Proceedings of the Standing Senate Committee on
Issue 17 - Evidence - Meeting of November 18, 2009
OTTAWA, Wednesday, November 18, 2009
The Standing Senate Committee on National Finance met this day at 6:30 p.m. to examine the expenditures set out in the Supplementary Estimates (B) for the fiscal year ending March 31, 2010.
Senator Irving Gerstein (Deputy Chair) in the chair.
The Deputy Chair: Honourable senators, I call this meeting of the Standing Senate Committee on National Finance to order. For anyone who might wonder what has become of the regular occupant of this chair, Senator Day has been unexpectedly detained in his travels, so it falls to me as deputy chair to assume his place. While I do not pretend to be a substitute for my honourable colleague, I am, nevertheless, his replacement.
This evening we are considering Supplementary Estimates (B) 2009-10 tabled in the Senate on November 5, 2009, and referred to this committee for review. This is the second set of supplementary estimates issued in this fiscal year. Because several of the senators in attendance are not regular members of this committee and because of the timing of these estimates is a little unusual, I beg the indulgence of my honourable colleagues and our witnesses while I briefly introduce the process we are about to undertake.
The normal supply cycle includes interim supply in March, approval of the balance of the Main Estimates in June and supplementary estimates during the remainder of the year. For many years, it was the custom to table supplementary estimates in December and March. In 2008 our government began to table supplementary estimates in the spring as well to provide Parliament with more timely information and better align requests for spending authority with the budgetary cycle. In addition, this year's budget was introduced earlier in the year than any previous budget in Canadian history because of the urgent need for fiscal stimulus to address the global recession. As a result, Supplementary Estimates (A) 2009-10 were tabled in May, and Supplementary Estimates (B) are now before us in November.
It is the role of this committee to review these supplementary estimates and present a report of our findings to the Senate prior to the introduction of the related appropriations act. I emphasize that, unlike the committees of the other place, it is our role and authority to review government spending and not to approve or modify it. Because the study of supplementary estimates is essentially a pre-study of the appropriation bill, the bill itself will not come to our committee. However, pages 44 to 66 of these estimates provide a preview of the proposed schedules 1 and 2 to the appropriation bill.
Today it is with pleasure we welcome back and receive testimony from officials of the Treasury Board of Canada Secretariat: Mr. Alister Smith, Assistant Secretary, Expenditure Management Sector; and Mr. Brian Pagan, Executive Director, Expenditure Operations and Estimates Division. Gentlemen, I welcome you back and invite you to begin your presentation.
Alister Smith, Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: Thank you, Mr. Chairman. I would like to take a few moments to give you an overview of Supplementary Estimates B 2009- 2010, and I will focus on the process of supply: the global amount of these supplementary estimates, the major initiatives being funded and the implementation of the priorities announced by the government in the 2009 Budget tabled last January.
I hope you all have a copy of this short deck that we have sent over. The outline of what I will say is on the second page of the deck. We will talk about the purpose of these estimates; we will add a little bit to what Senator Gerstein said about the context of "supply''; we will provide an overview of the proposed amounts, including the major voted budgetary items — there are some large statutory items too — for consideration; and we will set out some of the next steps in the supply process.
As you know we are seeking Parliament's approval of the spending authority here to implement planned spending for approved programs. That includes $640 million for budget 2009 initiatives. Much of the budget initiatives has already been funded through Supplementary Estimates (A) and other means, such as Treasury Board vote 35. This is the next instalment.
As always, Supplementary Estimates (B) also realign or transfer some existing spending authority between voted appropriations. As well, they are used to inform Parliament of updated projections of statutory spending.
The graph on the fourth slide of the deck shows the supply cycle. The illustration is to remind you of the key dates in the parliamentary supply process with the emphasis on the supply periods ending June 23, December 10 — the one we are currently in — and March 26.
Supplementary estimates were tabled by the President of the Treasury Board in the House of Commons in early November for this supply period, which ends December 10. It is the second of our supplementary estimates this year. We will be following with Supplementary Estimates (C), which will probably be tabled in February, for the March supply period.
Slide five sets out the voted items for which we are seeking Parliament's approval, totalling $4.9 billion in new appropriations. These estimates also provide information on a net increase of $26 billion in statutory spending, $24 billion on the non-budgetary side and $1.6 million on the budgetary side. Statutory spending is not voted.
The $24 billion on the non-budgetary side includes two large components. The first is $12.4 billion to Export Development Canada (EDC) for the purpose of facilitating trade between Canada and other countries, but particularly through support of the auto industry. The second is $12 billion for the Business Development Bank of Canada (BDC) to purchase term asset-backed securities to provide support for vehicle and equipment financing.
In the case of the EDC, the disbursements have included support for the auto industry, but also support for Canadian airlines and for the sale of ships and aircraft during this period of global economic crisis. In the case of the BDC, the forecast disbursements relate to the purchase of asset-backed securities which are backed by loans and leases on vehicles and equipment, so they are to aid in the financing of vehicles and equipment. That was part of the Canadian Secured Credit Facility which is part of the Economic Action Plan in Budget 2009.
Non-budgetary items do not increase the federal debt or deficit as their outlays represent changes in the composition of the financial assets of the Government of Canada.
The focus of slide six is on the major voted budgetary items. These items will be before Parliament in the supplementary estimates for approval. The first element is $403 million for the Public Health Agency of Canada to purchase the H1N1 vaccine. A second item is $321.5 million for CIDA, the Canadian International Development Agency, in support of Canada's 2009 G8 summit commitment to address global food security along with other G8 countries.
The third item is $264 million for Infrastructure Canada for the provincial-territorial base funding program, one of the infrastructure programs. The following item is $200 million for Atomic Energy of Canada Limited to support completion of the CANDU reactor refurbishment, and the final item we mention here is $198 million for policing and security for the 2010 Olympic and Paralympic Winter Games.
A complete listing of the major budgetary requirements in excess of $100 million can be found on pages 11 to 13 of the supplementary estimates documents, the blue books you have with you.
Finally, the last slide sets out the key messages and next steps. These estimates are fully consistent with the Budget 2009 framework, including the Economic Action Plan, and other decisions by cabinet. They include normal in-yea adjustments, which we do make every year. We will be tabling the final supplementary estimates for 2009-10 in February, and this will be followed also in February with Main Estimates for fiscal year 2010-11.
We would be happy to take your questions.
The Deputy Chair: Mr. Pagan, is there anything you wish to add to the opening remarks?
Brian Pagan, Executive Director, Expenditure Operations and Estimates Division, Treasury Board of Canada Secretariat: No, senator. That was our introduction. We would be happy to answer any questions you have.
The Deputy Chair: I will call first on Senator Harb.
Senator Harb: Thank you very much, witnesses, for the presentation. I have a question on page 158 of the estimate, 5(b); are you there?
Mr. Smith: Yes.
Senator Harb: This item is $384 million increasing to $428 million. It is capital expenditure and authority to make payment to provinces and municipalities and local or private authorities as contribution toward construction done by those bodies and authorities for the purchase and disposal of commercial fishing vessels.
