I'll try to restrict my remarks, Mr. Chair. I don't want to overstay my welcome, certainly, but I want to thank members of the committee for the opportunity to speak about government-wide 2014-15 supplementary estimates (C), and of course, the main estimates for 2015-16.
I'll also speak briefly about the Treasury Board Secretariat's main estimates for 2015-2016.
I should say that I have with me today officials from the Treasury Board Secretariat, including Yaprak Baltacioglu, the secretary of the Treasury Board. Mr. Brian Pagan is with us. He's the assistant secretary of the expenditure management sector. Daniel Watson is with us. He's the chief human resources officer for the Government of Canada. We also have with us Mr. Bill Matthews, the Comptroller General of Canada.
Of course I'm happy to take any questions after a brief statement.
I'll begin with the 2014-2015 supplementary estimates (C) for the fiscal year ending March 31, 2015.
As you know, the series of supplementary estimates, of which supplementary estimates (C) are the last every year, are part of the regular parliamentary approval process.
They ensure departments and agencies can receive the necessary funding to move forward with their planned initiatives to meet the needs of Canadians.
The 2014-15 supplementary estimates (C), which were tabled in the House of Commons on February 19, provide the information Parliament needs to consider the government's request for spending authority as we come to the fiscal year-end. They reflect expenditures the government set out in budget 2014 or in previous budgets. Specifically, the supplementary estimates (C) provide information on $1.8 billion in voted appropriations for 41 organizations, as well as information on a decrease of $1.3 billion in net statutory expenditures.
As the President of the Treasury Board, I can definitely provide some details on the funding being sought by the Treasury Board Secretariat through supplementary estimates (C). My department is seeking in total about $646.2 million. This includes $400 million to fund increases to vote 30, which is the government-wide vote managed by Treasury Board Secretariat to cover the legal payroll obligations of the Government of Canada.
This increase is primarily driven by the cash out of employee severance benefits accumulated to 2010. As you know or may remember, eliminating the accumulation of severance benefits for voluntary departures is a key part of the government's commitment to ensure that public sector compensation is both reasonable and affordable. We expect that eliminating severance will provide ongoing fiscal savings of about $500 million per year.
Through supplementary estimates (C), the Treasury Board is also seeking $246.2 million for vote 20. This is related in part to increased costs of the service income security insurance plan, which has been under some financial pressure. The pressures relate to low interest rates and an increase in the number of medically released armed forces members following the Afghanistan mission who are eligible for benefits under the plan.
As we approach the end of the fiscal year, the voted budgetary estimates, including the main estimates and supplementary estimates (A), (B), and (C), have all totalled about $93.4 billion. These estimates continue to reflect the success of spending restraint undertaken by the government. This, of course, underpins our ongoing commitment to keep taxes low and return to a balanced budget by 2015.
Let me talk briefly about the main estimates, Mr. Chairman.
Mr. Chair, I would now like to turn to the government-wide 2015-2016 main estimates, which were tabled in the House on February 24. These main estimates reflect the government's resource allocation priorities for the 2015-2016 fiscal year, starting on April 1.
Parliament will be asked to approve the voted expenditures. These amounts represent maximum “up to” ceilings or estimates, and aren't required to be fully spent during the course of the year. The actual expenditures are found in the Public Accounts of Canada, published every fall.
These estimates, combined with the reports on plans and priorities, the public accounts, the departmental performance reports, all help inform Parliament and hold government to account for allocating and managing public funds.
With respect to these main estimates, they provide information on $241.6 billion in planned budgetary expenditures for the next fiscal year. This includes $88.2 billion in planned voted expenditures and $153.4 billion in statutory expenditures. These include $499 million for the Canada job fund and job grant to help equip Canadians with the skills and training they need to fill available jobs; almost $448 million for the Canada First defence strategy for the modernization of the Canadian Forces; $315.6 million in funding for the operations, repairs, and maintenance of the Jacques Cartier and Champlain bridges; and a $203.2 million increase in funding for Infrastructure Canada's Building Canada fund.
This is for projects that are already under way and can continue to receive the funding they require. Of course, any planned expenditures announced in the upcoming budget will not be reflected in these main estimates but in future estimates that are tabled before the House.
Mr. Chair the 2015-2016 main estimates continue to reflect the ongoing success of the cost-cutting measures the government has put in place. There have also been significant statutory increases to elderly benefits and the Canada Health Transfer. And new spending is focused on creating jobs.
