Madam Chair, it is my pleasure to be here today to give you some of the details concerning the freeze on departments' operating budgets announced in the March 4 budget, which the committee is studying. As you mentioned, Mr. Smith, who is the assistant secretary of the Expenditure Management Division at the Treasury Board Secretariat, is with me today. I will make a brief statement, and then I would be happy to answer any questions you may have.
During his appearance on March 22, the President of the Treasury Board talked about the government's three-point plan to return to balanced budgets by 2014-2015. I would like to briefly remind you about these three points.
The first point concerns targeted measures to slow the pace of growth of federal program expenditures. The two examples featured in the budget are the reduction in the growth of the budget of the Department of National Defence and the international aid envelope. The second point concerns a decrease in the government's operating costs. The freeze on departmental operating budgets is included here. The third point concerns a series of reviews of the government's operating expenditures. This includes strategic reviews and a review of government's operating expenditures, that is administrative expenses.
Let's now turn to the freeze on departmental operating budgets, which will be frozen at 2010-2011 levels until 2012-2013. This measure is expected to achieve savings of about $1.8 billion by 2012-2013.
This freeze applies to all federal organizations appropriated by Parliament, including departments, agencies, and crown corporations; that is, all departments and agencies in the core public administration; all separate agencies, including the Auditor General, the Information Commissioner, and the Privacy Commissioner; crown corporations that are funded through appropriations voted by Parliament, such as CBC/Radio-Canada, the Canadian Tourism Commission, and museums and galleries; the Canadian Forces; the RCMP; and other agents of Parliament.
For 2010-11, departmental operating budgets total about $54 billion. These are at the highest levels they have been in over a decade. This amount is roughly comprised of $28 billion in personnel costs, which are wages and salaries, and $26 billion in other operating costs, such as professional services contracts, telecommunications, leases, utilities such as heat and hydro, materials, and supplies.
The freeze does not apply to: economic action plan spending, which ends in March 2011; any Budget 2010 measures not included in the main estimates, which have just been tabled; new policy initiatives that could be approved by cabinet; and non-discretionary labour costs, such as parental benefits or severance pay. The Treasury Board will provide a challenge function on any proposals that may involve increased operating expenditures.
As I believe I have said in the previous presentation here, and as the President of the Treasury Board did as well, there is no freeze on wages. Members of the federal public service will receive the planned increase in wages for 2010-11, which is set at 1.5% by the Expenditure Restraint Act and in collective agreements.
Departments will be expected to cover these salary increases, as well as any other increases to their operating costs, by finding efficiencies within their own operations. In the past, departments and agencies were reimbursed for these costs centrally, but they will not be in this instance.
As we indicated earlier, there is no freeze on hiring. Organizations, departments and agencies can fill vacancies or expand staff so long as they respect the overall limits on operating spending. In other words, departments and agencies will continue to manage their workforce using all of the strategies they already use. We are confident that over the next few years, retirements and normal attrition will likely provide departments with the necessary flexibilities to manage the size of their workforce.
In fact, other than continuing the freeze on spending on travel, conferences, and hospitality at 2008-09 levels for an additional year that was included in the 2009 budget, no single line item in operating budgets is targeted by this freeze. The government has chosen this approach, rather than across-the-board or additional targeted cuts, based on lessons learned from the past.
Deputy heads are best placed to make the decisions they need make to deliver the services within their mandates and their main estimates. This is what they do; this is what we do, day in and day out. We adjust our operations upwards, we adjust our operations downwards, depending on the priorities and the mandates we are given.
In fact, we believe the freeze may provide additional incentives to innovate and find efficiencies, because with the freeze on operating budgets and the administrative review, which was also announced in the budget, these will provide opportunities for internal efficiencies and improved services. In fact, if you look at the timelines, the review of administrative services is planned for this fiscal year to be reported in the 2011 budget, and these are looking at efficiencies across the government, as opposed to department by department. So that will enable us, as a result of the recommendations coming out of that review, to consider what changes need to be made to administrative operations across the government, rather than just by looking at them department by department.
In conclusion, Madam Chair, I gave you a brief overview of the elements and components of the freeze on departments' operating budgets. This is a key component in the government's overall strategy to keep growth and spending down.
