Proceedings of the Standing Senate Committee on
Issue 28 - Evidence - March 2, 2011
OTTAWA, Wednesday, March 2, 2011
The Standing Senate Committee on National Finance met this day at 6:47 p.m. to study the Estimates laid before Parliament for the fiscal year ending March 31, 2012.
Senator Joseph Day (Chair) in the chair.
The Chair: Senators, the Senate standing committee on National Finance is in session. This evening, we start our study of the Estimates for the fiscal year ending March 31, 2012 which have been referred to our Committee.
The Main Estimates, which were tabled in both houses yesterday, begin the financial cycle for the coming fiscal year, which begins April 1. These Main Estimates will lead to two supply bills, the first of which must be passed by the end of this month, the end of March, to grant interim supply, and the second, which must be passed before the end of June, to authorize the main supply, the remaining expenditures.
In addition to the Main Estimates, the government undoubtedly will table supplementary estimates over the course of the year. In recent years, the practice has been three such requests filed during the year, one each in May, November and February — A, B and C.
To begin our study of these Main Estimates, we will begin by hearing from our good friends from Treasury Board of Canada Secretariat, who are back with us again, having recently finished Supplementary Estimates (C).
We begin tonight with the Main Estimates for the next fiscal year and they will help us identify individual departments and agencies that are involved in requesting funds for the coming year. We will then determine which of those departments and agencies we may wish to come before us to talk about their particular requests for funds for the coming year.
We anticipate four one-hour sessions over the next two weeks with respect to these Main Estimates after this evening, and then we will present an interim report. That interim report will form the basis for our dealing with the supply bill that will be forthcoming for interim supply.
As I indicated, we will begin our study by hearing from Treasury Board of Canada Secretariat officials, who are indispensable in helping us understand this large compendium of information. I am pleased to welcome back David Enns, Deputy Assistant Secretary, Expenditure Management Sector; Sally Thornton, Executive Director, Expenditure Operations and Estimates Division; and Ken Wheat, Senior Director, Expenditure Operations and Estimates Division.
Mr. Enns, you will have introductory remarks, and then we will follow with questions, comments and answers.
David Enns, Deputy Assistant Secretary, Expenditure Management Sector, Treasury Board of Canada Secretariat: We have prepared a slide deck that I believe you have in front of you and I will go through that deck with you.
I am pleased to be here today, and this time I am here with my colleagues to talk about the Main Estimates 2011-12. After today's session I will have had the pleasure of completing a whole cycle of estimates with you.
The Chair: And us with you.
Mr. Enns: As you mentioned, I have with me, Sally Thornton and Ken Wheat.
We have prepared a brief presentation to give you an overview of these Main Estimates. After our presentation, we will be pleased to answer your questions.
If you turn to slide 2 of the deck, a brief overview is presented and I want to take the time to accomplish three things with you. First, I will touch on the purpose of the Main Estimates, including the supply cycle and how Main Estimates fit into the budget and relate to that budget. Second, we will walk through the document itself and some of the structural changes that we have made to the Main Estimates, to the Blue Book, and these changes have been largely in response to the feedback we have received from you in the past. Third, we will go into specifics about the 2011-12 Main Estimates and compare these estimates to the previous year.
Page 3 has text about the purpose of the Main Estimates. As you know, they provide information on the request for spending authority that must be approved by Parliament for each department, agency and appropriation-dependent Crown corporation.
Unlike the supplementary estimates we discussed with this committee a few weeks ago, the Main Estimates present the yearly funding being sought at this point for each organization, rather than an itemized breakdown of requests for additional funding.
The Main Estimates are at a much higher level than those detailed, itemized things you will see in the supplementary estimates. Also, the Main Estimates reflect the results of many decisions that have been taken not only over the past year but also in preceding years as they relate to funding being requested in 2011-12.
On page 4, you have a diagram that I am sure you are familiar with. That diagram is the supply cycle, and it outlines the various points in that cycle. The chair alluded to the fact that we will look for interim supply, and then full supply, in June. The interim supply bill will request only a fraction of the funding presented in these Main Estimates, and that bill is to allow departments and agencies to proceed with expenditure plans only for those first three months of the fiscal year. The full supply bill, which will request the remaining voted amounts in these Main Estimates will be tabled in June, as you have noted.
Slide 5 deals with the Main Estimates in the context of the budget plan. The timing of the budget with respect to the Main Estimates does not allow departments and agencies to come forward for the approvals required for budget initiatives to be reflected in the Main Estimates. Requests for funding for Budget 2011 initiatives therefore will be made through supplementary estimates, and the tabling date of a budget does have an impact on whether these initiatives will be presented in the earlier supplementary estimates or later on; that is in A, B and, in some cases, C.
Another point I should mention is that, as you know, expenditures may be either voted or statutory. Statutory expenditures may be authorized under program-specific legislation — an example would be Employment Insurance — or they can be included in a larger piece of legislation.
In 2009, you will remember that the initiatives under Canada's Economic Action Plan, like the Infrastructure Stimulus Fund and the Knowledge Infrastructure Program, were included in a budget implementation act and including them in this act had the effect of allowing spending on those programs to begin sooner without waiting for the supplementary estimates.
Slide 6, the structure of the Main Estimates, the document you have in front of you, is structured in two parts. Part I of the document, the expenditure plan, contains an overview of federal spending. It summarizes the key elements of the Main Estimates and includes summary tables, a breakdown by budgetary expenditure type — for example, transfer payments, public debt charges, operating and capital — a description of transfer payments and a breakdown of estimates by sector. Here we are talking about sectors such as social programs, general government services, and international immigration and defence programs.
In each instance, we show a year-over-year comparison, that is, of this year's Main Estimates to the Main Estimates of 2010-11. It is important to note that when making comparisons like that, we do have to make them between the Main Estimates and the Main Estimates, and not between the sum total of an estimates in one year and the Main Estimates of another.
Part II of the document directly supports the appropriation act, and identifies the spending authorities that will be included in the appropriation bill. Also in Part II are summary tables, but the bulk of this portion is a summary of estimates by department and agency within each ministry.
Moving to slide 7, Part II, which begins on page 43 in the English version of the Main Estimates, supports the appropriation bill. This section shows a breakdown of the funding sought by both vote and program activity for each organization. It also forecasts the statutory spending and provides explanations of year-over-year changes.
Here is where we have made changes that we hope you will find helpful. We have expanded the information available in these sections to respond to comments we have received. For example, in the first ministry presentation, agriculture and agri-food on page 46, we begin with a short description of the rationale for the organization. Then we show the year-over-year comparison in the subsection of the Main Estimates, but we have also added an information section titled ``Explanation of Change,'' which focuses on the change from one year to the next. This information is what has been provided to us by each department.
The Chair: Where do I find, ``Explanation of Change''?
Mr. Enns: Page 47.
The Chair: Yes, the heading is on the right side at the top of page 47, under Agriculture and Agri-food. Then over to the left is the explanation of change.
Mr. Enns: You would find that for each ministry and each department.
The explanations of year-over-year changes by the organizations in Part II include such things as increases for new programs that were not included in the previous Main Estimates — you may have seen some of that information in the supplementary estimates from the current year; changes relating to programs with funding profiles that ramp up or ramp down according to planned activity or need; changes related to funding that has been re-profiled from 2010-11 into 2011-12; and decreases for programs that have reached their sunset, or come to the end of their approved funding.
Here, I want to note that programs appear as sunsetting. This is normal. Generally, programs have a life, and after a certain prescribed period, they are reviewed and may be renewed for funding. The fact that they appear as a sunsetting program does not necessarily mean that the program is gone. It simply means a decision has to be made on the renewal coming through cabinet and subsequently to the Treasury Board for the appropriate authorities. We do not presume to judge whether that will happen or not; however, we present the information on the sun-setting programs for your information.
Moving to slide 8, the structure and presentation of the Main Estimates is different from the supplementary estimates. The supplementary estimates seek only in-year adjustments to spending for specific items, while the Main Estimates present the total spending for all programs of a department or agency for the upcoming year, as we know they will be at this point.
As well, the total spending in 2011-12 for a department may reflect decisions taken several years before. One example is an initiative flowing from Budget 2007 that could have a multi-year spending profile. Approval by Treasury Board for that initiative in 2007-08 can result in increases still that you see now in the Main Estimates.