In fact, major transfers to persons are forecasted to increase by $9 billion in 2015-16, to $148 billion. As I said, this includes increases to elderly benefits such as old age security and the guaranteed income supplement and allowance payments, but it also includes the Canada child tax benefit and the universal child care benefit, to provide families with the resources to support child care choices.
To be respectful of members, I'll skip over the TBS-specific 2015-16 main estimates. I can certainly answer any specific questions related to that.
Let me just say in conclusion that strong fiscal management is vital to our country's long-term prosperity. I'm certainly proud, as President of the Treasury Board, of the measures that our government has taken to manage spending during the economic downturn to ensure Canada's continued prosperity. The many accomplishments in this area are reflected in these estimates.
Thank you. Merci.
Minister, I would like to talk about the funding for National Defence. However, I would first like to take this opportunity to extend my sincere condolences to the family of Sergeant Andrew Doiron, who lost his life in the Iraq theatre of operations.
The Department of National Defence is asking for $138 million for the two operations Canadian Forces are involved in at this time, that is to say Operation Impact in Iraq, and Operation Reassurance, which is taking place mostly in Europe and Ukraine.
Can you confirm that these amounts are included in supplementary estimates (C)?
Do you plan an increase or a decrease in the funds that will be allocated to operations abroad?
Will there be an adjustment following this tragedy, for instance a change in the number of military members affected to the theatre in Iraq?
I am not talking about those who are currently on duty in Kuwait with aviation services, but about Canadian troops who are serving in Iraq in field operations.
Thank you for the question.
As the member has already said, the Office of the Parliamentary Budget Officer has done a certain amount of research on the missions.
I believe the Department of National Defence released their own estimates of what the mission would cost.
Understand that when the PBO does work in this area, they are basing their estimates on industry standards. They are not basing the estimates on specific planes. The National Defence costing is actually based on the planes and equipment they have in theatre, whereas PBO's estimates would be based on standards.
A credible estimate, a credible way to do things...but it's much more high level. It is an estimate. It's an “up to” amount. The key drivers in those costs are the number and types of equipment they have over there and the number of missions they are flying. As those change, the costs will change. National Defence would basically have better data at their fingertips in terms of the cost per flight, whereas PBO would be using a generic estimate. That's why you'll see a difference.
Minister and staff, it's good to have you here today.
I'm glad you started off in transportation in the Atlantic area, because that certainly is a matter of great interest to all of us who live on the Atlantic coast, given our watercourses. We've had what they call an old-fashioned winter, so we've had lots of time to reflect on many things down in the east.
I would like to ask specifically about the main estimates, the $90 million planned for expenditures for Marine Atlantic. Why is this figure so much lower than the $127 million listed in 2014-15? I know you alluded to it, but I wonder if you could give us a bit more detail on what's going on in this area, if you would.
As I started to explain, in the main estimates Marine Atlantic had received about five years of funding that started in budget 2010. That five years of funding ends in the 2014-15 fiscal year. When we have a sunset issue like that, it's typically found—yea or nay—in the budget, not in the estimates.
One would expect that this issue would be addressed one way or the other. I'm not trying to pre-empt the budget, but one way or the other, it will be certainly found; if it's not found in the main estimates—which it isn't—it will be found in budget 2015. That's why you perceive a decline in the estimates, because the funding has not been allocated according to the budget.
So this is quite typical. This is not an unusual situation. Departmental reference levels are regularly updated through the budget and the supplementary estimates that of course will come before the House. One would expect that the next opportunity to see whether Marine Atlantic has additional funding would be in supplementary estimates (A).
Thank you for the question.
Circling back to a previous comment from the minister about the positioning of the estimates versus the budget in the fiscal year, as mentioned, the reality is that by the Standing Orders of the House of Commons we have to table the main estimates on or before March 1 every year. By convention, the last several budgets have been in February, March, and April of other years.
It is quite common, if your budget is the pre-eminent policy statement of the document, aspirational in nature, setting out what they want to do, that it will take some time from that budget to work with departments to stand up a program. It will take some time to develop the terms and conditions, work with their partners, be it provinces, NGOs, international stakeholders, so that program will stand up to the scrutiny of the President and his Treasury Board colleagues.
At that point, when we have the Treasury Board approval, we bring the item forward in supplementary estimates for parliamentary approval. Depending on when that happens in the year, there can be as little as just a few weeks left in the fiscal year for a department to spend the money. I'll use supplementary estimates (C) as an example, which were just tabled on February 19.
