Good morning, everyone.
Thank you, members of the committee, for providing us with the opportunity to speak to you about Treasury Board estimates as well as the government-wide mains.
I'm joined today by officials from the Treasury Board Secretariat, including the secretary, Yaprak Baltacioglu; Jim Ralston, Comptroller General of Canada; Daniel Watson, the chief human resources officer for the government. You may recognize Bill Matthews, assistant secretary of the expenditure management sector.
Bill's going to say a few things as well, but I just wanted to give you a brief overview of government-wide 2014-15 main estimates.
Again this year, the main estimates show a significant decrease in the amount of voted expenditures. As you will see, the estimates for the voted amounts are down by almost $800 million compared to last year, which is a clear result of our government's commitment to reducing unnecessary spending and balancing the budget.
Chair, the 2014-15 main estimates provide information on the $235.3 billion in planned budgetary expenditures for the 2014-15 fiscal year. This includes $86.3 billion in voted expenditures, which have decreased from $87.1 billion in 2013-14. This also includes the $149 billion in statutory expenditures.
Mr. Chair, the main appropriations include an increase of $311.7 million for Health Canada in order to stabilize, renew and expand important health programs and services for first nations and Inuit communities,
the Canada Mortgage and Housing Corporation's $253.1-million investment in affordable housing program, as well as a $70-million fund for housing in Nunavut, and an increase of $59.6 million for the National Research Council of Canada to realign industry-focused research.
Parliament will be asked to approve the amount of voted expenditures through interim and full supply bills, of course. I should say that the main estimates continue the steady decrease in the amount of voted spending. Over the past four years, since fiscal year 2010-11, there has been a decrease in the main estimates voted appropriations.
At the same time, statutory expenditures have gone up by $3.53 billion, mostly because of the changes made to the estimates for seniors' benefits and the Canada health transfer.
Overall, these main estimates reflect the results of the government's cost containment measures.
As for my own department, in 2014-15, the Treasury Board Secretariat is asking for $7.4 billion in planned spending. This amount does include certain increases as they're related to an increase in pay, less expenditures, operating budget carry forward, and employer contributions made under the pension program.
The secretariat's reference levels were reduced by $7.6 million in 2012-13. By the end of the 2013-14 fiscal year, ongoing savings will reach $15.1 million and $23.6 million by the end of 2014-15.
Just to give an example, as a follow-up to budget 2012, the Treasury Board Secretariat cut $100,000 from its annual spending on travel to align with our government's commitment to reduce travel expenditures.
Our government remains focused on modernizing and simplifying the administrative systems of government as well as promoting productivity, innovation, and excellence in the public service. Returning to a balanced budget is not an end in itself; it provides a host of benefits that go well beyond the bottom line. It frees up taxpayer dollars that may otherwise be spent on interest costs to lower taxes and invest in the priorities of Canadians. It helps keep interest rates low. Instilling confidence in consumers and investors, these dollars spur economic growth and job creation. It strengthens our country's ability to respond to longer term challenges such as population aging and unexpected global economic shocks.
With your say-so, Mr. Chair, I would now ask Bill Matthews to give you a little more detailed information on the main estimates, and afterwards we'd be happy to take your questions.
Thank you very much, Mr. Chair.
As usual, we have prepared a presentation to remind members of the committee of the content of the Government of Canada's estimates and to outline the government's estimates for the year ending March 31, 2015.
There are two objectives here. The first part is a quick reminder around how estimates work and what sort of content is there. The second part is to give you the highlights of changes in these estimates in terms of major changes in dollars. Given that the first part of the presentation is a reminder on how estimates work, the second part is probably more important in terms of the highlights of the estimates themselves, so if you want to signal me to move it along at some stage and speed things up, I'm happy to do so, because the second part, I think, is more relevant to the committee.
Having said that, let's start on slide number four. You should all have a presentation in front of you. Slide four, members have already seen several times. This is our reminder of the parliamentary reporting cycle. To situate ourselves where we are at present, we're on the far left side of the diagram, January to March 26. This is the time of year where we're effectively wrapping up the current fiscal year as well as starting the next. We were here not that long ago on supplementary estimates (C). We've had the budget and now we have the main estimates, getting ready for the start of the new fiscal year on April 1. A reminder that for departments to spend money, Parliament has to approve something so we need something in place by April 1. That's why the main estimates get tabled in advance of April 1, so that Parliament can approve what we call interim supply in advance of the fiscal year starting.