We would be pleased to answer your questions.
Thank you, Madam Chair.
Ms. d'Auray, Mr. Smith, good afternoon. It is nice to see you again.
Since I became a member of this committee, which was about three years ago, people have been talking about streamlining expenses. There has been a lot of talk. Unless I am mistaken, the department has been asked several times to not only streamline its operations, but to also trim some fat. The department was told to find superfluous programs that could be eliminated or replaced by new programs in the interest of containing costs.
Ms. d'Auray, in your brief, you said that there will be no salary or hiring freeze, and I would like to focus on the significance of the spending freeze. I would like to begin by talking about the reduced level of service to Canadians, and then move on to how this will affect the working conditions of employees.
When the type of radical streamlining that has been announced is implemented, deputy ministers will need to be able to meet the objectives you have set. First, have you made sure that all deputy ministers, who will have to go through this exercise, will have the same means at their disposal, and that they are all on the same wavelength? Do you have a say in how deputy ministers will scale back their operations?
Madam Chair, your colleague asked several questions.
Indeed, deputy ministers all have the same means at their disposal. Standards, policies and degree of flexibility are the same for everyone. Deputy ministers are used to managing increases and decreases, to maintaining critical services and key services and to increasing efficiency. They do so on a regular basis, for instance, by investing in the electronic delivery of services to speed up the processing of applications. If we had not made those investments, which allowed us to reorganize the way Service Canada delivers services, I am sure that the Department of Human Resources and Skills Development, for example, would not have been able to hire as many people to deal with the increase in employment insurance applications. Indeed, we had already developed and implemented the necessary measures to meet the increased demand. Similarly, when the volume of applications goes down, we will have to manage this decrease and go back to normal levels. This will have a domino effect with regard to the processing of applications elsewhere.
We also have made many improvements and have reorganized our operations. This is part and parcel of a deputy minister's job. These are the tools we use to deal with a budget freeze.
As I said in my opening statement—I repeat—we have $54 billion in operating expenses, which is probably the highest it has been in the past 10 years. It is a good thing that we are rethinking the way we operate. This often happens when more and more programs, and more and more operational activities, are brought in. So you have to take a step back and see how you can do things more efficiently.
We are discussing this matter with our OECD colleagues, and some governments engage in this type of exercise on a regular basis. Some governments reorganize 10% of their programs each year to ensure that measures, funding and human resources are used efficiently.
Take Correctional Services Canada. In the last few years, there has been something called “redeployment”. This involves redeployment measures that affect staff and the organization. This is a sector that is overcrowded, and where legislation and philosophies come and go. Staff cannot cope anymore. Staff has been pushed to the limit. In short, the way the department is run, including all of its internal resources, has to change.
I have with me petitions signed by Correctional Services of Canada staff, and which were sent to the Treasury Board Secretariat and to the Treasury Board. These petitions call for a complete reorganization of Correctional Services Canada. In fact, the staff does not feel safe anymore, nor do the inmates. You might say that Correctional Services Canada has just received a budget increase, but the fact remains that the damage has been done. The extra money will only temporarily fix the problems experienced by employees.
What will the Treasury Board Secretariat do to hold the deputy minister, or former deputy ministers, to account, since this mess happened under their watch in the past few years? There is a safety issue at some CSC facilities today, and which must be internally addressed.
I see that Alister Smith is nodding his head. How can we fix the problems with this department?
Thank you, Madam Chair.
Thank you, Ms. d'Auray and Mr. Smith, for coming in this afternoon. We appreciate your testimony and your willingness to visit us again.
In terms of the overall freeze on spending, of course there are a number of things that come up. Could you speak about some of the opportunities and some of the things Treasury Board is involved in and maybe other departments are involved in that you're aware of in terms of the savings that government may be able to find during this time?
I've heard some of the provincial governments describing this time as an opportunity for government to change the way it does certain things. I know there's been some effort to overhaul some of the antiquated systems that are in place, specifically the payroll system, to try to reduce the cost the government incurs in that and reduce some of the stresses that are on the employees that administer that service. But there are also other places where governments are saving right now. I know that, anecdotally, construction costs and some services are actually cheaper today than they were two years ago or even a year ago. Specifically, construction cost is one that's easy to identify. We're hearing of construction projects coming in 40% less than what they were estimated to cost even two and three years ago.