We don't anticipate parliamentary approval of those amounts, the $1.8 billion in voted programming, until something like the third week in March. Therefore, there are instances where departments simply run out of runway, time and space, to be able to implement the initiative. Then there are some options available to them to carry forward the funds.
There is a process, which I'd be glad to speak to in the second hour to explain the carry forward process, or to have that funding reprofiled by the Department of Finance. That is a dual role. We will work with the department to see if there's a valid reason why they couldn't stand the program up. If the Department of Finance agrees, they will reprofile the money in their fiscal framework, and that will be subsequently presented to Parliament in future supplementary estimates for their approval at that point.
It's not automatic. It requires a dual role by TBS and by Finance, and it is presented to Parliament. In fact, in the main estimates we have a couple of examples. Aboriginal Affairs is—
I think we'll all have to wait.
Sometimes, Minister, I do indeed get my hair on fire, but I don't want you to ever get your pants on fire.
That said, it's important to be clear and to be precise. It's not just you who doesn't know the budget of Marine Atlantic, but the president of Marine Atlantic does not know the budget, and he won't know for quite some time. That creates an interesting management challenge.
How do you actually operate a federal crown corporation for a period of several weeks, if not months, without having a clue how much money you're going to have as an appropriation?
Certainly, a number of these indicate that the amounts in the 2015 main estimates have increased by almost $4.5 billion, I think, in statutory spending over the previous year. That's just one example. That's due to things that our government has taken very seriously and has already communicated, for example, the almost $2 billion increase in the Canada health transfer, which was listed in budget 2012. There's a $2 billion increase in benefits for the elderly, including old age security, the GIS—guaranteed income supplement—and allowance benefits. That's included in that total.
As I alluded to in my opening remarks, we have the Canada job fund, including the Canada job grant, to make sure that we train Canadians for the jobs that are available to them. There's more money for the Canada First defence strategy, and more money for the Jacques Cartier and Champlain bridges. Unfortunately, in our country there is always some environmental or weather disaster—flooding, fires, and those kinds of things—so about $250 million goes to those kinds of arrangements.
As you can see, that's typical of where you would see discrepancy between one and the other.
Thank you very much, Mr. Chair.
Thank you, Minister and officials, for being here with us today.
Before I ask my main question, I just want to give you a chance, Minister, to state again on the record how the sunsetting issue works. I think there's a lot of misinformation that these are cuts to programs.
Can you just clarify again exactly what is meant by sunsetting provisions? One of the officials I think said that some of these programs are designed for five years and then they lapse. I want to give you an opportunity to explain very clearly on the record what the sunsetting of programs means, and that it's not cuts to programs. Programs have lapsed because they have achieved their objectives or they have done what they were supposed to have done within that period of time.
I just want to give you this opportunity.
The other committee on which I serve, Minister, is the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities, which is now under Employment and Social Development Canada. It runs a myriad of programs.
I do have to mention, being a member of that committee since shortly after I was elected to Parliament in 2011, the transformation I've seen within that department and the number of programs and services that have better reflected, in my view, the reality of the labour marketplace: the new Canada job grant, apprenticeship loans, some of the changes we've made to the employment insurance program, and other things that I think are important and reflect the reality of life in 2015 in Canada versus maybe 20 or 30 years ago.
The amount of $2.6 billion has been allocated in the main estimates for ESDC. Can you explain what that entails? What's involved in that budget number?
Thank you very much, Mr. Chair. This is my first meeting at this committee and I'm thoroughly impressed. I find this committee fascinating and interesting. I wonder if all these meetings are this interesting. I look forward to future meetings. Seriously, I'm really impressed with the quality of the members and of the witnesses. So, welcome.
The Chair: No comment on the chair, sir?
Voices: Oh, oh!
Mr. Guy Lauzon: And the chair, at moments, does quite a good job.
Voices: Oh, oh!
The Chair: I shouldn't have fished for compliments.
Mr. Guy Lauzon: I don't want to put you on the spot, Mr. Pagan, but the minister said a couple of things in his comments that tweaked my interest. I don't know if you caught it or not, or if you or whoever wrote it is aware, but he mentioned, I think, either in his comments or in answer to a question, that we were on track for a balanced budget.
Is that your understanding of what he said?
There are two components to the Treasury Board appropriation.
