, at most three hours be scheduled for Monday morning after we return from the week spent in our ridings.

[English]

    I have Ms. Glover and then Mr. Mai.
    Again, Mr. Chair, this side has been more than generous and patient with the repetitious questions, with the out-of-scope questions. It doesn't sound like the opposition is willing to concentrate and focus on the BIA to meet the obligations set out in the motion.
    This side is willing to stay an extra hour, but that would be with the understanding that there would be no motions introduced, so that those members who can't stay, who do have flights, can leave. There would be no motions introduced, and we will not be agreeing to any more time than what has been suggested—the extra hour this evening—and then we will proceed as planned with the motion.
    We've given most of our time to the opposition as it is, and we'll continue to be generous, but they have to do their part as well.

  (1845)  

    Thank you.
    Mr. Mai.
    On the point of doing our part, if I recall correctly a couple of members from the other side were talking about their personal experiences. I won't go into details, but to be fair I don't think it's only the opposition that has been talking about fishing and personal stuff.
    We have a budget implementation act that is fairly large, and you mentioned that there are a lot of things that are not directly related to finance. It has to be both ways. I don't agree with your position that it's only the opposition who is asking repetitious questions and things that are not relevant.
    Thank you.
    Mr. Hoback.
    Thank you, Chair.
    Mr. Chair, I've been silent all through these meetings on purpose, and that was to allow the opposition time to go through it. But I also want to let the opposition know that I did my due diligence beforehand. I thought about where I thought there would be areas of interest or questions.
    I was paying close attention to my colleagues who were asking questions to ensure that if I didn't get one of my questions answered, or didn't have question addressed already by Mr. Jean or Ms. Glover or my other colleagues, I would address it. I have to say that I've been very happy with what I've seen as far as the questions that have come from this side are concerned.
    I'd also like to remind members that this is not a hard read. This isn't a very complicated budget; it's fairly simple.
    If you want to prioritize which officials should come forward before the end of the meeting, maybe you could give that list to the chair and the chair might be willing to prioritize those witnesses so you'd at least get the witnesses you want, instead of making all these officials sit here for the rest of the night.
    You've got some options here. As I said, we've been very cordial and very understanding, but I expect you to do your own work.
    I will back Ms. Glover who made the comment about repetition. We've seen repetition after repetition from that side of the committee. I don't buy this argument that you don't have enough time to do this or you don't have enough time to do that. You've had all the time in world to do your work; just be efficient in how you go about doing it, please.
    Thank you.
    I have Mr. Brison and Mr. Marston and then Mr. Jean.
    Mr. Chair, just one division of this legislation reflected what was an independent piece of legislation in the last Parliament, Bill S-13. It was debated at the Senate, but it did not have any scrutiny by members of Parliament at committee prior to today. We devoted about 25 minutes with officials to the entire study of Bill S-13 at the parliamentary committee level. So that is hardly a matter of the opposition parties using excessive time or utilizing dilatory procedures. There has been scant parliamentary oversight and consideration of the legislation.
    Frankly, I would challenge Ms. Glover or anybody over there to go through the questions that I've asked and find any evidence of repetition. You'll find questions about public policy. You'll find questions about the people we are elected to represent and to try to build good policy on behalf of them. You'll find questions based on significant research by our staff. So we have devoted the time and prepared for this. I would hope that all members of Parliament have done this and take it seriously.
    But Ms. Glover's kindergarten school teacher routine and condescension toward opposition members, that “We [on the government side] have been so good to you, and if you could just behave, everything would go along much more nicely”—
    Mr. Brison, there is a point of order. As you know, the chair has to recognize a point of order.
     Mr. Hoback.
    On a point of order, Mr. Chair, if he has something to add to the debate or something of value to talk about, we would all be very interested in listening to it, but obviously he does not. He'd rather take the committee down a road that I don't think you want to go down. So please, let's get back to dealing with what the business is, and that's listening to witnesses.
    That's technically a point of debate.
    I'd like to get to the witnesses. I'm just saying as your chair that the quicker we get to the witnesses the more time we will have with witnesses and officials. We can carry on this debate all night.
    I have Mr. Brison to finish, then Mr. Marston, Mr. Jean, and now Ms. Nash.
    I'll just say to members that the time we do this is time we take away from questioning witnesses, which, in my understanding, all of us want to do—

  (1850)  

