Dear Mr. Martin:
Pursuant to House of Commons Standing Order 109, on behalf of the Government of Canada, I am pleased to enclose the Government Response to the recommendations of the seventh report of the Standing Committee on Government Operations and Estimates: Strengthening Parliamentary Scrutiny of Estimates and Supply.
We were encouraged by the scope of the study and noted the range of views and perspectives presented to the Committee, which are indicative of the complexity of the matter and the possible approaches. You and the members of the Standing Committee have made a significant effort in reviewing the evidence and developing this report.
Several recommendations of the Committee are directed to the House of Commons and to standing committees. While we have focused on the recommendations to Government, we have taken note of these other recommendations and, where appropriate, offered observations or comments.
I would like to take this opportunity to thank you and the members of the Standing Committee for your work. I look forward to continuing our discussions on these very important issues.
Hon. Tony Clement
President of the Treasury Board
That the Treasury Board of Canada Secretariat complete its study of accrual-based budgeting and appropriations and report back to Parliament by March 31, 2013.
Consistent with the plan presented by the President of the Treasury Board in early 2008 to the Chairs of PAC and OGGO, the Treasury Board Secretariat will continue evaluating accrual-based budgeting and appropriations and communicate the results of the study to the Chairs of the Standing Committees on Public Accounts (PAC) and Government Operations and Estimates (OGGO) by March 31, 2013.
That the Treasury Board of Canada Secretariat transition the estimates and related appropriations acts from the current model to a program activity model, that they assist federal departments with this process, and that they prepare a timeline for this transition by March 31, 2013, and transmit this timeline to the Committee.
The Government agrees that Parliament requires improved information and linkages between appropriations and planned spending at a program activity level. The Government is improving the information made available at the program level, and will provide a clearer crosswalk to demonstrate the alignment between the current appropriation structure and the program activity model. The Government agrees to include information on planned spending by program activity as well as by vote in applicable Estimates documents.
Changing the vote structure would require considerable effort on a number of fronts: revisions to policies and processes; changes to internal control mechanisms and practices; enhancements to departmental financial management systems and central treasury and expenditure management systems; and training. A review may also need to be conducted of the Financial Administration Act and related regulations, appropriation bills, and expenditure authorities provided through other statutes.
The Government will develop a model that is aligned with Strategic Outcomes and Program Activities, and balanced to ensure a feasible number of votes that facilitates their review and management. The Government will provide this model by March 31, 2013, including costs and a timeline for implementation. The Government will also engage in appropriate consultations with the public and stakeholders prior to determining how best to proceed...
That the Standing Committee on Procedure and House Affairs pursue amendments to the Standing Orders, procedure and practice of the House of Commons in order to require the reports on plans and priorities of the government be tabled in the House of Commons on the same day as the main estimates, and that the Committee report to the House on its study by March 31, 2013.
While the Government agrees with the objective of this recommendation, to more closely link the reports on plans and priorities to Main Estimates and provide them in a timely fashion, it notes that the House of Commons Standing Orders permit the tabling of the reports on plans and priorities of the government on the same day as the tabling of the Main Estimates and, accordingly, a change to the Standing Orders is not required. The Government also notes that in certain cases it may be difficult to table the Main Estimates and the reports on plans and priorities on the same day – for example, at the opening of a new Parliament, or a new session of Parliament, when the government may not be in a position to table both the Main Estimates and the Reports on Plans and Priorities at the same time. The Government also notes that the Standing Orders may only be changed by a decision of the House.
Recommendations 4, 5 and 16 are related:
That the reports on plans and priorities contain financial information by program activity for three previous fiscal years and for three future years.
That the reports on plans and priorities include an explanation of any changes in planned spending over time and of any variances between planned and actual results by fiscal year, as available.
That the government develop a searchable online database that contains information on departmental spending by type of expense and by program.
The Government agrees with these three recommendations. There is a wealth of information currently available in a wide variety of reports, and the Government agrees that the presentation of financial and narrative information in the various reports could be augmented and made clearer, and the linkages between the reports better explained. The Government further agrees with the recommendations to expand the number of fiscal years presented and provide explanations of trends and variances.
As noted in Recommendation 16, technology is providing alternatives to static reports for making data available and the means to increase their utility to users. The Government will review the options provided by advances in technology to make this information more readily available.
That, to the extent possible, the budget items for a given year are reflected in the main estimates for that same year; and therefore that the government present its budget in the House of Commons no later than February 1 of each year; that the Standing Committee on Procedure and House Affairs pursue amendments to the Standing Orders, procedure and practice of the House of Commons in order to move the date on which the Main Estimates are presented to the House back to a later date in March; and that the Committee report to the House on its study by March 31, 2013.
Studying the Standing Orders and reporting to the House are within the purview of the House of Commons to implement. It should be noted that, under the current process, delaying the tabling of Main Estimates may have implications for the Senate. The Interim Supply bill cannot be tabled prior to Main Estimates and the legislative approval process for the Supply bill must be completed before April 1.
The Government does not support a fixed date for tabling of the budget as part of Recommendation 6. A requirement to present its budget in the House of Commons no later than February 1 of each year would restrict the Government’s flexibility in responding to global and domestic imperatives.