You are talking about the purchase and disposal. Is it both or one? Could you elaborate a little on that?
Mr. Pagan: Senator that legal wording is consistent with that which has been used by the Department of Fisheries and Oceans for some time. It is set out in the Main Estimates. If there were any change to that wording it would be underlined. In subsequent departments, you will see examples of where an authority might be underlined.
The starting point is that, as you know, the vote wording provides the legal authority of the department to be able to call on funds from the Consolidated Revenue Fund. It would depend very much on the transaction in any given situation as to whether they are purchasing, disposing, or repairing. The wording is carefully constructed so that it provides sufficient legal flexibility to do something but also control so that it can only be for the specific purposes set out in the wording.
Senator Harb: What is that expenditure for? Could you give us bit of detail in terms of what would that be for?
Mr. Pagan: Let us deconstruct it; 5(b) gives you your vote wording.
Senator Harb: No, I am talking about the item itself. What is it specifically for?
Mr. Pagan: The wording itself provides the legal authority and then the amounts are here. You will see 5(b) started at $1.25 billion for the year. Then we see transfers and adjustments. The department is transferring monies into the vote in the amount of $545 million. To that appropriation they are also seeking an increase of $24.2 million, so the total estimates to date would be $1.28 billion.
Now, to work through this, turn to page 159.
Senator Harb: Do not move out of that point. I only have 5(b). I am interested to find the explanation for 5(b). What is it specifically for? Are we building fishing vessels; are we disposing of them?
Mr. Pagan: The 5(b) figure is an aggregate. Page 159 gives the breakdown of those amounts. The adjustment to the appropriation is $24.1 million, and if we look at page 159 there is a subheading at the top called vote 5, which lists all the individual transactions by the department for that specific vote. For example, you will see the third item down, funding for the Small Harbour Craft Infrastructure Repair Program, shows a charge of $9 million for vote 5.
Senator Harb: The second question I have is about the government asking for $107 million for the assessment management, the remediation of contaminated federal sites. With 18,000 contaminated sites, how do you select which site goes first? The second part of the question is: Last year the Auditor General had said it would cost approximately $6.3 billion to really clean up all those sites. How do you select which one goes first?
Mr. Smith: The remediation of these sites is prioritized according to the nature, severity and immediacy of the risk to human health and safety. There is a list of priorities for these contaminated sites and of course the environmental consequence of not cleaning them is taken into account. This is part of that thrust in the budget to deal with contaminated sites. It is also an important stimulus action.
The liabilities that are involved here are estimated and carried in the public accounts and the Auditor General examines them every year. Where possible, those are calibrated and added to or subtracted from as sites are either cleaned up or uncovered. The amount being carried, you are right, is a significant amount and includes $3.2 billion for the management and remediation of federal contaminated sites.
Senator Harb: The final question is that for years now we have been talking about simplifying the estimates and the supplementary estimates. I believe Treasury Board has been working toward trying to simplify it so people in the decision-making process can look at the items and can see easily what is going on.
How far have you gone in the simplification process and when will Parliament be able to get hold of a document that is easy to read without being an accountant?
Mr. Smith: As you can see, looking at the Department of Fisheries and Oceans as an example, and you mentioned the purchase and disposal of ships here, we have been able to break out an explanation of the specific requirements by vote in the documents. It is greater information and more clarity. We think that is an improvement. It is hard at the level of the vote to see exactly what is going on.
At the level of the table on the explanation of requirements, you can see, for example, that ships are being purchased for this purpose or that purpose, and that support is being provided to the coast guard and to small craft harbours. There is a range of things. That is one thing we have tried to do. We have tried to make the language plainer as well.
We have also been clearer on the use of offsetting funds. When we come to Parliament we ask for appropriations on a net basis. We offset some of the increased requirement if there are existing funds available in a vote. However, in the past, it was not as transparent as it is now. Now we explain where the offsets are occurring and why the net figure is smaller than the gross requirement. We have tried to clarify that.
We have also introduced a number of other elements in the documents and overview of the major items. We have clarified that. We have also tried to provide a summary of the horizontal initiatives which involve more than one department, because that is very complex. Take contaminated sites for example. When you have several departments working on a major initiative of that kind, it is hard to capture the overall gross numbers, and size and scale of the initiative if it is sprinkled throughout their estimates. Therefore we have grouped those together. Each of those horizontal initiatives is at the front of the book and you can see where they link into the departments' spending.
We have made a number of those changes. We have also summarized all the transfers from one department to another, we have a list of that. It is perhaps more information but it is to try to make the document clearer and the transactions clearer to parliamentarians.
Senator Harb: Are you going to continue?
Mr. Smith: We will continue and we will try to continue to improve these and we are interested in your feedback as we move forward.
Senator Harb: Thank you very much.
The Deputy Chair: Mr. Smith, I will pick up on Senator Harb's question about remediation of federal contaminated sites, I note on page 101 that almost half of the amount is designated to the Department of Indian and Northern Affairs Canada. Could you comment on that, please?
Mr. Smith: Certainly. This is a large initiative, which involves many different departments and agencies across government and one of the key ones is the Department of Indian and Northern Affairs Canada. I am just looking for my note on it here to break out the INAC part of this.
It is in this case $15.3 million of new spending on operating and $34.5 million for new spending on grants and contributions, for a total of nearly $50 million to clean up a number of contaminated sites in First Nations areas. The grants and contribution funding is to support assessment and remediation activities that build capacity in First Nations. Examples include the support remediation activities for six sites on reserves and in the North. Funds will be used to support completing preliminary assessments of 350 sites spread across the three northern territories. This is largely focused on the North and it will no doubt be of great benefit to native communities up there.
Senator Callbeck: Thank you and welcome. It is good to have you back. I have several questions here. On page 10, under strategic review savings for 2009-10, correctional services is listed at $82 million. What correctional services have been cut?
Mr. Smith: These savings from strategic reviews were all from last year's round and they were all mentioned in the budget. There is a range of both savings and reinvestments in each of these areas. In the case of Correctional Services, and I am looking at the annex from the budget, there were some specific changes and there were some additional reinvestments as well.
Senator Callbeck: I would be interested in getting the breakdown for Correctional Services. In the same table, Agriculture and Agri-Food is listed at $130 million. What is that made up of? The table also lists savings from employee benefit plan. I assume that means that people were laid off or did they go by attrition?
Mr. Smith: Not necessarily. Whenever there is any reduction in government spending which involves operating funds, we automatically reduce the employee benefit plan cost as well. That is sort of a standard and automatic reduction we would make at the same time we would make any other spending reduction there.
As we add operating spending and add employees, we will add in the costs of employee benefit plans, which I think we calculate at 17 per cent of the overall operating costs for new employees. That is what that is about.
Senator Callbeck: That is a saving; that has been reduced, so the total overall expenditure must have been reduced.
Mr. Smith: I will go to the Agriculture and Agri-Food question first. In the last round we had savings that were counterbalanced by reinvestments. In fact, the reinvestments probably exceeded the savings. There were some sunsetting programs that were reduced; they had already achieved their objectives. They are being replaced by the new Growing Forward suite of agricultural programs, the business risk management programs.