Then we have Part III of the estimates family, which you do not have today. Part III includes the reports on plans and priorities and the departmental performance reports. These reports present more detailed information by departments on their spending plans over a three-year period. Rounding out the reports are the departmental performance reports, which provide information on the performance of departments against those plans spelled out in the reports on plans and priorities.
The reports on plans and priorities will be tabled soon. The departmental performance reports will follow, and are usually tabled in the fall.
Slide 9 has information about some of the changes between the two Main Estimates. The budgetary estimates for 2011 are $250.8 billion. That total includes both voted and statutory items. It represents a decrease of $10.4 billion, or 4 per cent relative to the total 2011-12 Main Estimates. The voted portion of 2011-12 spending, which is a proportion Parliament has been asked to approve through these Main Estimates, shows a decrease of 4.6 per cent, or $4.4 billion.
Slide 10 shows the breakdown of federal spending, expressed slightly differently. The bulk of spending is transfer payments, at 60 per cent. These payments are made to other levels of government, individuals, or organizations. Payments include grants and contributions programs administered by many departments, as well as major statutory transfers, such as elderly benefits and the Canada Health Transfer. Operating and capital expenditures represent 28 per cent and interest charges on the public debt represent 12 per cent.
On page 11, the spending is presented slightly differently. It is divided by the sectors that I mentioned earlier in my presentation. For social programs, in this sector the spending has decreased by $1 billion. General government services have decreased by $419 million. Spending on international, immigration and defence programs increased by $458 million, and spending in industrial, regional, and scientific support programs decreased by $5.2 billion. Again, that information is based on information in the Main Estimates.
Moving to slide 12, the Main Estimates reflect a number of increases and decreases. Decreases this year are largely due to the economic action plan and the wind down of that plan, and the interest on public debt.
I will not go into the details of those increases and decreases; I think you have them in the book. In general, you will see things such as the decrease for the Infrastructure Stimulus Fund, which was a large initiative that is seeing the end of its life, and Canada Mortgage and Housing Corporation economic action programs, including those for renovation and retrofit of existing social housing, and other programs of that nature.
Some targeted investments are presented in the estimates as well. You will find a description of those investments on slide 13. We have divided those investments into three broad areas: investing in people, investing in infrastructure, and investing in safety and security. These kinds of targeted investments are being made and are reflected in the Main Estimates for 2011-12.
These Main Estimates support both the interim supply bill, which will be tabled shortly, and the full supply bill, which will be tabled in June.
We will now be pleased to answer your questions.
The Chair: Thank you for initiating these changes; it is helpful to go through that information. The presentation makes it easier for us to understand when the estimates are laid out and you adjust them. We appreciate the changes to deal with some of our frustrations in previous times.
Senator Eggleton: Slide 9 shows a decrease of $10.4 billion from $250 billion. Our analysts have come up with another number that goes the other direction. That number is an increase to $931.8 million, or an 18 per cent net increase for 2011-12 spending compared to the spending presented in the 2010-11 estimates. Part of that appears to be the $600 million, which has to do with bringing forward some capital budget items. There are also things such as public service insurance, increase in pay list, and requirement spending. I do not see how that adds up either.
How do we reconcile these numbers? One says it is an increase and the other a decrease.
Mr. Enns: I believe you are referring to the figures for the Treasury Board itself.
Senator Eggleton: Is that what that is?
Mr. Enns: Yes: There are increases within the Treasury Board portfolio. Most of those increases relate to the central votes for all government departments. For example, the item on the capital budget carry forward is a central vote that is new, and will operate like the operating budget carry forward. It does not represent new funding or new monies. It is only a mechanism. Previously, departments had to request that their capital be carried forward, or re-profiled, from one year to the next. This mechanism provides a more efficient way to do that.
``Paylist'' refers to expenditures for benefits such as severance and parental leave. The increase is due to demographic factors. On both ends, the increases are the result of an aging workforce, and people retiring and cashing in vacation leave. At the other end, we have the recruitment of younger people who are having children; parental benefits are provided. That is a central vote.
Senator Eggleton: You mentioned programs that are sunsetted. Do you have a total of what they are?
Mr. Enns: We do not have a total for all sunsetting programs here. They are mentioned in the ``Explanation of Change'' when they are sunsetting. Some programs are, in fact, time limited and will sunset. While we do not presume to pronounce on when the programs will be renewed, you likely will see some of these items coming through in supplementary estimates later in the year.
Senator Eggleton: That depends on whether they are announced in the budget.
Mr. Enns: It depends on a variety of things, including that.
Senator Eggleton: One of them, on page 184, is the termination of the Affordable Housing Initiative. We have 4 million people who are searching for affordable housing. There is a housing crisis, yet you show it as terminating as of the end of March. Do you believe that will happen, or do you think the minister will rescue it at the last minute?
Mr. Enns: Again, it is hard to anticipate.
Senator Eggleton: Would you have had a signal by now? This program takes a lot of planning.
Mr. Enns: I am not aware, but again, it is likely due to the fact that it has reached its renewal time.
Sally Thornton, Executive Director, Expenditure Operations and Estimates Division, Treasury Board of Canada Secretariat: Are you referring to the Municipal Infrastructure Loan Program?
Senator Eggleton: No, I am referring to affordable housing. On page 184, it is described as $120.6 million. It is the fourth bullet down. It is in the numbers as well on page 182; the Affordable Housing Initiative is going down to a minimal amount, a 97 per cent reduction, and the explanation on page 184 says. ``A decrease of $120.6 million due to scheduled termination.''
Mr. Enns: That is the case of a program that has reached the end of its period and will be assessed for renewal or not.
Senator Eggleton: I cannot imagine that the minister will allow that program to go by the boards. I am sure there are other programs in that circumstance. How real is the $10.4 billion reduction? I realize there is a lot of stimulus funding there and we would expect that funding to go, but for termination of programs, these sunsettings, it would be helpful to know how many there are.
Mr. Enns: This situation is not abnormal or unusual. When we make comparisons from mains to mains we have been seeing over the past 10 years an increase in spending, or in planned expenditures, rather, which is what the estimates detail. We are seeing for the first time in 10 years a decrease. It is not unusual that programs will be renewed and that you will see them in supplementary estimates. That renewal has happened in the past and you will likely see that when we come back and go through these supplementary estimates.
Senator Eggleton: I certainly hope so. The government cannot cancel the housing program.
Mr. Enns: It has been extended once in the past.
The Chair: We had two questions outstanding after you were here previously. I will ask honourable senators to help me with one of them, but one was that infrastructure was traditionally underfunded and the department dipped into vote 5 emergency funding of Treasury Board Secretariat. You commented on that item the last time you were here but the explanation was not clearly understood. We thought maybe that funding could be rectified in the future, but the indications were when we had infrastructure that nothing will change and they will continue to use vote 5. That use seems to run contrary to the fundamentals of vote 5.
Mr. Enns: It is contrary to the fundamentals of vote 5. There might be a misunderstanding there. The department will continue to fund their operating requirements from the total envelope they have been provided for the programs. Given that the programs are scheduled to sunset in 2015-16, there are no plans to provide the department with an operating base for that short period of time. The department will continue to use money from within the total envelope to deliver the programs, but we do not anticipate that they will seek access to vote 5 in the future to deliver the programs. That request was unique this past year due to the requirements to deliver the stimulus programs.
The Chair: It will not be repeated. It is anticipated that it will not be repeated?
Mr. Enns: It is not anticipated. We can never guarantee that, but we will work with the department to avoid that happening.
The Chair: There was a bit of misunderstanding, at least on my part, in that regard. I am glad you have clarified that point.
The other question, and I cannot remember the vote, was a Treasury Board Secretariat central vote 30 — not vote 33, the new one you are creating — and this government entity dipped into this other fund that looked as if it functioned like vote 5. Was it Canada Border Services Agency that received about $22 million in funding from you to help them out? Can you help us on that item? There was a new name.
Mr. Enns: Was it the management reserve?
The Chair: That sounds right. We were not familiar with that fund.
Mr. Enns: The Treasury Board has a fund called the management reserve that is used to help provide bridge funding for departments through unforeseen difficulties or for targeted investments on a payback, a loan basis, if you will. Most of the requests made of the management reserve come for bridge funding, and requests are often due to unforeseen circumstances that require funding. I do not remember the specific details of CBSA, but it may have had something to do with the requirements because of the migrant vessel; I am not sure.