The Government does support the broader objective of improving the understanding of the purpose and content of the budget and the Main Estimates. Officials from the Department of Finance and the Treasury Board Secretariat are available to brief on the budget and Main Estimates.
That the government identify separately in the main and supplementary estimates all new funding that is included in the votes, and that it is cross-referenced to the appropriate budget source.
The Government agrees to identify, in estimates documents, new programs that are appearing for the first time and the appropriate source of funds from the fiscal framework.
That the Standing Committee on Procedure and House Affairs pursue amendments to the Standing Orders, procedure and practice of the House of Commons in order to require standing committees to consider during a minimum amount of time the estimates referred to them, and that the Committee report to the House on its study no later than March 31, 2013.
That as part of its amendments to the Standing Orders, the Standing Committee on Procedure and House Affairs examine the feasibility of providing standing committees at least two sitting weeks to consider and report on the supplementary estimates, and that the Committee report to the House on its study no later than March 31, 2013.
That, where feasible, standing committees provide questions to departmental officials in advance of hearings on the estimates, and that committee members endeavour to ensure the necessary departmental officials are invited to appear for estimates hearings.
That standing committees review statutory programs on a cyclical basis, at least once every eight years.
Recommendations 8, 9, 10 and 11 fall within the purview of the House of Commons.
That departments and agencies include tax expenditures, currently included in the Department of Finance’s Tax Expenditures and Evaluations report, in their reports on plans and priorities, as determined by the Treasury Board of Canada Secretariat to best fit their mandate.
The Government provides extensive information on tax expenditures through the annual Tax Expenditures and Evaluations report. This report has stimulated public debate on tax expenditures and contributed to transparency and accountability. Its high quality is widely recognized, and both the Organisation for Economic Co-operation and Development (the OECD) and the World Bank have referred to Canada as a model for countries interested in developing a tax expenditure reporting framework.
The Government agrees in principle with this recommendation, and supports the objective of facilitating access for members of Parliament to information on tax expenditures. However, the tax system, including all tax expenditures, is the responsibility of the Minister of Finance. Tax expenditures are part of the broader tax system. As such, they are considered and reviewed by the Minister of Finance (and, where relevant to another department, in consultation with the department) in the context of the overall tax system, taking into account the interactions among tax measures, tax policy objectives – for example, fairness, competitiveness and simplicity – as well as provincial and international considerations, fiscal implications, potential market reactions and system integrity. The Government reviews tax measures on an ongoing basis, as part of the yearly budget process, in studies published in Tax Expenditures and Evaluations, or through consultations, advisory committees and expert panels, to ensure that these measures continue to meet their intended objectives.
Given the above, the Government believes that information on tax expenditures should not be included in the reports on plans and priorities of other departments and agencies. Doing so would put these departments and their Ministers in the position of being accountable for policies and measures which are not under their areas of responsibility. This would not be appropriate as it would not be consistent with the principle of ministerial accountability. It may also create confusion among the general public and stakeholders as to the actual responsibilities of each department and Minister, and where to direct their inquiries. In addition, any allocation of tax expenditures to other departments would be imperfect and subject to interpretations. A number of tax expenditures could be associated with more than one department. The Department of Finance may not have sufficient information on these expenditures to break down their cost estimates according to departmental areas of responsibility. These estimates would also not be comparable to other financial information presented in departmental reports on plans and priorities given that tax expenditures are estimated on the basis of a calendar year, not a fiscal year.
However, in line with the intent of the Committee’s recommendation and in order to give Parliamentarians a broader perspective on government expenditures, the Government will coordinate the release of the Tax Expenditures and Evaluations publication with that of the Main Estimates, which are tabled on or before March 1 of each year, and will add a reference with a hyperlink to the Tax Expenditures and Evaluations publication in the Report on Plans and Priorities of all departments, with a note that tax measures presented in the publication are the sole responsibility of the Minister of Finance. In addition, the Government will direct Department of Finance officials to provide briefings on the Tax Expenditures and Evaluations report at the Committee’s request.
That standing committees review tax expenditures presented in departmental reports on plans and priorities on a cyclical basis at least once every eight years to assess whether or not they are meeting their intended objective.
That standing committees dedicate an in camera meeting at the beginning of a new Parliament, and periodically as needed, for a briefing session on the estimates and supply process and the related documents, with a focus on the committee’s role in scrutinizing government spending.
Recommendations 13 and 14 fall within the purview of the House of Commons.
That the House of Commons give its Standing Committee on Government Operations and Estimates the mandate to undertake a study of the Office of the Parliamentary Budget Officer which would include a thorough analysis of the mandate and function of the Office in order to better serve members of Parliament; and that in its study, the Committee should consider all structural models for the Office including, but not limited to, the Parliamentary Budget Officer reporting directly to Parliament as an Officer of Parliament.
While this recommendation is directed at the House of Commons, the Government notes that the mandate of the Parliamentary Budget Officer and the location of this position within the Library of Parliament were previously studied by the Standing Joint Committee on the Library of Parliament. The Joint Committee found the Parliamentary Budget Officer’s services to be a “natural extension” of those provided to parliamentarians by the Library, which include non-partisan and customized research and analysis services to assist parliamentarians and committees in considering legislation and holding the government to account. As the Joint Committee noted, the Library provides these services with full independence from government