Are there other services where we're seeing a reduction in the cost, or is that being identified as something that Treasury Board follows?
Thank you for the question. I think what I referred to briefly in my opening remarks is that there is a review of administrative services and operating costs of the Government of Canada, which was also announced in the budget, and to which my colleague Daniel Jean has just recently been appointed. He is going to be looking at where efficiencies and effectiveness can be found across the government.
For example, we are currently, with Public Works and Government Services, looking at the number of data centres and data warehouses we have. We have quite a few across the Government of Canada--over 120, I think. They're spread out across the country. They could be consolidated. We also need to consider, in light of business continuity requirements, that we could do maintenance a lot more effectively that way as opposed to looking at these services department by department.
For example, we have found that when departments co-locate services, when they're in the same building, we could probably drive more efficiencies by integrating services across organizations, so that we don't duplicate and have each one with a set of mailroom services or with the costs of administering some of the operating systems, such as financial systems. We can consolidate the application services for information technology. There is a range of opportunities that this will enable us to look at and to consider where the services are that I would consider to be perhaps not quite core to the government or where each department doesn't necessarily need to have its own.
We have seen in other jurisdictions--for example, in a lot of the provinces that have looked at this--that there are more effective and efficient ways of looking at what we would consider to be the costs of operating government. That doesn't affect the service delivery to Canadians; it's more about how we operate on an organizational basis across the board.
The Chair: Of course I won't forget you.
Mr. Pat Martin: No. Thank you, Madam Chair.
Thank you, Madam d'Auray and Mr. Smith. Welcome. It's nice to see you again.
We had the President of the Treasury Board here when he first launched his cost-saving measures. One of the things that struck me, especially as a former union representative, is that the minister, the President of the Treasury Board, tried to pass it on as some sort of example of egalitarian workplace democracy that he would allow public servants to be the ones to find the cost-saving measures, the efficiencies. Essentially, passing the buck on to public servants themselves was something to be lauded.
Now, I'm a veteran of some of the old scientific management gimmicks during the eighties and nineties--PS 2000, total quality management, quality work circles, kaizen, and all of those goofy so-called paradigm-shifting exercises we were supposed to go through. That's exactly the language we found there. We would find one task that six people would do and give them the job of finding a way to do it better. Usually what they'd do is vote to eliminate one of the six people and do the same job with five.
Don't you think--I don't even know if I have to ask you this--that one of the predictable consequences of this passing of the buck will be cuts? You can't shrink the budget without shrinking the public service. And there's no fat to be trimmed. After the Liberals got through with the public service, with the cutting and the hacking and the slashing that went on there, you're not going to balance the budget by trimming the fat in the public service. Those cuts haven't even healed yet, never mind cutting deeper. You cut right through the fat into the flesh and bones, into the very structure of the public service.
I really suspect that, first of all, this delegation of authority, this delegation of management duties, actually, to the workers to find the efficiencies is like putting a suggestion box on death row: how do you want to execute yourself, or who of your co-workers do you want to execute, just to save this money? I'm actually very concerned by what you have presented to us today.
I do have some specific questions. One of the new positions you will be creating is the deputy minister of administrative services review. Now, this is an ongoing thing anyway. Every government every year tries to find efficiencies in the administration, and cost-cutting measures. Is this a fixed-term mandate? What is the mandate of this new deputy minister of administrative services review? Is it a permanent thing you have set up, that one deputy minister will be now looking at all administrative services?
Fine, that answers my question.
I have another one. At the time the Liberals were in power, Marcel Massé was the President of the Treasury Board. Approximately 15,000 jobs were affected. They were eliminated, and some positions were not filled. History is repeating itself, because the Conservatives have done the same thing in certain areas, with regard to certain boards of directors, where positions were eliminated when they ceased to exist or when they were not filled. Ten years later on, we have an additional 38,000 public servants.
What guarantee is there that the measures which have been taken, for instance, are not just window dressing and a convenient way to present the government's finances, but rather measures which will result in a real reduction in expenditures without affecting salaries or employees?
You have asked a number of questions. Madam Chair, I would like to address each one separately.