    Mr. Chair—
    I'm just finishing my point, and then I'll go to Mr. Brison to finish his point, and then Mr. Marston.
    I say this respectfully, Ms. Glover. When you speak to us like children or people who have been pulled over for speeding and you tell us that somehow if only we could follow the rules, I would point out that we are following the rules. If you look at the questions I've asked, I think you will see very little repetition. You will see in fact public policy questions. They may be complicated, Shelly, but that doesn't mean they're repetitious.
    I would ask you, Mr. Brison, to make your comments through the chair. And let's endeavour to be respectful at all times.
    No kidding.
    I'm sorry, Shelly, your kindergarten school routine—
    Order, order.
    You ought to be sorry.
    The Chair: Order, order.
    I know. Are you going to write me a ticket?
    Order. I'll just remind members that we are on television. We are being watched by our constituents and we should reflect that in the best manner possible.
    We'll go to Mr. Marston, please.
    Thank you, Mr. Chair.
    Look, putting aside the personalities that are bubbling a little here, there's a certain tone of condescension that comes over about the amount of work that we put into this.
     I'm sitting here with pages after pages of legitimate questions. Your government has put together a huge document of 400 and some pages. Part of our responsibility is to bring forward the concerns and questions we have, and to do that in a public forum, here, in front of Canadians. I'm not going to make any apology at all to anybody for doing the due diligence that's necessary on this.
    Okay, thank you.
    Mr. Jean, please.
    Very briefly, Mr. Chair, I was just going to say that from my recollection, I think there was a proposed schedule or plan for of how we were going to study this. It was unanimous. I think it was unanimous, from my recollection of it. And if I can talk about it, I think everybody agreed to that project.
    Did they not? Did we not all agree to it? I remember it was submitted around the table.
    My understanding is that the motion itself was not unanimous, but regarding our calendar—and members can correct me on this—all three parties instructed me as the chair to operate under the schedule proposed by Ms. Glover, once the motion had passed. There wasn't agreement on the motion, but there was agreement on the schedule. That's what my understanding was as chair.
    That was my point, Mr. Chairman. Thank you for that confirmation.
    It was a unanimously agreed upon schedule. The motion wasn't, but the schedule was.
     Why don't we get on with the business? We already know what our position is. We know what your position is. You've stated it. We have a witness who's sitting here patiently—and whom I hope, for her sake, is paid significant overtime to be here. We've been here 15 to 20 minutes. Could we get on with the business we're here to do?
    Then at the end of the day, at 9:30 or 9:29, if you want to make your statement, I'd be happy to stay as long as you want. And I promise no more fishing stories, as long as you come up and go fishing with me, along with Mr. Mulcair.
    Voices: Oh, oh!
    Mr. Brian Jean: I'd appreciate that. We could sit on the beaches and eat some fish there. I think you'd enjoy that.
    Thank you.
    We'll have Ms. Nash, please.
    I would just like a clarification. Is the extra hour we sit tonight, if that's the will of the committee, an additional hour? Is that correct?
    Yes. If the committee agrees to it, it would be an additional hour tonight.
    All right.
    Can I just ask if the additional hour tonight is agreed to by the committee?
    Go ahead, Mr. Hoback, on this point.
    I just want to reconfirm that there will be no motions brought forward in this last hour.
    Do I have the agreement of the committee that there'll be an extra hour tonight, to 9:30, and there will be no motions brought forward by any member of the committee?
    Some hon. members: Agreed.
    The Chair: Look at how we all get along.
    Ms. Duff, I apologize for making you sit there. We'll have you present an overview of division 22 on the Canada Labour Code.
    Division 22 contains two elements. The first one consists of clauses 432 and 433, which amend section 115 of the Canada Labour Code, which in turn requires that unions and employers to file their collective agreements with the Minister of Labour.
    There is currently no mechanism, short of prosecution, to ensure that the parties comply with this filing obligation. Once amended, section 115 will specify that parties must file their collective agreement with the minister immediately after it is entered into, renewed, or revised. It will also stipulate that a collective agreement may come into force only if at least one party has filed a copy.
    Once the collective agreement is filed, its provisions will come into force on the day it would have come into force if not for the filing requirement, which essentially means that the provisions could apply retroactively.
    These amendments will come into force on the date fixed by the Governor in Council.

  (1855)  

    Thank you very much for that overview.
    We'll have members' questions, starting with Ms. Nash.
    First of all, thank you for waiting patiently for us tonight.
    Can you just clarify for me the rationale for this change, and would the information filed be made public?
    There was always a requirement to file collective agreements, so the rationale for this was simply to try to encourage compliance with the measure. In the past, there have been some difficulties obtaining collective agreements from particular organizations.
    There is a service at the labour program where people can seek information from collective agreements. It's contained in the Negotech system. There's a call centre. You can inquire about the provisions in collective agreements.
    Those are all of my questions.
    Thank you, Ms. Nash.