There were new programs such as the agri-flexibility program and slaughterhouse capacity, which were brought on at the same time. The net change is very limited, but there is change within the program structure from programs that were sunsetting and which were less effective, to programs that were new and important being brought on either through the Economic Action Plan or through the Growing Forward new suite of agricultural policies.
Senator Callbeck: Could you send the committee the breakdown on Agriculture and Agri-Food, Correctional Services and the employee benefit plan?
Mr. Smith: Yes. The employee benefit plan is an additional cost which is incorporated in all the changes we make — plus or minus.
Senator Callbeck: The next question I have is on Foreign Affairs. On page 165, it says "reinvestment of revenues from the sale or transfer of real property abroad.'' What has been sold or transferred?
Mr. Pagan: Properties sold or transferred in 2009-10 were official residences in Dublin, Ireland, and Atlanta; chanceries in Lima, Peru, and Dakar; and staff headquarters in The Hague, London, Canberra, Dallas, Atlanta and Santiago, Chile. These sales netted approximately $15.7 million.
Senator Callbeck: There are 10 there. Why was that? Was it more economical to rent, or were these places closed? I know Dublin, for example, was not closed.
Mr. Smith: There is always a range of reasons why Foreign Affairs will be disposing of property or buying new property, leasing property or renting. There is a constant change in the real property portfolio. A lot does depend on market conditions.
A lot also depends on where we are establishing new relationships. If we are building up in a country — in India, for example — we will be probably purchasing properties. If we are reducing our presence in another area or market conditions are right, we may be selling properties.
It is managed effectively by DFAIT. As you can see, some of these are well-placed residences, and it does result in savings for the Crown.
Senator Callbeck: On INAC, on page 184, it gives figures for the Specific Claims Tribunal. The Main Estimates had $2.6 million and this is asking for another $272,000, which brings it to about $2.9 million.
On the website, it says that the judges have not yet been appointed. How many people are working there?
Mr. Smith: Our information is that you are right; judicial members have not been appointed to date. They are to be appointed by Governor-in-Council in due course. There are currently 19 FTEs, 19 people working in 2009-10 on the Specific Claims Tribunal.
I can say one other thing here, which is that historically decisions about the validity of specific claims and the value of compensation were made at the discretion of the Government of Canada. Now the idea is be to have an independent tribunal with the jurisdiction to make binding decisions, providing greater transparency and fairness, finality, to specific claims' grievances. That is the tribunal's purpose.
Senator Callbeck: That is the purpose but it has not been set up. Who is deciding these specific claims right now?
Mr. Smith: They are being decided, as in the past, by the Government of Canada. The purpose of this tribunal will be to replace that process by one that is more at arm's length and which will be independent of government.
I do not have any information here on when the judicial members will be appointed, but I think it must be imminent.
Senator Callbeck: It must be, because they are asking for another $272,000 and there is already $2.6 million there. Is my time up?
The Deputy Chair: It is. I will put you for round two.
Senator Carignan: A few months ago, I was the mayor of a municipality. Because of this I am hugely interested in the funding for infrastructure, especially since I have been able to see the needs at the local level and how government's support, especially that of the federal government, is welcome by local governments in terms of their infrastructure.
I noted four items of infrastructure funding that seem quite similar at first sight. I am referring here to a summary that I have and unfortunately I do not have the precise references in the blue book.
Funding for the the Canadian Strategic Infrastructure Fund relating to investments to public infrastructure projects: $123 million; funding to support construction activities related to recreational infrastructure: $102.5 million; funding for the Office of Infrastructure of Canada for the Provincial-Territorial Infrastructure Base Funding Program: $263 million; and funding for the Building Canada Fund relating to investments in public infrastructure projects designed to improve the quality of life in urban and rural communities: $160 million.
These are pretty large amounts and they will be welcome in the communities. Could you tell us what specific needs have been identified to come up with such large amounts? How will the funding be allocated within these programs? How are these large amounts going to be spent?
Mr. Smith: I know the committee has heard from Infrastructure Canada on this range of programs, but you are quite right: These are large, significant programs. They are distributed in a variety of ways. The Infrastructure Stimulus Fund, for example, is on a per-capita basis across the country. The accelerated base funding program is one where every jurisdiction gets the same amount — $25 million a year — over seven years, accelerated, which is $175 million. In that sense, it is distributed fairly across the country.
There are a number of other elements of the Economic Action Plan, and I would be happy to go into more detail on them. Some are aimed at large projects. Some, such as the Infrastructure Stimulus Fund and the Building Canada Fund, have a major construction component. Some are aimed at smaller municipalities, such as the Building Canada Fund community component, which is for municipalities of 100,000 or less. There are also other programs which are for specific purposes, such as recreational infrastructure.
There is a wide range of spending. It terms of infrastructure, the Economic Action Plan contains amounts in the order of $12.8 billion over two years. These are very large amounts and they are spread evenly across the country.
Senator Carignan: Let me clarify my question. Could you tell us which types of infrastructure or projects could be financed locally through these funds?
Mr. Smith: There is a range of different requirements. In some cases, funding is for small-craft harbours. In other cases, it is for federal infrastructure such as bridges. There are a number of specific requirements in Supplementary Estimates (B) which we can go through. I will ask my colleague to go through them.
Broadly speaking, the infrastructure programs cover a wide range of needs: federal infrastructure, provincial- municipal agreements for local infrastructure, bridges, small-craft harbours, more infrastructure in the North, infrastructure in Native communities, and so on. It is very large. Mr. Pagan may wish to add to that.
Mr. Pagan: Allow me to give you a few examples regarding the Canadian Strategic Infrastructure Fund. There is the improvement of the airport in Whitehorse, Yukon: $4 million for boarding ramps and elevators for persons with disabilities in the terminal. In Newfoundland, $4 million for the construction of an overpass.
The Conception Bay South Bypass Road, phase 3.
This is for road improvements. The objective is to increase investment in the province and in the tourism sector.
In Alberta, there is a widening of the Trans-Canada Highway, specifically 63 kilometres of highway from Wandering River to south of the House River. There is $2.2 million for that project.
Those are concrete examples of different improvements to roads and airports.
Senator Carignan: I would imagine that when it comes to recreational infrastructure, we are talking more about things like arenas?
Mr. Smith: It is for arenas, swimming pools and other recreational facilities.
To add to what my colleague was saying, there are at least 4,700 projects across the country funded through these infrastructure programs. There are programs such as a program for recreational trails, which is for snowmobilers, as well as cross-country skiers and others who use trails.
There are all kinds of specific examples. Some of them are geared to recreation and sports; some are more geared to environment and environmental matters. There is a green infrastructure program and the clean energy program, too. Both of those are aimed at environmental actions and objectives. There is a wide range of large and small projects, in cities and rural areas, environmental and recreational. The $13-billion spending over two years is a large swath of spending.
Senator Mitchell: I would like to note that the Senate, on page 211, has no transfers and no adjustments to appropriations and is sticking within its budget as established at the outset. It is a pretty remarkable institution, I would say.