Slide number five is a reminder about the link between main estimates versus the budget, which has been a frequent topic of discussion at this committee, and it really does relate to the role of Treasury Board. When the budget is being prepared, it looks at spending approvals made by the Treasury Board up until about Christmas and they take that kind of pre-approved spending into consideration for the budget. New budget items that were announced in the budget a couple of weeks ago will be included either in future main estimates, or those that are more urgent you will see in upcoming supplementary estimates (A), (B), or (C) for the current year. By way of example, if you had looked at budget 2014, you would have seen some renewed funding for the first nations water and waste water action plan of $323 million over two years, if I recall correctly. A portion of that is in 2014-15. That is not in the main estimates because it was just announced in the budget, so you will see that in upcoming supplementary estimates (A), (B), or (C). That's a reminder of that link between those two things.
Slide number six is the structure of the main estimates themselves. There are two parts. Part one we call the government expenditure plan, which is the overview of federal spending and summarizes the key elements, including the distinction between voted and statutory, as well as budgetary and non-budgetary. A reminder that a budgetary expense is one that, if things go as planned, the bottom line is there's an impact on the expenses of the government. Non-budgetary are things like loans, where we expect to recover them, so if we do recover them, there is in effect no impact on the eventual bottom line of the government.
The bulk of the estimates, which is part two, is the actual department-by-department detail in what's planned in terms of spending. Then you'll also see a draft of the appropriation act itself, which Parliament will eventually be asked to approve.
In slide number seven, to remind you of part two of the main estimates, which again is the department-by-department detail, you will see the raison d'etre for each department: the planned spending, voted and statutory, with a comparison to the previous year for each department. You'll see a departmental highlights piece. It will highlight things that are included in this year's main estimates that were not in last year's main estimates. A good example would be if you think about the Department of Public Safety, the program for disaster financial assistance was renewed during the fiscal year and is included in this year's main estimates. It was not in last year's main estimates; it was in a supplementary estimate last year. That's highlighted in that department's explanation so you can better understand the changes in dollars if you're comparing main estimates to main estimates.
Slide number eight is a reminder, since we were just here on supplementary estimates (C), that main estimates differ from supplementary estimates.
Supplementary estimates are very much transactional. A department is looking for a certain amount of money to do a certain thing, and that is incremental in nature. Main estimates take all of the approved incremental funding and group it together into totals.
By way of example, when we were here a few weeks back on supplementary estimates (C), we were talking about Citizenship and Immigration. They had money for the Canada-Quebec accord and also increased funding for temporary residents as well as for citizens. That funding is now rolled into their main estimates total. You will not actually see it line by line, but it's in the total.
That's just to highlight the difference between main estimates and supplementary estimates.
As to the types of votes you will see in these estimates, you'll see program expenditures. For departments that are smaller in nature, less than $5 million, we lump everything together in what's called a program vote. For departments that are larger, you'll see voted money for operating, voted money for capital, voted money for grants and contributions. Those are the three types of votes you'll see for the larger departments.
The other unique bit you'll see is something called Treasury Board central votes. I have listed those for you on slide eight. Those are votes that the Treasury Board allocates to departments. There's quite a variety among these. We can speak about them, if members are interested, but you'll see the list here. It includes everything from government-wide contingencies, a normal allocation of $750 million that is not always used but is there if it's needed, down to operating budget carry forward, which is allocations made to departments based on unspent funds in the previous year to encourage better spending planning, as well as pay list requirements, which the president has already mentioned in his opening remarks.
I'm happy to take questions on those if they are of interest to committee members.
On slide nine we have highlighted for you a few changes to presentation.
The first one I will speak to is the alphabetical order of departments. What that means for us is departments are no longer presented in the same order in English and French. If you wish to ask a question and are quoting a specific page of the estimates documents, I would ask that you give us a minute or two so that we can find the equivalent page in the other version so that all members can follow along.
The second change I will highlight is that employment insurance benefits are no longer presented in the main estimates. I'm happy to discuss the reasons for that. The EI account is a bit unique in that it runs out of an operating account. In discussions with researchers in the past about how to better align our reporting, we have always been talking about budgets, main estimates, and then public accounts, which is the last piece. We've made a change to the presentation to no longer include employment insurance benefits in the estimates, and I'm happy to take questions on that.
Last, for any sort of funding that is deemed to have been appropriated from one department to another because of a transfer in administration, there is a presentation change concerning how those show up. As a good example, members would be familiar with the move of the Canadian International Development Agency over to the Department of Foreign Affairs. In terms of how in-year appropriations are presented, there's a slight change. I've highlighted that for you as well.
The second half of the presentation is more on the numbers that you'll see.
If we compare the main estimates for 2014-15 with those for 2013-14, as the President of the Treasury Board has already mentioned, the total amount for statutory expenditures continues to go up because of the Canada health transfer and the old age security program. At the same time, voted expenditures continue to decrease.