[Translation]

    Are there any further questions?

[English]

    We'll have Mr. Brison, please.
    Just to clarify, this has no effect on the treasury? Audits in a budget implementation bill....
    Sorry, perhaps I should clarify that. This is a DRAP-related measure, a deficit reduction action plan related measure. Currently, someone is responsible in the labour program for making certain that the collective agreements that haven't been filed are tracked down, because it's a requirement in the Canada Labour Code. That person will no longer be required to do that and take those measures.
    There is no cost in terms of the service, but with respect to the work, it will mean that the person can use his or her time on other things that labour program officials are concerned with.
    Thank you very much.
    Thank you.
    Are there any further questions on this?
    Thank you very much, Ms. Duff. We appreciate your time here tonight.
    I have a couple more.
    Oh, sorry.
    There's another part to division 22—and then I'm here for division 23, as well.
    Okay.
    The other part of division 22 is another amendment to the Canada Labour Code, unrelated to the first one. This amends part III of the Canada Labour Code to require federally regulated employers to insure, on a go-forward basis, any long-term disability plans they may offer to their employees. A transition period will be provided to ensure that employers have sufficient time to comply with the legislative change. As well, the maximum fines for offences under part III of the Canada Labour Code will be increased, and new graduated fine provisions that allow for higher fines for repeat offenders will be introduced.
    Thank you very much.
    Could I ask you to do the overview for division 23, then, at this point?
    Yes.
    Division 23 in the part IV of the bill repeals the Fair Wages and Hours of Labour Act, which was enacted in 1935. It stipulates that all persons employed by a contractor doing work on a federal government contract for construction, remodelling, repair, or demolition of any work, must be paid at least “fair wages”, defined in the act as “wages as are generally accepted as current for competent workmen in the district in which the work is being performed”.
    The Fair Wages and Hours of Labour Act holds contractors financially responsible if any of their subcontractors fail to pay wages. This division would repeal the Fair Wages and Hours of Labour Act and, as a consequential amendment, remove reference to the Fair Wages and Hours of Labour Act in the Campobello-Lubec Bridge Act. It would also stipulate that rights and obligations acquired under an existing contract to which the Fair Wages and Hours of Labour Act apply will not be affected. Employers in the construction industry, who are provincially regulated, will continue to be subject to provincial or territorial employment standards, and occupational health and safety legislation.
    Thank you very much.
    Any questions?
    We'll start with Mr. Marston, please.

  (1900)  

    Your explanation is pretty good, but I'm a little bit troubled because any time it appears that the protections for someone are being removed.... So if a contractor bid, let's say, on West Block, just as an example, and they were to bring in workers who were paid half of what workers normally would be paid on that site, under the old legislation that would be corrected. Would that be the case?
    Under the old legislation, there would be wage schedules used to determine the fair wages for those employees.
    So, if on that scale, it said that the wage should be 30% more than what they were paying, then there would have been an adjustment made to protect those workers. Would that have been the case?
    If that were the case, that would happen. I guess I would say that for construction workers who were unionized—
    That's it—
    —typically the wage would be higher—
    —and they'd have protection already.
    Right, and there are provinces that have provincial legislation stipulating wage rates in particular industries.
    What I am concerned about is that if we're having work done in the precinct and somehow we could have substandard wages paid to people working there, it's troubling that we could say this is an acceptable practice. It appears, to me at least, that this is what's happening here.
    What mechanisms would be available after this change to ensure fair working conditions for persons employed by the contractor? Is there anything after the fact, if this is enacted?
    I think the primary rationale for eliminating this is that it's duplicative. There is provincial and territorial labour standards legislation applied to these workers. In this instance, it's a federal standard that was established in the 1930s at a time when provincial labour legislation was much weaker. At this point, it's just establishing a layer on top of provincial and territorial legislation that duplicates much of what exists in provinces and territories now.
    Yes, having been a Bell Canada worker for 20-odd years, I know that Bell Canada would be one of the groups that could be coming in to do work. So they'd be under federal jurisdiction as opposed to provincial jurisdiction, because of communications.
    Bell Canada is a federally regulated industry, yes.
    So this act would be more important to them than it might be to someone else who is provincially regulated?
    Well, in this instance, this only applies to the construction sector, so typically it wouldn't apply to communications workers.
    Quite often during construction, though, at the times when wiring is being run before the walls are put up and so on.... But anyway, I'm not going to take it too far, because I don't think it's necessary. I understand the point you've made, so I'll leave it at that.
    Thank you, Mr. Marston.
    Are there any other questioners on this?
     Okay, Ms. Duff, thank you very much for being here with us tonight. We appreciate your information.
    We will now move to division 24, the Old Age Security Act, and ask those officials to come forward.
    We welcome our officials here this evening to present to the finance committee, and I invite one or more of you to present and give an overview of division 24.