Senator Banks: The only one.
Senator Mitchell: Yes, the only one that I can see.
I am interested in the relationship between total expenditure now and what the total expenditure was last year. I think the budget last year was $225 billion. The total budget this year, as of Supplementary Estimates (B), is $272 billion. Did it go from $225 billion to $272 billion, by $46 billion?
Mr. Smith: That is not quite true. I am looking at the annual financial report from the Department of Finance. These are the budgetary expenses on an accrual basis, which the Department of Finance recently put out. The expenses for 2008-09 were $239 billion.
Senator Mitchell: What were the budgeted expenses at the beginning of 2009-10?
Mr. Smith: Let me clarify that. Go to page 9 of the current document. The $272 up here is the number you are referring to, I think. That is based on the 2009 fiscal economic update. That incorporates all the Economic Action Plan figures.
Senator Mitchell: Okay. Is it up from $236 billion in the original estimates?
Mr. Smith: Regarding the Main Estimates, that table tries to reconcile the Finance budget number, which is an accrual number, with the cash numbers that are here. We are reconciling to that $272 billion, explaining the differences between it and what the cash figures show through Main Estimates, Supplementary Estimates (A), and now Supplementary Estimates (B).
Senator Mitchell: So there is a $33-billion increase in expenditure this year over last year's $239 billion?
Mr. Smith: I do not think it is quite that much because there are some adjustments there from accrual to cash.
Senator Mitchell: I am going on the $272 billion and the $239 billion you just gave me.
Mr. Smith: There is additional spending from the Economic Action Plan which increases the spending numbers considerably this year; that is correct.
Senator Mitchell: It is about a 15 per cent increase.
The table on page 10 shows the strategic review savings for 2009-10. The point is made that there is a series of strategic reviews. The announcement in this book is that the savings are $346 million on $272 billion in expenditures.
Mr. Smith: Yes.
Senator Mitchell: They are not really worth a page; they are kind of worth a footnote.
Mr. Smith: You raise an interesting point. The strategic reviews are not about fiscal savings. They are about reallocating funds from lower priority, less effective programs to higher priority, more effective programs. You will see reinvestments into new programs that, in some cases, exceed the reallocations or cuts. The idea here is to review the A- Base of direct program spending every year and to reallocate funds to higher priorities.
We put the savings in here for transparency because, when we ask Parliament for money, we ask on a net basis, and we offset some of our requirements with any sources of savings or funds that are available. We want to ensure it is clear what the offsets are when we provide you with the net requirements.
Senator Mitchell: Help me here. It looks like you are saving $82 million on Correctional Services, but then I go to Correctional Services itself and I note that you are increasing it by $33 million. Are you taking out $82 million and putting back $33 million?
Mr. Smith: On any given set of estimates you will see a whole new range of requirements which may or may not be related to the strategic review. The reinvestments in the strategic review may be in the Main Estimates of Corrections Canada. Here they are coming in for new requirements at the margin for other purposes. That is what is contained in these Supplementary Estimates.
Senator Mitchell: Could you tell me where the savings of $82 million were made?
Mr. Smith: Your colleague has already asked, and I am going to reply to you on that.
Senator Mitchell: I would very much like to know that.
Could you tell me what the $33 million increase is? Is that the start of more inmates because of the mandatory minimum sentencing? Is that the tip of the iceberg of expense when we start to put more and more people in jail, which I would argue will be of little effect, except to make them better criminals?
Mr. Smith: There are a number of elements under corrections. I will go through them. One is to lay the necessary groundwork for increased accommodation and programming needs under Bill C-25, which is before the House of Commons and the Senate. The second is to address other accommodation and program needs due to natural growth in the inmate population and to fulfill some Budget 2009 commitments related to contaminated sites. That is an initiative we spoke about before.
There are a number of different requirements here that we are picking up for Correctional Services.
Senator Mitchell: So we are getting more people in jail.
I believe one reason that visas for Mexicans and Czechs were implemented was to reduce the number of people who would come here and then apply for refugee status. Is there any estimate in that chart or elsewhere about how much that would save? When you do these strategic reviews, do you consider the amount saved versus the actual cost benefit? Who knows how much we are losing in trade or investment because we have incensed Mexico so much with this visa requirement.
Mr. Smith: I am looking at the requirements here under Foreign Affairs. I do not see anything for the passport office.
Mr. Pagan: There is a note.
The Deputy Chair: Would I be correct that Foreign Affairs would be more appropriate to answer that question than Treasury Board?
Mr. Smith: Yes, or Citizenship on the implications of the visa.
The Deputy Chair: Thank you.
Senator Mitchell: Are we calling Foreign Affairs?
Senator Neufeld: I will ask you to help me, because I cannot point you to a page where I see these numbers. It was brought to our attention recently that there was a cut in the operational budget of the Department of National Defence. I have other notes saying that there has been a transfer from capital program to operations in National Defence.
Does that tell me that operations have increased, and by how much, from the capital program? What is not going to happen now in the capital program to permit the increase in the operation budget?
Mr. Smith: I understand that there are some reduced funding requirements this fiscal year for several of the capital projects and that balance is available to cover some other requirements.
On the DND listing there are a number of new requirements. There is an increase in pay and allowances for Canadian Forces members, funding to acquire main battle tanks for the Canadian Forces, funding for the definition phase of a family of land combat vehicle projects and a couple of other capital requirements. However, the main operating requirement was for increases in pay and allowances for Canadian Forces members.
Senator Neufeld: What is the number for the total transfer?
Mr. Smith: The gross requirements were $186 million. The total funds available within the vote, due to the reduced funding requirements for certain capital projects, were $179 million. The actual transfer required here is only $5 million because of the netting effect. These are not large Supplementary Estimates for an organization as large as DND.
Senator Neufeld: You are saying that at the end of the day, there is only a transfer of just under $6 million out of capital to operations in National Defence?
Mr. Smith: Yes, that is correct.
Senator Neufeld: Can you tell me the total amount invested to date in the Mackenzie Valley Pipeline?
Mr. Pagan: Not including the requirements identified in Supplementary Estimates (B), to date since 2002-03, $266 million has been required to support the Mackenzie Valley initiative.
Senator Neufeld: I want to go to the Northern Pipeline Agency which is found on page 208. The Northern Pipeline Agency, for those who do not know this, is the Alaska Highway Pipeline Project — another pipeline where nothing has happened; where no rubber has hit the road. However, there is a request for $369,000. Can you tell me what that is for?
Mr. Pagan: The process for this project involves environmental assessments and a report prepared by a private sector joint review panel. This report from the joint review panel is expected to be presented to the government in December 2009 with the government response by the spring of 2010. The requirements for the agency are in anticipation of responding to that report. It is building up the staff and material required to provide a government response.
Senator Neufeld: The $369,000 is to build up a response to an environmental report for a pipeline that has been under study for about 20 years. Would that be correct?