The Chair: It may well have: I do not recall the precise details. We were not aware of the fund. If we look in these Main Estimates, will we find funding of Treasury Board Secretariat for this fund?
Mr. Enns: If it is provided through the management reserve, you will find it listed under the department to whom the funding was provided.
The Chair: Do you have an envelope of money called ``management reserve'' that you can give out to these departments if and when they meet your criteria?
Mr. Enns: Yes: I can assure you there is a lengthy due diligence process around that fund. Departments have to prepare business cases and they have to demonstrate, based on the criteria of the fund, that their circumstances are, in fact, unique. We do not provide funds for what will be ongoing needs and ongoing pressures. Funding is for the short term, generally one or two years, to help them through a particularly difficult situation that their operating base does not permit them to deal with.
The Chair: Then, if you advanced $22 million to Canada Border Services Agency, for example, in the next supplementary estimates they would obtain approval for that funding, and then it would be transferred back to Treasury Board Secretariat?
Mr. Enns: It is handled like a regular Treasury Board submission. There are specific criteria and we perform the due diligence to ensure that the need is real and that it meets the parameters of the management reserve. It is assessed by Treasury Board ministers, then the authorities are provided and it appears in the estimates.
The Chair: It sounds very much like a vote 5 contingency fund.
Mr. Enns: It is, in a way.
The Chair: How much do you start out with at the beginning of the year in a vote 5 contingency? How much is in that envelope?
Mr. Enns: I believe that the balance of the management reserve at the moment is in the neighbourhood of $350 million.
The Chair: That is in the management reserve.
Mr. Enns: Yes: However, I do not have that number here.
The Chair: Is that funding created statutorily so that each year we should see it in the estimates?
Mr. Enns: If funding is provided to a department from the management reserve, you would see it in the estimates of those departments.
The Chair: At the beginning of the year, before any funding is provided to a department, how does Treasury Board Secretariat have access to this envelope of money that is ready when someone makes a request?
Ken Wheat, Senior Director, Expenditure Operations and Estimates Division, Treasury Board of Canada Secretariat: It is not quite like vote 5. With vote 5, there is that pool upfront and we can allocate from it, so there is that $750 million at the beginning the year.
The Chair: You have to replenish it, or the department does, through various estimates or supplementary estimates.
Mr. Wheat: With the management reserve, there are two hoops for a department to jump through. There is the due diligence that Mr. Enns mentioned. Then funding also appears in the estimates so you can vote on it. It is not allocated from a central vote per se like vote 5 is. It will appear in each department as they ask for it.
Mr. Enns: You would see it likely in supplementary estimates.
The Chair: However, the money is made available to the department or agency before we vote on it based on your criteria; if they have met those criteria, you give them the funds?
Mr. Enns: The funds are provided upon supply.
The Chair: That is different from a contingency vote.
Senator Murray: They do not have to be replenished?
Mr. Enns: There are two streams, one of which is the bridge funding I referred to; the other stream is for investments that departments consider will have a payback, and that funding functions like a loan.
The Chair: We should have that information reflected in our report so we can understand it and our colleagues can understand it, because it is something that we have not seen before; at least, in my 10 years here, I have not seen it before.
Mr. Enns: It has been around for a number of years.
The Chair: Thank you for that explanation. That is helpful.
Senator Murray: My interest is in federal-provincial fiscal matters. I do not know whether it is fair to ask some of these questions of you. You might not have the information and if you do not, we will probably have the Department of Finance officials before us in due course.
We have the 2011-12 numbers for the Canada Health Transfer and the Canada Social Transfer fiscal equalization. I do not suppose you brought with you the province-by-province allocations, did you?
Mr. Enns: I do not have that with us.
Senator Murray: We will wait for the budget or the appearance of the Department of Finance officials for that information.
With regard to the Canada Social Transfer, CST, we know there is a legislated increase of 3 per cent. However, the footnote on page 10 refers to a ``decrease in the transitional payments announced in Budget 2007 that protect provinces against declines in their CST cash transfers.''
I will not go into all the details, but we know about it: what it was for and why it was done. Why is there a ``decrease in the transitional payments announced in Budget 2007 that protect provinces against declines''?
Mr. Enns: I am afraid we do not have that information.
Senator Murray: I see here that Youth Allowance recovery, which has a reduction of $700 million:
. . . relates to tax points transferred to the province of Quebec for the Youth Allowance program, which has since expired. The equivalent value of the tax point reduction is recovered from the federal cash transfers to the province.
That is understandable.
By the way, if you have recovered that figure, which is in an estimate with brackets around it — meaning it is a reduction — will that money show up somewhere in revenues? The question is a technical one.
Mr. Wheat: That is a question for the Department of Finance.
Senator Murray: In the next paragraph on page 11, it says:
Alternative payments for Standing Programs represent recoveries from Quebec of additional tax point transfer above and beyond the tax point transfer under the Canada Health Transfer (CHT) and the Canada Social Transfer (CST).
How do you recover that money? Do you recover it the same way; namely, by reducing the cash transfers to that province? Do you know?
Mr. Enns: You will forgive me but —
Senator Murray: These questions are technical and we will have these fellows from the Department of Finance come in here one of these days. I am sure we will have the answer one way or the other.
When I saw we would spend less money on interest on the debt, I was quite taken. I could not imagine why that might be. Even allowing for the fact that interest rates are low, the debt is up. I discovered the explanation on page 125:
Interest and other costs — decrease of $3.4 billion. The interest cost estimate has been revised downwards to reflect the lower than expected take-up of the Insured Mortgage Purchase Program and a reduction in payments to the consolidated specified purpose accounts.
Do you have a note about the Insured Mortgage Purchase Program: why there was a lower than expected take-up, or anything about it?
Mr. Wheat: That was CMHC buying back insured mortgages.
Senator Murray: I know what the program is, but why was there a lower than expected take-up? Does anyone know?
Mr. Wheat: We were authorized for $125 billion. I believe the take-up was around $70 billion. As to why it was so much lower, we have no explanation here.
Senator Murray: There is no explanation in your notes. We will get to it.
Senator Ringuette: Mr. Enns, it is always nice to see you. Happy anniversary on your presentation here.
I have a trick question for you. It boggles my mind and I need to know: Has Treasury Board, which is in charge of expenses, through perhaps Public Works and Government Services Canada, bought treadmills, elliptical machines, weight lifting machines or saunas in the last few months within the economic stimulus plan?
Mr. Enns: I am not aware of anything of that nature.
Senator Ringuette: Maybe that is the reason the minister chose to table this precious document in a fitness club instead of tabling it in both Houses of Parliament. That is most disrespectful.
I do not want you to comment on that. I will comment on it. It was probably the most disrespectful thing to Parliament and to the people of Canada that I have ever heard of: in a fitness club.
Regardless, my first line of questioning is in regard to the increase of 21 per cent for Correctional Service of Canada. There is $521 million for the country's prisons. Is that only for the operational costs, or does that include the capital costs?
There is also an amount of $458 million to implement the new sentencing laws and longer jail sentences. Is that amount also operational costs or capital costs?
Mr. Enns: I believe that the $458 million regarding the implementation of the Truth and Sentencing Act is because the act will result in increased individual sentence length and increased numbers of federal offenders, as you can imagine. These changes result in accommodation needs at Correctional Service of Canada and an increase in the current offender population. Therefore, there is an operating amount of $234.9 million.
Senator Ringuette: That amount is for operation.
Mr. Enns: It is operating for supervision of offenders, et cetera, and yes, you are right: there is an amount of $223.1 million in capital.
Senator Ringuette: It is $223.1 million in capital.
What about the country's prisons, the $421.6 million which is an increase of 21 per cent?
Mr. Enns: Can I ask you where you are? I do not have that figure in front of me.
Senator Ringuette: I will ask you another question.
Mr. Enns: Is it the $521.6 million? That is the increase from the Main Estimates level from 2010-11. That $458 million would be a part of that amount.
Senator Ringuette: What is the $137 million?