[Translation]

    I am Director General of Seniors and Pensions at HRSD.

  (1905)  

[English]

    —at HRSDC.

[Translation]

    We are honoured to be with you this evening. I am here with some colleagues, Nathalie Martel, who is Director of Old Age Security Policy,

[English]

    Ms. Annette Vermaeten, who is the director of the OAS task force; and Mr. Bruno Rodrigue, who is the chief of income security at the Department of Finance.
    I will begin with a quick overview of the provisions under division 24, part IV, of Bill C-38, specifically clauses 445 to 467 of the bill, which amend sections of the Old Age Security Act.

[Translation]

    This concerns three initiatives.
    The first concerns the increase in the age of eligibility for Old Age Security.

[English]

    Starting in April 2023 the age of eligibility for the OAS pension is proposed to be gradually increased by two years, from age 65 to age 67. In addition, the eligibility age for the allowances would be increased from age 60 to age 64, and be moved to age 62 to age 66 in parallel.
    This age increase is being proposed with many years of advance notice to provide adequate time for Canadians to adjust. The change is preceded by an 11-year notification period, from now until April 2023. The actual change in the age of eligibility will then be phased in over a period of six years, from April 2023 to January 2029. The eligibility age will be increased by one month every three month—thus on a quarterly basis.
    The change to the age of eligibility for the OAS program will not affect current seniors. Anyone aged 54 or older as of March 31, 2012, will not be impacted by the age increase. The government has announced that it would adjust programs under federal jurisdiction, since some programs use age 65 as a trigger for benefits. Such programs exist at Aboriginal and Northern Affairs Canada and at Veterans Affairs.
    The government will also work with provinces and territories to fill the gap that this change would create for the Canada pension plan disability benefits and survivors' pensions. Finally, the government has committed to compensating provinces and territories for any net additional costs they may face resulting from the increase in the age of eligibility for OAS benefits.

[Translation]

    The second initiative is voluntary deferral for Old Age Security pensions.

[English]

    Starting in July 2013, a voluntary deferral for OAS pensions is proposed for introduction. This will provide eligible Canadians the option of deferring their take-up of their OAS pensions by up to five years past the age of eligibility, and for them to subsequently receive a higher actuarially adjusted pension. The voluntary deferral of the OAS pension will be available between the ages of 65 and 70, until the age of eligibility is increased, at which point it will start moving and gradually reach age 67 to 72 in parallel with the increase. The actuarial adjustment to the OAS benefit will be 0.6% per month, or 7.2% for a full year of deferral. Over five years, the maximum increase to the OAS benefit would be 36%, which would be paid to recipients for the rest of their lives and be fully indexed to the consumer price index, as are all OAS benefits.

[Translation]

    Lastly, the third initiative concerns what is called proactive enrolment.

[English]

    This initiative will allow the Minister of HRSDC to waive the requirement for an application, thus allowing for the introduction of automatic enrolment of seniors where the department has sufficient information to satisfy its integrity requirement. Where the available information is not deemed sufficient to automatically enrol a senior, the available information will be used to pre-fill the application form. We refer to this as a streamlined application process, which will make it easier for seniors to apply for the OAS benefit. This initiative will be implemented over a period of four years, beginning in 2013, and be fully in place in 2016.

[Translation]

    Mr. Chair, that concludes my introduction.
    If you wish, my colleague Ms. Martel can briefly explain the most important sections, the most important clauses.

[English]

    or the more salient clauses involved.

[Translation]

    That's fine. Thank you.

  (1910)  

[English]

    No. I think we'll just stop it there and then we'll go to questions from members, and then you can provide details in response to their questions.
    Okay.
    We'll start with Ms. Nash, please.
    Thank you very much for being here this evening.
    At the briefing for this bill, people were told that the full costing of the changes to OAS using the Social Policy Simulation Database or other types of econometric modelling had not been performed. Why has the government not costed this program change, when it is designed basically to reduce costs?
    Just so that I better understand your question, is it on the cost of the program? I ask because we know the cost of the programs.
    What is the cost of raising the age from 65 to 67, for example?
    There's no cost associated with doing that.
    Then the savings?
     I think the minister addressed this question when he presented to this committee, and we don't have any further comments to make on that.
    If the point of doing this is to make the program sustainable, how do you know it's sustainable based on this change of increasing the age to 67?