Mr. Smith: We understand that the company responsible for the construction of the pipeline has told the Northern Pipeline Agency it intends to begin the Canadian portion of the pipeline system. That is to prepare for that and to oversee and facilitate the planning and construction of the Canadian portion of the pipeline. The NPA itself requires funding to hire seven full- and part-time staff as well as cover operating costs. That is our understanding.
Senator Neufeld: Would that be Conneco, or Exxon?
Mr. Smith: I understand this would be TransCanada.
Senator Neufeld: TransCanada? All right.
Next, on page 209, there is a line that says, "Funding to complete the settlement agreement with the provinces of Alberta and Saskatchewan in relation to the Soldier Settlement Board mineral rights.'' Could you tell me what that is for? I do not know if you have the answer to that. If you do not, that is fine.
Mr. Pagan: Yes. That is an amount of $83.5 million to complete negotiations and to settle litigation with the provinces. This dispute was in relation to the ownership and mineral rights for land granted to veterans after World War I.
Senator Neufeld: Are these the result of those two provinces taking the federal government to court or is this a settlement?
Mr. Smith: This is an out-of-court settlement.
Senator Neufeld: I guess it would not be correct to ask our witnesses if they would look favourably at reaching an out-of-court settlement with British Columbia; it would have to be the proper agency. That is what I was getting at. I appreciate the frankness of your answer. I will certainly take that information home to my province.
My final question relates to the contributions and support of the Pulp and Paper Green Transformation program. Could you give us a brief update on what is taking place and where that money is being invested across Canada?
Mr. Smith: The funding that is requested here is $100 million. It is to enhance environmental performance in the pulp and paper industry, and to provide contributions towards capital investments that meet energy efficiency or renewable energy production criteria in exchange for credits generated through the production of black liquor. That is our understanding of it. It is a non-repayable contribution program and firms will be able to generate credits based on the amount of black liquor produced between January 1 and December 31, 2009, to a cap of a certain amount in credits.
Senator Neufeld: This is to offset what has been going on in the U.S., correct?
Mr. Smith: That is correct.
Senator Banks: Thank you, gentlemen. It is nice to see you again. I am always astonished by the fact that you can come here and answer the minutia questions on every department of government. It is quite amazing. You are remarkable folks.
There is an allocation in these Supplementary Estimates (B) for statutory items — not discretionary but for motor cars for secretaries of state. Is that new? Have secretaries of state previously had cars and they are now getting new ones? Are they worth $10 million?
Mr. Smith: It is not new; it is statutory. Ministers of state have always had car allowances.
Senator Robichaud: Not always. I was a secretary of state.
Senator Neufeld: That was a long time ago.
Mr. Smith: Not always; sorry.
Senator Banks: Not always, but previously.
Senator Greene: They did not have cars then.
Senator Banks: It would not have cost $10 million for new cars!
The Department of Foreign Affairs and International Trade is asking for authority to spend $10 million on other things and to reinvest it in, I do not know what. Perhaps you can tell us this, if you know: In what will they reinvest it and where did it come from, the sale of what?
Mr. Pagan: In the second part of a question addressed previously in terms of the properties that were sold, I neglected, in my answer, to provide the second part of the equation. We have identified the properties sold, including residences in Dublin and Atlanta; chanceries in Lima and Dakar, and a few others. Those sales generated proceeds of some $15.7 million.
The special operating agency in DFAIT known as the Physical Resources Bureau is authorized to recoup and reinvest any proceeds for other projects. At this time, they have identified $10 million of the $15.7 million that they would like to reinvest. That funding will be for the relocation of our chancery in Kazakhstan to the capital, Astana.
Senator Banks: Will that become an embassy, then?
Mr. Pagan: It is listed as a chancery here. It is simply being moved to the capital. Whether that makes it an embassy, I am not certain. There is also the expansion of the chancery in Damascus, Syria.
Senator Banks: Do you know whether that means that the establishments we have had, for example, in Dublin, Dubai and a couple of other places that you mentioned, no longer exist? Are they gone? We have sold the property. Is the establishment there or do we know that?
Mr. Smith: When we sell a residence, it does not mean that we are leaving the country. It means that market conditions are probably optimal for selling a well-placed chancery or residence and then maybe renting or buying a new one.
Senator Banks: It does not necessarily mean that those establishments no longer exist?
Mr. Smith: No. It is management of their portfolio of buildings.
Senator Banks: I am always suspicious of mergers and streamlining and those kinds of things because sometimes they do not mean quite what they say. You can answer this question because this is a Treasury Board of Canada Secretariat question.
You are eating the Public Service Human Resources Management Agency of Canada. I must confess that I have never heard of the Public Service Human Resources Management Agency of Canada, but I presume it performs some sort of service. What is the rationale there? Is this a money saving, streamlining, efficiency move?
Mr. Smith: No, it was not done with that in mind. We did have a review of all the human resources agencies last year. Out of that horizontal strategic review came a number of recommendations.
There were also recommendations from the Prime Minister's advisory committee on the public service to streamline and better structure the way human resources are managed across government. Therefore in line with all those recommendations, there has been a consolidation of the new Office for the Chief Human Resources Officer, OCHRO, with some functions of Treasury Board. In particular, this has affected the pensions and benefits and labour relations parts of Treasury Board. The idea was to have one organization which would incorporate all of these human resources functions.
In the previous structure, the Canadian public service agency or its predecessor had some of the functions and we had some of the functions at Treasury Board. Now they are all consolidated. There is an effort to streamline operations and clarify what deputy ministers' responsibilities are on human resources versus what the central agency — in this case Treasury Board or OCHRO — responsibilities are for human resource management.
Senator Banks: It is a move to greater efficiency and streamlining.
Mr. Smith: It is, yes.
Senator Banks: In relation to all of my long questions, Senator Neufeld cut my grass, as it were.
I have a question with respect to National Defence, and the transfer that Senator Neufeld talked about from capital into operational expenditures. I am a member of the Senate Committee on National Security and Defence. Everyone understands why we need more money in operational expenditures for the Canadian Forces. It does not need to be talked about.
Does their capital budget include facilities maintenance? There is a very large deferred maintenance factor in the Canadian Forces. The sort of benchmark amount that is allocated in prudence to spend on the maintenance of facilities is about 2 per cent of their value. DND has never — I should not say "never,'' because ministers of state did not use to have cars — but has not, for a long time, come anywhere near that. Do you know whether any part of these capital expenditures came from facilities maintenance? Some buildings are falling down and leaking and it is quite serious.
Mr. Smith: This will help maintenance because the transfer here is to fund the purchase, maintenance, repair and upgrade of equipment as well as enhancing force generation readiness. That is the process by which the forces are trained, equipped and assembled for professional operations as well as training in other activities.
Maintenance is in the operating expense column — not in the capital. If it is a betterment of facilities that would count as capital, but in this case maintenance is operating. In fact this should improve maintenance of facilities. That is one of the objectives of this transfer.
Senator Mahovlich: For the appropriation for the G8 summit, I see there is an item for $30 million, but the G20 is not mentioned. Could you tell me where I can find that?