As for whether we will be able to cope with the relatively high retirement or departure rate within the public service, I would like to point out that the number of persons who left the public service in 2009-2010 topped 13,000. We expect that the departure rate will increase slightly over the next three or four years. The number of retirements is nearing a peak, if you will, given the average age of public servants. This gives us an opportunity to rethink our approaches and operations.
As you have indicated, there is no hiring freeze. The public service would like to engage in and offer value added work. Taking in to account our own ways of doing business, we would like to become a little more innovative and reduce the amount of repetitive work over the next few years. Data entry, for example, is not a particularly value added activity. That is a task that is being transformed. When you look at the kind of work that public servants are doing today, you realize that there has been an increase in particular in value added work. Electronic data processing, services to the public and policy development are some of the areas where we have seen the greatest increase in value added work.
With the regard to the changes that we could make by reviewing our internal operations, obviously, we will look at what is done in other jurisdictions. We have begun to consider some of the approaches taken by British Columbia and Ontario. Our goal is to maintain and, in some cases, increase the level of services by doing things differently.
Thank you, Madame d'Auray and Mr. Smith, for being here. We thank you for the dialogue we're going to have. Collectively we hope to figure out what your department does and what other departments are supposed to follow through on.
I'm going to suspend for a few minutes. We have the next round of witnesses coming in.
The Chair: I need to have the precision of the military here. We have until 5:15, so I'd like to welcome the Parliamentary Budget Officer, Mr. Page, along with Mr. Askari, Mr. Khan, Mr. Weltman, and Mr. Mathilakath.
I understand you have some opening remarks, Mr. Page.
Good afternoon, Madam Chair, vice-chairs, and members of the committee.
I would like to thank you for having invited me and my colleagues to speak to you about the freeze on operating budgets imposed by our government as part of Budget 2010.
I would like to make a few opening remarks on the fiscal context for restraint and on a proposed framework for analysis that could help serve this committee.
I wish to note that I am making available two documents: a document that describes the proposed risk and impact assessment for spending restraint, and a document for your information that provides an update of the Parliamentary Budget Office's assessment of the government's infrastructure stimulus fund, based on data from applications received on the January 29, 2010, closing date for the program.
I also wish to note that later this week my office will be releasing an analysis of the projected employment insurance premium revenues and expenses.
I have three key messages for you today.
One, the fiscal context is challenging. Notwithstanding Canada's relatively strong fiscal performance when compared to some other countries, parliamentarians are facing two large fiscal waves. First comes large federal budgetary deficits caused by the economic downturn and the implementation of a deficit finance stimulus package. This short term wave will be followed soon after by growing costs for baby boom retirees drawing elderly benefits and health care services as well as weaker budgetary revenues due to declining growth in labour supply.
Two, there is no fiscal consolidation without pain. To avoid large unsustainable budget deficits over the long term, parliamentarians may need to choose between higher taxes, changes to statutory transfer programs and less spending on direct program expenditures. According to PBO analysis and fiscal projections, the restraint measures introduced in Budget 2010 are not sufficient to return the federal budget deficit back to balance over the next five years based on average private sector forecasts, or to address the fiscal pressures related to aging demographics.
Three, there is both a strategic opportunity and a need to strengthen the estimates review process. Recent improvements in expenditure management information and the implementation of strategic reviews helped set the stage for new levels of fiscal transparency and involvement in a decision-support capacity of the government operations and estimates committee and indeed all standing committees that support the review of departmental activities.
Budget 2010 proposes expenditure restraint on operational spending. For 2010-11, departmental budgets will not be increased to fund the 1.5% increase in annual wages, which will require reallocation from operating budgets. For 2011-12 and 2012-13, operating budgets of departments will be frozen at 2010-11 levels.
The key question for today is, do parliamentarians have the decision support information they need to exercise parliamentary oversight on the proposed operational budget freeze? I think the answer is no. In the view of PBO, my office, the Budget 2010 operation restraint measures are ill-defined. There is insufficient information available on the planned spending baseline the government has chosen. We do not know from a fiscal planning basis what it includes or excludes, relative to operational spending, nor do we have a departmental breakdown on the spending baseline.