[Translation]

    Go ahead.
    In fact, the reason why this program is sustainable,

[English]

    why it will become sustainable, is that it's estimated that there will be fewer workers at the time, and also that the number of seniors will be increasing.
    In terms of the exact savings and the growing costs, we know that in 2030 the cost of the program will be $108 billion.
    You know the number of seniors and you just said that you know how many people this would affect, because we know these demographic numbers. So you must have done the calculation as to what that will mean in terms of people in the future not receiving OAS for those two years.
    Yes. The changes to the OAS program will ensure that the program remains sustainable over the long term and that it reflects demographic realities. In terms of additional information with respect to the estimated savings, the minister has addressed this question. We don't have any further comments on that, and it would be very difficult for me to provide comments or details on the content of briefings that have been prepared for the budget. However, if you have any questions specifically on the proposed amendments that are included in this bill, my colleagues from HRSDC have the expertise to answer these questions.
    Could I make a request then? Could you do this analysis and provide it to our committee?
    Once the legislation has been tabled...this information from the Chief Actuary, the minister of HRSDC has to cause an evaluation report. At that time there will be an actuarial report on the program that will be tabled in the House of Commons. Before that, as I said, it's difficult for us to provide any additional information.
    In other words you're saying that once this is passed, then we'll find out the impact on Canadians. Is that what you're saying?
    I am here to provide responses to questions you may have on the proposed legislative amendments.
    On the proposed change to OAS raising the age to 67 for future retirees, can you tell me what, in your view, the impact will be on seniors living below the low-income cut-off? Have you done that analysis?
    We know that the social safety net will be there, and we know that the labour participation of Canadians—

  (1915)  

    So just let me clarify that. Is it that they can go on welfare. Is that what you're saying?
    I'm saying that the social safety net is going to be there, but—
    That would be social assistance, I would think.
    —perhaps more importantly, the number of senior Canadians age 65 to 69, for example, has more than doubled in the last 10 years for men and more than tripled for women. That's from Statistics Canada.
    Thank you.
    The next round is a Conservative round.
    Mr. Jean.
    Excellent. I thought Ms. Nash's line of questioning, when she let the witness answer, was really good and I'd like to hear more from the witness in relation to the specific numbers.
    I was a bit shocked when you said the number of senior women has tripled and the number of senior men has doubled in the last 10 years. Obviously, if your customer base is doubling and tripling in a 10-year period, based on that trend I'd suggest that it wouldn't be very sustainable if they're receiving money from government.
    Could you give us those figures, please?
    According to the labour force survey of Statistics Canada, a decade ago about 200,000 seniors were employed. Today it's over half a million. For young seniors, those age 65 to 69, it's even more pronounced; their employment rate has increased from 11% to about 23%. For women, the employment gains were higher. For men the increase has been slightly lower. There are a number of reasons. For example, people are living longer and healthier lives, the labour force is getting older, and seniors are choosing to remain in the labour force longer.
    Actually that's a very fair comment. I've heard from a lot of seniors that they want to participate in the labour force, but often when they've retired from certain jobs it's difficult to find something that adapts to their particular lifestyle. I know that we've addressed some of that through work-sharing and other things we've done in this budget and the last budget.
    What about the number of seniors and those who are actually becoming seniors? My understanding is that each year in Canada, 100,000 people become seniors, though I'm not sure if I'm correct on that number. Is that correct?
    It's more than that. I think it's about 325,000 individuals who turn 65.
    So it's 10,000 per week, or pretty close to that.
    That's about right, yes.
    So almost 10,000 people in Canada are becoming seniors every single week.
    Between now and 2030, there will be about nine million individuals who turn 65.
    Nine million, over how many years?
    Between 2011 and 2030, so over the next—
    Nineteen years. Wow.
    Have you forecasted—
    The expenditures for the OAS program are tripling and that's due to two main demographic factors. One is the increasing life expectancy, as people are living longer. Individuals who turned 65, let's say, in the 1970s lived for about another 16 years.
    Yes, the average age is—
    Right.
    Today, an individual who turns 65 lives for about another 20 years. By 2030 it will actually increase to 22, another two years.
    That's great news. Hopefully, I'll last that long.
    I'm also curious. The real number is the number of people who support the seniors. I've heard some figures, and I'd like to have those clarified now. What would the ratio be between the number of workers today supporting each senior compared to the number 10 years ago—if you have those figures—and then the number by 2030 doing the same?
    Just before my colleague jumps in and answers your question, sir, all the data that Ms. Vermaeten is quoting is found in the Chief Actuary's 9th report that was tabled in Parliament. We refer to working-aged Canadians in that report.
    Sure. That's great.
    What were those figures?
    In the 1970s there were about seven working-aged Canadians for every senior. Today, there are about four working-aged Canadians for every senior and by 2030 that will be half, or about two working-aged Canadians per senior.

