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Mr. Pat
Martin
Chair
Standing
Committee on Government Operations and Estimates
House of
Commons
Ottawa, Ontario
K1A 0A6
Dear Mr.
Martin:
Pursuant to House of Commons Standing Order 109, on behalf of the Government of Canada, I
am pleased to enclose the Government Response to the recommendations of the seventh
report of the Standing Committee on Government
Operations and Estimates:
Strengthening
Parliamentary Scrutiny of Estimates and Supply.
We were encouraged by the scope of the study and noted the range of views and
perspectives presented to the Committee, which are indicative of the complexity
of the matter and the possible approaches. You and the members of the Standing
Committee have made a significant effort in reviewing the evidence and developing
this report.
Several
recommendations of the Committee are directed to the House of Commons and to
standing committees. While we have focused on the recommendations to
Government, we have taken note of these other recommendations and, where appropriate,
offered observations or comments.
I
would like to take this opportunity to thank you and the members of the
Standing Committee for your work. I look forward to continuing our discussions
on these very important issues.
Sincerely,
Hon.
Tony Clement
President
of the Treasury Board
RECOMMENDATION
1: That the
Treasury Board of Canada Secretariat complete its study of accrual-based
budgeting and appropriations and report back to Parliament by March 31, 2013.
Consistent
with the plan presented by the President of the Treasury Board in early 2008 to
the Chairs of PAC and OGGO, the Treasury Board Secretariat will continue
evaluating accrual-based budgeting and appropriations and communicate the
results of the study to the Chairs of the Standing Committees on Public
Accounts (PAC) and Government Operations and Estimates (OGGO) by March 31,
2013.
RECOMMENDATION
2:
That the
Treasury Board of Canada Secretariat transition the estimates and related
appropriations acts from the current model to a program activity model, that
they assist federal departments with this process, and that they prepare a
timeline for this transition by March 31, 2013, and transmit this timeline to
the Committee.
The
Government agrees that Parliament requires improved information and linkages
between appropriations and planned spending at a program activity level. The
Government is improving the information made available at the program level,
and will provide a clearer crosswalk to demonstrate the alignment between the
current appropriation structure and the program activity model. The Government
agrees to include information on planned spending by program activity as well
as by vote in applicable Estimates documents.
Changing
the vote structure would require considerable effort on a number of fronts:
revisions to policies and processes; changes to internal control mechanisms and
practices; enhancements to departmental financial management systems and
central treasury and expenditure management systems; and training. A review
may also need to be conducted of the Financial Administration Act and
related regulations, appropriation bills, and expenditure authorities provided
through other statutes.
The
Government will develop a model that is aligned with Strategic Outcomes and Program
Activities, and balanced to ensure a feasible number of votes that facilitates
their review and management. The Government will provide this model by March
31, 2013, including costs and a timeline for implementation. The Government
will also engage in appropriate consultations with the public and stakeholders
prior to determining how best to proceed...
RECOMMENDATION
3:
That the
Standing Committee on Procedure and House Affairs pursue amendments to the
Standing Orders, procedure and practice of the House of Commons in order to
require the reports on plans and priorities of the government be tabled in the
House of Commons on the same day as the main estimates, and that the Committee
report to the House on its study by March 31, 2013.
While
the Government agrees with the objective of this recommendation, to more
closely link the reports on plans and priorities to Main Estimates and provide
them in a timely fashion, it notes that the House of Commons Standing Orders
permit the tabling of the reports on plans and priorities of the government on
the same day as the tabling of the Main Estimates and, accordingly, a change to
the Standing Orders is not required. The Government also notes that in certain
cases it may be difficult to table the Main Estimates and the reports on plans
and priorities on the same day – for example, at the opening of a new
Parliament, or a new session of Parliament, when the government may not be in a
position to table both the Main Estimates and the Reports on Plans and Priorities
at the same time. The Government also notes that the Standing Orders may only
be changed by a decision of the House.