We do not know the strategy the government will employ to implement the savings measures. Will it be broad-based or targeted? Will central agencies responsible for the provision of policy advice be restrained in the same way as departments and agencies like the Canadian Food Inspection Agency, the coast guard, or border services, which are responsible for the provision of health and safety services?
In our view, Parliament needs information and analysis in a structured and timely fashion in order to examine the risks and impacts of restraint measures. The PBO proposes the need for an analytical framework to support the work of this committee that provides a risk and impact assessment from both a fiscal and a service delivery vantage point.
From a fiscal vantage point, committee members need to know what the risks are in achieving the proposed fiscal targets. Are the savings realizable? Are they cashable? Are they dependent on reasonable levels of demand for programs or services? Are there potential downstream fiscal pressures resulting from cost deferrals related to an operational freeze?
From a service delivery vantage point, committee members need to know the risks and impacts to service levels for Canadians, from speed of service, quality, or cost perspectives. Are there risks and impacts to the longer-term service capacity of government related to changes in employment, processes, or capital levels?
To prepare this type of analysis, the PBO, working on behalf of this committee, needs access to information. From a fiscal perspective, PBO needs access to planned and approved fiscal framework and departmental annual spending reference levels--historical and projected--as well as lapsed voted authorities.
From a service delivery perspective, we need departmental strategies for savings, service level standards, and fully loaded costs for program activities for affected departments. PBO requires committee support to obtain the required information for decision support to members. A previous request for similar information made by the PBO to the Treasury Board Secretariat has been turned down. Planned approved reference levels were deemed a cabinet confidence.
In the report PBO is releasing today on infrastructure, PBO benefited significantly from the support of this committee in receiving information. We've had good collaboration with officials from the department of transportation and infrastructure. As a result, members have timely access to information and analysis on the size, type, and nature of projects in the spending profile of the infrastructure stimulus fund.
PBO is undertaking a survey this summer to examine the impact of the infrastructure program. With timely and adequate access to information required to assist the operational freeze, PBO could prepare for this committee an assessment of risk and impact of 2010-11 savings in the fall of 2010 and a similar assessment of future savings prior to Budget 2011.
Thank you very much. We look forward to your questions.
Thank you very much. We look forward to your questions.
In a way, we wish we'd had you here before some of the department officials, because we have learned there is no baseline being done about the actual cost implications--in other words, not collecting even government-wide data about what a fixed cost that can't be changed over the next few years is or isn't, nor is there any anticipation of service level impacts, which you have identified in your remarks. That surely has to be the bottom line.
We've had governments in the past—I was in the opposition of one in Ontario—that said you can get more for less, and we got Walkerton. One of the implications is caution and knowledge ahead of time of where cuts are taking place.
This is what I am looking for here. On the money that is being cut, the Treasury Board Secretariat talked about $300 million, and within the deputies...but that was just on the salary side. It didn't have a quantification of what would have to be cut on the other side or where we would get it from.
Are you able to give us any outlook about what those choices might look like, what kinds of pots departments will be able to get to, or do you need our help, from this committee broadly, to be able to get some of that information?
My concern is that we really need to know about this as we step into it, not after the fact. I mean, that's what the Auditor General can help us with.
I also wonder if you have any comment on the fact that operational spending was going at a fairly good clip—I understand the Conference Board number was around 6.1% per year—and the implications of putting the brakes on in such a sudden way. Again, what protections could there be to make sure the public isn't hurt, that important public services don't become part of some very diffuse thing?
The impression I got from the last hour is that this is being handed off to deputies. No one is checking. There are no benchmarks. Whatever is going to happen is going to happen. All we know is that they are not going to get any more money and they'll have to manage within that. We know something about the compounded effect of that, of course, but we don't know entirely because we don't know the cost pressures of previous contractual arrangements and anticipation of other costs.
What can you tell us about the scope of the challenge that this policy represents even at this point? What do you need to be able to take us further in the anticipation of some of the choices that deputy ministers are going to be forced to make? And part of that is how we have protections for very important public services from a very broad directive like this.
First off, we do need help from this committee to do a proper analysis. That is probably the most important point I could make today. To get the committee's support to do this analysis going forward would be fundamental for us to do our job so we can come forward in the fall to provide a kind of risk and impact assessment on the spending freeze, both for 2010 and in future years. In addition to the operational freeze of this year, we have freezes in the following two years, plus we have the government looking for administrative savings.