  (1920)  

    So in essence we have a choice based on that. We either quadruple or multiply by seven the premiums that Canadians pay into this program.... That's in essence what we have to do: we either have to multiply it by seven or we have to find some other way to soften the impact on the Canadian worker and seniors generally.
    Is that fair? Is it a balance?
    The demographics speak for themselves. It's clear that the demographics are putting pressure on the OAS program.
    Yes.
    In essence, whoever supports that program has to pay more, which is Canadian taxpayers.
    It's completely funded through the general tax revenues.
    Exactly.
    So they're going to have to take the money from somewhere in order put into that program, either from health care or whatever it may be. Is that fair to say?
    Could we have just a brief answer to that, please?
    It's paid for by taxes.
    I know that.
    Thank you.
    Thank you, Mr. Jean.
    We'll go to Mr. Brison, please.
    Thank you very much.
    Mr. Rodrigue, I would like to clarify something. You said it is very difficult to provide us with the information prepared in briefings for the budget. But the information has been prepared, of course.
    I can't comment on that. It's a cabinet confidence.
    Section 69 of the Access to Information Act specifically states that the following is not covered by cabinet confidence. In fact, in the previous Parliament, the Speaker ruled that the government was in contempt of Parliament. Section 69 refers to,
discussion papers the purpose of which is to present background explanations, analyses of problems or policy options to Council
    —meaning cabinet—
for consideration by Council in making decisions.
    If the decisions to which the discussion papers relate have been made public, that is, once a decision has been rendered publicly, those discussion papers are no longer covered by cabinet confidence.
    Has the cabinet made a public decision to raise the qualifying age of OAS from 65 to 67? I would like to confirm this.
    It was announced in the budget plan.
    Okay.
    So you would agree, then, that background explanations and analyses of problems or policy options for cabinet are no longer covered by cabinet confidence once the cabinet decision has been made, based on section 69 of the Access to Information Act?
    I have no expertise in that area.
    You're a public servant, sir. This is the law of the land.
    Yes.
    You have a responsibility to know that.
    As I explained before, we're here to answer questions on the proposed amendments in this bill.
    Okay.
    Were cabinet ministers provided with any background explanation or analysis of the cost savings to the government as a result of this?
    The Minister of Finance has already answered that question.
    I have no further comment.
    The minister didn't answer that question actually.
    I'm asking whether cabinet has been provided with the information and the background analysis of the savings to the government from this decision?
    My role is to answer questions related to the proposed legislative amendments in this bill and how they're going to work.
    I have no further comments on the estimated savings if there are any.
     If there are any?
    I'm saying that the Minister of Finance was asked that question. He answered. I have nothing else to add.
    Point of order, Mr. Hoback?
    Can you remind our colleague across the floor of the role of the department officials and the role of the minister? He is asking political questions, and it's not the role of the department officials to answer political questions. He seems to be badgering the witness more than getting on with the topic of the budget within part 4.
    Mr. Brison is asking about potential savings from OAS changes. I don't see that as a political question. He is asking whether there's background information prepared by any of the departments on that.

  (1925)  