Mr. Enns: There is $44.2 million ``related to the department's allocation of the employer's share of employee benefit plan''; $19.6 million for the implementation of the Tackling Violent Crime Act, for sentencing practices that will increase both individual sentence length and the number of offenders; and $33.7 million, excluding the employee benefit plan, for the National Capital, Accommodation and Operations Plan — that funding relates to a funding formula driven by the variation in population levels in the system. It changes to the type of offender. There are costs driven that way.
There are smaller amounts, such as $0.9 million. A reduction of $15.4 million factors into those calculations to implement their strategic review decisions. There is $19.4 million representing a re-profiling of capital funds from previous years.
Senator Ringuette: The number I should be looking at with regard to prisons is $458 million?
Mr. Enns: That amount is directly for the implications of the Truth in Sentencing Act.
Senator Ringuette: I suppose that amount does not take into consideration the provincial costs associated with these new sentencing provisions?
Mr. Enns: These estimates are the Government of Canada estimates.
Senator Ringuette: So those estimates do not include the costs that the different provinces and territories will incur to meet the requirements of the new sentencing legislation?
Mr. Enns: These costs are for Correctional Service of Canada only.
Senator Ringuette: Are there any plans to identify this amount of money and transfer the proper amount to the provinces and territories because of federal legislation in sentencing?
Mr. Enns: That issue is not one that we would be aware of, or would deal with. That is a policy issue that comes from the minister.
Senator Ringuette: Chair, I have two other series of questions.
The Chair: Why not ask one of them now, and then I will put you on round two for the other one. We still have a bit of time now.
Senator Ringuette: Mr. Enns, I have been in politics for 24 years. I used to make a joke that if it is raining or there is a snowstorm, people cannot blame it on politicians. I used to joke about that, but that joke is starting to backfire because when I look at these estimates, I see cost reductions in programs for the environment, a 59 per cent reduction. I am thinking, climate change issue? Now people can blame this current government because funds to deal with climate change, clean air and water — basic human needs — have been reduced by 59 per cent. We are leaving an awful mess for our children.
With regard to specific programs — I did my homework in French, so I will change over to French for ease.
At page 115, a 10 per cent cut for the weather services; a 33 per cent cut for the Canada Foundation for Sustainable Development Technology; and 11 per cent cut for the Initiatives of the Action Plan on Clean Water, Freshwater Programs; and a 100 per cent cut, or complete elimination, of the transfer payments to support environmental and sustainable development initiatives.
Complete elimination of the environmental research and development programs; complete elimination of the contributions to support Canada's international commitments; complete elimination of the grants to support environmental research and development.
This is a complete disaster, not only for today but also for the future.
I cannot explain it, and you probably cannot either because it is a policy issue. I do not understand the research with regard to the environment, sustainable development and drinking water. Together with the corporate tax cuts that are polluting much of our environment, I have a hard time understanding this policy.
With regard to natural resources —
The Chair: Are you onto your next question?
Senator Ringuette: Yes.
The Chair: We will put you on the second round because you have gone over your 10-minute allotment.
Senator Marshall: Mr. Enns, can you explain to us how the transfers are laid out in the estimates? I want to start on page 9. This is how we review the estimates with the document that has been provided. Do you have page 9 there?
Mr. Enns: Yes.
Senator Marshall: We see the transfer payments of $151.4 billion for this year. When we turn to the next page, transfer payments are only $114.7 billion. Where are the rest listed?
On page 14, some of them are repeated again. Then when we go to page 126 for the Department of Finance, we see some of them repeated yet again. How do we follow transfer payments through the document?
My first question is, when we look at page 9 and then go to page 10, which adds up to only $114.7 billion, where is the difference laid out? Can you explain how transfer payments are laid out?
Mr. Enns: I will start and perhaps my colleague can finish.
What you see on page 9 are the total transfer payments. That includes the major statutory payments to individuals on other levels of government, but it also includes grants and contributions to organizations and individuals, which are presented later in the estimates document. Those amounts are the programs delivered through either a grant or contribution. They are not statutory but are voted.
Senator Marshall: Give me an example of that.
Mr. Enns: For example, a program such as the — I am trying to think of one off the top of my head — if you go to agriculture —
Senator Marshall: We will not go there. We will go to page 10 and flow through.
Mr. Enns: What you see on page 10, then, are the statutory major transfer payments.
Senator Marshall: These are all the statutory ones?
Mr. Wheat: All the major statutory ones.
Senator Marshall: That includes all the major statutory ones. That means, elsewhere in this document, we will find the minor statutory plus all the budgetary?
Mr. Enns: Yes, the voted Gs and Cs.
The Chair: ``Gs and Cs'' meaning grants and contributions?
Mr. Enns: Yes: sorry.
Senator Marshall: When we go to page 14, we see under ``General Government Services,'' major transfers, and some of these transfers are repeated from page 10.
Mr. Enns: Right: These are grouped into those broad sector categories to present an overview of spending in those broad thematic areas, if I can put it that way, whether they be international, immigration and defence programs, which you will find on page 15, or general government service programs. It is a different slice of the numbers.
Senator Marshall: They are rejigged and presented in a different format.
Mr. Enns: Right.
Senator Marshall: Is that the case on page 126?
Mr. Enns: Let me have a look. Perhaps Mr. Wheat can help.
Mr. Wheat: The major transfer payments on page 10 are given out by various departments. You will see them also in Part II under the responsible department.
Senator Marshall: I can follow page 10, page 14 and page 126 because I can cross-check the numbers. What is the difference between the $151.4 billion on page 9 and the $114.7 billion on page 10? Do I have to go on a big search of the estimates to find that information?
Mr. Enns: Essentially, you will find them listed under each department in their grants and contributions programs.
Senator Marshall: So I would have to go through every department and look for the transfers?
Mr. Enns: Yes.
Senator Marshall: Okay.
The Chair: Page 10 is only statutory transfers. Is that what you told us earlier?
Mr. Enns: Major statutory.
The Chair: Only statutory?
Senator Marshall: No, major statutory.
The Chair: There are no transfer payments, grants or contributions that have to be approved?
Mr. Enns: No.
The Chair: It is only the major statutory transfers.
Mr. Enns: Yes.
The Chair: Are we together?
Senator Marshall: Yes: I understand that. I asked you a question on this item the last time you were here. With respect to the public debt charges, when we looked at the estimates last year and then we looked at our Supplementary Estimates (A), Supplementary Estimates (B) and Supplementary Estimates (C), every time there was a downward revision in our debt charges because interest rates were going down. We saw that trend last year. Now we are looking at the document you presented tonight. We are estimating the public debt charges will go down from $33.7 billion to $30.3 billion. What assumptions do you make to come up with the $30.3 billion?
Mr. Enns: The changes to the public debt forecast, or charges, are not related to interest rates, per se, but to the CMHC program we were talking about earlier with Senator Murray. The smaller than anticipated uptake of that program has resulted in savings on debt charges.
Senator Marshall: That is different than what I thought. Those are all the questions I have for now.
The Chair: Do you want to go on round two?
Senator Marshall: I probably will, yes.
The Chair: Next is Senator Gerstein. He is from Toronto and is the deputy chair of the committee.
Senator Gerstein: Thank you for being back with us again. The Main Estimates, I assume, are adjusted throughout the year by Supplementary Estimates (A), Supplementary Estimates (B), and Supplementary Estimates (C). The increases or decreases may be adjusted as we progress into the year after the budget. Is that a fair assessment?
Mr. Enns: Absolutely.
Senator Gerstein: To be overly concerned about what is before us, one must let the program roll out. I am sure all Canadians are anticipating the budget that will be forthcoming shortly.
My second question is with respect to the 2010 budget. As I recall, by freezing departments, in the year 2010, which we will conclude shortly, they were looking for a savings of some $300 million. In 2012, I believe the number is $900 million. I think it is $1.2 billion in the year 2013, totalling $3 billion.
Can you give us an indication of how that relates to what is before us today; to what you think happened in 2010? I know 2010 is not over yet. What is the feeling in terms of what we are looking at in the Main Estimates?
Mr. Enns: What you are seeing here is probably not the complete picture. Some of the reductions you see relating to cost-containment measures are the result of having provided funds to departments that were clawed back subsequently. The Main Estimates, you will recall, are developed, and the timing with the budget is not necessarily ideal. The cost-containment measures were announced in Budget 2010 when the Main Estimates had already been effectively prepared.