As I said, I don't think there is fiscal consolidation without some pain. That is true not only in Canada but in other countries. In our own case, it is probably true that we have seen a lot of spending. We've seen direct program spending growth over the past 10 years--well over 6%. With the big stimulus package we have in place for 2009-10 and 2010-11, we know there is a lot of money in the system, and it wouldn't be surprising if some of that money does lapse. We probably will see a lapse in 2009-10. We'll probably also see not an insignificant lapse in 2010-11. That's why we've chosen to look at the infrastructure program in more detail, where we think there is a higher risk of a lapse of moneys.
More focused on the operational side, given that there is a lot of money in the system for 2010-11, it might be possible that there will not be significant pain in 2011 in terms of employment or other operational impacts.
Still, we cannot do a proper assessment unless we get access to information. We've outlined in the PowerPoint presentation the types of information we could look at. We need reference levels that are planned, not only for this year but for the next five years, including all the policy approvals that were in Budget 2010. We need that broken down by operating and non-operating on a departmental basis as well.
With that information we could start, at a high level, to look at what the impact of an operational freeze would be. Also, we need the FTEs, the full-time equivalents, for those departments so we can do that assessment.
Again, we need help from this committee to do the work.
There are two other questions I want to ask you. I think it's really important that the committee hear clearly that you don't have the information, because in the last hour we heard it was all there somewhere in the estimates, that we just had to look harder for it. It turned out to be “no” to two of the questions I asked, and it sounds like it's “no” to quite a few things.
The two questions I have are very particular. One is on the infrastructure. You've provided an information update showing that only a certain percentage of projects got completed last year--about 17%--by December 31. In terms of the possibility of lapsing, there are some qualifications to what you've been able to do with the data. I guess there's a general question I'd like to ask. I'm going to give you both of my questions so that you can allocate the couple of minutes we have.
Are we able, as a committee, as a Parliament, to really know the value of our infrastructure spending based on the information you have? We're now halfway through. You gave us some cautions last spring and you asked for certain things, so I'm asking for an opinion, whether you can render it today or it would be qualified by what you would need.
How well has the government done? How well have we done as a Parliament in being able to make sure that we're delivering value for Canadians and against the objectives the government has set for itself with this business of being timely, targeted to need, and temporary? I think we're in jeopardy of losing any sense of control over this when I see that the only information you can give us is partial and fragmented.
Second, I'm interested in the functioning of your office: whether you have the budget now that you need, whether you have access to it in the right fashion, and whether there's anything else we need to know about your ability to operate in these times. We have extra expenditures in the government's requisition, and we're trying to understand how that is going to work in the public interest, and now we have freezes that could be harmful. Can you and are you able to use the dollars in a way that will give us part of what we need as parliamentarians to oversee this?
Thank you very much. Actually, I think there are almost three questions there.
If I could just go back to the information baseline, when we go to page 180 in the budget and we see the way operational spending has been broken out between the amount that's going to be frozen plus other operational spending, we're not familiar with that baseline. In my office, we do not know what's included or what's excluded in terms of the freeze operational amount, and we certainly do not have access to information on how that baseline is broken out by department. If you take the fundamental component that's been set aside in the planning framework on page 180 in the budget, operational freezing, how is it broken out in the estimates by major department? We need that information so we can do our assessment.
Again, I'll go back: we think the measure, the baseline, is ill-defined. Again, it goes back to the strategy. We don't know if it's broadly based or if it's going to be targeted.
Your second point was on the numbers. Yes, based on the data that we do have, the December 31 progress database, the value of work completed was $674 million. That represents about 6.8% of the total program value, which we think could be upwards of $9.8 billion right now, and roughly 33% of the program timeframe has elapsed as of December 31.
Again, we've provided tables for you that show what the planned spending looks like through the course of the year. Certainly for this summer, the summer of 2010, you're looking at outputs of moneys of more than $700 million per month over the summer. That's a lot of spending and that's a lot of infrastructure in this program that needs to go. We will get back to you, sir, in the summertime, with an assessment.