    Thank you, Mr. Chair.
    If I were to fill out an ATIP request, could it capture information on how raising the age of OAS from 65 to 67 would change the projected costs for the government?
    Can you repeat that question?
    If I were to do an ATIP request, and the ATIP request were to ask for that information, would you provide it?
    It could potentially be excluded as a cabinet confidence under section 69.
    No. We've already covered that. Under the law of the land, section 69 of the Access to Information—
    That's your interpretation of the act. I take a different interpretation, although I'm not—
    What is your interpretation?
    I think information provided to cabinet in the preparation of the budget could be technically included as a cabinet confidence.
    As I said, this is not my area of expertise.
    Let's work together on this. Section 69 of the Access to Information Act does not apply to cabinet confidences “if the decisions to which the discussion papers relate have been made public”. So it is not a cabinet confidence once a decision—
    I cannot make that determination. I can comment on the information that was included in the budget plan and the legislative amendments that are proposed, but I have no comments on—
     Okay.
    One minute, Mr. Brison.
    Mr. La Salle, you said that you're giving the public plenty of time to adjust. However, 38% of Canadians are making less than $20,000 a year, and 40% of the people getting OAS are making less than $20,000.
    Are you saying to people who are 53 to just start saving a little more money to prepare for the future? What about those who are in physically demanding labour, such as fish plant workers, welders, or pipefitters? Should they just save more money?
    What I will say is that 11 years of notification compares very well with most countries that have implemented similar changes. Many countries in the OECD have implemented this sort of change.
    Are you familiar with the OECD report and the Parliamentary Budget Officer's report that says there's not a sustainability issue?
    Thank you, Mr. Brison. Unfortunately, your time has expired.
    Thank you.
    You'll have to come back in another round.
    We will go to Ms. McLeod.
    Thank you, Mr. Chair.
    I noted my colleague was continuing to ask you about what is releasable and what's not. You indicated that you're not an expert. People who have been around government know that there are people who assess questions such as he has asked. Could you talk about ATIP and your department? I know you're not the one who is responsible for looking at the legislation and making decisions. Would that be an accurate...?
    No, that's not my responsibility.
    So if a request comes in, it goes through the proper process. Every department has regulations and rules and procedures for—
    We have experts at the Department of Finance who work in close collaboration with counsel at the Privy Council Office to determine what is and what is not a cabinet confidence.
     I appreciate that you said it would be inappropriate for you to decide from a small written paragraph what is releasable and what's not.
    Thank you.
    That's it? Thank you, Ms. McLeod.
    Do you want in on the same round, Mr. Jean?
    If possible, yes, Mr. Chair.
    Okay.
     Thank you. I'll be very brief, Mr. Chair.
    I want to say, first of all, that with all these hours of work we're putting in, that is the best meal, and whoever ordered the fish did a great job. It's not a Clearwater River fish from northern Alberta, but it's not bad.
    You missed those comments earlier, Mr. Brison, when I invited Mr. Mulcair to Fort McMurray to do some fishing. I'd invite you along to do the same, because you obviously don't know what pipefitters and welders make in northern Alberta. They make more money than you and I do in this job, Mr. Brison. So if you want to have that opportunity, you can come up.
    Make your comments through the chair, please.
    Can I have that on the record, please?
    Mr. Jean, have you any questions for the officials?
    No, thank you.
    Thank you.
    We'll go to Mr. Marston, please.

  (1930)  

    Thank you, Mr. Chair.
    Mr. Rodrigue, I understand you are in what we would refer to as a hot seat in some sense, because it's very clear from your responses to us that somebody someplace has coached you in the positions you have to take, and I appreciate where you find yourself.
    Are you aware of the Parliamentary Budget Officer's opinion on the sustainability of OAS, and that the OECD's pension team had the same conclusions? Are you aware of that analysis, sir?
    I'm aware of that analysis, yes.
    Do you agree with it, or do you not?
    As I said, I'm here to provide, with my colleagues from—
    Okay, I'll accept that.
    I can provide explanations, answers on the bill that is—
    That's fine.
    I'm not to comment on policy—
    Okay, let's go into some numbers a little. I may not be absolutely precise on these, but currently, I understand, number one, this is old age security; this is not a pension plan. This was put in place for the poorest of the poor. You work with this every day, and I appreciate the work that is done for people.
    I understand that about 2.16% of GDP is used today, roughly $36 billion to $39 billion, to pay OAS. Is that correct?
    Correct me if I'm wrong, but the expenditures on OAS today are $38 billion.
    As I said, it's $36 billion to $39 billion. It's going to go to roughly $109 billion—
    To $108.7 billion in 2030, yes.
    We're pretty close, yes. That's roughly 3.1% of GDP.
    What we hear in the conversations around OAS and sustainability is about the growth in population. We don't disagree with that. We just agreed on the figures. There is no problem there.
    What we don't hear in the equation, though, is people talking about the incremental average growth in GDP that happens year to year, which leads us to believe that the OECD and the Parliamentary Budget Officer are correct, that it is sustainable as it is.
    As well, changes will be made after 2017 to the Canada health and social transfer that will reduce the liabilities for the government. So there is more flexibility than what is being spoken to here.
    What's important to us, and the reason we ask you to provide any of the materials of analysis that might have been used, is for us to be able to confirm whether we are right or wrong. It is very difficult for us sitting here when we get a witness who responds that he is limited in what he can say. In fact, it's very frustrating.
    The government at one point told all departments they had to look for efficiencies. They had to save money to address the deficit, so that happened about a year and half ago, somewhere in that time range.
    Prior to the government calling for deficit-fighting measures, was your department already looking at making this change from 65 to 67?
    I'm sorry, sir, I cannot speak to the intention of the government at any point except for what has been announced in the budget.
    That wasn't my question. I was asking about your department, not about the government, not about an opinion. Was your department looking at this before? There is a reason for my question.
    Could you give me a simple yes or no? If you're not aware of it, that's fine too.
    We are always looking at all programs and the potential changes in the projected expenditures, so generally, I'd say yes.
    Okay, from my point of view, it sounds as if this was a move that had been in the works for a period of time and was added to the budget.
    It's still quite troubling. Different methods of analysis may or may not have been used, and when we try to compare it to the OECD and to the Parliamentary Budget Officer and we can't even find out if those were used by your department, it's quite a struggle to make the ultimate decision that maybe you're right. Maybe the government is right, but we don't know that, and many people in Canada today are calling into question whether there is genuinely a need for this.
    I guess ATIP is going to be the only way we'll find out.
    Thank you, Madam Chair.
     Thank you.
    Does anyone have any questions?
    Ms. Glover.