Mr. Smith: What we have in front of us are really just the requirements for the G8. There has been no additional requirement in this book, to our knowledge, for G20 costs. Therefore the horizontal requirement here is for a total of $45 million. That is for a number of departments, but it is all for the G8.
I am not aware of a new requirement here yet for the G20. We may be asked for that in the future.
Senator Mahovlich: My knowledge is that the G20 takes place right after the G8.
Mr. Smith: That is correct. We are hosting the G20.
Senator Mahovlich: It is larger and they have run out of room, so they are going to go to the city.
Mr. Pagan: The G8 is held on a rotating basis. The Government of Canada knew some time ago it would be hosting the G8 next year and has well-developed plans for that.
The G20 summit is, as I understand it, a more recent development. It was determined just this year that Canada would host. Plans are under way but they not fully developed.
Senator Mahovlich: We are not prepared for it.
Mr. Pagan: Plans are not sufficiently developed to the point where the government can come and ask Parliament for money. To do that they would have to know exactly what the requirements are and they are still being worked up. It is my understanding that the G20 requirements will be presented to Parliament in the Main Estimates to be tabled in February.
Senator Mahovlich: Has there been any interest in a natural gas pipeline to the Prince Rupert area?
Mr. Smith: I am not aware, senator. I am not sure I can answer the question.
The Deputy Chair: That concludes round one. If there are no other questions in the first round, I will move to the second round.
Senator Callbeck: At page 215, figures for the Privy Council show funding to support additional operating requirements including internal services support. Could you outline what that would be?
Mr. Smith: This funding is to support additional operating requirements including internal services support at Privy Council Office for the Prime Minister's office and five other ministers within the Prime Minister's portfolio. Those are the pPresident of the Queens Privy Council for Canada and Minister of Intergovernmental Affairs and La Francophonie — one individual, the Leader of the Government in the House of Commons, the Leader of the Government in the Senate and the Minister of State for Seniors, the Minister of State for Democratic Reform and the Chief Government Whip.
Previous resource allocations established to support these operational requirements are no longer sufficient and PCO is unable to absorb the cost pressures from existing reference levels. That is the reason for the request.
Senator Callbeck: Would the Leader of the Government in the Senate not be in the Senate budget?
Mr. Smith: That office is supported by the Privy Council Office.
Senator Callbeck: The next line shows $4-million for the communication strategy for Canada's Economic Action Plan. Can you tell us how much the government has spent to date on communications on the action plan?
Mr. Smith: Let me first start by indicating what the $4 million request is for. As you say, it is to support implementation and coordination of a government-wide communication strategy for the Economic Action Plan. The government did direct the Privy Council Office to develop a comprehensive and integrated communications strategy to ensure Canadians have increased awareness of the measures contained in the plan. This is in support of those requirements.
It would include a range of items including — looking at the specifics here — the cost associated with developing, coordinating, implementing and monitoring marketing and branding activities; maintaining and updating the interactive Economic Action Plan website; increasing media monitoring activities; and reviewing and coordinating public opinion research.
That is a range of activity within PCO for communications on the Economic Action Plan.
Senator Callbeck: Do you have a figure for the amount of money that has been spent by the government to date on this plan? Can you get us a figure?
Mr. Smith: We do not have a figure. We can come back with a figure for you on that.
Senator Callbeck: I would like to see a breakdown on the $7 million for the internal services in the Privy Council Office.
Another question I had was on Agriculture and Agri-Food, which is on page 124. At the bottom of the page, 22(b) is underlined, so obviously that is a new program. However, the Canadian Pari-Mutuel Agency cannot be a new agency. The government has been there, has it not, regulating and supervising pari-mutuel betting? Where was it before?
Mr. Pagan: What that signifies is that it was not included in the Main Estimates. The Canadian Pari-Mutuel Agency, as far as I know, has always been Agriculture Canada. They did not forecast a requirement in Main Estimates and they are now coming forward for the first time with the forecast requirement for the year. You will see authority to date was zero, and then the new requirement of $525,000.
Senator Callbeck: How much was in the budget last year?
Mr. Pagan: I would not have that, but we could get that.
Senator Callbeck: When it is underlined, like 22(b), does that mean it is a new program?
Mr. Smith: It is a new vote. That is why it is underlined. I should not speculate — my colleague will look this up — but it could be that they are self-supporting. That may be the reason why there was no requirement for funds before. We will check and we will come back with that information.
Mr. Pagan: It is a statutory authority, and for fiscal year 2008-09 they required no appropriations from Parliament. To start 2009-10, they were not forecasting any appropriations from Parliament. It was intended to be self-sustaining. Then the question is about the requirement for this fiscal year. Bear with me while I pull that information out.
Mr. Smith: We will come back to you on this, senator. I do not have a note on that. I am not sure why they needed funds.
Mr. Pagan: In reference to Senator Banks' amazement at our ability to pull out minutiae, we establish a threshold. Anything below $1 million we would not have a note on, as in this case.
The Deputy Chair: You will get back to Senator Callbeck on that?
Mr. Pagan: Yes.
Senator Callbeck: On page 133, there is a long paragraph. When something is underlined, such as "catering of special events at international expositions'' in this paragraph, does that mean it is new?
Mr. Smith: That is a change in the vote wording.
Senator Callbeck: Where was that before?
Mr. Smith: This is now being added. As you can see here, the vote wording adds "and international expositions, including the catering of special events at international expositions.'' The fact that that was not in before meant it was not an eligible operating expense under that vote for the department.
Senator Callbeck: Where was it?
Mr. Smith: They would have had to absorb it in some ways. They would not have the authority to spend on that type of item. This change would allow them to use operating funds for that purpose.
Senator Callbeck: When you read on in that paragraph, there is something that I know is included for many departments, I would like you to explain it. It says:
The payment to each member of the Queen's Privy Council for Canada who is a Minister without Portfolio or a Minister of State who does not preside over a Ministry of State . . .
What does that include for Canadian Heritage?
Mr. Smith: This is the same language we see in other wording as well.
Senator Callbeck: I know, but can you explain that, for that department? What is included?
Mr. Smith: It simply deals with the salaries of the ministers.
Senator Callbeck: Of whom?
Mr. Smith: Of each member of the ministry, a minister or minister of state, who is associated with Canadian Heritage. That is why the language is broad enough to include "a Minister without Portfolio or a Minister of State who does not preside over a Ministry of State.'' It is language that covers all ministers associated with Canadian Heritage.
Senator Callbeck: How many ministers do you have associated there?
Mr. Smith: There are two in that portfolio. Normally it is a minister and a minister of state, but you could have two ministers of state in a portfolio. You could have a Minister of Labour and a Minister of Human Resources and Social Development and a Minister of State. It depends on the portfolio.
Senator Callbeck: I realize that.
The Deputy Chair: Perhaps you could ask your questions, and if there is anything further, the witnesses could get back to you in writing.
Senator Callbeck: You can go on and I will get my questions together here.
The Deputy Chair: Thank you.
Senator Carignan: As for the cultural side, the budget of Canadian Heritage will increase significantly. We are talking about an increase of five to six percent. Did I read that right?