We've already started working on a survey so that we can look at the impact. We think we missed an opportunity to look at the employment and output impact of this program, so we're going to survey municipalities to see what their sense is of the employment and output impact. We'll get back to you in the fall to give you a sense before this program is terminated.
On the last thing, just a point on the office, yes, thanks to this committee and other committees and your support, our budget has been returned, but we're still dealing with some significant HR issues, including people on this panel who have not been put on a permanent basis. For some of these projects we get asked to do, like big policy costing projects, if we can't secure this talent, we won't be able to do these projects.
Thank you, Madam Chair.
First of, I would like to thank Mr. Page and his assistants for appearing here today.
I would like to say that I am quite pleased with the document that you provided us, and I am referring to your opening remarks. Everything is so decentralized. Before your appearance, we heard from officials with the Treasury Board Secretariat. We asked them questions. But each time we tried to question people who watch over all departments, we can never get any answers. We could not find out any more about the specific goals and approaches with respect to the stimulus plan. Answers were hard to come by.
That is also true in this case: we are always told that the answers lie with the deputy ministers. Basically, our committee would have to meet with the deputy ministers from all departments in order to get the answers we are looking for. In particular, how will the freeze on expenditures be implemented, and what will be the impact of that freeze on departments' internal services and staff as well as services to the public?
You have made a very specific request this afternoon—I was not quite able to write it down because things have gone so quickly in the past 10 or 15 minutes. If I am not mistaken, on page 3 of your remarks, you ask for “access to planned (and approved) fiscal framework and departmental annual spending reference levels.” You also say that “we need departmental strategies for savings,” and so on. That is in these two paragraphs.
Madam Chair, I would immediately like to propose that our committee...—I hope that is sufficiently clear.
Since you cannot have that information, perhaps our committee could come through for you.
Could we forward that information to the Parliamentary Budget Officer so that he has the tools to do his work?
Thank you, Madam, for the question.
The PowerPoint presentation that we gave the committee today contains an overview of the situation, which we can explain in greater detail. However, it is important to examine the risks to the government finances and service delivery.
Furthermore, you have to set out the major issues for each type of risk, for example, the issues related to the government's finances. What are the risks to achieving the financial objectives? Are there ways to produce savings? Are there financial pressures going forward, such as cost ratios? The same can be said of service delivery: are there risks and consequences in terms of service levels such as speed, quality and costs? Finally, are there risks and consequences in terms of service capability, including employees, work methods and real property?
I believe it is possible to use such an analysis framework and examine the effects on such departments as Treasury Board or the coast guard. As well, with such a framework, you need to have key information in order to do proper analyses. In my presentation, I also mentioned the kind of information that my office requires.
That was only a PowerPoint presentation. My office and I can provide much more detailed information and draft information requests for Treasury Board deputy secretaries.
That to me means two things. Earlier, Ms. d'Auray, from Treasury Board Secretariat, told us that all the deputy ministers have the same guidelines, the same approaches, but of which we have no knowledge.
Furthermore, how can we be sure that the employees of a department or, for example, of a Correctional Service Canada institution and the public living in its vicinity can be made to feel truly safe, and that cuts will not be made to the security, food and services that must be provided to inmates?
You will recall that there was an uprising in Kingston in 1995 because the deputy ministers had decided to cut back on services to the inmates. They were female inmates.
I would like to come back to Correctional Service Canada. I have CSC institutions in my riding. There are people there who are currently on loan to Haiti as part of the Government of Canada's efforts to put that country's correctional system back on track. Those people are not doing anything at the moment, because Haiti is under reconstruction. But there they are, getting a tan on the beach.
What can we do? How can we be sure that all departments will be treated fairly? There you have it!
Thank you, Madam Chair.
Thank you, Mr. Page and gentlemen, for coming. We appreciate your testimony and we appreciate the role you undertake in helping to provide clarity for our committee.
In terms of the current conditions we find ourselves in, I don't think this is unique. We've seen it in other times that the Canadian government has had to restrain spending to try to address budgetary concerns. I'm wondering if you've undertaken any analysis, kind of a “lessons learned” approach, of some of the most recent budget cuts or even freezes. If so, would there be any advice to give to us from your analysis of those? I'd include analyses of other jurisdictions as well, possibly other countries and quite possibly provincial governments.