Monies provided to departments to compensate them for wage increases had to be clawed back. Those clawbacks were subsequently reflected in the estimates.
On the other hand, the estimates documents do not present information about funding that will not be requested. When departments' operating budgets are frozen, they are not permitted to come forward with a funding request. That is the way we achieve the cost containment.
In those cases, you will not see that funding in the estimates as a reduction because funding was never provided. We are confident that the projections that we developed earlier are holding.
Senator Gerstein: That is for the year 2010, and what you see here?
Mr. Enns: We are on track for achieving the $300 million that was forecast for cost containment in the current fiscal year about to end.
As you know, $180-something million of that amount was reflected in previous supplementary estimates, and the remaining portion will not be reflected and has not been provided. Those forecasts are based on the fact that monies will not be provided to the departments for those wage increases that have been negotiated.
Senator Gerstein: You have a high level of confidence in terms of these numbers being attained?
Mr. Enns: A budget freeze is exactly that. Funding is not provided. Those savings are a result of the foregone expenditures.
Senator Gerstein: Thank you.
The Chair: Thank you for clarifying that point.
Senator Callbeck: Thank you for appearing this evening. You talk about a savings of $300 million. What period is that for?
Mr. Enns: That was for 2010-11.
Senator Callbeck: Can we have a listing of what is in that $300 million? Where were the savings?
Mr. Enns: The savings are completely related to the costs of wages for the public service. Put it this way: Departments have to absorb what would have been provided to them to compensate them for collective bargaining increases.
Each department will manage that cost-containment measure in a way that is appropriate for the deputy minister. The deputy minister of each department will make decisions about how to continue to deliver services within that smaller envelope. The freeze acts as a reduction in the operating budget available.
Senator Callbeck: However, programs that have been eliminated can be in here as well?
Mr. Enns: Deputies will manage within the envelope provided to them in a way that will allow them to continue to deliver their services. You have had other departments appear explaining some of the measures they have taken.
Some are achieving savings through contracting practices, and some are taking a look at hiring. They are doing a number of things to achieve the efficiencies necessary to deliver services within the envelope they are provided.
Senator Callbeck: If you had a savings of $300 million, why can we not have a list of what that savings is made up of?
Mr. Enns: Again, departments are monitoring those savings. We are not monitoring how they achieve those savings. The funds are not provided to them. They will implement the cost containment in a way they see fit.
Senator Callbeck: There is no way we will know what has been cut to save that $300 million?
Mr. Enns: I assume you will see that savings reflected in departmental performance reports, their reports on plans and priorities or their quarterly financial reporting. They will address these issues, I assume, when they report on what has been done to achieve efficiencies.
Senator Callbeck: I never receive the figures. I do not know how many times I have asked different government people what those savings are. I see them reflected here in different departments and it is only an amount. I think we should have an explanation.
Mr. Enns: Again, these savings are primarily efficiency measures. The reductions you see here to programs will relate to either the natural termination of a program, because it has outlived its usefulness, or the fact that it is sunsetting and needs a policy discussion to determine whether it will be renewed, at which point it will appear in subsequent supplementary estimates.
Senator Callbeck: With respect to sunsetting, in your presentation you said there was $1.7 billion relating to sunsetting programs. Can we have a list of those programs?
Mr. Wheat: I have a list of the ones that have been identified.
Senator Callbeck: Can you present that list to the committee later, or send it to the clerk?
Mr. Wheat: Either way.
Senator Murray: What is the base year for the freeze on operating expenditures?
Mr. Enns: It is the current year, 2010-11. The base is being established.
Senator Murray: You clawed back $300 million in 2010-11?
Mr. Enns: Yes: The savings are $300 million. Some of the money was not provided, and some was clawed back.
Senator Murray: It pretty much all relates to the fact that those departments will have to swallow from their A base, their budget, any wage settlements?
Mr. Enns: Precisely.
Senator Murray: Therefore, 2010-11 minus $300 million, is the amount of the freeze going forward of operating expenditures, for how many years?
Mr. Enns: We are still in the year, and the freeze, the cap will be established based on this year.
Senator Murray: What does that mean? Sorry, chair, I butted in here.
The Chair: It is close enough to what we are talking about that I will take it as a supplementary question.
Mr. Enns: The operating expenditures of the department in the current year will be the level at which operating expenditures are frozen for the next two years.
Senator Murray: Do we know what those operating expenditures are?
Mr. Enns: We will with the public accounts.
Senator Murray: Essentially they will be the mains plus the estimates — the three sets of supplementary estimates — minus $300 million?
Mr. Enns: Essentially, again, it relates back to the withholding of resources for compensation.
Senator Murray: I do not have the figure in front of me for 2010-11 — maybe I do — and the increase in what I call program spending. Is that figure comparable for 2010-11? What was the increase? It was a big one, I think. Yes, of course it was. I have 17 per cent. Is that possible?
Mr. Enns: We have it divided by voted and statutory.
Senator Murray: We will get to it. The point I am getting at, I think, is that the freeze is at a fairly generous, dare I say ``liberal'' base for 2010-11, even allowing for the clawback, looking at 2010-11 over 2009-10. It will not create that much heartburn with the managers.
Mr. Enns: Deputies are smart individuals. They will cope with the envelope they have.
Senator Murray: It is for how many years going forward?
Mr. Enns: Two.
Senator Murray: That will be 2011-12 and 2012-13?
Mr. Enns: Yes.
The Chair: If I recall correctly, Senator Callbeck had the floor.
Senator Murray: I beg your pardon. I hope it helped elucidate the situation.
Senator Callbeck: Yes, that is fine. I was trying to find out where the savings of $300 million is, but I will not be provided with that information. There will be no list prepared.
Mr. Enns: There is no list of how each department is achieving specific efficiencies in their ministry or portfolio to absorb the effect of not being compensated for increases in wages.
Senator Callbeck: There is no way of knowing what programs have been cut or decreased?
Mr. Enns: You will see program reductions ultimately in subsequent documents, but efficiencies in the area of contracting and that kind of thing will not show up as specific items. Only the operating budgets will remain frozen.
Senator Callbeck: I am interested in programs. Are there any programs that have been cut or decreased in that $300 million?
Mr. Enns: Not that I am aware of.
Senator Callbeck: None?
Mr. Enns: Not that I am aware of.
Senator Callbeck: On page 179, ``Other Transfer Payments,'' ``Payments to provinces and territories under Labour Market Agreements'' will decrease considerably from $770 million to $543 million. Are there no agreements coming into effect in 2011-12?
Mr. Enns: We will have to refer that question to the department for an answer.
Senator Callbeck: I want to know. That drop is considerable, 29 per cent.
Mr. Enns: We can forward that query on.
Senator Ringuette: That is for training administered by the provinces.
Senator Callbeck: That is right, administered by the provinces, but it is an important area.
Halfway down the page, you have ``The provision of funds for interest and other payments to lending institutions and liabilities under the Canada Student Financial Assistance Act.'' That amount is decreasing from $15 million to $5 million. Is that decrease because of that liability problem?
Ms. Thornton: Are you referring to debt write-offs?
Senator Callbeck: I am referring to page 179.
Ms. Thornton: I see the statutory provision.
Senator Callbeck: The fourth figure down for 2011-12 is $5,218,598, but for the year ending this March it was $15,460,033.
Ms. Thornton: We will have to refer to Human Resources and Skills Development Canada for the answer.
Senator Callbeck: The decrease is 66 per cent.
Ms. Thornton: Yes.
Senator Callbeck: Will you provide the explanation for that decrease to the committee?
Ms. Thornton: Yes.
Senator Callbeck: On page 218, under ``Contributions,'' the fifth item down, the year ending in March is $25 million and the amount is going down to $5 million; an 80 per cent decrease. Why is that?
Mr. Enns: Which page are you on?
The Chair: That is Industrial Research Assistance Program Contributions to Youth Employment Strategy. Is that the one?
Mr. Enns: Yes: I do have a bit of information about that item.
The Chair: It is a reduction of 80 per cent.
Mr. Enns: Actually, that is an Employee Assistance Program effect. A temporary increase in funding was provided over two years, and now you are seeing the reduction back to the normal level of funding for that program that existed prior to the stimulus measures.
Senator Callbeck: Prior to that, it was $5 million.