This is, as the president has already mentioned, as a result of continued efforts to reduce the operating expenditures of government. The trend you're seeing in total is slight growth, but it's driven by the increases in the statutory payments, as mentioned, for the Canada health transfer as well as in programs for old age security.
Slide eleven gives you a little more context for what is going on between the splits between transfer payments, operating and capital, and public debt. What you'll see here is that the bulk of the spending is transfer payments, slightly more than 60%. Around 11% goes on public debt charges, and 28% on operating and capital.
If you're wondering how this compares with previous years, it's the same story as on the previous slide. The Canada health transfer and the old age security programs are very much transfer payments. They are causing the share of transfer payments to increase, while the other two categories are dropping slightly. Both public debt interest and spending on operating and capital are dropping slightly.
I will spend a few minutes on slide twelve, because these are the major changes from an organizational perspective, the largest increases and decreases by organization.
Foreign Affairs, Trade and Development spending is increased. That's actually linked to the first decrease you will see here, for the Canadian International Development Agency. The reason you're seeing that increase and corresponding decrease arises from the transfer or the merger that I already mentioned. CIDA is now part of Foreign Affairs, so Foreign Affairs' estimates increase; Canadian International Development Agency obviously goes down by a significant amount.
Continuing to run through the largest increases, for Treasury Board Secretariat as a department you will see a $400 million increase for the operating budget carry forward. I can speak to how that works. It's one of those central votes that is allocated to departments. As well, you'll see some funding for pay list requirements around something called pay in arrears, which we can also speak to. Again, central votes are driving that, as well as increased payment around the pension plan for the employees whom we have going.
For Employment and Social Development, the change—increases, largely—includes the one I've already mentioned, which is old age security and GIS, largely being driven by demographics.
For Public Safety, we've already mentioned that the disaster financial assistance program is in this year's main estimates and was not in last year's main estimates. That is what is driving that increase.
The last increase here, $676 million for National Defence, largely relates to a few capital projects they have going: light armoured patrol vehicles and Arctic offshore patrol ships, as well as spending on the Canadian Armed Forces health and service centres.
Those are the largest increases.
Among decreases, we've already covered CIDA.
The office of Infrastructure Canada estimate is decreasing, and that's largely to align spending plans with a more realistic projection of spending, considering what sorts of grants are coming in this year.
In CRA, there is a drop, and that is twofold. I think I already spoke about this at supplementary estimates (C), but about half of that decrease relates to decreased export charges under the Softwood Lumber Products Export Charge Act. The other part is largely related to some changes at CRA due to increases in e-filing and less paper-based exchanges and decreased mailing costs.
Citizenship and Immigration is dropping. That is essentially because of the transfer of Passport Canada out of CIC. That is what explains that decrease.
Last on this list, you will see Correctional Services Canada dropping by $262.9 million. That decrease relates to the expiry of some temporary funding that has now run its course.
Slide thirteen provides a reminder that this committee had made a recommendation that we link funding and estimates for items that were in a budget. Members were interested in knowing, the first time it appears in estimates, which budget it relates to.
From budget 2013, appearing for the first time in these estimates, on page 1 we have listed $253 million for investment in affordable housing and $70 million for housing in Nunavut. This is an example of those things being highlighted for you.
Also, if you go through the highlight section of departments' explanations of changes, you will see some links back to budget references: the $311 million for Health Canada related to programs and services for first nations; $95.6 million for Shared Services Canada around the consolidation of procurement of software. That is really not new money. It's basically money that used to be spent in departments that is being transferred over to Shared Services Canada, essentially to standardize and drive some efficiencies in procurement.
Last, there is some funding for National Research Council related to realignment of industry-focused research.
Slides fourteen and fifteen are both about Treasury Board Secretariat. The President of the Treasury Board has already given you a quick overview of Treasury Board Secretariat spending. As a reminder here, vote 1 is Treasury Board Secretariat's vote as a department for its operations. There are also those central votes that I mentioned earlier, which show up under Treasury Board Secretariat but are more related to Treasury Board Secretariat's role as a government-wide organization, because those funds are allocated out to departments.
Slide fifteen gives you a listing by votes of main estimates 2014-15 versus 2013-14 and highlights for you the increases and decreases.
Last, as the president has already covered off, there's an upcoming study of the estimates.
You have the draft of proposed schedules to the appropriation bill in the annex of the main estimates. These main estimates support both the interim supply bill and the full supply bill. These will be tabled in March and June respectively.
In advance of answering your questions, I would like to say that I hope the information we give you here today helps you with your study of your estimates and we look forward to your questions.