  (1935)  

    Thank you, Madam Chair.
    Thank you for appearing here tonight.
    I know that sometimes the questions are difficult ones. I have a specific interest in the proactive enrolment. I'm not sure if you even know this, and that's why I prefaced it. Some of them are tough questions. I'd like to know how many people who are eligible for OAS or GIS didn't get proactively enrolled and would now benefit from our proactive enrolment.
    I guess it goes to Ms. Martel. Do you have that kind of information?
    Perhaps I should start before I let my colleague Madame Martel give you that precise information of the gaps and so on, and just explain what proactive enrolment is.
    This initiative has two aspects to it. The bill would allow the Minister of HRSD to waive the necessity to submit an application. Right now, seniors have to submit an application. The minister could waive the necessity for an application where we have enough evidence that a Canadian has been in the country for x number of years, those basic requirements of the program. On automatic enrolment, in its first phase, we will be looking at people who are turning 65, who have 40 years of contribution to CPP, and who are actually receiving the Canada Pension. These people will receive a notice about six months before they turn 65 informing them that “Here's the information we have on you. If you do nothing, you will start receiving your OAS benefit.”
    Given that we are also offering the possibility of deferring the benefit, seniors about to turn 65 will be able to indicate, “I don't want to receive it right now, I want to wait a little bit, accrue a larger benefit for the future, fully indexed, etc.”
    Because these are lifelong benefits, they are expensive to distribute, so you want to be sure you are getting the right amount to the right person at the right time. Where we don't have enough information to satisfy our rigorous integrity standards, we will use the information to pre-fill the application and send it. We estimate that in many cases all that will be required is a signature and sending it back.
    We have automatic enrolment and we have streamlined application, if you like. Those two things are called proactive enrolment and they will be done in a gradual fashion. This is new for us. So we will start with a very, very high degree of certainty and we will develop the tools and the information exchange with the Canada Revenue Agency and Citizenship and Immigration Canada. To get the full benefit, you need to have been in the country for 40 years. That's why we use 40 years of contribution to CPP. Other people are eligible for the partial OAS who have lived here less than that. But we want to have the information exchange with the CIC for that purpose.
    So there you are. I think I'll leave it at that, and my colleague will answer your question of how many people are not getting it, etc.
    You have about 45 seconds.
    Okay.
    We expect that about 52% of new OAS clients turning 65 will benefit from automatic enrolment. In terms of numbers, we're talking about almost 200,000 people per year who will no longer need to fill in an application in order to receive their pension.
    Those are the ones who wouldn't have to fill out an application. But what about the ones who may not have been financially literate enough to know that they even had to do an application and were just passing their time, not knowing that they were entitled to a cheque? How many are there of those?
    We don't have a number for that particular group of people, but those who will be automatically enrolled are those people for whom the government has sufficient data available in order to put these people in pay.

  (1940)  

     Thank you.
    Thank you, Mrs. Glover.
    Monsieur Caron.

[Translation]

    Mr. La Salle, it is quite clear that you are walking on eggshells right now, but I would like to reassure you: I don't think you have broken any yet.
    I would like to return to a point that Mr. Marston raised. Earlier you talked about one measure, the number of workers required to support a person receiving Old Age Security. Another measure also used by the chief actuary is the program cost based on GDP.
    Do you know the difference between what we are currently paying and what we will be paying as a percentage of GDP, of the country's output, by 2030?
    Those figures are in the actuary's ninth report. Ms. Vermaeten has those figures.
    This is important because they indicate the weight of the program relative to what we can afford to pay.
    Yes, indeed.

[English]

    Off the top of my head, and I'll look at my notes to make sure, I think it's increasing. By 2030 it will be 3.14% of GDP, and today I think it's 2.4%. But let me verify that number.

[Translation]

    All right, let's say approximately 2.4% to 3.1%.

[English]

    Pardon?

[Translation]

    From 2.4% to 3.1%—

[English]

    Yes.

[Translation]

    —of GDP by 2030.
    Exactly.