Recommendations
4, 5 and 16 are related:
RECOMMENDATION
4:
That the
reports on plans and priorities contain financial information by program
activity for three previous fiscal years and for three future years.
RECOMMENDATION
5:
That the
reports on plans and priorities include an explanation of any changes in
planned spending over time and of any variances between planned and actual
results by fiscal year, as available.
RECOMMENDATION
16:
That the
government develop a searchable online database that contains information on
departmental spending by type of expense and by program.
The
Government agrees with these three recommendations. There is a wealth of
information currently available in a wide variety of reports, and the
Government agrees that the presentation of financial and narrative information
in the various reports could be augmented and made clearer, and the linkages
between the reports better explained. The Government further agrees with the
recommendations to expand the number of fiscal years presented and provide
explanations of trends and variances.
As
noted in Recommendation 16, technology is providing alternatives to static
reports for making data available and the means to increase their utility to
users. The Government will review the options provided by advances in
technology to make this information more readily available.
RECOMMENDATION
6:
That, to the
extent possible, the budget items for a given year are reflected in the main
estimates for that same year; and therefore that the government present its
budget in the House of Commons no later than February 1 of each year; that the
Standing Committee on Procedure and House Affairs pursue amendments to the
Standing Orders, procedure and practice of the House of Commons in order to
move the date on which the Main Estimates are presented to the House back to a
later date in March; and that the Committee report to the House on its study by
March 31, 2013.
Studying
the Standing Orders and reporting to the House are within the purview of the
House of Commons to implement. It should be noted that, under the current
process, delaying the tabling of Main Estimates may have implications for the
Senate. The Interim Supply bill cannot be tabled prior to Main Estimates and
the legislative approval process for the Supply bill must be completed before
April 1.
The
Government does not support a fixed date for tabling of the budget as part of
Recommendation 6. A requirement to present its budget in the House of Commons
no later than February 1 of each year would restrict the Government’s
flexibility in responding to global and domestic imperatives.
The
Government does support the broader objective of improving the understanding of
the purpose and content of the budget and the Main Estimates. Officials from
the Department of Finance and the Treasury Board Secretariat are available to
brief on the budget and Main Estimates.
RECOMMENDATION
7:
That the
government identify separately in the main and supplementary estimates all new
funding that is included in the votes, and that it is cross-referenced to the
appropriate budget source.
The
Government agrees to identify, in estimates documents, new programs that are
appearing for the first time and the appropriate source of funds from the
fiscal framework.
RECOMMENDATION
8:
That the
Standing Committee on Procedure and House Affairs pursue amendments to the
Standing Orders, procedure and practice of the House of Commons in order to
require standing committees to consider during a minimum amount of time the
estimates referred to them, and that the Committee report to the House on its
study no later than March 31, 2013.
RECOMMENDATION
9:
That as part
of its amendments to the Standing Orders, the Standing Committee on Procedure
and House Affairs examine the feasibility of providing standing committees at
least two sitting weeks to consider and report on the supplementary estimates,
and that the Committee report to the House on its study no later than March 31,
2013.
RECOMMENDATION
10:
That, where
feasible, standing committees provide questions to departmental officials in
advance of hearings on the estimates, and that committee members endeavour to
ensure the necessary departmental officials are invited to appear for estimates
hearings.
RECOMMENDATION
11:
That
standing committees review statutory programs on a cyclical basis, at least
once every eight years.
Recommendations
8, 9, 10 and 11 fall within the purview of the House of Commons.
RECOMMENDATION
12:
That
departments and agencies include tax expenditures, currently included in the
Department of Finance’s Tax Expenditures and Evaluations report, in
their reports on plans and priorities, as determined by the Treasury Board of
Canada Secretariat to best fit their mandate.