There will be funding for building a new museum that will cost $25 million. This museum will be dedicated to human rights, a very worthy initiative of the government that will focus on promoting human rights.
Then there is an additional $60 million for the Canadian Broadcasting Corporation, an increase of some 6 per cent of the budget of the Corporation. What are these payments to the CBC for? I am sure it is welcome news for the people working there.
Mr. Smith: Perhaps I can start and Mr. Pagan can add to my answer.
You are right; an increase in appropriations is again being sought for Canadian Heritage. They also received an increase in Supplementary Estimates (A), so their overall authority and budget is increasing.
You are also right in that there is a new Museum for Human Rights, which received parliamentary approval and for which funding is being sought here as well.
Third, on Radio Canada-CBC, there is also a requirement for $60 million more in new funds to strengthen and enhance English and French television and radio programming. You are correct, in all cases those are increases in funding in the Heritage portfolio.
Senator Carignan: So this is really for operating expenses, improving programming.
Mr. Smith: Yes, exactly.
Senator Carignan: We also see an increase of some 20 per cent in the budget of Agriculture and Agri-Food Canada, due mainly to a contribution of some $443 million to support the pork industry. This is a very large amount. What is the rationale for such a large contribution to the pork industry? How will these huge amounts be allocated?
Mr. Smith: There is additional funding to help the pork industry recover from a number of challenges it has faced in recent years: the rising Canadian dollar, higher feed and energy costs, the crisis that affected credit generally, a weak outlook for pork demand, possibly the effects of H1N1 as well, and uncertainty due to changes in the U.S. on the introduction of mandatory country of origin labeling.
As a result of these challenges, the Canadian Pork Council called on the government this summer to take immediate action. There was assistance to the pork industry in two areas. First is the Loan Loss Reserve Program to help cover short-term debts in the industry to help them to be consolidated into longer term debt. Second is the Hog Farm Transition Program to help rationalize the pork sector by providing financial assistance to producers that wish to exit the industry or cease production for a minimum of three years.
A number of important actions have been taken to help this industry recover.
Senator Banks: A long time ago, I was a member of this committee. I am not now, but I will ask a question I asked about nine years ago.
I note on page 211 of the Supplementary Estimates (B) that, as Senator Mitchell pointed out earlier, there is no increase in the costs of the Senate or any aspect of its operation. There is once again a $3.7-million increase in the cost of the operations of the House of Commons.
First, is this Supplementary Estimates (B) amount added into the normal rationale so that the next time this will be seen as the normal expenditure? In other words, will "normal'' — if that is the word — expenditure in the Main Estimates be seen to have increased as a matter of course by $3.7 million?
Second, it is not new that we properly provide an allowance in lieu of residence to the Speaker and Deputy Speaker of the House of Commons. They have been occurring for a while now. Why do things like that appear in supplementary estimates?
Supplementary estimates are supposed to supplement the Main Estimates. They are to be for something we did not know about. We knew that the Speaker and Deputy Speaker of the House of Commons have allowances for residences.
Mr. Smith: On questions of this kind, as you know, we simply respond to the Clerk of the House of Commons. He is the secretary of the Board of Internal Economy and provides us with the requirements that we incorporate into supplementary estimates or Main Estimates. We do not have a challenge function at Treasury Board for this purpose.
Senator Banks: That is our job.
Mr. Smith: We take the will of Parliament and accommodate the requirements of the Board of Internal Economy or, in the case of the Library of Parliament, the speakers in the House and Senate together.
We cannot answer questions on the rationale for requirements. Those should be directed to the Clerk of the House of Commons.
Senator Banks: I will put the question in a different way. These are supplements to the Main Estimates. Do I have that right?
Mr. Smith: Yes.
Senator Banks: Was there an appropriation, a vote or an amount that would accommodate allowances in lieu of residences for the Speaker and Deputy Speaker of the House of Commons.
Mr. Pagan: We would not be able to answer that. As Mr. Smith said, requirements of the House of Commona are presented to the Board of Internal Economy which approves them. They provide to us an aggregate amount by vote.
Senator Banks: Do they break them down like this?
Mr. Pagan: No, they do not.
Senator Banks: There might have been or there might not have been?
Mr. Smith: That is correct.
Senator Banks: I have two other short questions.
We have, in statutory non-budgetary spending, advanced to the Canadian Business Development Bank $12 billion to buy term asset-backed securities backed by loans and leases on vehicles and equipment. If you were a money manager — I think I am right — you would advise a client against buying these.
Are we doing this as part of infrastructure spending or getting money out to help the economy? Is this part of that kind of program?
Mr. Smith: Absolutely, this is part of the Economic Action Plan and part of the Canadian Secured Credit Facility. It is to ensure that there is liquidity for vehicle and equipment producers.
Senator Banks: This is to help stabilize other lenders.
Mr. Smith: That is correct. It is also to ensure that the auto industry and other vehicle manufacturers are able to continue to finance inventories.
It is an important element to ensure the liquidity of credit at a time when credit was endangered. It is similar on the housing side and on other aspects of the auto industry.
Senator Banks: It is not all about buying bad paper.
Mr. Smith: It is not about buying bad paper.
Senator Banks: That is good to know.
We now have in Supplementary Estimates (B) a request from Environment Canada for more than $3 million to pay the cost of the Canada-U.S. Clean Energy Dialogue, which is a welcome thing.
There were no such requests in Supplementary Estimates (A). The first report was made in September, 2009. I am assuming that since a report was made in September that activities have been happening to which I am assuming costs would be reasonably attributed. We are now being asked to appropriate money. Where did the money to pay for those things come from between whenever it started operating prior to September when they made the report and now, assuming these are approved?
Mr. Smith: When departments typically are working on initiatives like this that have not come to fruition, they cash manage and draw funds from other programs to fund something like the Canada-U.S. Clean Energy Dialogue. When it is clear that they are reaching an agreement or a program is underway, they will then come forward for the funding. They will provide a more detailed explanation of why they needed the funds. At that point, they will come forward through the appropriation system. Essentially, they cash manage in cases like that while they are doing preparatory work.
Senator Banks: This is a good idea; it is a step in the right direction. However, theoretically, if the Senate were to reduce these estimates by $3.1 million on this particular line, then that department would need to find that $3 million from someplace else.
Mr. Smith: That is right.
Senator Neufeld: I have a question in relation to what Senator Banks just asked with regard to the $12 billion.
Do you have a dollar figure, without going to a whole bunch of different places, that you could give us that the taxpayers of Canada have invested in the auto industry to keep it afloat? Obviously, there are other incentives that have been passed out. It would be interesting to know what that number is at the end of the day.
Mr. Smith: Yes. I can provide some information on this; it may not be complete. There are a range of different forms of assistance.
Senator Neufeld: I do not want to interrupt you, but it would be good if you gave me a round number now. However, if you can put that together and give it to the committee, that would be great.
Mr. Smith: Certainly. We could do that.
Senator Neufeld: That might be the best way to go and you would have a opportunity to review it.
Mr. Smith: You are asking about the assistance to the auto industry this year during this period of time.