Vote 1 is our program expenditure. This is the vote available to the department to manage itself. It's operating costs and programs. The other votes that we see listed under the Treasury Board Secretariat are, in fact, what we call central votes, which exist for the management of the public service as a whole. They are administered by Treasury Board, but they support public service management. We spoke earlier about vote 20 and public service insurance.
A big part of what we're seeing here in the reduction is for the vote 30, called “Paylist Requirements”. Vote 30 is the means by which we reimburse departments for their costs of parental leave and severance. We are seeing this year, as referenced by the minister, a reduction as a result of the winding down of severance, as well as the pay in arrears. There was a one-time spike in that vote last year to put the government onto a modern pay-in-arrears process, so now we are seeing a significant decrease, $850 million, in that vote this year.
Thank you for the question. I welcome this, because I think it is an opportunity to educate members of Parliament about the process and perhaps dispel some myths and misconceptions.
I spoke earlier about supplementary estimates (C) and the fact that they are tabled according to House Standing Orders at a certain point in the year, leaving just a few weeks in the fiscal year for departments to execute the programs based on the approvals provided by Parliament.
In the past, going back to the early nineties, this timing created a phenomenon known as “March madness”, whereby departments would spend the money available, because if they couldn't spend it, they would lose it. This was a practice that was criticized by the Auditor General and by parliamentary committees, so the concept of carry forward was introduced in 1993. It allowed a bit of flexibility. It simply recognized the reality of providing approval for funding very late in the fiscal year and some of the difficulty in spending this related to contracting, hiring staff, etc.
It proved to be quite successful, I think. The Auditor General supported an increase to the carry forward. It was increased to 5% in 1994-95 and has stayed at that level ever since.
A more recent development in 2007 was the creation of a central vote to provide more transparency to Parliament in terms of the use of that vote. Right now Parliament, through these main estimates, is creating a central vote for administration by Treasury Board, and we will report back—that central vote is worth $1.6 billion—at the conclusion of the fiscal year on how that $1.6 billion was allocated, department by department, in accordance with their carry forward needs and entitlements. There is a very strict process by which we determine whether they are eligible or not for that carry forward.
Thank you for the question.
Transparency and accountability for the moneys provided to departments again are something that we take quite seriously. We have, I think, worked very constructively with this committee, with the Senate Committee on National Finance, with the Office of the Auditor General to listen and hear their needs and make real improvements to the information provided to Parliament, not only in the estimates but in a range of other documents. The quarterly financial report provides in-year reporting on how each and every department is progressing against the authorities provided to them by departments.
In just a week or so the President of the Treasury Board will table departmental reports on plans and priorities, which provide a great deal of detail by department for the moneys requested in these supplementary estimates. We have worked with departments over the last several years to improve the transparency of their documents by identifying strategic outcomes and program activities that allow parliamentary committees to better understand the aggregation of programs and how those fit with departmental mandates and government priorities.
I think that provides just a very brief summary of the work that we've done, and I can assure you it is an ongoing exercise. I think Canada can be very proud of the way its public finances are managed, but we are always striving to identify and implement improvements, and we would welcome recommendations.
My question is that there's a particular crown corporation that offers two services, but they're identical. One's a core service; one's a seasonal service. It's a transportation company. The transportation company has a constitutional mandate or an authority with Canada and has an obligation to provide the transportation service. So it has boats, it has docks, it has ferry terminals, it has staff, it has various expenditures that it must make to meet that constitutional obligation. But it also offers a seasonal transportation service, which is ancillary to the constitutional obligation.
In terms of cost recovery measurements, because the constitutional obligation, the year-round service, already has the boats, the docks, the ferry, the ferry terminals, and the staff in place, when analyzing whether or not the seasonal service is meeting a certain cost recovery measure or target, that particular crown corporation suggests, because there are already certain capital assets and personnel in place, that when they do a cost recovery analysis on the seasonal service they don't have to include any of the costs of vessels, terminals, staff, anything like that. Is that a best practice? Would you encourage Canada Post to do the same thing, for example, in terms of measuring cost recovery for regular letter mail versus its courier business, or anything like that?
Thank you very much, well done.
Thank you, Mr. Pagan, and to your team for being with us today to answer some supplementary questions.
Seeing no further business....
An. hon. member: [Inaudible--Editor]
The Chair: Mr. Butt is asking if we had intended to pass the vote.
No, I think we'll be doing that at the next meeting of the committee, Mr. Butt. It's a valid question.
I declare the meeting adjourned. Thank you.