The
Government provides extensive information on tax expenditures through the
annual Tax Expenditures and Evaluations report. This report has
stimulated public debate on tax expenditures and contributed to transparency
and accountability. Its high quality is widely recognized, and both the
Organisation for Economic Co-operation and Development (the OECD) and the World
Bank have referred to Canada as a model for countries interested in developing
a tax expenditure reporting framework.
The
Government agrees in principle with this recommendation, and supports the
objective of facilitating access for members of Parliament to information on
tax expenditures. However, the tax system, including all tax expenditures, is
the responsibility of the Minister of Finance. Tax expenditures are part of
the broader tax system. As such, they are considered and reviewed by the
Minister of Finance (and, where relevant to another department, in consultation
with the department) in the context of the overall tax system, taking into
account the interactions among tax measures, tax policy objectives – for
example, fairness, competitiveness and simplicity – as well as provincial and
international considerations, fiscal implications, potential market reactions
and system integrity. The Government reviews tax measures on an ongoing basis,
as part of the yearly budget process, in studies published in Tax Expenditures
and Evaluations, or through consultations, advisory committees and expert
panels, to ensure that these measures continue to meet their intended
objectives.
Given
the above, the Government believes that information on tax expenditures should
not be included in the reports on plans and priorities of other departments and
agencies. Doing so would put these departments and their Ministers in the
position of being accountable for policies and measures which are not under
their areas of responsibility. This would not be appropriate as it would not
be consistent with the principle of ministerial accountability. It may also
create confusion among the general public and stakeholders as to the actual
responsibilities of each department and Minister, and where to direct their
inquiries. In addition, any allocation of tax expenditures to other
departments would be imperfect and subject to interpretations. A number of tax
expenditures could be associated with more than one department. The Department
of Finance may not have sufficient information on these expenditures to break
down their cost estimates according to departmental areas of responsibility.
These estimates would also not be comparable to other financial information
presented in departmental reports on plans and priorities given that tax
expenditures are estimated on the basis of a calendar year, not a fiscal year.
However,
in line with the intent of the Committee’s recommendation and in order to give
Parliamentarians a broader perspective on government expenditures, the
Government will coordinate the release of the Tax Expenditures and
Evaluations publication with that of the Main Estimates, which are tabled
on or before March 1 of each year, and will add a reference with a hyperlink to
the Tax Expenditures and Evaluations publication in the Report on
Plans and Priorities of all departments, with a note that tax measures
presented in the publication are the sole responsibility of the Minister of
Finance. In addition, the Government will direct Department of Finance
officials to provide briefings on the Tax Expenditures and Evaluations
report at the Committee’s request.
RECOMMENDATION
13:
That
standing committees review tax expenditures presented in departmental reports
on plans and priorities on a cyclical basis at least once every eight years to
assess whether or not they are meeting their intended objective.
RECOMMENDATION
14:
That
standing committees dedicate an in camera meeting at the beginning of a new
Parliament, and periodically as needed, for a briefing session on the estimates
and supply process and the related documents, with a focus on the committee’s
role in scrutinizing government spending.
Recommendations
13 and 14 fall within the purview of the House of Commons.
RECOMMENDATION
15:
That the
House of Commons give its Standing Committee on Government Operations and
Estimates the mandate to undertake a study of the Office of the Parliamentary
Budget Officer which would include a thorough analysis of the mandate and
function of the Office in order to better serve members of Parliament; and that
in its study, the Committee should consider all structural models for the
Office including, but not limited to, the Parliamentary Budget Officer
reporting directly to Parliament as an Officer of Parliament.
While this
recommendation is directed at the House of Commons, the Government notes that
the mandate of the Parliamentary Budget Officer and the location of this
position within the Library of Parliament were previously studied by the
Standing Joint Committee on the Library of Parliament. The Joint Committee
found the Parliamentary Budget Officer’s services to be a “natural extension”
of those provided to parliamentarians by the Library, which include
non-partisan and customized research and analysis services to assist
parliamentarians and committees in considering legislation and holding the
government to account. As the Joint Committee noted, the Library provides
these services with full independence from government
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