Senator Neufeld: Yes.
Mr. Smith: We will do that.
Senator Callbeck: I will put my questions now, and if you want to answer them for get back to me later, that is fine.
My first question is on page 166, it says that there are funds available of $3.5 million because Canada's Safe Travel Abroad advertising campaign was cancelled. I would like to know why.
My second question is on page 206. It is about the federal contaminated sites. Somewhere in here, there is a list of 15 departments and agencies that have requested funding. For the Department of National Defence, it is the opposite. They say they have $5.7 million resulting from reduced operating requirements. Why is that the case in National Defence?
My third question concerns Parks Canada. On page 152, there is a request for $3 million for advertising, but, at the same time, down below, it says that $2 million is available owing to reduced requirements for government advertising. That does not make sense to me. Obviously, there must be some reason here.
Mr. Smith: Let me see if I can tackle a couple of questions. I will come back to you on paper on these.
First, you can have different advertising campaigns, for example, for Parks Canada. This may reflect the sunsetting of one campaign and the opening up of a new campaign. It is not necessarily just one budget for advertising.
On the National Defence item, you mentioned that on page 206 there has been a reduction in the requirements. That was due to a slowdown of particular projects. It does not mean that they will not have additional requirements next year. It just means that this year they will not be able to make as much headway with those projects as they thought. It is likely they will ask to reprofile the funds or ask for new funds next year to be able to continue with those projects. It does not necessarily mean any pull back in their activity. It is just that projects slip and slide due to all kinds of things, for example, weather, negotiations with other levels of government, with First Nations and all kinds of reasons. That probably accounts for that particular item.
Senator Callbeck: That is what I was wondering because these other 15 departments and agencies are asking for more.
Mr. Smith: We will no doubt find there will be some slippage among some projects because there is quite a wide range of projects under way here. Requirements may come back next year to augment departmental budgets for those sites.
Mr. Pagan: I will add to that and address the other question.
To be clear here, the contaminated sites program is a multiyear program, which is being accelerated this year and next as a result of additional funding provided through the Economic Action Plan.
Some departments are now coming forward looking for additional funds because they can bring forward the work that they were planning in other years. DND is not able to do that; their work was sufficiently advanced and they have less requirement this year than they anticipated. That is why one is up and one is down.
With respect to Parks Canada, as Mr. Smith says, advertising dollars are provided for a very specific purpose. When those funds are advanced, and it is a plan that is approved by cabinet, we at the Treasury Board establish a special control in the form of an allotment. We take the money for that specific purpose and we put it in something called a "special purpose allotment.'' It can only be spent for that very specific purpose. If the costs are less than anticipated, if you complete a competitive contract and it costs you less than you estimated, or if you do not spend all of the money in a specific year, those funds lapse. It is voted by Parliament, and it is in the reference levels, but they cannot use it for any other purpose. That is why the money is an offset for other requirements of the department.
Senator Callbeck: The other one was the Safe Travel Abroad advertising campaign.
Mr. Smith: We will have to look for more information on that. I do not know why that particular campaign has ended.
The Deputy Chair: Mr. Smith, on page 9, budgetary expenditures are indicated for 2009-10 at $272.5 billion. My recollection is that the corresponding number for 2008-09 was $240 billion.
Mr. Smith: That is correct.
The Deputy Chair: If I look on page 85, I see that the operating budget carry forward is $718.4 million. Notwithstanding that that is a lot of money, it appears to be a relatively small amount in relation to a budget of $240 billion.
I realize there are some pluses and minuses, but could I conclude from this that spending is being well managed by the government on behalf of Canadians?
Senator Robichaud: Do not smile, senator.
Mr. Smith: The operating budget carry forward allows departments to carry forward into the next fiscal year in the current fiscal year 5 per cent of their operating expenditures from the previous fiscal year. If they are able to manage closer to their budgets, they would get less than 5 per cent, so 5 per cent is the maximum they can carry forward. This is below the 5 per cent. In that sense, departments have been managing budgets well.
Senator Mitchell: I want to ask a supplemental question on this.
The Deputy Chair: Could you kindly let our witnesses conclude, Senator Mitchell?
Then we will look forward to your supplementary question.
Senator Mitchell: Thank you very much.
Mr. Pagan: One of our first questions this evening was about ongoing improvements to the estimates. I would certainly agree with Mr. Smith that this is very much an iterative and ongoing exercise.
I happen to have a copy of the estimates in my office from the year 1889. They are remarkably similar in some respects to what we have today — similar vote structure, legal wording and so on. The difference is the amount of detail now provided in the documents. We break things out by voted and statutory, budgetary and non-budgetary, horizontal and transfers.
Senator Harb asked for some simplification. Through the questions we have taken today, I think we can see that it would be easy to provide a short, concise document but it would not give the level of detail that Parliament would expect to understand the Estimates. It very much is a balancing exercise.
As this relates to the ongoing management of funds, the chair's opening remarks mentioned the relatively recent introduction of a spring supplementary estimate. This is an example of ongoing efforts to improve the process so that we bring information to Parliament at the earliest opportunity. One of the intended outcomes, we had hoped, was that it would reduce lapsed funds and the need to carry forward funds. Departments would be getting the expenditure authority they require from Parliament earlier in the fiscal year and, therefore, would have less of a need to carry funds forward because they would have more time in the year to complete their programs. We believe that will be a long-term outcome of having a new central vote for operating budget carry forward. Unfortunately, last year was an aberration in the sense that Parliament was dissolved for an election, there was a disruption in the supply process, and it was not a typical year. Therefore, it is difficult to tell how this will change behaviour in departments.
However, I think it is fair to say that the advent of the operating budget regime in 1993 has addressed some of the concerns of Parliament and the Auditor General about the proper management of funds. It has introduced a modest amount of flexibility so that departments can make good choices with respect to the money they have in the bank. The more recent introduction of an earlier supplementary estimate should complement that and give departments more flexibility and time to be able to introduce their program and manage it within the confines of a fiscal year.
The Deputy Chair: Thank you, Mr. Pagan. We will conclude with a final supplementary question from Senator Mitchell.
Senator Mitchell: Just on the topic that has been raised by the Deputy Chair regarding whether or not the numbers reflect the ability of the government to manage well, I wanted to point out there is another side to this, of which you will be aware. The year before the present government took office, the total budget was $200 billion. We see in this document that the total budget now, three fiscal years later, is $272 billion, which is about a 36 per cent increase. Over that same period of time, they have gone from a $12 billion surplus, Mr. Martin's surplus, to a $56 billion deficit. What do those figures say about the effectiveness of this government at managing fiscally?
The Deputy Chair: We thank you for those remarks.
I thank members of the committee for their focused questions this evening. In particular, I would like to add to Senator Banks' comments to our witnesses, Mr. Smith and Mr. Pagan, and complement the remarkable knowledge you have not only in knowing what is in the budget but also in being able to communicate it to us. We thank you very much.
Mr. Smith: Thank you.
The Deputy Chair: The meeting is adjourned.
(The committee adjourned.)