Mr. Enns: Their original base funding was $5 million.
Senator Callbeck: If you go up to the second item down, ``Industrial Research Assistance Program Contribution to Firms'' is cut by 52 per cent. Is that for the same reason?
Mr. Enns: I am not certain of that. That is in the National Research Council. If you give me a moment, I will see if I have that information.
I think we have to ask for that information from the department for you.
Senator Callbeck: All right. You will send that information, then?
Mr. Enns: We will.
Senator Callbeck: We have already dealt with Justice Canada, but when I look at Public Safety and Emergency Preparedness under Correctional Service of Canada, which is on pages 299 and 300, how do I figure out whether the money for programs given to inmates while they are in the institution — such as program management for violence prevention, substance abuse and so on — is going up or not?
We will have a lot more inmates. We know that from the legislation coming through Parliament.
Mr. Enns: Those increases will be reflected in the operating vote of Correctional Services of Canada. I do not have anything specific here about the exact programs and how they might be affected, but we do know there will be increased costs associated with the supervision and programming for inmates as a result of increased numbers.
We can request more information from the department if you like.
Senator Callbeck: Yes, I would like information on the programs and how many more dollars will be spent on programming with the increase in inmates.
Mr. Enns: There is an amount of $33.7 million, which are adjustments related to offender programs and specific accommodation measures. As I mentioned earlier, the number is formula driven, based on population figures. However, beyond that general statement that there is additional funding for programming, I do not have specifics about what those programs are.
Senator Callbeck: I would like specifics on that programming. Is my time up, chair?
The Chair: Did you want to go on round two?
Senator Callbeck: I will go on round two.
The Chair: We are now into round two.
Senator Ringuette: My next line of questioning is in regard to economic development. I will try to direct you to the English pages, though I did my homework with the French version.
In regard to Atlantic Canada Opportunities Agency, ACOA, on page 59, I can understand infrastructure programs being slowly decreased because of the funding and the allotment of time for the infrastructure to be built. That said, I look at pages 59 and 60 in the English: ``Community Development,'' a 37 per cent reduction; ``Business Development Program,'' an 11 per cent reduction; ``Innovative Communities Fund,'' a 52 per cent reduction; and ``Recreational Infrastructure Canada Program,'' a 100 per cent reduction.
Basically, the government is reducing the business development programs and the innovative communities and the development communities fund by 37 per cent and 52 per cent. Is Atlantic Canada not for a region that desperately needs to increase its economic development and the vitality of its communities?
Is there any reasoning for those reductions?
Mr. Enns: You were correct in assuming that the bulk of those reductions have to do with the economic action plan and the wind-down. For example, we have ``A decrease of $50.1 million for the Community Adjustment Fund Budget 2009 initiative.'' That decrease is the natural winding down of the program. You referred to recreational infrastructure. It is the same.
The bulk of the decreases for ACOA have to do with the economic action program winding down.
Senator Ringuette: I have a problem with that decrease. You say that there is an 11 per cent reduction in the Business Development Program and a 52 per cent reduction in the Innovative Communities Fund, notwithstanding the 37 per cent reduction in the Community Development Program.
The programs are not within the economic stimulus portfolio. They are strictly to help these communities develop in regard to creating jobs, helping businesses and so forth. This funding is for ACOA so, of course, I have a particular interest in it.
However, I looked at the other agencies. I looked at the Quebec Region Development Agency, and there is a 31 per cent reduction. I understand the issue of infrastructure and I have removed that issue from my evaluation of the situation. The Economic Development Agency of Canada for the Regions Development of Quebec has a 31 per cent reduction; the Western Economic Diversification Canada has an 87 per cent reduction in regards to the collectivity development; the Northern Ontario Development Program, FedNor, is 100 per cent — the collectivity fund has been completely removed, $15.5 million; and for the Federal Economic Development Agency for Southern Ontario, a 31 per cent decrease for development of collectivity, a 66 per cent decrease in regard to innovation and business development and a 30 per cent decrease in regard to the regional infrastructure but a 100 per cent decrease in Eastern Ontario for water.
The regional development agencies are taking a hard hit, especially with respect to the possibility of enhancing their communities and the business viability in those communities.
Mr. Enns: To take one as an example, I can walk through some of the changes that have happened, both the increases and the decreases, to give you a better picture.
Senator Ringuette: No, I talked about the decreases and I want to understand why the decreases, especially in regard to developing collectivities and developing businesses in those collectivities.
Mr. Enns: At the risk of repeating myself, the bulk of these decreases are all related to the economic action plan and the issues delivered under that plan. For the Economic Development Agency of Canada for the Regions of Quebec, for example, there is a decrease of $158.4 million and that decrease is due entirely to the termination of the economic action plan.
Then you have a decrease of $2.5 million due to differing arrangements in terms of the profile to support ``cruise ship development on the St. Lawrence''; ``A decrease of $2.4 million in the reinvestment of income provided by reimbursing contributions;'' and ``A decrease of $1.6 million due to termination of the implementation of a broadband telecommunications network in the Bay James region.'' Again, if you look at the proportions there, a vast majority is due to the wind-down of the economic action plan.
Senator Ringuette: Let us go to ACOA, which is one of my favourite topics. In English it is on page 59 and page 60.
Mr. Enns: There has been an increase of $19 million for the Atlantic Innovation Fund. There has been an increase of $1.7 million for ongoing —
Senator Ringuette: Hold on. Where do you see those items on page 59?
Mr. Enns: You will find them on page 60, which is a more detailed explanation of the changes.
The Chair: The Atlantic Innovation Fund is under ``Contributions,'' second one down. We are with you.
Mr. Enns: Those changes are all detailed in that new section on the explanation of changes, which goes through each increase and decrease to provide you with information on how the overall funding reference level has changed.
Senator Ringuette: The ``Community Adjustment Fund Budget 2009 initiative,'' $50 million; is that gone?
Mr. Enns: That is gone. That, again, is an Employee Assistance Program, EAP.
Senator Ringuette: Then there is the infrastructure, federal contribution; and a decrease of $0.6 million funding for the Official Languages Action Plan. There is a 21 per cent reduction overall.
Mr. Enns: Overall, but again, it is almost all due to the economic action plan termination.
Senator Ringuette: On the ``Business Development Program,'' there is an 11 per cent reduction.
Mr. Enns: I assume, and I could be wrong, that reduction is the economic action plan initiatives that were delivered through that program, which is why you see that reduction, but we will check.
Senator Ringuette: Yes, because I have not seen that much infrastructure funding come to Atlantic Canada through ACOA.
Mr. Enns: We will verify that information.
Senator Ringuette: Please, yes; thank you.
Senator Marshall: I have a question on the Harmonized Sales Tax, HST. Will we have finance officials appear before us?
The Chair: Probably not: We probably will have four other departments, but if you request finance as one of the four, then that could happen.
Senator Marshall: For the ``Implementation of Harmonized Sales Tax,'' there is a decrease from $3 billion to $1.9 billion. Can you give us a brief explanation?
Mr. Wheat: It is covered in the Comprehensive Integrated Tax Collection Agreements, CITCA. It is the scheduled payments to assist British Columbia and Ontario in going to the HST. According to those agreements, there was $3 billion last year; the amount is decreased to $1.9 billion this year.
Senator Marshall: Can we have a breakdown of how much went to each province last year and how much is estimated to go this year? I want to see the breakdown.
Mr. Wheat: I expect so. We can ask finance.
Mr. Enns: We will work with our colleagues to obtain that information.
The Chair: Did I take your request that you want finance to come in to explain how they spend their money for their operation?
Senator Marshall: No, if it had been arranged for finance to come in, I would have asked them that question, but seeing as they might not appear, Mr. Enns said he will send that information to us so that is fine.
Senator Murray: Those payments come under the finance estimates. That is the point I am making, and if people want to ask questions about the payments, we should have those officials come in. I am not insisting.
The Chair: We will consider that suggestion because we have four slots before we prepare our interim report.
Senator Callbeck: Coming back to the Atlantic Canada Opportunities Agency, where we will take a hit of 17 per cent, you say that most of that hit is because of the economic action plan. However, today I looked at the budget for 2007-08 and it was $366,329,000. Now ACOA will receive $50 million less than back in 2007-08. That hit is approximately 14 per cent. Obviously our regional development agencies, or at least ACOA, are being weakened.