Are there things that you would advise us to be cautious of, or things that you'd encourage us to do as a committee, in terms of recommending to the government places where money could be saved or efficiencies could be found?
Yes, actually, we'd be happy to undertake some work that looked at that. There's a fairly rich literature that looks back at particularly our program review lessons learned from the mid to late 1990s. More recently, it has looked at some of the work of the expenditure review committees of recent times trying to find savings, at whether we were able to attain all those savings, and at the lessons from departmental cuts and from more horizontal exercises.
We could certainly look at other jurisdictions. In fact, a lot of other jurisdictions, I don't mind telling you, actually look to Canada for advice. Some of their fiscal problems, as you noted, are actually even more severe and unsustainable than ours.
I would just make a point about our fiscal situation. When we look at the numbers, we're still seeing deficits in 2009-10 and 2010-11 of roughly $100 billion for those two years. Of that, 70% is cyclical and roughly 30% is structural. That means it won't go away unless the economy operates well above its potential.
When we look to the long term, we see aging demographic issues. I think it's important that when we look to the finances of Canada, we take a long-term perspective. We've costed that out.
Thank you, Mr. Page. Welcome, to your team.
We very much appreciate the work you do for parliamentarians, the committee, and taxpayers in general. It's very appreciated, and it's important to us.
I'd like to essentially go back to your opening comment on the key question for today: Does this committee or do we, as parliamentarians, have the information we need to exercise oversight on the proposed operational budget freeze? Quite simply, you said the answer is no.
Frankly, I'm happy to have that validated. We find it frustrating. We don't really know whether it's our inability to evaluate the situation or whether we're sometimes not really given the tools needed to do our jobs as lay people and as MPs. I'm concerned that you made the statement, but as I said, I appreciate the validation of the way we feel.
What do we need? What additional information should we demand? As you know, as a committee, we have the power to compel the production of documents. Can you summarize or itemize what we should ask for more specifically? Believe me, we will ask.
They have the information, sir, but we have to basically reconcile what's in the budget to what's in the information base of the Treasury Board Secretariat, broken down by department. We need to get at the operational spending component of this.
We then go specifically to the service delivery question, sir. We need to know the strategies to find those savings department by department. The strategies are important to assess the risk.
When I said that I think the measure is ill-defined, it's because we don't know if every department is going to be treated in the same way or if some departments are going to be treated differently. There's a difference between cutting a policy type of department, such as the Treasury Board Secretariat, or cutting a department such as the coast guard, border services, or Correctional Service of Canada, etc.
Sir, we then need to know the service level standards. A lot of departments have good information on service level standards. I've worked at Agriculture Canada. They can tell you, sir, what the processing time is to provide a stabilization cheque to a farmer, a crop insurance cheque, for example. What are those service level standards?
We then need a full breakdown of the costs for the types of programs that are going to be affected. We can then tell you, sir, whether or not there is a downstream type of risk.
We have learned lessons in the past. I think it goes to Mr. Warkentin's question. Back in the 1990s, when we had a significant public debt crisis, we cut very deeply. We significantly cut capital to save operational spending. We need to know the relationship between operations and capital in this plan.
We can put a very well-defined request for information. As I said, we requested planned five-year reference levels for Treasury Board Secretariat in the summer of 2009. We were told it's a cabinet confidence, but we don't think it should be a cabinet confidence. We think you absolutely need the information in order to do assessment work on the impact of this operational freeze.
Thank you very much for being here. Your presentation and your risk analysis has created a buzz around here.
Madame Bourgeois wanted to make a motion.
We have an understanding that the type of information you are looking for is baseline: what it is; what the fixed costs and operating costs are; what the fairness in the system is; whether the central agency has the same constraints as CIDA, as an example, or CFIA; and what exactly the fiscal targets are. You have to be mindful that the committee receives that information, and the committee will then determine whether they can share that information. It is a protocol we have to go through, because information always comes to the committee.
In that regard, Madame Bourgeois has a motion. I am letting the motion be read here because you're here, and if the information you're looking for is not in the motion, I'd like to know.
Madame Bourgeois, would you like to read the motion?