Mr. Enns: You have to remember that these are the Main Estimates, and adjustments will be made through the A, B and C supplementary estimates that will affect the expenditures that are made in the end at ACOA.
We do not have the figures for the historical reference levels for each department here with us.
Senator Callbeck: We will watch closely for those figures because ACOA means a great deal for economic development in the Atlantic area in the creation of jobs, and that decrease is startling. We are $50 million down from where we were in 2007-08.
I have marked a question at page 92. It is under Canadian Heritage and has to do with the status of women. On page 92, the second figure there, under ``Contributions'':
Women's Program — Contributions to women's and other voluntary organizations for the purpose of furthering women's participation in Canadian society.
That amount has been cut by 19 per cent, by $1 million. What has been taken out of that budget or why?
Mr. Enns: We will endeavour to obtain that information for you from the Department of Canadian Heritage.
Senator Callbeck: Thank you.
Senator Mockler: I have a few questions that relate to different departments. Senator Ringuette will appreciate that looking at these estimates reminds me of when we were in the legislature in New Brunswick.
I want to go back to ACOA, page 60, ``Contributions for the Atlantic Innovation Fund,'' an increase of 57 per cent. There is no doubt we know what ACOA does and we know what they target. Do you have any comments on why that 57 per cent increase?
Mr. Enns: I do not have the details of the purpose of the increase, only that $19 million is provided to support the Atlantic Innovation Fund and the innovation communities.
Senator Mockler: I think that is a step in the right direction. ``Contributions under the Communities Futures Program,'' an increase of 15 per cent; is that situation the same?
Mr. Enns: That funding was provided in Budget 2010.
Senator Mockler: If I go to page 46, Agriculture and Agri-food, and look at ``Trade and Market Development,'' there is an increase of 20 per cent. Can you comment on that increase or do I have to ask the minister?
Mr. Enns: I can give you the details for some of the increases and the adjustments that have been made.
Senator Mockler: I would appreciate that.
Mr. Enns: An increase of $49.3 million is ``for the Agricultural Flexibility Fund to help the agriculture sector adapt to pressures and improve its competitiveness.''
There are increases related to the Specified Risk Material Innovation Program. That research development program supports the commercialization or adoption of innovative technologies for specified risk removal disposal or use.
There are reductions related to the sunsetting of the Agricultural Disaster Relief Program/AgriRecovery. Again, that policy decision will have to be made, I imagine.
A number of other reductions relate to sunsetting programs; for example, the Pork Industry Initiative. That initiative was to help the pork and hog industry recover and transition to new market realities, and that initiative is now winding down. There are others.
Senator Mockler: Is that the same situation for the ``Agri-business Development'' in respect to agriculture?
Mr. Enns: On page 46, you see a breakdown that is presented slightly differently, by program activity, which is a different grouping than specific programs.
Senator Mockler: If we go to page 72, which is Canadian Heritage, ``Grants to support the Youth Take Charge Program,'' the amount is $3.4 million. That program is new. Can you expand on that particular vote?
Mr. Enns: I do not have that information. We can obtain information from the department on that program.
Senator Mockler: Will you do the same for ``Grants under the Museums Assistance Program,'' which is new?
Mr. Enns: Yes, I will.
Senator Mockler: If I look at the Canadian Heritage budget and portfolio, from 2010-11 to 2011-12, there is an increase of about 3 per cent; is that right?
Mr. Enns: You are looking at the ministry and not the department. That is correct.
The Chair: As a follow-up to Senator Mockler's question about ACOA, can you look at page 60? Do you have any briefing note on the ``Contribution for the Saint John Shipyard Adjustment Initiative''?
Mr. Enns: No, I do not.
The Chair: Can you find out what is happening there? It was $10 million last year, and it is $6 million now. How many more years of funding will there be and how much more? We are interested in knowing how often we will see that item here.
We learned not long ago that certain infrastructure programs under the incentive program that were supposed to finish and all claims made by the end of March have been now extended to the fall. I assume that the extension and the costs will not be reflected here.
Mr. Enns: No.
The Chair: Will we see the increased cost of that extension in a supplementary estimate along the way?
Mr. Enns: Yes, and four specific programs have been extended. You will see that cost in subsequent supplementary estimates, yes.
Senator Murray: Do you have a ballpark estimate?
Mr. Enns: I do not. The program has been running for two years, and it will have played out largely. The extension is designed to allow projects to be completed.
Senator Murray: I have an observation. There is not much doubt, in reading the documents, that most of the reductions come from those departments and agencies through which stimulus funding, or whatever you want to call it, was flowing during the fiscal year. Infrastructure Canada has gone from $8.1 billion to $4.8 billion, and Industry Canada from $2.4 billion to $1.2 billion.
If you look at ACOA, as Senator Callbeck has done, they take a hit of 16.8 per cent.
The Quebec regional agency takes a 30 per cent hit; the Southern Ontario Agency, a 56.5 per cent hit; Western Diversification, a 54.4 per cent hit. I am puzzled by the Canadian Tourism Commission; there is a 24.5 per cent reduction. For Enterprise Cape Breton Corporation, there is a 24.7 per cent reduction, and Northern Economic Development Agency, a 27.8 per cent reduction. A lot of money clearly seems related to the stimulus program that has come to an end.
Then I go to Parks Canada, and this situation concerns me a great deal. I am not aware that Parks Canada was a big operator in the stimulus program, although I am willing to be corrected. I see that the government reduced its estimate from $804 million to $690 million, a 14 per cent reduction. I confess that I am a big fan of Parks Canada. We have been engaged with them lately in the Standing Senate Committee on Fisheries and Oceans on the heritage lighthouse protection program, and so on.
Apart from that, they are a good outfit, and I do not like to see them starved for funds. The explanation suggests there will be a decrease of almost $80 million — $79.9 million in funding — for improvements and upgrades to national historic sites and Parks Canada visitors' facilities. We have seen the story before. We let things go to moth and rust, and it is not good — to put it in a commercial way — for tourism. However, it is a bad advertisement for Canada and for the government.
``A decrease of $16.6 million in funding for the assessment, management and remediation of federal contaminated sites'' — that item is under the department rather than under Parks Canada, or so one assumes.
Mr. Enns: The department plays a lead role in the management of that program, but each department receives funding for the remediation of specific sites in their custody.
Senator Murray: There is ``A decrease of $15.0 million in funding for upgrading a section of the Trans-Canada Highway in Banff National Park; and A decrease of $4.5 million cost containment measures'' and so on.
What do you have by way of an explanation for all of these decreases?
Mr. Enns: Perhaps I will go back to an earlier point. When you look at the reduction from the Main Estimates 2010- 11 to 2011-12, $7 billion of that reduction is the wind-down of economic action plan programs.
If you are talking about Parks Canada, it received $130 million in EAP funding, so the three major decreases you are seeing are, in fact, economic action plan programs. Therefore, Parks Canada is returning to its normal reference level. There is a decrease of $4.5 million due to cost containment measures, and that is what all departments face.
Senator Murray: The one that concerns me is the decrease of almost $80 million in funding ``for improvements and upgrades to national historic sites and Parks Canada's visitor facilities.''
Mr. Enns: The funds were, in fact, economic action plan funds.
Senator Murray: They are either needed or not needed. I assume we were not spending money on improvements, upgrades and maintenance of facilities that were not needed. However, we will have a closer look sometime.
Mr. Enns: On the Canadian Tourism Commission, it is the same story. The sunsetting of $20 million in funding is for Budget 2009 initiatives, and this funding was related primarily to advertising programs to encourage travel within the country and to encourage visitors from other markets, notably, the United States.
That funding, again, was temporary funding provided under the economic action plan for the CTC.
Senator Murray: That is an annual expense.
Mr. Enns: There will have been a top-up.
Senator Ringuette: I have two small questions.
The Chair: Make it one big one.
Senator Ringuette: I have a supplementary question about the cost of sentencing, and you said $234 million for operating funds, and $223 million for capital funds. From now on, the $234 million in operations will be a permanent additional cost to the a-base of Corrections Canada and will grow on a yearly basis.
Mr. Enns: I cannot make that assumption.
Senator Ringuette: Will it be added to the a-base of Corrections Canada?
Mr. Enns: It is in their reference level for 2011-12.
Senator Ringuette: I see in these estimates funds for the Asia-Pacific Gateway, but I see absolutely no dollars for the Atlantic Gateway. Am I missing something, or is it not there?
Mr. Enns: What you are seeing in the estimates for the Asia-Pacific Gateway is a reprofiling. The funding is not new; it is being reprofiled into 2011-12.
Senator Ringuette: The funds are funds not spent in the current budget?
Mr. Enns: Again, due to a variety of reasons, such as project plans being delayed or whatever, that funding is a reprofile.
Senator Ringuette: It says on page 317 that there is an additional 40 per cent.
Mr. Enns: Again, it is not new funding per se. It is money that was available and is being reprofiled into the next year.
Senator Ringuette: In the current budget, there is $240 million, almost $242 million, and in the estimates for 2011-12, there is $337 million. Does the additional money come from the $240 million?
Mr. Enns: The increase related to the Asia-Pacific Gateway is for $105 million, and that is money being reprofiled from 2010-11 into 2011-12, unspent in 2010-11 and reprofiled into the next year.
Senator Ringuette: Only $105 million is being reprofiled?
Mr. Enns: Yes.
Senator Ringuette: That is a lot clearer than the $337 million being reprofiled all together.
Mr. Enns: You will find the explanation of changes for transport on page 316. That explanation details all the puts and takes, if you will; the decreases and increases for the Department of Transport.
Senator Ringuette: I am happy there is money there for the Asia-Pacific Gateway, but out of the almost 500 pages of information we have here, no dollars are mentioned for the Atlantic Gateway. That lack of funding is a real concern because it was promised four to seven times in the last two years.
The Chair: Thank you, Senator Ringuette. Can you refresh my memory, Mr. Enns? To avoid the March madness of departments running out and spending the rest of their budgets, a carry-forward was put in place. Was it 5 per cent or 10 per cent?
Mr. Enns: It was 5 per cent.
The Chair: Was that 5 per cent of operating budget?
Mr. Enns: Yes.
The Chair: What is this new 20 per cent non-used capital expenditure carry-forward that is being contemplated?
Mr. Enns: It is virtually the same mechanism used to allow departments to carry forward from their capital budgets. You can appreciate that capital projects are more difficult to manage within a one-year period. The carry-forward provides flexibility for departments to plan better.
What was happening, in any case, was that departments would come forward with reprofile requests from their capital votes which, by and large, were granted by the Department of Finance, but the mechanism to achieve that reprofiling was more cumbersome. The capital carry-forward provides a more streamlined way. It will not provide new funding; it provides only flexibility to departments in a more efficient way so they can engage in capital planning more effectively.
The Chair: Will we see the 20 per cent carry-forward for capital projects reflected in the second year; that a certain amount is being carried forward?
Mr. Enns: You will see that as a Treasury Board central vote as you do the operating budget carry-forward, and then it will be reflected in the spending plans for departments as it is distributed to them subsequently.
The Chair: There will not be a necessity for a vote item and a reprofiling?
Mr. Enns: You will see fewer reprofiles.
The Chair: If the funding fits in under this program, then it will not have to be reprofiled?
Mr. Enns: Right: Again, the carry-forward is simply a better mechanism to achieve the same end result in a way that is a bit less burdensome.
The Chair: Is this initiative something that needs statutory approval?
Mr. Enns: It was approved by the Treasury Board. It does not need statutory approval, no. Again, the carry- forward is only for departments that have capital votes, obviously. It was done on a pilot basis with a few departments, and the results were good, so a presentation was made to Treasury Board ministers to create the vote. We are moving forward with that vote.
The Chair: My recollection is that we had the Department of National Defence here, and they had special rules with respect to carry-forward for capital acquisitions. Are you familiar with that situation?
Mr. Enns: Likely that would be the case because, obviously, they are a capital-intensive department.
The Chair: So it is possible that a department can develop a special set of rules for carry-forwards?
Mr. Enns: Generally, DND does, but it is not common.
The Chair: Are there any others?
Mr. Enns: I am not aware.
Mr. Wheat: The new capital budget carry-forward vote does not apply to DND or to Crown corporations that have capital votes. It also does not apply to the three agencies that have two-year appropriations, those being Canada Border Services Agency, Canada Revenue Agency and Parks Canada.
The Chair: It does not apply to them because they already have special arrangements?
Mr. Enns: Exactly.
The Chair: That information is helpful. We are slowly going along and we are learning as we go. We appreciate your help in taking us through this process. We will now proceed to talk to specific departments. Any information that we have asked for, if you can provide that to us as quickly as possible, that would be much appreciated.
Mr. Enns: We will talk to our colleagues and departments and make sure they provide that information to you.
Senator Murray: Can I have, at your leisure, a short history of the management reserve? You said it has been in existence for some years now. I want to know its purpose and how much money is in it. Presumably the Treasury Board has written guidelines or rules for its use.
Mr. Enns: We have those available, yes.
Senator Murray: May I see them?
Mr. Enns: Certainly.
Senator Murray: These pools of discretionary funds always interest me.
Mr. Enns: We are careful.
Senator Murray: I am sure you are. I like to be as well.
The Chair: Another interesting point came up, Mr. Enns, that you may be able to help us with.
We were asked in Supplementary Estimates (C), I think it was, to consider approving an expenditure to be held in abeyance until the legislation is passed, and we had not seen that kind of thing before. It seemed strange to us.
Is this something that you do from time to time wherein you hold the money and wait for the legislation to pass? They receive the money before they have the law to use it.
Mr. Enns: They do not have the money. What they have is the approval, should that condition be met. We freeze that money in an allotment. Mr. Wheat can provide you with more technical details.
It occurs from time to time but, again, the purpose is to ensure that funds are not provided without the appropriate legislation or whatever the condition might be. The conditions are in place to not allow that spending to occur.
The Chair: The norm is to wait for the money after the law passes, and there is a structure that says they can do this: to proceed then to supplementary estimates, or if they need the money right away, to go to vote 5. This holding in abeyance is a new process.
Mr. Enns: Again, they are not provided with the funding; they are simply provided with the Treasury Board authority.
The Chair: Yes, but Parliament is being asked to put the cart before the horse.
Senator Ringuette: The approval of funds is the responsibility of Parliament. We are asked to approve funds to deal with a piece of legislation that we may not approve in a budgetary year.
Ms. Thornton: If the condition is that the legislation be approved before those funds are released, then the assumption is that activity must start day one; they do not receive the money unless that condition is met.
Senator Ringuette: The chair was trying to stress that repeatedly — at least to my knowledge, for the last seven years — every time a bill was approved and required funds, and if the bill was passed after a Ways and Means, we would either have Supplementary Estimates (A), (B) or (C) to take care of providing the necessary funds, and in the meantime vote 5 was used.
Mr. Enns: I need to be clear; no funds are provided without Parliament's approval in any case. The question is only one of the timing going through Treasury Board, which does not provide the funds but provides the authority to spend. Parliament provides the spending. Mr. Wheat might want to elaborate.
Mr. Wheat: I have been here only two years and I do not know of any other example, but I do not think it is precedent-setting. I have heard the expression that we no longer like to do what we call ``sup and freeze,'' which is essentially what this is.
The Chair: Yes, it is ``sup and freeze.''
Mr. Wheat: The implication is that this is something we used to do 10 or 15 years ago.
The Chair: That is before my time. Senator Murray, we need your help. Are you accustomed to ``sup and freeze''?
Senator Murray: We never did it, neither supped nor froze.
The Chair: I am making the comment that we found this situation peculiar and not desirable.
Senator Murray: All kinds of things can happen to a bill on the way through Parliament. We can amend it a dozen different ways and so it would not need a tenth of the money that we have already voted.
Mr. Enns: The initiative would die and no money would have been forwarded.
Senator Murray: I appreciate that, but if this example were to become common practice, it would stand the process on its head.
The Chair: If you have any other comment to send us in writing about ``sup and freeze,'' we will be pleased to receive it.
Mr. Enns: No, but we will take your comments back, as we took your comments about presentation in the estimates. I know these estimates are rather arcane documents and are not necessarily easy to wade through, but we are trying to make your job easier.
The Chair: We appreciate that very much. There are no further questions. We thank you very much for being here.
(The committee adjourned.)